This is the presentation for the launch of the OECD report: The Future of Regional Development and Public Investment in Wales, United Kingdom, given by Maria Varinia Michalun.

1. OECD REPORT TO THE
WELSH GOVERNMENT:
LAUNCH
Launch Event (Virtual)
17 September, 2020
Maria Varinia Michalun
OECD Centre for Entrepreneurship, SMEs,
Regions and Cities

2. • Methodology, timeline and framework
How was the report developed?
• A few territorial considerations
Some territorial characteristics with implications for regional development and public
investment in Wales
• Some key findings and recommendations
Challenges and recommendations for regional development and public investment in
Wales
• To conclude
Presentation outline

3. METHODOLOGY,
STRUCTURE AND
TIMELINE

4. 4
OECD project methodology and timeline
Report and
Recommendations
Analysis
and
evaluation
Stakeholder
dialogue
Data
gathering
and
analysis
Q1-Q3
2019
• Initial data gathering and assessment
Q4 2019
• Case study mission and OECD expert
seminar
Q1
2020
• Report first draft to Welsh Government
Sept
2020
• Report launch
Q4 2020
• Regional seminars and toolkit

5. The analytical framework: OECD Recommendation on
Effective Public Investment across Levels of Government
5
https://www.oecd.org/effective-public-investment-toolkit/
Good governance of
investment supports a more
effective use of funds and
boosts growth possibilities

6. A FEW TERRITORIAL
CONSIDERATIONS

7. 7
Territorial considerations: Labour productivity
Source: OECD (2020) OECD Regional Statistics (database), http://dx.doi.org/10.1787/region-data-en.
Labour productivity growth in the small regions of
the UK, average 2002-18
Evolution of labour productivity in Wales, 2002-2018
Note: Labour productivity is measured as GVA per worker and it is expressed in USD PPP at constant prices of 2015
100
105
110
115
120
125
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
United Kingdom Wales Scotland Northern Ireland Greater London (Frontier)
Growth index (2002=100)

8. Territorial considerations: Well-being
8
Income deprivation and COVID-19 deaths in
MSOAs of Wales (1 March-17 April, 2020)
Beyond GDP: Well-being outcomes in Wales
Sources: (OECD, 2020[39]), OECD Regional Statistics (database), http://dx.doi.org/10.1787/region-data-en; COVID-19 map: Author’s
elaboration based on data from the Welsh government and (Office for National Statistics).

9. 9
Territorial considerations: EU funds
Source: OECD (2017), OECD Economic Surveys: United Kingdom 2017, http://dx.doi.org/doi.org/10.1787/eco_surveys-gbr-2017-en; SPERI (2016), UK Regions and European Structural and Investment Funds, http://speri.dept.shef.ac.uk/wp-
content/uploads/2018/11/Brief24-UKregions-and-European-structural-and-investment-funds.pdf.
Note: Data on EU funding refer to the European Regional Development Fund (ERDF) and the European Social Fund (ESF) only. SEE: South East England; LDN: Greater London; SWE: South West England; NWE: North West England;
NEE: North East England; EE: East of England; EM: East Midlands; WM: West Midlands; YTH: Yorkshire and The Humber; SCT: Scotland; NIR: Northern Ireland
Allocation of European Structural and Investment Funds across UK Regions (2014-2020)

10. 10
Territorial considerations: Devolution
Source: Author’s calculations based on OECD (2020), Pilot Database on Regional Government Finance and Investment: Key Findings; ONS (2019), Country and Regional Analysis, https://www.gov.uk/government/statistics/country-and-
regional-analysis-2018; OECD (2020), OECD Regional Statistics, Database, https://stats.oecd.org/Index.aspx?DataSetCode=REGION_DEMOGR.
Note: Data for OECD countries except for the UK are for 2016. Data for the UK are for 2017; data are based on national averages for the regional government sector. In the UK, this corresponds to the three devolved nations and excludes
local authorities. UWA: Unweighted averages for all 24 OECD and EU countries, and separated averages for federal and unitary countries
Regional government spending contributions as a % of total public expenditure and
national GDP in OECD and EU countries
AUT
BEL
DEU
ESP
CHE
MEX
AUS
CAN
USA
HRV CZE DNK
FRA
ITA
NLD
NOR
POL
ROM
SVK
SWE
TUR
JPNKOR
NZL
All (24 UWA)
Federal (9 UWA)
Unitary (15 UWA)
EU (15 UWA)
GBR
0
10
20
30
40
50
60
0 5 10 15 20 25
Regional expenditure as % of national GDP
Federal countries Unitary countries Averages United Kingdom
Regional expenditure as % of total public expenditure

11. SOME KEY FINDINGS…
…AND SOME
RECOMMENDATIONS

12. 12
The changing role of governments…
OECD (2019), Making Decentralisation Work: A Handbook for Policymakers
 Tasks and responsibilities are frequently
shared in decentralised/devolved
contexts…
 …Success depends on clearly
established roles and responsibilities,
that are mutually understood and
agreed upon
More strategic role
Setting conditions to for properly aligned policy objectives
and policy coordination
Monitoring performance (of regions and cities)
Ensuring balanced territorial development throughout
the territory
From direct service delivery to enabling and guiding
subnational authorities in their service responsibilities
Supporting experimental governance, learning-by-doing,
and providing a mix of tools
Developing new capacities at the central level to cope with
new functions
Subnational planning, programming and investment
Delivery decisions
Day to day implementation
National level Subnational level

13. …calls for a new approach to regional development
and investment
Draws on an integrated
strategy and policies for
regional development and
public investment
Supports the delivery of policy
and services by a wide variety
of actors at the national,
regional and local levels
Optimises its resources – be
they financial, human,
infrastructure, etc., especially
in a limited fiscal context.
Balances top-down and bottom
up approaches, favouring
partnerships, ideally that
meet half way.

14. Key challenge #1 – Fragmentation
14
Policy and plans
Departments/
Sectors City and
Growth Deals
Local level
plans
Regional
Economic
Frameworks
Investment
Financing
Department
budgets
Local Authority
budgets
EU
Funds/Shared
Prosperity
Fund
City and
Growth Deal
Funds
…and requires effective coordination and management.

15. Recommendation:
Addressing the fragmentation challenge in regional
development and public investment
15
• Introduce a single, integrated Regional
Development Policy
• Complement with regionally designed
development plans
Policies and plans for
regional development
• Adopt the proposed Framework for Regional
Investment
• Build on existing knowledge, experience and
capacity; adjust what doesn’t work
Investment financing

16. 16
Recommendation:
Reinforce regional development and
investment coordination at the centre of government
Regional
Development
Strategy and
Policy
Regional
Development
Investment
Finance
Office for
Regional
Development and
Investment

17. Key challenge #2 – Policy and service implementation
Large number of actor
sets (e.g. national and
local governments,
city and growth deal
boards, partnerships,
committees)
Implementation and
delivery spread
among a limited
number of people, in
a complex
geographical
pattern(s)
A strain on
national and local
resources, and
leading to missed
opportunities

18. Recommendation:
Supporting a changing role at the subnational level
Introduce effective, resourced and
capacitated inter-municipal cooperative
bodies:
make the most of larger-scale (regional)
service delivery and investment
opportunities
Build the knowledge base of local
authorities:
apply learning-by-doing,
pilots/experimentation, formal partnership
agreements to effectively deliver on more
responsibilities over time
Reconsider the merits of a regional
development agency:
support subnational actors identity and act
on growth and investment opportunities

19. TO CONCLUDE…

20. Immediate/
Short term
(Q4 2020-Q1 2021)
Longer term
(Q2 2021…)
20
To conclude …
• Consider productivity models and drivers to generate growth and wellbeing
• Identify and harmonise regional development objectives across sectors
• Introduce the Framework for Regional Investment
• Introduce regional level bodies for tasks more effectively delivered at a
greater scale
• Establish an Office for Regional Development and Public Investment
(under First Minister’s Office)
• Develop and introduce a single, integrated Regional Development
Policy and support with integrated regionally-designed plans
• Rationalise the “territorial footprint” and subnational planning
• Support policy implementation in the public and private sectors (e.g.
pilots, RDA… )

21. mariavarinia.michalun@oecd.org
Thank you.
Diolch.

22. 22
Report structure
Ch 3: The territorial
picture viewed
through
megatrends
Territorial and
socio-economic
conditions
Productivity and
growth:
overcoming the
regional divide
Opportunities for
building greater
well-being
Ch 4: Fiscal
Frameworks and
Public Investment
Financing
Growing fiscal
capacity
Boosting fiscal
decentralisation
Governance of the
investment cycle and
optimising
investment levers
Ch 5: Governance
of Regional
Development and
Public Investment
Strategic planning
frameworks and policy
coordination
Reinforcing
governance
mechanisms for
regional development
Ensuring effective
policy and service
delivery
Ch 6: Case study
(Mid and South
West Wales)
Local authorities:
at the heart of
economic regions
Cooperative
arrangements for
the Welsh context
Building
governance
capacity for a 3 or
4 region model