Investing Together: Working Effectively Across Levels Of Government (GOUVERNANCE)

Why 'investing together'? Public investment is not only a major strategic responsibility for governments but also a shared one: almost two-thirds of public investment is undertaken by sub-national governments and major projects tend to involve more than one government level. In a tight fiscal landscape, improving the efficiency and effectiveness of investment, while maximising its impact on growth outcomes, is paramount. Identifying and addressing the governance bottlenecks that impede smooth co-ordination across levels of government can make a significant contribution towards reaching that end. This report dissects the relationships different government actors form vertically, across levels of government, and also horizontally, across both sectors and jurisdictions. It helps policy makers to understand more systematically how co-ordination works and why it so often doesn't, as well as shedding light on the mechanisms countries have developed to govern these interactions. In doing so, it addresses another key requisite to organising co-ordination, namely government capacity. Sub-national actors, especially, need to be equipped with the right skills and resources to carry out their responsibilities and to engage with stakeholders, across the public, private and civil society sectors. This report offers a toolkit to policy makers to assess their needs for capacity development. Read more... Foreword Acknowledgements Table of contents Acronyms and abbreviations Executive summary Public investment is an important strategic responsibility, shared across levels of government Doing more with less Key findings The quality of governance has a major influence on public investment outcomes OECD countries face a range of common challenges when it comes to managing public investment The character of these challenges varies across countries and regions Key recommendations Vertical coordination Horizontal coordination Contractual arrangements Critical capacities. Chapter 1. How to do better with less: Working across levels of government to invest more effectivelyThe importance of public investment Public investment can be a key contributor to economic growth ... Box 1.1. Public capital formation: Measurement and trends ... although its impact depends to a significant extent on how governments manage it A place-based approach is critical to maximising the impact of public investment Box 1.2. Drivers of regional growth and policy complementarities Place-based approaches to investment imply a need for some decentralisation of decision making ... ... But top-down, as well as bottom-up, input is criticalThe impact of the crisis on public investment across levels of government Sub-national governments play a central role when it comes to public investment ... Figure 1.1. Sub-national government ("local") shares of public investment (2011) Figure 1.2. Sub-national government share of total government public investment (1995-2010) ... but the crisis and its aftermath have seen public investment become an adjustment variable Figure 1.3. Changes in sub-national governments' share of total public investment (2007-11). Figure 1.4. Annual changes in public and private investment (1996-2011) ... and has undermined the ability of sub-national governments to engage in their key role for public investment Box 1.3. What constitutes good quality in governance and how can it be measured? Figure 1.5. Share of sub-national government debt-to-GDP (2001-10) Figure 1.6. Composition of public debt by sector of government (2009) Improving public investment through quality governance Doing better with less requires improving the quality of government ... Box 1.4. Sub-national quality of government: Using citizens' perceptions as a basis for measurementFigure 1.7. Human Development Index and Quality of Government Figure 1.8. Regional Quality of Government and sub-national variation Key bottlenecks exist in the governance of public investment OECD countries struggle to achieve effective inter-governmental coordination of investment ... Figure 1.9. Cross-governmental coordination challenges of public investment ... and they face shortfalls in sub-national capacities for implementing public investment.