OECD Regional Development Working Papers

2073-7009 (online)
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Working papers from the Regional Development Policy Division of the OECD cover a full range of topics including regional statistics and analysis, urban governance and economics, rural governance and economics, and multi-level governance. Depending on the programme of work, the papers can cover specific topics such as regional innovation and networks, the determinants of regional growth or fiscal consolidation at the sub-national level.

Governing together

An international review of contracts across levels of government for regional development You or your institution have access to this content

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Claire Charbit1, Oriana Romano1
Author Affiliations
  • 1: OECD, France

10 Nov 2017
Bibliographic information

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Contracts are a key tool for vertical co-ordination, enabling dialogue and capacity building across levels of government. They are frequently used for regional development policy in OECD and non-OECD countries. Drawing on contract theory and a variety of national experiences, this paper identifies three main types of contracts between central and subnational governments according to their objectives: i) empowerment; ii) delegation; and iii) policy-sharing contracts. The differentiation of contracts depending on their objective is based on two key factors: the maturity of decentralisation and the capacity of national and subnational governments. It is expected that with the development of subnational /central government capacities (or both), and with the increasing maturity of decentralisation, contracts can shift from one type to another. The paper concludes by suggesting enforcement mechanisms for more effective contracts across levels of government.
multi-level governance, contracts, enforcement, contract theory, regional development
JEL Classification:
  • H5: Public Economics / National Government Expenditures and Related Policies
  • H7: Public Economics / State and Local Government; Intergovernmental Relations
  • K12: Law and Economics / Basic Areas of Law / Contract Law
  • R1: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics
  • R5: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis
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