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Investing Together

Working Effectively across Levels of Government

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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

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How to do better with less: Working across levels of government to invest more effectively

This chapter explores the importance of public investment for economic growth, as well as the factors that appear to influence that relationship. It shows why the shared nature of public investment gives sub-national governments an important role, tapping into their comparative advantage of understanding the specific needs of particular places. It also looks at the way in which the economic crisis has compromised sub-national governments’ ability to carry out this role. Public investment has become an adjustment variable as governments seek to sustain other critical expenditures in tight fiscal circumstances. This points to the need for governments to do better with less when managing limited investment resources. In many instances, this will require improvements in the quality of governance, an issue explored in the penultimate section of this chapter. Finally, the chapter turns to the two key governance challenges that will constitute the focus of , namely co-ordination and sub-national capacity, providing evidence from a recent OECD survey that identifies critical challenges that exist with respect to these two aspects of governance.

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