Rethinking Regional Development Policy-making

image of Rethinking Regional Development Policy-making

This report takes stock of discussions held between academics and country practitioners during a series of seminars organised in 2017 by the OECD and the European Commission that focused on opportunities to improve the design and delivery of regional development policies. What can governments do to enhance economic development in regions and cities ? What lessons can be drawn from theory and practice to ensure public spending and investments contribute to regional development as effectively as possible ? At a time of increasing pressure on public finances it is paramount to enhance the effectiveness of regional policy governance instruments to add value to public spending and investment.

Bringing together frontier economic theory and country practices regarding performance frameworks, financial instruments, policy conditionalities, contractual arrangements and behavioural insights in regional policy, this report identifies cross-cutting lessons to help policy-makers manage common trade-offs when designing public expenditure and investment programmes for the development of regions and cities.



Conditionalities for effective public investment in regional development policies

This chapter provides theoretical insights for the use of conditionalities in regional development policies. It examines different perspectives from academic literature, including from Game Theory, Public Choice, and Neo-institutional Economics Perspectives, among others. The chapter explores when it is most useful to use conditionalities to support public investment and how different theoretical approaches can help policy-makers better use them. It provides lessons from theory and practice for designing conditionalities for regional policy. It highlights a series of critical factors that are crucial for their effectiveness in triggering regional policy reforms and changes, regardless of conditionalities applied. These range from a need to be context specific, to the fundamental importance of ownership.


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