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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.

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Contracts to manage the stability vs. flexibility trade-off in regional development policies

In times of fiscal constraint and uncertainty, governments need to balance long-term regional development policies seeking to provide certainty for the public and private sector, with the need to adapt these policies to new priorities and innovation. This chapter explores how contracts can be more flexible across levels of government to respond to these challenges, while not compromising stability. It revises the rationale behind the use of contracts for regional development and looks into new insights from contract theory. After assessing how countries are using contracts, the chapter provides some key lessons from frontier thinking and practical experience for policy makers to design more effective contractual arrangements.

English

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