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.



Performance frameworks for regional development policies

While there is broad consensus that public investment policies should focus on performance, policy makers face a number of practical challenges when designing performance systems. This chapter addresses some of the key questions that policy makers are seeking to address, including, how can they measure and monitor performance, how to design incentives to ameliorate performance and how performance information can inform budgetary discussions. For this, the chapter explores recent advances in theoretical analysis as well as practical approaches to performance and incentives. This includes a focus on the behavioural aspects of incentives and how to balance the desire for innovation, performance, and compliance, while keeping administrative costs and regulatory burdens manageable.


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