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.



Using financial instruments for regional development policies

This chapter discusses the use of financial instruments to support socially desirable investments by private and public actors in order to promote economic development in cities and regions. While theoretical arguments for the use of financial instruments are generally well defined, revisiting theory can help bridging gaps of their practical use. This chapter thus explores, from a theoretical and practical perspective, advantages and disadvantages of financial instruments, and how to promote their use in more effective ways. It identifies factors that make their use particularly effective when compared to grants and highlights, at the same time, circumstances under which they are less appropriate. Finally, it summarises practical considerations for policy makers to make the most of financial instruments.


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