This report examines productivity and well-being performance in Wales, Welsh fiscal and public investment frameworks, and the Welsh Government’s regional development and public investment governance practices. It identifies strengths and challenges in these areas and highlights immediate and longer-term actions that could help the Welsh Government meet its dual objective of growth plus inclusiveness.

Quality public investment, particularly for regional development, goes hand-in-hand with quality multi-level governance. How different levels of government interact in their pursuit of growth and well-being contributes to the effectiveness of the investment undertaken. A lack of clarity with respect to responsibilities, unaligned priorities, and limited or ineffective communication within or among levels of government can affect policy design and delivery, and the investments that support it. Effective institutions, clear policy objectives, appropriate regulatory and fiscal frameworks, adequate skills and expertise, and engaged stakeholders all contribute to better public investment outcomes. The quality of government has an incidence on economic performance, environmental sustainability, income inequality and poverty, education and health outcomes, as well as the subjective happiness of a population. Regions and local governments that enjoy higher quality governance are also more likely to effectively and efficiently use available public investment funds and attract additional ones.

In 2015, the Welsh Government introduced the Well-Being of Future Generations (Wales) Act in a significant step towards defining its path to balanced territorial growth. It is now considering new approaches to governance structures as well as regional development and public investment frameworks to further advance its objectives. For the Welsh Government’s approach to flourish, ensuring that public investment funds are optimally used and supported by effective governance and financing structures becomes fundamental in a post-Brexit, post-COVID-19 era. This means appropriately prioritising public investment projects, co-ordinating investment across sectors, and understanding and meeting local needs. It also calls for a strong and effective implementation capacity at all levels of government. Moving forward, the Welsh Government, Welsh local authorities and their public, private and third sector partners will need to reinforce their ability to work together to achieve common objectives and priorities and channel investment in an appropriate and effective way – one that ensures well-being and quality of life for today’s generations and those of the future.

The work with the Welsh Government was undertaken as part of the programme of work of the OECD’s Regional Development Policy Committee (RDPC), a leading international forum in the fields of regional, urban, and rural development policy and multi-level governance, and served by the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). The RDPC has long advocated for multi-level governance and place-based approaches tailored to local and regional needs. In 2014, it endorsed the OECD Recommendation on Effective Public Investment across Levels of Government to support the governance of public investment. To further advance the RDPC’s leadership in this area, the OECD created the Multi-Level Governance Studies series in 2016. As part of this series, this report contributes to the body of knowledge relating to the multi-level governance of public investment. The final report [CFE/RDPC(2020)9] was approved by the RDPC via written procedure on 24 July 2020.

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