Multi-level Governance of Public Investment: Lessons from the Crisis
AbstractOver 2008-11, most OECD countries switched from highly expansive fiscal policies to the tightest in decades. During the crisis and subsequent recession in 2008-09, many OECD and G20 countries implemented stimulus packages, which in some cases amounted to 4% or more of GDP. On the expenditure side, the fiscal programmes typically focused on public investment. Given their large traditional role in public investment in OECD countries, sub-national governments (SNGs) have played an important role in implementing investment recovery strategies. For future investment strategies it is important to learn about obstacles encountered across levels of government and the instruments that facilitated implementation. The crisis has made more obvious the multi-level governance challenges – in particular fiscal, policy, capacity or administrative challenges – that are inherent to decentralised political systems. Co-ordination across levels of government has proven critical for targeting investment priorities, ensuring coherence in fiscal policy and facilitating the implementation of national strategies during the crisis. As stimulus packages are phased out, many countries are planning some combination of spending cuts and tax increases in 2011-12. To avoid simply shifting the problem from the centre to the regions, co-ordinated efforts from all levels of government are required to accommodate appropriate budget cuts for fiscal consolidation and better prioritise investment in what unlocks each region?s potential to restore growth. Both the stimulus and the process of fiscal consolidation highlight the need to foster and improve policy co-ordination, transparency and information sharing across levels of government.
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Bibliographic InfoPaper provided by OECD Publishing in its series OECD Regional Development Working Papers with number 2011/5.
Date of creation: Jul 2011
Date of revision:
sub-national government; public investment; regional development; multi-level governance; fiscal consolidation; crisis;
Find related papers by JEL classification:
- H5 - Public Economics - - National Government Expenditures and Related Policies
- H6 - Public Economics - - National Budget, Deficit, and Debt
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
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