Regional development

Multi-level Governance and Public Finance


The issues | Multi-level governance and the OECD | Principles Sub-national finance

Territorial Reviews | Water | Regulatory


Multi-level Governance: The issues

Relations across levels of government have changed over the last two decades. Decentralisation has made local and regional governments more powerful in formulating and delivering policy thereby increasing their scope for improving the competitiveness of the regional economy and the well-being of residents.

This change from a centralised and "vertical" system has made governance more complex by involving a wider range of stakeholders at different levels. As a result both horizontal and vertical relationships are increasingly important. Understanding this complex network of relationships, as well as developing effective collaboration between levels of government, is critical to enable efficient policy making and service delivery.


Multilevel Governance at the OECD

OECD work on multi level governance addresses both vertical and horizontal dimensions.

The “vertical” dimension refers to the linkages between higher and lower levels of government, including their institutional, financial, and informational aspects. Local capacity building and incentives for effectiveness of sub-national levels of government are crucial issues for improving the quality and coherence of public policy.

The "horizontal" dimension refers to co-operation arrangements between regions or between municipalities. These agreements are increasingly common as a means by which to improve the effectiveness of local public service delivery and implementation of development strategies.

A multi-level governance framework has been formulated by the OECD and has been used in several areas of work related to multi-level governance including on Public investment, regional development, urban development, local finances, water governance, regulatory policy or environmental issues such as climate change. 


OECD Principles on Effective Public Investment

To promote good practices in the area of multi-level governance of public investment, the OECD has developed a recommendation on Effective public investment: a shared responsibility across levels of government, adopted by the OECD Council in March 2014 as an official OECD instrument.

Read more about the OECD Principles on Effective Public Investment



Investing Together

Investing Together: Working Effectively Across Levels of Government (2013)

This report dissects the relationships different government actors form vertically, across levels of government, and also horizontally, across both sectors and jurisdictions. Sub-national actors also need to be equipped with the right skills and resources to carry out their responsibilities and to engage with stakeholders, across the public, private and civil society sectors. This report offers a toolkit to policy makers to assess their needs for capacity development.


Consult the full list of publications on Multi-level governance.


Sub-national Finance

Sub-national governments play a significant role in public expenditure and investment. Across the OECD there are around 141, 000 general purpose regional and local governments.

Sub-national Governments in OECD Countries: Key Data provides compelling facts that highlight why strong subnational governance capacity and tools to co-ordinate within and across levels of government can improve the efficiency and effectiveness of public spending.  



Cover: Sub-national data in OECD Countries 2013



Multi-level governance in OECD Territorial Reviews

The OECD publishes territorial reviews at the national, regional and metropolitan levels which all contain a specific chapter on multi-level governance.


Multi-level governance of Water


Water governance is one policy area in which effective multi-level governance is vital. Managing water is a complex issue involving multiple stakeholders from all levels of government with different views and objectives.  A lack of effective management of interdependencies and coordination across these stakeholders can hamper the efficient design and implementation of water policy reform.

The publication Water Governance in OECD Countries: A multi-level approach identifies common governance gaps and is a tool for policy makers to carry out self-assessments and find commonalities with other regions.

More about water governance



Water Governance in OECD Countries: A multi-level approach (2011)

Water Governance in OECD Countries | OECD Free preview | Powered by Keepeek Digital Asset Management Solution


Multi-level Regulatory Governance


High-quality regulation at a certain level of government can be compromised by poor regulatory policies and practices at other levels. This negatively affects business and citizens, and thereby the economy as a whole. Following certain principles and good practices for high quality regulation in a coherent way, as well as facilitating co-ordination among regulatory institutions at different levels of government can bring improvements to the regulatory system as a whole.


More on regulatory governance

Multi-level Regulatory Governance:  Working paper (2009)