Effective Public Investment Toolkit

Effective coordination is essential to ensure that investment decisions taken by different levels of government and across policy areas are coherent and mutually reinforcing.

This pillar focuses on vertical and horizontal coordination mechanisms that align priorities, share responsibilities and reduce overlaps.

Principles covered:

1. Invest using an integrated strategy tailored to different places
2. Adopt effective instruments for coordinating across national and subnational levels of government
3. Co-ordinate horizontally among subnational government to invest at the relevant scale

These principles highlight the importance of clear objectives, shared information and governance mechanisms that facilitate collaboration among ministries, agencies and territories.

The effectiveness of public investment depends not only on funding but also on the institutional and human capacities to design, deliver and evaluate projects.

This pillar focuses on building capabilities at all levels of government and promoting continuous learning and improvement.

Principles covered:
4. Assess upfront the long-term impacts and risks of public investment
5. Engage with stakeholders throughout the investment cycle
6. Mobilise private actors and financing institutions to diversify sources of funding and strengthen capacities
7. Reinforce the expertise of public officials and institutions involved in public investment
8. Focus on results and promote learning from experience

These principles provide guidance on developing skills, using evidence in decision-making, and engaging citizens, businesses and other stakeholders in shaping investment strategies.

Strong framework conditions underpin the efficiency, transparency and long-term impact of public investment.

This pillar addresses the financial, legal and regulatory environment that supports effective multi-level investment governance.

Principles covered:
9. Develop a fiscal framework adapted to the investment objectives pursued
10. Require sound and transparent financial management at all levels of government
11. Promote transparency and strategic use of public procurement at all levels of government
12. Strive for quality and consistency in regulatory systems across levels of government

These principles focus on ensuring that governance systems, incentives and accountability mechanisms create the right conditions for sustainable investment.

Design and implement investment strategies tailored to the place the investments aim to serve. Public investment choices should be linked to a development strategy based on assessment of regional (or local) characteristics, competitive advantages, growth, innovation, and job creation potential and considerations of equity and environmental sustainability. Investment strategies should be results-oriented (with clearly defined policy goals), realistic and well-informed (based on evidence that points to the regions or locality’s ability to make fruitful use of investments), and forward-looking (with investments that can position regions and localities for competitiveness and sustainable development in the context of global trends).

Seek complementarities and reduce conflicts among sectoral strategies. Mutually reinforcing impacts in the form of policy complementarities are often required to make the most of public investment. At higher levels of government, such complementarities can be facilitated by a) using strategic frameworks for public investment to align objectives across ministries and levels of government; and b) minimising administrative barriers through co-ordination mechanisms such as, but not limited to, inter-ministerial committees and programmes, and harmonisation of programme rules. Governments can also establish joint investment funds that pool monies across public agencies/ministries to encourage consideration of a broader set of priorities.

Encourage the production of data at the relevant sub-national scale to inform investment strategies and produce evidence for decision-making. Such data may be collected by statistical agencies but also from administrative records, other data sources, and citizens themselves.

To provide strategic guidance to all levels of government

Development strategies help coordinate actors towards a common vision for development. A national strategy for regional development is critical to clarify the long-term objectives and support the prioritisation of projects across all levels of government. Regional and local government strategies are essential tools to support a shared vision for development and co-ordinate investments to achieve that vision.

To maximise the growth potential of each region

A place-based approach to regional development and investment can help to maximise the growth potential of each region. Different places have unique prospects based on their specific economic conditions, industry strengths, competitive advantages and potential for growth, innovation, and job creation. A place-based approach can unlock untapped potential in a place by better identifying and responding to local needs, challenges and assets. Adopting this approach requires adapting objectives, intervention scale, tools and actors involved in the policy-making process to a specific place.

To take advantage of complementary investments and actions across policy sectors

Public investment can serve multiple purposes beyond economic development, including well-being or environmental sustainability. Broader policy objectives need to be considered early during planning stages. Investments in both “hard” and “soft” infrastructure can help maximise potential investment outcomes. It is also important to seek complementarities and reduce conflict among sectoral strategies. For example, investments in housing need to be complemented by the right investment in transport and land use changes. Such complementarities need to be combined in integrated strategies.

To better exploit opportunities and manage challenges from long-term trends

Long-term and multidimensional challenges, such as demographic change, climate change, urbanisation, and digitalisation, require a coordinated approach to align policy objectives across levels of government and sectors. Each region faces distinct challenges - whether from natural disasters, economic downturns, climate change or demographic shifts - that require tailored approaches. An integrated place-based investment strategy can also help countries attenuate impacts that long-term trends can have on regional inequalities.

To invest based on well-informed and evidence-based strategies

Good data supports good investment decisions. Governments should encourage the production of data at the right territorial scale to produce evidence for investment decision-making. For example, this can require data beyond a city level to formulate strategies at the scale of the metropolitan area. 

• Mobilising local and regional knowledge to design development and public investment strategies, particularly through dialogues and partnerships
• Seeking complementarities among sector strategies through inter-departmental or ministerial committees and programmes, harmonisation of programme rules or joint investment programmes
• Reviewing policies at an early stage to adequately consider the impacts on different types of places
• Generating and using spatially-relevant data for investment planning
• Establishing a clear and transparent priority-setting process that accounts for the territorial impact of investment projects

• Copying another place's development or investment strategy without adaptation to place-specific social, environmental and economic needs
• Elaborating on a vague investment strategy that does not clarify priorities
• Ignoring the positive or negative impacts of public investments across different sectors
• Planning investments outside of a specific strategy in an ad-hoc way

• National regional development strategies, national climate strategies and national investment plans are increasingly common among Adherents. Most Adherents have some form of national strategy or plan for regional development or investment. Out of the 32 Adherent countries that participated in the 2024 survey, 27 have reported a national investment or infrastructure plan, and 25 have developed a regional development strategy at the national level.
• National and subnational strategies for regional development often lack targeted objectives for different places or territories. Out of the 21 Adherents that have a national development strategy, only half of them declare having differentiated objectives per territory or place. When it comes to climate action strategies, only 9 out of 28 have differentiated objectives.
• Adherents are increasingly aware of the need to co-ordinate investment across sectors. A majority of responding Adherents have mechanisms to co-ordinate across sectors, some of these mechanisms are permanent, others meet on an ad-hoc basis.
• Inter-ministerial committees or councils with a responsibility for coordinating regional development and/or investment that meet on a permanent basis are also common. In 18 responding Adherents, there are permanent inter-ministerial committees. Nearly half of the respondents utilise alternative mechanisms to support cross-sectoral co-ordination.
• All responding Adherents have a national statistical agency with a defined responsibility for collecting data at the regional and/or local scale. Regions and municipalities are also increasingly collecting their own data; in more than one-third of Adherents’ regions and/or municipalities have the mandate of collecting some key data.

Switzerland

The Swiss Territorial Project (Projet de territoire Suisse) is a strategic, non-binding framework developed through voluntary cooperation among the Confederation, cantons, cities and municipalities, reflecting a strong commitment to multi-level governance. It aims to guide Switzerland’s spatial development toward 2050 by fostering coordinated investment decisions across key sectors such as land use, transport, housing and energy. It aims to promote efficient land use, urban regeneration and alignment between infrastructure and development through a shared vision for sustainable territorial planning. The territorial project is planned to be updated by 2026 based on consultation from all levels of government.

Source: Federal Office for Spatial Development ARE (n.d.), Swiss Territorial Project

Japan

In 2022, Japan updated the Remote Islands Development Act, aiming to highlight the urgent need to develop human resources alongside tourism services and public infrastructure. Since 1953, Japan's strategy for remote island development is primarily guided by the Remote Islands Development Act. The legislation aims to address the unique challenges faced by remote islands, such as geographic isolation, limited infrastructure and economic disparities. The Act facilitates coordinated efforts between national, prefectural and municipal governments to implement development projects tailored to the specific needs of these islands. Over the years, the Act has undergone several revisions to adapt to changing circumstances and to enhance its effectiveness. Its latest revision in 2022 highlights the urgent need to develop human resources alongside enhancing tourism services and public infrastructure.

Source: Government of Japan (1956), Basic policy for remote island development; Bijslama (2022), The Miyako Bubble: Building the future of a remote island

Poland

Poland’s National Regional Development Strategy 2030 (KSRR 2030) sets out the strategic framework for addressing territorial disparities and strengthening regional potential in line with the principles of sustainable development. The strategy emphasises a place-based approach, tailored to the diverse needs of regions. Among other priorities, the document focuses on strengthening public administration skills essential for effective development policy, particularly in low-potential areas and enhancing connections between local/regional authorities, business and academia. It also foresees a greater role for local governments in shaping local development and promotes cross-border cooperation and joint projects among municipalities and districts.

Source: Government of Poland (n.d.), National Regional Development Strategy 2030 (KSRR 2030)

Portugal 

The National Statistics Institute (INE) created a dissemination platform that allowed citizens to visualise and explore main indicators from the 2021 Census. It was centred around themes of population, households and housing, and includes graphs and maps at a regional, local and neighbourhood level. Specific data included at a local and neighbourhood level includes population data (age, nationality, marital status), education data (level of education and areas of study), disability (type of disability), labour market (employed population by profession and economic activity, unemployed population by age and sex), migration (migrant population, reason and year of immigration), domestic accommodation (number of persons per accommodation), institutional accommodation, family groups (type of group and number of children), among others. 

Source: OECD (2024), Questionnaire on the Recommendation on Effective Public Investment Across Levels of Government; National Statistics Institute (2024), Censos 2021

Coordinate across levels of government to strengthen the efficiency and effectiveness of public investment. Coordination is necessary to identify investment opportunities and bottlenecks, to manage joint policy competencies, to minimise the potential for investments to work at cross-purposes, to ensure adequate resources and capacity to undertake investment, and to create trust among actors at different levels of government. Several tools can be used when coherence of investment across levels of government is required, such as co-financing arrangements, contracts between levels of government, formal consultation processes, national agencies or representatives working with sub-national areas, or other forms of regular inter-governmental dialogue.

To align objectives between the central and lower levels of government

Collaboration for public investment strategies across levels of government is difficult, even in situations where the actors involved clearly recognise the need for it. When decisions are taken in silos, the likelihood increases of investing in projects that may work at cross-purposes or allocating resources to projects that do not necessarily meet local needs effectively. By coordinating efforts, governments can avoid disjointed or conflicting investments while working with a common purpose that helps to ensure that all places have access to the necessary infrastructure and services to support their development.

To bridge information, financing and capacity gaps

Transaction costs, competitive pressures, resource constraints, differing priorities and fears that the distribution of costs or benefits from co-operation will be one-sided can impede efforts to bring governments together. Bridging information, financing and capacity gaps of different governments can help to ensure that investments are more effective and better support lower-capacity governments to invest.

To build synergies across national and subnational governments

Effective implementation of investments to address the long-term challenges of climate change, demographic change, and digitalisation requires concrete actions and partnerships across levels of government. It also requires alignment across different sectors and policy areas, such as transport, housing, water, energy and land-use planning. For example, implementing aligned climate policies requires pursuing a multi‑stakeholder and multi-level methodology that combines both bottom-up and top-down approaches.

To gain insight into which actions work best, where to implement them and under what conditions

Through dialogue and evidence-sharing, governments can gain insight into the actions that work best, where to implement them and under what conditions. The creation of co-ordination tools or institutions that facilitate structured dialogue on their own does not necessarily ensure an effective co-ordination. Transparency of rules and consequences, simplicity of the information shared, credibility, and cross‑government commitment are important ingredients to encourage fruitful dialogue.

• Using contracts or formalised agreements between levels of government
• Adopting co-financing arrangements between levels of government
• Establishing bodies for regular political and technical dialogue among levels of government
• Formalising consultation of subnational governments in the development of national strategies and plans
• Sharing simple and credible information in a transparent and continuous way
• Ensuring that subnational priorities are considered in the national investment strategies and plans

• Underestimating the coordination challenges at stake during all stages of the investment cycle
• Engaging in coordination with other levels of government too late in the investment decision-making process
• Involving coordination bodies without clear value added in the decision-making process
• Creating a proliferation of inter-governmental contracts that are complicated to manage
• Focusing on formal arrangements without considering their real effectiveness and the motivation of the actors involved
• Underestimating the role of informal dialogues that favour cooperative relations

• Adherents have developed a broad set of mechanisms to help bridge information, capacity, fiscal, administrative or policy gaps across national and subnational governments. In 2024, 24 out of 28 Adherents who responded to the survey question declared having some form of co‑financing arrangement, followed by national, regional municipal contracts (20 out of 29) and/or city or regional deals.
• A majority of responding Adherents, in particular federal countries, have in place inter‑governmental forums or platforms. In 2024, most Adherents have dialogue fora at the political (28) and technical (26) levels. At the political level, 67% of Adherents declare that dialogues take place regularly and 33% on an ad-hoc basis. At the technical level, 63% of the responding Adherents declare meeting regularly and 37% only when it is necessary.
• Mechanisms to consult with subnational governments are also increasingly common. Out of 32 responding Adherents, 29 have some form of consultation mechanism in place. Overall, 17 are required by law to consult subnational governments on investment strategies or plans, among those, 12 are required for all types, while 5 are only for certain sectors.
• Adherents take some actions to align national and subnational investment strategies. This alignment is not necessarily mandatory in all sectors where national and subnational governments share responsibilities. Indeed, only in 14 responding Adherents, formal regulations require the alignment in all sectors.
• Conditionalities on transfers are also very popular among responding Adherents. More than two thirds use some type of conditions on transfers to subnational governments. Most of them include reporting requirements or requirements to undertake an environment impact assessment. Almost all Adherents for which there is data (23 out of 25) require an environment impact assessment.

Canada

In Canada, the Regional Development Agencies (RDA) are the seven federal government agencies responsible for addressing key economic challenges and furthering economic development, diversification and job creation specific to their respective regions. RDAs are a key part of the Government of Canada´s Innovation and Skills Plan and work closely with business and investors in their regions to fuel economic growth. RDA programs foster the right environment to enable businesses to grow and entrepreneurs and innovators to start businesses, creating the ideal conditions for the development of strong, dynamic and inclusive regional economies throughout the country.

Source: Government of Canada (2024), Canada’s Regional Development Agencies

Colombia

Territorial Pacts (Pactos Territoriales) in Colombia are collaborative agreements between the national government, local authorities and other stakeholders designed to drive regional development through coordinated investment and strategic projects. These pacts seek to bridge the gap in economic and social opportunities between Colombia's regions by addressing specific local needs and promoting a balanced, inclusive growth model. By aligning the goals of national policies with the unique characteristics and priorities of each territory, Territorial Pacts help ensure that development efforts are both relevant and sustainable.

Source: DNP (2024): Territorial Pacts Signed

Netherlands

The Delta Act, adopted in 2012, established the Delta Programme, the Delta Commissioner and the Delta Fund. The Delta Programme is a national planning instrument with three objectives: flood risk management, freshwater availability and spatial adaptation. The Programme is a joint endeavour between the central government, provinces, municipal councils and regional water authorities, in close cooperation with social organisations and businesses. It sits alongside the National Climate Adaptation Strategy as the core component of Dutch climate adaptation policy.

Source: OECD (2024): Infrastructure for a Climate-Resilient Future

Norway

Urban Growth Agreements are key tools for the Norwegian government to promote sustainable urban development, to achieve the zero-growth target through targeted cooperation between the state, county councils and municipalities across sectors. These agreements span approximately ten years, integrating transport and land use planning to improve public transport, cycling, and walking to reduce greenhouse gas emissions, noise and pollution. Urban growth agreement targets are tracked using indicators like traffic counts. Regular meetings establish a four-year action plan, prioritising measures based on impact, funding availability and socio-economic factors, while cost management is handled through portfolio management. 

Source: Ministry of Transport (2024): Urban growth agreements and subsidies for urban areas

Provide incentives and/or seek opportunities for co-ordination among regional and/or local governments to match public investment with the relevant geographical area. Horizontal co-ordination is essential to increase efficiency through economies of scale and to enhance synergies among policies of neighbouring (or otherwise linked) sub-national governments. Modes of co-ordination include contracts, platforms for dialogue and co-operation, specific public investment partnerships, joint authorities, or regional or municipal mergers.

To invest at the relevant scale

Joint actions for investments can make it possible to reach a relevant scale and internalise positive or negative spillovers. Joint actions also enable the implementation of the complementary measures needed to make the most of investments. Horizontal coordination facilitates greater investment efficiency through economies of scale and enhances synergies among policies of neighbouring (or otherwise linked) subnational governments. This is typically the case for physical infrastructure investments where the most efficient scale often exceeds the administrative boundaries of individual regions or localities.

To avoid inefficient competition between jurisdictions

It can be easier to encourage coordination around investments in basic infrastructure and service provision (e.g. water, sewage) and more difficult around “strategic” investments where subnational governments might find themselves competing to secure public facilities, to attract intergovernmental grants or to attract private investment and qualified persons. Overcoming jurisdictional barriers requires the capacity to see and seize the opportunities, while garnering the necessary political support.

To manage spillovers across jurisdictions

Multi-dimensional challenges, such as climate change, do not respect administrative limits and pose growing challenges to infrastructure. Coordinated efforts across neighbouring jurisdictions can be essential to developing comprehensive, climate-resilient strategies and to mitigate risks and manage spillovers. Joint planning and cross‑border collaboration are necessary to ensure infrastructure systems are resilient and prepared for future challenges.

To support lower-capacity jurisdictions and support more balanced development

Regions or municipalities with more resources or stronger economic bases can benefit disproportionately from isolated investments, while poorer or more rural areas risk being left behind. By working together, subnational governments can ensure that public investment is more efficient and can also target areas that may need additional support. When multiple governments come together, they can also experiment with new approaches, exchange best practices and create joint solutions to complex problems that no single government could tackle alone.

To favour growth and productivity, especially in metropolitan areas

Coordination of development and investment is particularly relevant at the metropolitan scale, where a more integrated governance structure can favour growth and productivity. For a given population size, a metropolitan area with twice the number of municipalities is associated with around 6% lower productivity. This effect is mitigated by almost half when a governance body at the metropolitan level exists. Enhancing cooperation and coordination for investments in public infrastructure or services at the metropolitan scale can improve quality of life and international competitiveness.

To attract private investment

Reaching an efficient scale and viability for investment, in particular infrastructure, can make an investment more attractive for private involvement. Public-private partnerships, for example, become more viable when they reach a certain scale.

• Providing incentives to foster cooperation across jurisdictions
• Ensuring a legal framework is in place to enable inter-municipal cooperation
• Fostering horizontal collaboration across multiple sectors
• Developing adequate governance systems for metropolitan areas
• Fostering regional or municipal mergers

• Investing without considering neighbouring jurisdictions or cross-border impact.
• Creating mechanisms for horizontal collaboration that duplicate existing functions.
• Forcing collaboration where fiscal incentives are not aligned or shared benefits are unclear.

• Adherents have made important progress in enacting legal frameworks to facilitate and promote inter-municipal cooperation. Inter-municipal cooperation is recurrently identified as one of the major multi-level governance challenges. In the 2019 Report, it was evident that coordinating infrastructure investment across municipalities was a heavy task. The 2024 survey shows some progress. In 23 out of 32 responding Adherents, there are now legal frameworks for municipal cooperation. In five other Adherents where there no specific legal frameworks, such cooperation does still take place.
• Inter-municipal cooperation takes place in diverse forms. These range from “light” single or multi‑purpose cooperative agreements to “strong” integrations in the form of supra-municipal authorities with delegated functions and even taxation powers. A majority of Adherents have legal frameworks for inter‑municipal cooperation that specify joint authorities (18) and single or multi‑purpose cooperative arrangements (18). A smaller number specify shared services arrangements (8) or supra-municipal authorities (7).
• Financial and non-financial incentives to encourage inter-jurisdictional cooperation remain relevant. In 2019, 60% of responding Adherents had some form of incentive to foster inter-jurisdictional cooperation. In 2024, 13 out of 21 Adherents had financial incentives for inter‑jurisdictional cooperation.

Slovak Republic

The Slovak Republic employs inter-municipal cooperation to increase the efficiency of public service provision. “Joint municipal offices” involve the voluntary association of two or more municipalities for the purposes of managing functions delegated from the state. These offices are “headquartered” in a single municipality but serve multiple participating municipalities. They are frequently (but not always) multi‑purpose offices performing functions in a number of different domains. As of May 2021, there were 233 JMOs in the Slovak Republic implementing coordination arrangements covering 21 different domains, mostly focusing on public service provision. Cross-jurisdiction coordination for capital investment may result not only through JMOs, but also through medium-term strategic planning processes for regional Programmes of Social and Economic Development, which bring together stakeholders in the region, including local governments.

Source: Congress of Local and Regional Authorities (2023), Monitoring of the application of the European Charter of Local Self-Government in the Slovak Republic

United States

Economic Development Districts (EDDs) are multi-jurisdictional entities, commonly composed of multiple counties and, in certain cases, even cross-state borders. They help lead a locally based, regionally driven economic development planning process that leverages the involvement of the public, private and non‑profit sectors to establish a strategic blueprint (i.e., an economic development roadmap) for regional collaboration. The strategic blueprint, known as a Comprehensive Economic Development Strategy (CEDS), is a strategy-driven plan for regional economic development. A CEDS is the result of a “regionally owned” planning process designed to guide economic prosperity and resilience of an area or region. It provides a coordinating mechanism for individuals, organisations, local governments and private industry to engage in a meaningful conversation and debate the economic direction of their region.

Source: U.S. Economic Development Administration (n.d.), Economic Development Districts

Canada

The Community to Community Program is designed to help local governments and First Nations connect and build relationships to work together on mutual interests, provide or share services, and explore partnering opportunities on economic and community development projects. The Ministry of Housing and Municipal Affairs supports the Community to Community Program through funds provided to the Union of British Columbia Municipalities, which in turn administers the program in partnership with the First Nations Summit. The program is also supported by federal funding from Indigenous Services Canada, which typically matches the provincial contribution. One of the objectives of the program is to support the development of agreements (such as protocols, MOUs, service agreements, plans and strategies), and the joint review of bylaws and/or policies. The UBCM and the FNS have convened province-wide events, open to all local governments and First Nations, to discuss shared experiences and best practices. 

Source: Province of British Columbia (2025), Community-to-Community Forum Funding; FNS & UBCM (2019), Guide to Community-to-Community Forums in British Columbia

Use comprehensive, long-term assessments for investment selection. Ex ante assessments should be used to both clarify goals and reveal information. Appraisals should be technically sound, help to identify social, environmental and economic impacts, and investigate which investment method is likely to yield the best value for money. Policy makers should also consider policy and project complementarities, as well as alternatives to investment and efficient use of existing capital stocks to reach particular goals. Long-term operational and maintenance costs should be clearly assessed from the early stages of the investment decision.

Assess different types of risks and uncertainty associated with public investment, including longer-term impacts, at an early stage of the investment cycle as part of an appraisal. This includes fiscal risks, such as contingent liabilities, as well as political, social, and environmental risks. Such risks and adapted mitigation strategies should be re-evaluated as new information becomes available.

To ensure value for money and avoid unaffordable operational and maintenance costs
Weak planning and appraisal can lead to poor project selection and inefficient outcomes. Rigorous ex-ante evaluations help avoid investing in “white elephants” - projects that generate excess capacity or high maintenance burdens, such as underused highways, ports or stadiums. Assessing investments early supports better resource allocation and ensures financial sustainability over time.

To identify and manage social and environmental impacts
Public investment decisions must align with long-term economic, social and ecological objectives. Comprehensive ex-ante appraisals should identify potential impacts and evaluate which investment options deliver the greatest value for money. Integrating fiscal, financial, political, social and environmental risk analysis into evaluation frameworks strengthens alignment with national and global policy goals, including climate resilience.

To efficiently prioritise projects across levels of government
Project prioritisation is central to investment efficiency. It requires reliable data, technical expertise and institutional capacity, particularly at subnational levels, where resources may be limited. National governments can play a key role by providing guidance, tools and support to strengthen local appraisal practices.

• Using technically sound appraisal processes, with more rigorous assessments for larger or risky projects 
• Communicating appraisal results and making the information easily accessible to all stakeholders and levels of government
• Using independent evaluation institutions to enhance credibility, trust and enforcement
• Circulating guidelines for project appraisal for use by all levels of government

• Focusing on the cashflow projections only, ignoring other economic, environmental and social costs and benefits
• Ignoring new information that changes the investment approach after a decision has been made
• Under-assessing alternatives to investment

• Subnational governments in most countries undertake ex-ante evaluations of large public investments. In 25 out of 32 responding Adherents, large subnational public investments were highlighted to require a form of ex-ante assessment.
• Many Adherents require ex-ante evaluations to be undertaken for subnational investment projects that are supported by national governments. The 2024 survey indicated that in 14 out of the 25 Adherent countries, large subnational public investments need to go through a formal ex‑ante assessment process because it is required by law or because it is a conditionality to get national funding.
• There is room for improvement when it comes to ex-ante assessment processes at the subnational level. In two countries (Denmark and Norway), subnational governments are required by law/regulation to develop their own appraisal process for investments. Only five Adherent countries have a formal appraisal process that is recommended in national guidelines.
• Important efforts are also needed when it comes to risk assessments. Only in 7 out of 18 responding Adherents is there a form of regulation requiring a risk assessment during the project appraisal or planning phase of large subnational investments.  

Australia

In Victoria, Australia, strong ex-ante monitoring mechanisms are in place, especially through an innovative High Value/High Risk (HVHR) process used for certain investments. Under the HVHR framework introduced in 2010, investment projects with a value above a defined threshold or which are deemed to be high risk undergo rigorous scrutiny and approval processes, with increased oversight over various stages of investment development, procurement and delivery. The focus of this process is to enhance ex-ante control, improving the business case for major investments. The business case process also includes the development of performance indicators, creating the basis for monitoring infrastructure performance after implementation. 

Source: Department of Treasury and Finance, Victoria State Government (n.d.), High Value High Risk framework

Chile

The Chilean National Investment System brings together the methodologies, standards and procedures that guide the formulation, execution and evaluation of investment initiatives that apply for public funds. The system is composed of four subsystems, jointly managed by the Ministry of Finance and the Ministry of Social Development and Family: i) Ex-ante evaluation subsystem ii) ex-post evaluation subsystem iii) budget formulation subsystem iv) budget execution subsystem. The ex-ante evaluation system comprises a set of norms, instructions and procedures that allow public institutions to have a portfolio of socially profitable investment initiatives that can be executed (following a technical-economic analysis with a satisfactory recommendation granted by the Ministry of Social Development and Family).

Source: Ministry of Social Development and Family (2024), National Investment System; Observatorio Regional de Planificación para el Desarrollo, Sistema Nacional de Inversiones de Chile

France

In France, since 2013, with Decree N° 2013-1211, all investment projects must undertake an ex-ante evaluation. The Decree specifies that all investment projects are subject to a prior socio-economic assessment to determine the expected costs and benefits of the planned investment project. There are also additional requirements for investment projects exceeding 20,000,000 Euros. For these projects, the required information includes: a detailed presentation of the investment project, variants and alternatives to the investment project; main data on its size and provisional timetable; relevant socio‑economic indicators; public policy performance indicators; a comparative analysis of financing methods; opinions required by law and regulations; and, risk mapping.

Source: Légifrance (2024), Decree No. 2013-1211; Haut-Commissariat à la stratégie et au plan (2017), Guide to socio-economic evaluation of public investments in France

Engage with public, private sector and civil society stakeholders in the design and implementation of public investment strategies to enhance social and economic value, and to ensure accountability. All levels of government should involve stakeholders in needs assessment and the design of an investment strategy at an early stage of the investment cycle, and, at later stages, in feedback and evaluation. Information on public investment plans, expenditures, and results should be exposed to some level of public scrutiny to promote transparency and accountability.

Seek a balance when incorporating stakeholders’ views, taking steps to prevent disproportionate influence by special interest groups. Consultation processes at all levels of government should be inclusive, open and transparent, as well as promote transparency and integrity in lobbying. 

To align objectives and improve the quality of the projects

Public, private and civil society actors all have a stake and role in developing a vision and strategy for the future of a place. All levels of government should involve stakeholders in priority‑setting and needs assessments at early stages of the planning and investment cycle. They should also be involved in providing feedback and supporting evaluations at later stages. Involving stakeholders can help in improving the quality of projects by better understanding local needs. Governments can use participation to both understand public opinion and challenge it, helping inform and shape preferences. Well-managed consultations may also help to limit corruption, capture and mismanagement.

To gain legitimacy, generate ownership and strengthen trust in government

Fruitful dialogue with relevant stakeholders can help investment projects gain legitimacy by clarifying the needs and expectations of relevant actors. Stakeholder involvement may improve legitimacy, strengthen trust in government and cultivate support for specific projects. By involving stakeholders in the decision-making process, governments at all levels can generate ownership and a sense of fairness. This, in turn, encourages further stakeholder engagement. Ultimately, if conditions are met and the quality of the relationship is good, early stakeholder engagement can be a two-way virtuous circle.

To prevent capture by special interest groups

Governments should also take steps to prevent “capture” by special interest groups, such as seeking balance when incorporating stakeholder views, ensuring consultation processes are inclusive, open and transparent, and promoting transparency and integrity in lobbying.

To improve the quality of monitoring and evaluation

Regular top-down and bottom-up dialogue enables governments to identify and address potential challenges early in the project cycle, thus minimising delays and cost overruns. It also promotes greater accountability as stakeholders can actively participate in the oversight of investment projects, ensuring that public funds are used in a manner that delivers measurable results. Involving stakeholders throughout the project lifecycle can help align investment decisions with broader public policy objectives.

• Developing and implementing a stakeholder engagement plan
• Making investment information publicly available in a timely, visible and simple way
• Developing formal fora to encourage dialogue between stakeholders
• Building trust by focusing on developing clear and simple communication
• Ensuring transparency on the purpose of the process
• Reporting back to citizens on how their contribution has been integrated
• Adapting approaches stakeholder consultation to relevant audience
• Ensuring engagement procedures are transparent and consistent with the OECD Principles for Transparency and Integrity in Lobbying

• Disappointing residents if the engagement process is poorly managed
• Involving stakeholders too late in the investment project
• Involving only a limited set of stakeholders
• Consulting on issues that are not negotiable

• Some Adherents have formal requirements that subnational governments involve stakeholders when preparing investment plans or strategies. For 17 of 26 responding Adherents, there appears to be a national law or regulation that requires consultation with stakeholders (civil society, private sector, etc.) during the preparation of subnational development strategies and/or investment plans.
• Requirements for stakeholder consultation are sometimes used as a funding conditionality. Several responding Adherents report that consultation with relevant stakeholders is often required where funding is provided to subnational governments by the national government (e.g., conditionalities in grant documentation).

Denmark

Denmark undertook the BaltCICA (2009-2012) and Cities and the Rising Sea Level – Dialogue on Climate Adaptation (2018-2022) initiatives to encourage the resilience of its coastal cities. Both projects placed significant emphasis on citizen participation to shape climate adaptation strategies. BaltCICA, focused on issues of coastal retreat and threats to groundwater quality and facilitated citizen involvement through scenario workshops.

These workshops culminated in a citizen summit, where participants' deliberation on adaptation options influenced the adaptation strategy for the local municipality, which was subsequently shared across Baltic countries. The Cities and the Rising Sea Level project took a comprehensive approach to citizen participation, aiming to advance the knowledge base for climate resilience in Denmark more broadly. Workshops, consultations and online climate citizens' meetings brought together stakeholders, experts and citizens to discuss themes such as nature, transportation, housing and business. Newsletters and articles encouraged continuous engagement among citizens.

Source: Tekno – Cities and Rising Sea Levels

Colombia

The Territorial Planning Councils are territorial planning bodies established by constitutional mandate to ensure citizen and civil society participation in the creation and monitoring of public policies at the territorial level, in line with the principle of participatory planning. Colombia’s constitution states that territorial entities shall have Planning Councils, which, together with the National Council, make up the National Planning System. Regulation specifies that the processes of drafting, executing, monitoring and evaluating development plans, both at the national level and within territorial entities, should be participatory whenever possible. It is also specified that the consultative role of the Planning Councils does not end with the discussion phase of the Plan but extends to subsequent phases related to its modification. For the efficient functioning of CTPs, the Colombian Government has developed a guide that provides the regulatory framework, methodologies and guidelines for mayors, governors and communities.

Source: DNP – Territorial Pacts Signed

France

The Regional Economic, Social and Environmental Council (Conseil économique, social et environnemental regional, CESER) is a consultative body in each region that reports to the Regional Council and the President. Members are drawn from the region's economic, social, environmental, educational and voluntary sectors. The CESER issues opinions on strategic directions for the region and gives its opinion on several topics, among which include State-Region Plan Contracts (CPER) and environmental guidelines. The President of the Regional Council may request opinions or studies on any economic, social, cultural or environmental project concerning the region. The CESER may also, on its own initiative (self-referral), issue opinions on any issue falling within the region's remit.

Source: CESER de France

Norway

The right of Indigenous Peoples to participate in Norway’s decision-making processes was formalised in 2005. This included an obligation to consult the Sami Parliament in traditional Sami areas, especially for matters concerning the resource base of the Sami culture, land rights and land administration. This is complemented by the Nature Diversity Act, which requires Sami knowledge to be considered in public decisions related to the environment. It has also been supported by Norway’s Planning and Building Act, which clarified the tools and instruments in planning processes for reindeer herding areas. The relationship between the government and the Sami community and other indigenous groups has been evolving. Recent surveys suggest the government of Norway has improved communication. Beyond mandatory consultations, the government also consults with other Sami interest groups. Over time, this has contributed to enhancing awareness and knowledge of Sami issues in ministries and agencies.

Source: OECD (2022), Promoting Effective and Meaningful Engagement of Indigenous Communities in Norway’s Arctic Areas

Match private financing arrangements to investment needs and government capacity, particularly at the sub-national level, through careful analysis of the pros and cons of different private participation arrangements and what they entail in terms of risk and government financial and administrative capacity. Decisions regarding Public Private Partnerships (PPPs) should be coordinated with the budget process and their potential value-for-money should be compared to that of traditional procurement.

Involve private actors and financing institutions in public investment to offer more than just financing. Involving private actors and financing institutions in the investment should be a way to strengthen the capacity of government at different levels and bring expertise to projects through better ex-ante assessment, improved analysis of the market and credit risks, and achieving economies of scale and cost-effectiveness. Governments should mobilise innovative financing instruments or mechanisms, but do so with a clear understanding of the capacities such approaches require.

To help narrow the investment gap

Public sources of funding are often insufficient to meet investment needs. Mobilising finance from the private sector and institutional investors can help meet these investment needs. Institutional investors manage assets worth an estimated USD 53 trillion in 2022, some of which could potentially be mobilised to support public investment. While private financing plays an important role in investment, governments need to carefully assess different private participant arrangements. Governments should also ensure they mobilise other non-repayable sources of funding for investment, such as intergovernmental transfers and their own revenues. All governments need to ensure they have sufficient funding available for the entire lifecycle of infrastructure, including for construction, operations, maintenance and the repayment of finance.

To benefit from the private sector’s expertise

Involving private actors and financing institutions in investment projects can help complement the existing capacity of governments at different levels and bring specialist expertise to projects. For example, it can help ensure better ex-ante assessments and improved analysis of the market and credit risks. The private sector may also be able to better achieve economies of scale and cost-effectiveness and contribute to important cost savings through innovations in project design, technology and managerial efficiencies. This can lead to improved project delivery timelines, cost management and overall impact.

To develop public-private partnerships with careful consideration of the risks involved

Well-designed and managed public-private partnerships (PPPs) have the potential to offer governments greater value-for-money than traditional procurement approaches. They can achieve this by bundling responsibility for initial capital investment with future maintenance and operating costs, which provides an incentive for the firm to minimise costs over the project’s lifetime and potentially keep a check on “white elephants”. However, PPPs work better in larger jurisdictions with more robust fiscal and administrative capacities. They should also be treated with proper accounting practices and disclosure of all costs, guarantees and other contingent liabilities.

• Creating specific agencies for joint borrowing (e.g., municipal bond banks, local government financing agencies, infrastructure banks)
• Mutualising capital funding or guarantee funds to facilitate access to finance
• Using PPPs with attention to potential adverse effects, consistent with the OECD Recommendation on the Governance of Public-Private Partnerships
• Basing decisions about PPPs on a robust value-for-money assessment compared to traditional procurement approaches
• Properly accounting disclosing all costs, guarantees and other contingent liabilities for PPPs in budget documents
• Ensuring financing arrangements reflect capacities for effective public investment management at the subnational level (especially in lower capacity jurisdictions), with bottlenecks identified and clear guidance on steps to address them
• Facilitating borrowing in the credit and capital markets for environmentally- and socially-related subnational investments
• Establishing PPP units or centres of expertise at the subnational level
• Ensuring national assistance and support for subnational governments in the management of PPPs 

• Developing overly sophisticated financial arrangements
• Not providing guidance for subnational governments to manage PPP risks
• Using PPPs to hide bad financial health off-balance sheet
• Mobilising private actors just for financing and not for their expertise
• Using PPPs for small-scale projects

• National governments have room to improve the support that they provide to subnational governments in accessing finance. The 2024 survey reveals that only 11 Adherents report providing guidelines and technical standards for subnational governments on approaches to borrowing for investment, 9 provide technical assistance on this matter and only 5 have special training programmes.
• Green and social debt financing is growing, and subnational governments are becoming increasingly active in this market. In 2022, USD 55.5 billion in green, social and sustainable (GSS+) bonds were issued by local governments against USD 13.3 billion in 2018.
• Very few Adherents identified having mechanisms or institutions to strengthen subnational government ability to mobilise green finance. Only 5 Adherents, for example, provide guidelines for subnational governments on green financing, the same number provide technical assistance or training programmes for subnational governments on the topic, and only 2 have concrete incentives for subnational governments to issue green bonds.
• The framework for subnational government use of public-private partnerships (PPPs) has improved. A majority of responding Adherents have established a legal framework to guide the effective use of PPPs by subnational governments. In parallel, almost half of Adherents provide either guidance material, standards or technical assistance for subnational PPPs.

Lithuania

In May 2023, the Lithuanian government approved the Green Finance Action Plan for 2023–2026, which aims to foster the development of green finance in the country and create a favourable ecosystem for green investments, thereby accelerating the country’s green transition. By establishing a dedicated Green Finance Institute as part of the national development bank of Lithuania (ILTE) and a national sustainability data platform, the plan seeks to enhance coordination, improve transparency, and foster evidence-based decision-making. It signals a strategic shift toward embedding green principles in public finance, with an ambitious target of allocating half of state budget spending to green priorities by 2026.

Source: Ministry of Finance of the Republic of Lithuania (2023), New Plan for Development of Green Finance in Lithuania: Public Consultations Begin

Japan

Among other activities, the Japan Finance Organization for Municipalities (JFM) offers seminars to local governments focusing on funding and investment strategies. These seminars aim to enhance the financial management capabilities of municipal officials by providing insights into long-term, low-interest financing options for infrastructure projects such as water supply, transportation and healthcare facilities. Through these educational initiatives, JFM supports municipalities in effectively planning and executing public investments, thereby contributing to the overall welfare of local communities.

Source: Japan Finance Organisation for Municipalities (2023), Annual Report

Norway

Kommunalbanken provides green loans to Norwegian municipalities and local authorities for projects that promote environmental sustainability. As of 2022, Kommunalbanken had issued NOK 34.9 billion in green bonds and extended NOK 41.4 billion in green loans nationwide, supporting a broad range of climate-friendly investments. Kommunalbanken provides a user-friendly online platform where municipalities can apply for loans, access guidance, and utilise tools to assess project eligibility. The application process involves an initial assessment by Kommunalbanken relationship managers, followed by a review from in-house climate advisors and controllers to ensure compliance with the green loan criteria.

Source: The Norwegian Agency for Local Governments (n.d.), Green Loans

Bolster the capacity of both officials and institutions associated with public investment. Due attention should be paid to effective human resources management, as well as to cultivating knowledge (identifying, sharing and applying good practices such as the present Principles) and relationships (refining mechanisms for vertical co-ordination, strengthening co-operation among sub-national governments, and developing linkages to sources of expertise). Capacity at the sub-national level deserves particular attention; in some cases financial resources, professional skills, or institutional quality may be lacking.  Not all capacities can be strengthened at the same time.  It is therefore valuable to identify binding constraints and the proper sequence of reforms.

To address the increasingly complex tasks linked to public investment

To design and implement effective public investment strategies, governments at all levels need public sector employees and organisations to have substantial professional and technical skills. Beyond technical capabilities, policymakers also need skills to consult, negotiate and co-ordinate. Moreover, to face the emerging challenges, public workers need to develop new competencies and more networking-type skills to use complex and innovative financing sources for public investment. Capacity gaps are often larger at the subnational level and commonly identified as the main barrier for investment.

To develop institutional capacity and professional skills for better investment decisions

The capacity of subnational governments to undertake investment projects varies greatly within countries. Capacity gaps can be particularly large between rural localities and metropolitan areas. Large regions, particularly those that are more autonomous and have significant staff, can more easily access a diverse range of skills. The same is not necessarily true for small regions, municipalities, newly created regions or where decentralisation reforms have outpaced improvements in administrative capacity. More generally, subnational governments need to be appropriately empowered to hire and manage staff with some degree of flexibility. Systematic training, guidelines and capacity building activities can help build this capacity.

To more effectively engage with the private sector

The mobilisation of private actors and the need to resort to different funding mechanisms require a set of specialist skills. The technical demands to design PPP projects are substantial. Administrators need to understand the pros and cons of PPPs and evaluate if and how to integrate their use into development plans. They also need the technical skills to evaluate and work with potential private partners, assess and assign risk, design a contract, and monitor (and respond to) project implementation.

To strengthen transparency and accountability

When officials are well-versed in financial management and project oversight, they can better prevent corruption, inefficiency, and mismanagement. Public corruption is one of the greatest threats that may undermine infrastructure projects. Strong institutional capacity means projects that can be completed with greater integrity and ensure that funds are used as intended. This can help public institutions maintain the confidence of citizens and investors alike.

• Pooling expertise across jurisdictions in areas of needed expertise (e.g. PPP units, centres of expertise on procurement, regional development agencies)
• Using common e-government platforms to narrow gaps in capacity across regions or localities and facilitate peer learning
• Identifying subnational governments with higher capacity challenges and providing targeted support
• Accompanying decentralisation reforms with policies to strengthen subnational capacities for investment
• Distributing guidance documents in areas such as planning, project appraisal, procurement, monitoring and evaluation
• Adopting open, merit-based and competitive hiring practices for areas where technical expertise is needed
• Developing a permanent, comprehensive and articulated training and technical assistance system targeted to local needs
• Establishing partnerships with universities, technical consultants and quasi-public agencies, in particular for sophisticated projects, such a “mega-projects” or projects with network characteristics
• Establishing conditions to facilitate a “learning-by-doing” process

• Recruiting expertise in every jurisdiction, regardless of scale and cost effectiveness
• Outsourcing key competencies resulting in a minimum level of in-house skills
• Having high turnover of staff in teams involved in public investment
• Not tailoring training programmes to subnational governments that face different and specific challenge

• Subnational capacities vary importantly across Adherents. Capacity levels are often correlated to the degree of responsibilities of subnational governments. Recent evidence gathered by the OECD database on subnational public employment shows that variation in educational attainment across subnational public employees is partially explained by differing competencies.
• Adherents have developed a series of strategies to address capacity gaps at the subnational level. Almost 69% of Adherents that completed the corresponding question have in place technical assistance programmes for subnational governments and almost 56% use IT tools or online platforms for capacity building. Still, only half of responding Adherents have a comprehensive strategy to strengthen subnational capabilities.
• Adherents have made important progress in sharing expertise. In 2019, only 8 out of 27 Adherents reported having implemented such incentives, while in 2024, 15 Adherents have mechanisms or incentives to share expertise across subnational governments on technical issues.
• Capacity building is often weaker when it comes to developing specialist expertise for subnational public investment. While in 17 responding Adherents training courses related to public investment management are available for subnational public officials, only 11 declared having technical assistance programmes for project appraisal.

France

The National Agency for Territorial Cohesion (Agence nationale de la cohésion des territoires, ANCT) mission is to advise and support local authorities and their associations in the design, definition and implementation of their projects. National Agency for Territorial Cohesion facilitates local authorities' access to the resources they need to bring their projects to fruition, including technical and financial engineering, partnerships and funding. It has developed "tailor-made engineering", a free service for municipalities with fewer than 3,500 inhabitants and Public Establishment for Intercommunal Cooperation (Établissement public de coopération intercommunale) with fewer than 15,000 inhabitants, designed to help local authorities bring their projects to fruition by providing technical and financial support tailored to their specific needs. It is also the coordinating authority for managing European funds and has supported many national schemes. It is also responsible for observing and understanding local areas with programs covering a wide range of fields such as urban policy, access to public services. The National Agency for Territorial Cohesion is also in charge of deploying ecological recovery and transition contracts, which encourage collective work between the State, local authorities (Regions, Départements, communes, etc.) and local public and private players. They enable all local initiatives to be listed in a single document and simplify access to the financial and engineering resources likely to make a coordinated contribution to the actions undertaken.

Source:  OECD (2024), Questionnaire on Recommendation on Effective Public Investment Across Levels of Government; ANCT(n.d.), Agence Nationale de la Cohésion des territoires (n.d.)

Slovenia

The Association of Municipalities, with support from the central government, plays a central role in capacity building in Slovenia. It offers events, conferences for experts, seminars and workshops to train local officials. It also helps by providing advice in the field of local autonomy to bodies at state level and advises municipalities on legal, tax and economic matters. Furthermore, the association offers municipalities expert help with legal requirements for European funds and assists with training personnel from public enterprises. Overall, it seeks to increase the professionalisation of employees in municipal administrations and local public enterprises.

Source: Association of Municipalities of Slovenia (n.d.), “Fundation”

Germany

PD, a consultancy owned by the public sector, advises public sector clients in Germany on infrastructure and modernisation. PD is jointly owned by 202 stakeholders, including 14 state governments and 132 local governments. The consultancy model helps build experience at scale within PD, which is often not possible for local governments on their own. It also encourages cross-pollination of ideas across places and sectors. Since PD is partly owned by subnational governments, it can be more responsive to their needs and priorities compared with a fully nationally owned alternative. PD has advised on a range of projects contributing to climate resilience, including Brandenburg’s climate change adaptation strategy and Hamburg’s urban economic strategy (including an adaptation component), among many other projects. 

Source: OECD (2024), Infrastructure for a Climate Resilient Future

Clarify the outcomes to be achieved through public investment and pursue mechanisms to achieve them. Those mechanisms can include results-oriented investment strategies with clearly defined policy goals, well-designed tendering procedures, effective monitoring systems, high-quality ex-post evaluation, regular reflection on and upgrading of investment choices, active exchange of information and on-going, and mutual learning among actors involved in public investment.

To focus on investment outcome goals and pursue them throughout the investment cycle

Governments need to develop a results-oriented public investment strategy that focuses on the performance of investments throughout the entire lifecycle. Evaluation and monitoring criteria need to be defined in the early stages of the policy design to allocate the resources needed and produce appropriate data for this purpose. Effective monitoring requires setting clear objectives and the outcomes expected from public investment; making evidence-informed decisions; systematically collecting and managing data and evidence at the right scale; and exchanging information on good practices to foster learning.

To monitor the implementation progress of projects

A well-designed monitoring and evaluation mechanisms that includes a clear indicator system can improves the efficiency and effectiveness of public investment throughout investment cycle. It does so by linking policy objectives and outcomes and revealing information to feed into decisions regarding subsequent stages of a project. Yet, setting evaluation standards and using their results is not always easy. Beyond having the capacity in government, it implies additional costs and processes that need to be balanced with the need to pursue effectiveness.

To adjust to evolving priorities and contexts throughout the investment lifecycle

A performance-based approach ensures that investment decisions are grounded in evidence and data. This facilitates decisions that do not overly focus only on short-term political gains, but on long-term and sustainable outcomes. Public investment that is guided by performance also encourages efficient use of resources as governments can adjust or redirect funds toward more successful programs, urgent needs or emerging priorities based on real-time performance data.

To provides greater clarity on the impact achieved to citizens and relevant stakeholders.

This approach allows stakeholders to track progress and assess the effectiveness of projects in real-time, making it easier to demonstrate how public funds are being used to achieve specific goals. By focusing on performance, governments can offer concrete evidence of benefits delivered. This helps to enhance the legitimacy of public investment decisions. Furthermore, by making results more transparent, citizens and oversight bodies are better positioned to hold governments accountable. Greater accountability reduces the risk of corruption, waste, or mismanagement of funds. This, in turn, encourages greater civic engagement, as stakeholders are more likely to participate in decision-making processes. 

• Using monitoring systems to track performance, emphasising progress toward outcomes
• Developing indicators that are relevant, valid, reliable and useful
• Establishing a manageable set of common indicators for subnational reporting
• Developing "bench learning" practices among subnational governments
• Requiring or co-financing ex-post evaluations
• Releasing reports comparing different regions, agencies and service providers performance
• Attaching explicit rewards and sanctions to stimulate efforts by policy actors at different levels of government
• Establishing clear, known and measurable relationships between inputs, outputs and outcomes to support accountability
• Limiting the number of indicators to better capture performance that is under the control of the actor in the timeframe measured
• Ensuring consistency on the evaluation timeframe, as impacts are often only visible in the long term

• Requiring subnational governments to report back on too many indicators
• Focusing excessively on output indicators that risk leading to indicator-driven policymaking
• Changing indicators frequently, which limits evaluation and effective learning
• Gaming an indicator system and thus not achieving the desired outcomes

• Performance is at the centre of public investment decision-making for Adherents. Adherents perform relatively well on using data and evidence for strategic planning, project appraisal, impact analysis and infrastructure management. More than half of responding Adherents (17) declare having some form of regulation that requires input and output indicators to be defined for investment projects. Adherents have not progressed on this dimension since 2019.
• Ex-post evaluations of investments are increasingly common in Adherent countries. Most Adherents (20) also conduct independent ex-post evaluations of investments, representing important progress since 2019, when only 14 Adherents declared conducting such evaluations. The definition of input and output indicators, as well as the implementation of ex-post evaluations, is particularly driven by investments conducted in the framework of the EU Cohesion Policy.
• Performance monitoring systems are another crucial component of investment frameworks in many Adherent countries. Most responding Adherents (17) have established national performance monitoring systems that can be used by subnational governments and 12 provide guidance or incentives to subnational governments to develop performance monitoring systems.
• Performance-based investment can help align investment decisions with regional development policy goals. In almost half of responding Adherents (14) there is a formal regulatory requirement to align outcome indicators with regional development policy objectives; the same occurs with ex-post evaluations when 14 Adherents need to consider the achievement of regional development policy objectives.
• Adherents can further integrate performance-based decision-making. There are still an important number of respondents that either do not know whether mechanisms to ensure result‑oriented public investment are in place, or do not have any mechanism.

New Zealand

New Zealand developed an impact measurement framework to capture the Regional Strategic Partnership Fund’s Productive, Resilient, Inclusive, Sustainable and Māori-enabling (PRISM) impact. The framework consists of a set of indicators, underpinned by an outcome logic model, which connects them to PRISM objectives. Indicators were used to capture project-level outcomes and data is also aggregated and complemented with other available data to tell a programme-level story about the Regional Strategic Partnership Fund. The PRISM objectives are consistent with a growing trend among investors to “invest for impact”. The PRISM objectives, translated into a set of investment criteria that are applied alongside a commercial assessment (and eligibility criteria) to support investing for impact.

Source: Ministry of Business Innovation & Employment (2022), Report back on RSPF impact management framework

Estonia

Estonia's My Municipality portal offers detailed, comparable data on local government performance across 18 areas, such as education, governance, housing and communal facilities. It uses a comprehensive evaluation methodology that encompasses over 700 metrics, sourced from a variety of institutions, registers, municipalities and centrally-conducted satisfaction surveys. Visualising outcomes and trends over time enables municipalities to set targets, monitor results and learn from others’ approaches, strengthening accountability and continuous improvement in local service delivery.

Source: Ministry of Regional Affairs and Agriculture (n.d.), Minoumavalitsus

Sweden

Sweden's Agency for Growth Policy Analysis (Tillväxtanalys) conducts ex-post evaluations to assess the effectiveness of government interventions, both for governments and other stakeholders. These evaluations aim to understand the outcomes and inform future policy decisions. For instance, the report ‘Landing a giga investment’ explores how municipalities manage giga investments, major projects with substantial local impact, drawing on case studies from Luleå, Boden and Skellefteå, which are leading examples of Sweden’s green and societal transitions.

Source: Tillvaxtanalys (n.d.), Publications

Employ a fiscal framework adapted to the different investment policy objectives pursued. Intergovernmental earmarked grants and co-financing (matching) arrangements are appropriate when projects generate positive spillovers, when economies of scale are needed, when risk sharing or temporary cooperation is sought, when it is necessary to align priorities across levels of government and when capacities of subnational governments need to be bolstered. Co-financing can also increase the commitment of different stakeholders to the success of a project as well as encourage resource pooling across sub-national governments.  

Set enabling conditions for subnational governments to be able to exploit their own revenue raising potential, not only to finance investment, but to allow for participation in co-financing arrangements and to address long-term operations and maintenance costs.

To ensure subnational government’s financial capacity to invest

Intergovernmental fiscal arrangements largely determine subnational government’s financial capacity to invest. Local governments sometimes have rigid budgetary arrangements, with limited financial room for investment. This can reduce the space for investment. A sound fiscal framework that aligns with subnational investment competencies can help establish and clarify how subnational investment is funded. Sound fiscal frameworks are also important to ensure that places can invest in line with their needs. They can also potentially help address regional inequalities and support lagging areas catch-up.

To enable subnational governments to play an active role in investment

As actors in public investment, subnational governments need to play an active role in exploiting their revenue-raising potential to finance investments. Ensuring budgetary and fiscal frameworks align with the institutional context can ensure governments are efficient and responsible. Reforms in this area should clarify investment responsibilities across levels of government, enable greater transparency, reinforce accountability and guarantee fiscal sustainability of public investment. When subnational governments have stable own revenues and some degree of fiscal autonomy, they are also better positioned to plan long-term investments and adapt investment decisions to local needs.

To coordinate investments and align priorities across levels of government

Choices regarding subnational transfers, own revenues and borrowing should be informed by broader policy objectives. Co-financing schemes can help to ensure the commitment of different actors to the success of a project and create collective ownership. Transfers can also help to align investment priorities across levels of government or encourage subnational authorities to engage in projects with positive spillover effects with neighbouring jurisdictions.

To better connect planning and budgeting frameworks

Better-connected planning and budgeting frameworks can help ensure investments are sustainable. Public investment plans need to be accurately costed, with consideration of the operating and maintenance costs, using a multi-year approach. A lack of discipline around costing and budgeting can lead to chronic underfunding of investment and maintenance. Fitting public investment plans into a medium-term budget framework can help to provide visibility regarding resource availability and predictability. A robust budgetary framework can also help adapt to long-term trends, such as an ageing population that will put long-term healthcare spending pressures.

To manage fiscal risks from borrowing for investment

Fiscal rules such as budget balance rules and debt rules can help ensure that investment remains sustainable over the long term. Fiscal rules may include the so-called “golden rule”, which allows subnational governments to borrow only for capital investment, as well as caps on debt service, caps on the levels of outstanding debt and on new annual borrowing, limitations on loans with foreign institutions or on the use of foreign-currency borrowing, among others. 

• Linking the use of earmarked and matching intergovernmental grants to positive spillovers
• Harnessing intergovernmental transfers to align investment priorities across levels of government
• Reviewing the incentive effects of transfer arrangements to ensure subnational governments maximise their own revenues
• Ensuring timely, predictable transfers between levels of government
• Minimising variance between estimated and actual transfers

• Creating fiscal gaps or unfunded mandates that are linked to a mismatch between allocated competencies and resources to fulfil mandates
• Frequently changing the rules for transfers, which can cloud subnational governments’ long-term visibility on revenues, a key pre-condition for public investment

• Funding and financing investment remain one of the most important challenges for subnational investment. An EIB survey showed that the lack of funds is recognised as major obstacle by 58% of European municipalities. The lack of funds is a major challenge for 48% of municipalities in more developed regions, 59% in transition regions and almost 75% for municipalities in less developed regions. The survey also shows that a low proportion of municipalities (18%) have used external financing to fund their infrastructure investment.
• Grants and taxes make up most local government revenue. On average in OECD Member countries, taxes represent 34.2% of revenue, grants and subsidies represent 51.6%, tariffs and fees represent 11.2%, property income represents 2.0% and social contributions represent 1%.
• Property tax is a cornerstone of local taxation in many countries and has a strong link to public investment, but remains underused in many countries. Property tax can capture some of the increase in value from local investments, so it can be a useful source of revenue to support investments. In OECD Member countries, recurrent property taxes accounted for 3.2% of subnational revenues in federal countries and 1.5% in unitary countries in 2022.
•  Subnational tax autonomy varies substantially across Adherents. The degree of tax autonomy is largely determined by the governance system: in federal countries, tax autonomy is particularly high, whereas in unitary countries, the autonomy is reduced.
• Fiscal rules are increasingly being used at state and local levels to promote fiscal sustainability in Adherent countries. Fiscal rules are crucial to prevent subnational governments from engaging in excessive or unsustainable spending, encouraging prudent investment decisions, and aligning local spending with national fiscal objectives . Countries use a range of fiscal rules to manage subnational government debt, most commonly restricting borrowing to capital investment in the form of balanced budget requirements or ‘golden rules’.

Mexico

Mexico established in 2016 the Federal Financial Discipline Law for States and Municipalities. This legislative and regulatory framework aims to ensure sustainable of state and municipal public finances, promote greater transparency and accountability and help lower costs in contracting debt. The law established the obligation for all states and municipalities to maintain sustainable budget balances. Although this obligation already existed, the Law additionally establishes that earmarked revenues must be accounted for at the end of each fiscal year. The law also established clear rules and guidelines requiring subnational governments to go through a competitive process when contracting debt from financial institutions to ensure the lowest borrowing cost and get the approval from local legislatures. The law also introduces measures to help lower costs in contracting subnational debt. The central government grants credit guarantees to subnational governments’ debt issuance that subscribe to a financial discipline agreement through the secured debt mechanism. In addition, to support transparency and combat corruption, a single public registry (registro publico único) was created.

Source: OECD (2022), G20-OECD Policy Toolkit to Mobilise Funding and Financing for Inclusive and Quality Infrastructure Investment in Regions and Cities, OECD Publishing, Paris

New Zealand

New Zealand’s government passed the Infrastructure Funding and Financing Act (IFF) 2020, establishing a new funding and financing model to encourage private capital to support the provision of new infrastructure for housing and urban development. Through Special Purpose Vehicles, local councils, Māori and developers can collaborate to deliver infrastructure that is above the council’s debt constraints. This allows Special Purpose Vehicles to raise the finance for local infrastructure and then repay that finance through a levy charged to those who benefit from the new infrastructure, usually future homeowners. Four different types of infrastructure can be funded: water infrastructure (i.e., stormwater, drinking water and wastewater), transport infrastructure, community facilities, and environmental infrastructure for risk management and environmental restoration. The proposer (a local council, developer or any other person) must develop a levy proposal with information on the future levy. Throughout the process, optional assistance is provided by Crown Infrastructure Partners (CIPs), a government-owned company that assesses the feasibility of projects and helps in developing levy proposals.

Source: OECD (2022), G20-OECD Policy Toolkit to Mobilise Funding and Financing for Inclusive and Quality Infrastructure Investment in Regions and Cities, OECD Publishing, Paris

Adopt good practices for budgeting and financial accountability such as accurately costing public investment plans, reflecting them in budget strategies and allocation processes, fitting them into a medium-term budget framework and duly considering long-term operating and maintenance costs. This includes proper budgetary treatment of PPPs, local public enterprises, and any associated contingent liabilities.

To ensure budgeting and financial accountability at all levels of government.

Proper costing and budgeting can help prioritise and execute investment programmes effectively. Robust financial controls bolster accountability. Adopting best practices for budgeting and financial accountability, as defined in the OECD Principles of Budgetary Governance can ensure that the investments they choose are sustainable over time. This includes accurately costing public investment plans, reflecting them in budget strategies and allocation processes, fitting them into a medium-term budget framework and duly considering long-term operating and maintenance costs.

To enhance transparency with citizens and other stakeholders

Budgeting transparency throughout the investment cycle provides visibility on investments, clarifies recurrent budgetary implications and strengthens public accountability. Governments at all levels should make budgetary information regarding public investments publicly available to citizens and other stakeholders in a timely and user-friendly format. Transparency with respect to local public enterprises, often recorded in separate budgets, is a critical element to have a clear picture of subnational finances. This requires robust financial management systems that provide accurate data and performance indicators, enabling governments to make informed adjustments.

To ensure national fiscal stability

Poor budgeting and financial practices at the subnational level with respect to investment can have a cascading effect on other subnational governments and on the national government. If subnational governments accumulate unsustainable levels of debt, they may then require (and often obtain) implicit or explicit central bailouts to prevent a default.

To ensure long-term costs from investments are understood

Proper planning and budgeting can ensure that the investments they choose are sustainable over time. This requires accurately assessing the short- and long-term costs of investments, with consideration of initial capital expenditures and long-term operating and maintenance costs. Integrating investments into a medium-or long-term budget framework allows governments to look beyond the immediate fiscal year. 

• Ensuring that budget transparency occurs at all levels of government
• Coordinating public investment decisions with medium-term and long-term budget forecasts
• Accurately assessing the costs of public investment and selecting investments based on their value-for-money
• Assessing operations and maintenance costs of infrastructure investment and incorporating in future budgets
• Disclosing costs and contingent liabilities for PPPs in budget documents
• Making information regarding allocations for and spending on public investment transparent, comparable and publicly available

• Excluding contingent liabilities from budget documents, notably at the subnational level
• Disconnecting public investment strategies from budget procedures

• Adherents, especially regions and municipalities, are increasingly adopting green budgeting practices to align budgeting with the climate and environmental agenda at the national and subnational levels. The number of subnational governments implementing green budgeting practices has grown steadily over the last years. Furthermore, subnational green budgeting initiatives in OECD Member countries are very diverse, encompassing a variety of practices including carbon budgets, ecoBudgets, climate budgets, environmental and climate impact analyses, green budget tagging and more.
• Regional governments, as well as large and small municipalities, are adopting green budgeting practices. Regional governments, given their size and responsibilities, are prone to adopting green budgeting practices. Relevant examples have been found in France with the cases of the regions of Brittany, Grand-Est, and Occitanie, where they assess the climate adaptation and mitigation impact of their budgets. Interesting practices are also found at the regional level in Sardinia in Italy and Andalusia in Spain.

France

France engaged in a process of harmonisation of the budgetary and accounting framework from 2019. This sought to adopt a single financial account, harmonised local account reporting and an updated local budgetary and accounting framework. General and budgetary accounting rules were harmonised for local authorities, while also being adapted to the specific characteristics of each category of local authority, particularly for the smallest entities. Steps were also taken to improve the quality of local accounts and standards were developed for entities wishing to undergo an accounts certification process. This was implemented through an experiment over the period 2020-2023, in which more than 4,500 local public entities participated. The Government subsequently submitted an assessment of this experiment to Parliament before wider adoption.

Source: OECD (2024), Questionnaire on the Recommendation on Effective Public Investment Across Levels of Government

Spain

Andalusia was the first Spanish Autonomous Region to implement mandatory green budgeting through regional legislation in 2018. The region aims to connect gender and green budgeting, recognising that climate change affects men and women differently and requires a nuanced response to ensure an equitable transition. Key elements of Andalusia's Green Budgeting Framework include climate impact assessments, green budget tagging and specific environmental tax reforms, as outlined in its 2018 Climate Change Law. This law mandates that budgetary climate indicators be developed to assess the impact of budget programs on climate adaptation and mitigation. By 2021, Andalusia had introduced over 60 such indicators. Additionally, the law requires a climate impact assessment for regional and local plans, which involves analysing the vulnerability, mitigation steps and alignment with the Andalusian Climate Action Plan. Furthermore, Andalusia has established a EUR 1 million Green Budget Fund to support projects that incorporate green priorities within the budget framework. The Fund supports projects focusing on environmental sustainability, climate impact assessments and capacity building for public officials. 

Source: OECD (2022) Aligning Regional and Local Budgets with Green Objectives: Subnational Green Budgeting Practices and Guidelines, OECD Multi-level Governance Studies, OECD Publishing, Paris

Maximise transparency at all stages of the procurement cycle, promote the professionalisation of the procurement function, and establish clear accountability and control mechanisms. Procurement systems should be transparent, competitive, and monitored to ensure funds are used as intended, and effective at registering and addressing complaints. Governments should invest in ensuring adequate capacity, in particular at the sub-national level, by employing and training procurement professionals, using collaborative procurement mechanisms, and employing e-procurement tools.

Use procurement to ensure effective public service delivery while pursuing strategic objectives at different levels of government. To do so, the objectives of procurement should be clearly articulated and prioritised. These may be traditional value for money in the sense of price and quality, as well as wider governmental objectives such as sustainable development, innovation, and the development of small and medium enterprises (SMEs).

To diminish the risk of fraud and corruption

Procurement is critical for public investment. At the same time, it is a governmental activity that is particularly vulnerable to waste, fraud and corruption. Corruption in public procurement can occur both at the national and subnational levels. While decentralisation may narrow the scope for corruption as public officials might be more accountable to citizens, there can also be fewer obstacles to corruption at the subnational level due to weaker auditing functions, limited legal expertise or even greater closeness between public officials and business representatives.

To ensure efficient and transparent procurement systems

Public procurement accounts for approximately 13% of GDP across OECD Member countries. More than one-third of public procurement is undertaken by subnational governments. Governments at all levels can lack procurement know-how, specialised personnel or effective procurement systems. This can compromise the integrity of investment processes, deter investors and compromise policy objectives. Transparency throughout the procurement cycle, professionalisation of the procurement function and clear accountability and control mechanisms are required across all levels of government.

To enhance the use of procurement as a strategic tool

Governments sometimes choose to use procurement to pursue broader strategic objectives, beyond value for money and integrity. These can include green, social or economic objectives. Adopting green public procurement at the subnational level, for example, involves using the purchasing power of subnational governments to choose goods, services and works with a reduced environmental impact to contribute towards sustainability goals.

To coordinate and align procurement practices to achieve scale

By adopting harmonised procurement processes, all levels of government can work in sync, sharing information, aligning priorities and avoiding duplicative efforts. This can help with the identification of areas where governments can coordinate—vertically and horizontally—to pool resources, reduce costs through joint purchasing, and achieve greater economies of scale. Making use of digital tools can also help make the procurement process more efficient and accessible, including for small suppliers. 

• Providing guidance on procurement practices to national ministries and subnational governments
• Encouraging collaborative procurement (e.g. purchasing alliances, networks, framework agreements, central purchasing bodies)
• Using e-government tools to simplify and harmonise procurement practices
• Professionalising procurement practices

• Creating procurement functions in each jurisdiction without fostering collaboration
• Frequently changing procurement rules
• Insufficient training on procurement practices
• Underestimating the strategic potential of procurement

• Adherents are actively working to promote strategic, transparent and efficient public procurement systems. Adherents widely use mechanisms to ensure open, neutral and transparent procurement processes, and identify proposals that offer the best value for money.
• Most Adherents are seeking to strategically use green public procurement. The adoption of green public procurement strategies has substantially increased since the definition of Agenda 2030 and the Sustainable Development Goals . In 2022, 94% of OECD Member countries covered, had an active national green public procurement policy or framework; two-thirds of these countries declared regularly updating their green public procurement framework to target high-impact sectors and to move towards cleaner products more rapidly. Fourteen OECD Member countries have set mandatory requirements to use green public procurement.
• Some Adherents are seeking to enhance the efficiency and transparency of public procurement processes. At the national level, in 2022, 14 out of 34 Adherents used a digital platform linked to the electronic procurement system.
• Many Adherents are seeking to strengthen public procurement capacities. The lack of capacities and the difficulty to effectively train and professionalise the procurement workforce is a common challenge for Adherents.
• Most Adherents have opted for complementary training courses to reinforce public procurement capacities at the subnational level. The provision of training and guidance by the national level is vital to ensure that subnational public procurement is smooth and efficient. In the 2024 survey, out of the 20 Adherents that responded to this question, 19 declared having e-learning courses on public procurement laws, processes and/or guidelines, while 16 organise information sessions, 14 set-up forums or conferences for public procurement professionals, and a lower number (11) provide in-person training course.

Ireland

The Office of Government Procurement plays a central role in helping the State to achieve value for money when buying goods and services. The Office of Government Procurement facilitates quarterly information sessions for procurement officers to support understanding of the Public Procurement Policy Framework at all levels of government. It has also facilitated in-person training and e-learning courses to support learning on the Capital Works Management Framework at all levels of government.

Source: OECD (2024), Questionnaire on Recommendation on Effective Public Investment Across Levels of Government; Office of Government Procurement (2024), The Office of Government Procurement (OGP)

Korea

The Online E-Procurement System (KONEPS) in Korea is an integrated e-procurement system for national and subnational governments, which contributes substantially to the efficiency, effectiveness and integrity of public procurement. It includes tools that reduce the burden on suppliers by eliminating the need to submit duplicative certificates and other records, helping to ensure that the extent and complexity of information required in tender documentation and the time allotted for suppliers to respond are proportionate to the size and complexity of the procurement. Companies that previously had to register individually for each public procurement bidding could now register only once with the Public Procurement Service and participate in all biddings from central government entities, local government entities and public enterprises. Through shared use of government data and interchanges with other databases owned by public authorities, KONEPS enabled the elimination of paper submission of business registration certificate and tax payment certificate. 

Source: OECD (2024), Infrastructure Toolkit – Korea

Hungary

The National University of Public Service mentors and orients new generations of creative, educated, community-building and ambitious young people. The university provides support and knowledge to officials and officers who support the national government. The university delivers training courses to state or independently accredited procurement professionals working across different sectors or levels of public administration. The university also organises and publishes a programme of training courses aiming at strengthening transparency and integrity. Following graduation, the university operates a continuing training programme, called “Probono” with specialised courses on public procurement.

Source: National University of Public Service (2024),  Probono Magazin

Pursue high-quality and coherent regulation across levels of government by evaluating the regulatory framework when establishing investment priorities and programmes. Use co-ordination mechanisms to develop coherent regulation across sectors and levels of government, ensure consistency in application, and avoid duplication. National governments should regularly review the stock of regulation and assess costs and benefits of new regulations, taking into account the costs of compliance for sub-national governments. All levels of government should be aware of and seek to minimise the administrative burden of government formalities for a typical public investment project.

To promote a regulatory framework conducive for public and private investment

Divergent, overlapping, contradictory, or constantly changing regulations can lead to higher costs, reduce efficiency and deter investors. Regulatory coherence is of particular importance in network sectors, like power, telecommunications and water, owing to the greater degree of regulation to which such activities are typically subject. Even relatively basic public works projects may be impeded by a lack of regulatory clarity or coherence. The private sector may even stay away, experience delays, or abandon a project if there are issues in the regulatory framework or if the procurement process becomes problematic. Furthermore, clear and predictable regulations reduce opportunities for corruption or regulatory arbitrage, which often arises in fragmented systems where different standards apply across jurisdictions.

To enhance the regulatory capacity of subnational governments

Subnational capacity for regulatory quality is an integral aspect of effective public investment. Subnational governments should be able to implement regulations created by higher levels of government effectively, as well as define and implement their own strategy for regulatory management. This includes assessment of regulatory impact and reforms needed. Special attention can be given to administrative simplification, which could help involve private partners in public investment strategies. The OECD Recommendation on Regulatory Policy and Governance, adopted in 2012, invites governments to “foster the development of regulatory management capacity and performance at subnational levels of government.” Strengthening this capacity is critical for ensuring that local governments can effectively manage public investment and align it with broader regional development policy goals.

To increase the effectiveness of investment policies where capacities are low

Complex administrative procedures are a major obstacle to regional development. An excessive amount of legislation and guidance, or the proliferation of multiple conditions coupled with weak capacities, may lead to an inefficient or low use of funding programmes by subnational governments. Over-regulation can also make it difficult for policymakers to take ownership. If the administrative burden exceeds expected benefits, project beneficiaries might not even bother to apply for grants or financial instruments. It is thus crucial to compare the administrative burden with the expected policy benefits. Administrative burden combined with unequal capacities within countries risks deepening pre-existing inequalities.

To support regulatory adaptability to respond to emerging challenges and opportunities

Global challenges and more recurrent crisis impact regions differently. A region facing a sudden economic downturn might need to prioritise short-term job creation, while another area experiencing rapid population growth may need to focus on expanding housing and infrastructure. When rules are simpler and coherent, local governments can more easily adjust their investment decisions to reflect changing circumstances. Still, there is an important trade-off between flexibility and accountability. More flexible or adaptative rules may create some space for corruption, political intervention or inefficient spending. 

• Coordinate regulatory policy across levels of government (e.g. via inter-governmental platforms, mutual recognition policies, regulatory harmonisation agreements and regulatory uniformity agreements)
• Review existing regulations on a regular basis, assessing costs and benefits of new regulations and taking compliance costs for subnational governments into account
• Foster subnational capacity for regulatory quality as an integral aspect of effective public investment
• Implement the OECD Recommendation of the Council on Regulatory Policy and Governance
• Ensure flexibility in the rules to adapt programmes to specific local circumstances and development needs
• Keep instructions clear, succinct and convenient to improve participation from relevant parties and reduce errors
• Maintain stability of rules and regulations over a long period of time to facilitate compliance

• Constantly changing regulations undermine predictability
• Undermining high-quality regulation at one level of government by poor regulatory policies and practices at other levels
• Regulations that focus on a single jurisdiction to the detriment of other jurisdictions (such as with the race-to-the-bottom forms of competition)
• Ignore innovative regulatory practices set up at the regional or local level that could benefit higher levels of government
• Apply over-detailed regulations and procedures to address fiduciary and accountability concerns
• Use excessively technical language to communicate

Regulatory hurdles remain one of the primary obstacles for municipalities’ infrastructure investment. The 2022 EIB Municipalities Survey shows that while the lack of funding remains the most significant obstacle to municipal infrastructure investment, it is followed closely by challenges posed by the length of the regulatory process and regulatory uncertainty .

While regulatory co-ordination across levels of government has improved, it remains an important challenge. Back in 2017, OECD evidence showed that only 11 out of 32 Adherents had formal co-ordination mechanisms between national/federal and state/regional governments to co-ordinate regulations. In less than half of the sampled Adherents, national governments had to consult subnational entities prior to the issuance of new regulations. The most recent evidence shows some progress. In 2021, all federal OECD Member countries confirmed they have some mechanisms to promote regulatory coherence across levels of government, as well as 18 out of 30 unitary OECD Member countries.

A range of mechanisms is used to support regulatory co-ordination. As per the iREG indicators, the most frequent mechanisms used to coordinate are standing co-ordination mechanisms or legal/ administrative ones.

While some Adherents are making important efforts to strengthen capacities on regulatory policy and management across levels of government, there is still room for improvement. Only 17 Adherents have established some platform for subnational governments to share experiences (workshops, seminars or conferences), followed by reports on good practices. Only 15 Adherents have in place bodies that promote the use of good regulatory practices and evidence-based policy making at the subnational level.

Norway

In Norway, several mechanisms are in place to ensure coordination among regulatory proposals affecting local governments, especially those associated with infrastructure and public investment projects. First, regular formal meetings are held between representatives from the central and local government. Second, as part of the public consultation on draft laws and regulations, local governments and local government organisations receive draft regulations considered of special relevance for comment. Third, continuous informal dialogue takes place between central and local government representatives at different levels, in many different forms, on political as well as technical and professional issues. The arrangement consists of regular meetings at the top political level, involvement of the Norwegian Council of Ministers in cost calculations, and work on state legislative studies and bilateral cooperation agreements.

Source: KS (2024), Regular consultation meetings with the government

Czechia

The Czech government established the Government Committee for Regional Policy in 2023. The Committee aims to ensure effective coordination across all departments and strengthen cooperation between the government and regions and municipalities. It issues recommendations and proposes legal adjustments to enhance regional cohesion, regularly evaluating their impact against strategic objectives. The Committee also oversees funding, provides methodological guidance (e.g. territorial impact assessments) and addresses specific regional challenges, such as rural development and disadvantaged areas. It operates in close connection with formal coordination platforms, especially those related to EU cohesion policy, enabling dialogue between central authorities and territorial partners.

Source: Government of the Czech Republic (2024), Government Committee for Regional Policy