Building More Resilient Cross‑border Regions

1. Defining cross-border regions and their development challenges

Abstract

This chapter examines why cross-border regions in the European Union often lag behind non-border regions on different development indicators. It discusses different barriers hindering their development, including regulatory, governance and cultural differences. The chapter also explores the multi-level governance tools and mechanisms established by the European Union as well as national and subnational governments to reinforce cross-border governance, and where progress is lacking. Finally, the chapter presents the OECD Cross-border Governance Framework.

From this, subsequent chapters present an analysis of the cross-border governance arrangements in five cross-border regions and what other cross-border regions can learn from their practices.

Introduction

Supporting the development of cross-border regions has become a growing priority for governments across different OECD Member countries, as policy makers seek to enhance the socio-economic development of border regions and, in some contexts, also foster cross-border integration. To achieve these goals, countries are increasingly establishing policy mechanisms that reflect the unique challenges and opportunities that cross-border regions experience. The European Union (EU) has been particularly proactive in developing governance mechanisms to support cross-border development, largely driven by its single market initiative. While countries outside the EU are developing innovative policy approaches, the EU's long-standing efforts can offer valuable insights for other OECD Member countries working to address the complex issues facing cross-border regions.

In 1993, the European Union (EU) created the single market, a common economic area where goods, services, capital, and people can move freely without barriers. Since this milestone, it has boosted European competitiveness and economic growth. By 2019, the single market was estimated to have increased the EU’s GDP by around 9% on average, providing an annual income advantage of approximately EUR 840 for every EU citizen (in ’t Veld, 2019[1]; Bertelmann Stiftung, 2023[2]).

The single market has generated important benefits for cross-border regions, which make up 40% of the EU's territory. They are also home to 30% of the EU population and account for about 30% of EU GDP (Official Journal of the European Union, 2023[3]). The removal of tariffs, customs barriers and many regulatory discrepancies have made it easier for residents to find jobs in neighbouring countries, resulting in 1.8 million cross-border commuters as of 2022 (European Commission, 2024[4]). It has also boosted economic growth and competition while fostering opportunities for cross-border co-operation in the delivery of key public services, such as healthcare, transport, and education. Finally, the free movement of people has fostered cultural exchange and strengthened regional identities.

Despite these advancements, cross-border regions continue to face significant development challenges related to their proximity to national borders. For instance, legal and administrative barriers in border regions, which can affect the construction of transport infrastructure and the delivery of cross-border services, are estimated to result in a loss of 3% of the European GDP (EU 458 billion). This translates into a loss of 8.6% of jobs (about six million) in land-border regions (Camagni, Capello and Caragliu, 2017[5]). It is estimated that by addressing even 20% of the existing legal and administrative obstacles, the GDP of cross-border regions would be boosted by 2% and over one million jobs would be created (European Commission, 2017[6]). Cross-border regions also face distinct challenges when managing crises that ignore national boundaries, such as floods, wildfires, and other natural disasters. Differences in national regulations, emergency response protocols, and co-ordination mechanisms can lead to delays and inefficiencies in disaster response.

In response to the multiple challenges faced by cross-border regions and recognising their potential for further economic growth, the EU, national, and subnational governments have developed and implemented a wide range of legal, policy, and financial mechanisms to support cross-border co-operation. These include the creation of the European Groupings of Territorial Co-operation (EGTC) framework, which allows public authorities from different countries to establish formal cross-border governance bodies and pool resources to address shared needs. They also include the provision of Interreg funding to support regional development and co-operation in land and maritime cross-border regions. Efforts such as these have contributed to the establishment of over 90 EGTCs and the creation of more than 1 500 cross-border public service delivery initiatives throughout Europe (European Parliament, 2024[7]; European Committee of the Regions, 2024[8]; ESPON, 2022[9]).

Despite these efforts, challenges persist, with cross-border governance bodies often struggling to effectively address needs and priorities that are shared on both sides of a border. For this reason, policy makers in OECD Member countries and EU Member States may wish to explore how to further strengthen multi-level governance arrangements to support economic development, improve cross-border public service delivery, and enhance the well-being of citizens in cross-border regions.

The first part of this chapter presents an overview of particular challenges facing cross-border regions including a host of barriers affecting their performance. The chapter then discusses how robust multi-level governance arrangements can help address cross-border issues and further unlock their development potential. This is followed by a brief discussion of efforts by the EU and national and subnational governments to establish tools and mechanisms to reinforce cross-border governance. The chapter concludes by introducing the “Building More Resilient Cross-border Regions” project, which has generated analysis and tools to establish and reinforce cross-border mechanisms. The final section will introduce the four pillars of the OECD Cross-border Governance Framework. These serve as the basis for the following chapters presenting key lessons from the project’s work with different cross-border regions in the EU. The key concepts of the OECD Cross-border Governance Framework and lessons learned from the project are also relevant to cross-border regions outside the EU, providing a foundation to address shared development challenges.

Development challenges of cross-border regions

While many cross-border regions share certain characteristics (e.g. they are often located far from national political and economic centres), they are strikingly different in terms of economic and social conditions, to take just two examples. In general, however, cross-border regions tend to lag behind non-cross-border regions on a range of indicators, such as economic performance and public service delivery (European Parliamentary Research Service, 2023[10]). This disparity can be explained by a range of specific barriers to their development, including legislative, regulatory, governance, cultural and language differences. These can hinder regional economic integration, impede the delivery of cross-border services, and hamper the management of emergencies that transcend national boundaries.

Defining cross-border regions

Cross-border regions are unique geographical areas that exist along the borders of two or more countries (Box 1.1). Their defining feature is the presence of an international boundary—which can be land-based or maritime—that influences the lives of the people residing and working within these regions1. Despite sharing this basic characteristic, cross-border regions can differ widely in their development, economic and geographic conditions, and the degree of interaction among the communities on either side of the border. The diversity in resources, infrastructure, and population density in these regions results in varied forms of social and economic connectivity and collaboration between neighbouring countries.

Box 1.1. Challenges in defining cross-border territories

There are many different definitions of border regions. For instance, Eurostat defines cross-border territories as those NUTS 3 (TL3) regions that are either directly adjacent to an international border or close enough to be significantly influenced by it. Eurostat's methodology manual on territorial typologies includes two key criteria for identifying cross-border regions:

1. Regions with a land border: These are NUTS 3 (TL3) regions that directly share an international border with a neighbouring country.

2. Regions within 25 kilometres of a land border: These are territories that are not located on an international border but are situated within 25 kilometres of one, which means they are often affected by cross-border dynamics (e.g. commuting of cross-border workers).

According to this classification, there are 458 cross-border regions in the EU-27, of which 355 regions have a direct land border, and 103 regions fall within the 25-kilometer proximity zone. Defining cross-border regions accurately is crucial, particularly when determining which areas are eligible for EU funding under cross-border co-operation programmes.

There are, however, important limitations to this definition. For instance, it does not take into account cross-border interactions, such as commuting or the use of public goods and services available in the cross-border region by citizens from both sides of a border. These interactions can vary significantly depending on various factors, such as economic disparities across border areas, differences in public service availability, or infrastructure quality. Economic disparities, in particular, can lead to imbalanced cross-border flows, where residents of one region might frequently travel to the region across the border for work or services not available in their home area. Similarly, the presence and quality of transport infrastructure connecting cross-border regions play a crucial role in facilitating cross-border movement. These factors determine whether cross-border interactions are confined to smaller areas or encompass larger territories.

Source: Author’s elaboration, based on (Eurostat, 2024[11]).

Many cross-border regions are located on the peripheries of countries in sparsely populated areas, far from the capital city. In 2023, the average population density of EU border regions was 68 people per square kilometre, compared to 143 for non-border regions (Eurostat, 2024[12]). The vast difference in population density means that border regions often face challenges related to limited economic development and access to public services and infrastructure.

Not all cross-border regions, however, are rural or peripheral. Some encompass large urban centres or even cross-border metropolitan areas. For instance, in two EU Member States (Croatia and Denmark) the population density of border regions was higher than that of non-border regions (Eurostat, 2024[12]). In such cases, cross-border integration can take several forms (Decoville et al., 2013[13]).

• Integration by specialisation, where one city might, for example, offer more employment opportunities while the other provides superior residential infrastructure. A good example of this comes from the Malmö (Sweden) and Copenhagen (Denmark) cross-border region. Copenhagen offers relatively more job opportunities, attracting many Swedish cross-border workers (Greater Copenhagen, 2024[14]). Meanwhile, Malmö provides housing that is, relatively speaking, more affordable. Not surprisingly, Swedish citizens working in Copenhagen tend to live in Sweden; however, many Danish nationals also choose to live in Sweden (ESPON, 2022[15]).

• Integration by polarisation, where people relocate to or seek employment in a highly attractive economic centre across the border. Luxembourg exemplifies this type of integration. Its strong economy and significantly higher wages compared to neighbouring parts of Belgium, France and Germany make Luxembourg a lucrative place to work. As a result, in 2019 over 212 000 cross-border workers from Luxembourg’s neighbouring countries, such as France, Germany and Belgium, commuted to Luxembourg on a daily basis, seeking better employment opportunities (OGBL, n.d.[16]). This high volume of cross-border commuting can support economic activity but also create pressure on local infrastructure (e.g. public transport), generating both positive and negative effects.

• Integration by osmosis, where cities on opposite sides of a shared border offer comparable opportunities, leading to balanced flows of workers and residents. The macro-cross-border region that includes Liège (Belgium), Maastricht (The Netherlands) and Aachen (Germany) illustrates such a type of integration (Decoville et al., 2013[13]).

The different forms of integration reflect the complexity and variety of cross-border regions. They also show that the potential for large economic disparities between two sides of a border can be a driver for cross-border integration.

EU cross-border regions tend to have poorer economic and public service outcomes than non-cross-border regions

Regional development indicators show that the EU’s cross-border regions generally underperform non-border regions across a range of metrics. For instance, data on GDP per capita from 2021 reveals notable differences across border and non-border regions (Figure 1.1). In general, GDP (PPS) per capita in border regions was 86% of the EU average (100%), while in non-border regions, it was 105%. (Eurostat, 2024[17]). The most significant disparities are observed in countries such as Bulgaria, Czechia, Hungary, Ireland, Latvia and Slovenia, where the differences across border and non-border regions are substantial compared to the EU average. Denmark, Italy and Croatia, where border regions have higher GDP (PPS) than non-border regions (Eurostat, 2024[17]), are exceptions. The substantial GDP gap between a country’s border and non-border regions highlights internal economic inequalities, which could be linked to a number of factors that affect growth. These include limited access to major economic hubs, infrastructure constraints, or socio-political effects.

Figure 1.1. GDP per capita of border and non-border regions in select EU Member States, as a percentage of the EU-27 average, 2021

Note: Purchasing power standard (PPS), per capita in percentage of the EU-27 (2020) average. Eurostat lists all NUTS 3 territories in Luxembourg and Slovakia as border regions. Cyprus and Malta are not included as, for this indicator, both are listed as non-border regions by Eurostat.

Source: Author’s elaboration, based on (Eurostat, 2024[17]).

Data on unemployment rates also highlight disparities among border and non-border regions in the EU, though the gap is smaller compared to GDP (PPS) per capita (Figure 1.2). In 2023, on average unemployment among people between the ages of 15 and 74 was slightly higher in border regions (6.0%) than in non-border regions (5.8%). In some countries unemployment was significantly higher in border regions, such as in Hungary (+45pp), Czechia (+38pp), Greece (+32pp), Bulgaria (+32pp) and Lithuania (+26pp). However, there are also several countries where border regions outperformed their non-border peers (i.e. Austria, Belgium, Ireland, Italy, the Netherlands and Portugal). Factors that could contribute to the differences in unemployment rates include varying levels of economic development, cross-border co-operation, differences in access to labour markets, or the impact of regulatory and economic barriers in regions bordering non-EU Member States.

Figure 1.2. Unemployment rate (from 15-74 years) in border and non-border regions in select EU Member States, 2023

Note: No data are available for France and Germany. Cyprus and Malta are not included as both are listed as non-border regions by Eurostat. EU-23 presents the unweighted average of the EU Member States included in the figure, except Luxembourg and Slovakia as, for this indicator, Eurostat lists all NUTS 3 territories in both countries as border regions.

Source: Author’s elaboration, based on (Eurostat, 2024[18]).

Labour productivity data reveal that the EU's border regions are generally less productive than non-border regions, with an average productivity level of EUR 57 136 in border areas compared to EUR 66 497 in non-border areas (a 14% difference). However, significant variations exist at the country level (Figure 1.3). In most EU Member States, border regions lag behind, with the most marked gaps in Belgium, Czechia and Ireland. In contrast, a few countries, notably Italy, Slovenia, and Sweden, report higher productivity levels in border regions than in non-border areas. The productivity disparities may stem from varying levels of economic integration, availability of skilled labour (including from neighbouring countries), differences in cross-border trade dynamics2, and the availability of public and private investment in these regions.

Figure 1.3. Labour productivity (EUR) in border and non-border regions in select EU Member States, 2021

Note: Cyprus and Malta are not included in this figure as both are listed as non-border regions by Eurostat. EU-22 presents the unweighted average of the EU Member States included in the figure, except Croatia, Luxembourg and Slovakia as, in the relevant dataset used to generate this figure, Eurostat lists all NUTS 3 territories in these countries as border regions.

Source: Authors elaboration, based on (Eurostat, 2024[19]; Eurostat, 2024[20])

Transport performance in border regions also tends to be lower than in non-border regions. While road transport performance in cities, towns, and suburbs is relatively similar between border and non-border areas, rural border regions show a more pronounced disparity (European Commission, 2021[21]). This lower performance is influenced not only by the complexity of co-ordinating cross-border infrastructure but also by natural barriers such as mountains and large rivers, which often demarcate national borders. The disparity in rail transport performance between border and non-border regions is greater than that observed in road transport. Possible explanatory factors include challenges with technical interoperability (e.g. differences in width of rails) and timetable co-ordination (European Commission, 2021[21]).

Unfortunately, up-to-date data on a wide range of metrics such as access to public services in EU border regions compared to non-border regions is relatively scarce. However, historical data from 2009 may offer some insight. At that time, 15% of the population in border regions lived more than 30 minutes from a hospital, compared to 10.4% for the EU overall (Eurostat, 2009[22]). When examining the data more closely, significant differences could be seen between internal border regions (those bordering other EU Member States) and external border regions (those bordering non-EU Member States). Specifically, 13.1% of people in internal border regions and 24.9% in external border regions lived more than 30 minutes from a hospital. Similarly, in 2009 10.1% of people living in internal border regions and 24% in external border regions lived more than an hour away from a university, compared to 7.4% across the EU (Eurostat, 2009[22]). These gaps can be attributed to fundamental barriers faced by border regions, which are addressed below.

Barriers to the development of cross-border regions

Because of their proximity to national boundaries, cross-border regions often face many barriers to their socio-economic development. These include differences in legislation and regulation, territorial-administrative structures, language and culture.

Legislative and administrative factors lead to significant economic losses

Legal and administrative barriers are widely considered to be the most significant obstacles to the development of cross-border regions in the EU, directly affecting 53% of its population (European Commisson, 2015[23]). A 2015-2017 assessment identified over 200 legal and administrative impediments affecting cross-border regions in Europe (European Commission, 2017[24]). Over 90% of them fall into five broad policy areas:

• Labour market and education;

• Social security and health;

• Transport and mobility;

• Industry and trade; and

• Policy planning and provision of public services.

These issues affect citizens, businesses, and governments alike, complicating everyday interactions and economic activities across borders (European Commission, 2017[6]).

The increase in cross-border movement of people and goods has generally led to a rise in legal and administrative obstacles reported by citizens (European Commisson, 2015[23]). As people cross borders more frequently, they engage more often with the neighbouring countries’ legal systems and administrative procedures, which exposes them to a wider range of potential bureaucratic challenges and inconsistencies. For instance, the lack of formal recognition of educational qualifications obtained in a neighbouring country can act as a barrier to employment. Individuals might have to undertake costly procedures to have their credentials recognised in order to pursue their profession on the other side of their country’s border. Moreover, different tax and social security systems (i.e. pensions and healthcare) can create confusion and result in situations where cross-border workers are deprived of benefits in both countries (e.g. tax benefits, unemployment insurance) to which nationals in each country are entitled (European Commisson, 2015[23]). The complexity of these systems can discourage people from working across a border.

Differences in legislation and administration also severely affect businesses, SMEs and the overall economy of cross-border regions. For firms participating in cross-border trade, crossing borders means managing different sets of tax regulations, tariffs, import/export regulations, environmental standards, etc. In the EU, despite the single market, these issues persist. Firms are therefore less likely to trade freely across the border, which weighs on the overall economy of the region. For instance, companies doing cross-border business are estimated to incur costs that are 50% higher than those faced by domestic businesses (European Commission, 2017[25]). Nearly half of these additional costs stem from translation expenses, followed by costs related to gathering information, submitting documents, certification, and collecting data and documents.

Legislative and administrative barriers also pose significant challenges to governments, for example when investing in cross-border infrastructure. Cross-border transport and energy projects often experience delays and cost overruns. For example, 30% of EU “Projects of Common Interest” were delayed due to permit issues3 (European Investment Bank, 2023[26]). In fact, such cross-border infrastructure projects typically take twice as long to complete as domestic projects. Moreover, red tape has been identified as one of the main challenges in establishing cross-border public services in Europe (ESPON, 2022[9]).

These examples illustrate why legal and administrative barriers alone were estimated to account for a GDP loss of EUR 458 billion (3% of EU GDP) or almost 6 million jobs (3% of total employment in the EU-27) in 2017 (Camagni, Capello and Caragliu, 2017[5]).

Differences in multi-level governance arrangements can affect the capacity of cross-border regions to effectively address shared challenges

Differences in multi-level governance arrangements (e.g. territorial-administrative structures and political, administrative and fiscal decentralisation) in neighbouring countries can hamper cross-border development and co-operation. For example, there are significant asymmetries in the attribution of competences to government actors on either side of the Portuguese-Spanish border. Spain’s regions are responsible for a wide range of tasks, including regional healthcare planning, managing the regional education system and organising the protection of environmental areas. In Portugal, these responsibilities mostly fall under the purview of the national government4 (OECD, 2023[27]; European Committee of the Regions, 2024[28]). Without effective co-operation among different levels of government, in such cases, implementing cross-border initiatives can be particularly complex.

Such differences raise practical questions about who the relevant decision makers are on either side of a border and who should be involved when trying to resolve cross-border challenges in areas such as healthcare, education or river management. In these cases, diagonal co-ordination—bringing together actors from different levels of government (e.g. regional authorities in Spain and municipal authorities in Portugal)—and ensuring a mutual understanding of differences in mandates, decision making processes and resources becomes crucial to effectively manage cross-border regions.

Language and socio-cultural differences can hamper co-ordination and communication

Language and cultural differences can hinder the development of cross-border regions by affecting citizens, businesses and governments in distinct ways. For cross-border residents, language and cultural barriers can create obstacles in daily life, from accessing public services to engaging in cross-border social and economic activities. For example, when seeking healthcare services across the border, language differences can complicate communication with healthcare providers. As stated above, residents may also face administrative and financial hurdles, such as having to translate or even certify documents (e.g. medical records, diplomas, or professional qualifications), in order to access services or employment opportunities on the other side of the border. This not only adds costs but can delay access to essential public services or job prospects. It can also deter residents of the cross-border region from accessing services or pursuing employment opportunities altogether (EGTC Eurodistrict PAMINA, 2019[29]).

Additionally, cultural differences can reduce trust in cross-border interactions. The way people interact, work, and communicate can cause hesitancy and reluctance to engage with counterparts across the border, making people less likely to use public services or engage with individuals from neighbouring regions (European Commisson, 2015[23]).

For businesses, language and cultural differences can also hinder operations (European Commission, 2017[6]). For instance, companies may struggle to hire staff or necessary experts or collaborate with firms across the border due to language differences, difficulty obtaining official recognition of degrees or qualifications or when business practices differ significantly due to cultural norms. These challenges can limit cross-border trade, investment, and workforce mobility, thereby dimming the economic potential of the region.

Finally, at the governmental level, language and cultural barriers can directly affect public bodies. In many policy areas (e.g. security, emergency care, disaster-risk management), the ability to co-ordinate and co-operate effectively across borders often depends on mutual trust and understanding, which can be undermined by cultural and linguistic differences (Birdi et al., 2020[30]). For example, local, regional or national government officials may struggle with cross-border co-ordination on policy initiatives, such as mounting a response to a weather-related disaster affecting the cross-border region because of divergent bureaucratic procedures and practices.

Challenges to managing emergencies whose effects transcend national boundaries

The challenges posed by the above-mentioned barriers (e.g. legal, administrative, cultural) come to the fore most critically during emergency situations. Natural disasters do not stop at national borders. For example, around 70% of the European continent’s freshwater bodies form at least part of one transboundary river basin, meaning that flooding in one country can quickly spread to another, affecting multiple regions and requiring co-ordinated responses to manage water flow, mitigate damage, and protect communities (Joint Research Centre, 2024[31]).

When a natural disaster strikes, disparate regulations and emergency response protocols can add to confusion and delays, severely affecting efficient cross-border co-ordination. Different national regulations on emergency response and cross-border assistance authorisation can slow down the flow of aid, while conflicting standards for protocols can result in disjointed or contradictory actions. This misalignment hampers the kind of swift, co-ordinated efforts that are essential for effective disaster-risk management.

One particularly relevant example was the COVID-19 pandemic, when there was often a lack of co-ordination among countries in their implementation of border closures and travel restrictions. While some countries imposed strict border closures, others opted for partial closures or less stringent measures (Peyrony, Rubio and Viaggi, 2021[32]). This disjointed response to the pandemic, compounded by a lack of consultation with local authorities, led to confusion and disruptions for cross-border communities, particularly those who relied on cross-border travel for work, healthcare, or family reasons (Peyrony, Rubio and Viaggi, 2021[32]). The severe disruptions to cross-border mobility during the pandemic contributed to the GDP of cross-border regions dropping by twice as much as the EU average (Capello, Caragliu and Panzera, 2023[33]).

Another significant challenge in managing emergencies in cross-border regions is that what may be a high priority for one country might not be the same for the other. This, in turn, can lead to an imbalance in disaster preparedness and response efforts. An example of this is the dispute between Germany and Poland over the Oder River. The river demarcates part of the Polish-German border, and the dispute centres on contrasting visions for its development. Poland seeks to deepen and narrow the river to facilitate barge traffic, tourism, and flood prevention, while Germany focuses on preserving its natural state, arguing that alterations increase the potential for flooding. This issue hindered recovery efforts after a pollution incident killed thousands of fish in 2022 (Politico, 2022[34]; Joint Research Centre, 2023[35]).

Multi-level governance arrangements supporting cross-border regions

Addressing the many barriers to the development of cross-border regions requires adaptable multi-level governance arrangements that allow policy makers to effectively navigate the complexities of cross-border interactions. In recent decades, the EU, along with national and subnational governments in EU Member States, has introduced a wide array of legislative, regulatory and funding mechanisms to enhance cross-border co-ordination and co-operation. These include measures to support investments in service delivery and infrastructure, as well as to foster the creation of robust governance structures for pooling of resources and expertise among communities on both sides of a border. Despite these efforts, significant challenges remain due to disparate administrative structures, decision-making processes, and resource allocation across countries. This has led to calls for new regulatory tools and the consolidation of governance mechanisms to more effectively address local needs and priorities.

Flexible multi-level governance frameworks enable effective cross-border co-operation

A robust and adaptable multi-level governance framework (Box 1.2) is crucial for supporting cross-border development, as the challenges faced by these regions are often complex and interconnected, spanning local, regional and national boundaries. Issues such as limited access to affordable public services, transboundary water pollution, or legislative barriers that constrain businesses from operating across borders cannot be effectively addressed by any single level of government or country alone. A co-ordinated, multi-level, approach is essential for tackling such challenges in a comprehensive manner. For instance, improving cross-border public transport may require the joint efforts of local, regional, and national governments in neighbouring countries. Local authorities could focus on urban planning and managing local transit systems; regional bodies could be tasked with regional transport networks; and national governments could provide regulatory frameworks and essential (co)funding to establish and maintain cross-border public transport services.

Box 1.2. Defining multi-level governance

Multi-level governance refers to the institutional and financial interactions among and across levels of government and a broad range of non-governmental stakeholders, including private actors and citizens, when designing and implementing public policies with subnational impact. This interaction is characterised by a mutual dependence among levels of government and runs vertically (among different levels of government), horizontally (across the same level of government), and in a networked manner with non-governmental stakeholders (e.g. citizens, private actors).

Countries’ multi-level governance frameworks include:

• The territorial-administrative structure (e.g. number of government tiers);

• The assignment of tasks and responsibilities among levels of government;

• Fiscal frameworks (e.g. revenue sources and equalisation mechanisms);

• Financial and human capacities at all levels of government to carry out their mandates;

• Vertical and horizontal co-ordination mechanisms;

• Mechanisms for engagement with non-governmental actors;

• Data collection and performance measurement, accountability and transparency frameworks.

Source: Author’s elaboration based on (OECD, 2024[36]).

One of the challenges in cross-border governance issues relates to the fact that a country’s multi-level governance framework may differ from that of its neighbour(s). These structural differences can include divergences in the number of government levels; the depth of political, fiscal, or administrative decentralisation arrangements; co-ordination mechanisms for delivering policy or services; as well as regulatory differences. To manage such differences in a cross-border environment, governments need to be able to engage with relevant authorities and non-governmental actors on the other side of the border. For instance, allowing subnational governments to consult with actors from across the border, such as during the design of a regional or spatial development plan (even when one side may have already adopted similar plans), could help ensure that plans are cohesive and take into account the broader cross-border context. Additionally, allowing public funding to be spent in a neighbouring region could allow for shared investments in infrastructure or public services that benefit both sides of the border. Furthermore, facilitating the delivery of public services (e.g. healthcare and public transport) on a cross-border basis, could provide cross-border regions with an additional tool to address regional needs, and improve both regional attractiveness and quality of life for residents. Finally, adjusting data-gathering methods to enhance comparability with datasets of neighbouring countries can improve the evidence-informed design of cross-border policy initiatives and assess their performance over time.

Multi-level governance systems that allow for effective co-ordination and co-operation among and across governments in neighbouring countries can have a number of benefits, such as:

• Ensuring consistent and complementary policy making by aligning goals across borders, reducing the risk of contradictory policies and reinforcing development initiatives on both sides.

• Optimising resource use by pooling resources and expertise across regions, reducing inefficiencies and better addressing shared challenges through joint efforts.

• Enhancing the role of regional and local authorities by formalising their involvement in cross-border decision making, ensuring that policies are aligned with local needs and increasing the impact of development initiatives.

• Promoting smoother implementation of cross-border strategies, plans and projects by: i) clarifying the assignment of the roles and responsibilities among levels of government; and ii) generating a greater understanding of decision-making procedures (e.g. related to infrastructure investment and public service delivery) in neighbouring countries.

Recent efforts to reinforce cross-border governance

In the European Union, all levels of government have adopted different regulatory, policy, funding, and co-ordination mechanisms to improve the performance of border regions. This has led to the emergence of different forms of cross-border governance across the European Union.

EU-level support for cross-border governance

The EU started promoting cross-border co-operation in the 1980s, including through the European Outline Convention on Trans-frontier Co-operation between Territorial Communities or Authorities. This convention intended to facilitate co-operation by subnational governments across national borders, allowing them to create agreements and joint frameworks for addressing common challenges (Council of Europe, 1980[37]). Since then, various regulatory, policy, funding, and co-ordination mechanisms have been implemented, including the European Grouping of Territorial Co-operation (EGTC) structures, Interreg funding, and the b-solutions project, to enhance cross-border support among Member States.

In 2006, the EU adopted the EGTC regulation, which allows public authorities to work together across borders under a single legal framework, supporting three of the four strands of European Territorial Co-operation policy: cross-border, trans-national, and interregional co-operation (Box 1.3) (European Commission, 2024[38]; La MOT, n.d.[39]).

Box 1.3. The four strands of the EU’s territorial co-operation policy

The European Union has a specific instrument to fund territorial co-operation called Interreg. It covers four strands of transboundary co-operation, outlined below:

• Cross-border co-operation focuses on improving collaboration between NUTS 3 (TL3) regions from at least two different EU Member States that are located on (or directly adjacent to) a shared border. Programme areas for cross-border co-operation should be identified as those territories on a shared border or separated by a maximum of 150 km of sea where cross-border interaction may effectively take place.

• Transnational co-operation extends this cross-border co-operation to larger areas that span multiple countries on the mainland of the EU or territories around sea basins, working together on common challenges such as environmental management, energy networks, or sustainable transport.

• Inter-regional co-operation can involve all EU regions, regardless of their geographical location, and aims to facilitate knowledge sharing and policy learning across the entire EU to improve regional development policies.

• Co-operation among the EU’s outermost regions supports EU regions located in Amazonia “Plateau des Guyanes”; the Caribbean; the Middle Atlantic / Gulf of Guinea; and the Indian Ocean (from Australia to India and the Eastern coast of Africa) and Mozambique Channel to co-operate with their neighbouring countries and territories.

In each strand, there are also co-operation programmes with non-EU Member States, such as Moldova, Tunisia and Ukraine.

Source: Author’s elaboration, based on (European Commission, 2024[38]; La MOT, n.d.[39]; European Union, 2021[40]).

By 2024, more than 90 EGTCs have been established, the majority of which focus on cross-border co-operation. The creation of 10 EGTCs since 2021 speaks to a continued interest across European regions in establishing new cross-border governance bodies (European Parliament, 2024[7]; European Committee of the Regions, 2024[8]). Compared to other cross-border governance bodies (e.g. Euroregions), EGTCs present a range of advantages. The legal status of EGTCs enables quicker and more efficient decision making. They also help ‘stabilise’ co-operation by defining common objectives and strategies, making co-ordination less vulnerable to political changes on either side of a border. Moreover, EGTCs increase the visibility of regional actors at national and EU levels, enhancing a cross-border region’s ability to advocate for its needs and defend its interests in broader policy discussions (European Committee of the Regions, 2018[41]).

Significant EU funding and financing for cross-border co-operation has mainly come from the Interreg programme, which is a central component of the EU’s Cohesion Policy (European Commission, 2024[38]). Launched in 1990, Interreg initially focused on cross-border co-operation. Over time, it expanded to trans-national, inter-regional co-operation and co-operation for the EU’s outermost regions. For the 2021-2027 programming period, Interreg’s budget of nearly EUR 10 billion is allocated through 86 programmes, most of which support cross-border co-operation (European Commission, 2024[38]; OECD, 2024[42]). These programmes benefit a wide range of actors, including EGTCs.

The b-solutions initiative, launched in 2017, helps cross-border actors (e.g. EGTCs) cut through red tape along the EU’s internal borders (i.e. between Member States) (Association of European Border Regions, 2024[43]). Through calls for proposals, the b-solutions initiative offers legal and technical support to: i) assess border challenges in areas such as employment, health and transport; ii) identify potential solutions to address the challenges; and iii) outline a legal framework to push solutions forward (Box 1.4). By publishing analyses and solutions from individual projects, the initiative fosters peer-to-peer learning, helping other regions overcome similar challenges and improve cross-border co-operation.

Box 1.4. b-solution projects: examples from the fiscal and transport policy sectors

Since its inception in 2017, the b-solution initiative has provided legal support to 165 pilot cases with the aim of improving cross-border co-operation, of which the following are two examples.

Portugal and Spain: Paying VAT on cross-border mobility services in the Rio Minho cross-border region

In the Rio Minho cross-border region between Portugal and Spain, the EGTC Rio Minho helped establish a cross-border e-bike system to promote sustainable mobility and better connect municipalities. However, tax-related regulatory issues, particularly the payment of Value Added Tax (VAT), hampered the system's viability. Since the e-bike service operates in both Spain and Portugal, determining which VAT rate to apply was complicated. The b-solutions project proposed potential solutions, such as an EU-level regulation on the obligations of companies that provide digital services whose recipients are located in different EU Member States.

Italy and Slovenia: Creating new cross-border bus lines

The EGTC GO, covering the municipalities of Gorizia (Italy), Nova Gorica (Slovenia), and Šempeter-Vrtojba (Slovenia), faced a range of challenges to establish a new cross-border bus network, including differing operating rules, pricing systems and language barriers. The b-solutions case focused on the mobilisation of relevant actors at local, regional and national levels to help design a bilateral co-operation agreement. Under the accord, the territory shared by the three cities would form a single urban system thus enabling transport operators to set up new cross-border bus lines.

Source: Author’s elaboration, based on (European Commission, 2020[44]; Association of European Border Regions, 2024[43]; European Commission, 2024[45])

The European Commission also works to integrate the border dimension into EU legislation and instruments, for example by establishing the Border Focal Point within its Directorate General for Regional and Urban Policy (European Commission, 2024[46]). The Border Focal Point’s responsibilities include ensuring that EU policies do not negatively affect border regions and, in fact, support their development. It does so by promoting territorial impact assessments and linking cross-border needs with available European Commission services. It also generates and supports the exchange of knowledge on cross-border co-operation, for instance by developing thematic reports (e.g. the impact of the COVID-19 pandemic on border regions) (European Committee of the Regions, 2024[47]; OECD, 2023[27]). Another objective of the European Commission is to put cross-border co-operation on the agenda of EU, national and subnational policy makers.

Cross-border governance arrangements introduced by national and subnational governments

National and subnational governments in individual EU Member States have established a wide range of legislative, regulatory, policy, financial and co-ordination mechanisms to support effective cross-border governance.

Legislative and regulatory mechanisms

Many national governments have taken steps to formalise and streamline cross-border co-operation through legislative and regulatory reforms. For example, in 2007, the French Ministry of Health and Solidarity and the Belgian Ministry of Social Affairs and Health signed a co-operation agreement to address the need for cross-border emergency medical aid along the Franco-Belgian border (France-Belgian Health Observatory, n.d.[48]). The agreement established a framework that permits cross-border collaboration in urgent medical situations, with emergency medical services from one country able to intervene in the other country when useful.

Another example comes from the Netherlands, which adopted a special regulation mandating “cross-border policy checks” during the design stage of new national policies. This requires government bodies to assess the potential impact of proposed policies on border regions in areas such as tax collection, social security, healthcare, crisis management and to mitigate any negative effects (Government of the Netherlands, 2023[49]).

Policy and planning instruments

National and subnational governments across the EU have also implemented policy and planning instruments to support cross-border development. A notable example is the Joint Cross-border Development Strategy adopted by Spain and Portugal in 2020 (Government of Portugal-Government of Spain, 2020[50]). The objective of the strategy is to improve the quality of life for residents on both sides of the border by fostering co-operation in areas such as mobility, public service delivery, socio-economic development and regional attractiveness. It outlines actions to achieve these goals through joint efforts. An example from the subnational level is the development of a 10-year cross-border co-operation strategy for the Basque region (covering parts of the French-Spanish border) by the Pays Basque inter-municipal grouping (France) (La MOT, n.d.[51]). The strategy intends to strengthen co-operation on shared governance and cross-border priorities, including mobility, the ecological transition and employment.

Funding and financing mechanisms

Several European countries have established special funding mechanisms to support cross-border co-operation. For instance, since 2011, the Hungarian government has provided financial support from the central state budget for the operation of EGTCs that involve Hungarian government bodies (e.g. local governments) (Central European Service for Cross-Border Initiatives - Budapest, 2022[52]). Another example comes from Luxembourg, which, under a framework agreement with France on cross-border transport, has allocated over EUR 200 million to improve rail connectivity between the two countries. This includes funding for the construction and upgrading of different 'Park and Ride' facilities in France (Government of Luxembourg, 2023[53]).

Co-ordination mechanisms

In addition to EGTCs, special bodies have been set up to foster co-ordination among and across local, regional, and national government bodies in neighbouring countries. One example is the France-Luxembourg Inter-governmental Commission, established in 2010. Through its annual high-level meetings, the Commission strengthens cross-border co-operation in areas such as mobility, transport, healthcare, and security (Government of France, n.d.[54]). Another example comes from Portugal and Spain, which in 2023 established the Cross-border Co-operation Network (RedCot) (Ministry of Foreign Affairs, European Union and Co-operation of Spain, 2023[55]). The objective of this network, which includes 31 cross-border governance bodies of different types (e.g. EGTCs, Euroregions, and Eurocities), is to foster information exchange and promote good practices in areas such as healthcare, employment and infrastructure.

Finally, some countries have used the EGTC framework as a platform to strengthen existing mechanisms for cross-border co-operation. For example, in 2014, the Benelux countries (Belgium, Luxembourg, and the Netherlands) updated their regulatory framework to create Benelux Groupings of Territorial Co-operation (BGTCs) (Benelux Secretary General, 2014[56]). These bodies are based on the EGTC regulation but offer local actors more flexibility in establishing internal governing bodies.

Renewed efforts to address structural hindrances to cross-border development

Despite the above-mentioned efforts by the European Union and its Member States, concerns remain that structural barriers—such as regulatory and legal obstacles—continue to hamper the development potential of cross-border regions. For instance, EGTCs are legal entities involving government bodies from different countries and are therefore considered to be effective in facilitating cross-border co-operation; however, they lack powers to resolve regulatory obstacles in cross-border cases (European Commission, 2023[57]).

Such concerns led to calls for the creation of a European Cross-Border Mechanism (ECBM). The ECBM was designed to provide a voluntary legal framework allowing laws from one EU Member State to be applied in cross-border regions where national laws impede the creation of barriers to joint projects. The ECBM proposed two main measures to overcome legal obstacles hampering the growth of cross-border regions (European Parliamentary Research Service, 2023[10]):

• Self-Executing European Cross-Border Commitment: This measure would enable one Member State (the "committing" state) to adopt and enforce a law or regulation from a neighbouring Member State (the "transferring" state) within its own borders. This essentially means that the committing state could make an exception (or derogation) to its national law, applying the transferring state's law directly in the relevant cross-border area.

• European Cross-Border Statement: This approach would enable a formal legislative process within the committing Member State, allowing it to modify its national laws to accommodate and apply a neighbouring state's law.

The proposal developed by the European Commission was ultimately not endorsed by the European Council due to concerns over its nature and scope, including the effect on Member States’ territorial sovereignty and on the principle of subsidiarity. In 2023, an amended proposal was developed to take into account these concerns (Box 1.5). In October 2024, Member State EU ambassadors reached an agreement allowing the presidency of the European Commission to begin talks with the European Parliament on the proposal (European Council, 2024[58]).

Box 1.5. Proposed EU regulation on facilitating cross-border solutions

The proposed regulation intends to enhance cross-border interactions by addressing challenges in areas such as infrastructure development and cross-border public service delivery, focusing on land border regions. A key element is the voluntary establishment of cross-border co-ordination points within EU Member States. The co-ordination point should act as ‘one-stop shops’ for handling cross-border ‘files’ (e.g. description of specific regulatory challenges encountered in a cross-border region and their consequences). Public or private entities may initiate these files when they encounter cross-border obstacles.

Once a cross-border file has been submitted, the co-ordination point can either assess the file itself or pass it to the appropriate competent authority, depending on the Member State’s legal framework. Member States retain full discretion to decide how to overcome (e.g. administrative action, legal or regulatory amendment) the cross-border challenge encountered. The co-ordination point also reports back to the European Commission about the progress and outcome of cross-border files to ensure transparency and facilitate peer learning.

Source: Author’s elaboration, based on (Council of the European Union, 2024[59]).

Other measures are also being discussed. For instance, EU Member States do not consider the current financing and legal instruments available at the EU level to provide a comprehensive and effective response to the obstacles affecting cross-border regions. In response, in 2022 the European Parliament requested that 0.26% of the EU’s Cohesion Policy budget be earmarked exclusively for the development of border regions at the beginning of every new Programming Period, starting with the 2028-2034 period (Official Journal of the European Union, 2023[3]). It also requested this funding to be entrusted to EGTCs or comparable cross-border governance bodies.

Introducing the OECD Cross-Border Governance Framework to assess and reinforce co-operation

In response to the ongoing debate on how the EU Member States can further strengthen cross-border co-operation mechanisms to create more prosperous border regions, the European Commission and OECD implemented the “Building More Resilient Cross-border Regions” project in 2023 and 2024. The project’s overall objective was to help improve cross-border governance in the European Union through reinforced multi-level governance arrangements and the co-development of cross-border co-operation initiatives (Annex Box 1.A.1). As part of the project, the OECD assessed the governance arrangements supporting cross-border development in five pilot regions. It also developed analysis and tools that can help other cross-border regions establish or further strengthen their cross-border governance systems.

The lessons learned from these five pilot regions are also intended to provide insights and guidance to other EU cross-border regions interested in reinforcing multi-level governance arrangements that support cross-border co-operation. Furthermore, many insights may also prove valuable for cross-border regions outside the EU, offering guidance and good practices that may be adapted to address cross-border governance challenges in other international contexts.

The OECD Cross-Border Governance Framework (Figure 1.4), developed as part of this initiative, identifies the main aspects that policy makers should consider when establishing or reinforcing existing cross-border co-operation initiatives. It is structured around four complementary dimensions:

1. Structure: Establishing and reinforcing a cross-border governance architecture;

2. Strategy: Planning, implementing, monitoring, and evaluating cross-border co-operation initiatives;

3. Resources: Funding and financing cross-border bodies and actions; and

4. Advocacy: Promoting and advocating for cross-border development.

The Cross-border Governance Assessment Tool serves as a self-assessment checklist, offering a comprehensive list of over 140 ‘considerations’ relevant to establishing, operating, monitoring, and evaluating cross-border governance systems.

Figure 1.4. OECD Cross-border Governance Framework

Source: Author’s elaboration.

The ensuing four chapters examine the cross-border governance arrangements in the five pilot regions, using the framework’s four dimensions. The chapters highlight commonalities, differences, strengths, and challenges of the cross-border governance arrangements within these regions. Additionally, the chapters propose policy measures to be taken at the subnational, national, and EU levels to further unlock the potential of cross-border regions. This analysis and the recommendations presented herein may also offer insights that can inform cross-border governance improvements in other international contexts.

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Annex 1.A. Information about the “Building More Resilient Cross-border Regions” project

Annex Box 1.A.1. The “Building More Resilient Cross-border Regions” project

As part of the EU-funded “Building More Resilient Cross-border Regions” project, the OECD developed a Cross-border Governance Blueprint for cross-border co-operation bodies in five pilot regions. These pilot regions were selected by the European Commission’s DG REGIO after a call for proposals and are located in the following countries:

• Belgium and France. Partner: Eurometropole Lille-Kortrijk-Tournai;

• France and Spain. Partner: EGTC Cerdanya Hospital;

• Lithuania and Poland. Partner: European Grouping of Territorial Co-operation (EGTC) Nemunas-Niemen;

• Luxembourg and France. Partners: EGTC Alzette Belval, Pôle Métropolitain Frontalier, PRO-SUD;

• Portugal and Spain. Partner: EGTC Rio Minho.

The Blueprints consist of two parts: a Cross-border Governance Assessment and a corresponding Action Plan. The Assessment offers the above-mentioned cross-border governance bodies, and their members, an analysis of the governance arrangements supporting cross-border development in their regions, identify their strengths and challenges. Building on the Assessment, the subsequent Action Plan proposes concrete measures that could be taken by the governance bodies, and their partners, in the short and medium terms to address the most urgent governance challenges.

The OECD also developed a Cross-border Governance Framework and Assessment Tool and organised different thematic peer-to-peer learning events to generate dialogue among experts and practitioners on topics such as cross-border strategic planning, funding and financing, and promotion and advocacy.

Source: Author’s elaboration.

Notes

← 1.  While this report primarily focuses on land borders, the concepts discussed are generally also applicable to maritime borders.

← 2.  When discussing trade, this report approaches the topic not from the perspective of tariffs, but through the lens of trade facilitation.

← 3.  Projects of Common Interest (PCIs) are key cross-border infrastructure projects that link the energy systems of EU countries, particularly to help achieve EU climate objectives in accordance with the Paris Agreement (European Investment Bank, 2023[26]).

← 4.  Except, in some cases, in the autonomous regions of the Azores and Madeira.