Pointing to a striking difference in economic output between the capital region and others, the Estonian Government acknowledges regional inequality as a significant national challenge, and the need for a new approach to promote balanced growth and improve well-being across the territory. As a step in this direction, Estonia has introduced two pilot regional councils – one for South Estonia and one for Central Estonia – to identify and capitalise on the development potential of each region. These pilots also aim to strengthen the role of subnational governments in policy design and implementation, helping to ensure that regional perspectives are better reflected in national sectoral policies. Produced at the request of the Estonian Government and its Ministry of Finance, this report contributes to the government’s efforts by reviewing Estonia’s approach to improving multi-level governance for regional development, including through the pilot regional councils. This report is part of the European Commission-funded project Strengthening Regional Specialisation and Competitiveness in Estonia.
The report brings together findings from a number of activities undertaken between 2023 and 2025. First, futures and foresight workshops brought together a broad range of stakeholders from each of the pilot regions to consider what potential futures their region might face. These were followed by a set of vision‑setting workshops to guide stakeholders through the process of defining desired futures. Action plan workshops were also leveraged to assist the two regional councils through a process of developing concrete roadmaps for achieving their regions’ ambitions, which could, in turn, feed into regional development agreements. A capacity-building workshop for the councils focused on contracts and agreements among levels of government, bringing together experts from the OECD and the Icelandic Ministry of Infrastructure sharing Iceland’s experiences. Finally, a workshop for vice-chancellors and senior officials from across the Estonian Government provided a platform to explore how better cross-ministry co‑ordination can produce stronger outcomes for regions and sectors.
The experience of Estonia articulated by stakeholders in those fora and in this report echoes the messages of the OECD Recommendation on Regional Development Policy, including the importance of leveraging each region’s specific competitive and absolute advantages, and strengthening multi-level governance to promote effective co-ordination among levels of government and across parts of government.
This report was undertaken as part of the programme of work of the OECD’s Regional Development Policy Committee (RDPC), a leading international forum in the fields of regional, urban and rural development policy and multi-level governance, and delivered by the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). This report was submitted to the RDPC for comment on 3 June 2025 under cote CFE/RDPC(2025)8.