Decentralised development co-operation (DDC) is development co-operation led by subnational governments, encompassing both financial and non-financial support. Financial contributions include in-donor spending and cross-border transfers that are eligible to count as official development assistance (ODA).1 Non-financial components include in-kind activities such as peer-to-peer learning, capacity building and knowledge exchange (OECD, 2023[1]). Over the past three decades, DDC has evolved from a North-South and donor-recipient approach to a partnership approach that increasingly fosters peer-to-peer learning and mutual benefits (Figure 1.1) and takes different forms (Box 1.1). As such, DDC reflects a form of international public action through which subnational governments act as political actors, grounded in democratic mandates, local and regional policy agendas as part of a multi-level governance system of development co‑operation and institutional capacity to engage as equal partners in international co-operation. The value of this role is underscored by the current context of declining ODA, which fell by 23.1% in 20252 (the largest annual contraction on record) (OECD, 2026[2]), placing renewed emphasis on DDC and the role that subnational actors can play in complementing constrained national development co-operation budgets and sustaining engagement.
The Impact of Decentralised Development Co‑operation
Sources: OECD (2023[3]), City-to-City Partnerships to Localise the Sustainable Development Goals, https://doi.org/10.1787/d2fe7530-en, OECD (2018[4]), Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda, https://doi.org/10.1787/9789264302914-en.
There is a variety of different approaches that DDC can take depending on specific local and national contexts as highlighted by the OECD (2018[4]; 2023[3]). The most common types are:
City/region-to-city/region partnerships: Subnational governments engage directly with their peers in partner countries to develop co-operative actions of mutual benefit.
Territorial partnerships: DDC is implemented in collaboration with multiple territorial actors (e.g. municipalities, non-governmental organisations [NGOs], universities), often forming direct partnerships with subnational governments in partner countries.
Local and regional government (LRG) to NGOs: Subnational governments work through NGOs or other intermediaries to deliver activities on the ground.
LRG to national government: DDC is channelled directly to a partner country’s national institutions.
Source: OECD (2023[1]), “Decentralised development co-operation: A global policy toolkit and guidance for practitioners”, https://doi.org/10.1787/3cb22851-en,
DDC represents a place-based approach to development co‑operation. DDC’s comparative advantage lies in channelling resources and co‑operation at the subnational level, thereby bringing development co‑operation closer to the needs and realities of local communities. This place-based orientation is central to the United Nations (UN) Sustainable Development Goal (SDG) localisation agenda, which calls for local solutions to global challenges and requires subnational governments to play an active role in delivering on the UN 2030 Agenda (OECD, 2023[1]). Subnational governments are directly accountable to citizens, who have greater opportunities to exert influence through elections, public consultations and direct engagement with local officials compared to the national level. In many German municipalities for example, civic engagement and an active civil society, often animated by local migrant communities, have been among the primary drivers behind the establishment of city partnerships and development activities in the Global South (OECD, 2023[5]). This proximity to citizens also presents a comparative advantage in identifying local spending needs and preferences. More broadly, DDC is often grounded in a values-based foundation rooted in democracy, human rights and a culture of peace. A further strength of DDC is that subnational governments and their citizens engage in development co‑operation as actors with a direct stake in addressing global challenges that affect their own communities. In this sense, citizens can view DDC as a mechanism for strengthening transparency and exercising direct oversight over development outcomes (OECD, 2019[6]).
Peer-to-peer learning and collaboration to generate mutual benefits represent defining features of DDC. Knowledge exchange and capacity building are frequently the primary motivations driving subnational governments in OECD Development Assistance Committee (DAC) countries to engage in DDC. Given that subnational governments across different countries face many of the same challenges in planning, delivering and implementing the SDGs for example, peer-to-peer modalities offer a particularly effective mechanism for drawing on each other’s experience in ways that generate mutual benefits and positive returns for all parties involved (OECD, 2023[1]). These benefits also extend to the delivery of technical services and expertise, where DDC can provide another value added. Many of the thematic areas of DDC activities such as water and waste management, climate adaptation, urban mobility, education or housing are part of LRG’s core competencies and where they have specific technical expertise, such as basic service delivery (OECD, 2023[1]). At the same time, DDC can help strengthen mutually beneficial partnerships that take into account reciprocal political and economic interests. Placing mutual benefits at the centre of DDC and making the effects that partnerships generate on both sides visible is central to building a new narrative for decentralised development co‑operation that moves beyond the traditional donor-recipient framing toward a genuinely peer-to-peer model in which value, knowledge and experience flow in both directions.
DDC is increasingly recognised as a driver of strengthened governance and progress towards achieving the SDGs at the local level. Since the adoption of the 2030 Agenda in 2015, both encouraging and promoting effective partnerships for the goals (SDG 17) and ODA, including when led by subnational governments, have been identified as key enablers of SDG implementation (OECD, 2023[1]). Beyond SDG 17 on partnerships, DDC projects in 2024 targeted sectors linked to several inter-related SDGs, notably SDG 16 on peace, justice and strong institutions, SDG 11 on sustainable cities and communities, SDG 3 on health and SDG 4 on quality education. In recent years, a rising share of DDC flows was allocated to “government, civil society and peace”, which reached 19% of total cross-border DDC in 2024, up from 11% in 2013, thereby showing a growing focus on strengthening institutional capacity and local governance.
However, despite growing DDC efforts aimed at driving progress in local governance and achieving the SDGs, evidence of the actual impact remains so far limited. While DDC is increasingly acknowledged as a promising modality for cities and regions to advance sustainable development, systematic assessment of its effectiveness is still largely absent, in part due to the lack of consistent, granular data. More evidence, including both quantitative and qualitative, on the specific benefits of DDC for cities and regions in DAC members countries, along with better estimates of non-financial contributions, is also needed to capture the full value of DDC. While assessments of DDC have typically focused on its expected positive impacts for ODA‑recipient countries, its potential benefits for cities and regions in DAC countries, including strengthened local governance capacity, broader multi-stakeholder engagement and enhanced policy innovation, remain insufficiently documented. At the same time, many DDC efforts rely on non-financial inputs such as peer-to-peer exchange, knowledge transfer and technical assistance, which are often under-reported or not systematically measured. Capturing these aspects is essential to provide a more complete picture of DDC and to support better-informed policy and practice.
Bridging this evidence gap is essential to better understand what works and under what conditions, and to inform more effective and accountable DDC practice. The growing emphasis on transparency, accountability and results-based development co-operation, reflected in global policy discussions, such as the Group of Twenty (G20) Rome High-Level Principles on City-to-City Partnerships for the SDGs, has further highlighted the need for robust impact measurement (OECD, 2023[3]). In response, the OECD and the European Commission developed a monitoring and evaluation (M&E) framework for DDC, which includes a self-assessment tool aligned with the G20 principles and a set of SDG indicators to track outcomes. This framework was a first step towards monitoring and assessing city-to-city partnerships, in particular for the 57 partnerships supported under the European Commission’s Directorate-General for International Partnerships (DG INTPA) Partnerships for Sustainable Cities programme (OECD, 2023[3]). This report builds on that foundation and broader OECD analysis on DDC conducted over the past decade (see Box 1.2 for more information). In particular, it aims to advance the evidence base on DDC impact by providing an extensive assessment of how DDC contributes to local governance improvements and SDG outcomes. To do so, the analysis of DDC impact carried out in this report draws on 3 main sources of data: the OECD Creditor Reporting System (CRS) database (2025[7]), 2 OECD surveys on the impact of DDC (hereafter “DDC impact surveys”) (Box 1.3) and 16 case studies of cities and regions from DAC countries engaged in DDC (Box 1.4).
The OECD has been analysing DDC for more than a decade, building a progressive body of evidence and guidance that has shaped the understanding and practice of DDC across OECD and partner countries.
The first report Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda (OECD, 2018[4]) established the foundational framework by mapping DDC financial flows, documenting the shift from a donor-recipient model towards a territorial, partnership-based approach and identifying peer-to-peer learning, bottom-up local ownership and technical expertise delivery as DDC’s core value added. Building on this, in the following year, the paper “Decentralised Development Co-operation: Unlocking the Potential of Cities and Regions” (OECD, 2019[6]) deepened the analysis of how national governments and development agencies can better harness DDC’s comparative advantages and strengthen the enabling environment for subnational actors.
More recent work published in 2023 translated this analytical foundation into operational tools and country-specific guidance: the paper “Decentralised development co-operation: A global policy toolkit and guidance for practitioners” (OECD, 2023[1]) compiled nearly 30 best practices into structured recommendations across policies, governance, financing and monitoring; Reshaping Decentralised Development Co-operation in Germany (OECD, 2023[5]) provided the first in-depth national policy review of DDC; and City-to-City Partnerships to Localise the Sustainable Development Goals (OECD, 2023[3]) developed a systematic M&E framework for city-to-city partnerships. Published in 2025, “Harnessing city-to-city partnerships to finance urban development” (OECD, 2025[8]) examined how city-to-city partnerships can help subnational governments mobilise finance and build the local enabling conditions for sustainable urban investment.
Sources: OECD (2018[4]), Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda, https://doi.org/10.1787/9789264302914-en; OECD (2019[6]), “Decentralised development co-operation: Unlocking the potential of cities and regions”, https://doi.org/10.1787/e9703003-en; OECD (2023[1]), “Decentralised development co-operation: A global policy toolkit and guidance for practitioners”, https://doi.org/10.1787/3cb22851-en; OECD (2023[5]), Reshaping Decentralised Development Co-operation in Germany, https://doi.org/10.1787/afedb776-en; OECD (2023[3]), City-to-City Partnerships to Localise the Sustainable Development Goals, https://doi.org/10.1787/d2fe7530-en; OECD (2025[8]), “Harnessing city-to-city partnerships to finance urban development”, https://doi.org/10.1787/d782d57d-en.
The report is structured around six chapters, covering the methodology and data sources, trends in DDC ODA flows, local and regional perspectives on DDC practices and impacts, an assessment of DDC’s impacts on governance and SDG outcomes, the role of national governments and policy recommendations. Chapter 1 explains the background and methodology of the overall project. Chapter 2 provides an overview of the evolution of DDC ODA flows over the past decade across 15 DAC member countries with available data, including their allocation across sectors, macro regions, delivery channels and the SDGs. Chapter 3 presents local and regional perspectives on DDC deriving from the DDC impact surveys and analysis of 16 case studies. It also examines modalities and characteristics of DDC, M&E practices, and perceived impacts, including through a matched-partnership analysis linking responses from both sides of DDC partnerships, with particular attention to the non‑financial component of DDC. Chapter 4 outlines the approach developed to assess the relationships between DDC inputs and local governance and SDG outcomes. This approach includes an analytical framework and evidence from qualitative and quantitative sources, as well as artificial intelligence-powered efforts to localise DDC ODA flows in the CRS database. Chapter 5 discusses the role of national governments in DDC, with a focus on the framework conditions and incentives that enable stronger DDC impact. Finally, Chapter 6 presents the policy recommendations to enhance the impact of DDC on local governance and SDG outcomes, and proposes accompanying action plans to implement the recommendations.
To assess the impact of DDC on local governance and SDG outcomes, this project applies an approach that combines quantitative and qualitative evidence. Given the diversity of DDC initiatives, which vary widely in scope, scale, objectives and sectors, among others, a single methodological lens is insufficient to capture their full impacts. DDC projects range from short-term technical assistance, and non‑financial peer-to-peer learning, to multi-year infrastructure investments, and their outcomes are shaped by diverse local contexts, institutional capacities and framework conditions. Quantitative data provide the basis for identifying patterns and associations across a broad set of cases, while qualitative insights help explain the nuanced mechanisms and pathways through which DDC influences governance practices and development results in specific contexts.
The approach leverages diverse data sources to capture both DDC activities, and local governance and SDG outcomes. Figure 1.2 illustrates how these sources are brought together under a harmonised framework. On the input side, the analysis relies primarily on ODA flows data from the OECD CRS (OECD, 2025[7]), complemented by tailored data requests to countries (ECOPER, 2024[9]). On the outcome side, the OECD localised framework for SDGs (OECD, 2025[10]) provides a basis for cities and regions in DAC countries, which was complemented with other global sources and local reports such as Voluntary Local Reviews (VLRs) to capture cities and regions in non-OECD countries. In addition, 2 surveys were carried out (Box 1.3) and 16 case studies were analysed (Box 1.4) to collect key information on non-financial components of DDC, capture perceived impacts on governance and SDG outcomes in both OECD and partner cities and regions, and provide insights into the conditions that enable DDC effectiveness. Finally, a series of expert workshops and stakeholder consultations enabled feedback to refine the methodological approach and findings, taking into account the diverse views of engaged stakeholders. All these data sources and insights are combined through quantitative and qualitative analyses, including descriptive statistics, narratives from case studies, and correlation and regression methods, to deliver a more comprehensive assessment of DDC impacts.
Note: EQI: European Quality of Government Index; GHS-UCDB: Global Human Settlement Urban Centre Database; SHDI: Subnational Human Development Index.
As part of this project, the OECD launched two dedicated surveys to capture the perspectives of both local and regional governments (LRGs) in DAC countries and their partner LRGs in ODA-eligible countries engaged in DDC (DDC impact surveys, for simplicity).
The two surveys, which combine multiple-choice, rating and open-ended questions, follows a two-step approach to ensure that insights are gathered from both sides of the partnership:
Survey for cities and regions in DAC countries: This survey collected information to analyse how DDC shapes local governance and drives progress on achieving the SDGs in OECD contexts. LRGs in OECD countries that participated in the survey were also asked to nominate up to three of their partner cities or regions in ODA-eligible countries, making it possible to collect perceptions on DDC impact from both ends of the partnership. The survey was launched in mid-June 2025 and ran until 2 January 2026. More than 100 respondents from different cities and regions in OECD regions submitted responses. The questionnaire is structured around five sections: i) the DDC approach of the city or region; ii) the non-financial components of DDC activities; iii) framework conditions and incentives, iv) M&E practices; and v) the impact of DDC on local governance and SDG outcomes.
Survey for cities and region in ODA-eligible countries: Targeted at cities and regions in ODA-eligible countries that partner with OECD cities and regions, this survey captures how DDC is experienced on the partner side. It was launched at the beginning of September 2025 and ran until 2 January 2026. It includes five sections: i) the DDC partnership with an OECD city or region; ii) the non-financial components of partnerships; iii) framework conditions and incentives in the country; iv) M&E of the partnership; and v) the impact of DDC on local governance and SDG outcomes.
By gathering information and linking perspectives on both ends of the partnerships, the surveys build a comprehensive picture of how DDC affects local governance systems and contributes to sustainable development. This dual perspective provides a solid and balanced evidence base and allows for the identification of common challenges, enabling conditions and impacts across different contexts.
Sources: OECD (2025[11]), “OECD Surveys on the Impact of Decentralised Development Co-operation on Local Governance and Sustainable Development Goal Outcomes”, Unpublished, OECD, Paris; OECD (2025[12]), “ODA recipients: countries, territories, and international organisations”, https://www.oecd.org/en/topics/sub-issues/oda-eligibility-and-conditions/dac-list-of-oda-recipients.html.
The OECD has gathered qualitative evidence through a series of case studies designed to capture the diversity of DDC arrangements. A total of 16 case studies cover a mix of large and small subnational governments, reflecting a diversity of territorial, thematic and institutional characteristics. Out of the 16 cases, 8 focus on German municipalities, counties and federal states (German case studies), providing a country-specific perspective building on a previous OECD report on the German DDC model (OECD, 2023[5]) and reflecting its three‑tier approach to DDC across the national level, federal states and municipalities, and 8 cover cities and regions in other OECD countries (international case studies), offering a broader international perspective on DDC practices and related impacts.
Table 1.1 presents the final list of case studies. In Germany, the sample includes two small municipalities, two mid-sized to large municipalities, two counties and two federal states. The international sample includes two small municipalities, two mid-sized municipalities, two large municipalities and two regions.
The case studies analyse combined desk research and semi-structured interviews with key stakeholders. Interviews were organised around four core themes:
Partnership characteristics, including the approach to DDC, objectives, thematic and geographic focus and level of political support
Impact on local governance and SDG outcomes, in cities and regions from DAC and partner countries, including through any examples of improved services, citizen engagement or institutional capacity.
M&E, covering the existence and scope of frameworks to track results and impacts
Challenges and solutions, identifying obstacles that limit effectiveness and the support needed from national and international actors.
These case studies complement the quantitative analysis by providing insights into the enabling conditions, practices and outcomes of DDC that cannot be captured through ODA flow data. In addition, insights from these case studies will be used to inform the analytical framework and validate the quantitative findings.
References
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[11] OECD (2025), “OECD Surveys on the Impact of Decentralised Development Co-operation on Local Governance and Sustainable Development Goal Outcomes”, Unpublished, OECD, Paris.
[13] OECD (2024), “Official development assistance (ODA): Frequently asked questions”, Data explainer, OECD, Paris, https://www.oecd.org/en/data/insights/data-explainers/2024/07/frequently-asked-questions-on-official-development-assistance-oda.html (accessed on 26 June 2026).
[3] OECD (2023), City-to-City Partnerships to Localise the Sustainable Development Goals, OECD Urban Studies, OECD Publishing, Paris, https://doi.org/10.1787/d2fe7530-en.
[1] OECD (2023), “Decentralised development co-operation: A global policy toolkit and guidance for practitioners”, OECD Regional Development Papers, No. 46, OECD Publishing, Paris, https://doi.org/10.1787/3cb22851-en.
[5] OECD (2023), Reshaping Decentralised Development Co-operation in Germany, OECD Urban Studies, OECD Publishing, Paris, https://doi.org/10.1787/afedb776-en.
[6] OECD (2019), “Decentralised development co-operation: Unlocking the potential of cities and regions”, OECD Development Policy Papers, No. 22, OECD Publishing, Paris, https://doi.org/10.1787/e9703003-en.
[4] OECD (2018), Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda, OECD Publishing, Paris, https://doi.org/10.1787/9789264302914-en.
← 1. ODA is the term used by OECD Development Assistance Committee (DAC) members to refer to what most people would call aid. ODA includes activities carried out with the economic development and welfare of developing countries as their main objective. It is a measure of donor effort, including grants and grant equivalents of concessional loans (OECD, 2024[13]).
← 2. Preliminary data.