How to do better with less: Working across levels of government to invest more effectively

This chapter explores the importance of public investment for economic growth, as well as the factors that appear to influence that relationship. It shows why the shared nature of public investment gives sub-national governments an important role, tapping into their comparative advantage of understanding the specific needs of particular places. It also looks at the way in which the economic crisis has compromised sub-national governments’ ability to carry out this role. Public investment has become an adjustment variable as governments seek to sustain other critical expenditures in tight fiscal circumstances. This points to the need for governments to do better with less when managing limited investment resources. In many instances, this will require improvements in the quality of governance, an issue explored in the penultimate section of this chapter. Finally, the chapter turns to the two key governance challenges that will constitute the focus of , namely co-ordination and sub-national capacity, providing evidence from a recent OECD survey that identifies critical challenges that exist with respect to these two aspects of governance.