7. Multi-level governance and co-ordination mechanisms to support regional attractiveness
Making a region attractive depends on many stakeholders from across levels of government, policy sectors and different types of organisations (business, academia, civil society, etc.). In this multi-level governance context, regional authorities are key actors, to the extent they have the right skills, resources and capacities to design and implement long-term attractiveness strategies, engage in productive dialogue with non-governmental partners and interact effectively with higher and lower levels of government. A common challenge is to transform attractiveness into a shared project, thereby mitigating wasteful competition among territories and reconciling competing development objectives while ensuring equitable public investment. This chapter presents a roadmap designed to help public officials address governance gaps in pursuit of regional attractiveness.
Effective co-ordination is key to bridge multi-level governance gaps
Building effective regional attractiveness ecosystems depends on the co-ordination of many actors from different policy sectors, different levels of government and different types of organisations (business, academia, civil society, etc.).
In this context, for a territory to be attractive, several multi-level governance gaps that may arise between relevant actors – e.g. information, funding, scale, capacity, participation, policy, transparency and, above all, objective setting – need to be bridged.
Effective multi-level governance of regional attractiveness policies is also necessary to avoid zero-sum or even pure waste competition between places within the same country and to deliver quality balanced public investment, especially in infrastructure.
Regional authorities have a critical role to play in attractiveness policy
Regional authorities are well placed to become effective hubs for attractiveness policy, as:
They can exploit potential synergies and mitigate competition and negative externalities between different parts of their territory.
Their various and often increasing number of competencies allow them to bring together relevant stakeholders in cross-sectoral working teams that can break down sectoral silos, identify attractiveness synergies and trade-offs, agree on strategic orientations and develop effective attractiveness strategies for the benefit of all.
They can facilitate the involvement of sub-regional partners from public, private and civil society organisations in regional attractiveness policies.
However, to successfully carry out their task, regional authorities need to have the appropriate skills, resources and capacities, to collect and analyse data, develop strategic foresight, foster and maintain regular contact and trust relationships with businesses, associations and civil society, and design and implement strategies that coherently encompass the economic, social and environmental dimensions.
Tools are available to help regions overcome multi-level governance and implementation challenges
The regional attractiveness compasses proposed in this report are tools that support dialogue among stakeholders at all levels to identify policy priorities, clarify needed trade-offs between different regional attractiveness levers (e.g. in relation to land use) to address potential conflicting objectives and monitor, adapt and evaluate public action.
Regions can mobilise a variety of mechanisms (e.g. contracts) to foster multi-level co-ordination between partners across levels of government (national, regional and local).
The OECD proposes a Roadmap for Effective Multi-level Governance of Attractiveness Policies to help policy makers identify challenges that might affect the ability of attractiveness policies’ stakeholders to co-ordinate among themselves and to highlight ways to address these challenges.
Regional attractiveness is a multi-dimensional phenomenon that depends on a high number of actors. The OECD’s methodology considers more than 50 indicators to develop regional attractiveness profiles, covering 14 dimensions of attractiveness, across 6 domains (economic attraction, connectedness, visitor appeal, natural environment, resident well-being, land use and housing). As such, attractiveness policy is a “policy of policies”. The cross-cutting nature of the regional attractiveness paradigm means effective design and implementation of strategies to enhance it will have to bring together a multitude of actors, from different sectors (infrastructure, education, housing, industry, etc.), from different levels of government (local, regional, national) and different types of organisations (private, public, academia, civil society, etc.).
Multi-level governance is the way that responsibility is spread vertically among different tiers of government and horizontally across multiple administrations and non-governmental actors. It characterises actors’ relationships of mutual dependence and thus calls for and requires effective co-ordination. Without co-ordination at the right level, attractiveness policies risk generating negative externalities for other territories, zero-sum competition between territories, missing out on potential economies of scale and scope, or increasing territorial disparities. This can make regional attractiveness unlikely to be inclusive and sustainable overall. In this work stream, co-ordination concerns the management of cross-cutting issues that go beyond the frontiers of traditional policy sectors and administrative organisations and require coherent policy responses across scales. This surpasses the basic exchange of information among autonomous organisations. Rather, it involves the use of co-ordination mechanisms. These are initiatives governments introduce to facilitate joint, participative decision making and the pooling of resources to achieve collective policy goals that encompass – and exceed – the priorities of individual actors or agencies (McNamara, 2012[1]).
Regardless of the institutional context, regions are typically in a privileged position to design and implement attractiveness and retention policies, including by co-ordinating the relevant stakeholders. First, regions are at the intersection of national and local levels of government and close to businesses and civil society. In addition, key attractiveness policies, such as economic development and infrastructure, depend on competencies which are largely and increasingly allocated to their level of government (OECD/UCLG, 2022[2]). With the right capacities and institutional quality, they can play the role of a “hub” in the complex network of multi-level and multi-sector co-ordination necessary to design and implement effective attractiveness policies. Regional attractiveness policies do not only require synchronous co-ordination between different actors. They also require adjustment over time, based on the impacts of evolving megatrends such as the digital transition, climate and demographic changes and in some cases external shocks. They also require monitoring and evaluation, through economic, social and environmental indicators that measure their impact on attractiveness but also on inclusive and resilient regional development at large.
According to subsidiarity principles, a degree of independence should be guaranteed to a lower authority when a policy decision only impacts its local constituencies. Therefore, attractiveness policies cannot only depend on municipal decisions. First, because the strong attractiveness of one locality can lead to negative externalities such as congestion, consumption of natural resources or pollution, which risk negatively affecting neighbouring territories. Second, the strong attractiveness of one territory can also open opportunities to enhance the attractiveness of neighbouring territories by providing access to a dynamic local job market, good quality public services and infrastructure, etc. Therefore overall, local authorities should not compete but rather take a broader regional perspective and work together to avoid negatively impacting each other and better promote their region and the complementarity of their own assets. However, exploiting potential synergies between different parts of the same region is rarely a spontaneous process and requires appropriate incentives for co-operation to take place at the relevant scale; abundant literature can be quoted about inter-municipal co-operation or urban-rural linkages (OECD, 2023[3]; 2023[4]; forthcoming[5]). With regard to regional attractiveness, it is important to emphasise the key role of metropolises as engines for regional attractiveness and the need to identify appropriate ways to ensure that their success can benefit surrounding areas. The more attractive these large urban areas are to talent and visitors, the less affordable housing often becomes for inhabitants and newcomers. The scarcity of (affordable) land in metropolitan areas is also an obstacle to investment attraction in manufacturing. Developing partnerships with less dense peripheral areas – contributing to improving their connectedness with transport and digital infrastructure and containing any harmful impacts on the environment – can create mutual benefits and enhance the attractiveness of the region as a whole.
Regional authorities can play an active role in enabling regional synergies, as observed in this OECD project on rethinking regional attractiveness. In many Spanish regions, the regional government has taken steps to strengthen horizontal co-ordination through the creation of a second level of local administration (inter-municipal bodies called comarcas). In Cantabria, the reform provides for the creation of a total of ten comarcas, associating several municipalities with the aim of providing adequate and cost-effective public services in the region (OECD, 2023[6]). Some regional governments work to address disparities between large urban areas and territories at their periphery, for example the metropolitan area of Lisbon and the Tagus Valley in Portugal (OECD, 2023[7]), the Eastern and Midland Region in Ireland, which includes the Dublin metropolitan area, as well as the Mid-East and Midland Regions – parts of which form part of the Dublin functional urban area (FUA). While the Mid-East forms part of what is deemed the “core region”, benefitting from spillovers from Dublin (of investment, talent and visitors), the Midland Region is not benefitting at all from the diffusion of economic activity from Dublin and thus comes as one of the regions in Europe with the highest development trap intensity – which is surprising in what has been by some margin the most dynamic country in the European Union (Diemer et al., 2022[8]).
The Regional Spatial and Economic Strategy (RSES), co-ordinated by the Regional Assembly, outlines how collaboration among regional and local authorities, and across the border with Northern Ireland, can transform the Midland Region into a “gateway”, well connected to the rest of Ireland’s regions and Northern Ireland via the Dublin-Belfast Corridor. The co-ordinating role regions can play is also well exemplified in relation to attracting visitors, who, being mobile, can benefit several municipalities within a region. Such an approach is, for instance, adopted by the region of Algarve in Portugal, which uses the popularity of the city of Faro as a destination to promote its hinterland to visitors (OECD, 2023[9]). Similarly, the Valencian Community region in Spain intends to complement and attenuate the attractiveness of its “sol y playa” (sun and beach) assets with a variety of cultural and environmental amenities in currently lesser-known areas of the region (OECD, 2023[10]). Moreover, many regional government partners to this project also actively help harmonise infrastructure and services across local borders and prevent fragmentation of investments and projects, such as those linked to European Union funds.
The subsidiarity argument also justifies allocating attractiveness competencies to the regional level in the context of active co-operation with the central/federal level. While the macro drivers that significantly attract investors, talent and visitors are not region-specific (such as security for private investment, national labour and environmental regulations, customs; large infrastructure networks, etc.), regional competencies relevant to the development of attractiveness continue to increase. Indeed, about two-thirds of countries globally have increased the power of regions over the last 50 years (OECD, 2022[11]), in many cases including responsibility for the delivery of core services and infrastructure, many of which play a central role in regional attractiveness such as education, social protection, health, economic development or the environment (OECD/UCLG, 2022[2]). In Sweden for instance, since 2019, the 21 regions with elected regional councils, traditionally responsible for health and social services, have been devolved additional responsibilities for regional development and thus attractiveness. Through Ireland’s Local Government Act of 2014, the three Irish Regional Assemblies were established to deliver a regional and spatial economic strategy that outlines a core vision and long-term strategy for the territory, which cover a wide range of attractiveness objectives.
Regional authorities are highly involved in the processes of building attractive regions and are at the right scale to bring together relevant stakeholders in cross-cutting working teams that can break down sectoral and policy silos, agree on strategic directions and draft effective attractiveness strategies for the benefit of all. Regions are thus generally in charge of proposing regional strategies for inclusive and sustainable development (resulting from consultations of local and non-governmental partners) that serve as a prioritisation tool for co-funded investment (e.g. with national government and/or supported by European funds). The regional commitment is also a powerful guarantee of continuity in the action in favour of attractiveness and inclusive development – as exemplified by the case of Wales in the United Kingdom (Box 7.1).
As part of its economic action plan to boost productivity and tackle geographical disparities, the Welsh government (United Kingdom) has decided to devolve more decision-making responsibility to its three regions, including with regard to investment. The action plan entitled Prosperity for All commits to an inclusive and regionally focused model of economic development, building upon the distinctive opportunities and challenges of each region and enhancing existing cross-government work with the regions. This shift towards a regional model of economic development illustrates that regions are well placed to play a role in co-ordinating development and attractiveness policies.
To address regional disparities and ensure wealth and opportunity spread to all Welsh regions, the government aims to develop a robust and clear governance model and appoint three Chief Regional Officers in North Wales, Mid and South West Wales and South East Wales, who will represent the regions in government, feeding back local intelligence. They must provide leadership, co-ordination, planning and alignment within the region, including by bringing partners together to develop and deliver regional business plans that identify regional priorities and opportunities.
Source: OECD (2020[12]), The Future of Regional Development and Public Investment in Wales, United Kingdom, https://doi.org/10.1787/e6f5201d-en; Welsh Government (2019[13]), Prosperity for All: Economic Action Plan; OECD (2016[14]), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, https://doi.org/10.1787/9789264260245-en.
Regional-level co-ordination facilitates the participation of subnational partners from public, private and civil society organisations (CSOs) in regional attractiveness policies. Because of their competencies and proximity to citizens, regions – more so than national actors – can build relations with those non-governmental actors that provide services essential to attracting and retaining mobile targets (real estate operators, language schools, banks, CSOs, etc.). For example, under the smart specialisation strategy (S3), the regional authorities of Centro, Portugal, encourage the creation of collaborative laboratories at the local level and a regional mobilisation programme to promote interaction between business associations and higher education institutions (OECD, 2023[15]). In the Swedish county of Norrbotten, under the North Sweden Green Deal co-ordinated at the regional level, the local University (Luleå University of Technology), various municipalities and the local destination management organisation (Swedish Lapland Visitors Board) work together to enhance the attractiveness of the region (OECD, 2023[16]). In France, the Industrial Territories policy (Territoires d’industrie) aims to strengthen the inclusive and sustainable reindustrialisation of specific territories by mobilising national, regional and local stakeholders including from the private sector. Its governance is based on a local, elected official-industry pairing, with steering by the regions together with active support from the state (OECD, 2023[17]). The regional level presents opportunities for the development of dynamic debates, trust-building and the evolution of reciprocal working relationships between centres and peripheries and among public and private stakeholders. If policy responses are to offer long-term regional resilience, they must also take into account the evolving preferences of target groups. Regions also need the tools and capacity to do so (surveys, public consultations, polls, etc.).
Regional-level co-ordination is important to develop digital platforms and physical one-stop-shops that offer information and guidance to talent and investors at all stages of the arrival process. Finland’s national Talent Boost strategy, for instance, largely relies on regions becoming official “talent hubs”. This co-operation service model is based on regions co-ordinating various sectors and actors including municipalities, employers, non-profit associations and universities, in order to create simple paths to help international talent settle and integrate into Finnish life. Onboarding websites and one-stop-shops offer a soft landing for companies and individuals who can quickly focus on non-administrative issues and help promote the territories they cover in an integrated and cohesive manner. Moreover, the Strategic Development Plan of the Special Economic Zone in Campania, Italy, has simplified administrative measures by introducing a digital one-stop-shop, facilitating access to information for prospective investors and obliging all stakeholders to co-ordinate in the back-office building of this tool (OECD, 2023[18]). Such platforms have become an important part of successful attraction and retention strategies and benefit from a regional approach to effectively cover all sectors. Many regions have thus become points of contact for prospective companies, talent and visitors.
Regional authorities are at the right scale to find the policy synergies and trade-offs that attractive policies entail. As the OECD attractiveness compass clearly shows, attractiveness policy is about enhancing synergies and addressing difficult trade-offs between different attractiveness levers and potentially contradictory individual objectives and targets. Across regions participating in the OECD Rethinking Regional Attractiveness project, such trade-offs have for instance been identified in relation to land use: between the expansion of industries and that of touristic activities, as well as between built land for industrial investment, housing and biodiversity preservation. Facilitating the consensual approach towards attractiveness priorities and strategies benefits from shared reference, such as the one proposed in the OECD regional attractiveness compass methodology. For the different stakeholders to converge in adopting shared objectives and strategies for the attractiveness of their region, it is also necessary to rely on dialogue and trust between the actors. Different types of mechanisms set up within the regions and with their partners can help, as described in this chapter. For instance, in a tripartite agreement, the regional government of the Balearic Islands (the Govern) together with the Balearic Islands Port Authority (which is a public body of Puertos del Estado, a public business entity dependent on the Spanish Ministry of Transport, Mobility and Urban Agenda and which manages the five ports of general interest of the Balearic Islands) and the Cruise Lines International Association (CLIA) have signed an agreement with the aim of regulating the arrival of tourism cruise ships in the city of Palma, which were negatively impacting biodiversity and local communities’ well-being. This agreement, which sets a maximum number of passengers and boats per day, is unique in the country and illustrates regions are well positioned to solve conflicts linked to attractiveness trade-offs (OECD, 2023[19]).
Effective multi-level co-ordination of regional attractiveness policies is necessary to avoid competition between areas in the same country. Regional authorities are well placed to design and implement attractiveness policies for their region, however not without the assistance of national governments and local authorities and actors. The diversity of initiatives at the regional level can lead to a lack of clarity and, to some extent, competition between regions. The lack of national initiative for attracting talent has for example led several regions in Sweden and elsewhere to feel compelled to launch their own initiatives, both for promotion and hosting, despite the limited money available and sometimes the lack of expertise. Such an approach risks duplication of effort, inconsistent external marketing and a lack of clarity and dispersion of the regional offer. Public resources are also wasted on creating similar parallel efforts and structures. As a result, regions in Denmark that felt they were becoming each other’s competitors in attracting talent instead of working for the best interests of Denmark came together to ask for national support and clear mandate. In 2019, a joint and co-ordinated national effort, called State of Denmark, was created. It aims to market the whole of Denmark as a career destination. Funding for these joint efforts is provided by the European Commission (European Social Fund, ESF) and the Danish government (Andersson, 2022[20]). The State of Denmark is, in turn, part of a larger public-private partnership called Talent to Denmark, within which 30 national organisations, such as Work in Denmark, regions, companies and networks, are included. Moreover, without national co-ordination, investment attractiveness strategies risk being at best barren. At worst, they can considerably aggravate territorial inequalities (Box 7.2). The state thus has a role to play in setting national guidelines and providing a system of arbitrage among regions to ensure that all regional attractiveness strategies comply with the overall national goals and that they do not generate zero-sum or pure waste competition.
National investment promotion agencies (IPAs) can act as stewards of regional investment attraction
Without national co-ordination, investment attractiveness strategies risk becoming ineffective. They can even polarise territories. Therefore, in a large majority of countries, there are national IPAs, with many having a growing territorial concern. Considering the often-complex institutional architecture involving national and subnational agencies involved in investment promotion and facilitation, maintaining a good relationship with peers is key to achieving successful results. IPAs can have different modes of co-ordination, which are determined by their geographic, economic and institutional contexts. These relationships can consist of:
Collaboration, where national IPAs and subnational bodies work together to achieve a result or produce something jointly (e.g. sharing information, co-ordinated activities).
Complementarity, where national IPAs and subnational bodies bring different qualities that are improved or accentuated by the relationship (e.g. exploiting synergies, ensuring mandates and activities reinforce each other).
The nature and the quality of these relationships also depend on the different subnational entities, whether they are IPAs, economic development organisations (EDOs) or local authorities. Results from an OECD survey on investment promotion and regional development show that IPAs in the OECD tend to have good relationships with subnational entities overall, particularly with subnational IPAs and EDOs, but that there is considerable scope for improvement (OECD, 2022[21]). There is often greater complementarity than collaboration, reflecting the different roles national and subnational bodies can play in relation to foreign investors. It also suggests that working jointly is more complex than conducting complementary activities. Collaboration with local authorities is the weakest relationship overall.
The IPA of Costa Rica, CINDE, has adopted an innovative approach to national-regional co-ordination by establishing a specialised division for investment promotion outside of the Greater Metropolitan Area. This unit works with several constituencies in the community, including municipalities and private-public development agencies as well as academia and training institutions. These networks will be critical for CINDE in the implementation of their new law on Strengthening of Territorial Competitiveness for Attracting Investment Outside the Greater Metropolitan Area which, among other incentives, expands the use of the country’s Free Trade Zone Regime (Zonas Francas) across its territories.
Source: OECD (2022[21]), “The geography of foreign investment in OECD member countries: How investment promotion agencies support regional development”, https://doi.org/10.1787/1f293a25-en; OECD (2023[22]), “OECD webinar: Enhancing the attractiveness of non-Metropolitan Areas: The role of Special Economic Zones”, https://www.oecd.org/regional/globalisation.htm.
Inclusive and resilient territorial attractiveness depends on quality public investment, especially in infrastructure, which requires good co-ordination between the different levels of government. Good quality and accessible railroads, roads and telecommunications, both within and leading to the region, are fundamental for attracting international targets. Investments in these physical infrastructures are among the most shared responsibilities between different levels of government and therefore require good co-ordination between them. For instance, subnational governments are generally responsible for local roads and transportation infrastructure, while higher levels of government generally manage investments with significant externalities. Vertical co-ordination mechanisms will help align objectives between all public stakeholders and bridge a series of information, financing and capacity gaps that impede efficient use of investment resources. As illustrated in Box 7.3 by the case of France’s ultra-high-speed broadband strategy (Plan très haut debit, PTHD), infrastructure investments co-ordinated at the national level can help reduce territorial inequalities, makes it possible to invest at the right scale, internalise the positive and negative impacts, and implement the complementary measures needed to make the most of public investment.
In 2013, the French state launched its PTHD strategy to connect 100% of households and businesses by 2023. The plan has reached its main goal, largely thanks to good co-ordination and co-operation between local authorities, and the state and private operators within the framework of a national scheme, according to its recent evaluation.
The plan sets national objectives, the implementation of which is entrusted to local authorities. To enable them to carry out their missions, the plan provides for investment in the qualification of local authority staff. Specific structures have been created to pool certain resources, ensure territorial co-operation and develop the expertise of public agents. The country has been divided into two distinct types of zones:
Private intervention zones (10% of the national territory, 57% of the population and nearly 3 600 municipalities), which also include co-investment zones. These are the most densely populated areas.
Public intervention zones, covering the least dense and rural areas (90% of the national territory, 43% of the population), where infrastructure investments costs are higher than expected profits and where public initiative networks are thus deployed at the initiative of local authorities supported by the state, through public-private partnership projects under concession contracts signed between local authorities and private actors (construction companies, network operators and infrastructure investment funds).
The Digital Agency co-ordinates all broadband deployment projects, ensuring that the initiatives of private operators and local authorities are consistent and complementary. It works closely with private operators (such as Orange, SFR or Bouygues Telecom) and local authorities in order to facilitate the implementation of fibre optic deployment projects. It also co-ordinates public funding (state, European Union, local authorities) to support very high-speed broadband deployment initiatives in less dense areas. Finally, it plays a role in monitoring the deployment of the plan by regularly evaluating the progress of projects and ensuring that commitments made by all players are respected.
Source: France Stratégie (2023[23]), “Infrastructures numériques et aménagement du territoire : impacts économiques et sociaux du plan france très haut débit”; OECD (2019[24]), Making Decentralisation Work: A Handbook for Policy-Makers, https://doi.org/10.1787/g2g9faa7-en; OECD (2019[25]), Effective Multi-level Public Investment, OECD, Paris.
Unforeseen shocks with local impacts often require changes in the allocation of responsibilities and thereby effective intergovernmental co-ordination. This variability in the allocation of competencies over time and space requires a high degree of fluidity in the relationship between levels of government. For instance, while the COVID-19 pandemic was global in scale, its course and impacts differed across places – depending on local characteristics such as settlement density, mobility patterns, demography and economic activity. For example, compared to interior regions, the public finances of coastal regions in Italy and Spain suffered an intense blow due to travel restrictions and closure of hotels, thereby reducing tourist attendance, one of their main sources of subnational revenue (OECD/UCLG, 2022[2]). This pushed countries to change the distribution of competencies between different levels of government (OECD, 2022[26]). For instance, who was responsible for healthcare services varied a lot, with recentralisation being twice as frequent as decentralisation in OECD and partner countries (OECD, 2020[27]). Therefore, the pandemic put to the test countries’ multi-level governance frameworks. Highly decentralised systems were stressed by significant co-ordination challenges, while highly centralised systems experienced a lack of flexibility and room for manoeuvre to experiment and fight the pandemic consequences at the local level. In health terms, more decentralised health systems seem to have fared better during the pandemic (Rodríguez‐Pose and Burlina, 2021[28]; OECD, 2021[29]).
It re-emphasised that in all cases, pre-existent vertical co-operation mechanisms must exist so that, whatever the mode of governance and the policy area, it remains possible for all actors to carry out tasks, overcome obstacles and/or achieve shared objectives. This is important not only to enable adaptation and response to immediate needs arising from crises but also to ensure future capacity to do so and enhance the resilience of regions’ attractiveness.
In a context where good co-ordination is vital, governments have developed a wide range of mechanisms to help bridge information, capacity, fiscal, administrative or policy gaps between national and subnational governments. These mechanisms can range from “hard” to “soft” instruments. They include, for example, financial incentives to support co-operation between levels of government, co-financing mechanisms, joint investment strategies, the use of conditionalities in the allocation of funds, dialogue platforms or specific instruments such as contractual agreements (Box 7.4).
Regional attractiveness objectives cannot be achieved through a plethora of separate project- or sector-specific agreements. Rather, a holistic approach is required that integrates the various components of the sustainable and inclusive attractiveness strategy into a single overarching mechanism tailored to the region. Multi-purpose and multi-year contracts between the state and the region for regional development are largely used in OECD and non-OECD countries. Contracts are arrangements that reorganise the rights and duties of governments, other than by way of the constitution. They define mutual obligations of the parties, e.g. central government and region, which have to agree on: an assignment of rights decision among the parties (Authority); a distribution of contributions, including funding, human capital, assets, etc. (Mutual duties); and mechanisms that guarantee the correct implementation of each party engagement and solve disputes (Enforcement).
Contracts can potentially address all multi-level governance gaps with just one mechanism. They can engage stakeholders at various levels of government in clear shared objectives, while allowing implementation to be flexible and public action to be tailored to the (sometimes still unknown) challenges of tomorrow, boosting the resilience of the action. Moreover, in a context of political distrust, contracting can facilitate transparency and adherence to national and territorial policies, by making visible who commits to responding to citizens’ and business needs. The three steps of successful contracts are the following:
Consultation: The aim of this phase is to establish priorities and policies, identifying key assets in the region and assess regional development needs, as well as potential impacts on different categories of stakeholders. During this phase, the central government and the region come together to discuss how they can jointly contribute to shared policy objectives. These shared objectives require joint diagnosis through agreed indicators, prior consultation and engagement of stakeholders.
Negotiation and signature: The aim of the negotiation and signature phase of the contracting process is to obtain a formal agreement between the state and the regional authority and to prepare for the implementation of the contract. This phase usually has three stages: discussion, determination of financial contributions and mutual commitments, and agreement on the implementation schedule.
Monitoring and evaluation: The aim of this phase is to guarantee the effectiveness of contracts by ensuring, on the one hand, that the commitments of contractors are credible and verifiable and, on the other, that the performance of the mechanism and the delivery of the expected results are assessed. Monitoring in particular allows to adapt the contractual commitments and their achievement to evolving circumstances without losing sight of the major structural objectives for the long term. To this end, this step should involve a number of operational stakeholders, such as local, provincial or other subnational institutions, as well as businesses, associations, private actors, civil society, donors or non-profit organisations, including international organisations.
Source: Charbit, C. and O. Romano (2017[30]), “Governing together: An international review of contracts across levels of government for regional development”, https://doi.org/10.1787/ff7c8ac4-en; OECD (2007[31]), Linking Regions and Central Governments: Contracts for Regional Development, https://www.oecd.org/gov/linkingregionsandcentralgovernmentscontractsforregionaldevelopment.htm; OECD (2023[32]), “Les contrats entre niveaux de gouvernement: Un outil pour la régionalisation avancée au Maroc”, https://doi.org/10.1787/c29ad0fa-fr; OECD (2023[33]), Les Régions dans le Nouvel Environnement Global : de la Crise à la Résilience. Le cas de Tanger-Tétouan-Al Hoceima, OECD, Paris, https://www.oecd.org/countries/morocco/les-regions-dans-le-nouvel-environnement-global-de-la-crise-a-la-resilience-le-cas-de-tanger.pdf.
Regional public servants must have access to objective and subjective data at the most granular level possible and be data literate. If regional policy makers are to move beyond broad equity-efficiency, sustainability-efficiency or core-periphery perspectives to identify a fine-grained mix of policy and investment priorities relevant to specific places, they need to know what is happening on the ground and in all relevant sectors. Actions can involve, for example, complementing investment innovation support for firms in a region with measures to strengthen local capabilities and skills, and developing tertiary and vocational education to match enterprise demand (Ferry, 2021[34]). Regions also need in-depth data on their industries’ position in global value chains (GVCs) to identify their strengths and weaknesses and to pinpoint the specific support firms located in their territory need – in particular in terms of innovation and scaling. The local risk of industrial stagnation or “over-specialisation” also underscores the importance for public actors to hold the keys to help local industries diversify by attracting appropriate complementary investment and make the most of their interaction with research centres and universities. Finally, ensuring regional public servants have the capacity to collect and analyse subjective data, for instance through surveys or public consultations, is also crucial for policies’ relevance, political acceptance and social cohesion.
In a rapidly evolving world, not regularly revising policies to attract and retain talent, visitors and investors can lead to a quick deterioration in the relative attractiveness of a region – particularly if other regions with similar conditions are adopting policies flexible enough to adapt to changes and challenges. The global competition for mobile targets is growing with talent and multinational enterprises being increasingly able to choose the best destination for themselves. In this competitive environment, the position of regions constantly needs to be reassessed and attractiveness policies adapted accordingly. For instance, overlooking many regions’ efforts to succeed in their digital transition and the related increasing importance of access to high-speed Internet for talent and visitors will tomorrow discredit any attractiveness policy. The same is true of other global trends such as the green transition. This underlines the importance for regional governments to be able to actively update the policy framework in order to remain competitive and, therefore, have: i) strategic foresight capacities to anticipate systemic changes and quickly produce data; ii) solid co-ordination mechanisms allowing for frequent and easy consultations of all stakeholders; and iii) appropriate framework to navigate these changing waters with an “integrated information” compass, taking into account the diversity of attractiveness drivers, such as the one proposed in this report.
The capacity of regions to establish a dialogue with non-state actors, including civil society, is key. Where there is little capacity to co-design, jointly analyse the costs and benefits, and consult the public, there is a risk that policies will not achieve their objectives and may even have deleterious effects on residents and their perception of the benefits of globalisation (Arregui Coka and Rausch, 2020[35]). Regions must be able to develop and maintain regular contact and trust relationships with businesses, associations and overall civil society. This will improve the quality of policies, increase accountability, build trust in governments and help overcome potential opposition to policies as well as smooth and better understand “geographies of discontent”, directly linked to the increase in disparities between more dynamic, often metropolitan and less dynamic, often rural, territories (Dijkstra, Poelman and Rodríguez-Pose, 2020[36]). Trust relationships between public authorities, civil society and businesses are increasingly crucial to ensure the proper development of territories, in a context where many and varied “conflicts of use” emerge in relation to the different priorities of regional attractiveness and their local impact. For example, the decision to install a factory, a warehouse, a tourist or transport infrastructure, even if it provides jobs, cannot be implemented without the support of the population, which may fear the impact on the environment, particularly in terms of the use of water resources and the loss of biodiversity. This type of situation can lead to very localised tensions in terms of space allocation. Without a good relationship between the different actors and in view of the acceleration of climate change, the number of tensions is likely to increase. Regions must therefore be able to anticipate these localised challenges and put in place mechanisms for listening, consultation and collective decision making in terms of territorial attractiveness.
Identifying and addressing multi-level governance gaps for effective regional attractiveness policies
The challenges multi-level governance poses are characterised by the OECD as eight gaps to which public actors are invited to pay particular attention (Charbit, 2020[37]). This approach to characterise specific challenges of a variety of public policies is here adapted to regional attractiveness policies (OECD, 2022[38]). These issues are presented in Figure 7.1.
A roadmap to bridge governance gaps in pursuit of regional attractiveness
The OECD has developed a tool to provide policy makers suggestions and international examples to overcome the main gaps presented in Figure 7.1, which affect the ability of stakeholders involved in the development and implementation of attractiveness policies, to co-ordinate their activities (OECD, 2022[39]). It aims to support the dialogue between and the action of different actors across levels of government involved in regional attractiveness policies. It is, in effect, a roadmap to assess and respond to co-ordination challenges for regional attractiveness based on dialogue between stakeholders.
Step 1 - Adopt convergent objectives
Self-assessment question: Is there a mechanism for information-sharing and converging the objectives of public decision-makers in terms of attractiveness?
Tools and methods to address this challenge
Developing institutional mappings of “who is doing what” to make sure all relevant actors are part of the discussion is the essential first step.
Strategic and regular committees for the coherence of local, regional, national (and European) strategies, with sufficient time for consultation and negotiation between the different stakeholders.
Contractual measures and/or conditionalities (e.g. green, social, strategic, etc.) regarding access to finance (Box 7.4)
Smart Specialisation Strategy Platform – S3/S4.1
In Ireland, a Network of Regional Skills Fora was created as part of the central government’s National Skills Strategy to provide a shared platform for actors in the regional education, employment and training sectors to work together to meet the skills and talent needs of the region.
The Danish co-ordination model for talent attraction, primarily because the regions, with support and funding from the national side, have built up a common model.
In the Community of Valencia in Spain, a Strategic Committee on Territorial Policy comprising regional authorities, civil society members and the private sector, aims to align the vision and priorities among the public and private sectors. This committee was established as part of the Territorial Governance strategy 2010-2030,2 whose objective is to develop innovative formulas of territorial governance and facilitate co-ordination among the three Valencian provinces. The strategy focuses on four pillars: i) public-private partnerships; ii) evaluation of policies and projects; iii) management and decision-making systems; and iv) accountability (OECD, 2023[10]).
In Centro, Portugal, the Schist Villages Network is part of the Programme for the Economic Enhancement of Endogenous Resources (PROVERE) and has established a platform for inter-municipal co-operation to foster effective communication between public and private entities (OECD, 2023[15]).
Step 2 – Address information asymmetries
Self-assessment question: Are there common databases and tools for sharing information between different stakeholders?
Tools and methods to address this challenge
Agree on specific attractiveness indicators and then group the data produced on a shared regional platform, which will function as a “one-stop-shop for territorial data”.
Set up information desks to gather useful information between levels of government and private actors at a regional level (e.g. between regional government services, “deconcentrated” services – the regional representation of state agencies – representatives of civil society and local authorities).
Strengthen the presence and role of regional authorities in national discussions on attractiveness.
Regional data observatories (on employment, land, biodiversity, etc.):
In Cantabria, Spain, the Digital Innovation Hub was created with the vision of becoming the point of reference for digital transformation in the region and serving as a meeting point between the supply and demand of technology, to unify access to resources for innovation and support the digitalisation of administrations and companies, with special attention to small and medium-sized enterprises (SMEs) and micro-SMEs. The hub aims to be part of the initiative Digitising European Industry, promoted by the European Commission.
Invest Lisboa, Portugal, is a one-stop-agency created through a partnership between the City Council and the Portuguese Chamber of Commerce to provide information and assist companies, investors and entrepreneurs looking to invest or set up their business in the city of Lisbon (OECD, 2023[7]).
Step 3 – Strengthen the coherence of cross-sectoral policies
Self-assessment question: What co-ordination mechanisms are in place to identify and take advantage of possible cross-sectoral synergies between several regional attractiveness and policies?
Tools and methods available to address this challenge
Inter-ministerial committees on country attractiveness involving representatives of infrastructure, environment, tourism, economy, social and territorial development, together with representatives of regional authorities.
Regional attractiveness committees for inclusive and sustainable development, involving representatives of local and national levels together with businesses and civil society representatives, considering all attractiveness targets (investors, talent and visitors) to identify priorities, synergies and trade-offs in their action.
Contractual measures encompassing different attractiveness policy fields to be dealt and monitored across levels of government.
In Spain, the Interterritorial Council for Internationalisation aims to serve as a permanent framework for collaboration between the different agents involved in the internationalisation process. Representatives from the autonomous communities, the Spanish Confederation of Business Organisations (CEOE), the Spanish Chamber of Commerce, the State Secretariat for Trade and the Spanish Institute of Foreign Trade (ICEX) aim to strengthen collaboration in the promotion of the internationalisation of Spanish companies and the attraction of investment to the country.
In Algarve, Portugal, the Regional Coordination and Development Commission (CCDR Algarve) is working to advance a multi-level governance model with the 16 municipalities to attract talent, investors and visitors. An integrated and intersectoral approach was put in place by the CCDR Algarve to co-ordinate the preparation of the Algarve 2030 Strategy and the Action Plan to Diversify Algarve, including close co-ordination with municipalities through the Intermunicipal Community of the Algarve (CIM-AMAL) (OECD, 2023[9]).
Step 4 – Strengthen the capacity of regional and local actors
Self-assessment question: What are the human and technical capacities available to the regions for the implementation of attractiveness policies?
France’s ultra-high-speed broadband strategy (Plan très haut debit, PTHD) presented in Box 7.3 includes a budget for training civil servants to enable them to carry out their missions.
To support public administration, the Capacity Italy programme has been implemented to provide specialised expertise and technical assistance to public entities at all stages of the implementation of investments related to the National Recovery Plan, as well as the Capacity for Cohesion programme, to help public administrations manage European Union structural funds (OECD, 2023[40]).
Step 5 – Mobilise all available financial sources in a consistent way
Self-assessment question: Are all of the available funds mobilised by subnational authorities for the implementation of attractiveness and policies at the territorial level? Do the regions have sufficient financial resources to carry out the attractiveness policies that fall within their competency?
New EU Territorial Cohesion Policy 2021-20276 and making budgets more flexible.
The financial and tax concessions supporting the attractiveness of Special Economic Zones in South Italy regions include national instruments co-financed by regional resources and instruments with direct regional competency financed through the European Regional Development Fund (ERDF) and ESF.
Step 6 – Ensure transparency of public policy roles and practices
Self-assessment question: Is there a mechanism for assessing and assigning responsibility for attractiveness and internationalisation policies (including to the public)?
Tools and methods available to address this challenge
OECD recommendations for the implementation of a rigorous procedure for public policy evaluation (Box 4.4).
The OECD Recommendations on Open Government (OCDE, 2016[41]; 2017[42]).
Mobilising the European Quality Index (EQI)7 of subnational governments to promote regional attractiveness to investors and talent.
The OECD Observatory of Public Sector Innovation (OPSI).8
Strategic Committee (COSTRAT) for the attractiveness of the Grand Est Region in France, by crossing sectoral and territorial dimensions through the involvement of all stakeholders (OECD, 2022[39]).
Step 7 – Involve non-governmental stakeholders
Self-assessment question: Who are the private actors and civil society concerned by attractiveness policies? Have their opinions been incorporated into the design, implementation and evaluation of attractiveness policies? Do they participate in and help monitor regional attractiveness strategies?
Tools and methods available to address this challenge
Encourage citizen participation in the development, monitoring and evaluation of regional strategic plans and integrate the results into strategic documents.
Include in strategic documents actions to support the development and reinforcement of regional networks (arrangement of sponsorships, informal meetings for attractiveness actors, incentives for the development of multi-actor initiatives, etc.).
Invite land/logistics/tourism/academic actors to participate in existing discussions and contribute to strategic decisions on regional attractiveness. Consulting the following actors would benefit the quality of policies and the actors themselves:
Land actors: sustainable management of land resources (e.g. rehabilitation of brownfield sites) and development of economic land.
Logistics actors: strengthening the attractiveness of a regional industry.
Tourism actors: the attractiveness of the sector’s investors and researchers (via business tourism), the sustainable management of tourist flows and the emergence of new, more sustainable forms of tourism.
Academic actors: the attractiveness of talent in relation to regional innovation strategies and the development of new strategic GVCs.
The recovery strategy implemented by the Occitanie Region in France.9
The plan for the relocation and security of agri-food and health supplies in the Wallonia region of Belgium.10
The 2019 T-25 strategy in Norrbotten, Sweden, between employers and Luleå University, aimed at attracting 25 000 skilled workers over 5 years, notably by securing employment for spouses of recruits and by increasing graduate retention (OECD, 2023[16]).
The French Territoire d’Industrie11 programme and Team France Export involve the Chambers of Commerce and Industry, including during the monitoring and evaluation phases.
The province of Quebec, Canada, has developed a unique talent attraction model focused on international recruitment trips where delegations of employers travel to different target markets to attract candidates. These are managed operationally by the regional investment and development council, Quebec International (QI), with the support of the provincial government, the cities and municipalities, and the federal state.
Step 8 – Adopt policies at the relevant territorial scale by going beyond administrative boundaries
Self-assessment question: Are there incentives to adopt policies at the right scale by involving those responsible for the various territories concerned in the definition and implementation of attractiveness policies and do they overcome rigid administrative boundaries?
Tools and methods available to address this challenge
Localised mapping (who are the actors in the territory and how do they interact with each other?).
Evaluation of positive and negative externalities from urban areas on neighbour rural places in the region.
Co-ordinated attractiveness strategies with neighbouring territories (territories of the same region, regions of the same country or border regions) to agree on shared objectives, investment priorities and the monitoring of related policies with indicators on territorial inequalities and their evolution.
Interreg European co-operation programmes.12
The project for common tourism in the Vanilla Islands.13
Visit Dalarna website and campaign putting forward regional assets to tourists and local ones (OECD, 2023[43]).
The Green Deal Site Visits, organised within the framework of the North Sweden Green Deal project by Region Norrbotten, Sweden, where students from Luleå University can visit each of the county’s municipalities for a day to make contacts and learn about work possibilities (OECD, 2023[16]).
In 2021, Portugal and Spain created a cross-border tourism sustainability strategy between them, containing tourism supply plans, mechanisms of governance and financing to make the measures effective, including the necessary participation of local entities, regions and autonomous communities. With the aim to dissociate the idea of the border as an area of transit, turning it into a unique, quality, not overcrowded destination that is, above all, authentic.
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Notes
← 1. See https://s3platform.jrc.ec.europa.eu/about-us.
← 2. See https://www.upv.es/contenidos/CAMUNISO/info/U0672564.pdf.
← 3. See https://www.observatoire-des-territoires.gouv.fr/outils/cartographie-interactive/#c=home.
← 4. See https://public.tableau.com/views/DataVizTerritoiresdIndustrie/Accueil?:showVizHome=no.
← 5. See https://www.banquedesterritoires.fr/dataviz-coeur-de-ville.
← 6. The new EU Cohesion Policy 2021-2027 foresees a change in the rules for the allocation of funding, which will now be common to all eight funds supported by the policy. For example, more flexibility in programming has been introduced to allow for easier adjustments in the event of changing challenges and economic situations (https://ec.europa.eu/regional_policy/2021-2027_en).
← 7. See https://www.gu.se/sites/default/files/2021-05/2021_4_%20Charron_Lapuente_Bauhr.pdf.
← 8. See https://oecd-opsi.org/guide/open-government/.
← 9. See https://deliberations.laregion.fr/Docs/AssembleePleniere/2020/11/19/ANNEXE/P0963.pdf.
← 10. See https://developpementdurable.wallonie.be/alimentation/appel-projets-relocalisation.
← 11. Inter-municipal programme for industrial support in areas with a strong dependence on industry.
← 12. See https://www.interregeurope.eu/.
← 13. See https://www.vanilla-islands.org/association-iles-vanille/.