decentralisation trends in oecd countries
TRANSCRIPT
Decentralisation trends in OECD countries: a comparative perspective for Ukraine
Dorothée Allain-Dupré Senior Project Manager Regional Development Policy Division OECD
1. The current picture: decentralisation
around the world
2. Recent trends in decentralisation
reforms
3. Some lessons: making
decentralisation work
Outline of the presentation
The governance system of subnational government the OECD
Federations & quasi-federations
Unitary countries
38 960
3 818
360
579
78
2 489
1 788
245 1 478 310 8 186
36 004
8 176
419
31
74
11 510
446 311 314
255
338
3 197 2 935
2 109 2 320
605 402
2 874 6 272
103
105
212
213
35 countries: 9 federal and 26 unitary including 137 635 subnational governments in 2015-2016:
• 133 007 municipal-level entities • 4 108 intermediary-level entities • 520 regional or state-level entities
119
• The OECD institutional landscape which has dramatically changed over the last 20 years, especially since the crisis as a result of decentralisation or recentralisation processes.
The OECD: an institutional landscape very diverse and
complex at subnational level
9 countries with only one level:
- Municipalities
18 countries with two levels: - States/regions - Municipalities
8 countries with three levels:
- States/regions - Intermediary gov.
- Municipalities 9 federations and quasi-federations
Australia Austria Canada Mexico
Switzerland
Germany Belgium Spain1
United States
25 unitary countries
Estonia Finland2 Ireland Iceland
Israel Latvia
Luxembourg Portugal2 Slovenia
Chile Korea
Denmark Greece
Hungary Japan
Norway
New Zealand Netherlands
Czech Republic Slovak Republic
Sweden Turkey
France Italy
Poland United Kingdom3
Ukraine
Notes: 1. Spain is a quasi-federal country. 2. Finland and Portugal have autonomous regions on part of the country. 3. There is an intermediary
level only on part of England.
Almost 138 000
SNGs in the 35 OECD
countries in 2015-2016
5
SNGs are key economic and policy actors across the OECD
40%
63% 59%
32%
20%
Greece
New Zealand
Chile
Estonia Greece
Canada
Canada
Canada
Canada Canada
31%
60% 55%
24%
4% 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Expenditure Staffexpenditure*
Investment Tax revenue Debt***
OECD Minimum Maximum Ukraine% of general government - 2014
*: No data for Chile and Australia **: Debt OECD definition ie including, in addition to "financial debt", insurance reserves and other accounts payable. No data for Mexico, Chile and New Zealand
Degrees of decentralisation varies largely
in OECD countries
AUS
AUT
BEL
CAN
CHL
CZE
DNK
EST
FIN
FRA
DEU
GRC
HUN
ISL
IRL
ISR
ITA
JPN
KOR
LUX
MEX
NDL
NZL
NOR POL
PRT
SVK
SVN
ESP SWE
CHE
TUR
GBR
USA
OECD34
EU28
OECD25
OECD9
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Su
bn
ati
on
al
ex
pe
nd
itu
re
as
a s
ha
re
of
tota
l p
ub
lic
ex
pe
nd
itu
re
(%
)
Subnational expenditure as a share of GDP (%)
Subnational government expenditure as a percentage of GDP and total public expenditure (2014)
…. And around the world: 25% of total public spending i.e. 9% of GDP
AUT
BEL
BGR
HRV
CYP
CZE
DNK
EST
FIN
FRA
DEU
GRC
HUN
ISL
IRL
ITA LVA
LTU
LUX
MLT
NLD
NOR
POL
PRT
ROU
SVN SVK
ESP SWE
CHE
GBR
ARG
BRA
CHL
COL
CRI DOM
ECU SLV
GRM
HND
JAM
MEX
PRY
PER
ISR
JOR
PSE TUR ALB
ARM
AZE
GEO
KAZ
KGZ
MDA
MNE
RUS
SRB
UKR
AGO BEN
BFA
CPV
COG
GHA
GIN
KEN
MWI
MLI
MUS
MAR
NGA
UGA
SEN
ZAF
TZA
TCD
TUN
ZWE
AUS
KHM
CHN
IND
IDN
JPN
KOR
MYS
MNG
NZL
PHL THA
VNM
CAN
USA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0% 5% 10% 15% 20% 25% 30% 35% 40%
SNG
exp
en
dit
ure
as
% o
f p
ub
lic e
xpe
nd
itu
re
SNG expenditure as % of GDP
OECD average
Global average
9%
24%
40%
17%
Wealthier countries tend to be more decentralised…
TCD GIN COG KHM MLT GRM DOM JAM AZE BEN MWI BFA CRI CYP TUN SEN MUS MLI JOR ARM PRY SLV ZWE MYS CHL HND UGA PSE KEN GRC MAR TZA THA IRL TUR ALB CPV
ECU NZL NGA KGZ GEO ISR MNE SVK PRT IDN
HUN GHA SRB BGR LTU PER ROU KAZ MNG MDA SVN EST CZE LVA GBR FRA PHL HRV MEX COL POL ISL KOR NLD IND ITA UKR NOR
JPN AUS AUT
USA VNM CHE DEU CHN
ESP ZAF BRA BEL
FIN RUS SWE
CAN
DNK
ARG
R² = 0.3555
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
SNG
exp
en
dit
ure
as
a %
of
GD
P
GDP per capital (USD PPP)
Some policy areas are more decentralised than others: education, social protection, health, public transport, housing
21.8%
20.3%
13.8%
12.5%
9.4%
8.8%
5.7%
5.4% 2.4%
% of total SNG expenditure
Defence, security andpublic order
Environmentalprotection
Recreation, culture andreligion
Housing andcommunity amenities
Health
Social protection
Economic affairs &transport
General public services
Education
Breakdown of SNG expenditure by economic function
2.6%
1.9%
1.9%
1.5%
1.5%
0.6% 0.5% 0.4% 0.3%
% of GDP
Defence, security andpublic order
Environmental protection
Recreation, culture andreligion
Housing and communityamenities
Economic affairs &transport
Health
General public services
Social protection
Education
10
What are the sources of SNG revenues? Tax revenues account for 44% of SNG revenue in the OECD
Spending is more decentralised than revenues: the risks of fiscal imbalances
1. The picture in 2016: decentralisation
around the world
2. Recent trends in decentralisation reforms
3. Some lessons for countries at the early
stage of their decentralisation process
• The OECD area has grown more decentralised over the last two decades at least, although reforms that have profoundly changed the institutional set-up of fiscal decentralisation are confined to a few countries
• Motivations vary across countries
Mainly democratic/political motivations: eastern European countries (decentralisation wave in 2000, 2004, 2006: Poland, Slovakia, Czech Rep, Estonia, Hungary, etc.)
Mainly economic/public finances motivation: Greece, Italy, Portugal
• Changes /rationalisation in allocation of responsibilities:
Mostly in the field of education
Public transport
Health care: both decentralised and recentralised (Norway)
13
Different motivations for decentralisation reforms in the past 2 decades
Broader context of Multi-level Governance reforms
MLG reforms: three interconnected
dimensions
Institutional:
re-organising powers, responsibilities and
resources
Public management:
re-organising administrative
processes
Territorial:
re-organising territorial structures
France,
Finland
Italy
New Zealand
Japan
Ukraine
A regain of actions on MLG reforms across OECD countries
Institutional
reforms
Fiscal reforms Territorial reform
at regional level
Territorial reform at
intermediary level
Municipal (mergers, IMC,
metropolitan)
Australia X X State level
Austria X State level
Belgium X X Regional level Regional level
Germany X X State level State level
Spain X X + Regional level
Chile X X X
Czech republic X X
Estonia X X X
Finland X X X X
France X X X ? X
Greece X X X X
Hungary X X X
Iceland X X
Ireland X X
Italy X X X X
Japan X X ? X
Luxembourg X
Netherlands X X ? X
New Zealand X X
Norway X X X X
Poland X X ? X
Portugal X X
Sweden X X X X
Turkey X
United Kingdom X X X
UKRAINE X X X
1. The picture in 2016: decentralisation
around the world
2. Recent trends in decentralisation reforms
3. Some lessons
17
Decentralisation includes a number of benefits, but
needs to be properly done
Opportunities Risks
Efficiency and improved local public services
• More capacities for place-based policies
• Better local public service delivery • Lower costs • Mobilisation of local public resources • Incentives for pro-active local
development approaches • Mobilisation of comparative
advantages of local enterprises • Room for experimentation
• Diseconomies of scale • Duplication/overlap in competencies • Lack of human/technical capacities • Unfunded mandates • Rising disparities across jurisdictions • Increased competition
Democratic governance
- Enhanced transparency and accountability
- Enhanced citizens’ participation - Reflects better citizens needs
• Local politics and bad local governance
• Corruption • More complex governance structure –
more coordination costs
Adequate capacities at subnational government
Sufficient resources to meet new responsibilities
Balance in the way various policy functions are decentralised
Adequate coordination mechanisms
Effective monitoring systems at the central government level
Coherent fiscal constitutions
18
Some pre-conditions that need to be met in
all cases:
Keep flexibility in implementation
Allow for pilot experiences in specific places/regions
Define short term objectives/projects…
Within a broader strategic framework/long-term perspective
Not necessarily one side-size fits all. decentralisation may include asymmetric arrangements
19
Some pre-conditions that need to be met in
all cases:
• Invest using an integrated strategy tailored to different places
• Adopt effective co-ordination instruments across levels of government
• Co-ordinate across SNGs to invest at the relevant scale
Pillar 1
Co-ordinate across governments and policy
areas
• Assess upfront long term impacts and risks
• Encourage stakeholder involvement throughout investment cycle
• Mobilise private actors and financing institutions
• Reinforce the expertise of public officials & institutions
• Focus on results and promote learning
Pillar 2
Strengthen capacities and promote policy
learning across levels of government
• Develop a fiscal framework adapted to the objectives pursued
• Require sound, transparent financial management
• Promote transparency and strategic use of procurement
• Strive for quality and consistency in regulatory systems across levels of government
Pillar 3
Ensure sound framework conditions at all levels of
government
OECD Recommendation on Multi-level Governance of Public Investment
• Series of seminars (2017-Q1 2018)
• Second fact finding mission: March 2017
• Final report: end 2017
21
Next steps OECD support on
Decentralisation in Ukraine
