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Claire Charbit
Deputy Head of the Regional Development Policy Division Directorate for Public Governance and Territorial Development OECD
SEMINÁRIO INTERNACIONAL
POLÍTICA REGIONAL NO CONTEXTO GLOBAL: SITUAÇÃO ATUAL E PERSPECTIVAS
Brasilia, 19th March 2013
OECD Study on Regional Development in Brazil
OECD Territorial Reviews: A series of case studies of Regional Development Policy for
Inclusive Growth Among 34 member countries and non member :
18 National Territorial Reviews ( +2 in process)
22 Metropolitan Reviews (+1 in process)
2 National Urban Policy Reviews (+1 in process)
6 Regional reviews (+2 in process)
5 review s on regional innovation systems 9+2 National rural Policy Reviews(+1 in process)
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Conceptual framework:
1. Diagnosis and assessment (Chapter 1) Measure sub-national trends Identify key strengths and bottlenecks for growth
2. Review of policy instruments (Chapter 2) Are current policies adequate for addressing strengths and
weakness? Identify areas of improvement
3. Multilevel governance (Chapter 3) Identify implementation issues and mechanisms for bridging governance gaps
Why?
What?
How?
1. Key facts
2. Some policy lessons
3. Key governance challenges
4. Conclusions/recommendations
Outline
Despite Brazil’s high levels of concentration in GDP and population …
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61.754.2
49.547.247.247.046.546.0
45.044.443.943.4
41.841.140.539.7
38.535.8
34.734.5
31.931.3
29.929.7
27.927.6
26.125.825.7
24.1
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
BrazilSwedenIceland
CanadaFinlandGreece
United StatesAustralia
MexicoTurkeyJapanSpain
NorwayKorea
PortugalHungary
OECD averageNew Zealand
United KingdomFrance
BelgiumDenmark
AustriaIreland
GermanyCzech Republic
ItalyNetherlands
Slovak RepublicPoland
Index of geographic concentration of GDP (TL2)
62.052.252.0
47.647.1
44.442.6
41.140.9
39.137.937.636.9
33.333.233.0
31.530.5
26.924.124.023.622.822.221.921.420.820.4
16.416.3
11.1
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
IcelandSweden
BrazilCanada
AustraliaUnited States
FinlandMexicoKoreaJapanSpain
NorwayPortugalGreece
New ZealandOECD average
United KingdomTurkeyFrance
DenmarkGermany
AustriaBelgium
NetherlandsSwitzerland
HungaryIreland
ItalyCzech Republic
PolandSlovak Republic
Index of geographic concentration of population (TL2)
Geographic concentration index of GDP and population (TL2), 2007
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52
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1980 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Concentration index of GDP Concentration index of population
… concentration has been decreasing over the past decades
Despite the recent decline in territorial disparities…
Territorial disparities in GDP per capita among TL2) regions, 2010
0.34
0.30
0.24
0.22
0.18
0.17
0.16
0.16
0.15
0.15
0.15
0.13
0.13
0.13
0.12
0.12
0.12
0.12
0.11
0.09
0.08
0.08
0.06
0 0.1 0.2 0.3 0.4 0.5
Mexico
Brazil
Turkey
Hungary
Czech Republic
Finland
Canada
Italy
United States
Germany
OECD 21 average
Portugal
United Kingdom
Poland
New Zealand
Norway
Australia
Austria
Spain
Sweden
Korea
France
Japan
Gini idex of GDP per capita (TL2)
…in catching-up economies inequality is high and it tends to rise due to the presence of growth poles…
…in Brazil however it is an exception…
0.25
0.26
0.27
0.28
0.29
0.3
0.31
0.32
0.33
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80
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85
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Brazil (TL2)
… they still remain high in Brazil
Most unsatisfied needs are concentrated in lagging regions
1. The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education and standards of living for countries worldwide. Note: This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map. 2. This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map. Source: Calculations based on data provided by (1) IBGE, (2) Ministério do Planejamento, Orçamento e Gestão. Estados and (3) CEPAL/ PNUD/OIT (2008) Emprego, desenvolvimento humano e trabalho decente: a experiencia brasileira recente.
Catching up has been driven mainly by advances in resource-intensive regions
Despite Brazil’s faster overall growth …
Growth in GDP per capita among types of TL3 regions, 1995-2007
Brazil OECD
Predominantly rural 4.64% 2.31%
Intermediate 3.14% 1.88%
Predominantly urban 1.58% 1.93%
…urban regions have performed below their potential, recording a lower rate of growth than the average for OECD urban regions
Policies that aim to tap the growth potential of all types of regions is an important source of aggregate growth
This will require a differentiated approach, capable of adapting to the different needs and challenges of regions
Two thirds of national growth
comes from intermediate
(32%) and rural regions (37%)…
y = 0.4664x-1.275
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
Co
ntr
ibu
tio
n t
oO
ECD
gro
wth
TL2 regionsTL3 regions
Sao Paulo
Federal Dist.
Rio de Janeiro
Belo Horizonte
Curitiba
1. Key facts
2. Some policy lessons
3. Key governance challenges
4. Conclusions/recommendations
Outline
with labour mobility
Persistence of inequality
Policy
responses
Human capital formation
Brain drain
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Isolated sectoral action may have unintended outcomes (example)
A combination of policies is necessary
Sustainable poverty reduction requires creating local jobs and growth
Different policies have complementarities: ex infrastructure + economic +social dimensions
– Need to co-ordinate policies
– Important to target the relevant scale
Regional development policy could reinforce the impact of social policies such as Bolsa Familia
Paradigm shift in regional policies
Traditional Regional Policies New Paradigm
Objectives
Balancing economic
performances by temporary
compensating for disparities
Tapping under-utilised regional
potential for competitiveness
Strategies Sectoral approach Integrated development
projects
Tools Subsidies and state aid Soft and hard infrastructures
Actors Central government Different levels of government
Unit of
analysis Administrative regions Functional regions
Redistributing from leading to
lagging regions
Building competitive regions
by bringing actors together
and targeting key local assets
Resources for regional development are soaring, but target mainly private firms
0
2 000
4 000
6 000
8 000
10 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Resources for Regional Development (R$ million)
FNE FCO
FNO Tax exemptions SUDAM
Tax exemptions SUDENE Tax exemptions AFRMM SUDAM
Tax exemptions AFRMM SUDENE
Source: Sistema de Informações Geranciais dos Fundos Constitucionais de Financiamento (2000-09); IRPJ e
IOF-Coordenação-Geral de Estudos Econômicos-Tributários – COGET/Receita Federal; Relatório de
Execução Territórios da Cidadania Matriz 2008 and Relatório de Execução Plano de Execução 2009 Territories of Citizenship.
Public investment and BNDES funds still face difficulties reaching lagging regions
Southern region8%
Southeast region
60%
Centre-west region
7%
Northeast region
19%
Northern region7%
Federal district1%
Southern region18%
Southeast region
58%
Centre-west region
7%
Northeast region
10%
Northern region7%
Regional allocation of PAC investments (2007-10)
Regional allocation of lending by BNDES in 2010
Source: Relatórios Estaduais. Totals for four years, 2007-10. Source: BNDES website, www.bndes.gov.br.
1. Key facts
2. Some policy lessons
3. Key governance challenges
4. Conclusions/recommendations
Outline
Brazil is among the most decentralised countries both in revenue and spending allocations
AUS BEL
BRA
CAN
CZE
DEN
FIN
FRA
DEU
GRE
HUN
ISL
IRE
ITA
JAP
KOR
LUX NTH
NZL
NOR POL
POR
SVK
SLV
ESP
SWE
CHE
GBR
USA
0,0
10,0
20,0
30,0
40,0
50,0
60,0
0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0
Share of SNGs in Public Spending
Share of SNGs in Public Revenues
‘Mind the Gaps’ : a Tool for a Diagnosis of MLG challenges
Administrative gap
“Mismatch” between functional areas and administrative boundaries => Need for instruments for reaching “effective size”
Information gap
Asymmetries of information (quantity, quality, type) between different stakeholders, either voluntary or not => Need for instruments for revealing & sharing information
Policy gap
Sectoral fragmentation across ministries and agencies => Need for mechanisms to create multidimensional/systemic approaches, and to exercise political leadership and commitment.
Capacity gap Insufficient scientific, technical, infrastructural capacity of local actors => Need for instruments to build capacity
Funding gap Unstable or insufficient revenues undermining effective implementation of responsibilities at subnational level or for crossing policies => Need for shared financing mechanisms
Objective gap Different rationalities creating obstacles for adopting convergent targets => Need for instruments to align objectives
Accountability gap Difficulty to ensure the transparency and integrity of practices across the different constituencies => Need for institutional quality instruments
Brazil faces multilevel governance challenges
Multi-dimensional fragmentation of policies
Sub national governments financial and political autonomy
Institutional and administrative capacity at sub national level
Information asymmetries, monitoring and evaluation
Examples of existing tools for co-ordination
Co-ordinating institutions
Convenios (agreements) and pacts
Regional development agencies
Single Registry, national census, etc.
Central/Federal Government Ministerial Departments
Sub-national Governments
Inter Governmental Council (COAG, Australia)
Regional Agencies (Brazil, Canada,…)
Contracts (France; Italy...)
Special Commission (Delta, Netherlands)
Whatever the type of system – federal, regionalised, unitary – there is a strong need of coordination across levels of government
A wide range of governance mechanisms for vertical coordination of regional development policy
Conditionalities ( EU programming)
Contractual Governance: Some Findings
Contracts among levels of government are unavoidable (vertical interdependencies + assignment of responsibilities)
Contracts allow a customized management of interdependencies, useful in either unitary or federal contexts
Evaluation conditions the appropriateness of the contract
Contracts are tools for dialogue, for clarifying responsibilities, for capacity building
Bilateral commitments must be as « verifiable » as possible
The crucial challenges of enforcement mechanisms to make commitments credible
Towards a diagnosis of sub national capacity challenges
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Planning:Design a portfolio
for growth
Finance and Budgeting:
Ensure adequate resources
Accountability:ensure integrity
during implementation
Evaluation and Audit:
promoting results and learning
Throughout:Facilitating
achievement of goals
• Strategic planning• Cross-sectoral, vertical and cross-jurisdictional co-ordination • Stakeholder engagement; ex ante appraisal
•Multi-year budgeting • traditional and innovative financing instruments• private-sector engagement
• Sound public procurement systems
•Monitoring systems• Ex post performance assessment •Use of performance information
• Integrity, accountability and risk management• Regulatory quality• Professional and technical skills
Critical Capacities
needed at all stages of the investment
cycle
Institutions matter
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1. Sub-national governments (SNGs) are responsible for close to three-quarters of total public investment in the OECD.
2. The quality of government (QoG) at regional level varies within and across countries.
3. QoG is strongly related to sub-national human development indicators at regional level.
4. Better QoG is also associated with better returns to cohesion investments in places with relatively large cohesion expenditure.
5. The strong association between QoG and levels of both income and education reinforces concerns about SNG capacity challenges.
Source: N. Charron, V. Lapuente and L. Dykstra (2012.) “Regional Governance Matters: A Study on Regional Variation in Quality of Government within the EU” (forthcoming Regional Studies).
Ingredients for successful commitments, enforced on the ground
Implementation of effective contract for
regional development
Capacity building
Evaluation Third party control
From sanction to reputational mechanisms
1. Key facts
2. Some policy lessons
3. Key governance challenges
4. Conclusions/recommendations
Outline
Key conditions for effective regional development
Give to this policy high visibility and long term commitment
Adopt place-based policies
Enhance the effectiveness of vertical and horizontal co-ordination mechanisms
Involve local actors
Recommendations
1. Brazil could develop a place based approach that
would achieve higher complementarities between
social and other sectoral policies
2. Brazil is using a lot or regional development funds to
remediate the difficult access of private enterprises to
financing. Over time, it would be better to use
regional funds for their specific purposes of investing
in soft and physical investment with regional
development targets
.../...
Recommendations (2)
3. Government should contemplate new instruments to make sure that public funds reach lagging regions (capacity building, technical assistance, joint projects, etc.)
4. The OECD supports the move to complementing the Bolsa Familia programme with related programmes for promoting social and economic inclusiveness of the extreme poor
5. There is a proliferation of co-ordinating bodies without much effective co-ordination mechanisms. An institutional streamlining is required with a clear identification of the co-ordination gaps. The resulting institutions should have effective instruments to operate.
.../...
Recommendations (3) 6. The status of regional development agencies needs to
be clarified, as currently, they do not provide the co-
ordination mechanisms that they are supposed to
deliver
7. Need to simplify and unify the administrative map of
Brazil at the intermediary level between municipalities
and states
8. Make use of the information generated by universal
programmes such as Bolsa Família (Indice de Gestão
Decentralisada)or the School Census to better target
regional policies
.../...
Recommendations (4)
9. Sustain and enlarge programmes for capacity building
at the state and municipal level. In most countries, this
is the main bottleneck for the successful
implementation of regional development policy. It
largely depends on evaluation processes.
Obrigada!
Claire.Charbit@oecd.org
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