OECD Study on Regional Development in Brazil / Claire Charbit Deputy Head of the Regional Development Policy Division Directorate for Public Governance and Territorial Development OECD
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OECD Study on Regional Development in Brazil / Claire Charbit Deputy Head of the Regional Development Policy Division Directorate for Public Governance and Territorial Development OECD
1. OECD Study on Regional Development
in Brazil
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
2. 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
Conceptual framework:
1.
9+2 National rural Policy Reviews(+1 in process)
Diagnosis and assessment (Chapter 1)
Why?
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
What?
How?
2
4. Despite Brazil’s high levels of concentration in GDP and population …
Geographic concentration index of GDP and population (TL2), 2007
Brazil
Sweden
Iceland
Canada
Finland
Greece
United States
Australia
Mexico
Turkey
Japan
Spain
Norway
Korea
Portugal
Hungary
OECD average
New Zealand
United Kingdom
France
Belgium
Denmark
Austria
Ireland
Germany
Czech Republic
Italy
Netherlands
Slovak Republic
Poland
61.7
54.2
49.5
47.2
47.2
47.0
46.5
46.0
45.0
44.4
43.9
43.4
41.8
41.1
40.5
39.7
38.5
35.8
34.7
34.5
31.9
31.3
29.9
29.7
27.9
27.6
26.1
25.8
25.7
24.1
0.0
10.0
20.0
30.0
40.0
50.0
Index of geographic concentration
of GDP (TL2)
60.0
70.0
Iceland
Sweden
Brazil
Canada
Australia
United States
Finland
Mexico
Korea
Japan
Spain
Norway
Portugal
Greece
New Zealand
OECD average
United Kingdom
Turkey
France
Denmark
Germany
Austria
Belgium
Netherlands
Switzerland
Hungary
Ireland
Italy
Czech Republic
Poland
Slovak Republic
62.0
52.2
52.0
47.6
47.1
44.4
42.6
41.1
40.9
39.1
37.9
37.6
36.9
33.3
33.2
33.0
31.5
30.5
26.9
24.1
24.0
23.6
22.8
22.2
21.9
21.4
20.8
20.4
16.4
16.3
11.1
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Index of geographic concentration
of population (TL2)
Concentration index of GDP
Concentration index of population
64
62
60
58
… concentration has been
decreasing over the past decades
56
54
52
50
1980
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
4
2008
5. Despite the recent decline in territorial disparities…
…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…
Brazil (TL2)
0.33
0.32
0.31
Territorial disparities in GDP per capita among TL2) regions, 2010
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
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
0.3
0.29
Gini idex of GDP per capita (TL2)
0.28
0.27
0.26
1980
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
0.25
… they still remain high in Brazil
6. 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.
7. Catching up has been driven mainly by advances in
resource-intensive regions
8. Despite Brazil’s faster overall growth …
Growth in GDP per capita among types of TL3 regions,
1995-2007
Predominantly rural
Intermediate
Predominantly urban
Brazil
4.64%
3.14%
1.58%
OECD
2.31%
1.88%
1.93%
…urban regions have performed below their potential, recording a
lower rate of growth than the average for OECD urban regions
9. Policies that aim to tap the growth potential of all types of
regions is an important source of aggregate growth
17%
16%
Sao Paulo
15%
14%
13%
Contribution toOECD growth
12%
11%
10%
Two thirds of
national growth
comes from
intermediate
(32%) and rural
regions (37%)…
9%
8%
7%
6%
Federal Dist.
5%
Rio de Janeiro
Belo Horizonte
Curitiba
4%
3%
2%
y = 0.4664x-1.275
1%
0%
TL3 regions
TL2 regions
This will require a differentiated approach, capable of
adapting to the different needs and challenges of regions
11. Isolated sectoral action may have
unintended outcomes (example)
Brain drain
with labour mobility
Human capital
formation
Policy
responses
Persistence of inequality
11
12. 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
13. 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
14. Resources for regional development are soaring, but
target mainly private firms
Resources for Regional Development (R$ million)
10 000
8 000
6 000
4 000
2 000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
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.
2009
15. Public investment and BNDES funds still face difficulties
reaching lagging regions
Regional allocation of PAC investments
(2007-10)
Northern region
7%
Federal district
1%
Southern region
8%
Regional allocation of lending by BNDES in 2010
Northern region
Northeast 7%
region
10%
Centre-west
region
7%
Northeast
region
19%
Centre-west
region
7%
Southeast
region
60%
Source: Relatórios Estaduais. Totals for four years, 2007-10.
Southern region
18%
Southeast
region
58%
Source: BNDES website, www.bndes.gov.br.
17. Brazil is among the most decentralised countries both
in revenue and spending allocations
60,0
Share of
SNGs in
Public
Revenues
CAN
50,0
CHE
40,0
USA
SWE
ESP
DEU
JAP
30,0
BRA
ISL
DEN
FIN
BEL
AUS
20,0
SVK
KOR
ITA
POL
NOR
CZE
FRA
SLV
10,0
POR
NZL
LUX
GRE
HUN
GBR
IRE
NTH
0,0
0,0
10,0
20,0
30,0
40,0
Share of SNGs in Public Spending
50,0
60,0
70,0
18. ‘Mind the Gaps’ : a Tool for a Diagnosis of MLG challenges
Administrative gap
Information gap
“Mismatch” between functional areas and administrative boundaries =>
Need for instruments for reaching “effective size”
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
19. 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
20. Examples of existing tools for co-ordination
Co-ordinating institutions
Convenios (agreements) and pacts
Regional development agencies
Single Registry, national census, etc.
21. A wide range of governance mechanisms for
vertical coordination of regional development policy
Central/Federal Government
Ministerial Departments
Inter Governmental Regional Agencies Contracts
Council
(Brazil, Canada,…) (France;
(COAG, Australia)
Italy...)
Conditionalities Special Commission
( EU programming) (Delta, Netherlands)
Sub-national Governments
Whatever the type of system – federal, regionalised, unitary – there is a strong need of
coordination across levels of government
22. 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
23. Towards a diagnosis of sub national capacity challenges
• Strategic planning
• Cross-sectoral, vertical and cross-jurisdictional co-ordination
• Stakeholder engagement; ex ante appraisal
Planning:
Design a portfolio
for growth
• Integrity, accountability
and risk management
• Regulatory quality
• Professional and
technical skills
Throughout:
Facilitating
achievement of
goals
Critical
Capacities
needed at all
stages of the
investment
cycle
Evaluation and
Audit:
promoting results
and learning
• Monitoring systems
• Ex post performance assessment
• Use of performance information
Finance and
Budgeting:
Ensure adequate
resources
• Multi-year
budgeting
• traditional and
innovative financing
instruments
• private-sector
engagement
Accountability:
ensure integrity
during
implementation
• Sound public procurement
systems
23
24. Institutions matter
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).
24
25. Ingredients for successful commitments, enforced on the
ground
Evaluation
Third party control
Capacity building
Implementation
of effective
contract for
regional
development
From sanction to
reputational
mechanisms
27. 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
28. 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
.../...
29. 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.
.../...
30. Recommendations (3)
6. The status of regional development agencies needs to
be clarified, as currently, they do not provide the coordination 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
.../...
31. 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.