Intergovernmental grants are used in many countries to finance subnational spending and to implement national policies. However, the governance of grants is complex, and practices vary widely across OECD countries. The aim of this article is to provide a study of grant design that will be useful to policy makers. The article attempts to integrate both theoretical and empirical insights from the fiscal federalism literature as well as information obtained directly from practitioners concerning their experiences with the implementation of different types of grants. A typology of grants is presented, as well as an overview of the purposes of grants. The article concludes with some principles of grant design and implementation issues.

By Hansjörg Blöchliger and Claire Charbit Fiscal equalisation is a transfer of fiscal resources across jurisdictions to offset disparities in revenue raising capacity or public service cost. It covers on average 2.5% of GDP or 5% of total government expenditure across OECD countries. Equalisation reduces fiscal disparities by two-thirds on average and in some countries levels them virtually out. Strong equalisation comes at a price: on average, around 70% of a jurisdiction’s additional tax income must be dedicated to an equalisation fund. The equalisation rate is generally higher for jurisdictions with low fiscal capacity, reducing their tax effort and likely to slow down regional economic convergence. Cost equalisation is larger than revenue equalisation in terms of GDP despite smaller cost disparities, pointing at inefficiencies in the distribution formulae. Fiscal equalisation can be pro-cyclical but most countries succeed in reducing fluctuations of entitlements, sometimes at the cost of sub-central budget needs. Fiscal equalisation is very country specific, and data and analysis must be taken with care.

No abstract

No abstract

This contribution recalls the existing interdependencies across levels of government and elaborates on the multi-level governance gaps framework to identify coordination and capacity reinforcement tools to improve public policy outcomes in decentralised contexts. It details how the Organisation for Economic Co-operation and Development has adopted this approach. This paper then focuses on one of the tools used by countries and regions – Contracts. Contracts across levels of government, though not exempt of drawbacks, can favour information-sharing and mutual understanding as to how to address common policy priorities, while reducing the transaction costs of policy implementation; and generate trust between public actors for their future endeavours. The last section underlines some more general observations and questions like the use of multi-level governance approach to preserve the ‘biodiversity’ of regions. The note concludes with the need to re-insert relationships with people and not only among public authorities in a ‘new generation’ multi-level governance framework.