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Decentralisation and Regionalisation in Portugal: Lessons from International Experience and Reform Alternatives

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Decentralisation and Regionalisation in Portugal: Lessons from International Experience and Reform Alternatives Organisation for Economic Co-operation and Development DOCUMENT CODE For Official Use English - Or. English 1 January 1990 DECENTRALISATION AND REGIONALISATION IN PORTUGAL: LESSONS FROM INTERNATIONAL EXPERIENCE AND REFORM ALTERNATIVES The OECD has prepared this report upon request by Portuguese Independent Commission for Decentralisation. The aim of the report is to present alternative ways forward for Portugal to implement its decentralisation reforms, in particular at the regional government level. This report was produced by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) led by Lamia Kamal-Chaoui, Director. It is part of the multi-level governance Programme of Work of the OECD’s Regional Development Policy Committee. The report was coordinated and written by Antti Moisio, Senior Analyst, with substantial contributions received from Anna Rubin, Isabelle Chatry, Antoine Kornprobst, Louise Phung and Enrique Garzilazo from the OECD Secretariat. It was prepared under the supervision of Dorothée Allain-Dupré, Head of Unit, Decentralisation, Public Investment and Subnational Finance. This unit is in the Economic Analysis, Statistics and Multi-level Governance Section, led by Rudiger Ahrend, in CFE. The report also includes substantial contributions from Romain Pasquier, Professor and Director of Research at the CNRS; and Linda Vega, Professor of Economics, University of Minho. The overall project was directed by Joaquim Oliveira Martins, Deputy Director in CFE. In the context of the project, a fact finding mission was organised in Portugal in April 2019, and a seminar was organised in Porto. The OECD would like to thank Isabel Lopes for the coordination of the local team. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 │ │ 3 Table of contents 1. Introduction ....................................................................................................................................... 5 2. Executive summary and main policy options for Portugal ............................................................ 7 2.1. Overview ....................................................................................................................................... 7 2.2. Main challenges faced by Portuguese multilevel governance ...................................................... 7 2.3. Ways forward in the process of decentralisation in Portugal ........................................................ 9 2.3.1. Prerequisites for a successful territorial and institutional restructuring ................................. 9 2.3.2. Three scenarios for enhanced decentralisation in Portugal .................................................. 10 3. Why do countries decentralise? ..................................................................................................... 13 3.1. What is decentralisation and why do countries decentralise? ..................................................... 13 3.2. Main types and forms of decentralisation ................................................................................... 13 3.3. Fiscal federalism as a starting point for decentralisation ............................................................ 15 3.4. The benefits and challenges of decentralisation: a summary of the main effects ....................... 16 3.4.1. Economic outcomes ............................................................................................................. 16 3.4.2. Administrative and political outcomes ................................................................................. 21 3.5. Decentralisation goes hand in hand with an upscale of subnational governance........................ 22 3.5.1. Experiences from inter-municipal co-operation ................................................................... 22 3.5.2. Metropolitan governance in the OECD and beyond ............................................................ 26 3.5.3. Regionalisation: an increasing trend worldwide .................................................................. 29 3.5.4. Asymmetric decentralisation ................................................................................................ 31 4. Regionalisation in the context of decentralisation reforms.......................................................... 34 4.1. Strengthening regions in a multilevel governance framework ................................................... 34 4.1.1. Regionalisation through deconcentration ............................................................................. 35 4.1.2. Regionalisation through inter-municipal co-operation ......................................................... 37 4.1.3. Regional decentralisation ..................................................................................................... 38 4.1.4. Political regionalisation (institutional regionalism) ............................................................. 41 4.2. Regionalisation reforms in the EU countries: an overview ........................................................ 41 4.2.1. Regionalisation and regional institutions ............................................................................. 42 4.2.2. Regionalisation and identities .............................................................................................. 43 4.2.3. Opportunities and risks of regionalisation ............................................................................ 44 4.3. Regional reforms in Finland, France and Poland ........................................................................ 45 4.3.1. One or two-tier subnational government? The Finnish experience ...................................... 46 4.3.2. French experiences on regionalisation ................................................................................. 52 4.3.3. Regionalisation and decentralisation in Poland .................................................................... 56 4.3.4. Summary of the country examples ....................................................................................... 58 5. The case of Portugal: diagnosing multi-level governance strengths and challenges ................. 61 5.1. Stage of decentralisation in Portugal .......................................................................................... 61 5.1.1. Subnational government structure ........................................................................................ 61 5.1.2. Political decentralisation ...................................................................................................... 62 5.1.3. Administrative decentralisation ............................................................................................ 63 5.1.4. Decentralisation in Portugal in international comparison .................................................... 72 5.1.5. Main challenges faced by Portuguese multilevel governance .............................................. 79 4 │ 5.2. Portuguese model of multilevel governance in comparison with systems in the other EU countries: the path-dependency revisited ........................................................................................... 89 5.2.1. Countries with one subnational government tier .................................................................. 90 5.2.2. Countries with two levels of subnational government ......................................................... 90 5.2.3. Countries with three levels of subnational government ....................................................... 91 5.2.4. Portuguese multilevel governance model ............................................................................. 91 5.2.5. Portuguese model in comparison with Finland, France and Poland..................................... 92 5.3. Regional development policy in Portugal ................................................................................... 93 5.3.1. Regional performance and disparities in Portugal................................................................ 93 5.3.2. Regional policy as a test case for broader multi-level governance reforms: key achievements and outstanding challenge ..................................................................................... 105 6. Ways forward in the process of decentralisation in Portugal.................................................... 117 6.1. Making reform happen: prerequisites for a successful territorial and institutional restructuring ..................................................................................................................................... 117 6.2. Three scenarios for enhanced decentralisation in Portugal ....................................................... 120 6.2.1. Decentralisation and strengthened deconcentration without empowerment of regional level .............................................................................................................................................. 121 6.2.2. Decentralisation without full regionalisation by reinforced municipal and inter- municipal levels............................................................................................................................ 123 6.2.3. Decentralisation through complementary regionalisation and inter-municipal cooperation reforms.....................................................................................................................
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