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Getting infrastructure right: the OECD framework for better governance

Ian Hawkesworth's picture



Infrastructure is expensive, important and difficult to get right. For both the members of the Organisation for Economic Co-operation and Development (OECD) as well as other countries, infrastructure exposes shortcomings in country systems that may undermine our ability to identify, develop and procure good projects that are sustainable, affordable and legitimate. But there is no alternative—businesses rely on modern infrastructure to remain competitive, and society depends on good infrastructure to ensure equal opportunity and access to services for citizens.
 
With sufficient access to finance, poor governance of infrastructure is one of the most fundamental bottlenecks to achieving long-term development objectives.
 
In response to this challenge, investors, regulators, members of the public and private sectors, and decision makers from across levels of government, expertise, and regions, gathered at the 2nd  OECD Forum on the Governance of Infrastructure in Paris in March to discuss the impact of infrastructure governance on productivity, jobs and wellbeing.

The meeting addressed issues such as infrastructure policy and planning, institutional arrangements for multi-level investment projects, stakeholder participation, integrity, procurement for sustainable infrastructure and the role of private finance in infrastructure. The discussions got off to a vibrant start with a candid keynote address by Portugal’s Minister of Planning and Infrastructure, Pedro Marques. The ensuing days of open and animated discussion showed that this theme benefits from, and the forum provided, an opportunity to learn from each other how to get the most out of investment resources on our way to meet the Sustainable Development Goals (SDGs).
 
A highlight of the meeting was the launch of the OECD publication Getting Infrastructure Right: A Framework for Better Governance. This document identifies the principal “success factors” for ensuring good infrastructure governance. It is an update of the initial instrument welcomed by OECD ministers in June 2015 in Paris and at the meeting of the G20 Finance Ministers and Central Bank Governors in September 2015 in Ankara, Turkey. The publication also includes a snapshot of the state of play in infrastructure governance based on a survey of 27 OECD and partner countries.
 
The success factors include:
 
Strategy:
  • Establish a national long-term strategic vision for the use of infrastructure that helps to create activities that generate welfare and increase the nation’s productive capital stock.
  • Integrate infrastructure policy with other government priorities, such as education, poverty reduction, and urban development, and link it with related policies that support infrastructure development, such as logistics and infrastructure services, trade regulations, or customs procedures.
  • Coordinate infrastructure policy across levels of government in such a way that investment decisions by central and subnational governments are coherent.
  • Implement appropriate standards to provide resilient infrastructure systems that are resistant or adaptive to shock events.
Affordability and value for money:
  • Guard affordability and value for money by using and applying cost-benefit and other methods rigorously and consistently.
  • Establish clear criteria and processes to guide the choice of delivery mode, such as Public-Private Partnership (PPPs), concessions or other forms of public procurement.
  • Explore to which extent and under which conditions projects with private participation can lead to better outcomes.
Management:
  • Ensure the appropriateness of skills, procedures and processes to manage infrastructure projects over their life cycle.
  • Integrate mechanisms to monitor and evaluate performance of the asset throughout its life and consideration of options for better use of existing infrastructure.
  • Establish good regulatory design and maintain a predictable regulatory framework for investment.
Stakeholder engagement and consultation:
  • Make use of consultations and structured engagement in infrastructure policy formulation and project delivery.
  • Generate, analyze and disclose useful data to increase transparency and ensure accountability.



Infrastructure Governance in Chile

The framework served as the foundation for the new OECD review of infrastructure governance in Chile. The review examines Chile’s infrastructure stock and governance standards in light of the country’s 2030 growth agenda and OECD benchmarks. Chile’s planning and governance framework has supported the roll out of high quality and efficient infrastructure that has been a key enabler of the country’s rapid development over the past two decades. However, changing circumstances such as climate change, decentralization and more focus on social development now require a change in how infrastructure needs are identified, aggregated and executed. The review sets out how such change can be achieved.
 
For more information, please check out the following OECD documents:
Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.

Comments

Submitted by Engr Rushd on

After year 2008 at the beginning of Economic downturn,it was reported and circulated that many financial institutions are reluctant to invest in Infrastructure projects because of many reasons.
Now many them returning slowly and cautiously to invest again in Infrastructure projects.
Congratulations and welcome.
It is already late , even there is time to catchup.
For better future.

Submitted by jafariqbal on

thank you

Submitted by Akanimo Kufre on

YES! May not guarantee accuracy of facts but it is evidence in African States like Nigeria. It is evidence in my province in the country south. Infrastructures are guided by either sentiments of political loyalty or personal economic benefit of decision makers/associates. This attitude over times blocks long term benefit of infrastructure or their sustainability.

Submitted by Dr. Mohamed Taher Abdelrazik Hamada, Ph.D on

Yes infrastructure is very expensive , for the Organization For Economic Co-
Operation and Development (PECD), and countries , but both developed and developing
countries need it. It is essential for all long term projects with long term finance
from the lender agency , mainly the World Bank.
Wise governance in developing nations is necessary to make the ultimate profit
from the lender in long term financial projects .
Infrastructure projects are beneficial for both the World Bank and the
developing countries because both of them invest in something vital and essential.
These infrastructure projects can guarantee the continuity of the government's
abilities to gain the trust of their citizens .
It is essential for the World Bank and the assigned country to put priorities
for their needs of infrastructure because the needs of each country is different
from one country to another. These needs are categorized according the country's
size, level of needs in terms of poverty, or health and education ,
These priorities are considered the milestones for a successful relationship
between the World Bank and the assigned country.
Yours Very Respectfully,
Dr. Mohamed Taher Abdelrazik Hamada Ph.D
Retired Professor at Strayer University, USA
*edited for brevity and privacy*

Submitted by Nahid Majid on

Thank you! Great read and absolutely - effective, transparent and accountable good governance (public/private) is key as is leaderships and a shared and agreed narrative (joined up Government policy) and an independent project viability test - I led on the development of a new model for UK Government the Regeneration Investment Organisation RIO which shares many of the principles you rightly propose all leads to investor confidence in challenging contexts- RIO built a strong £100bn project pipe line and secured £1.5bn by matching supply of projects to demand/investor appetite it would be great to share the lessons learnt and proposed new adapted models/next steps particularly when allocating European Structural and World Bank funds in new emerging markets. Nahid Majid

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