Regional and local productivity in the public sector: where do we stand?

Direct consumption of economic resources by public sector agencies in producing services is a highly significant part of the GDP of OECD countries; yet, productivity in the public sector is a topic that has been long overlooked by research. This paper synthesises what we know about productivity in the public sector at the subnational level to date. It starts with a brief recap of what public sector productivity is and what is not. The next section considers how the specific functions characteristic of the regional and local public sector condition productivity, and the foundation expectations we can formulate about productivity differences across tiers of government. The paper continues with a summary of single-service studies of sub-national government productivity and the best available ideas for improving the productivity of regional, big city and local governments in ways that may generate more growth in their economies. The final parts of the paper are devoted to the renewed importance of governmental resilience and innovation at regional and local levels and on how more inclusive, balanced or compensating forms of economic development may help in lagging regions, especially in the context of adverse climate change. The conclusions argue that boosting public services productivity can also strengthen sub-national governments’ contribution to regional and local growth, and to alleviating these major new risks and challenges