Session 4 | The resilience of subnational infrastructure investment to shocks: the role of funding and financing frameworks
Nov 5, 2026 | 1:00 PM - 2:00 PM
CC1
Description
Subnational governments carry out over 55% of public investment in the OECD and are directly responsible for building and maintaining a significant proportion of government infrastructure, including that related to the energy and digital transitions. However, previous episodes of fiscal consolidation and associated cuts in capital transfers, as well as economic shocks, have demonstrated that that subnational governments tend to cut investment first. This is notably due to their lower tax autonomy and more limited access to borrowing compared to central governments. This leaves them with few options other than postponing or cancelling investment. In addition, disparities across jurisdictions exacerbate the problem, with fiscally stronger regions and cities being better able to raise revenues and sustain investment, while many smaller and poorer ones struggle to maintain basic capital spending.
This session will examine how existing funding and financing frameworks shape the ability of regions and cities to maintain investment during periods of fiscal stress and how resilient subnational investment is responding to shocks across territories, drawing on recent OECD work on subnational fiscal frameworks and the multi-level governance of public investment.
