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 Metropolitan fragmentation. Many large conurbations constitute functional economies but are politically fragmented, being comprised of a large number of municipalities. In many cases, this complexity is cases compounded by the presence of numerous “special purpose governments”, such as school districts, transport authorities and the like. The greater Chicago metropolitan region, for example, encompasses some 1700 distinct governmental authorities. This raises clear challenges in terms of efficiency and growth, since it can make it hard to tackle strategic issues like transport and land-use planning at the appropriate scale. It also presents a challenge for equity and inclusion, since such fragmentation often reflects – and reinforces – spatial inequalities and makes redistribution and equality of access to services more difficult across a metro area. The implications for Inclusive Growth are notable as spatial impediments to the prosperity of particular groups tend to result in poorer performance for metros as a whole.

 Urban planning. Urban planning procedures can reinforce intra-urban inequalities, particularly where, as is often the case, housing supply is constrained (and housing prices thus elevated) by an inflexible planning system. Strikingly, successful and growing cities are often those with the most restrictive policies, which makes it particularly hard for lower-income people to benefit from their prosperity.

Indeed, many urban growth-control policies are designed to limit the influx of low-income people to an area (e.g. those that impose low-density requirements, require minimum housing size, or ban attached homes). More generally, the technical nature of much urban planning, coupled with the fact that it is often conducted with minimal publicity, tends to favour the interests of better informed, better resourced communities and sectoral interests.

The two issues are, of course, interlinked, since metropolitan fragmentation often enables local authorities to pursue planning and urban development policies that are inconsistent with the goals of both inclusion and growth for the larger urban economy. Lack of co-ordination of transport, housing and land-use policies, in particular, can be particularly detrimental to social, economic and environmental outcomes.

Sources: Kamal-Chaoui, L. and J. Sanchez-Reaza (2012), "Urban Trends and Policies in OECD Countries", OECD Regional Development Working Papers, No. 2012/01, OECD Publishing; OECD (2012a), Redefining “Urban”: A New Way of Measuring Metropolitan Areas, OECD Publishing; OECD (2012), OECD Territorial Reviews: The Chicago Tri-State Metropolitan Area, OECD Publishing; OECD (2011c), OECD Regional Outlook 2011: Building Resilient Regions for Stronger Economies, OECD Publishing; Cheshire, P. and S. Sheppard, (2002), “Welfare Economics of Land Use Regulation”, Journal of Urban Economics, 52, pp. 242-69; Spink, P., P. Ward and R. Wilson (eds) (2012), Metropolitan Governance in the Federalist Americas: Strategies for Equitable and Integrated Development, University of Notre Dame Press, South Bend.

Inclusive policy making: a sound process with the right tools Key elements of an inclusive policy process The way policies are designed and implemented matter for Inclusive Growth. A policy-making process that is inclusive builds upon reliable information, provides a structure to exchange it, and aligns incentives and expectations of different actors effectively. This facilitates an engagement process that achieves credible commitments and is conducive to citizens’ trust in institutions and co-operation for

implementation. This policy process has the following core characteristics:

 The policy-making process is well-informed. This depends, in part, on (i) the inclusiveness of the information available to decision makers, to ensure that it covers the relevant stakeholders, with the classifications and breaks to reflect the different importance of the issues, and (ii) the quality of the information available to decision makers, associated with mechanisms such as evaluation, and performance management.

 The policy-making process reflects the public interest. The policy-making process should safeguard the public interest and avoid capture, while effectively aggregating what may be competing, but legitimate, interests. The recognition and effective regulation of formal mechanisms to influence policy making, including lobbying or support to political parties can help strike the right institutional balance.

 The policy-making process is aligned with broader principles and high standards of governance. Studies show that a crucial determinant of trust in government is whether government can be expected to take the right decisions and safeguard the public interest without the need for scrutiny. Integrity tools and mechanisms, embedded within a solid integrity framework to prevent corruption and foster high standards of behaviour, are necessary to reinforce the credibility and legitimacy of the actors involved in policy making.

These characteristics correspond to policy levers that governments can use to support a more inclusive policy process. For example, citizen engagement, access to information and open government can be leveraged to render the policy-making process more informed. Effective management of conflict of interest, good standards of behaviour in the public sector, and adequate lobbying and political finance regulation, can be leveraged to limit undue influence and build safeguards to protect the public interest (Table 4.1).





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Mechanisms that support inclusive policy making Inclusive policy making employs a variety of mechanisms, each targeting specific aspects of inclusiveness. Some mechanisms may aim to legitimatise public decisions, others advance evidence-based decision making (rationality), and yet others aim to raise support for policy actions among different stakeholders (integration). Participatory bodies advance legitimacy by allowing participation and political representation of different groups in the policy-making process. Policy-making supported by independent consultation bodies and technical capacity can also enhance legitimacy by supporting problem definition and possible solutions based on evidence, helping policy makers to distinguish between facts and opinions.

Finally, structured dialogue with stakeholders is crucial to develop feasible and sustainable policy solutions. The remainder of this section examines each of these mechanisms.

Participatory bodies as enablers for inclusive policies

Participatory bodies have an important role to play in inclusive policy making. Each of the objectives for inclusive policy making may be pursued through different types of participatory bodies.

Legitimacy can be advanced by expert groups, such as in the case of truth commissions, like in Chile and South Africa. Evidence-based decision making can be served by inter-ministerial commissions that aim at discussing the experiences and opinions of different entities of the public administration. Integration can be the objective of technical parliamentary commissions that aim at including different stakeholders through audiences, for example.

To fulfil their mandate, participatory bodies need to have certain characteristics. Legitimacy requires autonomy from the government, membership from outside the administration, and timely delivery of results, so that consultation is not used as a delaying strategy. A clear mandate and access to relevant information are necessary to advance evidence-based decision making. Integration is achieved by plurality, allowing opinions beyond those of the members of the consultation body, and by acting transparently, providing justifications for each proposal (Marcel, 2009). The 2006 Presidential Advisory Council on Pension Reform in Chile provides an example of how a participatory body helped to move reform forward in a controversial field (Box 4.2). Another example is the processes put in place by Malaysia in 2007 to secure engagement and support through PEMUDAH, a special taskforce to oversee regulatory reforms to facilitate businesses (Box 4.3).

Box 4.2. The experience of the Presidential Advisory Council on Pension Reform in Chile President Bachelet made two major commitments after taking over the presidency of Chile in 2006: participative government (gobierno ciudadano) and pension reform. Until then, the experience of Chile concerning participative mechanisms for designing, executing, and evaluating public policies was quite limited.

President Bachelet established the Presidential Advisory Council on Pension Reform (Consejo Asesor Presidencial para la Reforma Provisional, CAPRP) in March 2006, just one week after the inauguration of her term.

The CAPRP’s mandate was to develop reform proposals for the pension system taking into account opinions by the general public and stakeholders linked to the pension sector. The CAPRP brought together 15 experts with different political and professional profiles, designed a programme of work, which included an intense stage of audiences, commissioned polls and opinion studies, and produced a set of proposals after 100 days of work.

The members of CAPRP included engineers, lawyers, sociologists, and a civil engineer; eight coming from the academic sector or NGOs, six from the private sector, and one from an international organisation. Almost half had some previous experience in the public sector. Significant representation from outside the government coalition was actively pursued. However, membership avoided corporate representatives of a specific sector or advocates of a particular reform in order to advance an open dialogue.

The first month of work was spent holding audiences. Forty-nine audiences were organised for 73 organisations and 242 individuals. Forty percent of the audiences were granted to trade unions and social organisations, 27% to employers and stakeholders from the financial sector, and 33% for experts, academics, and international organisations. Audiences were organised at the initiative of the CAPRP or by request of interested parties.

Participants were to submit a 15 page position document previous to the audience and a one page synthesis of their presentations to be shared with the press and uploaded in the CAPRP website.

The CAPRP report provided the foundations for the reform bill that the President introduced in Congress and that became law in January 2008. The final report consisted on three volumes: diagnosis and proposals (81 of them), documents from consultations, and an executive summary. Among other features, the success of the CAPRP is attributed to 1) a clear mandate, with access to critical information, and a well-defined scope of the work to be undertaken; 2) autonomy from the government and a clear timeline; and 3) plural membership and transparency in the process of consultation.

Source: Marcel, M. (2009), “Nuevas modalidades participativas en la formulación de políticas públicas en Chile: La experiencia del Consejo Asesor Presidencial para la Reforma Previsional, Inter-American Development Bank, multicop.

Box 4.3. Partnership in improving the regulatory environment of Malaysia

The Special Taskforce to Facilitate Business (PEMUDAH) was established in February 2007 to oversee regulatory reforms to facilitate business in Malaysia. PEMUDAH reports directly to the Prime Minister and is composed of high-level business representatives and secretary generals of key ministries. It is co-chaired by the Chief Cabinet Secretary and a prominent captain of industry.

The work of PEMUDAH has included a systematic review of all business licenses, legislations and regulation.

As of October 2013, 803 licenses were simplified and composited into 466, nine licenses were abolished, and 19 are in the process of being eliminated - representing a total cost savings to business of RM729 million per year (EUR 160 million). PEMUDAH also introduced the requirement for online public engagement by all ministries and agencies for all new proposals or amendments to by-laws, policies, regulations, etc. This is designed to improve the inclusiveness of government policy making. The Taskforce has also contributed to policy improvements in a variety of areas including the autonomous liberalisation of over 40 sectors, allowing up to 100% foreign equity participation in selected sub-sectors, and introduction of new immigration policies (i.e. permitting a resident pass for up to 10 years, abolishing time limits on the approval of employment passes, and automatic issue of expatriate passes and work permits for expatriates’ spouses). The trust that has been built between the private and public sector through this body has enabled the number of reforms to date and potential new reforms are also in progress.

Source: OECD (2013), Malaysia Good Regulatory Practices, Interim Report (unpublished) Participatory bodies can exist at all levels of government. For example, sub-national citizen councils can act to steer and promote regulatory reform. These have been used by several of Mexico’s federal states (Box 4.4). Experiences in Mexico suggest that such councils should be legally established with a clear mandate, be led by citizens, have top-level political support, be multi-disciplinary and have representative membership, act in a consultative role to government, meet periodically, possess a welldefined structure, with working groups to address specific topics and have an autonomous administration (including its budget) (OECD, 2012d).

Box 4.4. Citizen councils to promote regulatory quality at the sub-national level in Mexico Several Mexican states have created councils and committees to promote improvements and continuity of reforms in regulatory management at the local level. In most cases, businesses and other stakeholders from private

entities are represented and take part in the decision making process. Some examples are the following:

 The Economic and Social Council of Mexico City was established by law in 2009 to support the Government of Mexico City in areas of sustainable development, fostering economic growth and job creation, and better income distribution to reduce social gaps in Mexico City. The Council is a representative, economic and social participation body, with a consultative character that can make recommendations to the Government of Mexico City. The Council is composed by Government officials, seven business representatives, seven individuals from academia, seven representatives from civil society, seven from trade unions, and four individuals from professionals associations.

 In the State of Colima, the 2011 State Law of Regulatory Improvement established a State Council for Regulatory Improvement, which incorporates representatives from business, academia, and civil society associations. The contributions of the Council include analysing and reviewing all valid regulations in the state’s jurisdiction to make recommendations for improvement; helping elaborate and update the Registry of Formalities and Services; participating, in co-ordination with social and productive sectors, in the design of draft regulations that impact the activities of businesses and citizens; proposing regulatory improvements at municipal level; strengthening Municipal Business Centres or one-stop shops to promote economic activity; and publishing opinions on regulatory impact analyses.

 In Nuevo Leon, the Citizen´s Council for Regulatory Improvement is one of the leading institutional arrangements for regulatory policy in the state. Created by law, it includes representation from business, civil society, and academia. Among other functions, the Council issues opinions about the State Regulatory Improvement Programme, participates in the review of state-level regulation, promotes coordination between public, social and private sectors on issues pertaining to regulatory improvement, and promotes regulatory reform at municipal level.



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