Press release
10.05.16

Vast spending does not spell high-quality infrastructure

The Governance Report 2016: Managing political priorities and coordinating among stakeholders are top challenges.

Download the executive summary in English.

Download the executive summary in German.

Paris, 10 May 2016. Big investments are no guarantee of high-quality infrastructure. Managerial capacity, like setting and evaluating priorities over time, and building consensus among stakeholders, is far more effective in creating infrastructure that meets public needs and boosts a country’s competitiveness. Taking into account their level of investment, some countries could achieve more by employing appropriate governance instruments.

These are some of the findings of The Governance Report 2016, developed as part of a joint undertaking of the Hertie School of Governance and the Organisation of Economic Co-operation and Development. The report was published by Oxford University Press and presented today (10 May) at the OECD headquarters in Paris with a keynote by OECD Deputy Secretary-General Mari Kiviniemi.

Using a survey of experts from government, research institutions and business in 36 OECD and non-OECD countries, the researchers evaluated the countries’ performance in infrastructure planning, management and outcomes. Based on the experts’ assessments, and economic data comparing factors like competitiveness, innovation and corruption, countries were ranked in each area.

“When taking a closer look, the indicators reveal that countries vary significantly in the ways and the extent to which they manage to translate resources into good outcomes,” says Helmut Anheier, Dean of the Hertie School of Governance and co-author of the report.

Germany earns only average marks for infrastructure management

German experts cited key issues as excessive administrative procedures and legal obstacles, lack of a comprehensive planning process, poor risk allocation in contracts, multiple contact points during construction, and lack of control through independent supervisory bodies and coordinating agencies. Despite their assessment that Germany could be more efficient, the experts viewed outcomes relatively positively, based largely on the fact that the substance and quality of its infrastructure was good to begin with, researchers said.

Compared to its neighbours, Germany did not score as well. Experts from France and the Netherlands were more positive about those questions of infrastructure management and coordination, with both countries scoring better in all three areas than Germany. In Italy, which ranked poorly in management, planning and outcomes, experts cited a lack of sustainable planning, accountability and coordination between central and regional actors, little private sector involvement and expertise, and regulatory and administrative obstacles. In the overall Infrastructure Governance Index, Germany placed 11th, France was 5th and the Netherlands came in 2nd, while Italy was 29th. Switzerland was the top ranked country in the index.

The report debunks a number of myths, showing that vast spending often does not result in higher quality bridges, roads or power systems, nor does it bring the anticipated gains in productivity growth. “In effect, increased spending and investment do not necessarily improve infrastructure quality,” says Matthias Haber of the Hertie School of Governance. OECD countries already spend a considerable share of their gross domestic product on infrastructure – between three and four percent, making it the fourth-largest area of government spending overall, although it has ebbed since the 2008 recession.

Rolf Alter, Director for Public Governance and Territorial Development of the OECD, says: “There are a number of governance instruments that countries with different political and administrative systems can employ in the area of infrastructure. In particular, these include independent bodies or boards that coordinate among actors. Data should also be gathered systematically and analysed to learn from previous mistakes.” 

As building and maintaining infrastructure becomes ever more complex, involving multiple stakeholders from the public and private sector and civil society, coordination across levels of government and administrations is vital. Efficient and successful project delivery requires more than comprehensive front-end planning, but also a flexible and transparent governance regime and risk-management techniques throughout the project life-cycle.

Strategic planning often irrelevant in practice

The number one issue for those surveyed was managing political priorities in planning or allocating resources.

“Tension between political business cycles and the need for sustainable infrastructure planning was considered the most important challenge for strategic planning in both OECD and non-OECD countries,” say the Hertie School’s Gerhard Hammerschmid and Kai Wegrich in the report.

Even though most countries have national strategic plans to prioritise infrastructure needs in at least some sectors, coordinate among stakeholders and foster transparency and rational decision-making, politics frequently gets in the way. 

“The results are sobering: only 18 per cent of the experts surveyed considered such plans as very relevant, and another 26.2 per cent as rather relevant. In contrast, 26.8 per cent regarded such plans in their countries as not relevant at all or rather irrelevant,” Wegrich and Hammerschmid say. In the countries that performed better, such as the Netherlands and Switzerland, experts considered these plans relevant.

About the Governance Report

Published annually by Oxford University Press since 2013, The Governance Report series presents cutting-edge scholarship on the changing conditions and nature of public policy-making. Information about current and previous reports, as well as the data and rankings, is available on the website: www.governancereport.org.