International co-operation between cities and regions involves more than financial aid. In practice, it can also include staff exchanges, training and the sharing of practical solutions. A new OECD report finds that these partnerships can strengthen local institutions and improve services. However, outcomes depend on staffing, predictable funding and co-ordination with national governments. Importantly, the statistical associations identified in the report do not prove direct causation.
From financial assistance to peer learning
Regional development is often described in financial terms: how much was allocated to infrastructure, how much investment was attracted and how large a territory’s budget is. Yet resources are not only financial. For example, cities can share management practices, train specialists and help one another address practical challenges.
The OECD examines this approach in its report The Impact of Decentralised Development Co-operation: Driving Local Governance and the SDGs, published on 8 September 2026. To do so, the authors draw on aid data, two surveys of more than 180 local and regional governments, 16 case studies and quantitative analysis. They also use text analysis and AI-assisted validation to identify the territories receiving support more precisely.
In this model, cities and regions take a leading role in partnerships. These initiatives often focus on areas within local governments’ operational responsibilities, including water, waste management, urban planning, mobility and climate adaptation.
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Assistance led by local governments doubled
Across the 15 OECD Development Assistance Committee countries with available data, official development assistance provided by local and regional governments rose from USD 1.8 billion in 2013 to USD 3.6 billion in 2024. This is the reported total for those countries, rather than a complete global figure. Further details are available in the OECD report and its key findings.
Nevertheless, financial transfers capture only part of this co-operation. Seventy-one per cent of projects reported by cities and regions in DAC countries included non-financial activities or relied on them entirely. These activities include knowledge exchange, technical assistance and capacity building, as described in the OECD analysis of partnership formats.
As a result, such projects can move beyond a simple “donor-recipient” model. Partners may exchange knowledge in both directions: one administration shares its experience, while the other contributes solutions of its own. Therefore, funding alone does not capture a partnership’s value. The knowledge retained by local institutions matters as well.
An association is not proof of causation
To assess outcomes, the OECD matched localised co-operation data with development indicators for individual territories. Its analysis found statistical associations with income trends, urban green space and transport emissions. However, the researchers do not claim that co-operation alone caused these changes. Other factors, such as economic structure and institutional quality, may also matter, according to the OECD methodology and impact assessment.
For this reason, an agreement between two cities does not automatically produce an economic outcome. More promising partnerships address local governments’ actual responsibilities and practical challenges. The OECD highlights water, waste management, urban planning and climate adaptation. In addition, long-term programmes and predictable funding are important.
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The biggest constraint is people
Even a well-designed project needs a team to manage it over time, co-ordinate departments, work with partners and put decisions into practice. Yet only 19% of surveyed partnerships reported having enough staff on both sides. The OECD identifies human-resource constraints as a major barrier to achieving partnership goals in its recommendations on capacity and staffing.
Without a stable team, knowledge can disappear when funding ends. Moreover, local administrations may lose accumulated experience when specialists leave. Consequently, co-operation needs to become part of regular government work, rather than remain the responsibility of a temporary project.
Effective partnerships also require broader co-ordination. Civil society, universities, national authorities and businesses can work alongside local administrations. However, the report says private-sector participation is less common. This may limit opportunities to connect changes in governance and the urban environment with investment and economic activity. At the same time, the report does not claim that business participation automatically produces those outcomes.
The centre needs a different role
The OECD does not frame the choice as a strong centre versus autonomous regions. Instead, it describes complementary roles. National governments remain important for legal frameworks, funding, co-ordination and evaluation. Local governments, meanwhile, are closer to specific challenges and can see which solutions work in practice.
Among surveyed authorities in DAC countries, 55% reported operating under a dedicated national framework or law for this co-operation. Separately, 56% reported access to national co-financing, while 68% used national financial support. These figures refer to survey respondents and describe different support mechanisms. The OECD findings on national frameworks provide further detail.
The practical lesson, therefore, is not simply to transfer more powers to regions. Local governments also need funding, staff, data and the ability to plan over several years. National governments can set common rules and connect separate initiatives without taking over every local decision.
What counts as a result?
Public programmes often record how much money was allocated and how many projects began. However, it is harder to assess what changed several years later. Did services improve? Did teams stay in place? Are new management practices still being used?
The OECD points to weaknesses in systematic evaluation. More than 60% of surveyed local and regional governments assessed their work in some form. By contrast, only 17% of partnerships conducted a systematic evaluation on both sides at the same time. Without comparable evidence, it is difficult to identify which practices produce lasting results.
Measurement presents another challenge. Financial flows are easier to track than training, technical assistance and staff exchanges. In many cases, reporting identifies a recipient country but not the specific city or region. Consequently, counting money alone can understate knowledge transfer and institutional capacity building.
Meanwhile, preliminary OECD data show that official development assistance from DAC countries fell by 23.1% in 2025. At the time of writing, the figure remained preliminary; final data were expected in December 2026. The OECD’s preliminary 2025 ODA data provide further context.
Knowledge exchange can complement funding, but it cannot replace it. Ultimately, sustainable local development requires both resources and the capacity to use them. The key question for regional policy is not only how much money a territory received, but also which capabilities it built and retained.
Aruzhan Tolegenkyzy, EconomyKZ Research expert, exclusively for EconomyKZ.org
