Traditional (sectoral) regional and urban policy models target particular sectors in specific territories. This means that levels of government function in a relatively segregated way. However, integrated territorial development requires a different mode of governance, encompassing a cross sectoral and cooperative way of working. An OECD report (Regional Development Policies in OECD Countries) indicates that this influences current government structures. The OECD states that, the role of the central government is being re-defined rather than diminished. Although in most cases the central government remains a significant source of funding and authority for regional development, the role of the central government in designing and delivering major regional development interventions is declining as regional policy systems are open to a broader range of participants. Instead, the role of the central government is increasingly important for providing an overarching framework for regional development policies.
Two notions of governance play a key role in integrated territorial and urban development:
- horizontal governance; cross-cutting policy sectors
- vertical governance; cross-cutting various government layers
The value of horizontal governance has been highlighted by the increasing recognition of interdependencies and interactions between different policy areas. Horizontal governance can potentially improve resource allocation and service delivery by facilitating more integrated approaches to policy administration. Vertical governance deals with the multi-level governance between national and sub-national levels. The relationship between levels of government (multi-level governance) is characterised by mutual dependence. A functional combination of the strengths of national, regional and local governments calls for multi-level governance arrangements which aim at sharing responsibilities, authorities, skills and resources. An integrated approach embodies simultaneously vertical and horizontal governance as the lines of communication and co-ordination for a given policy objective may criss-cross, involving multiple actors and stakeholders in the public as well as the private sector and citizens.