New Report: Governing and Financing Cities in the Developing World
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New Report: Governing and Financing Cities in the Developing World

CAMBRIDGE, Mass., May 13, 2014 — (PRNewswire) — The fast-growing cities of the developing world would benefit from a major overhaul in governance structure, to improve the financing and delivery of essential services, according to a report published by the Lincoln Institute of Land Policy.

Governing and Financing Cities in the Developing World, by Roy W. Bahl and Johannes F. Linn, examines more than 50 cities in the developing world in the midst of the rapid urbanization that has become typical in those metropolitan areas. The authors recommend a new relationship between major cities and national governments that combines autonomy and national fiscal planning.

"After decades of neglect, due in large part to the lack of effective political pressure on national, provincial, and local authorities, the stars may now align in favor of a metropolitan strategy for many cities in the developing world," the authors write. "With the increase in urban population, the metropolitan area constituency is growing in political power and may be, more than ever, in a position to sway votes. Moreover, the opportunities and the challenges of metropolitan cities are likely to become great and evident enough to force themselves onto the policy agenda of the governments around the world."

Big cities generate the most dynamic economic development, the strongest links to the global economy, and the resources to help poorer countries become more competitive and prosperous. However, the same advantages that drive investment and growth in these areas also draw migrants who need jobs and housing, lead to demands for better infrastructure and social services, and result in increased congestion, environmental damage, and social problems.

Governments in developing countries face two key challenges: how to capture a share of the economic growth to finance the needed expenditures, and how to manage cities so that the urban economy functions efficiently, services are delivered cost-effectively to all, and citizens have a voice in governing the city.

Governing and Financing Cities in the Developing World, the latest Policy Focus Report published by the Lincoln Institute, identifies the critical issues and describes current practice, the gap between practice and theory, and potential paths to reform. The authors identify two fundamental challenges: how to manage complex vertical and horizontal urban governance structures, and how to raise the finances to promote efficient, equitable, and sustainable metropolitan growth. The report explores local revenue instruments, with a focus on property-based local taxes and user charges, as well as external revenue sources such as intergovernmental transfers, borrowing, public-private partnerships, and international assistance.

Among the conclusions drawn from prevailing practice:

Clearly there are no blueprints, silver bullets, or universal solutions for metropolitan governance and finance reform. What might the future metropolitan areas look like in terms of the prevailing governance and financing patterns if they evolve in appropriate directions? Broadly speaking, the typical metro area in the mid-twenty-first century would have the following four key characteristics:

Governing and Financing Cities in the Developing World, the Lincoln Institute's most recent Policy Focus Report, was preceded by the book Financing Metropolitan Governments in Developing Countries, by Bahl, Linn, and Deborah L. Wetzel, country director for Brazil at the World Bank. The research has been the basis for a webinar series on governance and finance produced by the World Bank.

About the Authors

Roy W. Bahl is Regents Professor of Economics, emeritus, and founding dean of the Andrew Young School of Policy Studies at Georgia State University. He is the author of numerous books and papers on taxation and financing local governments, and he has worked extensively as an advisor to governments in the United States and in countries around the world.

Johannes F. Linn is a resident senior scholar at the Emerging Markets Forum in Washington, DC, and a nonresident senior fellow at the Brookings Institution. Prior to joining Brookings, he worked for three decades at the World Bank in various capacities, including as the Bank's vice president for financial policy and resource mobilization, and as vice president for Europe and Central Asia.

Both authors are members of the board of the Lincoln Institute. The Lincoln Institute of Land Policy is a leading resource for key issues concerning the use, regulation, and taxation of land. Providing high-quality education and research, the Institute strives to improve public dialogue and decisions about land policy. 

SOURCE Lincoln Institute of Land Policy

Lincoln Institute of Land Policy
Anthony Flint 617-503-2116
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