Strengthening booming cities in developing nations
A new book published by the Lincoln Institute of Land Policy spells out needed reforms in the governance of metropolitan regions in developing countries -- the major cities that are engines of economic growth and booming centers of rapidly increasing population. Financing Metropolitan Governments in Developing Countries, edited by Roy W. Bahl, founding dean of the Andrew Young School of Policy Studies at Georgia State University; Johannes F. Linn, nonresident senior fellow at the Brookings Institution; and Deborah L. Wetzel, country director for Brazil at the World Bank, is a compilation of papers from leading scholars presented at The Brookings Institution on the management and public financing of fast-growing metropolitan areas from Brazil to India to China and beyond.
The book will be translated into Chinese and announced in the People’s Republic of China on May 20 at the Lincoln Institute-Peking University Center for Urban Development and Land Policy in Beijing, as part of a daylong symposium on the subject of public finance and local government.
The economic activity that drives growth in developing countries is heavily concentrated in urban areas. The very advantages of metropolitan areas that attract investment, however, also draw migrants who need jobs and housing; lead to demands for better infrastructure and social services; and often result in increased congestion, environmental harm, and social problems.
The challenges for metropolitan public finance are to capture a share of the economic growth to adequately finance new and growing expenditures and to organize governance so that public services can be delivered in cost-effective ways, while giving the local population a voice in fiscal decision making. At the same time, care must be taken to avoid over-regulation and over-taxation that would hinder private investment and entrepreneurial initiative.
Sweeping metropolitan-area fiscal reforms have been few and far between, and the urban policy reform agenda is extensive. Financing Metropolitan Governments in Developing Countries identifies the most important issues in metropolitan governance and finance in developing countries, describes the practice, explores the gap between practice and what theory suggests should be done, and lays out reform paths to be considered. A growing number of success stories in metropolitan finance and management, together with accumulated experience about what works, can inform current efforts to address the growing public service needs of metropolitan-area populations.
Part of the solution, the scholars conclude, will rest in rethinking expenditure assignments and instruments of finance. But this will need to take account of how government is structured, the characteristics of the local economy, the infrastructure gap, the concentration of poverty and slums, environmental concerns, and external financing options. Another important factor is to increase the accountability of political leaders to design and implement better solutions to the metropolitan finance challenge.
The contents include a Foreword by Douglas H. Kare; Governing and Financing Metropolitan Areas in the Developing World, by Roy W. Bahl, Johannes F. Linn, and Deborah L. Wetzel; Metropolitan Cities: Their Rise, Role, and Future, by Shahid Yusuf; Metropolitan Cities in the National Fiscal and Institutional Structure, by Paul J. Smoke; The Decentralization of Governance in Metropolitan Areas, by Roy W. Bahl; Institutions and Politics of Metropolitan Management, by Inder Sud and Serdar Yilmaz; Metropolitan Public Finance: An Overview, by Richard M. Bird and Enid Slack; Property Taxes in Metropolitan Cities, by William J. McCluskey and Riël C. D. Franzsen; Local Nonproperty Revenues, by Jorge Martinez-Vazquez; Grant Financing of Metropolitan Areas: A Review of Principles and Worldwide Practices, by Anwar M. Shah; Metropolitan Public Finances: The Case of Mumbai, by Abhay M. Pethe; Paying for Urbanization in China: Challenges Municipal Finance in the Twenty-First Century, by Christine P. Wong; Metropolitan Governance and Finance in São Paulo, by Deborah L. Wetzel; Metropolitan Infrastructure and Capital Finance, by Gregory K. Ingram, Zhi Liu, and Karin L. Brandt; Slum Upgrading, by Maria E. Freire; and External Assistance for Urban Finance Development: Needs, Strategies, and Implementation, by Homi Kharas and Johannes F. Linn.