STATE OF THE WORLD'S CITIES 2012/2013 Prosperity

participation and erodes the relationships between the
citizenry and the level of government closest to them. 7
Box 3.1 highlights how decentralization can play a key
role in the prosperity of cities.
While the responsibilities of municipal governments
have increased following reforms in recent years, many have
no access to the financial resources needed to undertake
these functions. This naturally creates a mismatch between
responsibilities and financial resources, and is a major
reason why decentralization has been less than successful in
certain countries.
National reforms relating to various aspects of
decentralization – revenue allocation, community
participation, local elections, local planning, pro-urban
development strategies – all provide the enabling
environment for cities to prosper.
Box 3.1.1
Decentralization and the prosperity of cities
A major benefit of decentralization as it relates to the prosperity
of cities is that delivery of essential services such as water,
sanitation and waste management, health and education can
be carried out more effectively. Decentralization can make
for better service delivery by providing greater opportunities
for community-based groups to lobby for improved services.
Proximity to physical demand for a service encourages
effectiveness and promotes a more rational use of resources,
while also allowing for closer monitoring by the beneficiary
population of projects intended to serve them.
The devolution of authority can foster community
participation, too. Decentralization can lead to an institutional
framework through which various political, religious, social,
ethnic groups and multi-levels including towns and cities, can
participate in making decisions that will affect them.
Decentralized decision-making can provide a better
framework for poverty reduction, so long as it is accompanied
by fiscal devolution of powers to municipal authorities.
Decentralization can accelerate economic development through
active engagement of regional and municipal government
units and local enterprises in economic activities. The transfer
of authority and resources to local units of government and
administration to design and implement programmes provides
more opportunities for local citizens to play a more direct role
in the development process. As catalysts for development and
local change agents, they can make decisions about location of
services and determine priorities.
Source: UN-Habitat (2012) Decentralization in Iraq: Challenges and
Solutions for Federal and Local Governments, Nairobi: UN-Habitat
95
POLICy
System that creates
equal opportunities
The importance of this
factor is most pronounced
in Arabs States compared
with other regions. This
is because Arab States
are one of the most
egalitarian in terms of
income distribution in the
developing world. This is
reflected in an overall (low)
Gini coefficient of 0.36,
which has been declining
over time. 9 The low degree
of inequality in the region
has been attributed to a
From Comparative Advantage to Urban Prosperity
For decentralization to strengthen urban authorities’
commitment to urban prosperity, it must be backed by
fiscal devolution.
strong, cohesive social system, and the fact that redistribution
constitutes a policy priority in Islamic economies. 10
A system that creates equal opportunities for all can
use redistributive policies that give priority to low-income
groups and areas. In Venezuela, the government has used
redistributive policies to bring significant improvements
to the living standards of the urban poor through
massive investment in health and education. 11 With the
provision of over 8,000 clinics in the barrios, people are
able to access health services 24 hours a day at no cost.
Similarly, illiteracy has been eliminated, pupils are no
longer restricted to elementary school, and those with the
required academic qualifications can attend university.
Another form of redistribution policy involves
conditional cash transfers. These enhance the human
capital of beneficiaries through transfers which are made
POLICy
POLICy Decentralization
works well
when backed by strong
commitment and support
from central government. 8
FACT
A system that
guarantees equal
opportunities for all is
the third important factor
underlying the prosperity of
cities. The more egalitarian
a city, the more prosperous
it becomes.
For a city to be truly prosperous, it must deploy
systems that will ensure equal opportunities for all,
especially the more vulnerable – the poor, women, children, the
elderly, youth and the disabled. A prosperous city is one where the
aspirations of all segments of the population are realized. Highly
unequal cities are a ticking time bomb waiting to explode.