Social Development and Public Governance > Social Development > Urban Development
Municipal and Regional Development
Governments in Latin American and the Caribbean expect positive socioeconomic impacts from the decentralization of functions and resources for the provision of services to the communities and local enterprises. Consequently, subnational governments must play significant roles in social welfare and economic development. Decentralization encourages allocation efficiency by creating a better fit between the supply of public goods and services and the demands of the community and the enterprises, while also encouraging cooperation between local governments and businesses and civil society organizations. In addition, decentralization improves local governance, encouraging greater participation of community members in key decisions.
As decentralization advances in the region, reforms are needed to: reinforce the fiscal and regulatory frameworks; create an appropriate set of incentives for the effective management of subnational governments; and build the subnational governments' capacities to carry out new responsibilities.
The Bank expects to play an important role in this restructuring through lending and technical cooperation activities, with the following key priorities:
- Develop efficient intergovernmental relations systems to ensure a good match between the responsibilities assigned to the subnational governments and the resources needed for their efficient discharge;
- Expand the institutional capacity of subnational governments, improving human resources, organizational and operational structures, and taxation and finance systems;
- Promote transparent governance mechanisms to ensure accountability of decision-makers; and
- Support subnational finance systems based on a combination of intergovernmental transfers, revenue sources that mobilize local fiscal resources, and sustainable borrowing from capital markets and financial intermediaries under strict budgetary constraints.
Last updated: 06/14/07
