Social Development and Public Governance > Social Development > Urban Development
Subnational Development Strategy
(06/01, SOC-124, En, Es)
This strategy (GN-2026) was favorably considered by the Bank's board of Directors on May 2001.
The countries of Latin America and the Caribbean (LAC) are rising to the challenges of promoting social and economic development in an increasingly global economy. In their quest for accelerating the socioeconomic development process, they place great hope in capturing the development opportunities of their subnational territories. They foresee dynamic subnational economies able to provide employment opportunities and services to the population. To this end, they seek to improve government services and infrastructure and make subnational governments more attuned to the needs of local economies and better able to work with local entrepreneurs and civil society organizations in enhancing the competitiveness and promoting the growth of local economies. The bet on subnational governments as active actors to promote an equitable development process in LAC is also significant. Devolution of resources and decision-making power to subnational governments is expected to result in greater allocative efficiency in the provision of public services that are essential for the well-being of the population and also critical for attaining greater equity, both among different groups of society and different parts of the territory. The process is proceeding at a fast pace in LAC although differences exist among countries. While some countries have made significant progress in transferring responsibilities and resources to subnational governments, others are only beginning to discuss the issue. However, a common feature in all countries is that the regulatory and fiscal framework under which the process is taking place is highly imperfect, and often subnational institutional capacity to discharge the new responsibilities is not up to par. Reforms are required to attain the objectives set by governments.
The Bank can play a significant role in supporting these reforms through its lending and technical cooperation activities. Bank lending in support of subnational development represents a sizable portion of the Bank?s portfolio totaling US$17.4 billion (in 1992 dollars) or 13 percent of the total lending by the Bank in its forty years of operations. Demand for Bank support has kept growing steadily. Average municipal lending measured in constant dollars has tripled in the last twenty years, from US$104 million per year in the 1980s to US$298 million per year in the 1990s. Demand for Bank assistance in this sphere of development is high as indicated by the 71 projects in the Bank?s 1999-2001 pipeline (amounting to US$8.3 billion in loans).
For additional information, please refer to the background paper "Making Decentralization Work in Latin America and the Caribbean" (Index), (1), (2), (3).
Last updated: 06/08/07
