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Who rules the megacities?

Managing a metropolitan area, defined as a city that overlaps multiple municipal governments, involves reconciling interests and resolving conflicts that are much more complicated than those faced by smaller cities. The social, political and economic challenges facing Latin America’s numerous metropolitan areas are being studied by urban specialists around the world. Eduardo Rojas, a senior specialist in housing and urban development at the IDB, headed a team that edited “Gobernar las metrópolis”, a compendium of the latest theories and case studies regarding good and bad governance in the region’s large cities. Rojas spoke with IDBAmérica about some of the study’s themes.

IDBAmérica: From an exclusively demographic and economic perspective—or viewed from a satellite—Latin America can look like a group of big cities rather than a group of countries. Could metropolitan areas become more important than national governments?

Rojas: It is true that Latin America is becoming a group of large metropolises. In Brazil alone there are more than 30 metropolitan areas, that is, urban economies that exceed the boundaries of a municipality. In Chile and Argentina, over half the population lives in metropolitan areas. Another interesting development is the evolution of metropolitan regions, strings of metropolitan areas such as La Plata-Buenos Aires-Rosario in Argentina, where even the rural areas that lie between the cities are heavily influenced by urban economic activities. Some of these metropolitan regions cross borders into other countries, such as Santiago-Mendoza-Córdoba or Tijuana-San Diego .

Metropolitan areas are also gaining economic importance. São Paulo, for example, produces 60 percent of Brazil’s industrial GNP. And metropolitan economies interact directly with urban economies in other parts of the world. Although I doubt they will become more important than the national economies, metropolitan areas have enough economic heft that central governments have a growing interest in ensuring that these urban agglomerations are competitive and that they are trading with their counterparts in other countries. However, in order to compete, metropolitan areas need to be well governed, well managed; they need to offer a solid, efficient platform for economic activity. How to achieve such good metropolitan governance is the topic of the book, because to date there have been very few studies of the subject .

IDBAmérica: There is a lot of talk about the political and financial decentralization that has been going on in the region. What concrete impact have these processes had? How have people’s lives changed?

Rojas: The decentralization process no doubt has been far-reaching and continues to advance. An estimated 19.3 percent of public spending in the region is managed by subnational governments, whereas in 1985 it was only 13.1 percent. Among the highly decentralized countries are federalist nations such as Argentina and Brazil, and some unitarian countries that have undergone considerable decentralization, like Colombia. In addition, the democratic process through which local governments are elected has been sustained and expanded.

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However, it is difficult to measure what impact this has had on people. Harvard University has conducted studies on the impact of participatory budgeting in the south of Brazil, which is one of the most advanced countries in terms of local democracy. The studies showed that the percentage of the budget determined through participatory processes is very small, but that the share of the budget allocated to poor areas increased after citizen participation was introduced. This finding demonstrates that participatory budgeting does indeed have a positive impact on people’s lives. There is a change in resource allocation, and the closer public spending is to local government, the more transparent it is.

One of the problems we are studying is how to use participatory budgeting on a metropolitan area scale. Because ultimately metropolitan areas don’t tend to have a clear political identity, so it is easier to improve citizen participation at the state or municipal level.

IDBAmérica: In certain countries, there seem to be municipal or provincial governments that work better than the national government. How can you explain this phenomenon?

Rojas: It is true that surveys such as Latinobarómetro show that local political authorities have more credibility than the national ones. In a country like Ecuador, where the national government is in a highly unstable situation, the municipal government system is working quite well. The municipality of Quito, for example, is very stable, it delivers services, has a system of government enterprises that works well, and in general is a case of good governance. Guayaquil, which had serious problems for many years, is now a very good municipality, and similar situations can be found in several other countries.

This can perhaps be explained by the fact that people are much more engaged in local issues, which makes them more demanding of their municipal or provincial politicians. Local politicians are more closely scrutinized and therefore usually more serious. Quite a number of cities in Latin America have undertaken strategic long-term planning with a convergence of private and public interests, for example, while at the national level that sort of long-term planning is still rare. The common thread in all these cases of successful cities is that they have brokered major long-term agreements among business, labor and local government, and these agreements bring stability.

IDBAmérica: Yet there are still poorly managed municipalities that do not seem to have improved despite the decentralization?

Rojas: Yes, indeed. Often this is because decentralization has been incomplete. The process usually begins with political autonomy, giving mayors and city councils more authority with respect to their constituents, but without providing them with two crucial tools. First of all, they need a clear mandate about what their responsibilities are, and second, a source of funding that will be sufficient for them to discharge those responsibilities. In other words, political decentralization has not always been supported by true financial autonomy—greater decision-making authority over the source and application of funds—and by a clear definition of who is in charge of what.

Unclear delineation of responsibilities among different levels of government is especially problematic in metropolitan areas that cover several municipalities, for the simple reason that the most challenging issues to manage—public transportation, pollution control and public safety—require coordinated solutions. One of the main questions examined in the book is how to resolve such governance conflicts in metropolitan areas in Latin America, given that it is very difficult to change municipal structures and borders.

IDBAmérica: Speaking of public transportation—one of the core problems of our big cities—what trends do you see appearing in the region?

Rojas: There are several promising trends. First, there is a growing consensus that the issue of transportation is structural and central to operation of an urban economy, but also for the well-being of the population. In addition, it is increasingly accepted that focusing on individual transportation and highway construction will get us nowhere. The Los Angeles model has now been proven to have failed. Also, I think people are realizing that investments in public transportation are among the most redistributive you can make, due to the simple fact that low-income groups take some 90 percent of their trips using public transportation.

The key is when the authorities decide that transportation is a public issue that cannot be managed by the private sector (although it can be operated by private companies with government oversight). On one extreme there was the “free routing” model adopted by Chile in the 1970s, under which anyone could enter the transportation market and decide what route they would take. What did that lead to? It led to 80 percent of buses serving the Alameda Bernardo O’Higgins , which already had an underground train running underneath it, so the buses were empty but caused heavy pollution. In other words, the market cannot resolve this type of problem because it doesn’t have enough information.

So the only solution is centralized management. In Bogotá, Colombia, when they finally decided, “Okay, we need a system with some control,” things began to work and led to the TransMilenio . In this type of system, the transportation market is managed by the public sector but operated by private firms based on contracts. Bus rapid transit systems provide 70 percent of the benefits of an underground train, but at only 30 percent of the cost. Curitiba, Brazil, decided to adopt this model 30 years ago and now, in addition to Bogotá, the municipalities of São Paulo, Quito and Mexico City have followed suit, with several others in the region also planning to do so. This is a huge change, and the results are so impressive that the Latin American experience is now being studied by experts from all over the world.

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