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URBAN ECONOMY | Urban Development Finance

This cluster looks into macro-economic development and finance; including new analyses of relationships between urban economic growth and urban poverty, new assessments of urban competitiveness, and new guidelines for urban development strategies, urban taxation and financial improvements.

quick links

local level city level
  international level websites

local level

Stein, Alfredo (2001) - Participation and sustainability in social projects; the experience of the Local Development Programme (PRODEL) in Nicaragua - Working Paper no. 3 on Poverty Reduction in Urban Areas - IIED [pdf]

Nicaragua: This paper describes the work of PRODEL in eight cities in Nicaragua where it provided small grants for infrastructure and community works projects and loans for housing improvement and micro-enterprises, targeted at low-income groups. The external funds provided by the Swedish International Development Cooperation Agency (Sida) were matched by municipal, community and household contributions.

city level

Díaz, Andrés Cabanas; Emma Grant; Paula Irene del Cid Vargas & Verónica Sajbin Velásquez (2001) - "The role of external agencies in the development of El Mezquital in Guatemala City" - Environment and Urbanization, Vol 13 No 1 - IIED [pdf]

Guatemala - This paper describes and discusses the role of different international agencies (including UNICEF and the World Bank) and NGOs in supporting development in El Mezquital, a settlement formed from a land invasion in Guatemala City the mid-1980s. It draws on interviews with the inhabitants and with staff from supporting agencies. The support from these international agencies and NGOs allowed considerable improvements in infrastructure and service provision, and supported important processes of community empowerment and greater status and possibilities for women. However, the paper also describes the limitations of this support, including the limited scope for participation, the projects that were planned and never implemented and the problems that the international support failed to resolve. It also describes the resentment from groups within the community with regard to what was achieved.

Campbel, Tim (1998) - City Development Options for Haiphon-Charting a Path to the Year 2020 - World Bank [pdf]

Vietnam - This document analyzes the city of Haiphong, Vietnam, using the five step local economic development strategy approach. The Haiphong project has a LED strategy that aims to increase the city’s economic position, livability, bankability and manageability. This case study analysis is based on three strategic city development documents and is referenced below.

Grimm, Michael; Charlotte Guenard & Sandrine Mesple-Somps (2001) - What has happened to the urban population in Côte d'Ivoire since the eighties? An analysis of monetary poverty and deprivation over 15 years of household data - DIAL [pdf]

Ivory Coast - This article investigates the evolution of urban poverty in its various dimensions in Côte d'Ivoire since the 1980s. The robustness of the results is checked using dominance criteria. An econometric analysis of poverty complements the analysis. The study shows that the dynamic of poverty in terms of existence conditions can significantly differ from that of monetary poverty. As was the case in the 1980s, monetary poverty increased strongly in the 1990s in spite of a return to sustained growth following the devaluation of the CFA Franc. Poverty in terms of existence conditions rose less before the adjustment and even decreased afterwards.

Huybrechts, Eric (1999) - Rebuilding Lebanon : Role of Multilateral And Bilateral Organization on Urban Management - March 1999 ESF/N-AERUS Workshop [pdf]

Lebanon - The civil war in Lebanon stopped at the end of 1990. Rebuilding Lebanon is showing how urban management is changing with the reemergence of public institution in relation with civil and private sectors. In reality, approaches on urban management are really different in this country than those proposed by international organization, although Lebanese people has a permanent and traditional hearing on the international scene [1]. Are these main
differences the reasons of the weak impact of their orientation on urban management?

UN-Habitat (2002) - Poverty Eradication and Living Environment Improvement in Zhulin - UN-Habitat / Best Practice [pdf]

China - Zhulin is a town with a population of 10,000 inhabitants located in the mountainous region of Henan province. Starting in 1985, the town embarked on a programme to eliminate poverty through economic development and the improvement of the living environment.These improvements were recognized in 2001 when Zhulin town won the first "China Human Settlements and Environment Award".

UN-Habitat (2002) - Bandarharjo Housing, Urban Renewal And Community Development project - UN-Habitat / Best Practice [pdf]

Indonesia - Bandarharjo village is located in the north of Semarang regency, where the rejuvenating target area involves a population of 19.000 inhabitants with a planned area width of 53 Ha. Bandarharjo Housing, Urban Renewal and Community Development in general has the following development goal: Poverty reduction through the development of community housing asset, economic asset and socio-cultural asset (TRI BINA); and Urban slum elimination.

UN-Habitat (2002) - Urban Infrastructure and Local Finance Development, Quezon City (MDP) - UN-Habitat / Best Practice [pdf]

Philippines - The series of Municipal Development Projects (MDPs) in the Philippines showcase a number of "success and best practice initiatives" in different fields, notably: urban infrastructure, local finance, central-local partnership, local autonomy/decentralization, economic development, integrated approach to project development and capacity building.

Wellenstein, Anna (1999) - Spatial Analyasis of public investement flows in urban Argentina: an approach to evaluating urban poverty and inequality - World Bank [pdf]

Argentina - This document will review the methodologies applied in Argentina in order to assess their possible application in other World Bank operations in the region. The document briefly presents major characteristics of urban areas in Argentina followed by an introduction to various poverty studies underway. The methodologies employed are then presented, as well as recommendations for future applications. Finally, the importance of spatial analysis of poverty and infrastructure investments, and suggestions for further research are discussed.

international level

Allou, Serge (1999) - Combating poverty and negotiated urban management: one practitioner's viewpoint - March 1999 ESF/N-AERUS Workshop [pdf]

Programmes to combat poverty today figure significantly amongst the approaches used by multilateral aid bodies active in the urban areas of the countries of the South. Strictly speaking, a practitioner called upon to assist in the implementation of such programmes is concerned not so much with considering why they exist (although he or she may have some ideas on the underlying reasons for them), but rather with contributing to how they unfold, in other words considering the manner in which they should be conducted.

Dillinger, William (1995 ) -Urban Property Tax Reform: Guidelines and Recommendations - Urban Management Program / World Bank [pdf]

The property tax is a potentially attractive means of financing municipal government in developing countries. As a revenue source, it can provide local government with access to a broad and expanding tax base. At present, however, yields of urban property taxes in developing countries are extremely low. In part, these low yields reflect failures in the administration of the tax. Procedural improvements alone, however, are unlikely to have a significant, sustained impact on property tax yields. This suggests that the scope of reform must be expanded to address the systems for rate setting and revaluation, and the incentives confronting administrators of the tax.

Kessides, Christine (2000) - Strategizing for the Future in the Four ECA Cities: Budapest, St. Petersburg, Sofia and Split - World Bank / INFUD [pdf]

Eastern Europe: The present paper is a component of an overview study prepared for the 2000 World Bank/IMF Annual Meetings, entitled "Urban Policy in Transition Economics: its Role in Poverty Alleviation and Sustainable Growth". The thesis of this overview study is that socialism has left three significant urban legacies in these countries which are highly relevant to policies for the future social and economic dvelopment.

Satterthwaite, David (2001) - "Reducing urban poverty: constraints on the effectiveness of aid agencies and development banks and some suggestions for change" - Environment and Urbanization, Vol 13 No 1, April 2001 - IIED [pdf]

This paper discusses the institutional constraints that aid agencies and development banks face in being able to address urban poverty. These include their limited capacity to support local institutions that respond to the needs and priorities of low-income groups and that are accountable to them. It describes the distance between the decision-making processes of most international agencies and the 'urban poor', and the very limited possibilities for the urban poor to influence what gets funded and by whom. It also discusses the political constraints that have inhibited more effective donor agencies and suggests how support for locally based funds for community initiatives could help overcome some of these. It ends by describing the low priority given by donor agencies to urban poverty reduction and suggests some changes that would help development assistance to meet its targets for reducing urban poverty.

Webster, Douglas & Larissa Muller (2000 ) - Urban Competitiveness Assessment in Developing Country Urban Regions: The Road Forward - INFUD / World Bank. [pdf]

The key reason for increasing urban competitiveness is to raise the standard of living for people who live in the urban areas. By increasing the economic productivity of an area and marketing its most productive goods and services, the community can develop and grow at its greatest potential. Economic investment, well targeted and strategically focused, is a proven method for improving the vitality of a community. Given that strong export economies make the city more competitive, it is beneficial for the city to support the export economy of the city. Moreover, if a city increases its competitiveness, the standard of living for the people in the urban region will rise.


United Nations
Report of the International
Conference on Financing for Development
Monterrey, Mexico, 18-22 March 2002

1. We the heads of State and Government, gathered in Monterrey, Mexico, on 21 and 22 March 2002, have resolved to address the challenges of financing for development around the world, particularly in developing countries. Our goal is to eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable global economic system.


Documents highlighting DFID's published work in support of urban economics in urban areas.

Amis, Philip (1999 )- Urban Economic Growth and Poverty Reduction - University of Birmingham - DFID

This paper is concerned with exploring the relationship between urban economic
growth and poverty reduction. Its core objective is to try to identify what room for manoeuvre municipal government has in terms of either facilitating a process of “trickle down” or mitigating the worst effects of economic decline on poor
households. [pdf]


2003 Development Planning Unit | Sikandar Hasan | Anna Soave | Khanh Tran-Thanh || Tina Simon