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Toward Country-led Development: The Missing Link

Toward Country-led Development: The Missing Link

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This book examines the influence of local public services on the economics of cities. The relationship between economic development and urbanization is indisputable; less clear, however, are the ways in which cities directly contribute to economic growth and employment creation. Current economic thinking holds that the ability of cities to create wealth depends on “agglomeration economies;” that is, the geographic concentration of industries and people which enables economic actors to come together, interact, and become productive. However, this ability to promote productive interaction depends on several factors, one of which is the provision of local public services. The book argues that the quality of local services significantly influences the productivity of a city, and of its business firms. Inferior local services increase the cost of interaction, erode the effects of agglomeration, and diminish wealth-creation potential. This study attempts to assess the costs of inferior local public services to firms. Based on surveys conducted in five cities—Belo Horizonte (Brazil), Montreal (Canada), Puebla (Mexico), San José (Costa Rica), and San Salvador (El Salvador)—it examines the complex issues surrounding local service provision, and illustrates how inferior local services affect firms and, in turn, the ability of firms to contribute to wealth.
This book examines the influence of local public services on the economics of cities. The relationship between economic development and urbanization is indisputable; less clear, however, are the ways in which cities directly contribute to economic growth and employment creation. Current economic thinking holds that the ability of cities to create wealth depends on “agglomeration economies;” that is, the geographic concentration of industries and people which enables economic actors to come together, interact, and become productive. However, this ability to promote productive interaction depends on several factors, one of which is the provision of local public services. The book argues that the quality of local services significantly influences the productivity of a city, and of its business firms. Inferior local services increase the cost of interaction, erode the effects of agglomeration, and diminish wealth-creation potential. This study attempts to assess the costs of inferior local public services to firms. Based on surveys conducted in five cities—Belo Horizonte (Brazil), Montreal (Canada), Puebla (Mexico), San José (Costa Rica), and San Salvador (El Salvador)—it examines the complex issues surrounding local service provision, and illustrates how inferior local services affect firms and, in turn, the ability of firms to contribute to wealth.

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Publish date: Sep 15, 2003
Added to Scribd: May 23, 2009
Copyright:AttributionISBN:9780821356432

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9780821356432

In the mid-1990s, concerns were growing about
how aid was used and managed, and about the
disappointing impact it was having. The con-
cerns were widespread—at the World Bank and
other multilateral agencies, and among bilateral
aid agencies, nongovernmental organizations
(NGOs), and developing country governments.
After a decade and a half of structural adjust-
ment, there seemed to be too few positive and
sustainable results, especially in Sub-Saharan
Africa. Criticisms were mounting, particularly
among NGOs, that aid-supported adjustment
programs were at best ignoring the poor—and at
worst further impoverishing them (see Jolly,
Correa, and Stewart 1987).

Others argued that too singular a focus on
adjustment and growth neglected the funda-
mental goal of poverty reduction, broadly
defined to include participation, freedom, and
empowering the poor and excluded (Sen
1999).1

It was also becoming clear that the
many agencies and international organizations
working in developing countries taxed rather
than strengthened the capacity of recipient
governments. The poor coordination of donors
merely added to the challenge of making devel-
opment effective (van de Walle and Johnson

1996; Lancaster and Wangwe 2000). Some
remedial action was clearly needed.

In response, the donor community launched
several programs to enhance the effectiveness of
development aid: the Heavily Indebted Poor
Countries (HIPC) initiative; the International
Development Goals, included in the DAC 1996
statement, Shaping the 21st Century, and the
later UN Millennium Development Goals; and
related efforts to improve aid coordination
through the Development Partnership Forums
in the OECD’s Development Assistance
Committee and through the UN Development
Assistance Framework.

Thinking about a new paradigm for aid and
development was also gathering force at the
World Bank. In 1998, the Bank formed a
Partnerships Group to develop the concept of
partnership and how it should be implemented.
Ideas for improving the management and
impact of aid aimed at poverty reduction began
to appear in speeches by President Wolfensohn
and senior Bank staff. In Wolfensohn’s address
to the World Bank Board of Governors at the
annual meetings in 1998, he invited countries
to pilot a new way of doing business with
the Bank and other development agencies,
and in January 1999 he proposed the concept
formally as the Comprehensive Development
Framework (CDF).

The CDF is based on the assumption that
all development actors (government, multi-
laterals and bilaterals, civil society, and private
sector) play a part in poverty reduction
and equitable, sustainable development. The
CDF has four cardinal principles—a Long-Term,
Holistic Development Framework; Results Orientation;
Country Ownership;and Country-led Partner-
ship—each of which reflects on past develop-
ment assistance shortcomings and presents an
approach for improvement.

4

p. xxiv-39 for PDF 9/5/03 10:22 AM Page 4

IDevelopment strategies should be comprehensive
and holistic, and shaped by a long-term vision.

Past emphasis on short-term macroeconomic
stabilization and balance of payment pressures
overwhelmed longer-term structural and
social considerations (such as expanding and
improving education and health facilities,
maintaining infrastructure, and training a new
generation of public officials). Development
frameworks should no longer focus only on
short-term macroeconomic issues but should
also embrace social and structural issues in a
long-term vision for society.

IDevelopment performance should not be meas-
ured by inputs and outputs, but assessed by out-
comes and impacts, by results on the ground.The
traditional emphasis on disbursement levels
and project inputs has measured resource allo-
cation and consumption. What really matters
is impact on people and their needs.

IDevelopment goals and strategies should be
“owned” by the country, based on broad citizen
participation in shaping them.While donor-
driven aid delivered under structural adjust-
ment was sometimes effective, in many cases
painful and lengthy adjustment measures
were eventually undone. When countries
have greater say in shaping reforms, govern-

ments and their citizens will be more com-
mitted to seeing them through.

IRecipient countries should lead aid manage-
ment and coordination through stakeholder
partnerships.Donor-recipient relation-
ships should be actively managed by
the recipient country as a partnership and
not dominated by donor preferences.
Partnerships built on mutual trust and
consultation can improve aid coordina-
tion and reduce the inefficiencies,
asymmetrical power relationships, and
tensions of donor-led aid initiatives.

At the heart of the CDF are the assumptions
that the content of aid-funded activities is
important for poverty reduction and that the
way aid is delivered has an important influence
on its effectiveness. Governments and interna-
tional aid organizations needed to collaborate
far more effectively if aid were to fully realize its
potential in helping reduce poverty in the
world. Although largely promoted by the Bank,
the CDF was not intended to be a Bank product.
It was not explicitly linked to Bank lending, and
there was no conditionality attached to it.

None of these individual elements is new; what
is unprecedented is that World Bank leadership
brought these four principles together in a
common, codified framework for poverty reduc-
tion and vigorously promoted that framework as
an organizing principle to inform its work and to
coordinate with other aid agencies and develop-
ing country governments.

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