Guide to City Development Strategies Improving Urban ... · SWOT Analysis: External and Internal Environments 52 ... CDS City Development Strategy EUR Extended Urban Area FDI Foreign

Guide to City Development StrategiesImproving Urban Performance

Guide to City Development StrategiesImproving Urban Performance

© The Cities Alliance, 20061818 H Street, NWWashington D.C., 20433, U.S.A.http://www.citiesalliance.org

All rights reservedFirst printing June 2006

The material in this publication is copyrighted. Requests for permission toreproduce whole or portions of it should be directed to the CommunicationsUnit of the Cities Alliance Secretariat at the address shown above. The CitiesAlliance encourages active dissemination of its work. Permission to reproducewill normally be given promptly and, when the reproduction is for non com-mercial purposes, without asking for a fee.

Cover photo: The city of São Paulo, Brazil, South America’s largest economicand technological hub

Design: Naylor Design, Inc.Printing: York Graphic Services

Guide to City Development Strategies | iii

ACKNOWLEDGEMENTS vABBREVIATIONS AND ACRONYMS viiEXECUTIVE SUMMARY 1

PART ONE

1. Introduction 92. The Role of Cities 11

2.1 Urban Regions as Poverty Alleviation Mechanisms 112.2 Emerging Challenges 14

3. Guidelines Orientation 154. The Role of City Development Strategies 21

4.1 Why Undertake a City Development Strategy Process? 24

PART TWO

5. Approach 276. Themes (Substance) 28

6.1 Livelihood (Jobs, Business Start-ups, and Household Income) 286.2 Environmental Quality, Service Delivery, and Energy Efficiency 306.3 Infrastructure and Spatial Form 336.4 Financial Resources 356.5 Governance 37

7. Building Blocks (Process Methodology) 417.1 Initiating the Process 417.2 Establishing Initial Parameters 457.3 Initial Assessment 467.4 Formulating a Vision 497.5 SWOT Analysis 51

Contents

iv | Guide to City Development Strategies

7.6 Setting Strategic Thrusts 527.7 Awareness Building 547.8 Implementation 54

APPENDICES

Appendix A: Livelihood Themes 58Appendix B: Improving Environmental Quality, Service Delivery, and

Energy Efficiency 61Appendix C: Infrastructure and Spatial Form 64Appendix D: Financial Resources 68Appendix E: Governance 71

REFERENCES 75

BOXES

Box 1: Missed Opportunities in Tunis, Tunisia 18Box 2: Glasgow, Scotland, Reinvents Itself as a Cultural Centre 19Box 3: Improving Linkages between Government and Informal

Businesses in Karu, Nigeria 22Box 4: A Bold Transformation Plan for Mumbai, India 23Box 5: Mainstreaming CDS in South Africa with the Help of the Cities Network 25Box 6: An Aggressive Strategy Pays Off in Penang, Malaysia 26Box 7: Economic Strengthening in Santo André, Brazil, through Small

Business and Informal Service Sector Development 30Box 8: The Service Delivery Monitoring System in Johannesburg, South Africa 32Box 9: Capital Investment and Administrative Modernisation are Key to Local

Economic Development in Aden, Yemen 34Box 10: Sofia, Bulgaria—Institutional Development for a Transition Economy 39Box 11: Restructuring Municipal Management and Governance Under Stress in

Greater Amman Municipality, Jordan 40Box 12: Collecting City Data in Bamako, Mali 49

FIGURES

Figure 1. Stylised Urban Development Trajectory 17Figure 2. Strategic Focus: Pro-Poor Development 19Figure 3. Cities in the Post-Petroleum World 33Figure 4. Finance and the City 35Figure 5. Financing City Building: The Case of Bangkok, Thailand 36Figure 6. Stylised City Development Strategic Planning Process 42Figure 7. Four-Level Spatial Definition and Scoping: Xiamen, China 45Figure 8. Key Economic Clusters: Xiamen, China 50Figure 9. Visions of Ulaanbaatar, Mongolia, and of Xiamen, China 51Figure 10. SWOT Analysis: External and Internal Environments 52Figure 11. CARE’s Household Livelihood Security Approach 74

Photo Credits 79

Guide to City Development Strategies | v

These guidelines were prepared by Doug Webster and Larissa Muller in close

collaboration with the staff of the Cities Alliance. Pelle Persson, Senior Pro-

gramme Officer, managed the process on behalf of the Cities Alliance Secretari-

at. The report also benefited from the useful contributions of: Peter Palesch, Mark

Hildebrand, William Cobbett, Rajivan Krishnaswamy, Pascale Chabrillat and Chii

Akporji of the Cities Alliance Secretariat; Deepali Tewari, Christine Kessides,

Dave de Groot, Gwen Swinburn, of the World Bank; Julia Crause of UNEP and

Professor Om Prakash Mathur of the National Institute of Urban Affairs, India.

The Alliance gratefully acknowledges the contributions of stakeholders in the

over 100 cities which have undertaken CDSs sponsored by Cities Alliance, as well

as from the members of the Cities Alliance Consultative Group and the Policy

Advisory Board, all of whom shared invaluable knowledge of the CDS process,

which have both informed and enriched these guidelines. Chii Akporji managed

editorial, design and production of the Guide, and Erika Puspa provided web

design and support.

Acknowledgements

Guide to City Development Strategies | vii

ADB Asian Development Bank

BMA Bangkok Metropolitan Administration

CDS City Development Strategy

EUR Extended Urban Area

FDI Foreign Direct Investment

FTZ Free Trade Zone

GDP Gross Domestic Product

GEF Glasgow Economic Forum

GAM Greater Amman Municipality

GoM Government of Maharastra, India

GDP Gross Domestic Product

HLS Household Livelihood Security [CARE approach]

IDP Integrated Development Plan

IMF International Monetary Fund

JBIC Japan Bank for International Cooperation

NGO Nongovernmental Organisation

OECD Organisation for Economic Cooperation and Development

PDC Penang (Malaysia) Development Corporation

PSDC Penang Skills Development Centre

SACN South African Cities Network

SWOT Strengths–Weaknesses–Opportunities–Threats

UMP Urban Management Programme—UN-HABITAT

WDR World Development Report

WTO World Trade Organization

Abbreviations and Acronyms

Guide to City Development Strategies | 1

Executive Summary

CONTEXTThe Role and Potential of Cities

The premise of city development strategies(CDSs) is that well-positioned and well-

timed public, private, and civil society strategicinterventions can significantly alter a city’s devel-opment path. If national urbanisation policyframeworks complement local strategies, changeis likely to be deeper and quicker. Empirical evi-dence indicates that the performance of cities canchange enormously within a short time—certain-ly within a generation, that is, 10–20 years. Dor-mant cities, such as Shanghai and Glasgow, havereturned to health in a fairly short time as a resultof focused strategies incorporating policies, polit-ical will, and catalytic investment. In contrast,cities lacking coherent city development strate-gies, such as Lagos and Manila, have had prob-lematic track records.

The performance of 21st century cities is of glob-al concern. Urban regions will be the most impor-tant mechanisms of poverty prevention and alle-viation—the front line in the adjustment to apost-petroleum world (cities consume most of

the world’s energy and commodities, includingintercity flows). And because they account formore than 80 percent of global economic growth,cities will determine the economic fate of nationsand continents. Because cities are so productive—a result of density and high-transaction envi-ronments—cities drive much higher levels ofhousehold income than nonurban areas, consumeless energy per unit of economic output as theydevelop, have lower per capita costs for environ-mental infrastructure, and so on.

These positive impacts of urbanisation are beingleveraged by the rapidly increasing global urbani-sation. By 2030 at least 61 percent of the world’spopulation will live in cities, and by 2060 theworld will likely be fully urbanised (that is, morethan 80 percent of the world’s population willlive in cities). However, some cities are perform-ing far below their potential, particularly those inSub-Saharan Africa, resulting in lost opportuni-ties for their populations and in unrealised devel-opment benefits for their region.

2 | Guide to City Development Strategies

Emerging Challenges

Developing cities, like their industrialised coun-terparts, face considerable uncertainty. Most citiesare confronted with the tasks of managingunprecedented population growth rates and arealready unable to cope with existing backlogs.The decentralisation of responsibility to the locallevel—an imperfect and uneven process at best—is often not matched by the allocation ofresources or authority. As the numbers of urbanpoor grow, inequalities in opportunity andincome deepen—nearly three-quarters of Africa’surban residents reside in slums, often unrecog-nised and unserviced by their local government.Furthermore, as we have seen in Casablanca, Dares Salaam, London, Madrid, and New York, nocity is immune to terrorism. Poorly performingand failed states make life in cities perilous. Glob-

al warming is also expected to cause rising sea lev-els, threatening many large industrialised anddeveloping cities. In short, many developing citiesclearly face a perilous future unless better strate-gising, incorporating anticipation and foresight,becomes the norm. Indeed, resilience is becomingas important as competitiveness in urban per-formance.

Why do a CDS?

Given a competitive and uncertain economicenvironment, developing cities need discipline tomost effectively use their limited financial andhuman resources to achieve targets. The capitalavailable to any given city is also highly elastic andonly flows to cities that show potential and havewell-thought-out urban futures. An effectiveCDS process can both attract capital and disci-pline its use.

An effective CDS is designed to shock the sys-tem, albeit under controlled conditions. TheMumbai First strategy, driven by the businesscommunity, although not accepted by the overallcommunity, did just that. It catalysed new think-ing about Mumbai and raised the possibility of acompletely different future. Using the bestdomestic and international resources available, aneffective CDS assesses a city frankly and objec-tively, enabling the city to see its future moreclearly and to identify the best routes forward.

Local governments alone cannot turn a cityaround. They control a minuscule portion of thecapital available for city building and often havean even smaller proportion of the available talentin urban innovation. Although important as cata-lysts and as representatives of the public interest(in theory, at least), local governments shouldwork in partnership with private interests andcivil society to change a city’s developmentaldirection—CDS processes are based on private,public, and civil society partnerships.

View of Kisumu, Kenya

Nearly three-

quarters of

Africa’s urban

residents reside

in slums.


GUIDELINES

To assist in the design of a CDS process, theseguidelines are organised around five substantivethemes and eight methodological steps to set thebuilding blocks.

Themes (Substance)

The five important themes are:

• Livelihood, such as job creation, businessdevelopment, and sources of householdincome;

• Environmental sustainability and energy efficiency of the city and the quality of itsservice delivery;

• Spatial form and its infrastructure;• Financial resources; and,• Governance.

Livelihood (Jobs, Business Start-ups,and Household Income) Virtually every CDS has to address the question oflivelihood—the bottom line in every city is house-hold income. In most developing cities, the cre-ation of jobs will not absorb all the additional peo-ple in the urban labour force. Thus, livelihoodenhancement is as much about support for indi-vidual entrepreneurs and small business start-upsas it is about formal employment in existing firms.The poorer the city is, the more important theinformal sector will be. Because it is difficult tosustainably reduce poverty unless poor house-holds can increase their income, economic growthis essential to improving the lot of the urban poor,especially new migrants to the city.

Livelihoods in developing cities are inextricablybound up with the business climate. Local gov-ernments can do much to help small businesses:for example, they can minimise nuisance taxa-tion, offer training, and support start-ups.

The competitiveness of cities (how they performvis-à-vis other cities in a given activity) is becom-ing more important than comparative advantage.An analysis of competitiveness and strategies toenhance it would best start from the perspective

of economic clusters, rather than traditional eco-nomic sectors.

Human resource development, especially over themedium run, is critical to competitiveness. CDSprocesses should identify ways to improve accessto education and training, particularly for thepoor, enhance the quality of training programmesand align local educational curricula with theemerging urban economy.

Environmental Quality, Service Delivery,and Energy Efficiency In the past, CDS processes tended to view envi-ronmental and energy concerns in two ways: (i) as“add-ons” to overall strategies driven by econom-ic and spatial concerns; and (ii) as a subject forconventional environmental infrastructure pro-gramming. Given the rising cost of energy, thevulnerability of freshwater sources, urban sprawland related mobility costs, and the increased fre-quency of natural hazards in many cities, environ-mental and energy considerations should becomepart of the core CDS strategic process. Althoughprogramming of infrastructure services, such assewer trunk and feeder networks, is obviously animportant routine task for cities, CDS processesshould incorporate innovative thinking; for exam-ple, addressing types of technology to be used,and the role of demand management.

The extent to which a city addresses loomingenergy and water cost/supply squeezes may sig-nificantly determine its future competitiveness.Energy costs affect virtually every product andservice a city sells, as well as influencing the stan-dard of living of households, particularly poorones. An effective CDS would suggest incentivestructures to induce more efficient use of energyin industrial processes, building construction anduse (green buildings), household consumption,and urban form.

In terms of service delivery, the CDS should focuson coverage (geographic), accessibility and afford-ability (price), and quality versus cost (often,tradeoffs need to be made, depending on thesocioeconomic status of the neighbourhoods).

An effective

CDS is designed

to shock the

system, albeit

under controlled

conditions.


Spatial Form and InfrastructureRecent extensive research in East Asia hasstressed the importance of infrastructure in sup-port of both pro-poor development and urbancompetitiveness (ADB, JBIC, and World Bank2005). The neglect of infrastructure investmentin most developing cities over the past 15 yearshas greatly inhibited their performance. Infra-structure assessment and investment planning arecomplex and require careful attention in CDSprocesses. Often, tradeoffs are required (and syn-ergies may exist) between equity objectives (pro-viding basic services to all members of urban soci-ety at affordable rates) and economic objectives,which may be facilitated by expressways, ports,airports, and so on.

Cities should be concerned about their spatialform. However, urban form should not dominatethe content of a CDS. Land-use and physicalplans would flesh out the physical implications ofthe CDS and be deliberately linked to it. Spatialform, from a strategic perspective, is of particularconcern on three counts: (i) the close relationshipbetween urban form and energy efficiency; (ii)the close relationship between attractiveness ofcities (amenity) and economic performance (it isvirtually impossible for an unattractive city tomove into higher value economic activity); and(iii) the critical importance of land (availability,location, tenure) in addressing the challenges ofslum communities.

City planners should not treat slums as unique,outside the land market. Rather, they shouldrecognise the market value of slum communityland (very valuable, especially if it is in the citycore) and orchestrate win–win outcomesthrough the use of market-based techniques,such as land readjustment, that have the poten-tial to leverage enormous amounts of capitalfrom slum communities.

Accessible land must be available for a wide rangeof actors, ranging from formal developers to new-comers themselves, to provide housing and com-munities for new migrants. It is much easier to

prevent poverty by effectively absorbing migrantsinto housing, transportation, and livelihood sys-tems than to deal with the problems later. Thenumber of rural–urban migrants to developingcities over the next 30 years will exceed the flowsof the previous 30 years. Thus, prevention is asimportant as alleviation, if not more so. Peripher-al communities need to be connected to employ-ment nodes by affordable, efficient transportationsystems. Fortunately, developing cities are becom-ing more multinodal, making concentrations ofemployment more accessible to the poor.

Financial ResourcesMany CDS processes have emphasised the impor-tance of local government budgets, giving less con-sideration to the nonpublic resources of society.Local government financial management is veryimportant and it is essential that it be done effec-tively, as outlined in Appendix D. However, CDSprocesses should include an understanding that itis the role of local government to mobilise finan-cial resources, both from within and from outsidethe city, as well as from public (national govern-ment programmes, for example), private (domes-tic and multinational companies), and civil society(voluntary organisations) sources. Over the medi-um term (10 years), the amount of capital that acity can raise to improve its public and privateenvironments is highly elastic and potentially verylarge, given the right policy frameworks, market-ing, and promotion, and so on.

GovernanceLike finance, governance far transcends the role oflocal government. However, local government haskey roles to play: representing the public interest,being a stimulus to urban innovation, and takingresponsibility for delivery of key services (eitherdirectly or indirectly through innovative mecha-nisms, such as build–own–transfer).

An effective CDS programme needs to developnational policy frameworks, both explicit ones,such as urban infrastructure grants, and implicitones, such as the effect of changes in tariff struc-tures on key firms in the urban economy. Often,other agencies will already have assessed thenational urban policy framework.

CDS processes

should include an

understanding

that it is the

role of local

government to

mobilise financial

resources, both

from within and

from outside

the city.


It is important that CDS processes address thechanging role of urban government under condi-tions of decentralisation, a worldwide trend. Withdevolution of powers, local governments havemuch more control over, and responsibility for,urban futures. Unfortunately, in many developingcities, decentralisation has lowered the level ofperformance because of local capacity constraints,corruption, and inadequate resources to meet theincreased responsibilities and is often compound-ed by the unclear assignment of functions.Nonetheless, decentralisation clearly makes rapidchanges in city performance more feasible,although its effects on city performance may varywithin nations, creating winners and losers. Decen-tralisation makes CDS processes more important: thepotential gains from implementing a CDS are muchhigher in decentralised governance environments.

CDS processes need to take into account thequestion of metropolitan governance. Virtuallyevery large city in the world suffers from ineffi-ciencies and lost opportunities because of thefragmented, uncoordinated urban governancethat occurs in metropolitan areas with a prolifer-ation of local governments. There is a long andvaried worldwide experience of metropolitangovernance—best-practice learning should pro-vide a filter through which to identify appropri-ate metropolitan governance structures in CDScities.

Building Blocks (Process Methodology)

The eight building blocks of the CDS process are:

• Initiating the process;• Establishing the initial parameters and the

scope of the CDS;• Making an initial assessment;• Formulating a vision;• Identifying strengths–weaknesses–

opportunities–threats (SWOT analysis);• Setting strategic thrusts;• Building awareness; and• Starting the implementation.

The methodological sequence to be used in aCDS is well understood, and a broad consensusnow exists on the appropriate methodology, asFigure 6 and section 7 describe. Over the past 25years, several handbooks, both by Cities Allianceand by outside authors, have described theprocess. On the basis of feedback, the process isimproving.

The key methodology of a successful CDS,derived from experience, includes the following.

Initiating the ProcessThere is a need for high-level guidance and coor-dination. If the mayor or equivalent political fig-ure is not seriously involved in the CDS process,it should be abandoned. The process should beguided by a Key Stakeholders Group, or equivalentbody that represents key interest groups in thecity. Although open-access input from townmeetings, radio call-in shows, and so on is useful,collaborative approaches to strategy developmentrequire a small but representative group (the keystakeholders group) to negotiate hard content.One cannot merely create “wish lists” designed toplease everybody.

Aerial view of Dakar, Senegal


CDS processes would not result in new institu-tions or offices. Instead, one powerful office in thecity, normally the mayor’s office, would oversee awide spectrum of functions. However, a CDSprocess might recommend, as an output of assess-ment and strategising, institutional changes in thegovernance of the city. The initiation processneeds to result in agreement on the spatial scaleof the analysis (extended urban region, metropol-itan region, or city proper?) and the breadth ofissues to consider in assessment and strategising.

For spatial definition, there is an obvious trade-off between geographic area (coverage) anddepth of understanding. Therefore, a scan–scopeapproach, starting spatially with at least themetropolitan area, as section 7.3 describes, isusually very effective.

Defining the breadth of issues is difficult (the“where do you enter?” question). Normally, if acity has not done high-quality CDS work, a widespectrum is best. However, in cities where theopposite is the case, a more focused substantivefield of action may be appropriate. In all cases, theCDS technical team and key stakeholders groupshould openly and innovatively consider thewhole process, always thinking creatively to rec-ommend better strategies and ways to intervene.

Initial Assessment The city should be assessed initially by a team ledby leading domestic and international urban ana-lysts and supported by local urban researchers.The speed of an initial assessment should, howev-er, strike a balance between quickly meetingpolitical processes and expectations and gatheringenough relevant information.

Building for the future in Lima, Peru


The initial assessment employs a scan–scopemethodology, zeroing in on spatial areas and sub-stantive issues of particular concern. The initialassessment should, with a futures-oriented per-spective, identify and assess core change drivers,such as demographics, technology, and the inter-national economic environment. Clusters shouldbe the basis of economic analysis, as traditionalsectoral analysis is not geared to identifying trendsand opportunities or understanding the informalsector and the “new” economic activities in tech-nology and high-end business, professional, anddesign clusters. A useful assessment need not bevery specific; more important is understandingthe overall magnitude, direction, and rate ofchange. Benchmarking is an important compo-nent of the initial assessment. Once the analystsunderstand the city, they compare its perform-ance with comparable, competitor, and “aspira-tional” cities (those performing at the level towhich the analysed city aspires).

Formulating a VisionA Vision is a statement of where a city wants tobe, usually 10–15 years in the future. The Visionstatement needs to be specific, internally consis-tent, and realistic but challenging. It should stresswhat is unique about the city and be short (expe-rience shows that 60 words is enough) and easy toread. A Vision is important because it aligns stake-holders’ energies so that the stakeholders workcooperatively and for the same goals. A Vision isnot normally changed over the medium run (10years); it is like a lighthouse, with a fixed position.However, in today’s fast changing and uncertainworld, tactics need to change regularly to ensurethat the city achieves its Vision. Successful citiesare flexible and adaptive in pursuing their Visions,recognising that traditional, especially rigid, static,or top-down, planning can be harmful. Many sys-tems in a city are self-organising, yielding positiveoutcomes if set within appropriate visions andpolicy frameworks, and prompted by strategicthrusts.

Identifying Strengths–Weaknesses–Opportunities–Threats (SWOT Analysis)The strengths–weaknesses–opportunities–threats(SWOT analysis) is undertaken in the context ofthe Vision, rather than in an open-ended manner.The results of the SWOT analysis enable a city tobuild on and leverage its strengths and opportu-nities. Equally important, it enhances a city’s abil-ity to avoid threats or to take actions to minimisethem.

Strategic ThrustsStrategic thrusts are the heart of the CDS. Theyare cross-cutting, interlocking actions, delivered inmany ways (for example, through direct invest-ment by government or private–public partner-ships), almost always involving more than oneagency. Strategic thrusts deliver maximumimpact cost-effectively. Because a city cannotfocus on too many initiatives at one time, strate-gic thrusts are normally limited to five. Eachstrategic thrust contains, in turn, several actions.

Strategies are based on hypothesised causal rela-tionships between interventions and outcomesand are informed by international experience andthe SWOT analysis. Identifying strategic thrusts isan iterative process. Once the strategic thrustsbecome clearer—for example, a decision is madeto pursue a convention-based tourism strategy—specialised technical expertise is needed to helpformulate them. Strategic thrusts always need tobe paired with a few powerful indicators: usuallyone composite flagship indicator and several (fewerthan 10) priority indicators.

Awareness BuildingA successful CDS process needs the support ofmost of the community, especially the key stake-holders. Total consensus is never possible; in fact,it would be a sign of a weak CDS.The most effec-tive ways of disseminating a CDS vary from cityto city and rely on a mix of media, such as Inter-net sites and radio. Certain media—such as news-paper inserts, videos, posters, and models—workwell across a wide spectrum of cities.

A CDS is of

no value unless

implemented.


ImplementationA CDS is of no value unless implemented. Imple-mentation Task Forces need to be established,responsible for each strategic thrust. The imple-mentation task forces formulate more detailedaction plans, clearly indicating responsibilities,timelines, milestones, and expected inputs, out-puts, and outcomes (results or impacts). Indica-tors may need to be refined. Most important is asustainable monitoring system to gauge successbased on the identified indicators. Most monitor-

• They are internally consistent. For example, strategicthrusts follow from the Vision and SWOT analysis;

• The CDS has only a few strategic thrusts, the productsof tough choices. Nothing is of equal importance;

• The CDS is realistic but challenging;

• The CDS has a high probability of success;

• Achievement is measurable and measured with lean,powerful, results-oriented indicators;

• Strategic thrusts are cross-cutting, relying on a varietyof activities and agencies;

• Responsibility for implementation is clearly defined,against definitive targets and timelines;

• Incentives are in place to drive performance. Thesecan take a variety of forms such as financial, awards,and community recognition;

• The strategic framework is flexible enough to adapt tochanging conditions and tactics, but the Vision nor-mally remains constant over the medium run.

• CDS priorities are reflected in budgeting and invest-ment strategies.

ing systems are unsustainable because they havetoo many or unrealistic indicators and allocate nomoney for their ongoing operation. Thus, sustain-able indicator systems are essential.

An important role of the implementation taskforces is to identify, assess, and chase downsources of finance. To get the CDS off to a goodstart, emphasis should be on early implementa-tion of low-risk, high-profile initiatives.

What Constitutes a Good City Development Strategy?

Effective CDS processes, outputs, and outcomes have the following characteristics:


The purpose of these guidelines is to improvethe usefulness and positive impact of City

Development Strategy (CDS) processes support-ed by the Cities Alliance. CDSs should sustain-ably enhance urban performance, measured interms of: (i) economic growth, linked to improvedlivelihood opportunities; (ii) poverty preventionand alleviation; and (iii) improved environmentaland public health, inclusive of poor and informalurban communities.

The target group for these guidelines is primarilycities in the developing world that are about tostart a city or city-region strategising processinvolving local actors (in government, in the pri-vate sector, and in civil society), as well as theirinternational partners (development agencies,international investors, and nongovernmentalorganisations [NGOs]).

These guidelines have taken into account the con-siderable bank of experience built up by develop-ing-country cities carrying out CDSs funded bythe Cities Alliance over the past five years. A widerange of such activities have been evaluated.Theseevaluations include those of CDSs for specificcities (available at www.citiesalliance.org), thoseof experience to date, or those that have put for-

ward guidelines, such as the recently completedguidance framework for design, integration, andapplication of monitoring and evaluation in CDSprocesses (Econ Analysis 2005) and the AsianDevelopment Bank guidelines on CDS (ADB2004). Many cities around the world, whetherindustrialised, transitional, or developing, havealso produced innovative CDS outside the CitiesAlliance; examples are Glasgow, London, Mum-bai, and Prague.

Much has changed in the external context inwhich cities have been operating since the 1990s,particularly rising energy prices (for a review ofthis literature, see Roberts 2004; Kunstler 2005),natural disasters and environmental accidents,global economic imbalances, security and terror-ism threats, and declines in urban social capital.The uncertainty is putting a premium onresilience and increasing returns to cities that canhandle uncertainty.

There has been new learning in urban strategis-ing, mostly because of networking between cities.Within the academic community, research (andassociated output) on the relationship betweenthe characteristics of urban strategic processesand those of urban performance has been disap-

1. Introduction

P A R T O N E


pointingly limited. Our literature searches haverevealed almost no academic research over thepast five years on urban strategising, local eco-nomic development, and the like, especiallyresearch related to urban areas in developingregions. This is a serious loss, given the potentialvalue of reflective, objective research on such animportant topic.

The goal of these guidelines is not to prescribebut to inspire improvements in city developmentand strategising processes. Your use of the guide-lines could be selective (as modules), dependingon the developmental circumstances of your city.See the Cities Alliance homepage (http://www.citiesalliance.org) for further details on conceptsand for examples (ranging from best practice tofailures) to deepen your knowledge of diverseaspects CDS.

Increased commercial activities in a well functioning city like Singapore


2.1 URBAN REGIONS AS POVERTY ALLEVIATION MECHANISMS

The importance of urban regions in drivingeconomic growth, poverty prevention and

alleviation, and energy and natural-resource con-servation has never been greater. In part, thisreflects the fact that the majority of the world’speople will be urban by 2007.

The urbanisation process will continue at highspeed throughout the first half of the 21st centu-ry. The United Nations forecasts that 61 percentof the world’s population will be urban by 2030.Before 1850, the urban population of the worldnever exceeded 7 percent. In absolute numbers,Asia is the epicentre of the current urbanisationsurge. China will add at least 342 million peopleto its cities by 2030; India, 271 million; andIndonesia, 80 million. In Latin America, which isnearing the end of the rural–urban transition,“only” 169 million people will be added. Howev-er, in Sub-Saharan Africa, 395 million people willbe added to the cities over the same period, 112percent of its current population, a largerabsolute increment than China will experience(United Nations 2004b). Transitional (Eastern)Europe will be the only world region with nega-

tive urbanisation, a result of overall populationdecline. Urban areas there will lose 12 millionpeople by 2030, mostly in the Russian Federa-tion, creating new urban challenges. In the indus-trialised cities of the world, population growthwill be slow, with the exception of those inamenity regions in North America, such asPhoenix and Las Vegas in the southwestern Unit-ed States, and cities that attract large flows ofinternational migrants, such as Toronto, Canada.Cities in Western Europe and Japan will havemore stable populations.

The policy implications are obvious. Becausemost African urbanisation to 2030 has yet tooccur, productive migration absorption strategiesare particularly important. But urban growth inLatin American cities will represent only 39 per-cent of current urban population, indicating thatin situ poverty alleviation strategies should begiven more emphasis there. The highest absolutenational increase will be in China, but India andIndonesia are earlier in their rural–urban transi-tion processes. Urban growth in India to 2030will be equivalent to 86 percent of current urbanpopulation; in Indonesia, 74 percent; and inChina, 64 percent.

2. The Role of Cities


The fact that Africa is the poorest continent butalso the one earliest in the urbanisation processpresents enormous city-building challenges, butat the same time provides significant economicopportunity. If urbanisation is productive, that ismigrants are productively absorbed, rural–urbanmigration is associated with immediate, largejumps in national economic performance, as theurban trajectories of China and North Americaclearly indicate. Although urbanisation rates andabsolute increases in urban population will behighest in Africa, it is the region with the mostlimited resources to deal with rapid urbanisation,a process requiring high levels of capital invest-ment and technical resources.

Cities are proven poverty fighters. For example,urban incomes are, on average, four times higherthan rural ones in countries such as China andThailand, and significant income differentialsremain after controlling for higher education lev-els in cities. Metropolitan areas—even largerExtended Urban Regions (EURs), which oftencontain several metropolitan areas—account forenormous income and wealth creation, and the

capital they create can be mobilised to help alle-viate poverty. In 2005, emerging economies grewby $1.6 trillion1, more than the industrialisedcountries did. Most of this $1.6 trillion incrementaccrued to the cities that are relevant to theseguidelines. The economic underperformance ofIndia, compared with China (until recently), maybe partially a result of India’s much lower urban-isation level—28 percent in India versus 39 per-cent in China (41 percent in 2005) (UnitedNations 2004b)—India has 221 million fewerurban residents than China.

São Paulo, which has 10 percent of Brazil’s pop-ulation, accounts for 25 percent of the grossdomestic product (GDP). In China, by 2020, thethree leading coastal EURs (each containingmore than one metropolitan area)—the PearlRiver delta, the lower Yangtze River delta, andthe Bohai Bay region—will be home to morethan half of China’s population, but they willaccount for 80 percent of GDP. With metropoli-tan regions as the metric, the 53 metropolitanregions in China anchored by a city with morethan 1 million people are currently home to 370

million people, or 29 percent of thecountry’s population, but accountfor more than 62 percent of China’snonfarm GDP. Cape Town, eThek-wini (Durban), and Johannesburgaccount for some 50 percent ofSouth Africa’s GDP but representonly 20 percent of the nationalpopulation. Lagos produces 60 per-cent of Nigeria’s non-oil GDP. Thisurban dominance in economic pro-ductivity often shows up in fiscalperformance as well. For example,the Bangkok metropolitan regionaccounts for about 53 percent ofpublic sector revenue in Thailandbut is home to less than 20 percentof the population.

Cities are proven

poverty fighters.

1. All dollar amounts are in US dollars.

Aerial view of Johannesburg, South Africa


Of course, we should treat official data with greatcaution, especially in Sub-Saharan Africa, wherethe informal sector dominates and whereresearchers often undercount its contribution tolivelihood and economic development. Estimatesfor Africa indicate that the informal economyworkforce accounts for an extraordinary 78 per-cent of nonagricultural employment, 61 percentof urban employment, and 93 percent of all newjobs. The recent improvements in Chinese statis-tics (based on the economic census of 2002) illus-trate the economic value of undercounted urbanemployment, much of it informal. As a result ofmore accurate counting of service activities, pri-marily urban, the service sector was 48 percentlarger than previously indicated, accounting for41 percent of national outcome, not 32 percent.The recount increased China’s GDP by 17 per-cent, making it the fourth largest economy in theworld by the end of 2006. Similar discrepancieslikely affect data in other developing urbaneconomies (Huang 2006).

How can policymakers maximise the benefits ofthe urbanisation process? How can developingcountries mobilise urban capital to increase liveli-hood opportunities and standards of living for allcitizens, not just the most successful?

China, with its pro-urbanisation policies (acceler-ated productive urbanisation), has removed 220million people from poverty in less than 25 years(but 100 million remain in poverty, including26.1 million farmers in absolute poverty). Witheconomic growth highly correlated with povertyreduction, especially if coupled with pro-poorpolicy frameworks, the continued economic suc-cess of cities bodes well for poverty reduction. Italso bodes well for the achievement of Millenni-um Development Goal 7, Target 11, establishedby Cities Alliance, the one most relevant tourbanisation: “By 2020, improving substantiallythe lives of at least 100 million slum dwellers,while providing adequate alternatives to newslum formation” (United Nations MillenniumDeclaration, GA/55/2 of 8 September 2000[para. 19], United Nations 2005, p. 3). But theachievement of the goal will be the result of high-ly skewed global geographic outcomes, with the

bulk of progress in Asia. Africa in particular willneed to devise strategies at the local level, sup-ported by national frameworks, to make urbanisa-tion a more effective tool of economic develop-ment and poverty prevention and alleviation.

African cities need to provide their residents andmigrants with ladders to escape poverty. The abil-ity of African cities to become powerful agents ofpoverty alleviation and economic developmentdepends on two factors: (i) whether institutionsand policy conditions liberate or hamstring acity’s potential to create jobs; and (ii) whethercity residents have access to land and housing,education, health care, and security, even if theyhave erratic incomes, few powerful connections,and no recognised status in the city. In Sub-Saha-ran Africa, with a few exceptions, cities have notbeen able to move beyond a limited role as trad-ing and commercial and administrative centres,serving only the local populace. They have notdeveloped manufacturing or high-end serviceeconomies, which would support poverty allevia-tion across the continent. In fact, in most Sub-Saharan African cities, formal employment isactually decreasing.

Latin America, which is nearing the end of itsrural–urban transition, illustrates the dangers ofhyper-urbanisation: the potential of urbanisationto alleviate poverty has been blunted becausemeaningful livelihood opportunities (employ-ment creation and opportunities for householdsto create their own jobs) have not occurred rap-idly enough. Although economic growth is virtu-ally always beneficial in reducing and preventingpoverty, some types of growth are more pro-poorthan others—much of the East Asian urbangrowth in countries such as China, Malaysia, andThailand has effectively reduced poverty.

African cities

need to provide

their residents

and migrants

with ladders to

escape poverty.


2.2 EMERGING CHALLENGES

The fact that cities make people richer and pre-vent or alleviate poverty has a flip side, namely,environmental and natural resource challenges.Richer societies generally consume more energyand commodities and generate more waste,although not necessarily more pollutants (theyalso consume less energy and fewer commoditiesper unit of economic output). Translated intoglobal dynamics, this hastens the day when manynonrenewable commodities and energy sourceswill become scarce. High urban consumption isnot directly associated with urban lifestyles—rural people with the same levels of income ascity dwellers would consume more energy fortransportation, for example—but is explained bythe fact that cities are highly successful in raisinghousehold incomes.

This relationship between urbanisation andresource consumption, particularly of productsneeded for city building, has been clear from theexperience of industrialised countries for morethan a century. For example, in 2004, China con-sumed 40 percent of the world’s cement and 27percent of its steel, primarily to build cities(China Republic 2002). Again, as the UnitedStates’ urban population expanded by 124 mil-lion during its urban transition from 1900 to1970, per capita steel consumption increased six-fold. Similarly, as Japan’s urban populationincreased by 70 percent between 1950 and 1970,its per capita steel consumption increased eight-fold. Goldman Sachs, an investment bank, indi-cated that oil could reach $105 per barrel in thenext few years, an outcome essentially fuelled bythe massive urbanisation processes describedabove (Pesek 2005).

This means that cities will need to function dif-ferently. Buildings, which are the biggest con-sumers of energy in most developing cities, willneed to be built differently. Urban form willbecome even more important, given the closerelationship between urban form and energy con-sumption for transportation. It is to be hoped thatdramatic improvements in the energy efficiency

of cities will be the result of proactive policies,rather than the result of harsh feedback generat-ed by market prices.

The world has consumed half the available petro-leum (Deffeyes 2001). Energy, especially for vehi-cles, is likely to be in short supply before mid-cen-tury because alternative fuel systems are notexpected to be widely available until later on.Theresult could be slower economic growth and aslowing of globalisation (which is dependent oninexpensive energy). This situation will bringurban environmental and resource consumptionissues centre stage. Most of the world’s largestcities are located along coasts, so the risks of nat-ural hazards, especially those related to ocean lev-els and surges, are becoming real threats. Watersupply is a critical issue facing urban regions fromSub-Saharan Africa, to northern China, to thesouthwestern United States. (Semi-arid regionsare the most common climatic type on Earth.)Social disorder and security risks in cities areincreasing in many parts of the world, be it fromterrorism (Jakarta, London, Manila, and NewYork), insufficient social capital (Kinshasa, NewOrleans, Paris), or disputes over urban land, espe-cially disputes about the transformation of ruralto urban land (China).

And infectious diseases, such as SARS and avianflu—often bred in peri-urban areas wherehumans come in contact with both domesticatedand wild animals—may threaten the viability ofcities. These challenges and risks will be especial-ly strong for the African urbanisation processbecause the continent is so early in its rural–urbantransition. Yet Africa will have to complete thetransition under much more trying external con-ditions than experienced by the industrialisedworld and Latin America, which have essentiallycompleted their rural–urban transitions. In short,the risks urban regions face are becoming moreproblematic, despite the enormous potential ofcities to generate wealth quickly and prevent oralleviate poverty. Environment, energy, social, andsecurity issues will have to play a central role inCDS processes. At the urban scale, resilience isnow as important as competitiveness.


The goal of these guidelines is to help differ-ent actors make the most of CDSs to enable

cities to maximise their performance (ultimatelymeasured by the standards of living of their resi-dents, especially the poor), their resilience, andtheir competitiveness. Given the tough andincreasingly uncertain environment in whichcities operate, strategies need to be hard-nosed,using limited financial and human resources inthe most effective ways. Financial resources goinginto and out of cities are highly elastic; capitalresponds quickly to opportunities in urbanregions with positive business environments.Conversely, capital, whether generated locally orexternally, rapidly flees cities where the future istoo unclear. Often, tough tradeoffs are needed;talent and fiscal resources need to be focused formaximum leverage.

These guidelines recognise that CDS processessupported by the Cities Alliance vary widely inquality and effectiveness (as do urban strategieswithout Cities Alliance support) and that thenature and characteristics of the CDS process canvery much affect the performance of cities.

Key themes to be explored include the following:

• Mainstreaming urban poverty alleviation andprevention—To date, urban poverty has beencompartmentalised, both in analysis and in pol-icy. Slums have been targeted as if they were adiscrete form of settlement, rather than part ofa broad spectrum of physical development,highly integrated into urban communities. Asthe recent groundbreaking book by Neuwirth(2005) points out, squatter settlements are anormal part of the urban transition: London,New York, Paris, and Toronto all had largeswaths of squatter and slum neighbourhoods.Thus, poverty prevention and alleviation, notslums per se, should be the focus of an urbanstrategy. In some cities, such as Lagos, Manila, orMumbai, slums constitute close to half the res-idential structure of the city, containing a widespectrum of residents from poor to wealthy; tospotlight them as unique or separate makes nosense. However, because slums are so visible,addressing their problems can be catalytic inoverall urban development. Slums can be anextremely effective entry point into the widerstructural issues in a given city or country,mobilising a wide spectrum of groups. Further-more, it is often possible to build widespread

3. Guidelines Orientation


consensus in support of slum upgrading. Theright of the political spectrum has historicallyviewed slums as eyesores and inappropriate inmodernising cities (not acknowledging thatthey are economically critical to the function-ing of cities), whereas the left often associatesslums with poverty (to some extent, incorrect-ly). Thus, both sides of the political spectrumwant to “do something” about slums. Strategiesto improve opportunities for the poor need torecognise that slums cannot be treated sepa-rately from the overall development trajectoryof the city or from urban land markets, andtheir development should be consistent withthe city’s overall Vision. Such a perception isneeded to mobilise capital on a large scale.Win–win outcomes can be generated by releas-ing the very large amounts of capital that slumdwellers control (directly or indirectly): landreadjustment, for example, enables the poor toenter the urban mainstream,. Such principlesunderlie Rio de Janeiro’s Favela-Barrio pro-gramme.

• Preventing Potential Urban Poverty—The cur-rent (2005) urban population of the world is3.2 billion, of which 0.9 billion live in industri-alised countries. By 2030, the developingworld’s urban population will have grown by75 percent. More than 1.8 billion people willhave been added to the world’s cities, and morethan 93 percent of this increment (1.7 billion

people) will be in developing urban regions.This dynamic, combined with the fact thatlarge increases in urban population will occurin very poor countries, particularly in SouthAsia and Sub-Saharan Africa, means that pre-venting urban poverty will need to be a leadingpolicy priority in developing countries for thenext 25 years (this is separate from addressingin situ urban poverty). Migrants who are poorbut highly economically motivated and welleducated (compared with educational attain-ment norms in their source regions) need to beabsorbed productively so that they do not addto the stock of poverty within urban areas. Oth-erwise, the task of urban poverty alleviationbecomes overwhelming. Migrants need accessto financing to purchase housing affordablyclose to employment (no longer necessarily incentral business districts [CBDs], given theongoing shift to a more multinodal urban formin most cities). Migrants also need access tobasic services (such as water), appropriate train-ing, and good-quality, relevant education fortheir children, to enable intergenerationalmobility. And they need access to microfinanc-ing, particularly for small-business creation.Enabling mobility, not only from rural to urbanareas but also from regions with poor opportu-nities (such as northeast China) to those withgreater opportunities (such as the coastal andamenity regions in China), can do much to alle-viate poverty while greatly improving nationaleconomic efficiency. Such flows have alsooccurred across borders, as has been the casewith Johor (Malaysia), Riau (Indonesia), andSingapore. Because preventing poverty is lessexpensive than alleviating in situ poverty, pre-vention strategies should be a key element in aCDS; very high returns on investment are pos-sible. For example, for young migrants, trainingis relatively easy to effect and cost-effective;and less expensive land on the periphery ofcities can be made accessible to the poor.

• Environmental Quality, Public Health, andEnergy Efficiency will increasingly matter—Given the challenging environment in whichcities will have to develop and function, envi-ronmental, energy, and public health perform-ance will become increasingly important. Such

Slums cannot be

treated separately

from the overall

development

trajectory of the

city, or from

urban land

markets.

Aerial view of Lanzhou along the Yellow River, China


considerations need to be integral to the CDSprocess, driving strategy. For example, to date,urban form has been largely the product ofmarket forces and, to a lesser extent, planningframeworks. That is, it is the product of urbaneconomic function, motorisation, land mar-kets, and access to financing for city building(particularly residential). Future planning andpolicy frameworks should consider and incor-porate market signals to generate more effi-cient urban forms. Similarly, in most CDSprocesses, environment and energy considera-tions have been “add-ons,” for example, pro-gramming water supply and wastewater sys-

tems according to conventional civil engineer-ing standards, using conventional technologiesto supply urban communities wherever theyevolve, accepting the energy demands ofspread settlement, or allowing the construc-tion of buildings with scant attention paid totheir energy performance. Now energy consid-erations need to be reflected in spatial formand building design, driven by appropriate pol-icy frameworks, and supported by strong polit-ical will. Buildings consume more energy thantransportation in cities, and this energy con-sumption should be an important point offocus (Fry 2005). Systems that rate green and

FIGURE 1. STYLISED URBAN DEVELOPMENT TRAJECTORY

• Soft governance• Delivery of basic needs

• Water pollution• Address sanitation needs

• Monocentric• Small CBD, then uniform

relatively high density• ± 50% informal

settlement

• Informal economy dominates

• Stronger metropolitan orientation

• Heavy investment in urban infrastructure

• Environment improves• Heavy investment (3–6%

GDP) needed in environ-mental infrastructure &improvement

• Stronger business services CBD

• Suburban modes

• Consumer demand increases rapidity

• High-end services (busines producer)

• Global image making• Performance based

government

• High quality environment essential to competitiveness

• Edge cities• Highly attractive• Culture/tourism CBD

• High tech• High design• Culture & Hospitality• World class talent attracted

Potential to Eliminate Slums

Trading Manufacturing Oriented Services Amenity (Late Services)

Leap frog option, e.g., Bangalore, Accra (call centres)

Urban Development Trajectory

High

Stre

ssLa

g In

Res

pons

e

Gove

rnan

ce

Enviro

nmen

t

Spat

ial

Econom

y

Source: Webster (2005)

• More efficient governance

• Global intermediationcapabilities

• Air pollution• Urban environment worst

early–middle of this stage($2–3,000 US per capita)

• Peri-urban driven• Trunk infrastructure

shapes form

• FDI & Domestic investment fuel highgrowth in Mfging


sustainable development include the Leader-ship in Energy and Environmental Design sys-tem, developed by the US Green BuildingCouncil. Environmental quality, includingeffective and sustainable delivery of environ-mental services, is important at all points alongthe urbanisation trajectory (see Figure 1), fromthe delivery of economic benefits throughimproved population health in poorer citiesand the provision of basic services at one endof the trajectory to the attraction of talent,investment, and high-value economic activitiesat the other.

• Address Causes, Not Symptoms of Poverty—Making cities look good and function well isimportant, but that doesn’t provide real oppor-tunity for less advantaged people. The focus ofpolicies and scarce investment needs to be onsignificantly reducing intergenerational pover-ty, primarily through changes in education,health, and livelihood (jobs, business creation).Intergenerational thinking is particularlyimportant in very poor cities. Turning a cityaround takes 10–20 years, corresponding toone human generation. The Tunis CDS process(Box 1) failed to gain the support of the busi-ness community. It failed to leverage supportfrom probably the most important agent ofpoverty alleviation, the business community,which is instrumental in employment creation.

The focus of these guidelines is on CDS process-es in developing cities. Developing cities differfrom industrialised ones, as Figure 1 indicates,and therefore they require different strategicresponses, as Figure 2 indicates. Furthermore, theconditions in developing cities vary enormously,from those of very poor cities in inland Sub-Saharan Africa typified by Bamako, throughthose of transitional-economy cities such asPrague and Sofia, to those of soon-to-be-richcities such as Chengdu, China.

Industrialised cities also use CDSs to enhancetheir competitiveness, liveability, and so forth.They may also use CDSs to correct reversals infortune, as in the Glasgow case (Box 2). In fact,industrialised cities actually have a long historyof deploying strategic planning to achieve com-munity goals. This may partially account for thegenerally higher technical quality of strategicplans produced by industrialised cities than pro-duced to date by CDS cities. Although the sub-stantive content of CDSs will obviously varywidely between industrialised and developingcities, there is no inherent reason why the tech-nical quality of such processes and productsshould vary, given the access of all world cities tofunding; comparative urban experiences; andknowledge resources, such as consultants, univer-sities, and international organisations. By the late1980s, the methodology was highly developed,and many cities had implemented CDSs, often

Tunis is in an enviable situation. It has the largest concentration ofbusinesses in the country (its economic weight is 2.5 times its

share of population); one out of five workers has a university educa-tion; and only 4 percent of its households are officially below thepoverty line. Yet a quarter of Tunis’s population live in informal settle-ments, and nearly a third work in the informal sector. The govern-ment was already spearheading several poverty redistribution pro-grammes (in actuality, slum upgrading) when the city began its CDSprocess. The city subsequently incorporated these programmes intoits vision and development strategy and outlined the latter in theWhite Book, a publication for public dissemination and validation. Tosome extent, the White Book has successfully galvanised severalstakeholder groups to organise activities around central strategicconcepts. For example, it gave rise to ‘Re-appropriate the City,’ awomen’s movement to make coffeehouses and other locations inthe city safe for women in the evening. But the strategy formulationmissed key opportunities to capitalise on the city’s strengths. Mostnotably, the business community lost interest because it felt that theWhite Book lacked targeted strategies for economic development.The business community’s disengagement severely limited the abil-ity of the city government to catalyse and leverage private invest-ment to orient development along new directions. The city lost anopportunity to improve the employment and housing prospects andincomes of its current and future residents, including those in therural areas, who, lacking economic opportunities, continued tomigrate to the capital and into these informal settlements.

Source: UMP/UN–Habitat (2002).

BOX 1. MISSED OPPORTUNITIES IN TUNIS, TUNISIA


FIGURE 2. STRATEGIC FOCUS: PRO-POOR DEVELOPMENT

Trading/Informal

Manufacturing

Services

Amenity

• Health & educaton• Inter-generational mobility• Community infrastructure—water

—sanitation• Enterprise enabling actions

• Allocating accessible land for migrants• Land adjustment• Housing finance• Wide coverage lean social service delivery (economically feasible)• Access of poor to quality technical education• Technical education aligned with emerging clusters

• Sustainable social programs open to all (contributions by employers & employees)• Geographically accessible city• Enable creative activity

• Address poverty caused by social/psychological factors & slowing of middle class opportunities• Ensure equal access to education (student loans, etc.)• Affordable housing policies

When Glasgow’s traditional industries, particularly ship-building, fell into permanent decline—a casualty of a

new global division of labour that favoured other locations—this former economic powerhouse had to reinvent itself. Withfactories closing and unemployment levels soaring, the districtcouncil set about recasting Glasgow’s image from that of apolluted, rust-belt industrial city to one of a cultural city, with afocus on the arts, media, and business services. The districtcouncil was following the lead of local community groups,which had started an arts festival and opened a new museum,the Burrell Art Collection, in 1983. When the Scottish Devel-opment Committee hired McKinsey & Co., an internationalconsulting firm, to prepare a redevelopment plan for the city,the firm proposed building on these initiatives to promoteGlasgow as a cultural centre. The plan called for attracting inter-national companies, encouraging creativity among city resi-dents, and reinvigorating the city centre by converting oldwarehouses and factories into lofts and building new luxuryhousing in the docklands.i These efforts resulted in an eco-nomic renaissance for Glasgow. To sustain Glasgow’s success,the Glasgow Economic Forum, a public–private partnership ofeconomic stakeholders, prepared an economic strategy for2003–2005.ii The strategy builds on existing strengths to sus-

BOX 2. GLASGOW, SCOTLAND, REINVENTS ITSELF AS A CULTURAL CENTRE

tain growth and improve international competitiveness. It callsfor the redevelopment of Kelvingrove Art Gallery and Muse-um, the creation of new visitor areas (such as Merchant City),and the development of high-quality business locations alongthe River Clyde, Glasgow’s key territorial asset, according tothe OECD. Riverside development projects include the DigitalMedia Campus, the international financial services district,and the Glasgow Harbour Project. The development of CityScience will position Glasgow as the largest science and tech-nology centre in Scotland for business and research develop-ment. Another key objective of the city’s economic strategy isto improve the link between the unemployed Glasgow resi-dents and opportunities in job-rich and growth sectors. Thestrategy calls for improving and creating innovative training orretraining and employment linkage programmes and enhanc-ing transportation connectivity between disadvantaged neigh-bourhoods and key centres of employment. Finally, recognis-ing the need to compete in the place market, Glasgowcontinues to strengthen its brand recognition with a new citymarketing plan and is working on increasing direct and indirectinternational air services from Glasgow Airport.

i OECD (2002), UN–Habitat (2004).ii GEF (2003).

Urban Development Trajectory


with considerable success, as summarised byBryson and Einsweiler (1988), Kemp (1992), andBryson (1999).

The Cities Alliance is the most importantresource supporting CDS processes in developingcities. However, other groups are getting moreinvolved, particularly in middle-income and tran-sition cities. For example, the Shui On Corpora-tion, based in Hong Kong and Shanghai, producescomplete CDSs in partnership with municipalgovernments and key stakeholders before under-taking property development in Chinese cities. Todate, Shui On has completed CDSs for Chengdu,Chongqing, Fuzhou, Kunming, Wuhan, Xiamen,and Xi’an. Consortia in Europe, including theEuropean Union, support CDSs in that region,especially in transitional cities, such as Prague.Last, but not least, public agencies within cities

(such as economic development agencies) andpublic–private consortia (such as innovationcouncils) often undertake CDS processes withoutexternal support or funding.Although more com-mon in industrialised cities, this approach isbecoming a trend in developing cities as well. Forexample, a citizens’ consortium, led by the busi-ness community, initiated the Mumbai Firstdevelopment strategy, in Mumbai.

Between 2000 and 2005, the Cities Alliance sup-ported CDS processes in about 140 cities, con-tributing $22.5 million.These guidelines abstractfrom lessons learned from those processes and avariety of similar ones, including locally drivenprocesses and those supported by other interna-tional bodies or private corporations. In somecases, Cities Alliance activities have inspired CDSefforts it has not officially supported.

Between 2000

and 2005, the

Cities Alliance

supported CDS

processes in

about 140 cities.


4. The Role of City Development Strategies

CDSs DO MATTER

Increasing evidence shows that urban perform-ance is not based on maintaining existing roles,

economic structures, and institutional status quo.Rather, it is based on adaptability.Almost all citieswill be shocked by 2050, especially by externalforces. The success of a city is largely determinedby how it responds to shocks generated by rapidchanges in its external and internal environments.This quality is known as resilience, and it willbecome even more important in future.

Bangkok lost much of its comparative advantageas the factory of Southeast Asia in the 1997financial crisis and had its economic output (inUS dollars) more than halved in one month. Butby turning to high-end services, such as advertis-ing, medical services, and spas, Bangkok reposi-tioned itself to become a higher value economythan before. During this transition, poverty rateswere kept much lower than forecast becausehouseholds adapted, supporting less successfulfamily members and taking advantage of deepsocial capital (Webster 2004). The World Bankforecast that the Thai poverty rate would rise to18 percent from the pre-crisis rate of 11.9 per-cent (1996); it peaked at 15.9 percent.

Some other cities that were shocked never recov-ered. And some cities, such as Manila, forecast inthe early post–World War II period to becomeeconomic leaders, have been trapped in viciouscycles.

The evidence is clear: cities can and do suffermajor reversals in fortune. These reversals can bepositive or negative, with turnarounds and break-downs generally taking 10–20 years. Evidenceindicates that performance turnarounds are fre-quently the result of a city’s having a clear strate-gy, as was the case with Curitiba, Shanghai, andSingapore.

The role of a CDS process is first to shock anurban system under controlled conditions, caus-ing stakeholders to be truly objective in assessingtheir situation, and then to strategically deploy alimited number of actions to enable the city todramatically change its performance. The Mum-bai First case (see Box 4) is an excellent exampleof a bold, shock-inducing strategy. A good strate-gy is a prerequisite to performance change, butimplementation is what ultimately counts. Suc-cessful CDS processes almost always have keystakeholders acting with intent, chasing the samevision, within a framework of effective policies.


Like the economies of most African cities, that of Karu, a fast grow-ing satellite town on the outskirts of the capital of Nigeria, Abuja,

relies predominantly on the informal sector. So when Karu wanted toformulate a local economic development strategy to reduce povertyand maximise economic growth, it focussed on establishing a partic-ipatory framework to enhance the interaction between state andlocal governments and informal businesses. The result was the Busi-ness and Economic Development Committee, a consortium of localKaru businesses. As the CDS moves into implementation, the con-sortium continues to serve as a crucial link for information exchangeand feedback, priority setting, economic strategy development,resources, and joint action within the business community andbetween this community and the government.

Source: Cities Alliance (2003a, p. 14).

BOX 3. IMPROVING LINKAGES BETWEEN GOVERNMENT AND INFORMAL BUSINESSES IN KARU, NIGERIA

The process works best when outsiders help inassessing the city’s situation and in subsequentstrategising. Cities need to learn from other cities,particularly those in similar circumstances or sub-ject to the same types of shocks. This learningneeds to include not just best practices but alsocases in which events did not go according toplan. In both developing and industrialised cities,perceptive outsiders without vested interests canoften see the reality of a city more clearly,. Strate-gies are generally ineffective if they are mostlyinternally driven and ignore outside forces andlearning.

It is unanimously agreed that CDSs should not becomprehensive plans. Rather, they should identi-fy a few strategic thrusts (usually five to seven ofthese).The purpose of these thrusts is to lever thesystem through a variety of mechanisms: (i)changes in national and subnational (such as met-ropolitan or municipal) policy frameworks; (ii)

public and private investment, including innova-tive financing mechanisms; (iii) demonstrationand ripple effects from catalytic projects and pro-grams; and (iv) public–private initiatives.

CDSs are not public sector programmes or docu-ments like local government’s physical plans orlong-term budgets. Rather, CDSs are civic or pub-lic processes in which the local government playsan important enabling role. The city authority inKaru, Nigeria, found that a consortium of localinformal businesses had the potential to organiseitself and play a leading role in driving the city’sdevelopment, given that their economic activitiesconstituted a substantial part of the GDP of a citydominated by the informal sector (Box 3).

Local governments are important for their abilityto catalyse, to represent the public interest, and tofix market gaps and failures. However, the officialbudget of a city anywhere in the world is minus-cule compared with the total financial resourcesthat a city’s stakeholders can catalyse. For exam-ple, expenditure by the Bangkok city govern-ment, the Bangkok Metropolitan Administration(BMA) accounts for less than 1 percent of urbaninvestment. However, the city administration andbudget can be vital signals of intent and commit-ment, thereby acting as powerful factors ininvestment decisions. For example, the BMAattracted investors to develop Bangkok’s 23-kilo-metre elevated heavy-rail transit (BTS) system ona Build–Own–Transfer (BOT) basis. The systemhas completely transformed the city over the pastfive years. Similarly, those with talent and knowl-edge of urban innovation are widely distributedwithin urban systems, with local governmentsemploying only a small percentage of them. Keystrategies identified through CDS processes mayor may not be actions that local government canor should take. But almost invariably, local gov-ernments need to play a catalytic role in makingthe project happen, for example, by organisinginnovative financing and providing signals to theprivate sector.

Even if large segments of the community reject aCDS, a strategy like Mumbai First may lead toaction catalysing alternative responses (Box 4).

CDSs are civic

or public

processes in

which the local

government

plays an

important

enabling role


The redevelopment plan for the city of Mumbai is bold. Itsgoal is to transform Mumbai into a world class city by

2013, equalling or surpassing Shanghai. A core principle ofthe strategy is that incremental change doesn’t work—reform comes in leaps. The Government of Maharashtra’splan builds on a report by McKinsey & Co. on the future ofMumbai, originally commissioned by the citizen’s group Bom-bay First, which felt frustrated with urban development in oneof Asia’s most dysfunctional cities. The report called for a $40billion 10-year redevelopment plan for Mumbai, including a$1.2 billion plan to redevelop Dharavi, a slum community withthe unenviable reputation of being among the largest in Asia.Covering an area of 220 hectares and home to about 1 mil-lion residents, Dharavi is also one of the most entrepreneur-ial communities in India. Hundreds of microfactories operatewithin the slum, generating $500 million in annual sales ofpottery, leather, jewellery, and much more. Ideally situatednear the international airport and the new Bandra-Kurla busi-ness district, it also attracts white-collar workers, whochoose to live here among the rural migrant manufacturingworkers to be closer to their place of employment and toavoid the horrendous daily commutes endemic to this highly

BOX 4. A BOLD TRANSFORMATION PLAN FOR MUMBAI, INDIA

congested city. The redevelopment of such a large and primelocation in a city strapped for land is an important keystonein the planned transformation of Mumbai. It is intended to bean achievable “fast win” to catalyse a positive cycle ofchange and “transform the texture of life” in this city.i Theredevelopment plan calls for private developers and investorsto build new upscale business and residential areas, withland set aside as part of the land readjustment scheme toprovide affordable housing for displaced low-income Dharaviresidents.

To realise the transformation plan, the Government ofMaharashtra formed a Citizens’ Action Group, comprising cit-izens from academia, the private sector, and the slums, andthe government approached international agencies, includingUnited States Agency for International Development, theWorld Bank, and the Cities Alliance, for financial and techni-cal assistance. But bold moves invite controversy. Alreadyhighly contested, the development became especially con-troversial following the decision of the Government of Maha-rashtra in 2005 to undertake a slum demolition programmein 2005 in which 30,000 post-1995 homes. The strong publicoutcry halted the evictions, but not before the demolition

programme had severely jeopar-dised the support of a range oflocal and international actors anddamaged Mumbai’s internationalreputation for flexible, pro-poordevelopment. As the transforma-tion initiatives go forward, someslum residents remain scepticalabout the government’s intentionsand are calling for more incremen-tal approaches, whereas othersremain hopeful that the project willbring about a better quality of lifefor themselves and for Mum-baikars as a whole

i Government of Maharastra (2004).

Source: Sharma (2002), Cities Alliance (2005,pp. 36–37), The Economist (2005), Stewart(2005, pp. F4–F5).


4.1 WHY UNDERTAKE A CITY DEVELOPMENT STRATEGYPROCESS?

Why should a city undertake a CDS? Why notallow the market and day-to-day bureaucraticforces to determine its fate?

A strategy has several advantages:

• It encourages stakeholders to invest andbehave according to a vision, effectivelypulling in one direction—getting prioritiesright is crucial to success;

• It cost-effectively allocates resources to a fewkey strategic areas;

• It helps a city anticipate future shocks and rap-idly changing contexts (the risk environment)and raises its understanding of how stakehold-ers would respond under various scenarios;

• It enables a city to anticipate the rate, type,and physical direction of growth and to devel-op infrastructure ahead of growth.

Given the potential benefits, some countries haveinstitutionalised CDS concepts nationwide. Thebest example of this is South Africa, where allcities must now produce a strategic plan based onthe success of CDSs in larger cities, such asJohannesburg (see Box 8). Box 5 describes howCDS principles are being used to guide strategicplanning in urban areas throughout South Africa.

Cities do have choices in their future develop-ment directions and outcomes, albeit circum-scribed. Their path of development is by nomeans predetermined. As a general principle, aCDS is a ‘trend breaker’. It is designed to moti-vate key city decisionmakers and stakeholders tothink and operate differently; otherwise, therewill be no change. Strategies should be designedfor high leverage and be deployed where thehighest developmental leverage is possible.

The prime motivation for the instigation of CDSsis the stakeholders’ awareness that the current sit-uation is unsatisfactory. Cities have often had dra-matic reversals in their fortunes. For example,conditions in most Sub-Saharan cities, such as inHarare, Lagos, and Nairobi, are judged unsatisfac-tory and are often inferior to conditions of thepast. This is equally true in many industrialisedcities; for example, Glasgow was the second mostimportant industrial city in the British Empire inthe Victorian era, but it has degenerated to thepoint of becoming dysfunctional, and many areasof the city became derelict. But the city is mas-sively reversing its fortunes through a strategicplan to reinvent itself as a cultural and scientificcentre, as described in Box 2.

Shanghai is a similar case. Along with Tokyo,Shanghai was the leading city of East Asia in theearly decades of the 20th century, but it was in astate of disrepair and economic malaise by theearly 1980s. Subsequently, the national govern-ment declared it the Gateway to China. Now,locally driven strategic initiatives, such as the newPudong CBD, started in 1992, are restoring thecity to its former glory. Shanghai is re-emerging asthe dominant city of East Asia. Penang, Malaysia,is another city that successfully remade itself witha well-thought-out strategy for responding quick-ly to a global market. In the 1970s, it turned itselfinto one of the most important electronics manu-facturing centres in Asia, riding the incipient elec-tronics boom at that time (Box 6).

In other cases, cities are performing reasonablywell but want to reposition themselves to excel.Examples would include Curitiba, Brazil, whichis well known for excellence in urban manage-ment; Chengdu, China, which is becoming thedominant high-end financial services and elec-tronics centre in western China (Motorola, Intel);and Las Vegas, United States, which constantlyrepositions itself to reinforce its role as the enter-tainment capital of the world.


The Department of Provincial and Local Governments(DPLG) in South Africa has recently announced that all

five-year Integrated Development Plans (IDPs) must includea long-term strategy. Accordingly, by the end of 2006, all 284South African local governments will need to develop aCDS. Several of the larger cities already have a CDS, includ-ing Johannesburg, with a model CDS; Tshwane, which isexpanding the scope of its CDS in a groundbreaking waywith a new citywide housing and upgrading strategy andfinancing plan; and eThekwini, Cape Town, Ekurhuleni, andBuffalo City, which are each in the process of finalising andtendering a CDS. But the vast majority of South Africa localgovernments have yet to put effective CDSs in place. Fewof the IDP action plans take a long-term perspective involv-ing collective visioning and strategic planning. At a recentnational workshop to evaluate the impact of integrateddevelopment planning, mayors and city managers of SouthAfrican cities identified a need for economic growth strate-

BOX 5. MAINSTREAMING CDS IN SOUTH AFRICA WITH THE HELP OF THE CITIES NETWORK

gies based on competitive advantages, plus outcomes-based planning, monitoring, and spatial development frame-works, to coordinate public sector spending and other devel-opment efforts. Despite a rapid expansion of services, thecities see a need for more effective mechanisms—strategicactions focusing on few points of leverage for maximumimpacts—to tackle the major issues affecting the overallquality of life in South African cities, such as unemployment,crime, poverty, and HIV–AIDS. Many of these concernscould be addressed within a CDS.

To facilitate the process, the South African Cities Net-work (SACN), an organisation with a mandate to collect,analyse, and disseminate experiences of large city govern-ments in South Africa, has developed a programmaticframework to assist cities in formulating a CDS (see inset).Using the SACN framework, cities can formulate long-termstrategies that promote intergovernmental and intersectoralapproaches to planning, focus on points of leverage, and

mobilise city partners. The cityanalysis framework hasreceived overwhelming supportfrom public, social, and privatesector stakeholders in membercities. It is regarded as anessential instrument of analysisthat, in allowing all stakeholdersto participate in a critical analy-sis process, draws on the dis-tributed knowledge within soci-ety to develop a city strategywhile enhancing networkingbetween city stakeholders.

Source: SACN (2004, pp. 1–7).

SACN Framework for Analysis of City Performance

Productive CityKey Issue: Can the local

economy provide a majority of residents with a means to earn

a reasonable living?

Inclusive CityKey Issue: Do residentshave the opportunities and capacities to shareequitably in the socialbenefits of city life?

Well–Governed CityKey Issue: Is the

political & institutional context stable, open and

dynamic enough to accommodate all

interests?

Sustainable CityKey Issue: How is the city impacting on the envelope of natural

resources that sustainsthe settlement andmakes it livable?

CityDevelopment

StrategyKey Issue: What

long-term, inter-sector, mobilization, inter-governmental and

leveraging issues isthe city grappling with

toward meeting itsvision?


The story of how Penang became one of Asia’s majorelectronics manufacturing hubs offers many valuable les-

sons for urban strategists. Penang, the second smalleststate in Malaysia, prospered as a free port under British ruleand in the early independence period, but it suffered eco-nomically when the federal government revoked its free portstatus, in 1969. To reinvigorate the island’s economy andrespond to growing unemployment, Penang state, under thevisionary leadership of Dr Lim Tun, adopted an export-orient-ed industrialization policy, which many considered radical atthe time—import substitution was in vogue. The corner-stone of the strategy was the creation of a free trade zone(FTZ) at Banyan Lepas, outside the island’s main city ofGeorgetown. By creating an enclave outside the customsand other federal administrative domains, the state couldbypass many inefficiencies in the Malaysian system whileoffering investors attractive export incentives. The first majorinternational firms to locate there, in 1972, were NationalSemiconductor and Hewlett-Packard, two leading Americansemiconductor firms; others soon followed. Within a year ofthese firms arriving, the electronics and electrical equipmentindustries accounted for one fifth of all manufacturing jobs inthe state and accounted for 28 percent of Penang’s manu-facturing value added.i

Public investment was the main driver of Penang’s eco-nomic development. The state government invested inessential supportive industrial infrastructure, ahead ofdemand, to guide and promote economic development andshape desirable spatial outcomes. Early public sector invest-ment focussed on constructing the FTZ—developing the landand facilities and providing roads and utilities—well beforethe first investor was secured. The state government forecastfuture land needs and banked sufficient land next to the FTZto expand the zone and keep the industry spatially clustered,which served to promote interaction between firms and tosupport a close-knit business community. It built new cargofacilities at the airport before the old ones reached capacity.As employment grew and attracted a large number ofmigrants from other states, the state government created anew town to relieve pressure on the main city, Georgetown.Situated next to the FTZ, the new town was able to leveragethe extensive infrastructure investment the state had put inplace to service the industrial base and to subsidise the costs

BOX 6. AN AGGRESSIVE STRATEGY PAYS OFF IN PENANG, MALAYSIA

of production (for example, through affordable worker hous-ing). Although Penang Island had only 778,000 people at thetime, infrastructure was built to accommodate the 2020 fore-cast of 2.5 million.

To execute the vision, the state set up the Penang Devel-opment Corporation (PDC) as a semiautonomous entity.Staffed with top talent and given considerable autonomy,PDC became a highly respected and valued partner to theglobal electronics industry, responding flexibly, quickly, andeffectively to the shifting needs of investors in this rapidlychanging industry. By holding regular meetings with topindustry leaders, PDC officials not only ensured good lines ofcommunication and a forum for joint problem solving, butalso contributed to the creation of strong industry networksto increase knowledge spillovers and innovation. In one of itsmany supporting roles, PDC helped to pair local supplierswith major investors. When local universities, which fellunder the federal mandate, failed to respond to the severeskill shortages hindering industry expansion, a joint council ofPDC and the major manufacturing firms established thePenang Skills Development Centre (PSDC), in 1989. Itsunique organizational structure, with industry directlyinvolved and holding the chair position in the centre, ensuredthat PSDC would have demand-driven courses to meet theevolving needs of the industry. And in a much-emulated bestpractice, the PSDC has helped Penang to move up the elec-tronic industry value ladder and stay competitive by continu-ally enhancing the pool of qualified human resources.

As more of the labour-intensive electronic assembly pro-duction relocates to emerging low-cost locales in the region,especially China, Penang has shifted into higher value activi-ties, including wafer production and the design and prototyp-

ing of products and pro-duction processes,thereby retaining itsprominence as an elec-tronics manufacturinghub of Asia.

i Haggard, Li, and Ong (1998, p.22).

Source: Muller and Saxenian(2005).


These guidelines are organised around themes(substance) and building blocks (methodolo-

gy). The objective of the guidelines is to haveworldwide applicability in the development ofCDSs to enable cities to reposition themselves.This is a tall order, because, as noted, developingcities vary widely in social features (economic sys-tems, culture) and resources (finances, knowl-edge, governance capacity). Therefore, what fol-lows in sections 6 and 7 necessarily generalisesacross these differences.

Section 6 discusses the substantive focus of theCDS. Although each city’s strategy will beunique, experience has shown that virtually allsuccessful cities deal, albeit in different ways, with(i) livelihood enhancement (making a living [get-ting a job, starting a business], competitiveness,and human resource development); (ii) environ-mental quality, service delivery, and energy effi-ciency; (iii) spatial form and infrastructure (sup-plying land for shelter and livelihood, enablingtransaction-rich environments, and optimisingmobility through cost-efficient and environmen-tally sound transport systems); (iv) financialresources; and (v) governance.

A city’s perspective on these issues and its priori-ties will very much depend on (i) its place on thedevelopment trajectory (some cities are primarilyinformal economies, such as Maputo, Mozam-bique; some are just entering large-scale industri-alisation, such as Ho Chi Minh City, Vietnam;others are becoming high-end service-orientedeconomies, such as Hyderabad, India); (ii) its geo-graphic context (some are land locked; others arecoastal; some have highly attractive settings; oth-ers lack natural amenity); (iii) its culture; (iv) itsgovernance system; and (v) its openness to glob-alisation.

The building blocks (methodology), described insection 7, sequentially outline the technical stepsof any successful CDS process. Worldwide expe-rience has refined the approach taken in theseguidelines, which offer advice on each stage thatexperience has shown to underlie a successfulstrategic city development process.

5. Approach

P A R T T W O

6. Themes (Substance)


The following themes are useful in structuringthe CDS processes of identifying a city’s

issues and assessing its capacity. Appendices A toE are menus of specific elements for each of thesethemes. A city’s place on the urban trajectoryshould determine which elements of these menusit should focus on. Although these thematic cate-gories are central to the assessment, strategicthrusts (as discussed in section 7.6) normally cutacross more than one theme.

6.1 LIVELIHOOD (Jobs, Business Start-ups, and Household Income)

The bottom line of virtually every CDS is animprovement in livelihood opportunities for thecity’s population. For the adult population(labour force), the measure of livelihood is nor-mally employment (that is, working for a compa-ny or for someone else) or creation of one’s ownwork (for example, starting a business or provid-ing services as an individual). The formal and theinformal sectors both offer employment and busi-ness creation opportunities. CARE, the Atlanta,United States-based humanitarian organisation,has developed a household livelihood security

(HLS) approach as the basis of its work (Figure11); the HLS approach is useful in understandinglivelihood issues (Sanderson 2002).

Unless the incomes of lower income householdscan be increased, it is difficult to sustainablyreduce poverty. Widespread increases in theincomes of low-income households require eco-nomic growth; growth is good, if not essential, forthe poor (Dollar and Kraay 2000). And unless thevalue of urban output can be increased, it is verydifficult to generate the fiscal resources neededfor public facilities, which, in turn, improve thehealth and knowledge of local people and attractprivate investment, creating a virtuous circle.

CDS designers need to assess and consider issuesand formulate strategies in three areas to create alivelihood-enhancing environment: (i) the busi-ness climate and enabling policies for small-busi-ness creation; (ii) urban competitiveness; and (iii)human resource development.

APPENDIX A puts forward a menu of thematicissues related to livelihood enhancement. Relevantmenu items and policies may vary widely, depend-ing on a city’s place on the urban trajectory. In thepoorest of cities, policies would focus on estab-


lishing basic literacy; enabling informal businessesto start up with a minimum of hassles; and creat-ing supportive, non-nuisance environments toallow existing businesses to become more effi-cient and grow. Businesses with potential toexport, both to other parts of the country andinternationally, should have access to informationand support for their efforts to market these prod-ucts. In middle-income cities, at the other end ofthe developing city trajectory, policies will bequite different. They may be designed to supportresearch and development, to attract high-end tal-ent, to deepen economic clusters, and so on.

6.1.1 Business Climate

Business climates vary widely between urbanareas, but cities with more attractive business cli-mates are much more likely to attract invest-ment. The World Bank’s (2004) recently pub-lished global assessment of business climates is ofconsiderable value in formulating a CDS.

Enabling policies for small-business creation andgrowth are important in cities worldwide, butthey need to vary, depending on a city’s positionon the urban development trajectory. In poorercities, such as Jakarta and Nairobi, the formalsector obviously cannot create enough jobs tomeet the employment needs of labour forceentrants and migrants, let alone clear up employ-ment backlogs. Therefore, in such cities, many, ifnot most, people will have to create their ownjobs. If not, social instability is almost guaran-teed, as is economic performance that falls farbelow potential. Local governments can domuch to help organise and strengthen smallbusinesses and especially the informal sector. InKaru, Nigeria, the local government helped toorganise the informal sector into a business net-work (see Box 3). In the case of Santo André,Brazil, the regional development plan focused onthe service sector, which was dominated by smalland informal enterprises. Because there were nodata on this sector, a CDS process was initiatedto collect data and develop a strategy to enablethe tertiary sector to drive development (Box 7).Local governments and tertiary sector organisa-

tions can assist people in creating their ownsmall businesses by providing training, minimis-ing nuisance taxation, supporting small-businesslicensing, and the like.

6.1.2 Competitiveness

The competitiveness of cities can be assessed rap-idly. Webster and Muller (2000) prepared a man-ual that covers competitiveness assessmentmodes. A CDS should identify a city’s compara-tive advantage (that is, its endowments, such asclimate, geolocation, factor availability, and theprice of land and labour). At the same time, theCDS should assess the city’s competitive advan-tage (that is, how competitive a given industry oreconomic cluster, such as automotive assembly, isvis-à-vis a similar cluster in a competing city).

Unfortunately, we have few urban economicdata, even for the formal sector, in most develop-ing countries, especially in the medium-size andsmaller cities whose boundaries do not coincidewith provincial or municipal boundaries.Also, thedata tend to be organised traditionally, by sectors,whereas economic development is best under-stood through cluster analysis. To the extent pos-sible, a CDS should focus on key economic clus-ters in assessing a city’s competitiveness.

6.1.3 Human Resource Development

Human resource development is key to efforts toprevent or alleviate poverty and is the primeagent of upward mobility in developing cities. Itcontributes to overall urban productivity andcompetitiveness by developing a stock of spe-cialised, technically skilled labour. It involvesshort-term training, formal training leading tocertification (such as university or vocational pro-grammes), and other modalities of training (suchas apprenticeships and informal adult literacycourses). Key concerns in assessing human

Local governments

can do much to

help organise and

strengthen small

businesses and

especially the

informal sector.

resource development at the urban scale are: (i)access to training or education opportunities; (ii)the quality of training programmes; and (iii) thealignment of educational programming with theemerging urban economy.

Short-term training can be particularly importantas an adaptation mechanism when cities areshocked. For example, immediately after the1997 financial crisis in Thailand, the Bangkokgovernment (the BMA) trained more than100,000 people in occupations in demand. Thetrainees were then able to set up small businesseswith minimal requirements for start-up capital,such as hairdressing, motorcycle repair, home ren-ovation, or bookkeeping. The capability of a cityto rapidly gear up short-term training is an impor-tant element in the assessment of an urbanregion.


The Santo André CDS was an elaboration of a largerregional economic development plan. The greater ABC

region, in the south-eastern part of Greater São Paulo, pre-pared a regional economic development plan in 1999, settingout a planning and institutional framework for the region’seconomic revitalization. The strategy called for a focus on thetertiary economy. However, because small-scale and informalenterprises dominated this segment of the economy, infor-mation about business and other service sectors was scant.Thus, Santo André, the second largest of seven municipali-ties in the ABC region, initiated a process to deepen theknowledge base of this sector through a set of interviewsand, based on the results of this survey, a detailed action planto develop the service sector.

Santo André discovered that interview-based surveyingis a lengthy process, especially when the database forsampling is incomplete, as in the city’s informal sector. Ittook 20 weeks to collect surveys from small businessesand 15 weeks to collect surveys from the informal sectorin Santo André. The process was hindered by a lack ofawareness about the regional plan and its importance and

by respondents’ reluctance to share information about rev-enue and profits with the government. Better media cover-age could have helped. However, the survey process itselfraised awareness about the broader strategy and the gov-ernment’s desire for stakeholder participation. For this rea-son, Santo André had to ensure that the people conductingthe surveys were capable of describing the regional strate-gy and its participatory frameworks. The process alsorequired striking a balance between outside consultantsand insider inputs. Outsiders could facilitate the process,gather sensitive information more easily than the local gov-ernment, and provide helpful viewpoints, but creating data-bases, interpreting results, and developing feasibledetailed plans required local knowledge of processes, poli-tics, and history.

In the end, the Santo André CDS got the local communityinvolved in the regional strategy, and it added value to theoverarching strategy with better defined programmes andprojects, with the local stakeholders’ political support.

Source: Cities Alliance–ABC (2002).

BOX 7. ECONOMIC STRENGTHENING IN SANTO ANDRÉ, BRAZIL, THROUGH SMALL BUSINESS AND INFORMAL SERVICE SECTOR DEVELOPMENT

6.2 IMPROVING ENVIRONMENTAL QUALITY, SERVICE DELIVERY, AND ENERGY EFFICIENCY

CDS processes in the past have tended to viewenvironmental initiatives as add-ons to strategies.Often, the so-called environmental strategiesfound in CDSs are: (i) conventional civil engi-neering programming, such as wastewater orlandfill systems mechanistically developed on thebasis of demographic and economic forecasts; and(ii) proposals to minimise emissions, again on thebasis of forecast conditions. What is needed is achanged paradigm to totally reframe the environ-mental and energy content of a CDS. For exam-ple, the question could be; which city develop-ment vectors would minimise environmentalinfrastructure costs, substantially improve energyefficiency, and maximise returns on public healthand other social service investment? To whatextent can demand management reduce the needfor additional environmental or energy facilities?


Environmental assessments should also capturethe important relationships between cities andtheir surroundings. If cities do not take into con-sideration the impacts of urban production andconsumption outside the city’s boundaries(impacts on forests, rivers, watersheds, biodiversi-ty, coasts, climate change), they will seriouslydeplete the natural resources they depend on andhinder future development. The area covered bya CDS should also take into consideration naturalresource boundaries, such as watersheds andcoastal reef zones.

CDS designers need to assess system perform-ance, consider issues, and formulate policies andstrategies in three areas to improve environmen-tal performance: (i) environmental quality; (ii)service delivery; and (iii) energy efficiency.

Appendix B puts forward a menu of thematicissues related to environmental performance andservice delivery. Relevant menu items will varywidely, depending on a city’s position on theurban trajectory. As in the case of livelihood, theenvironmental and public health conditions willvary according to a city’s position on the urbandevelopment trajectory, as will its energy con-sumption. This trajectory, known as the environ-mental trajectory, is well understood. Environ-mental pollution generally worsens withindustrialisation and is often at its worst duringearly industrialisation (lower middle-income citystatus). Environmental conditions then improveas initiatives are taken, often in response to citi-zen demands. Mass motorisation, the usual primesource of air pollution in middle-income cities, isincreasingly occurring at the earlier stage of thetrajectory. Because the populations of cities tendto grow fastest early on in the urbanisation trajec-tory, a CDS usually stresses capital and humanresources needs for basic services; backlogs, evenfor basic services, may occur at an early stage inthe trajectory. Energy consumption per capitatends to increase until cities reach a high level ofdevelopment; then it levels off or drops. Energyconsumption per unit of production or in relationto GDP usually drops much earlier, especially ifproactive policies are in place to encourage ener-gy efficiency.

Of course, each city is unique and will movethrough the trajectory at its own pace. For exam-ple, atmospheric inversions in the locales of somecities make air pollution worse; cities in countriesthat import oil or electricity to meet a high pro-portion of their energy requirements may need tointroduce energy-saving interventions earlier on;and basic needs may be met more effectivelyunder capable, transparent local government,especially if local civic groups apply pressure. Thepurpose of a CDS is to target cost-effective inter-ventions that make the most difference in thoseareas most important to local public health andwell-being, environmental quality, and energyefficiency.

6.2.1 Environmental Quality

Air and water quality are of prime concern earlyon in the trajectory. To ensure water quality, careshould be taken in choosing technologies, espe-cially for wastewater treatment. Most wastewatersystems fail in developing cities because there isno provision for sustainability: financial resourcesfor chemicals, energy, and maintenance are lack-ing. Simply blanketing a city with a conventional(high-cost) wastewater system is often not thestrategic solution, especially in poorer cities.

6.2.2 Service Delivery

In service delivery, the prime concerns are cover-age (geographic), accessibility and affordability(price), and the quality/cost ratio (often a trade-off). As in the case of environmental quality, serv-ice delivery systems need to be sustainable. Thus,tariff structures need to be developed both to beaffordable to the poor and, in aggregate, to enablethe system to function without operating subsi-dies. Start-up subsidies are justifiable under cer-tain conditions. Much literature exists on servicedelivery, especially from the World Bank, to assistcities in assessing service delivery and in develop-ing strategic thrusts to make it more effective.

Johannesburg, South Africa, uses modern infor-mation technology, including geographic informa-

Environmental

assessments

should also

capture the

important

relationships

between cities

and their

surroundings.


To improve decisionmaking related to service delivery to theurban poor, the City of Johannesburg established a service

delivery monitoring system, integral to its CDS, with the supportof the World Bank, the Netherlands, and the Cities Alliance.

The underlying idea was to give political representativesand communities access to information relevant to annualbudgetary allocation decisions and empower the city’s poorthrough better information. The monitoring system, based onup-to-date information on the status of service delivery topoor households, has enabled the city to target poor neigh-bourhoods for sectoral expenditures. By linking budget allo-cations to their impacts on poor households, the monitoringsystem should keep municipal officials and the citizens ofJohannesburg abreast of the city’s progress towards Johan-nesburg’s goal of becoming a world-class city by 2030.

Simplicity, affordability (time and financial costs), userfriendliness, and fiscal accountability were important criteriafor the design of the monitoring mechanism. Using a Geo-graphic Information System (GIS), poorly served areas wherehouseholds received less than basic services were identifiedand mapped. Hand-held computers, programmed with con-sistency checks to reduce errors, were used to record infor-mation. The data were then transferred to a server everyother day for immediate use. The Excel database is available

to city officials and other stakeholders in user-friendly for-mats, and the city is now planning to install the database onits website for public use.

This initial mapping of poorly served areas is an importantstep towards establishing a system to monitor the deliveryof essential services, particularly to the poor. The effective-ness of the monitoring system rests on several importantfactors, including the kinds of information collected throughsurveys, how various stakeholders use the information, howmonitoring builds accountability to improve the delivery ofessential services to the poor, and how its impacts (that is,changes in the status of service delivery on the ground) mayin the future help to improve the fiscal efficiency of the city’sservice delivery.

The City of Durban is now implementing systems pio-neered through Cities Alliance support in Johannesburg; theCities Learning and Support Network expects to spreadthese systems to the other seven large cities in SouthAfrica. Lagos, Nigeria, Africa’s largest city, with more than 12million people, has also expressed interest in adopting theJohannesburg service delivery monitoring system.

Source: Cities Alliance (2002, p. 9).

BOX 8. THE SERVICE DELIVERY MONITORING SYSTEM IN JOHANNESBURG, SOUTH AFRICA

tion systems, to innovatively monitor servicedelivery in slum neighbourhoods. Through bettermonitoring of these neighbourhoods, the city canidentify the need for planning or managementand can quickly ascertain progress towards envi-ronmental and service objectives such as coverage(Box 8).

6.2.3 Energy Efficiency

As has been argued, energy efficiency will dra-matically affect the well-being of a city’s resi-dents, particularly lower income residents. Figure3 shows the major areas in which a city’s energyefficiency may need improvement. As the figureindicates, energy efficiency can be improved byincentives to change behaviour related to indus-

trial processes, household consumption, buildingconstruction and use, and urban form. Demandmanagement is as important as supply manage-ment, but because it is obviously much less capi-tal intensive, it is often more cost-effective. Andcities often have more control over demand (asdistributors), because the supply side is often con-trolled by national-scale state enterprises, corpo-rations, and so on. The environmental impacts ofenergy use are another area of high concern. Ascities around the world have shown, curtailing theuse of coal in urban areas can deliver enormousimprovements in air quality, as can using vehiclesthat have been converted or manufactured to usealternative fuels, such as liquefied natural gas orhybrid sources of power, for example, electricityand fuel cell.

6.3 SPATIAL FORM AND INFRASTRUCTURE

Spatial form and infrastructure are becomingincreasingly important in city development.Appendix C outlines a menu of urban form andinfrastructure issues areas to be considered inrapid assessment of cities.

6.3.1 Infrastructure

Recent research that the World Bank summarisedin its flagship report on infrastructure in East Asia(ADB, JBIC, and World Bank 2005) stresses theimportance of infrastructure in support of urbaneconomic competitiveness and human well-being. However, assessing infrastructure effective-ness is difficult, and allocating public fundsamong competing infrastructure needs is evenmore so. Often, tradeoffs, as well as synergies,exist between equity objectives (providing basicservices to all members of urban society at afford-able rates) and economic objectives (which maybe facilitated by expressways, ports, airports, andthe like). A good CDS carefully considers infra-

structure investment. Infrastructure investmenthas been neglected over the past 15 years in mostdeveloping cities, as reflected in both public andprivate investment. There is now a consensus thatmore attention needs to be given to urban infra-structure to absorb rapid growth and to enabledeveloping cities to meet their economic poten-tial. The evidence is clear that infrastructure bot-tlenecks greatly reduce economic efficiency byraising the cost of goods and services, reducingpublic health, and robbing people of their time.

6.3.2 Urban Form

Cities should be concerned about their spatialstructures. Congestion can impose high econom-ic costs; sprawl is associated with energy ineffi-ciency; and attractive environments—such asareas of high vitality intermixed with high-quali-ty public spaces—are conducive to inward migra-tion of talent, investment, and so forth. Afford-able, accessible land is essential to absorbingmigrants productively as part of large-scale pover-ty prevention programming.


Much Higher Fossil Fuel Prices

Lag in Delivery of Alternative Energy, e.g., HydrogenUrban Infrastructures

• Maximised use of rail infrastructure (7–10% as efficient as autos)• Demand management of energy• Alternative electrical generators, e.g., wind, nuclear

Households• Energy conserving appliances• Green buildings –smaller living spaces• Fuel saving lifestyles –minimize hearing, air conditioning –minimise trips• Fuel efficient vehicles

Urban Form

• High densities• High activity modes along transport corridors• Social & Community facilities near residences• Closer alignment jobs: housing• Contiguous development

Firms

• Fuel efficient production processes• Green buildings• Optimal transport routings• Resource minimisation –Minaturisation –Lean packaging

Energy Efficient City

FIGURE 3. CITIES IN THE POST-PETROLEUM WORLD


The city Vision that emerged from CDSworkshops in Aden, Yemen, with local par-

ticipants not only informed the formulation ofa local strategy to strengthen the city econo-my, but also sparked a wider infrastructureinvestment programme for the city and theregion.

Aden’s CDS strategy focused on strength-ening the economy through (i) improving theoperational efficiency of the seaport, airport,and free trade zone; (ii) linking key economicareas to the wider city economy by investing in roads to the industrial estate; and (iii) improving theoverall business environment. The latter focused on strengthening the delivery performance of insti-tutions and on making policy improvements to increase investor confidence. Measures includedstreamlining business regulations and modernising the administration’s information and communica-tion technology.

These local economic development initiatives received a major boost when the CDS process led toinitiation of the regionwide Port City Development Project, a 12-year, $96 million investment pro-gramme financed by the World Bank to improve transportation infrastructure, commercial areas, andcapital investment plans and to provide resources for building local capacity and modernising localadministrations.

Source: Cities Alliance (2003a, pp. 10–11, 2005, pp. 59–63).

BOX 9. CAPITAL INVESTMENT AND ADMINISTRATIVE MODERNISATION ARE KEY TO LOCAL ECONOMIC DEVELOPMENT IN ADEN, YEMEN


In many developing cities, slums, including squat-ter settlements, constitute a large percentage ofthe land area; in some cities, the majority. Slumscannot be viewed in isolation, as separate from the“modern” or “permanent” city. Nor can they beviewed as being outside the land economy.Acknowledging their economic value can help ineither getting new housing built elsewhere orimproving the settlements in situ. If there isenough confidence in local institutions (unfortu-nately, a condition that often does not exist), landreadjustment can deliver the most effectivewin–win outcomes, as the East Asian case indi-cates. Slums and squatter areas should be assessedas integral components of a city’s spatial structure,and like all land uses, as dynamic. Land uses can besignificantly changed by appropriate policy,investment, and awareness initiatives.

All land uses in cities shift, even central businessdistricts (CBDs), as the case of Manila illustrates;thus, all forms of land use should be assessed asdynamic, not static. For this reason, time-seriesanalysis of data from remote sensing is veryimportant in the initial assessment. Fortunately,such data sets are becoming more affordable.

The Aden, Yemen, CDS process clearly identifiedthe need for specific infrastructure to enhancethe economic competitiveness of the city andbetter link investment zones to the wider econo-my (Box 9). The process led to significant invest-ment, which unleashed considerable economicpotential and was influential in shaping the spa-tial form of the city.

Innovative Finance, e.g., BOT, BOO

Consumer Credit- funds housing +

local infrastructure(special assignments)

Public Sector: Public Spaces

Goods & Services

Goods & Services

EconomicProduction

FormalCommunities

InformalCommunities

Public Private Ventures

Borrowing from Commercial Banks

Mobilise Finance Through:1) Land tenure + micro and conventional credit2) Land tenure—sell3) Land readjustment: win-win

Transfers• general• specific

Bonds (Credit Rating)

Local Revenues- including off-budget

Borrowing from Pooled & On-Lending Facilities– national bonds

$

$

Expo

rts

PropertyDevelopers

Firms Raise Equity- stock markets

RemittancesForeign Direct Investment

Domestic Investment

Reinvestment of Earnings

Savings from Employment& Small Micro Credit Businesses

FIGURE 4. FINANCE AND THE CITY



6.4 FINANCIAL RESOURCES

Appendix D outlines a menu of key thematicissues pertaining to financial resources for a CDSto consider in its assessment.

As Figure 4 indicates, local public sector budgetsconstitute a only small stream of financing for citydevelopment. However, this is not cause for alarm.Even the poorest of cities can use a myriad of cap-ital sources to improve its performance and theliving standards of its residents. Lack of public sec-tor fiscal resources, although obviously making thesituation more difficult, need not constrain a suc-cessful strategy.

Figure 5, derived from the Bangkok case, showsthat much, if not most, public infrastructure canand should be financed by those who use it—theprivate sector and so on (consumers).

Assessments should accurately determine thefinancial status (operating and capital budgets) ofa city’s government. Appendix D provides thedetails. In some middle-income cities, municipalratings agencies do this, but less economicallydeveloped locales may not have such data. Oncethe CDS assessment has determined the currentfinancial status of the city, analysts should forecastits future financial status on the basis of expectedrevenue and committed capital spending, as wellas expected routine spending. Best practiceincludes the development of future financial sce-narios, often based on low-, medium-, and high-revenue forecasts. With this information, the citycan borrow and make future commitments witha better understanding of risk. An effective CDSsupplies a reader-friendly financial report withstylised facts to enable stakeholders to more easi-ly understand the city’s financial position. Themain strategies of the CDS have to be directlytied to the means of financing them, including

An effective

CDS supplies a

reader-friendly

financial report

with stylised

facts to enable

stakeholders

to more easily

understand the

city’s financial

position.

Network Trunke.g., Toll ways, (arterial roads)

trunk water, rapid transit

Property Developer Scalee.g., Local water telecommunications,

sanitation infrastructure

Community Scale(Preferred Development Areas)

e.g., Distributor RoadsCommunity Parts, Social Facilities

Land Readjustment

[Utility Delivery]

InnovativeFinancee.g., BOO Off Site Supply Infrastructure

e.g., Power GenerationResenders

InnovativeFinancee.g., BOT

Privatisatione.g., IPOEast Water

User Pays Operating Costse.g., Metering

Commercial BankMortgage Finance

User Pays Capital Finance• Special tex assessment• Up-front payment

Private-PublicPartnerships

ConcessionalFinancee.g., JBIC

LocalGovernmentExpenditure• L.G. Bond• Revenues

Privatisation• Bond• Equity

CatalyticDevelopment


FIGURE 5. FINANCING CITY BUILDING: THE CASE OF BANGKOK

city government financing. If the city lacks amedium-term financial planning process (incor-porating capital spending), the CDS would likelyrecommend such a mechanism. Financial analysisof the city’s government will set the stage, ofcourse, for determining how to finance neededinfrastructure, public facilities, and the like. Clearfinancial statements, including forecasts, are a pre-requisite for obtaining private sector funding,issuing bonds, or pursuing innovative financing,including public–private partnerships.

The ability of the city to service its current debtsand borrow additional funds is critical to deter-mining the future financial role of the local gov-ernment(s). The important considerations arerevenue diversity, autonomy to raise taxes, abilityto change financial commitments over the eco-nomic cycle, willingness to control expenses,cash-flow management, and the level of commit-ted capital investment.

The financial analysis examines the likely futurestrength of the city’s primary revenue sources,expenditure trends, operating results, and liquidi-ty. Particularly important are scenarios for futurerevenue streams. Normally, financial planning andbudgeting would be done over rolling five-yearperiods; however, analysis of past performancewould span the last full economic cycle.

The CDS process should establish indicators (seesection 7) to track the financial health of the city.Financial stocktaking provides a baseline forassessing the performance of future financialmanagement and for making comparisons withother cities, including benchmark cities.

As mentioned earlier, quick gearing up of train-ing systems is important during times of crisis.And a city’s financial systems need to be flexibleenough to respond quickly to economic, natural,and other crises. At such times, increased trans-



fers from national governments are likely, butcity authorities often require immediate action.The CDS process should assess the city’s abilityto act quickly and flexibly during times of stress.

6.5 GOVERNANCE

Just as in the case of finance, governance far tran-scends the role of local government. Governmentis important because it represents the publicinterest. Local government is especially relevantin city development: it is closer to the main stake-holders, it can become the knowledge hub forurban innovation, and it plays an important rolein delivery (directly or indirectly through subcon-tracting, concessions, and the like) of facilities andservices that are the responsibility of local gov-ernment or the equivalent publicly accountablebodies. Furthermore, local government can andshould undertake catalytic projects (alone orthrough public–private ventures) to bridge mar-ket gaps, especially when they negatively affectlow-income people or seriously constrain theoverall performance of the urban economy.

Appendix E presents a menu of thematic issues ingovernance for a CDS to consider. CDS work ongovernance is normally structured around the fol-lowing themes: (i) national urban policy frame-works; (ii) institutional structure and processes oflocal government (administrative/political); (iii)role of local government in the context of decen-tralisation; (iv) metropolitan governance; (v)capacity; and (vi) relationship to the private sec-tor and civil society.

6.5.1 National Urban Policy Frameworks

Often, the analysis of urban policy frameworkswill already have been done at the national level.It is difficult work because cities are often asmuch affected by implicit urban policies (such asenergy pricing or housing finance rates) as byexplicit policies (such as establishment of metro-politan structures and specific investments in theurban area). As with all CDS assessments, thefocus would be on those policy areas most perti-nent to the strategy. A CDS would therefore ini-

tially deploy a scan–scope approach (discussed insection 7.2.1). As strategic thrusts become clear-er, more focused policy analysis targeting a partic-ular thrust (such as affordable housing) should beundertaken.

6.5.2 Institutional Structure and Processes ofLocal Government (administrative and political)

Although it seems obvious, stakeholders maynot be aware of the structure and processes oflocal government, such as its ways of electing orappointing councils, recruiting and hiring staff,establishing the mandates of major committees,ensuring transparency and appeal safeguards,assigning roles and mandates, and so forth. It isimportant that those preparing a CDS obtainthis information and present it in a brief,stylised form.

6.5.3 Role of Local Government in the Contextof Decentralisation

All local urban governments, with the possibleexception of those in failed states, share powers,including fiscal powers, with other levels of gov-ernment (for example, national and provincial). Aworldwide trend towards decentralisation hasprovided greater autonomy to local governments,

Bangkok, Thailand


which may lead them to become more efficient,responsible, responsive, and transparent. In reali-ty, results have been mixed at best, with decen-tralisation contributing to poorer quality localgovernance in some cases and unleashing localcapacity and energy in others. To date, mostdecentralisation has been on the expenditureside, with less on the revenue side; that is, citieshave more expenditure powers, but their revenuegeneration mandates are increased at a slowerrate, creating unfunded mandates or a depend-ence on transfers.

The CDS assessment should take it into consid-eration the highly dynamic and usually stressfulgovernance situation that decentralisation cre-ates. From the CDS perspective, decentralisationis an opportunity. Stakeholders should ask howthis changed role for the local government canbest be used to advance the strategic thrusts. Ofcourse, if such changes have not occurred, themandate of local government vis-à-vis senior gov-ernments still needs to be made explicit.

6.5.4 Metropolitan Governance

A major constraint to performance is the frag-mentation of local governance in a metropolitanarea or the even larger EUR (which may containseveral metropolitan areas). CDS assessmentsshould determine whether there are mechanismsfor inter-jurisdictional cooperation within themetropolitan area. And if so, how effective arethese mechanisms? A wide variety of mecha-nisms exist, such as metropolitan governments,regional districts, councils of local governments,and bilateral and multilateral voluntary coopera-tion, which may be motivated by matching grantsfrom senior government.

6.5.5 Capacity

The capacity of local governments varies widelyand generally speaking increases with the level ofeconomic development. This capacity includesskilled employees, equipment, corporate culture,training opportunities, and so forth. The CDSassessment process needs to cover the capacity oflocal governments.

6.5.6 Relationship to the Private Sector andCivil Society

Urban governments also vary widely in the extentof their relationships with the private sector andcivil society. Their relationship with the privatesector vary from one of virtual isolation, throughconsultation, to private–public ventures, to pri-vatisation of key services, and so on. There is avast literature on the topic, documenting manysuccesses and failures. Local government relation-ships with civil society vary similarly over a widespectrum, depending on national governmentsand ideology, as well as local factors. Again, thevast literature on this topic indicates that civilsociety can play a positive leadership role in turn-ing cities around, or they might play a negativeone.

The case of Sofia (Box 10) describes urban gover-nance and management restructuring in a transi-tional economy. Facing financial restrictions andthe need to compete for global investment, espe-cially with other eastern European cities, Sofiaused a strategic approach to quickly effect majorurban institutional change.


Amman, Jordan, is another city that used a CDSto restructure its municipal management andgovernance. Box 11 describes how Amman reor-ganised local government departments and

upgraded and modernised their planning capacityto better cope with rapid population increasesgenerated by refugee movements due toAmman’s status in the region as a safe haven.

Sofia is facing challenges common to many cities with transi-tion economies:

• The economy has rapidly transitioned from an industrialmanufacturing economy to a predominantly service-ori-ented one. Public enterprises are being restructured, butthey still account for 40 percent of urban employment (in2000);

• The urban spatial structure is poorly suited to the neweconomy. A large amount of the inner city is industrialland, and more than 50 percent of the population lives onthe periphery in high-density, poor-quality housing devel-opments with inadequate access to infrastructure. Thisstructure contributes to severe air pollution from energy-generating activities and vehicles;

• The city is facing a severe shortage of housing and officespace;

• The urban public infrastructure is decaying and in need ofrenewal and expansion;

• The municipal governance structure is top down;

• Municipal finances are centrally controlled, and revenuetransfers from the national government to the city aredeclining. The city receives back only a small portion ofwhat it contributes in taxes and fees.

A clear priority for the City of Sofia is to improve the qual-ity of business and residential locations and services to makethe city more competitive, efficient, and livable for its resi-dents and for investors. However, Sofia, like many other tran-sition economies, needs to shift its public sector role in citybuilding and social services from delivery to guidance as itmoves towards a more market-driven process. This transitionis being driven by severe municipal financial constraints,which necessitate the involvement and mobilisation ofresources from the private sector and third-party organiza-

tions. To facilitate this process, Sofia developed a city strat-egy to introduce new institutional frameworks to open chan-nels of communication and streamline business and devel-opment approval processes. First, the strategy calls forforging new partnerships with various stakeholder groups,primarily through the creation of public–private organizationsto enable the government to (i) inform its citizens aboutmunicipal affairs and services; (ii) solicit regular feedback,ideas, and suggestions; and (iii) develop joint responses toissues and concerns. Second, to reduce red tape for busi-ness approvals and planning and building development, thecity plans to introduce one-stop approval services and makeapplication forms and information available online. The strat-egy also recommends that the city release more land fordevelopment and assist in consolidating land where owner-ship is highly fragmented. The third strategic measure is todevelop a master plan for Sofia to guide private investmentin support of a more compact urban form. The master planencourages the creation of business and residential clustersalong existing transportation corridors and of more mixed-use developments to encourage the efficient use of infra-structure and reduce future capital spending. The plan is alsodesigned to strongly protect valuable urban green spacesfrom redevelopment pressures. Sofia has an unusually largeamount of urban green space for a European city, which itrecognises as a unique asset improving the quality of theurban environment for its citizens and attracting upscaleinvestment and tourism. Through the implementation ofthese three measures (new partnerships, streamlinedapproval processes, and the master plan), Sofia hopes tocreate a more efficient and participatory governance struc-ture capable of responding effectively to a rapidly changingeconomic and social environment.

Source: Cities Alliance (2003b).

BOX 10. SOFIA, BULGARIA—INSTITUTIONAL DEVELOPMENT FOR A TRANSITION ECONOMY


Amman, the capital of Jordan and home to more than 2 mil-lion residents, has undergone rapid expansion in the past

decade. This increase reflects Amman’s status as a safe haven ina region of conflict—following the first Gulf War in the early1990s, for example, there was a sudden influx of about 300,000refugees. This influx has placed extraordinary pressures on thecity to plan and deliver municipal services.

To achieve its growth potential and more efficiently deliv-er services to city residents, the Greater Amman Municipali-ty focussed its CDS on strengthening municipal manage-ment and governance, participation, and urban planningcapacity. It used CDS funding to recruit amunicipal management specialist tostreamline the organizational structure,revamp management systems, andstrengthen urban planning processes: (i)functional departments were reorganisedand aligned with defined service deliverytargets and standards; (ii) the informationsystem, previously consisting of 15 dif-ferent outdated database platforms, wasoverhauled and consolidated into a singleintegrated enterprise system. (iii) partici-patory planning processes were imple-mented; and (iv) land-use planning, zon-ing, and building regulations werestrengthened to increase the population

in low-density areas, minimise sprawl, and better accommo-date and service the recent influx of new residents. A seriesof workshops is planned to unveil the revamped manage-ment and urban planning approaches and to encourage par-ticipation. In addition, the CDS has led to the adoption of acitywide upgrading strategy for squatter settlements andrefugee camps.

Source: Cities Alliance (2005, pp. 58–59).

BOX 11. RESTRUCTURING MUNICIPAL MANAGEMENT AND GOVERNANCE UNDER STRESS IN GREATER AMMAN MUNICIPALITY, JORDAN


7. Building Blocks (Process Methodology)

This section outlines the steps involved inpreparing a CDS. Although much is drawn

from worldwide experience over the past 15years, examples are presented throughout the sec-tion from the recently completed CDS for Xia-men, China, which is based on the approachdescribed below. Figure 6 shows key steps in theprocess, described in more detail below.

7.1 INITIATING PROCESS AND PROCESS PRINCIPLES

Careful and effective initiation of a CDS processis essential to its success. Principles associatedwith successful CDS initiation include: (i) a strat-egy; (ii) a key stakeholders group; and (iii) guide-lines for the process.

7.1.1 Strategy

A strategy, by definition, implies high-level guid-ance and coordination. Thus, senior officials mustagree to contribute time and political capital tothe CDS process. If a mayor (or equivalent seniorofficial) is not willing to spend a significant

amount of time initiating the process and consid-ering the assessment of the city that would beproduced, the whole process should be aban-doned. A strategy produced in conjunction withmiddle-level bureaucrats who have little realpower or influence is unlikely to accomplish itsobjectives.

Riga City Council, Latvia–Key Stakeholder business meeting


7.1.2 Key Stakeholders Group

A successful CDS requires a key stakeholdersgroup, chaired by the mayor and representingkey developmental constituents. Although itscomposition may vary and needs the backing ofthe mayor (or an equally senior official), thecommittee normally includes representatives oflocal government (the mayor), the knowledgecommunity (a leading academic in a related pol-icy field), large-scale domestic business (normal-ly the CEO or manager of a leading, fast-growingcluster anchor firm), the informal business com-munity (such as the head of the street traders’association or taxi cooperative), the foreign busi-ness community (the manager of one of the lead-ing multinationals anchoring a cluster), informalcommunities, public health and the environ-ment, and labour (or workers’ associations). It isexpected that each member of the stakeholdercommittee will be truly representative of a largenetwork of the people of the city and reflectstheir concerns. If the group is larger than 10, it istoo large and will tend to be ineffective in deal-making, as well as being too unwieldy to con-vene. The CDS process is essentially based oncollaborative planning; extensive literature oncollaborative planning indicates the need forsmall-group strategic development, with careful-ly chosen members who truly reflect their con-stituencies and can speak and bargain on behalfof these constituencies.

7.1.3 Guidelines for the Process

An initial meeting with the Key StakeholderGroup, chaired by the mayor, should establishguidelines for the process. These would includethe following.

7.1.3.1 Duration and Logic of the Process Successful examples show that an initial assess-ment, described below (section 7.3), could belimited to three weeks in the field and onemonth of follow-up research and documenta-tion. However, initial behind-the-scenes workwill be required to set up interviews, think-tanksessions with the knowledge community, and soforth. Normally, the setting-up activities wouldcommence six to eight weeks before the start of

Initiate Process

Develop a Vision

Implement

Establish InitialParameters

AwarenessBuilding

Identify StrategicThrusts

Make anInitial Assessment

• Relate to existing institutional structures and process• Define role of strategy

• Define region• Scan – scope• Identify areas of substantive interest based on past processes and context

• Actionable content• Based on unique attributes and advantages

• Undertaken in context of vision

• Drivers - demographicsScan / Scope• Spatial imagery• Secondary data• Field observation• Interviews (formal & informal actors)

• Establish Results Based Indicators

• Specific Cross- Cutting Actions

• Proceed “detective style” based on quickly following leads• Do not rely on secondary data: “somebody knows”

• No strategy without an indicator• No indicator without a strategy

• Print, internet, electronic media

• Commitment from specific actors• Time defined results commitments• Operationalise sustainable monitoring system

Undertake aSWOT Analysis

FIGURE 6. STYLISED CITY DEVELOPMENT STRATEGIC PLANNING PROCESS


7.1.3.2 Relationships to existing institutions and processesBecause the Cities Alliance CDS process is verylimited time wise, it becomes unsustainable if itworks on a separate track from that of the city’sinstitutional framework or establishes its ownCDS institutions and processes. Rather, it shouldwork with existing city planning, economic devel-opment, environmental, public health, energy,and social planning institutions.This does not pre-clude the initiation of new institutional processesand structures as a result of the CDS process;however, the point of departure would be theexisting processes and institutions. It is importantthat one of the city’s institutions act as the CDSprocess anchor. The institution should be enthusi-astic about the process and connected to politicaland coordinative power, including the mayor, andit should take responsibility for coordinating andcatalysing the process. This institution is often themayor’s office.

7.1.3.3 Community InvolvementAll major interest groups in the city should havea chance to participate in the process. The pre-dominant channel would be through the organi-sations represented in the key stakeholders group.That group will, in most cases, have already iden-tified their constituents’ interests. However, theCDS process should involve at least one openmeeting (a town hall meeting) to provide infor-mation about the process and the opportunity forany group or person to speak up. In cities whereaccess to the Internet is available to a significantpercentage of the community, an interactive web-site could be set up. Such a website has beenestablished for urban development issues in Thai-land (http://www.plannerthailand.com). Thiswebsite acknowledges visitor input (a senior offi-cial in Thailand responds to comments andqueries on a weekly basis).

A good CDS will not have 100 percent buy-in.Although searching for as much buy-in as possibleshould be an underlying principle, expecting toachieve consensus is a sure recipe for a strategywith no content. Searching for complete consen-sus often leads to cosmetic participatory process-es, such as town meetings where real dealingamong interest groups does not occur and people

the field assessment, depending on the city’sadministrative efficiency. Not all interviews andother assessment activities should be firmed upbefore the assessment begins. In fact, some meet-ings required during the second and third weekof the rapid assessment will not be identifiableduring the setting-up stage, given the iterativedetective-like nature of the process. However,meetings with key agencies responsible for eco-nomic development, spatial planning, environ-ment, public health, and labour do need to befirmed up.

Following the assessment process is stakeholderinvolvement. This would normally involve meet-ings with each of the stakeholder groups and thekey stakeholder group to facilitate Vision formu-lation (see section 7.4) and identification ofStrategic Thrusts (see section 7.6). Once thegroup and the stakeholders have identified thestrategic thrusts (through an iterative process),experts in the technical areas will refine them andmake them operational. Very importantly, theexperts need to develop powerful indicators tomonitor the progress of implementation, espe-cially outputs and results. Normally, stakeholderinvolvement would last for six months. Aware-ness building (see section 7.7) follows, a continu-ous process that extends over several years,including an initial intensive campaign to ensurethat every citizen of the local community and keymembers of the global community are aware ofthe strategy. Implementation (see section 7.8)extends over several years, with detailed five-yearstrategies in place involving about five interlock-ing, cross-cutting strategies. This arrangementprovides space for a change in tactics in responseto feedback or changing internal and externalconditions.

In total, the whole process from initiation to com-mencement of implementation, should take nomore than one year. Energy and enthusiasm maydissipate if the assessment, stakeholder involve-ment, and strategising phases take longer. It isimportant that the energy of the key stakeholdersbe compacted. Furthermore, the experts neededto produce a first-rate strategy will be expensiveto hire, and their work should therefore be con-centrated over a short period.

CDS processes

should work with

existing city

planning,

economic

development,

environmental,

public health,

energy, and

social planning

institutions.


in the community quickly realise that they arebeing manipulated, or they feel they are wastingtheir time and become alienated.

A good CDS is fair (just) to all groups and plotsthe best means to achieve the city’s vision on thebasis of a realistic reading of the city’s internal andexternal environments (see assessment in section7.3 and strengths–weaknesses–opportunities– threats [SWOT analysis] in section 7.5). This willmean commitment and compromise by all keygroups, and that all hard-edged negotiations willprecede the deals cut with interest groups throughthe Key Stakeholder Group. If the CDS is to bemeaningful, it will involve considerable contesta-tion, hard work, and stress within the Key Stake-holder Group. If the CDS process is easy anduncontested, it has no content and has no chanceof leading to meaningful change.

7.1.3.4A CDS does not set development targets or goalsat inception. The essence of the CDS process is todevelop a Vision; only later are strategic thrusts

identified. It is essential that targets and indicatorsbe directly linked to the strategic thrusts.

7.1.3.5 Implementation CommitmentAlthough there is a need at the outset of theprocess to obtain a commitment to implementa-tion, detailed implementation planning will needto await the identification of strategic thrusts.

7.1.3.6 Assessment Team CompositionThe assessment team should include the highestquality domestic and international experts andhave support from the very best young enthusias-tic researchers in the community (those likely tobe future community leaders)—probably localuniversity students. As argued above, outsidersbring a very valuable perspective to the process,and involving outsiders is virtually always prac-tised in preparing CDSs for industrialised cities.The senior team will normally consist of no morethan two domestic and two foreign people. Theteam members should not require more than sixto eight weeks of time each to undertake theassessment and document it to world-class stan-dards (using high-quality graphics, spatialimagery, and the like). The underlying principlewould be to hire the best available national andinternational talent for limited amounts of time,rather than hiring mediocre talent for longer peri-ods. Effective assessment requires conceptualbreakthroughs, knowledge of international bestpractice, and keen insight.These requirements arenot normally met by off-the-shelf teams providedby consulting firms, although some internationalfirms such as McKinsey are building up world-class CDS teams, operating globally. If a high-quality assessment team cannot be put together,the CDS process should be abandoned, ratherthan wasting the city’s time. Even worse, poorassessment, SWOT, and strategic thrust identifica-tion can mislead a city, causing significant dam-age, especially if a poor-quality product is takenseriously.

7.1.3.7 Strategic Thrust Technical TeamAlthough one or more members of the assess-ment team might be involved in technical sup-port to identify strategic thrusts and formulateindicators for the monitoring, team compositionfor these latter stages of the process cannot be

View of ‘Ger’ area in Ulaanbaatar, Mongolia

predetermined. Again, it is important that thebest personnel available provide the technicalinputs needed to formulate the strategic thrustsand indicators. Normally, these latter processesneed people with different sets of skills.

7.2 ESTABLISHING INITIAL PARAMETERS

Establishing initial parameters involves two mainfactors: (i) spatial definition; and (ii) substantivefocus.

7.2.1 Spatial definition

Defining the spatial domain for a CDS is a diffi-cult task because there is a tradeoff between theamount of territory (and usually the number oflocal government jurisdictions) covered, and thedepth of a strategy. As experience indicates,scan–scope approaches are the best way of han-dling this tradeoff. The context is scanned widelyat the regional (EUR plus hinterland) level, butthe actual strategising is applied at the metropol-itan level.Then, within the metropolitan area, theteam assesses specific areas in much more detail,using scoping, because they are key to the futureof the city for a variety of reasons—absorption ofmigrants, employment nodes, high-value transac-tion environments, social and economic malaise,and so on.

Figure 7 shows this four-level spatial definition inthe case of the urban development opportunityassessment study commissioned by Shui On LandLimited. Areas to be zoomed in on for scoping(detailed assessment, including street-by-streetfieldwork) cannot be identified at the start;instead, they are identified iteratively, during theinitial assessment stage. Spatial definition involvesthe use of remote-sensing imagery, preferablyalong with time-series images dating back 10 –15years. Such images are becoming inexpensive;however, if funds are not available to purchasesuch images, remote-sensing imagery of almost

FIGURE 7. FOUR-LEVEL SPATIAL DEFINITION AND SCOPING: XIAMEN, CHINA


Source: Webster et al (2005)


every city on Earth is now available on the Inter-net, particularly through Google Maps (by tog-gling on the maps at http://maps.google.com) andGoogle Earth (http://earth.google.com)—albeitthe detail varies from city to city.

7.2.2 Areas of Substantive Focus

This is often referred to as the “Where do youenter?” question. Cities vary widely in the extentto which they have assessed their situation andidentified strategic priorities. Thus, although inprinciple those involved in CDS processes shouldhave few preconceived notions, some cities mayhave already identified key priorities and evenformulated a vision. In such cases, the city and thekey stakeholder group will need to decide to whatextent the CDS process could be narrowed downby past work. For example, they may decide thatthe CDS should focus on productively absorbingmigrants, establishing the city as an informationcommunications technology leader, or restructur-ing the urban form to meet accessibility and ener-gy efficiency targets. However, even if the sub-stantive area of the CDS is narrowed, theassessment, within that frame, could beapproached with a clean perspective. That is,assessment and conceptualisation should becomeattempts to reframe both the problem and thesolutions (thinking outside the box) to come upwith the most effective strategies. If CDS strate-gies are narrowed, the technical assessment teamshould obviously reflect the new substantivefocus. However, in no case should a narrow CDS beundertaken unless a broader one, based on high-quality assessment and strategising, has first beenundertaken.

7.3 INITIAL ASSESSMENT

Initial assessment techniques to provide an infor-mation basis for identifying a city’s strengths– weaknesses–opportunities–threats (SWOT analy-sis) have been well documented and tested in the

field and are known to work well under almostany conditions. Manuals on these techniques arereadily available (ADB 2004; United Nations2004a; Frye 2005).

7.3.1 Drivers

Initial assessment starts with identification of“Drivers”, that is, what is driving the city’s econo-my and its national and global roles. Essentially,why does the city exist? And what is driving itsgrowth (or stagnation or decline)? Drivers are oftwo types: (i) internal (such as local humanresource capabilities); and (ii) external (such asforeign direct investment, trading environments,national policy frameworks for urbanisation,demand for exports). Driver assessment is asmuch an art as a science. It is itself driven more bycontent analysis of media and by unconventionalsources of information (such as futures studies)than by secondary data and other conventionalsources of information. The driver assessmentshould have a futures-oriented perspective; thatis, it should focus on emerging drivers (trends,potential shocks, cycles, and random events). AsKaplan and Norton (1996) indicated, the driveranalysis should determine which performancedrivers are directly associated with future per-formance, not those associated with past out-comes. Futures-oriented publications, such as TheFuturist, can sensitise analysts to the issues andcan give them ideas of where to look for relevantinformation about the city. Also useful are region-ally oriented publications, such as the Far EasternEconomic Review.

A major driver of urbanisation is demographicchange. Thus, the driver analysis should identifydemographic dynamics, including at the intramet-ropolitan scale. Where are migrants settling?Which parts of the city are growing fastest? Slow-est? In many cases, demographic assessments aredifficult because some censuses are of poor qual-ity or some jurisdictions count people only wherethey are registered (which may be a town theymigrated from), rather than where they actuallylive. Fast-growing cities tend to undercount theirpopulations.


7.3.2 Scanning

The next step in the initial assessment is to scanthe city’s in terms of its economy, public servicedelivery, environment, spatial and built form, andsocial conditions.

Economic scanning involves a review of key avail-able time-series economic data, enhanced withsimple indices, such as shift–share and locationquotient. This analysis by itself often yields a lim-ited understanding of the urban economy, giventhe poor quality of urban-scale data in mostdeveloping cities. Also, in fast-growing and fast-changing urban economies, knowledge of theexisting situation and even of trends is less usefulthan it would be in slower growing ones.

More important is cluster analysis based on in-depth interviews with leaders of the local eco-nomic development agency, chambers of com-merce, trade associations, informal economicassociations, and so forth. The objective of thecluster analysis is to determine (i) the order-of-magnitude importance (in employment andvalue-added terms) of diverse economic activi-ties; (ii) emerging activities and future potential;and (iii) key anchor firms or leaders of informaleconomic groups, such as vendors’ associations.Cluster analysis almost always produces insightsmissed by traditional sectoral analysis (Porter1988). For example, a cluster scan of the localeconomy of Xiamen, China, revealed the exis-tence of a world-class aircraft refurbishing cluster,which would not have been found in the second-ary data, where the activity was buried in themachinery category. Service sector data are ofteneven more deficient. For example, cluster analysisreadily identifies Bangkok’s vibrant advertisingindustry, whereas it is buried in the traditionalsectoral data.

Scanning of basic services delivery focuses on thequality, quantity (including coverage), fiscal andecological sustainability, and affordability of theservices. For example, scanning would determineaccessibility to primary health centres (where andhow costly they are and their wait times) and the

effectiveness of their treatments. More detail onthe delivery of basic services can be found in sec-tion 6.2 and Appendix B.

Environmental scanning involves the review ofexisting time-series data on aspects of the envi-ronment most important to public health, such asair pollution and surface-water quality. Develop-ing cities see environmental issues from a publichealth viewpoint, in contrast to the perspective ofWestern industrialised cities. Fortunately, elec-tronic monitoring equipment is becoming lessexpensive worldwide, so monitoring of environ-mental conditions is improving in many cities.Another focus of environmental scanning is acity’s environmental and public health infrastruc-ture and delivery of services, such as coverage ofwater supply and wastewater systems.

Spatial scanning focuses on (i) elements; and (ii)dynamics, as shown in Figure 7. Time-seriesremote sensing imagery discloses changes in thespatial form of urban areas. However, a deepunderstanding of spatial elements and dynamicsrequires in-depth briefings by local physical plan-ners, real estate agents (or their equivalents),property developers, and transportation planners.Key probes, as described in Appendix C, are basedon international experience and are used to iden-tify spatial elements. Spatial imagery examined inisolation reveals very little about spatial change.But combined with on-the-ground iterative field-work and triangulation with other data sources itcan be a powerful tool for understanding the spa-tial dynamics of a city.

Identifying spatial dynamics depends on identify-ing the drivers of change. Particularly important isthe transportation infrastructure, such as newexpressways and rapid transit systems (complet-ed, committed [date of completion], or planned).Also important to spatial dynamics are intraurbandifferentials in the dynamics of both formal andinformal real estate markets, changes in the per-


ception of areas (signalled by “trendy” activities,movement of neighbourhood status up anddown, and the like), and changes in spatial invest-ment and employment creation patterns. It isimportant not to confuse spatial dynamics withofficial city plans. As indicated by the case ofChengdu, China, cities often take off in directionsdifferent from those the planners advocate.

Social scanning could focus on access to basicservices and education, the prime levers ofupward mobility in most cities of the world. For-mal unemployment rates tell little in many cities.More useful are data on real household income,access to services, and education enrolment. Dataon access to education and to its facilitatingmechanisms, such as student loans, are particular-ly important. As is the case with economic andspatial scanning, time-series analysis is imperative.Knowing the changes in the social condition ofpopulations is more important than having adescription of static conditions.

In scanning a city, it is important to consider adiversity of views from a representative set ofactors, such as multinationals, small to medium-size enterprises, NGOs, labour unions, associationsand leaders representing the informal economy,trade associations, and property developers. Incities where use of the Internet is common, theCDS anchor institution could establish a site tosolicit input on the dynamics of the city; in othercontexts, call-in lines could be set up. Also usefulare radio talk shows soliciting calls from a varietyof residents.

Interviews are most effective if data needs arewell-documented and lists are left with priorityagencies for technical follow-up. This frees up theinterview time for probing questions, such as,what are the issues? Which aspects of the systemare performing poorly? Which are performingwell? Good interviews probe to find the biggestproblem, the identities of the important players

and the competitor cities, and emerging econom-ic activities. Data requests should be sharp, lean,and limited. Comprehensive data lists (fishingexpeditions) turn off the people at the agencies,who will correctly decide the assessors don’tknow what they are doing and may give them nodata, or at least not the most important data.

In a city assessment, the lack of formal data, espe-cially in many Sub-Saharan African cities, maynot be as big a problem as it initially might seem.By definition, “somebody always knows”, andBamako illustrates how data can be collected inthe absence of strong statistical databases (Box12).

7.3.3 Scoping

The next step in the initial assessment is to scopein on key issue areas and dynamics. In the case ofthe economy, scoping involves interviewing man-agers of anchor firms in rapidly growing clusters,obtaining their views on the future of the econo-my. A simple template of key information couldbe prepared before each interview and sent tothe interviewees before the visit. Figure 8 identi-fies clusters that were subject to more detailedanalysis in the preparation of the Xiamen cityevaluation study commissioned by Shui On LandLimited.

Specific problems related to public health andthe environment (such as respiratory disease orincreases in traffic deaths and injuries) would beassessed in more detail for causality. In a spatialsense, scoping involves walking the streets andback alleys of targeted areas, interpreting thedetails of imagery, and field-checking new devel-opment corridors and areas (is construction reallyunder way?). Scoping in on the most importantsocial challenges may involve meetings with lead-ers of advocacy groups, labour agencies, educa-tors, and others. The most important principle inscoping is to work iteratively: one key informantis likely to recommend a second, and so on. Inter-views or visits can also be politely dropped whenit is determined that the dynamics involved arenot critical to the future of the city.


When Bamako, Mali, decided to embark on a CDS process,it was met with enthusiasm by various city stakeholder

groups. The stakeholders placed great hope in the process todeliver desperately needed social programmes and infrastruc-ture. Given the weak statistical base and lack of city indicators,the CDS team organised a public workshop to gather informationon the city and to elicit public input for the CDS. The workshopbrought together stakeholders from a broad cross-section ofbusiness people, community groups, and local organizations,ranging from refuse collectors and women’s rights groups tocommercial interests and government agencies. These individu-als were able to provide information not elsewhere documentedabout the city’s conditions, spatial dynamics, and trends, andthey helped to identify important issues and objectives for thecity’s development.

With a substantial portion of Bamako’s population poorly edu-cated and illiterate, the standard written forms of informationgathering and dissemination—such as questionnaires, reports,journals, newspapers, texts, and statistical data—could not beused. Instead, the CDS team used direct contact and public radioto raise awareness about the CDS and the workshop. The work-

shop itself was conducted in the local language and effectivelyused moderators to explore, discuss, and debate positions dur-ing a face-to-face forum of city stakeholders. This highly partici-patory process resulted in a much richer understanding of thecity’s situation and development needs and led to an agreed-onset of objectives for the CDS, as well as the much-needed buy-in and commitment of a broad cross-section of stakeholders toa development strategy.

Afterwards, the difficult challenge facing the CDS teamwas to convert the workshop results from a wish list to atruly strategic development plan. Unfortunately, consultingsupport and funding had run out shortly after the publicworkshop, before the CDS team could translate the strate-gy into concrete actions. This loss of momentum is disap-pointing in light of the interest and participation of so manystakeholders, which if effectively coordinated and directed,represented an important resource for achieving the city’sdevelopment potential.

Source: Koby (2002).

BOX 12. COLLECTING CITY DATA IN BAMAKO, MALI

Scoping is even more important if data sourcesare limited. Scoping should be detective-like untilit has uncovered the information needed forunderstanding the dynamics of the city.

Assessment is not dependent on great specificity.More important is determining the overall magni-tude, direction, and rate of change within key the-matic areas so that SWOT analysis can be used tomake a diagnosis.As Lord Keynes noted, “It is bet-ter to be roughly right, than precisely wrong.”

7.3.4 Benchmarking

Another important component of the initialassessment is benchmarking. How does the city’sperformance compare in key thematic areas withother similar cities, with competitor cities, andwith “aspirational” cities (those performing at thelevel to which the analysed city aspires)? Severalmeasures can be used for benchmarking: income,social service coverage and effectiveness, unit costsof infrastructure delivery, growth rates, or energyconsumption. The key thematic areas that are thesubject of the scoping could be included as well.

7.4 FORMULATING A VISION

A Vision is a statement of where a city wants tobe, usually in 10–15 years.A city’s Vision needs tobe specific, internally consistent, and realistic butchallenging. It has to not only inspire and chal-lenge, but also be meaningful to all the residents.The key stakeholders group creates a city’s Visionin brainstorming sessions, using information fromthe initial assessment (described in section 7.3).AVision should reflect the unique attributes of theurban region: (i) its comparative and competitiveadvantages; (ii) its values and preferences of itsresidents; (iii) its relationship to the global,domestic, and subnational economies (especiallyits hinterland and competitor cities); (iv) its his-tory and culture; and (v) its physical characteris-tics, such as location, climate, terrain, water sup-ply, and scenic attributes.


The Vision should be oriented to the outsideworld, as well as to the city’s own residents. Itshould have a positive tone, saying, for example,“making high-quality housing available to all”,rather than “eliminating slums”.

A Vision should be short (no more than 60words) and easy to understand. It creates an iden-tity for a city, enabling it to stand out in theworld. Figure 9 presents the visions developed inthe Ulanbaatar, Mongolia, and Xiamen, China,CDS processes; they are based on the uniquecharacteristics of these cities (their economies,location, amenity endowments, and so forth).

Although short, a Vision can be a powerful uni-fying force in a community. Normally, it shouldstay the same over the 10-year period; tactics toimplement the Vision may change regularly as

conditions change, but the Vision should remainconstant, like a lighthouse. (Only in rare caseswould the external or internal conditions changeso significantly as to make a rewrite of the visionnecessary.) A Vision is important because it alignsstakeholders’ energies so that the stockholderswork cohesively, facing in the same direction, forthe good of the city and its region. Although ori-ented for the long term, a Vision should motivateshort-term action. As the environment facingcities worldwide becomes more uncertain, theirvisions become more important, providing conti-nuity when tactics change rapidly as a result ofanticipation and foresight techniques.

As noted, the key stakeholders group or an equiv-alent body, chaired by the mayor and representingthe executive leadership of a city, should developthe Vision. It is critical that the Vision not be pre-pared in isolation by the local government ortechnocrats. Often, the Vision can and should

A Vision creates

an identity for a

city, enabling it

to stand out in

the world.


Port Machinery

Chemicals

AircraftMaintenance &

Refurbishing

Electronics

LogisticsAirport

Tourism

MICE

AmenityProperty Financial &

BusinessServices

Logistics—Customer Oriented

Manufacturing

Manufacturing EconomyAmenity Economy

LOCAL GOVERNMENT SUPPORT

COSMOPOLITANISM CONNECTIVITY

FIGURE 8. KEY ECONOMIC CLUSTERS: XIAMEN, CHINA

incorporate the existing meaningful images of acity, such as slogans and icons, to provide continu-ity with the past. The exception would be imagesassociated with past failed efforts. As noted, thegroup should base the Vision on the initial assess-ment, paying special attention to the resourcesavailable for implementation based on an audit(see section 7.5). In formulating the Vision, thekey stakeholders group can employ various tech-niques to solicit input, such as focus groups, radiocall-in shows, Internet sites, contests, and letters tonewspapers. International experts may be helpfulin ensuring that the vision captures the larger pic-ture, that it is realistic, and that it focuses on theleading opportunities open to a city. This interna-tional input should include the expert opinions ofthe senior personnel who were involved in the ini-tial assessment.

7.5 IDENTIFYING STRENGTHS–WEAKNESSES–OPPORTUNITIES–THREATS (SWOT ANALYSIS)

With the initial assessment complete and theVision agreed on, the key stakeholders groupbegins the SWOT analysis. Figure 10 gives thebasic structure of a SWOT analysis. “Strengths”and “weaknesses” refer to the internal characteris-tics of a city, especially: (i) its key public, private,and third sector (nonprofit) institutions; (ii) eco-nomic factors and endowments; and (iii) the sta-tus of its physical environment. “Opportunities”and “threats” refer to the external environment,including economic, technological, political, andsocial trends, cycles, shocks, and the like.


FIGURE 9. VISIONS OF ULAANBAATAR, MONGOLIA, AND XIAMEN, CHINA

Ulaanbataar Vision 2020

Vision 1: The City to be a well-developed capital city of international level; to have avibrant economy; to be a world-class busi-ness center having a competitive position inthe areas of education, information, scienceand technology.

Vision 2: The City to have an appropriate pol-icy for land management and urban develop-ment, including developing the “Ger” Areawith appropriate infrastructure, and forimproving housing conditions of all citizens.

Vision 3: The City to be healthy, to have a safe environment, a well-knit social life and aprogressive legal framework.

Vision 4: The City to have a responsive andefficient public administration having a par-ticipatory approach involving the communityand the private business sector in civil serv-ices.

Vision 5: The City to be an attractive touristdestination in the Asian region.

Vision of Xiamen

• To become a globally connectedcity, based on Xiamen’s historicinternational role and world classlogistics capabilities.

• Supporting time sensitive and customer oriented manufacturing

• A unique urban island paradise,destination for business and leisuretravel, conventions, talent andamenity seekers.

• Providing residents with a friendlyand relaxed way of life in a superiorurban environment.

Source: Webster, et al (2005)


SWOT analysis is done after the Vision is com-plete and in only some cases, simultaneously withthe development of the Vision. In other words,the analysis assesses how well the internal andexternal environments of a city may contributeto, or hinder, achievement of the Vision. Largeamounts of technical information, particularly inthe business, planning, and public policy litera-ture, are available to assist in the undertaking ofthe SWOT analysts.

SWOT analysis enables a city to do the following:

• Build on and leverage strengths and opportuni-ties—A city’s emerging clusters, strengths, andopportunities could be increasing world mar-kets for its products, and this additional wealthcould lower the national interest rates tofinance affordable housing.

• Avoid threats or take actions to minimise them,or even reverse their impacts—A city couldderive an advantage from rising petroleumprices, for example, if it becomes more energyefficient than its competitors.

• Build on institutions with the most capacity,potential, leadership, and enthusiasm—Buildingon existing institutions is very important inimplementing strategic thrusts (see section7.8, below). Conversely, it enables strategicchampions to identify and avoid low-capacityinstitutions that would thwart the strategy. Orthose institutions could immediately bestrengthened if they are central to the strategy.Institutional contexts vary widely from city tocity, and especially between nations; thus, keyinstitutions should be selected carefully on thebasis of their real relevance to the vision.

• Identify institutions that may oppose the strate-gy—When it is known which institutions mayoppose the strategy, efforts can be put intoconvincing them of the value of the strategy,and if that doesn’t work, the strategy could beimplemented by “going around” them.

7.6 SETTING STRATEGIC THRUSTS

The key stakeholder group identifies the strategicthrusts (Kaplan and Norton 1996). In essence, astrategic thrust is based on a hypothesis aboutcause and effect. The group should normallyselect no more than five strategic thrusts; other-wise, the strategy will lack focus and be less com-prehensible, and financial and knowledgeresources will be stretched too thin. Strategic

ExternalEnvironment(factors outside controlof municipality)

InternalEnvironment

(factors under controlof municipality)

Opportunities

Threats

Strengths

Weaknesses

FIGURE 10.SWOT ANALYSIS: EXTERNAL AND INTERNAL ENVIRONMENTS


thrusts are a set of means (actions), pursued withdiscipline and intent to produce results within agiven period, as measured with key indicatorsagainst targets. Strategic thrusts are not wish lists,lists of projects, or comprehensive sectoral plans.If CDS processes are open ended and highly par-ticipatory, it is challenging to come up with a fewstrategic intervention points—large meetings tendto generate wish lists; see Box 12, the case ofBamako.

A given strategic thrust is rarely the responsibilityof one institution; instead, it is a set of cross-cut-ting, interlocking actions that will deliver themaximum impact while achieving its objectivecost-effectively.

Strategic thrusts almost always involve capitalinvestment from the public and private sectors;changes to policy frameworks, affecting firms andhouseholds; modification of regulatory frame-works; awareness and education campaigns; andcommunity action. For example, a strategic thrustmight involve implementing significant pick-upfees for garbage exceeding one bin weekly, encour-aging households to recycle and better managewaste; this action might be combined with anawareness strategy and support for a private recy-cling service. A strategic thrust to revitalise a CBDmight involve a private developer being encour-aged to build a signature (icon) building, changesin floor area ratios in the area, and rapid transitservice to enable high densities without conges-tion. A productivity enhancement programmemight involve new partnerships between leadingmultinational corporations and local technical col-leges, new curricula, greater interaction betweenthe local government and leading firms, a new sci-ence park near the local university, and a campaignto attract talent to (or back to) the city.

In designing strategic thrusts, further technicalwork will be necessary. More detailed studies willbe needed of issue areas, economic clusters, geo-graphic areas, financing options, among othersthat are the focus of the thrust. Meetings with keyactors, an examination of international best prac-tice and probes regarding financing possibilitieswill need to be undertaken. If the budget permits,the technical team should provide assistance in

the fine-tuning, fielding personnel that areexperts in the strategic areas identified.

In many CDSs, the strategic thrusts identified arenot true strategies but themes or even objectives,such as “improve the urban environment”,“improve accessibility through balanced trans-portation systems”, or “eliminate slums”. Imple-mentation of a true strategic thrust should bemeasurable; as such, it needs to consist of specif-ic actions.

Indicators should be attached to every strategicthrust to measure its achievement. The focusshould be on output, outcome, and results(impact) indicators, not on input indicators,although in a few cases, input indicators may beuseful (for example, students per classroom). Ifresults-based budgeting is introduced or required,for example, the monitoring system needs inputindicators. Formulating operational indicators isextremely difficult and requires technical expert-ise. Normally, the experts would identify a com-posite flagship indicator for each strategic thrust,along with four to six key indicators measuringthe most important elements of achievement ofthe strategic thrust (Flood 1999). In developingcities (this is also frequently true of industrialisedcities), monitoring systems to measure strategicperformance are rarely maintained, and theytherefore tend to be unsustainable. So, an appro-priately funded mechanism should be establishedto ensure the continued operation of the moni-toring system; otherwise, it will surely die.

Aerial view of Maputo, Mozambique


7.7 AWARENESS BUILDING

If a CDS is to be successful, it needs the supportof most of the community, especially the keystakeholders.To achieve this, the Vision and infor-mation on the identified strategic thrusts needs tobe disseminated throughout the city. This cam-paign can be mounted through a mix of media,which will vary from place to place. In somecities, an interactive Internet website (that solicitsfeedback) would be a powerful agent for dissem-inating strategic concepts; in many African cities,the radio will be the dominant medium. Othermedia used successfully worldwide are newspa-per inserts, models, exhibitions, and video showsin high-traffic areas (such as city bus terminals),on television, and at public meetings.

During the awareness building, buy-in campaign,strategic thrusts should be modified based on use-ful feedback. Additionally, groups or individualsare likely to step forward to offer their energies orcapital to effect the strategy. Early stage of strate-gy dissemination processes can ask the question,“what did we miss that is important?” It is criticalthat the citizens understand that the strategy isimportant; that it means something; that the cityleaders in the public, private, and third sectors aretaking it seriously; and that it will lead to action.

7.8 IMPLEMENTATION

A CDS is of no value unless it is implemented. Todo this an Action Plan for each strategic thrustneeds to be formulated. The action plans will bebased on cross-cutting actions, that is, sets ofactions involving several agencies or enterprises.The action plans require technical input, butwithin each strategic thrust area, task forces (seebelow) of local experts should be put in place toturn the action plans into rolling operations.

Implementation Task Forces should be estab-lished to implement each strategic thrust; that is,approximately five task forces will be needed.The action plan should identify and find themeans to procure the resources for implementa-tion, backed up by financial and economic analy-sis justifying the proposed resource allocation.Procuring financing is a key responsibility of thesetask forces. They will need to identify, assess, andchase down sources of financing; and they shouldbe entrepreneurial and enable innovative financ-ing, such as public–private partnerships. Theyshould persuade property developers, bankers,and investors to finance catalytic initiatives. Andto be credible, the task forces need to be knownfor integrity (lack of corruption) and for transpar-ent processes.

The Action Plan will clearly indicate who (whichagency) is responsible for what; the timelines andmilestones; and the expected inputs, outputs andresults (impacts). To minimise disruption, theCDS team will create conflict resolution process-es to deal with conflicts during implementation ofthe strategic thrusts. Public disputes and the esca-lation of conflict would undermine the wholeCDS process. The specifics of the action planmight require refinement of the key indicators formonitoring results. Importantly, the monitoringsystem to track strategy implementation wouldbe initiated at this time.

To get the CDS off to a good start, emphasisshould be placed on early, rapid implementationof high-profile, low-risk initiatives. Riskier initia-tives can be implemented later. For example,Penang, Malaysia, in implementing its highly suc-cessful CDS, used its own funds to set up an elec-tronics plant to train an initial set of workers toshow that local people could do well at electron-ic assembly (see Box 6).


Aerial view of the port city of Aden, Yemen


The five appendices provide guideance to some important thematic issues asked

by Cities Alliance partners during the city development strategy (CDS) process,

particularly when doing initial assessments. The themes are clustered as in the

main text, that is, around issues related to livelihood (Appendix A); environmental

quality, service delivery, and energy efficiency (Appendix B); infrastructure and

spatial form (Appendix C); financial resources (Appendix D); and governance

(Appendix E). These appendices do not provide a comprehensive list; nor are

they to be considered prescriptive. Rather, they give a sample of important

questions to consider.

Figure 11 illustrates CARE’s Household Livelihood Security Approach useful

in understanding livelihood issues as discussed in section 6.1 of this Guide.

The improvement in livelihood opportunities for the city’s population is the

bottomline of almost every CDS process.

APPENDICES


A1. BUSINESS CLIMATE

A1.1 Incentives Offered by the Local Jurisdiction

Some incentives are wasteful. For example, businessservice firms are more sensitive to personal incometax rates that help them retain and attract talent,whereas manufacturing firms are more sensitive toland costs and tariff structures (obviously a nationalfunction). The CDS assessment would criticallyexamine incentives offered to businesses to relocateto the locale, stay there, and expand, to ensure thatthe most cost-effective approaches are being taken.Location incentive programmes are expensive andhave to be targeted carefully to be effective; fur-thermore, World Trade Organization (WTO) rulesmay limit the types of location incentives that canbe offered.

A1.2 Nuisance Taxation

Decentralisation, a trend in most developing coun-tries, results in local governments having more lati-tude to tax, but such powers are often abused orapplied counterproductively. Nuisance taxation(frequently bordering on illegal) will discouragefirms from relocating to the city, will drive othersaway, and will discourage people from starting upnew businesses. Properly designed systems of localtaxation and user fees that improve the businessenvironment will have the opposite effect.

A1.3 Ease of Starting a Business

The World Bank and analysts such as Hernando deSoto (2000, chap. 2) have done a considerableamount of work on business start-ups. Althoughmuch of the red tape involved in business start-upsis imposed by national governments (and is thus notunder local control), a big problem lies with localgovernments that add their own bureaucratic hassles(for local permits, for example), local taxes with alow cost–benefit value, and so on. There appears tobe a direct correlation between urban economic suc-cess and the amount of time required to start a busi-ness: it is generally more difficult to officially startbusinesses in poor cities (in many industrialisedcities, a company can be legally established in a day,or even a few hours). In poor cities, particularly inAfrica, the decline in formal employment can bepartly attributed to difficulties in formalising a busi-ness: if the barriers to formally creating a businessare substantial, there will be few business start-ups.CDS assessment should document the time it takesto start a business (de Soto has done this in hisresearch, thus, a methodology does exist), the num-ber of steps involved, and the cost (including costsof corruption). CDS analysts can work through theprocess with a local start-up case study to obtainaccurate information.

Appendix A. Livelihood


A1.4 Investment Approval Processes for Foreign Firmsand Joint Ventures

Investment approval processes vary widely amongcities worldwide. For example, in some Chinese eco-nomic zones one-stop service can result in approvalsin less than a day. In other cities of the world suchprocesses can take over a year, to the point wheremultinational corporations give up and go else-where.

A1.5 Operating Environment of Informal Sector

What laws and regulations affect the operations ofsmall informal businesses (street vendors, repairservices operating in residential areas, and so on)?.

A1.6 Government Attitudes towards the Informal Sector

Is the local government supportive of the informalsector and livelihood expansion within it? Or doesthe local government view the informal sector as aproblem? Wuzhou, China, for example, has encour-aged informal sector activities while introducinghuman resource and small-business developmentprogrammes to upgrade those activities. Cities fol-lowing this approach have often experienced posi-tive results.

A2. COMPETITIVENESS

A2.1 Basic Economic Trends

Are there any available time-series data on employ-ment and output by key sectors and clusters? Whatare the income trends (per capita and household)?

A2.2 Diversity versus Specialisation

In general, smaller cities benefit from diversitybecause they are more vulnerable. Larger cities, onthe other hand, strive to specialise in activities inwhich they are globally competitive.

A2.3 National and World-class Economic Activities

Is the urban area a national or global leader in anyactivities? Often cities with low profiles will be aworld or national leader in a given activity. Suchactivities may show up as clusters, which becomelearning systems.

A2.4 Productivity Gains

What is the city’s labour and capital productivityrecord (returns to labour and capital)?

A2.5 Economic Mix and Change

Is the city’s mix of economic activity associated withfast-growing national and international activity?Simple measures such as shift–share can be used tomeasure a city’s economic mix if data are available.How fast is the economy changing? Is it movingtowards a higher value mix? In turn, controlling formix, is the economy performing better or worsethan expected relative to national and regionalnorms?

A2.6 Movement up the Value Chain and ClusterDeepening

Are local firms and clusters moving up the valuechange? How? Are clusters deepening—that is, aremore suppliers and more sophisticated suppliersemerging? Is the local, national, or provincial (state)government attempting to recruit firms to deepenlocal clusters?

A2.7 Rate of Start-ups and Business Deaths

At what rate are new businesses, formal or informal,being created? How conducive is the environmentto new firm creation?

A2.8 Foreign Direct Investment

What is the track record for foreign investment(FDI) over the last 10 years? To what activities isFDI flowing: manufacturing? real estate? trade?

A2.9 Innovation

What types of innovation are occurring in the city?Innovation assessment would not be limited to so-called high-tech firms. A garment industry can dis-play innovation as easily as a software cluster; forexample, high-value fashion clusters have developedin Milan and Bangkok. Without innovation, leadingto productivity increases, a city cannot increase itscompetitiveness. Gains from additional applicationof labour and capital in isolation will not translateinto greater competitiveness in the long run. Totalfactor productivity needs to improve.


A2.10 Performance of Anchor Firms

Are leading firms that anchor clusters growingquickly? Or are they stable? Are they moving up thevalue chain? Are they encouraging growth of suppli-ers? Are anchor firms in industries and clustersgrowing faster or slower than the international andnational norms (shift–share)? Are any anchor firmsthreatened by oversupply of the product they pro-duce? Might they soon be technologically obsolete(for example, firms producing chemical photo-graphic films)? In such cases, are new product linesbeing introduced to substitute for obsolescence inother product areas?

A2.11 Labour Market Efficiency

How is information concerning labour opportunitiesdisseminated? Does the local or national govern-ment operate efficient labour information centres?Do private labour matching services operate? Howefficient are these services, both public and private?How many people do they place annually inabsolute terms and as a percentage of the labourforce?

A2.12 Marketing and Promotion

How does the city market and promote itself, giventhat about 10 percent of advertising expenditure inmiddle-income and industrialised jurisdictions is forplace marketing? What attributes, clusters, or activi-ties are at the centre of marketing efforts—Tourism?Manufacturing investment opportunities? Location-al incentives? To what extent is this marketing tar-geting, for example, cold-climate tourist markets ifthe city has a subtropical or tropical climate? Whatmedia are used for place marketing? Marketing towhom? How successful is this marketing?

A2.13 Attracting Talent

What policies are in place to attract talent? Havemany talented individuals have these policiesattracted to the city? Are national immigration poli-cies conducive to attracting international talent, ordo they constrain such flows?

A3. HUMAN RESOURCE DEVELOPMENT

A3.1 Educational quality and quantity (enrolment atvarious levels).

Educational quality and quantity are measured usingkey indicators. Quality is as important as quantity.

A3.2 Education–Economic Alignment

To what extent are local educational curricula, par-ticularly technical, aligned with emerging economicactivities and clusters?

A3.3 Access to Education

Do the poor and migrants have access to education?Do financial problems, admissions procedures, lackof information, or local registration requirementscreate barriers that make it difficult for children ofmigrants to enrol in schools (a common problem inperi-urban areas in some countries)?

A3.4 Financial Support to Students

Is financial support, including student loans, avail-able to lower income children to attend school?

A3.5 Access to Entry-level Jobs

Are there courses, with few entry barriers, torespond to increasing consumer demand for driversand barbers, for example? What are the conditions ofaccess (cost, information, location) to these courses?

A3.6 Geographic Accessibility to Labour Market

What are the mean (average) time and financialcosts of travelling from home to employment, par-ticularly for lower income residents?


B1. ENVIRONMENTAL QUALITY

B1.1 Air Pollution

Is air pollution increasing or decreasing as measuredby key indicators (for example, suspended particu-lates)? What are the health implications of air pol-lution—respiratory disease, working years lost, mor-tality? What set of measures would most effectivelyand drastically reduce air pollution—Closing firmsexceeding emission standards? Changing fuel andautomobile standards (normally national govern-ment functions)? Introducing polluter-pay policies?Banning certain fuels (for example, banning theburning of coal at street level, as Beijing did)?

B1.2 Wastewater and Water Quality

Is water quality improving or declining in key waterbodies in the urban region? What is the wastewatersystem coverage, including that from non-conven-tional community cisterns and septic systems? Atwhat percentage of capacity do existing wastewatersystems operate? If operating problems exist, whichis the norm rather than the exception in most devel-oping cities, is this the result of lack of sustainablefinance (energy for pumping, chemicals), technicalcapacity, and so on?

B1.3 Pollution Sources

What and where are key point sources of air andwater pollution? What would be the impact of clos-ing the bottom x percent of polluters (for instance,heavy-polluting industries)?

B1.4 Sustainability and Safety of Water Supply

Is the water supply sustainable? Will abstracting thegroundwater result in insufficient water to supplythe forecast demographic and economic growth?How safe is the water for human use? Is it subject totoxic accidents?

B1.5 Loss of Agricultural and Environmentally Sensi-tive Land

What is the annual loss (and time-series trend line)of first-class agricultural land to urbanisation? Whatare the implications for agricultural production (byvalue and key crop output) in the extended urbanregion (EUR)? Have measures been taken to limitthis loss—for example, establishing growth bound-aries, setting land quotas, zoning urban expansionaway from first-class agricultural land? How effec-tive have these measures been? If there’s a problem,is it a result of poor policy design or a lack ofenforcement? To what extent is land being removedfrom environmentally sensitive uses—for example,

Appendix B.Environmental Quality, Service Delivery, and Energy Efficiency


wetlands, steeply sloped land, land with scenic orheritage merit—through conversions to urban uses?

B1.6 Amenity

Particularly in the case of middle-income cities, howattractive is the city to residents, tourists, investors,retirees, students, potential in-migrant talent?

B1.7 Natural Hazards

What natural hazards threaten the city? Can land-use policies, emergency preparedness, buildingcodes, and so forth be used to lower the risk?

B2. SERVICE DELIVERY AND POLICYFRAMEWORKS

B2.1 Demand for Services

What socioeconomic trends, particularly demo-graphic, underpin the demand for public services—for example, population growth relative to the sup-ply of basic public services?

B2.2 Delivery of Basic Needs

What percentage of the population (coverage) havetheir basic needs—water supply, garbage pickup,basic sanitation, electricity—met? Are low-incomeneighbourhoods served? What are the trend lines interms of coverage? Are user fees charged? Are theuser fees sufficient to ensure sustainable delivery ofbasic services? Are basic services affordable (whatpercentage of the population can afford a given serv-ice)? Are rate structures customised according toneighbourhood economic status, ability to pay, andso forth?

B2.3 Health, Education, and Literacy Status

What is the health, education, and literacy status ofcity residents as measured using key indicators? Bysub-area of the city? By household economiccohorts (if data available)?

B2.4 Quality of Basic Services

What is the quality of basic services—for example,primary education and health care—measuredagainst benchmark institutions in comparable cities?

B2.5 Delivery of Services to Migrants

Are services available to migrants in both city coreslums and peri-urban areas? If not, what precludesmigrants from getting access? Local registrationrequirements? Lack of local facilities and pro-grammes? Lack of capacity at facilities?

B2.6 Public Health

What are the key causes of sickness and death? Howhealthy are the city’s residents compared with thosein other cities of comparable economic develop-ment? What are the rates of infectious disease, suchas HIV–AIDS? How effective are programmes toaddress infectious disease? How could they beimproved? How prepared is the city for new healththreats (for example, an influenza pandemic)? Whatare traffic death and injury rates? What measures arebeing taken to reduce traffic deaths of pedestrians,bicyclists and motorcyclists, and vehicle occupants?

B2.7 Efficiency in Delivery ofEnvironmental Infrastructure

Are appropriate technologies being used to deliverbasic environmental services—solid waste disposal,provision of potable water, and so on—given thephysical conditions and the level of economic devel-opment? Are the unit costs of infrastructure delivery(both capital and operating) higher or lower than incomparable cities?

B2.8 Maintenance

How well are environmental systems maintained,measured as a percentage of operating capacity?

B2.9 Energy and Environmental Policy Frameworks

What policy frameworks are in place to encouragefirms, households, and infrastructure providers tochange behaviours affecting environmental qualityand resource and energy consumption (see Figure3)? Are they enforced? What changes in policyframeworks would have the greatest positive bene-fits, bearing in mind that greater economic benefitscan often be realised by changes in policy frame-works (for example, user fees for garbage pickupabove a certain weekly volume) than by capitalexpenditure (for example, building additional land-fills).


B3. ENERGY EFFICIENCY

B3.1 Energy Consumption

What is energy consumption (latest year availableand time series) per capita? Per unit of GDP? By keyindustrial processes in the city? By energy source?

B3.2 Urban Form and Energy Consumption

Does the existing urban form conserve energy?What financial savings would be realised throughchanges in urban form, particularly if it meant lowertransportation costs and unit costs of infrastructure

delivery? What are the trends in and current levelsof density and sprawl as measured by conventionalurban density, sprawl, and form quantitative indica-tors (see Schneider, Seto, and others 2003)? Suchindicators were used effectively in assessment workfor the Chengdu CDS.

B3.3 Demand Management

In managing energy consumption, what is the bal-ance between demand management and supplyenhancement strategies? How is demand managed?How is new supply determined and financed?


C1. INFRASTRUCTURE

C1.1 Infrastructure Delivery Performance

How, and by what institutions (public and private),are key infrastructure services delivered? What istheir performance record in terms of coverage, reli-ability, and cost-effectiveness? How are infrastruc-ture services regulated?

C1.2 Infrastructure Delivery Modes

What changes are being considered for infrastruc-ture delivery and maintenance?

C1.3 Planned Infrastructure

What important new civil and environmental infra-structure is coming on stream—Under construction?Committed? Planned?

C1.4 Trunk Infrastructure and Urban Form

How important is trunk infrastructure (for example,sewers, expressways) in shaping the city?

C1.5 Housing Supply and Demand

How many new housing units (formal and informal)are produced annually (time-series data)? What arethe trends in property prices, building permitsissued, and housing vacancies?

C1.6 Affordable Land and Housing

Where is land available at a reasonable price foraffordable housing? Is this the result of marketforces, or is it the result of government subsidies? Isthis land readily accessible by affordable transporta-tion to key employment nodes in the city? How is itserviced?

C1.7 Transportation Networks

Identify major transportation infrastructure net-works (existing, planned, committed), particularlyexpressway and mass transit networks. Is theexpressway network predominantly radial, or is it aring road? Which came first, radial or ring links? Andhow did this sequence affect urban form? What hasbeen, is, and is likely to be the relationship betweendevelopment of major transportation networks andland use? How do intercity routes (highways, rail)affect the structure of the city? Are road systemsbeing managed proactively (intelligent highways,road pricing, high-occupancy vehicle lanes), or arethey being left to laissez-faire use?

Appendix C. Infrastructure and Spatial Form


C1.8 Public Transportation Facilities and Services

What types of formal and informal public trans-portation exist—for example, heavy and light rail,busways, traditional bus systems, flexible van sys-tems often operated by the private sector (thefastest growing form of public transit worldwide, inboth developing and industrialised cities)? Are infor-mal public transportation operators, such as vanoperators that connect employment and residentialnodes, harassed or encouraged? Are they regulatedfor basic safety compliance? What is the route net-work of public transportation systems? What is theirquality of service? What percentage of the popula-tion uses public transport (widely defined), especial-ly for travel to and from work?

C1.9 Urban Nodes and Public Transport Demand

Are there significant employment, commercial, andresidential nodes that would justify rapid transit sys-tems to connect them?

C1.10 Major Transportation Facilities

Identify major transportation facilities, particularlyairports, seaports, and rail terminals (including highspeed rail, inland container terminals). What is therelationship between these facilities and past, pres-ent, and emerging land use? In particular, are highpopulation and employment densities associatedwith areas proximate to transportation facilities? Ifnot, what can be done to encourage such a dynamic?

C1.11 Movement of Goods

Can goods be moved to and from the nearest portand airport reliably and quickly? At what time andfinancial (per unit) costs? Congestion can deal aheavy blow to competitiveness, especially to manu-facturing firms using just-in-time processes. Forexample, the CALA (Cavite–Laguna) peri-urbanarea south of Manila has suffered considerable lossof competitiveness (relative to that of Bangkok andChinese coastal cities) largely because of congestion,the product of a lack of EUR- and metropolitan-scale planning and infrastructure implementation(see Webster 2002).

C1.12 Telecommunication Services

How reliable are telecommunications services? Arethey priced competitively? Telecommunicationcosts and reliability are an important factor in urbancompetitiveness. Some cities, such as Singapore,

charge telecommunications services at extremelylow rates (with laws in place to prevent abuse, suchas unjustified hotel surcharges on telecommunica-tion services), realising their importance to compet-itiveness. At the other end of the spectrum, somecities, especially in Sub-Saharan Africa, have high-cost telecommunications systems that virtuallyensure that large-scale manufacturing will notdevelop, even if other factors are in place.How reliable are broadband and wireless high-speedInternet services? Does the national governmentblock certain information or otherwise interferewith free transmission of information? What is therate of mobile phone penetration among the popu-lation? (Mobile phones have extremely high rates ofeconomic return, diffusing market and logisticsinformation, and so forth, especially to the poor.)

C2. SPATIAL FORM

C2.1 Formal and Informal Spaces

Is the physical structure of the city essentially for-mal and modern? Or is it predominantly informal,with a small, modern downtown?

C2.2 Urban Density

How dense is the city? Is there a steep density fall-off to the periphery? Is the density slope flat? Ordoes it have a U shape, reflecting higher densities onthe edge as land values have risen in recent years?

C2.3 Land and Property Value Gradients

What is the slope of land and property value gradi-ents (for residential, commercial, industrial) fromthe centre of the city outwards?

C2.4 Land and Housing Markets

Describe the behaviour of land and housing mar-kets over time in the city. How efficient are thesemarkets?

C2.5 Monocentric versus Multinodal Form

Does the city have a strong CBD, or is it multinodalwith a weak CBD?


C2.6 Peri-urban Spatial Form

Is peri-urban development contiguous—that is, thebuilt-up area is continuous? Or is it patchwork innature? Or focused around satellite cities? What arethe energy, congestion, and competitiveness implica-tions of physical development on the fringe?

C2.7 Location of the Service Economy

Are high-end business and professional services (tothe extent that they exist) concentrated in the CBD,as in most developing cities? Or are they located inedge-of-city nodes, as in the United States and insome developing cities, such as Beijing?

C2.8 Spatial Distribution of Employment and EconomicOutput

What and where are the major economic nodes(measured in terms of employment, economic out-put) in the city (for example, industrial parks, sci-ence parks, office complexes, economic clusters)?How is the spatial distribution of employment andeconomic output changing?

C2.9 Social Geography

Where do the richest people live? Where do thepoorest? What neighbourhoods are in decline?Which are in ascendancy, that is, becoming fashion-able? What social issues are associated with specificareas of the city? Are certain areas of the city associ-ated with specific ethnic, religious, or linguisticgroups?

C2.10 Geography of Poverty

How is the geography of poverty changing? Forexample, in many fast-growing middle-income cities(for example, in Southeast Asia), the geography ofpoverty is changing dramatically: the poor areincreasingly found in peri-urban areas, where manu-facturing enterprises locate, and less in inner cityareas. Or is the geography of poverty relatively stat-ic, with poor neighbourhoods densifying, as is thecase in many Indian cities?

C2.11 Location of Slums and Squatter Areas

Where are slum areas located? Is the pattern one ofmany mini-slums or a few vast slums? What is theabsolute population living in slum areas? What per-centage of the city’s total population live in slums?Is the mean population size of slum areas increasingor decreasing? For example, is there a proliferationof mini-slums, or do large slum areas account for ahigh proportion of the slum population? Is the lead-ership of slum areas contested by ethnic groups andso forth? How secure is the tenure of residents?Which slum areas are being upgraded? Which havedeteriorating living conditions? Why? Are slums dis-appearing in certain areas? How and why? What hashappened to the former residents of these areas: didthey move to other slums or “graduate” to middle-income neighbourhoods?

C2.12 Land Readjustment

Is land readjustment, which can generate win–winoutcomes, occurring in the city? Is there potentialfor land readjustment either in the city centre or atthe periphery? If not, why not? Is it because of a lackof trust in regulatory frameworks? Or do local gov-ernments lack the capacity to oversee such arrange-ments, guaranteeing the rights of all participants?

C2.13 Destination of Migrants

Where do migrants tend to settle? Why?

C2.14 Geography of Investment

Which areas of the city are experiencing invest-ment? Which are experiencing disinvestment? Why?

C2.15 Congestion.

Which parts of the city are most congested? Whatcan be done to alleviate this congestion, bearing inmind that high densities and congestion need not becorrelated? (Congestion is density that is poorlymanaged; smart urban growth is high density well-managed.)

C2.16 The Knowledge Economy

Where are the most important knowledge clustersin the city? Where are ideas exchanged (for exam-ple, universities, high-tech campuses, transaction-rich environments, key café and pub areas)? Have


universities spun off nearby science parks, knowl-edge entrepreneurs, incubation facilities, and soforth? If so, are they geographically proximate touniversities and technical institutions? If not, whynot (for example, lack of nearby land and facilities)?

C2.17 Expansion Vectors

In which directions is the city expanding most rap-idly—that is, where are the key vectors of expan-sion? What is the relationship between land-use andurban-structure plans and actual on-the-groundphysical development patterns?

C2.18 Street Life, Entertainment, and Recreation

Which parts of the city have the most active streetlife? Where are the entertainment areas for families?For individuals? By day? By night? Are recreationalareas accessible to the poor? Are the accessible toresidents of the core city, or are they concentratedon the periphery?


D1. LOCAL GOVERNMENT FINANCIALRESOURCES AND INSTITUTIONALSTRUCTURES

D1.1 Local Government Budgets

Over time, how have the size and composition ofthe local government’s budget changed? This wouldinclude tables of revenues and expenditures over thelast five years (or if more appropriate, the last fulleconomic cycle) and forecasts of expected revenuesand expenditures based on various assumptions(scenarios). This analysis would distinguish betweennew borrowings and debt repayment, as well asbetween capital and current expenditure and rev-enue. A statement of accounting standards would beattached.

To what extent (projects, programmes, monetaryvalue) has the local government leveraged itsresources through innovative financing mechanismssuch as build–own transfer (BOT), build–own–oper-ate, public–private ventures, and so forth?

D1.2 Local Government Revenues and Expenditures

Over time, how have revenues and expenditureschanged? Has the source of revenues changed? Thisanalysis would include description of each tax andof rate-setting powers; a description of user fees col-lected and of tax and other revenue arrears; and adescription of non-recurring revenue sources, suchas asset sales and privatisations.

D1.3 Capital Planning

What are the capital improvement plans of the localgovernment, and what are its investment policies?To what extent have past capital improvement plansbeen executed?

D1.4 Off-budget Revenue and Expenditures

How large are off-budget revenue (for example, rev-enue from concessions, sales of land, and so forth notincluded in the formal budget) and expenditurecompared with the those of the formal budget?How is this money spent? Are off-budget revenueand expenditure transparent?

Appendix D. Financial Resources


D1.5 Transfers

Over time, what has been the amount of transfersfrom national or other senior-level governments tothe local government? What has been the relativeimportance of these transfers? On a per capita basis,how does the amount of transfers compare with thatof other cities in the country? Is the city entrepre-neurial in lobbying for transfers? Or does it preferself-sufficiency (for example, wanting to avoid con-ditions attached to specific grants)?

D1.6 Extent and Impacts of Decentralisation

Is the national government implementing decentral-isation (fiscal, administrative, political)? If fiscaldecentralisation is ongoing, is it based on changes toboth expenditure and revenue mandates or mainlyon changes to expenditure mandates (as is normallythe case)? How is decentralisation affecting localpublic sector revenues? Is it resulting in more or lesslocal revenue generation? Many decentralisationframeworks facing developing cities offer little or noincentive to raise local revenues, and some mayactually discourage local revenue generation. How isthe city faring fiscally relative to other cities in thenation as decentralisation proceeds?

D1.7 Debt

What are the city’s debt load and service? What isthe city’s repayment performance? What conditionsconstrain (further) borrowing by the local govern-ment?

D1.8 Access to Credit

Does the local government issue bonds? Does thelocal government have access to on-lended orpooled funds (through mechanisms such as munici-pal development funds)? Has the local governmentborrowed from these facilities? If so, how much?Over what time period?

D1.9 Credit Rating

Is there a credit rating service for local governmentsoperating in the country? If so, what is the credit rat-ing of the city and how has it changed over time?

D1.10 Autonomous Bodies

Within the city are there fiscally autonomous orsemi-autonomous enclaves (for example, specialeconomic zones, industrial parks, science parks)?

D2. MOBILISING NONGOVERNMENT CAPITAL

D2.1 Impact of Land Readjustment

How much capital could be attracted if land read-justment involving high-quality development wereundertaken in key well-located neighbourhoods,especially slum areas? What policy measures, trustand awareness building, and other measures wouldbe needed to unleash this capital through land read-justment processes?

D2.2 Impact of Land Tenure

How much additional credit would flow to informalhousing areas if land tenure were ensured? Whatpolicy measures are needed to unleash this flow ofcapital?

D2.3 Housing Credit

Is credit readily available to low-income householdsto buy housing? Is this credit available through thecommercial banking system? To what extent is gov-ernment involved (for example, through specialinstitutions such as housing banks or provision guar-antees)? What is the monthly household incomethreshold that enables a household to purchase abasic house in the metropolitan area?

D2.4 Financing Local Infrastructure

Do consumers of housing and other buildings payfor the cost of local infrastructure through specialtax assessments (repayable through mortgages)? Ordo buyers get a “free ride” or suffer from lack of localinfrastructure (see Figure 5)?

D2.5 Microfinance

What is the amount of microcredit dispersed annu-ally in the city (most recent year for which data areavailable, plus time-series data)? What is the totalamount of microcredit in circulation? In microfi-nance allocations, which groups are eligible or givenpreference? For example, are women given prefer-ence? For what can microcredit be used? Is microfi-nance organised on a community basis or throughdifferent institutional mechanisms (for example,


worker cooperatives or trade organisations)? Howdo levels of disbursement, repayment rates, anddevelopmental impacts of microcredit comparewith those of best-case cities? What changes in pol-icy or public leadership would substantially enhancethe flow of microcredit? (For detailed informationon microfinance, see Ledgerwood 1999.)

D2.6 Credit for Small and Medium-size Enterprises

Do commercial banks readily lend to small andmedium-size enterprises that are creditworthy interms of potential but possibly not in terms of col-lateral? Or is the commercial banking system biasedtowards large businesses?

D2.7 Voluntary Organisation Finance

How successful are third-sector organisations (vol-untary organisations, nongovernmental and nonprof-it organisations, and so forth) in attracting funds?Are these funds used effectively? Are such organisa-tions financially transparent?

D3. PRIVATE SECTOR FINANCIAL FLOWS

D3.1 Foreign Direct Investment

How have the size and the composition of FDI flowsto firms operating in the city changed over time?

D3.2 Domestic Investment

How has the amount of domestic investment in pro-ductive enterprises changed over time, both inaggregate and by sector or cluster? Do companiesoperating in the city reinvest profits? Or do theprofits leak out? What policy actions would increasethe flow of capital into productive activity in thecity, including incentives to reinvest profits earnedthrough economic activity in the city?

D3.3 Commercial Banking Flows

According to central bank data, does the city expe-rience net inflows or outflows of capital through thecommercial banking system? What can be done toimprove this performance?


E1. NATIONAL URBAN POLICY FRAMEWORKS

What are the national urban policy frameworks fac-ing the city? Undertaking this work is difficultbecause most national policy frameworks affectingurban areas are explicit (for example, grants forurban mass transit systems) or implicit (for example,international trade or corporate taxation policies).Of particular concern are national or other seniorgovernment powers related to (a) financial and debtoversight; (b) service provision; (c) financial autono-my and debt issuance, including foreign currency ordebt restrictions; (d) environmental regulations; (e)privatisation; and (f) pending or proposed legislationthat affects revenue sources, issuance of debt,pledged security, operation of utilities, or shifts inservice mandates of local governments.

E1.1 Local Priorities and National Policies

How do local priorities align with national policies?Do these policies reinforce potential CDS strategicthrusts or inhibit it? If the latter, should such nation-al policies be taken as a given, or should efforts bemade to change them (through urban politicalpower, lobbying, and so forth)? (Urban areas virtual-ly worldwide tend to be quantitatively underrepre-sented in parliament relative to the urban popula-

tion’s share of the national population.) The largerand more economically and politically powerful acity is, the greater its potential to exert pressure tomodify national urban policies.

E2. INSTITUTIONAL STRUCTURE ANDPROCESSES OF LOCAL GOVERNMENT

E2.1 Local Government Structure and Processes

What is the structure of the local government(organisational chart)? How are decisions made? Towhat extent is this structure determined by nation-al laws? To what extent has it been and can it belocally customised? If the latter, are the presentstructure and process consistent with contemporaryissues and needs? Or are they more a reflection ofpast realities? Later in the CDS process, whatchanges are needed in governance structures,processes, network enhancement, knowledge gener-ation, and transfers to effect the strategy?

E2.2 Appointment of Officials and Governing Bodies

Which officials are elected locally? Which areappointed? What are the electoral procedures for thegoverning body and for the chief elected officers? Isthe local government led by independent representa-tives, or are the leaders representatives of political

Appendix E. Governance


parties? Are these political parties nationally organ-ised? If so, is the local leadership aligned with the rul-ing national party? Does this situation have implica-tions for implementation of the strategy?

E2.3 Corruption.

What is the level of corruption in the local govern-ment? What can be done to reduce corruption?

E3. ROLE OF LOCAL GOVERNMENT IN THECONTEXT OF DECENTRALISATION

E3.1 Decentralisation Impacts on Local Government

Determining the effects of the decentralisationframework on city finances requires information onthe following:

• The size of the transfers and their relativeshare of the city’s operating revenues;

• The degree to which the decentralisationframework motivates or discourages local rev-enue generation;

• The extent to which transfers are earmarkedfor specific purposes or can be used to fundoperations and debt service;

• Revenue sources that have been legally dele-gated to the city;

• Flexibility of the city to effectively adjust itstax sources and levels in response to changingeconomic conditions;

• Legal and political risks associated with thenational revenue-sharing system;

• The direction of any changes in the decentrali-sation framework (towards more or less decen-tralisation);

• Functions (mandatory and optional) delegatedto the city;

• The size and type of mandated expenditures(for example, public health, public education,public transportation);

• The degree to which operating expendituresmay be funded by user charges, fees and taxesdelegated to the unit, or earmarked revenuesfrom another unit of government; and

• The city’s ability to adjust its expenditurebudget quickly under changing economic con-ditions.

E4. METROPOLITAN GOVERNANCE

E4.1 Inter-jurisdictional Cooperation

How are functional responsibilities assigned hori-zontally (between municipalities and constituentdistricts and counties) and vertically (betweenmunicipal, provincial or state, and national govern-ments)? Are measures in place to coordinate thedelivery of services on a metropolitan or EUR scale(for example, special districts, councils of local gov-ernments, voluntary agreements among local gov-ernments, voluntary agreements motivated byincentives such as matching grants from senior gov-ernments).

E5. CAPACITY

E5.1 Capacity and Development Priorities

Are the staffing, power, and prestige of differentmunicipal departments well aligned with the emerg-ing economy and social issues? Often there is severemisalignment. For example, tourism is the world’slargest industry, and it’s one of the few service indus-tries in which developing countries enjoy compara-tive, and often competitive, advantage. Yet, in manycities, the government pays little attention to thissector, even when it’s the most important one in theurban economy. Similarly, the informal economydominates in many developing cities, especially inSub-Saharan Africa, many South Asian cities, andelsewhere, but few government agencies exist to fos-ter its performance.

E5.2 Institutional Strengthening and Building Priorities

What specific changes in government structures andin institutional strengthening or building are neededto improve performance? Later in the CDS process,the question will be asked in relation to implement-ing specific strategic thrusts.

E5.3 Attracting and Retaining Talent

Is the local government attracting talented creativepeople? If not, why not? What could realistically bedone to improve the situation?


E6. RELATIONSHIP WITH THEPRIVATE SECTOR AND CIVIL SOCIETY

E6.1 Relationship with the Private Sector

What is the relationship between the local govern-ment and the private sector (for example, leadingfirms, property developers)? In many cases, largefirms, particularly multinationals, have enormousresources, including problem-solving skills, whichcan be useful to the community, but they operate inisolation from the local government, having closerrelationships with the national government.

E6.2 Modes of Private Sector Cooperation

Does the local government engage in public–privatepartnerships, award concessions, participate in inno-vative finance (such as build–own–transfer), and soforth?

E6.3 Relationship with Civil Society

How strong are local, national, and internationalthird-sector organisations? How does civil societycooperate and interact with local government inshaping the future of the city? How important is therole of civil society? What is the character of therelationship between the local government and thecivil society? Enabling? Hostile?

E6.4 Local Government Capture

Have local government jurisdictions in the EURbeen captured by special interest groups? Peri-urbanarea jurisdictions are particularly vulnerable to cap-ture by Mafia-type groups, business groups, and civilsociety organisations.


Figure 11. CARE’s Household Livelihood Security Approach

Assets

SocialPhysicalHumanFinancialNaturalPolitical

Basic

needs

WaterHealth

ShelterEducation

FoodParticipation

Shocks and

stresses

Access to resourcesthrough productive/exchangeactivities: selling labour, goods…

Barrier to

access of position

in society:Culture, gender, religion,status

Pressure

Resources used tomeet basic needs

Household Assets buffer households fromshocks and stresses and improvehousehold members accessresources

Household members useresources to meet basicneeds and build assetsover time

Resources/

servicesWater, foodHealth Shelter,Education

Control of resourcesby structures and processes,e.g., of water by authorities


ADB (Asian Development Bank) 2004. City Development Strategies to Reduce Poverty.Metro Manila, Philippines.

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Cover: Alex Abiko/Sao Paulo Municipal Housingand Urban Development Department (SEHAB)

page 1: Alex Abiko/SEHAB

page 2: Nancy Maingi/UN-HABITAT

page 5: Leon Osong/UN-HABITAT

page 6: Scott Wallace/World Bank

page 9: Edwin Huffman/World Bank

page 10: Edwin Huffman/World Bank

page 12: Cities Alliance

page 16: Chreod Limited, China

page 23: © R.A. Acharya/UNEP/Peter Arnold, Inc.

page 26: © Nigel Dickinson/Peter Arnold, Inc.

page 27: Municipality of eThekwini, South Africa

page 34: Bill Lyons/World Bank

page 37: © Jean-Leo Dugast/Peter Arnold, Inc.

page 40: Greater Amman Municipality

page 41: Riga City Council, Latvia

page 44: Bharat Dahiya/World Bank

page 53: Maputo City Council, Mozambique

page 55: Aden Port Cities Development Programme

page 57: Curt Carnemark/World Bank

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