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9 The Challenge of Urban Governance The preceding analysis of the demographic, social, and economic aspects of the urban transition has emphasized three important features. First, we have demon- strated the inevitable tendency for the global population to become urbanized. Second, we have illustrated the growth of a system of urban places at both an international and national level dominated by very large urban regions that are responsible for generating a significant proportion of national wealth. And third, we have argued that these large urban regions are functional because they have been integrated through improvements in the transactional environment of the flows of people, commodities, capital, and information. One of the least well- understood elements on this list is information. The information requirements for the management of large cities are impor- tant conditioning factors in the cities' institutional elaboration. With the spread of democratization and decentralization now under way almost everywhere, lo- cal governments are increasingly being required to operate with the speed and efficiency of private business while facing ever more complex political and regu- latory issues. Local governments must digest an immense amount of information to perform their duties in a fair and efficient manner. Yet data are severely lack- ing in many cities throughout the developing world. The typical 10-year interval between censuses presents a problem for policy analysis and planning for large cities, where the metropolitan population may easily grow by 1 or 2 million in- habitants in 5 years. Moreover, demographic data at the subnational level typically are not processed or made available for several years after a national census has been conducted. Governments could also benefit greatly from data on population size, growth, and composition; differential fertility and mortality rates; and socioeconomic char- acteristics for numerous small-area units, which could then be aggregated to an- alyze trends within various parts of a metropolitan region. Employment data are particularly important here, since population growth has outstripped job growth 355

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356 CITIES TRANSFORMED in urban places in most developing countries. These data are also lacking or at least not readily available to planners and policy makers. Planners often have only rudimentary knowledge of the numbers and characteristics of recent migrants in most large developing-country cities. Moreover, cities' own projections of their future population growth often have been widely off the mark. Planning is further hampered by limited information about local land markets. Most large cities lack sufficient, accurate, and current data on patterns of land con- version and infrastructure deployment. Frequently, urban maps are 20 to 30 years old and lack any description of entire sections of cities, particularly burgeoning periurban areas. In most large cities in developing areas, each municipal agency or department typically maintains its own database, often using differing standards and rarely sharing data. Computerization of such data is still relatively uncommon. Many municipal agencies continue to rely on paper files and maps, which are often stored in formats and at scales so diverse that they cannot be compared or col- lated and are not easily updated (Bernhardsen, 1999~. There are almost no exam- ples of integrated databases for the constituent parts of large metropolitan regions. This is hardly surprising given the large number of political entities constituting most metropolitan regions, with their differences in age, socioeconomic needs, and financial and managerial capacity. Typically, there are reasonable data for the central city, with data (often noncomparable) for the outlying municipalities being of varying quality. This chapter is concerned with the political and institutional implications of the urban transition. For some commentators (Ohmae, 1990; Scott, 1998), the urbanization process is a result of powerful global forces that are, at the same time, leading to a reduction in the political power of the nation state. Whether or to what extent this may be the case, there appears to be ample evidence that the urban transition of the twenty-first century will involve a significant renegotiation of political relationships between national and urban governments. Just as the present system of governance grew out of the replacement of city states by national states (Mumford, 1961), new systems of governance may very well emerge from the current urban revolution. Underlying these political questions is one fundamental fact. The way in which present patterns of urban growth are being framed territorially differs from that of earlier periods of urbanization. Previously, government was organized on the basis of rural-to-urban responsibilities that were defined both spatially and structurally. Government was organized vertically so that tasks were divided among the national, provincial, and county levels, as well as highly local units of urban administration such as cities and towns. Each of these levels of gov- ernment was defined in terms of discrete spatial areas, although there were often overlaps in administrative responsibilities. Today there is general agreement that the rapid urbanization of developing countries should involve some reorganization and even reconceptualization of

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THE CHALLENGE OF URBAN GOVERNANCE 357 systems of governance. For example, the increasingly close interaction between central cities and their rural hinterlands (made possible by improvements in trans- portation and information transmission, among other things) suggests that rural and urban jurisdictions need not always be administered separately. And the fact that very large urban regions (including their hinterlands) are in many countries the source of both major economic initiatives and advances in national productiv- ity suggests that these city-regions should not remain under the restrictive control of other levels of government if they are to reach their full potential for devel- opment (see Scott, 2001~. Finally, the emerging importance of cities and city- regions in the world economy underlies the generalized shift from power relations based on pyramidal and hierarchical structures to those grounded increasingly in networks and horizontal relationships (Castells, 1997~. This chapter begins with a brief discussion of the concept of urban gover- nance and the issues involved, which are illustrated by the case of the Bangkok Metropolitan Region. We then undertake a detailed review of the major challenges of urban governance in developing countries. Next we examine the question of whether there is, in fact, a single "best" model of urban governance. The final section of the chapter presents conclusions and recommendations. THE CONCEPT OF URBAN GOVERNANCE While the concept of governance is widely used today, its common usage in the social sciences is a product of the last decade and a half. In a lengthy discussion of governance as applied to urban examples throughout the developing world, McCarney, Halfani, and Rodriquez (1995) find that an important element in the development process, explicitly lacking in many official and agency-based def- initions, is the connection of government, and particularly local government, to emerging structures of civil society. Accordingly, they define governance as "the relationship between civil society and the state, between rulers and ruled, the gov- ernment and the governed" (McCarney, Halfani, and Rodriquez, 1995: 95~. Im- portant elements of this definition were adopted by other researchers writing about comparative local governmentin developing countries (Wilson and Cramer, 1996) and were eventually incorporated into the United Nations Development Program (1997a: 2-3) current definition: Governance can be seen as the exercise of economic, political and administrative authority to manage a country's affairs at all levels. It comprises the mechanisms, processes and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations and mediate their differences [emphasis added]. One reason for the emergence of the concept of "governance" or "urban gov- ernance" is that the context within which local government operates has become

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358 CITIES TRANSFORMED much broader and more complex. In the United States, researchers dealing with metropolitan problems increasingly use the term "metropolitan governance" rather than "metropolitan government" because of the more inclusive connotations of the former (Stephens and Wikstrom, 2000: 47~. Similar ideas have begun to take root in Europe. In an important article on France (where a Law of Decentralization was first passed in 1981), Le Gales (1995) argues for a shift in nomenclature from "the government of cities to urban governance." While the term "local government" is associated with a formal description of powers and responsibilities of urban au- thorities, local politics and the way in which French cities are administered are changing rapidly. According to Le Gales (1995: 60), "the term 'governance' sug- gests . . . functions and actions of government, but without the idea of uniformity, rationality, or standardization. The term 'urban governance' implies a greater di- versity in the organization of services, a greater flexibility, a variety of actors, even a transformation of the forms that local democracy might assume, and taking into account citizens and consumers, and the complexity of new forms of citizenship." The emergence of a discussion of "governance" in a continental European context is of more than purely scholarly interest, since for some time the concept was considered an Anglo-Saxon term, and as such inappropriate outside English- speaking countries. Some Latin American researchers believed the more apt terms to be "governabilidad" and "governabilidade" in Spanish and Portuguese, respec- tively, which essentially mean "governability." But as Coelho and Diniz (1997) argue, the problem in the case of Brazil after formulation of the 1988 Constitution was not decision-making incapacity (or "ingovernability"), but rather the inability of leadership to achieve sufficient support and legitimacy to implement a whole host of technical measures. As a result, the authors propose retaining the concept of governability (governabilidad), but at the same time accepting a new concept, governance, to denote the state's command and steering capacity, its capacity to coordinate among politics and interests, and its capacity to implement measures from the level of the center to the local area. The concept of local governance, they add, brings to bear the political dimension "and places the interdependence of state and civil society at the center of the debate" (Coelho and Diniz, 1997: 113~. The intersection of state and civil society, in this view, takes place at all levels of government from the most local to the national. Discussing Africa, the French planning writer Jaglin (1998) first notes how the concept of governance permits the incorporation of a wide variety of actors and groups in both the formal and informal sectors, as well as local, national, and international groups and agencies. The situation in South African cities in the mid-199Os, however, was extreme. In the transition from an apartheid system in which the majority population was totally excluded from power to a (potentially) fully democratic local government system, an elaborate process of dialogue and negotiating forums ensured a relatively smooth movement from exclusion to in- clusion. Jaglin argues that the complexity and multisectoral nature of this process can best be described under the rubric of governance. "In imposing a form of

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THE CHALLENGE OF URBAN GOVERNANCE 359 representation of the political class, the private sector and local residents (through the 'civics' based in black townships) at the center of the required forums, the law made governance official, since it obliged the different actors to negotiate before local policies could be considered" (Jaglin, 1998: 31~. Beyond the pure concept of governance, which to us denotes the neutral rela- tionship between government and the governed (mediated for some through cul- ture and political practices), many writers and policy makers now speak of "good governance." While one must be careful not to reproduce in such a value-laden concept all the sociocultural and institutional prerequisites of government in de- veloped countries, the notion of good governance carries with it a premise of institutional design that is at once open and accountable to civil society in gen- eral, and effective in terms of financial management and policy implementation. Good governance involves an effective balance between the raising of revenue and the proper expenditure of this revenue on services and investments that are based on accountable decisions. This model, in turn, implies that many levels of government and many local stakeholders and social groups will be involved. The task of analyzing these changes in the patterns of governance in develop- ing countries is complicated by the diverse paths and scenarios of urbanization and socioeconomic development that exist in the developing world. Yet the expansion of the urban built environment is occurring everywhere, and thus the development of systems of urban governance that can cope with urban expansion is a major priority. The issues associated with urban governance are illustrated by the example of the Bangkok Metropolitan Region (BMR), which consists of the Bangkok Metropolitan Administration (BMA), with a population of 8 million, and the five adjacent provinces. In 2000, the BMR was estimated to contain 11.5 million peo- ple. Adding the adjacent industrial heartland of Thailand creates an extended metropolitan region (EMR) of 17.5 million people, making up 28 percent of the total population of Thailand in 2000 (Webster, 2000b: 8~.i This region has been the focus of much of Thailand's economic development, involving a major change from an agricultural rice-exporting economy to an economy open to foreign direct investment (a high proportion from Japan) in the 1980s and a very rapid increase in export-oriented manufacturing. The result was a period of hypergrowth that made the Bangkok region one of the fastest-growing urban economies in the world, with an annualized growth rate of 17.5 percent in the period 1990 to 1996. With gov- ernment encouragement, this economic expansion also led to the rapid outward sprawl of the region from the city (Webster, 2000b: 9), resulting in increased traf- fic congestion; environmental pollution; and serious infrastructure problems, in- cluding inadequate provision of water and sewerage and a substantial proportion of the population in the periphery living in substandard housing. iMuch of the discussion in this section is summarized from Webster (2000b).

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360 CITIES TRANSFORMED As the region grew in size and territory, no adequate system of governance emerged that could solve these problems in a coordinated manner. The city core, the BMA, is under the leadership of an elected governor; 60 elected councilors (one per 100,000 people), making up the Bangkok Metropolitan Council; and a large number of elected councilors in 50 local districts who advise district directors appointed by the governor. While it has a huge staff complement (num- bering 82,950, including teachers, in 2001) (Bangkok Metropolitan Administra- tion,2001), the Metropolitan Administration has limited powers although much greater than is the case for other local authorities in Thailand. Moreover, many of its key functions, such as water and electricity service, are under the control of national agencies. Outside the BMA, in the BMR, matters are even more com- plicated as provinces control most of the planning, and there is no overall plan for the EMR. Webster points out there are more than 2,000 local government authorities (many of them serving small villages) in this outer region of urban activity. The period of hypergrowth in Thailand was abruptly halted by the economic crisis that began in July 1997, which was focused on Bangkok. Between 1997 and 1998, the city product fell by one-half. By 1999 the official unemploy- ment rate had increased from 1.4 percent in 1997 to 5.1 percent, reflecting a decrease in construction employment. But the major effect was a decline in in- come among the urban informal sector, such as taxi drivers. Inflation caused in- creases in food and gas prices that also adversely affected the poor. Estimates suggest the slum population of the BMA grew from 1.2 million in 1996 to 1.5 million in 1998, and there appear to have been deteriorating social conditions, including increasing crime, drug use, and suicides (Webster, 2000b). In con- trast with the Indonesian case, however, there was no massive social and polit- ical disruption, for several reasons. First, households proved very adaptable- adopting strategies of outmigration, sharing of income, and increased participa- tion by women in informal-sector activities. Second, many foreign companies, particularly in the manufacturing sector, did not lay off workers but stopped giving bonuses; this was the case, for example, with a number of Japanese companies. As the baht devalued, these firms were able to take advantage of this strategy to export more cheaply. Finally, the government remained stable during this period. In fact, some writers have argued that the crisis benefited Bangkok, first because the city has been able to rebound more quickly than could either Vietnam or Indonesia, its chief competitors for export-oriented manufacturing in Southeast Asia; and second because the cost of living (including rent) has been substantially reduced, making Bangkok more competitive as a site for foreign investment. In addition to these factors, public works programs designed to provide employment have led to a decrease in pollution and traffic congestion. And the national govern- ment has been forced to accelerate its program of administrative decentralization to the local level despite very weak institutional capacity at this level. In this case,

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THE CHALLENGE OF URBAN GOVERNANCE 361 important attempts to develop new systems of urban governance are being made during a particularly volatile phase of contemporary globalism. The urban form of the larger EMR of Bangkok is thus assuming many similar- ities to other large mega-urban regions in the developing world (see McGee, 1991, and McGee and Robinson, 1995, for a description of mega-urban regions in the Asian region.) Basically, the EMR is divided into three zones the core, suburbs, and exurbia on the basis of typical characteristics of each zone. While these three zones function as an economic region, there are sharp differences among them (see Table 9-1~. Is there a preferred governance model that best fits such a mega-urban region? There are essentially four categories of mega-urban governance. These categories reflect attempts in other parts of the world to manage large metropolitan regions, a subject to which we return in the penultimate section of the chapter. The first cat- egory, which can be called the fragmented model, is characterized by a myriad of autonomous local government units, each with jurisdiction over a particular func- tion and/or territory. There is sporadic and poor coordination among the various units. This model is the most typical of the American approach to metropoli- tan governance, though some examples exist in developing countries as well. A second category, which can be termed the mixed model, encompasses regional governance approaches in which both central and local government play a role in the administration of a region. This approach is typical of most mega-urban regions in developing countries, including the case of Bangkok discussed above. A third form of administration is the centralized model. This model, still found in transitional societies such as Vietnam, is dominated by a central government. Finally, we should mention the comprehensive metropolitan governance model, although no pure examples of this approach currently exist in developing coun- tries. In this model there is either a single coordinating governance unit for the whole mega-urban region or a two-tier system in which local governments (or mu- nicipalities) perform a number of local functions, but cede to a higher metropoli- tan (subnational) authority the performance of region-wide functions. A version of this model has been operating in Abidjan, Cote d'Ivoire, since 1980, and a "unicity" model has been emerging in South Africa since the local elections of November 2000. Four major Chinese cities that are governed as provinces also fall into this category. While there is no consensus on the type of mega-urban governance that may emerge in this new era of urbanization, there is general agreement that as the wealth of these regions grows, some new form of governance will be required. As mega-urban regions grow in wealth, however, they will need to develop sys- tems of taxation and governance that operate at both a regional and a highly local level, a process that will involve both decentralization and privatization. The next section reviews some of the major issues involved in both designing and implementing governance structures at the metropolitan level in developing countries.

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THE CHALLENGE OF URBAN GOVERNANCE MAJOR CHALLENGES OF URBAN GOVERNANCE IN DEVELOPING COUNTRIES 363 As the example of Bangkok illustrates, the governance challenges of large metro- politan areas in developing countries are both diverse and complex. It is arguably the case that this diversity and complexity are increasing with population growth and globalization, and that as this process unfolds, new approaches to governance and the management of cities will emerge. To impose some order on a very large subject, we examine these major urban challenges along five major dimensions: capacity (with a focus on urban services and service delivery);financial resources (with emphasis on generation of local revenues); diversity (in particular, issues of inequality and fragmentation, often leading to violence and a failure to regulate social conflicts); security (involving crime and violence, and approaches to the preservation of public order and the alleviation of violence); and authority (with a focus on decentralization and distribution of powers, local jurisdictional configu- rations, and political participation). The literature on these interrelated topics is voluminous, but a certain disci- plinary specialization tends to attach itself to each of these dimensions: geogra- phers (with some economists) are more likely to focus on urban services, public finance economists on the financial dimension, sociologists and criminologists on the diversity and security dimensions, and political scientists and public adminis- tration specialists on the authority dimension. Each of these dimensions can be related to demographic dynamics. The sectoral policies adopted to address the challenges associated with each have implications for such demographic variables as urban migration, the differential treatment of gender and age groups in the population, and the quality of life of urban residents. The Capacity Dimension During the 1980s, rapid urban growth throughout the developing world began to seriously outstrip the capacity of most cities to provide adequate services for their citizens. Beginning in the 1960s, this incapacity was made visible through the increasing number and extent of slum and squatter settlements in the cities of de- veloping countries. The 1960s and 1970s were a period of extensive contention between municipal (and national) authorities and low-income urban residents. While the authorities sought to limit the use of urban land to the purposes for which it was usually zoned (i.e., high-income residential, commercial, and indus- trial uses), low-income populations attempted to build individual shelters on some of this land or to organize "invasions" for more concerted attempts to convert the land to their use. Clearly, the supply of cheap, serviced urban land fell far behind the demand for land on the part of a rapidly growing low-income population a

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364 CITIES TRANSFORMED population that, in addition, had to be close to centrally located sources of income and employment to subsist economically. In many countries, government response to this demand originally took the form of setting up centralized housing banks and construction agencies. For ex- ample, the National Housing Bank of Brazil (established in 1964 and closed in 1986) produced around 4 million units; two major agencies in the Ivory Coast produced close to 40,000 units during the 1960s and 1970s; in Egypt, public hous- ing agencies built 456,000 units between 1960 and 1986; and in Singapore, some 460,000 units were built from 1969 to 1985 (UNCHS, 1996: 219~. While this housing made up a substantial proportion of low-income housing in a number of countries by the 1980s, there were major problems: maintenance was poor, public subsidies were high, it was difficult to avoid corrupt practices entirely, and the pace of construction was in any case inadequate to respond to the level of inmigration (Cohen, 1974; Mayo and Gross, 1989; Perlman, 1976; Stren, 1978~. Notwithstanding exceptions, such as Hong Kong or Singapore, in which high-quality housing was successfully developed and maintained (Yeung, 1998a: Chapter 4), international agencies turned to more collaborative approaches. Two policy responses stand out. The first is the sites and services projects of the 1970s and 1980s (Cohen, 1983), in which minimally serviced plots in large subdivisions were allocated to low-income applicants, who were expected (with some assistance in the form of training and loans of materials) to build their own homes. The second is squatter upgrading projects, which regularized land tenure and improved services and infrastructure in "slum" areas to encourage the orderly improvement of neighborhoods without displacing existing residents. Variants of these approaches are still operative today, but both involve complex, costly planning and administrative organization, as well as the design of an incentive system to encourage investment by the poor and discourage "leakage" to higher- income groups. From the building of housing units, public policy approaches in developing countries have shifted to "enabling" strategies that encourage land and infrastructure development, as well as support for medium-sized and small- scale enterprise (UNCHS, 1996~. Prominent among these strategies are reforms in the governance of urban services from arrangements based entirely within the public sector, to arrangements based on partnerships with private and nongovern- mental groups (Fiszbein and Lowden, 1999; Freire and Stren, 2001), to various kinds of arrangements with private service providers (Batley,1996~. Overall, these enabling and partnership strategies are consistent with what some observers see as a shift toward "neoliberal" economic policies, as applied at the local level. While the typical package of neoliberal policies (such as fiscal dis- cipline, reduction of public expenditures, deregulation, open exchange rates, and trade liberalization) was generally applied at the national level when first intro- duced, new approaches to reform include social safety nets and decentralization. In the case of the former, many countries began in the late 1980s to develop redis- tributive programs and agencies targeted at the very poor; these programs were

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THE CHALLENGE OF URBAN GOVERNANCE 365 inevitably operated (at least partially) through institutional mechanisms set up locally though not, in most cases, within existing local government institutions. As for decentralization, while most studies of national reform policies in the 1980s and 1990s relegate it to a minor role, some authors claim it is an essential element of neoliberalism. Vilas (1996), for example, sees the elaboration of what he calls "neoliberal social policy" in the 1990s as having three basic characteristics: pri- vatization, targeting of the poor, and decentralization. Lowi (2000), with special reference to the United States but by implication including developing countries as well, argues that decentralization (which he qualifies as Revolution and links to privatization and deregulation) is a fundamental part of strategies to "address the spillover effects of extreme inequalities" caused by neoliberalism. Behind this assertion is the argument that local elites and political institutions in the United States are better able to manage the "fallouts" from continuing and increasing inequalities than are national institutions. One example of a large city confronting its service and infrastructure chal- lenges in an energetic and innovative fashion is Shanghai. With a population in its metropolitan area of more than 13 million (not including the transitory, unreg- istered population, which may account for a further 3.3 million) and a total land area of 6,340 square kilometers, Shanghai is the largest city in China and one of the largest in the world. The metropolitan area consists of 14 urban districts in the city proper (2,057 square kilometers) and six suburban counties, all within a single area with the status of a province within the Chinese system of government (Wu, 1999a: 207~. While Shanghai was a major industrial and commercial center from the mid- 1850s until the takeover of the Chinese Communist regime, it experienced neglect and disinvestment after 1949. Overall, from 1949 through 1983, some 87 per- cent of Shanghai's revenue was remitted to Beijing, leaving 13 percent for local allocation. By contrast, Beijing and Tianjin averaged 30 percent during the same period. As a result, Shanghai was known as the "golden milk cow" of the planned economy of China (Yeung, 1996: 9~. Limited investment in infrastructure and housing meant that urban amenities suffered, so that "by the 1970s and 1980s, the central city's infrastructure was near collapse. For instance, in the former French Concession, nearly 700,000 dwellings were without flushing toilets. Compared to the national urban average and Beijing (a city of comparable size), Shanghai lagged in several important indices of urban infrastructure, including per capita living space and per capita paved roads" (Wu, 1999a: 208-9~. The central government's neglect of Shanghai began to reverse itself in the early to mid-1980s, culminating in a 1988 agreement between the two to give the city more autonomy in revenue collection and expenditure. In the same year, the city established a foundation to mobilize funds for urban construction; in 1992, this became the Shanghai Urban Construction Investment and Development Company (Wu, l999b: 2277~. This state-owned company allocates funds in many different areas of infrastructure and services and to many different local agencies.

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THE CHALLENGE OF URBAN GOVERNANCE Local participation in Chinese cities 399 Although Western-style pluralist electoral politics is absent in China, major changes in the governance of Chinese cities have been proceeding since the late 1980s. These changes have taken place at the local level of the urban community in Chinese cities and, according to one estimate, affect 200-300 million of its cit- izens (Choate, 1998: 6~. While these changes are complex, they can be discussed from two vantage points: the formal structure of urban government and the op- eration of the local residents' committees that have become so prominent in the larger cities since the mid-199Os. During the period of centralized planning and administration in postwar China (roughly 1949-1978), the nation's municipal administrative and political structure was characterized by the penetration of local communist party structures into all levels of urban administration. The secretary of the Communist Party's city com- mittee, representing the party, was the most powerful individual, notwithstanding the fact that he had no position in the city government. The mayor, as the head of the city administrative bureaucracy, was second in importance, but at the same time was usually the party committee's deputy secretary. Decisions were nor- mally initiated by the party and then carried out by the city government. The city government had control over land and construction, but many functions related to urban services (such as health care, housing, and primary education) were under the control of the work unit, or danwei, which could be a large government office or an industrial plant. Beneath the level of the city government, cities were divided into districts (of which the largest cities had up to 14), subdistricts (or street offices), and neigh- borhood (or residents') committees. In this system of tight vertical control, only individuals who were formally working for a government-approved danwei were permitted to live in the city. Rural-to-urban migration was tightly circumscribed, and only those with a resident's permit had access to housing, rationed commodi- ties (including staple grains and oils, meat and fish, cotton cloth, and most con- sumer durables) and social services. "The government managed not only urban development, but also urban residents' lives" (Zhang, 2001: 187~. With the introduction of market-oriented reforms beginning in 1978, local governments (as discussed above) were given more freedom to raise and distribute financial resources, responsibilities were transferred from the national to the lo- cal level, and the government stopped managing every detail of urban citizens' lives. The formal structure of municipal government at the city level (including the relationship between government and party leaders) did not change; around 1985-1986, however, the government began to place much more emphasis on the structure and functioning of submunicipal government, in particular urban resi- dents' committees (Choate, 1998: 10~. Behind this decision were a number of important factors: massive movement of rural migrants into the cities, a rapid in- crease in urban under- and unemployment caused by enterprise restructuring, and

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400 CITIES TRANSFORMED a withdrawal of the social safety-net functions formerly provided by large urban work-based units. From 1989 to 1993, a number of laws reorganizing residents' committees were passed, and a 1992 joint policy paper and a 1994 major government cir- cular laid the groundwork for a more elaborate and stronger role for the local committees. By the late 1990s, these residents' committees (which catered to modal populations of some 2,000 each) were systematically involved in some or all of the following services: information and record keeping; public safety and security; mediation of local civil and family disputes; public health and family planning; environment and sanitation; legal education of the public; provision of "convenience" services, such as fast food restaurants, public transport, and pub- lic telephones; social welfare (especially for young children and the elderly); and employment placement (Choate, 1998: 16-25~. According to observers, the aver- age age of committee members is declining, and the committees are hiring more educated, experienced, and professional staff; paying more attention to the needs of the people through social surveys and feedback mechanisms; and connecting with newly formed associations, such as volunteer social service groups, propri- etor and land development associations, and cultural organizations (Choate, 1998; Read, 2000; Ying, 2000; Zhang,2001~. By the end of the 1990s, there were some 119,000 of these local committees throughout urban China. In Beijing and its suburbs in 1997, for example, there were 10 districts, l l 8 street offices, and 5,026 neighborhood committtees (Read, 2000: 807-8~. In many of their local initiatives, committees organize to collect fees and de- velop local projects. Ying (2000: 8-9) gives a good example of the new local management style in Shanghai, a style that often involves city residents actively reporting their complaints to the residents' committee office, which follows up with energetic and probably financially advantageous measures: The Quxi Road Market for Agricultural and Non-staple Products un- der the jurisdiction of the Wuliqiao Subdistrict [Street Office] in Shanghai [is a good] example. In 1997 the market was still dirty, chaotic and jammed with traffic. In addition, it was a market without effective management where some small private retailers ran ram- pant, gave short weight and beat up administrators. The local 2,000 households or more reported all this to the subdistrict office for ac- tion. Cadres of the office immediately held a meeting to discuss the matter and took measures. They cut the number of stands in the market from over 300 to 144. They also invested 260,000 yuan in building unified, standard permanent stands. They also organized an all-weather six-member sanitation team which worked on two shifts a day. The law enforcement team also entered the market to exercise supervision and strict management at regular intervals, thus reducing the number of problems. In 1998 the market was elected an advanced

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THE CHALLENGE OF URBAN GOVERNANCE exchange at the city level, and acclaimed by local residents. Find- ing problems through letters and calls and helping the people allay their worries and tide over their difficulties have become a distinc- tive feature of the Wuliqiao Subdistrict Office in its effort to offer good community service. According to statistics, in 1998 the office processed 253 letters from the people and received over 4,000 calls. These changes were not present in or before the early 1990s. They are also unprecedented in the development history of Chinese cities. so they are of great historical and practical significance. 401 While not all local committees may be as effective as this particular exam- ple, Choate (1998: 28) reports that, based on his observations and interviews in 14 cities over a 3-year period, "it appears as though the work of residents com- mittees is reasonably well-regarded by the relevant populations themselves." Per- haps as a result, many cities are developing full-service community centers at the street office and district levels. They are assisted by citizen "boards" or "man- agement committees" consisting of representatives of major mass organizations and the party (Choate, 1998: 29-31~. While these groups are not elected, they constitute an interesting local solution to the challenge of representing a range of opinions and professional skills in an increasingly complex social and economic environment. IS THERE A "BEST" MODEL OF URBAN GOVERNANCE? In this chapter we have attempted a limited review of some of the more notable changes in urban governance in very large cities in the developing regions of Asia, Africa, and Latin America. This review, while far from comprehensive and sys- tematic (inasmuch as more extensive case studies and comparative data do not yet exist in the research literature), indicates that new institutional forms are emerg- ing in municipalities across the developing world. Common to most if not all of these new institutional approaches are three main elements: greater involvement of NGOs and community groups in local governance, often through a more plural and democratic electoral system; greater transparency and accountability in both the planning and implementation of local policy; and the devolution of more legal and constitutional responsibility for urban affairs from the state or national level to the local level. From the election of mayors and local councillors across Latin America, to the increasing pluralism of the political process in Africa, to the incor- poration of massive numbers of new actors in the Indian and Philippine municipal systems, to the involvement of nonstate actors in service and infrastructure pro- vision in China, a massive opening of political space is taking place at the urban level. Behind this enhancement of the municipal political role are multiple and com- plex structural changes: the emergence and more active participation of civil

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402 CITIES TRANSFORMED society at the local level (often together with or as an offshoot of other social movements, such as those involving human rights, environmentalism, and indige- nous rights); the connection of municipalities and their activists with networks of other municipalities and elected officials; the decentralization of powers and func- tions from national to local government units; and the new power and influence that cities especially large cities are assuming in a competitive and globalizing world. Given the diversity of the new institutional arrangements coming into active use, as well as the fact that each country has its own historical and political cir- cumstances that vest local governance with a special logic and legitimacy, can common elements be discerned? This question is particularly pertinent since cities and their surrounding regions increasingly see themselves as being in competition with other cities and regions around the world (Scott, 2001~. At stake are poten- tially large investments on the part of multinational institutions (both private and public) that can make a major contribution to the employment prospects, and thus the economic welfare, of any city. Since the overall quality of governance is re- garded as contributing to a city's ability to manage its infrastructure and services and maintain a certain quality of life for its citizens, alternative models of good governance frequently figure in discussions of ways to improve the competitive position of cities. Reforms in local governance and the technical support needed by developing municipalities to put these reforms into practice effectively in their constrained economic circumstances have been the object of significant program assistance from international agencies. These agencies include the Urban Management Pro- gram of UN Habitat (formerly UNCHS); the World Bank; a number of inter- national municipal and local government associations; and various bilateral aid agencies, such as the U.S. Agency for International Development and Germany's Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ). In 1999, Dinesh Mehta, current director of the Urban Management Program, compiled three lists of "good governance" criteria to be incorporated in advice proffered by interna- tional agencies: (1) a Habitat II list (including accountability, transparency, par- ticipation, the rule of law, and predictability); (2) a United Nations Development Program (UNDP) list (including participation, the rule of law, transparency, re- sponsiveness, consensus orientation, equity, effectiveness and efficiency, account- ability, and strategic vision); and (3) a list compiled by Konrad Adenauer Stiftung for the "Better Cities Network of East and South-East Asian Cities" (including accountability, responsiveness, management innovation, public-private partner- ships, local government-citizen interaction, decentralized management, network- ing, and human resource management) (Mehta, 1999~. Of course, each program has developed explanatory text as to how these crite- ria might be applied, and there are many other lists. Virtually no research of which we are aware has been done on the relative effectiveness of different elements of these lists in either controlled or comparative situations. What is clear from these

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THE CHALLENGE OF URBAN GOVERNANCE 403 lists is that an idealized liberal-democratic model of urban governance (in which well-informed citizens protected by legal institutions make periodic democratic choices of teams of politicians and professional bureaucrats to manage and de- velop their local space) is the suggested institutional format. While improving governance is important in smaller and intermediate-sized cities, the analysis of governance models most commonly involves the largest cities, which have the most at stake in the new economic dispensation. By common agreement, achieving good governance in the largest metropolitan regions is more difficult than in smaller cities. Populations are larger and more diverse than in smaller cities, the level of resources necessary to institute and maintain services and infrastructure is much higher on an aggregate basis, civil society groups are more organized, and the range of functions for which the city is responsible makes the organization and logistics of urban management much more complex. As an element of his widely discussed argument that much of the world is moving from order toward anarchy, Kaplan (2001: 55) singles out urbanization: The 21st century is going to be the first century in world history when more than half of humanity will live in cities. Even sub-Saharan Africa is almost 50 percent urban. Urban societies are much more challenging to govern than rural societies. In rural societies people can grow their own food, so they are less susceptible to price increases for basic commodities. Rural societies don't require the complex in- frastructure of sewage, potable water, electricity, and other things that urban societies have. Urbanization widens the scope of error for lead- ers in the developing world while simultaneously narrowing the scope for success. It is harder to satisfy an urban population than a rural population, especially when that population is growing in such leaps and bounds that governing institutions simply cannot keep pace. As we have seen, very large cities do indeed present complex problems of urban management, but there is little or no evidence that they are sliding into an- archy. What we can conclude, which is also consistent (but not coterminous) with Kaplan's argument, is that the largest metropolitan areas will be more likely to house a highly diverse range of active civil society groups. Along with this or- ganizational diversity, large cities will harbor important movements of political opposition to the party or regime in power at the center. This tendency is most likely a function of both social and economic diversity and the pervasive pres- ence of global ties among the population. Thus in Kenya, the municipal elections of 1992 and 1997 reflected a largely antiregime sentiment, and both elections in Nairobi (the largest city) produced a majority of councillors representing oppo- sition parties. In Mexico City, as we have seen, the left-wing PDR carried the municipal election in 2000. In Brazil, the most recent municipal elections, in Oc- tober 2000, produced left-wing majorities (as against the center-left position of

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404 CITIES TRANSFORMED the ruling party) in the three largest cities Sao Paulo, Belo Horizonte, and Rio de Janeiro. Political opposition may be one reason central governments are notori- ously reluctant to agree to municipal reform packages involving greater autonomy for their largest cities. One major issue arising in the design of governance systems for large metro- politan areas is that of coordination. Aside from the question of scale and size, the physical expansion of large cities in almost all cases extends the population and the rural (or ruraVurban) hinterland over which the city holds sway to include a large number of separate and even independent political jurisdictions. Coor- dinating these jurisdictions is both a political and an organizational challenge, particularly given the tendency of the effectively urbanized area to spread over an ever-larger territory. In one of the classic works on this subject, Jones (1942) argues that growing cities in the United States (including central cities and their suburbs) were increasingly being fragmented into a multiplicity of inadequately coordinated units. "This fragmentation ensured competitive behavior between local governments, an inability to solve regional problems, an uneven distribu- tion of tax resources, a lack of citizen control of local government, and the un- equal distribution of services, especially pertaining to mass transit, sewerage and garbage, water supply, public health, law enforcement, and firefighting" (Stephens and Wikstrom, 2000: 40~. To solve these problems, Jones argues, new arrange- ments to ensure metropolitan political integration should be undertaken. Since the time of Jones's study, a considerable literature has addressed this problem in both Europe and North America. Yet as metropolitan areas grow in both size and number around the world, we are no closer to finding suitable com- prehensive solutions. In an overview of four major metropolitan areas in Canada and five in the United States in 1995-1996, Rothblatt (1999) shows that the av- erage metropolitan area in Canada contains 40 municipalities, while that in the United States contains 157 municipalities and counties. This difference in North American cities reflects the American tendency to localized, individualistic so- lutions as compared with greater acceptance in Canada of a coordinating role for higher levels of government (Goldberg and Mercer,1986~. Nevertheless, there are exceptions to the trend in both countries, and there is today a disturbing tendency toward greater social polarization and fragmentation in both American and Cana- dian cities. This trend appears on the surface to be positively related to political fragmentation (which permits the separation of groups by income and race), but the relationship cannot be clearly demonstrated. (For the American literature, see National Research Council, 1999: Chapter 3.) As large cities in developing countries spread outward, the jurisdictional mo- saic becomes larger and more complex. As we have seen in the case of Mexico City, the capital region now includes some 41 municipalities in two states, a Fed- eral District, and 16 subunits within that district that are equivalent to municipal- ities. The metropolitan area of Sao Paulo consists of 39 separate municipalities, while Greater Santiago is made up of 34 separate communes. Rio de Janeiro

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THE CHALLENGE OF URBAN GOVERNANCE 405 has 17 separate municipalities and Buenos Aires 20 local government units. In Africa, Abidjan consists of 10 communes and a second-tier government, but one must also include a number of privatized service agencies and central government ministries that administer important functions in the city region. In South Africa, there is currently a trend toward consolidation, but in the period immediately after democratization (in the early to mid-199Os), Cape Town was made up of 39 local government units and Durban as many as 69. The pattern extends to Asia as well, where, as we have seen, Bangkok consists of a Bangkok Metropolitan Admin- istration (divided into 50 districts) plus 5 adjacent provinces (which themselves include as many as 2,000 small local governments), while the greater Manila area includes 17 municipalities and up to 18 additional local government units in the surrounding mega-urban region. The governance of large (metropolitan) urban areas is currently a central issue in a number of Latin American countries as they try to reconcile a resurgent local democratic culture with the need to manage complex local functions efficiently so as to safeguard the economic benefits accruing to their city-regions. There are two parallel arguments in the literature on metropolitan governance a literature that, until recently, was based almost entirely on European and North American evi- dence. One argument addresses the question of whether there should be a unitary organization of government dealing with the entirety of the built-up metropolitan area. Assuming the answer to this question is positive, a second line of argu- ment has to do with whether there should be a single-tier or two-tier metropolitan government (Sharpe, 1995~. In principle, there are three possible organizational models arising from these options: (1) a loosely organized collaborative system involving relatively autonomous local governments that cover the metropolitan area; (2) a relatively unitary form of government incorporating the whole of the built-up area; and (3) a two-tier system of government covering the metropolitan area, with lower-level municipalities undertaking certain defined local functions and a higher-level council or metropolitan government dealing with functions of a regional nature. The first of these models parallels the fragmented model dis- cussed earlier in this chapter, while the second and third are variants of what we have called the comprehensive model. While the two-tier model was considered the most desirable system in prin- ciple for many years, it has been coming under attack for practical, political, and theoretical reasons (Sharpe, 1995: Chapter 2~. Among the practical problems are the difficulty involved in keeping up with the de facto extension of the boundaries of the metropolitan area, the problem of reaching agreement on exactly where the regional government begins and local municipal functions stop, and the distribu- tion of revenue both horizontally and vertically in large areas that are becoming fragmented and differentiated. There are, in addition, two major political prob- lems, one local and one intergovernmental. At the local, metropolitan level, those attempting to coordinate area-wide structures, whatever their democratic creden- tials (which are, in any case, usually limited) have great difficulty capturing the

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406 CITIES TRANSFORMED loyalties and attachments of their citizens. Tasks are too technical, and local- ized political attachments to one's own commune or municipality tend to prevail. Area-wide sentiment, which the metropolitan structure could tap as a political resource, is in short supply; rather, tensions and conflicts among different local structures and communities within the overall metropolitan region appear increas- ingly common. At the intergovernmental level, there is almost always tension between a large and powerful local (metropolitan) government and a higher level of government such as a state, province, or central government that must de- centralize functions and allocate revenue to another unit with which it may very well be in political competition. Some would argue that the fragmented model is theoretically superior to the comprehensive model. An argument can be made, based on public-choice princi- ples, that a number of small local jurisdictions is superior to a single overarching government. Since a variety of small local government units can offer different baskets of services and taxes, the whole local area can operate as a quasi-market, supporting greater efficiency through a kind of competition among jurisdictions based on the choices of citizens about where to live (Tiebout, 1956; Ostrom, Tiebout, and Warren, 1961~.4 It appears clear that, whatever the challenges to governance in large urban re- gions in the developing world, no single or even dominant model of metropolitan governance is likely to emerge in the foreseeable future. This has not happened in Europe and North America (Lefevre, 1998) and is unlikely to happen in de- veloping countries, which are even more differentiated in history, geography, and culture. More effective structures for coordination need to be developed, but each solution will have to respond to a myriad of complex political, financial, and tech- nical problems. What can be said is that more participatory local solutions will be attempted for the myriad of challenges entailed in assessing and collecting taxes; improving transparency and justice in the allocation of capital funding; and involving com- munities in such local services as health care, primary education, and even the construction of basic infrastructure. As these cities grow (albeit more slowly than smaller, intermediate-sized cities), their professional staff will become more pro- ficient and their elected officials more experienced, and the new powers and re- sponsibilities devolved to them will be consolidated. One can only hope that all cities will see the value of democracy, the rule of law, and honest and effi- cient local administration, as well as the importance of supporting strong civil society organizations. However they are eventually constructed, cities must draw on the legitimacy of an emerging localism and commitment to democracy, and they must find nontechnical means to engage the imagination and energies of civil society. 4Virtually all these arguments came into play in Toronto when, in 1997, the provincial government of Ontario removed the well-known and much-admired upper-tier government and its six second-tier governments and replaced them with a single municipal government covering one-half of the greater Toronto area.

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THE CHALLENGE OF URBAN GOVERNANCE CONCLUSIONS AND RECOMMENDATIONS Conclusions 407 The emergence of large urban regions, spread over many jurisdictions, presents acute problems of governance. Partly as a response, important institutional re- forms have taken place over the last decade. One way of characterizing these trends is to see them as a movement from "local government" to "local gover- nance." The term "urban governance" implies a greater diversity in the organization of services, a greater variety of actors and stakeholders, and a greater flexibility in the relationship between municipalities and their citizens. These trends in institutional reform can be illustrated by the example of the Bangkok Metropolitan Region. From this analysis the question may be asked: Is there a preferred governance model that best fits such a mega-urban region? There are four types of mega-urban governance in actual use around the world: the frag- mented model, the mixed model, the centralized model, and the comprehensive governance model. The first and last are the most widespread. The comprehen- sive model exists to some degree in Cote d'Ivoire, is emerging in South Africa with the "unicity," and is in effect practiced (albeit without local structures of democratic political representation) in four of the largest Chinese cities. In dis- cussing some of these variations on an overall theme of mega-urban governance, we looked in this chapter at some of the key challenges faced by all large urban areas: the capacity dimension (involving services), the financial dimension (with a focus on the generation of local revenues), the diversity dimension (where is- sues of fragmentation and inequality are central), the security dimension, and the authority dimension (looking at the distribution and allocation of power). As a result of decentralization reforms in many countries, local governments have been given more functions, as well as after an initial time lag more power to raise revenues. The range of these reforms is truly vast. Unfortunately, com- parative statistics are very incomplete, but what figures we do have show that municipal expenditure levels are slowly rising as a proportion of national govern- ment expenditure, although the level is still low. Local tax collection and revenue generation may be as much a governance is- sue as a technical finance issue, if we take into account some examples from China and Brazil. In the case of China, reforms since the late 1970s have decentralized decision making from the center to localities and have allowed local governments to enjoy the benefits of substantial "off-budget" revenues. With citizens' involve- ment, these revenues are a major source of infrastructural investment. In Brazil, many municipalities have adopted various versions of a "participatory budgeting" system, whereby cities are divided into regions or districts, and citizens in those areas participate in a process of determining the shape of the investment budget for each financial year. Security is an increasingly important dimension of urban governance. During the 1990s and beyond, urban security has become one of the dominant issues. As

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408 CITIES TRANSFORMED for policy responses to violence, the emphasis in a myriad of programs throughout the world focuses on strengthening local social capital. Violence erodes social capital when it reduces trust and cooperation within formal and informal social organizations; conversely, when social capital is strong, development processes are supported. Since the late 1980s, major decentralization initiatives that have strengthened municipal governance have taken place in a large number of countries. Exam- ples such as Abidjan in Cote d'Ivoire, Mexico City, and some of the larger coastal cities in China illustrate a wide variety of institutional reforms that have been tak- ing place at the local level around the developing world. Common to most of these reforms are greater involvement of NGOs and community groups, greater openness and accountability, and the disposition of more legal and financial re- sponsibility for urban affairs at the local rather than at the state or national level. The issue of coordination of multiple jurisdictions is central to the governance challenge in large city-regions. The literature on metropolitan governance fo- cuses on the fragmented situation typically found in almost all North American metropolitan areas. But developing countries exhibit high levels of jurisdictional incoherence as well. Here there are two competing arguments: one suggesting that a wide variety of jurisdictions and local agencies can be beneficial to citi- zens since it permits local choice in services and living environments; and an- other promoting more coherent metropolitan-wide administrative and political solutions. These correspond, respectively, to the "fragmented" model and the "comprehensive" model of governance. As yet, no single model holds sway around the world, but discussions and analyses of competing visions are taking place almost everywhere. Recommendations The field of comparative urban governance is relatively new. But to improve our ability to explain and analyze urban governance reforms and policy options, we recommend more comparative studies and better interdisciplinary tools. This will involve, at a minimum: Paying more attention comparatively to the local dynamics of policy reform, both among cities within individual countries and across national bound- aries. As urban populations increase to staggering dimensions in some cities, and as decentralization devolves substantial powers to municipal gov- ernments in the areas of health care, education, social assistance, and urban development, we need to incorporate information on and analysis of local governance into our development and policy discussions in a much more central fashion. Municipal development is real development for a large part of the population and must be treated as such in the research literature. Just as we have good cross-national information on GDP, demographic change,

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THE CHALLENGE OF URBAN GOVERNANCE 409 and even income inequality, we need to disaggregate as much of this infor- mation as possible to the urban level for comparative purposes. Incorporating local governance into our models and analyses of urban change. Until now, research on urbanization has focused primarily on the disciplines (such as sociology and geography) that deal with social and physical change in the urban environment. This was understandable as long as local governments had few powers and little ability to effect changes in the urban situation. But issues of metropolitan reform are on the table in many countries and need to be addressed using analytical approaches that link politics, administrative reform, and the other social sciences in the same . . . alscusslon.