As cities grow and decentralization becomes more common, local governments are assuming greater responsibility for providing and financing effective public services. In East Asia (excluding Japan), conservative estimates indicate that $1.2 trillion in infrastructure investments related to urbanization will be needed over the next decade. However, local fiscal and financial capacity rarely keeps pace with these increasing responsibilities. As a consequence, municipalities often find that they must confront a four part agenda.
First, they must manage available resources more efficiently and more responsively. Second, they must be advocates for reforms in intergovernmental fiscal relationships so that functional responsibilities are clearly defined and revenue sources are adequate. Third, they must mobilize new resources and increase their capacity to borrow responsibly for investments in local services. And, fourth, they must seek ways of attracting private participation in the financing and delivery of local public services.
The World Bank's East Asia and Pacific municipal finance work has emphasized helping local governments to:
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Link infrastructure development with economic growth initiatives.
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Link infrastructure finance with financial market development.
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Rationalize and make transparent inter-governmental fiscal/financial relations.
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Develop models and mechanisms for financing infrastructure.
More information:
   East Asia Decentralizes (report on the capacity and performance of local and provincial governments of selected countries in East Asia in the process of decentralization)
  Infrastructure in East Asia (report on providing effective and sustainable infrastructure services throughout the region)
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