World Development Report 1999-2000

Entering the 21st Century, the World Bank's World Development Report for 1999/2000, states that localization-- the growing economic and political power of cities, provinces, and other sub-national entities--will be one of the most important new trends in the 21st century. improved communications, transportation and falling trade barriers are not only making the world smaller they are also fueling the desire and providing the means for local communities to shape their own future. Faced with popular demands for greater self-determination, national governments from Africa to Latin America, and from Europe to South East Asia are devolving power to the local level with mixed results. With accelerating globalization of the world economy, localization could revolutionize prospects for human development or could lead to chaos and increased human suffering.

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• Akizuki, Kengo. Decentralization, Local Government and New Approaches for Governance: The Case of Japan.
• Anderson, Kym. Global Trade and the WTO.
• Ariff, Mohamed, Mohd. Haflah Piei and Tiangchye Tan. Finance and Economic Policy in Malaysia.
• Barrett, Scott. Facilitating International Cooperation (short paper).
• Bourguignon, François. Crime as a Social Cost of Poverty and Equality: A Review Focusing on Developing Countries.
• Choe, Sang-Chuel. Globalization and Urbanization in Korea.
• Cooper, Richard. International Approaches to Global Climate Change.
• Fujikura, Ryo. Public Participation in Urban Environmental Management in Japan.
• Gang, Fan. Impacts of Globalization on Developing Countries: The Case of China.
• Glaeser, Edward and Jordan Rappaport. Cities and Governments.
• Guo, Shuqing. Impact of Globalization on the Chinese Economy.
• Hayami, Yujiro. Toward a New Model of Rural-Urban Linkages under Globalization.
• Henderson, J. Vernon. Urbanization in Developing Countries.
• Hohenberg, Paul. Urban Systems and Economic Development: The European Long Term and its Implications.
• Hufbauer, Gary and Barbara Kotschwar. The Future Course of Trade Liberalization.
• Hughes Hallett, A.J. Policy Coordination: Globalization or Localization in International Monetary Arrangements?
• Kaothien, Utis and Douglas Webster. Thailand's Urban System Under Globalization.
• Kitano, Naohiro. Analysis of Spatial Organization and Transportation Demand in an Expanding Urban Area Using Centrographic Methods: Sendai 1972-1992.
• Kueh, Yak-Yeow. The Greater China Growth Triangle in the Asian Financial Crisis.
• Litan, Robert. Toward a Global Financial Architecture for the 21st Century.
• Lucas, Robert E.B. Internal Migration and Urbanization: Recent Contributions and New Evidence.
• Malpezzi, Stephen. The Regulation of Urban Development: Lessons from International Experience.
• Mitlin, Diana and David Satterthwaite. Urban Poverty Alleviation and Social Policies.
• Mohan, Rakesh. Decentralization and Intergovernmental Fiscal Relations in India.
• Ocampo, Romeo. Local Governance and Metropolitan Coordination in the Philippines.
• Phang, Sock-Yong. Urban Transportation and Land Regulations in Singapore.
• Quigley, John. Real Estate and Housing Cycles.
• Rimmer, Peter J. and Howard Dick. Telecommunications, Transportation and Urban Growth.
• Sit, Victor F.S. Foreign Investment and Urban Growth.
• Smoke, Paul. Strategic Fiscal Decentralization in Developing Countries: Issues and Cases.
• Srinivasan, T.N. Think Globally, Act Locally!: Development Policy at the Turn of the Century.
• Stren, Richard. Urban Governance and Politics in a Global Context: The Growing Importance of the Local.
• Wong, Christine. Municipal Finance with Chinese Characteristics: Growing Out of the Budget. (short paper)
• Yamada, Junichi. Regional Development Policies in China and Indonesia and Japan's Experience.
• Yanagihara, Toru. Regional Policy Coordination in Asia.
• Yeung, Yeu-man. Urban Poverty Alleviation in the Age of Globalization in Pacific Asia.

The World Development Report 1999-2000 was written by a team led by Shahid Yusuf, under the general direction of Joseph Stiglitz, former Senior Vice President and Chief Economist of the World Bank. The core team of principal advisors on the report included: Anjum Altaf, William Dillinger, Marianne Fay, J. Vernon Henderson and Charles Kenny.

Consultation Process

In preparing the outline, the team has engaged in extensive consultation through meetings in Berlin, Beijing, Geneva, London, New York, and Tokyo and a four day summer workshop held in Washington, DC. Further workshop, consultation, and exchanges were arranged in Paris, Sao Paulo and Dar es Salaam to discuss drafts of the Report and provide the team with a rich and continuing source of feedback. Highlights of the comments offered at these events are presented below.

Paris, April 6th 1999

Discussants were academics, NGOs and practitioners from all over the European continent. Every aspect of the Report received due commentary, critical assessment, and judicious, generally substantive comments, which greatly assisted the team in revising the Report. Highlights of some of these follow.

In general, participants urged that more effort be put into drawing links between the global and the local, and specifically between the environmental and urban chapters of the Report. On trade, participants felt that the tensions besetting the world trading environment and how they affect the WTO called for a more sustained discussion. Regarding finance, reviewers suggested more in-depth discussions of domestic and international banking regulations and of the proposals floated for a new international financial architecture.

A number of reviewers asked for a greater emphasis on poverty, income distribution, and safety nets. The team explained that the purpose of this Report was to help define the institutional and policy environment framework most likely to support equity and poverty alleviation. As such, the Report could and should lay out the challenges relating to poverty and equity but would not focus the discussion on them. This will be done in the next Report, World Development Report 2000-2001.

Sao Paulo, April 19th 1999 (co-hosted by the Braudel Institute)

The consultation provided the team with a Latin American perspective on the analysis and messages of the Report, which was of great help in subsequent revisions. Highlights of the day-long review follow.

Concerning capital flows, suggestions were made to give more in-depth treatment of:

• nonbank financial entities;
• the implications of dollarization and the role and status of central banks;
• the entry of large foreign banks;
• the nature of FDI in Latin America as compared to East Asia-is it more inward-oriented and less likely to generate trade?

On trade, discussants emphasized that, for various reasons, protectionism is unlikely in Latin America. Also, trade liberalization has led to a decentralization of industry from metropolitan areas to mid-sized cities that are more competitive. Thus MERCOSUR has implications for the structure of urbanization. Under conditions of openness the economic geography of developing countries is likely to be affected by the growth of industrial regions that magnify the benefits of agglomeration, industrial diversity, and thick labor markets.

Concerning decentralization, a topic of great importance in Latin America, discussions centered around:

• the need for central governments to impose a hard budget constraint on subnational governments;
• the difficulty of enacting reforms in electoral rules and the related political obstacles to reforming expenditure and revenue responsibilities;
• the proliferation of small municipalities and the consequent growth in spending on administration, as opposed to service delivery;
• the issue of regional economic equalization, its costs and its effectiveness in reducing inter-personal income inequalities.

On urbanization, discussants emphasized:

• the need for coordination and improvement in governance across metropolitan areas, rather than merely sector-by sector reforms;
• the complexity of the public security issue;
• the socio-political aspects of land titling and land use regulation, in particular the need to recognize the range of well-established ownership or usufruct systems that exist in informal settlement where clear legal title is absent.

Dar es Salaam, May 6th, 1999

Academics from across the African continents and a number of Tanzanian officials and practitioners met with the WDR team in Dar es Salaam to discuss a draft of the Report. Highlights of the comments and discussion follow-which complement the written reviews sent by a number of the African commentators.

The audience appreciated the critical review of past development policy-but would have liked more acknowledgment by the World Bank of its own past mistakes-and applauded the more holistic approach of Comprehensive Development Framework currently being developed by the World Bank and discussed in the Report. Reviewers commented favorably on the emphasis placed upon good governance, but called for more circumspection on the effect of democracy, pointing out that democracy does not necessarily entail good governance. On the subject of partnerships-considered essential in the African context-they suggested that more could be said on civil society's partnership with both the public and the private sector and the question of incentives to reform. Finally, the relevance of the Report to the African experience was considered "right on the mark."

The audience was positive regarding the balanced approach of the report on finance issues, notably its acknowledgment that financial liberalization is not an unmitigated good. The discussions focused around means for countries to protect themselves against speculative attacks and financial crises, monitoring of financial flows, and policy coordination. Concerning trade, the audience felt that to enhance the Report's relevance for Africa, the costs and difficulties of trade liberalization required a more extensive treatment. In particular, the WTO was seen as an unwieldy and somewhat inaccessible instrument for developing countries-especially African ones.

Decentralization was perceived by the audience as hobbled in Africa by severe resource and capacity constraints, confirming the presentation of decentralization problems in the Report. Discussions centered on the relation between decentralization and nation building:

• Should intermediate tiers of government be designed on an ethnic basis?
• Centralization at independence had been seen as key to nation building-how would this be affected by current trends?

Urbanization was recognized as a key issue for Africa, but different from other continents where cities appear to be much more dynamic, and a much greater source of economic growth. The role of partnerships was once again emphasized, but the point was made that there is little that the public sector can do if community-level institutions are weak.

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