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p. 2 of 26 BACK | NEXT Executive Summary I. Introduction II. The Urban Sector III. The Bank's Involvement in the Urban Sector IV. Objectives and Policy Priorities V. The Bank's Urban Sector Strategy VI. Implications for Bank Operations VII. Conclusion

Urban Sector Strategy

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I. Introduction

A. Major Themes

1. This paper reviews the causes and effects of urbanization¹ in the Asian and Pacific Region, highlights the resulting demands for improved management and servicing of urban growth, and proposes a strategy for Bank action in the sector. Because of the enormous variety of urban conditions and stages of economic growth in developing member countries (DMCs), the development of an urban strategy for the region is complex and needs to recognize the importance and diversity of country-specific policies and programs. However, a number of common themes underlie the strategy.

2. At the macro level, urbanization is strongly linked to economic growth and has contributed positively to the gains made in many countries throughout the Region. Measures to improve the extent, management, and operation of urban services benefit both local and national economies. At the same time, urban areas are exposed to external forces over which they have little control, such as the progressive globalization of decision-making and the economic crisis currently affecting the Region. The Bank’s urban strategy, therefore, must be both robust and flexible to respond to such forces and their impacts.

3. The phenomenal rate at which urbanization is occurring has overwhelmed those tasked with managing urban areas, particularly in the poorer countries of the Region. Exacerbated by a flood of rural-urban migrants, cities have witnessed tremendous growth of unserviced slum and squatter areas where millions of urban poor residents lack adequate access to potable water and sanitation services. A key theme is the way in which the problems of environmental degradation of urban poor communities, and urban poverty in particular, can be addressed. Related to these challenges are issues concerning improvement in the status of women and other vulnerable groups.

4. Potential improvements in the provision and maintenance of urban infrastructure and services are constrained by poor urban governance, management, and finance. Outdated legal, institutional, and governance traditions, as well as inadequate reform measures have constrained the pace of development. Thus a major theme is to address urban governance and the improvement of urban management through innovative approaches in the design and implementation of development activities; participatory processes at the local level; and the building of partnerships between corporate, community, and public sectors. The more efficient use of existing financial tools, the introduction of market-based approaches to local government operations, and the use of innovative financing mechanisms will also be required.

5. Achieving sustainable urban development is a final crosscutting theme, defined here as meeting the growing needs of the present without compromising the ability of future generations to meet their own needs. This is in accordance with the recommendations of the United Nations Conference on Environment and Development (1992), known as the “Earth Summit,” and the Second United Nations Conference on Human Settlements (1996), Habitat II. The comprehensive Global Plan of Action adopted at Habitat II incorporates policies for the sustainable development of settlements and the increased role of local governments in urban development and management. The urban strategy is designed to achieve significant increasesin sustainability within the framework defined by the long-term goal of full urban sustainability in DMCs in environmental, financial, and socioeconomic terms.

B. Development of the Urban Strategy

6. Responding to the growth of increasingly complex urban areas requires a review of Bank approaches to urban program and project formulation, prioritization, and implementation within and among DMCs, taking into account lessons learned from the Bank’s 30-year experience in the sector. While DMCs can be broadly grouped by stage of economic growth in terms of the priority needs of their urban areas, urban strategies must respond to competitive and comparative advantages, local urban economic circumstance, and other location-specific concerns. Therefore, this paper proposes a broad regional strategy for the urban sector that can provide both a framework for specific DMC urban strategies and a guide for Bank action in the sector.

7. The strategy was prepared by staff of the Water Supply, Urban Development and Housing (East) Division, with the support of interdepartmental working groups² guided by an interdepartmental steering committee³.

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