Public Sector Reform & Decentralisation

In recent years, the topic of territorial development and the need to empower developmental local authorities, given their central role and comparative advantage in promoting place-based development is receiving growing attention from policy-makers, practitioners, researchers across the globe, as well as from external development agencies. But also and most importantly it calls for a multi-dimensional national policy to promote territorial development.

The rationale for such policy choices is highlighted by the new urgency to address spatial ‘imbalances’ in social and economic development, and by the disappointing results of traditional approaches to territorial cohesion at both regional and urban levels.

An uneven spatial development effect often goes with national development policies…

As globalisation advances, national development policies in most developing countries are framed by efforts to connect the national economy to the global one, primarily through major cities (where the requisite human, financial and logistic resources are typically concentrated). The spatial model associated tends to be one of growing imbalances between the globalising cities and the rest of the country. This phenomenon constitutes a time bomb in many countries — threatening political stability, social cohesion and economic growth.

…but traditional policies aimed at correcting territorial disparities show usually limited success.

• States adopt a top-down, centrally driven mode of operation, with territories serving as a receptacle for national policies regardless of local priorities.
• A strictly sectoral logic is applied instead of integrated packages including a strategic spatial focus in public investment planning.
• The level of resources required to address territorial disparities exceeds available public spending when resources are constrained by both external and internal pressures to maintain fiscal discipline, lower taxes and cut expenditures.
• Interventions too often focus on a ‘hyper-local’ perspective on development, preventing the necessary linkages to be established for scaling up the process.

A consensus seems to emerge, that social and spatial inequalities may not only result in high social costs and political risks, but may also compromise the prospects of accelerated and sustained growth in both developed and developing countries.

Territorial development offers a middle road…

Rather that abandoning the search for spatially and socially balanced development, efforts should be made to develop a new set of more realistic, selective and effective policies to achieve it. These are required both to broaden the territorial footprint of economic growth and to expand access to social services in an age of globalizing economies and restructuring of the welfare state.

A middle road must be found to take advantage of the opportunity for economic growth offered by globalization, while limiting the risks of the growing social and spatial inequalities potentially associated with it. Realistic attempts at correcting territorial disparities will have to rely on:

• a rebalancing of the economic model that generates them, towards greater support to internal demand and the development of the domestic market;

• a shift from sector-based top-down spatial redistribution policies, to policies that more selectively fit local development strategies and help localities, particularly smaller cities and their rural hinterland to respond to opportunities offered by both domestic and global markets;

• a better use of co-provision and co-production arrangements with community and private sector services providers –to overcome the structural constraints on public spending of central governments;

• last but not least, both diffusing economic growth and preserving or enhancing basic social services, will require a smarter, more strategic and more locally-responsive use of limited central State resources as well as the mobilization of additional local resources from communities and private sectors.

LAs can offer comparative advantages in promoting territorial development…

On this middle road, nothing will be possible without an acceleration and consolidation of a “downward re-scaling” of the State, at the core of which is the emergence of developmental sub-national authorities empowered with a meaningful degree of autonomy and embedded in effective networks of accountability relations.

These local authorities no longer operate as just managers of nationally planned and funded investment and welfare programs but

• take on a much greater entrepreneurial role,

• identify and build upon the competitive and comparative advantages of their jurisdictions,

• mobilize the widest possible range of resources of their localities (first and foremost the local social capital), and

• reach out to local communities and private sector in order to both enhance the prospects of local economic growth and maintain or expand social services delivery.

… and promoting territorial development through LA can help localising SDG.

Territorial development should be recognised as a way to bring LAs into national development efforts. Attempts to localise the SDGs should start by recognising that the LA role extends to a much wider range of actions they could autonomously decide to undertake to:

• implement the SDGs goals at the subnational level;

• monitor progress of the SDGs at the subnational level.