Finance for City Leaders Handbook

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Cities are a driving force of the 21st century. Through bringing large numbers of people into close proximity, they spark economic growth, foster innovation, and generate prosperity. But they face the pressing challenges of creating a livable environment for their residents, enabling economic activity that benefits all citizens, and fostering urban development that is environmentally sustainable, equitable, and resilient to disruptive forces. Finance for City Leaders presents an up-to-date, comprehensive, and in-depth analysis of the challenges posed by rapid urbanization and the various financing tools municipalities have at their disposal. By providing city leaders with a wide array of financing solutions that emphasize sustainability, inclusion, and financial autonomy, this publication contributes to the growing conversation on how cities can look inward to finance major capital expenditures, infrastructure maintenance and operation, and public services.



Decentralization and local government financing

Fiscal decentralization—which entails shifting some responsibilities for expenditures and/or revenues to lower levels of government—has become a mainstream alternative framework for fiscal policy. It is generally a response to unsatisfied political demand for greater regional autonomy, or the result of a large economic divide between rich and poor regions. In a few cases, linguistic and cultural divides explain such trends. In many emerging and low-income countries, all these factors play a role, with tensions among ethnic groups an additional factor exerting pressure for decentralized public service delivery.


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