During the past decade the Indian state of Kerala has been successfully carrying out democratic decentralization, and has substantially transformed the functions of local governments in line with the 73rd and 74th Constitutional Amendment Acts, which institutionalised the local government system in India. In particular, formulation and implementation of micro plans with community participation has produced remarkable changes in the dynamics of local development and in the public management of local governments. This initiative for participatory planning at the local level taken by the government of Kerala enormously empowered local communities and the different actors in the local political system.

Pages 135-136 are on property tax. 'Another form of recurrent taxation that can be tapped for further resources in most developing countries is immovable property taxes. These taxes do not distort labor markets, human capital accumulation, or innovation decisions. Property taxes also provide a stable source of revenue that is less susceptible to short-term economic fluctuations and is difficult to evade. And although property taxes would likely not flow into federal social protection schemes (they are typically raised by local governments), they could fund regional or municipal social services or reduce the level of federal transfers to local governments. On average, high-income countries raise 1.1 percent of GDP from immovable property taxes. In middle income countries, these taxes yield about 0.4 percent of GDP.19 Yet property taxes represent untapped revenue potential for all countries. This revenue gap is estimated to be 0.9 percent of GDP in middle-income countries and as much as 2.9 percent in high-income countries.20 Governments in Sub-Saharan Africa are estimated to be missing out on revenues of 0.5 to 1 percent of GDP because of no property taxes whatsoever or their limited application.'
 

How can it be that people who should have the most fulfilling jobs in the world are generally far less engaged and productive than those we encounter in the private sector? The root causes, we believe, are organizational cultures that are strangled by rules. Myriad rules define the public-sector workplace—rules spelling out procedural red tape, layers of decision making, regulatory compliance, and employee safeguards. These rules are put in place for the best of reasons, such as to ensure fair hiring practices and prevent corruption, favoritism, and the influence of special interests. But as rules proliferate, they often congeal into inefficient, costly bureaucracies that slow decision making, stifle initiative, discourage cooperation, and frustrate employees.

Cities are assets, solutions and drivers of economic and social development. Cities possess huge untapped economic potential that can and should be leveraged to create wealth and economic opportunities for all. This requires good urban planning that supports urban compactness, integration, and connectivity. However, even the best urban plans risk ending up unused if they are not accompanied by financial and regulatory strategies for implementation. Strategic public investments must go hand in hand with strategic funding mechanisms and supporting governance systems. The report also identifies successful governance mechanisms for efficient and equitable provision of public services in metropolitan areas of developing countries, and shares experiences and methods to making public service provision more viable in peri-urban areas of large cities and in smaller urban centres of these countries.

This article sets out to describe recent approaches to strengthening local government within the framework of the World Bank's Municipal Management Programme (1985–95) in Sri Lanka. The article examines a number of innovations adopted within the programme that are of general relevance to the task of strengthening local government throughout the developing world. The article briefly outlines the background to the present system of local government showing that, whilst existing structures and functions remain relatively weak, a number of important innovations have been introduced to assist with the process of strengthening local resource mobilization and improving performance in service delivery, and enhancing certain aspects of accountability, particularly those areas concerned with the allocation and use of public funds. Since a number of these innovations have wide applicability to the process of local government strengthening and reform it is hoped that this article will demonstrate the practical relevance of certain key innovations for practitioners and policy makers elsewhere.