Urbanization. At the beginning of the 20th century less than 10 percent of the world’s population lived in urban settlements. Today approximately half of the global population is urban. The rate of urbanization places huge strains on both national and local governments. These authorities are struggling to manage growth, to provide adequate levels of basic services to citizens and to provide government institutions and a governance process that are accessible and responsive.

Despite the significant developmental challenges and seemingly unmanageable problems presented by urbanization, the growth of cities and towns also presents new opportunities and solutions. Local governments in many parts of the world offer some of the most ingenious examples of human organizational ability. Increasingly this is not just an ability to be providers of services (whether they be infrastructure, social, environmental, economic or cultural) and managers of urban growth, but to be facilitators of change through a democratic process of engagement and partnership with civil society and the private sector. Cities and towns are also important engines of economic growth and provide opportunities for new forms of livelihood and increased prosperity. They afford the economies of scale necessary to provide improved services and better housing. They are also the centres of innovation, providing a stage for social development and cultural advancement.

Poverty. The growing inequality between rich and poor is a major urban problem most notably in the developing world. The United Nations Development Program (UNDP) estimates that the gap between the poorest and the richest doubles every 30 years.

Close to half of urban dwellers in developing countries live in appalling conditions. They live in neighbourhoods characterized by inadequate provision of safe water supplies, lack of sanitation services, absence of solid waste management collection and disposal systems, poor and overcrowded housing conditions, inaccessible or inadequate education services and facilities, insufficient health care, absence of affordable public transportation and in some cases vulnerability to natural disaster. Poverty tends to be reinforced in urban society where governance processes are elitist or exclusive, thereby further marginalizing groups of the population who may not have access to decision-making due to factors such as socio-economic level, gender, ethnicity or religion. While at this point in time cities and towns seem to be a locus for growing poverty, they seem also to hold the key to new solutions for poverty reduction in the future.

Decentralization. National governments everywhere are transfering responsibility for delivering services from national to local governments. Decentralization is occurring for several reasons. These include the world trend towards greater democracy, the failure of centralized and/or authoritarian government systems, fiscal constraints at the national level and the growing importance of cities within the global economy. There is also an acknowledgement that delivery of certain services by local authorities – where there is a need for the delivery agent to be close to recipients – can be more efficient and responsive than delivery by more senior levels of government.

Decentralization has brought both benefits and problems. In some parts of the world, new responsibilities and autonomy for local governments have led to innovative solutions to urban issues. Elsewhere, local governments have demonstrated that they do not have adequate institutional, human or technical capacities needed to take on their expanded roles. In most countries, decentralization of new responsibilities has not been accompanied by the fiscal resources or revenue-raising powers necessary to deliver required services. As a result of these trends, local governments must rapidly build their capacities, to reinvent the ways in which their institutions operate. Citizens must be involved in planning and decision-making to ensure that services are responsive to constituent needs.

Economies in transition. The breakup of the Soviet empire more than 10 years ago launched the countries of Central and Eastern Europe (CEE) into an unprecedented period of economic and political transition. It was the end of a prolonged period of experimentation with communism that left the region scarred from mismanagement of the economy, the environment and the governance system. The challenges that lay ahead – democratizing political systems while at the same time converting centrally planned economies into market-based ones – were enormous. Yet with the cooperation of the international donor community (including a rather significant contribution from Canada) coupled with focused leadership within these countries, we witnessed profound change across the region in a relatively short span of time.

The pace of transition and development has been faster in some countries than others. Following an initial period of uncertainty, countries such as Poland, the Czech Republic, Hungary and Estonia experienced a period of strong economic growth moved along by sustained public sector reform, the pursuit of good governance, improving civil liberties, strengthened civil society and macro-economic stabilization among others. More recently, Slovakia has taken steps toward reform, allowing the country to begin catching up to these transitional leaders. A situation exists now that sees advanced integration of the economic and financial systems of these countries into Western Europe and improvement in several indicators that signal readiness for accession to the European Union (EU). Yet many countries in the CEE region have a long way to go in their transitional processes, requiring sustained support from the international community.

Peace and Unity. Good governance at the local level can help to build peace by nurturing a culture of unity, diversity, tolerance and fairness and through pursuing equitable access to local government decision-making processes, services and resources. Sadly, in many parts of the world, violent conflict or the threat of it is a part of daily life. While individual local authorities cannot bring about peace, they have a large role to play in establishing an environment of unity within and between different communities. A local government can have either a negative or positive impact on peace and unity, by virtue of the degree to which it exacerbates, or helps to close, gaps in inequality between different communities, ethnic groups or socio-economic strata.