Development Banking Approach to the Development of Regions and Cities*

The selection of cities and regions for priority development should not be determined by technocrats in the central government as has been widely practised in the past, but instead, should be made on the basis of the wishes of the local units. A national system which encourages responsible local governments to undertake development projects without ordinary budget constraints but with responsibility should be developed to achieve this objective. The establishment of a local development bank meets this need. It will help local governments to become motivated in development efforts, to develop planning, implementation and management capabilities, and to learn the importance of cost recovery.