National macroeconomic and sectoral policies which affect the efficiency of urban markets and the overall allocation of resources in ways that will achieve a balance between urban and rural development. Policies which hinder the formal and informal private sector in creating the necessary number of jobs to reduce unemployment to a reasonable level. The inability of urban governments to manage efficiently the services they provide and to mobilize the level of revenues necessary to run municipal governments. The fact that the dynamics of population growth and rural-urban migration mean that the requirements for new urban land, shelter, infrastructure, social facilities, and jobs will in many cases exceed the ability of national and local governments to keep pace. Policies which inhibit the potential contribution private sector investments in urban areas can make in stimulating rural productivity.
Some urban problems are the result of low levels of overall development.
Clearly the urban problem must be solved primarily by the governments and people of the Third World countries themselves. The development of country economic development policies which lead to the appropriate allocation of resources between urban and rural areas in support of national development objectives is of critical importance. Of particular importance, in terms of their distorting effects on both urban and rural areas, are policies that have been designed to effect net resource transfers from the rural to the urban sector. Support for the Private Sector and Job Creation Programming designed to improve the working of capital, labor, production process, and consumer markets so as to enhance the productivity of the private sector in providing employment opportunities is appropriate. Support for Development of Human Resources Activities to improve the productivity, efficiency and capacity of human resources may be appropriate for achieving the objectives of the urban development policy.