WPS3712

# **Governance and the City:**

# **_An Empirical Exploration into Global Determinants of Urban Performance_**

## **Daniel Kaufmann, Frannie Léautier, and Massimo Mastruzzi**<sup>**1**</sup>

## **Abstract**

We contribute to the field of urban governance and globalization through an empirically-based exploration of determinants of performance of cities. We construct a preliminary worldwide database for cities, containing variables and indicators of globalization (at the country and city level), city governance, city performance (access and quality of infrastructure service delivery), as well as other relevant city characteristics. This city database, encompassing hundreds of cities worldwide, integrates existing data with new data gathered for this research project. We present a very simple conceptual framework and a set of hypotheses, and then test them econometrically. The findings suggest that good governance and globalization (at both the country as well as at the city level) do matter for city-level performance in terms of access and quality of delivery of infrastructure services. We also find that globalization and good city governance are significantly related with each other. There appear to be dynamic pressures from globalization and accountability that result in better performance at the city level. Furthermore, the evidence suggests that there are particular and complex interactions between technology choices, governance and city performance, as well as evidence of a non-linear (u-shaped) relationship between city size and performance, challenging the view that very large cities necessarily exhibit lower performance and pointing to potential agglomeration economies. Our framework also suggests a way of bridging two seemingly competing strands of the literature, namely viewing the city as a _place_ or as an _outcome_ . We conclude pointing to the need for expanding the database and the econometric framework, as well as to more general future research directions and policy implications emerging from this initial empirical investigation in the field of governance and the city.

## World Bank Policy Research Working Paper 3712, September 2005

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

> 1 The authors are at the World Bank Institute (WBI). This paper is a preliminary draft, for comment and discussion, and will undergo revisions. We benefited from the valuable assistance of Erin Hoffmann and Fatima Sheikh.  The views, data, and research findings aim to further debate and analysis. The margins of error in any governance, institutional quality and urban dataset imply that interpretative caution is warranted in general, and in particular argue against inferring seemingly precise city or country rankings from the data. For details on data, visit: <u>http://www.worldbank.org/wbi/governance/.</u>