This policy note discusses strengtheninginstitutions for urban and metropolitan management andservice delivery and is part of a broader Philippinesurbanization study. Strong institutions are critical to theeffective management of cities, the delivery of efficienturban services and infrastructure, and the establishment ofan enabling environment for business and job creation.Strong institutions are needed to design and supportpolicies for land and housing markets, raise and equitablyredistribute revenues, and promote a safe and sustainableurban environment both at the national and local levels. Anumber of underlying institutional and governance issues atnational and metropolitan levels in the Philippines standout as binding constraints which have limited the countryfrom optimizing the benefits of urban development. Even asthe share of the national population living in urban areashas expanded to around 50 percent, urbanization in thecountry has never been guided by a comprehensive urbandevelopment policy supported by a clearly definedinstitutional framework. Institutional fragmentation amongvarious oversight and sectorial agencies at the nationallevel has exacerbated the weak institutional environment forurban development. The continuing expansion and populationgrowth of urban areas throughout the country heightens theurgency for adopting comprehensive urban policy andinstitutional reforms that will enable the country toharness the benefits of urban development and mitigatenegative externalities. There are a number of key challengesrelated to governance and institutions that are hamperingsuccessful urbanization: (i) absence of a comprehensivenational urban policy; (ii) absence of a lead agency forurban development; (iii) weaknesses in the fiscaldecentralization framework; and (iv) metropolitanfragmentation and weak mechanisms for inter-jurisdictional coordination.
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