Planning the Small City: Striking the Balance Between Big Projects and Local Agency

This blog is part of a series sharing findings from a research initiative of the JustJobs Network and the Centre for Policy Research that examined small cities in India and Indonesia. Read the introductory blog here.

Across the world, the nature of urban planning and city governance depends a lot on how power is distributed among tiers of government. India and Indonesia – the two countries that JustJobs Network and Centre for Policy Research studied in our small cities research initiative – have both pursued strategies to “decentralize” their governments and invest local authorities with more power.

Those policies and their effects, however, look different across the two countries. 

At the birth of Indonesian democracy at the end of the 1990s, the new government sought to hold together a turbulent country by creating a direct financial link between the central government and cities and regencies – the third tier of government after center and province. Not only do cities and regencies (kotas and kabupatens in Bahasa Indonesia) get direct fiscal transfers from the central government, they have relatively broad authority over issues like health, education, infrastructure, land, labor and capital investment. 

In reality, the central government holds the purse strings for many of these activities, and wields a lot of influence. But – in contrast to India – cities in Indonesia have the ability to bypass the provincial government on many important planning decisions. In India, despite a constitutional amendment in 1992, urban local bodies are not really empowered and important functions like planning and budget allocations are managed at the second tier of government, at state level. In general, municipalities have neither the resources nor qualified personnel to effectively govern cities. 

What does all this mean for life in small cities, their economies and their ability to forge meaningful employment pathways for young people? 

Our project showed us the pros and cons of the Indian and Indonesian models of decentralization. In terms of an accountable city government, to which citizens can make direct appeals when it comes to issues like service delivery, the Indonesian model is the clear winner.  Indonesian small cities and peri-urban areas fare much better – and are on par with big metropolitan areas – when it comes to water and sanitation, for example. In India, the quality of service delivery declines precipitously outside of the biggest cities.

On the other hand, the Indian model has better possibilities for promoting a regional approach to planning and leveraging rural-urban linkages to foster economic development, especially important for small cities. While Indonesian regencies and cities tend to view one another as competitors, the authority vested in Indian states enables a more integrated approach across large and small cities, towns and rural geographies. 

When it comes to citizen engagement and long-term economic planning, however, both countries witness the ability of top-down infrastructure projects to overwhelm attempts at participatory urban development. This may be obvious in the Indian cases, where state-level governments dominate. But even in Indonesia, where the local government has more authority, the flood of central government infrastructure spending tends to drown out home-grown priorities. This is particularly the case for small cities that are highly dependent on these resources for promoting economic development. Local governments in our Indonesian case cities mostly echoed central government ideas about how to grow their economies and improve the well-being of their citizens.

Despite their differing models of decentralization, both countries have a predominantly top-down mode of planning, and require fresh approaches for improving the planning and governance of India’s and Indonesia’s small cities.

First, it’s crucial to improve the way central government programs are translated at the local level – especially around employment, vocational training and school-to-work transitions. This requires central government programs that are flexible and adaptable enough to be molded to local needs and assets, and it requires strengthening the capacity of government in cities and districts to strategize the right uses of central government resources based on their knowledge of the local context. This is more about smart collaboration between higher and lower tiers of government than it is about decentralization.

Second, both countries need to invest in local, community-level leadership to complement the ambitions of major, top-down infrastructure plans. Rapid urbanization demands massive investment of public resources in these two countries – funds that lie with the central (and in India, state) government. But fostering participatory planning, for example through “barefoot planners” at the neighborhood level, can ensure that big infrastructure projects actually improve quality of life.

Finally, small cities in both countries could do much more to leverage the potential of rural-urban linkages in crafting long-run plans for a resilient local economy. India’s state and district governments are well-positioned to do this, but even in Indonesia, regencies and cities could adopt more collaborative approaches to harnessing complementarities in their respective economic development plans.