Solving Urban Challenges in Developing Countries : The Case of Lahore, Pakistan

In all successful modern economies, cities are the engines of growth and melting pots of diversely talented individuals. They offer inclusive environments with openness and access to opportunities, thus becoming the bedrocks of prosperity. On the contrary, many rapidly expanding cities in developing countries are marred poor public service delivery, traffic congestion and perverse spatial urban forms. In particular, unless the transportation infrastructure shortages are overcome through public investment, the well-documented economic benefits of agglomeration will continue to diminish. Notwithstanding the lack of resources available to governments in developing countries, this paper utilizes the case of Lahore, Pakistan to explore practical policy options for financing urban transportation infrastructure. After analyzing the much-hyped options of Public Private Partnerships and Municipal Finance initiatives, the paper concludes the following: First, governments must consider revamping urban land-use (zoning) regulations to create market-based solutions to the infrastructure challenge. Second, it is imperative that the underlying issues of poor governance and rent-seeking be addressed before any reforms can be fully implemented. Moreover, by gaining inspiration from urban economics and infrastructure finance literature, this paper enhances our understanding of policy dimensions of urban management in developing countries