The Impact of the Economic Crisis on Local Governments

The international economic slowdown has had  a deep impact on local governance. It challenges local governments to improve their economic policies and increase their efforts to promote local economic development. However,  local governments are also an important part of the solution to the crisis, by offering an effective lever for economic development. These are some  of the main conclusions of the recent report ‘the Impact of the Global Crisis on Local Governments’ of United Cities and Local Governments (UCLG).

The UCLG report provides a global vision on the impact of the economic slowdown on local governments. According to the UCLG, the crisis has had a direct influence on the size and composition of local government finances. However, this impact varies from country to country, depending on the level of decentralisation and exposure to global markets. National governments in countries with relatively low levels of decentralisation, for example, utilise most of the available sources to improve the economic situation on the national level. This leads to serious strains on and budget gaps in local government finances.

Nonetheless, there are some positive outcomes of the economic slowdown. The report highlights initiatives from countries such as Colombia, Mali and Chile. In these countries local leaders have seen the crisis as an opportunity to embrace strategic thinking about the future and to focus on building sustainable, adaptable and more distinctive local economies.

Since The Hague Academy is also convinced that economic growth can be stimulated at the local level, we offer a training course on Local Economic Development from 13 until 18 June 2010. The course will discuss, amongst others, how local governments can promote conditions for economic growth and job generation. Please click here for more information about the programme.

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