The theory and practice of providing government services in metropolitan areas are subjects that have attracted a great deal of attention in the industrial countries but have been largely ignored in low- and middle- income countries. With urbanization and the growth of megacities, time is running short for these countries to develop a workable approach to governance and finance in metropolitan areas with several million persons.

This chapter assesses whether the fiscal decentralization model that has been so instrumental in decisions about structuring governance on a nationwide basis can be applied successfully in metropolitan areas. The first section considers the theoretical underpinnings for choosing among the various possible metropolitan governance structures. Next is a review of some of the urban governance models used around the world and a discussion of their advantages and disadvantages. The chapter concludes with a discussion of the range of policy reform options that would appear to be feasible.