CITIES, JOBS AND LOCAL ECONOMIC DEVELOPMENT: A GUIDANCE NOTE FOR TASK TEAMS JUDY BAKER NARAE CHOI MANUEL GONZALEZ-SCHULER MAY 2023 DMITRY SIVAEV CITIES, JOBS AND LOCAL ECONOMIC DEVELOPMENT: A GUIDANCE NOTE FOR TASK TEAMS May 2023 Judy Baker Narae Choi Manuel Gonzalez-Schuler Dmitry Sivaev CONTENTS Acknowledgements.................................................................................................V 1. Introduction and Context...................................................................................1 1.1. Why Urbanization matters to job creation......................................... 2 1.2. World Bank approaches to supporting economic development and jobs in cities .................................................................5 1.3. Local Economic Development and Job Creation in Urban Development Projects.................................................................................. 9 2. Urban Jobs Portfolio Review........................................................................... 12 2.1. Urban jobs portfolio overview ........................................................... 13 2.2. Type of Urban Jobs and LED Interventions.................................... 16 3. Guidance to Task Teams..................................................................................24 3.1. Creating a narrative for project design...........................................24 3.2. Framing the typology of components and activities of urban projects related to Jobs and LED for temporal impact.......... 31 3.3. Measuring job creation and local economic development in Urban projects........................................................................................ 40 3.4. Facilitating conceptualization and design through Guiding Questions for TTLs...................................................................... 48 4. Conclusions and Future directions................................................................53 References.............................................................................................................. 54 APPENDICES Appendix 1. Intervention Typologie Examples.................................................59 Appendix 2. Analytical tools................................................................................62 Appendix 3. Indicators......................................................................................... 64 TABLES Table 1: Business lines of urban projects........................................................... 14 Table 2: Examples of narrative links of project activities to jobs in specific business lines........................................................................................... 15 Table 3: Type of urban jobs and LED interventions......................................... 16 Table 4. Defining SMART goal ............................................................................. 51 Table 5. Result indicators for Jobs, LED, and Economic Inclusion ..............52 CONTENTS iii CONTENTS FIGURES Figure 1: Urbanization is often closely associated with economic growth, but this is not always guaranteed ....................................................................... 3 Figure 2: What do Growth Coalitions can do to enable competitiveness factors in cities?........................................................................................................ 7 Figure 3: Urban Projects by Region (number, share)....................................... 13 Figure 4: Jobs and LED Relevant Projects by Region (number share) ....... 13 Figure 5: Urban Projects by Business Line (percent)....................................... 15 Figure 6: Jobs-Relevant Urban Projects by Business Line (percent) .......... 15 Figure 7: Model Theory of Change for different types of urban projects .. 26 Figure 8: Framing urban interventions for jobs and economic growth ..... 31 Figure 9. Power / Interest Grid for Stakeholder Prioritization...................... 50 BOXES Box 1: Approaches to supporting economic development at city level in the World Bank.........................................................................................................5 Box 2: Defining and operationalizing Local Economic Development Activities ................................................................................................................... 11 Box 3: Examples of subnational grants in IPF operations to support LED .19 Box 4: A typical LIPW intervention in an urban operation ............................22 Box 5: Georgia Regional Development Program ............................................32 Box 6: Upper Egypt Local Development PforR (P157395) .............................. 37 Box 7: Summary of tools measuring job creation........................................... 44 Box 8. A sample indicator to measure direct job creation impacts from the urban portfolio review................................................................................... 45 Box 9: Examples of Jobs measurement approaches from Project Documents............................................................................................................... 47 iv CONTENTS ACKNOWLEDGEMENTS This note was prepared by Judy Baker (Global Lead, GPURL), Narae Choi (Senior Urban Specialist, GPURL), Manuel Gonzalez-Schuler (Consultant) and Dmitry Sivaev (Urban Specialist, SLCUR) of the Global Practice for Urban Resilience and Land. The team would like to thank peer reviewers: Soraya Goga (Lead Urban Specialist, SAEU3), Tengiz Gogotishvili (Senior Urban Specialist, SCAUR), and Ayah Mahgoub (Senior Urban Specialist, SLCUR). The team would also like to thank participants of a focus group discussion on the topic including Steven Ajalu (Senior Urban Specialist), Yohannes Kesete (Senior Disaster Risk Management Specialist), David Mason (Urban Specialist), Tuo Shi (Senior Urban Specialist), Mohamed Nada (Senior Urban Specialist), Stefania Abakerli (Senior Urban Specialist) as well as Bernice Van Bronkhorst (Global Director) and Sameh Wahba (Director, Sustainable Development, Eastern Europe and Central Asia). CONTENTS v 1. INTRODUCTION AND CONTEXT C ities offer enormous opportunities for literature, these links have not always been economic growth and job creation. clearly laid out in GPURL project design. This When local businesses succeed, they may be due to several factors: economic create demand for workers, inputs, materials, growth it is not always considered a primary and additional services, increase productivity, goal of urban interventions; economic and ultimately contribute to increased incomes development is not always seen as a core and improved living conditions for citizens responsibility of municipal governments; and over time. Local Economic Development the economic impacts of urban interventions (LED) policies are at the heart of making on local economy and jobs may be difficult to local economies robust and resilient, and if capture making it complicated to demonstrate. well designed and implemented, can build The aim of this note is to help mainstream future opportunities for growth, job creation, the local economic development and jobs and poverty reduction. agenda in the World Bank’s urban portfolio Investing in local economic development by providing teams with a framework, tools, includes a range of priorities that enable and good practice examples for designing markets to work and create more demand urban projects with an LED/Jobs focus, for labor. Encouraging policies and business and a set of ‘narratives’ for our project regulations that are attractive to the private interventions as they relate to the Jobs and sector along with investments in public Economic Transformation (JET) agenda. The infrastructure, neighborhood improvements, note is divided in 3 sections intended to be basic service delivery, public spaces, and in used as a ‘toolkit’. Section 1 provides context people, all are important to spur economic on how urbanization links to local economic development and job creation. Policies and development (LED) and job creation. It draws programs specifically aimed at economic from both the literature and the World Bank’s inclusion are also critical to ensure that analytical work on urban and economic those with limited skills and experience, or development, discusses how cities relate marginalized groups, can fully benefit from to business development and economic LED policies. growth, while presenting jobs and economic Though the linkages between urban activity as a cornerstone of urban dynamics. investments, local economic development, Section 2 summarizes the findings of a and job creation are well articulated in the recent portfolio review of GPURL projects CONTENTS 1 carried out through the lens of jobs and LED of global GDP is generated in cities. perspectives. Section 3 provides guidance as Empirical studies show that economic growth well as practical tools to teams particularly tends to be positively associated with job on framing interventions and project design creation (DCED n.d.).1 This also explains for impact, outlining specific narratives for the economic dynamism of cities observed urban projects and jobs, and measuring job since the start of the industrial age: as cities creation in our projects. become centers of growth they demand labor to fulfill their economic potential – workers 1.1. Why Urbanization matters to in response to this move to cities seeking job creation jobs, livelihoods, and better living conditions. Theoretically, jobs are created in cities when The association between urbanization and firms are located closer to one another and economic growth has been extensively are better connected to other market players studied and demonstrated in the literature. such as workers, vendors, and potential Cities are seen as “engines of growth and customers. The benefits of proximity defining prosperity” (Duranton 2008), as thriving agglomeration economies (E. L. Glaeser 2010) production-and-consumption centers translate into productivity gains, reduction (Ianchovichina, Jedwab, and Haslop 2022) of transaction costs, higher revenues, and and as innovation, culture, and creativity hopefully new and better jobs (Sanchez-Reaza, hubs (UNESCO and World Bank 2021), Grover, and Charles 2016). The fundamental among other conceptual approaches. Today, economic potential offered by economies of modern metropolises have become poles of scale in cities urbanization can contribute to attraction for millions of people with diverse a greener, more sustainable, and inclusive cultural and professional backgrounds, who growth model, particularly through increased move in looking for opportunity, better living productivity and innovation if managed well standards, and new beginnings. The arrival of (World Bank Group 2022). newcomers brings new talent (know how) and This phenomenon is true for urban economies traditions (culture) that enrich the recipient in most developed countries, where most of community’s local markets and lifestyle. This the new jobs are created in cities. Between includes a wide range of profiles from artists 2006 and 2016, job creation was found to to scientists; from corporate executives to be largely concentrated in capital regions civil servants; from entrepreneurs to rural from a sample of OECD economies. In 15 migrants; from female heads of households out of the 27 OECD countries, more than 30 to retired seniors; from young professionals percent of net employment was generated to refugees among other groups. Not in the capital region. In the cases of Japan, surprisingly, more than half of the world’s Finland, Denmark and Ireland, for instance, population live in cities today (over 4.3 this figure went beyond 80 percent (OECD billion) (UN-DESA 2019) and more than 80% 2018b). Moreover, World Bank estimates 1 Khan (2007) finds that employment elasticity of GDP growth in developing countries to be 0.7. Kapsos (2005) finds that for every 1pp of ad- ditional GDP growth, total employment has grown between 0.3 and 0.38 pps in three different periods from 1991 to 2003. 2 CONTENTS indicate that 75 percent of new private emerging economies (see Figure 1) (World sector jobs were created in cities between Bank 2012). The narrative of urbanization 2000 and 2012, considering a sample as a pathway towards economic prosperity comprised of the 750 largest cities in the is thus not systematic for several cities in world (Kilroy, Mukim, and Negri 2015). emerging economies. These asymmetries are partly explained by low-capital investment Although no country has reached higher in urban infrastructure, poor development or upper-middle income levels without of tradable industries, high fragmentation urbanizing, the relationship between of urban landscapes, and weak fiscal and urbanization, economic growth, and jobs is land management institutions, among not always obvious in the developing world other reasons (UN-Habitat 2017b). Hence (UN-Habitat 2017a). Figures from Africa show the existence of poor megacities –such that several countries are not capitalizing on as Kinshasa, Karachi, Dhaka or Lagos – the gains of urbanization, as they witness with limited state capabilities to address incipient output growth or even declines metropolitan challenges often described in of GDP per capita when urban population the literature as the “demons of density”2 (E. increases. That is the case of developing Glaeser 2012). In most of these cities, job countries like Liberia, Madagascar, Nigeria creation struggles to keep up with accelerated and Zimbabwe. On the other hand, countries population growth and rapid urbanization, like Cameroon, Ethiopia, Ghana, Guinea- triggering thereby higher unemployment Bissau and Kenya follow the positive path of rates and lower levels of labor productivity. 2 Cost of living, crime, congestion, pollution, and epidemic-prone diseases. Figure 1: Urbanization is often closely associated with economic growth, but this is not always guaranteed a. East Asia and Pacific b. Sub-Saharan Africa 75 75 share of urban population, % share of urban population, % Liberia 60 60 Cameroon Malaysia Nigeria 45 45 Ghana Indonesia China Guinea- Bissau 30 30 Thailand Zimbabwe Vietnam Madagascar 15 15 Kenya Ethiopia 0 0 80 800 8,000 80 800 8,000 GDP per capita, constant 2000 US$ GDP per capita, constant 2000 US$ Source: WDI. Taken from the World Bank. 2012. World Development Report 2013: Jobs Note: Changes in GDP from 1985 to 2010. CONTENTS 3 A similar asymmetry can be observed in see the possibilities to grant access to more developed countries, where cities better economic opportunities to the are not able to attract and/or retain talent population. Yet global experience shows and shrink as a result (e.g. municipalities in that opportunities to grow a competitive former Soviet Republics, etc. Such decline economy exist beyond major cities, and is mostly explained by (de)industrialization, smart policy and investment decisions suburbanization, ageing, outmigration, low of local governments and broader fertility rates, political transitions, major communities can lead to emergence of environmental disasters or war (European un-expected growth champions. (Kilroy, Union, 2022). Mukim, & Negri, 2015) Regardless of conditions, LED is a key policy Ⱚ In FCV contexts while the competitiveness tool to spur economic growth, revitalize urban agenda might seem premature, urban areas, cushion the economic impacts of interventions that generate employment external shocks (e.g. conflict, climate change, (for example through public works) and pandemics, etc.) and promote recovery livelihood opportunities can help to through job creation. Even though the notion mitigate long lasting divisions and social of the critical role of cities for conversion of tensions. For example, the Magdalena urbanization into prosperity remains central Medio Program in Colombia was for understanding the importance of urban critical for stabilizing conflict affected jobs and urban economic development as a communities, (and was supported by the major development goal – as development World Bank in the EU) included support challenges evolve, so does the relevance of for demand driven intervention that this agenda: may unlock economic opportunities for Ⱚ Within broader territorial development local population, e.g. skills development approaches, urban economies remain programs. (World Bank, 2016) critical for addressing challenges of In most cases the thinking behind urban regional inequality and lagging regions. economic development interventions is Even in lagging peripheral contexts anchored on central ideas of competitiveness it is cities that offer better access to – identifying and utilizing local competitive employment and are more likely to have advantages to bolster that perspective of assets that may have a competitive growing internationally competitive export- advantage and thus are natural locations oriented industries. However, in the world to focus policy efforts. (Farole, Goga, & where automation is making a lot of traditional Ionescu-Heroiu, 2018) economic development pathways centered Ⱚ LED thinking is also relevant to cities on industrialization less inclusive, and with beyond the large metropolises or rapidly job quality and pay becoming a bigger growing and expanding cities. In fact, concern, new ways of addressing these smaller stagnating or even shrinking issues is needed. Such goals might focus, cities might benefit more from this for example, on expanding business support type of support. Such cities often lack and infrastructure investments, rather than governance capacity and experience to tax financial incentives. (Rodrik, 2022). 4 CONTENTS 1.2. World Bank approaches and population growth, multiple approaches to supporting economic to addressing the jobs agenda have been development and jobs in cities developed and are used by the World Bank and practitioners. These approaches are Given the importance of fostering job summarized in Box 1 and are elaborated creation along with economic performance with application to the urban context below. Box 1: Approaches to supporting economic development at city level in the World Bank Ⱚ JET (Jobs and Economic Transformation) aims to establish the conditions for job-creating private investment and raise the capacity of workers and entrepreneurs to enhance their productivity and access to job opportunities. Job creation can come from direct and indirect investments. Ⱚ Local Economic Development aims to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and job creation. Ⱚ Competitive Cities approach establishes an aim to help cities successfully facilitates its firms and industries to create jobs, raise productivity, and increase the incomes of citizens over time. Competitive cities approach can be seen as a subset of LED, that acknowledges relevance of a broader set of policy intervention to the goal of promoting the local economy, focuses on the role of the local governments, and critical importance of public private collaboration. In many ways the competitive cities approach builds on ideas of LED to make them more practical and operational. Ⱚ Economic Inclusion Programs are a bundle of coordinated, multidimensional interventions that support poor individuals, households, and communities in their efforts to increase their incomes and assets while working toward the long-term goal of economic self-sufficiency. At the local level, cities can support boost job growth and secure employment local economies through local economic opportunities for residents. On the demand development (LED) initiatives3, which aim to side, city governments can successfully 3 Concept definitions on LED are provided in the next section (Scope of Work). CONTENTS 5 attract firms and encourage local business desired results. This implies the creation development through business tax of multi-stakeholder alliances –say ‘Growth incentives; incentive zoning and land use Coalitions’ (Kilroy, Mukim, and Negri 2015)– regulation; efficient business licensing to gain greater insight into challenges facing and construction permit processes; SME the local economy from the viewpoint of the support and grant programs; investments in private sector, obtain additional capacity municipal infrastructure to prioritize basic by leveraging expertise that exists outside service delivery in a manner that creates private sector and private finance, establish opportunities for business growth; and, of broad ownership and legitimacy of decision- course, by respecting the rule of law and making processes, and build new institutional ensuring public safety. On the supply side, capabilities (Wahba, Mukim, and Levine city governments can accompany these 2018). In consequence, city governments efforts by supporting workers and job seekers may seek to strengthen ties and team up through labor insertion, on-the-job training, with the national government –institutional vocational education, and training (VET), and coordination– as well as the private sector top-talent attraction programs, among other –cross-sector collaboration– to shape and alternatives. The World Bank summarized the advance an effective LED strategy, one that possible areas of intervention for advancing is able to improve business climate, unleash local economies in four groups, where economic growth locally and create/secure actions that usually are within authority and jobs in urban settings (See Figure 2). capacity of city governments are defines as “The Mayors wedge” (Figure 2; Kilroy, Even beyond LED contributions of local Mukim, and Negri 2015). government, many core responsibilities of local government shape the business However, LED strategies initiated locally are environment and affect economic potential often not enough, and cities may require as well. This includes basic infrastructure additional support and cross-sector alliances and services which can attract investors, to succeed. Recent studies in South Africa, health and education services that can affect for instance, found that unemployment and whether talented people want to live in a city, poverty levels remained persistently high and processes for how business licenses, in municipalities where LED interventions land titles and construction permits are were carried out (Mashabela 2020; Mabece issued – all of which is a critical aspect of 2017). Authors recognize that part of the problem had to do with poor understanding business environment. Furthermore, recent of LED concepts, lack of adequate funding, research shows that urban form, which and low capabilities of responsible agencies. is to a large extend a product of land use Ensuring broad ownership and a good regulation and planning and infrastructure understanding of the LED policies by the investment - have significant impact on city’s public and by private sector actors, and economic performance (Harari, 2020), as effective implementation mechanisms and does its physical beauty and attractiveness delivery systems is crucial to achieving the (Carlio, Saiz, 2019). 6 CONTENTS Figure 2: What do Growth Coalitions can do to enable competitiveness factors in cities? Institutions and Infrastructure & Skills and Enterprise Support Regulations Land Innovation and Finance National Macroeconomic Highways, roads, Public education Export and trade government management airports, ports system facilitation National investment Power grid Immigration policies Access to finance and trade policy Regulations for to attract talent support schemes Legal framework infrastructure R&D funding, and property provision, such as support provision, protection PPP laws schemes Industry-specific Healthcare taxes and regulations Mayor’s Wedge City Municipal taxes and City roads Talent attraction Business support government incentives and public programs services Zoning and land use transportation Cluster Investment policies, policies Water and development promotion, and Construction sanitation support aftercare permits; business Public safety Linking firms with Facilitation of seed, licenses Housing/slum academia catalyst, and risk Public safety and upgrading capital law enforcement Private Standards and Vocational training Business sector certification programs associations and associations R&D support networks Market intelligence and business information Equity and debt Source: Kilroy, Mukim, and Negri 2015. The unprecedented effects of the COVID-19 8.3 percent in the same period, reaching an outbreak on urban economies and jobs amount equivalent to 4.4 per cent of global intensified the need of government action GDP (ILO 2021). The UN Secretary General to build and follow the path of a resilient asserted that impacts of the COVID-19 and inclusive recovery. ILO estimated that pandemic are falling “disproportionately between 2019 and 2020 there were global on the most vulnerable”. These groups employment losses of 114 million jobs, mostly specifically refer to “people living in poverty, affecting women and youth. Employment the working poor, youth at risk, women and losses were highest in the Americas, and children, persons with disabilities, and other lowest in Europe and Central Asia, where marginalized groups” (UN News 2020). job retention schemes have supported the As with previous crises, the economic reduction in working hours. Global labor impacts of the pandemic did not hit local income was estimated to have declined by communities equally, exacerbating structural CONTENTS 7 inequalities. Disparities observed in terms of to climate change, and technological income, employment opportunities, access to change, among others. These programs healthcare and education services, universal are usually a combination of cash or in-kind protection systems, housing, basic services, transfers, skills training or coaching, access and even food highlight the importance of to finance, and links to market support urgent and locally tailored actions (OECD initiatives. Through the examination of more 2020b). As shown in an OECD study on than 200 EIP in 75 countries, authors were intra-urban inequalities in European cities, able to determine that EIP are on the rise, people with highest income tend to live more reaching over 20 million poor and vulnerable concentrated in specific neighborhoods households, and benefitting nearly 92 million than others. In divided cities there are gaps individuals (Andrews et al. 2021). Whether and invisible boarders producing exclusive they target female-headed households in spaces and concentrations of disadvantaged Niger, a displaced population in Afghanistan, population groups, for example, migrants or an indigenous group in Peru (Pangestu and other minority groups often live in 2021), EIP seek to increase the assets poorer neighborhoods with lower access to and income of the most vulnerable by employment opportunities (OECD 2018a). In leveraging social safety nets. They also play short, the effects of global shocks–such as a key role in the quest for better and more the COVID-19 outbreak, inflation or climate inclusive jobs by enabling access to earning change– can exacerbate existing societal opportunities for the poor, empowering disparities observed in cities. Moreover, the women, and providing economic options for challenges of digitalization and technological youth-at-risk. The approach further goes change are particularly relevant for urban on to apply an urban lens and identifies a economies given the implications of number of urban specific constraints to automation in jobs, skills, and wages (James economic inclusion such as congestion and Manyika et al. 2017), which can deepen the strain on public utilities, lack of affordable socio-economic gap here discussed even housing, insecure housing tenure, exposure more. to crime, health, economic, and climate risks, and relatively lower levels of social cohesion. Therefore, the importance of Economic Opportunities for economic inclusion are Inclusion Programs (EIP) as vehicles to also identified including possibilities to take the most vulnerable out of extreme integrate into markets, and more earning poverty in a post-pandemic recovery opportunities, and better services than in context. According to a recent World Bank’s rural areas. Migrants are a group that may report on the state of economic inclusion face particular legal and regulatory barriers (SEI), governments around the world are affecting their opportunities for urban increasingly scaling up EIP initiatives in their livelihoods (Avalos, et. al, 2021). anti-poverty strategies to address challenges associated with urban sprawl such as spatial After devising short-term and crisis disparities and marginalization within cities, management responses, cities are well- human capital development gaps, adaptation positioned and better equipped to drive long- 8 CONTENTS term recovery strategies. For example, they 1.3. Local Economic Development have undertaken affordable housing and and Job Creation in Urban SME support programs to close structural Development Projects inequality gaps; they are encouraging public investments and policy incentives to In the context of the multiple links between promote cleaner forms of urban mobility, urbanization and jobs presented above, energy, and construction to mitigate the urban projects approach job creation effects of and adapt to climate change; and local economic development through and they are systematizing ICT tools and multiple pathways. Urban interventions are innovative practices to digitalize operations cross-sectoral by nature and usually require in different city hall departments to enhance the engagement of key stakeholders with municipal management and service delivery different backgrounds, capabilities, and (OECD 2020a). In sum, cities are on the areas of expertise (i.e. government, private front line of Covid-19 response (Wahba et sector, civil society, scientific community, al. 2022) and have a critical role to play academia, etc.) to succeed in design and in advancing greener, more resilient, and progress towards implementation. GPURL inclusive recovery initiatives. urban projects are commonly defined as “bundles of interventions” with PDOs that Despite these macro-considerations, at typically include one or more of the following the operational level the link between objectives: (i) infrastructure improvements urban interventions and jobs is still not (physical achievement), (ii) access to always clear. A main challenge related to basic services (social achievement), (iii) incorporating jobs and/or LED contents into enhancement of subnational governments’ urban operations has to do with their weak performance (institutional achievement), attributability. Teams identify challenges and/or (iv) boost of economic activity and in demonstrating the links between how competitiveness (economic performance). urban projects contribute to job creation. Local Economic Development activities are For example, while social and physical at the core of job creation efforts in cities infrastructure achievements related to (see Box 2 for definitions of LED activities). urban upgrading interventions have been Jobs then constitute the primary outcome largely documented, to date there is not yet variable that teams may expect/seek to a clear understanding of the actual economic impact when thinking about the connections impacts on jobs and economic activity. Yet between urban interventions and economic the reality of complicated and evolving activity (discussed further in Section 3.1). development challenges that the world is The discussion, however, should not be facing, the policies effecting all aspects of limited to the number of jobs (or percentage development – point to a growing relevance of people employed) during or after urban and importance of urban jobs and LED and project execution. Job dimensions are much thus a need to strengthen this aspect of broader and complex than that and include World Bank urban portfolio. aspects related to the following: CONTENTS 9 Ⱚ Income (i.e. wages, subsidies, tax (positively) impact LED and jobs in different benefits, etc.): how are salaries or ways and dimensions, beyond the single yet rents –directly or indirectly– affected legitimate challenge of job creation. The by urban interventions? For instance, sections that follow in this note provide how do neighborhood improvements further details and approaches on how to impact landlord revenues and/or rental address and analyze these connections, and affordability? How do the development/ what can be done to help GPURL teams performance of transport systems affect articulate and embed technical knowledge workers’ income or cost of living? into impact-focused operations. Ⱚ The quality of newly created jobs (i.e. However, before this note delves into the social security, tenure, health insurance, details of how urban interventions can etc.): Are short-term jobs associated become a catalyst for economic growth with public works always formal jobs? and job creation, it is important to highlight Are urban improvements –like street inherent risks of local economic development revitalization projects– prone to promote interventions that are (at least in part) place or reduce labor informality? based in their nature: Ⱚ The talent and skills demanded by Ⱚ Not every place has clear economic those jobs. (i.e. know how, technical potential or competitive advantage that competences, soft skills, etc.) Do those can be benefit from policy interventions affected by urban projects have the in the short or medium term. For example, required skills to be employed? Is there this couald include places where adequate a connection between urban upgrading human or physical capital do not exist, and workers’ employability in the areas where there is political instability, or of intervention? where climate risks may be extremely high. Ⱚ Accessibility of the jobs (i.e. physical and digital connectivity). How much time do Ⱚ Place based interventions may result in employees spend commuting to and from displacement of economic activity from work every day? Are cities equipped with other locations, thus benefiting the the right infrastructure –public transport target locations at the cost to a different systems and digital infrastructure– to one and producing limited net gains. connect firms with workers and job It is important to consider that potential of seekers? such suboptimal outcomes at the stage or These are the kind of thought-provoking project design and also account for them in questions that can motivate an in-depth monitoring and evaluation frameworks and discussion on how urban projects can economic analysis of projects. 10 CONTENTS Box 2: Defining and operationalizing Local Economic Development Activities Local Economic Development (LED) is a concept that is more than 20 years old, and it is traditionally defined as follows: � LED is the process by which public, business, and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation. The aim is to activate the capabilities of an area to harness its economic potential and improve quality of life for all in the community. (World Bank, 2002) � LED is a participatory process where local people from all sectors work together to stimulate local commercial activity resulting in a resilient and sustainable economy. It is an approach to help create decent jobs and improve the quality of life for everyone. (UN-Habitat, 2004) � LED means more than just economic growth. It is about promoting participation and local dialogue, connecting people and their resources for better employment and a higher quality of life (ILO, n.d.) In a nutshell, formal definitions for Local Economic Development tend to include aspects of multi-stakeholder engagement, economic activity, jobs, and better living standards for all the residents of a particular area, namely a community. In the context of the GPURL portfolio, LED can be seen as an umbrella term for a large group of interventions that includes most (if not all) of these actions. CONTENTS 11 2. URBAN JOBS PORTFOLIO REVIEW T o better understand how GPURL operations into urban, disaster risk approach job creation, local economic management and land groups can only be development and economic inclusion, done manually based on the project title, a review was carried out for GPURL FY22 development objective (DO) and components. portfolio (hereafter urban jobs portfolio A total of 111 urban operations (hereafter review). By discerning types of interventions the urban portfolio) were identified in the on jobs proposed by urban operations GPURL FY 22 portfolio, including “urban as well as the underlying analytical and resilience” operations. The urban portfolio operational justification and methodology was reviewed with a rapid scan of project to monitor the progress and impact of such documents5 using key words: job, livelihood, interventions, the intention is to help GPURL employment, income, wage and labor. task teams: Sections of the project documents that contain the above key words were reviewed � Identify and categorize opportunities further and relevant information was collated for job creation or facilitation in urban in a spreadsheet consisting of three pillars: operations (i) relevant analysis; (ii) proposed action and � Improve the design of jobs and LED (iii) monitoring indicators. components of urban operations The collated data were analyzed to assess � Propose a set of narratives on job projects’ degree of relevance to economic creation and LED in cities, drawing from development and jobs and categorize the existing analyses projects into four groups of relevance: high, � Understand any operational and medium, low and no. analytical needs of the teams, and plan � High: Project documents include at the global level to provide necessary strong narratives on jobs, direct action support accordingly. to facilitate job creation or support The GPURL FY22 portfolio consists of livelihoods and indicator(s) on jobs. 228 active projects.4 Classifying GPURL � Medium: Project documents discuss 4 “Portfolio” refers to projects that are being implemented and thus varies depending on when the data is retrieved. The portfolio data for this review was downloaded from Standard Reports – For Operations, for GPURL on August 22, 2021. 5 Project documents include project appraisal document (PAD), program document (for Program-for-Results and development policy opera- tions), project paper (PP for projects that have gone through restructuring or additional financing). 12 CONTENTS jobs and include related actions and/or indicators. The subsections below describe indicator(s). the share of the urban portfolio with “jobs � Low: Discussion or analysis of jobs is and LED relevant projects” by region and weak and jobs effect of project activities business types. are indirectly implied (e.g., infrastructure 2.1.1. Geographic Breakdown investment is expected to create Africa, East and South Asia dominate the temporary jobs). urban portfolio overall. The Africa region � No: Project documents do not include (AFR) has the largest share of the urban key words or relevant actions on jobs. projects (28%), followed by the South Asia Region (SAR) and East Asia and Pacific 2.1. Urban jobs portfolio region (EAP), which share around 20 percent overview of the urban projects each (Figure 4). The rest of the urban portfolio is evenly spread Of 288 GPURL projects in FY22, 111 projects over the remaining regions: Eastern Europe (38.5%) are urban. Half of the urban portfolio and Central Asia (ECA), Latin American (55 of 111 urban projects or 49.5%) are and Caribbean Region (LAC) and Middle assessed to have high to medium degree of East and North Africa (MENA). In terms of jobs relevance. Nearly two thirds of them (33 the instrument type, 86.5 percent of urban of 55 projects or 60%) are highly relevant to projects are investment project financing job creation. They qualify as “jobs and LED (IPF). There are 14 program-for-results relevant projects.” In comparison, projects (PforR) operations (12.6%) and 1 developing with medium jobs relevance tend to present policy financing operation in the FY22 urban weaker jobs analysis or miss dedicated portfolio. Figure 3: Urban Projects by Region Figure 4: Jobs and LED Relevant (number, share) Projects by Region (number share) SAR; SAR; 8; 14% AFE; 23; 21% AFR; 13; 23% 31; 28% MNA; 7; 13% MENA, 11, 10% LCR; AFW; 6; 11% 10; 18% LCR; EAP; 11; 10% 23; 20% ECA; EAP; ECA; 5; 9% 7; 12% 12; 11% CONTENTS 13 The regional share of jobs and LED relevant 2.1.2. Urban Jobs Portfolio by projects (Figure 4) shows that AFR, combining Business Lines both Africa East (AFE) and Africa West (AFW), Urban projects are categorized in four has a higher share of jobs and LED relevant groups of business lines, according to their projects (41%) than its portfolio size (28% of Development Objective, assigned sector and the urban projects in total). Likewise, MENA theme codes, and components. It should and LCR have a slightly higher share of jobs be noted that most urban projects have and LED relevant projects than their total integrated multiple elements of the main business lines and thus their categorization share of the urban portfolio (13% vs. 10% indicate the most prominent feature per for MENA, 11% vs. 10% for LCR). This is also its share of the total lending or by the based on a simple counting of jobs and LED dominant sector and/or theme codes. Urban relevant projects, which does not reflect how infrastructure and service delivery accounts sophisticated a project’s jobs components for a third of the urban projects as the main are or the amount allocated to activities. The feature and is also embedded in many other quality aspect of the urban jobs portfolio is business lines. Therefore, it is presented as a discussed below in Section 2.2. cross-cutting business line. Table 1: Business lines of urban projects Business line Sub business line # of projects Urban institution building 21 City Management, Governance and Financing Urban planning6 8 Regional development / Industrialization / Financing7 8 Territorial and Spatial Development Tourism 6 Urban resilience 14 Sustainable, Resilient and Climate Smart Cities Solid waste management 8 Housing 7 Housing and Inclusive Cities Slum upgrading 5 Cross-cutting Urban infrastructure and service delivery 34 (Total) 111 6 Urban planning projects include those focused on transit-oriented development (TOD), public space development (1), neighborhood upgrading (2), land use planning (2), some of which can be moved to under the territorial and spatial development business line 7 This category includes those focused on regional economic development (2), infrastructure financing (1), green financing and innovation (1), eco-industrial park (1) Nearly a third (31%) of the urban projects resilience (with a key focus on flood risk provide urban infrastructure and services management) takes up another 13 percent and another 20 percent focus on urban of the urban projects with the rest relatively institutional building (Figure 5). Urban evenly shared across various business lines. 14 CONTENTS Figure 5: Urban Projects by Figure 6: Jobs-Relevant Urban Business Line (percent) Projects by Business Line (percent) Slum upgrading Slum upgrading 5% Urban infrastructure and 8% Urban 6% service delivery infrastructure and 8% service delivery Housing 23% 7% 31% Housing Solid waste management 11% Solid waste management 13% Urban resilience Urban resilience Urban 19% Urban planning 11% planning 7% Tourism 19% Urban institution Economic 9% building 5% development 4% Economic 7% Urban institution 7% development building Tourism It is noteworthy that among the urban Housing take up nearly 10 percent each of projects that have high to medium jobs the jobs and LED relevant portfolio of urban relevance (55 of 111), several subsectors operations. They provide a strong narrative account for a higher share than in the urban on jobs, benefiting from concrete data for portfolio overall indicating they have a higher the industry or sector in terms of number of potential for impact in jobs and LED. Notably, jobs, share of GDP, contribution to poverty Tourism, Solid Waste Management and reduction and other spillover effects. Table 2: Examples of narrative links of project activities to jobs in specific business lines Links to Jobs narrative Project examples Subsector: Tourism Ⱚ Sector wide employment and industry numbers at national and Ⱚ Armenia Local Economy and Infrastructure global level more generally (tourism and travel) Development Project (P150327) Ⱚ Tourism links to poverty reduction with estimates of low- Ⱚ Albania Project for Integrated Urban and income population working in the sector Tourism Development (PIUTD) (P155875) Subsector: Housing Ⱚ Mexico Improving Access to Affordable Ⱚ Housing sector’s share of GDP, share of labor, estimated job Housing Project (P157932) creation, links to employment and poverty reduction Ⱚ First Tamil Nadu Housing Sector Strengt- Ⱚ Links to demand for construction (job creation) and increased hening Program Development Policy Loan wages for unskilled labor in rural areas. (P172732) Subsector: Solid Waste Management Ⱚ Direct employment through solid waste collection, and construction of landfill. Indirect employment through demand Ⱚ Liberia Cheesemanburg Landfill and Urban or purchase of additional equipment and maintenance and Sanitation Project (P159961) repair services CONTENTS 15 Of these, tourism appears as a strong relevant interventions in the projects with driver of LED in other business lines (4 high to medium relevance (55 projects) additional projects), and tourism projects into two main types: (i) projects with Local all have high jobs relevance/impacts. Solid Economic Development interventions Waste Management is another sector which (LED) (40 projects) and (ii) projects with provides skills development for informal Labor-Intensive Public Works interventions workers to transition to safer and more (LIPW) (15 projects). The number of urban secure livelihoods, in addition to investing in projects under each type (LIPW and LED) is improved waste management infrastructure summarized in Table 3. and service systems. It is also a subsector LED interventions refer to a rather diverse with a strong focus on women and youth’ group of project activities thus they are further economic empowerment and inclusion. Many categorized (in a manner consistent with housing projects in the portfolio present typology presented in Section 3.2), namely: (a) a compelling analysis showing the housing direct private sector support and incentives; and construction industry’s job-generating (b) urban infrastructure for economic potential and spillover effects on the overall activities; (c) LED strategies, business economy. However, actual project design is environment improvement, government less directly related to job creation or LED capacity building; (d) skills development, promotion – which can be an area for further livelihood and business support, and (e) LED strengthening. incentives for local governments, particularly in the context of performance-based 2.2. Type of Urban Jobs and grants. It is important to highlight that LED LED Interventions and LIPW should not be seen as two even categories of interventions, as the first one Further analysis of the portfolio focuses on is much broader than the second. However, the type of interventions that are proposed this is a useful categorization for analyzing in the project design. We break down all the portfolio the way it looks now. Table 3: Type of urban jobs and LED interventions Intervention Type # Projects *LED intervention type Project examples Nepal Governance and Infrastructure Project 1. LIPW 11 (P163418) (Box 3) Cameroon: Inclusive and Resilient Cities LIPW+ 4 Development Project (P156210) (p 16) 2. LED 40 Number of LED inter- Total By type A B C D E ventions in a project Haiti Cultural Heritage Preservation and Tourism Sector Support Project (P144614) (p 16) Georgia: Third Regional Development Project 4 interventions 3 3 Y Y Y Y (P150696) (Box 5) Kyrgyz Republic Regional Economic Development Project (P167428) 16 CONTENTS Table 3 Intervention Type # Projects *LED intervention type Project examples Ethiopia Urban Institutional and Infrastructure 3 interventions 5 2 Y Y Y Development Program (P163452) (Box 10) China Second Gansu Cultural and Natural 1 Y Y Y Heritage Protection and Development Project (P149528) India: Uttar Pradesh Pro-Poor Tourism 1 Y Y Y Development Project (P146936) Upper Egypt Local Development PforR 1 Y Y Y (P157395) (Box 6) China: Gansu Revitalization and Innovation 2 interventions 9 1 Y Y Project (P158215) Tanzania: Boosting Inclusive Growth for Zanzibar 4 Y Y - Integrated Development Project (P165128) Albania: Project for Integrated Urban and 1 Y Y Tourism Development (P165128) El Salvador Local Economic Resilience Project 1 Y Y (P169125) (Box 8) Jordan: Municipal Services and Social Resilience 2 Y Y (P147689) (Box 4) Argentina Integrated Habitat and Housing 1 intervention 23 6 Y Project (P159929) (page 17) Bangladesh: Competitive and Livable City of 5 Y Karachi Project (P161402) See section below on skills, livelihood, and 11 Y business development support for examples Mozambique Urban Development and 1 Y Decentralization Project (P163989) Number of projects per LED intervention 5 19 14 20 7 type *LED intervention types A. Direct private sector support and incentives B. Urban infrastructure for economic activities C. LED strategies, business environment improvement, government capacity building D. Skills and business development, and livelihood support E. Incentives for LED 2.2.1. Local Economic of LED interventions are included in one Development (LED) project to show which interventions feature prominently. It should be noted, however, The 40 projects with LED interventions that the number of LED intervention types demonstrate varying degrees of design does not necessarily indicate the level of complexity, often including a few different LED sophistication of a project. How deeply types of LED interventions in a given design. LED is mainstreamed in a project design, Table 2 shows how many of the five types even with fewer intervention types, requires CONTENTS 17 a qualitative examination and some of the and livelihood support (type D) are most boxes across this note present detailed case common among 40 LED projects, featuring studies of selected projects to support this 19 times, 14 times and 20 times respectively. point. Given that most urban projects invest in basic infrastructure, it is understandable Three projects, Georgia: Third Regional Development Project (P150696), Kyrgyz that many of them can be geared towards Republic Regional Economic Development or linked to LED. The Argentina Integrated Project (P167428), and Haiti Cultural Habitat and Housing Project (P159929) is a Heritage Preservation and Tourism Sector good example of making a direct investment Support Project (P144614), support four in a socio-economic facility in intervention different types of LED interventions. On areas by supporting and developing NIDO the case of the Haiti project this includes: (Centers for Inclusion and Development upgrading of the physical cultural heritage of Opportunities or “Núcleos de Inclusión sites and touristic circuits in the city center y Desarrollo de Oportunidades”) that of Cap-Haïtien (type B), strengthening of provide tools, training and networking that the capacity of the Ministry of Tourism enable people to access more and better and destination management organizations employment and production opportunities. (DMOs) (type C) and enhancing the local It is noteworthy that there are not emerging engagement in cultural tourism (type A, examples of projects that are utilizing D), which provides Community Events and performance grants, both in Investment Tourism Grants to Beneficiaries for carrying Project Financing (IPF) and Program for out Sub-projects to develop tourism related Results (PforR) designs, to incentivize services and products as well as other local governments to improve the business support.8 (Detailed discussion of Georgia environment, promote LED, and develop Regional Development project and its private institutional capacity (type C and E). These sector support component is offered in box designs usually (i) include infrastructure and 5.) Five projects have included three LED services that support economic activities interventions in diverse combinations across in the eligible expenditure (ii) and include five types. 9 out of 40 projects have two LED indicators on the role and capacity of sub- interventions and over a half (23 of 40) have national governments/municipalities in one LED intervention type, of which skills promoting LED as part of the performance and business development and livelihood assessment or minimal access criteria. support (type D) stand out (11 of 23). This Operations with performance grants also type is detailed further below. often include technical assistance activities Of LED intervention types, urban that aim to enhance the institutional capacity infrastructure for economic activities (type and performance. The Upper Egypt Local B), LED strategies, business environment Development PforR (P157395) in (Box 6) improvement, government capacity building is a illustrative and a particularly innovative (type C) and skills and business development example of PforR operations – as it has a 8 This project has been affected given recent events in Haiti 18 CONTENTS much stronger focus on LED outcomes and used municipal or subnational grants (some relevant capacity building, compared to competitive or performance-based) to help more traditional PforR operations that tend local governments to identify subprojects to focus on service provision investment with high LED potentials in close consultation and government capacity even if they cover with the private sector (see Box 3 for an aspects of LED. Several IPF operations example from several countries). Box 3: Examples of subnational grants in IPF operations to support LED Sri Lanka Local Development Support Project (P163305) The Sub-Component 2.2 Economic Cluster Support will finance identification and provision of infrastructure that supports local economic development such as roads, minor irrigation, markets, IT connectivity, rural electricity etc. Ministry of Internal and Home Affairs and Provincial Councils and Local Government (MIHAPCLG) will allocate funds to participating provinces to implement this component. The provinces will work with LGAs, businesses and other stakeholders to analyze potential economic clusters or value chains that can benefit from infrastructure investments that cut across administrative boundaries of multiple LGAs. Investments will be selected based on three compulsory basic criteria: (i) support or advance economic activity in a selected cluster or value chain; (ii) boost or catalyze economic activities of local residents; and (iii) activities that result in greater climate resilience. Jordan - Municipal Services and Social Resilience (P147689) Component 1: Municipal Grants will provide direct Municipal Grants to municipalities that are hosting the largest concentration of Syrians. This could include identifying areas of critical service gaps, drivers of local economic development and actions to foster job creation locally. Municipalities are already working closely with local Chambers of Commerce in identifying opportunities for public-private partnerships befitting of the local context, and the Project will enable participating municipalities to further invest in projects identified in their participatory local economic development plans and perceived to have positive impact on local growth and job creation. Such projects could include markets, labor intensive works, or investments leveraging some of the many other livelihood, entrepreneurship, or Micro, Small and Medium Enterprise programs supported by other partners. Component 2. Institutional Development and Project Management will provide technical assistance to municipalities to help them utilize the Municipal Grant CONTENTS 19 effectively and efficiently. A central element of this will be the preparation/updating Box 3 of simple local economic development plans that will tap into the latent endowments and comparative advantages of municipalities, local communities and the private sector to identify potential drivers of local growth and job creation. El Salvador Local Economic Resilience Project (P169125) Component 2: Competitive fund for high-impact investments on regional economic development will support the government’s territorial development strategy by financing strategic investments for local economic development at a multi-municipal scale on a competitive basis for an estimated amount between US$2 million and US$ 15 million each. Municipalities or groups of municipalities will submit project proposals that meet eligibility criteria and awarded proposals will then receive support to finance the preparation or update of technical studies and implementation of civil works. Examples of projects financed under this Component may include logistics improvements in nearby municipalities, markets, supportive infrastructure along tourist corridors (roads, bus stops, lookouts, and basic services), and artisan fairs. Selection criteria include, among others: (i) subprojects with high potential to create job opportunities, especially for women, youth at risk, migrant returnees and minorities; and (ii) subprojects with high potential to increase local competitiveness and productivity. Skills, business development and in line with the private sector demands and livelihood support targeted at vulnerable groups. The second provides bursaries for learners in addition Several urban operations include skills to developing an improved skills training development (often described as “training”) program. The third example provides grants as a standalone (sub)component, often for low-income households for their home targeted at certain groups such as the poor, improvements, which has spill-over effects women, and youth. These interventions while on the local economy. generally fitting under the LED interventions Ⱚ Sichuan Chongqing Cooperation: umbrella, deserve additional discussion Guang’an Demonstration Area due to their varied nature and specific Infrastructure Development Project characteristics. (P133456) includes support for Linshui Here are three examples of projects that County in designing skills training include interventions in this category. The services based on private sector demand first example provides skills training that are surveys and needs assessment. In this 20 CONTENTS project, training is targeted at the bottom roads and drainage for industrial waste, 40 percent of the income segment and and job and entrepreneurship training would have a target of 20 percent for centers. the registered poor. The project will also A self-standing sub-group of projects that look at the potential for gender targeting include interventions in this category of skills in the training being offered during the development are solid waste projects or program and curriculum design. components. They almost invariably include Ⱚ Uganda: Albertine Region Sustainable livelihood support activities, where skills Development Project (P145101) has a development features prominently, with a component (Component 3 – Skills Access particular focus on women and youth, often and Upgrading), which is designed to in close relation to social safeguards to upgrade Business, Technical, Vocational mitigate negative livelihood impacts. Senegal Education and Training (BTVET) quality in Municipal Solid Waste Management Project the oil and gas sector, make it more in line (P161477) includes activities to improve with private sector demands, and provide the livelihoods of waste pickers under Subcomponent 2, in addition to a social greater access to the BTVET system to program to mitigate the project’s impacts on people living in the Albertine Region. This informal recyclers and to provide livelihoods component improves access to relevant restoration and reskilling support. The project skills training programs by providing plans to hire a nongovernmental organization bursaries for approximately 600 leaners (NGO) for community engagement and from the Region. public consultation and implement the Ⱚ Indonesia National Affordable Hou- Livelihood Restoration Plan (LRP), including sing Program (P154948) provides development of livelihood options for waste Home Improvement Assistance under pickers and their families, in consultation Component 2, which is a long-standing with them. Cote d’Ivoire Urban Resilience national program that provides home and Solid Waste Management Project improvement grants for low-income (P168308) offers a gender-focused training homeowners with sub-standard housing. program to develop the skills of small and The housing grants target the bottom medium enterprises (SMEs) on relevant 40 percent earners, while creating jobs recycling tools and techniques as well as on for low-skilled workers and stimulating entrepreneurship skills focusing on the most the local economy and manufacturing profitable and relevant value chains. and trade sectors. Other activities aim to improve economic opportunities indirectly 2.2.2 Labor-intensive public works (LIPW) by providing livelihood-enabling facilities and services such as childcare centers, Labor-intensive public works (LIPW) community marketplaces, kiosks, storage interventions primarily aim to create temporary and treatment facilities and business- jobs from infrastructure investments, with a supporting infrastructure like access few projects offering livelihood support or CONTENTS 21 skills development opportunities (they are lifespan. The urban portfolio already includes referred to as LIPW+). LIPW interventions a few more sophisticated, evolved versions have been mainstreamed in the urban of LIPW that not only generate short-term portfolio. Over a quarter of projects with employment opportunities but also offer high and medium relevance for jobs and other support, notably, skills development LED (27% or 15 of 55 projects) involve and material / in-kind assistance (LIPW+ LIPW. Most LIPW interventions are “simple” projects). For example, the Inclusive and LIPW (11 of 15 projects) with the primary Resilient Cities Development Project (and only) objective of creating temporary (P156210) in Cameroon intends to provide jobs in association with project investments opportunities for young people who are in urban infrastructure and services. Their facing barriers to access the labor market job creation impact is directly attributable and representation through the use of to the project and almost all projects labor-intensive construction techniques in invariably include an indicator (person-days neighborhood upgrading (Sub-component of temporary work/employment created 2.2), which will be included in bidding under the project) to capture this effect documents, and support to local initiatives, in the results framework. A typical LIPW notably: (a) the provision of grants to intervention is illustrated in Box 3. support economically inclusive neighborhood However, without interventions to support improvement initiatives with a priority on the workers to improve their skills and long-term inclusion of young people, particularly young employability in general, the jobs effect of women, and (b) the provision of TA and LIPW may not sustain beyond the project training to beneficiary communities. Box 4: A typical LIPW intervention in an urban operation P163418 Nepal Urban Governance and Infrastructure Project Component 3: Support to municipalities for COVID-19 recovery (US$20 million).This component provides support and relief to vulnerable groups in 12 municipalities to help mitigate the short- and medium-term negative impact of the COVID-19 crisis through rapid labor-intensive public works (LIPW). The component will finance: Action I. payment of wages for unskilled labor to undertake temporary employment in participating municipalities; II. expenses for works, tools, and materials for the implementation of such projects; and III. expenses related to management of the LIPW (consultations, administration, and supervision). 22 CONTENTS Box 4 P163418 Nepal Urban Governance and Infrastructure Project Target beneficiaries for the LIPW will be individuals from mostly poor and vulnerable households. Participants will be provided with appropriate training on construction methods, where required, and specific occupational health and safety measures, including the use of protective personal equipment. Action The selection process for beneficiaries will have provisions for inclusion of vulnerable groups including the elderly, physically challenged, minorities, and disadvantaged groups. The LIPW subprojects will require a minimum percentage representation of female workers. The criteria and other guidance for targeting beneficiaries will be detailed in the PIM. Person-days of temporary work provided under Labor Intensive Public Indicator Works CONTENTS 23 3. GUIDANCE TO TASK TEAMS T his section aims to bring together an can impact employment, income, labor approach to framing and designing productivity, employability and even the urban projects that include local skillset of people living in a particular area economic development, job creation and (i.e., a street, a neighborhood, a community, economic inclusion components and/ a city or a region). The portfolio review or outcomes. It consists of four modular (Section 2) finds that many urban projects parts that provide TTLs with tools to better utilize a similar narrative around key urban job engage in design and appraisal exercises. challenges, underlying causes, and proposed Specifically, it comprises: (i) guidance on solutions, although detailed analyses vary creating a narrative for project design, which according to country and project contexts. includes a model theory of change (ToCh) for The common narrative usually flows as below GPURL operations, and a sample of proposed and can be developed further as a theory narratives linking urban interventions, LED of change. (The example below represents and job-related outcomes; (ii) a typology of a general picture and doesn’t intend to be LED and job-related activities that frames comprehensive and can’t be seen as relevant short, medium and long term impact for all projects in the portfolio). interventions for specific project needs; (iii) Ⱚ Problem statement: The high a review of the measurement and evaluation urbanization rate and growth potential (M&E) approaches to keep track of progress has not materialized or led to job and results of urban projects, given the creation. As a result, un- or under- importance that having reliable information employment rates are high in many cities on results can have on investment decisions; and the majority, especially the urban and finally, (iv) a set of core questions that poor, rely on the informal economy for would help to guide TTLs through project livelihoods. In FCV or lagging/declining design. regions context, the urban areas are not maximizing their potential to create 3.1. Creating a narrative for economic opportunities for population project design thus exacerbating other social and developmental challenges. When designing urban projects, teams can acknowledge that urban interventions Ⱚ Diagnosis: Urban productivity is 24 CONTENTS low because of the weak business connectivity and other infrastructure environment, insufficient infrastructure (indirect); high-density, compact and limited human capacity (low skills urban design level). Poor living conditions and Ⱚ Enhancing human capacity / disconnection between jobs and homes productivity: skills development and also hamper workers’ productivity as livelihood support (direct); improving well as well-being. Low capacity of local living conditions and physical government and weak engagement connection to jobs (indirect). of private sector in policy design and implementation limits the effectiveness The model Theory of Change (ToCh) below to persisting obstacles that the local provides entry points for introducing urban economy is facing. interventions that can facilitate job creation, enhance access to jobs and improve job Recommended / Required action: City / quality. It includes relevant components Ⱚ municipal governments can take actions of an urban project (i.e. inputs, outputs, with direct and indirect impacts on urban and expected outcomes), sorted by the GP productivity and jobs. business lines mentioned in the previous Ⱚ Improving business environment: section, and provides a series of pathways of action through which urban interventions regulatory and institutional actions, can relate to / lead to LED and job- particularly, for improving efficient related outcomes. Linking potential urban land use planning and management interventions with jobs effects across ToCh (indirect); engagement with the can encourage critical thinking about project private sector and support to firms, design and success, as they help teams especially SMEs (direct) identify a –hypothetical– chain of events Ⱚ Improving overall urban basic infra- that can lead to jobs effects within and structure and services: investment beyond a project and thus strengthen the in economic infrastructure such as coherence of narratives that demonstrated markets (direct); and investment in urban projects’ contribution to jobs. CONTENTS 25 Figure 7: Model Theory of Change for different types of urban projects GP Urban Interventions Changes and Results Expected Outcomes Business Lines [inputs] [Outputs] [Impacts] ▪ Land management, urban planning ▪ Builds trust and enhances the business climate ▪ Land based finance ▪ Facilitates economic and commercial activity ▪ Private investment in infrastructure City ▪ Incentivizes private investments and business Management, ▪ Social and Economic Infrastructure development +Jobs Created Governance ▪ One stop shops' ▪ Improves labor market opportunities Labor demand increased, and Financing ▪ Urban performance and/or city ▪ Strengthens SMEs financial capabilities More direct and indirect jobs, competitiveness grants ▪ Increases business income and fosters iob Temporary and permanent ▪ Skills and training creation. jobs, Self-employment. ▪ SME programs ▪ Cultural Heritage and Tourism ▪ Improves accessibility and enhances ▪ Multi-sectoral infrastructure investments: mobility neighborhood improvements, urban ▪ Attracts new visitors and tourists Territorial and regeneration, etc. ▪ Reduces transaction costs and +Job Access Spatial ▪ Public Space Upgrades increases productivity Physical access improved, Development ▪ Local Business support City networks connected, ▪ Facilitates business development and Healthier and more ▪ City competitiveness and regional economic activity productive labor force. development (infra+) ▪ Creates additional jobs through LIPW ▪ Solid waste management ▪ Incentivizes the formalization of sector jobs Sustainable, ▪ Sustainable and Resilient Urban ▪ Promotes the creation of green jobs Resilient and infrastructure ▪ Creates additional jobs through LIPW +Job Quality Climate Smart ▪ Green growth projects/financing ▪ Reduces business losses Better working conditions, Cities ▪ Flood management ▪ Improves mobility / connectivity for Safer and healthier jobs, ▪ Urban Transport improvements employment Happier workers, Labor productivity improved, Livelihood increased ▪ Urban Upgrading and basic services ▪ Better services & living conditions Housing and ▪ Housing ▪ Secure tenure. increase in property values Inclusive Cities ▪ Land titling ▪ Increased mobility Below are a sample of possible narrative These upgrades (input) can provide options through which an urban project existing businesses in the urban areas with can affect jobs and LED, grounding the opportunities to expand their customer base possible effects in existing literature. Some (output). They can also lead SMEs to grow subsectors, namely, tourism, housing and and promote the creation of new businesses solid waste management, seem to have an (outcome), bringing new jobs to the area. established narrative that is more evidence- Perez-Casas (2017) evaluates the impact of based or data-driven and provide a robust a multi-component slum upgrading program result chain weaving input, output and in Nicaragua on health and economic outcome. Sample narratives for selected outcomes and finds that the program leads subsectors were provided in Table 2 . to an increase in business activity. Moreover, Narrative Option #1. Public space urban interventions aiming at enhancing upgrades may improve the attractiveness public safety, through the introduction of (and safety) of streets and neighborhoods, streetlights or the setup of police units enable local markets development, (input), may also attract firms and visitors and unlock employment opportunities. to the area. Empirical evidence in support of 26 CONTENTS this channel comes from Motta (2017), who relationship between crime and business investigates the impact of criminal activity activity, suggesting that a reduction in crime on the performance of small and medium in neighborhoods might positively impact business enterprises in 15 countries in business activity (See pathways in flowchart Latin America. The study finds a negative below). Neighborhood More customers for attractiveness existing businesses Job Creation New visitors, Public Space Business and Temporary jobs created New investors, Upgrades economic activity Labor demand increased New firms Self-employment More competitors: Urban safety SMEs growth Urban interventions [Inputs] Changes, pathways and results [outputs] Expected outcomes [impacts] Narrative Option #2. Urban interventions interventions combined can boost the level of can foster human capital development human capital and improve labor productivity by incorporating social and economic in neighborhoods (impact). In a systematic infrastructure components. For example, review of youth skills training programs, setting up vocational education and Kluve et al. (2017) find that on average, skills training programs (VET programs) as well training programs have a positive impact as community development units (e.g. on the employment opportunities of young healthcare). The setting up of education men and women. Therefore, interventions and training programs (input) can make the that improve human capital could contribute available labor force more skilled (output), to the creation of new businesses from while community centers or daycare units newly trained entrepreneurs or alternatively might allow women heading-a-household attract new businesses to neighborhoods to invest time savings in finding additional that have benefitted from this intervention sources of income (output). These two (See pathways in flowchart below). Skillsets BT-VET programs, enhanced / Job Trainings developed Social & Economic Infrastructure Human capital Job Creation and Quality Improvements development More qualified workers Community Labor insertion (main beneficiaries: Employability increased Development services provided youth, migrants Labor productivity enhanced Initiatives and women) Entrepreneurship promoted Times and cost savings Urban interventions [Inputs] Changes, pathways and results [outputs] Expected outcomes [impacts] CONTENTS 27 Narrative Option #3. Basic infrastructure effects of an urban upgrading project could improvements allow for the development affect employment outcomes. of a healthier and more productive From the business development standpoint, workforce as well as the sustainability of no company can operate without basic productive businesses. Galliani et al (2008) service provision (i.e., water, electricity, study the effect of expanding water networks drainage, etc.). Hence, infrastructure in shantytowns in Argentina and find that the improvements of this nature may translate expansion of water networks is associated into productivity improvements for local with a large reduction in diarrhea in children. businesses. Empirical evidence from Limi Cleaner water and better waste management (2008), who studied firms in 26 economies in (input) could reduce the incidence of illness Eastern Europe and Central Asia, shows that and disease in the neighborhood (output) electricity and water outages have a negative and contribute to a healthier population impact in operation costs for businesses. (outcome). Kumar and Kober (2012) find a Therefore, an improvement in the supply positive correlation between health and of electricity and water could help reduce labor productivity. A healthier workforce operational costs, allowing (formal) SMEs could improve labor productivity if there is to perform better, increase production a reduction in illness related missed days of capacity, and attain higher levels of profits. work (World Bank, 2011). This may be more This is, of course, conditioned on the quality relevant, for instance, for slum residents of infrastructure enhancements, the real working in informal occupations where value that these interventions may represent incomes are directly related to the number for local businesses, and the risk of service of hours worked. For these kinds of workers, shortages or leakages in the area. It is worth any reduction in work hours due to illness noting that informal businesses may see could be quite damaging to their incomes. It these improvements not as advantageous is worth noting that an initial assessment of as other firms given the fiscal burden that current health outcomes would be needed comes with them (See pathways in flowchart to better understand whether the health below). Access to basic services Lower incidence Basic Community - Water networks expanded of illness and Infrastructure Development -SWM systems improved disease for workers Improvements Initiatives -electricity provided Job Quality Healthier workers Lower absenteeism Labor productivity increased Lower risk of shortages Lower Business and leakages Operational Costs development and for local companies Productivity Gains economic activity Urban interventions [Inputs] Changes, pathways and results [outputs] Expected outcomes [impacts] 28 CONTENTS Narrative Option #4. Addressing land in approval rates from public lenders. titling within urban development projects Tsivanidis and Gechter (2018) measure the ensures security of tenure and increases effects of a land formalization program the owners’ creditworthiness, which in Mumbai, India and find formalization may encourage business development increases economic activity and improves and economic activity, and translate into formal employment options. Therefore, any new employment options for residents. improvements in business development Some urban programs aim to improve and economic activity could directly create home ownership through land titling inputs, more employment options. However, it is particularly in developing countries dealing still unclear whether the job creation would with high levels of informality. Land titling directly benefit residents of the targeted (input) can provide business-owners with slum neighborhood. This would depend on a access to collateral-based credit (output). proportion of the new jobs hiring locally, as This could contribute to an increase in well residents of slum neighborhoods having business loans (outcome), which could help the required skills and capacity to fulfill these existing businesses grow further (impact). jobs, which in turn offers an opportunity for Field (2006) measures the effect of a teams to consider complementing tenure nation-wide urban land titling program in regularization with skills development Peru on access to credit and finds that land activities to increase the jobs effects. (See titling is associated with a 9-10% increase pathways in flowchart below). Land Titlina Security of Access Business Business Job Creation and Quality Development New jobs created Programs Tenure to Credit Loans or Expansion More iobs formalized Urban interventions [Inputs] Changes, pathways and results [outputs] Expected outcomes [impacts] Narrative Option #5. The construction of of three bus rapid transit systems (BRT) in transport systems provides city residents Latin America intended to improve mobility with mobility options to better access found that few of the BRT’s benefits were employment opportunities. Improvements realized by the urban poor who continued in transportation infrastructure (input) could to use traditional buses because they still provide residents of selected neighborhoods provided better access to their homes. with more transportation options (output). This is corroborated by Tsivanidis (2018) This can increase access to additional job who studies the welfare impacts of the new opportunities (outcome) in other city areas, BRT system in Colombia, and finds that and thus contribute to improve employment though the new system led to large welfare outcomes for residents (impact). A increases, these effects are stronger for comparative case study (Scholl et al., 2015) high-skilled workers compared to low-skilled CONTENTS 29 workers. Thus, for the connectivity upgrades high-skilled workers. Further it would also to translate into better employment, it would require that neighborhood residents have require that the new connectivity offers the willingness, capacity, and skill set to more accessible and affordable options meet employment opportunities outside of than the status quo for both low-skilled and the area (See pathways in flowchart below) Transport Better connectivity: More time for work, Time and More working Infrastructure mobility and for leisure, or for engaging in Job Access cost savings hours available Improvements commuting options additional economic activities Physical access enhanced Labor productivity increased Employment Urban interventions [Inputs] Changes, pathways and results [outputs] Access to employment opportunities opportunities outside Business dev. options of residential area Expected outcomes [impacts] The list of narratives presented above 2 in the previous section. They can also be is not exhaustive, rather it is illustrative used as a ‘bundle of interventions’ in broader and aims to show how specific how under place-based initiatives that follow a spatial different scenarios, urban interventions can approach for development. In this sense, connect with / lead to LED and job-related practitioners may advance legal (e.g. titling outcomes in a particular GP-URL operation. or tax abatements), physical infrastructure Whether urban projects aim to make cities (e.g. public space upgrades), and social and communities safer (narrative #1), better development (e.g. VET programs) strategies skilled and protected (narrative #2), healthier to create the right incentives and attract and productive (narrative #3), legal and catalytic investments to a particular area–– respectful of private property (narrative #4), say a street, a neighborhood, a business competitive and well-connected (narrative district or an industrial zone. Every scale #5), or greener, inclusive and more resilient, is possible (from the neighborhood to the there are links that to be made with a LED region) as long as the spaces targeted offer component or a pathway leading towards an economic potential, which can ultimately creating or accessing better quality jobs, translate into business development, and this link can be amplified to scale and productivity gains, or economic inclusion broaden investment benefits through other aspects of project design. options for the most vulnerable. Furthermore, these narratives can be The framework provided by the model Theory embedded or adapted to strategic policy of Change is an excellent opportunity for programs in the Tourism, Housing or Solid teams to reflect on these connections and Waste Management sectors, which have the co-create the narrative that better responds potential to unlock LED and job creation to their project’s particular policy challenges, opportunities and thus significantly contribute while staying sensitive of the client’s context to employment and growth, as shown in Table and scope of proposed interventions. 30 CONTENTS 3.2. Framing the typology of LED targets in the PDO. Medium-Term impact components and activities of activities allow for more substantial inputs urban projects related to Jobs towards job creation and local economic and LED for temporal impact development thus enabling to scale project impact and make the case for its relevance to strategic development priorities of the The timing of outcomes is often critical in client. Long-term impact activities help project design, with different interventions contribute towards major structural shifts having different time horizons for realizing that may have impact way beyond projects benefits. Framing interventions linked to lifecycle. jobs and economic development outcomes can help to organize the project narrative, The typology proposed here (Figure 9), results framework and project design overall. offers a framing for different types of project Some activities will have impacts in the short- activities with different time horizons for term, while others will require a medium- or impact to help align with project and country longer-term horizon, sometimes beyond a objectives. It is fully consistent with the project’s lifecycle. The short-term impact typology of urban interventions presented in components provide the ability to deliver Section 2 (portfolio review). The interventions visible results which is critical for making that fall under LED category are spread projects appealing to political leadership on between the short term and medium-term the client side and for inclusion of jobs and impact intervention. Figure 8: Framing urban interventions for jobs and economic growth Short Term (direct effects) Labor Intensive Direct private sector Public Works incentives components Medium term (indirect effects) Sub-national LED policy design and Urban infrastructure implementation and business for economic activities environment improvement Long term (transformative structural change) Improved physical Building self sustaining Increased livability structure and industry clusters and and attractiveness functionality private-public coalitions CONTENTS 31 Project design that takes into account a the most vulnerable population groups, temporal perspective for outcomes and while being 100% compatible with the impacts can be helpful and can contribute service and infrastructure provision to clarity in the project narrative. Task teams objectives of the project. Through are advised to consider inclusion of activities addition of training or small grant from different groups in the project at the schemes LIPW impact can be expanded. early stage of preparation. The combination The LIPW+ activities fall between Short- of activities with different time horizons is in term and Medium-term impact groups of tended to address different types of needs project activities. as described below. ii. Direct Private Sector Support and 3.2.1. Short-term impact Incentives. These activities can help achieve maximum impact of infrastructure Activities included in these groups can help and services investments implemented teams establish and communicate a strong under the project for the local economy. link between the project and jobs and LED These activities (e.g. small grants for outcomes and thus can support inclusion SMEs or investments in infrastructure of such outcomes in the PDO. In addition to connections) may have significant impact allowing the project to demonstrate the LED in urban projects, if closely linked to core and jobs outcomes in the short run (within infrastructure and services investments the project life span), from a technical of the project that improve local business project design perspective such activities environment. If infrastructure and can serve as attribution channels between service improvements of the project the key urban project activities (as discussed have potential to unlock businesses in the M&E section). The following activities opportunities in the project area, then the can be included in the group: accompanying grants and other incentives i. Labor Intensive Public Works The core can target the last mile issues, or market benefit of LIPW components is the fact failure, that constraints businesses and that they provide a clear short-term, investors from capitalizing on the newly attributable economic benefit targeted at created opportunity (see Box 5). Box 5: Georgia Regional Development Program The Regional Development Project for Georgia was aimed at “improving infrastructure services and institutional capacity to support the development of tourism-based economy and cultural heritage circuits in the Kakheti region”.9 Most of project investments focused on reconstruction of cultural heritage sites, urban regeneration in destinations with high tourism potential, provision of 9 The World Bank (2010) Georgia Regional Development Project (P126033): Project Appraisal Document (P126033). 32 CONTENTS basic tourism infrastructure (e.g. visitor centers), and capacity building activities. Box 5 However, a major project innovation was included in the form of investments in public infrastructure that would unlock major private sector investments in activities related to tourism: construction of hotels, restaurants, wineries. This design of the project was premised on a number of factors including rapid growth of the tourism industry in Georgia as a whole and in the target region of the first operations: Kakheti, - in the years preceding the approval of the initial project, the commitment of the government of Georgia to tourism development as an opportunity to achieve economic growth, and the confirmation of region’s tourism potential obtained during preparation of the national tourism strategy, that World Bank supported. At project preparation phase it was confirmed that connection to infrastructure in the context of poor access to finance might become a major barrier for attracting private investment and maximizing tourism potential. This private sector support sub-activity was implemented through establishing a transparent competitive application process for investors. Over the course of implementation of the First Regionals Development project 11 investments to support private initiatives were implemented. They included construction of approach roads, water pipes extensions, street lighting, sidewalks and installation of small water treatment units. While this component was rather small relative to the total size of investment – it allowed to crowd in private investment by helping overcome the last mile obstacles and thus also support the projects that would become proof of concept examples for further private investors. At closure it was estimated that only the private investments directly supported were associated with total annual increase of salaries for the residents of the project region of over US$ 1 million. This also meant that private sector growth and job creation could be directly attributed to project activities and included in the PDO and results framework (see theory of change of the project below). The results indicators included: (1) increase in the volume of the private sector investment (baseline - 0, target - US$ 50M, result - US$ 61M), (2) Increase in the number of hotel bets in the region (baseline – 1610, target – 1932, result – 3016), (3) increased points of sales in renovated cultural heritage sites and cities (baseline – 248, target – 323, result – 337). The ICR of the project also provided further information supporting strong economic development impact: the number of foreign visitors in the region grew by 721%, jobs created in the tourism sector increased by 300%, average salaries of employees almost tripled, and additional budget revenues generated by the sector went up 9.7 times.10 10 The World Bank (2017) Georgia Regional Development Project (P126033): Implementation Completion Report. CONTENTS 33 Box 5 PDOs: 1st order outcomes 2nd order outcomes Activities Outputs Impact Urban regeneration Improved Development of the tourism- infrastructure and based economy improved urban environment in Rehabilitation of cultural A 3 tourism hubs Improved infrastructure Growth of visitor heritage, provision of tourism services numbers, growth in the services facilities and average length of stay improved access to sites in Rehabilitated C and spending in main More reliable water tourism circuits tourism attractions tourism hubs and cultural supply, lower transport with improved heritage sites along the costs B access and facilities main tourism circuits Growing employment Public infrastructure and wages in connecting large private Access roads and Strengthened institutional the tourism investments in tourism mainline pipes capacity sector connecting private Increased private sector hotels and other D Strategic management investment: increasing tourism facilities. of tourism assets and number of hotel beds, Public sector capacity tourism promotion building for tourism growing number of activities. tourism businesses promotion and management Operational DMO, site management and M&E plans Higher quality of tourism services Trainings for employees of E tourism industry enterprises Employees trained Assumptions A B C D E Appropriate capacity of Capacity of the public sector Private investors DMO is sustained through Trained employees are the implementation agency to ensure high quality have sufficient commitment of public retained in the region agencies to ensure high of rehabilitation works on access to finance funds and private and the industry quality of works cultural heritage sites members contributions 3.2.2. Medium-term impact. core part of urban development projects, however in most cases these kinds of These activities allow the project to establish investments are not linked directly to jobs link to more sustainable jobs and LED and LED outcomes in project narrative and outcomes by delivering outcomes that can be directly linked to creation of jobs, attracting theory of change. In some contexts, these investments an income growth. While jobs investments can unlock opportunities for and economic growth outcomes of these business development and job creation, activities are unlikely to be observable as the improved physical environment within implementation timeline of the may opportunities for business and project, results that can be closely affiliated productivity growth. The key to building a with them can be included into the M&E jobs/LED narrative around this investment framework of the project. Investments and is evidence linking these investments activities included here fall into two diverse to existing business opportunities and main groups discussed below: market failures. Two main groups of such investments can be identified. i. Urban Infrastructure. This category of activities includes a large portion of a. Critical utility infrastructure impro- investments that tend to make up the vements. Generally, such investments 34 CONTENTS can clearly be linked to economic higher productivity and generating outcomes as they are broadly additional income for the city. considered fundamental requirement • Residential neighborhood infra- for business operation. Running a structure, services, and housing business in almost any industry without investments, that create living water supply, wastewater treatment, or environments with better access electricity is next to impossible. Thus, to economic opportunities. investments in network extension or Investments in this group include upgrading often allow to make the informal neighborhood upgrading case for LED/jobs impacts. However, and housing projects that can while such infrastructure deficiencies support local economy by enabling present a clear case of market failure, population to enter the labor the strength of the case for linking market. This can happen because them to jobs and LED outcomes would of easier access to employment often depend on clear identification of locations, or because of having the economic opportunity that they are more time because of improved preventing. Most notable examples of access to childcare or medical care project that develop a strong narrative facilities or other infrastructure of this sort are related to tourism and services. In selected cases development. (See Appendix 1) projects also can claim that b. Neighborhood upgrading, urban neighborhood improvements will infrastructure and public space attract business investment into with a link to economic outcomes. the areas due to growing access to This subgroup includes several local consumer market because of categories of investments that have improved safety and accessibility. different channels connecting them • Urban infrastructure invest- to jobs/LED outcomes: ments linked to a specific type • Improving basic conditions for of local economic activities. doing business in neighborhoods This type of investment ensures with economic potential. In short greater attributability of results and medium-term improvement of and in some cases even allowing infrastructure and public spaces tracking of jobs created within the in these kinds of areas can lead to project lifecycle. Most common increased flow of visitors enabling example of such activities is job creation in local services rehabilitation or construction of industries. In the longer term this markets to facilitate local trade. A may lead to an increase of land related, but more complex project values, which may attract private design approach would imply that investment on a larger scale allocation of funds for investments bringing in new industries with is conditional on completion of CONTENTS 35 studies identifying infrastructure to the public agencies responsible needs of businesses in sectors of for policy implementation. Close highest potential. alignment with the beneficiary ii. Support for design and implementation authorities is key for success of of sub-national LED policies, programs, these activities. An important part of business environment improvements achieving such alignment is ensuring and related capacity building. Activities that connection of these activities to other project investments and PDO in this group usually include TA, capacity is clearly articulated and understood building activities for public agencies, and appreciated by the counterparts. and skill and business development programs for local population and b. Skills and business development businesses that create critical conditions programs (and livelihood improve- for LED and job creation. These are ment programs). These activates usually not very large in terms of cost, imply direct support to non-public and in some contexts, governments can sector economic actors. Training be resistant to committing large amounts programs, to be impactful, need to of loan funding to consulting services. be informed by studies of specific However, these activities are often skills gaps in primary local industries. impactful because they address local If trainings target in-demand skills, it economic conditions other than physical increases the likelihood of graduates infrastructure (see Competitive Cities of programs securing employment. framework) and are often complementary Success of businesses training to the infrastructure investment and programs, or support centers that critical for maximizing their LED impact. provide different forms of technical The following key groups of activities and networking support to SMEs – included can be identified: also depends on how suited their a. LED strategies, business environ- programs are the local economic ment improvement activities and context. Activities targeting livelihood improvement for selected groups can related capacity building. This also be include here, as they enable group unites the activates, that access to economic opportunities support public sector (usually local in a manner that didn’t exist before governments) in designing and similar to skill straining. implementing policies to promote local economic development and job c. Incentives to promote institutional creation. This can include technical development, capacity building for assistance for development of LED and job creation. Conditional strategies and identifying policy grants project designs have recently priorities, mobilizing external been used to create incentives for expertise to aid policy and regulations local governments to improve local design, or capacity building support economic conditions: develop LED 36 CONTENTS strategies and policies, improve successfully piloted in the Upper regulations or build public-private Egypt Local Development PforR coalitions. This approach has been (Box 6). Box 6: Upper Egypt Local Development PforR (P157395) The Upper Egypt PforR is a joint investment operation of URL GP and FCI GP. It uses the subnational government conditional grants instrument to unlock economic growth in a lagging region following national development priorities. The projects innovation is in the fact that it combines two types of subnational government performance-based grants: (1) more traditional performance-based grants focusing on local infrastructure delivery and service provision, (2) innovative subnational competitiveness performance-based grants – that target development of vibrant industrial clusters in project participating municipalities. The competitiveness grants tool – was pioneered in this project, and since has been codified in the note, published in 2022. The tool expands the traditional mechanism of performance-based grants as it was allied in the World Bank operations before into a new technical area, while using all its key characteristics. While new to the World Bank project design, subnational competitiveness grants can hardly be called an innovation in broader context, as grants of this types were previously used by a number of countries, including developed countries. It targets areas of performance that are within the local government scope, relies on robust analytics to identify relevant targets, establishes minimal capacity and performance requirements that make local authorities eligible for the initial tranche, sets clear DLIs against achievement of which further disbursements are made. In the Upper Egypt project, the innovative subnational competitiveness grants are focused on development of local clusters. For this reason, the minimal eligibility criteria are focused on establishing a robust public private dialogue, identifying high potential clusters, and developing a cluster acceleration program. DLIs are tied to performance of industrial zones and implementation of cluster competitiveness initiatives, as well as to service delivery parameters. The forthcoming note on subnational competitiveness grants outlines the broader array of potential Minimum Access Criteria (MACs) and Disbursement Linked Indictors (DLIs) and discusses context in which this approach can be applicable. The project is still in its final stage of implementation; however, it is already clear that this approach has high potential for supporting and motivating local governments in playing their role in promoting local economic development and job creation. CONTENTS 37 Box 6 Local Government Eligibility Criteria Performance Metrics Core LG mandate Typical local Fiduciary Capacities government infra Institutions Local + services & Regulations Government Data & Diagnostics Annual Budget Yes / No Scalable Economic LED and PPD Capacity (Capital Infrastructure, Investment plan) 15-30% Public Space 70-85% Expanded mandate Critical studies: of Total & Land of Total Private Sector Grant Grant Contracts / Diagnostic (USD) (USD) Agreements with Critical Processes: Firm Capabilities local offices of Manual for PPD & linkages central agencies facilitation for economic development Total (annual) score Disbursement World Bank Central Government 3.2.3. Long term (transformative can be leveraged in this manner: structural change) i. Investments that improve livability, for Investments that are aimed at bringing example large scale investments in transformative change will often require a public spaces, parks and other public long-term horizon that will go well beyond amenities. In the short run this impact the lifecycle of a project to realize impacts. may result in growth of land values in These activities are thus usually combined specific neighborhoods and investments with other short- and medium-term in adjacent areas, as well as in health outcomes, though the longer-term impacts benefits for the population. But in the can be used to strengthen the project longer term these investments can shift LED/jobs narrative. Use of investment the perception of population about the and activities in this group to strengthen attractiveness of the city, help it retain the LED narrative of urban projects, while and attract high skill labor, innovative attaching them to other important relevant firms, and investors. outcomes is not a common practice at this point, however it can strengthen the appeal ii. Investments that improve the of urban jobs and LED operations, and can structure and functionality of the city. be supported by strong body of academic One example of such investments is urban literature. The following types of investment transport infrastructure, that will reduce 38 CONTENTS travel times in the medium term, but will Kulenovic, 2015) The public private help expand local markets and create coalition that was established as a result growth opportunities in the longer term. of a world bank RAS engagement in Another example is planning reforms Durban, South Africa, later became the and local government capacity building. leading force behind city’s emergency They support urban sustainability and response measures at the start of the resilience in the short run, but in the COVID-19 pandemic. long run may create a more compact and connected urban environment conducive 3.2.4. Designing approaches for to increased agglomeration productivity different country contexts benefits for local firms. A vast body of literature connecting urban form with In lower income, more vulnerable contexts, urban productivity can be consulted to priority needs would require short term develop this narrative. interventions: LIPW and infrastructure investments directly linked to local iii. Activities that lead to development of competitive advantages and supported by self-sustaining industrial clusters and business grants, trainings or other form of public-private coalitions. In the short direct support. In such contexts, interventions run the results of activities aiming to with medium-term, indirect impact can also create important private sector or private- be important in assuring progress towards public coordination bodies may be limited sustainable economic development. A typical to events, seminars, knowledge exchange project in this context can be focused on basic trips and signed memorandums that may neighborhood infrastructure and service have limited impact. Overtime, however, provision, but may include LIPW+ aspects to some can lead to significant impact support job creation, and may explore ways to where industrial cluster organizations or further expand economic impact by including public-private coalitions become drivers specific types of infrastructure: markets and of local economy over the long-term. improved public spaces around them. Simple For example, in Catalonia a leather institutional capacity building activities may tanning cluster organization, which also be included to strengthen local and was a beneficiary of regional cluster national government potential to implement upgrading program, played a critical role LED initiatives and potentially build foundation in helping the cluster adopt to stricter for next projects in the pipeline that may have environmental regulations at the EU level, stronger LED/jobs focus. and grow through reaching new markets and delivering new products. (Pezzi, In middle income contexts, in location with 2016) City Public-Private coalitions relatively clear economic potential emphasis on the other hand are associated with can be made on activities with medium- outstanding achievements in supporting term impact addressing key obstacles to local economic growth in cities as diverse economic growth. Activities with short-term as Bucaramanga, Colombia, Changsha, impact can still be considered and included China and Tangier, Turkey. (Cech & to assure greater attributability and visibility CONTENTS 39 of results. (This is the approach used by suggests that such coalitions are most easily tourism development project such as formed and sustained within the context of a Georgia Regional Development Projects specific country engagement at early stages 1,2,3). This kind of design, however, requires of project identification and client dialogue a thorough analytical underpinning. It is when synergies between relevant areas of recommended that in these contexts a expertise can be identified early on. detailed consideration is given to the need for institutional capacity building, and 3.3. Measuring job creation and components addressing these challenges local economic development in are included. In some cases, conditional Urban projects grant designs can be considered. Further information on the framework Monitoring and evaluation are an important including examples of projects that fall part of project design and implementation. into each of the groups, can be found in Drawing on the portfolio review discussed in Appendix 1. Section 2, GPURL projects tend to measure LED and jobs effects in two ways: (i) through 3.2.5. Importance of cross-GP an economic analysis which estimates a collaboration in maximizing the project’s direct or indirect impacts on potential of jobs and LED impact of employment and (ii) indicators in the project urban operations. results framework which measure LED and jobs interventions’ output or short- Across all the operational intervention term outcome. In some cases, however, considered in these sections, many elements these efforts fall short. Capturing the LED are multisectoral. LED policy, private sector and job creation aspects of investments in engagement and support, in-depth knowledge urban areas is complex given the multiple of specific economic sectors, often requires factors and interdependencies that are in specialized expertise from other global play and that the link between private sector practices of the World Bank group. In fact, investments, growth and jobs remains poorly a number of projects reviewed for this note understood.11 The literature on employment have been prepared and implemented by effects of urban interventions in developing multi-sectoral teams, e.g. the Upper Egypt countries includes approaches and tools used Local Development PforR (P157395) is co- by the World Bank and other donors, the ILO lead by Urban Resilience and Land GP and and academic researchers, though each has Finance Competitiveness and Innovation GP, challenges and limitations making monitoring and the Kyrgyz Republic Regional Economic and evaluation difficult (see Box 7). Development Project (P167428) is co-lead by Urban Resilience and Land GP and Agriculture This section reviews some of the core GP. The experience of these projects definitions and approaches particularly 11 David Robalino and Ian Walker, 2017. Economic Analysis of Jobs Investment Projects JOBS WORKING PAPER Issue No. 7 Guidance Note, The World Bank, Washington, DC https://openknowledge.worldbank.org/bitstream/handle/10986/28219/119112-replacement.pdf?sequence=1&isAllowed=y&utm_campaign=jobsblog 40 CONTENTS related to jobs measurement and addresses Unemployment: all those of working age core questions of what, where, when and who were not in employment, carried out how to carry out such approaches. It also activities to seek employment during a proposes some guidelines for task teams specified recent period and were currently in designing an approach to monitor and available to take up employment given a job evaluate the job creation aspects of projects. opportunity. Identifying an approach to measuring both Underemployment: all persons in LED and job impacts begins with the Theory employment who, during a short reference of Change which outlines a projects’ goals, period, wanted to work additional hours, interventions, and expected outcomes. whose working time in all jobs was less than The assumptions provide insights into a specified hours threshold, and who were the channels by which local economic available to work additional hours given an development and thereby job creation will opportunity for more work. happen. Local Economic Development is Labor force participation: a measure of multifaceted, thus the outcome indicators for the proportion of a country’s working-age measurement may differ (discussed below). population that engages actively in the labor A commonly used definition for “jobs” can market, either by working or looking for work. be drawn from the ILO which refers to both What is being measured? Following on wage and self-employment in both the formal from the TOC, there are multiple channels and informal sector. The World Bank Jobs that result in job creation and local economic work goes further through the JET agenda development and need to be captured. (World Bank, 2013) to define “more jobs” and There are those measures that are directly “better jobs” which is characterized by higher observable, such as number of new jobs development pay-off, improved productivity created, or private investments leveraged, and incomes, and better working conditions. and other more indirect measures such as ILO definitions include:12 impacts happening along supply chains, Employment: all those of working age increases in construction materials, improved who, during a short reference period, were access to microfinance, etc. These can be engaged in any activity to produce goods or defined as follows: provide service for pay or profit. Types of Employment13,14 Job: a set of tasks and duties performed, Ⱚ Direct: Direct effects refer to the or meant to be performed, by one person, changes in outcomes (e.g. employment) including for an employer or in self- that are caused by the outputs of the employment. intervention among its beneficiaries. 12 Source: ILO. 2016. Key Indicators of the Labour Market Ninth Edition. International Labor Organization: Geneva. https://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents/publication/wcms_498929.pdf. 13 IFC, 2020. “Ground Work towards a World Bank Group Jobs Measurement Framework IFC Proposal for the Supporting Effective Jobs Lending at Scale Program (SEJLS) under the Jobs Multi-Donor Trust Fund Phase 1.” Draft for Comment January 22. 14 Ianchovichina,E., Estache,A., Foucart,R., Garsous,G., Yepes,T. 2012. Job Creation through Infrastructure Investment in the Middle East and North Africa. Policy Research working paper; no. WPS 6164. World Bank, Washington, DC. https://openknowledge.worldbank.org/handle/10986/11975 License: CC BY 3.0 IGO. CONTENTS 41 Direct approaches will capture additional income on goods and services employment through a change in the in the economy. number of people employed, or the The Jobs M&E Toolkit also includes indicators number of hours worked, or both. Other to measure key results across: (a) Job measures include changes in wages, and Creation; (b) Job Quality; and (c) Job Access. possibly productivity. Capturing gender and other demographic variables may be Data and Indicators. Indicators used to important to project objectives. capture different aspects of job creation and local economic development are outlined in In the context of urban infrastructure, Appendix 3 with reference to relevant project direct employment is created directly examples. Most of these indicators are by interventions such as construction, reliant on specific data that can be captured operation or maintenance activities through business or household surveys and (including workers directly recruited management information systems. Data by contractors and subcontractors, can be collected in field visits or can be technicians, supervisors and other skilled self-reported by project beneficiaries using professional staff). online tools. Any approach will require Ⱚ Indirect: Indirect effects are changes careful design and implementation of data in outcomes among individuals and collection efforts. These indicators include firms that are part of the target group direct, indirect and induced jobs. of the intervention but which are not Who benefits from jobs interventions? The directly affected by the outputs of the Jobs M&E toolkit refers to the beneficiaries intervention. of ‘jobs operations’ as Individuals and For urban infrastructure investments, Firms. They may be direct or indirect (e.g. Indirect employment includes jobs in infrastructure projects) beneficiaries of created due to the increased demand projects. Individual beneficiaries include for inputs, goods and services when a project participants who seek a job or specific sector grows through backward- aspire to improve their employability or linked industries, e.g. materials, tools, etc. earnings. Firm beneficiaries refer to the These are estimated using multipliers entity directly participating in the project from experience that link these types of intervention. The term “firm” refers to the employment to direct employment. establishment: an establishment may be part of a larger firm, but data collected under the Ⱚ Induced: Induced employment effects projects must correspond to the specific refers to all changes in outcome establishment receiving support/targeted variables among individuals and firms by the intervention. that are not part of the target group of the intervention. Induced employment is When and where can results be captured? created through forward linkages when As discussed in Section 3.2, a framework households benefiting from direct and of urban interventions for jobs and indirect employment spend some of their economic growth results include temporal 42 CONTENTS considerations for the short, medium modeling of systemic jobs impacts is less and long term. Measuring these similarly likely for most projects. requires some notion of timing to capture Ⱚ Direct measurement: Using impacts. Management Information Systems Ⱚ Short term: The results are the most and surveys, it is possible to track straightforward to capture as they direct employment effects through include direct short term jobs and LED project investments. This is the most outcomes. straightforward approach and mostly Ⱚ Medium term: Results over the medium commonly used in URL projects (Box 8). term can be more difficult to capture as That being said, it has shortcomings as they often involve indirect jobs and LED it does not capture the counterfactual outcomes. (what would have happened in the Ⱚ Long term: Results that may show absence of the intervention). structural changes in the local economy Ⱚ Impact evaluation: Evaluating impact and labor market typically would happen focuses on estimating the causal effect over the long term, well beyond the of the intervention (treatment) on a project lifecycle. particular outcome. To do this, one Spatial aspects are also important needs to assess the ‘counterfactual’, particularly to urban development projects. that is what would have happened in Some determination of the spatial area the absence of the intervention. There where benefits are most likely to be felt is is a growing body of robust literature important to accurately capturing results. that has carried out impact evaluations For example, will a project that invests in to measure specific impacts, including improving urban markets create new job jobs. This is however, difficult to and livelihood opportunities only for vendors implement particularly for urban projects or are there supply chain impacts that as they can require extensive time for may span further to rural areas? Careful implementation, and randomizing or consideration of the spatial and temporal using quasi-experimental designs to aspects of capturing results is necessary. capture the counterfactual can be How to monitor and evaluate projects? complex in practice, particularly in urban There are several methodologies and tools settings where a range of factors exist used in the literature (Box 7). The choice and interact with each other beyond the on which to use will build on what is being point of control. measured, as well as time and resource constraints. In most cases in the URL Ⱚ General Equilibrium and Multiplier portfolio, a simplified approach will be most models: Quantitative equilibrium models relevant and feasible. In some cases, a more can capture the potential impacts of comprehensive approach involving impact interventions while holding other factors evaluation may be justified. More complex constant. CONTENTS 43 This can include impacts on a broad scale, such as GDP, firm revenues, investment and can be constructed to factor in specific or production levels.”15 Carrying out such variables. Employment multipliers are a type modeling can be very time consuming, costly of input/output model that can be useful and require very specific skills. The results to estimate the number of jobs created also will ultimately depend on the robustness in a target market system or the broader of the models, assumptions, etc. economy due to a change in another indicator, 15 Fowler, B. and Markel, E. Measuring Job Creation in Private Sector Development, Market Share Associates, 2014 Box 7: Summary of tools measuring job creation Method Approach World Bank jobs M&E tool Set of guidance on indicators for key results on jobs, data collection forms and manuals, which are tailored by beneficiary type: individuals and firms Includes survey instruments for individual firms World Bank Jobs Operational framework to guide policymakers and practitioners to diagnostics guide design country jobs strategies (policy reforms, regulations, and investments to improve labor incomes and working conditions for vulnerable groups). Job diagnostics steps: 1. Jobs-related problem (symptom) identification; 2. Analysis of the identified problems through the lens of labor demand & supply; 3. Identification of the causes of the symptoms from steps 1 & 2, through disaggregated indicators and corroborative evidences; 4. Policy and regulatory reform prescription. Local economy wide impact Designed to understand the full impact of an activity on local evaluation (LEWIE) method economies (changes in household income, local GDP, number of Taylor, J. Edward & Filipski, jobs etc,) using simulation methods Mateusz J., 2014. “Beyond Draws from data on Government expenditures and revenues, Experiments in Development household surveys, private sector surveys, complementary Economics: Local Economy- or indirectly related business surveys are the data collection wide Impact Evaluation,” method in majority of these studies. Oxford University Press Application to protected area Tourism 44 CONTENTS Box 7 Method Approach Jobs in value chains survey The tool focuses on identifying the number of jobs from specific toolkit interventions, where they are located in the value chain, and the extent and nature of relationships among actors in a value chain. It involves value chain mapping and firm-level surveys which quantify employment potential (inclusive of the informal sector), cover the extent and nature of relationships among actors in a VC and identify possible constraints to business operations and growth. The primary steps involve background research and a full mapping of all critical components of the specified value chain. Data are then collected from structured quantitative surveys and semi-structured interviews and focus groups. Urban Infrastructure ex-Ante This Guidance Paper provides a summary of methodologies for guidance paper the ex-ante assessment of the wider socioeconomic impacts (including jobs) of urban infrastructure projects ex-ante across 13 different sectors. Box 8. A sample indicator to measure direct job creation impacts from the urban portfolio review Drawing on urban projects with LIPW interventions, a common indicator formulation for direct jobs generated through LIPW interventions includes: Ⱚ Indicator: Person-days of temporary employment created under the Project Ⱚ Description: This indicator measures the number of days of temporary employment generated by labor-intensive roads and tertiary municipal services interventions under this Project. The values will be broken down by city. The indicator will measure the cumulative number of work days resulting from employment as part of project financed activities. A person-day of work would count the ideal amount of work done by one person in one working day. (Yemen Integrated Urban Services Emergency Project II, P175791) Ⱚ Calculation: According to technical audit reports of subprojects, baseline assumptions are 12 temporary jobs created per civil work x 262 civil works per 4 years of project implementation x 6 months of execution of each work (average) (El Salvador Local Economic Resilience Project, P169125) Infrastructure investments have a direct impact on employment, as people are needed to build, operate and maintain infrastructure. This includes temporary jobs in the construction and services sectors, and permanent jobs to carry out operations and maintenance. CONTENTS 45 The time period for appraisal of direct, indirect and induced impacts is important to Box 8 consider with infrastructure investments. For example, the construction phase may only last 1-2 years, therefore the impacts will be short-term, whereas the infrastructure may require maintenance over its lifespan of 50 years. To ensure impacts are measured in a comparable way in present values, a discount rate must be applied. Common methods for quantitative measurement include ad hoc/back of the envelope, regional input/output models (IO), and computable general equilibrium models (CGE). Input-output analysis splits the economy into final demand and production. It accounts for the direct and indirect interdependencies among different sectors. A CGE model is a large-scale quantitative model that simulates the economic interactions in the economy. It uses data on the structure of the economy along with a set of equations based on economic theory to estimate the effects of infrastructure investments on the economy. The IO and CGE models, used for both direct and indirect measurement have high data requirements that may not be feasible for many World Bank-financed projects, especially if economic analysis is not started early in the course of project preparation. Thus these tend to be used for large infrastructure projects, to capture jobs from total capital expenditures and operations. The analytic investment required to tailor a IO or CGE model to the project context is also likely to be more justified the larger is the project. For smaller projects, particularly in situations where data are not available, it is expected that most teams will rely on more ad hoc or back of the envelope methods. Capturing indirect and induced jobs is more complex. Infrastructure investments interact with different sectors through consumption of goods and services and are likely to include a wider geographic reach than direct impacts. Indirect impacts include those along the supply chain and induced impacts are the knock-on effects of increased household spending of those employed in the direct and indirect jobs. Multipliers are used for indirect and induced impacts and depend on country and sector context. They are often estimated using assumptions and high-level market data, affecting their accuracy. As a resource, the IFC has a modelling framework which includes guidance on appropriate multipliers which can be applied.16 Source: Vivid Economics in World Bank, 2021, Assessing wider socioeconomic impacts of urban infrastructure ex ante Guidance Paper 16 IFC, The Economics Impact Estimation Framework Other examples come directly from project documents as shown in Box 10. These samples demonstrate the different approaches to ex-ante measurement or description of potential jobs effects. 46 CONTENTS Box 9: Examples of Jobs measurement approaches from Project Documents Multiplier effects of investments in urban infrastructure and services (narrative) “The Project will be financing investments to enhance municipal infrastructure and services that improve the lives of city residents and attract and retain businesses vital to the economic role of Afghanistan’s PCCs. Development impact will be geographically balanced at the provincial level across all four regions of the country, supporting host communities in absorbing the influx of internally displaced migrants or returnees. Sub-projects selected to be financed will be subjected to feasibility studies and cost- effectiveness analysis. Many sub-projects are expected to have a multiplier effect by, for instance, addressing an infrastructure constraint that can in turn attract new private investment in housing, business enterprises and other investments that can bring about new jobs and productivity gains.” (Afghanistan Cities Investment Program, P160619, PAD page 17, para 5, Technical, Economic and Financial Analysis) Jobs effects (with some calculation or based on studies) “Economic and Financial Analysis: Urban roads and tertiary municipal services are labor intensive and will provide some US$20.5 million in wages to poor beneficiaries, representing 24 percent of the project costs for these sectors. In contrast, water and energy for critical services are less labor-intensive activities. Overall, the project is estimated to inject some US$23.1 million to poor households and provide numerous business opportunities for local SMEs.” (Yemen Integrated Urban Services Emergency Project II, P175791, Project Paper page 22, para 1) “An in-depth study on the employment impact of cobblestone construction under the ULGDP II found that the program created a considerable number of jobs and has become instrumental in employing the urban jobless in participating cities. In fact, in selecting the cobblestone workers to organize into MSEs, the unemployed are the main target group (with priority given to women and vulnerable groups, including people with moderate disabilities, returning refugees, ‘poorest of the poor’, and ex-combatants).” (Ethiopia Urban Institutional and Infrastructure Development Program, P163452, PAD page 4, para 14) “The CBA demonstrates that capital investments in the regions are profitable. The marginal amount of capital investment necessary for an entity to generate the next unit of production is positive. The larger base of assets, economic activities and skilled labor in the regions gives high returns estimates. The proposed investment in the regions is justified and is expected to (a) reduce regional disparities that currently exist in regions, (b) leverage private sector investments, and (c) create jobs.” (Armenia Local Economy and Infrastructure Development Project, P150327, PAD page 15, para 66) Source: Portfolio Review CONTENTS 47 3.4. Facilitating conceptualization Ⱚ Step 1: Defining the LED, job challenge and design through Guiding / policy problem. What major LED, job Questions for TTLs challenge(s) is the team aiming to solve? Possible options: increased poverty (low- income), poor productivity (total factor Below are a series of guiding questions that productivity–TPF), high unemployment can be used to facilitate a program design (including youth), labor informality, session or just inform TTLs’ thinking on how to unequal access-to-work, poor quality incorporate jobs, LED and economic inclusion of jobs available and lack of career aspects into an urban development project, progressions offered, gender pay gap, more precisely into a GPURL operation. etc. What does the policy problem look They are presented in a sequence of like? Provide metrics. seven steps, which articulate most of the frameworks and working materials discussed Step 2: Determining the root-causes in the note in a way that is simple and Ⱚ of the LED, job challenge. What are user-friendly so that teams can rapidly put knowledge into action: the major sources of constraint behind the LED, job challenge(s) identified? The 1. What major LED, jobs challenge(s) is the team can break down the problem by team aiming to solve? conducting a root-cause analysis17 and 2. What are the major sources of constraint analytical tools as outlined in Appendix 2 behind the LED, jobs challenge(s) to better understand or elaborate further identified? on its main drivers. Below are some 3. What can governments do to effectively possible approaches: address the LED, jobs challenge(s)? · Poverty: low income, no equity, 4. What strategies or policy options can city access to basic services, access to governments mobilize to overcome the work, access to housing, access to LED, jobs challenge? credit, incipient economic growth, etc. 5. Who will be involved? Who is responsible · Low firm productivity: high for what? transaction costs, legal uncertainty, 6. What does a successful LED, jobs project public safety and political risks, taxes look like? and tariffs burden, low economic 7. How to design an M&E approach and what complexity, poor private investment, LED, job-related, or economic inclusion low-skilled workers, etc. · Unemployment: insufficiency of labor metrics can be used to keep good track of progress and results? demand (limited job openings or firms hiring), excess of labor supply, (low- Steps for incorporating LED components skilled workers looking for a job), and / or job-related items into a GPURL lack of private investment, high costs operation of employment, high interest rates, 17 e.g. using the five whys method or the fishbone framework 48 CONTENTS generous social assistance programs, look like for workers? Are households technological change, demographic and firms provided with the basic change, economic crises, external urban services needed? shocks (e.g. armed conflict, pandemics, · Skills and Innovation: What skillset natural hazards), etc. are local firms demanding? Is youth · Labor informality: costly labor regu- unemployment associated with the lations, poor enforcement of labor lack of qualified workers in the city/ and fiscal regulations, corruption country of reference? How is the and institutional weakness, tax and educational system performing? tariffs burden, low firm productivity, · Enterprise Support and Finance: low education levels, poverty, cost of How does public-private dialogue look living, etc. like in the city/country of reference? Do MSMEs have access to the Ⱚ Step 3: Identifying entry points / financial markets or some sort of stakeholders / areas of action. Where public financing program? are the entry points? Who are the key stakeholders and what role do they play? Ⱚ Step 4: What LED and job strategies What can city/municipal governments, or policy options can governments others do to effectively address the LED actually mobilize to - directly or or job challenge(s) at hand? Using the indirectly - foster job creation / Competitive Cities four-pillar framework boost urban productivity / counter can help categorize the nature of the labor informality / unleash economic problem, which ultimately will pave the growth? What is needed? What can be way for a more targeted brainstorming done? Teams are invited to revisit and exercise to formulate viable solutions: consider the LED interventions outlined · Institutions and Regulation: What in sections 2 and 3 of this note, and does business climate look like in discuss which strategies and programs the city/country of reference? Are seem to be the most appropriate and current regulations (e.g. permitting, cost-effective alternatives considering zoning, and corporate taxes) the city’s context, fundamental needs as incentivizing or undermining business well as municipal government priorities. development? Is the city/country These may include LIPW, direct private institutionally capable of ensuring sector support and incentive, urban the rule of law (protecting property infrastructure and local economic rights in particular) to attract private development activity, LED strategies, investment and unleash local growth? business environment improvement · Infrastructure and Land: Is low firm actions and/or institutional strengthening productivity related to a connectivity for capacity building, skills and business problem in the city of reference? How development, and livelihood support and do commuting and mobility options Incentives for LED (PBGs). CONTENTS 49 Ⱚ Step 5: Identifying and buying-in key and regional development agencies, stakeholders to operationalize your municipal and subnational governments, project. Who will be involved? Who is etc.), but may also imply the engagement responsible for what? Once the urban of subnational government agencies, the project is conceptualized, TTLs and private sector, and third-parties like other their teams shall dedicate some time international development organizations. to identify the key players and local Developing a stakeholder analysis (see agents that are needed to carry out framework in Figure 9 below) is highly their LED strategies, and hopefully recommended at this stage to prepare an address the LED challenged that the accurate relationship-management plan project is seeking to tackle. This mostly includes the direct counterpart in client (if needed), and have a clearer image of governments (e.g. ministries of housing who are the ‘champions’ that ought to and urban development, economic be on board to ensure the successful development departments, planning implementation of the project. Figure 9. Power / Interest Grid for Stakeholder Prioritization High Keep Manage Satisfied Closely Power Monitor Keep (Minimum Effort) Informed Low Low Interest High Source: Mindtools.com Adapted from Mendelow, A.L. (1981). “Environmental Scanning - The Impact of the Stakeholder Concept”. Ⱚ Step 6: Describing expected results. the expected results to translate into What does a successful LED project the desired LED outcomes, TTLs ought look like? Now is the time for teams to out to be able to define SMART Goals, be quite specific about the results they that is specific, measurable, achievable, are pursuing with the project. Yet, for relevant, and time-bound targets. 50 CONTENTS Table 4. Defining SMART goal Guiding Question Example What will be accomplished? What actions will S Reducing youth unemployment you take? M How much? What figure will tell us that? Below a two-digits number (10 percent) Is the goal realistic? A Yes, No, Maybe. Do we have the skills and resources needed? Does the goal address the broader LED Youth employed means higher economic potential R challenge? and opportunity in the area of intervention. T What is the timeframe to meet the goal Two to three years? Source: University of California (2017). A How to Guide ULR Ⱚ Step 7: Designing an M&E framework Ⱚ List of relevant indicators drawn from and developing a full list of LED and jobs the urban jobs portfolio is in Appendix 3 indicators to monitor PDO achievement, 4. Develop and implement plan for project performance and results. measuring job creation For M&E design18: Ⱚ Ensure a robust team, sustained 1. Identify the types and characteristics of jobs that will be created budget, ongoing monitoring Ⱚ Links directly to the Theory of Change 5. Report results and pathways to employment Ⱚ Assess critical milestones for Ⱚ This can include geographic, sectoral reporting, ensure reporting is clear and target groups and robust 2. Determine what measurement approach On indicators, what LED, job-related or will be most appropriate economic inclusion metrics can be used to Ⱚ Assessment of budget, time, data keep good track of progress and results? constraints Once the team has reached consensus on Ⱚ Determine who the audience is and the goals and particular LED results that how results will be used will be achieved, they can concentrate on 3. Identify indicators and data resources to elaborating and refining metrics. The table capture results below illustrate this brainstorming exercise Ⱚ Determination of indicators, whether to with result indicators on jobs where the measure job quality or characteristics figures are associated with potential sources of job takers (e.g. demographic) of data collection. 18 Adapted from B. Fowler and E. Markel, for Market Share Associates, 2014, Measuring Job Creation in Private Sector Development. CONTENTS 51 Table 5. Result indicators for Jobs, LED, and Economic Inclusion Employment Indicators Indicator(s) Potential Source(s) Ⱚ Number of employees employed in businesses Ⱚ Business surveys in targeted neighborhoods (disaggregated by Ⱚ Business registry gender, race, ethnicity, refugee status, etc) Ⱚ Tax records Ⱚ Percentage of employees from targeted Ⱚ Business surveys neighborhood Ⱚ Percentage of households employed in jobs Ⱚ Household surveys outside targeted neighborhood Ⱚ Number of working days missed due to illness in Ⱚ Household surveys targeted urban areas Ⱚ Health clinic records Ⱚ Training program participation rates or number of people in training programs (disaggregated by Ⱚ Program implementation reports gender, race, ethnicity, refugee status, etc) Ⱚ Job placement upon completion of training program graduates (disaggregated by gender, race, ethnicity, refugee status, etc) Ⱚ Number of workers hired in labor-intensive public works (disaggregated by gender, race, ethnicity, refugee status, etc) Ⱚ Perceptions on value of vocational education and Ⱚ Household surveys training programs (VET programs) Ⱚ Key community leader surveys Ⱚ Perceptions on value of infrastructure upgrades (e.g. public space, basic services) Ⱚ Perceptions on value of connectivity upgrades (e.g. roads and transportation) Source: University of California (2017). A How to Guide ULR 52 CONTENTS 4. CONCLUSIONS AND FUTURE DIRECTIONS This note has addressed key concepts and framework; providing more detailed approaches for strengthening LED and job guidance on analytical approaches that can creation approaches in urban projects that be used by teams during project preparation; can be adapted by teams. There are a number addressing the opportunities and challenges of additional areas for future work that can with the automation and the digital economy; further enhance the LED and jobs approach. and any special considerations for job These include: further analyzing approaches creation for subgroups such as migrants to economic resilience; integrating this (especially those displaced forcibly), and work with the Green, Resilient and Inclusive aging populations. 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INTERVENTION TYPOLOGIE EXAMPLES Type of activities Examples Applicability Relevant M&E indicators Category: Short-term impact Traditional LIPW: Ⱚ Provide direct traceable Ⱚ Person-days Ⱚ Yemen Integrated Urban and attributable jobs of temporary Services Emergency Project II outcomes. employment created in (P175791), Ⱚ Can be combined with construction different types of urban Temporary job Nepal Urban Governance Ⱚ Ⱚ infrastructure investments. opportunities (in and Infrastructure Project Offer a mechanism person-days) created (P163418), Ⱚ to provide additional by the investments Labor Ⱚ Afghanistan Cities Investment economic opportunities financed under the Intensive Program (P160619) to disadvantaged project – for women Public Works communities as well as in Ⱚ Person days of LIPW+: the context of disaster or employment created Ⱚ Cameroon Inclusive and crisis relief (days, % female, % Resilient Cities Development IDPs, % host) Project (P156210) Ⱚ South Sudan Enhancing Community Resilience and Local Governance Project (P169949). Ⱚ Georgia Regional Development Ⱚ Requires significant Ⱚ Private sector Project (P126033) analytical work to confirm investment leveraged both presence of business by the project Ⱚ Albania Project for Integrated opportunity and of the (amount) Urban and Tourism Direct private last mile obstacles/market Ⱚ Jobs created in Development (PIUTD) (P155875) sector support failures businesses benefiting and incentives Ⱚ Kyrgyz Republic Regional Ⱚ Incentives can take from project support Economic Development Project different forms: (% female employees) (P167428) infrastructure connections financing, business training and small grants, etc. CONTENTS 59 Appendix 1 Type of activities Examples Applicability Relevant M&E indicators Category: Medium-term impact Urban infrastructure Tourism: Ⱚ Requires a clear Ⱚ Number of entities Ⱚ Georgia Regional Development identification of local providing cultural and Project (P126033), business opportunities, tourism services in perhaps even at a the project areas Ⱚ Albania Integrated Urban and Critical utility neighborhood level. Number of Tourism Development (PIUTD) Ⱚ infrastructure For the reason above – entrepreneurs (P155875), Ⱚ improvements most prominent in Tourism in project Ⱚ Uttar Pradesh Pro-Poor projects where businesses destinations with Tourism Development Project opportunity can be linked increased income, (P149528) to specific cultural and disaggregated by natural assets. gender Other sectors: Ⱚ Kyrgyz Republic Regional Economic Development Project (P167428) Ⱚ Second Regional Economic Development Project (P175587) Ⱚ Improving infra in core areas: Ⱚ Strength of narrative Ⱚ Beneficiaries living Cap Haitien Urban Development depends on presence of within 30 minutes trip Project (P168951), Kingston analysis that demonstrated of major employment Waterfront Improvement economic potential of centers. Project (P179642). selected areas. Ⱚ Businesses benefiting Ⱚ Combining rehabilitation from improved Ⱚ Informal settlement upgrading: of a central area of the infrastructure Metropolitan Buenos Aires city with connectivity and connections. Urban Transformation Project, informal neighborhood % of businesses in the P159843 Ⱚ upgrading and improved target area reporting Ⱚ Housing that brings people transport connection can that improvements closer to market: Mexico provide synergetic effects. will support business Improving Access to Affordable Ⱚ Technical assistance growth in the next Neighborhood Housing Project (P157932) and and capacity building year. upgrading, in Argentina Integrated Habitat exercises can be used to public space and Housing Project (P159929) bridge the gap between improvements Ⱚ Selection of investment the infrastructure and and transport only if linked to economic service improvements and infrastructure development: Sri Lanka Local economic outcomes and Development Support Project enhance attributability. (P163305), El Salvador Local Economic Resilience Project (P169125) Ⱚ Investment in local markets: Huainan Mining Area Rehabilitation Project (P133000) and Metropolitan Buenos Aires Urban Transformation Project (P159843) 60 CONTENTS Appendix 1 Type of activities Examples Applicability Relevant M&E indicators LED policy and capacity building Ⱚ Competitive and Livable City of Ⱚ Targets strengthening Ⱚ Participating Karachi Project (P161402) public sector capacity in municipalities Ⱚ Uttar Pradesh Pro-Poor relation to LED and jobs. implement/facilitate at TA for LED Tourism Development Project Ⱚ Can include TA to identify least two priority local strategies, (P146936) and address key local economic development business business environment subprojects identified environment challenges and obstacles in local economic improvement and propose ways to development plans activities and address them. Ⱚ Number of business related Ⱚ Can be targeted toward registrations and capacity development of a specific licenses secured building industry and strategies annually through the and policy programs Sindh Business Portal related to it. (SBP) Ⱚ Upper Egypt Local Development Ⱚ Allow to ensure presence List of possible PforR (P157395) for critical conditions performance metrics Conditional for LED (minimal access can be found in Table Grants for criteria), and provide 3 of Subnational LED and job of incentives for Competitiveness Grants certation institutional strengthening Guidebook (World Bank, (performance metrics). 2022) Ⱚ Sichuan Chongqing Ⱚ Directly targets capacity of Ⱚ Percentage of training Cooperation: Guang’an private economic actors. graduates who are Demonstration Area Ⱚ Needs to be aligned with employed or self- Infrastructure Development local potential, skills gaps, employed after six Skills and Project (P133456) and relevant to other months of completing business Ⱚ Albertine Region Sustainable investments planned in the training in supported development Development Project (P145101) project. programs programs Ⱚ Argentina Integrated Habitat Reform Task Force Oil and Housing Project (P159929) and Gas Committee established and functional to define skill needs and set standards Land regularization/ Land regularization and improved land management is closely linked to economic development property potential; however this link has rarely been used in the context of urban operations. titling programs Category: Long-term impact Improved livability Cannot be used as the main justification for the operations and sufficient for inclusion of jobs Improvement and LED in PDO. of the However, can strengthen the narrative of operation targeting urban infrastructure and service structure and provision improvement. functionality of the city CONTENTS 61 APPENDIX 2. ANALYTICAL TOOLS Analysis of a city economy can hardly be contained in one tool or methodology. Approaches differ based on context, goal of the analysis, availability of data and level of client engagement. Further mainstreaming of urban jobs and LED operations will be aided by development of clearer guidance’s on available analytical approaches. The table below offers the first high level cut of some frameworks and tools that teams can consider for utilization. Cost / time / date / Tool Description and reference capacity requirements Competitive A framework for structuring analysis of the urban economy, its The framework paper Cities: Growth performance and its key weaknesses, challenges. provides guidance on Pathways about the different tools The analytical framework is grounded in looking at the economy Analytical and approaches that of a city through a sector lens and distinguishing economy wide Framework can be used, including dynamic and challenges and sector specific issues. required resources, The framework paper a includes more detailed description capacities and time. of a specific analytical tool: city Snapshot is a tool for quick benchmarking of city’s economic performance and challenges, that can be utilized for initial engagement with clients. The framework paper also includes guidelines and additional resources that can be utilized for further in-depth analysis of an urban economy be it through a lens of industries, or through a analysis of specific economy-wide constraints. Literature: Sivaev D. (2015) Growth Pathways: A diagnostic methodology for city competitiveness. Competitive Cities for Jobs and Growth: Companion Paper 6. World Bank, Washington DC. Country CPSD - is an overall research approach used by IFC for its Conducting a full Private country analytical reports, that informs the country engagement CPSD is a long labor Sector process of the World Bank group. Each CPSD includes an intensive process, it Diagnostic assessment of the state of the private sector, identification of is recommended that (CPSD) near-term opportunities for private sector engagement, and it is used as a guiding recommendations of reforms and policy actions to mobilize framework, and a private investment and drive solutions to key development resource for specific challenges. By combining both economy-wide and sector- analytical ideas that might specific analysis of constraints, the CPSD helps to create a be applicable. common analytical basis to shape policy dialogue and guide transformational private investment. 62 CONTENTS Appendix 2 Cost / time / date / Tool Description and reference capacity requirements While not a city specific tool utilization of the overall approach of CPSD is another way teams can structure and organize thinking about a city economy and its specific challenges. Literature (Example): IFC (2022) Creating Markets in Sri Lanka: Country Private Sector Diagnostic. Private Sector-led Inclusive Growth for and Island of Excellence. Strategic A step-by step guide to analysis of an industrial sector or a Analysis can be done at segmentation cluster, based on identifying its sub-sectors and breaking down a high level in a matter analysis for the critical conditions required for growth of each cluster given of weeks, with some Global Value current state of the value chain in that specific segment. guidance from experts. Chains Deeper analysis requires Literature: World Bank (2018) Report on Strategic Segmen- industry specific expertise tation: Nutrition - Croatia Competitiveness Reinforcement and may require extensive Initiative data collection. Neighborhood A public consultation framework allowing the team to identify Planning a work shop revitalization features of neighborhood upgrading that can unlock private requires through prepa- for economic sector opportunities. ration and background development research. An estimate Literature: available upon request workshops of 2 weeks of work for background research, and at least 2 month of time to identify and ensure participation of relevant stakeholders. CONTENTS 63 APPENDIX 3. INDICATORS List of indicators from urban operations to measure jobs and LED impacts Type / Theme Indicators Ⱚ Job opportunities accessible within 60 minutes in the area of influence Ⱚ Number of person-days of employment created (days, % female, % IDPs, % host) Ⱚ Number of workdays generated from subproject construction / rehabilitation Direct (disaggregated by infrastructure type, gender, displacement status) employment Ⱚ Persons who participated in employment programs or activities and job Ⱚ Person-days of temporary jobs generated under the project investments creation (e.g. LIPW) Ⱚ Share of sub-projects with short-term employment opportunities for women Ⱚ Employment rate of men and women 18-29 years who receive vocational training Ⱚ Number of beneficiaries (men and women) of vocational training package Ⱚ Persons who obtained formal certifications relating to skills development Ⱚ Participating municipalities implement/facilitate at least two priority local economic development subprojects identified in local economic development plans Ⱚ Number of business registrations and licenses secured annually through the Sindh Business Portal (SBP) Ⱚ Municipal Performance Indicator – Improved municipal response to COVID-19 (Actions to mitigate the economic and social impact though support to local SMEs, informal economy, and labor-intensive infrastructure and services) Ⱚ Beneficiary local businesses in targeted localities positively impacted by the infrastructure financed by the project (men and women-owned businesses) Ⱚ Number of private investment proposals approved Ⱚ Increased (direct and indirect) volume of private sector investment LED Ⱚ Increased access to micro-finance and income-generating activities for slum population Ⱚ Land parcels benefitted under the project with increased tenure security Ⱚ Number of days required to register a firm Ⱚ Reduction in average number of days required for issuance of a building permit Ⱚ Time to process a land regularization request Solid Waste Management: Ⱚ Waste pickers provided with viable and sustainable opportunities for paid works or skills development training – Women’s share Ⱚ Female waste pickers with improved working conditions (Number); earning an income at a level on par with men (Number) 64 CONTENTS Appendix 3 Type / Theme Indicators Ⱚ Number of women in small and medium enterprises completing the support program to enhance their chances to enter the SWM market (Text) Ⱚ A system monitoring the number of women economically active in the SWM sector is in place (Yes/No) Ⱚ Formal jobs in SWM created by the project, of which female (Percentage) Cultural Heritage and Tourism: LED Ⱚ Increase points of sales (tickets, souvenirs shops, restaurants, hotels, guesthouse and family houses) in renovated culture heritage sites and cities Ⱚ Increase in number of merchants or vendor stalls in improved public spaces Ⱚ Number of entities providing cultural and tourism services in the project areas Ⱚ Number of entrepreneurs in project destinations with increased income, disaggregated by gender Ⱚ Number of tourism related small businesses supported by new community organizations Ⱚ Training program participation rates or number of people in training programs (disaggregated by gender, race, ethnicity, refugee status, etc) Institutional Ⱚ Percentage of training graduates who are employed or self-employed after six months of development completing training in supported programs and skills Ⱚ Reform Task Force Oil and Gas Committee established and functional to define skill needs development and set standards Ⱚ Number of workers (female, marginalized, etc) benefiting from skills development support under the project CONTENTS 65 CITIES, JOBS AND LOCAL ECONOMIC DEVELOPMENT: A GUIDANCE NOTE FOR TASK TEAMS May 2023