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Another option is horizontal coordination for broad local planning and management. Consider England’s combined authorities; groups of local authorities can submit proposals to form joint combined authorities, which exist above the level of the local authorities and are often formed to improve management of major cities and their surrounding metro and rural areas, which otherwise spill across administrative boundaries. Combined authorities conduct functions that benefit from shared planning across the region, such as economic planning, oversight of transit services, and investments in innovation hubs or industrial parks. Based on their needs and performance, they negotiate for incrementally greater decentralized powers and responsibilities through a sustained dialogue with the central government.

Local authorities must be properly resourced to perform their decentralized functions. This includes own-source revenues and central–local transfers. Relevant areas for fiscal decentralization include raising local governments’ control over fees to cover service costs and decentralizing land and property tax regimes and administration. Central-local government transfers also require greater transparency, predictability, and more equitable formulas, particularly in the Mashreq. Transparency and predictability are important to counteract spatial biases in spending and outcomes, and in many cases, formulas also must be revised to reduce the bias toward resource-rich locations and better target poverty in lagging regions.

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