The Middle East and North Africa (MENA) region faces one of the world’s most pressing employment challenges. While national economic reforms remain essential, a new World Bank report argues that the region’s cities—not just national governments—will determine whether MENA can generate the millions of productive jobs its growing population needs. The report provides an important reminder that creating jobs is ultimately a multilevel governance challenge, requiring empowered and capable local governments alongside coherent national policies.
The jobs challenge is increasingly urban
The numbers are striking. Nearly 300 million young people are expected to enter MENA’s labor market by 2050, even as the region already experiences among the highest youth unemployment rates in the world. At the same time, more than 60 percent of the region’s population already lives in cities, with urbanization continuing to accelerate. This means that the future of employment in MENA will largely be determined by how well its cities perform.
The recent World Bank report, Cities that Work: Realizing the Jobs Potential of MENA’s Cities, shifts the conversation away from seeing cities merely as places where jobs happen to exist. Instead, it presents cities as active engines of productivity, innovation, and employment—provided they are supported by the right institutions, infrastructure, and governance arrangements.
For those working on decentralization and multilevel governance, this conclusion is hardly surprising. Around the world, successful urban economies are rarely created through national policy alone. Rather, they emerge from effective interactions between national governments, regional authorities, local governments, businesses, and civil society.
Urban productivity drives job creation
One of the report’s central messages is refreshingly straightforward: better jobs require higher productivity. Using a novel benchmarking exercise covering 615 MENA cities and comparing them against more than 8,400 cities worldwide, the report finds that MENA cities perform reasonably well by global standards, yet still operate substantially below the global productivity frontier. Almost every city in the region has room to improve its economic performance.
Importantly, the report challenges the common assumption that employment policy is primarily about labor markets. Instead, it demonstrates that many of the determinants of productivity—and therefore job creation—are fundamentally urban.
Cities that provide reliable infrastructure, efficient transport, accessible housing, attractive business environments, and effective public services enable firms to become more productive. Higher productivity, in turn, allows businesses to expand employment while paying higher wages. In other words, urban policy becomes employment policy.
Four pillars for cities that create jobs
The report organizes its recommendations around four mutually reinforcing pillars that determine whether cities become engines of economic opportunity:
- Productive density, ensuring that infrastructure and services keep pace with population and business growth;
- Market connectivity, linking cities efficiently to domestic and international markets;
- Attractiveness to investment and talent, through livable urban environments and supportive business climates; and
- Public-private coalitions, enabling governments and businesses to jointly solve urban development challenges.
Although these pillars are presented primarily as urban development priorities, they are equally a roadmap for strengthening multilevel governance.
Virtually every one of these policy areas requires coordinated action across different levels of government. National governments establish regulatory frameworks, macroeconomic stability, and strategic investments. Regional governments often coordinate transport, land use, and economic development across metropolitan areas. Local governments shape the daily quality of infrastructure, public services, permitting, land management, and community engagement. None of these actors can succeed in isolation.
The missing governance conversation
Interestingly, while the report repeatedly emphasizes the importance of cities, it says comparatively little about the institutional capacities required for cities to fulfill these responsibilities. Yet governance capacity often determines whether urban investments actually translate into better economic outcomes.
Cities require more than financial resources. They need clear functional responsibilities, predictable revenues, professional administrations, planning authority, effective coordination across jurisdictions, and meaningful accountability to citizens and businesses. Without these foundations, even well-designed urban investments may fail to generate lasting improvements in productivity.
This reflects a broader lesson emerging across development practice: strengthening cities is ultimately about strengthening local public institutions.
Different cities require different governance solutions
One particularly welcome feature of the report is its recognition that one size does not fit all. Large metropolitan areas, secondary cities, and smaller urban centers each face distinct economic opportunities and constraints. The report therefore proposes differentiated strategies rather than universal prescriptions. Large cities should focus on global competitiveness and innovation, while smaller cities require realistic strategies that build on local comparative advantages and strengthen connections to larger markets.
This differentiated approach also has important governance implications. Metropolitan regions often require sophisticated arrangements for coordinating multiple municipalities and service providers. Secondary cities may benefit from greater administrative autonomy and stronger local fiscal capacity. Smaller municipalities frequently need support through intergovernmental cooperation, shared services, or targeted national investments. Effective multilevel governance recognizes these differences rather than imposing identical institutional models across all jurisdictions.
Why this matters beyond MENA
Although the report focuses on the Middle East and North Africa, many of its insights apply far more broadly. Across much of the developing world, governments face the same challenge of creating productive jobs for rapidly growing urban populations. Cities increasingly compete—not only with neighboring cities within their own countries—but with cities around the world for investment, talent, entrepreneurship, and innovation.
As countries pursue industrial policy, economic diversification, climate resilience, or digital transformation, the effectiveness of their cities increasingly shapes national success. This reinforces an important lesson for development partners: supporting local governments is no longer simply about improving service delivery. It is also about enabling economic transformation.
Making cities work requires multilevel governance
The World Bank report makes a compelling case that cities are indispensable to solving MENA’s employment challenge. But realizing this potential will require more than urban infrastructure projects or business climate reforms.
It will require strengthening the institutions of local governance, improving coordination across levels of government, empowering cities with the authority and resources they need, and fostering durable partnerships between governments, businesses, and communities. In short, cities create jobs—but only when multilevel governance creates cities that work.
Read the full report:
Le Courtois, A., Murray, S., & Roberts, M. (2026). Cities that Work: Realizing the Jobs Potential of MENA’s Cities. World Bank.
Note: The feature image for this blog post was generated by AI.
