177. Economic and social development and environmental protection are interdependent and mutually reinforcing components of sustainable human settlements development. Economically buoyant, socially vibrant and environmentally sound human settlements under conditions of continuing and rapid urbanization will increasingly depend on the capacity of all levels of government to reflect the priorities of communities, to encourage and guide local development and forge partnerships between the private, public, voluntary and community sectors. This can be achieved through the effective decentralization of responsibilities, policy management, decision-making authority, and sufficient resources, including revenue collection authority, to local authorities, closest to and most representative of their constituencies, as well as through international cooperation and partnerships, setting in motion a strategic and participatory urban management process rooted in a shared vision while ensuring and protecting human rights. This process of decentralization and the envisaged urban management process will place great demands on institutions, particularly in developing countries and countries with economies in transition. Capacity-building is thus to be directed towards supporting decentralization and the participatory urban management process.

178. An enabling strategy, capacity-building and institutional development should aim at empowering all interested parties, particularly local authorities, the private sector, the cooperative sector, trade unions, non-governmental organizations and community-based organizations, to enable them to play an effective role in shelter and human settlements planning and management. Concerted efforts in human resources and leadership development, institutional reform, organizational and management development and continuous training and retooling are necessary at all levels. This can best be achieved by national and international local authority associations/networks and by other national and subnational capacity-building institutions, although they themselves may first require strengthening. In developing countries and countries with economies in transition, Governments should accord a high priority to implementing a comprehensive policy for capacity-building. The international community should help them to develop their capacity, identify and assess their institution-building priorities and strengthen their management capacity.

179. Empowerment and participation contribute to democracy and sustainable human settlements development. Policy formulation and implementation by Governments should be guided by the principles of accountability, transparency and broad-based public participation. Accountability and transparency are imperative in order to prevent corruption and ensure that the available resources are used to the benefit of all people. Each Government should ensure the right of all members of its society to take an active part in the affairs of the community in which they live, and ensure and encourage participation in policy-making at all levels.