Megacities such as Santiago are becoming a worldwide phenomenon. In six of eleven South American countries, over 25 percent of the population lives in a single city. What policies should national governments adopt with regard to dominant metropolises? Is it appropriate to restrict the flow of population to big cities? Or should governments take a laissez-faire attitude and permit city growth?

Focusing on Chile, this book argues that appropriate government action lies between these extremes. The authors espouse spatial policies that mitigate the social costs of congestion and pollution but also ensure that migrants pay the social costs of moving to big cities.

This book assesses the effects of spatially concentrated programs for housing and neighborhood improvement. These programs provide direct assistance to low–income property owners in an attempt to arrest neighborhood decline and encourage revitalization.

The authors used the Harvard Urban Development Simulation Model (HUDS) in evaluating these programs. HUDS, a large–scale computer model, represents the process of housing rehabilitation, the production and consumption of housing services, household moving decisions, and other determinant of neighborhood change. The model simulates the behavior of approximately 80,000 individual households in two hundred residential neighborhoods of various quality levels. Unlike more aggregate models of urban development, HUDS has the capacity to identify how specific housing policies affect individual households as well as particular neighborhoods.

Since program evaluations are no better than the models on which they are based, the authors provide sufficient detail to permit those readers primarily interested in the policy analysis to assess the methodology and to understandhow the policies are represented in the model; a more technical discussion of the model is then presented in appendixes.

Although the simulations focus on policies that induce central–city property owners to upgrade their properties and thus stimulate revitalization, many of the authors' findings are relevant to larger issues of urban development. For example, the analysis of how housing rehabilitation subsidies affect the investment behavior of nonsubsidized property owners provides insights about the link between initial upgrading and sustained neighborhood improvement. The analysis also demonstrates how differences in location, household, and housing stock characteristics affect a particular neighborhood’s responsiveness to a common policy initiative.