"Sixty three of 75 countries with more than five million people are now pursuing decentralization policies that devolve functions and responsibilities to local governments, but the process of decentralization is severely constrained by a lack of institutional capacity among local governments, limited resource mobilization at the local level, and limited access to long-term financing for investment programs. Municipal development projects (MDP) aim at mitigating these constraints." This study has two objectives: (i) to assess impacts of MDPs on the institutional capacity building of local governments for fiscal and financial management and for planning and implementation of investment programs; and (ii) to assess both "direct" impacts on the beneficiaries as anticipated by the projects, and "indirect" (longer-term) impacts on the development of local economies focusing on employment and income generation in the participating municipalities. It focuses on the MDPs implemented in Brazil and the Philippines. The authors explain the logic of the evaluation instruments and what the evaluations mean for future projects.