The Challenge of Local Government Size

The Challenge of Local Government Size

Theoretical Perspectives, International Experience and Policy Reform

Studies in Fiscal Federalism and State–local Finance series

Edited by Santiago Lago-Peñas and Jorge Martinez-Vazquez

Expert contributors in economics and political science offer a comprehensive breakdown of the issue of local jurisdiction fragmentation and provide recommendations for successful policy reform. Topics discussed include economies of scale, the costs and benefits of voluntary and forced amalgamation programs, the correlation between government size and corruption, privatization, and inter-municipal cooperation. A combination of theory and empirical evidence provides depth and makes this book an invaluable addition to the literature.

Chapter 1: Introduction to the volume

Santiago Lago-Peñas and Jorge Martinez-Vazquez

Subjects: economics and finance, public sector economics, politics and public policy, public policy


Size matters in the efficient delivery of local public services. Many countries around the world have vertical government structures that are perceived as inefficient because of their high level of jurisdictional fragmentation. A common response has been the implementation of jurisdictional consolidation programs, both forced and voluntary. The main declared objective of these programs has been to achieve economies of scale, thereby reducing production costs of local and regional public services. On the critics’ side, it has been argued that policy strategies involving forced amalgamation can result in lost representation and accountability and that, therefore, other strategies need to be followed to address the issues raised by local government fragmentation. The aim of this book is to review the fundamentals of the different strategies to address local government fragmentation and their observed consequences. The volume examines in depth the following questions. What are the drivers of local government fragmentation? Should we be really worried about economies of scale? Are there population thresholds to have in mind when choosing the optimal size of jurisdictions or devolution of powers?