Optimum Territorial Reforms and Local Authority Amalgamations: Does Size Matter?

The economic rationale frequently cited for local government territorial reforms and municipal amalgamations is the economies of scale argument. It is argued that in the subnational public sector sphere larger councils may exhibit scale economies, and provide services at a lower per unit cost than smaller councils. As against the ‘small is beautiful’ argument that is advocated by political scientists using the local democracy and subsidiarity arguments but also by economists in favour of decentralisation, competition and government restraint, this is the case of ‘big is better’. In examining structural and organisational reforms aimed at seeking out the optimum size of local government the most likely conclusion based on international evidence is that there is no single or standard size that is appropriate for all local governments, i.e. no one-size-fits-all solution and no universal prescriptions for the design of local government systems as individual country and local circumstances and system-specific characteristics matter. Read more …