An International Perspective on the Determinants of Local Government Fragmentation

The main questions addressed in this paper are the identification of the main determinants of jurisdictional fragmentation as presently observed across countries and how well those findings line up with the predictions of the expanded standard model of optimal jurisdiction size. To our knowledge, to date, there does not exit a rigorous study analyzing the cross-country determinants of fragmentation in the way this issue has been previously analyzed for some particular countries. At the outset, country fixed effects can be expected to loom large and powerful. Each country with its own history conditioned by a myriad of details, including colonial legacies, geography or ethnic and linguistic fragmentation, are likely to have contributed to heterogeneous levels of fragmentation. These factors could all be summarized in what is often termed the long shadow or the “dead hand” of history. Indeed, some countries may still have the same vertical structure of government that they had many decades ago. But there are also many countries that have changed their governmental structures over the years. So in this paper we would like to find out what may the common determinants that have led to those changes, and also perhaps to help us better understand if those common determinants can also be used to explain why other countries have changed so little. The rest of this paper is organized as follows. In section 2 we offer a simple extension of the conventional model for optimal jurisdiction size. In section 3 we review the literature on government fragmentation and its impact. In section 4 we outline the empirical model proposed for the analysis of jurisdictional fragmentation. In section 5 we present the results from our estimations. We conclude in section 6.