Structural Reform: Municipal Mergers

Abstract

Structural reorganization using municipal mergers is a common form of local government reform. This chapter examines both the theoretical literature and associated empirical work on council consolidation. After briefly discussing the magnitude of amalgamation across the world, this chapter considers the various schools of thought on council consolidation before examining specific dimensions of local government, including scale economies, scope economies, interjurisdictional spillovers, economic development, administrative and strategic capacity and local democracy. Given the various theoretical expectations of the impact of amalgamation, this chapter then considers available empirical evidence on scale and scope economies, interjurisdictional externalities, economic growth, administrative capacity as well as local democracy. This chapter ends by concluding that the weight of empirical evidence indicates that municipal mergers have not met anticipations.