Decentralization, administrative reforms and local government performance: The impact of inter-communality in a pre-crisis time

The paper explores the potential of local council partnerships as instruments to improve horizontal decentralization reforms since these institutional arrangements exhibit several features of the functional, overlapping and competing jurisdictions (FOCJ) (Frey and Eichenberger, 1996). The issue is empirically addressed by evaluating the effect of local artnerships on two local council performance indicators, namely revenue autonomy and expenditure. Additionally, a distinction between impact of mandatory versus voluntary partnerships is introduced. Using data on 246 Italian municipalities at two pre-crisis times (1999 and 2003), we found that the degree of autonomy assigned to local councils to choose partners for cooperation is a crucial element of an effective local government reform. While mandatory local council partnerships show to be not effective to improve local council performance, voluntary local council partnerships enhance revenue autonomy without affecting local council expenditure. This latter form of inter-communality shows to work much more in line with the way FOCJ should do hence voluntary local council partnerships can help to improve horizontal decentralization.