Reforming Fiscal Federalism and Local Government

Beyond the Zero-Sum Game

image of Reforming Fiscal Federalism and Local Government

This book describes and examines reforms of fiscal federalism and local government in 10 OECD countries implemented over the past decade. The country chapters identify common patterns and factors that are conducive to reforms of the intergovernmental fiscal framework, using a common methodological approach. The summary chapter highlights the cross-cutting issues emerging from the country chapters and shows the key factors in the institutional, political, economic and fiscal areas that are supporting reform success. The report’s approach results in valuable insights for policy makers designing, adopting and implementing fiscal federalism and local government reforms.



Denmark: The Local Government Reform

On 1 January 2007, a new administrative map of Denmark was created, as the Danish Local Government Reform came into force. The number of municipalities was reduced from 271 to 98 by mergers, and the 13 counties were abolished and replaced by five regions (). A process of controlled voluntary mergers resulting from a political agreement between the main political parties forced municipalities to merge until they reached a minimum size of 20 000 inhabitants, while leaving them freedom to negotiate with their neighbours to create the new boundaries. The main objective of the reform was to adapt public service delivery to technological change and increasing demand, while leaving the Danish public sector decentralised. The public sector and service levels had grown over the years, and small municipalities could no longer provide the level of services that was now required. Municipal mergers were therefore seen as an alternative to recentralisation.


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