MUNICIPAL MERGERS: THEORETICAL CONSIDERATIONS, PRACTICAL EVIDENCE AND POTENTIAL IMPLICATIONS

Economic and fiscal crisis has put additional pressures on the efficient management of resources at the sub-national levels of government as well. Under the circumstances of fiscal austerity, policymakers are very inclined towards reorganization within the government, and this also includes possible consolidation (amalgamation) of local government units, i.e. municipal mergers. These mergers form part of the structural reforms of local self-government. where technical aspects of local government operation are targeted. To be specific, it is assumed, among other things, that municipal mergers and the subsequent consolidation of local government units would enable achieving economies of scale and subsequently reduce costs. This paper presents theoretical considerations on the reasons for municipal mergers, and subsequently, practical evidence on the outcome of these processes in various countries is also presented. The paper also focuses on the driving factors of mergers and extrapolates them for the potential of municipal mergers in the Slovenian context. Moreover; the empirics of the paper also focus on the application and validity of classical arguments for municipal mergers.