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This paper explores the impact of decentralization on countries' fiscal outcomes paying attention to one aspect usually neglected in the literature: the relevance of self-interested local politics. Relevance that can be proxied by the nationalization of political party systems, namely the extent to which parties compete nationally oriented. Based on a sample of developed and developing countries over the period 1970-2011, our findings are twofold. First, fiscal decentralization has a positive effect on general governments' primary balance. Second, primary balance is negatively affected by the nationalization of party systems only when the latter is extremely weak.

The challenge of local government size: theoretical perspectives, international experience and policy reform edited by S Lago-Peñas, J Martinez-Vazquez; Edward Elgar, Cheltenham, Glos, 2013, 291 pages, £85.00 cloth (US$135.00) ISBN 9781782544296 Over recent decades many countries have pursued voluntary or forced consolidation processes for local governments. The main argument in favour of this strategy is the achievement of economies of scale, as it improves efficiency in public services delivery. However, this strategy also raises concerns about its effect on political representation and accountability. The edited volume The Challenge of Local Government Size brings together a collection of studies that address this disputed topic. Rather than narrowing the scope on the relation of size with economic efficiency, this volume analyzes local government size as a multifaceted topic. The causes of local fragmentation, its effects on politics, the vertical control of corruption, how it relates with intensive labour services, or the mechanisms of local cooperation are only part of the research interests of the book.Oates's (1998) classical arguments on the optimal size of political communities underline the core conceptual framework of the volume. Efficiency, accountability, and political representation are key concepts that provide a common thread throughout the chapters. From the very beginning, the size of local communities is presented as a product of the 'dead hand of history'; but, at the same time, preferences for accountability are introduced as an element that tends to fragment local communities. Thus, the book creates the departure point for a political economy of local government size. In my view, this idea does not illustrate a tension between the economic and political vectors but moves the analysis one step further.Three central chapters analyze local government size from a political scope. The chapter by Charron, Fernández-Albertos, and Lapuente illustrates a paradox; despite political processes not receiving a worse evaluation in large communities when compared with small ones, it is the case in the quality of service provision. However, local government size proves to have a weaker effect on quality perception. This is not the case with political corruption. According to Nelson's findings, less fragmented municipal societies are related to more honest politicians, especially in developed countries. Nevertheless, the following chapter proves that the effect is the reverse, the higher the financial and fiscal autonomy of local authorities. As the evidence presented in all three cases is based on comparative studies, they easily complement each other. They also open different lines for further research. Probably the most urgent one is identifying the micromechanisms that drive the relation between community size and perceptions in quality of government and corruption.Of course, efficiency is not left aside in the volume, and the potential advantages in service provision of larger municipalities are addres...