The backgroundBefore the 1980s, academic research on subnational government in Western states concentrated primarily on local government in the context of fairly stable national welfare regimes. In this context, local authorities acted as 'agents' of central governments in the delivery of policy programmes which were mostly designed by the centre (Darby et al. 2002). Local governments in most of these states were assigned specific tasks such as transport and housing related to their own localities. They also provided an important dimension of democratic representation through local elections. The degree of political, fiscal and policy autonomy varied across the different states as did the situation of local authorities in federal versus unitary states (Loughlin 2004;Loughlin et al. 2010).From the early 1980s, two developments changed this situation of top-down approaches to subnational government. First, there was the inauguration of a new phase of globalization following the collapse of the Bretton Woods system of exchange, the two oil crises in the 1970s, and the crisis of the Keynesian economic model as well as of the welfare state (Held et al. 2009). This meant a shift in the role of the state which moved from greater intervention in society and the economy to a more hands-off approach, that is, a shift from Keynesianism to neoliberalism (Jessop 1990). Henceforth, the market would be favoured over the state in policy approaches. Some scholars would argue that this phase of globalization was a de facto propagation of neoliberalism across the globe (Held et al. 2009;Harvey 2005). The role of international financial institutions such as the International Monetary Fund (IMF) and the