Subnational territorial reforms and state capacity: evidence from the developing world

Governments often change their internal territorial divisions to pursue either political or governance goals. Over the recent decades, reforms of splitting local government units, known as fragmentation, have gained popularity in developing world, and further stimulate ongoing discussion about jurisdiction size quality government. Building on this stream literature, paper seeks empirically examine how design primary administrative division affects overall capacity state implement its policies. Drawing a country-year panel 132 countries 1960–2012 period, documents an inverse U-shaped relationship between degree fragmentation measured by different indicators, which suggests tradeoff designing divisions. Furthermore, curvilinear is found more pronounced under unitary system with high level ethnic fractionalization.