Enhancing administrative and fiscal decentralisation in the Czech Republic
There is considerable regional variation in incomes and poverty in the Czech Republic
and gaps have grown over time. With the highest number of municipalities per head
in the OECD, subnational government is very fragmented and the resulting lack of capacity
at the local level reduces the quality of public services and impedes the uptake of
effective development projects. This paper discusses various policy options to address
the challenges faced by Czech subnational governments and proposes reforms to enhance
their effectiveness. Mergers of municipalities would be an obvious way towards greater
integration, but this may be politically difficult. Mandating inter-municipal co-operation
over a legally defined set of public services can be an alternative way of improving
efficiency and the quality of service delivery. Tweaking the tax sharing system to
disincentivise small size of municipalities and to make subnational governments more
autonomous could be steps towards higher efficiency. Improving and consolidating the
delivery of education and health services at the local level is also needed in the
context of demographic change.
Published on January 21, 2021
In series:OECD Economics Department Working Papersview more titles