Theoretical Aspects of Sub-National Governance Structure and Competence Establishment of Territorial Municipalities

Abstract

The objective of this article is to analyze the criteria and conditions of division of competence between
territorial municipalities and other subjects of public governance as well as theoretical aspects of competence
establishment of territorial municipalities and sub-national governance structure.
The first part of the article examines the criteria and terms of division of competence between territorial
municipalities and other subjects of public governance. The second part analyzes theoretical aspects
pertaining to size and competence establishment of territorial municipalities. The third part deals with the
peculiarities of establishing the number of sub-national governance levels and competence of territorial
municipalities. After analyzing the scientific literature it can be stated that when shaping and improving the public
governance system of a specific country, it is beneficial to parallely assess and combine the competence
components of public governance structure and governance subjects, which are inter-related through ties
of mutual dependence.
Although guidelines are offered in economic theories for structurization of sub-national governance
and establishment of the competence of territorial municipalities, the structure of sub-national governance
and competence of territorial municipalities varies significantly from one country to another, subject to a
variety of situational variables. A conclusion was therefore made that it is practically impossible to establish
an optimal size of territorial municipalities and the number of levels of sub-national governance due
to the complicated assessment of diverse and changing conditions for production and organization of public
goods, the cost structure of public goods produced and organized by territorial municipalities,
qualitative aspects and the scope of externality.