Our study is focussed on local government, which we distinguish from other organisations through 4 criteria: a local government unit has a clearly defined territory, has authoritative power over its citizens, has directly elected decision-makers and/or municipal assemblies, and has a certain amount of local autonomy to provide policies.

Local autonomy is measured through 11 variables, which are combined in 7 dimensions and an overall “local autonomy index” (LAI).

The 11 variables of local autonomy

Local autonomy combines self-rule and interactive rule elements. It is measured through 11 variables:

Self-rule

1. Institutional depth: The extent to which local government is formally autonomous and can choose the tasks they want to perform
2. Policy scope: The range of functions (tasks) where local government assumes responsibility for the delivery of the services (whether it is provided by municipal personnel or through other arrangements)
3. Effective political discretion: The extent to which local government can make final decisions over these functions
4. Fiscal autonomy: The extent to which local government can independently tax its population
5. Financial transfer system: The proportion of unconditional financial transfers to total financial transfers received by the local government
6. Financial self-reliance: The proportion of local government revenues derived from own/local sources (i.e. taxes, fees, charges over which local government has influence)
7. Borrowing autonomy: The extent to which local government can borrow
8. Organisational autonomy: The extent to which local government is free to decide about its own organisation and electoral system

Interactive rule

1. Legal protection: The existence of constitutional or legal means to assert local autonomy
2. Administrative supervision: The extent to which administrative supervision of local government is (un)obtrusive
3. Central or regional access: The extent to which local authorities have channels to influence higher level governments’ policy-making

The 7 dimensions of local autonomy

We believe that each of the components of local autonomy is of interest in its own right depending on the questions one is interested in. For some purposes, however, it might be important to reduce complexity and to combine the different variables into a limited number of dimensions or into an overall index. By doing so, we also have the possibility to give different weights to the various aspects of local autonomy considering local autonomy as a multi-dimensional phenomenon. Following the literature, the European Charter of Local Self-Government and both theoretical and empirical grounds, we distinguish between to following 7 dimensions of local autonomy:

1. Legal autonomy (LA): The legal status and protection of local governments
2. Political discretion (PD): The formal distribution of power and the effective decision-making competences with respect to services delivery
3. Policy scope (PS): The scope of services for which local governments are responsible
4. Financial autonomy (FA): the financial resources available locally and the possibility to decide on their sources
5. Organisational autonomy (OA): the free organisation of local political arenas and administration
6. Non-interference (NI): the extent of liberty left by higher levels of government in their control
7. Access (AC): the degree of influence of local governments on political decisions at higher levels of government

The local autonomy index (LAI)

Based on the judgements of the country group coordinators, the Local Autonomy Index (LAI) puts an emphasis on effective political discretion and financial autonomy which are considered to be very important dimensions of local autonomy. Policy scope and organisational autonomy are important dimensions of local autonomy, while the last three variables are considered to be somewhat important.

The LAI is constructed as followed (weighting factors in bold):

LAI_YEAR = (1*LA_YEAR + 3*PD_YEAR + 2*D_PS_YEAR + 3*FA_YEAR + 2*OA_YEAR + 1*D_NI_YEAR + 1*D_AC_YEAR)/13