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Electoral system, Fiscal policy, Nationalization, Party system, Transaction costs,

Introduction We examine the extent to which party systems are shaped by fiscal and political decentralization or the authority granted to different levels of government. More specifically, we focus on the impact of decentralization on the degree of party system nationalization. (1) The topic is relevant for many reasons. According to Alema¨n and Kellam (2008, page 193),``comparative nationalization interests scholars because it helps to distinguish party systems from one another in ways that have implications for governability and political representation.'' Party nationalization is of paramount importance for analyzing party competition from both the supply and demand sides (Kasuya and Moenius, 2008, page 126). Party nationalization should therefore distinguish among party systems with similar formats and centripetal or centrifugal directions of competition, but different levels of nationalization. As Jones and Mainwaring (2003, page 140) have written,``in case of high nationalization, electoral competition follows a roughly similar pattern across the country's sub-national units. In a case of low nationalization, the parties that fare well in some sub-national units are minor electoral competitors elsewhere.'' Accordingly, parties should develop distinctive political and, in particular, electoral strategies depending on the extent to which they are nationalizedöthat is, receiving similar voting shares across all or most districtsö or notöthat is, oscillating between being hegemonic in some districts and secondary if not irrelevant in others. Many comparative dimensions of politicsösuch as the outcomes of decentralization processes, the range of public policies, the legislative careers of representatives, the politics of coalition making in parliamentary regimes, and even the consolidation of new democracies ömight have different results in highly or low party-nationalized countries (Jones and Mainwaring, 2003, pages 143^144). The first essential step is to clarify what the nationalization of party systems entails. Through the nationalization processes, highly localized and territorialized politics are replaced with national electoral alignments and oppositions; programmes and policies become national in scope and cancel out or at least reduce the scope of local problems,

The political and economic consequences of decentralization Decentralization has become one of the most important forms of contemporary policy reform and institutional redesign in the last several decades. It is not difficult to find empirical evidence supporting this claim. A recent survey finds that sixtythree of seventy-five developing countries have been undergoing some decentralization of authority (Garman et al, 2001, page 205). Moreover, an index of regional authority in forty-two democracies and semidemocracies reveals that twenty-nine countries have regionalized and only two have become more centralized since 1950 (Hooghe et al, 2010). In addition, around half the member states of the European Union have carried out significant decentralization and regionalization reforms since the 1980s, while none has become more centralized (Hooghe and Marks, 2001). These have not been surprising trends when viewed in the broader contexts of governments all around the world pursuing, in the past half century, greater economic efficiency in the public sector and stronger grassroots democratic institutions and representation for their citizens. However, as usual in the social sciences, the relationship between cause (decentralization) and effects (improved government efficiency, better governance, and so on) is not so simple. The decentralization processes also have consequences, often unintended, for a wide range of political and economic issues such as corruption, party systems, and turnout, on the one hand, and poverty and inequality, long-run macroeconomic performance, the development of social capital, and effectiveness of tax assignment, on the other. The papers in this issue are intended to shed light on and advance our understanding about some of these questions. Let us examine them. The debate on the impact of political institutions, particularly the territorial sovereignty (unitary or federal), on governance remains unresolved. The mechanisms behind a positive relationship between decentralization and governance might be compensated to some extent by other mechanisms playing in the opposite direction. Multilevel institutions create new opportunities for local actors, improve the quality of public policy, and reduce administrative costs by increasing the proximity between government and citizen as well as governmental understanding of citizen preferences [among others, see Escobar-Lemmon (2003) and Weingast (1995)]. However, if the electoral control of incumbents falters as a result of an inability to assign responsibility in multilevel governance, politicians are no longer forced to act in the best interest of the public (Anderson, 2006; Lago-Pen¬ as and Lago-Pen¬ as, 2010). Clarity of responsibility might be then a key challenge for the success of decentralization processes. According to Gerring and Thacker (2004), Kunicova¨and Rose-Ackerman (2005), or Treisman (2000), for instance, unitary polities experience lower levels of corruption because of, among other things, the more hierarchical arrangement of poli...

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