Across OECD and accession countries, inter-municipal co-operation has emerged as a key response to fragmentation and capacity constraints. With about a quarter of municipalities having fewer than 2 000 inhabitants, their small size often limits administrative capacity, service delivery, and the ability to respond to pressures such as demographic change, fiscal constraints, and increasing service complexity. Reforms such as outsourcing, mergers, or asymmetric decentralisation can help address these challenges, but they also have limitations, including political resistance, mixed economic outcomes, and greater institutional complexity. In this context, inter-municipal co-operation offers a pragmatic and flexible alternative, enabling municipalities to pool resources, share expertise, and operate at a scale better aligned with functional needs while preserving local autonomy.
Inter-municipal co-operation plays a critical role in addressing challenges that extend beyond administrative boundaries. It supports municipalities in adapting to demographic decline and ageing, particularly in rural and shrinking regions, while also helping fast-growing urban areas co-ordinate policies related to transport, land use and environmental management. More broadly, it strengthens urban–rural linkages and promotes integrated territorial development by aligning policies with functional geographies such as labour markets or service catchment areas.
Inter-municipal co-operation takes a wide variety of forms in OECD and accession countries. While inter-municipal is understood as formal or informal arrangements through which two or more municipalities jointly carry out specific tasks, the reality is much more diverse. At one end of the spectrum, it includes informal or lightly formalised arrangements, such as ad hoc agreements or contractual partnerships under public or private law. At the other, it encompasses fully institutionalised structures – under either public or private law – such as municipal associations, inter-municipal companies or specialised public bodies with their own governance, budgets and delegated competences. These arrangements cover a broad range of policy areas, from administrative functions (e.g. procurement, accounting) and service delivery (e.g. water, waste, transport, healthcare) to infrastructure provision and strategic functions such as spatial planning, economic development and social services.
This report focuses specifically on inter-municipal co-operation as a mechanism for joint service delivery, infrastructure development and operational co-ordination. It does not cover other forms of municipal collaboration primarily aimed at representation or advocacy or established as financial co-operation instruments like municipally owned banks. While these play important roles, they fall outside the scope of inter-municipal co-operation as defined here.
Despite its potential, inter-municipal co-operation is not without challenges. If poorly designed or implemented, it can increase administrative complexity, blur accountability or generate co-ordination costs that outweigh expected benefits. Empirical evidence on its effectiveness remains mixed, with outcomes varying significantly depending on the sector, scale, governance arrangements and local context.
Against this backdrop, the report provides policymakers, practitioners and researchers with guidance on how to design and implement effective inter-municipal co-operation. This includes: a legal framework that provides clarity, consistency and flexibility; an institutional framework that aligns functions, territorial scales and co-operation forms with the nature of services; and a solid fiscal framework that enables co-operation to merge, function effectively and endure over time. These three pillars should be supported by enabling conditions, such as trust, governance transparency, data and monitoring.
The report includes country snapshots of inter-municipal co-operation frameworks across 44 OECD and accession countries that offer useful points of comparison and help readers understand the diversity of co-operation arrangements.
This work is part of the OECD Multi-Level Governance Studies series. It was conducted by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), under the leadership of the Regional Development Policy Committee (RDPC). The first version of the draft report was shared on 21 November 2025 [CFE/RDPC(2025)28)], and was revised and shared again under the reference [CFE/RDPC(2025)28/REV1)]. It was presented at the RDPC meeting on 23 April 2026, and the final version of the report was finalised on 2 May 2026 following the receipt of the final comments from the countries involved.