EXPLORING THE NUMBER OF FIRST‐ORDER POLITICAL SUBDIVISIONS ACROSS COUNTRIES: SOME STYLIZED FACTS*

ABSTRACT Why do some countries have no first‐order administrative subdivisions (e.g., states or provinces), whereas other countries have over 80? Recently, economists have started to look at the optimal size of countries and forces influencing the creation of local political jurisdictions like school districts. This paper provides the first analysis of the “missing middle” level of political jurisdictions common to all countries. We empirically examine how country size, natural transportation infrastructure, location, population fractionalization, and level of development affect the number of first‐order subdivisions. The number of first‐order subdivisions is shown to be associated in a nonlinear way with measures of fractionalization—exhibiting a U‐shaped Kuznets curve for ethnic heterogeneity and an inverted Kuznets curve for lingual and religious heterogeneity. This is a different and more complex relationship than that found for local political jurisdictions where greater heterogeneity is associated with more districts suggesting that first‐order political subdivisions may serve a different role.