City Size and Public Service Access: Evidence from Brazil and Indonesia

Most global population growth over the next two decades is projected to occur in small- and medium-sized cities in low- and middle-income countries. Expectations derived from the literature on fiscal federalism suggest that this is a cause for concern, as larger cities are thought to deliver public goods more effectively than smaller ones owing to economics of scale. Drawing on detailed cross-sectional data from Brazil and Indonesia, we show that smaller municipalities tend to possess more basic public health clinics and schools per capita, scattered throughout their territory, than larger cities. We theorize that the greater prevalence of such facilities in small cities reflects a relative lack of non-state alternatives, fewer concerns regarding "urban" problems faced in larger cities, and politicians' greater ability to secure and claim credit for such facilities. We illustrate the logic of this argument in case studies of otherwise-similar cities of different sizes in Brazil, and with shadow cases from Indonesia. Our analysis underscores how jurisdiction size and non-state service provision can affect government services.