The aim of the article is to synthesise the process of the introduction of the reform of the basic territorial division of the state in Norway between 2016 and 2020, creating a new structure of municipal and regional self-government with a simultaneous change in some of the tasks carried out at both levels of municipal and provincial (regional) self-government. We comparatively analyse the process of development of territorial selfgovernment in Croatia, with a particular focus on changes in the attitude of academia and politics towards the consolidation of local self-government units. The analysis is based on the assumptions and categories of neo-institutional methodology. The main thesis of the paper emphasises the importance of the process of structural and functional consolidation of local government units carried out in order to optimise the delivery of public services, enhance the well-being of local communities and exploit economies of scale. The essence and evolution of local self-government institutions in Norway and Croatia and their political and theoretical conditions will also be the subject of synthesis in the paper.