Purpose of my master thesis is evaluate influence of small municipalities in Slovenia on local and regional economic and social undevelopment. Because of limited availability of data on local level, my research unit will be statistical region. This means I will check fragmentation of statistical regions. I define fragmentation of statistical region as average population per capita. This means that fragmentation of statistical region is actually arithmetic mean witch has benefits and weakness if compared with other measures of central tendency. Used socioeconomics variables are GDP, unemployment and average salary. In master thesis, I will use qualitative, quantitative and comparative research methods. I will use also use two different years (2015 and 2016) which will enable calculating degree of development. This means that I will find out not only which statistical regions are underdeveloped but also which are developing faster. Goal of my master thesis is how fragmentation of Slovenia (which is in large part product of establishing municipalities witch are less populous than required by law) influence on local and regional undevelopment of Slovenia. As a result, my master thesis can be understood as critique of local government in Slovenia, decentralised i.e. centralized country and unequal development of Republic of Slovenia.