Financial self-sufficiency of Ukrainian territorial communities and local economic development: Modeling the causal relationship
-
DOIhttp://dx.doi.org/10.21511/pmf.12(2).2023.02
-
Article InfoVolume 12 2023, Issue #2, pp. 17-31
- Cited by
- 427 Views
-
180 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The financial self-sufficiency of communities determines their ability to create additional jobs, attract investment resources, offer quality social services, and improve the population’s living standards and well-being. The study aims to identify the casual relationships between financial self-sufficiency and local economic development of Ukrainian territorial communities during economic instability. The paper used integrated assessment based on a spatial approach (identifying the level of local economic development), indicative method (calculating empirical values of financial self-sufficiency of communities), VEC model (analyzing the sensitivity of local economic development to changes in financial self-sufficiency), balanced multi-component regression method (modeling the relationship between local economic development and financial self-sufficiency). Data were gathered on all territorial communities of Ukraine in 2021. The results show that the highest level of local economic development was observed in Dnipropetrovsk oblast (empirical coefficient equal to 0.855), high levels in Kharkiv, Zaporizhzhia, Odesa, Kyiv, and Poltava oblasts (0.787; 0.687; 0.684; 0.663 each, respectively), and moderate levels in Zakarpattia (0.448) and Kirovohrad (0.433) oblasts. With increased financial self-sufficiency, local economic development can exceed 2%; a 1% increase in the decentralization of tax revenues and expenditures simultaneously leads to an increase in the attractiveness of the investment climate as an indicator of local economic development (2.3-6.6%). The study proves that the territorial communities of the regions characterized by a low level of local economic development demonstrated higher values of decentralization of interbudgetary revenues than those with higher values of local economic development.
- Keywords
-
JEL Classification (Paper profile tab)О18, Е62, С12
-
References30
-
Tables4
-
Figures2
-
- Figure 1. Methodology for studying the relationship between financial self-sufficiency and local economic development
- Figure 2. Local economic development in Ukraine, 2021
-
- Table 1. Configuration of components and indicators for the assessment of local economic development
- Table 2. Local economic development of territorial communities in Ukraine: Indicative and spatial approach, 2021
- Table 3. Financial self-sufficiency of territorial communities of Ukraine: The context of decentralization, 2021
- Table 4. Sensitivity of local economic development indicators to changes in financial self-sufficiency of territorial communities of Ukraine, 2021
-
- Araftenii, A. M. (2017). Problem of institutional provision of economic development of territorial communities in Ukraine. Economic Innovations, 19(1), 18-22.
- Behrman, J. R., Michelle, O. S., Soo, C. K., & Bravo, D. (2012). How financial literacy affects household wealth accumulation. The American Economic Review, 102(3), 300-304.
- Boyle, R. (2016). Re-shaping local government: Overview of selected international experience with local government reorganisation, mergers, amalgamations and coordination (Local Government Research Series No. 10). Dublin: Institute of Public Administration.
- Breathnach, P. (2017). The national planning framework: Key governance issues. The Political Studies Association of Ireland Annual Conference. Dublin City University All Hallows Campus.
- Gathergood, J. (2012). Self-control, financial literacy, and consumer over-indebtedness. Journal of Economic Psychology, 33(3), 590-602.
- Goncharuk, N. T., Prokopenko, L. L., Krushelnytska T. A., Rubchak, O. B., & Taraban, S. V. (2021). The capability of amalgamated territorial communities as a key factor in the socio-economic development of territories. Estudios De Economia Aplicada, 39(6).
- Henager, R., & Mauldin, T. (2015). Financial literacy: The relationship to saving behavior in low-to moderate-income households. Family and Consumer Sciences Research Journal, 44(1), 73-87.
- Horoshkova, L., Volkov, V., Kapranova, L., & Komelina, A. (2018). The reverse subsidy’s impact of united territorial community’s budget generations. International Journal of Engineering & Technology, 7(4.8), 539-543.
- Khirivskyi, R., Cherevko, H., Yatsiv, I., Pasichnyk, T., Petryshyn, L., & Kucher, L. (2020a). Assessment and analysis of sustainability of the socio-economic development of amalgamated territorial communities of the region. European Journal of Sustainable Development, 9(2), 569-578.
- Khirivskyi, R., Petryshyn, L., Pasichnyk, T., Brukh, O., Bernatska, I., & Kucher, L. (2020b). Assessment and forecast of the efficiency of use of the financial resources of amalgamated territorial communities in the context of European integration. European Journal of Sustainable Development, 9(3), 607-615.
- Liashenko, P., Plietnov, M., & Vakhlakova, V. (2023). Coherence of local economic development and post-war reconstruction of infrastructure: Scientific hypothesis. Economics. Finances. Law, 4, 26-29. (In Ukrainian).
- Lupak, R., Boiko, R., Kunytska-Iliash, M., & Vasyltsiv, T. (2021). State management of import dependency and state’s economic security ensuring: New analysis to evaluating and strategizing. Accounting, 7(4), 855-864.
- Openbudget. (n.d.). Derzhavnyi veb-portal biudzhetu dlia hromadian [State budget web portal for citizens]. (In Ukrainian).
- Pejic Bach, M., Tustanovski, E., Ip, A.W.H., Yung, K.-L., & Roblek, V. (2020). System dynamics models for the simulation of sustainable urban development: A review and analysis and the stakeholder perspective. Kybernetes, 49(2), 460-504.
- Petrushenko, Yu., Kostyuchenko, N., Smolennikov, D., & Vorontsova, A. (2017). Impact of the participatory financing of international development projects on social capital of the local communities. Problems and Perspectives in Management, 15(3), 183-192.
- Pike, A., Coombes, M., O’Brien, P., & Tomaney, J. (2018). Austerity states, institutional dismantling and the governance of sub-national economic development: The demise of the regional development agencies in England. Territory, Politics, Governance, 6(1), 118-144.
- Pike, A., Rodriguez-Pose, A., & Tomaney, J. (2017). Local and regional development (2nd ed.). Oxford and New York: Routledge.
- Rushchyshyn, N., Mulska, O., Nikolchuk, Yu., Rushchyshyn, M., & Vasyltsiv, T. (2021). The impact of banking sector development on economic growth: Comparative analysis of Ukraine and some EU countries. Investment Management and Financial Innovations, 18(2), 193-208.
- Shkolnyk, I., Mershchii, B., & Melnyk, T. (2018). Assessment of quality of financial support for local social development in Ukraine. Public and Municipal Finance, 7(4), 19-28.
- Spasіv, N. (2019). Synerhetyka yak metodolohichnyi karkas piznannia obiednanykh terytorialnykh hromad [Synergetics as a methodological carcass of knowing of the united territorial communities]. Rehionalna Ekonomika ta Upravlinnia – Regional Economics and Management, 1(23), 203-212. (In Ukrainian).
- Stroiko, T., Danik, N., & Prokofyev, D. (2021). Development of financial decentralization as a basis for self-sufficiency of territorial communities. Baltic Journal of Economic Studies, 7(4), 196-202.
- Umanets, T., Grynevych, L., Topalova, I., Darienko, O., & Shatalova, O. (2018). Economical self-sufficiency of a territorial community as a system characteristic of its self-development. Academy of Strategic Management Journal, 17(5), 1-8.
- Vasyltsiv, T., Biletska, I., & Mulska, O. (2021). Organizational and financial instruments of decentralization and development of united territorial communities in Ukraine: Poland’s experience. Management Theory and Studies for Rural Business and Infrastructure Development, 43(2), 276-287.
- Vasyltsiv, T., Lupak, R., Boiko, V., & Kunytska-Iliash, M. (2022). Technological competitiveness formation policy, economic security, and growth in the context of Ukraine. In M. Elhoseny, X. Yuan, & Sd. Krit (Eds.), Distributed Sensing and Intelligent Systems (pp. 299-312). Springer, Cham.
- Vernon, А., & Qureshi, H. (2000). Community care and independence: Self-sufficiency or empowerment? Critical Social Policy, 20(2), 255-267.
- Voznyak, H., Kloba, T., Kloba, S., & Kloba, L. (2019). Model of assessment of financial imbalances in regions of Ukraine. Investment Management and Financial Innovations, 16(1), 365-377.
- Voznyak, H., Mulska, O., Bil, M., Patytska, K., & Lysiak, L. (2022a). Financial well-being of territorial communities and the economic growth of the regions of Ukraine: Assessment and modeling of interrelation. Agricultural and Resource Economics: International Scientific E-Journal, 8(2), 141-157.
- Voznyak, H., Mulska, О., Bil, M., & Radelytskyy, Y. (2022b). Financial well-being of households in instability. Investment Management and Financial Innovations, 19(1), 135-144.
- Voznyak, H., Stasyshyn, A., & Koval, V. (2022c). Evaluation of self-sufficiency of territorial communities as the basis for ensuring their sustainable development. Agricultural and Resource Economics: International Scientific E-Journal, 8(4), 151-169.
- Zablodska, I., Melnykova, O., Romakhova, O., & Karielin, S. (2021). Territorial dimension for sustainable development of infrastructure enterprises: Information and administrative component. Management Theory and Studies for Rural Business and Infrastructure Development, 43(3), 354-362.