№ 7/2018

Fìnansi Ukr. 2018 (7): 100–117

LOCAL FINANCE

VOZNYAK Halyna ¹

¹SІ “Institute of Regional Research named after M. I. Dolishniy of the NAS of Ukraine”
OrcID ID : https://orcid.org/0000-0003-2001-0516

The role of financial decentralization in providing sustained endogenic growth of Ukraine’s regions

The development of regions in modern conditions can be ensured through the formation of the self-developed regional socio-economic systems. In this context, the new policy of endogenous growth should be based on the effective management of the financial potential of regions in the frames of financial decentralization. The purpose of the article is to study the impact of financial decentralization on the endogenous growth of Ukrainian regions. The article systematizes the forms of the influence of financial decentralization on the processes of socio-economic development of the regions and determines possible risks. The completion of the first stage of the financial decentralization reform in Ukraine reveals the following trends: the financial base is expanding and the volume of revenues to local budgets is increasing; the amount and volume of treasury loans to cover temporary cash disruptions of local budgets are decreasing; the volume of funds on deposit accounts in banks’ institutions are increasing; the capital expenditures and investment resources for the development of regions are growing. It is proved that excessive subsidization of local budgets still remains. The constructed equations for the estimating of the impact of financial decentralization on the socio-economic development of the regions have made it possible to establish its ambiguous nature. It is shown that: the growth of decentralization of incomes and expenditures is positively associated with the growth of GRP per person; the controversial nature of the manifestation of financial decentralization is derived from tax revenues; the negative impact of the intergovernmental transfers growth in the revenues of local budgets is explained by excessive financing of current expenditures, which does not contribute to the endogenous growth of Ukrainian regions. The range of problems caused by financial decentralization and the consequences for economic growth of Ukraine’s regions are determined. The ways of risks minimization is proposed in the frames of: the financial capacity of local budgets increasing and minimization of the regional budget disproportions; introduction of medium-term planning at the regional level; the completion of the process of association of territorial communities and the transition of all local budgets to direct relations with the state budget.

Keywords:financial decentralization, endogenous growth of regions, interregional asymmetries, local budgets, balance of budgets

JEL: С23, Н77, R58

VOZNYAK H. . The role of financial decentralization in providing sustained endogenic growth of Ukraine’s regions / H. . VOZNYAK // Фінанси України. - 2018. - № 7. - C. 100-117.

Article original in Ukrainian (pp. 100 - 117)

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