№ 3/2023

Fìnansi Ukr. 2023 (3): 75–87https://doi.org/10.33763/finukr2023.03.075

LOCAL FINANCE

PAVLIUK Klavdiia ¹, BARTOSH Serhii ²

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-9495-6630
²SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-9491-991X

Modern approaches to fiscal decentralization (part 2)

Introduction. Decentralization in Ukraine, the new stage of which began in 2014, in particular regarding the redistribution of powers and financial resources between the levels of the budget system, played a positive role in ensuring the livelihood of communities under martial law after the start of full-scale Russian aggression.
Problem Statement. In domestic scientific opinion, attention is usually paid either to the applied aspects of budgetary (fiscal, financial) decentralization, or to the analysis of classic works of representatives of the first and second generations of fiscal decentralization. At the same time, any practical measures require the study of theoretical foundations, including those that have been developed over decades and those that have developed in recent years.
The purpose is to generalize the work of foreign scientists on fiscal decentralization, which cover the first and second generation of theories, as well as relate to currently relevant issues.
Methods. General scientific methods of analysis and synthesis, induction and deduction, grouping, generalization, etc. are used.
Results. An analysis of the theories of fiscal decentralization of the first and second generation was carried out, in particular in the aspects of increasing accountability and transparency of the government system, balanced (centralized and decentralized) provision of local public goods, the influence of endogenous and exogenous factors on its overall effect, theories of social choice, etc. The issue of fiscal decentralization, which is currently the subject of research by scientists, is considered: the impact on economic growth and human development, the dependence of the positive effect on the quality of the institutional environment, the role in anti-crisis regulation, the ratio of advantages and disadvantages in countries with developed economies, newly industrialized countries and cranes that are developing
Conclusions. A certain consensus of scientists has been formed on the positive impact of decentralized systems, implemented worldwide over the last few decades, on socioeconomic development and growth of the economy, especially subject to proper substantiation of relevant reforms. At the same time, the impact on human development is ambiguous and depends on many internal and external factors. A sufficiently high quality of the institutional environment is a prerequisite for the successful course of the fiscal decentralization. In centralized countries, which are characterized by a rather rigid mechanism of economic regulation, fiscal decentralization is not only possible but also causes positive consequences, although they do not always coincide with the results of countries with liberal economies. Fiscal decentralization also justifies itself in emergency situations, which confirms the example of Ukraine after the start of full-scale Russian aggression, when communities have shown the ability to respond quickly to internal and external challenges, including accepted and satisfied the urgent needs of several millions of internally displaced persons.

Keywords:fiscal decentralization, theories of fiscal decentralization of the first and second generation, the impact of fiscal decentralization on economic growth and human development, advantages and disadvantages of fiscal decentralization

JEL: B26, H77

PAVLIUK K. . Modern approaches to fiscal decentralization (part 2) / K. . PAVLIUK, S. Bartosh // Фінанси України. - 2023. - № 3. - C. 75-87.

Article original in Ukrainian (pp. 75 - 87)

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