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Estimation of structural and regional differentiation of municipal budgets under financial decentralization (case for Ukraine)

Yevgen Kuzkin
Public and Municipal Finance , Volume 7, pp 29-40; doi:10.21511/pmf.07(4).2018.04

Abstract: Obligatory consideration of peculiarities of the territorial development and regional differences in municipal budgets development is a prerequisite for ensuring the success of reforms aimed at decentralizing state power in the financial sphere and for developing the mechanism of inter-budget relations. The purpose of the study is to substantiate theoretically and develop a methodical approach to the differences between regions in terms of structural and regional differentiation of municipal budgets under state power decentralization. The article proposes a methodical approach to identifying the needs and substantiating measures for financial decentralization. The approach is based on considering the structural and regional differentiation and using statistical and cluster analyses to identify special aspects of the municipal budgets creation at different levels. The following regularities of changes in structural and regional differentiation of municipal budgets in the context of reforming the inter-budgetary relations and financial decentralization are determined: the changes in the state regulation of the local economy and finances usually boost an increase in the manifestations of differentiation; strengthening the negative influence of endogenous and exogenous risks on the increased disproportions in the socio-economic environment of regions while preserving the features of extensive management in the economic system; increasing imbalances and disparities in the structural differentiation of municipal budgets is usually due to the excessive centralization of public finances, while the intensive reforms aimed at decentralizing municipal budgets can increase the growth risks.
Keywords: decentralization / structural / Municipal Budgets / Reforms Aimed / aimed at decentralizing / differentiation of municipal

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