Strengthening financial decentralization: driver or risk factor for sustainable socio-economic development of territories?

Michal Fabuš (), Nadiya Dubrovina (), Lidiya Guryanova (), Natalia Chernova () and Olexandr Zyma ()
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Michal Fabuš: Bratislava University of Economics and Management, Slovakia
Nadiya Dubrovina: Bratislava University of Economics and Management, Slovakia
Lidiya Guryanova: Simon Kuznets Kharkiv National University of Economics, Ukraine
Natalia Chernova: Simon Kuznets Kharkiv National University of Economics, Ukraine
Olexandr Zyma: Simon Kuznets Kharkiv National University of Economics, Ukraine

Entrepreneurship and Sustainability Issues, 2019, vol. 7, issue 2, 875-890

Abstract: The article deals with the problem of modeling the effectiveness of the development of financial decentralization mechanisms. A conceptual approach is proposed, which allows to form a complex of models. The models allow to evaluate the socio-economic effects of financial decentralization increase; to determine the “threshold” value of the level of financial decentralization, upon which slowdown in economic growth may occur. The models are based on based on the principal components’ method, canonical correlations, cluster analysis, Kohonen neural networks, the level of development method, production and institutional functions. The modeling results showed that a high level of financial decentralization is inherent to countries with a high level of economic development, where high quality institutional environment and administrative decentralization lead to the increase of the efficiency of the public sector functioning. At the same time, in countries with a high level of competitiveness and socio-economic development the gap between the growth rates of income and expenditure powers of budgets of various levels and the growth rate of GDP is growing. This fact reduces the level of budget and debt security. Models of production and institutional functions have been developed, countries with a “reference” development model have been identified, as well as groups of countries that would have a higher effect from the re-centralization of government finances or financial decentralization.

Keywords: financial decentralization; efficiency; modeling; multidimensional analysis; production and institutional functions (search for similar items in EconPapers)
JEL-codes: C54 H70 R50 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2019:i:2:p:875-890

DOI: 10.9770/jesi.2019.7.2(6)

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