FORMATION OF THE ORGANIZATIONAL AND ECONOMIC MECHANISM FOR THE DEVELOPMENT OF CAPABLE TERRITORIAL COMMUNITIES
Main Article Content
Abstract
Introduction. The organizational and economic mechanism is viewed as a complex of normative, financial, and organizational measures undertaken by public authorities, aimed at improving the administrative-territorial reform and strengthening local budgets. The priority directions for ensuring the strategic goals of the Territorial Communities (TCs) have been substantiated, and the mechanism's main principles and instruments have been defined. It is emphasized that the socio-economic development of territories is stimulated by the effective formation of local budgets (including development budgets), the expansion of their tax base, the rational use of local resources, and the encouragement of entrepreneurial initiative in the context of TCs transitioning towards economic self-development.
The purpose. The purpose of this work is to investigate the problems and identify the main factors (determinants) that will facilitate the activation of an effective organizational and economic mechanism for the development of capable territorial communities. To achieve this goal, the following objectives were set: to analyze the criteria for assessing the level of community capability and to determine the tools for forming the aforementioned effective organizational and economic mechanism.
Results. It was researched that the Concept of Reforming Local Self-Government and Territorial Organization of Power in Ukraine [9] and the Law "On Voluntary Amalgamation of Territorial Communities" [7] became the fundamental documents for improving the administrative-territorial structure and forming financially capable communities. For the successful implementation of the reform, the organizational and economic mechanism and its incentivizing instruments are critically important, as they must promote sectoral reforms (education, medicine, etc.) and ensure the comprehensive development of the individual and the availability of quality public services. The implementation of this mechanism at the state level is ensured by the President of Ukraine, the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine, Ministries and agencies, and Local Self-Government Bodies (LSGBs), utilizing organizational, administrative-legal, and economic instruments. Particular attention is paid to economic stimulation as a more effective approach than administrative sanctions for creating a material interest in the sustainable development of communities. Administrative instruments, particularly the Methodology for the Formation of Capable Territorial Communities [8], are aimed at creating capable territories, not just amalgamation, with an emphasis on the principle of ubiquity and appropriate territorial boundaries and personnel support for administrative centers.
Despite the positive dynamics (the growth of Amalgamated Territorial Communities (ATCs) to 1029 in 2020 [5]), the reform faced systemic shortcomings, the main one being the uniform approach to community formation and the limited criteria of the previous Methodology [8]. This led to formal enlargement, failed to account for regional peculiarities, and intensified urbanization and socio-economic differentiation, as ATCs received powers comparable to cities of regional significance but lacked the corresponding financial potential. In response to these shortcomings, the Cabinet of Ministers updated the Methodology in 2020, introducing comprehensive capability assessment criteria (population size, tax capacity index, share of local taxes, etc.) and obliging the consideration of optimal social infrastructure networks. These changes, enshrined in the Law of December 2019, simplified the plan approval procedure and made them a mandatory basis for community amalgamation, forming the foundation for the future law on the administrative-territorial structure.
The organizational and economic mechanism for the development of Territorial Communities (TCs) is based on principles such as legality, voluntariness, economic efficiency, state support, and accountability [7]. Its success is confirmed by the strengthening of the financial and economic provision of LSGBs, a key element of which is the direct inter-budgetary relations of ATCs with the state budget, realized through inter-budgetary transfers. Before 2022, investment development was supported by the Subvention for ATC/TC Infrastructure (over UAH 15.8 billion for 2016-2021) and funds from the State Fund for Regional Development (SFRD) (over UAH 30.3 billion) (Table 1). Meanwhile, the basic functioning of communities (education, medicine) is ensured by the Education Subvention and the Basic Dotation (hundreds of billions of hryvnias annually). The full-scale war fundamentally shifted priorities: investment instruments were suspended, and the focus of financial support shifted to recovery and the elimination of aggression consequences through the Fund for the Liquidation of the Consequences of Armed Aggression and special subventions (Table 2). However, own revenues and the fiscal independence of LSGBs (due to changes in the Tax Code) remain critically important for financing their own powers and the socio-economic development of territories.
Conclusion. The key direction of the organizational and economic mechanism is the support for the development of capable communities, which entails the implementation of the principle of the ubiquity of local self-government and the provision of communities with the necessary infrastructure, human, and financial resources, as well as increasing the revenue capacity of their budgets. Having received significant financial resources, local authorities must ensure their maximum effective use, where a direct link exists between the allocation of funds and the actual results in accordance with the community's priorities. This requires the creation of institutional conditions for the sustainable development of territories, which is a strategic goal of public policy for the efficient utilization of the country's entire economic potential. In the long term, the implementation of such a policy, aimed at the sustainable development of capable territorial communities, will contribute to improving citizens' well-being, strengthening national security, and the dynamic development of the entire economy.
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