The impact of decentralization on the financial support of regional development

Abstract

Nowadays in Ukrainian realities decentralization, as a process of expanding and strengthening the rights and powers of administrative-territorial units, contributes to the development of financial innovations, the accessibility of public goods, and improvements in the quality of life of the population. The aim of the article goal is developing the recommendations for improving the financial support of the regions by introducing new tools of influence of communities and local self-governments on the economic growth of territories. Using the methods of factor analysis, regression analysis, and significant components, the article determines the impact of regional economic development on the revenues of local budgets. The empirical findings show the close correlation between budgetary decentralization and industrial capabilities of the regions. A cluster analysis was carried out to identify the asymmetries of regional development in terms of financial capacity. It enabled to distinguish homogeneous groups of areas according to the indicators of their economic development. On this basis the authors substantiated the necessity of entrepreneurial activity stimulating, increasing the number of companies, and promoting a continuous flow of goods (works, services) from the producer to the consumer in different regions of Ukraine.