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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Michal Fabuš & Nadiya Dubrovina & Lidiya Guryanova & Natalia Chernova & Olexandr Zyma, 2019. "Strengthening financial decentralization: driver or risk factor for sustainable socio-economic development of territories?," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 875-890, December.
    • Handle: RePEc:ssi:jouesi:v:7:y:2019:i:2:p:875-890
    DOI: 10.9770/jesi.2019.7.2(6)
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    References listed on IDEAS

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    1. Lidiya Guryanova & Tamara Klebanova & Tetiana Trunova, 2017. "Modeling the Financial Strategy of the Enterprise in an Unstable Environment," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 91-109.
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    Cited by:

    1. Lidiya Guryanova & Olena Bolotova & Vitalii Gvozdytskyi & Sergienko Olena, 2020. "Long-term financial sustainability: An evaluation methodology with threats considerations," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(1), pages 47-69.
    2. Asmawi Hashim & Norimah Rambeli & Norasibah Abdul Jalil & Normala Zulkifli & Emilda Hashim & Noor Al-Huda Abdul Karim, 2019. "Does Export Led Growth Hypothesis Hold Under World Crisis Recovery Regime in Malaysia?," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(5), pages 9-19, December.

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    More about this item

    Keywords

    financial decentralization; efficiency; modeling; multidimensional analysis; production and institutional functions;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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