Determination of the Territories’ Financial Independence Taking into Account 'Financial Potential' and 'The Level of Shadow Economy' Indicators

Boronos V., Plikus I. (2015) “DETERMINATION OF THE TERRITORIES’ FINANCIAL INDEPENDENCE TAKING INTO ACCOUNT «FINANCIAL POTENTIAL» AND «LEVEL OF SHADOW ECONOMY» INDICATORS”. Economic annals-xxi 1-2(1): 74-77

4 Pages Posted: 15 May 2017 Last revised: 18 May 2017

Date Written: January 2015

Abstract

Economic success of Ukraine and its regions depends a lot upon the politics of financial decentralization. Nevertheless, the principle of financial independence remains only as a thesis and does not provide the territories with real independence. Practically, all the Ukrainian regions are subsidized from the state budget. In such conditions, decentralization of financial resources is vital for the development of the country. Results. Scientifically-methodical approach to the country’s level of financial independence determination is offered. It is designated that the quantitative criterion of the territorial financial independence determination is its financial potential. It is proposed to correct the financial potential of the territory on the level of «shadow» economy. Estimation of financial opportunities in a country must take into account the country’s tactical and strategic characteristics. Calculation of coefficients used in such estimations is proposed. The financial potential of Ukrainian regions, taking into account such coefficients and the level of the shadow economy influence, has been calculated. Usage of the financial potential in case of transfers for the inter-budgetary alignment determination, which is calculated taking into account influence of 'shadow' economy on financial flows of the territory, will allow avoiding of manipulations with monetary resources, which are allocated for development of the territory, and determining of donor-regions and regions-recipients. Conclusion. The system of the inter-budget relations may be improved by efficiency increase of territories’ financial potential usage and effective measures taking on fight against shadow economy. Financial independence of the territories leads to self-development, which is impossible without growth of financial potential.

Keywords: Financial Independence; Financial Decentralization; Financial Potential of the Territory; Shadow Economy; Inter-Budget Relations

JEL Classification: G32; H79; R58; R59

Suggested Citation

Plikus, Iryna, Determination of the Territories’ Financial Independence Taking into Account 'Financial Potential' and 'The Level of Shadow Economy' Indicators (January 2015). Boronos V., Plikus I. (2015) “DETERMINATION OF THE TERRITORIES’ FINANCIAL INDEPENDENCE TAKING INTO ACCOUNT «FINANCIAL POTENTIAL» AND «LEVEL OF SHADOW ECONOMY» INDICATORS”. Economic annals-xxi 1-2(1): 74-77 , Available at SSRN: https://ssrn.com/abstract=2966753

Iryna Plikus (Contact Author)

Sumy State University ( email )

Rymskyi-Korsakov str., 2
Rymskyi-Korsakov str., 2
Sumy, Sumska 40000
Ukraine

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