MODERN TOOLKIT FOR REGIONAL DEVELOPMENT: INSTITUTIONAL CHANGE

Abstract

The low effectiveness of modern budgetary tools of supporting and stimulating regional development creates the necessity to improve existing ones and the implementation of other, more rational tools. New requirements for the financial security of regional development, namely the rejection of paternalism and transition of regions and communities to self-sufficiency, based on the search of resources on the ground, the disclosure and effective use of the internal capacity lead to the change in approaches to the selection and formation of financial tools of supporting regional development. The purpose of the article is to study modern tools of supporting and stimulating regional development in conditions of financial decentralization and provision of recommendations for its improvement. The system approach allowed identifying the shortcomings of modern budgetary tools of supporting and stimulating regional development and allocating key advantages of grant-based approach in financing of local initiatives. The current stage of decentralization reform in Ukraine from the standpoint of the institutional approach with allocation of key initiatives that have contributed to the “launch” of local self-governmental reform has been analyzed in the article. An assessment of the “best practices” such as in the EU countries has been made. A comparative assessment of budgetary financing with grant-based financing has been made and key advantages of grant-based approach in financing of local initiatives have been allocated. This allows using limited resources more efficiently. The recommendations for improving the modern tools of regional development in conditions of financial decentralization, namely the effective use of the investment transfers and the grant-based approach in financing of local initiatives are given. Ways of improvement of functioning of SFRD are offered.