Evaluation of self-sufficiency of territorial communities as the basis for ensuring their sustainable development

Abstract

Purpose. The article aims to evaluate the level of financial self-sufficiency of territorial communities in terms of ensuring their sustainable development. Methodology / approach. An approach that involves the consequent implementation of compositional, empirical, and taxonomic stages based on the calculation of empirical parameters (based on the structural-spatial approach using the linear weighting) of structural levels (revenue and expenditure components) of financial self-sufficiency for the city, town, and village communities was developed to achieve the set objective. The general level of financial self-sufficiency is calculated based on the integral approach. The communities are ranged by the criterion of the efficiency maximization in the management of financial resources to achieve economic development. Results. The results of the evaluation for 73 communities showed that city territorial communities in Lvivska oblast had high (Lvivska) and moderate (Stryiska, Pustomytivska, Horodotska, Sudovovyshnyanska, Chervonohradska, Sambirska, and Kamyanko-Buzka) levels of financial self-sufficiency in 2021, so they were able to secure sustainable economic growth. The article reveals that 75 % of town communities had low levels of financial self-sufficiency (from 0.218 to 0.372), which is the consequence of weak fiscal capacity and, thus, low financial independence and high budget subsidiarity. Sokilnytska (0.788) and Solonkivska (0.637) village communities showed positively high results and 33 % had a moderate level of revenue component of financial self-sufficiency (from 0.414 to 0.553). The situation is triggered by their close location to the oblast center and sufficient fiscal independence. The ranking of communities by the criterion of the efficiency maximization in the management of financial resources revealed four groups. The group with a moderate level (45 communities) is the largest. Originality / scientific novelty. The article develops a scientific and practical approach to the evaluation of self-sufficiency of territorial communities. Unlike others, it provides the combined (integral) evaluation of the significance of the components of territorial communities’ financial self-sufficiency and allows the detection of the complementary impact of financial self-sufficiency on ensuring sustainable economic development of the territory. Practical value / implications. The article offers a set of tools to evaluate financial self-sufficiency of territorial communities. Their application by local governments will serve as the informational-analytical basis for the elaboration of measures to strengthen the capacity and self-sufficiency of territorial communities with modernizing the existing strategies or developing the territorial economic growth (or recovery) programs. The application of the methodological approach makes it possible to identify budget planning deficiencies timely and improve the efficiency of the use of financial resources of local self-government bodies.