The capacity of territorial communities of Ukraine: approaches to assessment, regional differences, typification

Abstract

Capable territorial communities are the key to the successful economic development of the country. Despite the existence of an official methodology, the assessment of community capacity remains a subject of debate among scholars and practitioners. This article presents an alternative methodology, which has been used to determine the level of capacity of Ukrainian territorial communities and typify them accordingly. The methodology is based on the use of econometrics and comparative statistics. The selection of indicators for assessing community capacity was carried out based on the results of factor analysis. In total, 10 indicators were carefully chosen, forming the matrix of original data. The assessment of community capacity level was conducted by calculating an integrated index of their development. The classification of communities by their capacity levels was performed using a criteria scale. This scale was based on the principle of deviating community capacity levels from the country's average value. The criterion for categorizing communities into territories with polar (high and low) values was a 25 % deviation of their capacity levels from the average. Communities with a moderate (average) level of development included territories with a deviation of +/–10 %. The study has assessed the level of capacity for 1 438 territorial communities in Ukraine as of 2022 and mapped them. The disparities in the capacity levels of the country's communities are determined as significant, yet not critical. The maximum value is 4.5 times higher than minimum. Nearly 58 % of communities have a moderate (average) capacity level. Only 8 % of communities belong to the areas of high or low levels. A low level of community capacity is distinctive across nearly all regions of western Ukraine. It has been confirmed that urban territorial communities generally have a higher capacity level compared to rural ones. Among urban areas, territorial communities centred around large and medium-sized cities emerge as leaders. Through correlation analysis, it has been established that financial indicators exert the greatest influence on the formation of community capacity. The current socio-economic profile of communities has been shaped over many years under the influence of various factors. That is why the territorial communities of Ukraine are not homogeneous. This study is the first to typify the country's communities by capacity indicators and create a corresponding map. The typification was conducted using cluster analysis. In total, nine community types were identified; however, even this number did not prevent an excessive concentration within certain groups. The majority – almost 86 % – of communities are concentrated within four types. These are traditional, predominantly rural and urban-type settlement communities, which cover 84% of the territory and are home to 40 % of Ukraine's population. The remaining five types encompass only 200 territorial communities. It has been determined that most of them are urban communities characterized by optimal and high capacity levels. Within these five types, a distinct group is formed by 17 primarily rural communities with the highest per capita budget revenues and a high tax capacity index. This phenomenon is attributed to the specifics of their geographical location and economic activities. The differentiation of communities by the level and indicators of their capacity identified in the study can serve as a basis for the modernization of regional and tax policy instruments in the post-war period. It is proved that the war with russia, temporary occupation of specific territories, enterprise relocation, and forced population migration will lead to changes in the capacity of territorial communities and in the approaches to its assessment. The findings presented in this article can serve as a starting point for further research in this field. Keywords: decentralization, territorial communities, community capacity, regional policy, typification of territories, econometric methods.