Risks of administrative and financial decentralisation: theoretical hypotheses and empirical assessment

Abstract

Despite the significant duration of decentralisation processes, no clear model of redistribution of resources, areas of responsibility and control at the national, regional and local levels has been introduced in Ukraine. Basic theoretical concepts prove that administrative and financial decentralisation is a complex and ambiguous process for the development of the country’s economy. Along with the positive results, there are some risks of deepening the irregularities of development, complications in the implementation of macroeconomic policies, increasing corruption, etc. Theoretical and empirical researches of decentralisation processes in the world allow us to identify trends such as the absence of a direct link between the level of the country’s development and the degree of administrative and financial decentralisation; the focus and motives for decentralisation processes are different in different countries; elimination of macroeconomic imbalances is often accompanied by the processes of recentralisation. The level of decentralisation of power and public finances in Ukraine is characterised by a high degree of centralisation of public finances. The decentralisation processes prove to be fragmented with a high risk of deepening territorial social and economic differentiation.