Regional Economy -- Year 2023, Issue 2(108)

Under the conditions of the decentralization reform, the budget equalization system in Ukraine underwent significant changes, which took place in terms of the transition from vertical equalization of expenditures to horizontal equalization of revenues. Today, a mixed budget equalization system is being formed in Ukraine, with an emphasis on horizontal equalization of revenues and the use of separate tools for vertical equalization of expenditures. The main problems of budget equalization in Ukraine include the insufficient amount of own revenues of local budgets, the high level of dependence of local budgets on transfers from the state budget, the insufficient justification of the procedure for calculating the tax capacity indicator, the low level of financial autonomy of communities, the lack of a clear division of powers between state authorities and local governments, transfer of powers to the level of local government without adequate financial support, significant differentiation of regions by the level of socio-economic development. The problem of restoring the district level of local government is in a “frozen” state. The budget equalization system of Ukraine should be improved in terms of creating equal financial opportunities for access to public services. In the medium- and long-term perspective, it is advisable to strengthen the role of expenditure equalization tools, supplement the representative tax system with a number of taxes (property tax, single tax, excise duty), create an independent agency for periodic analysis of the state of the budget equalization system and develop proposals for its reform, restore the practice of using agreements on interregional development, agreements on regional development, and programs for overcoming the depressed state of the territory. The new equalization system should be based on state service standards. With the transition to medium-term planning of local budgets, it is necessary to ensure the stability and predictability of the volume of transfers to local authorities and the transparency of the order of their distribution. 

budget equalization, local government, standards of public services, transfers, distribution of powers, differentiation of own revenues 

The issues of agglomeration management are considered. The authors point out the difficulties in balancing the interests of administrative-territorial entities operating within their borders and the forms of agglomeration management used in the world practice. Special attention is paid to the advantages of merging agglomerations into separate administrative-territorial units with the corresponding acquisition of legal personality by agglomerations. The article assesses the implementation of the national decentralization reform in terms of voluntary consolidation of territorial communities located within agglomerations with regional centers and cities with special status as their cores. The authors find that the relevant opportunities for agglomerations to acquire legal personality have been realized to a small extent. In particular, seven cities have remained within their boundaries and haven’t included any of the neighboring communities and their settlements in the consolidation. Most of the other oblast centers have included 1-2 settlements in the process of consolidation. Only three regional centers have created territorial communities covering 50-60% of the agglomeration area; five others have created communities covering 25-40%. The article argues that the reasons for the low rate of utilization of the opportunities provided by the reform for solving the problems of agglomeration management through the acquisition of legal personality in the form of a territorial community are both subjective and objective in nature: low activity of the oblast center authorities in initiating community consolidations in their areas of attraction; unwillingness of the representatives of governing bodies of administrative-territorial units to lose power in the process of consolidation; concerns of the residents of communities adjacent to the oblast centers of losing influence on decision-making on the development of their community, management of land plots, unregulated at the legislative level issues of protection of the interests of the residents of communities that consolidate with the oblast center, their guaranteed representation in the elected bodies of the consolidated territorial community; risks of ignoring the interests of the attached communities by the governing bodies of the communities of the oblast centers; risks of making suboptimal decisions on the ways of territorial development with the restriction of the representation of stakeholders in the decision-making process. 

agglomeration, forms of management, legal personality, oblast/regional center, decentralization reform, territorial communities 

The formed concept of territorial community development is nothing else than a management concept after defining the mission, general vision, and goals, which is used in strategic planning of territorial community development. The article aims to study the concept of mechanisms for the development of territorial communities on the basis of their combination, which will contribute to the efficient management of territories and ensure sustainable development of territories for future generations. The article defines the interpretation of the terms “concept”, “integration”, and “concept of integrated development”. The article shows that in order to elaborate the concept of integrated development, the materials of analytical studies are used, and various analysis methods and techniques are applied (socio-economic, comparative, SWOT analysis, PESTLE analysis). The author proves that by elaborating the concept of integrated development in territorial communities, the strategic development tasks will be realized using the effectiveness of the integrated interrelations of community entities and objects and their organic combination. This ensures accessibility and transparency of strategic planning in compliance with the principle of sustainable development of territories, identifies priority projects and programs, and creates a synergy effect of the integration of external and internal actions of community actors and their cooperation to increase the competitiveness of the community and preserve the environment. The article specifies that the formation of the concept of integrated development is carried out on the basis of the principles used in the relations of socio-economic activity on the territory of a territorial community as a closed system interacting in the open space of the national, international, regional level and other spatial formations (market, economic, social, environmental and other specific open spaces). 

management, territorial communities, concept of integrated development, integration 

The article analyzes the state of foreign trade in the regions of Ukraine during the war and examines the dynamics and structural changes in the export and import of goods in 2022 compared to 2021. Based on the analysis of changes in the foreign trade in the regions of Ukraine during the war, the main threats to foreign trade security in the regions are identified. The directions for reducing the negative impact of threats on the economy of the regions in the conditions of martial law are determined. Four groups of regions are distinguished based on the peculiarities of the conditions of foreign trade and the level of threats to foreign trade security. The ways of reducing the threats to the foreign trade security in the regions in the conditions of martial law are substantiated. The main measures for regions with a high and significant level of threats include the relocation of enterprises to safe regions, improvement of the logistics of export of goods, and the increase of capacities for the processing of raw materials. For regions with a moderate and low level of threat, it is necessary to ensure the development of processing industry, promote structural transformations of the economy, and activate innovative activities. A mechanism for reducing threats to the foreign trade security of Ukraine’s regions during the period of post-war economic reconstruction is proposed. The main institutional instruments of the mechanism are defined as the Recovery Plan of Ukraine, the Export Strategy of Ukraine, the State Strategy of Regional Development, and strategies for the socio-economic development of regions. Ensuring the effective functioning of the mechanism for reducing threats to foreign trade security requires coordination of the goals and objectives of all institutional instruments and the use of appropriate economic levers. Improvement of the institutional environment of economic activity, including Ukraine’s use of the opportunities provided by the European Commission’s support programs for candidate countries for EU accession, is an important condition for the effectiveness of the proposed mechanism. The objective function of the mechanism for reducing threats to foreign trade security in the regions is to improve the indicators of dynamics, product structure, and efficiency of foreign trade. 

foreign trade security, foreign trade, region, threats, martial law, post-war recovery, institutional tools, economic levers 

Transport and logistics system of Ukraine is a circulatory system of the economy. In the conditions of war, it plays a vital role in the delivery of humanitarian, social, food, energy, and, above all, military aid to Ukraine. The ability of the national transport network to provide reliable just-in-time shipment of goods in the required quantity to the end consumers and the interoperability level of the national and European transport systems today are the factors influencing the risk formation processes on a global scale. The war in Ukraine has brought about rapid changes in shipping and logistics, as well as in the structure and volume of international and transit cargo flows. In 2019-2021, about 20-25% of cargo transportation by road transport in international traffic was carried out through the territory of russia and belarus; more than two-thirds of goods crossing (in physical terms) the customs border of Ukraine were sold through sea checkpoints. However, in 2022, compared to the previous year, the number of vehicles that crossed the customs border of Ukraine with EU countries has increased by 21%, especially with Romania - by 64%. Automobile transport became the leader in terms of the volume of imports brought into the country, and railway transport took the second place. The rapid growth in the volume of rail and road freight transportation to Poland, Slovakia, Hungary, and Romania has significantly increased the burden on the transport and border infrastructure of the border regions of Ukraine. In such conditions, the available capacity of the transport and logistics infrastructure in the Ukraine-EU cross-border space proved to be insufficient. Therefore, the article offers a methodical approach to the analysis of the logistics and transport infrastructure of the border regions of Ukraine, taking into account the peculiarities and prospects of its operation at the international (European), national, and regional levels. The components of the logistics and transport infrastructure are defined, and the integral indices of the logistics and transport infrastructure are calculated. Ways of efficient realization of the capacity and the development of the transport and logistics infrastructure of the border regions of Ukraine are suggested. 

logistics and transport infrastructure, methodical approach, border regions, Ukraine, European Union 

The article emphasizes the significant role of environmental factors in the development of sustainable tourism. The essence of the competitiveness of the tourism and recreation sphere in the context of the environmental component is determined. The purpose of the article is to determine the environmental factors influencing the competitiveness of the tourism and recreation sphere of the region, evaluate them from the point of view of manageability, and determine the prerequisites for ensuring the sustainable development of the region. The main elements influencing the ecological stability of the tourism and recreation sphere are substantiated. Groups of managed and unmanaged environmental factors influencing the competitiveness of tourism and recreation are identified. The assessment of the competitiveness of the tourism and recreation sphere of the regions of Ukraine is based on the general methodological approaches used in the calculation of the travel and tourism competitiveness indices (The Travel & Tourism Competitiveness Index, TTCI). An algorithm and environmental indicators are defined. The results of the assessment of the impact of environmental factors on the competitiveness of the tourism and recreation sphere are presented. The article points out that in the conditions of the war and the post-war period, the assessment of the impact of environmental factors and the forecasting of their consequences on the competitiveness of the tourism and recreation sphere of the region is complicated by the need to carry it out from different positions: damage to natural resources and ecosystems; environmental pollution; loss of biodiversity; reconstruction of tourist identity. The following methods and strategies are proposed to contribute to the achievement of ecological development of the tourism and recreation industry: ensuring the sustainable use of natural resources; using environmentally friendly technologies and materials in hotels and other tourist infrastructure; developing ecotourism and other forms of tourism that contribute to the preservation of the natural environment and draw attention to environmental issues; applying the system of ecosystem restoration and waste minimization; developing ecological management of tourism; conducting environmental education among the local population and tourists. 

tourism and recreation sphere, competitiveness, evaluation, ecological stability of tourism, environmental factors, region, sustainable development 

The course and consequences of any shock is uncertain in both space and time. However, the emergence of threats and risks affects all spheres of life of a society in one way or another. At the same time, the socio-demographic sphere is a driver of the resilience capacity of the country’s socio-economic system, and, on the other hand, its qualitative characteristics are the result of the resilience of this system. Continuous regulation and efficient management of socio-demographic processes in society increase the resilience capacity of the country’s socio-economic system in the face of a global shock or threat. Meanwhile, the main public interest is to ensure the safety of each individual and well-being and stability of institutions that guarantee democracy, security, and sustainable development of society. An important indicator of the resilience capacity of Ukraine’s socio-economic system in shocks is the population’s savings. They provide insurance coverage for individuals in case of unforeseen events and contribute to the improvement of living standards. At the same time, rising income and wealth inequality, especially in times of crisis, weakens social resilience by reducing social cohesion in the long run. The socio-demographic resilience of a country can be strengthened or weakened depending on the specifics of a particular shock. The study argues that in the context of crises and threats faced by our country in recent years, the following socio-demographic characteristics weakened the resilience capacity of the socio-economic system of Ukraine the most: unbalanced socio-demographic structure of the society; high level of external and internal migration; a low share of household and business savings in their total income; the illegalization of the economy in general and the labor market in particular, the prevalence of informal employment, low wages and social protection. Today, in the context of the temporal and spatial uncertainty of a full-scale war, it is necessary to continue research on socio-demographic resilience as a strategy, the original cause of the return of people from abroad to Ukraine, and a deterrent to migration from Ukraine in the future. It is a key driver for building the resilience capacity of the country’s socio-economic system and strengthening the proactive position of authorities at various levels on IDP issues, increasing social cohesion, civic engagement, and volunteerism. 

resilience of a system, resilience of a socio-economic system, socio-demographic dimension, capacity of socio-economic resilience 

The article identifies the role of agriculture as the foundation of economic development of rural areas. The development and implementation of significant institutional changes in the functioning of agro-industrial production and the development of the rural areas became extremely relevant during the military operations on the territory of our state and will be one of the main tasks of the country’s post-war reconstruction. There is a need for changes in the regulatory and legal field, the use of support tools both at the state and regional levels, the formation of institutions contributing to the development of the agro-industrial complex of Ukraine as the main component of the national economy, which provides the appropriate level of food security of the regions and the state as a whole, and also forms its significant export potential. The main ways of improvement of the institutional sphere of development of rural territorial communities with agro-industrial enterprises are indicated. In many regions with agro-industrial specialization, which have been occupied, the restoration of their ecological, economic, and social capabilities should be redefined, and such restoration should be directed at the creation of a new type of agro-industrial formations in the rural areas, taking into account new values and motivations. For the rural territories of the regions of Ukraine, the agro-industrial sector is dominant. Its condition depends not only on the efficiency of the regional economy but also on the social condition of the rural population. To support the agricultural sector of rural areas, it is necessary to create favorable conditions for increasing the level of competitiveness of domestic market entities. It is necessary to achieve the maximum convergence of legislation with European counterparts, improve antimonopoly regulation, solve the issue of the development of rural areas and environmental problems that we are currently facing, strengthen the protection of property, stimulate the development of consulting and service cooperation, and introduce more effective measures to protect the domestic manufacturer and an improved system of product quality control. The article suggests a mechanism for the development of the agricultural sector as the basis of the economy of rural areas, the implementation of which is based on integration, innovation, and investment. 

rural areas, agriculture, institutional foundations, regional development, decentralization, development of rural areas 

The article conducts a theoretical study of the concept of the mechanism and nature of the shadow economy in the agro-industrial production of Ukraine. The shadow economy exists in all countries of the world and, depending on its size, creates problems of varying complexity: from non-payment of taxes to destructive processes in the economic system. Today, the existence of a shadow economy in agro-industrial production is a very urgent problem for Ukraine. The existence of this phenomenon is facilitated by a whole complex of reasons of a different nature, therefore, the fight against it should also include measures of various directions and be carried out at the national level. The factors contributing to the spread of the shadow economy in agro-industrial production, such as insufficient control efficiency, complex tax procedures, a low level of legal culture, etc., are analyzed. The author offers a vision of the concept of the mechanism in agro-industrial production as an economic mechanism, which is a complex of practical measures, tools, regulatory means, incentives, and resources used by management bodies to influence society and production. The shadow economy should be understood as a set of social, economic, and legal relations between individuals, groups of individuals, and institutional units in relation to the production, distribution, redistribution, exchange, and consumption of material goods and services, types of economic activity of economic entities, the results of which, for various reasons, are not taken into account, are not controlled, and are not taxed by the state and (or) are aimed at obtaining income by violating the current legislation. Conventionally, two approaches used by scientists in the study of the shadow economy can be distinguished. The first one defines the shadow economy as a set of forms or relations that are characteristic of the economy and oppose the state and legal market segments, i.e. the shadow economy is an interweaving of legal, semi-legal, and illegal connections. This approach is currently the most popular. The second approach is focused on the study of entities involved in shadow activities and practices of everyday economic activity. The main aspects of the shadow economy in agro-industrial production are outlined. 

mechanism, agro-industrial production, shadow economy, economic entities, government apparatus 

The article examines the main trends of export dynamics in terms of quantitative and structural indicators under martial law. It emphasizes that the formation of an effective policy to stimulate the development of Ukraine’s export potential should become one of the main priorities of the economic development of the state. The main steps of export policy formation at the state level are outlined. The main positive achievements and unrealized priorities of the Export Strategy of Ukraine for 2017-2021 are identified. The article emphasizes that the lack of an established and effective export support mechanism prevents the rapid recovery and expansion of export activities. The international experience in the formation of a mechanism and the use of tools for the protection and support of exporters at the state level is shown. The strengths and weaknesses of the export support instruments used in Ukraine are outlined. Partial regulation by the state under martial law is noted as an additional destructive factor of export activity. The main tools of the export support mechanism used in Ukraine are outlined. Informational and advisory support, financial support, and development of network interaction are highlighted among the tools. The sectoral and functional focus of each tool is defined. Special attention is paid to the financial support of exporters by using the services of the Export Credit Agency (ECA). The use of the ECA tool is effective in supporting the export of high-tech products, as well as industries that are the top priority for the development of the economy. The historical features of the formation of ECA in Ukraine are outlined. The peculiarities of the functioning of the ECA and the main tools used in its work are analyzed. It is necessary to increase the quantitative and qualitative indicators of the work of the ECA, to expand the types of economic activities that are supported in the direction of increasing the share of goods with high added value. The main measures that will contribute to increasing the effectiveness of the ECA are shown, in particular, the popularization of services among exporters, an increase in the amount of financing for exporters, an increase in the authorized capital of the ECA through the involvement of international financial organizations, the issuance of debt securities, the opening of reinsurance limits abroad, and an increase in insurance limits. The article reveals that, currently, there is no formed mechanism for supporting export activity in Ukraine. However, the state of war and its negative impact on foreign economic activity significantly accelerated the process of its formation. 

export, export credit agency, mechanism, tools, support 

In modern conditions, the issue of tourism and recreation research arises from the need to find a harmonious balance between economic growth and environmental sustainability. Today, tourism is an important part of the global economy, but it is also an activity that has a significant impact on the environment and natural resources. The study of environmental and economic relations in this area is key to the development of sustainable and responsible tourism. This is especially important in the context of climate change, growing environmental awareness among the population, and increasing regulatory measures by governments. The relevance of this topic is conditioned by the constant changes in the tourism sector, which require rethinking and adaptation of economic models and strategies. In particular, innovative technologies, which are becoming increasingly available, can be integrated to monitor the environmental condition of tourist areas and ensure more efficient resource management. The article aims to study the nature of the tourism and recreation sphere of the region and determine its ecological and economic aspects. The article examines the issue of the definition of tourism and recreation activities and points out different approaches to its interpretation, as well as the lack of agreement on its ecological and economic structural elements. The author proposes to consider this field as an activity aimed at satisfying the tourist and recreational needs not only of local residents but also of visitors from other regions and countries, using natural and other resources that are attractive to tourists. The author analyzes and classifies various types of tourism and recreation services, including ecological and economic aspects. The key factors of their attractiveness, which form popular tourist destinations and influence the specifics and opportunities for the development of the tourism and recreation industry, are identified. 

tourism and recreation sphere, economy, tourism and recreation activity, resources, ecology 

The article examines the topical issue of the development of the tourism industry in territorial communities, i.e. the impact of the external environment and the dependence of the development of the tourism sector of the economy on the system of macroeconomic factors which are not directly formed and controlled by territorial communities, despite being an integral element of their management. The authors outline the approaches to the application of PESTLE analysis as the strategic management tool, which makes it possible to analyze the external environment of influence on the development and functioning of tourism in communities, which does not exist outside the integration with other sectors of the economy and markets. The author emphasizes the definition of consumer values in tourism, which is the main goal for a tourist, a visitor to the territory, and a traveler when receiving certain services, which imply obtaining certain sensations: pleasure, emotions, cognition, comfort, health improvement, rest, etc. The article defines certain steps of the PESTLE analysis, which can be used in communities to prepare strategic planning. The authors reveal that when conducting a PESTLE analysis, it is necessary to try not only to describe and evaluate existing external factors but also to predict their changes for 3-5 years. It is necessary to identify the factors that can directly influence the development of the territorial community, the growth of its economic potential, and the preservation of the environment, and systematize them according to their importance for the achievement of the strategic goal. It remains important to predict and minimize possible risks and threats that occur/will occur during the functioning of the complex of tourist capacity of communities – tourist facilities, tourism industry enterprises, infrastructure, and communications. 

PESTLE analysis, external environment, tourism, factors of influence, consumer values 

The article is devoted to the study of the peculiarities of the development of electronic commerce in different countries of the world. Three countries - Italy, the USA, and China - were chosen for the analysis of the features of the development of e-commerce. The first one is the most classical country of the Old World by many criteria, the second one – the most characteristic representative of the countries of “migrant capital”, the third one – the brightest representative among the Asian countries due to the high growth rates of economic indicators and a planned development system that is almost unique in the modern world. The most popular types of e-commerce transactions in Italy are business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C). Italy is lagging behind other European countries in the development of e-commerce due to the country’s aging population, a low percentage of people with bank accounts and bank cards, the low percentage of people with high-quality Internet access, and the fact that only a little more than half of the country’s population uses smartphones. The US e-commerce market is characterized by two main directions of B2B and B2C formats. The e-commerce market in the US is moderately fragmented. Amazon, Walmart.com, and BestBuy.com are the leading online stores in the US e-commerce market. They account for 35% of all online revenues in the US. The mobile shopping category is a growing trend. The COVID-19 pandemic is accelerating the shift to online consumption as consumers practice social distancing, and e-commerce orders for food and medical supplies have become a survival and convenience tool for the American family. E-commerce in China, despite its rapid development, also faces a number of problems, such as the lack of a security system, insufficiently developed intellectual property institutions, illegal trade, and fraud. The resale of personal information seriously damages the possibilities of sustainable development of e-commerce. Nevertheless, the government is developing measures aimed at solving these challenges and strives to develop stable and safe online trade in the country. 

e-commerce, digitalization, COVID-19 pandemic, e-trade, Internet trade 

The article aims to deepen the theoretical foundations of the fragmentation of the Middle Eastern countries in terms of socio-economic factors that have significantly influenced stability and development in the region. The authors highlight the consequences of fragmentation for various aspects of social life, including political stability, social cohesion, economic development, and human well-being. The article outlines potential strategies and interventions to address these challenges in order to contribute to a more inclusive and prosperous Middle East. The authors analyze the ethnic, religious, and cultural differences in the Middle East that have contributed to social fragmentation and led to tensions and conflicts that ultimately impede socio-economic development. Fragmentation is shown to have affected social cohesion and cultural identity in the region. Differences based on ethnicity, religion, and political preferences hinder social integration, leading to increased social tensions and potential conflicts. Political instability and governance problems, including weak governance structures and authoritarian regimes, are analyzed. The article reveals that political instability has contributed to fragmentation in the region due to the lack of inclusive governance systems and effective institutions, which hinders economic growth and social progress. The fragmentation of political stability and security in the Middle East is assessed. Internal conflicts, inter-confessional tensions, and the rise of non-state actors pose serious challenges to regional stability and cooperation. The authors show that the unequal distribution of wealth and resources, combined with high levels of poverty and unemployment, has increased social inequality and created economic fractures in the region. Limited regional cooperation, trade barriers, and political instability impede economic growth, preventing the creation of sustainable livelihoods and opportunities. 

Middle East, fragmentation, socio-economic factors, social cohesion, economic development, political stability, human well-being