Economic activity vs generation of local budgets’ revenues: Regional disparities in COVID-19 instability

Abstract

In the last two years, Ukraine and the world have been living in economic instability caused by the COVID-19 pandemic, which has fundamentally changed the trends in global and domestic economies, public and local finance. This study aims to estimate the trends of economic development of Ukrainian regions in the coronavirus crisis and their impact on the local budgets’ tax revenues generation. Main findings show the impact of the COVID-19 crisis on the development of Ukrainian regions is territorially differentiated. It is determined that in quarantine restrictions, the regions were developing under the impact of behavioral and institutional factors. Although a range of enterprises terminated their activities and there was a decline in income from business activities in 2020, the tax revenues of local budgets increased. The growth of tax revenues was accompanied by decreasing interbudgetary transfers and growing expenditures on containing the spread of pandemics and supporting healthcare. Reduced transfers to local budgets from the public budget affected the funding of investment programs of regional development. The abovementioned effects of falling business activity and consumer expenditures of the population along with falling investment can be considered the delayed effects of economic activity curtailment in the short-term period. An intensive increase of public investment that stipulates projects co-funding from budget funds and resources of businesses and establishment of cooperation between public, regional, and local levels of government should become among the primary steps to overcome the negative trends.

Economic growth of Ukrainian regions and determinants of financial resilience: Modeling the causal nexus

“…Similar results are obtained in studies of the impact of banking sector development on the economic growth of countries in general. There is a high density of correlation between the efficiency of realization of the banking sector capacity and the level of socio-economic development of EU countries (Rushchyshyn et al, 2021;Storonyanska et al, 2021), as well as a causal relationship between the determinants of financial security and economic growth of territories (Lupak et al, 2021;Vasyltsiv et al, 2023).…”

Trust as a Catalyst of Economic Growth: A National and Regional Breakdown

“…Understanding and explaining regional economic growth "requires taking into account the role of both formal society-wide institutions and local and sometimes informal institutions" [30]. Currently, there are two but disparate strands of literature on informal and formal institutions and regional economic growth [31][32][33]. The first strand of literature addresses the role of informal institutions, such as trust [20,21].…”

Analysis of Transfer Funds on Regional Expenditure of North Sulawesi Provincial Government Before and During Covid-19 Pandemic

“…The transfer funds that are not fully realized as initially budgeted lead to the non-achievement of program goals in the current year, thus requiring fulfillment in the subsequent fiscal year. In addition, reduced transfers to local budgets from the public budget affected the funding of investment programs of regional development [20].…”