The article examines the problems of implementing structural transformations in relation to the priority tasks of local self-government in ensuring the capacity of territorial communities for economic development at the regional level in the public administration system. It was established that in such conditions, local authorities must deeply understand the peculiarities of the dynamics of local economic development, possess the necessary knowledge, information, skills and experience to ensure greater competitiveness of their communities in the complex world of new realities. Today, they cannot wait for decisions «from above», but must independently solve their local development issues – creating new jobs, increasing employment of the population, attracting investments, increasing the income of local budgets, improving the quality of life, developing public works and infrastructure.
It has been highlighted that in recent years in the developed countries of the world, there have been significant changes in the practice of planning the development of territorial communities (local development) and these changes relate to three areas: the levels of government responsibility for the implementation of territorial development planning have changed. Territorial communities assumed almost all responsibility for the local situation, for the level of quality of work, education, recreation and life in the community; the methodology of implementing the local development management process has changed. All activities of communities are subordinated to the strategy, which is created and executed by the community, which is implemented through permanent planned project activities subordinated to the strategy; there was a change in the management entity. Through partnership and inter-municipal cooperation, cities began to independently expand the space of their influence in the region, creating local factors of competitive advantages, forming joint projects to increase competitiveness (transport corridors, industrial parks, public-private partnerships, clusters, etc.).
It was found that local development, or the development of territorial communities in highly developed countries of the world, is directly related to»local economic development». In fact, local economic development is an objective and complex multifaceted process, it refers to a relatively complete socio-economic unit in which all aspects of the life of society are manifested. The phenomenon of "local economic development" arose as a result of globalization processes, which are becoming the main factors in the future development of the world economy. Analyzing the capacity of the community, the importance of understanding the essence and content of the object of research, the legal nature of the concept of «community» was determined. The development of an administrative-territorial unit depends primarily on an efficient, effective, self-development oriented community. And the state must justify the possibilities of development and the framework of the functioning of such a community in the normative and legal aspect.