Local partnership as a tool for stimulating the development of rural areas of Ukraine

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LOCAL PARTNERSHIP AS A TOOL FOR STIMULATING THE DEVELOPMENT OF RURAL AREAS OF UKRAINE

Oksana V. Zybareva

Department of Business, Trade and Stock Exchange Operations Yuriy Fedkovych Chernivtsi National University Chernivtsi, Ukraine

Pavlo I. Shylepnytskyi

Department of International Economics Yuriy Fedkovych Chernivtsi National University Chernivtsi, Ukraine

Liudmyla V. Verbivska

Department of Business, Trade and Stock Exchange Operations Yuriy Fedkovych Chernivtsi National University Chernivtsi, Ukraine

Svitlana I. Belei

Department of Accounting and Taxation Yuriy Fedkovych Chernivtsi National University Chernivtsi, Ukraine

Ivan O. Parubchak

Department of Public Administration and Management Lviv National University of Veterinary Medicine and Biotechnologies named after S. Z. Gzhytskyi Lviv, Ukraine

Abstract

The scientific research deals with the ways and strategies of using local partnerships to address the challenges of rural development. These include the advantages and economic, law-based and social restrictions as well as the principles of using local partnerships for rural development of Ukraine. The main economic benefits raise due to the aggregated resources, cooperation activities, risk reduction, employment and diversification of income and expenditures of the population. The advantages of local partnerships implementation lie in the application of the normative framework that is efficient for the project's implementation and promotion of the rural growth, in its continuous improvement, in support of the local projects by international organizations on the international level. Social advantages of the local partnerships are determined by its usage as the base for innovations on the rural areas with the aims to improve the welfare, solve common local issues, gain the advanced experience, provide informative- communicative systems and informative resources and secure the interests of local societies at the national level. The selective character of local partnership projects, low -informative level and insufficient support of local authorities, insufficient development of informative- communicative systems in the rural areas that lower the mobility level of some factors of production and have negative impact on the welfare - all determine restrictions of using local partnerships at the national level.

The main reason to use the local partnership for stimulating the rural growth in Ukraine is to support the adaptations to changes in the agrarian sector, united communities, environment, welfare affected by European integration. Among the principles of the local partnership implementation on all rural areas of Ukraine are openness, equal rights of all partners, indifference to politics, accuracy and transparence, activity and integration, common economic and social responsibility of partnership. The paper examines stages of the successive local partnership implementation on rural areas: diagnosis of the interests of stakeholders and environment, partnership planning, strategic grounds for partnership, partnership implementation, monitoring the stages of partnership and quality of the results by precise criteria, strategic partnerships support a wide and flexible range of activities for the long-term period.

Keywords: public-private partnership, cooperation, economic security, financial support.

Анотація

Оксана Василівна Зибарева

Кафедра підприємництва, торгівлі та біржової діяльності Чернівецький національний університет імені Юрія Федьковича Чернівці, Україна

Павло Іванович Шилепницький

Кафедра міжнародної економіки Чернівецький національний університет імені Юрія Федьковича Чернівці, Україна

Людмила Василівна Вербівська

Кафедра підприємництва, торгівлі та біржової діяльності Чернівецький національний університет імені Юрія Федьковича Чернівці, Україна

Світлана Іванівна Белей

Кафедра обліку та оподаткування Чернівецький національний університет імені Юрія Федьковича Чернівці, Україна

Іван Орестович Парубчак

Кафедра публічного управління і адміністрування Львівський національний університет ветеринарної медицини та біотехнологій імені С. З. Гжицького Львів, Україна

МІСЦЕВЕ ПАРТНЕРСТВО ЯК ІНСТРУМЕНТ СТИМУЛЮВАННЯ РОЗВИТКУ СІЛЬСЬКИХ РАЙОНІВ УКРАЇНИ

У науковому дослідженні розглядаються шляхи та стратегії використання місцевого партнерства для вирішення проблем розвитку сільських територій. Сюди входять переваги та економічні, законодавчі й соціальні обмеження як принципи використання місцевих партнерств для розвитку сільських територій України. Основні економічні вигоди отримують завдяки сукупним ресурсам, коопераційній діяльності, зменшенню ризиків, зайнятості та диверсифікації доходів і витрат населення. Переваги впровадження місцевих партнерств полягають у застосуванні нормативної бази, яка є ефективною для реалізації проекту та сприяння зростанню сільських територій у його постійному вдосконаленні на підтримку місцевих проектів міжнародними організаціями на міжнародному рівні.

Соціальні переваги місцевого партнерства визначаються його використанням як основою для інновацій у сільській місцевості, з метою покращення добробуту, вирішення загальних місцевих проблем, набуття передового досвіду, забезпечення інформаційно-комунікативних систем та інформаційних ресурсів і захисту інтересів місцевих товариств на національному рівні. Вибірковий характер проектів місцевого партнерства, низький інформативний рівень та недостатня підтримка місцевих органів влади, недостатній розвиток інформаційно- комунікативних систем у сільській місцевості, що знижують рівень мобільності деяких факторів виробництва та мають негативний вплив на добробут, - все це визначає обмеження використання місцевих партнерств на національному рівні. Основною причиною використання місцевого партнерства для стимулювання сільського зростання в Україні є підтримка адаптації до змін в аграрному секторі, об'єднаних громадах, навколишньому середовищі, добробуті, що постраждали від європейської інтеграції. Серед принципів впровадження місцевого партнерства у всіх сільських районах України є відкритість, рівні права всіх партнерів, байдужість до політики, точність та прозорість, активність та інтеграція, спільна економічна та соціальна відповідальність партнерства. У статті розглядаються етапи послідовного впровадження місцевого партнерства у сільській місцевості: діагностика інтересів зацікавлених сторін та довкілля, планування партнерства, стратегічні підстави для партнерства, реалізація партнерства, моніторинг етапів партнерства та якості результатів за чіткими критеріями, стратегічне партнерство підтримувати широкий та гнучкий спектр діяльності протягом довгострокового періоду.

Ключові слова: державно-приватне партнерство, співпраця, економічна безпека, фінансова підтримка.

Introduction

Deepening European integration opens new opportunities for the activities intensification in rural areas of the regions, as evidenced by the positive experience of EU countries (J. Banski, M. Mazur [1])); (P. Chromy, V. Jancak, M. Marada, T. Havlicek [2]). Development of rural areas of Ukraine is an uneven, asynchronous and disproportionate process, as evidenced by research results of S. Ivanov, М. Rogoza, K. Vergal [3], V. Melnyk, О. Pogrishchuk [4]. Given the dynamism of the external environment, there is a need to study the latest factors, forms, prerequisites and parameters of activating the overcoming of disparities in rural development in terms of integration and convergence, which affects economic security of Ukraine. Local partnership is one of the most effective mechanisms for overcoming the asymmetry of rural development.

The study of the local partnership phenomenon in the context of intensifying the development of rural areas is largely considered in the works of foreign scientists, such as M. Moseley [5], Е. Schauppenlehner-Kloyber [6], J. Benington, M. Geddes [7]. In current conditions of decentralization in Ukraine, the issue of using local partnership in the regional development system remains out of the attention of domestic researchers, only some aspects of it are covered. In particular, local partnership in rural areas is studied in the context of the adaptation of European models of local partnership to national legislation in the paper of N. Martynova [8; 9]. The most well-known theoretically described and practically implemented forms of the local partnerships functioning for rural development are the models of the European program, namely Leader І, Leader ІІ, Leader+ (local groups of actions) [8]. According to the European practice, public involvement in solving rural development problems, provided by this program, on the principle of “bottom-up” by selecting the most promising programs for the human development gave impetus to their development and economic growth, and the local partnership model proved effective. However, despite the significant accumulated global and, in particular, European, experience in the field of rural development, principles, approaches and models of using local partnership for rural economy still remain a novelty in the Ukrainian reality. The asymmetry of rural development is due to the action of its various material factors, as well as the conflict of interests of agrarian economy. Excessive centralization, over-regulation of the business environment and insufficient support for small businesses are the main reasons for the asymmetry of rural development in Ukraine. The presence of disparities in the development of rural areas of the regions is also comprehensively influenced by the demographic situation, unfavorable age structure of the population, outflow of the working age population abroad, infrastructural problems that level the quality of life in rural areas. For the younger generation, the main reason for unwillingness to stay and work in rural areas is the lack of employment with adequate wages [10].

In this regard, the research objective is to substantiate the advantages and limitations of using local partnership, principles and motives for its implementation to enhance rural development, as well as determine the main stages of the consistent implementation of local partnership in rural areas of Ukraine [11].

1. Characterization of local partnership as a special type of ties and relations

The problem of asymmetric distribution of benefits and advantages requires the adoption of collective measures in rural areas aimed at a fairer distribution of the effect. One of the mechanisms of the rural development intensification in the conditions of limited financial resources is local partnership, as a specific type of connections and relations, which arises as a result of the cooperation for the implementation of the common interests of individual subjects of rural areas (population, public organizations, business entities, local authorities), the key integrating element of which is local governments.

By the mechanism of implementation, this kind of cooperation is very similar to public-private partnership (PPP), and in practice it often works like: specifically, public functions are performed by the non-governmental sector [12]. However, there is a significant difference between these two phenomena of interaction between the state and the rest of the stakeholders. In the case of PPPs, despite the term “partnership”, which supposes the joint efforts and equality of the parties of the agreement, in fact there is a transfer of power from the state to private business in creating of common use infrastructure, production of goods and services, traditionally considered as a monopoly of the state and settlement between the parties in this regard the following issues: distribution of responsibilities, risks, obligations for financial support, design, construction, maintenance, operation, ownership, participation in the management and distribution of profits, based on the principles of equality, openness, non-discrimination, competitiveness, efficiency and minimizing of risks and costs. That is, such relations are more similar to public procurement, where the customer and, at the same time, the supervisory authority for the implementation of the agreement is the state [13].

Local Partnership supposes joining the efforts of stakeholders to respond to challenges and address the problems of the territory development based on the principles of partnership, equality, openness, transparency, accountability, complicity, agreeing of participant's objectives and non-discrimination (Figure 1). In practice, it can be formed on a contractual basis in the form of a local partnership agreement, or by establishing a special purpose vehicle as a separate legal entity.

Figure 1. Relationships in Local Partnerships

Source: compiled by the author.

As can be seen from the figure above, all the stakeholders can be divided into three main groups, which differ significantly by their interests: the state, business and civil society institutions. Thus, the state is represented by local authorities and self government, as well as government institutions such as schools, hospitals, kindergartens, cultural establishments and more. In this case, it plays a social, coordinating and controlling role. The main objectives here will be to protect the interests of society, especially its most vulnerable stratum, and to ensure that all stakeholders comply with existing legislation, in particular on the quality and affordability of infrastructure services (when their provision is transferred to private business) [14].

The main motivation of business is profit maximization. Involvement of this participant in the Local Partnership and empowerment to perform some functions of local government will give an opportunity to attract private sector resources, such as financial, technological, managerial, human, which allows not only to solve the problem of lack of available resources of local communities, but also to introduce technological managerial, marketing and other innovations, as well as the experience of private business in better meeting the needs of consumers. All this will ultimately lead to a better use of available local resource potential and the provision of services in appropriate volumes and quality in relation to today's requirements. Private business here will get new opportunities to expand the market [15]. The general purpose of the functioning of civil society institutions is an achieving of a social effect. In particular, if they are business development institutions, such as business centers, established in the form of a non-governmental organization, their activities are aimed on stimulating entrepreneurial initiative of the population by conducting training or consulting to increase the number of businesses or encourage selfemployment. In addition, civil society institutions in the course of their activities defend the interests of certain groups of the population and control the activities of the government itself. They may also be entrusted with certain social functions that are financially unattractive to private business, such as the maintenance of orphanages or nursing homes at public expense or grant funding. In this regard, donors or grantors must be mentioned who provide funds for the implementation of local partnership projects. In many cases, for the purpose of receiving of a grant they require the formation of such local partnerships in the form of a consortium of participants from the state and the nongovernmental sector [16].

The legal basis for the functioning of such entities is, first of all, national legislation and the regional and local levels regulations. Perspectives in this sense are agreements on Inter-Municipal Cooperation - arrangements that encompass two or more administrative-territorial units; they are considered to be effective tool in the implementation of large-scale infrastructure projects, when one locality is unable to implement them alone. Also, as sources of legal regulation of Local Partnerships, international agreements, international legislation and international programs ratified by the Supreme Council of Ukraine are used. The latter is usually a source of grant funding for local partnership projects. As an example, the so-called Neighborhood programs initiated by the European Union can be mentioned, which are designed to finance agreements on cross-border cooperation of border territorial communities of neighboring countries on the borders with EU countries [17].

2. Benefits and limitations of using local partnerships

Generalization of theoretical research [3-5] and practical results of individual local projects in rural areas of Ukraine allowed identifying a number of advantages and limitations of using local partnerships (Table 1).

Table 1. Advantages (opportunities) and limitations of using local partnerships in rural areas of Ukraine

Source: compiled by the author.

Motives for new forms of the interaction at the level of rural areas are:

- pooling and combining available human and financial resources from the public and private sectors to obtain a tangible economic effect from their use;

- uniting members of rural communities around collective projects and multisectorial actions in order to achieve a synergistic effect, equalizing the competitiveness of rural areas;

- strengthening cooperation and mutual dialogue between different participants of rural development, eliminating possible interpersonal conflicts, reaching an agreement through discussion and consultation;

- support for the process of adaptation to changes taking place in the agricultural sector in the united territorial communities (for example, changes in the quality standards of agro-industrial products or promotion channels), environment, quality of life through the rural economy diversification, etc.

In addition, there are a number of common restrictions on the use of the local partnership instrument in rural areas of Ukraine: imperfection of legislation, lack of bylaws to regulate various aspects of local partnership; short-term (onetime, selective) nature of local partnership projects, which positive experience does not extend to other territories; impossibility of implementing local partnerships in areas where there is no awareness and support of local communities; insufficient development of information and communication technologies in rural areas, which reduces the mobility of certain factors of production and negatively affects the level of the goods availability (goods, services, work, information, etc.) to rural residents.

Analysis of the experience of implementing local projects for the rural areas development by international organizations in Ukraine [18; 19] shows that in order to avoid / mitigate conflicts of interest of stakeholders in the formation of local partnerships in rural areas, one should be guided by the following principles:

- openness to all partners operating in the territory - anyone can join the partnership on the principles adopted by the group;

- equality of all partners - the voice of each partner is equally important;

- apolitical character in partnership - the partner group does not represent the views of political parties and acts for the whole society;

- joint responsibility of partners for results and risks;

- activity and integration of partners who jointly implement the strategy of the group, and each of which invests in the strategy, according to their capabilities, their intellectual, technical, logistical and financial resources;

- representativeness - each sector is represented by a number of entities adequate to the number of entities operating in the region;

- clarity and transparency of the partnership - all activities within the partnership, including the leader, are open, and each partner has equal access to information.

The above allows to determine the stages of the development of effective local partnership in rural areas:

I. Diagnosing (needs of partners and residents of rural areas; areas of the planned partnership; possible stakeholders; likely effects on the territory of the partnership and beyond; scenarios of the territory development before and after the project).

II. Preparation of a local project (organization of the interaction of interested parties (presentation of the idea of partnership to communities and stakeholders, acquaintance with previous experience, meetings with potential partners from related fields); search for investors, preparation and conclusion of contracts; analysis of the potential of rural areas, available resources and risks, opportunities for economic, social and other benefits).

III. Building a partnership (strategic support of the partnership (idea, mission, goals, objectives); structure and terms of partnership (creation of working groups, distribution of powers, responsibilities and risks of the parties, degree of participation, term of the project implementation); partnership program (verification of goals, program activities, detailed plans, ensuring equal access to information); funds accumulation(creation of a fund for the local partnership implementation - community funds, public funds, grant funds, funds of private investors) with a fixed contribution of each party; determination of expected results and criteria for their effectiveness).

IV. Partnership implementation (fulfillment of the schedule of planned works).

V. Monitoring of the stages of the partnership implementation and quality of the obtained results according to certain criteria: quantitative (indicators characterizing economic growth, quality of life and sustainable development of the environment, etc.) and qualitative (raising awareness and perception of the local partnership mechanism by partners, residents, gaining new knowledge and experience, strengthening the cooperation between partners, strengthening the competitiveness of local producers, developing new forms of business, promoting employment, increasing the level of satisfaction of residents, reducing social tensions, reducing the outflow of young people, etc.).

VI. Continuation of measures to implement the goals of the partnership on a longterm (permanent) basis and promote the partnership (promoting the results and positive experience of the partnership in other areas, for other activities; expanding the network of stakeholders; modifying the partnership; reporting, new partnerships).

According to the latest research of the International Labor Organization [20], one of the most promising forms of local partnership in rural areas in today's realities is the resumption of the cooperative movement. Activities of cooperatives are based on social responsibility in matters of environmental protection, food safety and combating unemployment, therefore, their formation in rural areas will have a positive impact on the employment growth, infrastructure development, promote self-realization, selfgovernment and collective protection of community interests. Pilot projects for the formation of communal cooperatives are already working in Ukraine (Poltava region). Therefore, this practice should be extended to other regions, taking into consideration all the benefits and identified risks. In addition, the introduction of agricultural clusters (“Medvino”, “Frumushika-Nova”, “Resort Koblevo”, “Dykanka all year round”, “Gorbo Gory”) has been started at the national level as the platforms for sustainable rural development in 5 pilot regions of Ukraine. In the formation system of agricultural clusters at the initial stages of their formation, it is local projects that can act as a catalyst for economic growth in rural areas.

Conclusions

The problem of asymmetric distribution of benefits and advantages requires the adoption of collective measures in rural areas aimed at a fairer distribution of the effect. Given the complexity and versatility of this problem, we believe that a local partnership is one of the mechanisms to intensify the development of rural areas in the face of limited financial resources. Advantages (opportunities) and limitations of the use of local partnership should be grouped by economic, organizational, legal and social characteristics. Increased economic benefits from pooling resources, cooperating in activities, reducing risks, promoting employment and diversifying incomes are the main economic benefits. Advantages of implementing the local partnership of organizational and legal nature are related to the availability and gradual improvement of the regulatory framework sufficient for successful implementation of partnership projects, support for the implementation of local projects by international organizations and at the national level. Social benefits of the local partnership are due to its use as a platform for spreading innovation in rural areas in order to improve the quality of life, solve common problems of local development, gain best practices, information and communication support, protect the interests of local communities at the national level. economic rural partnership

However, it was found that there are a number of restrictions on the use of the local partnership instrument in rural areas of Ukraine, including the absence / limitation of a prolonged effect from the implementation of local partnership projects; impossibility to implement local partnerships in the areas where there is no awareness and support of local communities, etc. In these conditions, the main motive for using local partnership to stimulate the development of rural areas of Ukraine is to support the process of their adaptation to changes in the united territorial communities under the influence of European integration processes, which should be based on openness, equality, apolitical character, joint economic and social responsibility. Given the above, the process of consistent implementation of the local partnership in rural areas should include the following stages: diagnosing interests of stakeholders and the environment, partnership preparation, strategic support of partnership building, partnership implementation, monitoring of partnership implementation stages and quality of results obtained according to certain criteria, continuation of measures to implement partnership goals on a long-term (permanent) basis and promotion of partnership activities to other territories and activities.

In modern conditions, one of the promising forms of local partnership in rural areas is cooperation, the use of which will fully implement the above benefits through an organic combination of personal and collective interests of the rural population and their key partners. Prospects for further research should focus on finding new opportunities and forms of the local partnership for the development of integrated structures in rural areas of Ukraine, within which united territorial communities can develop.

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