Ukraine`s rural areas in the conditions of decentralization and local self-government reform: challenges and prospects

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National Scientific Centre “Institute of Agrarian Economics”

Volynska State Agricultural Research Station of the Institute of Agriculture of Carpathian region

Staropolska Academy of Applied Sciences in Kielce

Uman National University of Horticulture

Vinnytsia Education and Research Institute of Economics of West Ukrainian National University

Lviv National Environmental University

UKRAINE'S RURAL AREAS IN THE CONDITIONS OF DECENTRALIZATION AND LOCAL SELF-GOVERNMENT REFORM: CHALLENGES AND PROSPECTS

Nataliia Patyka, Alla Sokolova,

Anastasiia Movchaniuk,

Inna Sysoieva, Roman Khirivskyi



Annotation

rural territorial decentralization community

Purpose. The purpose of the study is to determine the state, identify the main challenges and risks affecting rural development in Ukraine, and assess their influence on the effectiveness of functioning and financial capacity of rural territorial communities in the conditions of power decentralization and self-government reform.

Methodology / approach. The methodological basis of the research was a systematic approach to the study of the investigated phenomena and processes and the dialectical method of cognition, as well as general scientific and special methods. In order to assess the state and trends of rural development in Ukraine, economic and statistical methods were used in analytical studies (comparative analysis to compare the results obtained in certain years, average and relative values, trend analysis, index analysis, etc.). This was done to establish certain relationships, such as identity, similarity, or difference between characteristics and facts. To determin e the influence of individual factors on the operational efficiency and financial capacity of territorial communities, multiple correlation and regression analysis was used. A number of abstract-logical techniques made it possible to formulate intermediate and final conclusions and proposals.

Results. Current conditions are analyzed and trends of rural development in Ukraine for 1990-2022 are determined. It was found that over the past 32 years, the socio-economic crisis in rural areas continues to worsen, which is manifested in declining employment rates, increasing unemployment, rising poverty, mass migration of peasants, deterioration of infrastructure and access to social services. The main challenges and problems of rural development have been identified and systematized by groups: socio-demographic, economic, environmental and nature protection, institutional, political. To assess the factors influence on the effectiveness of functioning and financial capacity of territorial communities, a multifactorial correlation and regression analysis was conducted. It was found that the level of capital expenditures is most affected by the fiscal return of the community territory per 1 inhabitant.

Originality / scientific novelty. The elements of scientific novelty consist in the introduction of a systematic approach to generalizing challenges and problems affecting the development of rural areas and communities, which were systematized by groups: socio-demographic, economic, environmental and nature protection, institutional, political. The scientific and methodological foundations of studying the socio-economic situation in Ukraine's rural areas in terms of determining the factors and assessing their influence on the effectiveness of functioning and financial capacity of rural territorial communities have been further developed.

Practical value / implications. The identification of factors and their influence on the functioning effectiveness and financial capacity of rural territorial communities can be taken into account by state institutions when reviewing previously adopted documents and elaborating strategic plans for the restoration and development of Ukraine's rural areas, taking into account internal threats and the long-term external aggression of the russian federation against Ukraine.

Key words: rural areas, rural territorial communities, administrative and territorial reform, financial capacity, factors, development.



Introduction and review of literature

The difficult socio-economic condition in most rural areas of Ukraine, the spread of tendencies towards their decline, impoverishment of a large part of the rural population require significant changes in the state management of rural development. In this regard, it is considered necessary to change approaches to determining priorities and goals of rural development policy and form a new system of motivation for the territorial communities' development. An important component of this process is, first of all, the transfer of power and financial authority to territorial communities and local self-government at the basic level. To this end, administrative and territorial reform was launched in Ukraine in 2014.

With the expansion of the powers and capabilities of rural territorial communities as a result of decentralization, they are increasingly entrusted with the need to equalize the socio-economic development of settlements and ensure sustainable rural development. In turn, this requires determining the influence of various factors on the development of territorial communities in rural areas. To substantiate strategic guidelines for the socio-economic development of rural areas in conditions of decentralization, it is also important to analyze and evaluate existing problems and resources for solving them in a specific region. Due to the unevenness and disproportions in the development of the entire set of socio-economic and environmental processes, which are unique for each region and natural-economic zone, the regional approach to ensuring sustainable rural development is gaining special relevance [1].

The complexity, insufficient study and uncertainty of these issues at the theoretical, methodological and applied levels require constant monitoring of the situation dynamics in rural areas, the effectiveness of implementing decentralization elements in them, the elaboration and implementation of effective measures aimed at ensuring rural development, improving the welfare and quality of life of peasants, and confirm the relevance of this study.

It is worth noting a significant contribution of such well-known Ukrainian scientists as: O. Borodina et al. [2-5], K. Vaskivska et al. [6], Yu. Hubeni [7], M. Dolishniy et al. [8; 9], E. Libanova et al. [10], R. Khirivskyi et al. [11], V. Tereshchenko, P. Laiko [12], Yu. Lupenko et al. [13], O. Pavlov et al. [14], A. Sava [15], P. Savchuk et al. [16], O. Slavkova [17], A. Sokolova, T. Ratoshniuk [18], Yu. Shpyliova [19] and others to the priority socio-economic directions of rural development at the regional and local self-governing level. Their research covers a wide range of problems related to rural development: from the genesis, essence and significance of rural areas to the elaboration and justification of strategic guidelines for their development, considering the practice and experience of solving these problems in other countries.

A significant contribution to forming the basic principles of rural development was made by R. Chambers [20]. In particular, he investigated the sustainability of economic development and the quality of life of the rural population, noted an important problem that people (academic researchers, civil servants, politicians, consultants, etc.) engaged in rural development underestimate rural poverty. In fact, they are neither rural nor poor and therefore understand the nature of rural poverty. And it is not worth expecting them to develop real measures aimed at overcoming poverty or solving other problems of rural development.

In the study of the theoretical and methodological basis of rural development, it is worth highlighting the scientific works of O. Pavlov [21-23]. The scientist thoroughly investigated the economic essence, types, structure and functional purpose of rural areas, which, in his opinion, are heterogeneous multifunctional formations with the population as a system-forming element.

In the context of globalization of the socio-economic space of the world's agrarian systems, according to I. Kravchuk [24], an important role is played by the development level of local (territorial) spaces (rural areas), which are the basic segment of food supply, formation of the countries' export agricultural potential and maintenance of the health of nations.

In view of the above, scientists of the Institute of Agrarian Economics define rural development as a process aimed at a stable and balanced development of agricultural production, rural settlement network and rural areas on the basis of a modernized system of socio-economic development, the formation of a proper ecologically safe environment as a guarantee of reliability and attractiveness of residence, work and recreation of the population [25].

Monitoring the socio-economic problems of rural development in Poland, A. Rosner and M. Stanny emphasize the need for researchers to focus on key economic and non-economic aspects of rural development, including deagrarianization of the local economy, characteristics of the agricultural and nonagricultural sectors, spatial accessibility of communes, local state finance, labor markets, demographic changes, education, social engagement, local community wealth and living conditions [26].

The main priorities of the policy of sustainable development of rural areas, according to M. Tymoshenko [27], should be their integrated development aimed at ensuring attractive and appropriate working and recreation conditions; creating a comfortable living environment; reducing poverty and increasing the competitiveness of the rural economy through diversification and agrarian entrepreneurship.

Further deepening of destructive social processes in rural areas can be prevented, according to N. Patyka and O. Bulavka, through the gradual implementation of a complex of regulatory-legal and organizational-economic measures, which will be based on the real demand and supply of social services at the micro-level, i.e. strengthening the regulatory influence of local self-government authorities on the foundations of an organic combination of the local government structures functions with regional and national authorities in solving the problems of social development of rural areas [28].

The importance of the development of rural areas for the national economy is also indicated by I. Petretsky [29]. However, he adds that “...despite their importance for the national economy and the declarative attempts of the state authorities to improve the socio-economic situation of rural areas, their recession is observed, accompanied by a number of economic, social, environmental and demographic problems”. He sees a way out of this situation in effective administrative and territorial reform. In his opinion, “...under the conditions of i nstitutional changes with power decentralization and effective local management, rural territories open up significant administrative, socio-economic, resource-production and innovationinvestment potential”.

In the context of this study, the statement of T. Zinchuk [30] is true that the role of territorial communities (TC) in the period of power decentralization reform was especially relevant in view of the economic, social and environmental challenges that are most noticeable in the life processes of rural areas.

The expediency and timeliness of the administrative-territorial reform in Ukraine are also emphasized in the research by academician V. Riabokon [31], pointing to the important role of local budgets in the development of rural areas, which as a result of this reform “...will receive full independence when using available financial resources regardless of the central budg et”. However, the scientist also focuses on the shortcomings and miscalculations allowed in the decentralization reform, namely, administrative interference, haste, violation of the principle of voluntariness in the unification of communities, etc., which is a direct violation of the adopted normative legal acts.

The effectiveness of implementing the decentralization reform in the deep conviction of T. Hohol and L. Melnychuk [32] is possible only under the conditions of a cohesive community of residents, strong institutions and effective state administration.

According to some other scientists, the main resource for the development of territorial communities is not only financial or material resources, but also the residents themselves, their activity and entrepreneurship. V. Medvid came to such conclusions in his research [33]. However, according to his estimates, only every ninth respondent is aware of this. At the same time, community residents give preference exclusively to economic areas of development of social, cultural and environmental projects.

A. Kolosov and his colleagues studied the role of an individual - a TC member as a self-sufficient economic object in the success of community development [34]. In particular, they consider the insufficient attention to identifying initial conditions for the formation of capable TCs to be the theoretical, methodological and applied reasons for the ineffectiveness of TC functioning. Thus, in their research, the scientists prove that the TC potential opportunities to provide development prospects to each of its residents are very different, in cities they are much higher than in townships, and especially in villages, which was not considered in the process of creating rural and township TC. As a result, a model was formed where some TCs (recipients, more often - urban ones) attract residents from other TCs (donors - rural, township) for work, purchasing goods, paying for services, etc., which contributes to their development, while TC-donors lose resources (human, financial) for their development.

According to N. Hlynskyy et al. [35], the result of effective actions and decisions taken in the short and medium term can only be demonstrated by those sparsely urbanized territories where an effective system of local self-government has been formed. Increasing public activity and raising residents' expectations from local authorities is an additional and important factor that encourages the latter to use limited development resources to the maximum efficiency.

Evaluating the potential rejection of the idea of voluntary association by citizens and especially local governments, I. Tomashuk [36] defines one of the government tasks in the transition to the decentralization of state administration to include the motivational factor of reforming local self-government. He also emphasizes that one of the fundamental conditions for the independence of local self-government authorities is financial decentralization. In addition, the administrative-territorial reform itself should be considered “...as a factor that directly affects the diversification of rural development”.

Continuing this opinion, O. Dovhal [37] notes that the decentralization reform actualizes the task of optimally choosing the structure of economic activity of a particular region, according to a set of regional production factors that are in excess compared to other regions. In his research, the scientist argues that the level of wellbeing of territorial community members depends not only on the availability of resources, but also on how fully and effectively they are used.

V. Rossokha and M. Plotnikova also emphasize increasing the responsibility of local governing authorities for the socio-economic development of rural areas, the use of their resource potential, the intensification of economic activity and privatestate partnership in the region due to the expansion of their powers in the process of decentralization reform [38].

In general, the researchers' opinion regarding the positive impact of the decentralization reform on the development of rural areas through the emergence of new development opportunities for them is shared by S. Belei [39]. However, he emphasizes the need for “...the formation of a holistic vision of relevant measures, clear criteria for assessing and forecasting their impact on the socio-economic development of rural areas in order, first of all, to ensure capacity”. As an indicator of rural development, S. Belei sees the elimination of asymmetries and disproportions, overcoming socio-economic depression and improving the quality of life of the rural population.

Analyzing the decentralization reform and its impact on the development of territorial communities, Z. Siryk and co-authors [40], along with certain achievements in completing the stage of territorial communities formation, note that the decentralization process still requires a clear regulatory and legal framework, adoption of important systemic acts and changes in the approach to forming communities, taking into account not only the level of financial capacity, but also the possibility of their development in the long term. According to their estimates, as of the beginning of 2020 in Ukraine, there was a rather high differentiation in the financial capacity level of existing TCs: currently, among others, only the communities of cities of regional significance have a high level of financial capacity. The rest of communities, especially those with a population of less than 5,000 people, are at risk of insolvency, which threatens their future development and indicates a lack of community unification on a voluntary basis.

The key to the success of the decentralization process, according to E. Zhumagulov et al. [41], is the availability of stable and sufficient financial sources of local self-government. In their opinion, the positive development of local selfgovernment in the Republic of Kazakhstan can be expected if there is a clear differentiation of the sources of budget revenues at all levels, the distribution of budgetary powers, the legislative definition of the principles of formation and use of financial resources, effective relations of local self-government with business entities and financial and credit institutions.

Continuing the topic of financial decentralization and assessing its impact on regional development, I. Tsymbaliuk and B. Pidtserkovnyi [42], using indicators of financial self-sufficiency, revealed the relationship between financial decentralization and the dynamics of regional development, which is manifested in promoting the unification of territorial communities, but leads to a significant accumulation of local budgets in the country's banking system. This, in turn, indicates the inefficient use of resources obtained as a result of financial decentralization by local self-government authorities.

Carrying out a quantitative assessment of the impact of European Union financial subsidies on the socio-economic development of rural areas in Romania, emigration processes, and the growth of Romanian agritourism, N. Galluzzo [43] notes their key role in stimulating the diversification of farm production resources, thus confirming the role of state authorities in the development of rural areas and agritourism in Romania.

S. Vasarri and P. Salek-Lipcean [44], summarizing the results of their study of decentralization processes in the Eastern Partnership countries, recommend including the principle and concept of subsid iarity in the country's legislation, wh ich means a dynamic principle of power distribution among different levels of government. In their view, in order to achieve development goals, resource and expenditure planning should be based on mediumand long-term strategies. The availability of financial resources may not be sufficient to ensure development if they are used inefficiently or improperly.

At the same time, a certain part of problematic issues requires a more detailed study. Despite considerable theoretical and methodological developments and numerous works, the issues of identifying the main challenges and risks affecting rural development in Ukraine, assessing the degree of their influence on the efficiency of functioning and financial capacity of rural territorial communities in the context of power decentralization and self-government reform in Ukraine do not lose their relevance and require in-depth research.



The purpose of the article

The purpose of the study is to determine the state, identify the main challenges and risks affecting rural development in Ukraine, and assess their influence on the effectiveness of functioning and financial capacity of rural territorial communities in the context of power decentralization and selfgovernment reform.

In this paper, a working hypothesis was developed, which follows from the purpose of the study, namely: the administrative-territorial reform in Ukraine is ineffective and negatively affects rural development in Ukraine, as confirmed by the dynamics of the main socio-economic indicators.

To achieve the defined purpose, the following research tasks were formulated:

- to analyze current conditions and determine trends in rural development in Ukraine;

- to summarize normative legal acts for implementing the state policy on the socio-economic development of rural areas;

- to identify and systematize the main challenges and problems affecting the development of rural areas and communities;

- to assess their influence on the efficiency of functioning and financial capacity of rural territorial communities.

Methodology

To solve the research tasks and achieve the set purpose, the dialectical method of scientific knowledge, as well as general scientific and special methods, was used. Using the historical-retrospective method, the regulatory and legal support for implementing the state policy on the socio-economic development of rural areas was investigated. In order to assess the state and trends of rural development in Ukraine, economic and statistical methods are used in analytical studies (comparative analysis to compare the results obtained in individual years, average and relative values, trend analysis, index analysis, etc.). This was done to establish certain relationships, such as identity, similarity, or difference between characteristics and facts.

Multiple correlation and regression analysis was used to determine the influence of individual factors on the efficiency of functioning and financial capacity of territorial communities. A number of abstract and logical techniques made it possible to formulate intermediate and final conclusions and proposals.

The methodology used in the study corresponds to the following steps (Figure 1).

The information base of the research was: data of the State Statistics Service of Ukraine, the “Decentralization” portal, regulatory and legal acts of Ukraine; scientific publications; information from Internet resources. The research period covers 1990 - 2022.

Figure 1 Logical scheme of research methodology

Source: generated by the authors

However, although the qualitative and quantitative approaches used in the research to prepare this paper provide accurate measurements and comparisons, they cannot cover the full complexity of the research subject. This study provides important information about the main challenges and problems affecting the development of rural areas and communities, their financial capacity, but of course, it does not include the influence of many other potentially influential variables.

Results and discussion

Since 2014, the decentralization process began in Ukraine, the legislative framework for reforming the management of the socioeconomic development of the state was approved and is gradually being implemented, which provides for: 1) the transfer of most powers from executive authorities to the level of territorial communities and securing sufficient financial resources for them; 2) clear demarcation of powers between executive authorities and local self-government authorities, as well as among different levels of local authorities; 3) strengthening the responsibility of local self-government authorities and officials to voters and the state.

In particular, the Concept of reforming local self-government and territorial organization of power in Ukraine was developed, adopted and implemented [45], the Laws of Ukraine “On cooperation of territorial communities” [46], “On the voluntary association of territorial communities” [47] and a number of amendments to the Budget and Tax Codes - regarding financial decentralization, etc. were adopted. The goal of the reform was defined as “... the formation of effective local self-government and territorial organization of power to create and maintain a full-fledged living environment for citizens, provide high-quality and accessible public services, establish institutions of direct people's power, coordinate the interests of the state and territorial communities” [45].

During these years of reform, as of now, 1,470 territorial communities (rural, township and urban, including the city of Kyiv) were formed, of which 627 rural communities or 42.7 % of the total number, where more than 30 % of Ukraine's population (rural people) lives. However, based on the results of the research presented below in the paper, it is proved that the administrative-territorial reform, unfortunately, did not improve the situation in rural areas, in particu lar, the wellbeing and quality of life of rural residents. Its ineffectiveness led to the current crisis phenomena in rural areas.

This crisis is manifested primarily in a sharp decline in employment and an increase in such phenomena as unemployment and poverty, and in the search for a way out of them - mass migration of peasants, especially rural youth. As a result, further strengthening of these negatives leads to rural depopulation, which today has covered the whole of Ukraine, a sharp reduction of the population, including economically active one, in rural settlements, and, as a result, economic degradation of rural areas as a whole.

Thus, according to official statistical data of the State Statistics Service of Ukraine [48], for the period 2000-2021, the number of settlements in Ukraine decreased by 370 villages, an average of 17 -18 villages annually. At the beginning of 2022, 12,473,600 rural people lived in Ukraine (excluding the temporarily occupied territory of the Autonomous Republic of Crimea and part of the temporarily occupied territories in the Donetsk and Luhansk regions), which was 30.3 % of the total population of the country. Compared to 1990, the rural population decreased by 4,495.7 thousand people, or by 26.5 %. At the same time, the rural population decreased by almost half in Chernihiv region - by 49.6 %, Sumy region - 41.5, Khmelnytskyi region - 34.1, Poltava region - 33.2, Zhytomyr region - 32.7 %.

The death rate in rural areas is 2.5 times higher than the birth rate. In 2021, the birth and death rates were 7.7 and 19.5 per 1,000 of the existing population, respectively.

The socio-demographic situation is also complicated by the fact that the population reproduction potential is practically exhausted in the Ukraine's rural areas. At the beginning of 2022, the number of people over 60 years old (3,048 thousand people) exceeded the number of children under the age of 14 by 1.5 times (2,075 thousand people - in 2021 alone, this contingent of the rural population decreased by 43 thousand people), and there were 3385.4 thousand people in the most productive reproductive age (20-39 years), which was only 27 % of the total number of Ukraine's rural population. In 2021 alone, this age group (20-39 years) decreased by 60,000 people, which was 0.5 % of the total rural population.

In turn, this fact proves that in the absence of able-bodied youth on the rural labor market, the rural able-bodied population is at a disadvantage compared to urban residents in terms of the quality of workforce (educational and qualification level, professional skills, health status, etc.). As a result, this will significantly complicate the implementation of technical and technological changes in agricultural production and affect labor productivity.

In 2021, the employment rate of the rural population reached its lowest level since 2000 - 46.7 %. This is the lowest indicator of rural employment in the last 20 years. The unemployment rate of the rural population increased to 10.6 % in 2021, and among persons of working age - to 11.2 %.

It is clear that during the Russian-Ukrainian war, the situation worsened significantly. The lack of official statistics does not make it possible to assess the actual level of employment, but according to expert assessments, its decline is significant, and in some regions, even catastrophic.

Due to unemployment and the loss of peasants' opportunities to exercise their constitutional and normative right to work and commensurate payment for it, as a result of inflation, constant growth of prices and tariffs for social services, the purchasing power of rural residents decreases, the consumption of food products (in rural families in the general structure of total expenses for almost two decades, 5367 % falls only on food products), industrial goods and services decreases, the cost of living of peasants is continuously increasing, and their standard of living is worsening.

The situation in providing villages with social infrastructure facilities is complicated. Over the past ten years, the number of secondary schools has decreased by 34.8 %. The number of hospitals decreased by 16.8 times, paramedics and midwives by 41.7 %, libraries by 13.6 %, club-type cultural institutions by 8.1 %. Although the number of pre-school children 's institutions increased by 400 during the analyzed period, the level of their provision remained quite low - 33.6 %.

As of the end of 2022, 331 (22.5 %) territorial communities from nine regions were located in areas of military (combat) operations or under temporary occupation, encirclement (blockade). The settlement network in these territories is being destroyed. In the majority of cities, townships and villages that were or are in the zone of active hostilities, the production infrastructure and housing stock are destroyed partially, and in some places completely, housing communal enterprises are not operating, and engineering support is in poor condition. As a result, the attractiveness of the population's residence and the possibility of exercising employment rights have been almost completely lost. 105 of these 331 TCs are rural territorial communities.

Regulatory and legal support that regulates rural development, including the issues of sustainable development, has its history since the foundation of independent Ukraine and includes numerous legislative and regulatory documents. In particular, such as the Law of Ukraine “On the priority of social development of rural areas and agro-industrial complex in the national economy” dated October 17, 1990 No. 400XII; Resolution of the Cabinet of Ministers of Ukraine “State target program on the development of Ukrainian rural areas for the period till 2015” dated July 19, 2007 No. 1158; Resolution of the Cabinet of Ministers of Ukraine “State strategy for regional development for 2021-2027” dated August 5, 2020 No. 695; Order of the Ministry of Agrarian Policy of Ukraine “Industry program of socio-economic development of rural territorial communities” (model project “New rural community”) dated June 01,2010 No. 280, etc.

In 2015, the Ministry of Agrarian Policy and Food of Ukraine created a project of the “Unified comprehensive strategy for agriculture and rural development of Ukraine for 2015-2020”, which outlined priority and long-term measures and expected results, deadlines for their implementation, as well as a detailed plan of actions and responsible performers. However, the document was never legitimized.

In order to create the necessary organizational, legal and financial prerequisites for rural development, the Decree of the Cabinet of Ministers of Ukraine “On approval of the Concept of rural development” dated September 23, 2015 No. 995-r and “On approval of the Plan of measures for the implementation of the Concept of rural development” dated July 19, 2017 No. 489-r were adopted. The implementation of the Concept is planned for the period until 2025.

Certain legislative measures to solve the problems of balanced economic, social and ecological development in Ukraine at the state level were reflected in the Order of the Cabinet of Ministers of Ukraine “Concept of the State target program for sustainable development of rural areas for the period until 2020” dated March 02, 2010 No. 121-r; Decrees of the President of Ukraine “On the sustainable development strategy “Ukraine - 2020” dated January 12, 2015 No. 5/2015 and “On the goals of sustainable development of Ukraine for the period until 2030” dated September 30, 2019 No. 722/2019.

However, the analysis proved that the peculiarities of regulatory and legal support for implementing the state policy on the socio-economic development of rural areas are that they are general in nature and do not contain specific mechanisms by which the state would clearly influence the functioning of the agricultural sector, which guarantees the food security of the country and ensure effective rural development; there is no financial support for the adopted normative acts in full or at all. In addition, some adopted acts are not executed.

The new regulatory documents also follow up on these shortcomings. In particular, the “National economic strategy for the period until 2030”, approved by Resolution No. 179 of the Cabinet of Ministers of Ukraine dated March 3, 2021, one of the results of which should be the improvement of rural development and the quality of life in rural areas, currently does not have a Plan of measures for its implementation, and therefore monitoring and evaluation of the results achieved.

One of the priority areas defined by the “State strategy for regional development until 2027” (Resolution of the Cabinet of Ministers of Ukraine No. 695 of August 05, 2020) is the development of rural areas (within strategic goal 1, within which 17 tasks have been identified). However, there is no monitoring of the performance of these tasks. According to official statistics, the situation regarding social infrastructure in rural areas is not improving, but rather getting worse, access to medical and educational services has become difficult, in some cases impossible. This indicates that the tasks defined in this resolution have not been fulfilled.

The situation is similar with regard to institutional support for rural development policy. In particular, among the committees of the Verkhovna Rada of Ukraine, there is not yet a single one that would be responsible for rural development policy [49].

On December 2, 2022, a new Ministry for Communities, Territories and Infrastructure Development of Ukraine was formed (on the basis of the Ministry of Infrastructure). The Regulations on its activities were approved by Resolution No. 1400 of the Cabinet of Ministers dated December 17, 2022. However, if earlier, in accordance with the legislation, the Ministry of Regions was assigned with the tasks of general coordination of rural development, elaboration and implementation of rural development programs, elaboration and implementation of measures aimed at comprehensive rural development, and submission of relevant proposals for consideration by the CMU; ensuring monitoring of the provision of social infrastructure facilities in rural areas, then in the Regulations of the Ministry for Communities, Territories and Infrastructure Development of Ukraine there is not a single word about rural areas and their development.

It is also worth paying attention to the fact that in the draft document “New agrarian policy” [50], there is no section or even a mention of rural development. This only shows that there is still no understanding of the importance of this problem at the state level and the need for a comprehensive approach to its solution.

Thus, it is reasonable to state that at the moment there are no strategic documents on rural development, no institutional support for it, no financial instruments for implementing the state policy of rural development and, in general, there is no proper understanding of the need for a comprehensive rural development policy (including in the context of European integration) at the political level.

In general, the main challenges and problems affecting the development of rural areas and communities in Ukraine should be identified and summarized into relevant groups (Table 1).

Each of these problems is already significant in itself, and their totality in a certain combination is a prerequisite for the emergence of a crisis in rural development and entails the destabilization of the entire national economic complex. At the same time, a clear identification of these problems is the basis for determining the main directions of reforming rural development in Ukraine and choosing instruments for its implementation.

However, it is worth noting that in the process of implementing the administrative and territorial reform in Ukraine, there are also positive changes. In particular, it is appropriate to note a certain effectiveness of financial decentralization, which theoretically can provide conditions for further socioeconomic development of rural TCs. One of the facts confirming this ability is data on financial revenues to local budgets. Thus, during 2014-2021, the TC's revenues increased by more than 4.6 times: from 68.6 billion UAH in 2014 to 317.1 billion UAH in 2021, which in turn contributed to an increase in the share of TC's revenues in local budget revenues by 41.4 percentage points up to 70.7 %.

Table 1

Systematization of rural development problems in Ukraine

Problem group	Components of the problem group
Sociodemographic	demographic situation crisis; negative sex-age structure and depopulation; high level of external and internal migration; increase in the number of internally displaced persons as a result of hostilities in the country; impossibility of employment and low income; unsatisfactory provision of social infrastructure, health care, education and culture, sports, household service institutions, their destruction as a result of military operations; unsatisfactory transport connections and low-quality roads
Economic	unfavorable investment climate due to difficulties in attracting foreign and domestic investments in TC; narrow specialization of agricultural enterprises (mainly crop production); highly intensive development of agriculture, significant decline and unprofitability of livestock production (meat and dairy cattle breeding, pig breeding), as a labor-intensive industry; lack of a sufficient number of market - forming enterprises; low purchase prices for the products of agricultural enterprises and households; inflated prices for material and t echnical resources; lack of develop ed transp ort infrastructure and its low availability; disruption of logistics chains and loss of markets for agricultural products due to milita ry actions; insufficient state support for agricultural producers and lack of social protection and cooperation of households owners; monopolization of state support by large agricultural formations
Environmental and nature protection	decrease in soil fertility and quality; non-compliance with scientifically based farming systems; irrational use of forest resources and uncontrolled logging and harvesting; illegal and inefficient use of natural minerals; air and water pollution; unsolved problems of solid household waste and landfills arrangement; radiation pollution of rural areas in certain regions of Ukraine
Institutional	ineffective decentralization of management in rural areas; institutional activity and level of development of local development agencies of territorial communities that do not meet the requirements of the time; inefficient activity of institutions authorized by the state to implement measures in the field of management decentralization and support of TC; the general nature of regulatory and legal support for implementing the state policy on the socio-economic development of rural areas; insufficient financial support for adopted normative acts, inconsistency of individual regulatory procedures and normative legal acts that govern the local self-government authorities of territorial communities; the dominant destru ctive nature of the functioning of informal institutional levers of TC development
Political	Russian-Ukrainian war; political instability in the country; insufficiently balanced state migration, social, tax, foreign economic policies; lack of specific mechanisms by which the state would ensure effective rural development; low executive discipline

Source: summarized by the authors based on the results of their own research

The largest increase is shown by the actual receipt of personal income taxes. It would seem that one of the reasons for such growth was an increase in income due to creating new jobs and increasing employment in communities. However, according to official statistics on rural employment, the situation is the opposite, new jobs are not being created, instead existing ones are being eliminated, especially in agriculture, and the unemployment rate of the rural population is growing. At the initial stages of TC operation, including in rural areas, jobs were created only in such areas as provision of administrative services, medical, educational, social, etc.

At further stages of development and functioning of rural TCs, it is advisable to focus attention on attracting both own revenues and investments for developing the production and service sectors, in particular, non-agricultural industry, construction, transport, tourism and recreation, etc. An urgent need is that in the event of a reduction or termination of subventions from the state budget, the financial capacity of some rural TCs for sustainable socio-economic development may significantly decrease, which will lead to the reduction or elimination of existing jobs in the future.

In order to assess the effectiveness of financial decentralization and analyze the influence of factors, an economic-mathematical method was used, which made it possible to identify the relationship between the resulting characteristic and factor indicators. Multifactor correlation and regression analysis, which determines the dependence of the resulting characteristic on several factors, is one of the effective methodological approaches for assessing the influence of the system of factors on the efficiency of functioning and financial capacity of territorial communities.

Regional features of rural development in Ukraine in the context of decentralization were identified and disclosed on the example of the Volyn region. To this end, a statistical correlation and regression model was developed and a relationship between the amount of budget capital expenditures for fin ancing investment and innovation activities of TC per 1 resident of the community and a number of financial and economic factors that reflect the income, expenses and level of rotation of territorial communities of the studied region was established. At th e same time, the nature of the specified dependence, according to the research results, is direct. The following were selected as factor characteristics (Table 2).

Table 2

Factors influencing the resulting characteristic and the method of their quantitative measurement

Factors	Indicators, method of their calculation
X1	Profitability of community lands, which is defined as the ratio of the payment for land to the community territory, UAH/ha
X2	Local taxes and fees, depending on the rates established by the Tax Code of Ukraine, the object of taxation, payment procedure and provided tax benefits, per 1 inhabitant, UAH
хз	Fiscal return of the territory (the ratio of revenues of the general fund to the community territory), per 1 inhabitant, UAH
X4	Expenditures of the general fund, including expenditures for implementing delegated and own powers and interbudgetary transfers to other budgets, per 1 inhabitant, UAH
X5	Total revenues to the general fund (tax and non-tax payments, as well as local taxes and fees), per 1 inhabitant, UAH
X6	Expenses for the maintenance of management personnel and local self-government authorities, per 1 inhabitant, UAH
X7	Basic (reverse) subsidy is a transfer provided from the state budget to local budgets for the horizontal equalization of the fiscal capacity of territories, per 1 inhabitant, UAH
X8	Official transfers from state authorities (subsidies, targeted and investment subventions, etc.), per 1 inhabitant, UAH

Source: generated by the authors

The indicators were determined based on statistical data characterizing the level of development of 54 TCs of the Volyn region in 2022, as well as the author's research and calculations. A number of indicators were calculated based on the information and analytical dashboard “Municipality budgets in Ukraine”, which visualizes the resulting characteristics of the budgets of all territorial communities of Ukraine by income, expenses and transfers for 2022 [51]. It should be noted that this is a new instrument for budget analysis at the local level, the indicators are regularly updated, contain minimum, maximum and average values of the above indicators and can be used for detailed economic and financial diagnostics of TC budgets, identifying shortcomings and developing proposals to improve the financial capacity of communities in the future. The initial data for building the model are shown in Table 3.

Table 3

Input data for the model construction

No.	Territorial community	Y	Factor characteristics
			Х1	Х2	Хз	Х4	Х5	Х6	Х7	Х8
1	Vol.-Volynska	3,587	171,901	1,159	259	10,008	25,393	982	0	1,958
2	Zaturtsivska	57	12,655	1,314	11	9,090	3,914	1,919	1,212	5,325
3	Zymnenska	493	21,061	1,585	13	9,846	4,215	1,269	1,411	5,435
4	Ivanychivska	85	43,880	1,194	43	8,367	4,314	1,057	1,102	3,993
5	Lytovezka	131	17,843	1,153	33	6,791	4,180	1,544	158.9	3,042
6	Lokachynska	410	23,365	1,351	15	9,638	5,391	1,160	980.2	4,529
7	Novovolynska	744	243,090	1,280	67	7,291	5,042	833	776.6	2,530
8	Ovadnivska	511	21,693	2,073	21	10,914	7,471	1,556	829.7	4,935
9	Pavlivska	141	21,939	1,220	13	9,018	3,236	1,261	1,484	2,552
10	Poromivska	105	14,465	944	68	8,904	7,479	1,340	0	3,628
11	Ustyluzka	206	11,995	1,580	15	9,518	6,298	1,502	52.48	3,347
12	Kam.-Kashyrska	373	5,223	707	2	9,310	3,384	516	1,702	6,307
13	Lyubeshivska	348	10,502	802	3	8,931	3,298	817	1,382	6,223
14	Manevytska	399	6,223	892	5	9,211	5,001	825	940.8	5,113
15	Prylisnenska	239	11,902	1,161	9	9,196	4,498	1,001	1,294	6,156
16	Soshynetska	238	4,273	684	6	8,548	2,270	841	2,073	7,109
17	Velymchenska	169	7,969	441	19	8,642	7,147	677	2,137	7,034
18	Velytska	443	11,106	994	13	8,177	2,823	1,443	1,740	5,954
19	Vyshnivska	740	13,519	1,499	14	11,210	7,090	1,429	176.4	4,672
20	Holobska	240	19,524	1,258	12	8,420	3,753	1,378	1,388	7,816
21	Holovnenska	353	4,635	464	6	7,026	1,938	583	1,367	5,248
22	Dubechnenska	144	8,232	536	8	8,665	2,577	671	1,784	6,256
23	Dubivska	975	16,937	1,993	28	13,140	5,346	1,511	1,129	8,141
24	Zabolotivska	314	7,101	482	9	7,945	2,399	768	1,832	5,285
25	Zabrodivska	185	5,224	484	6	8,402	1,997	613	1,983	6,735
26	Kovelska	934	313,711	2,762	26	9,180	8,220	977	224.6	2,782
27	Kolodiazhnenska	620	7,222	1,142	8	10,058	3,904	1,609	1,603	6,523
28	Lukivska	138	20,128	1,286	35	8,193	5,497	873	1,361	4,285
29	Lublynetska	155	21,166	1,081	38	7,986	4,389	918	1,405	4,329
30	Lubomlska	840	29,574	1,724	20	10,487	5,773	1,239	1,008	4,285
31	Povorska	314	7,102	784	16	9,159	4,041	1,157	1,580	5,700
32	Ratnivska	896	9,487	815	11	9,405	5,250	794	1,226	5,306
33	Rivnenska	594	7,442	989	15	9,985	5,397	1,202	995.5	5,218
34	Samarivska	337	5,178	632	17	10,216	4,279	1,842	1,919	7,325
35	Serehovychivska	93	17,074	1,240	18	7,133	3,067	1,531	1,819	4,778
36	Smidynska	910	13,524	1,066	14	6,961	3,110	947	1,591	5,139
37	Starovyzhivska	62	10,338	843	9	8,697	3,650	1,035	1,143	4,794
38	Turiiska	370	15,834	1,517	5	9,860	4,789	1,165	881.9	4,928
39	Shatska	468	8,694	1,089	8	9,901	6,275	1,264	969.8	4,711
40	Berestechkivska	197	25,372	1,106	13	...

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