Abstract
The present study demonstrates the possibilities for assessment of the financial autonomy of rural municipalities using the TOPSIS method. The study aimed to design and empirically verify the model for assessment of the financial autonomy of rural municipalities. As a result of the empirical study, an integrated system for assessment of the financial autonomy of rural municipalities was designed. The applicability of the TOPSIS method is demonstrated by the assessment of the financial autonomy of rural municipalities performed for two regions of Lithuania in the period 2009–2019. The empirical study showed that medium-low level of financial autonomy was characteristic of all the rural municipalities in the selected regions. On one hand, the findings suggested the presence of “convenient dependence” of the rural municipalities on the centralised allocation. On the other hand, they signalled the lack of the incentives for the rural municipalities to make use of the capacities and create sustainable, stable economic and social prospects.
Highlights
In the European Union member countries, regional and local objectives are implemented by the local government units (LGU), i.e., municipalities
Upon Lithuania’s accession to the EU, particular focus was placed on rural areas and rural municipalities, representatation of their interests, and their financial autonomy
Financial autonomy of local government units is the term employed when referring to the complex, multidimensional economic phenomenon based on the economic, fiscal policy, fiscal decentralisation, and regional development theories
Summary
In the European Union member countries, regional and local objectives are implemented by the local government units (LGU), i.e., municipalities. Financial autonomy of LGUs influences multifunctional development of the rural areas, which is one of the goals of the EU’s Common Agricultural Policy (CAP) (Głowicka-Wołoszyn and Satoła 2018). The importance of autonomy assessment of LGUs is generally is indisputable if viewed from the financial perspective. Financial autonomy is the prerequisite of existence of a local government and the key factor of stable local development. Sustainable financial resources are the foundation of social and economic development in rural areas in particular (Satoła et al 2019; Łuczak et al 2018b). Assessment of the level of financial autonomy of rural municipalities has recently become an increasingly important research topic from the economic and socioeconomic perspective. Financial autonomy (FA) is the basic category assessed in the analysis of financial stability of LGUs (Satoła et al 2019)
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