Socio-Economic Development of the Republic of the North Caucasian Federal District in the Conditions of External Challenges

Abstract

Introduction. The article analyses the features of the socio-economic development of the republics of the North Caucasian Federal District in the conditions of external challenges that our country has been facing over the past three years, including the consequences of the COVID-19 pandemic, as well as external sanctions pressure in 2022. The relevance of the study is due to the constant dependence of the budgets of the republics of the North Caucasian Federal District on revenues from the federal budget, tension in the labor market, and the need to improve the mechanisms of regional governance.Materials and methods. The concept of economic (budgetary federalism) developed by J. Stigler, W. Oates, L. Feld and F. Schneider serves as the theoretical and methodological basis of the study. Foreign theories of economic federalism offer two models of the budget process – decentralized and centralized. The Russian model of budgetary federalism, functioning as a centralized unitary state, was considered in the works of A. Avetisyan, I. Kharitonov, E. Mashchenko and many others. On the one hand, such a system makes it possible to accumulate federal budget funds for solving common problems. On the other hand, there are still regions with a strong economic dependence on gratuitous receipts from the budget of a higher level. This study is based on the analysis of socio-economic statistics and monitoring of regional media.Results. The Republics of the North Caucasian Federal District continue to demonstrate a high subsidized dependence of their budgets on gratuitous receipts from the federal budget. At the same time, in the post-pandemic period, there has been a slight growth in own budget revenues due to an increase of small and medium-sized businesses. Unemployment remains a serious systemic problem. The digitalization and the development of e-government play an important role in the optimization of management processes. During the pandemic, the number of citizens of the North Caucasian Federal District receiving public services in electronic form increased by 12%. The sanctions pressure after the start of the Special Military Operation in Ukraine did not have a significant impact on the economy of the republics of the North Caucasian Federal District due to their weak involvement in the international division of labor.Discussion and conclusion. The serious dependence of the budgets of the republics of the North Caucasian Federal District on subsidies from the federal center, on the one hand, makes the socio-economic situation in the republics free from external challenges. On the other hand, the entire burden of economic support and financing of the necessary social measures falls on the federal government, in particular, smoothing out inflationary risks for small businesses and families with children. The difference in the possibilities of regional budgets was also manifested in the provision of one-time financial assistance to the families of the mobilized. This again raises the need to increase the revenue side of regional budgets, due to the growth in the number of taxpaying enterprises.