Ongoing decentralization of power in Ukraine enhances abilities of each region to independently choose their development path and use their own resources. It requires reviewing and updating of mechanisms and instruments of local government and public administration projected to increase the sustainability of development. This necessitates further research of issues of this extremely complex phenomenon. The problem of sustainable development of the regions and their internal capacities over the past decades has attracted the attention of many Ukrainian scientists. They considered the question of the essence and characteristics of this phenomenon, categorical apparatus, and formed approaches to the assessment of the state etc. Existing scientific researchers provided an opportunity for better understanding and deepening of the issues of processes of development formation, becoming the basis for further research. The purpose of the article is the definition of the potential of local governments in the sustainable development of the region, finding approaches for improving management and rational use of resources to enhance the regional development. Development of regions is the scope of display of results and public nature of local self-government. However, the results which are achieved by regional development and its level of sustainability do not meet the needs of society. The results of ongoing reforms, their economic, environmental and social significance do not correspond to spent resources and efforts of society. Strategies of regions for the transition to sustainable development are not systematic. To search for answers and ways to address the issues of the article attempts to identify common root causes in the organization of local government, the underlying increase its impact in the direction of creating conditions and ensure the flow of sustainable regional development through research and their potential influential factors. It is disclosed a substantive nature of the term “potential of local self-government”, which boils down to that: the potential of local self-government of regions to ensure their sustainable development is a combination of sources, resources and funds of local government, forms, incentives, institutional, meth odological, organizational and management instruments and mechanisms of influence, used in government, organic interaction which is able to create, maintain and increase the opportunities and impact on rational use, recharge potential of the region to ensure the sustainability of development. Creating conditions for rational use of the potential of the region are invited to do by performing these steps: definition of system components of regional space, specification of system resources elements, identification of types of local potential use in strategies and development plans, study key areas of development of regions, the choosing and using an innovative mechanisms and techniques of public management and administration, a system of monitoring the results of state and flow processes of the system of indicators and performance criteria, institutional arrangement of updating and organization of local government in view of the increasing role of local self-governments as the driving force, accumulating potential and faster development of the regions. Scientific understanding of the meaning of the term “potential of local government” in the projection of the development of the region in terms which allow increasing the powers of local authorities to increase attention and focus activities on the rational use of the potential of the region by introducing a new vision of the role of potential in shaping this process. Harmonization of regional capacity with selected regions pace of development, the introduction of a new order of management process of using a set of influential factors and innovative management techniques allow regions to implement and build local capacity, improve living standards.
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