Decentralization Efficiency Research Articles

THE IMPACT OF THE BUDGETARY COMPONENT OF FISCAL POLICY ON MACROECONOMIC GROWTH IN CONDITIONS OF FINANCIAL DECENTRALIZATION: CASE OF UKRAINE

The article examines the role of the budget component of Ukraine’s fiscal policy in macroeconomic growth. The directions of increase of economic growth under the influence of financial decentralization are offered. The expediency of using multifactor economic and mathematical modelling in the study of the dynamics of the national accounts of Ukraine under the influence of indicators of the budget component of fiscal policy is substantiated.
 The purpose of this study is to investigate the dynamics of national accounts under the influence of the budget component of fiscal policy in the context of financial decentralization. A number of methods have been widely used in the study, including economic and mathematical modelling, correlation-regression analysis, factor analysis, and so on. These methods will underpin the development of strategic prospects for economic growth of the Ukrainian economy under conditions of financial decentralization.
 It is substantiated that an increase in the share of local budget expenditures in consolidated budget expenditures and a decrease in the share of state budget expenditures in GDP lead to an increase in the physical volume index of GDP and an increase in GDP in actual prices. It is also proven that the share of local budget expenditures in consolidated budget expenditures has an immediate direct impact on the GDP physical volume index.
 Another significant factor of direct influence on the GDP physical volume index is identified – the share of capital expenditures (development expenditures) in local budgets, as one of the indicators of financial decentralization efficiency. It is substantiated that the share of state budget expenditures in consolidated budget expenditures is a factor of inverse effect on GDP (in actual prices), and the share of capital expenditures is a factor of direct influence.
 It is proved that financial decentralization in Ukraine is an important factor of economic growth of the Ukrainian economy, as the increase of the share of local budget expenditures in the consolidated budget expenditures and the reduction of the share of state budget expenditures in GDP lead to an increase in the GDP physical volume index and an increase in actual GDP.

Main definitions of decentralization definition

The article explores the scientific approaches to defining decentralization. It is analyzed what decentralization is, what is its purpose. The main possibilities are identified. It is emphasized that the benefits of decentralization are the implementation of differentiated policies, effective mobilization at the local level, namely: increasing interest, building partnerships and social cohesion, gaining experience and creating technical groups at the local level; greater flexibility in decision-making and management; possibility of direct physical control at the local level in addition to documentary control. The necessity and efficiency of decentralization are substantiated, through the implementation of reforms aimed at increasing the efficiency of activities of both central and local authorities, as well as creating favorable conditions for economic development. It has been determined that decentralization must necessarily support the functioning of democracy, the proper technical capacity of local self-government and the development of civil society and public organizations.

INSTITUTIONAL INCENTIVES FOR INCREASING PUBLIC SECTOR EFFICIENCY IN DECENTRALIZATION

In the given paper, the features of the influence of institutional incentives and power tools on the efficiency of decentralization in ensuring prosperity and in the context of economic growth are explored. The purpose of the given paper is to determine the instruments of government and to characterize the methods of using them to promote decentralization, as well as the mechanisms for financing local governments, the decentralization of information and to define their role in the application of market incentives for decentralization. To study the peculiarities of power tools and institutional incentives for decentralization, to determine the conditions for effective work of local government financing mechanisms, the benefits of information decentralization and types of market incentives, a methodology of desk research was used with analysis of the results of theoretical and applied research published in foreign literature. Secondary information has been gathered in the context of the experience of implementing reforms on decentralization of state power, the peculiarities of the institutional environment and the establishment of stimulating factors for increasing the efficiency of state power. Institutional incentives to increase the effectiveness of decentralization have a complex hierarchical structure, and their impact depends on many factors of local culture and management traditions. Decentralization of information and different market incentives may also have different effectiveness in their application. In any case, many changes are needed in the political system. In future studies, it is planned to focus on the peculiarities of decentralization in certain regions of Ukraine and to assess the state of implementation of the proposed mechanisms for funding local governments in specific circumstances.

Modified allocation capacitated planning model in blood supply chain management

Blood supply chain management (BSCM) is a complex process management that involves many cooperating stakeholders. BSCM involves four echelon processes, which are blood collection or procurement, production, inventory, and distribution. This research develops an optimization model of blood distribution planning. The efficiency of decentralization and centralization policies in a blood distribution chain are compared, by optimizing the amount of blood delivered from a blood center to a blood bank. This model is developed based on allocation problem of capacitated planning model. At the first stage, the capacity and the cost of transportation are considered to create an initial capacitated planning model. Then, the inventory holding and shortage costs are added to the model. These additional parameters of inventory costs lead the model to be more realistic and accurate.

Managerial Performance Evaluation, Internal Trade, and Organizational Design

We study divisional versus firm-wide performance evaluation in both a centralized and a decentralized setting as instruments to align managers’ interests with firm-wide objectives. Given optimally designed managerial performance evaluation, we then analyze the relative efficiency of centralized versus decentralized organizational arrangements. Divisions are run by privately informed managers and are interdependent due to interdivisional trade and relationship-specific investment decisions. While optimal compensation contracts under decentralization includes both divisional and firm-wide metrics, we find that pure divisional performance evaluation is optimal under centralization when abstracting from risk interdependencies. We show that centralization trades off the weight on divisional performance measures and the quantity of the intermediate good. Regarding the choice of an optimal organizational arrangement, our analysis shows that for increasing variances of cost and revenue parameters, centralization reduces the risk premia that must be paid to divisional managers compared to decentralization. Therefore, we find that the flexibility gain under decentralization is absorbed due to relatively higher risk premia for divisional managers. The efficiency of decentralization also depends on the degree of risk aversion and bargaining power of divisional managers.