Volume 11 - Issue 53
/ May 2022
45
https:// www.amazoniainvestiga.info ISSN 2322 - 6307
DOI: https://doi.org/10.34069/AI/2022.53.05.5
How to Cite:
Gryshchenko, I., Bondar, Y., Serohina, S., Bodrova, I., & Stohova, O. (2022). Building the capacity of territorial communities by
revealing their latent potential. Amazonia Investiga, 11(53), 45-58. https://doi.org/10.34069/AI/2022.53.05.5
Building the capacity of territorial communities by revealing their
latent potential
Розвиток спроможності територіальних громад шляхом розкриття їх латентного
потенціалу
Received: April 10, 2022 Accepted: May 9, 2022
Written by:
Iryna Gryshchenko20
https://orcid.org/0000-0002-8191-1177
Yurii Bondar21
https://orcid.org/0000-0002-8430-8138
Svitlana Serohina22
https://orcid.org/0000-0002-0107-834X
Irina Bodrova23
https://orcid.org/0000-0002-4507-8544
Olha Stohova24
https://orcid.org/0000-0001-7010-556X
Abstract
Decentralization is a common component of
public finance development and reform
strategies through efficiency, better governance
and accountability. It has become particularly
important for the local governments to recognize
and test policies and practices that promote
building the capacity of local communities by
revealing their latent potential. The aim of the
article was to identify and describe the current
state of the decentralization process in Ukraine
and in the EU, the problems and achievements of
local communities. Observation and comparison
were the leading methodological tools. The
research found that the effective development of
territorial communities of Ukraine requires
further implementation of the relevant regional
strategic planning of the European Union.
The appropriateness and prospects of the
LEADER/CLLD approach in the form of
cooperation and partnership between urban and
rural areas were established. Fiscal
decentralization as a basic factor on the way to
improving the level of regional development was
determined through a comparative analysis of the
20
Doctor of Public Administration Sciences, Associate Professor, of Department of Public Administration and Innovation
Management, National University of Life and Environmental Sciences of Ukraine, Kyiv, Ukraine.
21
Post-graduate student, Professor, First Deputy Mayor for the work of executive bodies, Chabany Urban-type Council, Chabany,
Ukraine.
22
Doctor of Law, Professor, Head of the Department of State building, Yaroslav Mudryi National Law University, Kharkiv, Ukraine.
23
PhD in Law, Associate Professor of the Department of State Building, Yaroslav Mudryi National Law University, Kharkiv, Ukraine.
24
PhD in Political Sciences, Associate Professor of the Department of Fundamental Jurisprudence and Constitutional Law, Academic
and Research Institute of Law, Sumy State University, Sumy, Ukraine.
46
www.amazoniainvestiga.info ISSN 2322- 6307
factors of positive dynamics of development of
territorial communities in the EU and Ukraine. A
comparative analysis of the practice of Ukraine
and EU countries in the implementation of
LEADER/CLLD projects in the context of
building the capacity of local communities by
revealing their latent potential is a promising
vector of further research.
Keywords: decentralization, administrative
territorial reform, regional competitiveness,
human capital, infrastructure investment.
Introduction
Decreasing respect for human rights and
democracy on a global scale and increasing
autocracy pose a real threat to civil society, social
space and civic engagement in general. Jämtin
and da Silva (2021) indicate that 68% of the
world’s population currently lives in autocracies,
compared to 48% in 2010. Some countries used
the COVID-19 pandemic as a basis for
disproportionate, excessively broad and
potentially persistent civil space constraints. In
modern conditions, a priority.
Improving the welfare of citizens is the priority
for the development of democratic states in the
current context. Knir and Budnyk (2020)
emphasize that this goal can be achieved only
through proper public administration and
elimination of inequality in access to public
goods. Decentralization has recently become
more common in most countries around the
world. Dick-Sagoe and Andraz (2020) establish
that this procedure provides for the transfer of
authority from the central government to local
governments, and comprises fiscal,
administrative and political decentralization.
Lanzaro and Larraburu (2021) state that
decentralization reform played a role of a
political concession which included the features
of pluralism. Closeness of local self-government
to the population compared to the central
government is the main reason for the
implementation of decentralization. Canare
(2021) believes that local authorities have the
best opportunities for accessing primary
information about the unique needs of the local
population in this case. Local governments also
have the best opportunities to determine
economically viable areas in their region for tax
purposes through proper fiscal decentralization.
These benefits will allow local governments to
invest their resources in services that directly
meet local needs and provide the best utility to
people, technically being known as distribution
efficiency.
Gong et al. (2021) provide an example of China,
where administrative decentralization has
significantly increased GDP per capita by about
3.3%, and where the positive impact on
economic growth was achieved mainly through
increased investment. According to the European
Committee of the Regions (2021), the situations
related to the COVID-19 pandemic have clearly
shown the fact that the role of the EU subnational
government has seriously increased as a result of
the fact that it appeared to deal with the inevitable
consequences of the corresponding crisis.
European Committee of the Regions (2021)
states that recovery from the economic effects of
the pandemic while accelerating the transition to
a green economy will require enormous
collective efforts, with the local governments
being the key to success.
Most decentralization programmes also provided
for the transfer of some centralized
responsibilities to the local level as a tool to
increase both the distribution and technical
efficiency of different public services. The
introduction of new approaches to regional
development made the issue of effective
implementation of financial decentralization
reform one of the basic conditions for
independent and effective activities of local
governments, as well as for extending the
financial potential of regions and communities.
Changing the course in the field of state
regulation of territorial organization towards
administrative and financial decentralization
underlie the improvement of the development of
Ukraine in the current realities. Patytska (2019)
writes that the main objective of the relevant
reforms is to build the organizational and
economic foundations for the development of
territorial communities in Ukraine through the
effective use of their financial and economic
potential. Since independence that Ukraine
gained in 1991, the decentralization reform in
Gryshchenko, I., Bondar, Y., Serohina, S., Bodrova, I., Stohova, O. / Volume 11 - Issue 53: 45-58 / May, 2022
Volume 11 - Issue 53
/ May 2022
47
https:// www.amazoniainvestiga.info ISSN 2322- 6307
Ukraine has being consistently introduced more
local democratic accountability in local
communities. 19. World Health Organization
(2021) indicate that more direct and transparent
fiscal relations, as well as clearly delineated
responsibilities, more coordinated financing and
accountability for performance have been
established. Nevertheless, active state-building
processes are not yet perfect and should be based
on the most effective European practices in the
context of Ukraine’s European integration
aspirations. In particular, effective means of
building the capacity of territorial communities
of EU member states which were not adapted by
the state are becoming especially urgent.
In view of the foregoing, the aim of the article
was to search for the main means of latent
potential of territorial communities of EU
member states in order to further adapt them to
the realities of Ukraine. The aim involved the
following research objectives:
1) analyse the current state of the
decentralization process in Ukraine and in
the EU, the problems and achievements of
territorial communities;
2) identify adaptive examples of relevant
initiatives aimed at building the capacity of
territorial communities by revealing their
hidden potential in the EU countries for
further possible implementation of relevant
achievements in the regulatory framework
of Ukraine.
Literature Review
The chosen research topic correlates with modern
vectors of scientific research of theorists in different
countries. The work of Hrynchyshyn (2021)
entitled Budgetary Mechanisms to Ensure the Well-
Being of Territorial Communities in the Context of
Deepening Socio-Economic Differentiation was the
selected as the main tool and background for this
article. In his study, the researcher generalized the
grounds for defining the concept of territorial
community that different scholars used and
proposed his own definition. The monograph of H.
Patytska (2019) entitled Financial and Economic
Potential of Territorial Communities: Mechanisms
of Functioning and Activation also had an impact
on the author’s position on the research topic. The
groundwork of researchers allowed determining the
vector of research on the transformation of
strategies and policies of many countries in the field
of building the capacity of local communities by
revealing their latent potential. In turn, Mihai and
latu (2020) indicated to the author the need for
further implementation of mechanisms to achieve
sustainable development of rural areas.
The findings of Tolkki and Haveri (2020) on the
dynamics between state control and the capacity of
the capital’s government were also taken into
consideration in the research. The scientific works
of Masot et al. (2019) on the analysis of the main
components of the LEADER approach (2007–
2013) in South-Western Europe and Novak (2022)
on the peculiarities of the management of financial
and economic security of the amalgamated
territorial communities in Ukraine through tax
administration are worth special attention.
In their work which was used in this paper, Dick-
Sagoe and Andraz (2020) emphasize the
importance of prospects and innovations in the
development of local communities. This work was
useful for tracking the transformation of the main
features of the innovative approach to
decentralization processes, which comprise fiscal,
administrative and political components.
The relevant vectors such as innovation (novelty),
objectivity, subjectivity, purposefulness, demand,
implementation in practice, the effectiveness of
territorial communities outlined by Park and Fowler
(2021) were taken into account in the research. The
results of the comparative analysis of the results of
decentralization and development of territorial
communities conducted by Canare (2021) were also
taken into consideration. Dissertation for the degree
of Doctor of Economics by Hrynchyshyn (2021)
entitled Budgetary Mechanisms to Ensure the Well-
Being of Territorial Communities in the Context of
Deepening Socio-Economic Differentiation was of
particular importance for making a comprehensive
view of the subject of study.
Active research on this issue confirms that special
attention should be paid to revealing the latent
potential in all relevant activities (investment,
economic, human, managerial, financial, civic
engagement) in the process of building the capacity
of territorial communities in order to ensure the
well-being of the local community. Therefore, it is
urgent to conduct research on new criteria of
scientific research.
Methods
Testing of practical and methodological tools
determines the effectiveness of scientific research,
which is reflected in the following research design
(Figure 1).
48
www.amazoniainvestiga.info ISSN 2322- 6307
Figure 1. Research design (developed by the author)
The main hypothesis of the study is the concept
of possible testing of the positive experience of
the European Union in Ukraine in terms of
restoring and building the capacity of territorial
communities in the country.
The values of the approaches introduced in the
EU were outlined through observation, which is
considered the main method of scientific
research. This method was tested during the
sectoral analysis of the hidden potential of
territorial communities in different jurisdictions
and the disclosure of positive vector results of
strengthening the efficiency of regions. This
method was tested during the sectoral analysis of
the latent potential of territorial communities in
different jurisdictions and the coverage of
positive vector results of enhancing the
efficiency of regions. These tools allowed
rendering the author’s view on the possibility of
implementing the LEADER approach in
Ukraine, as well as predicting the prospects for
such a positive experience for the territorial
communities of Ukraine in the current realities.
The observation became an effective tool in the
research design to develop a stable author’s
position on the subject of the article. It will also
be useful in further research on this subject
matter.
Comparison was also used for the analysis of the
sample, which allowed identifying the distinction
between the various means of latent potential of
local communities, and projecting the most
positive changes in the context of intensifying
implementation of foreign experience in
Ukraine.
The research also involved the following
scientific methods: system analysis (to analyse
the set of means of latent potential of territorial
communities); structural-functional analysis (to
determine the relationship and interdependence
of fiscal and administrative decentralization of
territorial communities); institutional method (to
identify the competencies of the representatives
of territorial communities and their relationship
with the social groups of the region); formal-
legal method (for a comprehensive study of legal
texts, which are the key to reforming and
building the capacity of territorial communities
in different jurisdictions); modulation method
(making a project idea of the prospects for
updating the approaches to building the capacity
Basic experiment
1) Sampling and
formation of a
comprehensive basic
idea of the vectors of
scientific research.
2) Analysis of scientific
approaches to the chosen
research topic, finding
problematic and
controversial points.
3) Grouping of primary
conclusions.
The first pilot research
1) Outlining the
prospects and declared
vectors of building the
capacity of territorial
communities in Ukraine,
analysis of the
background for radical
changes in the state.
2) Arrangement of
results and their
structured presentation
in the context of
research objectives.
Main experiment
1) Comparative analysis
of the main tools for
building the capacity of
territorial communities
by revealing their latent
potential in the
European Union in order
to develop integrated
approaches to
implementation in
Ukraine.
2) Generalization of the
data obtained.
Analytical stage
Drawing comprehensive
scientific and practical
conclusions based on the
results of scientific
research, finding
possible promising
approaches to testing in
Ukraine.
Volume 11 - Issue 53
/ May 2022
49
https:// www.amazoniainvestiga.info ISSN 2322- 6307
of territorial communities of Ukraine on the basis
of positive results of EU member states).
A solid empirical background was analysed in
the article, in particular, 43 references were
reflected and analysed in the text. Coverage of
the debatable aspects of the implementation of
the latest practices of building the capacity of
local communities and analysis of statistical
information was of particular importance. The
author’s conclusions on the subject of the article
were drawn on the basis of accurately selected
references in combination with an effective
methodological background.
Results
In the current realities, the development of
territorial communities is mostly associated with
decentralization. The United Nations
Development Program (UNDP) describes
decentralization as a restructuring of the
competencies of state power, which should lead
to an efficient structure of joint obligations
between institutions of government at the central,
regional and local levels. Moreover, this
restructuring should be carried out in accordance
with the norm of subsidiarity (UNDP, 2004).
This principle refers to the process of transferring
state obligations to a lower institutional or social
platform that can implement them. The
Organization for Economic Co-operation and
Development (OECD) in this regard emphasizes
the importance of the choice component as a
principle of power at the subnational level
(OECD, 2019).
Definitions such as "devolution", "delegation"
and "deconcentration" are extensively used in the
context of decentralization (The World Bank
Group, 2001). At the same time, decentralization
focuses on political, administrative and fiscal
directions. The European Charter of Local Self-
Government, adopted by the Council of Europe
in 1985, requires signatories to adhere to the
basic principles of appropriate local autonomy
(Council of Eurоpe, 1985). There were 47
countries, including all EU member states, which
ratified the Charter. So, it is an important starting
point for conceptualizing different aspects of
decentralization.
The results of decentralization are particularly
significant for the EU as a supranational structure
with complicated formations for development,
implementation and monitoring that comprise all
levels of government. Local and Regional
Authorities (LRAs) are taking an increasingly
strong position in various policy areas, which
could have a significant impact on EU strategic
goals such as the European Green Deal and
climate neutrality. The EU law governs about
60% of all decisions made at the subnational
level, and the LRA is responsible for about 70%
of public sector investment in EU countries
(CEMR, 2016). The Decentralization Index is an
interactive tool with perspective on different
dimensions of decentralisation (political,
administrative and fiscal) in the 27 EU Member
States (European Committee of the Regions,
2022). The Index allows tracking on an
interactive map the level of decentralization
within the country at the local and regional
levels, as well as making comparisons between
Member States. Indicators for determining the
degree of decentralization were developed in a
special study, which was based on existing data
from the Distribution of Powers (DoP) Portal
developed by the Committee of the Regions
(CoR). The data included, among others, the
legal framework for different governance
structures in the Member States. The DoP Portal
ensures particular data on the governance
formations and competencies of various
appropriate levels in the EU, candidate countries,
the Eastern Partnership and Southern
Neighbourhood countries. It gives data on the
distribution of powers in different policy areas
among government agencies. The Portal
guarantees quality facts on such governance as
subsidiarity and communication with EU
formations. Ukraine is not included in the
European Decentralization Index. The reasons
are the vectors of political and legal
transformations of Ukraine to match the EU
standards and associate membership. This
requires a thorough approach to intra-state
changes in Ukraine.
So, the territorial community in Ukraine has the
right to complete the missions of local
importance (Document 254к/96-ВР, 2020); it is
a component of the system of local self-
government, the primary subject of local self-
government, is the performer of its functions and
exerciser of its powers (Law of Ukraine №
280/97-VR, 2022).
The decentralization reform has been launched in
Ukraine in 1997, when the
Verkhovna Rada of Ukraine ratified the
European Charter of Local Self-Government and
strictly complied with the European principles
and standards of governance (Council of Europe,
1985). In 2014, the Cabinet of Ministers of
Ukraine adopted the concept of reforming local
self-government and territorial organization of
power (Order № 333-r, 2014). In 2015, Ukraine
50
www.amazoniainvestiga.info ISSN 2322- 6307
adopted a law (Law of Ukraine № 157-VIII,
2020) to regulate direct inter-budgetary relations
of the amalgamated territorial communities with
the State Budget of Ukraine and to establish the
principles and scope of financial support for the
amalgamated territorial communities. The
adopted methodology (Resolution № 214, 2015)
regulated the procedure for the development of a
long-term plan for the establishment of the
community territory and determined the criteria
for the establishment of a viable territorial
community.
In 2015, 159 amalgamated territorial
communities (ATCs) were established, there
were 366 ATCs in 2016, 665 — in 2017, 874 —
in 2018, while 924 ATCs were established in
Ukraine as of July 2019, in which 29.1% of the
population of the country lived (another
approximately 42% lived in cities of regional
significance with developed local self-
government) (Ministry of Regional
Development, Construction and Housing and
Communal Economy of Ukraine, 2019).
Financial decentralization resulted in increased
revenues to local budgets from UAH 68.6 billion
in 2015 to UAH 189.4 billion in 2019; the share
of local budgets in the total budget of Ukraine
increased from 45.6% in 2015 to 51.5% in 2019;
the amount of financing of regional development
from the state budget increased from UAH 0.5
billion in 2014 to UAH 19.3 billion in 2018
(Ministry of Regional Development,
Construction and Housing and Communal
Economy of Ukraine, 2019).
Ukraine entered the second phase of
decentralization at the beginning of 2019, which
provided for administrative and territorial reform
at the district level, as well as redefining regional
and higher subregional prerogatives. The
ongoing unification of municipalities makes
Ukraine more resilient to Russia’s hybrid war
and demonstrates adherence to the EU principles
of democracy and subsidiarity. Ukraine aspires to
become a new example of the political value and
administrative usefulness of a non-federal two-
tier national system of government. In 2020,
those settlements that failed to establish a single
territorial community were amalgamated on the
basis of set criteria (Law of Ukraine № 562-IX,
2020; Resolution № 807-IX, 2020). This is how
a new administrative-territorial system was
approved, administrative centres were
determined, and the territories of territorial
communities were approved.
Since then, Ukraine has implemented a process
of political decentralization in order to
significantly restructure the centre-periphery
relations. This reform of local government
involved the transfer of powers from the national
to the municipal level (and to a lesser extent to
the regional and upper subregional levels).
Decentralization is implemented not through
federalization, but through the merging of small
municipalities and the transfer of political,
administrative and financial authority to these
amalgamated local communities. One of the
main objectives of local self-governments is the
management of resource provision of local
budgets.
ATCs acquire significant rights to collect taxes,
self-government and public policy upon their
recognition by the central government. The
central government also provides ATC with
funding for newly established institutions and the
implementation of local development projects.
The reform is accompanied by a parallel
“sectoral decentralization”, primarily in health
care and education. As of January 10, 2022,
1,470 communities, 136 districts, 119 district
councils and 119 district state administrations
were established in Ukraine (Ministry of
Development communities and territories of
Ukraine, 2022). A total of 296 territorial
communities concluded 153 inter-municipal
cooperation agreements.
There is a 349.0% increase in revenues of the
general fund of budgets of territorial
communities in January - November 2020-2021
— from UAH 48.6 milliard to UAH 218.2
milliard (see Figure 2). State financial support for
community and infrastructure development in
2021 amounted to UAH 81.8 milliard, while
UAH 131.8 milliard was provided for 2022.
Figure 3 shows planning of financial
transformations of territorial communities for
building their capacity.
Volume 11 - Issue 53
/ May 2022
51
https:// www.amazoniainvestiga.info ISSN 2322- 6307
Figure 2. Revenue structure of the general fund of local budgets of Ukraine for January-November 2021
(excluding transfers from the state budget) by territorial communities (according to the Ministry for
Communities and Territories Development of Ukraine)
Figure 3. Planned financing of the development of territorial communities of Ukraine for 2022 (grouped
by the author)
The share of local budget revenues (general fund
excluding transfers) in GDP in 2021 was
projected at 7.3%. The share of local budget
expenditures in GDP in 2021 was projected at
12.1% (Ministry of Development communities
and territories of Ukraine, 2022). As regards
12,60% 2,50%
59,20%
15,80%
6,40% 3,60%
The structure of revenues of the general fund of local
budgets of Ukraine for January-November 2021
Land taxes
Real estate
PIT (personal income tax)
Single tax
Excise tax
Others
Regional
development
UAH 27.5
milliard Transport
infrastructure
development
UAH 2.5
milliard
Infrastructure
development
(social support)
UAH 9.6
milliard
Road
infrastructure
development
(including state
importance
roads)
UAH 66.8
milliard
Healthcare
UAH 5.4
milliard
Rural
development
UAH 7.1
milliard
Education
UAH 6.8
milliard
Other directions of
development of
territories
(including
Administrative
Service Centres)
UAH 3.3 milliard
Sports
infrastructure
UAH 0.9
milliard
Cultural sphere
UAH 1.9
milliard
52
www.amazoniainvestiga.info ISSN 2322- 6307
social investments in Ukraine in 2020, education
was financed from three main sources:
investments from state and local budgets
(81.25%), own funds of companies and
organizations (17.61%), other funds (1.1%) are
bank loans, funds of investment companies,
foundations, etc. (State Statistics Service of
Ukraine, 2020). Healthcare and social support
rank second among social areas in terms of the
investment size. These areas involve the
following sources of financing: funds from state
and local budgets (70.69%), own funds of
companies and organizations (23.17%), other
sources are bank loans, funds of non-resident
investors, etc. Arts, sports, entertainment and
recreation are funded by state and local budgets
(36.34%), from own funds of companies and
organizations (63.58%) that have invested in this
area, and other sources (State Statistics Service
of Ukraine, 2020).
Capacity of the territorial community is the
availability of financial resources, infrastructure
and HR, which determine the territorial
community’s ability to provide public services,
as well as the opportunity to use unemployed and
latent potential (investment, economic, human,
managerial, financial, civic engagement) to
ensure the well-being of the territorial
community. The activities of the territorial
community involve coordination between
residents and government agencies in solving
major problems through participation in
management decisions. This also requires a clear
understanding of the overall responsibility for the
well-being of residents. But residents of rural
communities often do not take full responsibility
for their own well-being and do not exercise full
control over local government activities (17% of
residents of large cities, 12% of small towns and
only 9% of rural residents are ready for this
position) (NISS, 2020).
The reflective rather than proactive established
approaches to state regional policy indicate a
serious need for the development and
implementation of new regional (local)
development policy. The approach to local
development requires updating to be based on
place (place-based theory) and socio-economic
development of local communities on the basis
of endogenous potential. The new vector of
regional development considers low productivity
(rates and growth) as a key problem; insufficient
use of internal potential; lack of regional
competitiveness; interregional and interpersonal
inequality to be the key problems. It resulted in
the movement towards latent potential, local
knowledge, intensification of local development
and ensuring the well-being of community
residents, regardless of place of residence.
Consequently, this requires transformation of the
goals of regional development policy as regards
reorientation from making up for the
shortcomings of the areas that lag behind in the
regions in response to shocks (industry decline)
to intensifying use of underutilized local
potential of territorial communities based on
their existing strengths and implementation of
innovations. Accordingly, in addition to
traditional subsidies and state aid, it is necessary
to use other tools out of a wide range: targeted
investment in human capital; infrastructure
investment; business development support;
support for research and innovation; coordination
between non-governmental actors.
An example of effective assistance to build the
capacity of territorial communities is the
PLACED (2020) Project of dynamic digital
services related to libraries. The PLACED
Project supports the establishment of dynamic
urban centres of innovation, citizens’ activities to
create knowledge and transform this knowledge
into part of the general resources of the urban
community. The partners of this project are
Aarhus University, Denmark; LIRIS - CNRS,
France; ENSSIB, France; Dokk1 - Aarhus Public
Libraries, Denmark; Chalmers University of
Technology, Sweden; Municipal Library of
Lyon, France; Lundby Library, Gothenburg,
Sweden; RISE Interactive, Sweden. The
PLACED Project is a new type of digital library
services focused on space and activities.
PLACED services support library activities,
while library services are typically focused on
providing access to a collection of media files.
An innovative aspect is that these services collect
knowledge gained from these actions, make them
part of the library collection and allow future
library users to study and access them. So,
PLACED (2020) services help to go beyond the
institutional walls of the library and make it an
integral part of urban life, creating a constantly
evolving collection based on urban activities and
knowledge accumulation.
Recently, in the EU countries in rural areas there
has been a trend characterized by the presence of
a certain type of problems. They were caused by
the inability to solve the main problems in rural
agglomerations using standard top-down policy
approaches. The LEADER approach (European
Network for Rural Development, 2018) set itself
the task of correcting this situation. This
initiative was based on the concept that it was
possible to increase prosperity in rural
agglomerations due to the activity of local
Volume 11 - Issue 53
/ May 2022
53
https:// www.amazoniainvestiga.info ISSN 2322- 6307
residents themselves. Moreover, special
emphasis began to be placed on the formation of
partnerships of local initiative groups (LAG),
which in their composition began to include
public, private and civil segments. These LAGs
are the main tool for applying the LEADER
approach to territorial development, directly
involving local representatives in the
development and implementation of local
strategies, decision-making and resource
allocation (Figure 4). This approach has an added
value, which is connected with the extended
opportunities and rights at the local level through
the development, implementation and allocation
of resources at the local level. The LEADER
approach has been further developed through
extension. Сommunity-led local development
(CLLD) were formed in various agglomerations,
as well as communities related to fishing.
Financing was carried out during 2014-2020.
Figure 4. Main components of the LEADER approach for testing in Ukraine (identified by the author)
LEADER took as its basis the principle of the
bottom-up approach and is based on that
statement, that no one but the locals can know
their own problems better. With the right active
position, problems can be reduced. The
corresponding “bottom-up” principle is reflected
in the EU rules, which provide for a “bottom-up”
approach. In this regard, it is important to ensure
that there is no preponderance of different groups
in decision-making.
District approach: LEADER and CLLD
programs contain a variety of approaches based
on the priorities of the local territory, the
mandatory cooperation of neighboring
agglomerations. More importantly, collaborative
methodologies are being developed to help
neighborhoods interact and develop each other.
The LEADER approach has worked well in
communities with between 10,000 and 150,000
inhabitants (European Union, 2013).
Regional cooperation for territorial growth uses
a specific management system Local Action
Group (LAG). In the future, the population gets
the opportunity to become active partners and
initiators of the positive growth of the rural
economy of their own agglomerations; this is the
defining feature of CLLD, which is characterized
by the presence of multi-sectoral local
development strategies. With regard to the
decision-making process, each respective
segment is entitled to propose no more than 49%
of the members of the local partnership
(European Union, 2013).
In this regard, it is especially necessary to
emphasize the role of networking and innovation,
which lead to the establishment of a connection
between the various participants in the working
system. For the LEADER approach, along with
inter-territorial and international cooperation in
the field of agricultural development, it is also
very important. An example of this development
is the activities of various new LEADER groups,
the European Structural Investment Fund (ESIF).
The LEADER project “At home in Emlichheim”
(Germany) (European Network for Rural
Bottom-up
approach
Interterritorial and
international
cooperation
Thrive on
innovation
Networking
Integrated and
multisectoral local
development
strategies
Local partnerships
District approach
54
www.amazoniainvestiga.info ISSN 2322- 6307
Development, 2020) was implemented to enable
the elderly to maintain their independence for
longer through regular preventive home visits.
The proposed recommendations were used at a
high level in this project: the service provider
with a well-developed network has in-depth
knowledge of the provision of services at the
local level; acts as an early warning system. The
LEADER Gratitud Pallars (Spain) (European
Network for Rural Development, 2020) was an
integrated and innovative project aimed at
supporting landscape conservation, climate
change mitigation and the development of smart
sustainable tourism. The project achieved
obvious success of intersectoral cooperation
between government agencies, businesses,
landowners, local people and newcomers; an
integrated approach to environment and nature
protection, green tourism and a healthy lifestyle
was implemented.
The microproject LEADER "Sozialwierkstat"
(Luxembourg), which put an innovative
component at its core, and which devoted its
activities to youth issues, received special
recognition. The activities of this project
included volunteering, holding consultative
meetings related to employment and professional
development (European Network for Rural
Development, 2022). The result was the
employment of young people in the region.
The activity of the LEADER project in Biertan
(Romania) was also indicative. The problem was
the poor quality of medical care, which had been
declining since the nineties. The poor were
especially hard hit. The purpose of this project
was to help the population who did not have the
opportunity to receive quality medical care, as
well as to build trust and further constructive
dialogue between residents and local authorities.
The result of this project was the operation of a
multidisciplinary health center that could provide
appropriate assistance to 40 older people with
disabilities and another 65 people at home
(European Network for Rural Development,
2021). In addition, a significant increase in the
professionalism of the local administration and
social workers, as well as the level of provision
of relevant medical services, has become a
positive moment.
A well-known Waterford Project was created and
funded in Ireland by the Waterford LEADER
Local Action Group jointly with public
organizations, charities and other organizations
engaged in development. This is one of the
elements of a broader strategy aimed at creating
a single economic zone, which is used by many
Blackwater Valley villages in West Waterford
(Ireland) to establish an economic union
pursuing a collective goal and vision (European
Network for Rural Development, 2021a). In
particular, the aim of this Project was to create
and maintain ICT-based jobs at the local level
through smart jobs strategy that includes
animation, research, training, networking,
marketing and investment. It is consistent with a
number of other measures for the improvement
and protection of the environment, and
complements them. This Project provided
support for the rural development programme,
which attracted significant additional capital of
EUR 2 million used to start and complete all
capital improvements by 2022. Of this amount,
EUR 1.2 million came from charities, and EUR
800,000 came from the communities themselves.
We can establish that the human potential
influence the development of territorial
communities and their self-sustainment through
the use of nonmaterial added value in the
cultural, educational and medical fields. In this
regard, the territorial community should reorient
the necessary areas through the development of
relevant skills and attraction of innovation in
order to build its capacity. Mobilization of
untapped capacity requires collecting data on the
success of communities and identifying
opportunities that have contributed to success. It
also requires the organization of a core group to
promote the process, fully map the opportunities
and assets of individuals, associations and local
institutions. Building relationships between local
assets for mutually beneficial solutions to the
problems that exist in the community is of
particular notice. In this regard, it is very
important to fully mobilize the EU expert
resources for economic development and
information exchange, and to gather the widest
possible representative group to form a vision
and elaborate a community development plan.
Discussion
Relying on Dick-Sagoe and Andraz (2020), the
conclusion was drawn that a proper design of
decentralization requires excluding the
discrepancy between the distribution of costs and
revenues and the uneven formula of vertical
distribution in favour of the central government.
It is, however, appropriate to combat ineffective
control and ensure transparency of public
spending for the local population. Researchers
recommend project-based spending at the
community level and extending the rights and
opportunities of communities to ensure
Volume 11 - Issue 53
/ May 2022
55
https:// www.amazoniainvestiga.info ISSN 2322- 6307
accountability of local self-governments for costs
and revenues.
Sustainable district development is still the
subject of research in many countries. According
to Mihai and lațu (2020), the interregional
economic and social gaps manifested on all
scales underlie such scientific interest. The
European Union aspires to address these issues
by promoting sustainable development. Mihai
and latu (2020) emphasize that these
development goals are intended to reduce
poverty, inequality, unemployment, meet the
basic needs of the disadvantaged people and
expand community participation in rural
development processes, but especially reduce
development gaps, including through latent
potential.
Masot et al. (2019) confirm that studies dealing
with the evaluation of the contribution of the
European financial instruments to rural
development often proves the significant
contributions of the LEADER Programme to the
community development. At the same time,
Opria et al. (2021) indicate that LEADER
produces lower contribution to rather
disadvantaged areas. The benefits for isolated,
depopulated and underdeveloped areas were
minimal. This means that the development gap
between EU countries will increase over time,
which will have an impact on the effectiveness of
the management of European funds (Opria et al.,
2021).
According to Tolkki and Haveri (2020),
contextual reasons are the main factor that
explains why different forms of control can
strengthen or weaken governance in different
metropolises. In one agglomeration, the
governance can be ensured through direct public
administration, and in another one — through
indirect control, for example, by financing a
politically decentralized mechanism. Beeri and
Magnússon (2019) maintain that the complete
absence of governance by the state is
problematic. State control creates a platform for
the development of management potential.
Park and Fowler (2021) state that despite the
advantages and disadvantages typical for
decentralization, the COVID-19 pandemic
revealed the institutional limitations of
decentralization and the benefits that centralized
administrative coordination creates during crises.
Researchers believe that one of the most
important defining factors of national pandemic
response is the degree of balancing the political
and administrative aspects of
centralization/decentralization.
Lanzaro and Larraburu (2021) indicate that in
addition to technical needs, administrative
decentralization as a component of public sector
development is a response to political games and
the result of long-term political systems.
According to Hrynchyshyn (2021), businesses as
institutional units of the economy are mostly
considered separately from the public sector,
while civil society is traditionally positioned as
untapped potential. Hrynchyshyn (2021) also
maintains that the new regional development
policy should help integrate their interaction
through public-private partnerships, while civil
society is one of the important stakeholders in
shaping and implementing this policy. Novak
(2022) contends that tax administration is a tool
to increase revenues to the general budget, and
thus to provide expenditures on subsidized
establishments and activities as a guarantee of
further financial and economic security, socio-
economic development of ATCs.
Grillos et al. (2021) notes that teams of civil
servants in decentralized and comparable public
healthcare systems with centralized governance
are often less effective in joint work. The reason
is the adverse implications of the reform for the
existing employees: new pairs of employees are
relatively efficient, while existing employees do
not work that well with each other in mixed
teams. Researchers conclude that policymakers
need to take steps to ensure that the effectiveness
of existing employees stays unimpaired by
governance reforms.
Conclusions
Decentralization can make public decision-
making more efficient and fairer by internalizing
the external factors, using all available
information, and better matching services
provided to the needs. The important elements of
a framework for evaluation of the effectiveness
of decentralization are participants, authority and
accountability.
All communities must have a certain
demographic, territorial and productive potential
to be financially, professionally and
institutionally able to perform their functions and
tasks. Decentralization reform is directly related
to the development and optimal use of the
resource potential of territorial communities. The
voluntary amalgamation of territorial
communities in Ukraine has created the grounds
for the transformation of the territorial structure
56
www.amazoniainvestiga.info ISSN 2322- 6307
and subregional level. The amalgamated
territorial communities received additional
financial resources, expanded their powers and
established direct inter-budgetary relations with
the state budget. The exercise of these powers
through the use of appropriate resources is the
background for the formation of the integral
potential of the territory and for ensuring its use
for the development of the territory.
EU countries strive for building community
capacity and stimulate innovation (including
social innovation), entrepreneurship and the
capacity for changes, encouraging the
development and revealing latent potential
within communities and territories. The
relationship between state control and the
opportunities of urban governance in the EU
countries indicates the complex relations
between the state and agglomerations: even the
relationship of control is interdependent rather
than hierarchical.
The LEADER Project can be used in Ukraine,
especially in promoting new forms of
cooperation and partnership between urban and
rural areas. Closer cooperation at the local level
in urban areas can be promoted through different
tools: approaches based on small areas, which
may include disadvantaged urban areas,
industrial areas, deserted areas, suburbs, etc.,
small towns and surrounding rural areas. The
LEADER project implements subject-related
approaches to solving specific urban problems,
such as unemployment and the labour market,
social isolation, urban mobility or local energy
efficiency plans. Approaches to target groups are
concentrated on particular groups, for example,
youth. This project contributes to the extension
of the rights of local communities, including
disadvantaged groups, as a tool to address
unemployment and social inclusion issues. The
analysis of possible implementation of the
LEADER Project in Ukraine upon the end of
martial law in the country will be the vector of
further scientific research in this context.
Bibliographic references
Beeri, I., & Magnússon, M. A. S. (2019).
Governance Relations in Small Nations:
Competition vs. Cooperation and the Triple
Role of Big Cities. Lex localis - Journal of
Local Self-Government, 17(2).
https://doi.org/10.4335/17.2.267-284(2019)
Canare, T. (2021). Decentralization and
Development Outcomes: What Does the
Empirical Literature Really Say? Hacienda
Pública Española: Review of Public
Economics, 237(2), 111-151. Retrieved from
https://archium.ateneo.edu/economics-
faculty-pubs/155/
CEMR. (2016). Local and Regional
Governments in Europe: Structures and
Competences. Retrieved from
https://www.ccre.org/img/uploads/piecesjoin
te/filename/CEMR_structures_and_compete
nces_2016_EN.pdf
Council of Europe. (1985). European Charter of
Local Self-Government. Strasbourg.
Retrieved from
https://rm.coe.int/168007a088
Dick-Sagoe, С., & Andraz, J. М. (2020).
Decentralization for improving the provision
of public services in developing countries: A
critical review. Cogent Economics &
Finance, 8(1).
https://doi.org/10.1080/23322039.2020.1804
036
Document 254к/96-ВР “The Constitution of
Ukraine”. Revision on January 1, 2020.
Retrieved from
https://zakon.rada.gov.ua/laws/show/254%D
0%BA/96-%D0%B2%D1%80#Text
European Committee of the Regions. (2021).
Developing a Decentralisation Index for the
Committee of the Regions Division of
Powers Portal. Retrieved from
https://cor.europa.eu/en/engage/studies/Docu
ments/Developing%20a%20Decentralisation
%20Index%20for%20the%20Committee%2
0of%20the%20Regions%20Division%20of
%20Powers%20Portal/study_green%20deal.
pdf
European Committee of the Regions. (2022).
Division of Powers. Decentralization Index.
Retrieved from
https://portal.cor.europa.eu/divisionpowers/P
ages/Decentralization-Index.aspx#
European Network for Rural Development.
(2018). LEADER/CLLD explained.
Retrieved from
https://enrd.ec.europa.eu/leader-clld/leader-
toolkit/leaderclld-explained_en
European Network for Rural Development.
(2020). LEADER case study – Connected in
the local community. Retrieved from
https://enrd.ec.europa.eu/projects-
practice/leader-case-study-connected-local-
community_en
European Network for Rural Development.
(2021). Equipping the healthcare centre in
Biertan, Sibiu County, Romania. Retrieved
from https://enrd.ec.europa.eu/projects-
practice/equipping-healthcare-centre-
biertan-sibiu-county-romania_en
European Network for Rural Development.
(2021a). Work West Waterford. Retrieved
Volume 11 - Issue 53
/ May 2022
57
https:// www.amazoniainvestiga.info ISSN 2322- 6307
from https://enrd.ec.europa.eu/projects-
practice/work-west-waterford_en
European Network for Rural Development.
(2022). Empowering young people – micro-
project under the LEADER umbrella project
“Sozialwierkstat”. Retrieved from
https://enrd.ec.europa.eu/projects-
practice/empowering-young-people-micro-
project-under-leader-umbrella-project_en
European Union. (2013). Regulation (EU) No
1303/2013 of the European Parliament and of
the Council of 17 December 2013 laying
down common provisions on the European
Regional Development Fund, the European
Social Fund, the Cohesion Fund, the
European Agricultural Fund for Rural
Development and the European Maritime and
Fisheries Fund and laying down general
provisions on the European Regional
Development Fund, the European Social
Fund, the Cohesion Fund and the European
Maritime and Fisheries Fund and repealing
Council Regulation (EC) No 1083/2006.
Retrieved from https://eur-
lex.europa.eu/legal-
content/EN/TXT/?uri=celex%3A32013R130
3
Gong, Q., Liu, C., & Wu, M. (2021). Does
administrative decentralization enhance
economic growth? Evidence from a quasi-
natural experiment in China. Economic
Modelling, 94, 945-952.
https://doi.org/10.1016/j.econmod.2020.02.0
35
Grillos, T., Zarychta, А., & Andersson, К.
(2021). Governance Reform,
Decentralization, and Teamwork in Public
Service Delivery: Evidence from the
Honduran Health Sector. Public
Administration, 99(4), 832-858.
https://doi.org/10.1111/padm.12722
Hrynchyshyn, I. M. (2021). Budget Mechanisms
for Well-Being Territorial Communities in
the Conditions of Deepening Socio-
Economic Differentiation. (Doctoral
dissertation). National Academy of Sciences
of Ukraine, SI "Institute of Regional Studies
named after M.I. Dolisniy of NAS of
Ukraine, Lviv. Retrieved from
https://ird.gov.ua/irdd/d20210416_a805_Hry
nchyshynIM.pdf
Jämtin, С., & da Silva, M. J. (2021). Enabling
Civil Society is a Development Priority.
OECD Forum. Retrieved from
https://www.oecd-forum.org/posts/enabling-
civil-society-is-a-development-priority
Knir, M., & Budnyk, N. (2020). Decentralization
of budgeting processes: the case of Ukraine.
RFI Scientific Papers, 2, 63-75.
Lanzaro, J., & Larraburu, C. R. (2021).
Decentralization and Co-participation in the
Public Sector: A Historical Feature of
Uruguayan Pluralist Democracy.
International Journal of Public
Administration, 44(1), 14-29.
https://doi.org/10.1080/01900692.2020.1750
029
Law of Ukraine № 562-IX "On Amendments to
Certain Laws of Ukraine Concerning the
Definition of Territories and Administrative
Centers of Territorial Communities" of April
16, 2020. Revision on July 23, 2020.
Retrieved from
https://zakon.rada.gov.ua/laws/show/562-
20#Text
Law of Ukraine № 157-VIII "On Voluntary
Association of Territorial Communities" of
February 5, 2015. Revision on May 14, 2020.
Retrieved from
https://zakon.rada.gov.ua/laws/show/157-
19#Text
Law of Ukraine № 280/97-VR "On Local Self-
Government in Ukraine" of May 21, 1997.
Revision on February 13, 2022. Retrieved
from
https://zakon.rada.gov.ua/laws/show/280/97-
%D0%B2%D1%80#Text
Masot, A. N., Alonso, G. C., &
Costa Moreno, L.M. (2019). Principal
Component Analysis of the LEADER
Approach (2007–2013) in South Western
Europe (Extremadura and Alentejo).
Sustainability, 11(15), 4034.
https://doi.org/10.3390/su11154034
Mihai, F.-C., & latu, C. (2020). Sustainable Rural
Development under Agenda 2030. In M. J.
Bastante-Ceca, J. L. Fuentes-Bargues, L.
Hufnagel, F.-C. Mihai, & C. Latu (Eds.),
Sustainability Assessment at the 21st century.
IntechOpen Book Series. Retrieved from
https://www.intechopen.com/chapters/69950
Ministry of Development communities and
territories of Ukraine. (2022). Monitoring the
reform of local self-government and
territorial organization of power. Retrieved
from
https://decentralization.gov.ua/uploads/librar
y/file/800/10.01.2022.pdf
Ministry of Regional Development, Construction
and Housing and Communal Economy of
Ukraine. (2019). Monitoring of the Process of
Decentralization of Power and Reform of
Local Government. Retrieved from
https://decentralization.gov.ua/mainmonitori
ng
NISS. (2020). NISS hosted a professional
discussion and presentation of the scientific
report "Decentralization and policy
58
www.amazoniainvestiga.info ISSN 2322- 6307
development of regional development in
Ukraine". Retrieved from
https://niss.gov.ua/en/node/3767
Novak, N. P. (2022). Management of financial
and economic security of united territorial
communities in Ukraine on the basis of tax
administration. Agrosvit, 3, 3-9.
https://doi.org/10.32702/2306-6792.2022.3.3
OECD. (2019). Making Decentralisation Work.
Retrieved from
https://www.oecd.org/cfe/making-
decentralisation-work-g2g9faa7-en.htm
Opria, A.-M., Roșu, L., & Iațu. C. (2021).
LEADER Program—An Inclusive or
Selective Instrument for the Development of
Rural Space in Romania? Sustainability,
13(21), 12187.
https://doi.org/10.3390/su132112187
Order № 333-r "On approval of the Concept of
reforming local self-government and
territorial organization of power in Ukraine"
of the Cabinet of Ministers of Ukraine of
April 1, 2014. Revision on April 1, 2014.
Retrieved from
https://zakon.rada.gov.ua/laws/show/333-
2014-%D1%80#Text
Park, S., & Fowler, R. (2021). Political and
administrative decentralization and responses
to COVID-19: comparison of the United
States and South Korea. International Journal
of Organization Theory & Behavior, 24(4).
Retrieved from
https://www.emerald.com/insight/content/do
i/10.1108/IJOTB-02-2021-0022/full/html
Patytska, Kh. (2019). Financial and economic
potential of territorial communities:
mechanisms of functioning and activation:
monograph. Lviv: State Institution "Institute
of Regional Studies named after M.I.
Dolishny National Academy of Sciences of
Ukraine". Retrieved from
http://ird.gov.ua/irdp/p20190007.pdf
PLACED. (2020). About PLACED. Retrieved
from https://placedproject.eu/about-placed
Resolution № 214 "On approval of the
Methodology for the formation of viable
territorial communities" of the Cabinet of
Ministers of Ukraine of April 8, 2015.
Revision on January 31, 2020. Retrieved
from
https://zakon.rada.gov.ua/laws/show/214-
2015-%D0%BF#Text
Resolution № 807-IX "On the formation and
liquidation of districts" of the Verkhovna
Rada of Ukraine of July 17, 2020. Revision
on July 17, 2020.Retrieved from
https://zakon.rada.gov.ua/laws/show/807-
20#Text
State Statistics Service of Ukraine. (2020).
Economic statistics. Economic activity.
Capital Investments. Retrieved from
http://www.ukrstat.gov.ua/operativ/menu/me
nu_u/ioz_19.htm
The World Bank Group. (2001). Administrative
Decentralization. Retrieved from
http://www1.worldbank.org/publicsector/dec
entralization/admin.htm
Tolkki, H., & Haveri, A. (2020). The Dynamics
between State Control and Metropolitan
Governance Capacity. Administrative
Sciences, 10(2), 26.
https://doi.org/10.3390/admsci10020026
United Nations Development Programme
(UNDP). (2004). Decentralised Governance
for Development: A Combined Practice Note
on Decentralisation, Local Governance and
Urban/Rural Development. Retrieved from
https://gsdrc.org/document-
library/decentralised-governance-for-
development-a-combined-practice-note-on-
decentralisation-local-governance-and-
urbanrural-development/
World Health Organization. (2021). Aligning
health and decentralization reform in
Ukraine. Retrieved from
https://apps.who.int/iris/bitstream/handle/10
665/341533/WHO-EURO-2021-2593-
42349-58635-eng.pdf