Financial well-being of territorial communities and the economic growth of the regions of Ukraine: assessment and modeling of interrelation

Abstract

Purpose. The purpose of the article to assess and model the interrelation between the financial well-being of territorial communities (TCs) and regional economic growth in Ukraine under conditions of uncertainty. Methodology / approach. The empirics of assessment and modeling of a causal relationship between the financial well-being of TCs and economic growth of regions is based on: the construction of time series for empirical parameters of territorial communities’ financial well-being (substantiation of structural elements of financial well-being, TCs clusterization by the criteria of profitability, and calculation of integral coefficients); multidimensional estimation of regional economic growth (multiplicative approach, principal component analysis); detection of impact (“pressure” force) of TCs’ financial well-being on the paces of regional economic growth (index and regression methods). Results. Based on the results of the integral assessment with preliminary clusterization of TCs by their revenues, the article reveals that in 2020, the weighted average level of TCs’ financial well-being in Ukrainian regions was the highest in Zakarpattia (0.592), Kherson (0.534), Zaporizhzhia (0.513), and Chernivtsi (0.512) oblasts, while the lowest – in Ivano-Frankivsk (0.281) oblast. In 2010–2020, Ivano-Frankivsk (0.48 %), Poltava (0.06 %), Rivne (0.16 %), Ternopil (0.25 %), Khmelnytskyi (0.35 %), and Chernihiv (0.54 %) oblasts demonstrated higher annual average economic growth paces, while Dnipropetrovsk (-0.86 %) and Kherson (-0.94 %) oblasts – negative ones. Originality / scientific novelty. The article enhances the methodological approach to the complementary assessment of TCs’ financial well-being and regional economic growth, which has contributed to modeling the ability of territories’ economies to increase investment-economic capacity and the causal relationship between economic growth determinants and the financial capacity of territorial communities in regions. Practical value / implications. The article offers and substantiates the action-oriented approach to the assessment of regional economic development. Its implementation contributes to making the spatial breakdown of the system’s economic condition and building the architectonics of economic progress determinants to determine the “divergence areas” of regional development.