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MUNICIPAL FISCAL COMPETITIVENESS AND ITS EVALUATION

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The competitiveness of regions is discussed in the scientific literature differently, but still no consensus on the concept of regional competitiveness. In this article, the authors aim to evaluate municipalities’ fiscal competitiveness and its determinants in Lithuania. There are scientific researches that assess regional competitiveness applying the concept of fiscal competitiveness, but such researches focus only on the calculation of competitiveness indices, including tax collection and public spending indicators as one of the components. The article characterizes the region’s fiscal competitiveness and determines the channels of the impact on the regional economic growth, as well as evaluates determinants of Lithuanian municipal revenues and expenditures. Authors applied the research methods as analysis, synthesis, comparison, grouping, generalization, description, and cluster analysis. In the article, the concept of fiscal competitiveness and its place within the regional competitiveness concept was analysed. As a result, two aspects of regional competitiveness in terms of the concept of fiscal competitiveness were defined: the municipality’s ability to collect revenues to the budget as much as possible and the municipality’s ability to distribute expenditures as efficiently as possible in order to ensure economic growth. In addition, basic determinants of municipalities’ fiscal competitiveness were defined: institutional environment, local and foreign investments, human capital, society entrepreneurship, formation of companies’ clusters. The dynamic and structural analysis of Lithuanian municipal budget revenues showed that four resort municipalities and three municipalities of the largest cities are in the “top 10” by the budget revenues. The assessment of the highest budget expenditures per capita showed that there are three resort municipalities and four border municipalities in the “top 10”. Additionally, the one municipality as in the case of budget revenue - Neringa, occupied the first place in terms of budget expenditure per capita. The results of cluster analysis using two indicators related to budget revenues and expenditures, showed that municipalities, which collect the lowest revenues and have minimal expenditures, demonstrate similarities in terms of analysed indicators. At the same time, similarities between leaders by budget revenues and expenditures have not been observed. The research is funded by the Research Council of Lithuania according to project “The evaluation of municipalities’ fiscal competitiveness in the context of economic growth” Nr. MIP- 013/2015.
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