Journal section "Public finances"

Priorities of Budget Financing of Cities and Regions of the Russian North

Timushev E.N.

Volume 12, Issue 1, 2019

Timushev E.N. Priorities of budget financing of cities and regions of the Russian North. Economic and Social Changes: Facts, Trends, Forecast, 2019, vol. 12, no. 1, pp. 174-188. DOI: 10.15838/esc.2019.1.61.10

DOI: 10.15838/esc.2019.1.61.10

Abstract   |   Authors   |   References
The paper analyzes the phenomenon of the flypaper effect – non-identical growth of inter-budget transfer and equivalent growth of private income for budget expenditures – in the relations between the budgets of the Northern entities of Russia and their local budgets for 2013–2016. We conduct comparative assessment of the budget response to changes in parameters of the private sector on the one hand; on the other hand, in parameters of relations with the budget of another level. The relevance of the proposed study of inter-budget relations lies in determining the effects of inter-budget redistribution and optimal expenditures at different levels of the budget system in the current system of distribution of expenditure obligations. The purpose of the present research is to reveal the consequences of allocation of non-target transfers from budgets of the entities in the Russian North from the point of view of fiscal incentives formed in the process of inter-budget relations and the models of behavior of local budgets created by these incentives. For the Republic of Karelia and the Sakhalin Oblast, the flypaper effect in inter-budget relations of regional and local budgets has been revealed. In the Arkhangelsk Oblast, Khanty-Mansi and Yamalo-Nenets autonomous okrugs, Kamchatka Krai, the republics of Komi and Sakha (Yakutia), the flypaper effect has not been revealed. It has been established that local budgets in the Republic of Karelia and the Sakhalin Oblast act in the interests of the regional budget to a relatively greater extent, they are more willing to expand production of local goods. In other regional budget systems, local budgets have a relatively more flexible fiscal policy, acting in the interests of local taxpayers, but at the expense of reducing regional benefits. It is assumed that budget systems of entities with the flypaper effect demonstrate lower differentiation of local and regional expenditures, which prevents decentralization; as well as higher dissatisfaction with the value of basic services in the public sector, which reduces the need for local differentiation. The author demonstrates the promising areas of interregional research. It has been revealed that the causes of the flypaper effect cannot be detected by analyzing traditional indicators of finance and regional economy


the north, local budgets, russia’s constituent entities, flypaper effect, grants

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