Intergovernmental transfers and financial capacity in the territorial economic development

The level and dynamics of social and economic development of territorial entities should be improved based on the mobilization of their fiscal revenue sources, their financial capacities, further improvement of intergovernmental transfers distribution mechanism. From this perspective, the study discusses one of the most significant financial units related to the regulation of the territorial economic development. In the context of the analysis of the transforming role of intergovernmental transfers, a paradigm shift in financial support for the integrated social and economic development of regions and municipalities seems to be logical. A gradual shift from the dominant role of subsidized support for municipalities to reliance upon their financial resources is required. First, one should assess the financial resources for territorial development which are reasonably required and analyzed on the basis of the minimum subsistence level in order to identify potential sources of these funds and establish a budget and extrabudgetary funds of territorial entities. For this purpose, it is necessary to define the financial capacity of the latter. The methodical algorithm for its analysis is proposed as well.