The role of institutional environment in allocation of the productive forces

Development of institutional environment has a strong effect on allocation and structure of the productive forces of the country since the legal frame of the local finance on the federal level is ascertained with a number of legal acts. The article covers principle problems of particular state powers distribution which the local government are allotted by the federal or regional laws simultaneously with allocation of the necessary material and financial means and which ultimately affect distribution of the productive forces locally. Nearly all expenditures of the federal budget are territory-oriented as they are outright allocated in the RF subjects. Still distribution of social expenditures of the federal budget between regions is extremely irregular. The article covers financial flows between the center and the regions, which at the same time serve to smooth away these disproportions. Besides, state-private partnership has recently got significant development alongside with the alternative way of allocation finance in the infrastructure projects, like exеmptions and advantages to priority industry enterprises.