Journal of Applied Economic Research
ISSN 2712-7435
Net Weight of Regional Economy: Increment Policy to and Interbudgetary Relations
Gusev A.B.
Abstract
In public administration, regional economy is perceived predominantly from the point of view of territorial distribution of economic capacity without taking into account the structure of economic agents. This approach makes it impossible to determine the success or failure of regional economic policy and does not allow for justification of the distribution of tax revenues between the federal budget and the consolidated budget of the region, concealing the responsibility of the regional authorities by shifting it to the federal level. The aim of the paper is to test an approach to the assessment of the net weight of a regional economy in order to develop proposals for improving state policy for spatial development and inter-budgetary relations. It is proposed that the net weight of a regional economy be estimated as a share of small and medium-sized businesses in GRP. For the purposes of analysis of inter-budgetary relations the index of revenue compensation is introduced. It indicates the coverage by federal resources of the imbalance between the net weight of the regional economy and the share of revenue generated and transferred from the region to the federal budget. As a contribution of the methodological support the interregional distribution of funds, an index of pension compensation is proposed. The index evaluates self-sufficiency of regions in terms of its ability to provide support to local pensioners. As a result of testing the developed methods, 13 relatively independent regions with different levels of prosperity were identified. The regions accounted for 11.5% in GDP in 2015. It is found that the federal budget does not compensate Kirov Region, Penza Region and <st1:place w:st="on"><st1:placename w:st="on">Transbaikal</st1:placename> <st1:placetype w:st="on">Territory</st1:placetype></st1:place> for the excessive portions of revenues transferred to the national treasury in the context of the net weight of the regional economies. The analysis unveils the inability of the regions to independently meet pension liabilities with their own resources regardless of the net weight of the regional economy. A set of proposals has been developed on the distribution of federal tax revenues (VAT, corporate profit tax) levied on an additional increase in the net weight of regional economies, including methods of calculating the tax base, and low interest rate loans from loyal regional banks. Considering the expected introduction of a progressive personal income tax it is proposed that the regions the right to determine the tax rates in order to stimulate business activity and support working social groups should be delegated to the regions.
Keywords
state regional policy; small and medium enterprises; net weight of regional economy; inter-budgetary relations; regional economic development; strategy of spatial development in Russia.
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About Authors
Gusev Alexander Borisovich – Candidate of Economic Sciences, Head of the Department, Russian Institute for Economy, Policy and Law in Science and Technology, Moscow, Russia (105064, Moscow, Zemlyanoi Val street, 50a, Building 6); e-mail: a_goose@mail.ru.
For citation
Gusev A.B. Net Weight of Regional Economy: Increment Policy to and Interbudgetary Relations. Bulletin of Ural <st1:place w:st="on"><st1:placename w:st="on">Federal</st1:placename> <st1:placetype w:st="on">University</st1:placetype></st1:place>. Series Economics and Management, 2018, Vol. 17, No. 1, 71-104. DOI: 10.15826/vestnik.2018.17.1.004
Article info
Received November 22, 2017; Accepted December 1, 2017.
DOI: http://dx.doi.org/10.15826/vestnik.2018.17.1.004
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