World economy and international economic relations

Fiscal decentralization in Europe in the context of social protection development

Economic Annals-XXI

Economic Annals-ХХI: Volume 175, Issue 1-2, Pages: 24-28

Citation information:
Storonyanska, I., Hrynchyshyn, I., Dub, A., & Horga, I. (2019). Fiscal decentralization in Europe in the context of social protection development. Economic Annals-XXI, 175(1-2), 24-28. doi: https://doi.org/10.21003/ea.V175-04

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Iryna Storonyanska
D.Sc. (Economics),
Professor,
SI «M. I. Dolishniy Institute of Regional Research of the National Academy of Sciences of Ukraine»
4 Kozelnytska Str., 79026, Lviv, Ukraine
istoron@i.ua
ORCID ID: http://orcid.org/0000-0002-0237-1409

Iryna Hrynchyshyn
PhD (Economics),
Senior Research Fellow,
SI «M. I. Dolishniy Institute of Regional Research of the National Academy of Sciences of Ukraine»
i.hrynchyshyn@ukr.net
ORCID ID: http://orcid.org/0000-0002-0339-9227

Andrii Dub
PhD (Economics),
Associate Professor,
Senior Research Fellow,
SI «M. I. Dolishniy Institute of Regional Research of the National Academy of Sciences of Ukraine»
oak_an@ukr.net
ORCID ID: http://orcid.org/0000-0001-6377-1556

Ioan Horga
D.Sc. (History),
Professor,
Dean, Faculty of International Relations and European Studies,
University of Oradea
1 University Str., Oradea, Bihor, 410087, Romania
ihorga@uoradea.ro
ORCID ID: https://orcid.org/0000-0001-8791-5243

Fiscal decentralization in Europe in the context of social protection development

Abstract. The authors analyze the European experience of fiscal decentralization in the context of the development of social protection. Based on the distribution of functional expenditures, countries that have prioritized organization and financial provision of social protection at the local level have been identified. The authors share the view that the effectiveness of social protection reforms is largely due to the interdependence of spending on social protection and the reduction of poverty in the country. The countries that use a relatively small share of GDP expenditure while having low poverty rates after social transfers are the Czech Republic and Ireland, while such countries as Italy and Greece track high share of GDP expenditure as social transfers and high poverty rates. The countries that spend much less on social protection in terms of GDP and have high levels of poverty are Estonia, Bulgaria, Latvia, Romania and Lithuania. An analytical study of the decentralization of incomes made it possible to find out the differences in the formation of municipal budgets through transferring powers and financial resources to the local level, as well as different approaches in determining sources of income and financial equalization. Some European countries still have high centralization of social protection expenditures, such as Bulgaria, Spain, Estonia, the Czech Republic, Portugal, Slovakia, Italy, Croatia, Cyprus, Malta, where the share of expenditures on social protection is less than 10% of the local level expenditures. At the same time, in Denmark, the UK, Germany, Ireland, Norway, Sweden, the Netherlands, Iceland, Austria, Poland, and Belgium the share of social protection expenditures in structure of the local level expenditures is more than 20%.

The importance of the municipal level in financing social protection expenditures has been established, which confirms the assignation of the majority of financial resources to support the elderly, families with children and social inclusion.

Keywords: Fiscal Decentralization; Decentralization of Income; Decentralization of Expenditures; Municipal Budget; Social Protection

JEL Classification: H21; H55; H75

DOI: https://doi.org/10.21003/ea.V175-04

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Received 29.10.2018

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