ANALYSIS OF MUNICIPAL BUDGETS OF REPUBLIC IMPORTANCE CITIES AND TOWNS FOR EVALUATION OF ECONOMIC DEVELOPMENT OPPORTUNITIES

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ANALYSIS OF MUNICIPAL BUDGETS OF REPUBLIC IMPORTANCE CITIES AND TOWNS FOR EVALUATION OF ECONOMIC DEVELOPMENT OPPORTUNITIES – CASE STUDY OF LATVIA

Journal Title: VADYBA - Year 2013, Vol 23, Issue 2

Abstract

The article presents information about the budget revenues and expenditures of the cities and towns of republican significance – Rīga, Daugavpils, Jelgava, Jēkabpils, Jūrmala, Liepāja, Rēzekne, Valmiera, and Ventspils in 2009, 2010 and 2011. These cities are important nationwide, as they are home to more than half of Latvian residents, as well as they are the main centres of economic activity. Consequently, the municipal financial and economic situation is most significant, as well as the decisions that can both facilitate the economic development and also impact it negatively. And vice versa - the economic activity and welfare of the population closely affect the actions and perspectives of the local government. This is also highlighted in the research papers by other authors - the economic development must be balanced, and its existence and pace depend both on the business activities, as well as on the decisions taken by the state and local government institutions. Research includes information about the municipal budget revenues of the republican cities and towns, the total amount of income and the amount of income per capita, which is a more objective indicator, which takes into account the differences in the population size. Since the main municipal budget revenue source is the tax revenues, the amount of this item per capita has been individually viewed. The analysis of the total budget expenditures of the cities and towns and the expenditures per capita are presented. Taking into consideration the primary objective of the local government performance, namely, to act in favour of people's interests, separate analysis on the most significant items of municipal expenditures is presented, and the expenditures per capita on education, social protection and maintenance costs have also been calculated. Municipal effectiveness cannot be assessed only by analyzing the budget revenue and expenditure items. To ensure complete situational awareness, the assessment and comparison of the needs of the current situation is required. Such indicators, characterizing the activities of the local government, as population size, the dependency ratio, the unemployment rate and the number of individual merchants and commercial companies per 1000 inhabitants are used. The research also presents the summary of the indicators, characterizing the budgetary and socio-economic situation of the main cities and towns. The results suggest that the rates show considerable cross-correlation and effects, and, consequently, we may conclude that in the local government group of republican significance, there are visible leaders and those, losing ground. Analyzing all the indicators included in the research, the best situation is in Valmiera, Rīga and Ventspils, the worst - in Daugavpils and Liepāja. It shows that the existing socio-economic situation leaves an impact on the local government opportunities, and government actions and decisions affect the development of the potential socio-economic situation. These conclusions are based on the condition, that in ranking, greater expenditures lead to poor indicators. However, in reality, more government spending, if it is used in a rational and strategic approach, will ensure the local government commitment and better economic situation in the future, which may contribute to the improvement of the other parameters under consideration.

Authors and Affiliations

Svetlana Ivanova, Kamols Uldis

Keywords

municipality budget income expenditure economic development

EP ID EP306116
DOI -
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