STRUCTURAL MODEL OF LOCAL PUBLIC FINANCE IN TRANSITION ECONOMIES
Abstract
The transformation of centrally planned economies into market-oriented systems has fundamentally reshaped public finance structures, particularly at the local government level. Transition economies face complex fiscal challenges, including revenue instability, expenditure decentralization, weak institutional capacity, and intergovernmental fiscal imbalances. This study develops a structural model of local public finance tailored to transition economies, emphasizing revenue assignments, expenditure responsibilities, intergovernmental transfers, borrowing mechanisms, and institutional governance. Using a comparative institutional approach and secondary data analysis from post-socialist countries in Eastern Europe and Central Asia, the study identifies key determinants of fiscal sustainability and local autonomy. The findings suggest that effective fiscal decentralization depends not only on revenue autonomy but also on transparent transfer formulas, accountable governance, and sound macroeconomic coordination. The proposed structural model integrates fiscal federalism theory with transition economy realities, offering a framework for policy reform in emerging and developing countries undergoing institutional transformation.
Keywords
local public finance, fiscal decentralization, transition economies, intergovernmental transfers, structural model, fiscal sustainability.
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