IBBS 332.142.2

Vladyslav Matvieiev

second year student,

Economic Science faculty,

specialization Finance and Credit with the knowledge of English,

Petro Mohyla Black Sea State University

PROBLEMS OF REGIONAL ECONOMIC DISPARITIES IN THE EUROPEAN COUNTRIES AND UKRAINE

The regional economic disparities problems are analyzed in this article. The main reasons and the solution ways are considered on the example of Italy with ‘Cassa per il Mezzogiorno’ phenomenon. The author stresses the necessity of this problem for Ukraine and suggests the possible solution ways.

Key words: regional economic development, State Budget, public financing.

Actuality. In recent years there are a lot of conversations about the Ukrainian economic development and the problems connected with it. One of the questions is the regional economic disparities leading to some economic troubles inside the country. Therefore the overcoming of this problems and equalizing the disparities is very important not only for our country but also for other world countries.

Connection with scientific research. The research experience in this question exists not only in European literature. Foreign researchers are Alfredo Del Monte, Astarita T., Maggioni M., Uberti T., Brakman S., Garretsen H., Gorter J. The Ukrainian spesialists: E.M. Libanova, O.N. Pale, I.V. Rozputenko, S. Sidenko, A. Silenko, V.A. Skurativsky, N.M. Tkachova.

Goal. The objective is to analyze the European experience in elimination of regional economic disparities on the example of Italy and its ‘Cassa per il Mezzogiorno’ phenomenon.

Tasks. In Ukraine we have the same situation in different regions. After detailed analysis the main purpose will be the possibility to implement some European countries’ methods of elimination of regional economic disparities in Ukraine.

Body. The Cassa del Mezzogiorno or Cassa per il Mezzogiorno (English: Register or Fund for the South) was a public effort by the government of Italy to stimulate economic growth and development in the less developed southern regions of Italy. It was established in 1950 primarily to construct public works and infrastructure (roads, bridges, hydroelectric and irrigation) projects, and to provide credit subsidies and tax advantages to promote investments. It was dissolved in 1984, although its mandate was maintained by successive, less centralized institutions [1].

Cassa per il Mezzogiorno was set up as a huge public master plan to help industrialising the South, that aimed to do this in two ways: by land reforms creating 120,000 new small farms, and through the "Growth Pole Strategy" whereby 60% of all government investment would go to the South, thus boosting the Southern economy by attracting new capital, stimulating local firms, and providing employment [2]. However, the objectives were largely missed, and as a result the South became increasingly subsidised and state dependent, incapable of generating private growth itself. Presently huge regional disparities still persist. Southern Italy continues to be poor and underdeveloped. Problems still include pervasive organised crime (except Sardinia) and very high unemployment rates [4].

The legal support plays a special role in Ukrainian shaping regional policy. Today the Law of Ukraine "On the promotion of regional development" and the “National Strategy for Regional Development until 2015” are the main components of the regional development legal basis [5]. These legislative acts identify regional development key problems, regional policy priorities in terms of national needs and interests, provide implementation mechanism to reduce the disparities in socio-economic sector at the regional level and overcoming depression of some areas. The gross regional product (GRP) and GRP per capita essentially shows us the disparities of regional development in Ukraine (table 1) [6].

Table 1

Values of GRP per capita in Ukrainian regions (2011)

№	Region	GRP per capita (UAH)
1	Kyiv City	79729
2	Dnipropetrovsk Oblast	42068
3	Donetsk Oblast	36446
4	Poltava Oblast	35246
5	Kiev Oblast	34420
6	Kharkiv Oblast	27966
7	Zaporizhia Oblast	27567
8	Odessa Oblast	25748
9	Luhansk Oblast	25067
10	Sevastopol City	24564
11	Mykolaiv Oblast	23402
12	Cherkasy Oblast	21082
13	Lviv Oblast	20490
14	Kirovohrad Oblast	19918
15	Sumy Oblast	19800
16	Autonomous Republic of Crimea	19467
17	Ivano-Frankivsk Oblast	19386
18	Chernihiv Oblast	19357
19	Vinnytsia Oblast	17768
20	Khmelnytskyi Oblast	17260
21	Zhytomyr Oblast	17184
22	Volyn Oblast	16993
23	Kherson Oblast	16990
24	Rivne Oblast	16735
25	Ternopil Oblast	15055
26	Zakarpattia Oblast	14455
27	Chernivtsi Oblast	13228

Moreover State Budget is distributed irregularly. It is significant that the proportion of the Donetsk region in Ukraine's GDP in 2010 was 12%, and in 2010 the total amount of subsidies, current and capital transfers received by the region was 21% and in 2011 - 27% of the nationwide sum. A similar situation in the Luhansk region - the part of Ukrainian GDP was 4%, the cost of the area was 8% (2010) and 11% (2011). Thus, for example, in the Dnipropetrovsk region the situation was reversed: the part of the region in the national GDP was 11%, the region received only 2% of these subsidies and transfers in 2010 and 3.8% - in 2011. Similar disparities exist in most regions of Ukraine. Kiev is one exception where rates are the same: the proportion of GDP - 18%, the part of spending - 16% and 18.3% in 2010 and 2011, respectively. In 2011 only three regions - Kyiv, Donetsk and Luhansk region - received 56% of the total 31.2 billion UAH subsidies and transfers (image 1) [3].

Image 1. Distribution of state funds to Ukrainian regions

The main problem of these disproportions is the corruption of the ruling elite. They lobby the laws helping to develop their native regions – Eastern Ukraine. First of all, Ukraine needs the reforms of budget system. The depressive regions need more money and more developed regions should help them with it because the economic growth of country depends on successful development of each region. For achievement of this purpose Ukraine should fund the low developed branches of national economy, for example, agriculture or metallurgy because Ukraine has big perspectives in this sphere. Of course the shadow economy will interfere to these reforms.

Conclusion. Each region is the part of one general thing – the country. And this country cannot exist without high developed regions because this country needs the support and help from each part. Italian ‘Cassa per il Mezzogiorno’ phenomenon and the regional economic disparities problems in Italy and Ukraine were observed in this article. The main tools and methods for overcoming of the current situation were offered towards Ukraine. And now Ukraine can use the bad experience of Italian reforms to avoid similar mistakes in adjusting or regional economic disparities.

References:

1. Alfredo Del Monte, "Fallimenti del mereato e fallimenti del governo: quale politica per il Mezzogiorno?," Meridiana, (n. 11-12, 1991), p. 142

2. Encyclopedia Britannica [electronic resource]. - Mode of access: http://www.britannica.com/

3. Independent Financial News [electronic resource]. - Mode of access: http://news.finance.ua

4. T. Astarita, “Between Salt Water and Holy Water: A History of Southern Italy”, 2005, p. 352.

5. Official website of the Verkhovna Rada of Ukraine [electronic resource]. - Mode of access: http://zakon.rada.gov.ua/

6. Official website of the State Statistics Committee of Ukraine [electronic resource]. - Mode of access: http://www.ukrstat.gov.ua/

Аннотация

В данной статье анализируются основные проблемы диспропорций развития различных регионов страны. Основные причины и варианты решения рассматриваются на примере Итальянского феномена ‘Cassa per il Mezzogiorno’. Автор подчеркивает важность этой проблемы и для Украины, а также возможные пути решение схожей проблемы.

Анотація

У даній статті аналізуються основні проблеми диспропорцій розвитку різних регіонів країни. Основні причини і варіанти рішення розглядаються на прикладі Італійського феномена 'Cassa per il Mezzogiorno'. Автор підкреслює важливість цієї проблеми і для України, а також можливі шляхи вирішення схожої проблеми.

Abstract

In 1950 the Cassa per il Mezzogiorno (Fund for the South) was set up by the Italian government to stimulate social and economic development in the Mezzogiorno. These reforms have continued for few decades. But presently huge regional disparities still persist.

These problems of regional economic disparities exist not only in Italy but in other European countries too. Ukraine is not the exception. Our state has visible to the naked eye high developed Eastern region and Kyiv and poor other regions. The further Ukrainian development depends on the elimination of this deep economic disparities.

Different researchers have already observed these problems and have offered some tools and methods to solve it. But as we can see these methods are not effective and these regional economic disparities still exist in different countries. The author thinks Ukraine can use European experience but with some cultural and regional features.

The author observed the main reason of similar problems – it is the corruption. This phenomenon interferes to find the solutions of different economic troubles and disproportions in distribution of financial flows.

The further development of this question and combination of Ukrainian and European experience can help Ukraine to solve the present problems and achieve new peaks in general economic development. Ukraine needs to obtain a higher place in world rating.