Academic journal article Journal of Sustainable Development

Economic Aspects of Local Authorities Functioning

Academic journal article Journal of Sustainable Development

Economic Aspects of Local Authorities Functioning

Article excerpt


The relevance of the study on economic aspects of local authorities' functioning is due to their dual nature in the complex system of market relations. In this regard, this article is aimed at economic aspects' revealing of local authorities' functioning, as well as the disclosure of various interest levels' interaction in the system of municipal management. A leading approach in the study of this problem is the method of the effectiveness assessing of local authorities' functioning. The article presents the analysis of domestic researchers' different points of view in relation to the substantial characteristics of municipal economy, reveals the nature of the interaction of various interest levels in the system of municipal relations, discloses the duality of local authorities' position in the municipal system of economic relations, proposes a classification of business entities under the municipal economy, proves the specificity of the economic and moral relations in the system of local authorities. The article is valuable for researchers, teachers and students studying the problems of formation and development of the national municipal economy, research methods within the discipline "Economics of public (government) services", "Municipal economy", as well as specialists of local authorities who are concerned with the improvement and development of municipal economy.

Keywords: local authorities, economic basics, levels of interests, dualism, municipal enterprises, municipal property, municipal management

1. Introduction

1.2 The Relevance of the Problem

The relevance of economic aspects' study of the local authorities' functioning is due to a set of problems and contradictions that are substantially different from traditional economic activities. According to experts' data, 80% of all free social benefits, guaranteed by the Russian Federation's Constitution, and more than 90% of the paid services almost every citizen of Russia receives only at the place of his or her permanent residence (Leksin & Shvetsov, 2001). Therefore the most important task of local authorities is to ensure the most important vital interests and needs of living population on the territory of the municipality, including the provision of them by gas, electricity, sanitation, a number of housing services, services for removal and recycling, services of urban and suburban passenger transport, catering, health services, education, culture and sports and much more. On the other hand, the administration of the municipality has the task of forming the tax base and private enterprises as sources of revenue in the municipal budget that provides the financial base for the performance of its obligations for the population of the municipality (Voronin, Lapin & Shirokov, 1998). The specifics of economic relations in the municipal sector with the objective necessity creates the dualism of municipal economy (Ivanov, 2001), the essence of which is that two types of diverse interests are faced- the local authority and the population living on its territory. Thus the main task, the functions of local authorities are often in conflict with economic space dominated by a complex system of economic relations associated with the production, distribution, redistribution, exchange and consumption of goods and services within the territorial education (Zotov & Makasheva, 2004), as well as with the immediate interests of employees of local authorities. In this connection, the problem how to overcome the contradictions of municipal economy related to the difference of economic interests under the municipal economy, (Ignatov, 2002), as well as the absence of the actual benefits of municipal economy over other forms are greatly updated. (Koveshnikov, 2002). The latter is particularly actualizes economic methods of municipal economy management, as they face up a range of problems, starting with the characteristics of natural monopoly industries and finishing with the extremely low level of their own financial base in most municipalities. …

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