Transformation of municipal Finance in the context of globalization

¹ Saint Petersburg state University of Economics, Faculty of Economics and Finance, Department of Finance, 21 Sadovaya str., St-Petersburg, Russia
² St-Petersburg State University of Aerospace Instrumentation (SUAI), Institute of Entrepreneurship Technologies, Department of international entrepreneurship. B.Morskaya str., 67, lit.A, St-Petersburg, Russia
³ Saint Petersburg State University, Economic Faculty, Department of Theory by Credit and Financial Management. 7-9, Universitetskaya Nab., St-Petersburg, Russia

^* Corresponding author: svetagor306@yandex.ru

Abstract

Research background: In the context of globalization, a steady trend towards the formation of “open” economies in the context of the international division of labor, the idea of states defending their national economic interests as the basis for their economic and political independence becomes particularly important. The basis for strengthening the economic base seems to be the formation of sustainable finances at all levels of government, especially at the municipal level, which is directly close to the needs of the population, as well as the active involvement of civil society in ensuring the independent and comprehensive development of territories.

Purpose of the article: To study the transformation of municipal finances, turning them into the economic basis of “state-population” political exchange

Methods: The research is based on J. Buchanan’s theory of constitutional economics about the “state-population” political exchange as a condition of social development.

Findings & Value added: The research conducted by the authors allows them to conclude that due to the constitutional and legal status of the municipality, local government is the level where the real and most effective “state-population” political exchange takes place, acting as a driver of socio-economic transformations. Because of this, municipal finance becomes the economic basis for such an exchange and an indispensable condition for the harmonious sustainable development of territories, which gives special importance to the issues of their formation and evaluation of the effectiveness of public participation in the organization of their functioning.