Economic Co-Operation of Administrative-Territorial Units: Legal Status

Abstract

Territorial communities (hromadas) are increasingly acting as economic agents, responsible for allocating resources, developing the area and providing public goods. Their capacity largely depends on effective economic co-operation. This study aims to analyse administrative-territorial units as economic actors and examine the legal mechanisms governing their economic co-operation. A combination of dialectical, system-structural, comparative-legal and formal-legal methods is employed in the research. The results demonstrate that the current legal framework in Ukraine does not fully align with the economic functions of territorial communities. The absence of a clear concept of economic legal personality, inconsistencies in the distribution of budgetary powers and fragmented regulation of intermunicipal co-operation limit the efficient use of resources and hinder local economic development. The study identifies the key legal gaps that affect economic co-operation. These include conflicts in the delimitation of competences between levels of government, and insufficient implementation of the principle of subsidiarity in the economic sphere. The paper pays special attention to institutional forms of economic co-operation, such as joint municipal enterprises, inter-municipal partnerships and public-private partnerships. These are assessed in terms of their capacity to reduce transaction costs and enhance economic efficiency. The paper also examines how European standards of financial autonomy and multilevel governance impact the development of local economic systems. The findings highlight the necessity of modernising the legal framework to better align it with the economic functions of administrative-territorial units. The proposed approach strengthens economic autonomy, improves interterritorial co-operation and ensures sustainable local development, particularly in the context of post-crisis recovery and integration into the European economic space.