Assessment of the socio- economic and environmental development of a region: A result-oriented approach

ARTICLE INFO Borys Burkynskyi, Valerii Horiachuk, Oleksandr Laiko, Nataliya Shlafman and Olena Krivtsova (2021). Assessment of the socio-economic and environmental development of a region: A result-oriented approach. Problems and Perspectives in Management, 19(2), 40-56. doi:10.21511/ppm.19(2).2021.04 DOI http://dx.doi.org/10.21511/ppm.19(2).2021.04 RELEASED ON Tuesday, 27 April 2021 RECEIVED ON Wednesday, 10 February 2021 ACCEPTED ON Wednesday, 21 April 2021


INTRODUCTION
Ukraine's adoption of the Sustainable Development Goals for the period up to 2030 and the implementation of the decentralization reform determine the relevance of the socio-economic and environmental assessment of regional development. The state support for the regional development should be methodically based on the results of an objective assessment of regional development. An unjustified assessment can disorient management bodies and lead to subjectivism in making managerial decisions, significantly reduce the efficiency and effectiveness of management and, accordingly, lead to negative consequences.
A reasonable assessment of the socio-economic and environmental development of a region is a necessary condition for solving the problems of regional management in the current and future periods; analyzing the effectiveness of regional executive authorities and local self-government; conducting interregional comparisons; developing regional strategies and targeted regional programs; determining promising directions for using the region's potential and forming resource support; preserving and increasing the potential of a region; preventing negative processes with the possibility of transition of the

LITERATURE REVIEW AND THEORETICAL BASIS
The analysis of existing methods for assessing the regional development allows distinguishing two main approaches such as factor and result-oriented. According to the first approach, the assessment is carried out on the basis of factors that affect the socio-economic and ecological state of a region, for example, the volume of investment, the cost of fixed capital, the level of education and qualifications of the population, the state of the institutional environment, the availability of natural resources, geographical location, etc. According to the second approach, the level of development of a region is determined based on the results of its activities.
Results and factors of regional development are correlated as a function and its arguments: [ ] ( ) 12 12 ,,, ,,, , The factor approach is most widely used. Experts who use it believe that one or more socio-economic and environmental indicators cannot fully reflect the level of the regional development, as well as ensure their objective comparison. For a comprehensive assessment of the level of the regional development, they suggest using a significant number of indicators based on which the integral indicator is calculated.
Within the framework of the factor approach, regional development assessment is carried out according to the following algorithm (Goryachuk, 2011): • development of the structural model of the regional development; • identification of the main factors that determine the regional development level; • determination of weighting factors; • choosing the form of factors aggregation into integral indicator of the level of the regional development; • calculation of the integral indicator of regional development; • use of statistical methods for comparative analysis of the regional development and research of the dynamics of their development.
The structural model for assessing the regional development should present the main system-forming factors that affect its development. Since the model for assessing the regional development level is always formed by researchers, the definition of a set of factors, based on which the assessment is carried out, always has the elements of subjectivism and simplification. Accordingly, the evaluation results also contain a significant share of subjectivity.
As a part of the factor approach, Pripoten (2017) proposed a three-stage procedure for assessing the regional development based on a three-level hierarchical system of indicators. At the first stage, the selected factors are normalized using the threshold values of intervals. This allows the value of a specific factor of the analyzed region not to be tied to the other region values. The assessment result is not to place a region on the rating scale, as is usually done in many other studies, but to determine the place of the region on the threshold scale.
The resulting values have an economic interpretation. At the second stage, two generalizing indicators are calculated, which characterize the social and economic aspects of the region's development, respectively. When calculating them, the significance (weight) of the initial factors is taken into account. At the third stage, an integral development indicator is calculated based on generalizing indicators of social and economic development of the region, while taking into account the significance (weight) of generalizing indicators. Difficulties in the practical application of the proposed approach are due to the problems of determining thresholds, assessing the significance of initial factors and generalizing indicators. It should be particularly noted that the integral indicator of regional development does not have meaningful content. Sergeev and Klimuk (2014) proposed their version of the three-stage regional development assessment procedure. As intermediate generalizing indicators, not two (social and economic) are used, but four (production, socio-demographic, financial and economic, environmental and energy). Each of them is characterized by a set of factors. The main methods for calculating weighting coefficients are the hierarchy analysis method, the point method, and the Fishburne method. Difficulties in the practical application of the proposed approach are associated with the problems of determining the significance of initial factors and generalizing indicators. Just as in the previous methodology, the integral indicator of regional development does not have a meaningful content. According to Feraru and Orlova (2014), to achieve sustainable socio-economic development of a region, all values of summary indicators should be in the zone above the threshold and regulatory limits.
In Ukraine, attempts have been repeatedly made to introduce a system for assessing regional development at the state level. On April 15, 2003 . Paragraph 3 of the Procedure defines that a region can be considered depressed if over the past five years the average indicator of the volume of gross regional product (before 2004 -the volume of gross value added) per person in actual prices is the lowest in all regions. In other words, only one region can be defined as a depressed region. It is clear that this approach is unfounded. In the European Union, about 25 percent of regions are considered depressed (regions where the level of gross regional product per capita is less than 75% of the community average). According to this Resolution: the list of territories is defined that granted the status of depressive; their borders are established; the period for which the territory is granted the status of depressed is determined; measures of state stimulation of the development of the territory in order to overcome the depressed state and the forms and conditions of their application are defined; the ratio of state, regional and other financial resources that are directed to the implementation of the program for overcoming the state of territory depression; the term for introducing the draft program for overcoming the state of territory depression.
The . For a comprehensive assessment, 39 indicators of socio-economic development are used in five areas: real sector; investment and foreign economic activity; public finances and financial results of enterprises; social sector; and consumer market. In addition, the Methodology contains the "Index of physical volume of gross regional product" indicator and two other groups of indicators "Sphere of small business development" and "Sphere of ecology", which are not included in the assessment and are informational in nature. Assessment is carried out in three stages. At the first stage, the assessment is based on calculating the relative deviations of indicators of each region from the maximum and minimum values of such indicators among all regions.
At the second stage, the average value of ratings for all indicators that characterize the particular type of activity is determined, and at the third stage, the integral rating assessment of regional development is determined as the arithmetic mean of ratings for all types of activities. The region with the lowest integral rating is considered the best. According to the Methodology, the assessment of the socio-economic development of regions is carried out annually on the basis of 64 indicators in 12 areas. In 2018, the first place was taken by Kharkiv region, and after it, the second and third places were taken by Rivne and Vinnytsia regions, respectively; only the fourth place was taken by Dnipropetrovsk region. The last places were taken by Mykolaiv, Odesa and Chernihiv regions (excluding Donetsk and Luhansk regions) ( Table 1) (Ministry of Regional Development, Construction, Housing and Communal Services of Ukraine, 2018).
The fifth and sixth places were taken by Chernivtsi and Ternopil regions, which traditionally, together with Zakarpattia region, occupy the last places in terms of GRP per capita. Poltava, Zakarpattia and Odesa regions, which have always been considered developed regions, ranked ninth, nineteenth and twenty-first, respectively (the penultimate one excluding Donetsk and Luhansk regions).
According to calculations using this Methodology, the rating of many regions changed dramatically (Ministry of Regional Development, Construction, Housing and Communal Services of Ukraine, 2016, 2017, 2018). Therefore, in 2015, Kyiv region took the 5th place, in 2016 it rose to the 2nd place, and then there was a sharp drop to the 13th place in 2017, and again a rise to the 7th place in 2018.
A similar pattern occurs in the case of Ivano-Frankivsk, Ternopil and other regions. Ivano-Frankivsk region, in terms of falling and rise, fell from the 3rd to the 15th place, and Ternopil region also rose from 14th to 6th place in terms of falling and rise (Figure 1).
Since the regions as the socio-economic systems are inertial, such drastic changes in the assessment of their development level are difficult to explain. Therefore, questions regarding the validity of the Methodology arise.
The analysis of the Methodology shows that it has significant disadvantages.
Use of an integral indicator to assess socio-economic development. Firstly, the calculation of such an assessment is carried out by averaging different in- Adding the second component of the volume of industrial products sold, namely intermediate costs (raw materials and services) to the GRP value, distorts the integral assessment of the regional development. Because the higher the intermediate costs, the greater the integral estimate. This is with the same regional product value. That is, with the inefficient use of resources, we have more importance of an integrated assessment of the regional development. The same applies to other types of activities (agriculture, transport, trade, construction, etc.).
The distortion of the integral assessment of the regional development also occurs when using indicators that affect the gross regional product, namely fixed assets, capital investment, foreign investment, etc. For example, the larger the volume of capital investment (with the same gross regional product), the larger the integral valuation. In other words, a region that uses capital investment less efficiently is more important for an integral assessment of the regional development.
Lack of a balanced regional development assessment model. The model should present the main system-forming factors that determine the development of a region, and they should be balanced. The current Methodology is based on 12 groups of indicators: economic and social cohesion, economic efficiency, investment and innovation development and foreign economic cooperation, financial self-sufficiency, development of small and medium-sized businesses; labor market efficiency, infrastructure development, renewable energy and energy efficiency, availability and quality of services in the field of education, availability and  A large number of indicators (64 indicators), no separation of key indicators. Proponents of using a large number of indicators believe that the use of GRP per capita as an integral indicator does not give a complete picture of a region's economic development and, therefore, it is necessary to use additional indicators that provide a more complete picture, for example, the output of basic economic activities, the volume of fixed assets, the volume of investment in fixed capital and foreign investment, the level of income, etc. Various researchers use dozens or even hundreds of indicators, on the basis of which the integral indicator is calculated. But as noted above, the use of a large number of indicators is associated with double accounting and distortion of an integral assessment. Besides, the use of a large number of indicators is associated with the problem of assessment of their impact, as well as with increasing difficulties in developing management decisions aimed at improving regional development.
The lack of comparison of key indicators of Ukraine's regional development with the same indicators in other countries. The lack of comparison of key indicators such as GRP per capita, life expectancy, education level and other indicators of the development of the regions of Ukraine with the same indicators in other countries significantly limits the idea of the level of the development of the regions of Ukraine.
The lack of assessment of trends of key regional development indicators. The assessment of changes in these indicators over the past year alone does not provide an idea of the current trends in economic, social and environmental spheres of the region.
The lack of assessment of regional development indicators in the context of thresholds. Ranking (location determination) of regions by a certain indicator does not provide a qualitative assessment in terms of thresholds. For example, if we are talking about per capita income, it is advisable to compare it with the threshold value and highlight regions where it is exceeded and where it is not.
The lack of representativeness of certain groups of indicators. The group of indicators "Accessibility and quality of educational services" does not provide an idea of the availability of education. Since secondary education in Ukraine is free, we should talk about higher education. But among seven indicators in the "Accessibility and quality of educational services" group, six relate to preschool and secondary education, and only one to higher education.
The group of indicators "Financial self-sufficiency" does not provide an idea of the self-sufficiency of local communities, since the indicators of this group characterize only local budget revenues, but do not determine the volume of necessary expenditures for the execution of delegated powers.
The above-mentioned disadvantages are typical for most regional development assessment methods developed within the framework of the factor approach.
The result-oriented approach, unlike the factor approach, involves assessment of the level of development of a region based on the results of its activities, and not factors that affect the results. As part of a result-oriented approach, Pashnanov (2012) suggests assessing the development of regional socio-economic systems based on two indicators: • gross regional product per person as an integral result of the regional economic subsystem, and • life expectancy at birth as the final result of the social subsystem.
Pashnanov believes that any economic indicator that characterizes the development of the economic subsystem of a region, finally, is reflected in the GRP per person, and any social process (or phenomenon), as a result, affects life expectancy. For example, people who do sports have a much higher life expectancy than those who do not. Moreover, it is widely known that active mental activity, such as active scientific research, increases life expectancy. It is also believed that active occupation of culture and religion contributes to life extension. In the domestic and foreign economic literature, it is noted that the life expectancy of the population of the region depends on the level of the development of the region's economy and its growth rate.
Davydyants (2016) to assess the overall level of the development of regional socio-economic systems, suggested using GRP per capita and life expectancy at birth, which he defined as a "criterion of socio-economic efficiency" (Pashnanov, 2012). The use of such an indicator raises some doubts, since it does not have meaningful content. In addition, indicators such as GRP per capita and Life expectancy at birth are not interchangeable.
Ginevičius and co-authors justify the advantages of the results approach with the following arguments. GDP per capita is a reliable indicator of a country's success and well-being, reflecting the level of its economic development. Foreign direct investment contributes to faster technological development and is an important source of capital creation; the unemployment rate reflects people's participation. The analysis of their dynamics has shown that both foreign direct investment and employment levels are closely related to GDP. This means that GDP reflects both the rapid technological progress of a region and the positive impact on economic development through fixed capital growth with the help of direct foreign investment. Similarly, GDP reflects the situation on the labor market -a high level of GDP reflects a high level of population participation (Ginevičius et al., 2015(Ginevičius et al., , 2018. The model for assessing the level of regional development of the British Institute of Competitiveness is based on a small amount of data -only six statistical indicators are used in the model. In addition, the authors of the model took into account the hierarchy of factors, separating the "causes" and "results" of the region's activities. The level of regional development is considered as a cumulative result of the economic regional process, which has a group of "input" factors and a group of "output" indicators. The "input" parameters include factors that are a necessary prerequisite for regional development (Goryachuk, 2011): • business density, which is an indicator of sustainable economic growth through generating new entrepreneurs and firms and is expressed by the number of business entities per capita; • knowledge-based economy, which is represented by the share of enterprises in the branches of the "knowledge-based economy" in the regional economy; and • economic activity, which is an indicator of the quality of human capital available in the region.
These factors affect the "output" of a region, which consists in productivity (GRP per capita). Finally, the interaction of these factors is realized in the characteristics of the "result": the average income of the population and the unemployment rate.
In the European Union, the following system of key indicators is used to compare regions and determine their level of development (Sepik, 2005): • economy (GRP per capita, number of European patent applications per 1 million residents); • labor market (unemployment rate, stagnant unemployment, employment rate of the population aged 15-64 years); • demographics (population size, population density per square kilometer, percentage of the population under the age of 15, 15-64 and over 65 years); • education (educational level of persons aged 25-59 years).
It should be noted that this model is based on the concept of a small number of key factors that determine the level of regional development.
Some researchers, as part of results-oriented approach, suggest that the assessment of the level of regional development should be based on the productivity of using regional resources and, first of all, labor and capital, which are generally measured by the volume of GRP per capita (Shehovtseva, 2001). In regions with higher GRP per capita, citizens tend to have a higher level of income and investors have a higher level of return on investment. Sepik (2005) points out that GDP per capita is the traditional measure of living standards in the EU. It can be considered as an integral indicator of the level of development of a region in the economic sector. A developed region is characterized by high productivity, high employment and an economically active population: where GRP -gross regional product, P -population, EP -employed population, and EAP -economically active population. Sepik (2005) believes that, in addition to productivity per capita, the following indicators of the level of a region's development should be taken into account: the state of social sphere, health and environment.
According to the European Union Strategy "Europe 2020", three priorities of socio-economic growth of the community are defined (Horiachuk, 2018): • smart growth: economic development based on knowledge and innovation; • sustainable growth: creating an economy based on the appropriate use of resources, ecology and competition; • comprehensive growth: promotion of employment, achievement of social and territorial harmony.
In accordance with the target priorities, Eurostat monitors and evaluates the state of regions in the European Union (unity policy) (Eurostat, n.d.).
At its core, the factor approach is mainly aimed at assessing the potential level of development of a region, and, to a lesser extent, at assessing the real level of the region's development. This is recognized by the authors of the widespread factor methodology of the World Economic Forum. The results-oriented approach is more reasonable and provides a more adequate assessment of regional development. Sepik (2005) emphasizes that the level of development of a region is determined by the results (income/standard of living), and not by the factors that affect them.

RESULTS
Based on the results of the analysis of methodological approaches to assessing the regional development, a choice was made in favor of results-oriented approach, and the following methodical bases are proposed: • assessment of regional development based on the results of their activities, and not on the factors that affect these results; • as an assessment model, it is proposed to use a well-known model of sustainable development and assess the development of a region in the economic, social and environmental fields. This assessment should be balanced. Given that today the main focus is on the economic and environmental spheres, it is necessary to increase attention to the social sphere, especially in the context of growing differentiation in society in terms of income, the ability to purchase their own housing, access to health care and education; • refusal to use artificial integral indicators at all levels of assessment since they do not have meaningful content; • refusal to use a large number of indicators and switch to the use of a limited range of key indicators that reflect the main results of economic, social and environmental development; • use of additional indicators that complement key indicators and provide a more complete picture of regional development; • determination of the place of Ukrainian regions in the world by comparing their key development indicators with the same indicators in other countries; • determination of trends in key indicators of the regional development during the last ten years, and, in some cases, during the entire period of the country's independence; • qualitative assessment of regional development indicators in the context of thresholds and corresponding grouping of regions.
It is proposed to assess regional development in three areas: economic, social, and environmental. Assessment in each area is carried out on the basis of a two-level system of indicators. The upper level consists of key indicators that determine the main results of the development of a particular area, and the lower level consists of additional indicators that complement key indicators.
Based on the above-mentioned methodical foundations of the socio-economic and environmental evaluation of regional development, the development of Odesa region in the economic, social and environmental spheres in 2018 was assessed.
GRP per capita. The region ranks a fairly high sixth place in Ukraine, but only 125th in the world. According to the European Union criterion, the region is not depressed (a region with a GRP per capita above 75% of the average is considered depressed) ( Table 2). The GRP structure has significantly deteriorated, the share of the processing industry has decreased by almost 1.6 times, and agriculture has increased by more than 1.5 times. The largest share remained in transport -18.4%, but it decreased (21.0% in 2008), the second and third places are occupied by trade and agriculture -14.0% and 11.0%, respectively ( Figure 3).   Internal current expenses for R&D. In 2008-2018, there was a steady downward trend of this indicator from 0.38% to 0.17% of GRP (a decrease of 2.3 times), the 8th place in Ukraine in 2018 ( Figure 5). This is significantly less than in the EU, where the average cost of R&D is 1.7% of GDP.     Housing affordability. The region is among the top ten in Ukraine (10th place, 240 m² per 1 thousand people). The volume of housing construction in 2008-2018 fluctuated significantly, the general trend is falling, from 356 m² to 240 m² per 1 thousand people (Figure 7).
Medicine availability. In terms of "infant mortality" (7.6 per 1 thousand newborns) and "life expectancy" (71.0 years), the region ranks in the middle of the second ten in Ukraine -15th and 16th plac-es, respectively, and 62nd and 125th places in the world, respectively. The average life expectancy in 2013-2108 increased by more than six months and in 2018 was 71 years.

CONCLUSION
The analysis of existing methodological approaches to assessing the development of Ukraine's regions has shown that the most common is the factor approach; it has significant conceptual flaws, first of all, this is due to the use of an integral assessment, which is calculated by averaging different indicators that have different units of measurement. At the same time, there is a double and distorted accounting, and the assessment itself does not have a meaningful content.
It is shown that the results-oriented approach is more reasonable, according to which, unlike the factor approach, the level of development of a region is determined by the results (standard of living/income), and not by the factors that affect them. Within the framework of this approach, the methodological bases for socio-economic and environmental assessment of regional development are proposed. They are grounded on the use of a sustainable development model, which includes social, economic and environmental components. The scientific novelty consists in the following: transition to a limited range of key indicators that determine the results of the region's activities; use of additional indicators that complement key indicators; determining the place of regions in the world; assessing trends in key indicators of regional development in the last 10 years; qualitative assessment of regional development indicators in the context of threshold (critical) values. The proposed methodological foundations provide a reasonable and transparent assessment of the development of Ukraine's regions, which gives a comprehensive view of the state and trends in the development of a region and is intended for top managers of government bodies.
Calculations carried out to assess the development of Odesa region in the economic, social and environmental spheres showed that, according to most of the key indicators, it is in the top ten regions of Ukraine, the level of its development according to the concept of sustainable development is balanced and, according to the criterion of the European Union, the region is not depressed.