Local Autonomy versus Central Control during Transition: Explaining Local Policy Outputs in Post-Soviet Ukraine

Many post-Soviet central governments have assigned numerous policy responsibilities to local governments, but have simultaneously constrained local autonomy in an effort to ensure that local governments pursue central objectives. In this paper, I examine the interplay between local autonomy and central control in one post-Soviet central government—Ukraine—by examining the case of small-enterprise privatization. Shortly after Ukraine's independence, the central government transferred ownership of state-run small enterprises to local governments, but required that local governments meet annual privatization targets set by a central agency. Some local governments have met the annual targets, while others have lagged behind. The results of an empirical analysis of local privatization levels indicate that central control mechanisms currently have limited influence over local decisionmaking. The results demonstrate that, instead, local elections have increased the influence of local groups whose interests do not always coincide with those of the central government. In response, the central government has instituted several changes to the intergovernmental finance system that are likely to increase central government authority and continue to move Ukraine towards a system in which local governments carry a heavy service-delivery load with limited autonomy.