Peculiarities of municipalities' investment activity: a case study of Eastern Poland

Abstract

Polish municipalities have the competence to initiate and guide own socio-economic development. Local public investment is a particularly important factor that supports the development of every municipality. However, local public investment depends on several conditions, including the current socio-economic status of a municipality, which in turn is influenced by the municipality’s investment activity. The investment activity pursued by municipalities, as suggested by many authors, is of special importance in the development of municipalities situated in both socially and economically less developed areas, such as Eastern Poland. The purpose of this study has been to identify the determinants of investment activity carried out by municipalities situated in the provinces of Eastern Poland, in the context of local socio-economic development and the efficiency of local governments, and to assess the strength and direction of relationships be-tween these determinants and the investment activity of municipalities. A multiple linear regression method was chosen to identify determinants of investment activity, as it enables the user to assess the presence of a relationship between a response (dependent) variable and explanatory (independent) variables as well as the strength and direction of such relationships. The time period for most of the analysed variables spanned the years from 2004 to 2020, and the territorial scope was composed of municipalities located in the Polish provinces: Lubelskie, Podkarpackie, Podlaskie, Świętokrzyskie and Warmińsko-Mazurskie. The study confirmed that the investment activity of municipalities depends on factors involved in local socio-economic development. Among these factors, the ones that play a significant role in the municipalities situated in Eastern Poland’s provinces are demographic issues, especially internal migrations, economic activity, unemployment and other budget expenses which are competitive to investment outlays, for example expenditure on education and upbringing, or on social welfare. The factors mentioned above implicate the areas worthy special attention of local authorities for the sake of attaining improved socio-economic development of a given area.