The goal of this subproject is to investigate the significance of financing systems for the fulfillment of tasks in the field of services of general interest and regional development in rural areas of the Baltic Sea region. In the countries of the Baltic Sea Region, the issue of financing services of general interest and regional development in rural areas is of particular importance, as some of the countries have a strongly below-average share of population in so-called "functional urban areas". Accordingly, the proportion of rural areas in the Baltic Sea region that are far from the center is particularly high, which poses special challenges for public services and their state and municipal providers.

Within the framework of public services of general interest, state or municipal actors provide social, cultural and economic goods and services with the aim of ensuring the basic supply of the population. In rural areas, the provision of services of general interest faces particular challenges in terms of revenue and expenditure due to larger catchment areas to reach economic user numbers and lower tax revenues of the municipalities themselves. Therefore, special efforts are required within the framework of regional policy measures to improve the attractiveness of rural areas as a location for businesses and as a place to live.

The countries of the Baltic Sea region are addressing this situation in different ways: By delegating tasks to subnational administrative units, by explicit or implicit fiscal transfer systems, and by implementing development policies that respond to specific regional contexts in their design and intensity of intervention. The design of task responsibility and financing systems represents an important variable influencing the achievement of regional policy goals.

During this research, the allocation of task responsibility to the administrative levels and the relevant financing systems will first be described. Subsequently, it will be explained and evaluated how these differences affect task performance. A complementary focus is on the short- and medium-term fiscal implications of the Corona pandemic and the resilience of municipal finances in rural areas. Finally, an in-depth look at health care financing systems in the Baltic Sea region is provided.