Demographic potential as the basis for spatial differentiation of the financial situation communes of eastern Poland in 2009-2018

Purpose: The resources of labor and endogenous capital in these communes are shrinking due to wash-out effects. The aim of the article is an attempt to identify demographic factors influencing the spatial differentiation of the financial situation and an attempt to establish a relationship between the demographic situation of communes and their financial situation. Design/Methodology/Approach: The choice of variables in 2009-2018 was largely conditioned by the availability of data collected in the municipal system at the Local Data Bank of the Central Statistical Office. The Technique for Order Preference by Similarity to an Ideal Solution method was used to build synthetic measures. Findings: Communes located peripheral to the central center are characterized by, among others the effect of washing out the demographic potential. Their main problem is the scarcity of endogenous factors, which is a barrier to independent initiation of development. The research results indicate that a better demographic potential increases the diversity of individuals. Moreover, there is a relationship between the demography and the financial situation of communes. Demographic conditions are one of the basic factors in the development of communes. The financial situation and development opportunities change in the face of a progressive decline in the fertility rate, aging of the population and increasing population mobility. Practical Implications: The results of the conducted research enable local governments to make comparisons. The conclusions drawn may allow local authorities to determine potential directions of optimization of fiscal and demographic policies. Originality/value: The added value of the paper is the research findings focused on the assessment relationship between the financial situation and the demographic potential of municipalities. The research was conducted on a large group of communes (484) in eastern Poland.peer-reviewe