Baltic Journal of Economic Studies  

175

Vol. 4, No. 1, 2018

Corresponding author:
1 Department of FEA Management and Eurointegration, Sumy National Agrarian University.
E-mail: likalachevska@gmail.com

DOI: https://doi.org/10.30525/2256-0742/2018-4-1-175-180

MODELS FOR INNOVATION DEVELOPMENT OF RURAL 
TERRITORIES BASED ON INFRASTRUCTURE DEVELOPMENT

Larysa Kalachevska1
Sumy National Agrarian University, Ukraine

Abstract. The research subject is an aggregate of theoretic and methodical grounds for choice and organization of 
rural development innovation models based on infrastructure development, taking into consideration the world 
experience. Methodological and theoretical ground for the research is a systematic approach for studying social-
economic and ecologic phenomena and processes under the market conditions. In order to solve some tasks, there 
are used several methods: abstract-logical method to determine the conception and methods of analysis and 
synthesis. The aim of the research is to study the models for innovation development of rural territories based on 
infrastructure development. Conclusions. Segregate scientific approaches to form the model of rural economy are 
ruralism and neoruralism. Ruralism is a way of thinking and idea representing ruralisation in the human community, 
the development of which is focused on securing food supply and needs of those who live and work in rural areas. 
Neoruralism is a multifunctional social-economic system, which is focused on broadening of powers for united 
territorial communities. The rural economy here is an open system, focused on securing rural inhabitants welfare. 
The idea that agricultural changes in terms of modern tendencies and effective models of rural development, 
especially in the sphere of agricultural modernization, as a ground for its sustaining power, improvement of 
competitive ability for agricultural production and to meet the WTO Ukrainian member requirements is proved. 
Strategic benchmarks for Ukrainian rural areas in accordance with the requirements of Europe 2020 strategy are 
smart development – balanced development of the economy and social sphere; constant development – abide by 
scientifically proved norms; inclusive development – taking into consideration social standards for development. 
Special institutions determining law institutional mechanism of innovation development are very important for the 
revival of rural areas and infrastructure development.

Key words: development model, rural areas, estimation, infrastructure, social sphere.

JEL Classification: F140, Q180

1. Introduction
Rural areas are the important element of life 

in any country, developing under the conditions 
of market economy, they have a great economic, 
natural, demographic, and socio-cultural potential. 
Utilization of such potential in many ways determines 
the development of certain regions. That is why any 
country must consider the development of rural areas 
as an important step, not only for the improvement of 
agricultural productivity but also for increasing of GDP 
in the whole. We must also determine the development 
of rural areas choosing a particular model able to solve 
the existing tasks.

The existing model for agrarian sector development, 
where large agrarian holdings have the dominant role, 
has negative ecologic and social effect. Ineffective 
utilization of key asset  – land is in the first place. 
Large agrarian holdings renting more than a half of all 

agricultural lands grow only highly productive cultures, 
without following crop rotation measures, they use 
great numbers of chemicals without application of 
organic fertilizers. Such technologies lead to soil fertility 
fall. Soils are vulnerable to water and wind erosion. 
Utilization of “monoculture” leads to accumulation of 
heavy metals, pesticides, and pathogenic agents in soil. 
Wrong crop rotation leads to large numbers of weeds 
and pests.

Practically all production of large agrarian holdings 
is exported as a raw material. So, producers do not get 
added value from procession and marketing. It damages 
agricultural complex, leads to increase in unemployment 
rates in rural areas and restrain the development of social 
and productive infrastructure.

Besides, holdings, having modern wide agricultural 
machinery, a number of storage facilities and resources 
for chemical fertilization, leave small farms and 
agricultural enterprises as non-competitive. It leads to a 



Baltic Journal of Economic Studies  

176

Vol. 4, No. 1, 2018
reduction in a number of such enterprises and decrease 
in production of food crops, grown on small farms. 
Holdings do not invest much in the development of 
rural infrastructure especially social and productive.

Taking into consideration the depression of rural areas, 
we consider the tendency to decrease in purchasing 
power for food products. It restrains the eco production, 
which is highly important in the formation of a healthy 
nation. Among the challenges of the agrarian sector is 
the lack of commercial, law, and market information 
needed by stakeholders, it restricts their investment 
activity. Unpredicted changes in taxation system also 
have a negative effect on the agrarian sector. All these 
points need to be urgently changed together with the 
implementation of new legislation considering the 
agrarian sector. Everything mentioned above needs new 
models for innovation development of rural areas based 
on infrastructure development

2. Research and literature analysis
Theoretical grounds for innovations in agrarian 

infrastructure development and theoretical and 
methodological paradigm of rural areas development and 
rural economy in particular have been studied by famous 
Ukrainian and foreign scientist. T.  M.  Lozynska has 
studied the institutional inefficiency of transformations 
in the agrarian sector (Lozynska, 2012). Tendencies, 
subjects, and prospects of reforming rural areas are 
the research subject of A. Yermolaiev, I. Klimenko, 
V. Yemets, S. Taran (Yermolaiev, 2015). Current state and 
prospects of international integration of agrarian sector 
have been studied by Y.O. Lupenko (Lupenko, 2015) 
and P. Т. Sabluk (Sabluk, 2006). М. О. Baranovskyi has 
studied the rural areas in the context of the level of their 
development, transformational changes, and conceptual 
approaches (Baranovskyi, 2011). М.  В.  Polenkova 

studied the economic complex of rural areas and 
its integral aspect, in particular (Polenkova, 2013). 
А. V. Lisovyi studied methodological approaches to the 
assessment of rural areas in Ukraine and their need for 
innovation development and creation of infrastructure 
(Lisovyi, 2013). However, a great number of other 
points in innovation development for rural areas still 
demand a research work.

3. Research materials
Problems of rural areas are evident and if the situation 

gets worth, it will cause the danger to territorial balance. 
The characteristic feature of the process is dissolution 
of many locations from the map of Ukraine. As it is 
known, the reason for it is a crisis in the basic brunch 
of economy – agriculture. M. Baranovskyi studying the 
conceptual approaches for reformation of agricultural 
sector, mentioned that Ukraine for many years had one 
way of rural development, despite its agrarian potential, 
it had agrarian tendency without development of 
any other productions (Baranovskyi, 2012). The 
mentioned above facts show the need for theoretical 
and methodological research in the sphere of systematic 
development for rural areas with innovation models 
adapted to modern challenges.

Scientific researches of Ukrainian and foreign 
scientists, based on classic approaches to agricultural 
economics concerning the specifics of native agrarian 
sector development became the ground for models 
of agricultural development. Scientific researches of 
agrarian economists are important for further research 
work and creation of strategic vectors for further 
development of rural areas. The mentioned researches 
give the opportunity to separate two development 
models for rural areas based on innovations: ruralism 
and neoruralism (Fig. 1).

 

Ruralism 
Ruralism – a way of thinking 

and idea, representing 
ruralisation in the human 

community, the development 
of which is focused on 

securing food supply and 
needs of those who live and 
work in rural areas is one of 
the most important factors of 

effective agrarian policy. 

Neoruralism 
a multifunctional social-

economic system, which is 
focused on broadening 

powers for united territorial 
communities. The rural 

economy here is an open 
system, focused on securing 

rural inhabitants welfare. 

Models of rural development 

Fig. 1. Scientific approaches to form the model of the rural economy according  
to the principles of ruralism and neoruralism

Source: the author’s research



Baltic Journal of Economic Studies  

177

Vol. 4, No. 1, 2018
Theoretical and methodological approaches of 

ruralism and neoruralism have several levels: global and 
national. Studies of the global level analyse the points 
of natural, spiritual, and economic development of 
rural areas under the conditions of modern challenges 
connected with the changes of the world markets, 
growing food supply problems and urbanization. 
National level studies specific characteristics of a 
particular country, its resources, peculiarities of 
production, and models of development. Neoruralism, 
extended under the conditions of decentralization and 
broadening of powers for united territorial communities, 
having enough financial resources and the ability to 
use active assets, is concentrated in rural areas, new 
communities can solve a great number of economic, 
ecologic, and social problems.

Despite the number of the researches, the formation of 
the new socially oriented economy is an urgent problem 
and needs further research work. P. M. Matvieiev, 
studying ecologic and economic grounds for the 
formation of effective agricultural production, states that 
the key branch of the real economy sector is agriculture, 
effective and rational development of which is a 
guarantee for food and ecological safety of any country 
(Matvieiev, 2014). A. V. Lisovyi, studying the methodical 

approaches to assessment of rural areas and the need of 
innovation and infrastructure development, proved that 
agriculture gradually becomes the indicator of economic 
development, showing a good economic efficiency of 
agricultural production, steady increase of innovation 
ability and investment prospects (Lisovyi, 2007).

Current state and challenges of agrarian land 
transformations in Ukraine have been studied by A. 
Yurchenko. Taking into consideration the fact that 
agriculture is an important factor of welfare, the author 
says that there is a need for a certain model providing 
steady development of the sector. Ukraine due to existing 
soil resources and favourable climatic conditions is 
highly competitive on the world market (Yurchenko, 
2015). An important part of steady development for 
rural areas is effective functioning of agriculture, being 
presented in multifunctional production (Fig. 2).

О. М. Borodina, describing the rural development 
policy based on united communities in Ukraine proves 
that multifunctional conception is a methodological 
ground for strategies for the agrarian sector in many 
countries of the world and in European Union in 
particular (Borodina, 2015).

Under the conditions of globalization and growing 
competition among the world producers of agricultural 

 

A
gr

ic
ul

tu
re

 is
 v

ie
w

ed
 a

s 
a 

br
un

ch
 o

f t
he

 a
gr

ar
ia

n 
co

m
pl

ex
. T

he
 m

ai
n 

ra
te

s 
of

 
se

ct
or

 c
on

di
tio

ns
 a

re
 g

ro
ss

 a
gr

ic
ul

tu
ra

l p
ro

du
ct

 v
al

ue
 b

as
ed

 ra
te

; a
gr

ic
ul

tu
ra

l 
pr

od
uc

tio
n 

ac
co

rd
in

g 
to

 o
w

ne
rs

hi
p;

 p
la

nt
 p

ro
du

ct
io

n 
an

d 
an

im
al

 h
us

ba
nd

ry
 in

 
na

tu
ra

l f
or

m
; t

he
 n

um
be

r o
f a

gr
ic

ul
tu

ra
l w

or
ke

rs
; m

at
er

ia
l a

nd
 e

qu
ip

m
en

t Increase in agricultural productivity, intensification 
of production processes, and implementation of 
innovations;  

Rational utilization of resource potential (soils, 
labour, finance); 

Alternative (non-agricultural) employment in rural 
areas, diversification of production; 

St
ea

dy
 d

ev
el

op
m

en
t o

f r
ur

al
 a

re
as

 

Ecological safety development, improvement of 
natural environment, preservation of natural 
landscapes; 

Added value production by small- and middle-sized 
producers. It will make them competitive with large 
agricultural holding. Development of rural areas and 
an increase of gross export potential are impossible 
without small- and middle-sized producers; 

Production of intangible values and services in rural 
areas, creation of complete cycle production 

Fig. 2. Parts of a steady agricultural development as a system-forming part  
of the agrarian sector

Source: the author’s research



Baltic Journal of Economic Studies  

178

Vol. 4, No. 1, 2018
production, it is important to develop models of future 
development for the agrarian sector and rural areas, 
with a system of assessment for it (Fig. 3).

Grouping of indicators allows forming four groups, 
depending on their functional purpose: economic  – 
characterize economic effectiveness, institutional  – 
characterize the level of legislation, social  – characterize 
social effectiveness, ecological – characterize the level of the 
ecological environment. In order to secure the development 
of rural areas, according to neorural model, it is necessary 
to develop and confirm the long-term oriented plan of 
rural development. One of the most important parts of this 
process is scientific and research work. It contains initiation 
for development, making the idea popular, the creation of 
a work group to provide scientific researches. Scientific 
research work, in its turn, is held in two directions. The first, 
the assessment of territorial competitive ability, the second 
is an assessment of competitive advantages and critical 
challenges of territorial development. The final point of 
the research work is in discussion and confirmation of the 
research results.

The planning system has three-way activity, devoted 
to the development of systematic, special multisectoral 
programs and projects based on competitive advantages. 
Here we can mention human resources, spatial 
planning, and electronic government. The development 
of programs involves a power supply, environment 
protection, modernization of living conditions. In 
Ukraine realization of such incentives is a problem 
because of the lack of financial support. Agrarian sector 
of EU depends on donations and gets lots of financial 
resources for the development. Decentralization is one 
of the reforming measures providing accumulation 
of the financial resources needed. The process of 
government decentralization and reformation of local 
authorities is a priority of modern Ukrainian policy. It 
must have a positive effect on the development of rural 
areas (Fig. 4).

Under the conditions of decentralization and reformation 
of the management system and growing of agrarian 
sector, it is impossible to do so without the development 
of infrastructure. It is important now to form a united 

Fig. 3. Set of indicators for the assessment of models for rural development

Source: the author’s research

 

 Gross agricultural production; 
 Ratio of capital investments in agriculture; 
 Profitability of agricultural enterprises; 
 Rural employees productive abilities; 
 Government financing of the rural economy. 

Economic – 
characterize 
economic 

effectiveness 

Institutional –
characterize the 

level of 
legislation 

Ecological – 
characterize the 
level of ecologic 

environment 

 Income-expenses relation; 
 Level of rural unemployment; 
 Budget healthcare expenses; 
 Hospital accessibility for rural inhabitants; 
 Part of budget expenses for education; 
 Internet and media accessibility. 

Social – 
characterize 

social 
effectiveness 

 Local authorities functioning; 
 Accessibility of local authorities; 
 Scientific research expenses (budget %); 
 Status of development programs; 
 The existence of steady development strategy. 

 Expenses to decrease air pollution; 
 Expenses for ecosystem restoration; 
 Expenses for measures of biodiversity 

conservation; 
 The amount of waste from stationary and mobile 

sources of pollution per 1 person; 
 The rate of biotechnologies utilization. 



Baltic Journal of Economic Studies  

179

Vol. 4, No. 1, 2018

organizational, economic, finance, investment and logistic 
system of development. All of them are closely connected 
and form the united system of infrastructure development. 
Having a base in the neorural idea, decentralization gave the 
local authorities an opportunity to improve the conditions 
for local business. The principle is easy to understand  – 
the better conditions local enterprises have, the better 
financing a local budget has.

4. Conclusions
The model of decentralization chosen, having a base 

in the neorural idea, is an important step of rural areas 
development. First steps in uniting the communities 
have positive results; today we need a special strategy 
and system of problem-solving for further development.

First of all, we must consider the functions of 
rural territories. It contains: productive-economic, 
sanative-recreational, environment protection and 
social functions. The productive-economic function 
is of a global character, as it is a decision for Food 
Safety Program of our country, and provides the rural 
community with the inputs and clear legislation in the 
market for agricultural production.

Together with economic problems, we need to solve 
ecologic problems; these ecologic problems contain 
sanative-recreational and environmental protection. 

Ecotourism must be an integral part of rural development. 
Environment protection and rational utilization of natural 
resources must be a dominant function in rural areas.

Social content is one more important point of rural 
functioning. Here is the development of infrastructure, 
whole year employment of rural inhabitants, the 
creation of conditions for labour and rest needed for 
educational, cultural, and health development.

In order to solve these problems, we need to proceed 
in the revival of rural territories and create conditions 
for steady development. But first of all, we must consider 
the social purposes for rural areas. All above mentioned 
requires control of recourses utilization, especially for 
the agricultural lands, increase soil productivity and 
protection of the environment.

The main aims of rural development, under the 
conditions of decentralization model, are real managing 
power of united communities, making the social 
services available and others. According to the research 
data, monitoring of the process of decentralization, 
we have some positive results. As of 17 October 2017,  
665 united territorial communities have been created. 
252 communities have the desire to run in the elections, 
it is a positive impulse, showing a good performance in 
the development of rural areas, having a positive effect 
on the social and productive sphere.

Fig. 4. Aims for the development of rural areas under the conditions of decentralization and 
widening of united territorial communities powers

Source: the author’s research

 

Strategic aims – 
Secure high living standards in any region of the country. In order to secure it, we must 

realize the existing problems. 

Aims 

Widening of community’s 
possibilities to manage the 

investments of any kind 

Real powers of the 
community to manage the 

capital 

Territorial availability 
of social services 

Creation of united 
territorial communities 

and centres of 
administrative services 

A delegation of powers in 
infrastructure management 
and all parts of endogenous 
territorial potential to united 

communities 

Redistribution of budget 
financing to communities; 

direct access to international 
and national investments 

Instruments 

Stakeholders: Ministry for Regional Development, Housing and Building of 
Ukraine, State Statistic Service of Ukraine, State Service of Geodesy, Mapping and Land 
Registry of Ukraine, Ministry of Justice, State Owned Enterprise “National Informational 

Systems”, State Fiscal Service of Ukraine, State Judicial Administration of Ukraine. 



Baltic Journal of Economic Studies  

180

Vol. 4, No. 1, 2018

References:
Baranovskyi M. (2012) Kontseptualni pidkhody do reformuvannia silskoho sektora Ukrainy [Conceptual 
approaches to the reforming of rural sector of Ukraine]  – Nizhyn Mykola Gogol State University Publishers:  
pp. 29-30. [in Ukrainian]
Borodina O. (2015) Polityka silskoho rozvytku na bazi hromad v Ukraini : naukova dopovid. [Community-based 
rural development policy in Ukraine: Scientific Report] National Academy of Sciences of Ukraine. Kyiv: pp. 47.  
[in Ukrainian]
Yermolaiev A. (2015) Ahrarnyi sektor Ukrainy: tendentsii, subiekty, perspektyvy reformuvannia [Agrarian sector 
of Ukraine: trends, subjects, prospects for reforming].  Kyiv: ISD: 28 p. [in Ukrainian]
Lisovyi A. (2007) Metodychni pidkhody do otsiniuvannia silskykh terytorii Ukrainy [Methodological approaches 
to the assessment of rural territories in Ukraine]. Ekonomika APK  – Economics of AIC (8): pp. 123-130.  
[in Ukrainian]
Lozynska T. (2012) Instytutsiina neefektyvnist transformatsii v ahrarnomu sektori ekonomiky [Institutional 
inefficiency of transformations in the agrarian sector of economics]. Scientific works of Poltava State Agrarian 
Academy (5): pp. 163-169. [in Ukrainian]
Lupenko Yu. (2015) Suchasnyi stan ta perspektyvy mizhnarodnoi intehratsii ahrarnoho sektoru Ukrainy: zavdannia 
ahroekonomichnoi nauky [Current state and prospects of international integration of agrarian sector of Ukraine: 
problems of agroeconomic science]. Ekonomika APK – Economics of AIC (6): pp. 6-11. [in Ukrainian]
Matvieiev P. (2014) Ekoloho-ekonomichni zasady formuvannia silskohospodarskykh zemlevolodin i 
zemlekorystuvan [Ecological and economic principles of agricultural land holdings formation]: dissertation of 
candidate of economic sciences, Kharkiv: 358 p. [in Ukrainian]
Polenkova M. (2013) Hospodarskyi kompleks silskykh terytorii: intehralnyi aspect [Economic complex of rural 
territories: an integral aspect]. Molodyi vchenyi – Young scientist 2(02): pp. 32-39. [in Ukrainian]
Sabluk P. (2006) Rozvytok silskykh terytorii – zaporuka vidrodzhennia ahrarnoi Ukrainy [Development of rural 
territories – a guarantee of agrarian Ukraine revival]. Visnyk ahrarnoi nauky – Bulletin of Agrarian Sciences (5):  
pp. 21-23. [in Ukrainian]
Yurchenko A. (2015) Suchasnyi stan ta problemy zemelnykh transformatsii v ahrarnii sferi Ukrainy [Current state 
and problems of land transformations in the agrarian sector of Ukraine]. Zemlevporiadnyi visnyk – Bulletin of land 
management (12): pp. 28-31. [in Ukrainian]