Social and economic disparities between Ukraine’s regions far greater than in the EU

The less-developed regions of Ukraine face challenges such as limited access to social services, poor infrastructure, lack of jobs and economic opportunities, and environmental challenges  which in some ways are far worse than in more prosperous regions of the country. To support the government, its regions and local communities in addressing these challenges, in 2013 the EU initiated a project devoted to regional development in Ukraine.

The Experts working on the project explain its main activities, goals, and outcomes.

Colin Maddock, team leader of the EU-funded, “Support to Ukraine’s Regional Development Policy” (SURDP) project, has gained plenty of experience working on regional development in post-Soviet countries over the last 20 years. Yuri Tretyak, deputy team leader and regional development management expert, worked with Ukrainian members of parliament on drafting a number of pieces of national legislation on regional policy.

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Colin Maddock, project’s team leader

“The role of regional development is to promote equality,” explains Maddock. “Territories are not homogenous in terms of potential and economic opportunities. The state has a role to play to ensure equal opportunities everywhere for all citizens.”

In Ukraine, there is a lot of work to be done to bridge the gap between regions. “The richest region in Ukraine is 22 times better off than the poorest region. In the EU regions, the difference is just 5 times, while in the US it’s 2.5 times,” highlights Tretyak.

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Yuri Tretyak, deputy team leader, regional development management expert

This EU project aims to assist the government in reducing the discrepancy between regions in terms of quality of life. “In the past, there were no mechanisms in Ukraine to bridge these gaps at all,” says Tretyak. “We helped the government build this system and develop a strategy along with all the documents and procedures required.”

He stresses that the project’s biggest achievement is that regions now work out their development strategies independently. “Before our project began, regional strategies were developed by academic institutes. Some of these academics might never have even visited the regions; they simply focused on statistics.”

The SURDP project helped change this approach. The project working groups consist of stakeholders who discuss the priorities for their regions. “As a result of this approach they get a document they all contributed to,” explains Tretyak, adding that their strategic planning method was developed based on EU practices.

The project team also helped the government and ministry of regional development elaborate a national strategy and action plan for regional development. The strategy defines three main goals, which are in line with EU regional development policy: competitiveness of all Ukrainian regions, social and economic cohesion and spatial development of the country, and effective governance of regional development policy in Ukraine.

The SURDP project has focused its assistance on providing government, ministries, and other stakeholders with regional development training, methodological and legal support in line with the best EU and international practices.

The project also contributed to the creation of the State Fund for Regional Development (SFRD). With this mechanism in place, Ukraine allocates 1% of its annual revenues toward regional development projects and programmes to be distributed across the regions according to a formula: 80% of the Fund is allocated across all the regions proportionally to the population in the regions and 20% is allocated to the regions where the GDP per capita is less than 75% of the average GDP per capita in Ukraine. This means poorer regions get more money to implement programmes to better the lives of their citizens.

“This formula is a huge breakthrough in Ukraine, because previously, before the creation of the Fund and the Revolution of Dignity, money for regional development was distributed arbitrarily,” explains Tretyak. The government used to decide which regions would get more money. As a result, some regions received bigger allocations, while others got no money for their development at all. “It was entirely a political decision. But that is changed now and this formula has been applied for the past two years,” says Tretyak.

The SURDP project team established an online platform of the State Fund for Regional Development to submit and evaluate projects for the Regional Development Fund. The platform lists all the projects supported through the Fund and the public can follow the progress and results online. The project has also established and supported the development of a Ukraine-wide network of experts and practitioners of local and regional development REGIONET. Network’s website www.regionet.org.ua provides useful information for regional development professionals.

In the context of SURDP, the European Commission implemented a grant programme that has supported 14 pilot projects on regional development and 18 projects to support Internally Displaced Persons (IDPs). “The main thing is to showcase that it is possible to achieve concrete results with a small amount of money,” says Maddock, though he adds, “the government should allocate more money to achieve these results on a larger scale.”

The local projects funded by the European Commission have contributed to local communities’ wellbeing.

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Repaired and modernised bridge in Severodonetsk (Luhansk region)

For instance, a war-damaged bridge in Severodonetsk (Luhansk region) was repaired and modernised, and housing for IDPs, schools, and kindergartens were refurbished across Ukraine.

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Restored Austrian school in Hlynyany town

In Pyatykhatky district, farmers improved milk production. In Cherkassy, another farmers’ initiative created a cooperative to breed rabbits.

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New milk tank vehicles for Pyatykhatky farmers

These relatively small projects are good examples of how small steps can provide a significant boost to poorer regions, improving local infrastructure and fighting unemployment in rural areas.

“A huge success for Ukraine is that the country now has a functional regional development policy that is understood at the regional level. And that’s critically important,” says Colin Maddock.

Now that the mechanism is established, it is up to the government to make effective use of it.

Useful links:

Official website of the project “Support to Ukraine’s Regional Development Policy” (SURDP): http://surdp.eu/en

Project’s official facebook page: https://www.facebook.com/surdp.project 

REGIONET website: http://regionet.org.ua