Regional investment and governance is necessary

With author Nathan Hutson, university lecturer in urban policy and planning
ved University of North Texas.

Ukraine faces centrifugal forces which, after the war, may lead to the concentration of population and economic power in the capital Kyiv. Such processes will damage the possibilities for balanced growth. A coordinated spotlight on planning and investments at regional level will be crucial to counteracting such trends.

Since pre-independence, Ukraine's decentralized distribution of population, natural resources and taxation has helped the country maintain a degree of political pluralism and balanced economic growth. In the reconstruction after the war, it is important for the country to maintain this economic balance. Not least in the face of an expected 'slide' of international aid. It threatens to promote the concentration of power in Kyiv.

Since the Russian invasion, international development banks and partner countries have provided significant grants to the central government in Kyiv. This is to keep primary institutions and services running. This 'pipeline' of aid money has replaced declining incomes in the regions since the basic industries here have been decimated. As aid flows to Kyiv, the consequence is that regional initiatives are controlled, directed and partially bypassed. This is how Ukraine risks experiencing that economist Paul Collier reviews as a resource curse (paradox of abundance), where the centralized flow of resources displaces local industries and also leads to a breakdown in regional representation. This undermines institutional and regional governance. The significant flow of aid will, at least temporarily, make Ukraine's economy analogous to a resource exporter and bring challenges for democratization and institution building. It would be ironic and tragic if the struggle for liberation, which consolidates Ukraines independence, also places the country on a course towards such an economic 'development trap'.

Like most capital cities, Kyiv exceeded that of the metropolis economic power before the invasion (30 percent of GDP), by far its 11 percent of Ukraine's population. Since independence, the city's population has increased consistently, even though the national population fell from 52 in 1990 to 44 million in 2020. After the invasion, many internally displaced persons from the country's eastern and southern parts found refuge in the Kyiv metropolitan area. It has magnified the existing imbalance in the population.

Lack of population leads to lack of investment.

As Ukraine's depopulation is expected to persist, there will be demographic imbalance. The flow of aid money threatens to lead to continued immigration to Kyiv at their expense regionale the centers. We predict that several regional base industries will no longer be viable due to damage to physical infrastructure, lack of available labor or changes in input costs. This potentially creates a negative feedback loop where a lack of population leads to a lack of investment. It further demotivates the displaced from returning. If international aid continues to be directed disproportionately to the central authorities, this risk will increase further. On the other hand, international aid can be organized regionally or localt act independently of domestic centrifugal forces.

Regional planning and development challenges

Ukraine's regions may emerge from the war as economically weak, underpopulated and with limited administrative capacity. It will be important after the war to create the right conditions so that internally displaced persons from the east and south can return to their respective places of origin instead of flooding the capital. However, it is equally important, given that many will never return, to create dynamic regional cities that attract new residents to offset population loss. It is therefore needed urban Developmentsstrategies that enable regional centers to compete with the capital in terms of quality of life. For example, it prioritizes recently published the vision for Mariupol creation of new tourist clusters and NGO headquarters with associated expat hubs. They did not exist before the war. Other cities envision strategies that utilize more traditional approaches – especially those that were not used during the Soviet era.

Can IDPs from the east and south return to their places of origin instead of flooding the capital?

The Tiebout model, which illustrates how metropolitan amenities lead to “self-sorting», postulates that when cities offer facilities and give the population the opportunity to choose where to live, this can collectively create increased utility and a more dynamic society. In the same way, we argue that effective urban planning in Ukraine is essential for the emergence of a balanced economic reconstruction and development. Especially because many workplaces in the new Ukrainian economy will facilitate 'virtual commuting' and are thus not location-specific.

Threats to regional governance

Regional and local autonomy as well as self-sufficiency is important when economies are changing, as will be the case in post-war Ukraine. We expect many hromadas (municipalities) will immediately appear as 'bubbles'. For them to pass, a creative economic and strategic approach will be required.

Challenges for the budgets of local authorities could be a deteriorating housing stock, a lack of competitive industries and infrastructural decay. Ideologies that claim that 'place doesn't matter' can also fuel systemic inequality, disinvesting and lack of representation. Instead of increasing dependence on foreign aid and creating so-called 'assisted economies', argue Rodriguez-Pose in order to "[…] relate to the individual location's structural possibilities and limitations".

Actions by the government in recent months unfortunately run counter to such thinking. For example, the municipalities. Instead of introducing new property taxes, grants to developers or other financial instruments (e.g. bonds) so that local communities can cover their social expenses, the law promotes private initiatives with little public oversight or value capture. In a situation, with a reduced population and a weakened industrial base, where cities and regions are simultaneously deprived of legal authority, it may be that they are unable to meet the necessary development needs.

Additional state processes to balance regional growth is stopped. This applies, for example, to the abolition in 2022 of the parliamentary subcommittee for local governance. And the merger of the Ministry for Regional Development and the Ministry for Infrastructure, respectively, whose district political departments are in danger of being closed down. While in normal times international aid organizations might oppose such decisions, in a time of war they have hesitated to openly criticize the Ukrainian government regarding its domestic legislation.

Although we see some decentralized "aid-based financing", Can't this replace one consistent regional policy with competitive local growth initiatives.

Shrinkage scenarios

Difficult decisions lie ahead of us with regard to small towns that cannot be prioritized, and where infrastructure cannot be rebuilt either. While an initial response might be to rebuild Ukraine as it was, now is the time to decide which industries and regional job creation centers can be considered viable. Based on the results of the decentralization reform from 2015, we recommend several new measures at national level:

• To develop a strong regional political strategy and a national spatial plan (last updated in 2001) as a starting point for professional assistance. The focus should be on economic diversification and regional growth centres.
• Strengthen the role of a national coordinating body with representatives of local and regional authorities. Renew the national statistical work so that territorially disaggregated data and geographical documentation are included – which the EU requires to provide funding from the European Regional Development Fund.
  For example, the new vision for Mariupol is the creation of new ones tourist clusters and NGO head offices with associated expat hubs.

• Promote circular reconstruction, i.e. through sorting and reusing building materials.
• In addition, 'smart shrinking plans' can be introduced as part of overall development strategies in localities at three levels: country, region and municipality. There is research on past success and failure approaches in the development of shrinking cities and regions: the German Ruhr, the American Rust Belt, and Finnish fringe regions. Most of the successful examples show the necessity of coordination and pooling of resources under the auspices of subnational or regional bodies with data-driven procedures and locally rooted knowledge as a starting point.

International investment framework

With professional assistance from EU to ensure sufficient project quality, coordination and scope, new investments will be able to reach all local communities. At municipal level, where local budgets are expected to be reduced, separate analyzes relating to "shrinkage scenarios" can be usefully prepared.

Finally, in line with European Green Deal, all project support and investments should be registered to prevent over-exploitation of scarce resources in rivers, forest, marsh and coastal areas. Such activities often undermine regional and local economies. A deliberately regionalized international investment framework for planning and capacity building will ensure that local communities throughout Ukraine appear both well-functioning and competitive.

PS.

After extensive rocket fire and bombing in the first phase of the war, Russia has begun reconstruction in the port city Mariupol. It is located 40 km from Russia, borders the Luhansk region and is a strategically important hub for the connection to the Crimean peninsula. The city had 440 inhabitants before the war. 000 percent have Russian as their mother tongue. About. 90 have remained, the rest have fled or been sent to Russia.

If Russia is to present itself as a liberator in relation to Putin's alleged nazification and discrimination, the first thing that must be done, according to Spanish contemporary historian Luis Velasio Martinez, is to legitimize the acts of war and the local and regional authorities incarcerated. It is part of Putin's explanation that the eastern regions are ethnically and linguistically Russian.

90 percent of the buildings in Mariupol were destroyed in the bombing between February and March 2022. According to Ukrainian authorities, 25 were killed. The UN has confirmed 000 but suggested that it could be several thousand.

During June–December 2022, the Russian Ministry of Defense has built a dozen apartment blocks in Kuprina Street in the southwest of the city for the free disposal of 2500 residents. The activities are documented with images from the European Space Agency's Sentinel-2 satellite. This is part of a master plan where 8 square meters will be developed into housing before 750. The plan also prioritizes the reconstruction of the 'Old Town' and infrastructure for transport purposes. The Azovstal steelworks – where Ukrainian forces fought heroically – will be turned into an industrial and technology park.

On March 16, 2022, Russian rockets hit Mariupol's theater. Amnesty has defined the attack as one in which it believes the Russians were well aware that a large number of civilians were in the building. Also here have reconstruction started, but is covered by tarpaulins and screens. The war crime must be hidden.

Laura Navaro / Javier Galan
The Country, January 2023