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B6 Organized Session: How Decentralization Helps Foster Economic Resilience of Rural Areas in Ukraine During the War?
Time:
Friday, 20/June/2025:
9:00am - 10:30am
Session Chair: Vasyl Kvartiuk, IAMO
Location:Conference Room I
Session Abstract
Although decentralization reforms have swept across the world granting more rights and freedoms to local communities, it is not clear what the role of decentralization can be in a crisis situation of a military conflict. Enhancing local decision-making freedoms under certain conditions has been widely promoted as a welfare enhancing policy (e.g., Faguet, 2014; Weingast, 2009, 2014). Rights to retain fiscal resources in rural municipalities has been shown to enhance the incentives to foster favorable business climate and provide better public goods (Smith & Revell, 2016; Wang, 2013). However, it is not clear how local governance autonomy on the municipality level performs in a conflict situation. Do communities use their powers to flexibly address crisis-related challenges or is it a destabilizing factor contributing to disorganization
This organized session will address these questions from different perspectives.
The session will focus on the interplay between the decentralization of governance in Ukraine and economic resilience of rural communities that face the hardships of the Russian war against Ukraine. First, we will discuss how local communities’ governance can be measured and what are the challenges within a conflict setting. Second, we will focus on the development interventions that can help improve local growth-inducing policies and help local business face the crisis. Furthermore, these interventions will be evaluated on a specific example from a three-year intervention implemented by the German-Ukrainian Agricultural Policy Dialogue (APD). Finally, we will present new approaches to estimating fiscal potential of rural municipalities which will be essential during the rebuilding and reconstruction phase once the ceasefire agreement is reached.
This organized session stipulates three presentations and a brief reaction from a discussant from the Ukrainian Ministry of Agriculture who will draw some conclusions and derive practical policy implications from the policy-oriented research. Apart from Q&A after each presenter, we will allocate some time for a general Q&A with all the participants present at the podium.
Presentations
Practical Experience of the APD Project in Enhancing the Competence of Pilot Community in the Context of Sustainable Agrarian and Rural Development
A comprehensive and methodical approach to enhancing the competence of authorized
representatives of communities in agrarian and rural development (consultants in this field)
will be presented. This includes tools and frameworks developed and implemented, such as
the consultant’s concept, the agro-economic passport of the community, strategies for
updating existing regional development plans, and the methodology for horizontal
comparisons of communities in Ukraine. A key practical element in enhancing the
sustainability of community development involved hands-on training for utilizing various tools
to engage farmers and local residents interested in agrarian business development, attracting
investment, and securing state support. To support these efforts, a series of practical tools
and recommendations were created and put into action. Currently, the focus is on developing
the capacity for knowledge multiplication—facilitating the transfer of accumulated experience
and resources to other territorial communities across Ukraine (approximately 1,500 in total)—
and fostering proactive engagement with investors to build a positive territorial image and
attract regional development projects, including EU and LEADER initiatives. Additionally, a
major outcome for 2025 will be the creation of a tailored marketing strategy for the respective
territories.
Evaluating a capacity-building project for Ukrainian communities: An experimental approach
Vasyl Kvartiuk
IAMO, Germany
The study provides a quantitative evaluation of a three-year project on building capacity of local governments in Ukraine in the war conditions. APD Ukraine implemented series of awareness-raising, educational, and technical activities in selected hromadas of five oblasts in Ukraine. The intervention’s goal was to improve hromadas’ ability to implement fiscal planning, streamline land management, and assist local farms in attracting state and donor funding. Using a baseline (2022) and post-intervention surveys (2025) involving pre-defined control and treatment groups, we estimate average treatment effects on the treated (ATET). We expect to find a positive effect on the farms’ ability to attract state and donor support. Based on the results, we discuss the options of scaling up the interventions within this pilot.
Benchmarking Local Governments Performance
Oleg Nivievskyi
Kyiv School of Economics, Ukraine
Fiscal distress is a pressing issue worldwide, with Ukraine facing particularly severe challenges due to the ongoing war with Russia. The financial burden of national defense, reconstruction, and recovery has significantly strained both national and local budgets. As part of Ukraine’s decentralization reforms, local governments have been granted increased fiscal authority but also bear greater responsibility in mobilizing local revenues. This paper provides the first-ever benchmarking of local governments' tax potential and efforts in Ukraine, offering a framework for systematic monitoring and informed policymaking. The study critiques existing assessment methods used by the government and alternative expert-developed approaches, highlighting inconsistencies in their results. By addressing a critical gap in the literature, which has largely focused on cross-country analyses rather than local-level fiscal performance, this research contributes to the development of a more reliable performance measurement framework for local communities and governments to support Ukraine’s post-war recovery and economic sustainability.
