RVO: Matching regional specialisation to Ukraine’s post-war economy

Our client was the Netherlands Enterprise Agency, under its Private Sector Development Programme. The assignment – formally “Economic Assessment and Strategic Development for Ukrainian Regions” – covered three oblasts and reported to their regional administrations, the Ministry of Economy and the Ministry for Communities, Territories and Infrastructure Development.

The occupation of 26% of Ukraine’s territory, lost production capacity, relocated enterprises and mass internal migration reshaped what each region actually produces. The specialisations recorded in strategy documents no longer described the economies they were meant to describe – and support mechanisms and state-targeted programmes were built on those records.

Key challenges:

• Formally designated regional specialisations had drifted from the actual post-2022 economic landscape, holding back private sector growth
• Existing support mechanisms and state-targeted programmes were slowing the industries they were designed to accelerate
• Any answer had to work for two audiences at once – regional administrations and national ministries

1. Phase I: Methodology and region selection. We built a selection methodology and applied it to choose three oblasts – Ternopil, Zakarpattia and Cherkasy – for socio-economic analysis and economic profiling, so that the choice of regions was itself defensible rather than assumed.
2. Phase II: Data and field verification. We collected and analysed the data needed to identify priority industries – smart specialisation – for each region, then built an interview instrument and tested the conclusions against the economy itself: 30 interviews with sector representatives, businesses and other stakeholders, alongside field visits to all three regions.
3. Phase III: Profiles and instruments. We produced regional economic profiles setting out smart specialisations, development constraints and project portfolios for growth and cooperation in the key industries, together with an investment passport for each region. Recommendations and regional development instruments went to the Ministry of Economy and the Ministry for Communities, Territories and Infrastructure Development.

Three regions were profiled from evidence rather than from existing strategy documents: three regional economic profiles with smart specialisations, development challenges and project portfolios, and three investment passports, built on 30 stakeholder interviews and field visits to each oblast.

The direct beneficiaries were the regional military administrations of the three oblasts, the Ministry of Economy and the Ministry for Communities, Territories and Infrastructure Development; indirectly, local authorities, up to 150 businesses across the three regions, and the universities and research institutions the profiles identify as part of each specialisation.

• A specialisation on paper is not a specialisation in the economy. After 2022 the two had come apart in every region examined, which is why the profiling had to start from data and interviews rather than from the strategies already on file. Where support mechanisms are built on the recorded specialisation, they slow the industries they were designed to accelerate.
• An investment passport is the shareable form of an economic profile. Analysis addressed to a ministry and a document addressed to an investor are different objects with different burdens of proof. Producing both from one evidence base is what lets regional analysis travel beyond the administration that commissioned it.