LOCAL BUDGETS OF THE REGIONS OF UKRAINE: MULTIDIMENSIONAL MODELING OF THE DYNAMICS AND FINANCIAL STABILITY IN WARTIME
Abstract
The full-scale war has profoundly disrupted Ukraine's economic landscape, making the analysis of regional budget resilience critically important for informed policy decisions and future economic recovery planning. This study aims to assess the impact of the full-scale war on the local budgets of Ukrainian regions by conducting a taxonomic analysis of their financial performance in 2021-2024 years. The urgency of this research stems from the critical need to understand the financial resilience of regional economies during wartime and to identify areas requiring urgent policy interventions. The methodology employed involves a taxonomic analysis, which is a multivariate statistical technique used to evaluate and compare the development levels of different regions based on a set of financial indicators. Six key indicators were selected to capture the essential aspects of regional budget health, including tax and non-tax revenues, local budget numbers, credit growth rates, population size, and consumer price indices. These indicators were standardized to ensure comparability, and regions were ranked based on their composite taxonomic scores. The analysis revealed significant shifts in the financial landscape of Ukrainian regions. Notably, the Dnipropetrovsk region demonstrated remarkable resilience, maintaining a high level of financial stability and effective budget management despite the war. In contrast, most other regions experienced a decline in their taxonomic scores, indicating a deterioration in their financial standing. The most substantial adverse effects were observed in the Lviv, Vinnytsia, and Kirovohrad regions, highlighting the need for targeted financial reforms, while the Cherkasy region showed the best improvement in its assessment, and the Kherson, Rivne, Ivano-Frankivsk, and Vinnytsia regions maintained their evaluations without change. The practical value of this study lies in its ability to inform policymakers about the specific financial challenges faced by different regions. The findings can be used to develop tailored strategies for economic recovery and to enhance the financial management capabilities of local authorities. This research provides a quantitative framework for monitoring the financial health of Ukrainian regions and for guiding the allocation of resources to support their sustainable development during and after the conflict.
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