CHALLENGES OF SOCIO-ECONOMIC DEVELOPMENT IN THE WESTERN REGIONS OF UKRAINE UNDER CONDITIONS OF WAR

Abstract

The full-scale war in 2022–2025 has dramatically impacted Ukraine’s spatial economy, causing massive internal displacement, enterprise relocation, and investment redistribution. Under these circumstances, the western regions (Lviv, Ivano-Frankivsk, Ternopil, Zakarpattia, Volyn, Rivne, Chernivtsi Oblasts) became receiving hubs for internally displaced persons (IDPs) and relocated businesses. This article aims to identify the key socio-economic development challenges facing these regions under martial law and to outline practical recommendations for enhancing their resilience. The research is based on a systematic literature review, analysis of official statistics from the State Statistics Service of Ukraine and the National Bank of Ukraine, and reports from international organizations (World Bank, IOM). It is found that the western oblasts partially fulfilled the function of a stabilizing core: enterprise relocation and the influx of IDPs supported local demand and partially preserved production chains. The adaptation effects were uneven: Lviv Oblast demonstrated significantly higher volumes of capital investment and business activity, while other oblasts lagged. Social infrastructure (schools, primary healthcare, social services) experienced substantial strain, requiring temporary organizational solutions. The labor market adapted through the expansion of the service sector and remote employment, but a structural mismatch persisted between available vacancies and the qualifications of the labor force. The working hypothesis concerning the relative socio-economic resilience of the western regions is only partially confirmed: the regions demonstrated adaptive potential, but their long-term sustainability is limited by uneven investment distribution and the risks of fiscal exhaustion in certain local communities. To enhance resilience, the following measures are proposed: targeted state transfers and donor support for burdened communities (Amalgamated Territorial Communities – ATCs); requalification programs and active IDP employment schemes; incentives for investment in lagging communities; development of affordable housing and social projects; and the introduction of regular monitoring of key indicators (number of IDPs, share of IDPs in the workforce, unemployment, capital investments, strain on schools and hospitals). The implementation of these measures will contribute to a balanced post-war recovery and increased resilience in the western regions.