ENDOGENIZATION OF DISPLACED BUSINESSES DEVELOPMENT IN UKRAINIAN COMMUNITIES: ANALYSIS OF PRACTICES AND FINANCIAL SUPPORT MECHANISMS

Abstract

As a result of the war, Ukraine experienced a massive wave of internal business relocation: in 2022–2024, more than 200,000 enterprises moved their operations to safer regions within the country. This process significantly reshaped local economies, simultaneously creating both challenges and opportunities for host communities. The study examines how territorial communities can turn forced relocation into a catalyst for local development, drawing upon an endogenous growth approach. Based on a survey of 141 communities in 22 regions of Ukraine, proactive local strategies – a combination of financial incentives, administrative integration, and infrastructure readiness – are shown to contribute to the effective integration of relocated enterprises into a local economy. At the same time, while some communities have seen increases in tax revenues and employment, others have faced limited infrastructure, high operating costs, and a lack of institutional support. A five-pillar approach to community-level support is proposed, encompassing concessional financing, fiscal relief, industrial infrastructure development, and the use of digital relocation tools (such as GeoMatch). When strategically implemented, these mechanisms help anchor relocated businesses in a local economic ecosystem and enhance its long-term resilience. Successful outcomes are shown to depend less on external assistance and more on the community’s own capacity to coordinate, adapt, and innovate. Future research should focus on examining the integration of relocated businesses into host communities within a broader framework, including innovation diffusion, clustering, and fiscal resilience of host regions.