COMPREHENSIVE ASSESSMENT OF THE IMPACT OF FINANCIAL DECENTRALIZATION ON THE SUSTAINABLE DEVELOPMENT OF UKRAINE’S REGIONS IN THE CONTEXT OF IMPLEMENTING EUROPEAN EXPERIENCE

The ongoing Russo-Ukrainian war and Ukraine’s aspiration for European integration underscore the urgent need to assess financial decentralization as a driver of sustainable regional development. Amid economic disruptions and regional disparities, understanding financial decentralization’s role in fostering economic growth, social equity, and environmental sustainability is critical, especially when drawing on European models to navigate crisis conditions. This study evaluates the impact of financial decentralization on Ukraine’s sustainable development from 2015 to 2024, analyzing its economic, social, and environmental effects and proposing strategies inspired by European practices to enhance resilience in a wartime context.Using official data from the State Statistics Service of Ukraine, the study finds that financial decentralization averaged 57.4%, peaking at 75.3% in 2022. A 1% increase in local revenue share raises GDP per capita by UAH 410.2 (p < 0.01) and adds 0.30 hospital beds per 10,000 population (p < 0.05). However, the war since 2022 has reduced GDP by UAH 4,870 and hospital beds by 7.9 (p < 0.01), with less decentralized regions like Chernihiv (β = 310.4) lagging behind Kyiv (β = 450.8). Environmentally, financial decentralization’s impact on CO2 emissions is negligible (β = –0.01, p > 0.05), with a 0.32 tons/capita drop tied to industrial decline. War damage, averaging 14.8%, exacerbates regional disparities.Financial decentralization significantly enhances economic and social sustainability but lacks environmental impact without targeted policies. The war amplifies inequalities, necessitating adaptive measures to support less autonomous regions. The study recommends increasing fiscal autonomy to 75–80%, establishing a wartime stabilization fund, and integrating green policies aligned with EU standards, such as Germany’s, to advance Ukraine’s Sustainable Development Goals despite conflict challenges.