Digital capacity, startup ecosystems, and collaborative governance as drivers of regional economic growth: Evidence from Ukrainian regions

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Type of the article: Research ArticleAbstractThis study develops and empirically tests a composite framework for assessing the digital and innovation capacity of Ukrainian regions. The aim is to evaluate the impact of digital innovation capacity on regional economic performance under conditions of systemic disruption with the Virtual Grow Poles Index (VGPI) which captures four dimensions using observable indicators: 1) digital infrastructure readiness, 2) mobile internet coverage and uptake of digital public services, 3) startup ecosystem activity, and 4) governance and civic collaboration, which reflects participatory budgeting intensity, use of civic tech platforms, and open-data engagement. Using a panel dataset of 24 Ukrainian regions for 2018–2024, we apply correlation analysis and fixed-effects regression models to quantify the contribution of digital and innovation capacity to regional economic performance. The VGPI shows a moderate yet stable correlation with per capita GRP growth (r ≈ 0.50). Regression estimates show that a 0.1 increase in VGPI is associated with an additional 0.07–0.09 percentage point increase in regional GRP growth, controlling for unemployment, industrial structure, and war exposure. Most substantial effects are observed in regions with high digital readiness and collaborative governance (Kyiv City, Lviv and Dnipropetrovsk regions), while war-affected regions (Sumy, Chernihiv, Zaporizhzhia, and Kherson regions) show substantially lower VGPI values and weaker economic performance. These findings suggest that in conditions of severe structural disruption caused by Russia’s war against Ukraine, strengthened digital ecosystems and collaborative governance structures can partially compensate for damaged physical infrastructure and enhance regional resilience.

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