The Russian war on Ukraine disrupted Ukraine’s economy and its global value chains and unleashed a refugee crisis of historic proportions. In a project’s first phase, we prepare to mobilize German and Austrian companies to employ and train Ukrainian refugees, not just for jobs in Germany and Austria, but to catalyze Foreign Direct Investment that helps reconstruct Ukraine’s economy and generate jobs in
Ukraine.

The challenge

Only about 40% of the millions of working-age Ukrainian refugees have found employment abroad, and most of them would like to return home as soon as conditions improve. At the same time, Ukraine’s traditional industrial heartlands have been leveled by Russian artillery and its legacy trade networks and Russia-centric value chains have collapsed. In 2022, Ukraine’s GDP contracted by 30%, sending an additional 7 million Ukrainians into poverty (1).

The philanthropic solution

To maximize the chances of success, the first (analytic) phase lays the groundwork for the planned intervention in the second phase. The team will conduct various analyses that aim at identifying strategic industrial bets for Ukraine and identifying the skills, interests and aspects of vulnerability of the Ukrainian refugee communities in Austria and Germany. Moreover, the team will liaise with employer organizations and firms in Austria and Germany to form partnerships with companies that have investment plans in Ukraine and are interested in training
refugees. The team will also work with the Ukrainian Ministry of Economy to ensure that investments match national reconstruction goals.

The evidence

Returning migrants are an important conduit of knowledge transfer that kickstarts development in the places where they return (2). While such processes typically unfold organically, we aim to render them more effective by targeting refugees and companies. By connecting jobs and training of refugees to long-term development, a modest number of participating refugees who get job opportunities in the short term are empowered to
rebuild their economy and create a much greater number of high-quality jobs at home. The intervention resembles joint ventures where relatively small groups of employees receive intensive training abroad, to transfer technological know-how to the home company. These can have sweeping long-run economic effects, with the joint ventures between Samsung Electronics of Korea with NEC and SANYO of Japan, and between Desh of Bangladesh and Daewoo of Korea being canonical examples (3).

The impact

The first phase will be considered successful if the team forms partnerships with companies that are strategically important for Ukraine’s economy and commit to train or employ at least 100 Ukrainian refugees. This can be achieved in different ways (e.g., two large companies may take many trainees, or 5-6 companies take 20-30 trainees each). The companies will be selected from high-value-added sectors, in order to ensure that the created jobs in Ukraine will be high-quality jobs.

(1) OECD (2023) and World Bank (2023).
(2) Hausmann and Nedelkoska, 2018; Bahar et al. 2022; Diodato et al. 2023.
(3) Mostafa and Klepper, 2018; Samsung (2012).