Regional development becomes an increasingly important national issue in both developed and developing societies as regional inequality evolves and changes with time. Few analyses have been done on regional inequalities of the former Soviet countries such as Ukraine. This lack of research can be explained by the 'socialist' regional policy of equality that was dominating during the Soviet era. The socialist policy denied significant differences in income distribution, and consequently in quality of life in different regions. One of the major goals of 'developed socialism' was elimination of inequality between urban and rural areas and different social groups such as industrial and agricultural workers. The evidence suggests that this goal was not realized during the Soviet period. During transition to the market economy inequality has increased entailing significant differences in the quality of life in different regions and between different categories of population.;A broad goal of this study is to improve understanding of regional development processes in countries that are in transition from centrally planned to market economy such as Ukraine. The objectives that lead to this goal are narrowed to the following: to identify inequality in regional development of Ukraine in a dynamic time framework; to model relationships between the level of economic development and factors that stimulated development such as Foreign Direct Investment and Domestic Capital Investment, to analyze mechanisms of regional policy that influence the process of regional development, and to formulate recommendations for regional policy-makers.;The results of this study reveal increasing spatial inequality (divergence) within Ukraine. The factors that influence economic development in Ukraine are defined. The changes in regional development policy are examined, and recommendations for the policy-makers are made.
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