CASE: Economic priorities in post-war Ukraine

2023-03-20 | Expert publications, Reconstruction

Lead Author – Dmytro Boyarchu, Executive Director CASE Ukraine.

Over 30 years of independence, Ukraine has launched almost all of the necessary critical reforms to build and develop a market economy. Before the invasion, it had been making progress in institutional reforms but still had far to go. The greater part of state-owned enterprises had passed into private hands, although in many cases they were controlled by powerful oligarchs. After 2014 there was substantial progress in the area of strengthening corporate governance. Price liberalization had almost been completed by 2020 before global inflation, driven by monetary policies in the advanced economies, increased substantially in 2021. A simplified taxation system helped tackle the problem of administrative discretion. The National Bank of Ukraine moved to inflation targeting, thus strengthening the macroeconomic system’s resilience to shocks. A world-famous online public procurement system, Prozorro, was created. Decentralization reform was successfully implemented, although additional support is required. And an agricultural land market was finally allowed to develop.

Ukraine joined the WTO in 2008. Most importantly, in 2014 Ukraine signed the EUUkraine Association Agreement, and substantial progress has been demonstrated since then. From 2014 the EU became the main trading partner of Ukraine (36% of commodity exports went to EU countries in 2021). However, by 2021 the candidacy prospects still remained rather distant. Unprovoked Russian aggression in 2022 and the resilience displayed by Ukrainians in the war radically changed the perception of Ukraine in the European Union.

Reconstruction and the post-war landscape will highlight the reality that the full-fledged Russian invasion has seriously damaged the Ukrainian economy. Because of the war, Ukraine will have a unique opportunity to leap ahead in the European of the war, Ukraine will have a unique opportunity to leap ahead in the European integration process. In June 2022, Ukraine was granted candidate status for EU membership with seven post-candidacy conditions. However, the accession model for the country is still unclear and needs to be defined.

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