Special Report: Economic Priorities in Post-war Ukraine
The CASE Center for Social and Economic Research has just finished a report “Economic Priorities in Post-war Ukraine”. A group consisting of ourselves and other economists has been working on this over the last 8 months, and it is fundamental research on the issue of post-war recovery. Unlike other groups that concentrate mainly on the process of giving money to the Ukrainian government as the main instrument of post-war economic policy, we concentrate in this report mainly on establishing a strong and self-sustainable market economy.
This report was previously published on February 13, 2023.
* 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.
* In terms of priorities for reform in post-war Ukraine, establishing the rule of law should be the main priority of post-war institutional change. The law enforcement and judicial systems should be rebooted energetically from the top down, and numerical metrics should be created for evaluating progress in establishing the rule of law. For the post-war transformation period, while the rule of law is still being created, the authorities should apply simplified tools of economic policies to boost economic growth. Progress in establishing rule of law should be directly linked to financing Ukraine’s recovery.
* Macroeconomic policy also needs tending to, and tax and customs procedures should be streamlined in line with EU practices once the rule of law has been established. For the period when law enforcement and the judicial system are being established, Ukrainian authorities should consider simplified instruments in the tax and customs administration to reduce the adverse impact of non-functional rule of law on economic development.
* Property relations have been a long-neglected part of Ukraine’s transition, but no post-war recovery will be possible without the finalization of land reform, including opening the agricultural land market to non-residents to speed up the modernization of agricultural businesses and the privatizing of state and municipal land.
* Finally, social reforms need to be examined for their long-term ramifications and drain on the state budget. The unsustainable pay-as-you-go pension system should be reformed, while policies in social assistance, health care, and education should all be properly adjusted to meet the new reality of the post-war period.
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