{"id":21920,"date":"2022-12-23T18:28:07","date_gmt":"2022-12-23T15:28:07","guid":{"rendered":"https:\/\/ces.org.ua\/?p=21920"},"modified":"2023-01-23T18:34:51","modified_gmt":"2023-01-23T15:34:51","slug":"state-becomes-main-player-in-ukrainian-economy","status":"publish","type":"post","link":"https:\/\/ces.org.ua\/en\/state-becomes-main-player-in-ukrainian-economy\/","title":{"rendered":"State Becomes Main Player in Ukrainian Economy"},"content":{"rendered":"

Russia\u2019s invasion of Ukraine has left the country\u2019s economy in tatters. The National Bank of Ukraine\u00a0forecasts<\/a>\u00a0a 31.5 per cent drop in gross domestic product (GDP) by the end of the year, while unemployment reached\u00a035 per cent<\/a>\u00a0in the second quarter and consumer prices are projected to rise by about a third. The poverty rate, which was 2.5 per cent in 2020,\u00a0\u00a0may approach\u00a025 per cent<\/a>\u00a0by the end of December and twice that by the end of next year.<\/p>\n

Ukraine\u2019s economy has gone into wartime mode, with an increasingly higher state involvement. Forbes Ukraine\u00a0estimated<\/a>\u00a0that the share of GDP redistribution through the budget increased from the traditional 40 per cent to a record 78 per cent. This was not just military spending and social assistance for the poor and internally displaced during the war. Today, the state is the country\u2019s main employer with six million people, about 37 per cent of the working population, employed by state institutions.<\/p>\n

As the state\u2019s share grows, the power of oligarchs is shrinking. According to a study by the Centre for Economic Strategy, the war delayed the implementation of the anti-oligarch law, but has forced authorities to resort to more radical steps against unfriendly oligarchs and their assets. In addition, some major assets were destroyed or damaged as a result of the hostilities.<\/p>\n

\u201cThe state becomes more powerful in wartime,\u201d Hlib Vyshlinsky, executive director of the Centre for Economic Strategy, told IWPR. \u201cRussian properties have been nationalised and transferred to the state, the government favours state-owned enterprises (SOEs) and state-owned banks (SOBs) for emergency programmes. After the war it will be hard to return to the pre-war status quo as interests of the SOE management and related stakeholders become entrenched.\u201d<\/p>\n

In the first months of the war, private Ukrainian businesses stopped all operations because of uncertainty, while key state-owned companies continued to operate. Ukrzaliznytsia, the railway company, became a critical asset as it\u00a0evacuated<\/a>\u00a0millions of Ukrainians, bringing them to safety for free. Similarly, Ukrposhta, Ukraine’s national postal service, assisted in the relocation of businesses.<\/p>\n

\u201cThe state is never an effective manager at the micro level when it comes to enterprise and business management,\u201d explained Eugene Dubogryz from the CASE Ukraine think tank. \u201cThis is valid both in peace and wartime, but in wartime, businesses find it difficult to coordinate, and difficult, not to say impossible, to plan. Therefore, the state remains the only manager, because businesses do not work.\u201d<\/p>\n

Vyshlinsky noted that the CEOs of Ukrzaliznytsia and Ukrposhta, the most successful SOEs, were selected after a corporate governance reform which included appointing a supervisory board with independent members as well as competitive selection.<\/p>\n

As a result, many Ukrainians felt that the state had shown itself as a more effective manager.<\/p>\n

International support remains key to facilitate the inflow of foreign investment once the war will end.<\/p>\n

\u201cUkraine will need military risk insurance funded by the international partners to enable FDI to flow in immediately after the war,\u201d Vyshlinsky noted. \u201cOtherwise, the postwar economy will still rely on the SOEs and limited local private investment capital.\u201d<\/p>\n

The article was published on Institute for War and Peace Reporting website.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Russia\u2019s invasion of Ukraine has left the country\u2019s economy in tatters. The National Bank of Ukraine\u00a0forecasts\u00a0a 31.5 per cent drop in gross domestic product (GDP) by the end of the year, while unemployment reached\u00a035 per cent\u00a0in the second quarter and consumer prices are projected to rise by about a third. The poverty rate, which was […]<\/p>\n","protected":false},"author":1,"featured_media":21921,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[187],"tags":[],"experts":[170],"news_type":[139],"class_list":["post-21920","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-experts-in-the-media-en","experts-hlib-vyshlinsky-en","news_type-we-are-in-media"],"acf":[],"_links":{"self":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/21920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/comments?post=21920"}],"version-history":[{"count":0,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/21920\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media\/21921"}],"wp:attachment":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media?parent=21920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/categories?post=21920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/tags?post=21920"},{"taxonomy":"experts","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/experts?post=21920"},{"taxonomy":"news_type","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/news_type?post=21920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}