The new political economy theory divides all countries into two types: with open and limited access order.
Limited access order has deep social inequality due to limited opportunities for all, except for privileged individuals. Instead, open access order provides equal opportunities for all, all are treated equally by the law; no business enjoys particular preferences, because state defends fair competition.
The underdeveloped countries are usually the states of limited access order. At the same time the world’s leading economies are mostly open access order states, what is the secret of the so-called ‘golden billion’ (population of developed countries).
Although the advantages of open access system seem overwhelming, it is very difficult for state to pass from limited order to openness. To do this, many stereotypes must be changed and resistance of powerful business interests must be overcome.
Ukraine is balancing at the edge between limited and open access order. Although the country lacks rule of law and business is closely interlinked with politics, political competition is still present, civil society has been developing and some markets are competitive. The transition stance of Ukraine is unstable, burdensome and dangerous. Only implementation of real deep structural reforms can make the transformation to open system easier and quicker. However, Ukrainian authorities do not conduct such reforms, often substituting them with technical policy changes (improving only some mechanisms), or introducing only temporal economic policy measures (like ‘belt tightening’)
This is explained by conflict of interest for authorities (systematic reforms weaken the power hierarchy) and by resistance from businessmen close to the circle of power (open system threats existing rent-creation schemes). Bureaucracy also has conflict of interest due to the tight connections with business and multiple privileges the limited access grants them. Similarly to other limited access order states, in Ukraine decisions on appointments of officials are made dependent on personal loyalty of candidates or their affiliation to some groups of interest. That is why reforms are conducted either by people with ‘soviet’ mentality or those, representing some business interests.
However, systemic reforms are badly needed and understanding the difference between systemic reforms and pseudo-reforms is crucial for society to hold government accountable. To assess the reform efforts of the government in terms of transformation to open access order state simplified interpretation of policy change efforts is needed.