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Over the last two years Ukraine has implemented many policy changes outlined at the President Reform Program for 2010-2014. Despite the large number of bills and laws approved through 2010-2011, the program lags behind the outlined schedule and none of the reforming priorities has reached the declared goals. Some of the adopted regulations are quite positive; however, still the initiatives have quite limited effect due to existent practices for administrative pressure, corruption and poor confidence on judicial power. Large number of approved laws and regulations are simply technical, which means that the essence of the problems they addressed remains unchanged. Positive steps were observed in reformation of healthcare, education, and pension system, however, so far no fundamental changes happened at the areas. Some of the reform priorities remained untouched. For instance, in electricity sector and oil and gas sector, where business and political interests are closely interlinked, powerful business-groups simply blocked any reforms. In general, the reformation process is poorly transparent. Moreover, for many important directions the authorities ignore public opinion consulting with civil society players only formally.

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’).

Nobel Prize winner Douglass North defines two types of social order. The first one is the open access order, which stands on principles of openness and fair competition. The second one is the limited access order, which relies on selectiveness and privileges thus restricting both political and economic competition. In the first case the open system brings to success the most competitive players (those who can produce the best quality and the cheapest products and services). In case of limited access order the success depends only on how someone is close to the clan, family or caste. Ukraine, apparently, is a country with the limited access order. And it needs fundamental changes to pass to the openness. However, political elites as well as business elites face conflict of interests when it comes too close to real reforms since fundamental changes threaten their own rent-seeking schemes. In that case the only way (though a thorny one) is to build demand for real changes from “below”.

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