Publications

Soviet ideology was emphasizing exclusivity of working class. It was stressed that welfare was created by real production only. Trade and other forms of intermediation were branded ‘speculations’ which were believed to parasitize on the body of society. Still the reality of a healthy economic life is somewhat different to what the Soviet ideology was saying and real production is only one, usually not the most important, element of the whole economic process.

When analyzing economic phenomena, people often make the same mistakes as their ancestors who believed that allegedly Sun revolves around the Earth. However, economic illusions, unlike the example with Sun, not only prevent us from exploring the world but have very important impact on our well-being. As far as the economy is the science of how this wealth is created. In this respect, to refute many economic illusions dominating our society, we launch a series of articles “Debunking economic illusions”. The series target encouraging the reader to reflect on some simple facts, which poor understanding is the prime cause of our ongoing economic problems.

When analyzing economic phenomena, people often make the same mistakes as their ancestors who believed that allegedly Sun revolves around the Earth. However, economic illusions, unlike the example with Sun, not only prevent us from exploring the world but have very important impact on our well-being. As far as the economy is the science of how this wealth is created. In this respect, to refute many economic illusions dominating our society, we launch a series of articles “Debunking economic illusions”. The series target encouraging the reader to reflect on some simple facts, which poor understanding is the prime cause of our ongoing economic problems.

Deregulation in Ukraine was quite efficient at the end of 90th – at that time deregulation triggered fast increase of small and medium enterprises (SME) at the country. At the same time, seemingly similar economic policy declared in 2010 by President Viktor Yanukovicth (and presented at the Reform program) had quite opposite effect: number of SME halved from 2010 till 2011, more than 2 mln jobs have been destroyed. In our research we showed that this time deregulation did not work primarily due to half-baked and inconsistent policy measures of the government, which appeared to be at odds with the initial declarations.

Land ownership issues in Ukraine are painful because they accumulate contradictory social and business interests. Therefore, while introducing the land market, Ukraine has to choose between highly productive agricultural production and social welfare in rural communities. International experience of land reform in countries that are constantly used as examples for Ukraine (Russia, Moldova, Georgia, Baltic countries, Poland, Hungary and Brazil) confirms this. In each of these countries private ownership and land market were formed with a specific purpose – either to achieve a high level of agricultural production or to develop a mechanism of social protection for population living in rural areas. Unfortunately, it is hard to combine these two goals.

The public finance system is based on small contributions of millions of Ukrainians. In fact, common Ukrainians, not industrial giants or oligarchs, maintain financially huge state apparatus, cover state procurements and pay social assistance bills. Unfortunately, the chain “my money → taxes → government spending” is not that obvious for wide audience. Only private entrepreneurs recognize this fact bringing taxes to state treasury by their own. However, unless taxes common employees and consumers pay, government would lose two-thirds of budget revenues.

The current stance of the housing sector in Ukraine satisfies neither residents due to poor services, nor the state, which pays large subsidies to the sector. The needed changes are usually substituted with technical modernization, or even are narrowed down to simple tariffs increase what should, on one side, cover the cost of the services, and, on the other, should envisage resources for renovation and capital investments. However, even for successful technical modernization of the housing sector and imposing economically justified tariffs a fundamental reformation of “the rules of the game” is critical i.e. institutional reform is needed. The crucial issue of such reform is the property rights.

Already two years have passed since the day Viktor Yanukovich announced new reformation course and presented Economic reform program 2010-2014 «Prosperous society, competitive economy, effective state». The ambitious plan outlined considerable changes in economic system and even in case the plan was partially implemented, Ukraine could reach another level of development. A Coordinative Center for Economic Reforms had been created at the President Office and active work had started. However, after two years of active changes and contradictory results a question arose – what, out of all implemented measures, was indeed for good and deserves to be called «reforms».

Inter-budget relations are a kind of technical problem which is of poor interest for general public. However, the point is that all major problems, related to the life quality of common people (healthcare, education, social protection etc.), closely correlates with the quality of so inconspicuous inter-budget relations issue.
In general, public opinion treats poor funding as the main reason for bad public services quality. However, this point of view is too much simplified. Almost all countries face budget limits problems (even the richest one). However, what really improves public service quality under budget limits is an adequate system of incentives and efficient surveillance over the public funds use. In this context improvement of inter-budget relations mechanisms are crucial for Ukraine.

The ongoing health care reforms are one of the most exposed to criticism among the long list of reforms currently conducted by the government. In fact, the reforms is a step in right direction, also the changes are sometimes painful and hard. A refusal to run the unpopular reforms means further degradation of health care system in Ukraine. However, the rush with some changes during the first phase in the reform process under conditions of limited human resources and funds causes inconveniences and risks for people without any noticeable improvement in quality of health care services. The key prerequisites for the reforms to continue and succeed are achieving public consensus on the reforms; widening opportunities for high-quality training of family practitioners and their true motivation and adequate financing of the reforms.

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