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Estimation of the Losses of the Ukraine's Financial Potential from Military Conflict

Author

Listed:
  • Nataliia Vygovska

    (Zhytomyr Polytechnic State University, Zhytomyr, Ukraine)

  • Andriy Polchanov

    (Zhytomyr Polytechnic State University, Zhytomyr, Ukraine)

Abstract

Estimation of the loss of financial potential of the state from military conflict is the basis for the development and implementation of state policies to combat the effects of hostilities and strengthen peace. The purpose of the article is to systematize methodological approaches to assessing the financial potential of the state and to substantiate the methods for determining its losses from military conflict for Ukraine in 2014-2017. Theoretical and methodological basis for the formation of the financial potential of the state on the basis of the systematic approach were substantiated. It allowed to clarify the structure of state's financial potential and to reveal the influence of the interaction of its components and environmental factors on the development of financial potential of the state. It was found that the main methodological approaches to the estimation of the financial potential of the state (additive, multiplicative, secure, based on the analysis of macroeconomic indicators) do not allow to comprehensively assess the level of formation and use of the financial potential, taking into account its structure and resilience to financial threats. On the basis of the additive approach, a quantitative estimation of the volume of financial potential of Ukraine in 2008-2017 was conducted and the stability of the relationship between the financial potentials of authorities, economic entities and households, as well as between the total volume of financial potential of the state and GDP was revealed. It was determined that the financial potential of Ukraine suffered a significant impact of the military conflict, and in order to reach the level of 2013, it should grow annually by an average of 7.45 % during 2018-2022. To reach this level it is necessary to carry out: 1) expanding the powers of local governments in the implementation of local borrowing to stimulate the development of regions; 2) the creation of tax incentives for reinvesting the income of business entities; 3) activation of lending by financial institutions of the private sector through overcoming information asymmetries in the market and ensuring the protection of the rights of borrowers and lenders.

Suggested Citation

  • Nataliia Vygovska & Andriy Polchanov, 2019. "Estimation of the Losses of the Ukraine's Financial Potential from Military Conflict," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 70-77, December.
    • Handle: RePEc:iaf:journl:y:2019:i:4:p:70-77
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    References listed on IDEAS

    as
    1. Demirguc-Kunt, Asli & Klapper, Leora F. & Panos, Georgios A., 2009. "Entrepreneurship in post-conflict transition : the role of informality and access to finance," Policy Research Working Paper Series 4935, The World Bank.
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    3. Tony Addison & Abdur Chowdhury & Mansoob Murshed, 2002. "By How Much Does Conflict Reduce Financial Development?," WIDER Working Paper Series DP2002-48, World Institute for Development Economic Research (UNU-WIDER).
    4. Miss Randa Sab, 2014. "Economic Impact of Selected Conflicts in the Middle East: What Can We Learn from the Past?," IMF Working Papers 2014/100, International Monetary Fund.
    5. Hamid E. Ali, 2013. "Estimate of The Economic Cost of Armed Conflict: A Case Study From Darfur," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(6), pages 503-519, December.
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    Cited by:

    1. Zhuk, Valerii & Pugachov, Mykola & Shpykuliak, Oleksandr & Bezdushna, Yuliya & Popko, Yevheniya, 2023. "Application of accounting for the assessment of war losses for agribusiness enterprises of Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(3), September.
    2. Valerii Zhuk & Yevheniia Popko & Serhii Ostapchuk, 2022. "Fixation of Direct Damage to Agrarian Business due to War, Based on the Accountant's Professional Judgment," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 15-21, June.

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    More about this item

    Keywords

    military conflict; financial potential; financial resources; methodological approaches to assessing the financial potential of the state; overcoming the consequences of a military conflict;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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