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Ukraine: The Cost of Weak Institutions

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  • Andrew Tiffin
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    Abstract

    Ukraine has the potential to be a very wealthy country. It has a well-educated workforce, some of the best agricultural land in the world, an enviable supply of hydrocarbons and minerals, and a relatively well-developed infrastructure. Despite these advantages, however, Ukraine's per capita income remains low. Using a cross-country stochastic-frontier framework, this paper argues that Ukraine's failure to tap its full potential is mainly a result of its market-unfriendly institutional base. With an inherited Soviet framework that is ill suited to the needs of a market economy, Ukraine has been slow to establish the institutions needed to use its resources efficiently. The paper provides a quantitative guide to the benefits, in terms of potential output, of further structural reform. Looking forward, the study finds that durable growth in Ukraine will depend primarily on the authorities' ability to implement their ambitious reform agenda, and thereby to help secure the basic foundations of a modern market economy.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/167.

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    Length: 29
    Date of creation: 01 Jul 2006
    Date of revision:
    Handle: RePEc:imf:imfwpa:06/167

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    Related research

    Keywords: Transition economies; Economic growth; Markets;

    This paper has been announced in the following NEP Reports:

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    1. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
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    7. Osiewalski, J. & Koop, G. & Steel, M.F.J., 1997. "A Stochastic Frontier Analysis of Output Level and Growth in Poland and Western Economies," Discussion Paper 1997-85, Tilburg University, Center for Economic Research.
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    Cited by:
    1. Constant, Amelie & Kahanec, Martin & Zimmermann, Klaus F, 2006. "The Russian-Ukrainian Earnings Divide," CEPR Discussion Papers 5904, C.E.P.R. Discussion Papers.
    2. Tadeusz Kowalski, 2013. "Poland’s Long-term Macroeconomic Performance and Recent Trends: A Comparative Analysis," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(1), pages 41-56, 05.
    3. Dabrowski, Marek, 2007. "Ukraine at a Crossroads," MPRA Paper 11966, University Library of Munich, Germany.

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