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Development of entrepreneurship in Ukraine: historical determinants and prospects

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  • V. Nebrat

Abstract

The article is devoted to the problem of formation and development of entrepreneurship in Ukraine. The author shows historical conditionality of modern features of entrepreneurial activity and reveals the causes and factors of the deformation of the institution of entrepreneurship. The importance of private enterprise for economic development is explored, and the roles of innovation and competition are underlined. The author uses the methods of evolutionary economic theory and institutional history, carries out a retrospective review of the origin, formation and development of entrepreneurship and reveals the importance of primary forms of entrepreneurship in the Middle Ages. The economy and trade were of a high level and progressive character on the Ukrainian lands. Institutional norms contributed to the development of private entrepreneurship. Kievan Rus was an economic leader of Europe. Further disintegration of the state had negative consequences. Political, social and religious barriers arose for the entrepreneurial activity of the Ukrainian population. In the article, the reverse character of institutional evolution is justified. The author reveals the role of the Ukrainian Cossack State and the policy of Bohdan Khmelnitsky in economic democratization and shows the dependence between the processes of formation of the national state and the formation of the national market. The myth of the primacy of state and landowner manufactories is refuted. In mid-17th century, manufactories developed on the basis of private crafts, being the private property and hired labor at the heart of entrepreneurship. Institutional scrapping occurred later, when the Russian empire planted state-owned manufactories and factories. The concentration of power and property in the hands of the landlords and the state hindered the development of capitalism. Reforms of the second half of the 19 - early 20th centuries strengthened the integration of the Ukrainian economy into the Russian market, though numerous features of the feudal system were preserved. The asymmetry of access to economic resources aggravated. The policy of "internal protectionism" contributed to the rapid development of new industries and monopolization of the economy. A merge between business and state took place. At the same time, the unevenness of economic development intensified social contradictions. Another institutional breakdown in the history of entrepreneurship in Ukraine occurred during the Soviet period. Mental and behavioral archetypes of economic activity were undermined, and the institutional foundations of private enterprise were destroyed. Privatization and liberalization of the economy during the years of Ukraine's Independence have failed to overcome the historical trajectory of the development of economic institutions. Competition and private enterprise are inferior to monopoly and bureaucracy. The formation of a new entrepreneurship paradigm requires inclusion and social responsibility. Creation and dissemination of new innovative forms of entrepreneurship in Ukraine according to the network model corresponds to global trends. Reliance on social capital and IT technologies indicates the prospects for the development of entrepreneurship, and overcoming institutional barriers requires a proper transformation of the system of extractive institutions into a system of incentives and mechanisms of social inclusion.

Suggested Citation

  • V. Nebrat, 2017. "Development of entrepreneurship in Ukraine: historical determinants and prospects," Economy and Forecasting, Valeriy Heyets, issue 3, pages 140-156.
  • Handle: RePEc:eip:journl:y:2017:i:3:p:140-156
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