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Peculiarities of the Development of Ukraine's Financial Potential in the Period of Military Conflict

Author

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  • Andriy Polchanov

    (Zhytomyr State Technological University, Zhytomyr, Ukraine)

Abstract

Evaluation of the impact of military conflict on the financial potential of the state allows to substantiate the ways of the most effective economic recovery and the necessary infrastructure for this. The purpose of the article is to determine the specifics of the development of Ukraine's financial potential in the period of the military conflict on the basis of the integrated assessment of financial potential changes during the 2014-2016. Based on the analysis of publications, the main channels of influence of the military conflict on the financial potential of the state were identified. The peculiarities of the development of the Ukraine's financial potential in the period of military conflict were revealed. In particular, the sharp and significant increase in military spending has caused the redirection of the movement of financial resources from various sectors of the economy to national security and defense needs. As a result of the actual destruction and loss of control over assets in the conflict zone, as well as the weakening of positions in traditional markets for domestic products and capital outflows, Ukraine's GDP fell against the background of the global trend towards its growth. The growth of macroeconomic instability in the country under the influence of military and political factors led to a deterioration in the authority of the state as a borrower in the international financial market. In addition, there was an increase in the cost of bank loans for enterprises in Ukraine during the active phases of military operations. According to the author's opinion, the beginning of the deterioration of the macroeconomic and military-political situation in Ukraine could be observed even before the military conflict in the east, which, in turn, further deepened the existing imbalances in the economy and society. It was proved that the military conflicts have a negative impact on the indicators of the financial system, and so the success of economic reforms is inextricably linked with the effectiveness of measures to establish peace.

Suggested Citation

  • Andriy Polchanov, 2018. "Peculiarities of the Development of Ukraine's Financial Potential in the Period of Military Conflict," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 96-101, June.
    • Handle: RePEc:iaf:journl:y:2018:i:2:p:96-101
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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 & Alemayehu Geda & Philippe Le Billon & Mansoob Murshed, 2001. "Financial Reconstruction in Conflict and 'Post-Conflict' Economies," WIDER Working Paper Series DP2001-90, World Institute for Development Economic Research (UNU-WIDER).
    4. 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).
    5. 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.
    6. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    military conflict; financial potential of the state; national economy; GDP; credit rating;
    All these keywords.

    JEL classification:

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

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