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Ukraine; The Cost of Weak Institutions

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  • Andrew J Tiffin

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.

Suggested Citation

  • Andrew J Tiffin, 2006. "Ukraine; The Cost of Weak Institutions," IMF Working Papers 06/167, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/167
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    Cited by:

    1. Kowalski, Tadeusz, 2013. "Globalization and Transformation in Central European Countries: The Case of Poland," MPRA Paper 59306, University Library of Munich, Germany.
    2. Amelie F. Constant & Martin Kahanec & Klaus F. Zimmermann, 2012. "The Russian–Ukrainian earnings divide," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 20(1), pages 1-35, January.
    3. Marek Dabrowski, 2007. "Ukraine at a Crossroads," CASE Network Studies and Analyses 0350, CASE-Center for Social and Economic Research.
    4. International Monetary Fund, 2013. "Iceland; 2013 Article IV Consultations and Third Post-Program Monitoring Discussions," IMF Staff Country Reports 13/256, International Monetary Fund.
    5. Tadeusz Kowalski, 2013. "Poland’s Long-term Macroeconomic Performance and Recent Trends: A Comparative Analysis," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(1), pages 41-56, May.

    More about this item

    Keywords

    Economic growth; Markets; Investment; Transition economies; Ukraine; Total factor productivity; stochastic frontiers; technical efficiency; institutions; growth rate; per capita income; transition countries; tfp; Stochastic Fronotiers;

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