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Ukraine: The Cost of Weak Institutions

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  • Mr. 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

  • Mr. Andrew J Tiffin, 2006. "Ukraine: The Cost of Weak Institutions," IMF Working Papers 2006/167, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2006/167
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    References listed on IDEAS

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    Cited by:

    1. Khrystyna Huk & Ayaz Zeynalov, 2022. "Regional Disparities and Economic Growth in Ukraine," Papers 2211.05666, arXiv.org, revised Nov 2022.
    2. 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(01), pages 41-56, May.
    3. Kowalski, Tadeusz, 2013. "Globalization and Transformation in Central European Countries: The Case of Poland," MPRA Paper 59306, University Library of Munich, Germany.
    4. World Bank, 2008. "Ukraine Agricultural Competitiveness," World Bank Publications - Reports 19478, The World Bank Group.
    5. Dabrowski, Marek, 2007. "Ukraine at a Crossroads," MPRA Paper 11966, University Library of Munich, Germany.
    6. International Monetary Fund, 2012. "Russian Federation: Selected Issues," IMF Staff Country Reports 2012/218, International Monetary Fund.
    7. International Monetary Fund, 2007. "Ukraine: Selected Issues," IMF Staff Country Reports 2007/047, International Monetary Fund.
    8. 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.
    9. International Monetary Fund, 2013. "Iceland: 2013 Article IV Consultations and Third Post-Program Monitoring Discussions," IMF Staff Country Reports 2013/256, International Monetary Fund.
    10. Oleg Kuklin & Mykhailo Kryvoruchko, 2019. "Institutional Analysis Of Interregional Socio-Economic Convergence In The Context Of European Integration: Interdisciplinary Methodological Approach Development," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 5(2).

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