Buy essay on The impact of poor governance and institutional arrangements on the economic development in Ukraine

Ukraine is the 40th economy in the world in terms of GDP (2009); GDP per capita makes $ 6400 (2009). By 2010, the fall in GDP amounted to 14,1%, while the state debt of Ukraine reached 93,5% of GDP in March 2010 (Sen 115-16). The most developed sectors of the national economy of Ukraine are industry, transport and energetics. The most economically developed regions include Donbass (Donets’k and Luhans’k regions), Dnieper (Dnipropetrovs’k and Zaporizhzhya regions), as well as the cities of Kyiv, Kharkiv, Odesa and Lviv. In 2006, the largest contribution to real GDP was made by Kyiv (17,5%), followed by predominantly industrial regions – Donets’k (13,3%), Dnipropetrovs’k (9,6%), Kharkiv (5,9%), Zaporizhzhya (4, 6%), Odesa (4,6%), and Luhans’k (4,4%) regions. Western Ukraine is traditionally a more agricultural region (Maksymenko 75-99).
The basis of the Ukrainian economy is formed out of the capital generated in the 1990’s by private owners in the independent Ukraine in the period of mass privatization. After the collapse of the USSR, the industry of Ukraine was involved in the process of partial de-industrialization, which, unlike in Western countries, had no post-industrial nature (Lewis 208-10). After the period of economic crisis in the 1990’s, taking into account the growth at the beginning of the 21st century, Ukraine can be referred to emerging markets and developing economies.
After decades of totalitarian rule with stagnation and tendency to reduce the production of consumer goods, Ukraine’s economy became weak and structurally deformed. Unsystematic and anarchist restructuring at the initiative of Mikhail Gorbachev in a period of 1986-1990 not only didn’t bring positive changes, but on the contrary, significantly worsened the economic situation. Gorbachev’s “perestroika” finished with the collapse of the USSR, and along with it, with the collapse of integrative economic ties between the former Soviet republics and their economic structures. After those events, the new states had to start market reforms, which, however, did not obtain the creative nature from the very beginning (Williams 331-345).
Moreover, the reforming processes of 1991-1994 were carried out on the hyperinflationary destructive model of the transition period which was imposed to post-socialist countries from outside and finally led their economies to a catastrophic decline and the majority of the population – to impoverishment. The economic situation was also significantly worsened by the factors of nonequivalent external economic turnover, unlimited dollarization of the national monetary circulation, supplantation of national producers from their domestic markets by foreign competitors and blocking their access to external markets. In addition, the political power of market anarchy often overruled, without being aware of how the economy could be effectively reformed and how it could be joined to the civilized market relations (Lewis 221-30).
The disruption of production, economic chaos, the lack of clear legal protection, theft of cash resources, and appropriation of state property were accompanied by logic economic decline. It occurred most significantly in 1992, when on the requirements of archiradicals, the state practically refused from the functions of regulating the processes of economic reforming, dropping them into the mainstream of market-liberal drift. Out of slowly developing ones, the rates of the economic downturn quickly reached the catastrophic collapse (Williams 331-345). According to the calculations of the European Centre of Macroeconomic Analysis in Ukraine, the real value of GDP in 1993 decreased by 26,9% compared with 1992, and by 2,3 times in 1994 compared with the previous year (Tiffin 1-29).
In 1995, the destructive process did not stop, although it was slowed down due to the increased stabilization policy of the new government. System analysis shows that the underlying socio-economic transformations, which got out of state regulation and control and were thrown into the uncontrolled market and powerlessness in the absence of strict economic management, could only enhance the structural deformation of the whole economic model of the transition period, deepening the crisis (Lewis 145-46).
In the early steps of the of the state’s independence, politicized and polarized forces of the society focused their efforts on the struggle for power and property, while taking care of purely personal interests generally discredited the state power. The influence of “democratic” euphoria factually blocked the attempt, firstly, to overcome the management disorganization of replenishment of macro- and microprocesses; secondly, to prevent spoliation, waste, and undermine of the existing economic structures without creating new ones; and thirdly, to stop the break of the long-term economic relations with the CIS member and countries of Eastern Europe (Yekelchyk 382-83).
As a consequence, the rhythmic work of industrial and agricultural commodity production, transport, of the entire infrastructure and the market as such was lost. The economic arrhythmia generated by certain inertia of previous governments was in no way associated with volatile solvent demand, i.e. it didn’t correlate with market conditions. On the contrary, it only exacerbated the general economic crisis, with the opposite effect on amplification of this arrhythmia (Zon 67-9).