Assessing the Macroeconomic Impact of Structural Reforms in Ukraine

IMF Working Papers, April 23, 2021

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Paper aims to assess the major areas of institutional weakness in Ukraine and quantify the long-term growth impact of catching-up to Poland in terms of the quality of major economic institutions and market development.
Ukraine’s economic performance has been anemic since the early 1990s.
A major impediment to productivity growth has been low investment, held back by lack of strong and independent institutions.

The legal system is identified as the area where institutional quality is weakest compared to Poland.
Other institutional and market areas weaker in Ukraine, in descending order from the analysis: market competition, openness to trade, and financial depth.
Using a methodology that accounts for positive spillovers between the structural reform areas, the paper estimates that even under the most optimistic scenario, where institutional gaps are fully addressed, Ukraine would need 15 years to catch up to Poland’s current income level.

Analysis uses a methodology that accounts for positive spillovers between the structural reform areas.

Subjects: Central banks, Commodity markets, Corruption, Crime, Financial markets, International reserves, Macrostructural analysis, Production, Structural reforms, Total factor productivity
Keywords: Commodity markets, Corruption, Eastern Europe, growth impact, indicator value, International reserves, reform gap, reform scenario, scenario Ukraine, Structural reforms, Total factor productivity