On the situation in Ukraine
As the first wave of fighting subsided in 2014, I completed an economic recovery needs assessment in the conflict area of eastern Ukraine. I led a large multi-national team of EU, World Bank, UN, and government experts to quantify the crisis & the impact of the conflict. Working closely with government officials (above), we prepared programming recommendations for immediate and near-term economic recovery for the three organizations.
At the time there are over half a million IDPs, and the conflict had resulted in a drop in output of about 6%. Indications were that the decline will continue, as it did.
Even before this Ukraine's economy had been under-performing for years. Characterized by systemic weakness and inefficiencies, transactions costs (costs of information, negotiation, and enforcing contracts) are unreasonably high, and economic institutions (the rules and norms of economic activity) are not favorable to sustained rapid economic growth. A return to the status quo ante was not advisable if sustainable growth is desired. Modernization of the economic model is overdue.
Economic recovery and economic development, I recommended, should be considered in tandem. The priorities lie with the critical needs of people affected by conflict and with interventions that have a quick economic benefit accruing to the maximum number of citizens, and at the same time professionals will recognize the significance of the deeper and more sustainable aspects of a recovery program and will appreciate their significance for the long term.
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