Ukraine's economic reforms. Prospects of sustainability


  • Susanne Oxenstierna
  • Jakob Hedenskog

Publish date: 2017-11-30

Report number: FOI-R--4472--SE

Pages: 74

Written in: English


  • Ukraine
  • economic reform
  • foreign assistance
  • oligarchs


Ukraine has been subject to several attempts of economic reforms since independence in 1991, but has not managed to fully transition to a market-based system. As a result, the Ukrainian economy has ended up in a semi-transformed state with many shortcomings. A main problem is that basic institutions like the rule of law have never been properly established. Instead, a powerful oligarch class emerged along with the early privatisations and their influence led to state capture, which has effectively hindered market reform and nurtured vested interests and corruption. This report attempts to assess the potential of the Ukrainian economic reforms started in 2014 to become sustainable, in the sense that institutions underpinning a market economy may become permanent and sustain economic growth. The report also discusses the significant foreign assistance supporting the reform process, and oligarch influences that represent risks to sustainability. In the concluding assessment, it is found that although the risks for failure of the reforms remain present, for instance in the form of oligarch power, the opportunities for success appear to be quite strong. Reforms addressing corruption and establishing an independent judiciary have been started, and Ukraine has an engaged civil society that plays a key role in keeping the reforms on track and monitoring the behaviour of the political establishment.