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by Anatoliy Kinakh, Prime Minister ofUkraine After a deep and long-lasting recession, the Ukrainian economy has for the past two years demonstrated some very positive dynamics in its quantitative development indicators. This is essentially the result of reforms, which still require to be consolidated in order to engage the factors and mechanisms capable of ensuring long-term qualitative and sustainable development in our economy. How do we ensure sustainable growth, and realise the improvements in the main macroeconomic indicators together with serious and complex improvements at the micro-level, which would allow us to achieve the urgently needed shifts in the social sphere? These actual problems are the main priorities of macroeconomic policy. Furthermore, the search for solutions to these problems of our transitional economy requires profound scientific analysis. The following presentations made at the Conference on "Factors of Economic Growth in Ukraine" are serious scientific contributions by prominent economists in this field.
Contents
1 Background.- 2 The structure of this book.- 3 Outlook and acknowledgements.- I: the International Environment and Growth.- 1 Achievements or Missed Opportunities: Factors of Economic Growth in Russia. What Lessons are Relevant to Ukraine?.- 1 Some empirical facts about the economic performance during 1999 and 2000.- 2 Growth, institutions, and the exchange rate policy dilemma.- 3 Growth and structural changes.- 2 Economic Growth in Bulgaria and Romania.- 1 Introduction.- 2 Comparative overview.- 3 Main current features of economic growth in Bulgaria.- 4 Main current features of economic growth in Romania.- 3 Trade, Capital Flows, and Economic Growth in Developing Countries.- 1 Liberalisation, external constraints, and growth.- 2 Private capital flows: solution or problem?.- 4 Natural Resources and Economic Growth: What Is the Connection?.- 1 Introduction.- 2 Channel 1: The Dutch disease and foreign capital.- 3 Channel 2: Rent seeking and social capital.- 4 Channel 3: Education and human capital.- 5 Channel 4: Saving, investment, and physical capital.- 6 Natural capital and economic growth.- 7 Concluding remarks.- II: Sustaining Growth of the Ukrainian Economy.- 5 Is the Economic Growth in Ukraine Sustainable?.- 1 Introduction.- 2 Short history of economic decline/growth in Ukraine.- 3 Decomposition of growth trend by components of global demand and by sectors.- 4 Hypotheses concerning sources and sustainability of economic growth. Experience of other transition countries.- 5 Concluding remarks.- 6 Is there Any Economic Growth in Ukraine?.- 7 Economic Growth in Ukraine: What if Reforms and Economic Recovery Had Started Earlier?.- 1 Summary.- 2 Introduction.- 3 Actual economic performance in transition.- 4 Methodology of counterfactual simulations.- 5 Results and interpretation.- 6 Policy recommendations.- 8 Finance and Growth in Ukraine.- 1 Introduction.- 2 Availability of finance for investments.- 3 How to improve availability of finance.- 9 Fiscal and Regulatory Causes of Ukraine's Shadow Economy.- 1 Introduction.- 2 A currency-demand-for-money model to estimate the shadow economy.- 3 Comparison with estimates based on electricity consumption.- 4 Conclusions.- III: Institutions, Competition, and Growth.- 10 Enterprise Restructuring under Economic Growth in the Byelorussian Republic.- 1 Introduction.- 2 Conditions for economic growth in the Byelorussian Republic.- 3 Restructuring of industrial enterprises in Belarus.- 4 Conclusions.- 11 Performance of Small and Medium Sized Manufacturing Firms in Ukraine: Does the Quality of Governance Matter?.- 1 Introduction.- 2 Business environment for SMEs in Ukraine.- 3 The quality of governance and SME development.- 4 Data.- 5 Estimation equation and variables.- 6 Regression results.- 7 Conclusions and policy implications.- 12 The Investment Environment in Russia and Ukraine: Common Weaknesses in the Institutional and Policy Framework.- 1 FDI as an engine of growth.- 2 What constitutes the enabling framework?.- 3 To what extent are Russia and Ukraine reaping the potential benefits of FDI?.- 4 FDI flows to developing and transition countries.- 5 What are the reasons for these low shares of FDI in Russia and Ukraine?.- 6 OECD reviews of the investment environment in Russia and Ukraine - analytical approach and fundamental questions posed.- 7 Conclusions - Implementation and follow-up of reforms and the need to strengthen competition.- 13 Ukraine: "A Miracle in Waiting". Challenges and Reforms for an Improved Foreign Investment Environment.- 1 Summary.- 2 Overview.- 3 Major challenges.- 4 and first achievements.- 5 Foreign direct investment in Ukraine today.- 6 Legal and institutional changes.- 7 The way ahead in reforms.- 8 OECD recommendations.- 9 Conclusion.- IV: Empirical Studies of the Determinants of Growthin Ukraine.- 14 Reserve Requirements and Implicit Taxation of Commercial Banks in Ukraine.- 1 Introduction.- 2 The role of reserve requirements.- 3 The impact of reserve requirements on the private sector.- 4 Reserve requirements in Ukraine.- 5 Conclusions.- 15 Efficient Infrastructure Supply as a Condition for Economic Development - The Case of Ukraine.- 1 Introduction.- 2 How infrastructure development is currently monitored?.- 3 Results of a more detailed assessment.- 4 Conclusions and policy recommendations.- 16 A Regional Agricultural Trade Model for Wheat and Sunflower Seeds in Ukraine.- 1 Introduction.- 2 Excessive marketing costs and social welfare losses.- 3 A regional agricultural trade model.- 4 Model scenarios.- 5 Conclusions.- 17 The Economic Implications of Ukrainian Government Support for the Steel Industry.- 1 Introduction.- 2 The role of the steel industry in Ukraine's economy and the government support it receives.- 3 The theoretical and methodological framework for measuring the economic and welfare implications of government policies.- 4 Estimating the results for the Ukrainian case.- 5 Conclusions and policy implications.- 18 The Relationship between Foreign Direct Investment and Trade Flows in a Transition Economy: The Case of Ukraine.- 1 Summary.- 2 Introduction.- 3 Peculiarities of FDI flows in Ukraine: Initial evidence.- 4 Main hypotheses.- 5 Empirical study.- 6 Impact of FDI on trade diversification.- 7 Closing remarks.- 19 The Debt Structure of Ukrainian Firms.- 1 Introduction.- 2 The distribution of the debt stocks.- 3 Changes in the debt structure.- 4 The skewness of indebtedness.- 5 Conclusions.- 20 A Restructuring Trap in Transition Economies: Where Does it Lead?.- 1 Introduction.- 2 Theoretical background.- 3 A game theory approach.- 4 Empirical testing.- 5 Conclusions.- 21 The Feasibility of Monetary Targeting in Ukraine.- 1 Introduction.- 2 Review of the strategies for monetary policy.- 3 Theoretical background.- 4 Methodology.- 5 Empirical results and interpretation.- 6 Conclusions and policy implications.- The Authors.- Maps.- Tables.- Graphs.- Abbreviations.