Abstract

This paper investigates patterns and determinants of growth in Ukraine in a medium-
term and a long-term perspective. During 2000-2008, high growth in Ukraine was sup-
ported by favourable external conditions and was mainly demand-driven. Due to the
massive decline of external demand and the reversal of capital flows during the global
financial crisis some factors that have underpinned growth since 2000 have been ex-
hausted. The terms of trade have already deteriorated and foreign credits granted to
households and enterprises, which fuelled the consumption boom, have already strongly
declined

In addition to capital deepening, long-term growth will therefore require maintaining
robust total factor productivity, i.e. transfer of technology and efficient allocation of
resources. Poor economic and political framework conditions are the main development
barriers in Ukraine. Implicit and explicit subsidies, excessive state ownership, corrup-
tion, weak competition and high levels of regulatory uncertainty constitute the principal
obstacles to an increase of the level and efficiency of investment. The paper suggests
some main areas of reforms to overcome these obstacles.

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