Missed Economy

1. The first and foremost conclusion from three years of Russia's war against Ukraine: the country's entrepreneurial capital is the most valuable, uniquely strong, competitive form of capital. The Ukrainian entrepreneur has convincingly proved that even under unprecedented security risks, he is capable of organizing the production of goods and services, voluntarily paying taxes, donating to the Armed Forces of Ukraine (AFU), supporting humanitarian projects, strengthening logistics, and doing everything possible to sustain life in the country. The entrepreneur of Ukraine did not ask the government for benefits, subsidies, privileges, or indulgences. He asked for only one thing: "Don't interfere!" (laissez-faire). Unfortunately, the government did not fulfill this simple request. That is why, after the dramatic GDP decline of 28.8% in 2022, the recovery rate of the Ukrainian economy resulted in 4.5% GDP growth (the average annual rate for 2023-2024), rather than 7-10% GDP growth. The opportunity cost to Ukraine because the Government ignored the Ukrainian Entrepreneur's request was $70 - 100 billion of gross domestic product. If the Official had liberated the national producer of goods/services, Ukraine's GDP in 2024 would have been not $185 billion, but over $250 billion.
   
   

   

   

   

   
   
   
   
   

   

   

   

   
   
   
   
   Source: https://www.imf.org/en/Publications/CR/Issues/2024/12/20/Ukraine-Sixth-Review-Under-the-Extended-Arrangement-Under-the-Extended-Fund-Facility-559954
   
   
2. Second conclusion: The country’s government was before the war and remained the biggest brake on economic development, a source of additional risks and costs for the Entrepreneur.
   In 2022-2024, the Government’s efficiency, as well as the quality of state regulation even worsened compared to the pre-war period. This is confirmed by numerous indices, ratings, and business surveys in Ukraine. The verdict for the current system is the 150th place in the Index of Economic Freedom, the lowest indicator in the country's history. The government has been taken over by large interest groups. It uses state expenditures (65 - 70% of GDP) with the dominance of state property to obtain nomenclature, corruption rents at the expense of the population, and small businesses. The costs of such a nomenclature-authoritarian economy amount to 15–20% of GDP per year, or approximately $27–30 billion. This is more than the government's annual expenditures on weapon production.
   

IMF's assessment of Ukraine's key macroeconomic indicators for 2022-2033

3. The third conclusion: the strong state takeover of the economy, the displacement of the private sector from production, discriminatory practices, the discretion of the Official, strict regulatory, trade, and financial protectionism - all this has sharply weakened Ukraine's critical intangible asset - trust.