Cambridge Business Association
Why is Ukraine such an economic failure?
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Why is Ukraine such an economic failure?

An urgent mystery

Noah Smith
Noah Smith, 2022
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The story of Ukraine’s modern economy details a rolling series of missteps. An antiquated manufacturing sector, hyperinflation after the Soviet Union’s fall, reliance on cheap energy from Russia, and rapacious plutocrats and corrupt politicians have left the country in disarray and ill-equipped to defend itself. Economist Noah Smith details the background to the current situation in Ukraine, offering a cautionary tale of failed economic development and its consequences.

Summary

Ukraine’s economy, relative to those of its peers, has underperformed for some time.

A middle-income country with a per capita GDP of around $13,000, Ukraine has languished since the Soviet Union’s collapse. The World Bank estimates Ukraine’s output level is some 20% less today than it was in 1990. 

Had it followed the growth trajectory of its peers, like Poland and Romania, Ukraine would now be a developed nation, with GDP per capita exceeding $30,000. 

Inept policies and institutionalized grift hindered the country’s development.

The Soviet Union’s collapse affected all Eastern European economies, but Ukraine...

About the Author

Noah Smith is an economist and financial journalist who blogs about economics at noahpinion.com

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