Industrial Restructuring in Ukraine: from Socialism to a Planned Economy?

Six years into post-socialist economic reform, a division has appeared between the Central and Eastern European reform countries (CEE) and the CIS-countries. Whereas the former are dedicated to introducing the institutions of a capitalist market economy, the European CIS-countries (Russia, Ukraine, Belarus, Kazakstan) still hang on to some type of state-planning and a high degree of political interference in economic life. We show this development in a country that is new to European economics and policy: Ukraine. Just like its fellow CIS-countries, Ukraine has quickly succeeded macroeconomic stability, but insufficient structural reform may prevent a sustained economic development process. Our thesis is that Ukraine is at present embarking on a path from non-monetary socialism to a monetary planned-economy. An incredible amount of planning activity is observed in almost all spheres of economic life. We provide proof of that through empirical case studies, carried out personally in about 50 industrial enterprises all over the country. We conclude that the window of opportunity, during which substantial reforms can be pushed through based on a large social consensus, is over. Remaining reforms will be piecemeal only, and hence, can have only piecemeal results. The post-Soviet patterns of economic reforms that are emerging in the CIS-countries have a direct impact on the European and world integration of these countries.