On April 28, 2016, a public discussion “How can Ukraine become rich? Global competitiveness, strategies and reform leaders” was held under the auspices of the Kyiv International Economic Forum (KIEF). Erik Reinert, one of the most famous economists of our time, the author of the book “How rich countries got rich… and why poor countries stay poor”, and Arturo Bris, Director of the World Competitiveness Center and Professor at the Swiss IMD Business School, have visited Kyiv to participate in the event.
The third KIEF taking place on October 6-7, 2016 will be maximally close to the practice of attracting investment in Ukraine. However, we must build a solid theoretical foundation before going to practice. If a country has not clearly defined its goal and not pointed the way to it, it will not succeed. The word “reforms”, which is heard everywhere means only changes but does not specify from where and where we are going.
Today, ultra-liberalism is the mainstream in the economic and social discourse
of Ukraine. Everyone is talking about the need for horizontal changes
(deregulation, state apparatus reduction, law reform, etc.), but talking about
prioritization and use of development tools by the state is criticized as a way
to corruption.
Erik Reinert insists that Ukraine should get rid of “the ideological captivity”
of liberalism and adopt an industrialization strategy. Indeed, except for a few
oil exporters, no country managed to become rich without industrialization.
Moreover, the concept of a state as “a night watchman” and “the invisible hand
of the market” is outdated and remained in the 1980-90s.
However, according to Reinert, other strategies that do not belong to
ultra-liberal ones and are now offered to Ukraine will not lead to success. In
particular, if to hold a course for Ukraine’s transformation into an
agricultural giant, the country will face two major problems: low salaries and
economic emigration of a considerable part of the population. The strategy
“Ukraine as China to the EU” also means poor citizens, and we do not have the
technological industries of China. The so-called “export tiger” strategy is
limited because the EU allows Ukraine to export to itself only in the
quantities that do not threaten the interests of the EU members.
Complex industrialization can make Ukraine wealthy. “Stop selling wheat to
Italy and buy much more expensive spaghetti from them. Export processed
products, not raw materials. Upgrade existing production using foreign
technology. Join the global joint ventures. Create vital institutions:
export-import bank, small business administration, development bank,” suggests
the expert.
Another speaker of the Kyiv International Economic Forum, Arturo Bris, under
whose guidance the Global Competitiveness Index is calculated, told in his
speech about who should implement Ukraine’s strategy. He is confident that reforms
are always made “from above”, not “from below”. For their successful
implementation, a country needs not only a qualitative economic strategy, but
also a leader who has a clear vision for 10 years or more.
Moreover, the expert tried to paint a picture that awaits the world economy in
the future. Over the past 20 years, the world has undergone huge changes. But,
according to Bris, even greater changes are ahead: the next 20 years will lead
to even more radical changes. “60% of jobs of the next generation do not yet
exist. Anticipated life expectancy of the newborns in 2035 will be more than
100 years – just imagine what will happen to pension funds. Translators, who
are now giving people the opportunity to understand each other, will be
replaced by digital devices. Machines and robots will replace more human workers.
And if there are cars without
drivers, there might be governments without ministers,” thinks Bris. Such
changes should be taken to consideration when proposing reforms.
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Kyiv International Economic Forum (KIEF) is a permanently operating venue for the formation of Ukrainian economic development strategy. It is aimed to set up a dialogue between experts, businesses and government, borrowing the best international practices, creating a road map for the development and promotion of the conversion of ideas into the real action.