The Driving Forces for Unwanted Reforms: Lessons from the Ukrainian Transition
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Date
2010
Authors
Dubrovskiy, Vladimir
Szyrmer, Janusz
Graves III, William
Golovakha, Evgeny
Haran, Olexiy
Pavlenko, Rostislav
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This work explores the political-economic mechanisms that lead to economic reforms even if the
state is “captured” with the rent-seeking interests, as was the case in Ukraine in 1990th. We argue that unless
the social capital is strong enough to solve the coordination problems, the rent seeking can be sustainable
for a long time only if the players are coordinated forcedly by an authoritarian arbiter. Such arrangement is
mutually associated with peoples’ passivity, and inability of comprehending the virtues of market coordination
based on the private property rights.
Until this public consciousness change, so already emerged market institutions start crowding out
the rent-seeking ones, deterioration of authoritarian control and coordination due to the technical and
societal progress remains the main long-term factors of reforms. Although such deterioration does not cease
the rent seeking, and can even release it, lack of control makes it unsustainable, so ultimately requires
replacing a forced coordination with the market one based on universal protection of the property rights. On
the other hand, the longer this stage lasts, the stronger get intermediate (and often informal or illegal) rentseeking
social structures and practices fed with the rent from uncontrolled resources, which obstruct
establishing the market order.
In Ukraine deterioration of totalitarian control started at least since Stalin’s death brought about the
proliferation of interpersonal networks of mutual exchange based on blat. Price liberalization of 1992 was a
“passive” systemic reform that the government had to accept because of the far-went deterioration of
centralized control and coordination. Then the gap of control was mostly closed in two main waves of
reforms, each of them coming as a reaction to crisis: monetary stabilization plus privatization (1995-96), and
fiscal stabilization plus contracting of state paternalism towards the enterprises (1999-2001). However, the
market adjustment after initial shock appeared to be delayed for almost eight years due to the persistence of
deep-rooted rent-seeking interpersonal networks, and thus incurred very high social cost.
Скорочений варіант результатів наукового дослідження опублікований в "Рушійні сили небажаних реформ: уроки українського перехідного періоду / Дубровський В., Ширмер Я., Грейвс-третій В., Головаха Є., Гарань О., Павленко Р. // Соціологія: теорія, методи, маркетинг. - 2010. - № 1. - С. 56-72".
Скорочений варіант результатів наукового дослідження опублікований в "Рушійні сили небажаних реформ: уроки українського перехідного періоду / Дубровський В., Ширмер Я., Грейвс-третій В., Головаха Є., Гарань О., Павленко Р. // Соціологія: теорія, методи, маркетинг. - 2010. - № 1. - С. 56-72".
Description
Keywords
political economy, reforms, Ukraine, clientelism, transition, results of the research
Citation
The Driving Forces for Unwanted Reforms: Lessons from the Ukrainian Transition / Vladimir Dubrovskiy, Janusz Szyrmer, William Graves III, Evgeny Golovakha, Olexiy Haran', and Rostislav Pavlenko ; ed. by Vladimir Dubrovskiy, Janusz Szyrmer and William Graves III. - [Kyiv : s. n.], 2010. - 47 p. - The country study prepared within the Global Research Project of Understanding Reforms conducted by the Global Research Network (GDN).