What type of What type of capitalism in capitalism in

Ukraine?Ukraine?Vlad MykhnenkoVlad MykhnenkoInternational Policy FellowInternational Policy FellowOpen Society Institute – BudapestOpen Society Institute – BudapestE-mail: mykhnenko@policy.huE-mail: mykhnenko@policy.hu

Key concepts for a ‘variety Key concepts for a ‘variety of capitalisms’ analysisof capitalisms’ analysis

The French RThe French Réégulation School and comparative political gulation School and comparative political economy approaches: economy approaches:

capitalist mode of development = RoA + MoR capitalist mode of development = RoA + MoR → outcomes→ outcomesa)a) Regime of Accumulation = a production system with a specific Regime of Accumulation = a production system with a specific

technological style:technological style:- extensive- extensive- intensive (Fordism)- intensive (Fordism)- super-intensive? (post-Fordism / ‘new economy’)- super-intensive? (post-Fordism / ‘new economy’)

b)b) Mode of Regulation = a set of institutional forms (‘structural Mode of Regulation = a set of institutional forms (‘structural mediations’) to guide and stabilise the accumulation process, mediations’) to guide and stabilise the accumulation process, i.e. to promote coherence of capitalismi.e. to promote coherence of capitalism- competitive mode- competitive mode→ → laissez-faire capitalism, 1800s-1930slaissez-faire capitalism, 1800s-1930s- monopolistic mode- monopolistic mode→ → ‘organised’ (co-operative corporate) ‘organised’ (co-operative corporate) capitalism, 1940s-1970scapitalism, 1940s-1970s- neo-liberal mode - neo-liberal mode → → ‘disorganised’ capitalism, 1980s – ‘disorganised’ capitalism, 1980s – presentpresent

c)c) performance = economic development + social progress (‘long performance = economic development + social progress (‘long waves upswing v. long waves downswing’)waves upswing v. long waves downswing’)

Problematic issuesProblematic issues

The dichotomy of ‘organised’ & The dichotomy of ‘organised’ & ‘disorganised’ capitalisms v. the ‘diversity ‘disorganised’ capitalisms v. the ‘diversity of capitalism’ approach (German, Anglo-of capitalism’ approach (German, Anglo-American, Scandinavian, Japanese, etc.)American, Scandinavian, Japanese, etc.)

Methodology for studying the most Methodology for studying the most advanced Western societies (G-7; high-advanced Western societies (G-7; high-income OECD)income OECD)

Traditional v. post-communist types of Traditional v. post-communist types of capitalism (e.g. ‘oligarchic’ / ‘hybrid’ / capitalism (e.g. ‘oligarchic’ / ‘hybrid’ / ‘mutant’)‘mutant’)

The post-communist The post-communist transformation of the transformation of the

Ukrainian political economy Ukrainian political economy Issues to be addressed:Issues to be addressed: Performance under post-Performance under post-

communism: economic growth and communism: economic growth and social progresssocial progress

Instruments of control and Instruments of control and regulationregulation

What type of capitalism for What type of capitalism for Ukraine?Ukraine?

Ukraine's post-communist economic trajectory

40

45

50

55

60

65

70

75

80

85

90

95

100

105

1990 91 92 93 94 95 96 97 98 99 2000 01 02 03

Vol

ume

inde

x, 199

0 =

100

GDP Industrial output Agricultural output Electricity consumption

Ukraine's annual growth patterns

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1991 92 93 94 95 96 97 98 99 2000 01 02 03

Ann

ual g

row

th

GDP Industrial output

Two stages of Ukraine’s Two stages of Ukraine’s post-communist post-communist transformationtransformation

I.I. Decline: 1990 – 1996Decline: 1990 – 1996II.II. Recovery: 1997 – presentRecovery: 1997 – present Two transformation phases ↔ two Two transformation phases ↔ two

different modes of regulationdifferent modes of regulationI.I. ‘‘Chaotic capitalism’ (Lane 1999; 2000) Chaotic capitalism’ (Lane 1999; 2000)

→ Ukraine’s Great Post-Communist → Ukraine’s Great Post-Communist DepressionDepression

II.II. ‘‘Combine capitalism’ (= state-initiated Combine capitalism’ (= state-initiated conglomerate-propelled) → economic conglomerate-propelled) → economic recovery and growth; and social recovery and growth; and social progress?progress?

What is a ‘chaotic What is a ‘chaotic capitalism’?capitalism’?

““A chaotic social formation may be defined as a A chaotic social formation may be defined as a social and economic system which lacks social and economic system which lacks institutional coordination and promotes social institutional coordination and promotes social fragmentation: goals, law, governing institutions fragmentation: goals, law, governing institutions and economic life lack cohesion. Its and economic life lack cohesion. Its characteristics are uncertainty about the future, characteristics are uncertainty about the future, elite disunity, the absence of a dominant and elite disunity, the absence of a dominant and mediating class system, a mixture of media of mediating class system, a mixture of media of exchange, criminalisation and corruption, rent-exchange, criminalisation and corruption, rent-seeking entrepreneurs, inadequate interest seeking entrepreneurs, inadequate interest articulation and an economy in decline articulation and an economy in decline characterised by inflation, unemployment and characterised by inflation, unemployment and poverty. Whereas ‘disorganised capitalism’ does poverty. Whereas ‘disorganised capitalism’ does not lead to breakdown, a chaotic social not lead to breakdown, a chaotic social formation is perverse and system is precarious” formation is perverse and system is precarious” (Lane 2000: 497-98).(Lane 2000: 497-98).

Ukraine’s post-communist Ukraine’s post-communist modes of regulation: from modes of regulation: from

‘chaotic’ to ‘combine’‘chaotic’ to ‘combine’ MoR spheres of guidance and MoR spheres of guidance and

stabilisation:stabilisation:a)a) the role of the state and form of state the role of the state and form of state

economic managementeconomic management

b)b) the form of capital – labour relationsthe form of capital – labour relations

c)c) the nature of competition between firms the nature of competition between firms (from plan to market?)(from plan to market?)

d)d) motivational system (values, profits, motivational system (values, profits, investments)investments)

e)e) the place of national economy within the the place of national economy within the international system international system

‘‘Chaotic’ mode of Chaotic’ mode of regulation: major featuresregulation: major features

a rapid withdrawal of the state from the economy and de-statisation of a rapid withdrawal of the state from the economy and de-statisation of social welfare; ‘no industrial policy is the best industrial policy’social welfare; ‘no industrial policy is the best industrial policy’

the most unbalanced monetary and credit arrangements; repeated the most unbalanced monetary and credit arrangements; repeated monetary validation of ever-continuing inflationary shocks; deficit monetary validation of ever-continuing inflationary shocks; deficit budget spending accommodated via escalating money emissions (= cash budget spending accommodated via escalating money emissions (= cash printing) printing)

no mediating role for the state within increasingly antagonistic industrial no mediating role for the state within increasingly antagonistic industrial relations; the hegemony of capital over labour relations; the hegemony of capital over labour → → no wage bargaining no wage bargaining occurs; earned wages and salaries are regularly unpaid to be used by the occurs; earned wages and salaries are regularly unpaid to be used by the owners and managers as a cushion against bankruptcy; the minimum owners and managers as a cushion against bankruptcy; the minimum wage, if exists at all, is set by the state at a level far below the physical wage, if exists at all, is set by the state at a level far below the physical subsistence level subsistence level

under macroeconomic instability accompanied by the privatisation drive, under macroeconomic instability accompanied by the privatisation drive, microeconomic competition is not carried out though the price microeconomic competition is not carried out though the price mechanism within the regulated market place between various firms, but mechanism within the regulated market place between various firms, but is conducted in a form of ungoverned and physically most brutal struggle is conducted in a form of ungoverned and physically most brutal struggle between individual entrepreneurs themselves for the chunks of state-between individual entrepreneurs themselves for the chunks of state-owned property and for free or even negatively charged loans issued owned property and for free or even negatively charged loans issued directly by the central bankdirectly by the central bank

motivational system is based upon rent-seeking and assets-stripping motivational system is based upon rent-seeking and assets-stripping on a global scale, the national economy which is governed by the chaotic on a global scale, the national economy which is governed by the chaotic

mode of regulation fails to diversify its major trading partnership and mode of regulation fails to diversify its major trading partnership and remains on the periphery of the international economyremains on the periphery of the international economy

Changing the role of the post-Changing the role of the post-communist state in Ukraine: slowing communist state in Ukraine: slowing

down the state’s withdrawaldown the state’s withdrawalThe pace of Ukraine's de-statization

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

1990-1996 1997-2002

aver

age

per

per

iod

Average annual decrease in the public ownership of physical capital stock

Mixed property rights Mixed property rights structurestructureUkraine: ownership structure, 2002

0 10 20 30 40 50 60 70 80 90 100

Total labour force

Fixed capital assets

Agricultural land

Agricultural production

Industrial production

percentage of total

Private ownership (individual or collective) Public ownership (state or municipal)

Returning to welfare Returning to welfare provisionprovision

Changing public spending priorities

46.3%36.3%

56.2%

53.7%63.7%

43.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 1996 2002

shar

e of

tot

al b

udget

exp

enditure

Other publicexpenditure

Publicexpenditure onsocial welfareprovision (healthcare, social workand protection,culture, science& education)

Facilitating the business Facilitating the business environmentenvironment

The Business Environment and Enterprise The Business Environment and Enterprise Performance Surveys (World Bank and EBRD).Performance Surveys (World Bank and EBRD).

Qualitative assessments of the business environment: Qualitative assessments of the business environment: average score by dimension on a scale from 1 (=minor average score by dimension on a scale from 1 (=minor

obstacle) toobstacle) to4 (=major obstacle)4 (=major obstacle)

19991999 20022002

UkraineUkraine 2.772.77 2.222.22

Post-Post-communist communist countries’ countries’ medianmedian

2.672.67 2.082.08

Business environment, 1999

1.0

1.5

2.0

2.5

3.0

3.5

4.0Finance

Infrastructure

Taxation

RegulationJudiciary

Crime

Corruption

Poland Ukraine

Business environment, 2002

1.0

1.5

2.0

2.5

3.0

3.5

4.0Finance

Infrastructure

Taxation

RegulationJudiciary

Crime

Corruption

Poland Ukraine

The Ukrainian state: from pulling The Ukrainian state: from pulling out to bringing back?out to bringing back?

Ukraine's public spending trajectory

Consolidated budget expenditure

General government sector expenditure

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

1992 93 94 95 96 97 98 99 2000 01 02 03

Shar

e of

GD

P

The form of capital – labour The form of capital – labour relations: from social antagonism relations: from social antagonism

to social accord?to social accord?Increase in tripartite wage bargaining and decrease in industrial disputesIncrease in tripartite wage bargaining and decrease in industrial disputes

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1996 97 98 99 2000 01 02

num

ber of st

rikers

55%

60%

65%

70%

75%

80%

85%

share

of to

tal w

ork

forc

e

Striking workersCollective wage-rate aggrements coverage, percentage of total workforce

Real wage growth

-55%-50%-45%-40%-35%-30%-25%-20%-15%

-10%-5%0%5%

10%15%20%25%30%

1992 93 94 95 96 97 98 99 2000 01 02 03

annu

al g

row

th

More secure jobs?More secure jobs?Ukraine: ILO unemployment

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

1995 96 97 98 99 2000 01 02 03

shar

e of

tot

al e

conom

ical

ly a

ctiv

e pop

ula

tion

Long way round neo-Long way round neo-corporatismcorporatism

Wage differentiation within manufacturing

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

1990 1996 2002 2002 2002 2002 2001 2002 2002

Ukraine Sweden Germany UK USA S.Korea Malaysia

wage leve

l of th

e h

ighest

paid

div

isio

n (=

1.0

) v.

the low

est

paid

div

isio

n

Information and co-ordination Information and co-ordination structure: towards the full structure: towards the full

combination of available mechanismscombination of available mechanismsState intervention + Markets + NetworksState intervention + Markets + Networks

Industrial policy (since mid-1990s): subsidies Industrial policy (since mid-1990s): subsidies for mining and quarrying; tax allowances, for mining and quarrying; tax allowances, pro-innovation preferential treatment and pro-innovation preferential treatment and co-investment projects in other industriesco-investment projects in other industries

Regional policy (since late 1990s): special Regional policy (since late 1990s): special economic zones (tax-free areas) and priority economic zones (tax-free areas) and priority development areas (special investment development areas (special investment regime)regime)

However, active developmental policies are However, active developmental policies are hindered by low state expenditurehindered by low state expenditure

Two-tier corporate structure: giant Two-tier corporate structure: giant conglomerates and small & medium firmsconglomerates and small & medium firms

Ukraine’s Five Grand Ukraine’s Five Grand National MastersNational Masters

““Five players have appeared on Ukraine’s Five players have appeared on Ukraine’s business field. The five players who have business field. The five players who have reached not only the level of masters but reached not only the level of masters but that of grand masters. We would like the that of grand masters. We would like the rest to catch-up with them. We should also rest to catch-up with them. We should also draw a thick line and not allow foreign draw a thick line and not allow foreign penetration into strategic sectors. Foreign penetration into strategic sectors. Foreign penetration could be a threat to this state’s penetration could be a threat to this state’s national economic interests” national economic interests”

- Mykhailo Chechetov- Mykhailo Chechetov

Head, The State Property Fund of Ukraine Head, The State Property Fund of Ukraine

(press-conference in Kyiv, 26 December 2003)(press-conference in Kyiv, 26 December 2003)

The Big Five:The Big Five:1.1. The Industrial Union of the Donbas (The Industrial Union of the Donbas (ISDISD; ;

Donetsk-based; owners: Vitaliy Hayduk, Donetsk-based; owners: Vitaliy Hayduk, Serhiy Taruta and Viktor Yanukovych)Serhiy Taruta and Viktor Yanukovych)

2.2. System Capital Management (System Capital Management (SCMSCM; Donetsk-; Donetsk-based; owner: Rynat Akmetov)based; owner: Rynat Akmetov)

3.3. Interpipe Group (Dnipropetrovsk-based; Interpipe Group (Dnipropetrovsk-based; owner: Viktor Pinchuk)owner: Viktor Pinchuk)

4.4. Private Bank Group (Private Bank Group (Hrupa PryvatHrupa Pryvat; ; Dnipropetrovsk-based; owner: Ihor Dnipropetrovsk-based; owner: Ihor Kolomoyskyi)Kolomoyskyi)

5.5. Ukrainian Siberian Bank (Ukrainian Siberian Bank (UkrSybBankUkrSybBank; ; Kharkiv-based; owner: Oleksandr Kharkiv-based; owner: Oleksandr Yaroslavskyi)Yaroslavskyi)

Ukraine’s largest Ukraine’s largest conglomeratesconglomerates

The rest:The rest:

1.1. The Donbas business group members: The Donbas business group members: D.A.N.K.O D.A.N.K.O (Donetsk-based; co-owner: Serhiy (Donetsk-based; co-owner: Serhiy Momot) and Momot) and A.R.S. A.R.S. (Donetsk-based; owner: (Donetsk-based; owner: Ihor Humeniuk)Ihor Humeniuk)

2.2. Finance & Credit Bank Group (Finance & Credit Bank Group (HrupaHrupa Finansy Finansy i Kredyt; i Kredyt; Kyiv-based; owners/associates: Kyiv-based; owners/associates: Kostiantyn Zhevaho; Volodymyr Khlyvniuk)Kostiantyn Zhevaho; Volodymyr Khlyvniuk)

3.3. Ukrainian Industrial Investments Group Ukrainian Industrial Investments Group ((UkrPromInvestUkrPromInvest; Kyiv-based; owner: Petro ; Kyiv-based; owner: Petro Poroshenko)Poroshenko)

4.4. Dynamo Kyiv F.C. Group (Dynamo Kyiv F.C. Group (Hrupa DynamoHrupa Dynamo; ; Kyiv-based; owner: Hryhoriy Surkis)Kyiv-based; owner: Hryhoriy Surkis)

The Industrial Union of the Donbas (ISD)Chairman of the Board: Mr. Serhiy Taruta (aged 48); CEO: Mr. Oleh Mkrtchian(aged 36)

Conglomerate headquarters: Donetsk, Ukraine; Conglomerate total revenues: US$ 5.1 billion (2003)Founded December 1995; reportedly by Messrs Akhat Brahyn (a.k.a Alek ‘The Greek’, assassinated 1995), Yevhen Shcherban (assassinated1996), Vitaliy Hayduk et al; formal institutional founders: Vis-à-Vis Close Joint-Stock Co; AzovInTex Ltd; Ukrainian Technological Sciences

Academy; Ukrainian Economic Sciences Academy; Donbas Chamber of Commerce and Industry

Ferrous Metals: over 95% sharecontrol on average

Shares

Alchevsk Iron &Steel Combine

MarkokhimMariupol Coke

Works

Alchevsk Coke &Chemicals

Khartsyzsk TubeWorks

Dniprovsk TubeWorks

Engineering: > 30% control

KramatorskKuibyshev Iron &Steel Combine

EnergomashspetsstalEngineering Special

Steels

Shares

UkrVuhleMashCoal-MiningMachinery

AzovMashMariupolMachine-BuildingFactory

SlovianskHeavy

Machine-BuildingFactory

Mining and Quarrying, Fuel andPower: > 60% control

Shares

DONETSKINDUSTRIAL

UNION,Subsidiary

Agriculture: 100%control

Shares

Ol'ha Agro Firm

Zoria Agro Firm

Dianovske PoultryFarm

BakhmutAgricultural Union

Northern Iron OreConcentrating

Combine

Krasnyi LymanCoal Mine

StrategicAlliances

DunaFerr Iron &Steel Combine

(Hungary)

KrasnoarmiiskCoal Mine

Bazhan Coal Mine,MakiivCoal State

Holding Co.

RodynskeCoal Mine,

KrasnoarmiiskCoalMining Association

Kholodna BalkaCoal Mine,

MakiivCoal StateHolding Co.

Northern CoalMine, MakiivCoalState Holding Co.

Communist CoalMine, OctoberCoalState Holding Co.

Horlivka MeatPacking factory

Karanske GrainElevator

InvestAgroService

SnezhnoeKhimMashChemicalMachinery

Old KramatorskHeavy

Machine-BuildingFactory

DruzhkivkaMachine-BuildingFactory

KamianskMachine-BuildingFactory

Horizon MiningRescue

MachineryPlant

ShaktyMachine-BuildingFactory(Russia)

KramatorskHeavy

Machine ToolConstruction

Factory

Krasnyi LuchMachine-BuildingFactory

UkrIndustryMetals

EngineeringConsortium

Finance, Investment, andConstruction: > 80 - 100%

Shares

DonetskStock

Exchange UzNaftoHazBudUzbek Oil & Gas

Construction(Uzbekistan)Keramet

InvestmentCompany

PanteleimonivkaFire Clay Factory

KramatorskPushka Cement &

Slate Combine

Donbas BudConstruction

Trust Co.

Azov-EasternSpecial

EconomicZone

Fedorov MiningMechanics R&D

Institute

Other Service Activities:>80 - 100% control

Shares

Metalurg DonetskFootball Club

ISD-AVIA AirCompany

Yalta-Intourist HotelComplex

DnipropetrovskPetrovskySteelworks

DniproDzerzhynskyIron & Steel

Combine

StrategicAlliances

DufercoInternationalSteel Trading(US-Brasilian

TNC)

Region-wideElectricity & Natural

Gas Whole-saleDistribution

Energy Construction and Operation projects:3 Gas pipe-lines (=200 km-long), Donbas;

1 Gas pipe-line (150 km) and 2 OilStorehouses (3 mil. barrels), Uzbekistan

Various construction projects(motorways, buildings, stadiums)

DonHirMashDonetsk Mining

MachineryFactory

AzovZahalMashMariupol

Machine-Building

System Capital ManagementPresident: Mr. Rynat Akhmetov (aged 38; over 90% of shares); CEO: Mr. Ihor Prasolov (aged 42)Founded November 2000 by Mr. Akhmetov, formerly one of the principal ISD’s share-holders

Conglomerate headquarters: Donetsk, Ukraine

Ferrous Metals and Engineering

SharesStrategicAlliances

Kerch Iron & SteelCombine (>24%)

Yenakieve Iron &Steel Works (>58%)

D.A.N.K.O.

Khartsyzsk TubeWorks (>24%)

Silur Khartsyzsk WireMill

LemanCommodities S.A.

(Switzerland)

A.R.S.

Resources and Raw Materials

SkhidEnergoEastern Electric

Power & HeatStations

Azovstal Iron &Steel Combine

Avdiivka CokeWorks (>57%)

AzovstalTrading House

(>52%)

Zaporizhzhia CokeWorks (>20%)

Embrol UkraineLtd.

Shares

Druzhkivka OreBoard (>27%)

Central Iron OreConcentrating

Combine (>25%)

Joint-Venture HefestLtd

Petrol Stations(>60%)

MarkokhimMariupol Coke

Works

Banking and Finance

Shares

DonMiskBank (DonetskCity Bank; 100%)

First UkrainianInternational Bank

ASKA InsuranceCompany (>17%)

Food and Drink

Transport, Communications & Other Service Activities

AzovMash MariupolMachine-Building

Plant (>50%)

Shares

Digital CellularCommunications Joint-VentureMobile Phone Network (>51%)

Shakhtar DonetskFootball Club (99%)

Donbas Palace Hotel(99%)

Atlant Hotels (>50%)

Ukraine TV & Radio Company(98%)

Segodnya PublishingGroup (85%)

Shares

SarmatDonetsk

Brewery (98%)

DniproDnipropetrovskBrewery (>51%)

CrimeaSimferopol

Brewery (93%)

Kyiv BreweryNo. 1 (>76%)

Luhansk Brewery(>90%)

Poltava PyvoBrewery(>50%)

Donetsk BakeryComplex No. 1

(>24%)

DonetskBakery No. 14

(>46%)

Ukrainian Industrial & TransportCompany

Luxe Hotel (>60%)

KuybyshevKramatorsk Iron &

Steel Works (>24%)

Makiivka BakeryComplex (>23%)

Kharkiv Coke Works(>80%)

Donetsk EnergyPlant (>24%)

Druzhkivka Machine-Building Plant

(>15%)

Donetsk BakeryCombine(>16%)

October OresConcentration

Factory

Dobropillia OresConcentration

Factory

Keramet InvestmentCompany

Motivational system: from rent-Motivational system: from rent-seeking & rent-taking to capital seeking & rent-taking to capital

accumulation via profit & accumulation via profit & investmentinvestment

Fixed capital investment

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1990 91 92 93 94 95 96 97 98 99 2000 01 02 03

annual

gro

wth

Profits and capital investments

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

1992 93 94 95 96 97 98 99 2000 01 02 03

mill

ion

hryv

nia

Enterprise gross profits Fixed capital investment

Positioning within the international Positioning within the international political economy: from the Soviet political economy: from the Soviet

autarky towards geographical autarky towards geographical diversificationdiversification

Ukraine: foreign trade distribution

57.7

35.127.3

74.5

56.4 54.1

19.0

29.8

33.3

18.0

31.5 32.7

18.0

23.7 28.2

3.06.0 7.0

0.74.4 5.9

1.0 0.8 1.03.9 4.5 3.4 3.0 4.2 2.90.7 2.4 1.8 0.5 0.9 2.10.0 0.1 0.1 0.0 0.2 0.3

0

25

50

75

100

1994 1998 2002 1994 1998 2002

Merchandise exports Merchandise imports

perc

enta

ge s

hare

of to

tal

Australia andOceania

South America andthe Caribbean

North America

Africa

Asia

Europe

Former USSR

Climbing the exports ladder Climbing the exports ladder backwards backwards

Ukraine: exports structure

10.1 11.8 11.4

10.9 10 12.50.6 0.9

1.913.7 13.2 9.3

39.543.9 44.6

21.9 13.9 13.6

3.34 5.6

0 2.3 1.1

0

25

50

75

100

1994 1997 2002

per

centa

ge

shar

e of

exp

orts

Articles nonclassified elsewhere

Miscellaneousmanuf. articles

Machinery andtransport equipment

Manufacturedgoods, classif. bymaterialChemical products

Oils, fats and waxes

Crude materials,minerals and energy

Food and liveanimals, drink andtobacco

The ‘combine’ mode of The ‘combine’ mode of regulation: mixed signs of regulation: mixed signs of

successsuccessa)a) the return to pro-active developmental state (=economic the return to pro-active developmental state (=economic nationalism) and the increased level of intervention nationalism) and the increased level of intervention through industrial policy; yet hindered by low level of through industrial policy; yet hindered by low level of public spendingpublic spending

b)b) the suspension of unregulated labour market policies and the suspension of unregulated labour market policies and the establishment of certain neo-corporatist arrangements the establishment of certain neo-corporatist arrangements

c)c) the combination of markets, indicative planning, and the combination of markets, indicative planning, and networks (hybrid contracting); two-tier corporate structure networks (hybrid contracting); two-tier corporate structure → → competition of conglomerates within international competition of conglomerates within international markets and negotiation between the conglomerates within markets and negotiation between the conglomerates within the domestic market + competition of small and medium the domestic market + competition of small and medium firms on domestic and world marketsfirms on domestic and world markets

d)d) the return to accumulation of capital through profit and the return to accumulation of capital through profit and investment as the basis of value systeminvestment as the basis of value system

e)e) the insertion of the national economy into the international the insertion of the national economy into the international system, occupying low value-added niches system, occupying low value-added niches

Will the ‘combine capitalism’ accelerate Ukraine’s social Will the ‘combine capitalism’ accelerate Ukraine’s social progress?progress?

Hungary

LithuaniaCroatiaLatviaBelarusBulgariaMacedoniaRussiaRomaniaKazakhstan

Turkmenistan

Albania

Moldova

Tajikistan

Slovenia

Ukraine

High human development

Medium human development

High HDI average

Medium HDI average

PolandSlovakia

Estonia

Bosnia

GeorgiaAzerbaijanArmenia Uzbekistan

Kyrgyzstan

Czechia

Post-communist average

Developing countries

High-income OECD

0.650.660.670.680.690.7

0.710.720.730.740.750.760.770.780.790.8

0.810.820.830.840.850.860.870.880.890.9

0.910.920.93

1990 1995 20010 – 0.5= poor human development; 0.501 – 0.8= medium human development; 0.801

– 1.0= high human development

HD

I va

lue

What type of capitalism for What type of capitalism for Ukraine?Ukraine?

The shift from ‘chaotic’ to ‘combine’ capitalism The shift from ‘chaotic’ to ‘combine’ capitalism → economic recovery and growth→ economic recovery and growth

However, the pace of catching-up is sluggish; However, the pace of catching-up is sluggish; human and social development indicators are human and social development indicators are still far below the pre-transformation levelsstill far below the pre-transformation levels

There is a need for enhancing the state There is a need for enhancing the state capacity, if industrial policies to be made capacity, if industrial policies to be made effectiveeffective

More state ‘steering’ of conglomerates towards More state ‘steering’ of conglomerates towards the high value-added technological stylethe high value-added technological style

New sources of capital investment to intensify New sources of capital investment to intensify the national regime of accumulationthe national regime of accumulation