Experts of the Economic Policy Advisory Council to the Ministry of Economy of Ukraine have presented a new document proposing a number of steps aimed at accelerating economic growth. The recommendations include additional measures in the areas of production, transportation sphere, the labour market, productivity, and the return of Ukrainian citizens from abroad.

“Economic resilience is crucial in the war of attrition that Russia is waging against Ukraine. To overcome Russian aggression, Ukraine must not only maintain its defence capabilities but also boost its production capacity, enhance labour efficiency, and develop new economic sectors. This will enable the government to finance the army, increase military production, support the population, and facilitate the return of refugees”, — noted Yuriy Gorodnichenko, a professor in the Department of Economics at the University of California, Berkeley. 

In the area of production growth, experts recommend considering regional specifics, focusing on the most adaptive economic sectors, and attracting both domestic and foreign investment. A novel approach involves creating fortified economic clusters (FECs) in the western and southwestern regions of Ukraine, shielded by geographical distance and modern air defence systems.

State policy in the transport sector should prioritize integration into the EU transport system. Developing border infrastructure will create additional jobs and promote business growth in the adjacent regions on both sides of the border. A key measure in this area is the construction of the 1435 mm gauge Krakow-Lviv railroad, identified as a priority project by the European Commission.

In the labour market, the Advisory Council’s experts propose ensuring the effective redistribution of workers, including internally displaced persons (IDPs), to regions with higher demand for labour and more industries. Measures include reforming state employment policies, developing procedures to temporarily exempt some workers from military service, and resuming data collection and publication by the State Statistics Service.

Regarding productivity, the authors highlight that in times of war, Ukraine must boost labour efficiency to maximize output from available resources. This calls for additional measures to deregulate economic activity, adopt a new Labour Code, simplify the tax system, and digitalize public services.

The return of Ukrainian citizens from abroad is also a significant focus. The state should provide safe living conditions, competitive wages, housing, and a supportive environment for development. Additional steps include sharing with Ukraine some of the tax revenues (pension part) generated by refugees in host countries to strengthen its defence capabilities, and creating a credit for pension taxes paid from abroad.

The Advisory Council, led by Yuriy Gorodnichenko, a professor in the Department of Economics at the University of California, Berkeley, and featuring the President of the Kyiv School of Economics, Tymofiy Mylovanov, contributes to formulating recommendations on Ukraine’s recovery architecture. This encompasses fiscal and monetary policy, the labour market, and state regulations.