The regulatory environment for businesses in Ukraine has been considered unfavorable and market unfriendly. Although various governments have made numerous efforts to improve it, many of these attempts have failed and increasing the quality of the regulatory environment in the country still remains on the agenda of the government. With this report we claim to review a set of measures undertaken in Ukraine after the Orange Revolution in the area of deregulation of business activity. The paper analyzes the effectiveness of actions undertaken in Ukraine in a general framework of successful regulatory policies implemented in other parts of the world. Based on this analysis we developed concrete public policy measures aiming to increase the quality of the regulatory environment in the country, which, in turn, should secure Ukraine’s further movement toward a real, functioning market economy.
Authored by: Ewa Balcerowicz, Oleg Ustenko
Published in 2006
This paper examines the motives behind foreign direct investment (FDI) in a group of four CIS countries (Ukraine, Moldova, Georgia and Kyrgyzstan) based on a survey of 120 enterprises. The results indicate that non-oil multi-national enterprises (MNEs) are predominantly oriented at serving local markets. Most MNEs in the CIS operate as 'isolated players', maintaining strong links to their parent companies, while minimally cooperating with local CIS firms. The surveyed firms secure the majority of supplies from international sources. For this reason, the possibility for spillovers arising from cooperation with foreign-owned firms in the CIS is rather low at this time. The lack of efficiency-seeking investment poses further concern regarding the nature of FDI in the region. The most significant problems identified in the daily operations of the surveyed foreign firms are: the volatility of the political and economic environment, the ambiguity of the legal system and the high levels of corruption.
Authored by: Malgorzata Jakubiak
Published in 2008
This paper provides the results of analyses of key problems related to pension systems and their reforms in Russia and Ukraine. The pension systems and their reforms in both countries are compared. They are also compared with the general picture observed in the OECD or selected countries belonging to that area. The analysis focuses on long-term trends rather than short-term shocks. The recent economic crisis is not covered since the analysis was mostly completed by 2008.
Authored by: Marek Gora, Oleksandr Rohozynsky, Oksana Sinyavskaya
Published in 2010
The paper discusses possible directions and magnitudes of the relationship between the social security driven tax wedge, employment and shadow employment in Russia and Ukraine. The first section presents a summary of the economic and institutional background for development of the current size and structure of the socially driven tax wedge in both countries. The second section presents some theoretical considerations on the relationship between the social protection system, tax wedge, non-employment and finally, shadow employment. The third section contains an attempt to econometrically estimate the magnitude of the possible relationship between the tax wedge and total employment rates in both countries. In the fourth section, the authors try to discover the mechanism of influence of the last reform of the Ukrainian payroll tax system on the structure and size of shadow employment in the country. The last analytical section closes the circle leading the reader back from shadow employment to wages and finally to the issue of access to social security institutions. The last section concludes.
Authored by: Marek Gora, Oleksandr Rohozynsky, Irina Sinitsina, Mateusz Walewski
Published in 2009
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
This paper is an overview of the achievements in the area of employee financial participation (EFP) during the last fifty years. It addresses the question of the extent to which EFP is relevant in today’s world. EFP is distinguished from participation in management (industrial democracy), and the various types of EP are discussed. The major arguments for EFP are presented and discussed critically. The evolution of major forms of EFP, the scale of their operation in several advanced economies, and the legal and tax incentives for EFP are described. The efforts of European Union bodies to popularise this idea in all member countries are illustrated. Showing that EFP has become a broadly recognised principle of modern management in thousands of enterprises, we consider opportunities for disseminating these solutions on a wider scale, in particular in Poland. Finally, a number of directions for further research on financial participation are considered.
Authored by: Barbara Blaszczyk
Published in 2014
The objective of this paper has been to experiment diverse economic indicators in order to help equip Ukrainian policymakers with a relatively simple tool, which could deliver warning signals about the possibility of upcoming economic problems and thereby assist the Government in designing policy instruments which would help prevent or soften a slowdown or recession.
Authored by: Vladimir Dubrovskiy, Inna Golodniuk, Janusz Szyrmer
The paper focuses on the social safety nets in Russian Federation and Ukraine in the view of changes on the labour market since the beginning of economic transition. The authors showed that many past phenomena (e.g. restructuring of the economy, wage and pension arrears, new groups at-risk-of-poverty, demographic transition) caused a need to change an old type social safety net (SSN) into the new one, better adapted to emerging more liberal economy problems.
Additionally, the authors analysed some gender specific issues related to social security that are caused mainly by inequalities in the labour market. Differences of earnings between men and women in Russia caused by sector segregation account for seem to be more important than the gap between gender earnings attributed to the position. In Ukraine the main contributors to gross gender differential of log earnings (that equals to 32%) explained by our model are sector segregation and occupation.
The authors also pointed out to future policy challenges in the area of social security systems in both countries. The retirement reforms introduced recently are a step in the right direction, although their impact will not be felt for a number of years. Other reforms, with more immediate results, are necessary. Social safety nets should be made more efficient and social benefits should be better targeted.
Authored by: Marek Gora, Grzegorz Kula, Oleksandr Rohozynsky, Magdalena Rokicka, Anna Ruzik-Sierdzinska
Published in 2009
The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries – Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc.
Authored by: Marek Dabrowski, Oleksandr Rohozynsky, Irina Sinitsina
Published in 2004
This paper examines the motives behind foreign direct investment (FDI) in a group of four CIS countries (Ukraine, Moldova, Georgia and Kyrgyzstan) based on a survey of 120 enterprises. The results indicate that non-oil multi-national enterprises (MNEs) are predominantly oriented at serving local markets. Most MNEs in the CIS operate as 'isolated players', maintaining strong links to their parent companies, while minimally cooperating with local CIS firms. The surveyed firms secure the majority of supplies from international sources. For this reason, the possibility for spillovers arising from cooperation with foreign-owned firms in the CIS is rather low at this time. The lack of efficiency-seeking investment poses further concern regarding the nature of FDI in the region. The most significant problems identified in the daily operations of the surveyed foreign firms are: the volatility of the political and economic environment, the ambiguity of the legal system and the high levels of corruption.
Authored by: Malgorzata Jakubiak
Published in 2008
This paper provides the results of analyses of key problems related to pension systems and their reforms in Russia and Ukraine. The pension systems and their reforms in both countries are compared. They are also compared with the general picture observed in the OECD or selected countries belonging to that area. The analysis focuses on long-term trends rather than short-term shocks. The recent economic crisis is not covered since the analysis was mostly completed by 2008.
Authored by: Marek Gora, Oleksandr Rohozynsky, Oksana Sinyavskaya
Published in 2010
The paper discusses possible directions and magnitudes of the relationship between the social security driven tax wedge, employment and shadow employment in Russia and Ukraine. The first section presents a summary of the economic and institutional background for development of the current size and structure of the socially driven tax wedge in both countries. The second section presents some theoretical considerations on the relationship between the social protection system, tax wedge, non-employment and finally, shadow employment. The third section contains an attempt to econometrically estimate the magnitude of the possible relationship between the tax wedge and total employment rates in both countries. In the fourth section, the authors try to discover the mechanism of influence of the last reform of the Ukrainian payroll tax system on the structure and size of shadow employment in the country. The last analytical section closes the circle leading the reader back from shadow employment to wages and finally to the issue of access to social security institutions. The last section concludes.
Authored by: Marek Gora, Oleksandr Rohozynsky, Irina Sinitsina, Mateusz Walewski
Published in 2009
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
This paper is an overview of the achievements in the area of employee financial participation (EFP) during the last fifty years. It addresses the question of the extent to which EFP is relevant in today’s world. EFP is distinguished from participation in management (industrial democracy), and the various types of EP are discussed. The major arguments for EFP are presented and discussed critically. The evolution of major forms of EFP, the scale of their operation in several advanced economies, and the legal and tax incentives for EFP are described. The efforts of European Union bodies to popularise this idea in all member countries are illustrated. Showing that EFP has become a broadly recognised principle of modern management in thousands of enterprises, we consider opportunities for disseminating these solutions on a wider scale, in particular in Poland. Finally, a number of directions for further research on financial participation are considered.
Authored by: Barbara Blaszczyk
Published in 2014
The objective of this paper has been to experiment diverse economic indicators in order to help equip Ukrainian policymakers with a relatively simple tool, which could deliver warning signals about the possibility of upcoming economic problems and thereby assist the Government in designing policy instruments which would help prevent or soften a slowdown or recession.
Authored by: Vladimir Dubrovskiy, Inna Golodniuk, Janusz Szyrmer
The paper focuses on the social safety nets in Russian Federation and Ukraine in the view of changes on the labour market since the beginning of economic transition. The authors showed that many past phenomena (e.g. restructuring of the economy, wage and pension arrears, new groups at-risk-of-poverty, demographic transition) caused a need to change an old type social safety net (SSN) into the new one, better adapted to emerging more liberal economy problems.
Additionally, the authors analysed some gender specific issues related to social security that are caused mainly by inequalities in the labour market. Differences of earnings between men and women in Russia caused by sector segregation account for seem to be more important than the gap between gender earnings attributed to the position. In Ukraine the main contributors to gross gender differential of log earnings (that equals to 32%) explained by our model are sector segregation and occupation.
The authors also pointed out to future policy challenges in the area of social security systems in both countries. The retirement reforms introduced recently are a step in the right direction, although their impact will not be felt for a number of years. Other reforms, with more immediate results, are necessary. Social safety nets should be made more efficient and social benefits should be better targeted.
Authored by: Marek Gora, Grzegorz Kula, Oleksandr Rohozynsky, Magdalena Rokicka, Anna Ruzik-Sierdzinska
Published in 2009
The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries – Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc.
Authored by: Marek Dabrowski, Oleksandr Rohozynsky, Irina Sinitsina
Published in 2004
Migration of capital, transnationalization of the world economy jung boramiriotas
Translated version of International Economics Master thesis from the St. Petersburg State University of Economics & Finance in 2008.
(Original is in Russian)
English version is also available.
This study surveys the current state of affairs in Poland with regard to the development of knowledge-intensive entrepreneurship (KIE), or new firm creation in industries considered to be science-based or to use research and development (R&D) intensively. We place KIE in Poland in the larger institutional context, outlining the key features of the country’s National Innovation System, and then focus on KIE itself. Our findings are perhaps more optimistic than many previous studies of knowledge-based economy development in Poland. We observe significant progress due to Polish access to the European Union. The frequency with which universities are playing a significant role as partners for firms in the innovation process has increased significantly; moreover, we observe a significant degree of internationalization of innovation-related cooperation. Another optimistic development is that the level of activity of venture capitalists seems to be fairly high in Poland considering the relatively low degree of development of capital markets offering VC investors exit opportunities. Moreover, after almost two decades of decline in the share of R&D spending in GDP, there are signs that this is beginning to rise, and that businesses are beginning to spend more on R&D. While demand-side problems continue to be significant barriers for the development of KIE, due to the relatively low level of education and GDP per capita in the country, the trends here are optimistic, with high rates of economic growth and improvements in the level of education of younger generations. Significant improvement is still needed in the area of intellectual property protection.
Authored by: Richard Woodward, Elzbieta Wojnicka, Wojciech Pander
Published in 2012
This report is concerned with the analysis of privatization and private sector development for the eastern and southern Mediterranean countries partnered with the European Union and collectively known as MED-11. Noting that the analysis applies to the situation prior to the dislocations of the Arab Spring, we review the shift in the relative shares of the public and private sectors in these countries, as well as the business climate affecting the development of the private sector, examine a number of cultural factors that may influence the development of the private sector, and discuss some alternative scenarios for future developments. In the last 20 years, efforts have been made in all countries of the MED-11 to encourage private sector development and, to a greater or lesser extent, privatization of stateowned assets. However, there is a great deal of differentiation among the countries in the group. In the MED-11, Israel has not only the most business-friendly policy environment but also the most developed private sector, accounting for almost 80% of employment. The other countries of the region can be divided into two groups: one, including Algeria, Libya, and Syria, where reforms promoting privatization and private sector development have been very limited, and the rest, in which they have been much more extensive (the Palestine Authority is, for obvious reasons, a rather special case). A generally poor business environment makes for a large informal sector in almost every country in the region; however, generally speaking, we do not find the cultural factors we examine to be hostile to private sector development. Optimistic, reference and pessimistic scenarios are discussed; which of these is realized in any particular MED-11 country will depend greatly on the direction of change following the events of 2011’s Arab Spring.
Written by Mehdi Safavi and Richard Woodward. Published in October 2012.
PDF available on our website at: http://www.case-research.eu/en/node/57858
This paper analyzes the direct and indirect income effects of international labor migration and remittances in selected CIS countries. The analysis is based on computable general equilibrium (CGE) models for Moldova, Ukraine, Georgia, Kyrgyzstan, and Russia. All net emigration countries would experience a sharp contraction of private consumption in the absence of remittances. In Russia, the main effect of immigration has been to hold down the real wage (as potential capital stock adjustments in response to immigration are not reflected in the authors comparative-static modeling framework). The paper concludes that because of the important contribution of migration and remittances to stabilizing and sustaining incomes in many CIS countries, enhanced opportunities for legal labor migration should figure prominently in any deepening of bilateral relations between CIS countries and the European Union under the European Neighborhood Policy.
Authored by: Aziz Atamanov, Toman Omar Mahmoud, Roman Mogilevsky, Kseniya Tereshchenko, Natalia Tourdyeva
Published in 2009
Ainura Uzagalieva
Vitaly Vavryschuk
The Orange Revolution in the fall of 2004 built great hopes for a better future for Ukraine. However, three years later those hopes have been replaced by disappointment, frustration and confusion. Although progress in the areas of political freedom, pluralism, civil rights and freedom in the media remains unquestionable the record of economic, institutional and legal reforms is much more problematic. The key macroeconomic indicators are not better than they were few years ago and the business climate has barely improved. The WTO accession process remains incomplete. The perspectives of Euro-Atlantic integration are continually subject to heated domestic political controversies. The political situation remains unstable, mostly due to the hasty constitutional changes that were adopted during the Orange Revolution.
The purpose of this paper is to analyze the state of the Ukrainian economy at the end of 2007 and reflect upon what kind of reform program the Ukrainian government should consider, regardless of its political color. The reforms suggested in this paper involve a broad agenda of macroeconomic, social, structural and institutional measures. This agenda goes beyond the purely economic sphere and also addresses issues of legal, administrative and political reforms. The politics and political economy of any future reform effort will not be easy because the country is deeply divided in political, cultural, regional and ethnic terms. In such an environment, crucial reforms and strategic decisions will require a wider cross-party political consensus.
Authored by: Marek Dąbrowski
Published in 2007
This paper studies costs and benefits of institutional harmonisation in the context of EU relations with its neighbors. The purpose of this paper is to outline the likely forms of institutional harmonisation between the EU and its Eastern neighbors and provide an
overview of the methodologies that can be used in measuring its effects (costs and benefits). This paper serves as a background for two measurement exercises – one on benefits and another on costs – that are to be undertaken during the second stage of research.
Authored by: Veliko Dimitrov, Vladimir Dubrovskiy, Anna Kolesnichenko, Irina Orlova
Published in 2007
Baseline Research Agenda UNWTO Taskforce Women Empowerment in TourismDr Lendy Spires
As part of the UN Millennium Development Goal on gender equality, the UNWTO formed a Taskforce for the Empowerment of Women through Tourism in 2008. On November 11th 2008 a few members of this taskforce met in London for an informal meeting in which they discussed first steps of necessary actions. As a taskforce member Dr Irena Ateljevic agreed to supply the „state of the art‟ of research in the area of women empowerment in tourism. This final report presents the „state of the art‟ of research in the area of women empowerment in tourism.
Problem Statement and Objectives One of the proposed actions in the draft action plan developed by the taskforce on November 11th is putting in place a “data collection system”, including desk research and case studies. However, as pointed out in the taskforce meeting, before any decisions regarding further re- search can be made, stocktaking of the existing state of affairs in this field of research is nec- essary. In the field of women empowerment in tourism there is currently no overview of what has been done so far in terms of research. Secondly, current knowledge is fragmented and dispersed across various disciplines and sectors.
Therefore, it was complicated to define the white spots in this field and to lay out an agenda for future research in this field. Thus, this research has the following main objective: To enable the UNWTO Taskforce to make informed decisions with regard to their future re- search agenda by: presenting an overview of the current state of affairs in women empowerment and tourism; summarize the major issues and conclusions in this field of research; identify the knowledge gaps.
Methodology and Structure In conducting this desk research the following three major sources of information have been consulted: o Academic studies The following process was applied: 1. On request, one database concerning the topic was send by CIRET: the International Center for Research and Study on Tourism
The empirical analysis of the determinants of institutional development in transition countries as well as the qualitative country studies summarized in this publication allow for some optimism concerning a potential impact of the EU on institution building and governance quality in CIS countries. Regression analysis reveals a positive impact of EU cooperation agreements below a membership perspective. Alternatively to the EU, entry into the NATO accession process also exerts incentives for better institutions which are often overlooked. In contrast, WTO membership is not found to have any impact on institution building in CIS countries. While there is room for some EU-related optimism given the results from the regression analysis it depends on the country-specific ENP action plans and programs whether or not ENP cooperation actually leads to Europeanization or institutional convergence towards EU standards in the CIS. The case studies on the effectiveness of Neighborhood Europeanization through ENP in Ukraine, Georgia, and Azerbaijan reveal that current EU policies towards these countries can be, at best, seen as a catalyst but not as a main driver of institutional convergence. A perspective for a stake in the internal market is on the long horizon for Ukraine only. ENP mechanisms for conflict resolution in Georgia and Azerbaijan have been rather weak before the recent clash in Abkhazia and South Ossetia. The top-down institutional convergence, i.e. an EU-first strategy, worked well for Enlargement Europeanization but implemented in the ENP it significantly reduces the leverage of the EU to create a ring of well-governed neighbour states.
Authored by: Thorsten Drautzburg, Andrea Gawrich, Inna Melnykovska, Rainer Schweickert
Published in 2008
In this paper the authors undertake an ex-post evaluation of whether the special economic zones (SEZs) introduced in Poland in 1994 have been successful in meeting regional development objectives. They evaluate the policy of as many of its objectives as possible: employment creation, business creation (which includes attracting foreign direct investment), income or wage effects, and environmental sustainability. They use different panel data methods to investigate this question at the powiat and gmina levels in Poland during the 1995-2011 period. It is also possible to include numerous controls to reduce the problem of the omitted variables bias such as education level, dependency rates, state ownership, general subsidies and whether the area is urban or rural. The results indicate that SEZs in Poland have been successful in a number of their objectives such as private business creation. The positive effect of the policy however mainly comes through foreign direct investment (FDI), whereas the effects on e.g. investment and employment are small or insignificant. In other areas, such as securing higher income levels and locking firms into the sustainability agenda through the adoption of green technologies and reduced air pollution, the authors find only a small positively moderating effect of the policy on what are traditionally economically disadvantaged areas in Poland that used to be dependent on the socialist production model. Hence, despite high levels of FDI, the zones policy has not managed to overcome the legacy of backwardness or lagging regions. The main policy implication of the paper is that SEZs may be successful in stimulating activity in the short run but the policy must be seen as one of necessary temporality and can therefore not stand alone. Before launching SEZs, policymakers must have plans in place for follow up measures to ensure the longer term competitiveness and sustainability implications of such an initiative. There is a need to understand the connection between the specific incentive schemes used (in this particular case tax incentives were used) and the kinds of firms and activities they attract, including the behavioral models that those incentives promote.
Authored by: Camilla Jensen
Published in 2014
Labor migration from Eastern Europe and the member countries of Commonwealth of Independent States (CIS) to the Western countries became an important socio-economic issue. Since political systems and the nature of border management in these regions, migrations turned out to be a very complex and unpredictable issue. The purpose of this study is to analyze the region specific actors, practices and policies of migration in the Eastern countries, the possible scenarios and demographic consequences of the future migration flows. In order to address this issue properly, some of the complexities of labor migration phenomenon in the region are uncovered.
Authored by: Xavier Chojnicki, Ainura Uzagalieva
Published in 2008
This study seeks to determine the extent to which countries of the former Soviet Union are "infected" by the Dutch Disease. We take a detailed look at the functioning of the transmission mechanism of the Dutch Disease, i.e. the chains that run from commodity prices to real output in manufacturing. We complement this with two econometric exercises. First, we estimate nominal and real exchange rate models to see whether commodity prices are correlated with the exchange rate. Second, we run growth equations to analyse the possible effects of commodity prices and the dependency of economic growth on natural resources.
Authored by: Balazs Egert
Published in 2009
The aim of this paper is to examine the issues of gender disparities in the Commonwealth of Independent States (CIS) region, with a special focus given to countries covered by the European Neighbourhood Policy (ENP). The analysis is conducted in several dimensions: labour participation, economic opportunity, political empowerment, educational attainment, and health and demography. Beside the comparative study of "in region differentials" done for the CIS, I analyze the trends in gender disparities in comparison to EU-12 and EU-15, using data for the period 1985-2005.
The study confirms the existence of slightly different paths in which gender disparities have evolved over time. While in EU-15 women participation in labour market, their remuneration, and position in public life have significantly increased, in majority of the CIS countries a gradual decrease of female labour activity was reported. In addition female representation in politics and public life has shrunken after and during the transition period. On the other hand in such fields as secondary and tertiary education attainment, health, and demography male population in the CIS region has became more disadvantaged, which also leads to enlarging gender gap.
Authored by: Magdalena Rokicka
Published in 2008
This work is done as contribution to the Regional Human Development Report 2004 section 3.7 on “Labor Markets”. The paper focuses on discussing peculiarities of the labor market transition in CIS countries, features of unemployment, labor legislation, and role of the trade unions.
The paper gathers information on the labor markets of CIS and Eastern European countries that was available by summer 2004, and draws policy recommendations based on comparison between these two groups of countries. The main conclusion is that the transformation of labor markets is not complete in any of the CIS countries; most of the problems that prevailed in the early 1990s remain. These include: centralized wage setting in five CIS countries – Belarus, Moldova, Tajikistan, Turkmenistan, and Uzbekistan; extensive unemployment and underemployment, much of which is hidden; ineffective systems of labor relations and social protection; large mismatches between the labor market skills supplied and the skills demanded by new market economies; inadequate official labor market data.
Fortunately, the strong economic growth experienced by most CIS countries since 1999 has increased the demand for labor and is putting downward pressures on unemployment rates. This offers a window of opportunity for policy makers seeking to further transform labor markets, and to modernize labor relations and social protection systems. The above analysis suggests the policy recommendations to speed up further transformation.
Authored by: Olga Pavlova, Oleksandr Rohozynsky
Published in 2005
The paper discusses the issue of labor force mobility in a broad sense, and analyses how changes in social security policy and the structure of the social safety net (SSN) affects different aspects of labor force mobility. The text is structured as follows: Introduction, then follows Chapter 2, which provides an overview of the labor market and social safety net developments in Russian and Ukraine over the last decade, as well as discusses common features of these countries. The Chapter 3 establishes theoretical models for different aspects of labor force mobility, discusses the availability of data on Russia and Ukraine to test these models, and provides a statistical analysis of the data. The Chapter 4 discusses results of the statistical analysis. The final chapter discusses policy conclusions that can be derived from comparison of the effect of the SSN on labor mobility in these two countries, and extends them to all countries in transition.
Authored by: Marek Gora, Oleksander Rohozynsky
Published in 2009
Iraq faces structural reforms designed to effect transition from opaque administrative structures to competitive markets. The process has already begun with a series of measures announced by the Coalition Provisional Authority for Iraq. The paper provides arguments in favor of establishing liberal, preferably free trade regime based on past foreign trade performance indicating that there is not much to protect, Saddam Hussein’s legacy of negotiated free trade agreements with most Arab countries and domestic political economy considerations. It also argues in favor of radical reforms in measures shaping business climate as well as explores institutional measures to lock-in a current liberal trade regime.
Authored by: Bartlomiej Kaminski
Published in 2003
In this paper we investigate the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On the one hand, higher competition exerts a downward pressure on prices because of lower mark ups. On the other hand, the catching up process of low income countries leads to a rise in the price levels and higher inflation over a transition period. Using comparative price levels for individual product categories price convergence can be established. However, the speed of convergence is rather slow, with half lives around 10 years. The enlargement has slightly stimulated the convergence process, and this impact is robust across different groups of countries. Moreover, the driving forces of convergence are explored. In line with theoretical predictions, the rise in competition exerts a downward pressure on prices, while catching up of low income countries leads to a rise in price levels.
Authored by: Christian Dreger, Konstantin Kholodilin, Kirsten Lommatzsch, Jirka Slacalek, Przemyslaw Wozniak
Published in 2007
The paper is devoted to formation of the modern corporate governance system in Kyrgyz Republic. The main factors that influence this process have been studied, e.g., legal background and practice of privatization; corporate and antimonopoly law; financial markets; stakeholders activities, etc. The authors conclude that there were significant positive changes in the sphere of corporate governance in Kyrgyzstan. First of all it should be marked that in the country that had no previous experience of private property and market, institutions of corporate governance were formed, there was a process of learning of both owners and managers how to govern the company using the available set of laws and regulations. But this process is far from being complete, since the real corporate relations are still very dysfunctional. In the authors’ opinion, improvement of corporate governance in the country requires a complex approach: upgrading of legislation must be accompanied by active measures aimed at improving the situation in all spheres that influence the quality of corporate governance. The main task in this sphere is creation of favorable legal and institutional climate which would lead to improvement of common norms of corporate governance and to attraction of external investments.
Authored by: Alexey Kisenkov, Piotr Kozarzewski, Irina Lukashova, Maria Lukashova, Julia Mironova
Published in 2006
Migration of capital, transnationalization of the world economy jung boramiriotas
Translated version of International Economics Master thesis from the St. Petersburg State University of Economics & Finance in 2008.
(Original is in Russian)
English version is also available.
This study surveys the current state of affairs in Poland with regard to the development of knowledge-intensive entrepreneurship (KIE), or new firm creation in industries considered to be science-based or to use research and development (R&D) intensively. We place KIE in Poland in the larger institutional context, outlining the key features of the country’s National Innovation System, and then focus on KIE itself. Our findings are perhaps more optimistic than many previous studies of knowledge-based economy development in Poland. We observe significant progress due to Polish access to the European Union. The frequency with which universities are playing a significant role as partners for firms in the innovation process has increased significantly; moreover, we observe a significant degree of internationalization of innovation-related cooperation. Another optimistic development is that the level of activity of venture capitalists seems to be fairly high in Poland considering the relatively low degree of development of capital markets offering VC investors exit opportunities. Moreover, after almost two decades of decline in the share of R&D spending in GDP, there are signs that this is beginning to rise, and that businesses are beginning to spend more on R&D. While demand-side problems continue to be significant barriers for the development of KIE, due to the relatively low level of education and GDP per capita in the country, the trends here are optimistic, with high rates of economic growth and improvements in the level of education of younger generations. Significant improvement is still needed in the area of intellectual property protection.
Authored by: Richard Woodward, Elzbieta Wojnicka, Wojciech Pander
Published in 2012
This report is concerned with the analysis of privatization and private sector development for the eastern and southern Mediterranean countries partnered with the European Union and collectively known as MED-11. Noting that the analysis applies to the situation prior to the dislocations of the Arab Spring, we review the shift in the relative shares of the public and private sectors in these countries, as well as the business climate affecting the development of the private sector, examine a number of cultural factors that may influence the development of the private sector, and discuss some alternative scenarios for future developments. In the last 20 years, efforts have been made in all countries of the MED-11 to encourage private sector development and, to a greater or lesser extent, privatization of stateowned assets. However, there is a great deal of differentiation among the countries in the group. In the MED-11, Israel has not only the most business-friendly policy environment but also the most developed private sector, accounting for almost 80% of employment. The other countries of the region can be divided into two groups: one, including Algeria, Libya, and Syria, where reforms promoting privatization and private sector development have been very limited, and the rest, in which they have been much more extensive (the Palestine Authority is, for obvious reasons, a rather special case). A generally poor business environment makes for a large informal sector in almost every country in the region; however, generally speaking, we do not find the cultural factors we examine to be hostile to private sector development. Optimistic, reference and pessimistic scenarios are discussed; which of these is realized in any particular MED-11 country will depend greatly on the direction of change following the events of 2011’s Arab Spring.
Written by Mehdi Safavi and Richard Woodward. Published in October 2012.
PDF available on our website at: http://www.case-research.eu/en/node/57858
This paper analyzes the direct and indirect income effects of international labor migration and remittances in selected CIS countries. The analysis is based on computable general equilibrium (CGE) models for Moldova, Ukraine, Georgia, Kyrgyzstan, and Russia. All net emigration countries would experience a sharp contraction of private consumption in the absence of remittances. In Russia, the main effect of immigration has been to hold down the real wage (as potential capital stock adjustments in response to immigration are not reflected in the authors comparative-static modeling framework). The paper concludes that because of the important contribution of migration and remittances to stabilizing and sustaining incomes in many CIS countries, enhanced opportunities for legal labor migration should figure prominently in any deepening of bilateral relations between CIS countries and the European Union under the European Neighborhood Policy.
Authored by: Aziz Atamanov, Toman Omar Mahmoud, Roman Mogilevsky, Kseniya Tereshchenko, Natalia Tourdyeva
Published in 2009
Ainura Uzagalieva
Vitaly Vavryschuk
The Orange Revolution in the fall of 2004 built great hopes for a better future for Ukraine. However, three years later those hopes have been replaced by disappointment, frustration and confusion. Although progress in the areas of political freedom, pluralism, civil rights and freedom in the media remains unquestionable the record of economic, institutional and legal reforms is much more problematic. The key macroeconomic indicators are not better than they were few years ago and the business climate has barely improved. The WTO accession process remains incomplete. The perspectives of Euro-Atlantic integration are continually subject to heated domestic political controversies. The political situation remains unstable, mostly due to the hasty constitutional changes that were adopted during the Orange Revolution.
The purpose of this paper is to analyze the state of the Ukrainian economy at the end of 2007 and reflect upon what kind of reform program the Ukrainian government should consider, regardless of its political color. The reforms suggested in this paper involve a broad agenda of macroeconomic, social, structural and institutional measures. This agenda goes beyond the purely economic sphere and also addresses issues of legal, administrative and political reforms. The politics and political economy of any future reform effort will not be easy because the country is deeply divided in political, cultural, regional and ethnic terms. In such an environment, crucial reforms and strategic decisions will require a wider cross-party political consensus.
Authored by: Marek Dąbrowski
Published in 2007
This paper studies costs and benefits of institutional harmonisation in the context of EU relations with its neighbors. The purpose of this paper is to outline the likely forms of institutional harmonisation between the EU and its Eastern neighbors and provide an
overview of the methodologies that can be used in measuring its effects (costs and benefits). This paper serves as a background for two measurement exercises – one on benefits and another on costs – that are to be undertaken during the second stage of research.
Authored by: Veliko Dimitrov, Vladimir Dubrovskiy, Anna Kolesnichenko, Irina Orlova
Published in 2007
Baseline Research Agenda UNWTO Taskforce Women Empowerment in TourismDr Lendy Spires
As part of the UN Millennium Development Goal on gender equality, the UNWTO formed a Taskforce for the Empowerment of Women through Tourism in 2008. On November 11th 2008 a few members of this taskforce met in London for an informal meeting in which they discussed first steps of necessary actions. As a taskforce member Dr Irena Ateljevic agreed to supply the „state of the art‟ of research in the area of women empowerment in tourism. This final report presents the „state of the art‟ of research in the area of women empowerment in tourism.
Problem Statement and Objectives One of the proposed actions in the draft action plan developed by the taskforce on November 11th is putting in place a “data collection system”, including desk research and case studies. However, as pointed out in the taskforce meeting, before any decisions regarding further re- search can be made, stocktaking of the existing state of affairs in this field of research is nec- essary. In the field of women empowerment in tourism there is currently no overview of what has been done so far in terms of research. Secondly, current knowledge is fragmented and dispersed across various disciplines and sectors.
Therefore, it was complicated to define the white spots in this field and to lay out an agenda for future research in this field. Thus, this research has the following main objective: To enable the UNWTO Taskforce to make informed decisions with regard to their future re- search agenda by: presenting an overview of the current state of affairs in women empowerment and tourism; summarize the major issues and conclusions in this field of research; identify the knowledge gaps.
Methodology and Structure In conducting this desk research the following three major sources of information have been consulted: o Academic studies The following process was applied: 1. On request, one database concerning the topic was send by CIRET: the International Center for Research and Study on Tourism
The empirical analysis of the determinants of institutional development in transition countries as well as the qualitative country studies summarized in this publication allow for some optimism concerning a potential impact of the EU on institution building and governance quality in CIS countries. Regression analysis reveals a positive impact of EU cooperation agreements below a membership perspective. Alternatively to the EU, entry into the NATO accession process also exerts incentives for better institutions which are often overlooked. In contrast, WTO membership is not found to have any impact on institution building in CIS countries. While there is room for some EU-related optimism given the results from the regression analysis it depends on the country-specific ENP action plans and programs whether or not ENP cooperation actually leads to Europeanization or institutional convergence towards EU standards in the CIS. The case studies on the effectiveness of Neighborhood Europeanization through ENP in Ukraine, Georgia, and Azerbaijan reveal that current EU policies towards these countries can be, at best, seen as a catalyst but not as a main driver of institutional convergence. A perspective for a stake in the internal market is on the long horizon for Ukraine only. ENP mechanisms for conflict resolution in Georgia and Azerbaijan have been rather weak before the recent clash in Abkhazia and South Ossetia. The top-down institutional convergence, i.e. an EU-first strategy, worked well for Enlargement Europeanization but implemented in the ENP it significantly reduces the leverage of the EU to create a ring of well-governed neighbour states.
Authored by: Thorsten Drautzburg, Andrea Gawrich, Inna Melnykovska, Rainer Schweickert
Published in 2008
In this paper the authors undertake an ex-post evaluation of whether the special economic zones (SEZs) introduced in Poland in 1994 have been successful in meeting regional development objectives. They evaluate the policy of as many of its objectives as possible: employment creation, business creation (which includes attracting foreign direct investment), income or wage effects, and environmental sustainability. They use different panel data methods to investigate this question at the powiat and gmina levels in Poland during the 1995-2011 period. It is also possible to include numerous controls to reduce the problem of the omitted variables bias such as education level, dependency rates, state ownership, general subsidies and whether the area is urban or rural. The results indicate that SEZs in Poland have been successful in a number of their objectives such as private business creation. The positive effect of the policy however mainly comes through foreign direct investment (FDI), whereas the effects on e.g. investment and employment are small or insignificant. In other areas, such as securing higher income levels and locking firms into the sustainability agenda through the adoption of green technologies and reduced air pollution, the authors find only a small positively moderating effect of the policy on what are traditionally economically disadvantaged areas in Poland that used to be dependent on the socialist production model. Hence, despite high levels of FDI, the zones policy has not managed to overcome the legacy of backwardness or lagging regions. The main policy implication of the paper is that SEZs may be successful in stimulating activity in the short run but the policy must be seen as one of necessary temporality and can therefore not stand alone. Before launching SEZs, policymakers must have plans in place for follow up measures to ensure the longer term competitiveness and sustainability implications of such an initiative. There is a need to understand the connection between the specific incentive schemes used (in this particular case tax incentives were used) and the kinds of firms and activities they attract, including the behavioral models that those incentives promote.
Authored by: Camilla Jensen
Published in 2014
Labor migration from Eastern Europe and the member countries of Commonwealth of Independent States (CIS) to the Western countries became an important socio-economic issue. Since political systems and the nature of border management in these regions, migrations turned out to be a very complex and unpredictable issue. The purpose of this study is to analyze the region specific actors, practices and policies of migration in the Eastern countries, the possible scenarios and demographic consequences of the future migration flows. In order to address this issue properly, some of the complexities of labor migration phenomenon in the region are uncovered.
Authored by: Xavier Chojnicki, Ainura Uzagalieva
Published in 2008
This study seeks to determine the extent to which countries of the former Soviet Union are "infected" by the Dutch Disease. We take a detailed look at the functioning of the transmission mechanism of the Dutch Disease, i.e. the chains that run from commodity prices to real output in manufacturing. We complement this with two econometric exercises. First, we estimate nominal and real exchange rate models to see whether commodity prices are correlated with the exchange rate. Second, we run growth equations to analyse the possible effects of commodity prices and the dependency of economic growth on natural resources.
Authored by: Balazs Egert
Published in 2009
The aim of this paper is to examine the issues of gender disparities in the Commonwealth of Independent States (CIS) region, with a special focus given to countries covered by the European Neighbourhood Policy (ENP). The analysis is conducted in several dimensions: labour participation, economic opportunity, political empowerment, educational attainment, and health and demography. Beside the comparative study of "in region differentials" done for the CIS, I analyze the trends in gender disparities in comparison to EU-12 and EU-15, using data for the period 1985-2005.
The study confirms the existence of slightly different paths in which gender disparities have evolved over time. While in EU-15 women participation in labour market, their remuneration, and position in public life have significantly increased, in majority of the CIS countries a gradual decrease of female labour activity was reported. In addition female representation in politics and public life has shrunken after and during the transition period. On the other hand in such fields as secondary and tertiary education attainment, health, and demography male population in the CIS region has became more disadvantaged, which also leads to enlarging gender gap.
Authored by: Magdalena Rokicka
Published in 2008
This work is done as contribution to the Regional Human Development Report 2004 section 3.7 on “Labor Markets”. The paper focuses on discussing peculiarities of the labor market transition in CIS countries, features of unemployment, labor legislation, and role of the trade unions.
The paper gathers information on the labor markets of CIS and Eastern European countries that was available by summer 2004, and draws policy recommendations based on comparison between these two groups of countries. The main conclusion is that the transformation of labor markets is not complete in any of the CIS countries; most of the problems that prevailed in the early 1990s remain. These include: centralized wage setting in five CIS countries – Belarus, Moldova, Tajikistan, Turkmenistan, and Uzbekistan; extensive unemployment and underemployment, much of which is hidden; ineffective systems of labor relations and social protection; large mismatches between the labor market skills supplied and the skills demanded by new market economies; inadequate official labor market data.
Fortunately, the strong economic growth experienced by most CIS countries since 1999 has increased the demand for labor and is putting downward pressures on unemployment rates. This offers a window of opportunity for policy makers seeking to further transform labor markets, and to modernize labor relations and social protection systems. The above analysis suggests the policy recommendations to speed up further transformation.
Authored by: Olga Pavlova, Oleksandr Rohozynsky
Published in 2005
The paper discusses the issue of labor force mobility in a broad sense, and analyses how changes in social security policy and the structure of the social safety net (SSN) affects different aspects of labor force mobility. The text is structured as follows: Introduction, then follows Chapter 2, which provides an overview of the labor market and social safety net developments in Russian and Ukraine over the last decade, as well as discusses common features of these countries. The Chapter 3 establishes theoretical models for different aspects of labor force mobility, discusses the availability of data on Russia and Ukraine to test these models, and provides a statistical analysis of the data. The Chapter 4 discusses results of the statistical analysis. The final chapter discusses policy conclusions that can be derived from comparison of the effect of the SSN on labor mobility in these two countries, and extends them to all countries in transition.
Authored by: Marek Gora, Oleksander Rohozynsky
Published in 2009
Iraq faces structural reforms designed to effect transition from opaque administrative structures to competitive markets. The process has already begun with a series of measures announced by the Coalition Provisional Authority for Iraq. The paper provides arguments in favor of establishing liberal, preferably free trade regime based on past foreign trade performance indicating that there is not much to protect, Saddam Hussein’s legacy of negotiated free trade agreements with most Arab countries and domestic political economy considerations. It also argues in favor of radical reforms in measures shaping business climate as well as explores institutional measures to lock-in a current liberal trade regime.
Authored by: Bartlomiej Kaminski
Published in 2003
In this paper we investigate the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On the one hand, higher competition exerts a downward pressure on prices because of lower mark ups. On the other hand, the catching up process of low income countries leads to a rise in the price levels and higher inflation over a transition period. Using comparative price levels for individual product categories price convergence can be established. However, the speed of convergence is rather slow, with half lives around 10 years. The enlargement has slightly stimulated the convergence process, and this impact is robust across different groups of countries. Moreover, the driving forces of convergence are explored. In line with theoretical predictions, the rise in competition exerts a downward pressure on prices, while catching up of low income countries leads to a rise in price levels.
Authored by: Christian Dreger, Konstantin Kholodilin, Kirsten Lommatzsch, Jirka Slacalek, Przemyslaw Wozniak
Published in 2007
The paper is devoted to formation of the modern corporate governance system in Kyrgyz Republic. The main factors that influence this process have been studied, e.g., legal background and practice of privatization; corporate and antimonopoly law; financial markets; stakeholders activities, etc. The authors conclude that there were significant positive changes in the sphere of corporate governance in Kyrgyzstan. First of all it should be marked that in the country that had no previous experience of private property and market, institutions of corporate governance were formed, there was a process of learning of both owners and managers how to govern the company using the available set of laws and regulations. But this process is far from being complete, since the real corporate relations are still very dysfunctional. In the authors’ opinion, improvement of corporate governance in the country requires a complex approach: upgrading of legislation must be accompanied by active measures aimed at improving the situation in all spheres that influence the quality of corporate governance. The main task in this sphere is creation of favorable legal and institutional climate which would lead to improvement of common norms of corporate governance and to attraction of external investments.
Authored by: Alexey Kisenkov, Piotr Kozarzewski, Irina Lukashova, Maria Lukashova, Julia Mironova
Published in 2006
Similar to CASE Network Studies and Analyses 324 - Regulatory Policy in Ukraine: Current State and What Should be Done to Improve the Business Environment
The Institute for Economic Research and Policy Consulting (IER) has released the 21-th monthly enterprise survey “Ukrainian business in wartime” for January 2024.
The goal of the project is to quickly collect information on the current state of the economy at the enterprise level.
The field stage of the 21-th wave lasted from January 16 to January 31, 2024. The enterprise managers compared the work results in January 2024 with December 2023, assessed the indicators at the time of the survey (January 2023), and gave forecasts for the next two, three, or six months, depending on the question. In certain issues (where indicated), the work results were compared with the pre-war period (before February 24, 2022).
In January 2024, 552 companies were surveyed.
Main results of the 21-th monthly enterprise survey:
• In January 2024, long-term expectations are improving, and uncertainty is easing, but the "here and now" recovery is stagnating amid business concerns about security, labor shortages, and demand issues.
• The Business Activity Recovery Index is positive but lower than a month ago.
• The Industrial Confidence Indicator is also positive, but the downward trend continues for the second month in a row.
• Uncertainty in the 2-year perspective has decreased. Uncertainty in the six-month perspective for the business activity continued to decrease gradually and remained unchanged for the overall economic environment. Uncertainty in the 3-month perspective is decreasing (or not increasing) for core expectations, excluding exports.
• Production indicators in January significantly worsened compared to December. At the same time, expectations regarding production in the three months horizon have not changed for the fourth month.
• Employment indicators are declining, and businesses are having trouble finding skilled workers.
• The enterprises' export results have worsened, but the expected changes in the short term remain positive. The share of enterprises operating at full capacity has remained unchanged for the third month in a row.
• The first place in the list of obstacles is shared by "unsafe to work" and "rising prices."
• The main events that businesses are waiting for are the end of the war and the reduction of taxes.
• More than half of the respondents have a neutral assessment of the Government's economic policy.
New Monthly Enterprises Survey. Issue 20. (12.2023) Ukrainian Business in Wartime
The Institute for Economic Research and Policy Consulting (IER) has released the 20-th monthly enterprise survey “Ukrainian business in wartime” for December 2023.
The goal of the project is to quickly collect information on the current state of the economy at the enterprise level.
The field stage of the 20-th wave lasted from December 13 to December 31, 2023. The enterprise managers compared the work results in December 2023 with November, assessed the indicators at the time of the survey (December 2023), and gave forecasts for the next two, three, or six months, depending on the question. In certain issues (where indicated), the work results were compared with the pre-war period (before February 24, 2022).
In December, 535 companies were surveyed.
Main results of the 20-th monthly enterprise survey:
• In December 2023, Ukrainian business considered danger the most acute problem, but entrepreneurs continued to adapt to work in war conditions.
• Despite the deteriorating security situation and high uncertainty affecting long-term plans, businesses are showing resilience by focusing on finding solutions for the present and the near future.
• Business activity recovery index remains high for two months in a row. Production indicators improved in December compared to November.
• Production expectations in the short term are positive but have not been growing for several months.
• Long-term expectations worsened for the first time, although the percentage of "optimists" still outweighs "pessimists."
• Half-yearly expectations regarding the business activity at the enterprise and the overall economic environment have not changed compared to November, but the annual trend towards a gradual deterioration of the values is recorded.
• Employment indicators continued their seasonally slowing trend, while the labor market experienced a shortage of both unskilled and skilled workers.
• In December, the list of obstacles changed significantly; security issues and "labor shortages" ranked 1st and 2nd, with price increases obtained 3rd place.
• Negative assessments of the government's economic policy decreased, and the percentage of neutral ones increased.
New Monthly Enterprises Survey. Issue 19. (11.2023) Ukrainian Business in Wartime
The Institute for Economic Research and Policy Consulting (IER) has released the 19-th monthly enterprise survey “Ukrainian business in wartime” for November 2023.
The goal of the project is to quickly collect information on the current state of the economy at the enterprise level.
The field stage of the 19-th wave lasted from November 17 to November 30, 2023. In November, 539 companies were surveyed.
The enterprise managers compared the work results in November 2023 with October 2023, assessed the indicators at the time of the survey (November 2023), and gave forecasts for the next two, three, or six months, depending on the question. In certain issues (where indicated), the work results were compared with the pre-war period (before February 24, 2022).
Main results of the 19-th monthly enterprise survey:
• The economic recovery rate accelerated again amid the cessation of the downward trend in short-term optimism and the reduction of uncertainty.
• Uncertainty in the 3-month perspective has decreased significantly, and uncertainty in the 2-year perspective, although still high, has also decreased somewhat.
• The rate of business activity recovery compared to the previous year is high and has almost doubled compared to the previous month.
• Industrial confidence indicator increased, production indicators compared to previous months, and expectations for three months remain optimistic.
• The share of enterprises operating at full capacity has increased.
• Rising prices, insecurity, logistical problems, and labor shortages top the list of obstacles.
• The obstacle "unsafe to work" moved from the 3rd to the 2nd position in the list of obstacles.
• Employment indicators showed a seasonal slowdown, while the labor market experienced a shortage of unskilled workers.
The paper discusses possible directions and magnitudes of the relationship between the social security driven tax wedge, employment and shadow employment in Russia and Ukraine. The first section presents a summary of the economic and institutional background for development of the current size and structure of the socially driven tax wedge in both countries. The second section presents some theoretical considerations on the relationship between the social protection system, tax wedge, non-employment and finally, shadow employment. The third section contains an attempt to econometrically estimate the magnitude of the possible relationship between the tax wedge and total employment rates in both countries. In the fourth section, the authors try to discover the mechanism of influence of the last reform of the Ukrainian payroll tax system on the structure and size of shadow employment in the country. The last analytical section closes the circle leading the reader back from shadow employment to wages and finally to the issue of access to social security institutions. The last section concludes.
Authored by: Marek Gora, Oleksandr Rohozynsky, Irina Sinitsina, Mateusz Walewski
Published in 2009
New Monthly Enterprises Survey. Issue 18. (10.2023) Ukrainian Business in Wartime
The Institute for Economic Research and Policy Consulting (IER) has released the 18-th monthly enterprise survey “Ukrainian business in wartime” for October 2023.
The goal of the project is to quickly collect information on the current state of the economy at the enterprise level.
For reference: The field stage of the 18th wave lasted from October 16 to 31, 2023.
This survey uses a panel sample that includes 534 enterprises located in 21 of 27 regions of Ukraine, including Vinnytsya, Volyn, Dnipropetrovsk, Zhytomyr, Zakarpattya, Zaporizhzhia, Ivano-Frankivsk, Kyiv, Kirovohrad, Lviv, Odesa, Poltava, Rivne, Sumy, Ternopil, Kharkiv, Khmelnytskyy, Cherkasy, Chernivtsi and Chernihiv regions and the Kyiv city.
Main results of the 18-th monthly enterprise survey:
• In October 2023, the recovery rate is slowing down, although business optimism for the three- and six-month outlook is high, but has stopped growing in recent months.
• "Unsafe to work" remains among the top 3 obstacles to doing business.
• Uncertainty in the six-month and two-year horizon remains high, and uncertainty in the three-month horizon is increasing.
• The recovery rate of business activity compared to last year remains strong, although the trend to slow down continues.
• The previous month's trend of reduction in production growth rates continued.
• The share of enterprises operating near full and at full capacity increased after three months of decline, and export indicators improved compared to the previous month.
The paper examines the quality of the business climate in the group of the Commonwealth of Independent States (CIS) from the prospective of the level of development of entrepreneurship, and individual countries’ attractiveness to the foreign direct investments (FDI). The analysis suggests that the main obstacles for further improvements of the business climate in this group of countries are high level of corruption, inefficiency in the existing system of tax administration and regulation, discretionary implementation of custom and trade regulations, low level of property rights protection, and macroeconomic instability. Some explanations of the historical and institutional causes of these business impediments are provided.
Although the net FDI inflow to CIS countries has been substantially increased since the time they gained independence, it’s still well bellow than in Central & Eastern Europe Countries (CEE). The number of private enterprises per capita vastly varies within the CIS countries, with some of them approaching the OECD level, but some else lagging far behind. FDI stocks also unequally distribute within the CIS group. Fuel exporting countries are better off than fuel importing countries, although the individual country’s business climate within two groups does not differ significantly.
As a conclusion, paper suggests a number of concrete public policy recommendations aiming to improve business climate in the CIS region. This paper focuses on discussing the deep systemic causes of the existing business and investment climate in the CIS, its potential negative implications for economic growth and possible cures.
Authored by: Vladimir Dubrovskiy, Oleg Ustenko
Published in 2005
The objective of the PICK-ME (Policy Incentives for Creation of Knowledge – Methods and Evidence) research project is to provide theoretical and empirical perspectives on innovation which give a greater role to the demand-side aspect of innovation. The main question is how can policy make enterprises more willing to innovate? This task is fulfilled by identifying what we consider the central or most salient aspect of a demand-side innovation- driven economy, which is the small and entrepreneurial yet fast growing and innovative firm. We use the term “Gazelle” to signify this type of firm throughout the paper. The main concern of policy-makers should therefore be how to support Gazelle type of firms through various policies. The effectiveness of different policy instruments are considered. For example, venture capitalism is in the paper identified as an important modern institution that renders exactly the type of coordination necessary to bring about an innovation system more orientated towards the demand side. This is because experienced entrepreneurs with superior skills in terms of judging the marketability of new innovations step in as financiers. Other factor market bottlenecks on the skills side must be targeted through education policies that fosters centers of excellence. R&D incentives are also considered as a separate instrument but more a question for future research since there is no evidence available on R&D incentives as a Gazelle type of policy. Spatial policies to foster more innovation have been popular in the past. But we conclude that whereas the literature often finds that new knowledge is developed in communities of physically proximate firms, there is no overshadowing evidence showing that spatial policies in particular had any impact on generating more of the Gazelle type of firms.
Authored by: Itzhak Goldberg, Camilla Jensen
Published in 2014
New Monthly Enterprises Survey. Issue 15. (07.2023) Ukrainian Business in Wartime
IER released the Fifteenth monthly enterprise survey "Ukrainian business in wartime" for June 2023.
The monthly survey of enterprise managers is conducted by the Institute of Economic Research and Policy Consulting" (IER) as part of the project "For Fair and Transparent Customs," funded by the European Union and co-financed by the International Renaissance Foundation and the ATLAS Network (USA).
The need for comprehensive information on the economic situation is crucial for economic policy in wartime. The Institute for Economic Research and Policy Consulting conducts a monthly enterprise survey using the Business Tendency Survey approach to quickly collect information on the current economic state at the enterprise level. The methodology is designed to assess the situation from the “base level”: the judgments and expectations of key economic agents such as entrepreneurs and business managers.
The monthly survey consists of two parts: the regular one and the special one.
Respondents regularly answer questions on the changes in key activity indicators and short-term forecasts for future changes in the same indicators. This entails the dynamics of output (production), sales, exports, debt, new orders, employment, etc. We also focus on estimates and expectations of the changes in the business climate and business activity at the enterprise in the next six months. This part of the survey applies the business tendency survey methodology, harmonized according to the Joint Harmonized EU Program of Business and Consumer Surveys (BCS) requirements.
The special part of the monthly enterprise survey is devoted to the war’s impact on the production activity of enterprises and exports and the assessment of government policy on business support. The industry dimension in data analysis is used in the issue.
Main results of the Fourteenth monthly enterprise survey:
In July 2023, for the first time in the last three months, uncertainty in the long term decreased; instead, entrepreneurs became more cautious about the short and medium-term plans, where uncertainty gradually increased for the second month in a row.
Estimates of the current business activity at the enterprise and the overall economic environment have slightly deteriorated, while expectations remain high.
Compared to the previous months, production indicators slightly worsened, and expectations for three months, while remaining highly positive, tend to stagnate. Despite a slight decrease, the share of enterprises operating at full and near full capacity remains dominant.
The importance of obstacles "unsafe to work" and "power supply cuts" remains significant for every third surveyed enterprise.
Export activity has slowed, although companies have positive expectations for the next three months.
Only a third of enterprises were able to increase the workers' salaries from the beginning of 2023, on average, by 12%.
New Monthly Enterprises Survey. Issue 17. (09.2023) Ukrainian Business in Wartime
The Institute for Economic Research and Policy Consulting (IER) has released the Seventeenth monthly enterprise survey “Ukrainian business in wartime” for September 2023.
The goal of the project is to quickly collect information on the current state of the economy at the enterprise level.
This survey uses a panel sample that includes 534 enterprises located in 21 of 27 regions of Ukraine, including Vinnytsya, Volyn, Dnipropetrovsk, Zhytomyr, Zakarpattya, Zaporizhzhia, Ivano-Frankivsk, Kyiv, Kirovohrad, Lviv, Odesa, Poltava, Rivne, Sumy, Ternopil, Kharkiv, Khmelnytskyy, Cherkasy, Chernivtsi and Chernihiv regions and the Kyiv city.
The field stage of the 17-th wave lasted from September 18 to September 29, 2023. The enterprise managers compared the work results in September 2023 with August 2023, assessed the indicators at the time of the survey (September 2023), and gave forecasts for the next two, three, or six months, depending on the question. In certain issues (where indicated), the work results were compared with the pre-war period (before February 24, 2022).
The monthly survey consists of two parts: the regular one and the special one. Respondents will regularly answer questions on the changes in key activity indicators and short-term forecasts for future changes in the same indicators: output (production), sales, exports, debt, new orders, employment, etc. We will also focus on estimates and expectations of the changes in the business climate and business activity at the enterprise in the next six months.
The special part of the Monthly survey provides information on specific topics. A special part examines the enterprises' problems, the war's impact on production volumes, export activity, basic business needs, and the assessment of government policy.
Main results of the Seventeenth monthly enterprise survey:
• Business expectations in the short term remain high, although the production recovery rate has slowed somewhat (as evidenced by a number of indicators).
• Risks related to war are becoming a significant factor in the business environment: for the first time during the survey, the risk related to war took second place in the rating of obstacles.
• Business relies on itself and needs a friendlier regulatory policy.
• Uncertainty in the long-term horizon is high and unchanged, while uncertainty in the short-term and semi-annual horizons is decreasing.
• Half-yearly expectations regarding the business activity and the overall economic environment remain high and positive.
• Compared to the previous month, production indicators slightly improved, while three-month expectations decreased slightly.
• Businesses still experience difficulties in finding skilled workers and difficulties in finding unskilled workers are gradually decreasing.
This paper focuses on knowledge-based entrepreneurship, or new firm creation in industries which are considered to be science-based or to use research and development intensively, in the East Central European (ECE) context. On the basis of case studies of thirteen knowledge-based firms in six ECE countries, we suggest that KBE firms in these countries may differ in some important ways from the conventional picture of new technology based firms. In general, we see the ECE knowledge-intensive firm as a knowledge-localiser or customiser, adapting global knowledge to local needs on the domestic market, rather than a knowledge-creator generating new solutions for global markets. The entrepreneurs who start and run these businesses are skilled at spotting trends early and bringing them to their countries. Based in countries that generally have poor reputations as sources of innovative, high-technology products, but having established strong brands for themselves in their home markets, they are struggling with the challenge of entering export markets with products and services that can achieve global, or at least regional, recognition. The studies of the companies discussed here suggest that ECE firms are still in the early stages of this strategic shift.
Authored by: Slavo Radosevic, Richard Woodward, Deniz Eylem Yoruk
Published in 2011
New Monthly Enterprises Survey. Issue 12. (04.2023) Ukrainian Business in Wartime
IER released the twelfth monthly enterprise survey "Ukrainian business in wartime" for April 2023.
The monthly survey of enterprise managers is conducted by the Institute of Economic Research and Policy Consulting" (IED) as part of the project "For Fair and Transparent Customs," funded by the European Union and co-financed by the International Renaissance Foundation and the ATLAS Network (USA).
The monthly survey of enterprise managers is conducted by the Institute of Economic Research and Policy Consulting” (IED) as part of the project “For Fair and Transparent Customs,” funded by the European Union and co-financed by the International Renaissance Foundation and the ATLAS Network (USA).
The need for comprehensive information on the economic situation is crucial for economic policy in wartime. The Institute for Economic Research and Policy Consulting conducts a monthly enterprise survey using the Business Tendency Survey approach to quickly collect information on the current economic state at the enterprise level. The methodology is designed to assess the situation from the “base level”: the judgments and expectations of key economic agents such as entrepreneurs and business managers.
The monthly survey consists of two parts: the regular one and the special one.
Respondents regularly answer questions on the changes in key activity indicators and short-term forecasts for future changes in the same indicators. This entails the dynamics of output (production), sales, exports, debt, new orders, employment, etc. We also focus on estimates and expectations of the changes in the business climate and business activity at the enterprise in the next six months. This part of the survey applies the business tendency survey methodology, harmonized according to the Joint Harmonized EU Program of Business and Consumer Surveys (BCS) requirements.
The special part of the monthly enterprise survey is devoted to the war’s impact on the production activity of enterprises and exports and the assessment of government policy on business support. The industry dimension in data analysis is used in the issue.
Main results of the twelfth monthly enterprise survey
In April, enterprises showed their best results for the entire survey period and remained optimistic (albeit somewhat less than before) about the near future. The importance of "unsafe to work" as an obstacle to doing business has decreased. Assessments of the current situation in the country and the business activity at the enterprise have increased, and expectations, while remaining high, have become somewhat more restrained than a month ago. The dynamics of production indicators were the best for the entire survey period. Uncertainty over the six- and three-month horizons continues to decrease (excluding exports and employment). But the longer-term future remains unclear for business: uncertainty over the two-year horizon is hi
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The report examines the social and economic drivers and impact of circular migration between Belarus and Poland, Slovakia, and the Czech Republic. The core question the authors sought to address was how managing circular migration could, in the long term, help to optimise labour resources in both the country of origin and the destination countries. In the pages that follow, the authors of the report present the current and forecasted labour market and demographic situation in their respective countries as well as the dynamics and characteristics of short-term labour migration flows between Belarus and Poland, Slovakia, and the Czech Republic, concentrating on the period since 2010. They also outline and discuss related policy responses and evaluate prospects for cooperation on circular migration.
Podręcznik został opracowany w celu przekazania trenerom i nauczycielom podstawowej wiedzy, która może być przydatna w prowadzeniu szkoleń promujących pracę rejestrowaną. Prezentuje on z jednej strony korzyści z pracy rejestrowanej, z drugiej – potencjalne koszty związane z pracą nierejestrowaną. W pierwszej kolejności informacje te przedstawiono w odniesieniu do pracowników najemnych (rozdział 2), podkreślając w sposób szczególny to, że negatywne konsekwencje pracy nierejestrowanej są ponoszone przez całe życie. Ze względu na specyficzną sytuację cudzoziemców pracujących w Polsce konsekwencje ponoszone przez tę grupę opisano oddzielnie (rozdział 3). Ponadto zaprezentowano skutki dotyczące pracodawców z szarej strefy z wyodrębnieniem tych, którzy zatrudniają cudzoziemców (rozdział 4). Uzupełnieniem przedstawionych informacji jest opis działań podejmowanych przez państwo w celu ograniczenia zjawiska pracy nierejestrowanej w Polsce (rozdział 5) oraz prowadzonych w Wielkiej Brytanii, czyli w kraju będącym liderem w walce z szarą strefą (rozdział 6).
European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
One of the key instruments applied toward these goals is the retirement age. Formally it is a legally established boundary: once people have crossed it – on average – they significantly lose their ability to perform work (the so-called old-age risk). But since the 1970s, in many developed countries the retirement age has become an instrument of social and labor-market policy. Specifically, in the 1970s and ‘80s, an early retirement age was perceived as a solution allowing a reduction in the supply of labor, particularly among people with relatively low competencies who were approaching retirement age, which is called the lump of labor fallacy. It was often believed that people taking early retirement freed up jobs for the young. But a range of economic evidence shows that the number of jobs is not fixed, and those who retire don’t in fact free up jobs. On the contrary, because of higher spending by pension systems, labor costs rise, which limits the supply of jobs. In general, a good situation on the labor market supports employment of both the youngest and the oldest labor force participants. Additionally, a lower retirement age for women was maintained, which resulted to a high degree from cultural conditions and norms that are typical for traditional societies.
Until now, the banking sector has been one of the strong points of Poland’s economy. In contrast to banks in the U.S. and leading Western European economies, lenders in Poland came through the 2008 global financial crisis without a scratch, without needing state financial support. But in recent years the industry’s problems have been growing, creating a threat to economic growth and gains in living standards.
For an economy’s productivity to increase, funds can’t go to all companies evenly, and definitely shouldn’t go to those that are most lacking in funds, but to those that will use them most efficiently. This is true of total external financing, and thus funding both from the banking sector and from parabanks, the capital market and funds from public institutions. In Poland, in light of the relatively modest scale of the capital market, banks play a clearly dominant role in external financing of companies. This is why the author of this text focuses on the bank credit allocation efficiency.
The author points out that in the very near future, conditions will emerge in Poland which – as the experience of other countries shows – create a risk of reduced efficiency of credit allocation to business. Additionally, in Poland today, bank lending to companies is to a high degree being replaced by funds from state aid, which reduces the efficiency of allocation of external funds to companies (both loans and subsidies), as allocation of government subsidies is not usually based on efficiency. This decline in external financing allocation efficiency may slow, halt or even reverse the process, that has been uninterrupted for 28 years, of Poland’s convergence, i.e. the narrowing of the gap in living standards between Poland and the West.
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance.
This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.
Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of
individuals into informal employment, I use a rich set of control variables representing several individual characteristics.
Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is
stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland.
Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland.
But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020).
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported.
In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019.
Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion).
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic.
A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
"Many brilliant prophecies have appeared for the future of the EU and our entire planet. I believe that Europe, in its own style, will draw pragmatic conclusions from the crisis, not revolutionary ones; conclusions that will allow us to continue enjoying a Europe without borders. Brussels will demonstrate its usefulness; it will react ably and flexibly. First of all, contrary to the deceitful statements of members of the Polish government, the EU warned of the threats already in 2021. Secondly, already in mid-March EU assistance programs were ready, i.e. earlier than the PiS government’s “shield” program. The conclusion from the crisis will be a strengthening of all the preventive mechanisms that allow us to recognize threats and react in time of need. Research programs will be more strongly directed toward diagnosing and treating infectious diseases. Europe will gain greater self-sufficiency in the area of medical equipment and drugs, and the EU – greater competencies in the area of the health service, thus far entrusted to the member states. The 2021-27 budget must be reconstructed, to supplement the priority of the Green Deal with economic stimulus programs. In this way structural funds, which have the greatest multiplier effect for investment and the labor market, may return to favor. So once again: an addition, as a conclusion from the crisis, and not a reinvention of the EU," writes Dr. Janusz Lewandowski the author of the 162nd mBank-CASE seminar Proceeding.
Dla wielu rodaków europejskość Polski jest oczywista, trudno jest im nawet wyobrazić sobie, jak kształtowałyby się losy naszego kraju bez uczestnictwa w integracji europejskiej. Szczególnie młode pokolenie traktuje osiągnięty przez nas dzięki uczestnictwie w Unii ogromny postęp cywilizacyjny jako coś danego i naturalnego. Jednak świadomość tego, jaki był nasz punkt wyjścia, jaką przeszliśmy drogę i jak przyczyniły się do tego unijne działania oraz jakie wynikały z tego korzyści powinna nam stale towarzyszyć. Bez tej świadomości, starannego weryfikowania faktów i docenienia naszych osiągnięć grozi nam uleganie niesprawdzonym argumentom przeciwników integracji europejskiej i popełnienie nieodwracalnych błędów. Dla tych, którzy chcą poznać te fakty, przygotowany został raport "Nasza Europa. 15 lat Polski w Unii Europejskiej". Podjęto w nim ocenę 15 lat członkostwa Polski z perspektywy doświadczeń procesu integracji, z jego barierami i sukcesami, a także wyzwaniami przyszłości.
Raport jest wynikiem pracy zbiorowej licznych ekspertów z różnych dziedzin, od wielu lat analizujących wielowymiarowe efekty działania instytucji UE oraz współpracy z krajami członkowskimi na podstawie europejskich wartości i mechanizmów. Autorzy podsumowują korzyści członkostwa Polski w Unii Europejskiej na podstawie faktów, nie stroniąc jednakże od własnych ocen i refleksji.
This report is the result of the joint work of a number of experts from various fields who have been - for many years – analysing the multidimensional effects of EU institutions and cooperation with Member States pursuant to European values and mechanisms. The authors summarise the benefits of Poland’s membership in the EU based on facts; however, they do not hide their own views and reflections. They also demonstrate the barriers and challenges to further European integration.
This report was prepared by CASE, one of the oldest independent think tanks in Central and Eastern Europe, utilising its nearly 30 years of experience in providing objective analyses and recommendations with respect to socioeconomic topics. It is both an expression of concern about Poland’s future in the EU, as well as the authors’ contribution to the debate on further European integration.
Poland’s new Employee Capital Plans (PPK) scheme, which is mandatory for employers, started to be implemented in July 2019. The article looks at the systemic solutions applied in the programme from the perspective of the concept of the simultaneous reconstruction of the retirement pension system. The aim is to present arguments for and against the project from the point of view of various actors, and to assess the chances of success for the new system. The article offers a detailed study of legal solutions, an analysis of the literature on the subject, and reports of institutions that supervise pension funds. The results of this analysis point to the lack of cohesion between certain solutions of the 1999 pension reform and expose a lack of consistency in how the reform was carried out, which led to the eventual removal of the capital part of the pension system. The study shows that additional saving for old age is advisable in the country’s current demographic situation and necessary for both economic and social reasons. However, the systemic solutions offered by the government appear to be chiefly designated to serve short-term state interests and do not create sufficient incentives for pension plan participants to join the programme.
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991.
As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Estonia has Europe’s most transparent tax system (while Poland is second-to-last, in 35th place), and is also known for its pioneering approach to taxation of legal persons’ income. Since 2000, payers of Estonian corporate tax don’t pay tax on their profits as long as they don’t realize them. In principle, this approach should make access to capital easier, spark investment by companies and contribute to faster economic growth. Are these and other positive effects really noticeable in Estonia? Have other countries followed in this country’s footsteps? Would deferment of income tax be possible and beneficial for Poland? How would this affect revenue from tax on corporate profits? Would investors come to see Poland as a tax haven? Does the Estonian system limit tax avoidance and evasion, or actually the opposite? Is such a system fair? Are intermediate solutions possible, which would combine the strengths or limit the weaknesses of the classical and Estonian models of profit tax? These questions are discussed in the mBank-CASE seminar Proceeding no. 163, written by Dmitri Jegorov, deputy general secretary of the Estonian Finance Ministry, who directs the country’s tax and customs policy, Dr. Anna Leszczyłowska of the Poznań University of Economics and Business and Aleksander Łożykowski of the Warsaw School of Economics.
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit.
Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
This Report has been prepared for the European Commission, DG TAXUD under contract TAXUD/2017/DE/329, “Study and Reports on the VAT Gap in the EU-28 Member States” and serves as a follow-up to the six reports published between 2013 and 2018.
This Study contains new estimates of the Value Added Tax (VAT) Gap for 2017, as well as updated estimates for 2013-2016. As a novelty in this series of reports, so called “fast VAT Gap estimates” are also presented the year immediately preceding the analysis, namely for 2018. In addition, the study reports the results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). It also scrutinises the Policy Gap in 2017 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses.
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how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
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As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
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What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
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@Pi_vendor_247
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Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
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CASE Network Studies and Analyses 324 - Regulatory Policy in Ukraine: Current State and What Should be Done to Improve the Business Environment
1. S t u d i a i A n a l i z y
S t u d i e s & A n a l y s e s
C e n t r um A n a l i z
S p o l e c z n o – E k o n omi c z n y c h
C e n t e r f o r S o c i a l
a n d E c o n omi c R e s e a r c h
3 2 4
Ewa Balcerowicz and Oleg Ustenko
Regulatory Policy in Ukraine: Current State
and What Should be Done to Improve the Business
Environment
Wa r s aw , A p r i l 2 0 0 6
3. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
3
Contents
Abstract ..................................................................................................................... 5
Introduction............................................................................................................... 6
1. What economic theory says about regulation ................................................... 8
1.1. What regulation is and why it is imposed ................................................ 8
1.2. Regulation in practice: why the remedy creates problems .................... 9
2. Key lessons from international experience on successful state regulatory
policy ....................................................................................................................... 10
2.1. Quality regulation: creation of good regulation..................................... 11
2.2. Access to quality information about regulation .................................... 13
2.3. Implementation of regulation .................................................................. 13
3. Regulatory policy in Ukraine in 2005 ................................................................ 14
4. Results of the regulatory policy actions and unresolved issues ................... 17
4.1. Creation of regulation .............................................................................. 17
4.2. Review of the regulation stock................................................................ 20
4.3. Business community involvement.......................................................... 22
4.4. Registration .............................................................................................. 23
4.5. Permits ...................................................................................................... 26
4.6. Licenses.................................................................................................... 29
References .............................................................................................................. 30
4. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
Ewa Balcerowicz is a co-founder and the President of the Board of the CASE - Center for
Social and Economic Research, where she also conducts her research. She graduated in
1977 from the Warsaw School of Economics (SGH), then called the Main School of Planning
and Statistics (SGPiS). There she also received her PhD (1988). The major field of her
research and publications include: SME sector, environment for development of the private
sector, banking sector and insolvency systems, barriers of entry and exit in transforming
economies of CEEC.
Oleg Ustenko is a senior economist at The Bleyzer Foundation and also an associate with
CASE Ukraine. His financial and economic research is focused on CIS countries. He has
been involved in different projects carried out by the World Bank, OECD, governments of CIS
countries and leading international universities, as well as by different representatives of the
private sector. Mr. Ustenko holds a Master's Degree from Harvard University and a
Candidate of Sciences degree from the Kiev State Economic University.
4
5. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
5
Abstract
The regulatory environment for businesses in Ukraine has been considered unfavorable and
market unfriendly. Although various governments have made numerous efforts to improve it,
many of these attempts have failed and increasing the quality of the regulatory environment
in the country still remains on the agenda of the government. With this report we claim to
review a set of measures undertaken in Ukraine after the Orange Revolution in the area of
deregulation of business activity. The paper analyzes the effectiveness of actions undertaken
in Ukraine in a general framework of successful regulatory policies implemented in other
parts of the world. Based on this analysis we developed concrete public policy measures
aiming to increase the quality of the regulatory environment in the country, which, in turn,
should secure Ukraine’s further movement toward a real, functioning market economy.
6. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
6
Introduction
The regulatory environment for business in Ukraine has for many years been
perceived as an unfavorable one. This conclusion has been made in a number of studies
undertaken in the late 1990s and in this decade.1 In comparative cross-country analyzes,
Ukraine has also been frequently evaluated as a difficult place to do business. For example,
according to the Heritage Foundation Index of Economic Freedom, computed annually since
1995, Ukraine belongs to the group of mostly unfree economies and has been placed close
to the end of the list of economies ranked according to decreasing levels of economic
freedom2. The small size of the SME sector in Ukraine seemed to be yet another piece of
strong evidence of the overregulation of the Ukrainian economy. For example, the share of
small enterprises in the total production of industry was only 2.9% in 2000.3 The large size of
the gray economy in Ukraine has been an additional indicator of the unfriendly regulatory
environment. Moreover, overregulation and poor regulation create incentives and make room
for corruption. According to the Transparency International Corruption Perception Index
(CPI)4, Ukraine has been perceived as a very corrupt country5.
The various Ukrainian governments have made numerous efforts to improve the
regulatory environment, and these efforts gained momentum in the years 2001-2003 when
many programs on deregulation were launched. Despite all these efforts, which were
1 See for example IFC (1997); Tegipko (1999); Institute of Competitive Society (2002); Nashchekina
and Timoshenkov (2003). Also Quarterly Enterprise Survey prepared since August 2002 by the
Institute for Economic Research and Policy Consulting in Kiev and available at
http://www.ier.kiev.ua/English/qes_eng.cgi.
2 The results and the methodology of the assessment can be found at the Heritage Foundation’s
website: www.heritage.org
3 State Statistics Committee (2005). According to the Law on Enterprises in Ukraine, manufacturing
(and construction) enterprises are classified as small when they employ less than 200 people. In other
sectors this limit varies from 15 employees in retail trade to 100 employees in science. In this respect
Ukraine differs from the EU where the limit for a small enterprise is 50 workers and a company
employing above 50 people and up to 250 is classified as medium-sized. Unfortunately, differences in
statistical criteria make a genuine comparision impossible. Knowing, however, the Ukrainian definition
of small enterprise, it is fair to say that in Ukraine’s manufacturing sector big enterprises dominate,
while in the EU member states the SME sector does.
4 See www.transparency.org/policy_and_research/surveys_indeces/cpi
5 The score for Ukraine has been in the range of 2.6 in 1999 and 2.4 in 2002 on the scale 0 – 10,
where 0-highly corrupt, 10-highly clean.
7. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
discussed in the Blue Ribbon Commission’s report for Ukraine published in early 20056, the
business climate has remained unfriendly and uncompetitive as compared to what investors
find in the majority of market economies. In January 2005 Ukraine was listed only 124th in a
ranking of ease of doing business encompassing a total of 155 countries7. Domestic and
foreign entrepreneurs continued to complain about the administrative burden imposed on
them8. This is one of the explanations as to why the contribution of small enterprises to
manufacturing sector production remained small9. The gray economy, conversely, has
remained large and by the estimates of the Ukrainian Ministry of Economy accounted for
34% GDP in 2004.10 Corruption marginally decreased but was still perceived as high11.
The objective of this paper is to review regulatory policy and deregulation measures
undertaken in Ukraine after the Orange Revolution and aimed at improving the environment
for business in the country and thus enhancing entrepreneurship. We start with a brief
theoretical discussion about regulation and why governments impose it (Section 1). Then we
list problems that regulation creates, though its rationale is to solve specific economic and
social problems that emerge in market economies; we also discuss how economic theory
explains the origin of these deficiencies. This brings us to Section 2, where we make a brief
presentation of the international experience in improving business regulation through
undertaking deregulation actions and incorporating basic rules with regard to the creation
and execution of business regulation into the everyday practice of governments. The first two
sections (1 and 2) provide a good framework and context to discuss the current state of the
business regulatory environment in Ukraine as well as to evaluate the regulatory policy of the
Ukrainian government in recent years, which are the topics of Sections 3 and 4. The lessons
learnt from a number of developed countries that have furthest deregulated their economies,
are used to make recommendations for Ukraine on further deregulation as well as on
improving the quality of law creation. These recommendations are presented in Section 4
and are divided by problems that are discussed in the subsequent sub-sections.
6 Proposal for the President: A New Wave of Reform, Blue Ribbon Commission for Ukraine, Kiev
2005, http://www.carnegieendowment.org/files/BRCReport121204Eng2.pdf
7 World Bank and IFC (2006). Doing Business in 2006. Creating Jobs.
8 See: UCIPR, CIPE, and ICS (2005), The business climate in Ukraine: the Current Situation and
Expectations. Survey of Business Associations; Ernst & Young (2005). Doing Business in Ukraine;
IFC (2004), Business Environment in Ukraine; Palianytsia (2004). Business Environment Study
Ukraine.
9 In fact this further decreased, accounting for 2.4% in 2004, see: State Statistics Committee (2005).
10 Ministry of Economy (2005). Tendencies in the shadow sector of the economy, available at
http://me.kmu.gov.ua/control/uk/publish/article?art_id=48658&cat_id=38737
11 In 2004 CPI was 2.6. See www.transparency.org/policy_and_research/surveys_indeces/cpi/2005.
The problem of corruption is investigated in detail in Dubrovskiy (2006).
7
8. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
1. What economic theory says about regulation
1.1. What regulation is and why it is imposed
The importance of economic freedom for economic growth and the wealth of the
nation had been raised and discussed in detail by the father of modern economics, Adam
Smith, in his famous work An Inquiry into the Nature and Causes of the Wealth of the
Nations, published for the first time in 1776. Such a perception of economic freedom has
been further elaborated by other classical economists, the Austrian school, and in the 20th
century by Friedrich von Hayek and Milton Friedman.
An important element of economic freedom is free entry into the market and free exit
from the market. It has been theoretically proven that these two fundamental mechanisms
make markets competitive. They will ensure that the more efficient firms, and those
producing in line with market demand, survive and prosper, while inefficient units will contract
and eventually embark on exit. Free entry and competitors discipline enterprises and force
them to decrease costs and introduce technological innovations and new products. Recent
developments in the theory of industrial organization have clearly established that the
presence of free entry and free exit by itself imposes a discipline on incumbent firms and
forces them to behave as if these rivals have already entered the market, ensuring an
improvement in the allocation of resources and the overall welfare.12
Therefore, the basic question is why governments impose limitations to economic
freedom by introducing and executing administrative constraints to individuals and entities
starting or running business activities. This is what economic literature calls regulation. The
fundamental rationale for government’s intervention is the existence of market failure: the
free operation of market forces results in a greater (or lesser) than optimum level of output in
activities with negative (or positive) externalities. Negative externalities include environmental
pollution, unemployment (caused by technological change, etc), asymmetric information,
barriers to entry, increasing returns, etc. It is the public interest theory, originating from Arthur
Pigou’s work The Economics of Welfare, that highlighted the need for government to limit
economic freedom as to maximize social welfare. The same theory implies that governments
can effectively compensate for the impact of market failure caused by externalities. The
public interest theory made room and justified the creation and operation of industrial, trade
and entrepreneurship policies.
12 The theory of Contestable Markets by Baumol, Panzar and Willig (1988).
8
9. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
1.2. Regulation in practice: why the remedy creates problems
Economists who contributed to the so-called new theory of growth13 proved, with the
use of statistical tests, that high growth rates are positively correlated with a high scope of
openness of the country, i.e. with free trade (e.g. Baldwin 1992) and the protection of
property rights, and negatively with different forms of administrative regulation (e.g. Barro
and Sala-I-Martin 1995).
The empirical research on regulation shows that the way in which government plays
its role of imposing and enforcing regulation is of vital importance.
First, there is strong theoretical and empirical evidence that administrative constraints
imposed on business impact the scope of economic activities undertaken by entrepreneurs
and the macroeconomic performance of the country.
The economic literature has also elaborated on the impact of barriers to entry on
technical and allocative efficiency and consumer welfare (Bain, 1968; Stigler, 1968; Von
Wizsacker, 1980; Demsetz, 1982).
For the business community, regulation brings about compliance costs: administrative
and paperwork costs that are necessary to meet government requirements. In Sweden,
which ranks high in the World Bank ranking of ease of doing business for 2005,14 some six
years earlier compliance costs were conservatively estimated at SEK 50 billion (see: NNR,
2002,
p. 1).
Debate on the public interest theory has also led to the formulation of alternative
explanations for government intervention, including the regulatory capture theory and the
theory of rent seeking society. According to the capture theory, economic regulation is
introduced at the behest of the regulated sector of the economy, and that it is this sector, and
not the public, that benefits from state intervention. In the 1970s economic theory of
regulation (also known as interest group theory of regulation) offered an explanation for why
a regulatory institution will be captured by producers at the expense of consumers; it is
because the latter are worse organized and for them collecting funds for lobbying is much
more difficult than for producers (Stigler, 1971; Peltzman, 1976), or by one pressure group
against others competing for privileges rationed by the state (Becker, 1983). Much attention
was placed on an analysis of the costs of government regulation born by the society and
generated by rent-seeking entrepreneurs. They capture a regulatory institution and make it
introduce regulation friendly to them and at the expense of consumers, or entrants, or foreign
13 Its creation had been initiated by Paul Romer in 1983, whose paper entitled Increasing returns and
long term growth questioned the assumptions of Solow’s theory of growth, which had dominated since
the 1960s.
14 Sweden was 15th in the ranking that encompasses 155 countries, see: Word Bank and IFC (2006).
9
10. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
investors. The social costs of such rent-seeking emerge and the costs of lobbying for such
regulation is a deadweight cost (Tullock 1996).
2. Key lessons from international experience on successful
state regulatory policy
The creation and practical implementation of effective regulation has been on the
agenda of the group of most developed market economies over the last 30 years. This is due
to a number of reasons. First, there has developed a strong and well-grounded consensus
that it is business that creates jobs and economic growth and improves the welfare of a
society. Second, there has been a growing understanding on the part of governments that
the regulatory environment significantly affects the decisions of individual investors and
enterprises, and that large administrative burdens imposed on business discourages entry
into markets and curtails the growth of active companies. It has been widely recognized that
compliance costs are a charge against the scarce resources of the private sector.
Furthermore, the globalization of markets, increasing competition and growing international
regulatory competitiveness, have contributed to an increased interest on the part of policy
makers in improving the quality of business regulation, and, in particular, reducing
unnecessary and undesirable administrative burdens to business.
This part of the paper discusses the international experience in improving business
regulation and policy lessons gained. These lessons are used in Section 4 of the paper,
where specific policy recommendations relevant for Ukraine are proposed.
How do governments actually go about creating better business regulation? National
level approaches differ due to a number of factors like national history, administrative culture,
etc. Therefore there is the potential for cross-cutting and cross-national learning. Below,
experiences of the frontrunners in making regulation better are presented. Lessons learnt are
divided into three areas. These areas are: (1) creation of regulation, (2) access of business
to information on regulation (3) implementation of regulation.
10
11. Studies & Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
2.1. Quality regulation: creation of good regulation
Any law should be ex ante assessed to carefully examine how the proposed
changes in regulation will affect the economy and welfare of the society. In fact,
so called regulatory impact assessment (RIA) should be an integral part of the
policy development process, in order to strengthen transparency and
accountability in regulatory decision-making. RIA is an effective tool to deal with
the most difficult challenges which governments face in regulatory decision-making
and, in particular, to continue improving a country’s economic
competitiveness, ensuring that all government actions are consistent with market
economy principles, and to continue to improve transparency in the decision-making
process. One of the sub aims of this ex ante audit of regulation is to study
and take into consideration the compliance cost of business regulation.
Assessment of the impact of regulation is an obligatory practice in many countries,
including Western Europe, USA, Canada, and New Zealand. In New Zealand, with a long
tradition of RIA preparation, a much stronger tendency to use ex ante assessments of new
regulation has been observed from April 2001. Since then, all policy proposals submitted to
the Cabinet of Ministers must be accompanied by a Regulatory Impact Statement (RIS) and
Business Compliance Cost Statement (BCCS). RIS and BCCS are published and are
included in the Explanatory Notes to bills submitted to the House of Commons.
RIA needs to be adopted by the government and the parliament as a self-constrained
device and necessary instrument for high quality regulation. In case this commitment is
weak, then RIA becomes a very formal and unimportant exercise. As a result, the idea of ex
ante evaluation of intended changes in regulation is spoiled. This statement can be
supported by an example from the Polish experience. In 2003, the Polish Cabinet of
Ministers approved the methodology of preparing RIA and initiated the assessment of new
laws proposed. However, neither the government nor the parliament were seriously
concerned with the results of the RIAs, therefore the ex ante assessment of new laws
became merely a formal procedure and findings were poor.
11
12. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
It is important to provide a good institutional intragovernmental environment so as
to produce quality regulation and to prepare quality RIA and BCCS.
Well-educated and trained staff is required if quality regulation is to be prepared.
Moreover, this staff should be motivated to prepare good quality law and properly assess ex
ante its impact, including business compliance costs. Important here is that an internal
monitoring system is inevitable as to control the quality of work. In New Zealand, for
example, a special unit has been established and placed in the Ministry of Economic
Development. The task of this unit is to review the regulatory impact and business
compliance costs statements prepared by governmental departments and to make
comments whenever standards of analysis are not met. Besides controlling Business
Compliance Costs, the unit also teaches how to improve these statements (see MED 2001).
In addition, there has been a special education program for government departments to
increase the recognition of compliance costs for business and to change approaches in
policy planning so as to factor in concerns about the level of these costs.
The results of regulatory impact assessments and, specifically, business
compliance costs assessments need to be published.
RIAs and BCCSs should be published for the following reasons. First, publication of
RIAs and BCCSs makes the public in general and business society in particular aware of
proposed regulation, and gives them the opportunity to respond and to have a say regarding
the cost of regulation. Second, publication of an ex ante regulation evaluation increases the
government’s accountability. Business society, in particular, and the public, in general, have
better grounds for evaluation of government performance and may use this knowledge in the
political process (voting). Third, publication of RIAs is also important for the improvement of
their quality, as government agencies by nature try to minimize their work load and are
inclined to regard regulation from a governmental perspective. A good example is Sweden,
where 19 business organizations created in 2001 the Board of the Swedish Industry and
Commerce for Better Regulation (NNR) with the task of studying the RIAs, revealing their
weaknesses and communicating findings with the government (see NNR 2002). The report,
published in May 2002 after reviewing some 150 recent RIAs and assessing them against 11
criteria jointly describing their quality, showed that impact statements were generally much
below the standard expectation of being a genuine instrument of ex ante audit of regulation.
In the process of creating and improving business-related regulation, partnerships
with the business community should be used extensively.
Business advice should be sought so as to have first hand knowledge of costs born
by enterprises to comply with regulation and so as to identify priorities in alleviating
regulatory barriers to entry and growth of companies.
12
13. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
In Sweden, stakeholders are entitled (by law, and this applies to all governmental
bodies that propose regulation as well as parliamentary commissions and committees) to
express their opinions on proposed regulation, as well as the accompanying RIA (see NNR
2002).
2.2. Access to quality information about regulation
Business needs good quality and easily accessible information about regulation
that is binding for entrepreneurs and companies. Easily accessed and clear
information reduces the time, effort and cost necessary to find and comply with
regulation and the risk and the costs of “getting it wrong”.
International experience suggests that those countries which provided entrepreneurs
and companies with high quality information accessible 24-hours a day through e-technology
made tremendous progress in their developments. Much effort and commitment in this
direction has been shown by the governments of Australia, USA, Canada, and New Zealand.
In these countries, governmental departments have developed and updated websites where
they clearly present all information that is needed by businesses. In New Zealand,
additionally, a one-stop business portal was created in 2001. Info lines provide assistance in
cases where website info does not suffice.
13
2.3. Implementation of regulation
• Enforcement of regulation should be consistent: to this end the law has to be clear so
as to not leave room for different interpretations by implementing institutions
• Administrative capacity has to be in place: well-trained, well-motivated, well-supervised
staff, with a customer-focused approach, is necessary
• Procedures need to be transparent and clear so as not to leave room for discretion on
the part of the administration
• Forms should be plain and easy to use with electronic templates to be filled in by
businesses
• Enforcement of regulation has to be monitored and followed up with revision
• On-line facilities for businesses should be introduced
14. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
On-line access to the institutions that implement regulation reduces substantially
business costs in terms of both money and time.
On-line facilities are costly investments for the government but they pay back quickly. To
enhance their use in some countries, governments introduced special incentives for
businesses. In New Zealand, for example, the Companies Office (a companies register)
introduced reduced rates for businesses settling their affairs on-line (MED 2001).
• Administrative charges for business need to be reasonably low so as not to create a
barrier to the entry and growth of companies
3. Regulatory policy in Ukraine in 2005
Starting from the beginning of 2005, the President and the Government have
undertaken a number of serious actions aimed at improving the regulatory environment in
order to enhance the development of private business. These actions are briefly discussed
below. They have focused on increasing the quality of law through improving regulatory
impact analysis, the elimination of some redundant or distortive legal acts, securing
stakeholders’ consultations, and improving laws regulating permissions and inspections.
However, some of these steps did not bring the expected results, owing to a number of
reasons to be discussed in Section 4 of this paper.
(1) On 12 May, 2005 Presidential Decree (#779/2005) on Liberalization of
Entrepreneurial Activity and State Support to Entrepreneurship was issued15. It requires that
(i) all government agencies review all their regulatory acts and bring them into compliance
with article #4 of the law on On the Main Principles of State Regulatory Policy in the Sphere
of Economic Activity of September 11, 200316; (ii) all government agencies increase
transparency in regulatory policy and improve access to information on regulation of
economic activity; (iii) the Cabinet of Ministers prepares and submits to the Parliament (a) a
draft law on the unified social tax, (b) a draft law on the permission system for business, (c)
amendments to the Law on Licensing of Some Types of Economic Activity, which should
decrease the number of activities required to be licensed, (d) amendments to the Law on
Profit Tax and Law on Value Added Tax, which should decrease the tax pressure on
enterprises by decreasing tax rates; (iv) secures an increase in 2006 budget expenditures for
15 The text of the Decree is available at: http://www.president.gov.ua/documents/2340.html
16 Find this at http://zakon.rada.gov.ua/cgi-bin/laws/main.cgi. Article 4 concerns principles of the state
regulatory policy and defines them as (i) advisability, (ii) adequacy, (iii) effectiveness, (iv) equilibricity,
(v) predictability, (vi) transparency and public participation.
14
15. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
the national program on supporting small business development; (v) introduces a “national
concept” of developing “administrative services”. The last requirement is rather a vague one.
(2) Presidential Decree #901/2005 concerning state regulatory policy On Some
Measures on Securing Implementation of the State Regulatory Policy was issued on 1 June
2005.17 It requires (i) improvement of qualifications of the state regulatory bodies’ staff
through special training programs. Pointing out the importance of the qualifications of the
public administration, the Decree has only signaled intention and has left room for
government action to this end.
The Decree also asks for (ii) the development of a concept of regulatory impact
assessment (RIA). The decree does not specify, however, which spheres it relates to and it
is vague. Moreover, RIA has been introduced as a general requirement for all regulatory acts
by the 2003 Law On the Main Principles of State Policy in the Sphere of Economic Activity
(article 5). Finally, the President requested (iii) a review of all regulatory acts issued by
government bodies with the goal of bringing them into compliance with the principles set forth
in the Law on the Main Principles of State Regulatory Policy in the Sphere of Economic
Activity. In opposition to the previous Decree of May 2005, which had already called for such
an action (see point 1 above), this decree was very detailed at this point. Special working
groups were to be formed. To increase public awareness of the government’s action and to
secure high quality work, the decree envisaged the inclusion of representatives of the
stakeholders into working groups and offered them a 50% quota of the seats in such task
groups. Based on the recommendations of the working group, the Ministry of Justice was
expected to take the decision on reviewed acts before the 45th day after the beginning of the
review process. Therefore, it was expected that the “cleaning procedures” would be
undertaken in a fast track regime.
(3) On 6 September, 2005 the Ukrainian Parliament passed the Law on Permissions
System in Business Activity.18 The Law had been proposed by the Cabinet of Ministers in
response to the President’s request expressed in the decree of 12 May (see point 1 above).
The main goal of this law was to introduce clear, more unified and more transparent
procedures for granting permits to private businesses and, as a consequence, to
substantially decrease room for corruption. The Law specified clearly, as well, which types of
activities are to be subject to permits. As a result, two thirds of the existing 1,200 permits
were expected to be eliminated from 5 January 2006, when the Law was to enter into force.
19
17 Find this at: http://www.president.gov.ua/documents/2754.html
18 Law No. 2806-IV; find this at: http://zakon.rada.gov.ua.
19 For more details see official address of the Head of the State Committee of Regulatory Policy and
Entrepreneurship on February 3, 2006, which is available at:
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=56143cat_id=37571
15
16. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
(4) On November 24, 2005, and with reference to the two Resolutions of the National
Security and Defense Council20, the President issued Decree #1648/200521. The Decree,
which deals with the investment climate, addresses issues related to regulatory policy and
regulation. In particular, it requires that (i) within one month government bodies will review
and introduce changes in the existing procedures and methodology for developing and
evaluating new regulatory acts so as to put them in line with the requirements of the Law On
the Main Principles of State Regulatory Policy in the Sphere of Economic Activity 22; (ii) within
one month the government will undertake measures aimed at reducing the length of
registration for a new company to one day by introduction of a one-stop-shop system; (iii)
concrete measures will be developed to conduct a reform of the tax system; (iv) the
government will implement measures aimed at decreasing time limits for processing
applications and issuing permits and lower administrative fees, especially those issued by
the fire inspections and phitosanitory bodies; (v) the government will submit a proposal on
transforming the State Committee for Regulatory Policy and Entrepreneurship into the
National Commission of the country’s executive body with a special status: supervised by the
President and accountable to the Parliament.
(5) On 26 December 2005 a new order of information exchange between one-stop-registration
offices and the Unified State Register was introduced. The provisions of a joint
resolution issued by the State Committee for Regulatory Policy and Entrepreneurship and
the Unified State Register23 should contribute to reducing the time required to open a new
business. The introduction of internet technologies and on-line registration should increase
the level of transparency and prevent private entrepreneurs from possible abuses from the
side of government officials.
(6) On 18 January 2006 the Cabinet of Ministers passed Resolution N-13-p on
Measures on Implementation of the State Regulatory Policy in 2006.24 This program
envisages (i) an increase in the quality of regulation by introducing into the process of
creation of regulatory acts a special mechanism: alternative approaches to reach goals
targeted in the specific acts are to be assessed ex ante; (ii) introduction of permanent
monitoring of the implementation of regulatory acts; (iii) providing regulatory bodies’ staff with
training programs specifically tailored to their tasks; (iv) increasing transparency and publicity
20 Resolution of June 29, 2005 on Measures to improve Investment Climate in Ukraine and resolution
of October 28, 2005 on Measures to Increase Efficiency of Private Property Rights Protection.
21 Find this at: http://www.president.gov.ua/documents/3552.html
22 For more details see Article 3.10 of the Decree. Available also at
http://www.president.gov.ua/documents/3552.html
23 For more details see Press Release of the State Committee on Regulatory Policy and
Entrepreneurship of November 11, 2005, which is available at:
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=54581cat_id=33037
24 Find this at http://www.kmu.gov.ua/control/uk/newsnpd?npdList_stind=161
16
17. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
of the process of developing and passing business regulation; (v) an improvement in
cooperation between the central and local administrative bodies on regulatory policy issues.
4. Results of the regulatory policy actions and unresolved
issues
Despite the efforts of the President and the government to improve regulatory policy,
many issues still remain unresolved and should be part of the government agenda in the
near future. The results of actions undertaken so far demonstrate that easing the
administrative burden imposed on business is a very difficult, costly, and slow process. In the
subsequent sub-sections we present the current state of affairs in a number of areas of
regulation in Ukraine and formulate recommendations on how to deal with unfinished
reforms.
17
4.1. Creation of regulation
Ex ante assessment of regulation has been introduced in Ukraine by the Law On the
Main Principles of State Regulatory Policy in the Sphere of Economic Activity which was
passed on 11 September 2003. Article 5 of this law has determined that all regulatory acts
have to be reviewed from the point of view of their possible impact on businesses, while
Article 8 requests that a report from this review, which is a regulatory impact assessment
(RIA), should include a cost-benefit analysis.
According to statistics compiled by the Council of Entrepreneurship of the Cabinet of
Ministers, RIAs have been carried out for 81.7% of laws under preparation in 2004, and for
91.4% in 200525. Taking into consideration these figures only, one has come to a positive
picture: in the two years since RIA has been introduced in Ukraine as a mandated part of the
lawmaking procedure, a majority of laws have been the subject of ex ante assessment and
only less than 9% have not been reviewed.
This positive picture will change, however, when we take into consideration the
content of RIAs. Their quality has proven to be far from satisfactory26. There are a number of
reasons for this: (1) lack of understanding of the task and (2) inadequate skills of the staff
performing assessments, which both stem from, (3) high staff turnover (among others
25 See the press release of the Council of Entrepreneurship of the Cabinet of Ministers available at
http://www.business-rada.kmu.org.ua/ua/news/337.html
26 The same source.
18. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
things). Yet another reason was (4) a lack of detailed guidelines concerning procedures and
methodology to be applied when working on RIA. Last but not least, (5) inadequate
supervision over units in charge of RIA should be mentioned here.
With regard to the last reason, it is important to notice that, according to Article 10 of
the law, a government body drafting a regulatory act is also responsible for preparing its RIA
and, finally, for monitoring law implementation.
Formally and institutionally, however, room has been created for external supervision
over the quality of regulations and RIAs, which is a must in order to guarantee genuine and
quality ex ante assessment of laws. The State Committee for Regulatory Policy and
Entrepreneurship has been equipped with the power to review each regulatory act from the
point of view of its compliance with the principles of regulatory policy adopted in Ukraine
(Article 21 of the On the Main Principles of State Regulatory Policy in the Sphere of
Economic Activity). This encompasses as well the monitoring of the quality of RIA.
ll government bodies are obliged by law to submit to the Committee their regulatory
act proposals together with RIAs. The Committee has the right to reject proposals if it finds
that they do not meet the criteria stipulated by law, as well as to request that they be made
compliant. Rejected regulatory act projects must go through the same procedure once again.
Since external supervision over preparing new regulations cannot be fully exercised
by the State Committee, then the obvious conclusion is to remove the existing obstacles and
give this body full monitoring power. The need for RIA is well recognized in Ukraine and
there is also a conviction that the position of the Committee in this respect has to be
strengthened. As has already been mentioned in Section 3, Presidential Decree #1648/2005
calls on the Government to develop a proposal on converting the State Committee for
Regulatory Policy and Entrepreneurship into an executive body with a stronger position vis-à-vis
18
other government agencies.
As has already been discussed in Section 2, the RIA results and, specifically,
business compliance costs statements, for the sake of their quality, should be published.
Therefore it is important that Article 9 of the Law on the Main Principles of State Regulatory
Policy in the Sphere of Economic Activity states that each proposed regulatory act is to be
exposed to public discussion. Moreover, public hearing is mandatory and, according to
Article 8, should be complemented by the RIA. According to Article 13 of this law, the general
public should be informed about prospective regulatory acts and their impact through media
and government agencies’ internet resources.
The practice of making the public informed about state policies vis-à-vis business is,
however, still meager. As of January 23, 2006, only four central government bodies made
publicly available information on their plans related to drafting regulatory acts for the current
19. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
year. These are the Ministry of Economy, the Ministry of Agrarian Policy, the Ministry of
Transportation, and the Ministry of Finance. Other central government agencies do not
present their plans and thus do not create room for the participation of civil society in the
prospective discussions.
19
Recommendations
1. Increase the quality of RIA so as to make it a genuine instrument for the
government in the process of business law creation. To this aim a number of actions
are necessary and they are listed below (see recommendations no. 2, 3, and 4).
2. Increase understanding of the objective of RIA and skills of the staff responsible for
making assessments by introducing special training programs. The usual requirement
to have a good incentive system for staff holds true. Namely, government officers
responsible for supervising, as well as preparing, RIA need to know in advance that
increases in their salaries and job promotions are related to their performance.
3. Detailed procedures and guidelines on how to prepare regulation impact
assessment need to be worked out so as to give clear instructions to government
staff and thus to ensure the quality of the RIA content.
4. A genuine external monitoring system over RIA preparation needs to be
established. The department of regulatory policy that exists in the State Committee
for Regulatory Policy and Entrepreneurship and is responsible for making economic
and legal evaluations of regulatory acts needs to be strengthened. A special division
should be created with its main task to exercise control over the quality of the work of
the ministerial staff responsible for ex ante analysis of compliance costs of regulation
to business. Besides the quality control of RIAs, this unit should be mandated with
responsibility for preparing training programs for ministerial staff on how to approach
and conduct assessments and on how to supervise the quality of training. This unit
should also be used as a consultation center.
5. Make state regulatory policy transparent and accountable by ensuring that all
government agencies make all information on regulatory acts drafts available to the
public. This recommendation embraces also the advice that RIAs should be
published.
20. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
20
4.2. Review of the regulation stock
The regulation stock in Ukraine is large, difficult to access, and non-transparent and
therefore difficult and costly for businesses to comply with. Also some of it is not in use any
longer and creates only confusion. Therefore, the action ordered by the Presidential Decree
of June 2005 of reviewing regulation was an appropriate one and was welcomed by the
business community. The working groups, comprised of administrative staff as well as
representatives of the stakeholders; had a mandate to analyze regulatory acts issued by
government bodies only, i.e. laws passed by the Parliament were not subject to this action
since only the Parliament has the right to repeal them.
In the short period set up for the review, which has been commonly named the
regulatory guillotine, 9,340 governmental regulatory acts were screened27, and slightly more
than half of them28 were considered to be noncompliant with the state regulatory principles
and were requested to be either fully or partly abolished.29 By 1st September 2005 94.5% of
the work was completed30 Over 1,500 representatives of the business community, academia
and the non-governmental sector were involved in this one-time extensive cleaning up
action.31
In addition to the regulatory guillotine action, the central government bodies (35
ministries and state agencies) have undertaken a separate action and evaluated 236 laws, of
which 20 were considered as not fulfilling the requirements of the state regulatory policy. Yet
after the evaluation done by the State Committee of Regulatory Policy and Entrepreneurship,
seven laws (out of the already examined 216, which in the first round were considered
compliant with the principles of the state regulatory policy by the central government bodies)
were additionally assessed as requiring changes. Based on this evaluation, central
government bodies initiated the process of developing draft laws and amendments to the
existing laws, which need to be passed by the Parliament in order to bring them into
compliance with the principles of the state regulatory policy. However, as of February 14,
2006 this work was not yet completed. The State Committee of Regulatory Policy and
27 According to the Ministry of Justice, the total stock of government regulation consists of 36,052 acts
(as of March 20, 2006).
See http://www.reestrnpa.gov.ua/REESTR/RNAweb.nsf/wpage/RnaAbout?OpenDocument. It is not
clear however, how many of these regard businesses.
28 5,184 exactly, which constituted exactly 55.5% of the total number.
29 See an official address of the Head of the State Committee of Regulatory Policy and
Entrepreneurship of February 3, 2006 at:
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=56143cat_id=37571
30 See the press release of the State Committee of Regulatory Policy and Entrepreneurship issued on
March 7, 2006. Also available at
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=56940cat_id=33911search_para
m=%C0%D0%C2searchPublishing=1
31 The same source as above.
21. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
Entrepreneurship has received for its approval only eight draft laws, which introduce
amendments to 14 existing laws out of 27 that require amendment.32
The effect of this action, however, was relatively small. Although a significant number
of regulatory acts was reviewed and many of them eliminated, no central government agency
conducted a comprehensive analysis of the quality of the existing regulatory acts. The review
has been rather simple, as it focused on checking whether the existing regulatory acts meet
the principles of the state regulatory policy and did not examine the effects of the existing
legal acts on business and the performance of different industries33. The most questioned
regulatory acts were those dealing with the competences of different government bodies and,
therefore, creating room for conflicts of interest between them, while examining these acts
against the principles of the state regulatory policy.34
Since the review has not been finished, an interdepartmental commission chaired by
the Minister of Economy has been created to complete examination of the remaining
regulatory acts. The first results of the commission’s work are encouraging, since some
important issues have been addressed. In particular, on January 11th 2006 the Cabinet of
Ministers passed resolution #17 On Introduction of Changes to the Procedure of Issuing Fire
Inspection Permits to Open Enterprises and Leasing,35 which significantly eases the process
of obtaining this type of permit. However, some further steps are required. In particular, it is
necessary to introduce correspondent amendment to article 3 of the Law on Fire Safety.36
21
Recommendations
1. Review of the regulation stock initiated in the second half of 2005 should be
completed. The newly elected Parliament should finalize the process of passing
amendments to those laws identified as not compliant with the principles of the state
regulatory policy.
2. It should be established, through dialog with the business community, whether
there is the need to repeat an action aimed at evaluating the remaining business
regulation stock.
32 See the press release of the State Committee of Regulatory Policy and Entrepreneurship issued on
March 7, 2006, referred to above.
33 See the opinion of the Council of Entrepreneurship of the Cabinet of Ministers of Ukraine at
http://www.business-rada.kmu.org.ua/ua/news/337.html
34 Here we mean either the regulatory acts, which were issued by the joint decisions of several
government bodies, or those acts which originally created a conflict of interest between government
agencies since they targeted questions also under the competence of other agencies.
35 See http://www.kmu.gov.ua/control/uk/
36 Law on Fire Safety № 3745-XII of 17.12.1993 available at http://zakon.rada.gov.ua/cgi-bin/
laws/main.cgi
22. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
22
4.3. Business community involvement
The business community’s involvement in the process of the creation of business
regulation has been growing since 2003, when Article # 4 of the Law On the Main Principles
of State Policy in the Sphere of Economic Activity opened room for consultation and obliged
governmental bodies to ask for stakeholders’ opinions. Although stakeholders’ participation
in discussions of new regulatory acts has been increasing, it still does not cover all acts
issued by the government bodies. The public participation ratio (PPR), reflecting the number
of cases publicly discussed to the total number of new regulatory acts, increased from 78%
in 2004 to 89% in 2005.37 At first glance both figures give an optimistic picture, however it
should be underlined that in many cases this participation remained in fact insignificant and
formal only. There are at least three reasons for this. The first one is that there are technical
problems with circulation and publication of regulation proposals by the government
agencies, which are caused by a lack of facilities, funding, and trained staff. The second
reason is the reluctance of some government bodies to make all information publicly
available. The third is intergovernmental departments’ conflicts of interest on some regulatory
acts, which government bodies do not want to demonstrate publicly.38
A special and far-going provision for stakeholders’ participation was made in autumn
2005, when a one time action to review regulations was ordered by the President (see
Section 3 of the paper). Representatives of stakeholders, i.e. business associations, the
private enterprise sector, as well as non-government research institutions and academia
were invited into working groups that made recommendations on individual acts and were
offered half of the seats there.
Recommendation:
Ensure genuine and significant involvement of the business community in
creating and improving business-related regulation. The increased participation of the
business community is important as it can bring about an ex ante feedback on
regulation proposals and work to keep the costs of complying with laws and
regulations lower. To this end, technical problems with the circulation of information
on proposed regulation, opinions of stakeholders and the government’s responses to
the opinions need to be solved. This requires the development and use of e-government
capacities. Also, intergovernmental departments’ relations in the process
of creation of law need to be clearly defined so as to diminish room for possible
37 According to data collected by the Council of Entrepreneurs of Ukraine, see http://www.business-rada.
kmu.org.ua/ua/news/337.html
38 For more details see I. Akimova, D. Lyapin, et al. (2005). Monitoring of publicity of regulatory acts by
central government agencies in August- October 2005. UNDP/BRC Analytical Center. A-03/2005.
23. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
conflicts of interest between the parties involved; in particular, the tasks,
responsibilities and cooperation between departments have to be thoughtfully
shaped.
23
4.4. Registration
Simplification of procedures to open business has been on the agenda of the
Ukrainian government over the last couple of years. An important step in this direction was
made in May 2003, when the Ukrainian Parliament passed the Law on State Registration of
Legal Entities and Natural Persons – Entrepreneurs, which formed the legal base for the
introduction of one-stop-shop for business registration.39 As of July 2005, 673 registration
offices out of a total number of 677 offered one-stop-shop service.40 These deal with a
number of administrative procedures to be followed before a business may formally start its
activity.
Introduction of the one-stop-shop was expected to significantly shorten the
registration process for the benefit of entrepreneurs; however in practice the outcome did not
meet expectations. One-stop-shop obviously saves the time of would-be entrepreneurs who,
prior to the reform of the registration system, had to visit many offices in order to place
applications addressed to several administrative bodies. Nevertheless, settling formalities in
a one-stop registration office still takes much time. Instead of delivering all necessary
applications at one window, the applicant has to queue in a number of lines in order to talk to
registration officers in charge of individual procedures. Furthermore, information on
registration procedures and documents necessary for reviewing applications is not helpfully
exhibited41.
It is not only the organization of work but also inadequate technical capacities of
registration offices that are to be blamed for the still poor quality of registration services. In
particular, registration offices are short of computers and software. They also need to have a
joint computer system in order to introduce, store, and transmit business applications to
respective registering bodies. Poor coordination of registration offices’ work with the work of
other administrative bodies responsible for subject registrations is another problem. This
issue has been partly addressed by the introduction in December 2005 of a new order of
information exchange between one-stop-registration offices and the Unified State Register.
The new order is also aimed at facilitating a smooth exchange of information between the
39 The full text of the law is available at http://zakon.rada.gov.ua/cgi-bin/laws/main.cgi
40 See http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=52383cat_id=33070
41 The presentation made by the Head of the State Committee of Regulatory Policy and
Entrepreneurship and available at
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=52383cat_id=33070
24. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
central administrative bodies participating in the registration process by means of internet
facilities.
Introduction of one-stop-shop alone cannot ease the administrative burden
accompanying registration. As the Ukrainian experience has demonstrated so far, the
number of procedures matters, since each of them requires some paperwork and the
collection of accompanying documents, which also involve some costs. An investor who
decides to register a company in Ukraine has to deal with 15 procedures and this number
places Ukraine close to the end of the list of 155 countries for which this data has been
collected.42 Only five countries: Belarus, Brazil, Paraguay, Uganda and Chad require more
procedures to get a limited liability company registered than does Ukraine, while four
countries: Argentina, Bolivia, Greece and Guatemala have the same number of formalities.
Let us also notice that the average number of registration formalities in the CIS countries43 is
8.3 - close to two times lower than in Ukraine. At the other extreme, there are countries with
the most friendly environment for business, where only two (in Australia, Canada, New
Zealand), three (in Denmark, Finland, Ireland and Sweden) or four (in Belgium, Norway)
formalities need to be passed to start a business.
The registration process in Ukraine is time- and money-consuming, since prior to
visiting the one-stop-shop an investor who wants to establish a limited liability company or a
joint stock company has to notarize the company’s charter and open a temporary bank
account, in which 50% of the initial capital has to be deposited in advance. Next, and before
going to a registration office, an investor has to fill in all application forms and collect required
documents in order to have a business registered at (1) the Unified State Register, (2) the
State Statistics Committee, (3) the Pension Fund, (4) the Employment Fund, (5) the Social
Insurance Fund, and (6) the Industrial Accidents Fund. The next two formalities, which are
registrations at the Tax Police and at the State Tax Administration, are not covered by the
one-stop-shop and require visits to the respective offices.
After processing all the applications by respective governmental bodies, a business is
registered and then an entrepreneur, or his/her representative, must visit a local police office
and apply for permission to produce a seal44. Having the permit in hand he/she may have a
seal made and next he/she must return to the bank in order to open a permanent bank
account for a registered business. District Tax Inspectorate must be notified of the opening of
this bank account; however, this formality does not require a visit to the inspectorate, but
may be fixed by mail.
42 As of January 2005, see Word Bank and IFC (2006), pp. 95-97.
43 Data for Kyrgyz Republic, Georgia, Kazakhstan, Russian Federation, Moldova, Azerbaijan; Ukraine excluded.
44 Required and regulated by the Decree of the Minister of Internal Affairs № 17 of January 11, 1999.
24
25. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
Such a long and troublesome procedure creates a demand for the services of lawyers
to take over the burden of registration; however, their services are obviously not free of
charge and thus increase the overall cost of starting business in Ukraine. Furthermore
Ukrainian corruption increases the cost of starting a business. If these two costs are not
factored in, then the cost of registration of a limited liability company, for example, has been
estimated at the level of 10.6% of income per capita as of January 200545. In a comparative
perspective this is quite a good result, since for Poland - for example - this is calculated at
22.2%. If these two costs (legal support and bribes) are factored in, then the cost of
registration of a limited liability company requires a larger percentage of income per capita.
25
Recommendations
1. One-stop-shop system requires an investment in the technical facilities of
registration offices and training of its staff in order to be able to perform its tasks
properly. Better coordination between registration offices and sectoral registration
bodies is also required. Improvement in these areas would help to shorten the
registration process. However, an improvement of performance of the one-stop-registration
shop system alone will not suffice to bring about a substantial easing for
entrants.
2. Registration process should be further eased by the elimination of some of the
currently binding formalities. In order to decrease business compliance costs, the
obligation to register a business at the four state social funds collecting payroll taxes
separately46 should be replaced by one for all four registration, as has been done, for
example, in Poland where the Social Security Office runs the register for all labor-related
funds. Such a change will demand, of course, a substantial organizational
effort on the part of the government in order to reorganize the internal flow of
information, and will involve additional one-off costs. In the long run, however, it will
bring substantial gains from reduced public spending (cheaper government). This
reform should be synchronized with the introduction of a unified social tax, which has
been for some time the subject of public debate in Ukraine.
3. Another detailed recommendation with regard to registration formalities - and this
one is easy to introduce - is to abandon the requirement to ask the Ministry of Internal
Affairs for a permit to produce a company seal. This formality, whose rationale might
45 According to calculations by Word Bank and IFC (2006).
46 These are (1) the Pension Fund, (2) the Employment Fund, (3) the Social Insurance Fund, and (4)
the Industrial Accidents Fund.
26. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
have been to increase the security of contracts, takes time and is not free of charge,
while it does not, in fact, protect business partners and customers from fraud.
26
4.5. Permits
Market entry has been under tough administrative control in Ukraine during the entire
transition period. At the end of 2005, there were as many as 61 broadly named business
activities that were subject to permission. Within these activities there were 1,200 specific
ones for which receiving permission was a must if a business activity was to be started and
run legally. Access to business activities subject to an administrative decision have been
regulated by more than 60 laws and close to 100 decrees issued by the Cabinet of Ministers.
Therefore, abandonment of bureaucratic control over entry into two thirds of activities which
stems from the Law on Permission System in Business Activity47 that is in force from early
January 2006 needs to be appraised as a very important move towards the improvement of
the business environment in Ukraine.
The procedures for processing and issuing permits have been numerous, non-transparent
and cumbersome, while requirements vis-à-vis businessmen and companies
applying for permits have not been clearly defined and have been difficult to access. In
addition to general regulations on permissions, however, there have also been many local
regulations introduced by regional governments. In general, the burden imposed on
entrepreneurs and companies has been high, and this has been especially damaging for
small entities which, as compared with big companies, face strong financial constraints48. In
individual areas, however, the actual burden connected with obtaining a permit differed
significantly49. The most difficult permits to obtain have been those issued by the fire and
phytosanitary inspections, which are supervised by the Ministry for Emergencies and Affairs
of Population Protection from the Consequences of the Chernobyl Catastrophe and the
Ministry of Public Health respectively. It is worth noticing that without having these two
permits no single business is allowed to start and operate an activity in Ukraine. Construction
and re-construction of buildings, for which permits are granted by local government bodies,
has been another difficult area.
Private businesses have also been required to obtain permissions, which had only an
indirect relation to the type of activity that they run. As a result, Ukrainian entrepreneurs and
47 Find this at http://zakon.rada.gov.ua/cgi-bin/laws/main.cgi
48 See for example findings of IFC/SME Support Project in Ukraine round table 2005, available at
http://www.vlasnasprava.info/ru/dozvil
49 See studies done by World Bank (2004), IFC (2005), and UNDP (2005).
27. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
companies have been forced to spend significant amounts of time and money (official fees
as well as bribes) in order to obtain the obligatory permits.
Finally, it should be added that many permits were constructed in such a way that
they were granted for a limited period of time and therefore need to be frequently renewed.
Companies navigating the troublesome procedures, have had to do so again after some
time.
In these circumstances, passing the Law on Permission System in Business Activity,
which proclaims more unified and transparent procedures for the issuance of permissions, is
a very good step towards shortening the time and decreasing the costs needed to obtain
permits. It should also help to limit corruption. It is important that the Law imposes principles
of common procedure for granting permits by both central and local government. However,
the detailed provisions of the Law may not ensure the same practice in different economic
activities. Articles 4.2 and 4.3 stipulate that the procedure for granting permit by a central
government body will be set by the Cabinet of Ministers, while the procedures to be followed
by local government bodies are to be set by the respective administrator, however, this
should be in line with the common procedure. As a result, there is still room for making the
procedures of locally granted permits more troublesome and lengthy.
President’s request (Decree #1648 of 24 November, 2005) to take measures aimed
at substantial reduction in the time required to process applications and a decrease in
administrative fees for granting permissions, has also provided a good response to the
existing problems. The Decree, which was very general, at one point was more concrete,
asking the government to start deregulation with the permits issued by the fire and
phytosanitary bodies.
Despite the fact that the Decree has set a one-month deadline for government to
come up with specific measures, so far (until mid-March 2006) there has been no formal
action made by the Cabinet of Ministers. Moreover, it is clear that the response may come in
June at the earliest, after the parliamentary election on 26 March and formation of the new
government.
The Law on Permission System in Business Activity has introduced an important
innovation, which should save the time of entrepreneurs and companies starting business
activity or renewing permits. One-stop-permit centers were proclaimed to be established to
accept applications for receiving permission and accompanying documents and – after the
applications were successfully processed - to hand over permits. Article 7.8 set a short time
limit of five days for the issuance of a permit. As of the end of 2005, there were over 700
centers open. However, a further increase in the number of centers was halted by opposition
on the part of local governments, which complained about a lack of budgetary funds needed
to establish and run such centers. Since this innovation seriously hurts the interests of local
27
28. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
bureaucrats, this might be yet another serious, though not explicit, explanation for resistance
to the further development of the centers’ network.
As far as the performance of the one-stop-permit centers is concerned, entrepreneurs
complain about the work organization and pace of dealing with applications. The head of the
permits department in the State Committee for Regulatory Policy and Entrepreneurship has
declared that centers will be able to reduce the time for processing applications and issuing
permits by three to four times.50
A broader record of how the new Law works may be available later this year after the
Cabinet of Ministers makes a review of the implementation of new regulation, which should
be done after six months from the date of its publication (i.e. after 6 March).
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Recommendations
1. Enforcement of the Law on Permission System in Business Activity should
be regularly monitored to give the government and the business community
information as to whether and to what extent the unified procedures are followed by
individual government bodies granting permits. Based on this information, the
Government should react to cases of misconduct and bring the granting procedures
in line with legal standards
2. The principle of granting many permits for a limited period of time should be
thoroughly reconsidered. The longer the time limit of the permit, the better for
business development, whereas customer protection can be well secured by
inspection, whose task is to check if permit terms are being fulfilled by an enterprise
3. In order to improve and speed up the processing of applications and the issuance
of permits, the legislative base should be further developed
4. Introducing special training programs for the staff working in one-stop-permit
centers should secure more effective and friendlier functioning of the centers
5. Finally, it is important to secure business community awareness of the
specifics of the one-stop-permit centers’ activity
50 See the statement dated 9 December 2005 and published at
http://www.dkrp.gov.ua/kompred/control/uk/publish/article?art_id=54976cat_id=33070
29. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
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4.6. Licenses
The system of licensing is regulated by the Law On Licensing of Some Types of
Economic Activities51 and is very extensive. Article 9 of the Law identifies as many as 74
types of economic activities for which obtaining a license is a must. The prerogative to define
government bodies responsible for issuing licenses has been given to the Cabinet of
Ministers.52 The Decree of the Cabinet of Ministers # 1698 of November 14, 200053 listed 36
government bodies that have the right to issue licenses.
As has already been mentioned in Section 3 above, the Presidential Decree On
Liberalization of Entrepreneurial Activity and State Support to Entrepreneurship #779/2005
requested the Cabinet of Ministries to prepare and submit to the Parliament amendments to
the Law On Licensing of Some Types of Economic Activities no later than in October 1, 2005
(Article 2.3). The amendments were expected to reduce the number of activities subject to
licensing.
The Cabinet of Ministers did not prepare the requested amendments. It was a
Member of Parliament who submitted (on October 27, 2005) the draft law on amendments to
the Law On Licensing. This draft proposes to introduce some changes to the licensing
procedures so as to make these easier for businesses and more transparent; it does not
tackle, however, the severe issue of excessive administrative control over market entry. The
draft proposes to reduce the number of business activities subject to licensing to 72, i.e. by
two only. The proposal has not been subject even to a first reading.
Recommendations
1. The scope of licensing is large and needs to be substantially reduced so as to
widen the freedom to entry and decrease the costs of operating business activities in
Ukraine. Therefore, passing the new, more liberal law on licensing should be a high
priority.
2. When working on a reduction in the scope of licensing, it is essential to ensure that
this is not being done in isolation from other forms of administrative control, which are
currently in use. In particular, licenses and permits jointly create one system of
administrative control over businesses and therefore they should be considered
together whenever any changes are planned to be introduced. Such an approach
guarantees that only one administrative instrument to control market entry will be
51 The Law On Licensing of Some Types of Economic Activities #1775-III of 1 June 2001. Available
at http://zakon1.rada.gov.ua/cgi-bin/laws/main.cgi
52 See article 1 and 6 of the Law.
53 Available at http://zakon1.rada.gov.ua/cgi-bin/laws/main.cgi
30. Studies Analyses CASE No. 324 - Regulatory Policy in Ukraine: Current State and…
used in relation to a concrete business activity. In the case of the pending
amendments to the Law On Licensing of Some Types of Economic Activities it may be
assumed that some of the licenses should be removed for the simple reason that they
duplicate the functions of existing permits.
30
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