Ukraine's economic freedom score declined in 2015, ranking its economy 162nd out of 176 countries. Its score fell in eight of the ten economic freedoms due to deteriorations in property rights, government spending, and investment freedom. Ukraine has one of the lowest scores in Europe, below the world average, and its economy remains repressed with weak rule of law and a closed investment regime dominated by state-owned enterprises. Recent political instability and conflict with Russia have disrupted trade and investment.

1. 443
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
2013 data unless otherwise noted.
Data compiled as of September 2014.
Quick Facts
Population: 45.4 million
GDP (PPP): $336.8 billion
0.1% growth in 2013
5-year compound annual growth –1.3%
$7,423 per capita
Unemployment: 7.9%
Inflation (CPI): –0.3%
FDI Inflow: $3.8 billion
Public Debt: 41.0% of GDP
Economic Freedom Score
0 20 40 60 80 100
Country Comparisons
Freedom Trend
Country
World
Average
Regional
Average
Free
Economies
2011 2012 2013 20152014
50
25 75
0 100
Least
free
Most
free
44
45
46
47
48
49
50
51
46.9
60.4
67.0
84.6
46.9
Ukraine’s economic freedom score is 46.9, making its econ-
omy the 162nd freest in the 2015 Index. Its score is 2.4
points lower than last year, reflecting declines in eight of the
10 economic freedoms with especially grave deteriorations
in property rights, the management of government spend-
ing, and investment freedom. Ukraine is ranked last out of 43
countries in the Europe region, and its overall score is lower
than the world average.
Ukraine has registered the second largest score decline of any
country graded in the 2015 Index. Previously, its economic
freedom had advanced by 1.1 points, with improvements in
half of the 10 economic freedoms driven largely by gains in
business freedom and monetary freedom.
Ukraine’s economy remains “repressed.” The rule of law is
particularly weak. The investment regime remains closed,
with foreign investment competing with large state-owned
enterprises. A rigid labor market and bureaucratic busi-
ness regulations inhibit the development of a dynamic pri-
vate sector.
BACKGROUND: Ukraine gained independence after the col-
lapse of the Soviet Union in 1991. In February 2014, Presi-
dent Victor Yanukovych was ousted by pro-Euro–Atlantic
members of parliament after he used security forces to crack
down on popular protests against his attempt to tighten ties
with Russia. Petro Poroshenko was elected to replace him
in May 2014. After Yanukovych was unseated, Russia ille-
gally annexed the Autonomous Republic of Crimea, and pro-
Russian separatists increased their efforts to destabilize the
eastern part of the country. In 2014, Ukraine accepted $30 bil-
lion in aid from the IMF, World Bank, EU, and other bilateral
donors. Ukraine has signed an Association Agreement with
the EU that includes Deep and Comprehensive Free Trade
Area (DCFTA) accords. Ukraine has well-developed agricul-
tural and industrial sectors, but dependence on steel exports
and natural gas imports makes it vulnerable to global finan-
cial turmoil and Russian pressure. Ukraine joined the World
Trade Organization in 2008 and the EU’s Eastern Partnership
in 2009.
World Rank: 162 Regional Rank: 43
UKRAINE

2. 444 2015 Index of Economic Freedom
Ukraine’s average tariff rate is 2.1 percent. Trade and investment flows have been disrupted as
a result of disputes with Russia. Foreign investors may not purchase agricultural land. Bureau-
cratic requirements deter much-needed growth in private investment. The primarily cash-
based economy suffers from a lack of sufficient capitalization. Nonperforming loans continue
to be a drag on the banking system.
Complexity often creates uncertainty in commercial transactions. The business start-up pro-
cess has been streamlined, but completing licensing requirements is still time-consuming.
Modern and efficient bankruptcy procedures are not in place. The labor code is outmoded and
lacksflexibility.Massiveandprice-skewinggovernmentsubsidies(7percentofGDPonnatural
gas subsidies alone) have caused deep economic distortions.
Ukraine’s top individual income tax rate is 17 percent, and the top corporate tax rate is 18 per-
cent.Othertaxesincludeavalue-addedtaxandapropertytax.Thetotaltaxburdenequals38.9
percent of domestic income. Government spending amounts to 49 percent of GDP, and public
debt equals 41 percent of domestic output. The IMF is helping to bolster public finances.
Pro-Western Ukrainians hoped their 2014 Euromaidan revolution would dismantle the oli-
garchic politics and deeply rooted cronyism that allowed business owners to amass wealth
by exploiting their access to those in power rather than through efficient management, but
that corrupt system is still largely in place under the Poroshenko government. The judiciary
remains weak, and contracts may not be well enforced.
Property Rights
Freedom from
Corruption
Fiscal Freedom
Government
Spending
Business Freedom
Labor Freedom
Monetary Freedom
Trade Freedom
Investment Freedom
Financial Freedom
Business Freedom
Labor Freedom
Monetary Freedom
REGULATORY
EFFICIENCY
OPEN
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
GOVERNMENT
SIZE
Fiscal Freedom
Government Spending
RULE OF
LAW
Property Rights
Freedom from Corruption
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
Country World Average Rank Change
1–Year
Score
RULE OF LAW
GOVERNMENT
SIZE
REGULATORY
EFFICIENCY OPEN MARKETS
–10.0
+15.0
+16.9
–19.1
+4.3
–7.6
+78.6
+30.8
–35.0
–20.0
138th
149th
97th
163rd
115th
145th
68th
46th
168th
131st
20.0
25.0
78.7
28.0
59.3
48.2
78.6
85.8
15.0
30.0
–10.0
+3.1
–0.4
–9.5
–0.5
–1.6
–0.1
–0.4
–5.0
0
Long-Term Score Change (since 1995)
THE TEN ECONOMIC FREEDOMS
UKRAINE(continued)