ONE TRILLION DOLLARS�FOR UKRAINE
Andrei Illarionov,
Head of the Program, Ukrainian Institute for the Future, Kyiv, Ukraine
Senior Fellow, Center for Security Policy, Washington, USA
President, Institute of Economic Analysis, Moscow, Russia
Ukrainian Institute for the Future, Kyiv, October 18, 2021
Ukraine’s 30 Years Main Achievements, �1991-2021
2
1. Ukraine’s independence �All Ukrainian regions voted for independence on 12.01.1991
3
2. Ukraine’s anti-imperial choice �Per cent of Ukrainians voted for pro-Ukrainian leaders and parties
4
3. Ukraine’s statehood�Rule of Law Index, V-Dem, 2020
5
4. Ukraine’s non-authoritarian political regime�Freedom in the World Index, Freedom House, 2021
6
5. Ukraine’s ability to defend itself�Aggressor’s plans, 2003: Tuzla
7
Тузла
5. Ukraine’s ability to defend itself�Aggressor’s plans, 2008: “Novorossia”
8
5. Ukraine’s ability to defend itself�Aggressor’s plans, 2012: “Historic Russia”
9
5. Ukraine’s ability to defend itself�Aggressor’s plans, 2021: all Ukraine
10
5. Ukraine’s ability to defend itself�Aggressor’s plans and fact, 2021
11
Ukraine’s 30 Years Main Failure:�Economic Growth
12
Ukraine’s GDP per capita in 2020 is 30% less than in 1989�GDP per capita growth index, 1989-2020 (1989=100%)
13
Ukraine’s 30 years cumulative economic growth is negative�GDP per capita average annual growth rates in 1989-2020, %
14
- To solve most of country’s problems (living standards, health, education, social protection, science, defense, foreign policy, etc.) one needs financial resources.�- Necessary financial resources can be produced by only economic growth.�- Economic growth is the result of entrepreneurial activities of millions of people affected by external environment, social institutions and government policies.
15
Economic growth is the key to success
- External Security��- Internal Rule of Law��- Government policies: Optimum Size of Government
16
Three pillars of fast and sustainable economic growth
External security: NATO membership�Frequency of the USSR/Russia aggressions against neighbors �per 100 neighbors-years
17
Source: author’s calculations.
Legal Institutions and Economic Growth
© ИЭА
18
Rule of Law and GDP per capita as % of OECD level, 1996−2019, 174 countries
19
Optimum Size of Government
20
Relative Size of General Government:
21
Size of Government in the USA�Government expenditure as % of GDP, 1789−2020
22
Size of Government in the World�Government expenditure as % of GDP, 1950-2020
23
Size of Government and Economic Growth: �High-Income Economies
24
Size of Government and Economic Growth in the USA, 1950−2020
25
Size of Government and Economic Growth in Germany, 1950−2020
26
Size of Government and Economic Growth in Japan, 1950−2020
27
Size of Government and Economic Growth�in OECD countries, 1960-2020�(24 countries, 6 decades, 144 observations)
28
А 1 percentage point increase in the share of government spending in GDP was accompanied with about a 0.1% decline in average annual GDP growth rate
Size of Government and Economic Growth: �Transition Economies
29
Size of Government and Economic Growth in Lithuania, 1994−2020
30
Size of Government and Economic Growth in Latvia, 1994−2020
31
Size of Government and Economic Growth in Estonia, 1994−2020
32
Size of Government and Economic Growth in Georgia, 1994−2020
33
Size of Government and Economic Growth in Kazakhstan, �1992−2020
34
Size of Government and Economic Growth in Russia, 1994−2020
35
Size of Government and Economic Growth in Ukraine, 1994−2020
36
Size of Government and Economic Growth�in Transition Economies, 1999−2020 (27 countries)
37
Economic Growth Curve: �Size of Government and Economic Growth �in 18 Large Middle-Income Countries, 1991–2000
38
15-19%
Economic Growth Curve
Economic Growth Curve in Practice:�High-, Middle-, and Low-Income countries
39
Size of Government in Ireland and Japan, 1979−2018
40
GDP per capita in Ireland and Japan, 1979−2018
41
Government Expenditure per capita in Ireland and Japan, 1979−2018
42
Size of Government in China and India, 1979−2018
43
GDP per capita in China and India, 1979−2018
44
Government Expenditure per capita in China and India, 1979−2018
45
«Economic Miracles»:�doubling size of GDP per capita in 10 years�for a period of no less than 10 years
46
«Economic Miracles», 1951−2018�(GDP above 50 US$ bn by PPP)
47
Size of Government in Japan, 1951−2018
48
Size of Government in Spain, 1951−2018
49
Size of Government in Taiwan, 1951−2018
50
Size of Government in Portugal, 1951−2018
51
Size of Government in South Korea, 1951−2018
52
Size of Government in Thailand, 1951−2018
53
Size of Government in China, 1951−2018
54
Optimum Size of Government
55
Size of Government in «Economic Miracles»
56
How to reduce �Size of Government?
57
China’s Great Maneuver,�1979-1995
58
Government Expenditure as % of GDP in China, 1979–2001
59
Government Expenditure per capita in China,�constant prices, 1979–2001
60
China’s Size of Government as % of GDP and GDP Growth
61
Russia’s Maneuver,�1998-2008
62
Russia’s Size of Government �Government expenditure as % of GDP, 1992-2019
63
Russia’s Size of Government as % of GDP and GDP Growth
64
Is it possible to reduce �Size of Government in Ukraine?�Examples of democratic and transition countries.
65
Canada: Government expenditure as % of GDP, 1950-2019
66
Netherlands: Government expenditure as % of GDP, 1950-2019
67
Ireland: Government expenditure as % of GDP, 1950-2019
68
New Zealand: Government expenditure as % of GDP, 1950-2019
69
Sweden: Government expenditure as % of GDP, 1950-2019
70
Lithuania: Government expenditure as % of GDP, 1991-2019
71
What happens when �Size of Government�is reduced?
72
Canada: Size of Government as % of GDP and GDP Growth
73
Finland: Size of Government as % of GDP and GDP Growth
74
Netherlands: Size of Government as % of GDP and GDP Growth
75
New Zealand: Size of Government as % of GDP and GDP Growth
76
Spain: Size of Government as % of GDP and GDP Growth
77
Sweden: Size of Government as % of GDP and GDP Growth
78
Ireland-1: Size of Government as % of GDP and GDP Growth
79
Ireland-2: Size of Government as % of GDP and GDP Growth
80
Slovenia: Size of Government as % of GDP and GDP Growth
81
Lithuania: Size of Government as % of GDP and GDP Growth
82
Ukraine’s Economic Growth: �failure in 1992-2020�and�possible success in 2022-2040
83
Root of the Ukraine’s growth failure: excessive size of government�Government revenue, expenditure, deficit as % of GDP, 1992-2020
84
Excessive Size of Government kills economic growth in Ukraine�Government expenditure as % of GDP and GDP Growth
85
One Trillion Dollars for Ukraine.
National strategy till 2040:
86
Engine for Ukraine’s economic success: �to reach Optimum Size of Government (~20% GDP) by 2040
87
Ukraine’s GDP in current US$ bn, 1992-2040
88
Balassa-Samuelson Effect�GDP per capita and price level as % of USA
89
90
One Trillion Dollars for Ukraine.
Expected Results by 2040:
91
Thank You