Espreso. Global

The West is about pragmatism. Therefore, do not be overly optimistic

30 March, 2023 Thursday

If investment strategy issues are not proactively put on the agenda as equal, you will not like the economic future very much


Is there a difference between optimism and idiocy?

If we don't want to finish the country off completely, there must be.

Misconceptions about the postwar economy.

1. Investments will come.

No, they will not. Investments are deals. These are investments in specific projects in a specific place. For them to come on the expected scale, there must be hundreds or thousands of individual projects in Ukraine. Those that meet the requirements of Western investors in terms of risk and readiness. How many are there now? Zero. Who is preparing them? Let me ask you a simple question: do you personally prepare them in your business? And who will do it then?

2. Ukraine is attractive for investment.

No, it is not.

This is not an innate trait, it has to be made so. Open any study on the investment attractiveness of developing countries – their pros and cons. Everywhere we read about risks, barriers, and incentive programs.

In Ukraine, the risks and barriers are off the charts – 127th in the world in the Economic Freedom Index in 2021, and incentive programs are inferior to competing countries. How has the war affected this, what do you think?

“In Ukraine, the risks and barriers are off the charts – 127th in the world in the Economic Freedom Index in 2021, and incentive programs are inferior to competing countries. How has the war affected this, what do you think?”

Barriers need to be torn down, it's hygiene, and to compensate for the risks, incentive programs should be head and shoulders above the competition. They must be unprecedented because the abyss in which the country finds itself is unprecedented. Are the current economic authorities capable of generating such programs? Does it need foreign investment? This is the key question. In the past, everyone was satisfied with the local sandbox, and there was enough to carve up.

3. Joining the EU is the main task, the rest will follow.

No, it won't.

I'll put it very simply: if EU standards are applied to Ukrainian manufacturing businesses now, 90% of them will shut down on the first day. Environmental standards, in particular. For local players, joining the EU is a test of strength and readiness to compete.

Moreover, in all previous years, it was not Ukraine's absence from the EU that was the main factor holding back investment. The main factor was competitive backwardness in the investment market. And it hasn't gone away and won't go away on its own. Plus, the EU is full of countries that do not receive significant investment.

Yes, everyone is talking about a program to rebuild destroyed infrastructure, housing and other capital facilities. This is the most obvious need. It will give a boost to the construction industry for several years. But what's next? What about other industries?

“No "Western partners" will do our job for us. The infantile attitude that the breakthrough economic growth of our country is one of someone's external priorities and the idea that we will be dragged forward – is idiocy”

Oh, and also, no "Western partners" will do our job for us. The infantile attitude that the breakthrough economic growth of our country is one of someone's external priorities and we will be dragged forward – is idiocy. Yes, all resources are now coming from outside. But external levers will not work without domestic policy. Have we made much progress in 30 years? And would you personally be concerned about the fate of an economy that is less than 1% of the US or EU, and 0.1% of the world's? After the situation stabilizes, the content and tone of conversations about our problems will change significantly. The West is all about pragmatism.

The practical conclusion is that the more difficult the situation you find yourself in, the more radical and decisive the strategic response should be. The war has catastrophically worsened Ukraine's already weak investment position. If the investment strategy is not proactively put on the agenda as an equal priority, you will not like the economic future very much. This is an accurate prediction.


About the author. Oleksii Tymofiiv, author of the course at Deloitte Academy in Ukraine, former Smart Holding CEO .

The editorial board does not always share the opinions expressed by the blog authors.

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