Scenarios for Ukraine

 

Reforming institutions, strengthening the economy after the crisis

Amidst the severe geopolitical tensions that followed the political changes in the country, Scenarios for Ukraine is designed to provide insight into the different policy paths available to the country’s new leadership, beyond short-term interests and political positions.

Despite the current crisis, its geography, strong natural resource base and human capital make Ukraine well placed to leverage the next phase of globalization – defined by a soaring middle class in emerging markets – and achieve high levels of prosperity. However, institutional weaknesses coupled with the absence of a long-term development strategy are severely constraining the modernization of its economy, just as the country needs to adapt to a shifting global context.

Through a year-long strategic dialogue process, more than 300 decision-makers, government, business, and civil society leaders as well as leading experts sketched out different pathways for Ukraine’s future economic development. Stakeholders focused on three strategic challenges that determine the extent to which Ukraine can unleash its potential and benefit from the changing external environment


Adapting to Shifting Geographies of Demand in the Global Economy
As demand for some of Ukraine’s traditional exports wanes, and emerging markets transition to greater domestic consumption, Ukraine needs to reposition itself in global markets and retool its economy in line with such transformations.

Fostering Higher Levels of Value Creation in the Ukrainian Economy
Across all sectors of the economy, significant new investments are needed to increase productivity and technology adoption, which in turn requires supportive institutions and a competitive market environment.


Reducing Energy Intensity and Ensuring Reliable Access
As one of the most energy intensive economies in the world, that is also highly reliant on energy imports, the country urgently needs to focus on a reliable investment climate with a special focus on the reform of energy prices.


Scenario Framework

Central to all these challenges is the imperative to build a more supportive institutional environment based on effective cooperation among all stakeholders. The matrix of improving institutions, combined with external economic forces, sketch out the framework for the three scenario pathways that resulted from the strategic dialogue process



Scenarios

Nurturing a virtuous circle is a scenario of fundamental transformation in which stakeholders emerge with a widely-shared commitment to a new social contract based on transparency and reorientation of state expenditures. This provides fiscal space to support the modernization of the economy and unlocks a virtuous circle across sectors.



Lost in stagnation is a scenario of collapse. While the global economic context worsens, Ukrainian stakeholders fail to find common ground on a strong forward-looking agenda, leaving the country stuck in a rapidly escalating downward spiral.



Back to the future is a scenario of selective change in which the unreformed system finds a new equilibrium. Deteriorating external conditions create a sense of urgency for targeted top-level actions that support strategic sectors and catalyse new trade and investment perspectives, but stop short of transformative change.



Conclusions: Finding Common Ground for the Way Forward

Three attributes have characterized the Scenarios for Ukraine process, and could form the basis of a forward-looking agenda that succeeds in finding common ground among all stakeholders, both internal and external.

1. Strategic rather than tactical thinking: Economic reforms need to be conceived with a systemic long-term view of the country’s place in the region and its comparative advantage in an evolving global context. While potentially providing the country with short-term benefits, playing external partners against each other is unlikely to provide long-term prosperity for the country or the region.

2. Inclusive rather than divisive processes: Developing this agenda and building the requisite momentum for implementing it will require effective cooperation among stakeholders. Strategies that unite, therefore, need to prevail over actions that deepen divisions.

3. Comprehensive rather than piecemeal approach: The Ukrainian economy is a large and complex ecosystem embedded in a larger regional system, and isolated measures in one part of the system are unlikely to have fundamental effects over the long term.

Following these principles, the World Economic Forum remains committed to supporting Ukraine and acting as an impartial platform for this constructive and forward-looking multistakeholder dialogue.

Process and Stakeholder Engagement

Milestones

World Economic Forum Annual Meeting 2013
Davos-Klosters, Switzerland, 23-27 January 2013

Scenario Development Workshops
Kyiv, Ukraine, 4 July 2013
London, United Kingdom, 2 September 2013
Dnipropetrovsk, Ukraine, 7 October 2013

World Economic Forum Strategic Dialogue on the Future of Ukraine
Kyiv, Ukraine, 5-6 November 2013

World Economic Forum Summit on the Global Agenda
Abu Dhabi, United Arab Emirates, 18-20 November 2013

World Economic Forum Annual Meeting 2014
Davos-Klosters, Switzerland, 22-26 January 2014

Follow-Up Work

Beyond the launch of the final report at the Annual Meeting 2014, the World Economic Forum will support further strategic dialogues to monitor and assess future progress along the lines of the key uncertainties highlighted in the report.

Getting Involved

For more information on the project and to get involved, please contact:

Anastassia Aubakirova, Director, Head of Eurasia, E-mail: aaud7b2c586@5e3900293f5d28e70weforum.org
Andrew Chakhoyan, Senior Community Manager, Eurasia, E-mail: acha6645c9b159aab@c21930df7a2aeweforum.org
Kristel Van der Elst, Senior Director, Head of Strategic Foresight, E-mail: kve305ab7eb@805a3286weforum.org
Stephan Mergenthaler, Associate Director, Deputy Head of Strategic Foresight, E-mail:smerf589f72bc@e748fcweforum.org
Olivier Woeffray, Project Associate, Strategic Foresight, E-mail: owo7c5746af84230161@a7374d8267weforum.org