9 May 2013

Life, power and progress in Ukraine

I spent about ten days in Ukraine on a job for the World Bank. During my time there, I got to thinking about development -- or the lack thereof.

Countries, of course, do not develop. Development occurs when people cooperate to protect or create public goods (such as environmental goods or security) and secure private goods (such as land or food). They do not develop (or regress) when public goods are ransacked or ignored or private goods seized.

Ukraine is not doing too well in this area:
[Ukrainian President] Yanukovych’s idea of Ukraine’s sovereignty is based not on a sense of nationhood but on a firm belief that “Ukraine can only be pillaged by the Ukrainians”. Over the years Ukrainian officials have done a fine job. The most blatant example is in public procurement.
The World Bank, indeed, has a study of procurement that notes (p. 16) that:
Construction costs in Ukraine are between 25-30% higher than in Germany, despite lower labour costs. This does not necessarily point to issues with procurement processes but rather abuse of the systems involved.
Those abuses are often a sign of deeper and more widespread problems that leaves most of the population with few good choices. In the worst cases, both guys and gals rent their bodies -- the guys as thugs and the girls as prostitutes -- but most Ukrainians work hard for little and depend on their extended networks for moral, financial and logistical support.

The bad outcomes -- and the root causes are discussed in magazines I found there (they are free in Kyiv but paywalled on the internet).*
Although it's true that poor people are easier to control (they chase food before corruption), it's also true that there's significant resistance against the powerful who plunder their country (duplicating the Russian system, even in the way that life in Moscow resembles life in Kyiv).

Femen protesters (photo) are getting a lot of attention (obviously) but also having an impact against a system that likes to ignore problems and hope that people remember their hunger (remember that the Soviet-era Ukrainian government did not report the nuclear accident at Chernobyl for days -- until it was forced to).

Although it seems like Ukraine is falling apart under the incompetent kleptocracy of Yanukovych, results from the private sector (and parts of the public sector) are encouraging. Only the future will tell whether the country goes towards a Russian-style dictatorship or a Polish-style democracy that serves its (growing) middle class.

Bottom Line: Sustainable development comes from inside a country. Outsiders can do little except support freedom and condemn corruption.

* I'm hoping that the discussions are as direct and logical in Ukrainian-language magazines and papers, but that's no sure thing. The government is attacking free media.