Ukraine is trapped by greed and stupidity

In Ukraine, according to various estimates, 50-60% of the population is below the poverty line. This means that the country has fallen, as economists say, into the “poverty trap”. Poverty does not allow to get a good education. Poor education does not provide an opportunity to introduce advanced technologies and raise productivity. Without productivity growth of GDP per capita does not grow. So again there is no money for education. The circle is closed. Economists have been trying to find recipes for breaking out of the poverty trap for 40-50 years. All sorts of models such as neo-Keynesian, neoclassical, institutional, etc. – give some recommendations. But all of them proceed from the premise that the economy has an unlimited cheap labor resource, which has nowhere to go in search of a better job. This factor, according to economists, will make it possible that within a couple of decades to freeze the salary at the subsistence level and sacrifice one generation (as slaves) for the “launch” of two or three basic industries, which will pull the entire economy. But theese tough models are not suitable for Ukraine, because the Ukrainians leave to work abroad and labour reserves dwindle. As a result, local entrepreneurs are forced to raise salary without a real increase in productivity. This leads to inflation, losses, loss of competitiveness and bankruptcy. To avoid this, entrepreneurs are forced to enter into an Alliance with officials, who save the business with free capital by stealing budget funds or providing preferences and rents. Well, in fact, it is inadecuate to go for the loan at 25% per annum!This is the main cause of corruption in the country. And this explains why our officials and security forces actually own all the more or less important business in the country.Without theft of the budget the economy of Ukraine will quickly be bent. Therefore, any attempt to overcome corruption or smuggling, to separate business from the government, etc. now doomed to failure.There is no theoretical model that would allow Ukraine to break out of the poverty trap in the economy. No one knows what to do with the economy of Ukraine, even the IMF. Therefore, poverty in Ukraine is, for many decades.

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