The reconstruction of Ukraine should follow the principle of "Build Back Better" and focus on the green and digital transformation of the economy. According to a study by the Vienna Institute for International Economic Studies (wiiw) and the Bertelsmann Foundation, there are six areas in the Ukrainian economy that have great potential and could be of interest to investors: renewable energy, rare raw materials, metal processing, mechanical engineering, the food industry and information technology. The development of these areas could enable Ukraine to make a leap in economic development and build technologically advanced sectors with higher added value. However, institutional reforms in the areas of rule of law and anti-corruption, as well as a strategy to attract foreign direct investment, are needed to fully exploit this potential. The education system should also be improved to further increase the number of IT graduates.
The study recommends three actions by the EU in relation to Ukraine. First, the EU should help Ukraine attract foreign direct investment by improving labour productivity through integration into European education, research, development and industrial policy programmes and by promoting better institutions. Second, the EU should improve Ukraine's access to the internal market and promote integration into EU value chains to achieve greater regulatory alignment with EU standards. Third, the EU should work closely with Ukraine to develop its industrial policy and align reconstruction with existing economic strengths and promising niches.
Foreign direct investment plays a crucial role in Ukraine's success. However, Ukraine has struggled to attract significant amounts of foreign direct investment. Therefore, military security guarantees from the West as well as institutional reforms in the areas of rule of law and property rights are necessary to facilitate the inflow of foreign direct investment on a large scale. The information technology sector has experienced a solid export-led growth trend in Ukraine over the past decade and could become one of the mainstays of the Ukrainian economy, provided its potential is fully exploited. The education system in Ukraine produces significantly more IT graduates each year than its neighboring countries in East Central Europe.
Overall, there is great potential for Ukraine to strengthen its economy by developing the six areas mentioned above. Through targeted institutional reforms, support from the EU and attracting foreign direct investment, Ukraine could make its economic development leap and build technologically advanced sectors with higher added value. It is now up to political decision-makers to take the necessary steps to realize this potential and support Ukraine on its way to a successful future.
Source: Seen in an article from www.ots.at
Source: die-nachrichten.at
