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Economic Efficiency in Transition The Case of Ukraine
EconomicE?ciencyinTransition:
TheCaseofUkraine
AnatoliyG.Goncharuk
Althoughamarketeconomyisbyde?nitionmoree?ectivethanacen-
trallyplannedeconomy,variouscountriesintransitionhavefacedthe
problemofeconomicine?ciency.Theaimofthispaperistodevelop
acomprehensivemeasureofeconomice?ciencyusingtheproduction
functionframeworkandestimateitfortheUkraineeconomy.There
existnamelyavastamountofindicatorsthatsupportourhypothesis
onthediminishinge?ciencyoftheUkraineeconomyinthelastyears.
Ourin-depthanalysisshowsthatthediminishinge?ciencyisacon-
sequenceofine?ective investmentsand innovationsas well as ofan
increasingintensityofmaterialsuse.
KeyWords:economice?ciency,productivity,factors,labour,capital
jelClassi?cation:o47,c3
Introduction
Thetransitionfromanadministrative-commandeconomytoamarket
economyraisesmanytheoreticalproblemsunknownearlier,sincethis
transition is an absolutely new historical process. Andone of the key
problemsoftheformeradministrative-commandeconomythatconse-
quentlyledtotransitionwasthedecliningeconomice?ciencyofthese
economies.
The centrally planned economy practically divested itself of scien-
ti?c and technological progress, thereby there were no e?ective mo-
tivesforprogressataworkmanandenterpriselevel.Especiallythiscon-
cernedtheindustriesthatproducedgoodsaimedfor?nalconsumption,
suchasagriculturalandfood-producingindustries.Theadministrative-
command economy was based on bulky and planned distribution of
scareresourcescharacterizedby:dominationofheavyindustryandthe
defenseestablishment,withinabilitytoresponddynamicallyandade-
quatelytoconsumerneeds,slow-movingproductionapparatusandcon-
stantlyaccumulatedpervasivedisproportionsinproduction.Besides,in-
activityoftheeconomywasaccompaniedbyprofessionalinactivityof
AnatoliyG.GoncharukisAssistantProfessorattheDepartmentof
Management,OdessaNationalPolytechnicUniversity,Ukraine
ManagingGlobalTransitions4(2):129–143
130
AnatoliyG.Goncharuk
the labour force, and the essential system of employees dismissal,
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