A bleak diagnosis
Canada has to assess Ukraine’s potential
On March 7 a roundtable on Ukraine’s demographic development took place in Kyiv. During the conference two analytical reports were presented under the same title: “Ukraine’s Potential and Its Implementation.” One report was prepared by Ukraine’s economy and finance ministries and the National Bank of Ukraine, and the other was authored by the International Center for Perspective Studies. Both studies were part of the project “Socio-Economic Performance and Potential Analysis Capacity” (SEPPAC) in Ukraine, financed by the Canadian International Development Agency (CIDA), at a cost of some 2.3 million Canadian dollars.
This is one of the first studies conducted in Ukraine, based on thorough and politically neutral analytical methods that can be used to determine Ukraine’s strategic priorities for developing a policy until 2050. Abina M. Dann, Canada’s Ambassador to Ukraine, noted that these findings present two points of view on Ukraine’s potential and its realization: a governmental and a non-governmental one. According to the ambassador, the benchmarking method is important for these studies, as they compare Ukraine to other countries in terms of demographic progress and use various demographic and financial Ukrainian indices, as well as demographic trends and their possible economic consequences for Ukraine. With the solid foundation represented by these studies, it is possible to formulate an adequate policy and take certain steps.
Ambassador Dann explained that Canada, as a medium-sized democracy with its own sizable cultural heritage, is interested in these studies because her country wants to see Ukraine in a good situation, able to use its potential for its national well-being. Assessing potential and its realization constitutes a very important problem in regard to economic growth. The Canadian side hopes that these findings will serve as the basis of related decisions.
The fact remains that both studies offer disheartening forecasts: by 2050 Ukraine’s population will have decreased by more than one- third, down to 29 million, with the number of able-bodied residents (aged 15-59) dropping almost twofold, from 30.3 million in 2005 to 16 million. Ukraine’s official study states that the catastrophic decline in the numbers of able-bodied citizens will have a direct impact on Ukraine’s labor potential by narrowing the scope of steady economic growth prospects.
The results of the NGO study show that in order to improve this situation it is necessary to add to natural population growth by nearly doubling the birth rate. The authors of the study cite the experience of many countries that have faced the problem of shrinking populations. They point out that policy measures, including material incentives, have a limited and short-lived effect on the birth rate. Over the past couple of decades not a single country has been able to resolve its depopulation problem without involving the immigration factor, state the authors of the report by the International Center for Perspective Studies.
The authors of the official study also agree that the depopulation process in Ukraine constitutes a real danger to the physical existence of the Ukrainian people, and that the government must take active measures to counteract it. The study’s scenario does not envisage increased budget allocations to combat the depopulation process. The authors believe that the prognostication methods and algorithms applied during this study can also be used to assess the long-term consequences of this counteraction within the national finance system.
Ukraine’s First Deputy Minister of the Economy Anatolii Maksiuta stressed the necessity of long-term planning: “Ukraine has been focusing too much on short- term and domestic problems. Today it is very important to take a closer look at long- and medium- term problems, to compare our country to the rest of the world, which is evolving and moving ahead. Ukraine has a chance either to march together with other countries or lag behind, or even make a breakthrough in certain spheres.” Maksiuta added that government officials were involved in the process of developing this study - people who are dealing with these issues on a daily basis and formulating the policy.
“I think it’s very important for a policy to be developed based on research because there are certain studies made for the sake of research, and policies that are rooted in opinions and facts that have to be further investigated. If we succeed in combining all this, we will make a great contribution to Ukraine’s development. We must pay more attention to using research as a basis when we are formulating a strategy for Ukraine’s competitiveness and its overall economic policy. After all, the issue here is not just demography but the conditions in which this problem arose.”
Perhaps it is time for Ukrainian politicians to start thinking along state-building lines. Ukraine faces real threats. We must prepare for them right now, except that we should have started preparing for them yesterday.
