The main crisis of Ukraine

Still in crisis…

Like many other experts, I believe that permanent crises – economic, political, social, religious, educational – are just a consequence of one global crisis – "Crisis of Public Management"(crisis of management of the country, regions, communities).

Lao-tzu, Confucius, Plato, Machiavelli, Montesquieu, Napoleon, Roosevelt, Churchill, de Gaulle, Thatcher, Havel, Balcerovich or Kolodko have not taught us that the prosperity of the state directly depends on the country’s management model. For some reason, we have not learnt from examples of countries such as Japan, South Korea, China, Singapore, Malaysia, Poland, Hungary, as well as newly formed states, such as "united" Germany, the Czech Republic, Slovakia, Slovenia, which in the shortest term have turned into strong world economies. In modern conditions of development, based on centuries of experience and transformations of the leading countries, we had the opportunity to develop a Ukrainian model of state management in a record time, the result of which would be the construction of a unique state in the center of Europe, oriented at freedom, well-being, security and prosperity of the country and people, and the experience of the country UKRAINE would be studied and applied by other, less developed countries.

I do not believe that the young age of our state is an excuse. In 26 years, we had to have made a rapid breakthrough, which would have brought our country to the leading position in the world. Never having realized that the state administration is the dominant force of rapid development, we have not even come close to transforming the existing inefficient management model.

Is there hope?

However, not all is lost, and those who predict the collapse of Ukraine, may be rushing a bit. Their conclusions are based on the existing situation in the country, but it is quite possible in the shortest time to turn the semi-functional Soviet management system into a modern, effective result-oriented model. We just need to realize that at this stage of development, the reform of the state administration is a priority in our country. It is necessary to show the political will and gradually improve the mechanisms of the state management machine. The key idea is to refine, modify, and not break down and conserve.

After all, there is nothing complicated in the creation of a modern management model.

The country needs to be developed on the basis of a well thought-out strategy, taking into account, as they say, our DNA (history, traditions, achievements, genes, including those of each individual region); it is necessary to develop a vision of Ukraine (what our state should be like in 10-15 years) and to determine the effective mechanisms and tools for implementing this vision. And then, everything goes according to the classical scheme: mission → goal → task → selection of the team of professionally trained people → algorithm of the solution sequence → detailed work plans → adjustment due to global and local changes. The world is changing and new ideas are emerging that will need to be implemented.

But the basis of the transformation of the country is, of course, the REGIONS, working on the same principles, implementing their own strategies.

It is the regional development strategies plus the exclusive powers of the state that will form a new strategy for Ukraine. After all, the advantage of our country is the uniqueness of each region. Our differences, dissimilarity, historical path of development, genotype, worldview, traditions and manners make Ukraine unique.

How not to repair, but to create

Opponents may not accept this point of view and object that we have not used the old management system enough. I can agree with this stance, but the problem is that there are too many "random" people in the government, whose level of competence is the lowest of the low, and this human resource degradation continues.

Practice has shown that right people in the right places have created the preconditions for economic growth even in the existing model of public administration.

Of course, I am against the repair of the old system, I am for creating a new, effective one. At the same time, it is necessary to ensure the growth of the economy now and we must make every effort to overcome the crisis.

Investments can be a stabilization factor. Almost all post-socialist countries and East Asian Tigers developed their economies through the attraction of foreign direct investment and the relocation of high-tech manufacturing facilities from west to east. Ukraine was also actively demonstrating the experience of attracting transnational companies in 2001-2004. Instead of strengthening these trends, the government rejected them, and the country immediately slipped to the level of "investment outsiders."

Experts often discuss the role of the center and the regions in investment attracting.

Currently, the ratio of the role of the regions and the state in investment attracting is as follows:

What does it mean? This means that the central government has not created a favorable investment environment.

As soon as competitive investment conditions are created at the state level, the role of the regions in investment attracting will grow and the ratio of the roles of the regions and the state will change radically:

Here is an example of the region showing completely different results of investment policy with the same management model, the same manager, but in different environment and with a different quality of the management staff.

2004, Transcarpathia: 

• large TNCs were attracted and products were being manufactured: Jabil, Flextronics, Škoda, Volkswagen, Yazaki, Fischer, Inter Groclin Auto, Philips, etc.;
• the region ranks 2nd in terms of the total volume of investments attracted to the country;
• 8 new plants were built; more than 30 enterprises were modernized;
• as a result of the intensification of investment activity, as of the end of 2004, more than 19 thousand jobs were created, the annual foreign trade turnover increased almost fourfold;
• many experts called it the beginning of Transcarpathian economic miracle. 

2015, Transcarpathia:

• outflow of investments;
• no new large project with foreign investment.

I conclude that the primary element in the state investment policy is the environment → state level, and the secondary element is TECHNOLOGY → regional level.

By the environment, I mean the investment-stimulating legislative framework. Of course, this is backed up by political will. The decision of the government to finally start implementing an economic strategy aimed at stimulating investment will raise Ukraine’s economy to a new level of development. Only after the creation of the favorable investment environment, we will be able to say: "Ukraine is open to investors!".

An effective administrative model is that, where the role of the center is to create conditions for investment, and the role of the regions is to use the best set of technologies for attracting investments, to implement the latest practices in the competition for investors, to fully promote and support the development of investment projects locally.

The world countries use a variety of state-level governance models that demonstrate the effectiveness and flexibility of responding to current challenges. There is no classic model of state administration, nor the universal "recipe" for the development of the national economy of Ukraine.

However, there are principles, without which it is impossible to build an effective management system:

• human-orientedness;

• national interests are above all;

• staff that can respond to the current challenges;

• prompt changes in the legislative framework and mechanisms for its implementation;

• prompt decision-making;

• innovations.

 It is on the basis of these principles that we have a chance to develop a model of state management that will make Ukraine the leading European state.

Volodymyr Panov, Vice-President of the Association "Innovative Development of Ukraine"