Managing Ukraine’s Potential for Socio-Economic Recovery: Assessment of Challenges and Development Prospects

Abstract

The article aims to assess the potential for socio-economic recovery of Ukraine and identify the reserves for its increase. The methodology is based on a system-structural approach using composite and recursive methods. The study includes data on Ukraine’s development potential by four groups (capital, labor, entrepreneurship, innovation) and markers of socio-economic recovery (gross domestic product, labor productivity, research expenditures, budget revenues, the ratio of income to the value of enterprise assets) for 2005-2023. The article reveals that the relationship between the total potential and Ukraine’s economic recovery is direct and short-term (a decrease in potential in 2007-2009, 2013-2014, and 2021-2023 by an average of 0.08 pp, 0.09 pp, and 0.8 pp, respectively, led to a decrease in the rate of socio-economic recovery by $1,300, $900, and $1,400 per capita, respectively). The rate of recovery with a 1% increase in the country’s total potential is twice as fast as the rate of loss of resistance and decrease in potential. The results allow identifying areas of Ukraine’s potential growth: increasing human capital investment, curbing youth migration, developing virtual employment, creating a favorable investment environment, strengthening infrastructure investment, creating a startup ecosystem, encouraging business with tax incentives, supporting export-oriented enterprises, developing innovation clusters, and digitalizing the economy.