Pavlo Sheremeta, Minister of Economic Development and Trade of Ukraine (2014): “Economic freedom correlates with welfare and productivity”

The Aspen Institute Kyiv continues a series of dialogues discussing various aspects of the social contract. The Institute engages Ukrainian intellectuals and leaders from different spheres of our society. In addition, as part of the project development, the Institute has compiled a collection of essays written by leading Ukrainian thinkers. 

On January 24, the Aspen Institute Kyiv held a public discussion, “Social Contract in Ukraine: Quo Vadis?”. The speakers explored both the philosophical aspect of the social contract and its practical and methodological issues.

Economic freedoms as a key to the country’s development

The Minister of Economic Development and Trade of Ukraine (2014), Pavlo Sheremeta, emphasizes that after Ukraine’s victory in the war, we will have to pay considerable attention to ensuring economic freedom in our country. According to him, countries that have failed to guarantee economic freedoms have a low level of development. 

“It is difficult to talk about economic freedoms while the war is ongoing, but we need to prepare for the situation after our victory. Currently, the country’s economy lacks “blood,” so no basic thing allows the body to move. Look at the countries that do not have economic freedom — Cuba and North Korea — they are poor countries. First of all, economic freedom is associated with prosperity. And welfare, in turn, is achieved through higher productivity, where competition is one of the main factors. When you see competitors working more productively, you either die or start working more productively”.

Infrastructure and education: factors affecting productivity

Continuing the discussion on productivity, Pavlo Sheremeta named two more factors that affect it the most: 

“The first factor is infrastructure. Now, all our infrastructure, both energy and transportation, is under attack from Russia. All of this we need to restore. And it has to be done in an innovative manner, at a higher level of development than before. The second is education, which directly correlates with productivity. Part of the social contract should be the state’s guarantee of competition in the education sector and a certain level of investment in it. But at the same time, citizens should take care of their education throughout their lives because information tends to become old.”

Decentralization of the economy to attract investment

Pavlo Sheremeta also emphasized that we should all try to restore decentralization processes in political life and the economy.

“The country is currently undergoing a process of centralization, but at the same time, we must rebuild our decentralization. This applies to the political component but even more to the economy and business. The reward for this may be more funds because private investors in developing countries will attract more investment than the government.”