International Finance Corporation2014-01-292014-01-292014-01-13https://hdl.handle.net/10986/16711Ukraine has untapped growth potential. Ukraine has one of the most fertile agricultural lands in the world, an attractive geographical location in Europe, bordering the European Union, the largest market in the world with a Gross Domestic Product (GDP) of more than $16 trillion, and a large domestic market of almost 50 million consumers. This note argues that the stunted growth of the private sector goes a long way in explaining Ukraine's poor growth performance. The tepid private sector growth is reflected in: the stagnant structure of the country's exports, where old industries such as steel, machine building and chemicals continue to predominate, operating at low levels of industrial productivity, which has grown at a much slow pace than in peer countries in the last decade; the low inflow of high value-added Foreign Direct Investment (FDI), especially in export-oriented manufacturing; and the relatively limited role of Small Medium Enterprises (SMEs) in the development of the economy. All of these factors suggest that the market-driven process of entrepreneurship, innovation and productivity does not seem to work properly, undermining Ukraine's growth prospects. The note identifies weaknesses in the regulatory environment, limited access to finance and lack of competition as the main constraints to private sector development and offers short-and medium-term policy reform options. The note is structured as follows. The first chapter uncovers the roots of the tepid private sector growth. The following three chapters focus on the three main constraints to private sector development, reviewing weaknesses on the business regulatory framework, access to finance, and competition, and providing recommendations. The last chapter concludes.en-USCC BY 3.0 IGOACCESS TO INFORMATIONACTION PLANAGRICULTUREALLOCATIVE EFFICIENCYAUTOMOBILESBANKING SERVICESBANKRUPTCYBARRIERS TO ENTRYBUSINESS ACTIVITIESBUSINESS ASSOCIATIONBUSINESS ASSOCIATIONSBUSINESS CLIMATEBUSINESS DECISIONSBUSINESS ENTITIESBUSINESS ENVIRONMENTBUSINESS ENVIRONMENT RANKINGSBUSINESS REGISTRATIONBUSINESS REGULATIONBUSINESS REGULATIONSBUSINESS SECTORBUSINESS TRANSACTIONSBUSINESSESCAPITAL INVESTMENTCAPITAL MARKETSCARTELCENTRAL BANKCERTIFICATESCERTIFICATES OF DEPOSITCHEMICAL INDUSTRYCOALCOMMERCECOMMODITIESCOMMODITYCOMMUNICATION TECHNOLOGIESCOMPARATIVE ADVANTAGECOMPARATIVE ADVANTAGESCOMPETITION POLICYCOMPREHENSIVE STRATEGYCONSUMER PROTECTIONCONSUMERSCOPYRIGHTCOPYRIGHT CLEARANCECOPYRIGHT CLEARANCE CENTERCORPORATE GOVERNANCECPICREDIT HISTORIESCREDIT RISKCREDIT RISK MANAGEMENTCUSTOMSDEBTDECENTRALIZATIONDEPOSITSDEVELOPED COUNTRIESDEVELOPMENT STRATEGIESDISCLOSURE REQUIREMENTSDOMESTIC MARKETE-GOVERNMENTE-MAILECONOMIC ASSETSECONOMIC COOPERATIONECONOMIC DEVELOPMENTECONOMIC EFFECTSECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC HISTORYECONOMIC MODELSECONOMIC OUTLOOKECONOMIC PERFORMANCEECONOMIC POLICY REFORMECONOMIC POWERECONOMIC RESOURCESECONOMIES OF SCALEELECTRICITYENERGY CONSUMPTIONENERGY EFFICIENCYENTERPRISE SURVEYENTERPRISE SURVEYSENVIRONMENTSEXCHANGE RATEEXPORT MARKETSEXPORTSFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL SECTORFISCAL POLICYFLEXIBLE EXCHANGE RATEFOREIGN BANKSFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN INVESTMENTFREE TRADEGDPGDP PER CAPITAGLOBAL COMPETITIVENESSGOVERNMENT POLICIESGOVERNMENT REGULATIONGROSS DOMESTIC PRODUCTGROWTH POLICIESGROWTH POTENTIALGROWTH PROJECTIONSGROWTH RATEHARMONIZATIONHUMAN CAPITALICTIMPACT ASSESSMENTIMPACT ASSESSMENTSINCOMEINCOME LEVELSINCOMESINDUSTRIAL BASEINDUSTRIAL PRODUCTIONINDUSTRY STANDARDSINEFFICIENCYINFORMATION INFRASTRUCTUREINITIAL PUBLIC OFFERINGINNOVATIONINNOVATION POLICYINSPECTIONINSPECTIONSINSTITUTIONAL CAPACITIESINSTITUTIONAL FRAMEWORKINTEREST RATEINTEREST RATESINTERNATIONAL BEST PRACTICEINTERNATIONAL COMPETITIONINTERNATIONAL INVESTMENTINTERNATIONAL STANDARDSLABOR COSTSLABOR PRODUCTIVITYLAW ENFORCEMENTLEGAL FRAMEWORKLEGISLATIVE FRAMEWORKSLEGISLATIVE REFORMLICENSESLIMITED ACCESSLIVING STANDARDSMANAGEMENT SYSTEMMANUFACTURINGMARKET COMPETITIONMARKET ECONOMIESMARKET ECONOMYMARKET STRUCTUREMARKET TRANSPARENCYMATERIALMEDIUM ENTERPRISEMEDIUM ENTERPRISESMERGERSMONOPOLYMONOPOLY RENTSNATIONAL BANKNATURAL MONOPOLIESNATURAL RESOURCESNEW MARKETSOILONLINE REGISTRATIONOPPORTUNITY COSTOPTIMIZATIONOWNERSHIP STRUCTUREPER CAPITA INCOMEPLANNED ECONOMIESPOLICY FRAMEWORKPOLITICAL ECONOMYPORTFOLIOPOTENTIAL INVESTORSPRICE COMPETITIVENESSPRIVATE SECTORPRIVATE SECTOR DEVELOPMENTPRIVATE SECTOR GROWTHPRIVATE SECTORSPROCUREMENTPRODUCERSPRODUCT INNOVATIONPRODUCTION EFFICIENCYPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC ADMINISTRATIONPUBLIC HEARINGSQUERIESREAL GDPRED TAPEREGISTRYREGULATORY CAPTUREREGULATORY ENVIRONMENTREGULATORY ENVIRONMENTSREGULATORY FRAMEWORKREGULATORY POLICYREGULATORY SYSTEMRESULTRESULTSRETAIL TRADERISK AVERSIONRISK MANAGEMENTSECURE PROPERTY RIGHTSSTATE CAPTURESTOCK MARKETSTOCK MARKET CAPITALIZATIONSUPERVISIONTAXTAX RATESTAXATIONTECHNICAL ASSISTANCETELECOMMUNICATIONSTELEPHONETERMS OF TRADETOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTRANSITION ECONOMIESTURNOVERUNFAIR COMPETITIONUSERVALUE ADDEDWAGESWEAK ENFORCEMENTWORLD TRADEWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/16711