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Opinion
February 2, 2018 www.intellinews.com I Page 24
GDP in the last few years, while it should be 4-5% of GDP under more normal circumstances.
This means that Russia and Ukraine have a mis- erable investment ratio of 18-20% of GDP, while countries at their relatively low level of economic development should have 25-30% of GDP to grow at a normal rate of 6-8% a year.
Russia and Ukraine cannot go back to the happy days of 2000-07. The commodity boom is over and not likely to come back soon, but far worse is that corporate raiding carried out with the illegal use of law enforcement and courts has been so ex- tensive that both local and foreign investors have been scared away.
Because of its chaotic corruption, Ukraine has never developed a real stock market. A handful
of decent Ukrainian agricultural companies are traded on the Warsaw stock exchange. Moscow’s stock exchanges have seen a big fall since their heyday in May 2008, leaving Russian stock values at half of those in other emerging economies, because everybody knows that big companies can
only be sold to Putin’s cronies or the state, who thus set the price.
However wealthy the ruling elites are, they are not interested in protecting property rights. Instead, their focus is the maintenance of their monopoly rents. They do not need property rights at home, since they have them abroad, while property rights of others at home would hinder the rulers from seizing their assets. Therefore, they are dead against real property rights and fair courts.
If the leaders of Russia and Ukraine actually wanted their countries to grow, they would focus on reforming law enforcement and courts to es- tablish real property rights. As long as they in- stead focus on maintaining their rents, both these countries are condemned to minimal economic growth regardless of commodity prices.
Anders Åslund is a senior fellow at the Atlantic Council in Washington. He has worked as an eco- nomic advisor to both the Russian and Ukrainian governments.
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