Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223097
Authors: 
Havlik, Peter
Kochnev, Artem
Pindyuk, Olga
Year of Publication: 
2020
Series/Report no.: 
wiiw Research Report No. 447
Abstract: 
This study provides a systematic assessment of the costs of the ongoing armed conflict in the Donbas region of Ukraine. By combining the pre-war geographical distribution of fixed capital with data on battle intensity, survey evidence on household damage in the conflict-affected areas and novel data on the macroeconomy of certain areas of the Donetsk and Luhansk regions, the report estimates the minimum reconstruction costs of the region at USD 21.7 billion. On the basis of the composition of the costs, the study argues that the government's main focus should be on restoring the basic institutions that are usually taken for granted in most economies: the markets and state capacity. The study proposes the key features of a reconstruction plan to help achieve this goal. This plan - assuming a lasting ceasefire is being observed - involves a continuation of the reform path in order to achieve sustainable and inclusive economic growth, to attract both foreign and domestic investments, improve the well-being of Ukrainian citizens and increase the opportunity costs of conflict. The systematic collection and dissemination of data on the Donbas region is essential. Ukraine should strive for balanced trade with the rest of the world. Last but not least, ensure that the peace settlement is durable. In the case of the Donbas this would mean an additional agreement that would not substitute the Minsk II Agreement but would both help to implement and complement it.
Subjects: 
conflict economics
political economy
international conflict
Ukraine
restoration
Donbas
JEL: 
F50
F51
H12
H56
O52
I38
Q34
Document Type: 
Research Report

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