Efficient Infrastructure Supply for Economic Development in Transition Countries: The Case of Ukraine

Abstract

Infrastructure restructuring is one of the major elements of structural reforms in transition economies because of its expected large economic and social impact. This article aims to assess the role of infrastructure policy in economic development in transition countries in general and Ukraine in particular. We test the relationship between infrastructure policy and economic growth, though this test is carried out at a very aggregate level due to data problems. According to our estimations the government can make an indirect contribution to economic development by enhancing competition and efficiency within the infrastructure industries. The article also develops a framework to analyse and compare infrastructure policies across transition countries, and provides a detailed survey of infrastructure policies in Ukraine. We conclude that the major element of reforms should be tariff reform, carried out concurrently with commercialisation and deregulation of the sector.