THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Ukraine

Ranked 107th of 149

At a glance

Ranks

107 th on the Legatum
Prosperity Index™

85th
97th
128th
45th
111th
134th
93rd
135th
112th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Ukraine performs best on Education and Economic Quality and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Ukraine compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Ukraine has consistently run a prosperity deficit over the past decade, particularly since the start of the armed conflict in 2014. Guatemala, a country with a similar GDP, delivers more prosperity than expected given its wealth due to better governance and the absence of armed conflict.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Ukraine, like Turkey, seeks a closer relationship with Europe in the hopes of becoming more prosperous, but both are constrained by cultural and geopolitical factors. In the case of Ukraine, Russian influence on political and economic life is seen as having slowed democratization and market liberalization. Like many of its former Soviet peers, Ukraine struggles particularly with corruption. These concerns came to the fore in late 2013 when former Kremlin-backed President Yanukovych did not sign an EU association agreement as previously promised. Ukrainians once again took to the streets, this time violently, and Yanukovych was forced to step down in early 2014. Unrest continues throughout the country, particularly in eastern Ukraine where pro-Russian separatists have engaged in armed conflict against Ukrainian government forces and established separatist republics with Russian military support. Russia annexed the region of Crimea, though this has not been recognized by the international community.

Unsurprisingly, these events have had a negative effect on Ukraine’s delivery of prosperity. While there have been signs that Ukraine’s economy is slowly beginning to stabilize post-conflict, it is unlikely that wider prosperity will be achieved until there is a lasting peace settlement.

Ukraine’s Economic Quality, Governance, Safety & Security and Personal Freedom Scores since 2007
Ukraine continues to struggle in several sub-indices over the past decade with a notable drop in Safety & Security since the start of the conflict with Russia.

Since the political crisis of 2014, Ukraine’s economy contracted sharply and GDP declined in 2015. The Prosperity Index has seen Ukraine fall 19 ranks to 85th in the Economic Quality sub-index over the past decade, with the biggest downward movements occurring in 2012 and 2015. Over the past two years, there are notably fewer people satisfied with their living standards and current incomes. However, the World Bank estimates that the Ukrainian economy will grow by 1% in 2016, indicating a gradual stabilization. It is important that market liberalization continue and that efforts are taken to weaken the current oligarchical structure of the economy.

Governance remains a serious cause for concern and Ukraine ranks in the global bottom 25 in this sub-index. It ranks far below its other democratic European peers: only autocratic Belarus has a lower score in the region. Despite initial optimism following the pro-democracy Orange Revolution, further democratization efforts stalled, particularly after the election of Yanukovych in 2010. Ukraine has fallen 15 ranks in the Governance sub-index since 2007 to 128th and its level of democracy has decreased. Confidence in the government was never high – only 24% of people had confidence in the national government during the Yanukovych years – but this number has dropped to just 8% in 2016 following the political turmoil. There has been barely any movement in the perception of corruption over the past decade and Ukraine is in the global bottom 25 of the Corruption Perceptions Index. Judicial independence also seems to have decreased over the same period: Ukraine ranks in the bottom ten globally for judicial independence, just above the Democratic Republic of the Congo. While the judiciary is officially independent, judges come under significant political pressure to hand out ‘desirable verdicts.’ The indictment and jailing of former Prime Minister Yulia Tymoshenko on corruption charges after her defeat in the 2010 presidential election was widely interpreted as being politically motivated. She was released in 2014 following the revolution which saw a number of political prisoners acquitted and released.

Level of Judicial Independence in Ukraine compared to the European and World Averages
Ukraine’s lags far behind its European and global peers when it comes to judicial independence, ranking just above the Democratic Republic of the Congo.

Given the ongoing armed conflict with Russia, Ukraine has moved down considerably in the Safety & Security sub-index and it is here that the biggest change can be seen. In 2013, Ukraine ranked 69th but has fallen 65 ranks to 134th, placing it firmly in the bottom 20 of this sub-index and it is here that Ukraine’s prosperity deficit is, perhaps, most apparent. War casualties, death in terror attacks and political terror have all significantly increased since 2013. In terms of battlefield deaths, it ranks fifth globally behind only Israel, Afghanistan, Iraq, and Cameroon. For a country that was on the brink of an EU association agreement, this is notable and certainly damaging to Ukraine’s prospects for increasing prosperity.

Ukraine’s Safety & Security score compared to the European and World Averages.
The conflict in Ukraine sees the country drop into the bottom 20 of the Safety & Security sub-index.

Personal Freedom is another sub-index in which Ukraine has seen a decline: it has fallen 17 ranks from 76th to 93rd over the past decade. Ukraine’s Personal Freedom Score was highest in 2007, perhaps reflecting the optimism that accompanied the Orange Revolution, but has declined over the past decade. People perceive themselves as being less free to live life as they choose now than in 2007, while both government and social restrictions on religion have increased. Civil liberties have decreased and little to no progress has been made to improve the freedom of the press.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.