Engineering Ukraine's Wirtschaftswunder

Ufuk Akcigit, Furkan Kilic, Somik Lall and Solomiya Shpak

No 34103, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: As Ukraine emerges from the devastation of war, it faces a historic opportunity to engineer its own Wirtschaftswunder—a productivity-driven economic transformation akin to post-war West Germany. While investment-led growth may offer quick wins, it is efficiency, innovation, and institutional reform that will determine Ukraine’s long-term economic trajectory. Drawing on rich micro-level firm data spanning 25 years, this paper uncovers deep structural distortions that have suppressed creative destruction and productivity in Ukraine. It finds that business dynamism is on the decline, alongside rising market concentration among incumbent businesses, including low productivity state owned enterprises. To inform priorities for reviving business dynamism, this study develops a model of creative destruction drawing on Acemoglu et al. (2018) and Akcigit et al. (2021). The quantitative assessment highlights that policies that discipline entrenched incumbents are the bedrock for reviving business dynamism and engineer Ukraine’s Wirtschaftswunder. Policies targeting specific types of firms have limited efficacy when incumbents run wild.

JEL-codes: E65 O11 O43 P26 (search for similar items in EconPapers)
Date: 2025-08
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Working Paper: Engineering Ukraine’s Wirtschaftswunder (2025)
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