Finding the balance : the Ukrainian experience on the road to freedom and development
The theme of this study is freedom and development. One of the crucial points is the relation of freedom and development to different degrees of regulation and to the provision of substantive rights in a given society. The importance of formal and informal institutions as constraints on individual freedom but also as a necessary condition for individual freedom and co-operation is illustrated. The theoretical framework I am building on combines two distinct but reconcilable approaches to this topic: Amartya Sen's Development as Freedom and F.A. Hayek's The Constitution of Liberty. It is supplemented by Hernando DeSoto's The Mystery of Capital and some ideas of the New Institutional Economists. By applying this framework to developments within a transition · economy - the Ukraine, and in particular to the agricultural sector of the country - I try to show both the basic challenges that transition economies face and how far theoretical approaches to freedom and development are actually applicable to practical issues. The problems the Ukraine is facing on its way to a free market economy, especially in the area of privatisation and liberalisation, are largely the result of arbitrary regulation and coercive state interference. Rent-seeking and corruption are a consequence of creeping administrative discretion and have impeded the development of the country tremendously. These problems are enforced by the neglect of substantial rights such as political freedoms, social opportunities and protective security. Thus both the regulatory environment - the rule of law - and the actual freedoms that people enjoy need to be improved. A stable institutional framework that avoids both over-regulation and under- regulation needs to be created. Within such a framework people will be able to act freely and lead a life they have reason to value. The German Advisory Group on Economic Reform and members of the Department for Agricultural Economics of the University of Gottingen have largely provided the information about developments and policies in the Ukraine. Although I did not engage in proper empirical work myself - and as a philosopher I probably should not have done so - my visits to the Ukraine have helped me to process the variety of empirical data.
Networked Digital Library of Theses and Dissertations