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What Can Ukraine Learn from Aufbau Ost?

Author

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  • Blum Ulrich

    (Martin Luther University Halle-Wittenberg; and Institute for Technologies and Economics of Lithium, Halle, Germany.)

Abstract

This article uses Aufbau Ost (or reconstruction of the East) of the new German states as a structural model to estimate the possible costs of an Aufbau Ost 2.0 of Ukraine while taking institutional differences into account. Based on three approaches, the model is validated for the new German states – namely capital coefficients, actual investment flows and actual public transfers – and applied to Ukraine. Key indicators for Germany from 2021 are used as a basis. The economic goal for Ukraine set in this article is to reach Poland’s present level of prosperity in 15 years, which implies a growth rate of 9% per year. This will require a total of US $8.5 trillion over 15 years, which can, however, be financed to a considerable extent by endogenous, investment-driven economic growth if the institutional framework conditions are designed in a market-economy way, especially the taxation system. Transfers and capital imports must close a current account deficit of about US $200 billion per year.

Suggested Citation

  • Blum Ulrich, 2023. "What Can Ukraine Learn from Aufbau Ost?," Intereconomics: Review of European Economic Policy, Sciendo, vol. 58(2), pages 119-126, March.
    • Handle: RePEc:vrs:intere:v:58:y:2023:i:2:p:119-126:n:2
    DOI: 10.2478/ie-2023-0023
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    References listed on IDEAS

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    1. Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
    2. Ulrich Blum, 2019. "The Eastern German Growth Trap: Structural Limits to Convergence?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(6), pages 359-368, November.
    3. Demary, Markus & Zdrzalek, Jonas, 2022. "Nur begrenzten Einfluss auf die Inflation," IW-Kurzberichte 89/2022, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    4. Ulrich Blum & Leonard Dudley, 1999. "The Two Germanies: Information Technology and Economic Divergence, 1949-1989," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 710-710, December.
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems

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