KIEV: Today Russia and Ukraine are on parallel courses of economic reform. Both achieved financial stabilization during 1996, but each country is still experiencing considerable declines in economic output.
Russia and Ukraine make a good pair for the purpose of comparison, as their preconditions were quite similar. They are both large countries with predominantly Slavic populations, arising out of the Soviet Union. Originally, Ukraine had a slightly higher output per capita at the beginning of the transition; Russia has more natural resources. The big difference between the two is that Russia launched its economic reforms in 1992, while Ukraine did so almost three years later.
Reform started later in Ukraine for several reasons. A fundamental cause was political leadership. Independent Ukraine's first president, Leonid Kravchuk, cared little for economic reform, while Russian President Boris Yeltsin believed in, and pushed for, radical economic reform, even if he soon were to hesitate. Russia at the outset of the reform process possessed a strong group of economic reformers; too few in Ukraine understood the need for radical economic reform. Instead, many Ukrainians saw Russia's exploitation of Ukraine as the main problem facing their country. Russians had little but communism to blame for their plight.
Ukraine turned around in 1994, with the election of President Leonid Kuchma. He concluded that Ukraine had learned that slow reforms did not work and that radical reform was the only way out of his country's mounting economic mess.