Ukraine can gradually join EU after war, study says

After the war, Ukraine will be able to join the European Union and integrate into the European market, as other Central and Eastern European states have already done. At the same time, it will not overload the EU economically.

Source: a joint special study of the Vienna Institute for International Economic Studies and the German Bertelsmann Foundation, published on 15 November, European Pravda reports

Details: Ukraine’s status as a candidate country for European Union membership has sparked discussions about its readiness for the accession process and raised doubts about whether Ukraine can meet the Copenhagen criteria for EU entry. As a large, economically challenged, and corruption-prone state with a significant agricultural sector, there are concerns about the potential strain Ukraine might place on the EU.

A recent study delved into Ukraine's ability to meet the economic aspects of the Copenhagen criteria, comparing it with Central and Eastern European countries at the time of their EU membership applications. 

The researchers found that Ukraine closely aligns with the typical characteristics of the countries of Central, Eastern and Southeastern Europe (CESEE). In many indicators, it can be compared to Romania, Poland and the Baltic States when they applied for EU membership.

The study revealed that Ukraine already exhibits a decent level of competitiveness in certain areas, promising positive prospects for future convergence. 

If Ukraine is granted security guarantees after the war, it has the potential to follow the successful convergence and integration path of Central and Eastern European countries with the EU, researchers say.

Key weaknesses in Ukraine include a negative demographic outlook, historical difficulties in attracting foreign direct investment and a limited level of economic integration with the EU. 

Addressing these issues should be a top economic priority post-war.

Economically, Ukraine is unlikely to overwhelm the EU. If it were to join today, the EU's economic production would increase by 1% and its population by 9%, similar to the effect observed when Poland joined the EU in 2004.

Prior to the Russian invasion, Ukraine experienced faster GDP growth than the European Union (EU) between 2000 and 2008, 2010 and 2013, as well as from 2016 to 2019.

"This suggests that Ukraine has the capacity to catch up as quickly after the end of the war as the new members in the east did, especially if it gains deeper access to the common market and gets EU funding," emphasises Richard Grieveson, Deputy Director of the Vienna Institute for International Economic Studies and co-author of the study.

"A credible EU accession perspective, which the country did not have until recently, will greatly help this economic catch-up process," says Grieveson.

Ukraine's current economic structure closely mirrors that of Romania before its accession to the European Union, characterised by a strong presence of agriculture and extractive industries, with industry playing a somewhat lesser role. In macroeconomic terms, Ukraine remained relatively stable before the war, despite traditionally higher inflation than other candidate countries.

Certain sectors of the Ukrainian economy, including the IT sector, metallurgy, defence industry and agriculture, are already highly competitive and possess significant potential.

However, there are also dark sides amidst the promising aspects. The most serious among them is the immense loss of population caused by the war, primarily due to the displacement of refugees. Regardless of the war's duration and the possibility of further escalation, Ukraine is likely to never fully recover demographically from the war's consequences, as indicated by another study from the Vienna Institute for International Economic Studies conducted in collaboration with Bertelsmann Stiftung.

Even in 2040, projections suggest that Ukraine will have approximately 35 million inhabitants, roughly 20% less than pre-war levels. 

The labour shortage will be a primary challenge for reconstruction and economic recovery.

A second significant obstacle is the persistent corruption issue combined with a still weak rule of law, despite targeted anti-corruption reforms in recent years. 

Currently, Ukraine still lags behind the institutional standards of EU member countries in Eastern and Central Europe at the time of their accession. It can be roughly compared to Bulgaria and Romania when they applied for EU membership in the 1990s.

To reach the institutional level of these two countries, which was acknowledged to be low when they joined the EU in 2007, Ukraine still needs to make progress in the fight against corruption and, most importantly, reform ordinary courts and law enforcement agencies in the long term.

Read also: EU Candidate Race: Can Ukraine Catch Up with Western Balkans? Analysing EU Commission Report.

Support UP or become our patron!