Baltic Journal of Economic Studies (Jun 2024)
INCLUSIVE ECONOMY AND PUBLIC FINANCE: CURRENT STATE AND PRINCIPLES OF POST-WAR RECOVERY
Abstract
The purpose of this study is to analyse the current state of the economy and public finances in Ukraine and to develop an inclusive and collaborative framework for their post-war recovery. The main research methods used were quantitative, qualitative and documentary analysis. Quantitative analysis was used to evaluate and compare key economic and financial indicators between different countries, as well as to identify trends, including inclusive ones, in the development of the economy and public finances. Qualitative analysis was used to study and analyse the political, social and economic factors that influence the development of an inclusive economy and public finance after conflicts. The documentary analysis was used to assess the legal and regulatory framework governing economic and financial relations in Ukraine and other countries, and to determine the capacity of the existing regulatory system to ensure inclusive post-war recovery. The results of the study, based on the study of empirical material and typologies of best practices of countries that have been in various types of conflicts, prove the need for an in-depth study of the interactions and interdependencies between the inclusive economy and public finance based on the Inclusive Growth Index and structural changes in the issues of the impact of inclusion on the ontogeny of public finance, solving problems with corruption, involvement of civil society institutions and adaptation of SMEs to the conditions of the military economy. The paper also identifies structural, fiscal and debt obstacles to ensuring the sustainability of public finances, which threatens Ukraine's further post-war recovery based on an inclusive paradigm. The authors present the key determinants of post-war recovery based on an inclusive country ranking, which should underpin further progress in public finance in the context of short-, medium- and long-term post-war goals. The study's conclusions are based on the inclusive economy paradigm, which forms an ecosystem of rationalisation of natural resources and the use of innovations, which should become the basis for post-war recovery, ensuring sustainable and balanced development of public finances and inclusive economic policy based on the Ukrainian Peace Formula. To this end, the article substantiates the need to develop a modified version of the strategy (in the tactical projection – more broadly adapted to the conditions of the wartime economy, the need to provide financial resources for the shift in economic policy from raw material orientation to inclusive development, in the medium term – anti-crisis correction of behavioural models of economic agents in the direction of imbuing the Ukraine Facility Plan for 2024-2027 with the spirit of inclusion and barrier-free access, and in the long term – achieving the goals of post-war recovery, ensuring the sustainability of public finances and the national economy) for reforming the public finance management system, which should organically include the post-war recovery of Ukraine and take into account the inclusiveness of the economy, taking into account the programmed joint evolutionary progress in the specified niche (sectoral) strategies. The new socio-economic, financial and budgetary reality coloured by the Russian-Ukrainian war makes it necessary to rethink the interactions and interdependencies between inclusion, public finance and the potential for post-war recovery, both as a result of their collaboration and multidirectional development. The unregulated transition of economic policy to inclusive development is the root cause of the current restraint of transformational changes in public finance, and further creates a regulatory "vacuum" in the unbalanced development of niche strategies that define the paradigm of inclusion and sustainability of public finance. In such a disposition, there is no logical institutional and regulatory "flow" between these strategies to the conceptualisation of Ukraine's post-war recovery from the consequences of the war, as expressed in the Ukraine Facility Plan for 2024-2027.
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