Why should Ukraine be a fast state for overcoming war consequences?

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Wyzsza Szkola Ekonomiczno-Humanystyczna (Poland) Ukrainian American Concordia university (Ukraine)

Why should Ukraine be a fast state for overcoming war consequences?

Liubov Zharova

Abstract

economic international corporation

A full-scale invasion of Ukraine became a challenge not only for it, but also for the whole world, which has not yet overcome the consequences of the covid pandemic. Ret blinking approaches to assessing the impact of military actions on the economy re- qui res the development of new theoretical foundations and practical recommendations. Previous experience cannot be used, including as a result of changes due to globalization processes.

The modern world is characterized by openness and interdependence at all levels - from economic to social. That is why blocking ports in Ukraine can cause famine in African countries. The influence of civil society affects the economic behavior of international corporations, which are forced to leave the market of the Russian Federation not only because of sanctions, but also to preserve the image and loyalty of consumers. The creation of a single European space currently also requires the formation of a single line of behavior in relation to Ukraine and Russia. This is far from a complete list of the latest relationships that shape the modern world and affect the economy.

Currently, Ukraine suffers losses every day, the amount of which cannot be fully estimated. This is hindered by the incompleteness of information, the continuation of hostilities, and the inconsistency of existing methods with the current situation.

In the article, based on the analysis of the existing situation and existing challenges, the concept of a fast state is proposed. The idea grounds the socio-economic state's development on the maximum promotion of entrepreneurial activity. It is based on a synergistic effect when the introduction of business opportunities will stimulate the creation of new workplaces, the growth of incomes, and with them, the expenses of the population, which in turn will boost the opening of new enterprises and the development of existing ones. The central, new idea of a fast state is to concentrate not on raising taxes but on reducing them as much as possible and filling the budget due to the growth of entrepreneurial activity, and not on increasing levies on those that are still functioning. Also, the research makes the point that the reconstruction of the state in the context of a fast state will be built based on finding one's own innovative trajectory of development and not on the adaptation of best practices focused on the catch-up nature of such action.

Keywords Ukraine, war, economic development, fast economy, international politics, innovations, international geopolitics, military economy, compensations

Чому Україна повинна стати швидкою державою, щоб подолати наслідки війни?

Любов Жарова

Вища школа економічно-гуманістична (Україна)

Україно-американський університет Concordia (Україна)

Анотація

Повномасштабне вторгнення в Україну стало викликом не тільки для нашої країни, а й для всього світу, який ще не подолав наслідки пандемії ковіду. Переосмислення підходів до оцінки впливу військових дій на економіку потребує виопрацювання нових теоретичних основ та практичних рекомендацій. Попередній досвід не може бути використаний, в тому числі внаслідок глобалізаційних змін.

Сучасний світ характеризується відкритістю та взаємозалежністю на всіх рівнях - від економічного до соціального. Саме тому блокування портів в Україні може спричинити голод в країнах Афріки. Вплив громадянського суспільства впливає на економічну поведінку міжнародних корпорацій, які змушені виходити з ринку Російської Федерації не тільки через санкції, а й задля збереження іміджу та лояльності споживачів. Створення єдиного європейського простору наразі також вимагає формування єдиної лінії поведінки по відношенню до України та Росії. Це далеко не повний перелік новітніх взаємозв' язків, що формують сучасний світ та впливають на економіку.

Наразі Україна щодня зазнає збитків, розмір яких не можна оцінити в повній мірі. Цьому перешкоджає неповнота інформації, продовження бойових дій, невідповідність існуючих методик оцінки ситуації, що склалась. В статті на основі аналізу української економіко-політичної ситуації та наявних викликів запропоновано концепт швидкої держави, який базуватиметься на соціально-економічній розбудові держави на засадах максимального сприяння підприємницькій діяльності, як такій, що повинна створити синергетичний ефект, коли запровадження можливостей для бізнесу стимулюватиме створення нових робочих місць, зростання доходів, а з ними і витрат населення, що у свою чергу спричинить відкриття нових підприємств, та розвиток існуючих. Центральною, новою ідеєю швидкої держави є концентрація не на підвищенні податків, а на максимальному їх зниженні й наповненні бюджету за рахунок зростання підприємницької активності. Акцентовано, що відбудова держави в контексті швидкої держави грунтуватиметься на засадах віднайдення власної інноваційної траєкторії розвитку, а не на адаптації кращих практик, орієнтованих на наздоганяючий характер такого розвитку.

Ключові слова: Україна, війна, економічний розвиток, швидка економіка, міжнародна політика, інновації, міжнародна геополітика, військова економіка, компенсації.

Introduction

The full-scale invasion of February 24, 2022, changed life in Ukraine and worldwide. Currently, the division into "before" and "after" is not only a literary allegory but also a reality of socio-economic life. It is impossible to assess all the consequences now because the situation is rapidly changing. Ukraine suffered unprecedented losses and faced challenges not so much development as survival. At the same time, modern approaches to economic development suggest that reconstruction should not wait until the end of the war. Plans for the future should already be developed, and their implementation should begin shortly. Within the framework of this research, we tried to show the uniqueness of the situation and its difference from the previous world experience and propose possible ways of developing and revival the economy of Ukraine.

At the very beginning, it is worth noting that the Ukrainian fierce struggle and tenacity affect the political situation in the world. Firstly, the distraction of the comforting belief about the impossibility of the war in the heart of Europe. Next, countries and politicians faced the need to declare their intentions and values, which are also directly or indirectly based on the attitude towards the parties to the war - Ukraine, and Russia. Also, the idea of the interconnectedness of all countries, regardless of their geography, became evident. Moreover, old conflicts (the confrontation between China and the USA, the influence of the OPEC countries, Turkey's struggle for impact on Asian countries, etc.) have intensified and become more visible.

From a social point of view, the issues of documenting war criminals, compliance with the requirements of conventions and treatment of prisoners and civilians, and monitoring the current situation arose. Europe again faces the issue of multicultural policy and the effectiveness of the mechanisms for the reception and adaptation of refugees. Only the enumeration and systematization of social challenges require a separate study. Therefore, we will remain within the framework of the economic dimension.

The uniqueness of the economic situation lies in that aid to Ukraine will be provided now, not after the war's end. Moreover, the aid, in all its forms, will be aimed at the reconstruction and economic development of the state and not only at liquidating the consequences and the conduct of military operations. This focus on rebuilding is unique in history, and now we must figure out how to make it possible. Apart from the apparent war, the problem is that simply getting money and allocating economic growth points is not enough. It is necessary to create new conditions for development. The issue is that Ukraine currently has a warring state's budget (17.8% of expenditures are earmarked for defense and security) with a large deficit (currently set at 20%). Taxes are a resource for covering expenses. But the controversiality of the situation is that we should not raise taxes but lower them to keep businesses from emigrating from Ukraine and encourage new entrepreneurs to open businesses.

The challenge is to achieve economic development in a country that continues to actively defend and reclaim its territories, and is constantly under the stress of bombings, the possibility of infrastructure destruction, and nuclear blackmail. This task is not ordinary, but at the same time, it is not impossible. That is why the vision of a fast state emerged as a concept that would allow us to achieve this. Speed here is not about catching up with others (reaching the level of any chosen country) but about the speed of rebuilding one's own economy and economy on a new basis. It is about the fact that we will not restore old buildings (e.g., built in Khrushchev's times) but will build new modern housing. The idea is to focus not on temporary solutions but a strategic vision of the situation.

Research methods

The country's characteristics, the identification of its problems, and the ways of solving them are usually started from the general description of its development and prosperity. Moreover, we increasingly discuss development and do not associate it exclusively with macroeconomic indicators, such as GDP, unemployment, or inflation. Although indicators are still important, they are more a tool for analysis than a reflection of what we associate with development. However, economic growth means an increase in real national income/output. Simultaneously economic development means improving the quality of life and living standards, e.g., literacy, life expectancy, and health care measures. Ceteris paribus, we would expect economic growth to enable more economic development. Higher real GDP enables more to be spent on health care and education. However, the link is not guaranteed. The proceeds of economic growth could be wasted or retained by a small wealthy elite.

Institutions measure a country's level of development in many different ways. For instance, the United Nations has few conventions for distinguishing between "developed" and "developing" countries, while the World Bank makes specific distinctions using gross national income (GNI) per capita, although other analytical tools may be used in the process.

The International Monetary Fund's (IMF) definition is often considered to be the most comprehensive measure since it takes into account per capita income, export diversification, and the degree of integration into the global financial system. In 2011, the organization published a research report on the topic of classification titled "Classification of Countries Based on Their Level of Development" which outlines its methodologies for classifying a country's level of development. The World. Bank But the organization also divides these developing countries. It has a much more concrete methodology as it considers countries with per capita income ranging from low-income to upper-middle-income countries, meaning there are other gray areas for international investors to consider. There are no WTO-dividing countries. Members announce for themselves whether they are “advanced” or “developing” countries.

New times require new approaches and terms. Usually, when we characterize the state, we use already established terms and definitions, which, at the moment, also do not have an unambiguous interpretation by various organizations (see Table 1).

Table 1. Country classification systems in selected international organizations

The non-standard situation in which Ukraine is now, required rethinking, including the terms we will use to describe phenomena and processes. We believe that previous approaches, in particular attempts to adapt best practices, will not work correctly at the moment, as the acceleration of the world and the deepening of uncertainty make such a catch-up development a failure at the very beginning. Therefore, it was proposed to talk about a fast state, as a new characteristic of the country's development that is more adequate to modernity.

The fast state is focused on developing socioeconomic development on an innovative basis under the conditions of maximum promotion of entrepreneurial activity in all its manifestations. Suppose we talk about the fact that small and medium-sized businesses are the economy's lifeblood (they represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 50% of GDP). It means that we must create conditions specifically for small and medium-sized businesses, as the most mobile, innovative, and viable, able to use the minor opportunities for maximum results. But, at the same time, such a business is sensitive to many factors, including the ease of doing business, the complexity of the rules, and the tax burden. As part of the proposed research, we try to outline the reality in which we are now and highlight the place and role of a fast state and why Ukraine needs this approach.

For this, the research is meaningfully divided into an analysis of the historical context, a description of the losses in the modern heatwave, and proposals for further development. After all, this development cannot take place according to the approaches of the past because it is aimed at the future in a world of uncertainty and speed.

Results and Discussion

Historical scene. After the quit of the wars of faith, approximately the center of the seventeenth century, wars have been fought for man or woman sovereigns' pursuits and have been confined to their targets and scope. The artwork of maneuver has become decisive, and analysis of battle became couched, therefore, in terms of techniques. The state of affairs was modified essentially with the outbreak of the French Revolution, which improved the dimensions of forces from small expert to big conscript armies and broadened the targets of struggle to the beliefs of the revolution. These fashions appealed to the loads, who were concern to conscription. Inside the relative order of post-Napoleonic Europe, the mainstream principle back to the idea of conflict as a rational, constrained tool of countrywide coverage. This technique became nice articulated with the aid of the Prussian navy theorist Carl von Clausewitz in his famous conventional On struggle (1832-37) (Thies and Bau, 2020; Frankel, 2022).

World War I was "total" in character because it resulted in the mobilization of entire populations and economies for a prolonged period of time. The theorists held that struggle, in its modern-day, total form, if nonetheless conceived as a countrywide state tool, should be undertaken handiest if the maximum vital hobbies of the kingdom, touching upon its very survival, are involved. In any other case, war serves extensive ideologies and now not the extra narrowly defined hobbies of a sovereign or a kingdom. Like the religious wars of the 17th century, struggle turns into a part of "grand designs," along with the rising of the proletariat in communist eschatology or the Nazi doctrine of a grasp race. The war had become an intractable social phenomenon, the elimination of which seemed to be an essential precondition for the survival of humanity. On the other hand, the use of war as an instrument of policy was calculated unprecedentedly by the nuclear superpowers, the United States and the Soviet Union. War also remained a stark but rational instrumentality in specific, more limited conflicts, such as those between Israel and the Arab nations. Thinking about war, consequently, became increasingly more differentiated because it had to answer questions related to very different types of conflict.

War remains possible as long as individual states seek to ensure self-preservation and promote their individual interests and - in the absence of a reliable international agency to control the actions of other states - rely on their efforts. It is no accident that reforms of the international system figure prominently in many prescriptions for the prevention of war. Whereas the reform of human propensities or of the state is bound to be a long, drawn- out affair if possible, relatively straightforward reforms of the international system may produce significant restraints upon resorting to war, and a thorough reform could make war impossible.

The cost of war is masked mainly by national income accounting, which ignores the loss of lives and the destruction of physical and human capital associated with war. Moreover, resources devoted to war are treated as final goods or services instead of production costs. The research should question the assumption of many that war is good for business, presumably because war increases employment and output. Careful measurement of war in a large data set indicates that war is not good for business. In addition to the loss of lives and destruction of physical and human capital ignored by national income accounting and the mistreatment of the cost of war as a positive value by national income accounting, the tendency is for war to reduce GDP per capita as measured. Countries that suffer from war underperform in terms of production and also underperform in terms of consumption. GDP per capita falls because of lower labor and total factor productivity, presumably due to the destruction of existing physical and human capital, the lack of investment in new physical and human capital, and reduced gains from internal and external trade.

Economic & Technological Backdrop. After World War II, the international community came together to build a shared future. Now, it must do so again. Owing to the slow and uneven recovery in the decade since the global financial crisis, a substantial part of society has become disaffected and embittered, not only with politics and politicians but also with globalization and the entire economic system it underpins. In an era of widespread insecurity and frustration, populism has become increasingly attractive as an alternative to the status quo (Krausmann et al., 2009; Globalization 4.0, 2019).

Post-WWII saw many countries devastated physically and financially, but they rebuilt many outdated structures and developed new technologies that are still used today (Vanham, 2019).

The United States benefited the most from WWII as it had a large population, technological prowess, and the capital necessary to change WWII machinations into business and industry that benefited the civilian.

Europe saw great growth post-WWII; it just happened slower than it did in the United States and Japan (GapMinder, 2022).

As terrible as war is, it has historically tended to produce new technology that can later be used for civilian gain (Gopinath, 2019). Globalization also influences economic development and recovery (Olgen, 2022). Actually, for now, we had three waves of globalization and are facing the fourth one. Globalization 4.0. This era extrapolates 3.0 (Grasso & Grasso, 2019) beyond people into technology and the low latency flow and storage of data around the world, creating two major technological advances (Felberg, 2022):

* Interconnection adoption: Globalization 4.0 enables people to instantaneously conduct business and promptly access files from anywhere. At its most granular level, this transmission of data and information typically occurs over network cables underneath the ground that all connect at a given location; usually a data center. Inside these data centers, cross connects allow businesses to easily make direct connections between two different termination locations. Interconnection within a data center allows businesses to create higher performance, lower latency business transactions, and improve the end-user experience as opposed to leveraging hardwired cables. Organizations are increasingly adopting these services as they pick up on these benefits.

* Hyper-scale growth of public cloud: This market is predicted to surpass $1 Trillion in global IT spending over the next five years (Gartner, 2016). With IT modernization currently being the top driver of public cloud adoption, enterprises are leveraging a mixture of on-premises virtualization and cloud services to improve resource utilization, business agility, cost savings, and resiliency. Cloud is where business IT infrastructure is shifting, and it's time to join the trend; however, it is essential not to overcommit to the cloud. More specifically, a hybrid-cloud solution is where most enterprises focus their efforts to achieve the proper balance.

COVID-19 impact. The pandemic pushed more than 34 million people into extreme poverty in 2020 (United Nations, 2021). Under the baseline scenario, the developed economies are expected to contract by 5.0 % in 2020, while the output of developing countries will shrink by 0.7 % (Watson et al., 2020). In the end, the main impact is a prolonged slowdown of all economic processes (GDP growth of 5.8% in 2021 after a 3.3% decline in 2020 is not enough to compensate for the negative impact of sharply reduced global demand and disruptions in global supply chains). Almost 90 % of the world economy has been under some form of lockdown, disrupting supply chains, depressing consumer demand, and putting millions out of work. The COVID-19 pandemic brings to the forefront the complex interconnected dilemmas of globalization, health equity, economic security, environmental justice, and collective trauma (Thangave et al., 2021; Economic consequences.., 2020).

Globalization's Post-Coronavirus Prospects (Felberg, 2022):

Start with global growth patterns, where the key lesson is that international flows tend to swing dramatically with macroeconomic cycles.

Supply chain policies have come back to the top of the agenda, and shifting approaches have the potential to reshape trade and FDI flows. The key globalization- related debate here is redundancy versus reshoring.

Superpower frictions and fragility had already destabilized the international business environment before Covid-19, and the pandemic added new layers of complexity. It has led to a vast expansion of state power while introducing pandemic control as yet another arena for ideological competition.

Ongoing technological shifts such as the adoption of e-commerce, videoconferencing, and robots have all been supercharged by Covid-19. Before the pandemic, many focused on how new technologies could reduce global flows. But many pandemic-induced shifts could also strengthen globalization if protectionist policies do not curb them.

Public opinion about globalization may take another negative turn due to Covid-19, scaling back the surprisingly strong support for trade and immigration reported in recent polling.

Socio-Economic realities.

Since the war in Ukraine started, people globally are facing a cost-of-living crisis not seen in more than a generation, with escalating price shocks in the global food, energy, and fertilizer markets - in a world already grappling with the COVID-19 pandemic and climate change. An estimated 1.6 billion people in 94 countries are exposed to at least one dimension of the crisis. About 1.2 billion of them live in 'perfect-storm' countries which are severely vulnerable to all three dimensions - food, energy, and finance - of the cost-of-living crisis, according to the latest findings of the United Nations Secretary- General's Global Crisis Response Group (GCRG) on food, energy and finance systems.

Global trade of cereals except rice is a little less than 20 % of total world production (about 620 million of about 3.3 billion tons produced in 2020/2021). Total production is sufficient to feed all 8 billion inhabitants of the world, but production in semiarid countries is less, and some countries are behind their potential. That's why trade plays an important role in balancing global supply and demand. In the 2020/21 season, Russia provided 52.32 million tons (7.8 %) and Ukraine 69.82 million tons (11.3 %) of cereals to the world.

Ukraine exports oilseeds (sunflower, soybeans, rape- seed) with a well-established crushing industry to produce sunflower oil. 52% of globally traded sunflower seed and oil came from Ukraine in 2020. According to the latest data, at least 129,900 residential buildings were destroyed and damaged in Ukraine. Direct losses due to the destruction of high-rise buildings amount to 42.3 billion dollars, and another 5.4 billion in losses are caused to the owners of private houses.

In second place in the total amount of losses is the infrastructure sphere, with 31.6 billion dollars. Businesses and industries suffered losses of 8.8 billion dollars as a result of hostilities. It is noted that the increase in the number of damages is also related to the increase in the number of destroyed and damaged objects of education, healthcare, and the social sphere. As of the end of July, 2,217 educational institutions were destroyed for $3.8 billion, 903 medical institutions for $1.6 billion, and 89 social institutions for more than $300 million.

According to experts' estimates, the total need for the restoration of destroyed assets is 185 billion dollars or almost 5.4 trillion hryvnias. 40% of this amount is needed to restore the housing stock -- 75.3 billion. Another 42.3 billion is required to restore Ukraine's infrastructure.

Figure1 shows three lines. Before 2014, all lines show actual data. The blue line at the top shows the potential path of Ukraine's GDP from 2014 onward had the invasion in 2014 and the war in 2022 not happened. It uses the 'Poland+Estonia' proxy approach during 2014-2021 and the IMF pre-2022 projections for Ukraine after that. The yellow line shows the actual path of Ukraine's GDP after the 2014 invasion and up to 2022 and the potential path after 2022, as projected by the IMF had the war in 2022 not happened. Finally, the red line at the bottom of the figure shows the actual path of Ukraine's GDP after the 2014 invasion and up to 2022 and the projected path after the 2022 war, which assumes a 30% GDP drop in 2022, and the IMF pre-war growth projections thereafter.

Figure 1. Scenarios of economic development (Tsyrennikov, 2022)

The estimated annual loss in GDP from the 2014 invasion is measured by the vertical distance between the blue and yellow lines (see labels along the yellow line) in Figure 1. A simple addition of the yearly losses from 2014 to 2021 gives the cumulative loss of $580 billion. Assuming that these monies were invested into the US 30-year Treasury notes, one gets the aggregate loss of $630 billion. This number is over 50 times larger than the largest assistance of $13.6 billion received from the US. The expected damage from the 2014 invasion between 2022 and 2026 is an additional $410 billion.

The expected annual loss in GDP from the 2022 war is measured by the vertical distance between the yellow and red lines (see labels along the red line). The present discounted value of the losses between 2022 and 2026 is $270 billion. If the drop in GDP in 2022 is 50% rather than the assumed 30%, the cumulative damage is $445 billion.

Thus, the trillion-dollar question has a trillion-dollar answer: Russia is expected to cause damage of $1.36 trillion. Of this number, $680 billion are losses incurred between 2014 and 2021, $155 billion of losses are expected in 2022, and the remaining $525 billion during 2023-2026. This is admittedly a simplified approach. But, even if it included a substantial error, one needs to include 'trillion' in the negotiation vocabulary. Unfortunately, we think this number is just a lower bound, and the loss is growing daily. And unless there is an unusual spur in Ukraine's growth relative to the pre-war potential, the loss will continue to grow after the five years. Fortunately, with oil prices at $100, Russia can repay using 25% of its oil revenues in 'just' 15 years. It would take only 11 years if $300 billion of the Central Bank of Russia's reserves frozen abroad were netted out.

The World Bank predicts that the Ukrainian economy will shrink by 45% in 2022. The war significantly reduced the economy's potential - physical capital losses from the destruction of enterprises, housing, and infrastructure reached $100 billion, which is the equivalent of 50% of GDP in 2021 (National Bank of Ukraine, 2022).

Recovery plans for the economy.

Essential macroeconomic risks are inflation growth due to the imbalance of supply and demand and the loss of the possibility of further financing of budget expenditures (Zhalilo, 2022). The financial assistance promised by the international community, especially the positive effect of economic reconstruction on the national income, is a medium-term issue. Meanwhile, it is necessary to "restart" the economy in wartime conditions immediately. Powerful fiscal levers of economic revitalization are currently being used, in which the component of emission financing of deficits will inevitably increase.

Macroeconomic risks will be weaker; the more successful such policy will be in revealing economic potential and restoring and maintaining economic turnover. In the short term, the economy will have two main drivers. The first mover is people. Consumption is both the final goal and the key driver of the functioning of the economy. War is a period of significant losses and trials. However, it is fundamentally important to prevent significant deterioration of the humanitarian situation, at least in regions not directly affected by the war.

Such a deterioration threatens demotivation and the continuation of the outflow of people from the country. And to lose human potential today means to lose the prospect of reviving the country tomorrow. The government has taken powerful actions to maintain the level of income of the population: payments to employees of the budget sphere, pensions are supported, payments to persons who have been forced to lose their jobs have been implemented, payments to the military have been significantly increased, etc. This helps solvent demand. However, the demand must be met by an adequate product supply.

Since the Marshall Plan became synonymous with post-war reconstruction programmes, as early as the beginning of April 2022, this idea was discussed in the IMF and the World Bank under this very definition, which is significant for European history (MIND, 2022).

The first, most detailed variant of such a programme - A Blueprint for the Reconstruction of Ukraine - was already offered by the British Centre for Economic Policy Research (CEPR) as early as the end of April 2022. According to the developers, key management of the Plan should rest on a non-governmental investment and recovery agency with broad autonomy in operational project management, while Ukraine would remain the "owner" of the reconstruction programme. The amount of assistance is expected to reach $500 billion, if taking into account the final losses at the end of the hot phase of hostilities.

Table 2 shows author's interpretation of solutions in different spheres of social-economic life.

Table 2. Possible solutions in different social-economic spheres

The Ukrainian government and an international expert team estimated the "Marshall Plan" implementation for Ukraine at $765 billion with the target date for its implementation - the year 2032. Of these, $65 billion should be raised already this year, about $300 billion - at the stage of the so-called Fast recovery, which covers the years 2023-2026. This stage will focus on social infrastructure and engineering communications. The third part of the Plan - Modernisation from 2026 to 2032 - will require about $400 billion and will include the maximization of products with high added value in the Ukrainian economy as well as the minimization of the "carbon footprint."

For the current year (2022), investments in landmine clearance of 5% of the country's territory, preparing the power system for the winter period and gas storage, ensuring investments against war risks, beginning of the construction of a cargo corridor to the Lithuanian Klaipeda through Poland, and finally - repairing of 20,000 war- damaged houses and building of 100,000 new residential buildings are foreseen. The further investment plan envisages the appearance of European-standard railway infrastructure, new NPP units, and European market- oriented industrial clusters in Ukraine over the next 10 years.

Structurally, the Ukrainian vision of the Plan is divided into 15 segments. The Plan also includes more than $50 billion for the country's defense capability and the restart of the defense industry with a focus on NATO standards. The measure of the successful implementation of the Ukrainian Marshall Plan is at least 7% economic growth every year, as well as Ukraine's entry into the list of 25 leading countries according to the Human Capital Index. In 2020, Ukraine took only 53rd place in the list.

Fast state concept as a solution.

The fast state combines a cybernetic approach with people-centeredness (Bunak et al., 2022). It is built around the effective use of the country's human capital and the optimal use of resources.

The fast state is a people-centric system. Its central resource is people, and its goal is to ensure their development and comfort of life through process optimization. Deputy Prime Minister Mykhailo Fedorov's words that the most convenient state in the world is being built in Ukraine are precisely about the fast state, the state-as-a-service.

Speed requires efficiency: all possible processes must be automated, and all available resources must be involved in work processes.

When we talk about effective human development, we mean high-quality education and training of people, the creation of working conditions -- minimal regulatory restrictions, access to quality infrastructure, and capital markets for business. An essential element is the motivation of citizens - what will make Ukrainians return and work in their country?

The basis of individual motivation is safety, quality medicine, and healthy life. The development of personal freedoms and property relations is mandatory. After all, the owner is a free person, but the owner is responsible for his activities and his land. Transparency of ties in the economy, understanding of one's tasks, and recognition of personal contribution to action are the basis of individual realization of citizens.

The economy of the fast state works like a spiral. Educated people create quality factors of production - develop infrastructure, increase resource use efficiency, develop business relations, and improve access to financial markets. At the expense of quality factors of production, competitive markets and products ready for competitive export are created.

The export potential of Ukrainian production attracts foreign investors who become co-owners of Ukrainian companies. The integration of international capital opens even more access to global markets for Ukrainian goods. The growth of local production and markets contributes to the country's economic growth. The state receives resources for the creation of new industries, which require new skills, new factors of production, new markets, which are created through a new cycle of human capital development.

The chain "Man - Factors of production - Markets - Economic growth - Man" works in any economy. The difference is only in the speed of rotation of these cycles. The task of a fast state is to speed up these processes by improving development conditions, reducing the burden and large-scale automation of state services.

This can be done based on the following principles:

Speed - acceleration of organizational processes due to the avoidance of vacuum in state structures. Minimize the waiting time for absolutely all government services.

Efficiency is a revaluation of the use of resources, the economy by definition stimulates the private sector through competition to improve all possible processes.

Certainty is clear rules and procedures that allow you to formulate strategies, forecast your activities, and see the expected result.

Engagement is a constant assessment of human potential, production, and finances in relation to their use in the economy. In a fast-moving state, people do not sit idle, and banks actively finance production.

Automation - processes should be so clear and simplified that they can be broken down into simple functions and executed as a computer script. Simplifying routine procedures will reduce the burden on people and businesses and free up the most valuable resource - human time for strategic development tasks.

The concept of a fast state is a rethinking of traditional approaches to development through the prism of the VUCA of the world when we must respond to the challenges of volatility, uncertainty, complexity, and ambiguity.

Conclusions

Currently, in a very generalized way, for Ukraine, variability means a constant change in the situation at the front, which directly affects all spheres of life, uncertainty in terms, losses, and opportunities to receive assistance, difficulty in achieving economic development during a full-scale open war, and the ambiguity of the impact of various social, economic, geopolitical, geographical factors, etc.

The development of the economy on the basis of a fast state will:

stimulates employment in the economy;

accelerates population retraining processes;

facilitates the work of the economic sectors, reducing their infrastructure load and opening market access;

improves transparency and predictability of economic activity in the country, allows enterprises to better plan their activities;

opens a place for new professions and career plans.

This approach is extrapolated to other economic processes, but the main thing remains common: the state should provide people with opportunities to implement economic activities on their own. The state should grow not at the expense of regulation but at the expense of human capital and fair and effective competition. The state leaves the economy to the people but cleans up well after itself.

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