18 Apr 2024

A blueprint for Ukraine’s post-war reconstruction

In the newly published “Frankfurt Report on Ukraine’s Reconstruction” by the Leibniz Institute SAFE and the Centre for Economic Policy Research, an international research team outlines what Ukraine needs for economic recovery and draws parallels with the Marshall Plan

The new “Frankfurt Report on Ukraine’s Reconstruction” highlights the principles and strategies critical to building Ukraine's sustainable and resilient post-war future. In the paper, presented jointly by the Leibniz Institute for Financial Research SAFE and the Centre for Economic Policy Research in London, and supported by the Institute for European Policymaking at Bocconi University in Milan, an international team of economists outlines measures to create a trustworthy and effective financial system to facilitate Ukraine’s recovery and modernization. Drawing parallels with the post-World War II European recovery program known as the Marshall Plan, the paper highlights the transformative effect of institutional reform and international cooperation on economic recovery.

“The tragedy of war is forcing Ukraine to rebuild its physical infrastructure, but it also provides an opportunity to modernize its institutions. Central to this is creating a robust financial system that effectively channels resources and promotes sustainable development,” says Jan Pieter Krahnen, SAFE Founding Director and co-author of the Frankfurt Report. Krahnen and his co-authors list five key principles for Ukraine's reconstruction.

Establishing a Ukrainian development bank and platform

First, Ukrainian financial institutions should adapt to the regulatory framework of the euro area and the EU Banking Union to move closer to European markets. This would facilitate access to global capital and promote convergence with European standards. Second, institutions such as the National Reconstruction and Reform Council (NRRC), the Ukrainian Development Bank (UDB), and the Ukrainian Development Platform (UDP) need to be established. These three institutions should be internationally coordinated, leverage existing resources, and strategically plan reconstruction.

Third, the report states the post-war legacy needs to be addressed. Efforts to recapitalize banks, eliminate non-performing loans, and reduce investment risk through public-private partnerships are critical to restoring financial stability and confidence in the Ukrainian economy. Fourth, broader corporate governance, rule of law, and macroeconomic policy reforms are also needed. According to the authors of the Frankfurt Report, these reforms should complement Ukraine's path to EU accession.

“Belief in Ukraine’s long-term success as a free, democratic, and prosperous nation is the basis for winning the support of international allies and boosting investor confidence,” says co-author Yuriy Gorodnichenko, a Professor at the Department of Economics at the University of California, Berkeley, describing the fifth and final principle of the Frankfurt Report. The native Ukrainian adds: “Ukraine has the potential to serve as a model for post-conflict reconstruction worldwide by embracing institutional reform, promoting international cooperation, and maintaining confidence in its future.”

Scientific contact

Prof. Dr. Jan Pieter Krahnen

Founding Director emeritus