DONORNOMICS: My New Term for the Ukrainian Economy

A new type of economy has taken shape in Ukraine — and the most appropriate term for it is Donornomics.

In textbooks, an economy is a system of production, distribution, and consumption, which relies on labor, capital, investment, and institutions. There are no shortcuts in this model: reforms, privatization, tax discipline, productivity — all of it is painful and slow.

How closely does the current Ukrainian economy correspond to this classical model?

In reality, a completely new type of economy has formed in Ukraine — one entirely dependent on external assistance.To describe it, I propose a new term: DONORNOMICS.

This word has not yet been used in global economic literature.So what is the essence of Donornomics?

• A deficit of more than 20% of GDP is covered not by domestic business, but by external grants and loans.

• The exchange rate and inflation are controlled not by the market and not by reforms, but by foreign exchange interventions by the National Bank, funded by the same donors.

• International reserves are not the result of export success, but a “gift” from partners.

• Instead of institutional changes and sectoral reforms, the government relies on memorandums, meetings, and photo reports from Brussels and Washington.

In a regular economy, the main goal is to create added value.In Donornomics, it is to maintain donor trust and receive the next tranche on time.

What the consequences of this model will be — is a matter for separate research.