It is not uncommon to debate about freedom of choice from the political perspective, but it is rarely being evaluated from the economic and business point of view, getting to one of the most important parts of a modern economy – how much does it actually cost and what are the monetary benefits of it?
Let’s compare the gross domestic product (GDP) by period, noting that the free choice is strongly correlated to two primary economic data points. It should also be noted that some of the data in this article is not scientific and is used in an attempt to exhibit the impact of changes on everyday life.
Looking through modern history, the best point of analysis would be Ukraine, due to the following reasons: large population; a long period of dependency from the external government; three major turmoils in the recent years, that is leaving USSR in 1991, “Orange Revolution” in November 2004 – January 2005 and “Maidan Revolution” in November 2013.
What was the impact of such occurrences on the economy?
Firstly, from 1990 to 1996, the GDP has decreased from $84.5 billion to a staggering $44.5 billion, constituting a 45% decrease. However, the GDP in 1996 is not the lowest it has ever been; in the year 2000, it plummeted to its lowest of $31.2 billion. In 1997, it did increase to $50.1 billion, but when viewed cumulatively, it does not follow the general trend line.
It is clear from the data that it took nine years for the country with quite a good share of natural resources and a stable climate with fertile land to recover from such a rapid change of management structure – and it can’t go without saying this required outstanding patience and sacrifice from people who lived and worked in Ukraine during this period.
In the next period for our analysis, from November 2004 to January 2005, the so-called “Orange Revolution” occurred. Comparing the GDP before and after this event, we can observe profitable growth, although not a dramatic increase. However, it can be seen that there was an overall positive impact on the economy.
Even though it was a hard time, people saw this as an opportunity for further growth, development, and improvement and the chance to make more money. Ultimately, this led to such an unusual scenario when, after the major political changes, economic indicators improved rather than deteriorated.
The next significant impact happened in November 2013, the so-called “Maidan Revolution”.
In 2013, right before the event, Ukraine exhibited the best GDP in history: $183.3 billion. But then in 2014, it declined to $133.5 billion, and then again in 2015 dropped to $91 billion. That is nearly by half of the total, meaning the economy was almost collapsing.
Still, just after a few dark years, we can now see that Ukraine’s economy is growing. In 2019, the GDP was $153.8 billion – a 41% growth in four years – and this is an exceptional result, allowing to suggest a full recovery in 2021 and further growth onwards. This time, it took three long years for the economy to recover.
Coming up to the conclusion, we can clearly see that market liberation is always followed by economic growth, yet there is always a price to pay in the short-term. On the contrary, in the long term, it gives a potential of an unusual rise and allows businesses and people to achieve a whole new level of development which was impossible under the extractive (Why Nations Fail: The Origins of Power, Prosperity, and Poverty – Daron Acemoglu, James Robinson) political institutions. It gives hope for the future and helps the majority to work harder, faster, smarter, and much more efficiently.
The outcome of the article and the ideas provided in the article should not be considered, under any circumstances, as a recommendation or call to any action. The author abides neutral point of view and respects any legal democratic norms.
By Andrey Kovalev, https://www.businessinvitee.net/