Ukraine still desperately ignores the fundamental laws of economics, as if avoiding a direct look at the rules that make nations prosperous and competitive. Without clear property rights—both in land and in business—national well-being, development, and even our subjectivity on the global stage are at risk. Why does our state, despite all historical lessons, continue to bypass the issue of property rights? Isn’t it time to realize that without this fundamental principle neither economic growth nor a stable future for every Ukrainian is possible?
Ukraine in the International Property Rights Protection Index
Ukraine once again found itself among the outsiders of the world ranking of property rights, as if confirming that the promises of the movement towards Western values remain only words. According to the International Property Rights Alliance, which covers 93.9% of the world’s population and 98.1% of the world’s GDP, in 2024 we were ranked 102nd out of a possible 125, scoring only 3.82. And although slogans about the European future are still displayed on our banners, in reality, Ukraine is walking alongside countries such as Honduras, Ivory Coast, and Burkina Faso, where the concept of “property rights” has almost no meaning.
It should be noted that at the beginning of October 2022, according to this rating, Ukraine took 105th place, having risen by one position compared to 2021.
Only 23 countries in the world can boast of a very reliable property protection system with an Index of 6.8 to 8.7 points, and they provide more than half of the world’s GDP, although only 11.8% of the world’s population lives in them. At the same time, 61 countries have an Index below 4.7 points, which means critically weak protection of property rights. These countries, home to about 2.8 billion people, provide only 12.9% of the world’s GDP.
The International Index of Property Rights Protection is a comprehensive indicator that reflects the success of the countries of the world in the field of protection of private property rights, including both physical and intellectual property. It has been issued annually since 2007 by the International Property Rights Alliance to provide a global assessment of the level of legal stability and effectiveness of property rights protection in various countries. The index covers three main categories, on which the level of protection of private property in the country depends. The first is the legal and political environment, including the independence of the judiciary, the rule of law, political stability and the level of corruption, which are fundamental to the protection of property. The second category is rights to physical property, which takes into account the protection of physical objects of property, registration of property and availability of credit. Finally, the third category is intellectual property rights, which provide for the level of protection of patent law, measures against “piracy” and protection of innovations.
The methodology of the Index is based on the analysis of data from such institutions as the OECD, the World Bank, the World Trade Organization and other international and national research centers. The annual ranking includes representatives of leading universities and international organizations in the editorial board, which adds significance to this research. The index not only ranks countries, but also makes it possible to see weak points where the protection of property rights needs improvement, which is key to economic growth and social well-being
Instead of moving up, we are steadily grazing the rear, which is not just a political problem, but an economic sentence. While other countries are steadily improving their indicators, Ukraine remains a consistently low bar, as a result of which it loses the trust not only of its own citizens, but also of international investors. At the same time, among our “neighbors by rating” are Russia, Gabon, and Mozambique. And this despite the fact that we constantly declare a pro-European course, implement dozens of “formal” programs and strategies that should bring us closer to EU standards.
The situation with property rights in Ukraine
For a very long time, Ukraine has been living in realities where the protection of property rights remains a purely declarative norm, distant from real practice. While in civilized countries this component is the basis of economic growth, stability and social well-being, in Ukraine it has become a habit of the authorities to ignore it. Numerous statements and programs of integration with the European Union, dozens of strategies and concepts are actually just formalities and loud slogans that cover the real state of things — the lack of a reliable system of property protection, which repels investments, limits the development of entrepreneurship and endangers economic stability.
While our politicians prefer formalism, showing us and the world “paper” declarations, other states create strong legal systems that guarantee property rights. The group of leaders with the most effective protection of property rights has up to 19 times more income per capita than the countries with the worst protection of property rights. Ukraine remains among the last quarter of countries, where property is a conditional concept, and the sense of security of citizens for their assets is only an illusion. In this case, the question arises: what kind of economic development and what prospects for the future can our country be talking about?
Peruvian economist Hernando de Soto, the ideologue of the International Property Rights Index, has repeatedly argued that there is a direct and inextricable link between property rights and social prosperity. However, the Ukrainian political elite ignores this experience, instead continuing to focus on models that push the country backwards, supporting a corrupt bureaucracy, rather than creating transparent and fair legal institutions.
The situation with property rights in Ukraine is like an endless labyrinth of bureaucracy and corruption, where the interests of citizens and businesses are regularly subordinated to the interests of elites. While the whole world is building stable legal institutions that protect property, Ukraine seems to be going in the opposite direction. Corruption, which eats away at the system from the inside, has turned our courts and authorities into instruments for influence and personal enrichment, rather than protection of citizens’ rights. Instead, officials who publicly claim European integration and attracting investment tacitly agree to the existence of a system in which private property is a conditional concept and investment security is an illusion.
During 2023, Ukraine received 36 points out of a possible 100 in the “Corruption Perception Index” rating from the international organization Transparency International. Despite the loud statements of the authorities about the fight against corruption, its level in the state institutions of Ukraine is breaking records and has only increased in the conditions of war. It is deeply rooted in the system, and it has long been no secret that promises to fight it remain at the level of words, while the country’s resources continue to sink into the pockets of the elected.
Without protected property rights, the Ukrainian economy becomes like a ship without a compass: it floats downstream, not knowing where to dock. The lack of transparent, stable institutions and a legal framework leaves Ukraine in a state of permanent risk for everyone who tries to invest in its development. Large investors, seeing the chaos and lack of guarantees, avoid investments, and those who have already ventured in face the fact that their properties become vulnerable to raiding, court proceedings and manipulation by officials. As a result, even the most ambitious businessmen and innovators eventually lose motivation to work in a country where at any moment their property can be seized or devalued due to legal instability.
As long as property rights in Ukraine remain without real protection, our reputation in the international arena is melting, and hopes for economic development are becoming more and more illusory. Businessmen and investors expect a fair and transparent approach from the state, but instead they see corruption schemes that not only scare away, but frankly destroy development prospects. Until the authorities recognize that the property of citizens and businesses must be inviolable, all attempts to attract foreign investment will remain futile.
Ukrainian politicians continue to cover themselves with words about the “European choice”, not recognizing that without protected property rights, this choice is an empty shell. The European community will not accept us among its nations as long as the basic rights of Ukrainians remain unprotected. In the top 30 countries according to this indicator, half of which are EU members, property protection comes first as a guarantor of economic stability. Instead, the government in Ukraine continues to choose bureaucracy and formalism, neglecting economic well-being and real development.
How to protect property rights
A country where citizens cannot feel like real owners of their own assets is sick, and this disease eats away not only at the economy, but also at the social sphere. The war only exacerbated these problems as corruption, raiding and political privilege became deeply entrenched in state institutions where instead of economic growth we got destruction and disenfranchisement. The government should start treating the economy precisely by introducing real protection of property rights. This is the key point from which the tangle of oligarchy, corruption schemes and the system of favoritism that has been strangling Ukraine for years should be untangled.
A look at the experience of other countries only emphasizes this lesson. For example, in the early 1990s, Estonia was much poorer than Ukraine, but adopted a different path — economic freedom and protection of private property. Today, Estonia ranks 24th in the world, demonstrating economic strength and stability. Qatar is rich in gas, but understands that protecting property is more important than natural resources – which is why the country ranked 26th in the world. The same applies to the UAE, which, with its rich oil reserves, has realized that economic success is determined by the protection of private property, not just natural resources.
Ukraine does not need formal papers with stamps, but the real implementation of an effective institution of private property – the right of citizens to freely dispose of their resources, assets and property, which is not controlled by the state through price restrictions, regulations or forced quotas. The economy cannot fully function if the state grants itself the right to prohibit, restrict, or compel owners to use their property in ways that are beneficial to the government. True private property is the freedom to make your own decisions and manage your assets as you see fit.
The next step for Ukraine is to reduce the state’s share in ownership of assets and resources, reduce the impact of government spending on the economy, and avoid conflicts of interest in power. As long as one state body is the owner, administrator and controller at the same time, the risks of corruption remain critically high. Individuals and legal entities should manage their own risks using market instruments, without unnecessary barriers such as licenses, permits or forced membership of associations.
It should be noted that the main enemy of the protection of property rights in Ukraine is discretion, when an official can subjectively interpret the legislation. As long as government officials are able to decide for themselves what is “normal”, “fair” or “appropriate”, we will see arbitrariness. Removing subjectivity from the legal system is the basis for a stable economic environment where investors will feel confident.
Another lesson for Ukraine is the example with currencies. The dollar and the euro saved Ukrainians from wild fluctuations and devaluation of the national currency. Similarly, we could institute a commercial court, allowing businesses to resolve conflicts in trusted jurisdictions. Opening up competition in the judicial system would allow entrepreneurs to choose where to defend their rights, and this would be a step towards the true rule of law.
If Ukraine continues to remain among the states where legal norms are more of a formality, we are doomed to economic stagnation and the final loss not only of investments, but also of trust in our own institutions. All opportunities for development and growth require one thing — the construction of a reliable legal field that will protect the property rights of every citizen. Otherwise, the country will remain on the fringes of world development, and its ambitions for European integration will dissipate in the form of empty promises.
Ukraine can be rich and prosperous, but for this it is necessary to start from the basics – with real protection of private property, where the state is the guarantor, not the master of citizens’ resources.
