Myths and realities of the role of officialdom in economic development in Ukraine: Two case studies in small business creation, Kharkiv and Transcarpathia

Ukraine\u27s official goals and policies regarding European integration are presented, and the European Union\u27s conditions of accession are examined. Because Ukraine seeks membership in the EU, democratization and marketization, receive focused attention. Problems of Ukraine\u27s quadruple transition are also examined. The meaning of the Orange Revolution is discussed, as its significance is challenged. In many extensive interviews, administrative officials from two selected oblasts express optimistic and hopeful assertions of Ukraine\u27s development of a market economy, and officials claim to facilitate economic development and, at times, even small business development. These claims are put to the test by use of two in-depth case studies of small business creation. The two case studies take place within the two contrasting oblasts of Kharkiv and Transcarpathia. Extensive interviews of professors, small businessmen, lawyers and others tend to corroborate the findings of a recent IFC study by Yacoub and Senchuk, and corroborate the experiences of the two directors of the small businesses, Oksana Degtyarenko and Olha Zinchenko. The myths of officialdom in economic development and small business creation are evident in an inconsistency between claims of higher level administrative concern and support for entrepreneurs and small business development and the actions of officials within lower levels of administration. Instead of functioning as a chief catalyst for small business development, and development of a market-based economy more broadly, the administration and its officials are often acting as impediments. The reality, for entrepreneurs, appears to involve a high degree of state interference, specifically extraordinarily complicated processes of gaining an exhaustive number of approvals, permissions, and official acts. The administration, at its lower and mid levels, portrays an extreme lack of interest in the development of entrepreneurs, and visible incompetence and extortion. While some very worthwhile administrative reforms are evident in these oblasts, the destructive and impeding actions of the lower and mid level officials are inconsistent with the hopeful and claims of goal-oriented higher level officials, many of which are well-educated, skilled, and genuinely well-intentioned. In the drive toward a market economy and economic development, Ukraine continues to face difficult challenges