Tackling the Informal Economy in Ukraine

The problem of informal work and informal networks (blat) in Ukraine is long-standing. Until now, research on the informal economy in Ukraine has largely focused on measuring its size rather than exploring the nature and motives of the people engaged in informal activities. Moreover, few studies in relation to Ukraine have sought to evaluate the validity of the contrasting theorisations of the informal economy and no studies in Ukraine have considered the issue of contemporary informal networks (blat). The intention of this thesis is to fill these gaps. In doing so, the objective is to start to resolve the lack of knowledge on the nature of the informal economy which leads to ineffective and even destructive policy approaches to tackling it.
The aim of this thesis is to critically evaluate the existing theorisations of the informal economy and their applicability to Ukrainian society in order to start to enable a move towards developing policy solutions for tackling the informal economy. To achieve this aim, a mixed methods approach is adopted in this thesis. The survey, consisting of 200 semi-structured interviews, was carried out in an urban area of Ukraine – the city of Mykolayiv. The data collected was analysed both qualitatively and quantitatively.
The results of the survey affirm that informal activities are diverse in nature and are driven by a variety of motives. Thus, no single existing theory fully explains the informal economy in Ukraine; instead, there is evidence to support each theory of the informal economy. As such, policy responses need to be tailored in order to effectively deal with the challenges faced by the different types of informal activity. Such a response is more likely to result in the formalisation of such activities by removing the barriers to formalisation and nurturing fledgling business activities rather than simply trying to eradicate them.