Economic growth requires reduced politicization of economy - Leszek Balcerowicz

“If a country wants to achieve economic growth it needs to reduce the politicization of the economy and it should be guided solely by the laws of the market and the rule of law. The politicization of the economy is the main threat to economic growth”, Leszek Balcerowicz, Chairman of the National Bank of Poland (2001-2007), stated at 10^th Kyiv Security Forum held by the Arseniy Yatsenyuk Foundation Open Ukraine.

It is no secret that the direction of growth tends to be discontinuous. This is a normal process, thus it is incorrect to claim that crises arise only in the conditions of the market. Usually, such claims can be heard from the countries which preserve total control of the state over their economies. In fact, the biggest crises in the world economy occur where there is a large concentration of power over the economic policy on the part of a state. This, in particular, applies to China, where the policy of Mao Zedong resulted in numerous casualties”, Leszek Balcerowicz noted.

At the same time, he added that the perception that crises in the economy were caused by the market was an absolute myth. “Putting crises in the economy down to the market is an absolute myth. They arise solely because of the excessive authoritarianism and total control over the economy of a state. The global economic crisis, for instance, the situation in Greece, is a bright example of this. Then, the crisis in the country was not a consequence of the county’s market economy, it was caused only by the political decisions of the Greek government”, the Polish economist stated.

“While talking about the crises in the financial sector, we often mention private banks as their reason. However, if we analyze this problem, it becomes obvious that wrong decisions of private banks are connected to the wrong political decisions, in particular, improper regulation of the banking sector, wrong decisions on loans, etc.”, he added.

As regards the economic situation in Ukraine, Leszek Balcerowicz believes that in 2014 the country was on the verge of economic collapse. However, the Ukrainian authorities took actions and managed to prevent it from happening. “The country began reforms that already have positive results. Today, Ukraine has the reserves to continue these reforms. Your main task is to avoid a political crisis. If you succeed and if you can effectively use your reserves, the economic growth that we currently observe today may continue”, Leszek Balcerowicz believes.

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Kyiv Security Forum was launched by the Arseniy Yatsenyuk Foundation Open Ukraine in 2007 is an annual international event to high-level discussions on the current issues in the Black Sea region and wider Europe. The Forum aims at increasing security cooperation between the EU and the Black Sea region, raising awareness about regional developments among key regional players, promoting the role of independent and non-governmental actors in setting the security agenda in Europe.