Corruption in Ukraine: The Economy of Losses and Processes

Corruption in Ukraine is not just a daily reality, but a systemic problem that distorts the functions of the state and stifles societal development.

Corruption in Ukraine is not just a daily reality, but a systemic problem that distorts the functions of the state and stifles societal development.

Corruption in Ukraine is not merely a matter of occasional abuse but a stable system where the main goal is not achieving results but maintaining endless processes. Such a system forms a unique economic model, which can be described as the "economy of losses" or the "economy of processes."

In this article, we will examine the key features of this model, its consequences for society, and why this approach contradicts the fundamental principles of business logic and efficiency.

The Concept of the "Economy of Losses"

The "economy of losses" is characterized by the systematic expenditure of budgetary funds without achieving socially significant results. The primary goal is not to create value but to redistribute resources in favor of a narrow group of individuals tied to power structures. This phenomenon manifests in various forms:

• Kleptocracy — a system where power is used for the personal enrichment of elites at the expense of state resources.

• Budget siphoning — a term describing mechanisms of redistributing budget funds through corrupt tenders, inflated estimates, and kickbacks.

• Crony capitalism — a model where business success depends on proximity to power rather than the quality of goods or services.

• "Budget black hole" effect — a situation where allocated funds disappear without any tangible results.

These practices have become the foundation of the "economy of processes" — a system where goals are perpetually elusive, and resources are consumed in an endless movement toward an unattainable result.

The Economy of Processes: Logic and Mechanisms

The economy of processes assumes that actions have no final goal or result. Projects are designed so that their completion becomes impossible, allowing resources to be endlessly allocated. This contradicts business logic, where success is measured by results and profitability.

Key Features of the Economy of Processes:

• Priority of process over result

  • Government projects become perpetual. Completing a project means halting funding, so goals are deliberately blurred or postponed.

• Endless corrections and improvements

  • Every failure is used as a reason to obtain new funds. Corrections create even more problems, turning projects into "bottomless pits" for money.

• Motivation for failure

  • A successful project is unprofitable as it stops the flow of funding. It is much easier to justify expenditures on problem-solving than on development.

• Creation of toxic systems

  • Such projects are not only useless but harmful. They increase debt burdens, erode public trust, and block real progress.

Examples of the Economy of Losses and Processes in Ukraine

• Infrastructure projects

  • Roads, bridges, hospitals, and schools often remain unfinished or of poor quality. Funds allocated for their implementation end up in corruption schemes.

• Endless reforms

  • Reforms are conducted for years but never achieve their goals. Instead, each new wave of changes demands additional expenses and justifications.

• Social programs

  • Humanitarian projects, assistance to the underprivileged, and refugee resettlement often become tools for fund appropriation. They bring minimal real benefits to citizens.

• Energy and defense sectors

  • Sectors tied to national security are regularly subject to corruption. Contracts are signed with fictitious companies, equipment is purchased at inflated prices, and results remain questionable.

Contradictions with Business Logic

People from the business sector, accustomed to efficiency and results, struggle to understand the logic of corrupt systems:

• Focus on results

  • In business, projects are evaluated based on their completion and profitability. Corrupt logic suggests that results are irrelevant — the process must continue.

• Accountability for failures

  • A failed project in business means losses and the need for change. In the economy of processes, failure becomes an excuse for further expenditures.

• Rationality of investments

  • For a businessperson, investing in a project doomed to failure is unacceptable. In corrupt systems, this is standard practice, as it allows participants to increase personal profits.

Consequences for Society

• Loss of trust in the state

  • Citizens stop believing in the ability of authorities to manage resources effectively.

• Growth of inequality

  • The main beneficiaries of corruption are a narrow group of individuals, while the population suffers from a lack of resources and poor services.

• Stagnation and decline

  • Real reforms and development become impossible because the system aims to maintain the status quo.

• Cynicism and apathy

  • People grow accustomed to the idea that corruption is inevitable, and attempts to change anything are futile.

Conclusion

The economy of losses and processes is a systemic disease that blocks progress and destroys the social contract between the state and its citizens. Solving the problem requires not only changing the individuals in power but also radically altering the principles of governance. The state must once again become a tool that serves the interests of society rather than a mechanism for enriching elites.

Only a return to a results-oriented approach will allow Ukraine to break out of this vicious cycle and build an effective, just society.