Article August 26, 2002 Issue

If they build it, it can grow

A daunting task from Day One—help develop an entrepreneurial climate in post-Soviet Ukraine

By Corvin Huber

Prior To Returning to the private sector and my academic roots in aviation engineering, I was partner in a European consultancy that ran government-to-government aid programs. One of our major assignments involved designing a program to help new entrepreneurs in the former Soviet Union start small- and medium-sized businesses.

These new ventures would either be spinoffs from existing industrial structures or service-related start-ups. In both cases, there were no working models in that part of the world—there were no smallor medium-sized businesses when the Soviet Union broke up, no individual entrepreneurs. Fostering entrepreneurship and company-building would all have to be done from scratch. The tasks looked, and in some ways still look, daunting.

Among those tasks were assisting new governments with administrative procedures for business regulation, and structuring legislation for such areas as taxation, accounting standards and practices, business registration, and product certification. There were also the challenges of dealing with red tape and corruption—how to conduct legal businesses in a climate that was hostile to private enterprise. And not only was the existing economic system in disarray, there had been no acceptable level of environmental protection practices in existing industries, the social and pension systems had collapsed, and the preexisting system of personal fiefdoms (openly known as the system of benefits and privileges) was based on political connections and clout.