Institutional Determinants of Sustainable Development of Agri-Food Markets in Ukraine: Diagnosis of Traps and Exit Mechanisms

Abstract

The study aims to develop a comprehensive typology of inefficient self-reinforcing equilibria in the food sector and to substantiate pathways for overcoming them in the context of post-war economic transformation and European integration. The relevance is determined by the strategic importance of the agri-food sector for the national economy (approximately 59% of foreign exchange earnings from exports) and the necessity for scientific support of the adaptation process to the requirements of the EU Common Agricultural Policy. The methodological framework is based on the synthesis of neo-institutional economic theory and social-ecological systems concepts. The analytical framework integrates path dependence approaches, the concept of undesirable resilience, lock-in theory, and institutional bricolage. The leverage points methodology was applied to substantiate the hierarchy of interventions. The empirical base was formed using data from the State Statistics Service, analytical materials from the Ukrainian Agribusiness Club (UCAB), reports from the Kyiv School of Economics (KSE), and World Bank indicators (WGI) for 2019-2024. Five interrelated types of inefficient equilibria were identified: commodity (78% of exports comprise raw materials and primary processing, Economic Complexity Index ECI = –0,45, loss of 60-70% of value added), technological (40–60% imported seeds, 65% equipment depreciation, 0.3% of GVA on R&D, soil degradation), regulatory (Regulatory Quality index 0,31, Rule of Law 0,02, over 150 legislative changes annually), shadow economy (30-35% sector informalization, 45% informal employment, 60% cash transactions), and social (15% rural population decline during 2014-2024, poverty rate 32% versus 18% in urban areas, less than 1% of farmers in cooperatives). The systemic nature of trap mutual reinforcement through coordination effects, learning effects, and network externalities was demonstrated. It was established that war as a critical juncture creates an ambivalent impact: it deepens social and commodity traps while simultaneously opening a window of opportunity for reforms through delegitimization of inefficient institutions. Based on the analysis of Central and Eastern European countries' experience, the risks of institutional monocropping, dependent capitalism, and compliance trap were identified. A three-stage transformation model was developed: short-term 2025-2027 (regulatory guillotine, digitalization, formalization), medium-term 2027-2030 (clustering, National Seed Program, precision farming), and long-term 2030+ (LEADER program, cooperative movement, social entrepreneurship). Overcoming inefficient equilibria requires a comprehensive approach considering their systemic interdependence. Reform effectiveness is determined by the ability to adapt acquis communautaire requirements to the national context through institutional bricolage. The scientific novelty of the study lies in: developing a comprehensive typology of institutional traps in agri-food markets under conditions of military conflict, integrating technological, market, regulatory, and social dimensions of deformations; substantiating the mechanism of trap mutual reinforcement through coordination effects and network externalities; conceptualizing war as a "critical juncture" that creates an ambivalent impact on the institutional environment; developing a three-stage transformation model based on the leverage points methodology. The results can be utilized in formulating the Agricultural Sector Development Strategy until 2030 and ensuring the achievement of UN Sustainable Development Goals (SDGs 2, 8, 12, 16).