Econometric Analysis of the Post-War Recovery of Ukraine’s Economy Based on the Experience of the Balkan Countries (Croatia and Bosnia and Herzegovina)

Abstract

Relevance of the study stems from the systemic destruction of Ukraine's economy caused by the full-scale war (direct infrastructure damage has exceeded USD 152 billion) and from the need to empirically test the GDP growth rates of over 7 % assumed in the National Recovery Plan, which makes it urgent to develop quantitatively grounded recovery trajectories based on the experience of post-conflict countries. The purpose of the study is an econometric analysis of models and scenarios of the post-war recovery of the Ukrainian economy through a comparative study of the experience of Croatia and Bosnia and Herzegovina in order to identify pathways toward sustainable economic growth. Methods. A set of econometric models was estimated on annual World Bank data for 1996–2024: a fixed-effects panel regression and individual models for the two countries with HAC robust standard errors, complemented by an ETSX forecast with confidence intervals. Results. The decisive role of foreign direct investment and exports as growth drivers was confirmed, and three scenarios of Ukraine's recovery for 2027–2036 were considered; it was proven that the plan's targets are attainable only under the export-and-investment model. Croatia's integration-and-export trajectory ensured convergence toward European standards, whereas Bosnia and Herzegovina's dependency-and-transfer trajectory produced an inertial-type economy with signs of structural stagnation; particular attention is paid to the non-linear effect of remittances, which is relevant for Ukraine given its more than 6.7 million citizens abroad. Conclusions. Institutional quality, the rule of law, and a consistent European-integration policy are key preconditions for transforming the initial recovery into sustained long-term growth. The estimated elasticities of GDP with respect to foreign direct investment and exports have applied value for adjusting the National Recovery Plan, capital-attraction policy, and the reorientation of foreign trade. Prospects for further research lie in extending the model with institutional indicators and in the sectoral decomposition of GDP.