Author: Cecilia Smitt Meyer
Christmas Time in Poland Through the Lens of Gender Equality
In the Christmas season, we examine how people in Poland allocate their precious minutes in the days before and during the holidays. We use data from the Polish Time Use Survey and show that, in several aspects of time use, Christmas is indeed special, and that there are notable differences in how men and women allocate their time to work and pleasure. Women spend more time than men on household chores and preparing meals, and in the latter case the imbalance is particularly striking: on average women spend two hours more per day cooking ahead of the holidays.
Introduction
Every year, billions of people around the world spend the end of December enjoying time with friends and family. Many celebrate Christmas on the 25th and 26th, while others bid farewell to 2024 and welcome a new year. Celebrations and fun are often preceded or combined with intensive preparations—cooking, cleaning, shopping, and travel. Time is of the essence, and as with other major celebrations, the 2024 Christmas season is likely to feel too short, intensive, and possibly stressful.
In this policy brief we look at how people in Poland allocate their precious minutes during these special days. Every ten years the Polish Central Statistical Office collects detailed data on time use, interviewing over 35 000 individuals, most of whom fill in diaries of their time allocation over two different days. This results in over 70 000 diaries with information divided into 144 ten-minute intervals. We use the latest available survey wave from 2013 in which we have information from 72 967 correctly completed diaries, on average almost two hundred diaries per day (the 2023 data is not yet available for research purposes). Particularly interesting is that the data collection in 2013 was carried out in the days running up to Christmas and continued through the 2013 holiday season. This gives us a unique chance to examine the allocation of time over this period, and specifically compare how men and women spend their time in preparation for celebrations, and during the holidays. We compare Christmas time allocation to diaries filled in on weekdays and Sundays in November to show, on the one hand, that the way people in Poland spend their holidays differ in several ways from a regular Sunday, and that allocation of time is particularly unique in the days running up to Christmas. This relates both to how much time is spent on getting ready – preparing meals, cleaning the house, etc., as well as to how these chores are allocated between men and women.
Time Use Diaries in Poland
Polish time use data is unique in its scope and content. During the year of data collection over 35 000 participants complete detailed time use diaries on two days – one weekday and one weekend day. Every ten-minute slot is assigned a category for the ‘main activity,’ with the option to record a ‘secondary activity’ for multitasking. The 163 detailed categories range from broad types like “sleeping” or “time devoted to main job” to specific activities such as “repairing household equipment” or “handcrafts”. The large number of diaries and narrow activity focus enables unique analyses of time use and allows studying specific days (for an example, see Adena et al., 2023).
In 2013 the diaries cover 355 days and on these ‘active’ days the number of completed diaries varied from 116 (on 6th November) to 562 (6th January). The diaries were completed also on the 24th and 23rd of December respectively, (239 diaries) and on both days of Christmas (25th and 26th of December, 250 diaries). These special four days – which happened to start on a Monday – are compared to four November weekdays, the consequent days starting on Monday the 25th of November (549 diaries), and two November Sundays (17th and 24th of November, 737 diaries).
Is Christmas Time Different?
The 163 different categories of time use are aggregated into 10 groups: (1) preparing meals, (2) household work and cleaning, (3) meals, meetings and celebrations, (4) church and prayer, (5) watching TV, using computer, (6) walks, games and hobbies, (7) shopping, (8) work and study, (9) personal care, (10) sleeping.
These broad categories include activities which are similar and/or related to the broad headings. For example, ‘household work and cleaning’ includes vehicle maintenance or cleaning the basement, while ‘meals, meetings and celebrations’ include also ‘phone calls with family and friends’ or ‘reading, playing and talking with children’. The broad activity categories were identified by examining the most common activities given the time allocated by respondents to the listed activities in November and December. Other less common activities were then added to those main categories. The average number of minutes allocated to the ten categories in the weekdays and Sundays of November, the two days before Christmas, and the Christmas holidays is presented in Table 1.
Table 1. Time Allocation: average number of minutes per day allocated to ten aggregate activity categories
As evident there are interesting differences in the pattern of time allocation between the four groups of days which seem to be a result of discernible differences in behaviour. On ‘usual weekdays’ in late November respondents spend on average about 70 minutes on meal preparations and almost 90 minutes on housework. This increases significantly on the 23rd and 24th of December, respectively, to nearly three hours (169 minutes) and over two hours (125 minutes). As expected this then drops substantially over the two days of Christmas. In terms of housework and cooking, Christmas days differ slightly from a typical Sunday. However, even on these days, cooking and household tasks do not come to a complete halt: there is still work to be done! It is clear, though, that the brunt of the preparation is conducted in the days leading up to Christmas. It should be noted also that in Polish tradition the main Christmas celebration usually takes place in the evening of the 24th, although preparations often run all the way up to that evening meal. We can observe for example that the average working time on 23rd-24th December is much lower compared to late November and the time spent on attending mass or prayer is already significantly higher. The preparations on those two days seem to ‘eat in’ to the amount of sleep and time spent in front of the TV. We see more time devoted to meals and celebrations compared to normal weekdays in November, although the values listed are averages over the two days including the 23rd.
The average allocation of time on the two days of Christmas stands out in a few categories. In particular more time is allocated to pleasure: ‘walks, games and hobbies’ take up 171 minutes per day on average over the Christmas holidays, which is over an hour more compared to a normal Sunday. Watching TV is another favourite Christmas pass-time (191 minutes), although people seem to watch slightly less TV on Christmas compared to November Sundays. While meals and celebrations take up more than four hours per day on average, this is only slightly longer than on a normal Sunday (263 vs 247 minutes), and Christmas sleeping patterns are also very similar compared to Sundays – with little catching up on sleep lost in the lead-up to the holidays.
Work and Pleasure over Christmas – Gender Differences in Time Allocation
In Figure 1 we present the average allocation of time in Poland in the run up to Christmas and over the two holidays separately for men and women. The figure depicts the ten aggregated categories, and for each set of days the outer ring represents the average time allocation among women, while the inner ring shows the average time allocation among men. We see some striking differences. Women spend almost 3.5 hours on average on cooking on each of the two days before Christmas, which is nearly 1.5 hours more compared to men. The difference in household work is not as striking, and men tend to spend more time on pre-Christmas shopping (35 vs 26 minutes per day on average). Men also spend more time at work during these two days (189 vs 110 minutes), although much of the time which is not spent on cooking seems to go to leisure: on average men watch more TV and spend more time eating and socializing.
Work and leisure are also unequally divided between men and women on the two days of Christmas. Women spend more than 2 hours per day on average on cooking and cleaning, while men spend only about 50 minutes per day. Over Christmas men spend more time in front of the TV, but they also devote more time to paid work, with an average of about 100 minutes per day. Celebrations and meals over the Christmas season naturally take up much of the time, and in this case the disproportions are not as large, though both in the run up and during Christmas men tend to spend slightly more time ‘at the table’ than women. The difference is more pronounced for the days running up to Christmas (23-24th December) which is noteworthy, given that the evening on the 24th is traditionally the main family celebration time in Poland.
Figure 1. Christmas time allocation among women (outer rings) and men (inner rings)
Is Christmas Time Special? The Gender Perspective
In this section we examine the data in a more formal way by adjusting the patterns of time use of men and women for differences in age, education and household size. We focus on six out of the ten categories distinguished above and regress time (in minutes) within these categories separately for the four sets of days detailed in Table 1: weekdays in November (25th-28th), Sundays in November (17th and 24th), as well as for 23rd-24th December and 25-26th December. The estimates of the coefficient on the female indicator included in these regressions reflect how much more or how much less time women spend on a specific activity category compared to men, conditional on the controls.
Figure 2. Women vs men: differences in time allocation in November and over Christmas
In Figure 2 we present the results for the six time-use categories, in each case showing the estimated coefficient on the female indicator for the four sets of days. Since the samples are quite small (see Table 1), the standard errors of the estimates are relatively large. However, they still allow us to infer interesting patters of time use differences between men and women. The most visible difference concerns the time allocated to preparing meals in the run up to Christmas. While women spend more time preparing meals in all four-day categories, the days just before Christmas are clearly special (Figure 2a). On average on the 23rd-24th of December, women spend almost two hours longer on this activity per day compared to men, while on a ‘normal’ Sunday or weekdays this difference is ‘only’ 51 and 61 minutes, respectively. Interestingly, women continue spending more time than men on meals preparation also over the holidays, although the extra minutes in this case resemble a usual Sunday. The latter similarity seems to be repeated in the estimates related to ‘household work and cleaning’ (Figure 2b) – women once again spend more time doing chores: 18 minutes more than men on a normal Sunday and 21 minutes more over Christmas. In this category we do not see any statistically significant imbalances during the days leading up to Christmas (the point estimate however suggests that also on those days women ’out-perform’ men by about 15 minutes per day). On the other hand, while (except for November Sundays) the differences are not statistically significant, women seem to spend more time on ‘walks, games and hobbies’ compared to men and the difference is highest over the Christmas holidays (35 minutes per day, see Figure 2c). Since the day is 24 hour long for everyone, we should see some differences going the other direction – activities where women spend less time compared to men. Once again we see some striking patterns in the days running up to Christmas with women spending much less time compared to men on ‘meals, meetings and celebrations’ (60 minutes, see Figure 2d) as well as on ‘work and study’ (80 minutes, see Figure 2f).
With all the work that seems to be going into preparing meals and other housework, it is perhaps good to see that at least on the 25th and 26th of December women spend as much time as men on Christmas celebrations (Figure 2d). It should be noted though that men get some additional ‘passive’ rest in front of the TV on those days (Figure 2e). Differences in TV watching patterns over Christmas are similar to those observed on ‘normal’ Sundays and the days just before the holidays – men watch TV by an average of 57 and 41 minutes/day more than women. Differences between men and women in the time spent on ‘work and study’ just before Christmas are not very different compared to ‘normal’ weekdays when men on average work nearly 100 minutes per day more compared to women. For this category Christmas days seem different from a ‘normal’ Sunday: women tend to work less during the holidays compared to men (by about 46 minutes/day), but we see virtually no difference in labor market activities on a normal Sunday.
Conclusion
If patterns of time-use have not changed much over the past ten years, Poles will spend almost four and a half hours per day on average enjoying meals and celebrations during the coming Christmas. They will add to this, on average, slightly more than three hours in front of the TV and about the same time enjoying walks, games and hobbies. The holiday will be preceded by intense preparations – in particular regarding preparing meals (170 minutes per day on the 23rd and 24th of December) and household work and cleaning (125 minutes per day). As we show in this brief, in 2013, the time burden of holiday preparations and household chores related to Christmas, was certainly not shared equally between men and women. Women spent much more time on those activities, especially in the days running up to Christmas, but also on the 25th and 26th of December.
With the upcoming release of the 2023 Polish time use data we will be able to examine whether patterns of Christmas time use have changed over the last decade. However, how our precious time over this year’s holiday season will be allocated is entirely up to us.
Merry Christmas!
Acknowledgment
Data used for the analysis in this brief come from the 2013 Polish Time Use Survey provided by the Polish Central Statistical Office (GUS). GUS bears no responsibility for the presented results and interpretation. I am very grateful to Daniel Hamermesh for his suggestions and comments.
References
- Adena, M., Hamermesh, D., Myck, M., Oczkowska, M. (2023) Home alone: Widows’ well-being and time, Journal of Happiness Studies, 24, 813–838. doi: 10.1007/s10902-023-00622-w.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Gender Board Diversity Across Europe Throughout Four Decades
Despite comprising a large share of the workforce, women remain a minority in corporate boardrooms across Europe. While progress has been made in recent decades among public (listed) firms, diversity lags behind in private corporations. This policy brief showcases evidence from the Gender Board Diversity Dataset (GBDD) – a newly released, unique data source which covers a comprehensive sample of European private and public corporations over multiple decades. Uniquely, the GBDD, encompasses private (non-listed) companies, a novel method for identifying the gender of board members based on linguistic and cultural heuristics, and a cross-country harmonization of firm-level data. These features make the GBDD a great tool for answering policy-related questions and enable cross-country and cross-sector comparisons. As such, the GBDD can help ensure that policies aimed at promoting gender board diversity are scientifically well grounded.
Background
The labor force participation rate of women in Europe has been rising over the last few decades and is approaching the participation rate of men. However, the proportion of company board positions held by women is still significantly lower. This issue has generated heated debate among academics (e.g. see Nguyen et al., 2020, for a recent literature review) as well as among the general public. It has also prompted several countries to mandate gender quotas for some companies (typically public companies or the largest limited liability companies). For example, in Norway, large and medium-size firms are mandated to guarantee that both women and men account for at least 40 percent of board members. Given the increasing proliferation of mandated gender board quotas across countries, it is imperative that the public be aware of the main facts concerning gender board diversity in a broad set of companies i.e. those that make up the largest proportion of the economy, offer the majority of jobs, and often remain outside the scope of quota legislation.
The Gender Board Diversity Dataset
The Gender Board Diversity Dataset (GBDD), created by Drazkowski, Tyrowicz, and Zalas (2024), provides a novel cross-country perspective on women in management and supervisory boards over the past four decades. The GBDD is based on firm-level registry data from Orbis, which the authors have harmonized to ensure comparability across countries. A key feature of the GBDD is that it covers registry information from both public and private (non-listed) companies. This makes it a comprehensive source of information as the majority of board positions, as well as the majority of jobs in general, are in private rather than public companies. Data on private companies are scarce, and the GBDD is one of very few data sources containing this information across Europe. The GBDD is based on a sample of over 28 million unique firms from 43 European countries observed, on average, for around seven years. It contains information about nearly 59 million individuals who sit on management and supervisory boards and covers the period between 1985 and 2020.
Another key component of the GBDD is the identification of the gender of board members, which is a key innovation compared to other studies that use Orbis data. While the original data do not specify the gender of individuals until 2010, they do include names and surnames, which the creators utilized to perform gender identification. By applying cultural and linguistic heuristics, they were able to determine the gender of over 99 percent of the board members in their sample. For example, in some languages (e.g. Czech), surnames end with a gender-specific suffix, while in other languages (e.g. Polish), given names of women end with a vowel.
The GBDD reports several measures of gender board diversity computed for countries over time, as well as for sectors in each country over time. As such, it is a unique source of information about gender board diversity in corporate Europe, and it can serve as a useful guide for policymakers and analysts. The data are publicly available and can be downloaded in various formats from the website of the authors’ research group: https://grape.org.pl/gbdd.
The Absence of Women in Boardrooms
A key insight emerging from the GBDD is that, despite women holding on average 22 percent of all board positions in a given industry, more than two-thirds of all firms report no women in their boardrooms. More specifically, 68 percent of sectors across the European continent over the past several decades have not had a single firm with at least one woman in their boardrooms. Figure 1 shows the fraction of firms in a sector with no women in the boardroom. This is a new measure in the literature. The x-axis shows the proportion of such firms in a sector, ranging from 0 (all firms in that sector have at least one woman on their boards) to 1 (women are absent from all corporate boardrooms in the entire sector). The y-axis shows the relative number of sectors in the sample for each of the observed fractions.
Figure 1. Fraction of firms with no women in the boardroom
This finding points to clusters of companies with potentially significant obstacles to gender board diversity. Since lack of representation could be considered a major barrier to diversity, policies aimed at promoting even minimal representation of women among board members could have a significant impact on overall diversity.
The Substantial Differences Between Industries and Countries
The average firm-level share of women on corporate boards is only around 16 percent in the IT sector, while it is 35 percent in the education, health, and care (EHC) sector. Figure 2 shows two distributions of the average firm-level shares of women among board members: one for the IT sector and the other for the EHC sector. The distribution for the EHC sector is clearly to the right relative to the distribution for the IT sector, which means that across multiple countries and years, women tend to constitute a much smaller proportion of board members in the IT sector than in the EHC sector. Furthermore, the proportion of observations with no female board members (the spike at value 0) is much higher in the IT sector than in the EHC sector.
Figure 2. Distribution across sectors
Decomposing the data by country also highlights significant differences. For example, firms with no female board members tend to be more prevalent in Poland than in Finland. This is illustrated in Figure 3, where the distribution for Poland is shifted to the right relative to the distribution for Finland.
Figure 3. Distribution across countries
The above data suggest that there may exist a set of sector- and country-specific barriers to gender board diversity. Therefore, policies tailored to addressing those specific barriers could be more appropriate than blanket economy-wide policies.
Diversity Has Mildly Increased
The GBDD can also be used to assess how gender board diversity has evolved over time. Generally, there was an increase in diversity in the 1990s, stagnation in the 2000s, and another increase in the 2010s. However, in the case of supervisory boards, the recent increase in the proportion of female board members was not accompanied by an increase in the number of women on supervisory boards. While the full explanation of this observation would require further research, one possible interpretation is that supervisory boards might have become smaller over time, with male board members accounting for most of the decline, thus mechanically increasing the share of female board members.
Conclusion
Despite the increase in gender diversity among company board members over the last three decades, women still comprise a smaller share of board members and, in many cases, are completely absent from boards. While examining the reasons for this is beyond the scope of this policy brief, the high prevalence of firms with no women on their boards suggests the possibility that significant barriers to entry for women still exist, with this total lack of representation in many companies potentially being one. Policymakers interested in fostering an inclusive and fair society could focus their attention to understanding and removing barriers to board participation faced by women. Furthermore, identifying and tackling country- and sector-specific barriers to board diversity could be particularly impactful. The GBDD can be used by researchers and non-researchers alike to gain further insights into this topic, thus contributing to evidence-based policymaking.
Acknowledgement
The research outlined in this policy brief was funded by Norwegian Financial Mechanism 2014–2021 (grant # 2019/34/H/HS4/00481).
References
- Drazkowski, H., Tyrowicz, J., & Zalas, S. (2024). “Gender board diversity across Europe throughout four decades” Nature (Scientific Data), 11(1), 567.
- Nguyen, T. H. H., Ntim, C. G., & Malagila, J. K. (2020). “Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda.” International Review of Financial Analysis, 71, 101554.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Behavior and Information: Does Media Promote Consumerism?
Consumer behavior is well recognized as a vital component in dealing with climate change. In this regard, it is important to understand both which mechanisms promote pro-environmental behavior, and which instruments stimulate unsustainable consumer activities. This policy brief summarizes the results from a study on how media use can promote consumerism. Based on a 2022 online-survey of Belarus’s urban population, the study empirically assesses how exposure to information promoting overconsumption can impact unsustainable actions. The findings show that consumerism media use has a positive effect on unsustainable consumption behavior. To mitigate the impact and promote sustainable behavior, media could be obligated to provide information about the negative footprint of unsustainable consumption.
Introduction
Consumer behavior holds large potential when it comes to climate change and other environmental problems. According to Moran et al. (2020), changes in consumer behavior could lead to a European Union (EU) carbon footprint reduction by approximately 25 percent.
There are two conflicting streams of literature on the effects of media use on consumer behavior. The first strand states that media use exerts a positive effect on pro-environmental attitudes and behavior (Holbert et al. 2003; Wang & Hao, 2018) while the second declares that media use (in particular, the Internet) promotes consumerism (Simeone & Scarpato, 2020).
The objective of the study underlying this policy brief is to contribute to this debate by exploring whether media use positively affects unsustainable consumption behavior, drawing on data from a nationally representative online survey in Belarus.
Behavior and its Determinants
The study’s conceptual approach rests on the Attitude-Behavior-Context (ABC) theory (Guagnano et al., 1995; Gardner and Stern, 1996; Stern, 2000) which states that behavior is a product of attitudinal variables (norms, beliefs, values), contextual factors (e.g., interpersonal influences, media, community expectations, monetary incentives and costs) and personal capabilities (e.g., knowledge and skills).
With the ABC theory in mind, and also driven by prior empirical studies (e.g., Huang, 2016), the study explores how unsustainable consumption behavior can be affected by materialistic values, environmental self-efficacy (in the study perceived as a combination of values and personal knowledge), and consumerism media use.
We define unsustainable consumption behavior as conspicuous buying, which describes acquiring expensive, and luxury goods or services in order to impress others and gather prestige through objects (Rook, 1987; Pellegrino & Shannon, 2021).
Media use in general means exposure or attention to both traditional media, such as newspapers, TV, and radio, and the Internet (Huang, 2016). Consumerism media use in our study refers to the exposure on these media channels to information promoting a luxurious lifestyle and the idea that buying more leads to happiness.
According to Hurst et al. (2013), materialism can be more easily targeted and changed than personality traits, which are more stable. Besides, theoretical and empirical evidence suggests that materialistic values are negatively associated with pro-environmental behavior. To measure materialism as a value we employ the short version of the Materialistic Values Scale (Richins, 2004), which assesses beliefs about the importance of material possession.
Environmental self-efficacy, also known as perceived consumer effectiveness, refers to an individual’s belief in their ability to make a meaningful impact through their efforts (Ellen et al., 1991). We hypothesize that environmental self-efficacy should be negatively associated with unsustainable consumption behavior.
To operationalize the above constructs (see Table 1), the study uses data from a nationally representative online survey among the urban Belarusian population aged 18-75, conducted in April 2022 by MIA Research on behalf of BEROC. The sample size includes 1029 participants.
Table 1. Descriptive statistics of each construct’s indicators
As seen in Table 1, consumers in Belarus are mostly exposed to the information promoting luxurious lifestyle and buying more goods to be happy on the Internet, relative to other media channels. Another interesting outcome is that Belarusian consumers are more likely to perceive material possessions as a source of happiness compared to the other domains of the classical material value triad; success, centrality, and happiness (Richins and Dawson (1992) and Richins (2004), where success refers to using possessions to evaluate the success of oneself and others centrality refers to the central role of possessions in a person’s life, and happiness reflects the belief that happiness and life satisfaction are achieved through possessions and their acquisition.
Assessment of the Unsustainable Consumption Behavior Model
The study estimates the structural equation model for unsustainable consumption behavior. The main hypothesis of the study is that consumerism media use might exert a positive influence on unsustainable consumption behavior. Materialistic values as well as environmental self-efficacy can also affect unsustainable consumption behavior. As both our values and beliefs may to some extent determine the context in which we live, we assume that materialistic values and environmental self-efficacy might impact consumerism media use. Additionally, we assume that materialistic values can have a negative influence on environmental self-efficacy. Figure 1 details the path diagram with maximum-likelihood estimates of fully standardized coefficients.
Figure 1. Path diagram of the structural equation model explaining unsustainable consumption behavior
The results show that consumerism media use has a positive, and significant effect on unsustainable consumption behavior (0.124; standard deviation change). The possible channel leading to these findings is the emotions at play. Advertisements promoting a luxurious lifestyle and buying more things to be happy can elicit quite strong emotions in consumers related to happiness and success in life. Around two decades ago a large body of literature in consumer research emerged on the role of emotions in decision-making (for an overview see Laros & Steenkamp, 2005). Recent experimental studies about adoption of sustainable innovations (e.g. Contzen et al., 2021 (a); Contzen et al., 2021 (b)) also prove the role emotions play in consumer behavior.
Materialistic values are another significant contributor to unsustainable actions (0.249 standard deviation change). As expected, materialistic values also exert a positive and statistically significant effect on consumerism media use (0.165 standard deviation change). However, contrary to our expectations, environmental self-efficacy does not exert a direct negative impact on unsustainable behavior (dashed line in Figure 1).
Conclusion
The results from the structural equation model show that consumerism media use exerts a positive moderate effect on unsustainable consumption behavior of the urban population in Belarus. This effect is statistically significant.
To reduce the negative environmental impact of unsustainable behavior, policymakers should, thus, target regulation that downplays the emotional appeal of ads promoting excessive consumption and stresses the adverse environmental effects of consumerism. This could include, for example, policies requiring ads to contain information about the environmental footprint of the product, from production to its full lifecycle.
References
- Contzen, N., Handreke, A. V., Perlaviciute, G., & Steg, L., 2021 (a). ‘’Emotions towards a mandatory adoption of renewable energy innovations: the role of psychological reactance and egoistic and biospheric values’’. Energy Research & Social Science, 80, 102232. https://doi.org/10.1016/j.erss.2021.102232.
- Contzen, N., Perlaviciute, G., Sadat-Razavi, P., & Steg, L., 2021 (b). ‘’Emotions toward sustainable innovations: A matter of value congruence’’. Frontiers in Psychology, 12. https://doi.org/10.3389/fpsyg.2021.661314
- Ellen, P. S., Wiener, J. L., & Cobb-Walgren, C., 1991. ‘’The role of perceived consumer effectiveness in motivating environmentally conscious behaviors”. Journal of public policy & marketing, 10(2), 102-117. https://doi.org/10.1177/074391569101000206.
- Gardner, G. T., & Stern, P. C., 1996. “Environmental problems and human behavior”. Allyn & Bacon.
- Guagnano, G. A., Stern, P. C., & Dietz, T., 1995. “Influences on attitude-behavior relationships: A natural experiment with curbside recycling”. Environment and behavior, 27(5), 699-718. https://doi.org/10.1177/0013916595275005
- Holbert, R. L., Kwak, N., & Shah, D. V. (2003). Environmental concern, patterns of television viewing, and pro-environmental behaviors: Integrating models of media consumption and effects. Journal of Broadcasting & Electronic Media, 47(2), 177-196. https://doi.org/10.1207/s15506878jobem4702_2.
- Huang, H., 2016. “Media use, environmental beliefs, self-efficacy, and pro-environmental behavior”. Journal of Business Research, 69(6), 2206-2212. https://doi.org/10.1016/j.jbusres.2015.12.031.
- Hurst, M., Dittmar, H., Bond, R., & Kasser, T., 2013. “The relationship between materialistic values and environmental attitudes and behaviors: A meta-analysis”. Journal of Environmental Psychology, 36, 257-269. https://doi.org/10.1016/j.jenvp.2013.09.003.
- Laros, F. J., & Steenkamp, J. B. E., 2005. “Emotions in consumer behavior: a hierarchical approach”. Journal of business Research, 58(10), 1437-1445. https://doi.org/10.1016/j.jbusres.2003.09.013.
- Pellegrino, A., & Shannon, R., 2021. “Materialism’s Influence on Unsustainable Consumption Across Social Networking Sites: A Systematic Review”. International Journal of Business and Economics Research, 10(4), 125. https://doi.org/10.11648/j.ijber.20211004.13.
- Richins, M. L., & Dawson, S. (1992). “A Consumer Values Orientation for Materialism and Its Measurement: Scale Development and Validation”. Journal of Consumer Research, 19, 303-316.
http://dx.doi.org/10.1086/209304 - Richins, M. L., 2004. “The material values scale: Measurement properties and development of a short form”. Journal of Consumer Research, 31, 209e219. http://dx.doi.org/10.1086/383436.
- Rook, D. W., 1987. “The buying impulse”. Journal of Consumer Research, 14, 189-199.
- Simeone, M., & Scarpato, D. (2020). Sustainable consumption: How does social media affect food choices?. Journal of Cleaner Production, 277, 124036. https://doi.org/10.1016/j.jclepro.2020.124036.
- Stern, P. C., 2000. “New environmental theories: toward a coherent theory of environmentally significant behavior”. Journal of social issues, 56(3), 407-424.
- Wang, Y., & Hao, F. (2018). Does internet penetration encourage sustainable consumption? A cross-national analysis. Sustainable Production and Consumption, 16, 237-248. https://doi.org/10.1016/j.spc.2018.08.011.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
EU Accession and Sustainability Challenges for Ukraine’s Agricultural Sector
Recently the EU opened accession negotiations for Ukraine. Apart from the trade benefits of having access to a large and wealthy EU market, Ukraine’s agricultural producers in particular, will have to comply with and implement a complex and demanding EU acquis in agriculture. Together with the Common Agricultural Policy, this includes regulation of markets and standards in farming practices, animal and plant health, food safety, and environmental and animal welfare. The potential additional compliance costs from EU accession may undercut Ukraine’s agricultural competitiveness and supply growth, crucial for feeding a growing population. However, in this policy brief, we show that these costs are not critical and that there is a potential for agricultural producers to simultaneously increase their output and contract harmful environmental impacts, which in turn can compensate for the additional compliance costs.
Introduction
The European Council granted Ukraine candidate status in June 2022 and eventually opened accession negotiations in December 2023. For the Ukrainian agricultural sector, an EU membership would bring trade benefits from having access to a large and wealthy EU market. At the same time, Ukraine would have to comply with a complex and demanding EU Acquis in agriculture (hereafter called EU agricultural acquis). This, together with the EU Common Agricultural Policy (CAP), includes regulation of markets and standards in the areas of farming practices, animal and plant health, food safety, and environmental and animal welfare (Nivievskyi, 2024).
Complying with these regulations would entail additional costs for agricultural producers, raising concerns about the comparative advantage of Ukrainian agriculture. If these effects are strong enough, it could, in turn, hamper Ukraine’s agricultural supplies growth, crucial for feeding a growing global population.
While the evidence on the expected compliance costs is very scarce (see e.g. EU Commission, 2014), it shows they would be in the range of up to an additional 10 percent of the total costs. This cost increase, however, does not seem to ruin Ukraine’s comparative advantage in agriculture. Moreover, in this policy brief, we demonstrate that producers of grains and oilseeds in Ukraine have the potential to improve their efficiency by increasing their output by almost 20 percent and simultaneously contracting harmful environmental impacts by 16 percent. Such improvements can compensate for additional EU agricultural acquis compliance costs for Ukraine’s agricultural producers.
Relevance
Ukraine’s agricultural sector plays a key role domestically and internationally. It is noticeably dominated by crops, mainly by highly competitive grains and oilseeds. Agriculture alone accounts for about 10 percent of Ukraine’s GDP, but together with upstream (e.g. agricultural machinery) and downstream (e.g. food processing) industries, the entire agri-food sector’s share amounts to roughly 20 percent of GDP. The agri-food sector accounted for 60 percent of Ukraine’s total exports in 2023 with Ukraine’s shares in global corn and wheat trade reaching almost 20 and 10 percent, respectively.
At the same time, agriculture is among the top five sectors of the Ukrainian economy contributing to Nitruos Oxide (N2O) emissions in the country (SSSU, 2018). Since it generates not only desirable outputs but also environmentally undesirable ones (such as GHG emissions, pollution from applied chemical fertilizers and pesticides etc.), the negative outputs should be both considered in the assessment of the sector’s performance.
The existing empirical literature places the main focus on the economic aspects of the agricultural sector’s performance in Ukraine, more specifically on technical efficiency and total factor productivity. A recently published study (Halytsia, Vrachioli, Nivievskyi, Sauer, 2024) we undertake the first attempt to incorporate undesirable outputs of agricultural production in the analysis of Ukrainian agricultural producers’ efficiency and provide empirical evidence on how they perform from a combined economic and environmental perspective. This policy brief summarizes the study’s results.
Data and Methodology
To estimate the environmentally adjusted efficiency of crop producers, we use farm-level accounting data from 2017-2019, collected by the State Statistics Service of Ukraine. The analysis is conducted for cereals (including wheat, barley, maize and others) and sunflower production since they are the major crops in terms of sowing land and output shares and given their importance for Ukrainian agricultural export.
To account for both desirable and undesirable outputs of crop production (environmental bads in our study are N2O emissions originating from the usage of mineral fertilizers and CO2 emissions from fuels’ consumption), the production technology is formalized in the form of a hyperbolic distance function. This gives the maximum linear expansion of a desirable output vector and contraction of an undesirable output vector for a given input vector. Parametric estimation (deploying a so-called stochastic frontier model) of the distance function yielded hyperbolic efficiency estimates that reflect the producers’ ability to expand good outputs and simultaneously contract environmentally undesirable ones to achieve maximum environmentally adjusted economic efficiency.
Empirical Results
The results from the econometric analysis reveal that the average environmentally adjusted economic efficiency estimate for crop producers in Ukraine is 0.84 (efficiency estimates are bounded between 0 and 1). This suggests that, on average, producers of cereals and sunflowers in Ukraine can improve their production results by increasing crop output by 19 percent (1/0.84 = 1.19) while simultaneously contracting undesirable output by 16 percent (1–0.84 = 0.16) in order to be fully efficient, i.e. have their output level on the frontier of the production technology (Figure 1).
The obtained environmentally adjusted economic efficiency level is fairly comparable to the efficiency values estimated in empirical studies for crop producers in other Eastern European countries, more specifically Poland (Gołaś et al, 2020; Stępień et al., 2021).
Figure 1. Graphic synthesis of the study’s findings
Policy Implications and Recommendations
Performance Improvement
The results from the empirical analysis show that there is room for Ukrainian crop farmers to improve their environmental and economic performance. The following policy interventions can be helpful in facilitating this improvement:
- establishing clear standards for the quality of chemical fertilizers, promoting organic ones and robust agrochemicals management and monitoring systems
- promoting the adoption of climate-smart agricultural technologies, such as, for instance, fertigation (which can be especially effective in the steppe agro-climatic zone where most Ukrainian crop production is concentrated and which is noticeably affected by changing climatic conditions)
- governmental programs for energy saving in agriculture to help reduce the amount of farm CO2 emissions.
Implementation of these measures can contribute to closing the efficiency gap, bring more sustainable agricultural production growth and help farmers compensate for the anticipated costs of EU legislation compliance regarding environment, animal welfare, and food safety. The latter, in turn, entails not only costs but also a number of benefits. Potential benefits from implementing environmental regulations are, for instance, input savings ( e.g. in fertilizer or pesticide costs), additional revenues (higher prices and increased consumer demand for agricultural products produced sustainably) and extension programs financed through public funds (Mettepenningen et al., 2009).
Data Collection Improvement
Key limitations of this study stem largely from issues related to data availability. More specifically, there is no data available on organic fertilizer application, specification of the types of used pesticides, or details on farm characteristics (such as farm economic size, land type, environmental subsidies, etc.). These data would enable a robust and comprehensive estimation of the environmentally adjusted economic efficiency of agricultural producers, accounting for a broader range of undesirable outputs and incorporating determinants of inefficiency into the analysis.
Currently, the State Statistics Service of Ukraine’s annual statistical survey forms do not contain questions which enable the collection of the above mentioned data. Enhancing farm-level data collection will be necessary to align Ukrainian statistical databases with Eurostat, given Ukraine’s candidate status for EU membership.
The importance of collecting data on farms’ environmental performance is supported by the ongoing transition in the EU from a farm accountancy data network to a farm sustainability data network, which aims to collect rich microeconomic data not only on farms’ income and business activities but also information on their environmental and social sustainability performance.
Conclusion
Over the two decades prior to Russia’s unprovoked full-scale invasion, Ukraine developed into an increasingly important global supplier of staple food.
In this policy brief, we quantify the improvement potential for the performance of crop producers in Ukraine from both economic and environmental perspectives and highlight that potential efficiency improvement could compensate for the additional EU agricultural acquis compliance costs that Ukraine’s agricultural producers are expected to face upon Ukraine becoming a full EU member.
Acknowledgment
This policy brief is based on the academic article Assessing the Environmental Performance of Agricultural Production Using a Parametric Approach: An Application for Crop Producers in Ukraine by Olha Halytsia, Maria Vrachioli, Oleg Nivievskyi and Johannes Sauer, published in Eastern European Economics.
References
- Borozan, D. (2023). Institutions and Environmentally Adjusted Efficiency., Journal of the Knowledge Economy, 14. https://doi.org/10.1007/s13132-022-01066-y
- EU Commission. (2014). Assessing farmers’ costs of compliance with EU legislation in the fields of the environment, animal welfare and food safety. Commissioned by the European Commission Directorate-General for Agriculture and Rural Development, AGRI-2011-EVAL-08. https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/cmef/sustainability/assessing-farmers-costs-compliance-eu-legislation-fields-environment-animal-welfare-and-food-safety_en
- Gołaś, M., Sulewski, P., Wąs, A., Kłoczko-Gajewska, A., Pogodzińska, K. (2020). On the Way to Sustainable Agriculture—Eco-efficiency of Polish Commercial Farms. Agriculture 10 (10): 438. https://doi.org/10.3390/agriculture10100438
- Halytsia, O., Vrachioli, M., Nivievskyi, O., Sauer, J. (2024). Assessing the Environmental Performance of Agricultural
- Production Using a Parametric Approach: An Application for Crop Producers in Ukraine. Eastern European Economics, 1–23. https://doi.org/10.1080/00128775.2024.2368042
- Mettepenningen, E., Verspecht, A. and Van Huylenbroeck, G. (2009). Measuring private transaction costs of European agri-environmental schemes. Journal of Environmental Planning and Management, 52(5): 649-667
- Nivievskyi, O. (2024). EU Integration of Ukraine – Assessing the Challenges for Agri-Food Public Authorities. Available at SSRN: https://ssrn.com/abstract=4957056 or http://dx.doi.org/10.2139/ssrn.4957056
- Stępień, S., Czyżewski, B., Sapa, A., Borychowski, M., Poczta, W., Poczta-Wajda, A. (2021). Eco-Efficiency of Small-Scale Farming in Poland and Its Institutional Drivers. Journal of Cleaner Production 279 (January): 123721. https://doi.org/10. 1016/j.jclepro.2020.123721
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
“Active Parent”: Addressing Labor Market Disadvantages of Mothers in Poland
In 2023 only one out of four children aged 0-3 years was covered by the Polish system of formal childcare. Traditional social norms with regard to provision of childcare at home, together with high costs of existing formal and informal childcare arrangements constitute important constraints with regard to labor market participation among mothers with the youngest children. While labor market activity rate among women aged 25-49 years stands at 84 percent overall, it is more than 20 percentage points lower for mothers with children aged 1-3 years. In this policy brief we provide an overview and an evaluation of “Active parent”, a recently introduced policy aimed at supporting earlier return to work after birth among mothers in Poland. We argue that the success of the program will be strongly determined by the extent to which it manages to stimulate growth of high-quality formal childcare for those aged 0-3 in the next few years.
Gender Gaps in Employment and Childcare in Poland
The average labor market activity rate among women aged 25-49 in Poland stands at 84 percent, which is slightly above the EU average (by 2 p.p.; see Figure 1). The rate, however, differs substantially by age group, and even more by the number and age of children. For childless women just below 30 years, the activity rate almost exactly matches the rate for men (88 percent vs 90 percent). However, among women with children, and especially among those with the youngest child being between 1 and 3 years old, this number drops to 62 percent. For fathers with such children, the activity rate however stands at 98 percent. Women gradually return to work when the youngest child is growing up – 3 out of 4 of those with a child aged 4 to 6 years are active in the labor market, and this share grows to 84 percent for mothers of teenagers (aged 13-14 years). At the same time women in Poland are much less likely to work part-time than women in the EU on average (7 vs. 28 percent, respectively; Eurostat, 2021). Rates of part-time employment are higher if women have more and younger children, though not by much (11 percent for mothers of 3+ children, 10 percent when a child is up to 3 years old; PEI, 2022).
While in most Polish households with children both parents are working for pay, traditional gender norms still largely prevail with respect to providing childcare or handling household duties. According to a survey conducted by the Polish Economic Institute (PEI), in only 18 percent of double-earner families do both parents take care of a child to the same extent (Polish Economic Institute 2022). For 68 percent of such families, it is the mother who provides most care. In only 1 in 10 families the father is the main care provider.
Figure 1. Labor market activity rates in Poland in 2022
Traditional attitudes towards childcare responsibility are clearly visible in the actual gender split of parental leave in Poland. Despite the introduction of a non-transferable 9-week long parental leave dedicated to fathers (out of the total of 41 weeks of parental leave) on top of a two-week paternity leave, the division of care duties for the youngest children has essentially remained unaffected. While 377 000 mothers claimed parental leave benefits in 2021, only 4 000 fathers decided to stay at home with their child (Social Insurance Institute, 2021). Besides, many fathers still do not exercise their right to the fortnight of the paternity leave. According to the PEI survey conducted among parents of children aged 1-9 years, 41 percent of fathers reported virtually no work gap after the birth of their child and further 43 percent acknowledged only a short break from work (up to 14 days). On the other hand, 85 percent of mothers took a work break after childbirth of more than 8 months. For 40 percent it lasted between 12-18 months and for 28 percent the separation from work exceeded one and a half years.
Evaluating the Consequences of the “Active Parent” Program
To address the resulting disadvantages for mothers on the labor market the current Polish government introduced a program called “Active parent” in October 2024. The program is targeted at parents of children aged 12 to 35 months and consists of 3 options. The highest benefits in the program amounting to 350 EUR per month, are granted within the “Active at work” option to households in which parents are active on the labor market. For couples, the minimum work requirement is half-time work for each parent, while lone parents are required to work full-time. The same monthly amount can be granted if the child is enrolled in institutionalized childcare (“Active in nursery” option), though in this case the benefit does not exceed the cost of the nursery. This option covers both formal public or private nursery as well as semi-formal care provided in “kids clubs”. Finally, in case the child stays at home with a non-working parent (“Active at home” option), the family receives 115 EUR per month.
The main objective of the program is to increase the number of women returning to work after the period of maternity and parental leave (which in Poland cover the first 12 months of a newborn), before the child becomes eligible for kindergarten (where a place for each child aged 3 to 6 years is to be guaranteed by the local government). It is worth noting that after exhausting the parental leave, Polish parents are entitled to up to 3 years of childcare leave. Though this is unpaid, many parents, once again almost entirely mothers, opt for staying at home, often due to the lack of alternative forms of childcare. For children under the age of 3, formal childcare is highly limited. In 2023, nursery places were available only to one out of four children aged 0-3 years (CSO Poland). Additionally, these places are unevenly accessible throughout the country – in 2023 formal childcare for the youngest kids (public or private) did not exist in as many as 45 percent of Polish municipalities (CSO Poland). At the same time, while family help with childcare in Poland is still provided on a massive scale, it is limited only to those who have parents or other family members living close by, already in retirement and without other caring obligations (e.g. for older generations).
Within the new program parents who receive the “Active at work” benefit have complete discretion of how to use these funds. Many may choose to send the child to a formal childcare institution, but the lawmakers also expect a surge in undertaking formal contracts with grandparents or other relatives – including those already in retirement. There’s an additional benefit embedded in this particular solution, namely social security contributions resulting from contracts concluded with “a carer” (regardless of if it is a third person or a family member) which are covered by the state. These contributions are added to the carer’s pension funds and translate into higher retirement benefits – with regular recalculations of pension funds among those already retired and higher expected pension benefits for those still below retirement age.
A recent policy report (Myck, Krol and Oczkowska, 2024), evaluated the impact of the “Active parent” program using the microsimulation model SIMPL. The analysis (based on the Polish Household Budget Survey from 2021) focused on the estimation of the expected costs of the program to the public budget and the distribution of financial gains among households. We find that families eligible to receive support, i.e. those with children aged 12-35 months, are concentrated in the upper half of the income distribution (12.6 percent among the richest households and only 5.4 percent living in the poorest households). Thus, taking the observed work and childcare use patterns from the data we find that the average net gains related to the entire “Active parent” program are also concentrated among the richer households (see Figure 2).
Figure 2. Average net monthly gain from the “Active parent” program, assuming no change in parental behavior in reaction to the roll-out of the program
Households from the highest income decile group on average gain 220 EUR per month, while those from the poorest income group receive 170 EUR per month. In relative terms, these gains correspond on average to as much as 17 percent of their income, while for the former group the gains do not exceed 4 percent of their income. When disaggregating by the three options of the program, eligible households from the bottom part of the distribution receive much higher gains from the “Active in nursery” or “Active at home” options, as these households are much less likely to have both parents working.
Clearly, some parents may adjust their work and childcare choices in reaction to the introduction of the program, which, in fact, is one of its key objectives. If a family decides to take up work or send their child to a nursery, they become eligible for higher support. Rather than receiving 115 EUR from the “Active at home” option, they become eligible for up to 350 EUR under the other alternative options. In almost 200 000 out of the overall 550 000 families with an age-eligible child, one of the parents (usually the mother) is observed to be out of work. Using this, we estimate the likelihood of taking up work among these non-working mothers and conditional on the expected probabilities of employment we assigned additional families to the two more generous options of the program – either to “Active at work” (those with highest work probability) or to “Active in nursery” (those with lowest work probability). This allows us to evaluate potential changes in the cost and distributional implications of the program under different scenarios. Table 1 presents a set of “gross” and “net” costs of selected combinations of parental reactions. The “gross” costs correspond to the total expenditure of the “Active parent” program, while the “net” costs account first for the withdrawal of previous policies (see note to Figure 2), and second for the budget gains related to taxes and social insurance contributions paid by the parents who are simulated to take up work.
Table 1. “Active parent”: aggregate costs to the public budget under different assumptions concerning work and childcare adjustments among parents
Assuming no change in parental behavior (0 percent increase in work and 0 percent increase in enrollment in nursery), the total, “gross” cost of the program for the public finances amounts to 1.72 bn EUR, on average, annually. Savings related to the withdrawal of existing policies lower this cost by 0.5 bn EUR. Any modelled increase in nursery enrollment (with no concurrent reaction in the labor market) means an increase in both the “gross” and the “net” costs, while on the other hand an increase in labor market participation of the non-working parent (when nursery enrollment is held constant) expands the “gross” costs but reduces the “net” costs due to higher taxes and contributions paid in relation to simulated additional earnings.
The final distributional household effects of the program will depend on the actual reactions among parents. However, according to our simulations, the families who are most likely to either increase employment of the second parent or sign up their child for a nursery, and, thus, gain from the “Active at work” or “Active in nursery” options, are those currently located in the 2nd, 3rd, and 4th income decile group in the distribution (for more details see: Myck, Krol and Oczkowska, 2024).
Conclusion
The main objective behind the introduction of the new “Active parent” scheme is to increase the labor market participation among mothers with the youngest children. As the program aims to facilitate balancing professional careers with family life among parents, it can also be expected to contribute to increases in the fertility rate, which has recently fallen in Poland from 1.45 in 2017 to 1.16 in 2023 (CSO Poland).
The success of the “Active parent” program should be evaluated with respect to three important indicators:
- the resulting increase in the number of mothers who have taken up work,
- the increase in the number of children registered for nurseries,
- and, related to the latter – the increase in the availability of childcare places in different Polish municipalities.
It is worth noting that the “Active parent” program was introduced in parallel with the prior “Toddler +” program that aimed at creating new childcare institutions and more places in the existing ones in 2022-2029 in Poland. Central funding was distributed to reach these goals among local governments and private care providers. However, a 2024 midterm audit of the “Toddler +” program demonstrated the progress to be “insufficient and lagging” (Supreme Audit Office Poland, 2024). The “Active parent” program will play an important role in providing additional stimulus to the provision of new childcare places for the youngest kids in different Polish regions, which should help the “Toddler +” program to finally gather momentum. In the medium and long run, the development of high-quality formal childcare for children below 3 years will be a crucial determinant of an increase in early return to work among mothers.
Acknowledgment
The authors wish to acknowledge the support of the Swedish International Development Cooperation Agency (Sida) under the FROGEE project. The views presented in the Policy Brief reflect the opinions of the Authors and do not necessarily overlap with the position of the FREE Network or Sida.
References
- CSO (Central Statistical Office) Poland. Local Data Bank: Formal childcare: rate of children, number of places; Fertility rates.
- Eurostat. Labour force participation and part-time work.
- Myck, M., Krol, A., Oczkowska, M., (2024). “Active at work, in a nursery, or at home: Financial consequences of the “Active parent” program”, CenEA Report (in Polish).
- PEI (Polish Economic Institute). (2022). “Work vs. home. Parental challenges and their consequences”, PEI Report (in Polish).
- Social Insurance Institute. (2021). Number of parental leave benefits.
- Supreme Audit Office Poland. (2024). “Development of childcare system, including administration of the program “Toddler+”, Post-control results report (in Polish).
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Dreaming of Entrepreneurship or Requiem for a Dream – What Kind of Future Do Parents Envision for Their Children in Belarus?
Even under current conditions in Belarus, society remains focused on freedom and fostering entrepreneurship. The perception of business as a means of minimizing interaction with the state still exists. This policy brief discusses parents’ perceptions of entrepreneurship as a possible area of self-realization for their children in Belarus, to analyze the role of the family in the formation and reproduction of entrepreneurial capital for future generations. The policy brief is based on a representative survey of individuals aged 18 to 64 who reside in Belarus, conducted from June to August 2024. The findings suggest Belarusian parents are largely positive toward entrepreneurship as a future avenue for their children, despite the continuing deterioration of conditions for the business sector.
The perception of private business and entrepreneurship in Belarus has undergone significant transformation over the course of the country’s modern history. Emerging from the Soviet era, which was distinctly anti-entrepreneurial, both the business sector and the Belarusian society have evolved. In a context where mass privatization did not take place, society – initially skeptical of entrepreneurs, often viewing them as dishonest “speculators” – gradually came to recognize that entrepreneurs are generally hardworking individuals who not only generate income for themselves but also create opportunities for others.
Despite the Belarusian authorities’ conservative and often restrictive approach toward business and entrepreneurship, pro-entrepreneurial values have taken root in Belarusian society. This has contributed to the development of a relatively dynamic and productive private sector, increasingly seen as a desirable environment for employment and growth. From 2012 through 2020, the share of the private sector in employment increased by 7.7 percentage points, in export sales of goods and services by 23.9, and in GDP by 14.6 percentage points, respectively (Daneyko et al., 2020).
Over time, businesses in Belarus have thrived, largely due to entrepreneurial skills, investment in human capital, and adaptability to external conditions, rather than reliance on state support or natural resources.
These dynamics further accelerated when Belarusian authorities realized that relying on and investing in state-owned enterprises (SOEs) was not generating the desired economic growth and employment, and a gradual liberalization of business conditions was introduced (Daneyko et al., 2020). This liberalization allowed the government to delay urgent structural reforms needed in the SOE sector, focusing instead on reducing excess employment, which was absorbed by the growing private sector (Chubrik, 2021; BEROC, 2023).
However, following the 2020 presidential elections and subsequent mass protests, the contribution of the private sector to the economy began to be downplayed in official rhetoric. Entrepreneurs were increasingly portrayed as dishonest individuals, profiting from unjustified price increases and lacking loyalty to the state. In response, the government intensified control over entrepreneurial activities, adopting several significant legislative changes aimed at regulating prices and individual entrepreneurs’ activities.
Moreover, the comprehensive sanctions imposed on Belarus in recent years have made the overall business environment more opaque and challenging. These conditions have enhanced the risk of legal violations during business operations, which in turn increases the personal risks for business owners and managers, potentially threatening their personal freedom.
In this hostile environment, families have become the decisive factor influencing one’s decisions about creating businesses and providing emotional, financial, and instrumental support.
Family as a Driver of Entrepreneurial Careers
There is significant evidence that family upbringing plays a crucial role in fostering entrepreneurial qualities and skills in children, which in turn positively influences their interest in starting their own businesses (Chauhan et al., 2024; Osorio et al., 2017). Parents’ knowledge, accumulated experience, and willingness to provide emotional and practical support further encourage entrepreneurial aspirations in children. A family’s support in developing relevant values and qualities also reflects how attractive entrepreneurship is in the eyes of parents.
Families also serve as role models, transmitting best practices and influencing children’s educational and career choices (Edelman et al., 2016). This support can help young people overcome common barriers to entry into entrepreneurship, such as lack of experience, resources, or social capital, increasing the prospect of starting their own.
The role of family support is particularly important in environments with insufficient structural or financial backing for entrepreneurship, as is the case in Belarus (Maleki et al., 2023; Guerrero & Marozau, 2023). In such contexts, the family’s role in fostering entrepreneurial ambition becomes a key factor in enabling the next generation of entrepreneurs to succeed.
Attitudes Towards Entrepreneurs
The perception of business in Belarus is reflected in the general attitude toward entrepreneurs and their role in the economy and society. Parents are the main influencers and role models shaping children’s entrepreneurial attitudes like risk-taking, problem-solving, and independence (Georgescu & Herman, 2020).
In a recent survey of 2,000 Belarusian respondents aged 18 to 64, including 826 parents of children under 18, participants were asked to select the statement that best describes their attitude towards Belarusian entrepreneurs. The findings suggest that individuals with children under 18 tend to have a more positive view of business and are more likely to choose favorable statements about entrepreneurs (see Figure 1).
Figure 1. Attitudes towards entrepreneurs
Almost half of the respondents who have children under 18 (49.9 percent) describe their attitude towards entrepreneurs as the most positive option choice as they “earn their living through honest labor, generate employment opportunities, and stimulate economic development”. This share is significantly higher than among respondents without children (37.8 percent). A very positive attitude toward Belarusian entrepreneurship is also characteristic of young cohorts of respondents aged 18–24 (47.7 percent) and 25–34 (49.5 percent). This resonates well with the distribution found in a previous study by the IPM Research Center and BEROC (2019) and indicates that recent changes in the official rhetoric and entrepreneurship-related legislation have not yet damaged the public image of Belarusian entrepreneurs and businessmen.
Preferred Careers for Children
In the survey, Belarusian parents were asked to select areas of employment (choosing no more than three options) in which they would like to see their sons and daughters. The vast majority (69.2 percent) chose the option “to run their own business, to be entrepreneurs/freelancers” as the desired future for their children. Among other popular areas of activity were entrepreneurships’ antipoles; work within law enforcement agencies (22.9 percent) and civil service (16.1 percent). Interestingly, the choice of a future related to entrepreneurship for a child does not significantly differ by the child’s gender (see Figure 2).
Figure 2. Preferred careers for children, by gender
Source: Calculations based on survey data. Note: The graph displays the answers to the question “What would you like your child to do in the future?” and is displayed as percent of respondents in the corresponding group.As one might expect, parents-entrepreneurs more often associate their children’s future with entrepreneurship (80.9 percent) compared to non-entrepreneurial respondents (65.7 percent) (see Figure 3). Similarly, female entrepreneur respondents more often than others prefer their daughters to engage in business in the future (80.9 percent). This level of approval of an entrepreneurial future for daughters may be related to an understanding of the self-realization opportunities that business provides for women, compared to other employment options. Working “for themselves” allows women to avoid barriers and limitations encountered when working for an employer and it may also be associated with schedule flexibility and an ability to improve work-life balance.
Figure 3. Preferred careers for children, by parents’ occupational background
Attitudes Towards Entrepreneurship
The attitude towards entrepreneurship was captured by asking parents to choose what they would tell their children if they expressed the intention to become entrepreneurs. Based on interviews and a pilot survey, multiple statements that carried positive, neutral, and negative connotations were presented in the questionnaire (see Figure 4).
Parents interested in their children becoming entrepreneurs in the future tend to foster a positive view of entrepreneurship through encouraging messages about business. From the results, parents tell their children that business is “dream, wealth, and freedom”, with more than half of the respondents who wish for their children to have an “entrepreneurial destiny” choosing this triad to convey that business is a positive path.
Among those who do not see their children in entrepreneurship, these categories also dominate in justifying the attractiveness of business. However, those parents are more cautious and tend to warn their children about the associated risks of uncertainty and instability.
Figure 4. Attitudes towards entrepreneurship
Overall, the selection of positive associations by most parents indicates a high level of support for children’s interest in entrepreneurship within families. By choosing the triad “dream, wealth and freedom”, parents emphasize priorities related to the formation of free individuals and see potential in their children for engaging in business in the future, despite the existence of, and appeal from, other career choices. Employment (regardless of ownership structure) is much less frequently considered as an appealing prospect for children’s future. The likely rationale is the dependent position of employees within the current sociopolitical context, which partially undermines the benefits of private-sector employment. Therefore, many respondents may perceive employment as “captivity” – in contrast to the freedom associated with entrepreneurship. Thus, the current generation of parents largely want their children to have minimal interactions with the state.
Conclusions
Despite the current challenging conditions for business in Belarus, many parents still see entrepreneurship as a pathway to independence and freedom for their children. The role of the family in nurturing entrepreneurial potential should not be underestimated in this context. The fact that many parents see entrepreneurship as a means of self-realization for their children indicates a sustained positive perception of business within the population, despite the recent years negative portrayal of entrepreneurs in official media outlets.
For many, business is associated with the positive triad of “dream, wealth, and freedom”. This is particularly true for the current generation of parents, whose worldviews were shaped during the relatively open periods of the late 1990s and early 2000s. For them, entrepreneurship represents a means for their children to achieve personal freedom and self-realization without having to leave the country.
However, there is a notable contrast between these aspirations and the reality of doing business in Belarus today – a divergence that could prove pivotal for the future of private business in the country. Entrepreneurship in Belarus has the potential to either become a chance for future generations to help develop the nation (“dreaming of entrepreneurship”) or, if suppressed further, a missed opportunity (“requiem for a dream”).
There is no guarantee that future generations of Belarusians will share the same positive attitude toward entrepreneurship and pro-democratic values as their parents, if they lack real opportunities to start and run businesses or public success stories. The “fork” in the future of entrepreneurship in Belarus has another critical dimension: if parents no longer see opportunities for self-realization within the country, they may consider leaving it. Following the 2020 political crisis, Belarus has seen significant emigration driven by the risks of domestic criminal prosecution and the search for safety abroad.
The main implications for the decision-makers concerned with a future stable, predictable and democratic Belarus, could thus be the following:
- Supporting entrepreneurship as a driver of democratic values: In a non-democratic environment, entrepreneurs are known to act as carriers and multipliers of pro-democratic values such as freedom, personal responsibility, and self-determination. (Audretsch & Moog, 2022; Marozau, 2023). The (still) positive attitudes to entrepreneurship, intergenerational transmission of entrepreneurial values, and overall survival of the Belarusian private should be perceived, and treated, as a foundation for counteracting (some of the) ongoing negative institutional developments.
- Transmitting pro-entrepreneurial values to future generations: With the same idea in mind, it is important to support families transmitting pro-entrepreneurial values to future generations by complementing their efforts through, e.g., education. This can be realized by offering additional training programs for children and adolescents, such as financial literacy schools, business clubs, and leadership schools.
- Advancing the role of female entrepreneurship: The increasing participation of women in entrepreneurship presents an opportunity to transfer values, particularly to daughters, and thereby preserving entrepreneurial capital and overcoming gender inequality issues in Belarus.
Acknowledgment
The study underlying this policy brief was made possible by the generous support of the American people through the United States Agency for International Development (USAID). BEROC acknowledges support by Pyxera Global whose financial and technical assistance for INNOVATE is part of a USAID-funded activity to support the innovative-based economy and private sector growth in Belarus.
The contents of this brief are the sole responsibility of BEROC and do not necessarily reflect the views of USAID or the United States government.
References
- Audretsch, D. B., & Moog, P. (2022). Democracy and entrepreneurship. Entrepreneurship Theory and Practice, 46(2), 368–392.
- BEROC. (2023). Development of the private sector. Instead of reforms and for the economic sovereignty of Belarus. Ideas Bank (In Russian)
- Chauhan, S., Chauhan, K., Singh, S., Mahlawat, S., Kumar, V., & Singh, S. (2024). Analyzing family support mediating role between motivational factors and sustainable entrepreneurial intentions: A study on university students, Sustainable Technology and Entrepreneurship, 3(3).
- Chubrik, А., 2021. Back to the Future or a Short Historical Note on the Belarusian Private Sector. Discussion paper #2021/03 (in Russian).
- Daneyko, P., Chubryk, А., Hayduk, К., Bornukova, К., & Kruk, D. (2020). Transformation of the state-owned commercial enterprises in Belarus, IPM Research, Discussion paper PDP/20/07; BEROC, Policy Paper no. 100. (in Russian)
- Edelman, L. F., Manolova, T., Shirokova, G., & Tsukanova, T. (2016).The impact of family support on young entrepreneurs’ start-up activities, Journal of Business Venturing, 31(4), 428–448.
- Georgescu, M. A., & Herman, E. (2020). The impact of the family background on students’ entrepreneurial intentions: An empirical analysis. Sustainability, 12(11), 4775.
- Guerrero, M., & Marozau, R. (2023). Assessing the influence of institutions on students’ entrepreneurial dynamics: evidence from European post-socialist and market-oriented economies. Small Business Economics, 60(2), 503-519.
- Maleki, A., Moghaddam, K., Cloninger, P., & John Cullen, J. (2023). A cross-national study of youth entrepreneurship: The effect of family support, The International Journal of Entrepreneurship and Innovation, 24(1) 44–57.
- Marozau, R. (2023). Belarusian business in turbulent times. FREE Policy Brief
- Osorio, A. E., Settles, A., & Shen, T. (2017). Does family support matter? The influence of support factors on entrepreneurial attitudes and intentions of college students, Academy of Entrepreneurship Journal, 23(1), 24–43.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
The 2024 FREE Network Retreat: Economic Research and Capacity Building in Moldova
The 2024 FREE Network Retreat, held in Chisinau, Moldova on September 11-13, brought together representatives from the FREE Network institutes and other stakeholders, focusing on economic research and capacity building, especially in the context of Moldova’s EU accession efforts. The event featured general sessions on institutional development, special tracks on academic, administrative and communication topics, and a half-day conference on “Economic Research and Capacity Building“. Key discussions addressed challenges such as Moldova’s weak economic research infrastructure, policymaking gaps, and the need for capacity building. Several examples of Moldovan success stories were also highlighted. The event concluded with a call for strengthened collaboration and donor support towards economics education and fostering Moldova’s research and capacity-building landscape.
Introduction
The FREE Network Retreat is an annual event for researchers and administrators from the FREE Network institutes. The 2024 Retreat took place in Chisinau, Moldova, September 11-13 and was attended by representatives from BEROC (Belarus – currently in exile in Lithuania), BICEPS (Latvia), CenEA (Poland), ISET (Georgia), KSE (Ukraine) and SITE (Sweden). In addition, although not being a member of the FREE Network, the New Uzbekistan University in Tashkent and its Greater Eurasia Research Center (GEAR) were represented.
Like at previous retreats, there were two general sessions with a focus on the development of the individual institutes and the Network as a whole, and three tracks of special sessions on academic, administration and communication topics. The Retreat also involved a meeting of the FREE Network’s joint initiative The Forum for Research on Gender in Eastern Europe (FROGEE) – and a special side event on the integration of Ukrainian Refugees in Moldova.
An integral part of this year’s Retreat was the half-day conference, “Economic Research and Capacity Building”. Drawing on the FREE Network’s experience, the conference focused on how capacity building and research can facilitate the transformation of societies and economies, particularly within the Moldovan context, on its path towards EU-accession. In addition, it provided the FREE Network members an opportunity to share their experiences of capacity building, economic research and policymaking with Moldovan stakeholders.
The Conference was open to external participants interested in the topic, particularly policymakers, academics, and think tank representatives. It clearly illustrated the need to strengthen not only economic research and capacity building but also academic education in economics and related fields, improve the quality and access to data, and raise the level of competence in economics within the government and public sector in general.
A summary of the Conference discussions is provided below. For a full overview of the program and participants see the Appendix.
The Opening Session
The opening session started with the general observation that EU integration, in addition to being a political and security issue is primarily an economic issue with a need for economic research and analysis that can inform policy discussions and educate current and future stakeholders. Within this context, all the FREE Network institutes have considerable experience engaging in research and discussions of policy and policy reform within the region. With Moldova not (yet) represented in the FREE Network, the Conference served as a platform for the Network to learn and eventually engage in sustainable partnership(s).
The discussion then shifted to the Moldovan situation and the challenges ahead on the path to EU membership. Several challenges were identified: a lack of economic research, with most existing research being rather weak; missing connections between researchers and policymakers; a shortage of human resources; and generally weak institutions; as well as policies often being based on trial and error rather than evidence-based decision-making.
To address these challenges several actions were suggested including the need to strengthen research and independent economic thinking through capacity building; drawing on the experience of the countries that have joined the EU during the last two decades; developing international research cooperation through networks like the FREE Network; business-friendly practices and treating investors right while at the same time encouraging entrepreneurship and educating society on the importance of private and public investments.
The discussion also addressed activities supporting civil society undertaken by the EU and Sweden, respectively. Examples of activities include building partnerships and strong ecosystems for innovation and entrepreneurship, supporting reforms cutting red tape and improving the business climate in general as well as supporting the Academy of Economic Studies Moldova and the Association of Women in Business.
Research and Capacity Building – the Moldovan Perspective
The discussion started with a presentation of three Moldovan success stories. The first one is a recently launched program on media, gaming development and animation. Currently, 1,000 students are being enrolled. The program attracts Moldovans from all over the country as well as Moldovan students abroad who decided to terminate their studies abroad to go back to Moldova and enrol in the program. The success of the program is a good example of cooperation between industry, higher education institutions and the Ministry of Education opening up to new professions and programs that attract young people.
The second example is taken from the fashion industry. Traditionally Moldova has been a country where sewing takes place thanks to cheap labor. However, in recent years a “pipeline” of talent, design and brands has developed. As a result, the value added in the industry and export revenues as well as wages have increased.
The final example is the Moldovan tech industry. The tech industry has been at the forefront and could be considered the tiger of the Moldovan economy with growth rates of 30-40 percent per year. There are two main reasons behind this success: the rapidly developing Moldovan startup scene combined with a 7 percent single tax mechanism for the tech industry.
The discussion then turned to the role of research in policymaking. The first argument put forward focused on the impact (or rather the lack of impact) of research and analysis on Moldovan policymaking. As the examples above show, the Moldovan economy has the potential to develop – however, the policy discussion does not focus on the transition towards higher-value activities. On the contrary, even though Moldovan research highlights the role of transition to higher value-added, this argument has essentially been ignored in the policy debate that has been mostly characterized by rhetoric on job creation rather than transition to an economy that creates jobs within the high(er) value-added sectors. Unfortunately, this is not the only example of Moldovan policy discussions and decision-making ignoring the research perspective and outcomes. Among other examples mentioned is the recent tax reform experience and programs supporting Small and Medium Sized Enterprises. Currently, reforms are driven either by purely political reasons or by lobbying or by any other vested interests. There is essentially no impact assessment or any economic analysis underpinning the decisions. Due to the fact that policy initiatives neither are based on economic analysis nor on best practices, they are vulnerable to clientelism or corruption. The importance of rule of law was emphasized in light of Moldova’s anchoring to the EU and with reference to Latvia and the other Baltic states. It is a too important topic to be left to the lawyers and should hence be part of economic capacity building and research.
The second argument referred to access to reliable data needed for quality policy-oriented research. While the data collected by the National Bureau of Statistics in general is good, the main issue lies in accessing it. The Bureau does not have the resources to support researchers. To exacerbate the problem further, there seems to be no willingness among policymakers to address this issue. Given Moldova’s vulnerability to Russian disinformation and the increased pressure on Moldova, the issue of access to reliable data is even more pressing today than a few years ago.
To foster an informed policy debate and decision-making process taking evidence-based research into account, it would be desirable to create a platform to advocate the results of economic policy analysis where, e.g., policy papers and monitoring reports, could be presented and discussed by experts and decision-makers in the public and private sectors as well as the civil society.
The session continued with a discussion on human capital. The successful program attracting Georgians in the diaspora to return and work for the Georgian government, launched during the first decade of the 2000s, served as the point of departure for the discussion. The key to the success in Georgia was that the government was able to pay competitive salaries. This is one of the main challenges facing Moldova. Even though there have been some adjustments in government salaries during recent years, the government is still far from being anywhere close to paying the same salaries as the private sector in general and think tanks in particular. An understanding of this is important not only at the national level but also among donors. It was noted that there have been some adjustments in government salaries, but it has not been enough. Further, while the Moldovan diaspora are starting to return, they, however, have little governmental or political experience, which makes it difficult to involve them in, e.g. policymaking and development of support programs. It would be good to draw on experiences and best practices from other countries in the region – such as the Baltic states and Georgia – and use them as benchmarks, e.g., for the innovation ecosystem, incubators and accelerators.
Research and Capacity Building – the FREE Network Experience
The FREE Network institutes shared their experiences in capacity building and brain gain, developing an economics undergraduate program, research and policy impact, and network building through research.
ISET (Georgia) shared their experience on attracting talented economists in the Georgian diaspora back to Georgian academia, research, and government positions. The starting point was an initiative developed in collaboration with the donor community to establish a world-class economics school in the Caucasus – the International School of Economics (ISET). The school has developed from a small boutique school to a school with three academic programs (undergraduate and graduate) and about 700 enrolled students. ISET graduates are in high demand and are seen in the private and public sectors. The ISET Policy Institute plays a pivotal role in terms of contributing to evidence-based policymaking. Throughout the years more than 50 ISET graduates have been accepted in Ph.D. programs at top universities worldwide. Many of them have returned to Georgia and ISET after completing their Ph.D. Had not it been for opportunities offered by ISET and the Policy Institute, it is very unlikely that they would have returned. The FREE Network and the opportunities offered are a great resource for the ISET as well as for the ISET Policy Institute.
BEROC (Belarus – in exile in Lithuania since 2022) shared their experience on the process of creating and launching an undergraduate program in economics and business. BEROC started as a research center, but the idea to establish a Bachelor program in economics and business had been around for several years. As part of the re-organization and reformation of the European Humanities University (Belarusian, but in exile), the European Commission approached BEROC asking if it could develop an undergraduate program in economics and business for Belarusian students.
The challenge has been two-fold: first, in the current political situation, Belarusian people are “locked within the country” and for them it is much easier to go to Russia for studies. In addition, the cost of living and the tuition fee (although low by Baltic standards) provide additional barriers to potential students. Second, BEROC operates in exile themselves. Nevertheless, a Bachelor program in economics and business will be launched in October 2024 with the support of Belarusian business in exile. Thanks to cooperation with partners within the FREE Network the program is at the global frontier.
BICEPS (Latvia) provided an overview of how research can contribute to the policy agenda. BICEPS’s first policy reports, published more than 15 years ago, focused on the unsustainable Latvian economic growth and inflation levels at the time. These reports reached conclusions that, while correct ex-post, were contrary to those of the Latvian Central Bank. This divergence sparked substantial discussion at both the political level and in the media.
In the early 2010s, BICEPS was commissioned to produce the first-ever Latvian Competitiveness Report. This report has served as a foundation for policymaking and has left a lasting mark on the policy agenda. Furthermore, following BICEPS’s research on the shadow economy and the annual presentation of the shadow economy index, the Ministry of Finance, through public procurement, commissioned a 2021 project to develop a model addressing the impact of the shadow economy.
The Global Entrepreneurship Monitor (GEM) Latvia and the EUROMOD tax-benefit microsimulation model are long-term projects run by BICEPS. Current projects include one focused on the impact of broadening the sugar tax base, a regional Global Entrepreneurship Monitor study, a project on road congestion tolls in cities and the development of sustainable agriculture in Africa.
CenEA (Poland) might be small in terms of people employed, but disproportionally big in terms of impact and presence in the Polish policy discussion. From the very beginning, CenEA has aimed at combining policy with solid economic research. The focus has primarily been in the areas of fiscal policy, ageing and health – with the latter two being major issues in Poland.
For CenEA, the FREE Network has been fundamental, both for funding and for building its credibility and position. CenEA has played an active role in terms of broadening and deepening the cooperation within the FREE Network. It has been very active in developing and coordinating the FROGEE project. The project (financed by the Swedish International Development Cooperation Agency, SIDA) has run for six years and covered a wide range of topics within the field of gender equality. It has resulted in several FREE Policy Briefs, policy and research papers, and several conferences and workshops. In addition, the project has contributed to the development of tools and skills for both senior and junior researchers within the Network. Based on the success of the FROGEE project, new projects and initiatives within the Network have been developed.
SITE (Sweden) has taken the lead on the FREECE (the Forum for Research on Eastern Europe: Climate and Environment) project. The project has been around for eighteen months with a focus on the transition from an economy based on the production and consumption of fossil fuels to an economy based on the production and consumption of zero-carbon renewables. This will be a challenge for everyone, especially for countries throughout Eastern Europe that often rely on the extraction and consumption of fossil fuels for employment as well as for energy needs.
The FREECE project provides several opportunities to engage in policy-relevant research while at the same time filling a gap in the literature.
Initiatives and the Road Ahead
At the current stage of Moldovan economic and political development there is a higher demand for analysis and applied research, rather than general and theoretical research. In other words, policy relevance needs to be in focus. At the same time, such applied analysis and research need to involve well-educated human capital with relevant skills, such as university graduates. This puts focus on the role of universities and how they can reform.
The Moldova School of Economics initiative was launched approximately half a year ago. Among the first activities were public lectures on economic behaviour and public policies. In September, in cooperation with CERGE-EI in Prague, the first short economics course was launched. Currently, there are discussions with the Ministry of Education and the State University on developing the initiative into an actual program. So far, the response has been positive. The vision is to create the Moldova School of Economics into an initiative that reaches out not only to Chisinau and Moldova but to the wider region.
The session on this topic proceeded to discuss how the FREE Network could support Moldovan research and capacity building, focusing on its experience in implementing various projects. One potential starting point would be a summer school involving both the FREE Network and Moldovan economists living abroad. There are already contacts with members of the diaspora who have expressed a willingness to participate as faculty members, without compensation. Additionally, there is a need for shorter courses or executive classes aimed at individuals in ministries. Topics to be covered may include basic macroeconomic analysis, fiscal policy, and economic growth. It is also important to incorporate microeconomic subjects, such as the factors driving innovation and the development of economic clusters.
Concluding Comments
The FREE Network Retreat and conference has shown that many of the issues currently facing Moldova, have at least partly been addressed by the FREE Network members in their respective countries. Looking forward this should provide a good basis for cooperation between the Network and Moldovan partners. Three broadly defined areas for collaboration and partnerships were identified: (i) education and training: at the university level as well as for ministries and government agencies; (ii) creation and development of a good environment for research and policy analysis; (iii) communication and outreach.
The dialogue that has been initiated during the conference should continue and include a discussion on how to attract donors to support long-term cooperation that contributes to the needed strengthening of research and capacity building in Moldova.
Appendix
Conference Programme: Economic Research and Capacity Building
9.30 Conference Opening
- Torbjörn Becker, Director, Stockholm Institute of Transition Economics
- Jānis Mažeiks, Ambassador of the European Union to the Republic of Moldova
- Katarina Fried, Ambassador of Sweden to the Republic of Moldova
10:00 Research and Capacity Building – the Moldovan perspective
- Doina Nistor, Chief of Party, Moldova Future Technologies Activity
- Adrian Lupușor, Executive Director, Independent Analytical Center Expert-Grup
- Kálmán Mizsei, EU Adviser to the Government of Moldova
10:50 Research and Capacity Building: The FREE Network Experience
- Tamar Sulukhia (ISET, Georgia): Capacity building and brain gain
- Dzmitry Kruk (BEROC, Belarus – in exile): Development of a new academic programme
- Marija Krūmiņa (BICEPS, Latvia): Research and policy impact
- Michal Myck (CenEA, Poland): Network building and the FROGEE experience
- Julius Andersson (SITE, Sweden): Network building and the FREECE experience
11:30 Initiatives and the Road Ahead
- Mihnea Constantinescu, Advisor to the Governor National Bank of Moldova
- Misha Zeldin-Gipsman, the Moldova School of Economics Initiative
12:10 Concluding Comments
- Torbjörn Becker, Director, SITE
- Kata Fredheim, Associate Professor, BICEPS and Stockholm School of Economics in Riga
12:20 Lunch and Networking
Conference moderator: Kata Fredheim, BICEPS and SSE Riga.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Belarus’s Progressing Economic Dependence on Russia and Its Implications
This policy brief examines the complexities surrounding Belarus’s economy as it deepens its economic dependence on Russia. Recent growth, driven by increased domestic demand and a resurgence in exports to Russia, has surpassed expectations. This trajectory is largely due to Belarus’s mounting dependence on Russia across trade, energy, finance, logistics, and other domains, a dependency that poses significant long-term risks and uncertainties. The Belarusian regime has begun to see this relationship not only as a lifeline but also as a potential source of economic enhancement. However, this approach may blur the lines between sustainable growth and short-term gains, fostering uncertainties about the true nature of this economic uptick. Hence, questions on whether this growth is viable or merely cyclical persist. The uncertainty and progressing dependence on Russia, in turn, imply numerous challenges for the political domain.
New Issues on the Belarusian Economic Agenda
The Belarusian economy continues to surprise, displaying output growth substantially higher than previous forecasts (see e.g. BEROC, 2024). In 2024, the economy is projected to grow by around 4.0 percent. The growth is being driven by domestic demand, fueled by rising real wages and labor shortages. However, an underlying factor is the recent resurgence of exports to Russia. The unexpectedly high growth has allowed for the Belarusian economy to surpass pre-war output levels, at the moment defying earlier predictions of stagnation or decline.
Although the growth period has now extended beyond what could be considered a mere “recovery”, the overall picture – as suggested in Kruk (2024) – still appears relevant. Despite the upturn, the economy remains significantly behind the counterfactual ‘no sanctions, no war’ scenario (see Figure 1).
Figure 1. The Dynamics of Output (seasonally adjusted, index, 2018=100): Actual vs. Counterfactual
Moreover, all the risks to long-term growth associated with total dependence on Russia, potential contagion effects from Russia, etc. are still relevant (KAS, 2024; Bornukova, 2023).
At the same time, a prolonged period of growth gives grounds to think about recent trends also from the perspective of ongoing structural changes in the Belarusian economy. Can these changes, besides implying numerous risks, enhance Belarus’s growth potential and degree of sustainability? If so, to what extent, for how long, and under which conditions? With these questions in mind, it is important to gain a better understanding of what aspects of the Belarusian economy are being transformed due to the increased coupling with Russia and which effects, besides increased dependency and corresponding risks, this coupling generates. Are there any growth-enhancing effects? If so, how sustainable are they?
Belarus’s Growing Economic Dependence on Russia
Belarus’s economic dependence on Russia is reaching unprecedented levels, spanning various critical sectors, with new dimensions of reliance emerging in recent years. This dependence is deeply embedded in the trade, energy, financial, and technological sectors of the Belarusian economy, and recent geopolitical shifts have further intensified these connections.
One of the most evident signs of Belarus’s economic reliance on Russia is reflected in its foreign trade. Russian imports make up around 55-60 percent of all imports to Belarus, with a staggering 80 percent consisting of intermediate goods crucial for industrial production. Energy products, including crude oil and natural gas, form the largest part of these imports, with almost all of Belarus’s energy needs being met by Russia. Exports have also become increasingly concentrated to the Russian market. In 2022-2023 there were several periods when about 70 percent of Belarusian exports were directed to Russia, an increase from about 35-40 percent prior to 2022. This surge was driven by new opportunities for Belarusian firms on the Russian market following Western companies withdrawals. Although competition in the Russian market has since intensified, Russia still accounts for around 60-65 percent of Belarus’s total exports (see Figure 2).
Figure 2. The Evolution of Physical Volume of Exports (2018=100) and the Share of Exports to Russia (in percent)
A major new development since 2022 is Belarus’s reliance on Russia for transportation and logistics. Sanctions and the war in Ukraine have forced Belarus to abandon its traditional export routes through European ports, leaving Russian seaports as the only viable option for further exports. In 2023, Belarus secured around 14 million tons of port capacity in Russia, primarily for potash fertilizers and oil products exports. Although it is still below the needed volumes, this logistics dependency significantly exacerbates Belarus’s external trade dependency. Taking into account direct exports and imports to and from Russia, as well as mechanisms of logistics and transport control, Russia essentially “controls” up to 90 percent of Belarusian exports and about 80 percent of its imports.
Energy dependency is another critical factor to consider. Belarus imports over 80 percent of its energy resources from Russia, making it vulnerable to any shifts in Russian energy policy. In fact, Russian energy subsidies have played a crucial role in keeping Belarusian industries competitive. In 2022, when global energy prices spiked, the low and fixed price that Belarus paid for Russian gas and the steep discount on oil supplies translated into record-high energy subsidies. These amounted to billions of US dollars and shielded Belarus from the economic fallout other countries experienced due to rising energy prices. Although the value of these subsidies has somewhat decreased in 2023-2024, they remain significant and vital for Belarus.
Belarus’s fiscal situation has also become increasingly tied to Russia. After years of running budget deficits, Belarus achieved a budget surplus in 2023, largely due to Russian financial assistance. For instance, the budgetary item ‘gratuitous revenues’, which mainly includes reverse excise tax and other transfers from Russia, reached a historical high in 2023, securing revenues of around 3.0 percent of GDP. Without this external support, Belarus would likely face a severe fiscal deficit, forcing cuts in social spending and other areas. The scale of Russian financial aid has become a key factor in maintaining budgetary stability, imposing a serious risk for Belarus. Were Russia to restrict such financing, Belarus would almost instantly lose its fiscal stability.
In the monetary sphere, Belarus’s dependence on Russia manifests through the informal peg of the Belarusian ruble to the Russian ruble. Given the deep trade ties and shared currency use in bilateral transactions, Belarusian monetary policy is effectively constrained by Russian economic conditions. The Belarusian National Bank has little room for maneuver, as any nominal devaluation or appreciation of the ruble tends to self-correct through inflation or price adjustments tied to Russian trade. This linkage limits Belarus’s monetary sovereignty and aligns its inflation trajectory closely with Russia’s.
Belarus’s debt structure underscores this dependency further. Of the country’s roughly 17.0 billion US dollars in external debt, about 65 percent is owed directly to Russia or Russia-controlled entities like the Eurasian Fund for Stabilization and Development. In 2022-2023, Russia granted Belarus a six-year deferment on debt repayments, providing crucial breathing room for the regime. This deferment, along with Belarus’s limited access to other international financial sources due to sanctions, has cemented Russia’s role as the primary creditor and financial lifeline for Belarus.
New dimensions of dependence have also emerged within infrastructure, technology, and cyberspace. As Belarus is cut off from Western technologies and financial systems, it increasingly relies on Russian alternatives. Belarus has adopted Russian software for critical functions such as tax administration, giving Moscow access to sensitive financial data. Similarly, with several Belarusian banks disconnected from SWIFT, the country has integrated into Russia’s financial messaging system, further entrenching its reliance on Russian infrastructure. Belarusian companies, particularly in sectors like accounting and logistics, have also shifted to using Russian business software, while consumers increasingly rely on Russian digital platforms for social networks, payments, and entertainment.
An Attempt to Spur Growth Through Coupling with Russia
From the perspective of macroeconomic stability and the traditional view on strengthening growth potential, Belarus’s progressing dependence on Russia is obviously an evil (Kruk, 2023; Kruk, 2024). However, the Belarusian regime sees it as a necessary trade-off, or a “lesser evil”. In 2021-2023, the coupling was done in exchange for economic survival. Firstly, production coupling allowed to counterweight the losses in output associated with sanctions (as niches were freed up in the Russian market) (Kruk & Lvovskiy, 2022). Secondly, the coupling was driven by pressure from Russia and a desire from Belarusian authorities to rapidly obtain some compensations if accepting Russia’s demands. For example, in 2022-2023, Belarusian enterprises were granted a credit line of 105 billion rubles within so-called import-substitution projects.
However, in 2024, coupling with Russia is beginning to look more like a purposeful strategy by the Belarusian economic authorities rather than just a survival strategy. The regime seems willing to sacrifice sustainability considerations in favor of strengthening the growth potential by ‘directive production coupling’, i.e. artificially shaping value-added chains between producers in Belarus (mainly state-owned enterprises) and Russia. For instance, the regime accepted the co-called Union programs for 2024-2026 (Turarbekova, 2024), which encompass numerous activities by the governments of Belarus and Russia aimed at securing ‘production coupling’ in sectors such as machine building, agricultural and automotive engineering, aviation industry, and elevator manufacturing. In some cases, the Belarusian party solely initiates such kind of sectoral activities. It seems that the authorities either accepted the dependency due to the lack of outside options, or they became more optimistic regarding the possibility to spur economic growth through coupling with Russia based on the experiences from the last couple of years. And to some extent, this logic might hold true.
As in the previous two years, the coupling with Russia may, in the short to medium term, more than compensate for certain institutional weaknesses and vulnerabilities in the Belarusian economy. The positive effects may even extend beyond mere cyclical impacts and, under certain conditions, contribute to a semblance of stability for a period of time. For example, economic growth in Belarus could reach some degree of stability under the following conditions:
- (a) if the war in Ukraine becomes protracted and military demand from Russia remains steady;
- (b) if the Russian economy continues to grow (albeit modestly) in an environment with limited competition in Russian commodity markets;
- (c) if specific tools and forms of support for the Belarusian economy remain in place.
Growth driven by a combination of these preconditions could be sufficiently stable as long as they persist. However, the existence of such a status quo is not inherently sustainable and could vanish at any moment. Each of these preconditions is highly unreliable and comes with its own set of determining factors. Thus, one cannot count on the preservation of the entire “package” of preconditions in the long term.
Conclusions
Belarus and its economic prospects are currently in a highly complex situation. The Belarusian economy has been steadily increasing its degree of coupling with Russia, with the ties strengthening both in the range of economic sectors involved and the depth of their integration.
From a long-term growth perspective, the unprecedented level of dependence on Russia is undoubtedly detrimental. In this regard, Kruk’s (2024) conclusion about the economic and political deadlocks remains entirely relevant.
However, as the past two years have shown, this situation can achieve a certain semblance of stability in the medium term. The Belarusian regime is increasingly viewing its coupling with Russia not only as a mechanism for economic survival but also as a means to enhance economic potential. In this way, the growing dependence on Russia, which brings substantial macroeconomic risks, is seen as an unavoidable cost entailed to the only available mechanism to sustain economic growth in Belarus.
How then, should we interpret the related fluctuations in Belarus’s economy? As an increase in economic potential (equilibrium growth rate) or as cyclical acceleration? Traditional economic logic encounters a contradiction here, as the line between equilibrium growth and cyclical fluctuations becomes blurred. An increase in economic potential should inherently be sustainable, whereas cyclical acceleration is inherently transient. Yet, how should we treat a mechanism that might be somewhat sustainable under certain conditions?
This contradiction creates numerous uncertainties, both strictly within the economic domain and beyond it. Economically, it diminishes the effectiveness of conventional macro forecasting tools, making them more dependent on ad-hoc assumptions. For example, if there is indeed an increase in potential, then macroeconomic projections generated without accounting for this channel (e.g. BEROC, 2024) would likely underestimate output growth while overestimating the risks of overheating and destabilization. Conversely, if the model assumes higher equilibrium growth but it proves unsustainable, the forecast could significantly overestimate growth while underestimating macroeconomic imbalances. In other words, the seemingly favorable situation could ultimately be a harbinger of a macroeconomic storm.
These uncertainties are even more pronounced in the political domain. Up to what threshold can an increasing economic dependency on Russia yield macroeconomic gains for the regime? What political consequences can arise if the strategy of coupling with Russia for growth enhancement fails? Can the progressing dependency on Russia undermine the regime politically? If political barriers for democratization are eliminated, what should and can be done to get rid of the dependence on Russia? Are the estimations and prescriptions in Hartwell et al. (2022) – which considers the perspectives of economic reconstruction for a democratic Belarus and the costs of eliminating the dependency on Russia in pre-war reality – still relevant today?
Answering such questions meaningfully using formal research tools ex-ante is nearly impossible. The dependence of macroeconomic sustainability on non-economic factors and motivations leaves little room for an accurate ex-ante diagnosis of the current state of affairs. Only ex-post will we likely be able to reliably assess which diagnosis is closer to the truth. This, in turn, means that we must accept an additional degree of uncertainty in today’s forecasts and projections. Similar challenges are faced by decision-makers in Belarus. As a result, the likelihood of incorrect economic and political decisions due to misdiagnosing the current situation is relatively high, even in the (more optimistic) scenario where the authorities recognize and account for these uncertainties. Such decisions, if made, could not only be costly but might even trigger rapid and drastic economic and political changes.
References
- BEROC. (2024). Macroeconomic Forecast for Belarus. 2024-2025 (in Russian). BEROC. https://beroc.org/publications/view/makroprognoz-dlya-belarusi-2024-2025/
- Bornukova, K. (2023). The Economic Dimension of the Russian Policy toward Belarus. In A. Moshes & R. Nizhnikau (Eds.), Russian Policy toward Belarus after 2020: At a Turning Point? (pp. 29–46). Lexington Books.
- Hartwell, C., Bornukova, K., Kruk, D., & Zoller-Rydzek, B. (2022). The Economic Reconstruction of Belarus: Next Steps after a Democratic Transition (EP/EXPO/AFET/FWC/2019-01/Lot1/R/03). European Parliament. Directorate General for External Policies. https://www.europarl.europa.eu/thinktank/en/document/EXPO_STU(2022)653663
- Konrad Adenauer Stiftung. (2024). EU Sanctions against the regime in Minsk (in Russian). https://www.kas.de/documents/285805/31503540/sanctions-6.pdf/4b6d787d-60fa-ba9a-9ff3-a546946dae31?version=1.0&t=1721109230965
- Kruk, D. (2024). Cognitive Dissonance on Belarus: Recovery and Adaptation or Stalemate? (Policy Brief Series). FREE Network. https://freepolicybriefs.org/2024/01/08/belarusian-economy-outlook/
- Kruk, D. (2023). What is Needed to Reinforce Macroeconomic Stability in Belarus? (In Russian) (85; BEROC Working Paper Series, p. 52). BEROC. https://beroc.org/publications/working_papers/chto-nuzhno-dlya-ukrepleniya-makroekonomicheskoy-stabilnosti-v-belarusi/
- Kruk, D., & Lvovskiy, L. (2022). Belarus Under War Sanctions (Policy Brief Series). FREE Network. https://freepolicybriefs.org/2022/10/17/belarus-under-sanctions/
- Turarbekova, R. (2024). The Union State: Belarus’ Increasing Dependence on Russia and the Risk of Sovereignty Erosion, 2020-2023 [SCEEUS Guest Commentary]. https://sceeus.se/en/publications/the-union-state-belarus-increasing-dependence-on-russia-and-the-risk-of-sovereignty-erosion-2020-2023/
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Moldova’s EU Integration and the Special Case of Transnistria
In the shadow of Russia’s invasion of Ukraine, another East European country is actively working to secure its European future. After three years of negotiating cooperation agreements with the European Commission, Moldova finally obtained its EU candidate status and is now on track to join the EU as a member state. However, among many remaining obstacles on the path to full membership, one stands out as especially problematic: the region of Transnistria. The region, officially Pridnestrovian Moldovan Republic, is an internationally unrecognized country and is rather seen as a region with which Russia has “special relations”, including a military presence in the region since 1992. This policy brief provides an overview of the current state of the Transnistrian economy and its relationships with Moldova, the EU, and Russia, arguing that Transnistria’s economy is de facto already integrated into the Moldovan and EU economies. It also points to the key challenges to resolve for a successful integration of Moldova into the EU.
Moldova’s EU Integration: The Moldovan Economy on its Path to EU Accession
On December 14th, 2023, the European Council decided to open accession negotiations with Moldova, recognizing Moldova’s substantial progress when it comes to anti-corruption and de-oligarchisation reforms. The first intergovernmental conference was held on the 25th of June 2024, officially launching accession negotiations (European Council, 2024). On October 20th, 2024, Moldova will hold a referendum on enshrining Moldova’s EU ambitions in the constitution. However, several issues remain to be solved, for Moldova to enter the EU.
With a small and declining population of only about 2.5 million people and a GDP of 16.54 billion US dollars (2023), Moldova remains among the poorest countries in Eastern Europe. In 2023 the GDP per capita was 6600 US dollars in exchange rate terms (substantially higher if using PPP-adjusted measures; World Bank, 2024a). In the last decade, the largest share of its GDP, about 60 percent, stemmed from activities in the services sector, and about 20 and 10 percent from the industrial and agricultural sectors, respectively (Statista, 2024). Despite substantial economic growth in the last decade (3.3 percent on average between 2016 and 2021) and recent reforms (largely under the presidency of Maia Sandu), Moldova remains highly dependent on financial assistance from abroad and remittances, the latter contributing to about 15 – 35 percent of Moldova’s GDP in the last two decades (World Bank, 2024b).
The COVID-19 pandemic and refugee flows caused by Russia’s invasion of Ukraine have only intensified this dependence. Furthermore, these events excavated existing vulnerabilities in the Moldovan economy, such as high inflation and soaring energy and food prices, which depressed households’ disposable incomes and consumption, while war-related uncertainty contributed to weaker investment (World Bank, 2024c).
The Contested Region of Transnistria – Challenge for Moldova’s EU Integration
In addition to Moldova’s economic challenges, the country also faces a particular and unusual problem; it does not fully control its territory. The Transnistrian region in the North-West of the country (at the South-Western border of Ukraine) constitutes about 12 percent of Moldova’s territory. The region has a population of about 350 000 people, mostly Russian-speaking Moldovans, Russians, and Ukrainians.
Following the breakup of the Soviet Union, a movement for self-determination for the Pridnestrovian Moldavian Republic resulted in a self-declaration of its independence on the 2nd of September 1990. More specifically, the alleged suppression of the Russian language and threats of unification between Moldova and Romania were the main stated reasons for the Transnistrian movement for self-determination, which in turn led to the civil armed conflict in 1992 and a following ceasefire agreement (Government of Republic of Moldova, 1992). The main points of the agreement concern the stationing of Russia’s 14th Army in Transnistria, the establishment of a demilitarized security zone, and the removal of restrictions on the movement of people, goods, and services between Moldova and Transnistria. As of 1992, Transnistria is de-facto an entity under “Russia’s effective control” (Roșa, 2021).
Over the years, the interpretations of the conflict have become more controversial, ranging from the local elite’s perspectives to assertions of an entirely artificial conflict fueled by malign Russian influence (Tofilat and Parlicov, 2020).
Notably, the Moldovan government has never officially recognized Transnistria as an occupied territory (see Article 11 of the Moldovan constitution stating “The Republic of Moldova – a Neutral State (1) The Republic of Moldova proclaims its permanent neutrality. (2) The Republic of Moldova shall not allow the dispersal of foreign military troops on its territory” (Constitute, 2024)).
Furthermore, the European Council’s official recognition of Transnistria as an “occupied territory” on March 15, 2022, underscores the EU’s stance on the matter and highlights Russia’s pivotal role in providing political, economic, and military support to Transnistria (PACE, 2022).
The Transnistrian Economy: Main Indicators and Weaknesses
Despite Russia’s central role in Transnistria, the region’s economy is, in practice, substantially integrated into the Moldovan and EU economies. This fact should be considered at various levels of decision-making when discussing Moldova’s EU accession.
As depicted in Figure 1, economic activity in Transnistria has been quite “stable” in the last decade. GDP per capita has remained around 2000 US dollars, 2,5 times lower than Moldova’s GDP per capita in 2021.
Figure 1. Moldovan and Transnistrian GDP per capita, in thousand USD
However, one must be careful when estimating and interpreting Transnistrian economic indicators in dollar terms. The local currency is the Transnistrian ruble which is not recognized anywhere in the world except in Russia. Its real value is thus highly uncertain as there is no market for this currency. Moreover, only Russian banks are authorized to open accounts and conduct transactions in the currency, demonstrating yet another significant weakness for Transnistria as a potential independent state, particularly given the current global ban on most Russian banks. As such, the official exchange rate for US dollars should be taken with a grain of salt. At the same time, there are no alternative statistics as the Pridnestrovian Republican Bank is the only source for relevant data on Transnistria.
Another distinctive feature of Transnistria is the substantial reliance on remittances from abroad (see Figure 2). In 2021, remittances amounted to 143.7 million US dollars, constituting 15.5 percent of GDP in 2021 (if relying on the official exchange rate for US dollars, as published by the Pridnestrovian Republican Bank).
Figure 2. Remittances to/from Transnistria, in million USD
Figure 2 illustrates a notable trend of increasing dependency on remittances in recent years, particularly on remittances originating from CIS countries, chiefly Russia and Ukraine.
In terms of reliance on Russia, this dependency is not a concern when it comes to Transnistria’s exports. Foreign trade data from recent years indicates that the Transnistrian economy no longer relies on exports to Russia. As seen in Figure 3, the share of exports to Russia has been constantly declining since 2014 and amounted to merely 9.2 percent in 2021. At the same time, exports to the EU, Moldova and Ukraine collectively accounted for about 80 percent in 2021. The primary commodities driving Transnistrian exports were metal products, amounting to 337.3 million US dollars in 2021, followed by electricity supplies at 130.1 million US dollars. Additionally, food products and raw materials contributed 87.6 million US dollars to Transnistrian exports in the same period.
Figure 3. Transnistrian exports by destination countries, in percent
These figures highlight the significant integration of the Transnistrian economy into the European market and, to some extent, indicate the strong potential to further align in this direction.
The increase in Transnistria’s exports to the EU in recent years can be largely attributed to the implementation of mandatory registration of Transnistrian enterprises in Moldova in 2006 as a prerequisite for engaging in foreign economic activities (EUBAM, 2017). Consequently, Moldova has exercised full control over Transnistrian exports and partial control over its imports since 2006.
However, Transnistria remains reliant on Russia for its imports, particularly in the energy sector. In contrast to the export structure, Russia’s share in Transnistrian imports was significantly larger in 2021. About 45 percent of the imports originated from Russia in 2021, and mostly constituted of fuel and energy goods (447.0 million US dollars) and metal imports (254.3 million US dollars), quite typical for a transition economy.
Figure 4. Transnistrian imports by origin countries, in percent
Transnistria’s Energy Dependence on Russia
The biggest challenge for Transnistria, as well as for Moldova, is the large fuel and energy dependence on Russia, mostly in the form of natural gas.
For many years, gas has been supplied to Transnistria effectively for free, often in the form of a so-called “gas subsidy” (Roșa, 2021). This gas flows through Transnistria to Moldova, effectively accumulating a gas debt. Typically, Gazprom supplies gas to Moldovagaz, which in turn distributes gas to Moldovan consumers and to Tiraspol-Transgaz in Transnistria. Tiraspol-Transgaz then resell the gas at subsidized tariffs to local Transnistrian households and businesses. This included providing gas to the Moldovan State Regional Power Station, also known as MGRES – the largest power plant in Moldova. MGRES, in turn, exports electricity, further highlighting the interconnectedness of energy distribution between the Transnistrian region and the rest of Moldova.
Figure 5. Export/import of fuel and energy products from/to Transnistria, in million USD
The revenue generated from energy exports to Moldova has been deposited into a so-called special gas account and subsequently channeled directly into the Transnistrian budget in the form of loans from Tiraspol-Transgaz. In this way the Transnistrian government has covered more than 30 percent of their total budgetary expenditures over the last ten-year period. This further points to Transnistria’s’ fiscal inefficiencies and highlights its precarious dependency on gas from the Russian Federation.
In the last few years there have however been repeated disruptions in the gas supply and continuous disputes about prices and how much Moldovagaz owes Gazprom. De jure Tiraspol-Transgaz operates as a subsidiary of Moldovagaz, but de facto its assets were effectively nationalized by the separatist authorities in Transnistria (Tofilat and Parlicov, 2020). These unclarities has led to multiple conflicts over who owes the built-up gas debt. Given the ownership structure the debt is often seen as “Moldovan debt to Russia” (see e.g., Miller, 2023), albeit created by Transnistrian authorities. According to Gazprom, the outstanding amount owed by Moldovagaz to Gazprom stood at approximately 8 billion USD at the end of 2019 (Gazprom, 2024). This corresponds to about 7 times of Transnistria’s GDP. The Moldavian assessment of the debt is about two orders of magnitude lower (Gotev, 2023).
The disagreement on the debt amount was the official reason for the gas supply to be drastically reduced in October 2022. From December 2022 to March 2023, Russia’s Gazprom supplied gas only to Transnistria and it was not until March 2023 that supplies to the rest of Moldova were resumed. Since then, there have been shifts back and forth with Moldova mainly buying gas from Moldovan state-owned Energocom, which imports gas from suppliers other than Gazprom (Całus, 2023; Tanas, 2023). Understanding all turns and events is at times challenging due to lack of transparency in dealings.
Currently, despite Gazprom’s debt claims, the entirety of Transnistria’s gas is still being provided by Russia. While this is a relatively “cheap” investment from the Russian perspective, its impact on Moldova is large, as highlighted by Tofilat and Parlicov (2020) “the bottomline costs for Russia with maintaining Transnistria as its main instrument of influence in Moldova was at most USD 1 billion—not too expensive for twenty-seven years of influence in a European country of 3 million people”.
Corruption in Transnistria – Who is the Real “Sheriff”?
Another obstacle hindering a resolution of the Transnistrian conflict is the near complete monopoly of political and economic power held by Transnistria’s former President Igor Smirnov (1991-2011), through his strong ties to the Sheriff corporation. The corporation, established in 1993 by two former members of Transnistria’s “special services” (Ilya Kazmaly and Victor Gushan), was enabled by Transnistria’s former president, Igor Smirnov. For instance, the Sheriff company was exempt from paying customs duties and was permitted to monopolize trade, oil, and telecommunications in Transnistria. In return, the company supported Smirnov’s party during his presidency. For more on the conflict between Transnistria’s power clans and their relationships with Russia, see Hedenskog and Roine (2009) and Wesolowsky (2021).
The Sheriff company encompasses supermarkets, gas stations, construction firms, hotels, a mobile phone network, bakeries, a distillery, and a mini media empire comprising radio and TV stations. Presently, the company is reported to exert control over approximately 60 percent of the region’s economy (Wesolowsky, 2021).
A straightforward illustration of Sheriff’s political influence is the establishment of the Sheriff football team. For the team, Victor Gushan constructed the Sheriff sports complex, the largest football stadium in Moldova, accommodating
12 746 spectators. This investment in sports infrastructure is notable, especially considering that the total population of Transnistria is only approximately 350 000, and that the region is fairy poor. A similar example concerns the allocation of a land plot of 6.4 hectares to the company “to expand the construction of sports complex for long-term use under a simplified privatization procedure” signed directly by the former president.
While these details may seem peripheral to broader problems, they illustrate how some vested interests in the Transnistrian region may not be keen to change towards a society based on the rule-of-law, increased transparency and a market-oriented economy.
Moldova’s Options for Resolving the Transnistrian Conflict in EU Integration
As Moldova grapples with both the consequences of the ongoing conflict in Ukraine and the prolonged “frozen” conflict with Transnistria, its economy remains vulnerable. With the recent attainment of EU candidate status, it’s essential for the Moldovan government to map out ways to solve the conflict despite strong interest from powerful political and economic groups in preserving the status quo.
While the perspectives of resolving the Transnistrian conflict obviously hinge on Russian troops withdrawing from the region, Moldova would also need to address a wide range of economic issues. The Transnistrian economy faces numerous critical structural challenges including a persistent negative foreign trade balance, an unsustainable banking system, and pervasive corruption. Notably, the dominant oligarchic entity, the Sheriff company, exercises monopolistic political and economic influence, striving to preserve the status quo for Transnistria. The obvious unviability of the local currency due to its artificial nature and a complete dependency on Russia’s banking system are additional challenges to be solved for Moldova to be able to integrate Transnistria properly into its economy. Therefore, introducing additional measures such as restricting access to remittances in Transnistria, and imposing personal sanctions on elite groups could help Moldova in establishing economic control over the region.
Furthermore, while the Transnistrian region de-facto has strong economic ties with the Moldovan and European markets in terms of exports, its heavy reliance on Russian gas imports remains a significant vulnerability.
When integrating Transnistria and severing its ties with Russia, Moldova would also need to resolve the issues arising from its reliance on the electricity produced at MGRES using subsidized Russian gas. Natural gas bought at market prices would make Moldovan electricity highly costly, presenting financial challenges to Moldova, and effectively destroying the competitive advantage and important source of revenue in the Transnistrian region. Moreover, alternative electricity routes to Moldova are yet to be completed (with an estimated cost of approximately 27 million EUR).
These and other issues need to be dealt with for a successful Moldovan transition into the EU. Although these challenges are highly important from a Moldovan point of view, and even more so from a Transnistrian perspective, it should be emphasized that these issues are, in economic terms, relatively small for the EU. Given that the EU has opened the way for Moldovan accession, it should be ready to step up financially to help Moldova solve these issues and stay on the membership path.
References
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Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
An Environmental Perspective on Belarus’s Sustainable Development
In the last two decades, Belarus has performed better than other CIS countries in sustainable development. However, Belarus has in recent years seen a decline in its global environmental rankings, particularly in the areas of climate action and environment. In 2023, the country’s standing worsened in the Sustainable Development Index, Climate Change Performance Index, and Environmental Performance Index compared to previous years and rankings. This policy brief analyzes Belarus’s performance across these indices and explores the potential causes of recent negative trends and the environmental decline in Belarus. It underscores the crucial role of political and civil engagement in ensuring long-term sustainability of environmental reforms in Belarus.
In recent years, political and economic turbulence has overtaken the public debate about the state of things in Belarus, while environmental issues have taken a back seat. However, tackling climate change is important in any political context, and in this policy brief, we delve into recent developments in Belarus along the environmental front.
Belarus has traditionally done relatively well in regard to sustainable development. For example, in the last two decades, it has consistently outperformed other CIS countries, as measured by the Sustainable Development Goals (SDG) Index, and has been on par with the Eastern European EU Member States (see Figure 1).
However, in the last few years, Belarus’s progress in this dimension has stagnated, and even partially reversed. This brief focuses on one of the drivers of this stagnation – recent developments in the environmental sphere. The brief shows that Belarus worsened its position in three major global indices measuring environmental performance and discusses which components of environmental performance have lagged the most. It proceeds to analyze the underlying causes for this stagnation. The brief concludes by discussing necessary policy measures to improve Belarus’s environmental sustainability.
Figure 1. SDG Index scores for selected countries, 2000-2023
Belarus in Global Environmental Rankings
Global environmental rankings are an essential tool for encouraging global efforts to tackle ecological challenges and promote sustainable development. The rankings aim to evaluate a country’s environmental policies and practices and provide a relative assessment of its sustainability efforts, pollution control, and conservation practices. We analyze the performance of Belarus with the help of three well-known indexes: the Sustainable Development Goals Index (SDG Index), the Climate Change Performance Index (CCPI), and the Environmental Performance Index (EPI).
The Sustainable Development Goals Index
The SDG Index measures the progress of countries towards accomplishing the 17 SDGs. Its score can be interpreted as a percentage of SDG achievement (Sachs et al., 2023). It is based on 97 indicators that are grouped by SDGs. The indicators are normalized on a 0-100 scale, and the scores are calculated as averaging across respective indicators. The SDG Index includes the total score and scores for individual goals (Sachs et al., 2023).
The SDG Index scores for Belarus improved significantly between 2000 and 2020, increasing by 8.31 points (see Figure 1). However, since 2020, the score has stagnated and even declined slightly. In 2020, Belarus ranked 23rd out of more than 160 countries. In 2023, it dropped to 30th place, the lowest since 2001.
To a large part, the decline in Belarus’s SDG Index score is driven by a drop in the index for the 16th SDG ”Peace, justice and strong institutions”. However, Belarus has also faced stagnation in the SDGs that are explicitly related to the environment – such as the index for SDG 7: “Affordable and Clean Energy”, SDG12: ”Responsible Consumption and Production” and SDG13: “Climate Action” (see Figure 2).
Figure 2. Selected SDG Index components for Belarus, 2020-23
These developments reflect Belarus’s key challenges, including its excessive reliance on fossil fuels and insufficient focus on renewable energy; inefficient management of waste and emissions, including plastic and food waste; low priority of climate change issues in the country’s economic and social policies, high carbon intensity in the economy and low ambition when it comes to emission reductions. The Belarusian Civil Society Report on the Sustainable Development Goals’ implementation (2022) also refers to similar challenges.
As the SDG Index covers a broad range of sustainability aspects, it may be less precise when it comes to the specificities of developments in the environmental domain. To get a better grasp of these developments, it is useful to consider more refined indices addressing specifically environmental performance and climate change adaptation.
The Climate Change Performance Index
The CCPI is a tool to monitor the climate protection efforts of 63 countries and the EU, which together make up more than 90 percent of global greenhouse gas (GHG) emissions. This index was developed by Germanwatch in collaboration with the NewClimate Institute and the Climate Action Network. Published annually since 2005, the Climate Change Performance Index tracks countries’ efforts to combat climate change. As an independent monitoring tool, it aims to enhance transparency in international climate politics and to enable comparison of climate protection efforts and progress made by individual countries. The CCPI tracks climate protection performances in four areas: GHG emissions (40 percent of the overall score), renewable energy (20 percent), energy use (20 percent) and climate policy (20 percent) (Burck et al., 2024). The CCPI ranks countries’ efforts as very high, high, medium, low, and very low, with the actual scores normalized between 0 and 100.
The CCPI for Belarus has exhibited an uneven development. In most of the considered years, Belarus’s efforts to prevent climate change were ranked as low, except for 2010-2012 and 2018-2019 when they were characterized as medium or moderate. The lowest scores were recorded in 2017 and from 2020 to 2024, highlighting that climate protection has been less prioritized in Belarus in recent years compared to earlier periods.
The relative CCPI ranking for Belarus is similar to the SDG Index (Figure 1). In 2024, Belarus performed worse than the average for Eastern European countries that are part of the EU – their average CCPI score was 55.43. Still, Belarus performed better than some members of this group (Poland (44.4), Czechia (45.41) and Hungary (45.93)). At the same time, Belarus displayed the best results among CIS countries, as Russia scored 31.00, Kazakhstan 38.52 and Uzbekistan 46.68 in 2024, respectively.
While Belarus slightly improved its score in 2024, relative to 2023, it actually moved down the country ranking in all areas considered by the CCPI. The country still received a medium rating in the areas of GHG emissions and energy use. However, the 2024 efforts with respect to renewable energy and climate policy were once again rated as very low, resulting in a relatively low overall ranking in 2024. CCPI experts point to low diversification of imported energy resources, high reliance on fossil fuels, and delayed climate action as key underlying issues.
Figure 3. CCPI Scores for Belarus, 2008-2024
The Environmental Performance Index
The Environmental Performance Index ranks the performance of countries on environmental health, ecosystem vitality, and their efforts to prevent climate change (Block et al., 2024). It allows tracking of countries’ progress towards established environmental policy targets. The EPI was developed by Yale University in collaboration with Columbia University and is supported by the World Economic Forum and the European Commission. The EPI framework has been repeatedly changed over the years to incorporate more detailed accounting and further indicators. Thus, it is not possible to directly compare EPI levels for different years.
Instead, we look at the evolution of the EPI ranking for Belarus: in 2016 the country ranked 35th among 180 countries, in 2020 it ranked 49th, and in 2022 its position dropped to 55th place.
In 2022, the EPI score for Belarus amounted to 48.5, surpassing all other CIS countries, for which the average score was 39.79. However, Eastern-European EU members all outperformed Belarus, with an average score of 57.92.
It is worth pointing out how differently Belarus performs with respect to the three policy objectives of the EPI. The first component concerns environmental health – it reflects how well a country mitigates environmental risks that directly affect the health and safety of its population and includes issues such as air quality, sanitation and drinking water, heavy metals, and waste management. Belarus’s 2022 score for environmental health was 51.1 earning them a 52nd place. The second component of EPI is Ecosystem vitality – reflecting the performance in the domains of biodiversity and habitat, ecosystem services, fisheries, forests, climate change mitigation, agriculture, and water resources. Belarus’s ecosystem vitality performance was in 2022 substantially better with a score of 55.4, earning Belarus a 41st place. However, the last component of EPI – climate change mitigation efforts, were evaluated as insufficient for Belarus. The country scored only 39.6 in this regard, equivalent to a 94th place.
Reasons for Belarus’s Decline in Environmental Rankings
The recent stagnation and negative trend observed for Belarus across these global environmental rankings warrant an inquiry into the causes of such developments. Plausibly, these are a combination of insufficient effort to address preexisting environmental challenges and consequences from more recent economic and institutional shocks.
Preexisting Environmental Challenges
One of the main examples of preexisting economic challenges is the continued dominance on imported fossil fuels in the energy sector, low diversification of energy suppliers, and only a marginal share of renewables. According to the National Statistical Committee of the Republic of Belarus, the country belongs to the top-20 most energy-dependent countries in the world. In 2020 the share of energy imports to gross consumption made up 83.7 percent, with around 85 percent of these resources imported from a single supplier: Russia (Internation Energy Agency, 2021). The share of primary energy production from renewable energy sources in the gross energy resources consumption continues to be low (7.8 percent in 2020 vs. 5.6 percent in 2015).
Another challenge has to do with the implementation and enforcement of environmental legislation. Belarus has recently developed and extended its legal framework in environmental sustainability. For instance The National strategy of sustainable development for the Republic of Belarus till 2035, was approved in 2020 and the National action plan for the development of a “green” economy in the Republic of Belarus for 2021-2025 was approved in 2021. The first document outlines the general plan for sustainable development in Belarus; the latter sets 11 priorities for the green economy in the country, including the promotion of green financing and creation of smart and energy-efficient cities, climate change mitigation and adaptation to climate change, education and social engagement.
However, the legislation falls short when it comes to practical implementation of the declared goals and mechanisms. For example, virtually no public financing has been allocated for these purposes and other sources of financing are not specified. Also, the National action plan contains only a general reference to the possibility of attracting extrabudgetary funds, foreign financial resources, or other sources.
Economic and Political Shocks
Recent political and economic crises have also had a negative impact on the environmental sustainability in Belarus.
One can begin by considering the substantial, though potentially unintended, adverse effects of sanctions – imposed in response to the widely contested validity of the 2020 elections and Belarus’s involvement in Russia’s war on Ukraine. While it wasn’t their main objective, the sanctions led to the suspension of green projects and initiatives, supported by international organizations such as the World Bank and other UN programs, the EU and the European Bank for Reconstruction and Development, IMF etc., as well as international investments into Belarus. Funding was suspended for several energy efficiency projects and other green initiatives in Belarus, and for projects promoting sustainable environmental practices, energy efficiency, and clean water access – aimed at reducing Belarus’s carbon footprint and enhancing renewable energy capacity.
The political crisis also led to Belarus’s withdrawal from the Aarhus Convention in 2022. The UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters of 1998 outlines every person’s right to a healthy and sustainable environment which includes access to justice, participation, and information. The Aarhus Convention guarantees legal protection to people exercising these rights. Belarus’s withdrawal from the Aarhus Convention has increased the likelihood of being prosecuted for environmental activism, thereby undermining civil society’s involvement in environmental decisions and practices. For example, the Belarusian Civil Society Report on Sustainable development goals implementation (2022) mentions the dangers of publicity and resulting loss of funding for local initiatives concerning sustainable consumption practices.
Another adverse consequence of the political crisis was the massive explicit liquidation of ecological NGOs in the country, accompanied by self-liquidations. This negatively impacted civil society engagement into ecological matters in Belarus.
Conclusion: Addressing Belarus’s Environmental Decline
In recent years, Belarus has worsened its position in three major global environmental rankings, the SDG index, the CCPI and the EPI.
In this policy brief, we have outlined these declines and highlighted how they are linked to a combination of preexisting dependencies and recent economic and political developments.
The continued reliance on fossil fuel imports, insufficient renewable energy integration, and problems with enforceability and implementation of green agendas have collectively contributed to these developments. Additionally, the suspension of international projects and investment in the environmental sphere as a result of sanctions, Belarus’s withdrawal from the Aarhus Convention and the massive, forced liquidation or self-liquidation of ecological NGOs has further aggravated the situation.
To enhance its sustainable development, Belarus should focus on boosting renewable energy use and diversify its energy supply. This includes enforcing stricter environmental laws and reconnecting with global environmental agreements (such as the Aarhus Convention). Additionally, Belarus should incentivize research in green technologies and encourage government and private sector collaboration on environmental initiatives. Well-funded, comprehensive climate action plans with clear targets for emission reductions and renewable energy adoption must be developed and implemented. It’s also vital for Belarus to acknowledge and collaborate with environmental NGOs and actively involve the community in addressing the environmental decline through sustainability decisions and initiatives.
References
- Belarusian Civil Society Report on Sustainable Development Goals Implementation: Trends since 2016. Vilnius: 2022 — 112 pages. https://library.fes.de/pdf-files/bueros/belarus/19382.pdf
- Block, S., Emerson, J. W., Esty, D. C., de Sherbinin, A., Wendling, Z. A. (2024). 2024 Environmental Performance Index. New Haven, CT: Yale Center for Environmental Law & Policy
- Burck, J., Uhlich, T., Bals, C., Höhne, N., Nascimento, L., Kumar, C.H., Bosse, J., Riebandt, M., Pradipta, G. (2023). ‘Monitoring Climate Mitigation Efforts of 63 Countries plus the EU – covering more than 90% of the Global Greenhouse Gas Emissions. Bonn: Germanwatch
- International Energy Agency. (2021). Belarus Energy Profile. Retrieved from: https://iea.blob.core.windows.net/assets/a9233b70-ee3e-4a0c-8cde-7a174760b3e2/BelarusEnergyProfile.pdf
- Sachs, J.D., Lafortune, G., Fuller, G., Drumm, E. (2023). Implementing the SDG Stimulus. Sustainable Development Report 2023. Paris: SDSN, Dublin: Dublin University Press, 2023. 10.25546/102924.
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About BEROC
BEROC promotes a market economy in Belarus through research, education, and public dialogue. It conducts academic and policy research, organizes educational programs, and fosters collaboration between Belarusian and international economists. BEROC is part of a research network including SITE (Stockholm), BICEPS (Riga), CEFIR (Moscow), CenEA (Szczecin) and KSE/KEI (Kiev).
To read more policy briefs published by BEROC, visit the Institute’s page on the FREE Network’s website.