Case study · NBER Working Paper 34103 · August 2025
Engineering Ukraine’s Wirtschaftswunder.
A productivity-driven economic transformation, akin to post-war West Germany, is possible. Twenty-five years of firm data show why it has not yet happened, and what reconstruction must do.
Akcigit, Kilic, Lall, Shpak.
Chapter 1 · Two Wirtschaftswunders
West Germany rebuilt twice. Once in concrete. Once in firms.
By 1948, West Germany had spent eight years dismantling its own economy and three years watching the dismantling deepen under occupation. The miracle that followed was not the rebuilding of cities. It was the rebuilding of a competitive firm distribution that allowed productive companies to grow and unproductive ones to fail.
Ukraine is now at a comparable inflection point. The case for a productivity-driven recovery is not academic. It is the difference between a reconstruction that restores the old captured economy and one that builds a competitive one.
Chapter 2 · What the data shows
A competitive economy hollowed out, in panel data.
Between the early 2000s and 2019, the top four firms in Ukrainian manufacturing grew their share of the market from roughly 48 to 49 percent to about 53 percent. The number is not dramatic on its own. It becomes dramatic when paired with the productivity series.
Labor productivity growth in manufacturing, which had been compounding at 15.2 percent annually in the early period, collapsed to 3.7 percent in the second. The market share rose. The contribution to growth fell. Concentration, in this economy, was a substitute for productivity, not a sign of it.
Source · Akcigit, Kilic, Lall, Shpak (2025)
Chapter 3 · The collapse
Productivity growth fell by a factor of four.
The collapse from 15.2 percent to 3.7 percent annual productivity growth is not a story of war. The war began in 2014, but the collapse was visible in the firm-level data well before. The structural cause was endogenous: the largest firms were appropriating the gains from new products before those products could reach scale.
The next chapter shows the mechanism, in animation.
Chapter 4 · The ten-month problem
A new product line. Ten months. Absorbed.
Transformative firms launch new product lines. Incumbents capture them. The average interval between launch and absorption is ten months. Watch it happen.
The pattern is not aggressive competition. The pattern is the absence of contestable markets. Each absorption is a quiet restructuring that leaves the incumbent more concentrated and the entrant cancelled.
Source · Akcigit, Kilic, Lall, Shpak (2025)
Chapter 5 · Offshore capital
Capital from offshore arrives. Entrants do not.
Industries that received investment routed through offshore financial centers show firm entry rates 27 percent below the comparable industries that did not. The pattern is geographically clustered: certain Ukrainian regions show the effect more strongly than others.
The interpretation is not that offshore capital is inherently bad. The interpretation is that, in the Ukrainian institutional setting of the 2010s, offshore capital arrived attached to incumbent positions, and crowded out the conditions for entry.
Chapter 6 · The prescription
Reconstruction is not enough.
The paper closes with three actionable propositions for Ukraine’s recovery. None of them is about how much money to spend. All of them are about how to spend it without rebuilding the economy that produced the diagnosis above.
One
Tie reconstruction grants to firm-entry conditions in the receiving sector.
Sector-level reconstruction support is conditional on a measurable improvement in entry rates over a defined window. The criterion is observable in firm registry data and auditable by independent monitors.
Two
Treat the offshore-routing of investment as a structural diagnostic, not an accounting one.
Beneficial-ownership transparency is a precondition for re-entry of capital, not a follow-up reform. Ukrainian regions that demonstrate the practice retain the entry premium in the data; those that do not, do not.
Three
Build the firm-level data infrastructure before the reform package is signed.
The diagnostic this paper makes possible is itself a public good. Ukraine’s recovery monitoring framework should treat the firm-level panel as primary, the sectoral aggregates as secondary.
The post-war economy worth rebuilding is not the pre-war economy that broke.
Citation: Akcigit, U., F. Kilic, S. Lall, and S. Shpak. “Engineering Ukraine’s Wirtschaftswunder.” NBER Working Paper 34103, August 2025.
