In the 36th year of its independence, Ukraine has reached a point beyond which GDP growth alone no longer guarantees the return of millions of citizens from abroad.
A significant portion of this growth is still funded by external partners, and this aid will not last forever; the ongoing allegations of corruption at the highest levels of power, and the prospect of possible elections even whilst the country is at war, call for reflection on the essential reforms needed to lead Ukraine towards an effective model of social and economic organisation.
According to an analysis by Rbk-Ukraina, based on consultations with various specialists and economists, there are certain issues that are non-negotiable for Ukraine’s future. First and foremost, external aid must be viewed “as a bridge, not as a model”: the country needs external support, but the foundation for growth should be built on private investment and domestic initiatives. Salaries alone are not enough: security, housing, professional employment and quality of life are also crucial for encouraging people to return from abroad.
To achieve higher incomes, a new economy is needed: Ukraine requires technology, investment, robotisation and high value-added manufacturing. The labour shortage will persist for some time yet, and the solution lies in productivity, automation and the reskilling of older workers and migrant workers. The defence integrator MilTech could also become a power station, but this requires dual-use technologies, exports and the development of civilian sectors.
The key remains the quality of institutions: the protection of property and the rule of law must transform international aid into private investment.
Ukraine has marked another anniversary of independence with a paradoxical economy: the military-industrial complex is recording record growth, whilst the rest of the economy is contracting. The country has reached a point beyond which GDP growth alone no longer guarantees either the return of millions of Ukrainians from abroad or a sustainable post-war recovery.
“This year, the military-industrial complex remains the main driver of economic growth, but at the same time the civilian sector is suffering increasingly from the escalation of the war: we are already seeing a slowdown in consumption and the impact of the destruction of business assets and logistics infrastructure. This means that growth in the military-industrial complex is not yet indicative of healthy growth for the economy as a whole,” observed Elena Bilan, chief economist at the investment firm Dragon Capital, during an event organised by the Centre for Economic Strategy.
The National Bank believes that the military sector MilTech will nevertheless be a key example and a new driving force, stimulating the development of related sectors, but this is precisely where the key question for the coming years lies: what will happen to the Ukrainian economy when the war ceases to be the main obstacle, whilst its consequences – labour shortages, destroyed infrastructure, the need for capital and security risks – remain?
Economic growth alone does not guarantee the return of people who have moved to European countries, and the reason is not just the war. According to Irina Ippolitova, a senior economist at the Centre for Economic Strategy, what matters to refugees is not a direct comparison between wages in Ukraine and those in Germany, Poland or the Czech Republic, but rather “the ratio of income to the cost of living”.
Even without a precise calculation, it is clear that the bar has been raised considerably. Aleksij Poznjak, head of the Department of Migration Studies at the Institute of Demography and Quality of Life Problems of the National Academy of Sciences of Ukraine, pointed out that even before the war, researchers considered a threshold of 70 per cent of a foreign salary to be a sufficient incentive to keep a person in Ukraine.
Now the logic is different: “Before, the aim was to keep people in Ukraine; now, however, it is to bring them back home, and perhaps 70 per cent is no longer enough to incentivise a return; a repatriation rate of 80–90 per cent would probably be more appealing,” says the scientist.
Money is not the only factor, nor is it the main one; Poznjak highlights a “psychological barrier”, given that many Ukrainian women abroad work outside their field of specialisation, such as in retail or as seasonal workers, and even the highest salaries abroad do not compensate for the loss of social status. Meanwhile, the opportunity to regain their previous status in Ukraine may encourage a return, even with a lower salary.
The debate over the type of economy to build is heated, pitting two opposing schools of thought against one another. Data recently cited by former Prime Minister Julia Sviridenko show that the focus on industrialisation is already having a fiscal impact, but the think tank Case Ukraine opposes this logic: Vladimir Dubrovskij, a senior economist at the organisation, describes the focus on industry as a strategic error, “as the world is already in a post-industrial era and industry will never again be an engine of growth… focusing on it is like focusing on agriculture in the 20th century”. A level playing field is needed across the entire market, particularly given the perennial problems of corruption, the rule of law and the overall quality of public administration.
The key areas are “improving the quality of education, which is deteriorating rapidly, retaining talent and creating favourable innovation ecosystems”, says the economist. Even if the industrial showdown were to end in favour of factories, there would be no one to build them: the labour shortage is no longer a temporary problem, and is becoming a structural constraint on the economy.
According to Poznjak’s estimates, there are around 5 million Ukrainian forced migrants abroad; even in an optimistic scenario, no more than 50–60 per cent of them will return, but the problem lies not only in the quantity but also in the ‘quality’ of those who have left.
“There is a particularly acute labour shortage in Ukraine among skilled workers: drivers, seamstresses, electricians, welders, mechanics… most adult Ukrainians who have gone abroad have a higher education, so their return would not be able to fill this gap, as they would be limited to blue-collar professions,” says Irina Ippolitova.
Aleksej Poznjak therefore proposes a complex solution, starting with attracting older people who “still retain sufficient working capacity” into the labour market, greater automation of production processes (technologies tested on the front line can be transferred to the civilian economy), and, finally, importing labour, because “there are no rich countries in the world without migrants”, whilst warning, however, that the proportion of migrants should not exceed 10 per cent of the population, as a higher proportion significantly exacerbates the problem of their integration.
Time is working against Ukraine: an analogy with pre-war studies on labour migration in France shows that after around five years abroad, the likelihood of a migrant returning decreases dramatically.
Whilst the civilian economy is searching for a new growth model, the defence sector has already become its driving force, and has the potential to remain a key player even after the war. The head of the supervisory board of the Ukrainian defence cluster Brave1, Aleksandr Bornjakov, sets out the figures: Ukraine produces 4–5 million drones a year, and the potential for defence production in 2026 is estimated at 50–55 billion dollars.
At the same time, the domestic budget covers only about a third of this production capacity, and excess capacity in some categories reaches 50 per cent. This is why unlocking controlled exports has become a matter of the sector’s survival, not just growth.
The Drone Deals framework has already yielded its first results: agreements have been signed with Saudi Arabia, Qatar, the United Arab Emirates, the Netherlands, Lithuania and Latvia, and in July 2026 the United States and Ukraine signed a bilateral declaration of intent for cooperation in the field of drones.
This marks the birth of a new industry with competitive advantages unmatched by any other country: testing of technologies in combat, a compressed development cycle (weeks rather than years) and direct feedback between the front line and production. Dual-use applications “represent an additional market for Ukrainian companies and new opportunities to attract private capital”, emphasises specialist Oksana Ferčuk.
Hope for Ukraine’s future depends on the war – both in terms of resistance to the Russian invader and the military industry’s success, both domestically and internationally.
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