During the 1990s, Ukraine achieved little economic growth, thanks largely to economic mismanagement and inherited structural problems. Some years after the government's "Program of Radical Reforms" in 1994, very little real structural transformation has taken place. The serious economic problems confronting Ukraine are of a deep structural nature and include modest industrial restructuring , inefficient privatization, a heavy state machinery, a narrow tax base, the rise of powerful criminals, controlling parts of the economy, and economic dependence on Russia. These factors have caused a large part of the economy to operate in the informal sector.
While foreign assistance is crucial in the transitional economic process, official flows of assistance in the longer term should be dwarfed by private capital flows if Ukraine creates a more favorable environment for the development of the private sector . Ukraine requires technology, management expertise, and access to international markets that only private businesses can provide. Although Ukraine is taking steps in adapting its trade regime to conform to the World Trade Organization's (WTO) membership requirements, progress is slow and difficult.
Ukraine's history and geography tie it to Russia, but its economic future lies with Western Europe. In order to ensure its integration into Western organizations such as the WTO and the EU, Ukraine has to implement a number of economic reforms. The most pressing of these reforms is continuing privatization and improvements in regulatory laws. Meanwhile, Ukrainian industry must transform itself from the production of primary materials such as steel and energy resources, materials in which Ukraine cannot compete with lower priced manufacturers, to refined or processed materials.