Interview with Tymofiy Mylovanov on Ukraine’s Wartime Economy
By Bennett Murray, MALD 2026 Candidate, The Fletcher School
“Disruption forces you to innovate,” Tymofiy Mylovanov, President of the Kyiv School of Economics, told me on October 1, 2024 as he wrapped up a brief speaking tour that included The Fletcher School. Mylovanov participated in the “Global Repercussions of Russia-West Economic Warfare” conference at The Fletcher School on September 26-27, speaking on a panel about Western adaptations.
Mylovanov was not talking about a new app or B2B model altering the business landscape of his native Ukraine. He was speaking about the full-scale Russian invasion that has lethally disrupted all facets of life in his homeland. From Kyiv startups frenziedly developing battlefield tech to humble wheat farmers trying to get their products to international markets, the Ukrainian economy perseveres under the new status quo despite the destruction and violence.
Tymofiy Mylovanov, 49, is among Ukraine’s top economists. After serving as deputy chairman of the board of Ukraine’s central bank for three years, Mylovanov served as Minister of Economic Development, Trade, and Agriculture in the early months of the Zelensky presidency before resigning.
Following his resignation, Mylovanov became President of the Kyiv School of Economics, a post he held throughout the full-scale Russian invasion.
Grain Exports Continue Despite Broken Grain Deal
As the invasion approaches its fourth year, the Ukrainian economy sputters along even as half the state budget goes to the war effort.
“If the war expenditure goes away or is reduced substantially, then I think the Ukrainian economy will be able to recover, and it will be a question of time,” he said.
In the meantime, the economy continues. Shopping malls in Kyiv and Kharkiv run a brisk business despite the missile attacks. Even in Kramatorsk, which is only about 20 kilometers from some of the most hellish sections of the frontline, supermarkets remain fully stocked. At the same time, off-duty soldiers frequent the city’s many cafes and restaurants, seeking respite from the fighting.
“It’s very surreal; you can get bombed, and then after that, everyone goes to the movies,” said Mylovanov.
The Ukrainian economy, which exported around 60 million metric tons of grain annually prior to 2022, is still especially dependent on its agricultural sector. Grain exports initially came to a halt once the full-scale Russian invasion began. They resumed in July 2022 after Turkey brokered a deal between Ukraine and Russia to allow for a safe corridor for ships to transport shipments through the Black Sea.
While Russia terminated the grain deal a year later, Ukraine unilaterally kept the corridor open through effective military action against the Russian Black Sea Fleet. Total grain exports for 2024 are up from last year, despite the absence of a grain deal in place.
Although a ship carrying Ukrainian grain was hit last month by a Russian missile, Mylovanov brushed off the implications, pointing out that no one was killed in the attack and the ship received only minimal damage.
“It doesn’t appear to have made a lot of damage or destruction to the trade,” he said, adding that sinking a large cargo ship is more difficult than targeting warships.
“It’s not like a military ship where wherever you hit, something will explode.”
On the mainland, the agricultural sector is upping its game in order to squeeze more profit out of its product.
“The logistical costs have taken out some of the businesses, especially where their productivity is relatively low, or if they are unconsolidated or in pretty remote areas,” said Mylovanov.
“But many of them have adjusted, and some of them are actually investing in more processing, so they’re bringing more elements of the value chain to Ukraine,” he said.
Mil-tech startups
Away from the wheat fields, startups in Ukrainian cities are churning out increasingly sophisticated products for use on the battlefield. These include electronic gadgets designed to detect and/or interrupt enemy UAVs and communication systems. Soldiers also generally source personal body armor and weapons upgrades directly from the private sector.
While precise data is difficult to obtain, such gear is ubiquitously sold in Ukraine, both online and in specialty military shops.
Unlike most militaries, which are expected to supply soldiers with everything they need on the battlefield, Ukraine sidesteps much of the procurement process by paying generous bonuses to soldiers on the frontlines that they can, in turn, use to buy gear of their choosing.
A month of frontline service warrants hazard pay of around $2,500 on top of their base salary, providing soldiers with personal budgets several times the nation’s median monthly income. Similar, smaller bonuses also exist for soldiers serving elsewhere in combat zones. As a result, it is common for soldiers to select and purchase all the gear they take to war, minus their weapons.
Under the current system, Mylovanov said that companies improve their products far faster than they would if they answered to a formal state procurement process.
“What happens is that soldiers buy these prototypes for low cost or even for free essentially, and they give immediate feedback for innovation,” explained Mylovanov, adding that this sector was fueled by the government’s unique payment system to soldiers.
“Companies don’t even bother to certify their equipment for procurement, because by the time they certify it is already outdated,” Mylovanov added. “Because Russia responds to your innovation, and you respond to their innovation.”