Institutional rail reform: The case of Ukrainian Railways

• We analyze the reform of the Ukrainian Railways;
• Focus is on processes of institutional change in Ukrainian Railways.
• The analysis demonstrates the place-dependent nature of changes in the rail sector.
• Ukraine is a unique case: Soviet history, high significance of rail and role of industrial tycoons.
• Railway transport in Ukraine should not be exposed to shock reforms.

Rail reforms are aimed at increasing the share of rail in a country's or region's modal split through an efficiency improvement in railway operations, a stimulation of intra- and inter-modal competition and an increased financial accountability and sustainability of the railway company. The recent approaches to railway institutional change in the leading economies of the world was guided by deregulation and liberalization of railway transport. Rail reform in the European Union aimed at a more open market and a clear division of roles between infrastructure managers and railway operators is well documented. The reforms taking place elsewhere in Europe received less attention. This paper deals with the reform of the Ukrainian Railways taking into account the difficult economic, political, social and financial environment the country is in.We analyzed the processes of institutional change in Ukraine and the effectiveness of this institutional change for the development of Ukrainian Railways. Theoretical concepts from institutional economics were applied to map how railway administration and railway players modify existing institutional arrangements to their interests.The analysis in this paper demonstrates the place-dependent nature of changes in the institutional–organizational framework for the rail sector. The case of Ukrainian Railways supports this notion. Ukraine presents a unique case given the path dependence created by its former Soviet history, the great significance of rail in the national transport network and the role of industrial tycoons in cargo generation. We believe railway transport in Ukraine should not be exposed to shock reforms given its great importance to the national economy. However, further changes in the Ukrainian Railways institutional framework are needed to fit even better into the economic realities. We propose specific recommendations for the rail institutional framework adjustments in Ukraine.