Beyond East and West: how lawlessness and economic vulnerability destroyed support for privatization in Ukraine

This paper explores how crime rates and living standards in Ukrainian regions relate to support for privatization reform. The dynamics of support for the privatization of land, large and small enterprises, were heterogeneous in different regions, where the west of Ukraine maintained more pro-market attitudes than the east, the south, and the center. We show that the effect of market transition on market attitudes of the population was uneven among Ukrainian regions due to their differences in industrial structure and level of urbanization inherited from the Soviet past. Instrumenting average crime rate by the structure of regions' residence, we find that increase in per capita crime rate is associated with a decrease in support for the privatization of land and large enterprises. Average regional incomes, life expectancy, age of the population, and confidence in leaders have an expected impact on different specifications.