Russia and Ukraine, although they are now politically independent of each other, share a long common history.
The first state of Rus' was established in Kiev between the ninth and the twelfth centuries, and ruled the territories of today's Ukraine, Belarus and Western Russia. The city was entirely destroyed in the thirteenth century by a Mongol invasion.
The capital of the state accordingly moved from Kiev to Moscow: Muscovy succeeded Kievian Rus'. From this moment and periodically, there were demands for the return of the capital to Kiev, as well as separatist movements. Moscow managed to remain the capital of this new state until the early eighteenth century. In 1713, Peter the Great transferred the capital of his Empire to Petersburg (later known as St. Petersburg, Petrograd, Leningrad and back to St. Petersburg). The capital was transferred back to Moscow in 1918 by Soviet leaders.In the meantime, from the thirteenth to the twentieth centuries, the territory of Ukraine underwent several foreign dominations: Polish, Lithuanian, Ottoman, Tatar and eventually the Russian tsarist regime. Ukraine was thus under Russian hands before the 1917 revolutions and soon engaged in a war of independence, and was run by several independent Ukrainian governments from 1917 to 1920. Eventually, Soviet Russia took Ukraine back and, at the birth of USSR in 1922, Russia and Ukraine both became Soviet Socialist Republics: Moscow was the capital of Soviet Russia, and Kiev of Soviet Ukraine. But Moscow remained the capital of the USSR. After the fall of the USSR, Ukraine regained its independence vis-a-vis Russia. Although it was not perceived alike, Russia also gained its independence in 1991 (see Plokhy, 2010).
A key difference between contemporary Russia and Ukraine is their external orientations. Russia has always been torn between the West (Europe) and the East (Asia). If the Western turn, initiated by Peter the Great, has tipped the balance (at least that of the government) in the last three centuries, it can still change. The current strength of the Eurasian movements recalls the unique position of Russia: neither Europe, nor Asia. On its side, Ukraine is in Europe. But Ukraine hesitates about its relationships with Western Europe on one side, and with Russia on the other. The versatile reactions of Europe and of Russia towards Ukraine explain these hesitations. It should be remembered that many Russians live in Ukraine, and that many Ukrainians live in Russia. Both languages are similar, and the cultures are as well. Having this in mind, the present study considers Russia and Ukraine together, as having a common tradition of economic thought, even if we are aware of the shortcomings of such approach.