*119955*

Usachev V.A., Popova V.A.

Donetsk national university of economics and trade

named after Mikhailo tugan-Baranovsky

Economy of Ukraine

Ukraine has a developed economy with strong industry and agriculture. Ukraine is a major producer of iron and steel, machines, ships, chemical fertilizers, grain, sugar beets, dairy product, meat and wine. In the 1990’s Ukraine began changing its economy from one owned and controlled by the government to an economy based on free enterprise. In this kind of economy, individual owners and managers run their own businesses.

However, the nation lacks the modern technology and equipment in its factories and on its farms. About two-fifth of Ukraine’s people work in industry, and about a fifth work in agriculture. Most other Ukrainians have jobs in such service industries as education and health care.

Ukraine’s heavy industries produce iron and steel and such machines as tractors, machine tools, and mining equipment. Ukraine also produces automobiles, trucks, buses, locomotives and railway cars, airplanes, and ships. Many of Ukraine’s heavy are in the Donbas region, near mines that supply raw materials.

Ukraine can be divided into three economic areas: Southwestern, Donets-Dnieper and Southern.

The Southwestern Economic Area has supplies of metals and fuel, largest reserves of mineral and wood. The top position is held by the sugar industry. Buses of the L’viv plant have won great popularity. The area produces also trams, television sets and cameras.

The Donets-Dnieper Economic Area has rich mineral deposits. It has major industrial base for heavy industry. The Donets Basin contains plants producing zinc, plastics, soda and dyes. The area has the greatest concentration of power stations in Ukraine.

The Southern economic area is close to the sea. Its key sector is shipbuilding. Local factories produce machinery for the power industry, tractors and harvesters. There are many saline deposits for the chemical industry. Southern Ukraine is a large producer of grape wines, tinned fruits and vegetables. Crimea has rich recreational resources.

Ukrainian has very favourable conditions for the development of agricultural production.

Transport plays a big role in the economy of Ukraine. The railway network has some 22,000 km of track. The ports of Ukraine ensure trade contacts with over 80 countries. The length of navigable rivers in Ukraine is close to 5,000 km. The air transport has become one of the principal means of transportation in Ukraine.

Ukraine provides one-tenth of the planet’s cast-iron, one-eleventh of steel, one-twelfth of pit coal.

The economic reforms, started in the national economy after the proclamation of independence, aimed at the establishment of an open market type structure. Ukraine had to be transformed from planned-centralized to market-controlled economy. It included:

- Incorporating and privatizing enterprises;

- Demonopolizing and restructuring the economy;

- Liberalizing prices and foreign trade activities;

- Denationalizing domestic trade;

- Implementing banking reforms;

- Restructuring the agrarian sector;

- Switching from planned to market economic regulators and

simultaneously replacing bureaucratic structures.

Reforms in the sphere of property continue. They aid the development of the non-government sector.

Today’s industry are unable to satisfy the consumer’s wants. They are not integrated into the world process of economic, technological and scientific progress.

The national industries show low standard in processing raw materials. Production equipment is outdated and worn-out. There is unwillingness to accept progressive techniques and lack of innovating iniciative.

These and other problems are to be solved in the course of new economic reforms aimed at creating an open, effective market type economy.

Finally, Ukraine's reliance on the IMF and foreign assistance, as well as a weak hryvnya, the currency of Ukraine, has made it an unattractive atmosphere.

Though the economy has many factors working against it, there have also been some major breakthroughs recently, which show a strengthening of the economy.

The efforts put into improving foreign trade seem to be paying off as the

Ukrainian trade turnover rose from $19.7 billion in 1994 to $23 billion in 1995, with a current trade surplus of $200 million per annum.

Another sign of an improving Ukrainian economy is the growth of the private sector. Private sector production rose from just 40% of economic activities in 1995 to 60% currently.

Ukraine has also achieved relative financial stability recently, based on the gradual reduction of the deficit. In 1997 the deficit amounted to 31.2% of the GNP, while it is currently 21%. As the deficit decreases, foreign investors will continue to see Ukraine as an increasingly safe place to invest in, and the economy will continue to grow. Unemployment figures have also improved since the early 90's. Even though the economy appears to be improving, one needs to only look at the Ukrainian people to see how desperate the situation truly is, despite the improving numbers.

In the conclusion we can say that,the poor economic times, mixed with growing unemployment, the destruction of science, the lack of money for education, culture, and arts has created an atmosphere in which the average citizen feels they have little hope. People have lost hope that changes will ever occur. The costs of living here are enormous, as the average prices for consumer goods have risen by 83, 000 times in the past 5 years, while the price for communal services has risen by 170, 000 times. Today, Ukraine is a far way from prosperity, but the promise of a great future is there. Geographically located between Europe and Russia, Ukraine has the potential to become a key trading hub between east and west, while the Black Sea ports Ukraine possesses show promise of becoming key naval links. Ukraine also possesses huge quantities of natural resources, including the fertile Steppes. Mixed with a trained and well educated working population all the keys to success are there. With the economy growing at a steady rate, Ukraine seems poised to move ahead and become a major world economic power. However, if it is to do so, it must begin to alleviate the suffering of its people, and implement programs which help everyone, not just the wealthy.