Ukrainian economy

Modern condition of Ukrainian economy. Fuel and energy complex. Graphical depiction of Ukraine's product exports in 28 color-coded categories. Economic development of the Ukraine. Targeted values of social-economic development of Kyiv city by 2025.

Рубрика Экономика и экономическая теория
Вид курсовая работа
Язык английский
Дата добавления 16.11.2013
Размер файла 1,2 M

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Table of contents

1. Modern condition of Ukrainian economy

1.1. Overview

1.2. Economic growth by years

1.3. Heavy industries

1.3.1. Iron mining

1.3.2. Steel production

1.4. Fuel and energy complex

1.4.1. Fuel industry

1.5. Graphical depiction of Ukraine's product exports in 28 color-coded categories.

1.6. Financing, banking, investments

1.6.1. Investments

1.6.2. Foreign direct investment

1.7. Infrastructure

1.7.1. Transportation

1.7.2. Communication

1.7.3. Trade

1.8. Environmental issues

2. Economic Development of the Ukraine

2.1. Introduction

2.2. Labor Market & Management

2.3. Industry & Agriculture

3. Tables and Charts

3.1. Targeted values of social-economic development of Kyiv city by 2025

3.2. Building complex of the city.

3.3. Share of small enterprises by types of economic activity

4. Conclusion


1. Modern condition of Ukrainian economy

1.1 Overview

Ukraine is subdivided into nine economic regions: Carpathian, Northwestern, Podillya, Capital, Central-Ukrainian, Northeastern, Black-Sea-Coastal, Trans-Dnieper, and Donetsk. Those regions were redrawn from the three Soviet economic regions of the Ukrainian SSR: Donetsk-Trans Dnieper, Southwestern, and Southern.

In 1910, Ukraine's GDP was estimated at 7 per cent of USA (about the same size as the Netherlands). By 2010, Ukraine's GDP had shrunk to 1 per cent of USA. The nation has many of the components of a major European economy - rich farmlands, a well-developed industrial base, highly trained labor, and a good education system. At present, however, the economy remains in poor condition.

Deep recession during the 1990s leading to a relatively high poverty rate, but beginning in 2001, as a result seven straight years of economic growth, the standard of living for most citizens has increased. World Bank report, 2007 notes: "Ukraine recorded one of the sharpest declines in poverty of any transition economy in recent years. The poverty rate, measured against an absolute poverty line, fell from a high of 32% in 2001 to 8% in 2005. UN notes that absolute poverty in Ukraine already was overcome; there is only relative poverty today. The macroeconomics is stable, and the hyperinflation of the 1990s has subsided. Ukraine's currency, the hryvnia, was introduced in September 1996. The economy has continued to grow thanks to exports since 2000, although at uneven speed and being highly affected (circa -15% GDP growth) by the late-2000s recession and the 2008-2009 Ukrainian financial crisis. In general, strong domestic demand, low inflation, and solid consumer and investor confidence have undergirded growth.

1.2 Economic growth by years

1992: -9.7%

1993: -14.2%

1994: -22.9%

1995: -12.2%

1996: -10.0%

1997: -3.0%

1998: -1.9%

1999: -0.2%

2000: 5.9%

2001: 9.2%

2002: 5.2%

2003: 9.6%

2004: 12.1%

2005: 2.7%

2006: 7.3%

2007: 7.9%

2008: 2.1%

2009: -14.8%

2010: 4.2%

2011: 5.2% 

2012: 0.2%

1.3 Heavy industries

1.3.1 Iron mining

Ukraine is rich in mineral deposits, including iron ore (of which it once produced 50 percent of the entire Soviet output), manganese ore (of which it produced 40 percent of world output during the Soviet era), mercury, titanium, and nickel. economy targeted ukrainian export

Ukraine is one of the world's most important mineral producing countries, in terms of both the range and size of its reserves. There are nearly 8,000 separate deposits, harboring some 90 different minerals, of which about 20 are economically significant. About half of all the known deposits are under exploitation. Coal reserves in Ukraine amount to 47.1 billion tons. The annual domestic demand for coal as fuel is about 100 million tons, of which 85 percent can be satisfied by domestic production. Ukraine has oil and gas fields that meet 10 percent of her oil and 20 percent of her gas consumption, respectively. Ukraine contains natural gas reserves of 39.6 trillion cubic feet, but only about 20 percent of the country's demand is met by domestic production. Deposits of iron ore (estimated at 28 billion tons), manganese ore (3 billion tons), chalk and limestone (1.5 billion tons) are also large in Ukraine. The domestic industrial sector suffers from constant energy shortages and energy supply payment debts totaling about $792 million at the end of 1995.

1.3.2 Steel production

Ukraine has a major ferrous metal industry, producing cast iron, steel and pipes. Among its economy leading companies in that field are Metinvest, Kryvorizhstal, AzovStal, Ilyich Steel & Iron Works, and others. As of 2010, Ukraine was the world's eighth largest steel producer (according to World Steel Association). Another important branch is the country's chemical industry, which includes the production of coke, mineral fertilizers and sulfuric acid. Manufactured goods include metallurgical equipment, diesel locomotives, tractors, and automobiles. The country possesses a massive high-tech industrial base, including much of the former USSR's electronics, arms industry and space program. However, these fields are state-owned and economically underdeveloped.

1.4 Fuel and energy complex

1.4.1 Fuel industry

Ukraine imports 90% of its oil and most of its natural gas. Russia ranks as Ukraine's principal supplier of oil, and Russian firms now own and/or operate the majority of Ukraine's refining capacity. Natural gas imports come from Russia - which delivers its own gas, as well as the gas from Turkmenistan. Instead, Ukraine is transporting Russian gas to the EU through its well-developed gas pipelines system, being Europe's vitally important connection. The country's dependence on Russian gas supplies dramatically affects its economics and foreign policy, especially after the recent major gas dispute.

However, Ukraine is independent in its electricity supply, moreover, exporting it to Russia and other countries of Eastern Europe. This is achieved through a wide use of nuclear power and hydroelectricity. The recent energy strategy intends gradual decreasing of gas- and oil-based generation in favor of nuclear power, as well as energy saving measures, shortening of industrial gas consumption. Reform of the still inefficient and opaque energy sector is a major objective of the International Monetary Fund (IMF) and World Bank programs with Ukraine.

Ukraine is a partner country of the EU INOGATE energy programme, which has four key topics: enhancing energy security, convergence of member state energy markets based on EU internal energy market principles, supporting sustainable energy development, and attracting investment for energy projects of common and regional interest.

1.5 Graphical depiction of Ukraine's product exports in 28 color-coded categories

1.6 Financing, banking, investments

1.6.1 Investments

In 1992, Ukraine became a member of the IMF and the World Bank. It is a member of the European Bank for Reconstruction and Development.

In 2008, the country joined World Trade Organization. Ukraine applied for WTO membership in 1993, but its accession process was stalled for 15 years. The IMF approved a $2.2 billion Extended Fund Facility (EFF) with Ukraine in September 1998. In July 1999, the 3-year program was increased to $2.6 billion. Either Ukraine's failure to meet monetary targets and/or structural reform commitments caused the EFF to be suspended or disbursements delayed on several occasions. The last EFF disbursement was made in September 2001. Ukraine met most monetary targets for the EFF disbursement due in early 2002; however, the tranche was not disbursed due to the accumulation of a large amount of VAT refund arrears to Ukrainian exporters, which amounted to a hidden budget deficit. The EFF expired in September 2002, and the Ukrainian Government and IMF began discussions in October 2002 on the possibility and form of future programs.

A political crisis in the middle of 2006 was feared as a threat to economic and investment stability, however, despite the forecasts; the political situation has not scared investors. The GDP showed a good growth rate of 7% in 2007, compared to the previous year. Industrial output has increased. Car sales soared, while the banking sector has expanded, thanks to the arrival of European banks.

In May 2010, Ukraine was the third largest borrower of the IMF, following Hungary ($11.6 billion) and Romania ($12.5 billion). The IMF granted Ukraine a $16.4 billion loan in October 2008, of which the government has so far received $10.6 billion. Further payments were frozen late 2009 after Ukraine raised minimum wages and pensions contrary to IMF recommendations.

On July 28, 2010, the IMF approved a 29-month $15.15 billion loan to Ukraine. Among others, this led to a 50 percent increase on household natural gas utility prices in July 2010 for Ukrainian consumers (a key demand of the IMF in exchange of the loan).

1.6.2 Foreign direct investment

Ukraine encourages foreign trade and investment. The Parliament of Ukraine has approved a foreign investment law allowing Westerners to purchase businesses and property, to repatriate revenue and profits, and to receive compensation if a future government nationalizes the property. However, complex laws and regulations, poor corporate governance, weak enforcement of contract law by courts, and corruption all continue to stymie direct large-scale foreign investment in Ukraine. While there is a functioning stock market, the lack of protection for shareholders' rights severely restricts portfolio investment activities. As of April 2011, total foreign direct investment stock in Ukraine stood at $44.7 billion.

State enterprise Invest Ukraine was created under the State Agency for Investment and National Projects (National Projects) to serve as a One Stop Shop for investors and to deliver investment-consulting services.

Ukraine signed a shale gas exploitation deal with Royal Dutch Shell on 25 January 2013. The $10 billion deal was the largest foreign direct investment ever for Ukraine.

1.7 Infrastructure

1.7.1 Transportation

About 100,000 Ukrainians regularly sail across the world on foreign ships, one of the largest group of Ukrainian labor migrants and the sixth largest number of sailors from any country. The relatively high salaries of more than $1,000 per month attract them.

Every major Ukrainian coastal city has a maritime university.

1.7.2 Communications

Ukraine ranks eighth among the world's nations in terms of the Internet speed with the average download speed of 1,190 kbit/s. Five national providers of fixed (DSL, ADSL, XDSL) internet access -- Ukrtelecom, Vega Telecom, Datagroup, Ukrnet, Volia, and 5 national operators of mobile internet -- MTS, Kyivstar, PEOPLEnet, Utel, and Intertelecom are currently operating in Ukraine. Every regional center and large district center has a number of local providers and home networks.

2011 revenues from Internet service providing in Ukraine reached UAH 4.75 bn

Almost 20 million Ukrainians had Internet access in December 2012. In Kyiv 90% of population had internet. The number of Internet users in Ukraine was expected to nearly double by 2015.

The mobile-cellular telephone system's expansion has slowed, largely due to saturation of the market, which has reached 125 mobile phones per 100 people.

1.7.3 Trade

The EU is Ukraine's largest trading partner, with 27.1% of exports and 33.7% of imports in 2008; and trade with EU has seen strong double-digit growth in recent years. The Russian Federation is Ukraine's second largest trading partner, with 21.1% of exports and 28% of imports in 2009. An overcrowded world steel market[citation needed] threatens prospects for Ukraine's principal exports of non-agricultural goods such as ferrous metals and other steel products. Although exports of machinery and machine tools are on the rise, it is not clear if the rate of increase is large enough to make up for probable declines in steel exports, which today account for 46% of the country's overall exports.

Ukraine's "business climate" has a very negative reputation.

1.8 Environmental issues

Ukraine is interested in cooperating on regional environmental issues. Conservation of natural resources is a stated high priority, although implementation suffers from a lack of financial resources. Ukraine established its first nature preserve, Askania-Nova, in 1921 and has programs to breed endangered species.

The country has significant environmental problems, especially those resulting from the Chernobyl nuclear power plant disaster in 1986 and from industrial pollution. In accordance with its previously announced plans, Ukraine permanently closed the Chernobyl Atomic Energy Station in December 2000. In November 2001, Ukraine withdrew an application it had made to the EBRD for funding to complete two new reactor units to compensate for the energy once produced by Chernobyl. Ukrainian concern over reform conditions attached to the loan - particularly tariff increases needed to ensure loan repayment--led the Ukrainian government to withdraw the application on the day the EBRD Board was to have considered final approval. Work on the so-called "object shelter" to permanently entomb the reactor where the world's worst nuclear accident occurred has been slower than anticipated but continues. Design work as well as structural improvements to the "sarcophagus" erected by the Soviet Union are largely complete, and construction on the new shelter is scheduled to begin in 2004.

Ukraine also has established a Ministry of Environment and has introduced a pollution fee system that levies taxes on air and water emissions and solid waste disposal. The resulting revenues are channeled to environmental protection activities, but enforcement of this pollution fee system is lax.

2. Economic Development of the Ukraine

2.1 Introduction

Ukraine became an independent state after the collapse of Soviet Union in 1991. Since that time the country has passed through a process of significant political, economic, and social change. Having experienced difficult economic times during 1991-1995 (the break down of integrated connections with the post-Soviet business environment, hyperinflation, privatization issues, and national business system formation), the Ukrainian government successfully established a national currency (hryvna) and overcame high inflation by the late 1990s

Considering the economic development of Ukraine in the past decade, selected macroeconomic indicators show the national economy performance outcomes during this transitional process. For instance, GDP showed a positive dynamic starting from 2000 (5.58% annual change) until 2009 when the GDP dropped by 15.1% which was a direct consequence of the world financial crisis. Inflation in Ukraine remains relatively high (10-20 percent increase annually with the lowest level in 2002 (0.7%) and the highest ones in 2000 (28.2%) and 2008 (25.2%). The value of the current account balance had a surplus during 1999-2005 period with the highest value in 2004 (6.9 billion US dollars) and a deficit during 2006-2009 with the lowest value in 2008 (12.8 billion US dollars). Economic instability has a direct impact on demography. The population has been steadily declining every year, dropping from 52 million people in 1992 to 45.7 million in 2009 1.

Though the market system is being formed, the transformation process is not complete yet. Being in the transition stage of its development, Ukraine experiences problems connected with institutional framework development which cause political and economic instability. One of the consequences of weak institutional governance is a significant informal sector widely used by Ukrainian citizens to earn additional income. 2. The failure to build strong democratic institutions has also impacted the country's economic performance 3. And, in spite of its large rich agricultural resources, and favorable location at the intersection of Western Europe and Asia, Ukraine has not yet reached the desired and expected economic progress due in part to its dependence on Russian natural gas and oil, ongoing political instability, and the world economic crisis.

2.2 Labor Market & Management

The labor market in Ukraine has evolved gradually. Having passed first from an agricultural state to an industrial one during the time the country was part of the Soviet Union, Ukraine started on the path of a service-oriented economy after the breakdown of the USSR, as the national labor market increasingly become oriented toward such industries as tourism, entertainment, and leisure. Today, more than half the national labor force is involved in the service sector.

Though the Ukrainian labor force is characterized as highly qualified and skilled, the level of labor pay is much lower than in developed countries. Ongoing political and economic instability has led to rapidly increasing labor migration, in which both skilled and unskilled workers leave the country in order to find more reliable sources of income. The countries where most Ukrainians emigrate or go to work for shorter or longer periods of time include Russia, Western Europe, Canada and the United States.

In addition, political and economic realities present many challenges to management on a national level. Exploitation of workers and an extensive underground economy in which workers are "paid under the table," - colloquially described as "salary in an envelope" -- are issues which need to be addressed.

2.3 Industry & Agriculture

As a result of extensive development of basic Ukrainian industries while a part of the USSR, especially those tied to defense, Ukraine inherited a huge industrial potential when the USSR collapsed. The major industries are power generation, fuels, ferrous and non-ferrous processing, chemicals, gas, machine-building, machinery-building, woodworking, and food production. Ukraine is also known for its highly developed defense industry producing and supplying military equipment to the countries throughout the world. Most Ukrainian industrial enterprises are located in the south-eastern part of the country

Ukraine has a moderate climate and mostly flat territory which is very favorable for agricultural development. Agricultural land consists of cultivated land, orchards, gardens, vineyards, and pastures. The main grain crops are winter wheat, spring barley, and corn. Other important agricultural crops include sunflowers and sugar beets.

3. Tables and Charts (Kyiv economic development)

3.1 Targeted values of social-economic development of Kyiv city by 2025

3.2 Building complex of the city

3.3 Share of small enterprises by types of economic activity (Percent to the total volume)

4. Conclusion

Firstly, it is important to mention, that all main values of Ukraine's economic are built on some old parts of USSR economic. That fact shows us, that real economic development of Ukraine can be started only if government brings modern values of economic. These actions are able to lead our country to some global positive changes. Now we can observe the process of degradation of Ukrainian economic, because of development of corruption and selling of state Property.

Finally, Ukraine is one of the countries, nature potential and since base of which is very high, but because of not correct using of these resources, economic situation in country is not stable and positive.


1. Wikipedia (Economic of Ukraine)

2. The Library of Congress (Economic Development of the Ukraine)



5. Ministry of Economic Development and Trade website

6. State Agency for Investment and National Projects website

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