Export in services of Ukraine: pre-pandemic period, covid-19 and war
The study is devoted to assessing the export of services in Ukraine. The foreign trade in services in the pre-pandemic period and 2021 is considered. The impact of the pandemic and the full-scale invasion of Russia on the export of services is assessed.
| Рубрика | Экономика и экономическая теория |
| Вид | статья |
| Язык | английский |
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Export in services of Ukraine: pre-pandemic period, covid-19 and war
Mariana Vdovyn
Doctor of Philosophy, Associate Professor, Department of Statistics, Ivan Franko National University, Lviv, Ukraine,
Larysa Zomchak
Doctor of Philosophy, Associate Professor, Department of Economic Cybernetics, Ivan Franko National University, Lviv, Ukraine
Abstract
The research is devoted to the assessment of export in services in Ukraine. The article examines foreign trade in services in different time periods, in particular the pre-pandemic period and 2021. The impact of the pandemic and the full-scale invasion of russia on the territory of Ukraine on export in services is assessed. An analysis of the geographic and trade structure of Ukraine's export in services was carried out. Descriptive statistics methods were used to analyze foreign trade, and statistical information was visualized. The world trade in commercial services is also considered. Year-on-year percentage change from 2008 to 2020 is displayed. It is emphasized that the pandemic had a significant impact on the decrease in the volume of world exports in many types of services, and especially transport and tourist services. It is also stated that a full-scale invasion of russia into Ukraine will have a negative impact on the macroeconomic situation in the world, in particular on the export of goods and services.
Key words: foreign trade, service, full-scale invasion, pre-pandemic period, statistics methods export trade pandemic
Formulation of the problem. Foreign trade in services has always been in the center of attention of world leaders, since the vast majority of developed countries in the world have a higher share of exports of services than of goods. The pandemic slightly changed the trends towards a constant increase in the volume of services. Obviously, the restrictions imposed by the governments of the countries had a significant impact on tourist services, restaurant services and catering services, etc. Ukraine is also no exception, and in addition to the pandemic, the consequences of which have not yet managed to be overcome, a war has also been added. Therefore, it is important to evaluate the influence of various factors on the development of foreign trade in services.
Analysis of recent research and publications. The study of foreign trade in goods and services has received great attention from many scientists around the world. In particular, Ioanna Konstantakopoulou and Pantelis Argyropoulos in [1] analyze the export variable in the Eurozone member countries for 2007-2021 and the position of the Eurozone in world trade. In general, in many scientific articles, researchers describe the state and use different models of foreign trade in goods and services in individual countries, for example in [2] - in Ukraine and the EU, in [3]- in Eurozone countries, in [4] - in China and Latin America, and in [5] - in Central and Eastern countries of Europe.
Trade liberalization and the process of integration of the subjects of the international economy into the global economic space affect the development of trade in services, so research on the liberalization of foreign trade, as conducted by Zhang Niannian, Ling Hu, Ji Nana [6] and Li Jingbo [7], are important.
The researchers also describe the impact of the pandemic on trade [8,9]. However, the analysis of foreign trade, especially services that dominate the exports of the world's leading countries, is relevant and requires further research.
Highlighting previously unresolved parts of the overall problem. Ukraine was and remains, despite the extremely difficult working conditions of farmers during the war, one of the leaders in the export of grain, sunflowers, and rapeseed. However, it is also important to focus attention not only on the export of agricultural products, but on the export of services, in particular those for which there are all opportunities for the development and increase of exports. It is appropriate to assess the state of foreign trade in services and the influence of various factors on it.
Formulation of the goals of the article (statement of the task). The purpose of the study is to analyze foreign trade in services of Ukraine using the methods of descriptive statistics. As well as a oview and visualization of statistical information on export in services of Ukraine in different time periods from 2011 to 2021.
Research methods. The research uses the methods of descriptive statistics, in particular summarizing and presenting a set of data in tabular and graphical presentation of information, as well as the calculation of statistical indicators of the development of foreign trade. Special attention is also paid to such general methods of scientific research as observation and analysis and synthesis.
Presentation of the main research material. Foreign trade in services has developed dynamically in the world for many years, but the COVID-19 pandemic has made adjustments. The export of services in 2020, especially tourist and transport services, decreased significantly. So, the expenditure of international travelers was down by 81 percent and transport by 29 percent in Q2 of 2020. This is illustrated in fig. 1
Fig. 1. World trade in commercial services by sector quarterly, 2008-2020 (Year-on-yearpercentage change)
Source: WTO-UNCTAD-ITC Estimates [10]
Other services are represented in table 1.
Source: authors' construct based on the data of WTO [11]
Table 1 shows that only in exports of three types of services (Insurance and pension services, financial services and computer services) a slight increase was observed in 2020 compared to 2019.
Regarding Ukraine, it should be noted that export of computer services in Ukraine in 2020, year on year percentage change was +20%. This is the twelfth place among all the countries of the world [10].
Table 1.
World export of other commercial services in 2020 (Y ear-on-year percentage change)
|
Other commercial services |
Year-on-year percentage change of export, % |
A sign of increasing or decreasing |
|
|
Construction |
18 |
U |
|
|
Telecommunication services |
5 |
U |
|
|
Other Business services |
5 |
U |
|
|
Insurance and pension services |
3 |
ft |
|
|
Personal, cultural and recreational services |
14 |
U |
|
|
Financial services |
4 |
ft |
|
|
Computer services |
8 |
ft |
|
|
Charges for the use of intellectual property |
8 |
U |
In the first four months of 2021 the services exports remained depressed in Ukraine. But the percentage increase compared to January-April 2019 of cumulative commercial services exports was by less than 1 [10].
Therefore, we could be sure that the pandemic had a significant impact on the decrease in the volume of world exports in services in general, and especially transport and tourist services. The growth of world export was only for certain types of services.
World trade declined less during the COVID-19 crisis in 2020 than during the global financial crisis in 2009 [12].
World trade of services will also be affected by the war in Ukraine. This concerns primarily the transport sector, which covers container shipping and passenger air transport [12].
First, we will consider the export in services of Ukraine in the pre-pandemic period. Export in services of Ukraine in 2015-2019 is presented in table 2 and fig. 2.
Source: authors' construct based on the data of WTO [11]
Export of many types of services in Ukraine in the period from 2015 to 2019 grew at an accelerated pace, except construction (34,4 % in 2015 and 14,0% in 2019) and financial services (32,5 % in 2015 and 22,4% in 2019) (fig.2).
Table 2.
Export in services of Ukraine in 2015-2019
Export in services of Ukraine in 2015-2019, million US dollar
|
Services |
2015 |
2016 |
2017 |
2018 |
2019 |
|
|
Manufacturing services on physical inputs owned by others |
1,078 |
1,126 |
1,419 |
1,698 |
1,628 |
|
|
Maintenance and repair services |
192 |
232 |
244 |
243 |
235 |
|
|
Transport Travel |
5,322 |
5,348 |
5,922 |
5,949 |
6,181 |
|
|
1,082 |
1,078 |
1,261 |
1,445 |
1,62 |
||
|
Construction |
288 |
182 |
96 |
153 |
117 |
|
|
Insurance and pension services Financial services |
14 |
24 |
12 |
19 |
15 |
|
|
190 |
83 |
74 |
106 |
131 |
||
|
Charges for the use of intellectual property |
85 |
73 |
72 |
92 |
82 |
|
|
Telecommunications, computer, and information services |
2,105 |
2,31 |
2,76 |
3,473 |
4,331 |
|
|
Other business services |
1,807 |
1,643 |
1,963 |
2,264 |
2,591 |
|
|
Personal, cultural, and recreational services |
39 |
36 |
37 |
52 |
66 |
|
|
Total services |
12,442 |
12,448 |
14,167 |
15,794 |
17,308 |
|
|
Government goods and services |
240 |
313 |
307 |
300 |
311 |
Fig.2. Export in services of Ukraine in the period from 2015 to 2019, %
Source: authors ' construct based on the data of WTO [11]
In 2021, Ukraine began to resume export activities in the field of tourism after the COVID-19 pandemic.
Regarding tourism export, which is interpreted as the export of tourist impressions from the country, which is accompanied by the simultaneous import of money by the tourist into this country. During 2021, Ukraine was visited by more than 4 million foreigners, which exceeded the similar indicator of 2020 by almost 26%. Among travelers, citizens of the United Arab Emirates, which spent the most - an average of $2,220 per visit. Citizens of Saudi Arabia and Oman spent slightly less at $1,500, Canadians at $1,250, and travelers from the United States at $1,125 [13].
In general, the structure of Ukraine's foreign trade by types of services in 2021 was diverse. Transport services were exported the most. The top 6 types of services by export volume in 2021 are presented in Fig. 3
Fig.3 Export in services of Ukraine in 2021 (thsd. USD)
Source: authors' construct based on the data of State Statistics Service of Ukraine [14]
We think it's important to consider the structure of export in transport services. The information is visualized on fig.4.
Fig.4. Structure of export in transport services of Ukraine in 2021 Source: authors' construct based on the data of State Statistics Service of Ukraine [14]
It's interesting that the main share was air transport and pipe transport services.
For the last ten years the share of the USA in the export of Ukrainian services increased, and the share of russia decreased significantly from 40.9% in 2011 to 14.7% in 2021 of the total volume. These services are mainly natural gas transit. Currently, trade with the aggressor country russia is suspended due to its full-scale invasion of the territory of Ukraine.
In general, Ukraine exported services to more than 140 countries in 2021. The top 5 countries, excluding russia, to which Ukraine exports the most services are presented in fig. 5
¦ 2011 ¦ 2021
USA Switzerland Great Britain Germany Poland
Export in services, % of the total volume
Fig.5. Top- 5 countries with the largest shares of exports in services in 2011 and 2021
Source: authors' construct based on the data of State Statistics Service of Ukraine [14].
It can be seen that in all considered countries the share of services exports increased in 2021 compared to 2011.
The geographic structure of import of services has also changed over the past 10 years. Thus, since 2011, Turkey has significantly increased the sale of services to Ukrainians from 4.5% to 12.3%. The US and Ireland also significantly increased sales of services from 6.2% to 10.3% and 0.3% to 4.9% respectively. But Cyprus reduced from 13% to 4.5%. This may be partially related to the pandemic, as tourist services from Cyprus prevailed.
It should be noted that UNCTAD estimated eхроrt and offered export volatility [15], based on national statistics. Export volatility helps to identify volatility patterns and tracks export performance across the last 6 months. A greater score implies higher export vulnerability [15]. Export volatility in Q4 2021 in Ukraine was 0.51. For comparison, in the EU, this indicator was 0.01, United Kingdom - 0.28, Japan - 0.04, Switzerland -0.03. Therefore, it is necessary not only to increase the export of products, but also to promote the stability of exports time series, that is, the annual steady growth of ex ports, as well as to change approaches to stimulating the foreign merchandise trade and export of commercial services.
It is worth highlighting the factors that will contribute to increasing the growth rate of the export in Ukrainian services:
- acceleration of harmonization of Ukrainian legislation to EU legislation;
- reform of the customs system;
- simplification of administrative procedures for international freight transportation in the field of maritime transport, railway transport, etc.;
- increasing the predictability and transparency of state policy in the IT sector;
- increasing the efficiency of the intellectual property protection system.
In our opinion, the main recommendations after Ukraine's victory in the war regarding the intensification of foreign trade in services are: increasing the financing of the export promotion office (EPO) - an advisory and consultative body to the Ministry of Economic Development and Trade of Ukraine, deepening trade and economic integration with individual partner countries, in particular with Poland and Lithuania within the framework of the Lublin triangle, increasing the pace of development of a particular type of services for their further export, as well as the formation of various state programs to support lending to business entities that carry out export activities with services.
Conclusions
Trade in services in majority countries of the world was growing substantially through 2020. During the pandemic the export revenues fell mostly in oil-exporting regions. Compared to the pre-pandemic period the trade of services deeply degraded. But in 2021 all regions were recording year-on-year growth.
In general, the geographical structure of export in services has changed in Ukraine. In particular, if before 2014 the key partner was russia, then in 2021 the EU countries and the USA.
Ukraine has significant production and export potential in the service sector. However, Ukraine does not fully use the available opportunities for expansion export There are, of course, objective reasons for this. First of all, the pandemic, the war that has been going on since 2014 and the full-scale invasion of Russia on the territory of Ukraine on February 24, 2022.
References
1. Konstantakopoulou,I, Argyropoulos, P. (2022). Export performance and growth in the Eurozone for the period 2007-2021. KEPE, Greek Economic Outlook, issue 48, pp. 81-101.
2. Available from: https://www.researchgate.net/publication/362126816_Export_performance_and_ growth_in_the_Eurozone_for_the_period_2007-2021 [accessed Aug 09 2022].
3. Vdovyn, M., Zomchak, L. (2017). Statistical estimation and analysis of foreign trade in EU and Ukraine. Socio-economic potential of crossborder cooperation. Ivan Franko National University of Lviv, University of Rzeszow, 137- 143.
4. Konstantakopoulou, I., Magdalinos, T. and Skintzi, G. (2019). Investigation of external trade and export competitiveness of Eurozone countries. KEPE Studies No. 80. ISBN: 978-960-341-124-6.
5. Arteaga, J.C., Cardozo, M.L. and Diniz, M.J.T. (2020). Exports to China and economic growth in Latin America, unequal effects within the region. International Economics, 164, 1-17.
6. Vdovyn, M., Zomchak, L., Panchyshyn, U (2022). Мodeling of economic systems using game theory. Veda a perspektivy. 7 (14), 91-100. DOI: 10.52058/2695-1592-2022-7(14)-91-100.
7. Zhang Niannian, Ling Hu, Ji Nana. (2020). Trends and problems of Global trade liberalization. Marketing (28), 34-35.
8. Li Jingbo. (2020). Trade liberalization and welfare effects: a literature review. Foreign trade, 000 (001), p.51-54.
9. Demir, B., & Javorcik, B. (2020). Trade finance matters: evidence from the COVID-19 crisis. Oxford Review of Economic Policy, 36 (Supplement 1), S397-S408.
10. Liu Jiayao (2020). Novel coronavirus pneumonia impact on Global trade and coping strategies. Prices Monthly, (7): 90-94.
11. World Trade Statistical Review (2021). URL: https://www.wto.org/english/res_e/statis_ e/wts2021_e/wts2021chapter03_e.pdf
12. 11.Official site: World Trade Organization. URL: https://www.wto.org (accessed 04.08.2022)
13. World Trade Report 2021: Economic resilience and trade URL:https://www.wto.org/ english/res_e/booksp_e/wtr21_e/00_wtr21_e.pdf
14. Official site: State Tourism Development Agency. URL:https://www.tourism.gov.ua/
15. 14.Official site: State Statistics Service of Ukraine URL: http://www.ukrstat.gov.ua (accessed 04.08.2022)
16. Global trade update (2022). URL:https://unctad.org/system/files/official-document/ ditcinf2022d 1_en.pdf
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