Ukrainian Economy
According to Harvard's Center for International Development, research headed by Ricardo Hausmann has come to some interesting conclusions led by perusing trade data from the United Nations. Two decades following independence, Ukraine has not managed to achieve, as Poland has, integration with Western Europe. Leaving it in economic thrall to the very same neighbour which in Soviet times, dominated Eastern Europe.
Ukraine's main export partner remains Russia. Ukraine's new President, Petro Poroshenko may state that he plans to reinstate good relations with Russia, but he also plans to integrate his country's economy with that of the European Union, to advance Ukraine's future. Even as Russia insists that the bankrupt economy of Ukraine must pay it the billions Moscow claims is owed for gas that Ukraine has already consumed, before it can expect Russia to export more gas its way to fuel its production engine.
Ukraine's exports to Russia are just about double its exports to the entire European Union. Further punishment from Russia for Ukraine's errant ways in turning away from complete integration and dependence on the Russian federation could come in the way of diminishing Ukrainian imports by Moscow, further harming Ukraine's industrial prospects for its economic renewal.
Ukrainian export sales to Russia are complex and strategic in prospects for Ukrainian economic growth. Russia purchases steam turbines and other vapor turbines from Ukraine, and military parts, along with agricultural products. Western Europe imports Ukrainian honey, as an example. Is Western Europe prepared to commit to taking up the more complex technological slack benefiting Ukrainian exports to make up the differential that Ukraine will most surely lose in turning away from Russia and favouring Western Europe?
In doing so, Ukraine will be taking a chance with its economic future which at the present time looks dim enough. Ukraine's industries cannot function if they cannot find a market. If the Russian market closes down to Ukrainian industrial products -- though to do so would in the near present harm Russia as well, since some of those markets are intertwined -- they must find alternate markets.
Ukraine's exports of metals, mineral products, machinery/electrical, transportation, chemical and allied industries, wood and wood products, plastic/rubbers, textiles, animal and animal products, stone/glass, fur/hides, and vegetable products must find buyers somewhere, should their current purchasing source dry up as seems likely enough.
Can, and will, Europe meet that challenge? If Ukraine makes its final decision to ally itself firmly with Western Europe it must transition its economy and export market accordingly to become globally competitive. For Europe, with its own export/import relations with Russia, the issue is fraught with instability as well, but Ukraine's heavy debt load and its political instability leave it little choice but to hope that Europe will put its money where its mouth is.
Labels: Economy, European Union, Export, Marketing, Political Realities, Russia, Ukraine
posted by Pieface @ Friday, June 13, 2014
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