Ukraine Economic Conditions in the 2000’s

By | December 24, 2021

The Ukrainian economy presents the typical characteristics of the transition from a planned socialist system to a free market one, open to international trade and investment. The program of economic liberalization and financial austerity promoted since 1994 by President L. Kučma, with the support of the International Monetary Fund and the World Bank, as well as the United States and other Western countries, has only partially succeeded in achieving the desired results. Reforms such as the privatization of the industrial apparatus, the cutting of credits to loss-making industries, the adjustment of energy tariffs to market prices, the progressive liberalization of retail prices and the opening to foreign trade have met with tenacious resistance of broad strata of the political elite, mostly linked to the past regime and still oriented towards a centrally planned economy. Consequently, the privatization of large companies has begun with difficulty, and the still heavy control of the state over the economy, in an administrative apparatus where the degree of bureaucracy and inefficiency is high, is holding back entrepreneurs and foreign investors. For Ukraine 2009, please check hyperrestaurant.com.

Agriculture plays a fundamental role in the country’s economy, occupying 15.8% of the total workforce (2008), contributing 10% to the formation of the GDP and, above all, feeding large export currents. Despite the launch of the land privatization program, the sector is still largely managed by collective companies. The agricultural land, which represents almost 57% of the total national territory, is mostly used for the production of cereals (the US was considered the ‘granary’ of the USSR). In the whole of the territory, three different agricultural regions can be distinguished, in the northernmost of which, fresh and humid, textile plants such as flax and hemp, tubers, such as potatoes, and minor cereals, such as rye, buckwheat and barley find the best conditions in areas free from forests. In the central area of ​​the arborate steppes and the ‘black lands’ there are the largest cultivated areas, dedicated first of all to wheat (almost 26 million tonnes in 2008), then to tobacco and oilseeds; the orchards were also extended. The southern and coastal region, subject to dry periods, benefits from irrigation (the main scheme derives water from Lake Kahovka); beetroot is the most important production and the development of cattle and pig breeding has been based on its waste, supplemented by forage crops. Viticulture is widely practiced along the coasts, also present in the Dnieper valley. The main agricultural and livestock productions have suffered marked decreases compared to the average of the Soviet period and the recovery appears slow. From the forests, which cover approximately 17% of the surface, more than 15 million m3 of wood are obtained per year. Fishing is widely practiced in the Black Sea, with good income.

The Ukraine possesses vast deposits of coal (Donez basin) and iron ore (Krivoj Rog, Kremenčug, on the Dnieper, and Kerč´, in Crimea), as well as oil reserves (Borislav and Drogbyč, in the Lviv Oblast) and natural gas (Drogbyč, Sebelinka, Borislav, Byktov, Mrežnica and Dashava). The production of iron ore (80,000,000 t in 2008) places the Ukraine in 6th place among the major producing countries and supplies the raw material to the national steel industry. Coal production is also noteworthy (58,000,000 tons), even if the sector is in crisis due to the high extraction costs due to the progressive depletion of the deposits and the backwardness of the plants. The manganese extraction near Nicopolis, on Lake Kahovka, is significant. Other productions concern sodium and potassium salts, magnesite, mercury, uranium, while in Bucovina, near the Romanian border, there are plaster and alabaster. The supply of energy for industrial activities has traditionally been based on coal, with hydroelectric input remaining scarce. The thermonuclear sector produces more than a quarter of total electricity, despite the accident in the Chernobyl´ power plant, which remained in operation until 2000. The reserves of gas and oil are totally insufficient for the needs of the country, which continues to depend largely on the Russia for supplies.

The secondary sector, which employs 18.5% of the workforce and contributes 31.2% to the formation of GDP, is particularly developed, as in all former Soviet countries, in heavy industry. The steel industry prevails, with the major districts centered on Krivoj Rog and Doneck. The metallurgy of manganese in Nicopolis and of aluminum in Zaporož´e are also developed. The capital, Odessa and Kharkiv appear, with some of the metallurgical centers, as production sites for commercial vehicles and tractors, Kharkiv stands out for locomotives, together with Zaporož´, and for various agricultural machinery and with Kiev for electrotechnical productions. In the ‘light’ sector, bicycles and cars are produced in the capital and in Lviv; more widespread are factories of radio and television sets and household appliances. The cities along the Dnieper almost totally concentrate the production of heavy basic chemicals (sulfuric, nitric and hydrochloric acids; soda, potash, ammonia); Kiev is the largest center for artificial and synthetic fibers, and together with Kharkiv supplies most of the pharmaceutical products. Still on the Dnieper there are cement factories, while the textile industries are more dispersed; however, also in this sector Kharkiv and the capital stand out, in which there are also the major factories of tobacco, beer, tires and footwear. Still on the Dnieper there are cement factories, while the textile industries are more dispersed; however, also in this sector Kharkiv and the capital stand out, in which there are also the major factories of tobacco, beer, tires and footwear. Still on the Dnieper there are cement factories, while the textile industries are more dispersed; however, also in this sector Kharkiv and the capital stand out, in which there are also the major factories of tobacco, beer, tires and footwear.

The tertiary sector is constantly growing, employing 65.7% of the workforce, generating 58.8% of GDP. Commercial and financial activities are particularly important. Tourism offers excellent potential, in particular on the Black Sea coast. The trade balance has recorded, in the years following independence, fluctuating trends, mainly negative: traditional exports of food products and textiles and machinery cannot compensate for imports., especially of energy raw materials essential to power heavy industry. In addition to Russia, among the main trading partners of the Ukraine include Germany, China, Turkey and Poland.

The road network (169,422 km in 2007) and the railway network (21,655 km, of which only 9,000, however, are electrified) are decent, but need modernization. The major airports are in the capital, Lviv and Odessa, which is also the largest seaport. Widely exploited the Dnieper and its main tributaries for fluvial communications.

Ukraine heavy industry