t would
be too naive to believe that after Ukraine gained independence it will be warmly
welcomed on world markets. Entering the world economy has turned out to be painful.
The unstable Ukrainian economy joined in a trade race from the position of an
apparent outsider. The situation is not yet turning out to our benefit, because,
unlike central and eastern European countries, Ukraine continues to export mostly
raw material and semifinished goods. For this reason it has to catch up with rivals
on a winding sine curve of world raw material prices.
oreign trade liberalization
starting from 1994 formed a basis for Ukraine's boosting its exports of goods
and services. A comparison between export volumes and Ukraine's GDP shows an apparent
increase in exports in the following two years. However, two significant circumstances
need to be taken into account. First, the export growth occurred against the background
of decreases in domestic consumption and in real GDP (from 1993 through real GDP
dropped by 42 per cent). In other words, the export potential was gradually losing
its domestic economic base. Second, from 1997 the monetary volumes of exports
were decreasing, which is an alarming signal of a crisis in production primarily
orientated toward export.
The situation was further worsened by the 1997-1999 world financial crisis. The
demand for the main items of Ukrainian exports, first of all for metallurgic output,
notably dropped; Russian markets, traditional for the Ukrainian producer, began
to shrink; Ukraine's foreign trade dynamics were adversely affected by the introduction
of stringent administrative controls on the foreign exchange market; and the domestic
financial crisis, in its turn, reduced exporters' potential.
ver the past three years
Ukraine's foreign trade has been shrinking like shagreen leather. The structure
of both exports and imports has worsened. The export of the output of a number
of industries is ineffective and sometimes loss making (we will recall the situation
in the metallurgic complex in 1997-1999). Ukrainian Mercury [god of commerce in
Roman mythology] is running after his colleagues with a heavy "energy" weight
tied to his feet. Because of excessively high power consumption by some export-oriented
industries (metallurgy and chemical industry), a considerable amount of export
receipts (3bn-3.2bn dollars) is being used not for technological renovation of
production but for payment for imported fuel, thus increasing dependence on Russia.
n order to find out our
location on the world trade map, it will suffice to compare export volumes per
capita over, for instance, the past year. This index is 67 per cent lower in Ukraine
than in Poland and 90 per cent lower than in Hungary (see chart one). [Omitted:
Chart one shows exports of goods per capita in 1999 in descending order, with
the highest figure for the Czech Republic, followed by Hungary, Slovakia, Croatia,
Poland, Russia, Bulgaria and Ukraine]
In general, Ukraine has so far secured at the international market not a brilliant
exhibition hall but a trading stall at the outskirts. The potential of extensive
export development has nearly been exhausted. Qualitative change is needed involving
an increase in the portion of finished products in the total volume of exports;
enhancement of the efficiency of export transactions; a resumption of presence
on traditional markets and expansion of trading bases in new directions; and finally,
improvement of state foreign trade regulations.
