INDUSTRIAL AND ECONOMIC DEVELOPMENT OF UKRAINE

In its economic history, Ukraine has evolved first from an agricultural to an industrialized, and then to a service-oriented country. Major industries include coal, electric power, machinery, chemicals, food processing, woodworking, and tourism. The industrialization of Ukraine started in 1930s when it was a part of the Soviet Union. Having inherited a huge industrial potential from the USSR, Ukraine, as an independent country, has lost part of its industrial capacity due to ongoing inner political and economic crises. Dependence on Russian energy supplies is also a problem as are non-economic, social factors, including an under-developed institutional and social infrastructure and corruption, which have further delayed Ukraine’s transition to a fully developed industrial/service economy.

But now Ukrainian industry is growing again. After economic stagnation, Ukrainian industry is investing and growing, creating a historical window of opportunity to restructure obsolete plants and apply more energy efficient and environmentally friendly technologies and business practices. This would enhance the international competitiveness of the industrial sector and improve quality of life of citizens. Nowadays, 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 present Ukrainian industrial enterprises are located in the south-eastern part of the country.

Ukraine as a developing country has great economic potential. In Soviet times, the economy of Ukraine was the second largest in the Soviet Union, being an important industrial and agricultural component of the country's planned economy. With the dissolution of the Soviet system, the country moved from a planned economy to a market economy. The transition process was difficult for the majority of the population which plunged into poverty. A significant number of citizens in rural Ukraine survived by growing their own food, often working two or more jobs and buying the basic necessities through the barter economy. Prices stabilized only after the introduction of new currency, the hryvnia, in 1996. In the early 2000s, the economy showed strong export-based growth of 5 to 10 percent, with industrial production growing more than 10 percent per year. And although Ukraine was hit by the economic crisis of 2008, it was able to, more or less, recover from the crisis results by the beginning of the year 2011.

A relatively cheap local labor force and favorable climate conditions, make it very attractive for the foreign investors. The main trade/investment partners of Ukraine are Russia, Turkey, Germany, Poland, Italy, Turkmenistan, and United States. Ukraine exports ferrous and non-ferrous metals, fuel, petroleum products, chemicals, machinery, and imports energy and some types of machinery and equipment. Ukraine produces nearly all types of transportation vehicles and spacecrafts. Antonov airplanes and KrAZ trucks are exported to many countries. The majority of Ukrainian exports are marketed to the European Union. Since independence, Ukraine has maintained its own space agency, the National Space Agency of Ukraine (NSAU). Ukraine became an active participant in scientific space exploration and remote sensing missions. Between 1991 and 2007, Ukraine has launched six self-made satellites and 101 launch vehicles, and continues to design spacecraft.

The country imports most energy supplies, especially oil and natural gas, and to a large extent depends on Russia as its energy supplier. While 25 percent of the natural gas in Ukraine comes from internal sources, about 35 percent comes from Russia and the remaining 40 percent from Central Asia through transit routes that Russia controls. At the same time, 85 percent of the Russian gas is delivered to Western Europe through Ukraine.

The World Bank classifies Ukraine as a middle-income state. Growing sectors of the Ukrainian economy include the information technology (IT) market, which topped all other Central and Eastern European countries in 2007, growing some 40 percent.