Economical Sciencies/14. Economical Theory

S.V. Romanec

ACTUAL PROBLEMS OF ECONOMIC DEVELOPMENT IN UKRAINE

National University of Food Technology

Ukraine became an independent state after the collapse of Soviet Union in 1991. Since that time the country has passed through a process of significant political, economic, and social change. Having experienced difficult economic times during 1991-1995, the Ukrainian government successfully established a national currency and overcame high inflation by the late 1990s.

Considering the economic development of Ukraine in the past decade, selected macroeconomic indicators show the national economy performance outcomes during this transitional process. (For instance, GDP showed a positive dynamic, inflation in Ukraine remains relatively high, economic instability has a direct impact on demography, the population has been steadily declining every year).

Though the market system is being formed, the transformation process is not complete yet. Being in the transition stage of its development, Ukraine experiences problems connected with institutional framework development which cause political and economic instability.

One of the consequences of weak institutional governance is a significant informal sector widely used by Ukrainian citizens to earn additional income. Second consequence of weak institutional governance is the failure to build strong democratic institutions has also impacted the country's economic performance. The third: in spite of its large rich agricultural resources and favorable location Ukraine has lost status of breadbasket of Europe.

During the past two decades, it is the institutional reforms promoting the liberalization of economic policy which have played the most significant role in the restructuring of post-Soviet economies. The key structural reforms such as financial stabilization, reduction of the public sector through privatization, and elimination of barriers to free trade and foreign investment determine the place of economic development in post-Soviet states. If similar reforms are successfully implemented in Ukraine, they will not only align the economic policy framework with internationally accepted standards existing in Western free market economies, but they will also provide valuable opportunities for private sector development.

Now, the essence of modern Ukrainian politics is aware of the economic revival of Ukraine. To achieve this goal seeks to intensify available from scientific and industrial potential, to achieve the transition to a market growth, to increase investment, to innovative business activity, to expand restructuring, to speed up gradually productivity of the role human capital, to improve a country's standard of living.

The program of economic revival Ukraine should include measures to stimulate final demand the protection of national producers, tax reform to stimulate business activity and restore order in the administration of state property and finances, reducing inflation and so on. The main issue Ukraine faces is to be civilized and economically independent state or deteriorate to the level of the colony. Real life in a volatile international environment requires from Ukraine to protect our right, our own interests, to establish our own national security and defense. The economic development of any country of the world, including Ukraine, has determined the achieved level and quality of life. The concept of the United Nations Development Program (UNDP) states that any country in the world in the process of economic development. Firstly we must create favorable conditions to life. In turn, we must note that today in the practice the level and quality of life have not yet become a major goal in the regions of Ukraine. Ukraine is a potentially rich country that knows itself and is perceived from the outside as a political and economic power. The main property of the country - enterprising, industrious and educated population that can produce literally everything.

National economy includes such industries as heavy machinery, ferrous and nonferrous metallurgy, shipbuilding, buses, cars, trucks, tractors and other agricultural equipment, locomotives, machine tools, turbines, aircraft engines and aircraft equipment for the power, oil, gas and chemical industry and others. In addition, Ukraine is a powerful producer of electricity. The problem of total failure of economic policy in Ukraine should be viewed through the prism of these interrelated objective and subjective factors: imperfect system of government; the current legal framework urgent needs of the national economy; opaque ownership structure, as a symbiosis of public, private and corporate interests; the global financial crisis.

Achieving mechanism of economic stabilization through the introduction of various macroeconomic measures cannot be the main task of public authorities. The ultimate goal of the reforms is: to build a strong, socially-oriented state capable of ensuring a competitive national economic complex on the global market for goods and services and sustainable growth of Ukraine citizens’ welfare.

There are several important near-term steps that the Ukrainian government can take to create an appropriate economic policy framework for foreign and domestic investment: the administration must clearly define the main objectives and role of the government; the government should replace its current privatization strategy with a new one based on more open and transparent rules for the privatization of state-owned enterprises; the Verhovna Rada should speed up its long-delayed process; the government should not excessively interfere in business affairs. Ukraine has not yet reached the desired and expected economic progress due in part to its dependence on Russian natural gas and oil, ongoing political instability, and the world economic crisis.

Literature

1. World Economic Outlook Database, April 2010. International Monetary Fund. [Electronic resource]. – Access mode: www.imf.org

2. Williams C., Round J. Out of the Margins: Re-Theorizing the Role of the Informal Economy in Ukraine. International Journal of Economic Perspectives, 3(1), 45-58. Retrieved July 13, 2010, from ABI/INFORM Global.

3. Jonavicius L. Why Ukraine and Georgia Have Not Used The "Window of Opportunity"? / Neo-Institutional Analysis of Transformational Stagnation in Georgia and Ukraine. / UNISCI Discussion Papers, (19), 12-37. Retrieved July 13, 2010, from Research Library.