Экономические науки/2. Внешнеэкономическая деятельность

Grystyuk I.V.

3-d year student faculty of international economic relations

Savytska L.V.

Associated Professor, Doctor of Philosophy

Kharkiv national university of economics

INTENSIFICATION OF INTERNATIONAL TRADE IN UKRAINE BY INCREASING EXPORT POTENTIAL OF AGRICULTURAL SECTOR

International trade is the original form of international economic cooperation. Nowadays Ukraine has trade deficit increasing every year, which generally has negative impact on development of national economy. In order to intensify international trade special attention should be paid to stimulate export activity in agricultural sector. Export stimulation helps to expand international markets and improve the quality and, accordingly the competitiveness of goods, to transform enterprises into reliable exporters [1].

The term “export stimulation” originates from the end of XIX century. Such foreign scientists as V. Hlashtetter, R. Hentsler, D. Lefebvre, M. Porter and others were interested in international trade stimulation. R. Hentsler stated that export stimulation was a system of tools and measures to support export industries to establish relations with foreign partners and implement more export orders in foreign markets [2].

Problems related to international trade in Ukraine are also discovered by many Ukrainian scientists (I. Burakovskyy, A. Mazaraki, L. Kutidze, J. Verlanov, N. Osadcha, A. Shkolny, J. Orlik, V. Movchan, N. Skrypnyk, T. Miller, L. Ivashov, N. Reznikov etc.) but, however, the problem of increasing export potential in Ukraine remains open and needs analysis, further examination and searching the optimum solution.

The aim of this publication is to analyze the agricultural potential in Ukraine and determine the main directions to intensify international trade through state support of agricultural export potential.

No doubles, Ukraine has extensive agricultural potential. The agricultural area of Ukraine is over 20% of the area of 27 member states of European Union. 0.8 hectares of agricultural land is accounted per inhabitant, including 0.67 hectares of arable land, while the average in EU is respectively 0.38 and 0.22 ha. The share of total global arable land is 2.3%. According to 2012 data of Ministry of Agriculture of Ukraine, export of agricultural products was 18.2 billion USD. This is 40% more than in 2011. Ukraine is steadily increasing agricultural export potential, but it is used insufficiently and extremely inefficiently [3].

A complex of endogenous and exogenous factors significantly influence on Ukrainian export. The most important are:

1) low competitiveness of domestic industrial production;

2) difficult financial position of most manufacturing companies makes virtually impossible to invest in export-oriented projects through internal resources;

3) artificial containment of UAN rate in the "currency corridor" narrows the possibility to use exchange rate factor for promoting exports;

4) insufficient development of national certification systems and export quality control at the background of significant enhancement to consumer demands and environmental characteristics, as well as safety of products sold in the markets of developed countries;

5) outstripping price growth for products and services of natural monopolies in comparison to higher prices for agricultural products;

6) lack of expertise and experience in the field of export, and lack of co-ordination of Ukrainian businessmen activities in foreign markets;

7) breach of the traditional industrial relations in post-soviet economic space;

8) existence of discrimination elements to Ukrainian exporters abroad, usage of restrictive business practices, including cartel agreements to displace or prevent Ukraine on perspective markets;

9) low global rating of Ukraine for loans and investments creates difficulties to use foreign funds for export potential development;

10) norms of Ukrainian legislation, which fix the liability of supplier for bad quality of products, don’t correspond to principles adopted in international practice [4].

An important condition for Ukraine to enter international space is to create export potential. The effectiveness of these processes is determined by the competitiveness of national economy, increasing export and stimulating domestic producers. Export activity is a significant factor to improve living conditions in the country.

Ukrainian export of raw agricultural products indicates that domestic agricultural producers have limited opportunities to purchase modern equipment and facilities due to low solvency and technological backwardness.

However, Ukraine has extremely high level of living space exploration. More than 92% of its territory is involving in usage. 82% of land is used as main means of production in agriculture and forestry. 71.2% is taken by agricultural sector. 44.6% are arable land. 70.4% of the arable land is placed on chernozem and chernozem soil type. And only 5-7% of the total area of productive land is used for commercial construction and other non-production needs [5].

The existing problem of increasing export potential in Ukraine should be solved considering specific internal and external economic conditions and recognition the substantial dependence of national economy on international trade.

Therefore it is necessary to form an integrated system of state export promotion. The main objective should be not only to form favorable economic, organizational, legal and other conditions for export potential development in the country, but strongly enhance to use it in efficient way, create mechanisms for state financial, tax, information and consulting, diplomatic and other assistance to domestic exporters.

This should improve mechanisms for state financing and export insurance, provide state warranty for export credits, improve credit conditions of export products with long manufacturing cycle.

An important step in improving the competitiveness of domestic products on international markets should become effective system of export products certification in Ukraine. For example, state inspection of export goods quality could serve as a barrier to penetrate poor quality products to international markets and would promote competitive products production taking into account modern demands of foreign customers for its quality.

One of the most important areas of export promotion, especially products with high degree of processing, is to use tax adjustment levers. It is reasonable to improve the existing tax system: develop set of measures to reduce indirect taxation for invisible export, free exporters from paying tax on advertising of export goods.

It is also important to improve information providing international trade. The primary task in this direction is to create informational system about international trade. An extensive information and consulting services network could provide information about international trade in appropriate manner for client.

One more important step is to expand agricultural products proposals and food industry, which production exceeds domestic demand and consumption rates and can be exported under favorable conditions for state interests in economy.

Thus, balanced state policy in lending and taxing of export, certification of export and highly qualified information, consulting services will be a step to enhance international trade in Ukraine. Besides, it’s important to develop export potential in international specialization, using potential opportunities for structural reforms in economy, because Ukraine still has good conditions (convenient location, generous natural resources, scientific and sufficiently efficient system of education, qualifying and rather cheap labor) to consolidate positions in international markets and create competitive economy

References translated and transliterated

1. Babenko V.A. Government policy to stimulate export in a market economy: PhD theses in economy 08.02.03 / Kyiv National University named after T. G. Shevchenko. – K., 2004. [Electronic resource]. – Access mode: http://www.lib.ua-ru.net/diss/cont/27638.html.

2. Henzler R. Ausfuhrförderung, in: Sei schab H., Schwan tag K. (Hrsg.), Handwörter-Buch der Betriebswirtschaft. – Stuttgart, 1956. – P. 311.

3. Yurchenko O.Y. Globalization. // Bulletin of Khmelnitsky National University. – 2011. – № 2. – P. 151-153.

4. Improving the competitiveness of economy of Ukraine // Official site of National Institute of Ukrainian-Russian relations. [Electronic resource]. – Access mode: http://www.niurr.gov.ua/ukr/econom/vzaem/rozdil_3-3.htm.

5. The State Statistics Committee of Ukraine [Electronic resource]. – Access mode: http://www.ukrstat.gov.ua