Priorities of Economic Development of Ukraine in the Context of European Integration

10/13/2018

|

Oleksandr Yunin, Volodymyr Sevruk, Sergiy Pavlenko | Baltic Journal of Economic Studies

Abstract.

The aim of the article. Although a large number of original and meaningful works by both domestic and foreign scientists studied issues on the topic under consideration, it should be noted that the problem of defining profitable spheres in the economy of Ukraine remains poorly researched. This also concerns the definition and development of the specificities of an innovative approach to the Ukrainian economy in the context of European integration and globalization challenges. The subject of the study is the priorities of the economic development of Ukraine in the context of European integration. Methodology. Based on the analysis of laws and regulations of Ukraine and scientific literature, the current economic situation, status of Ukraine, and strategic priorities and goals of Ukrainian economic development are interrogated. The results of the study revealed that nowadays Ukraine declared European integration as a key priority of economic policy. The intention of our state to meet the requirements of the modern world economic system caused the need to develop the integration strategy of Ukraine, it is a way of modernizing the economy, overcoming technological backwardness, attracting foreign investments, applying new technologies, creating new jobs, increasing the competitiveness of domestic commodity producers, entering the world markets. Practical implications. It is proved that presently the institutional transformation of the Ukrainian economy towards its green growth is not determined enough due to imperfections, inconsistencies, and inefficiencies of existing mechanisms. The strategic priorities of the formation of new “green” economic areas and ecological transformation of the economy of existing industries are analysed. Relevance/originality. For Ukraine, the EU is an important strategic partner, including the investment and foreign trade sectors. Therefore, the future of our country in the EU will be determined by signing the Association Agreement. It is proved that the EU as an integration association will hold the status of the leader in international economic relations; therefore, for Ukraine as a European state, an important step is to form a new strategy for economic development of the EU.

Problem statement

In current conditions of the world economy, each country tries to achieve a high level of the socioeconomic development. To meet increasing demands for the parameters of the national economy dictated by globalization, Ukraine must develop a strategy for the improvement that can reflect adequately our state by means of macroeconomic indicators and a standard of living of the population (Chorna, 2018). In 1991, Ukraine gained sovereignty. However, apart from independence and autonomy, it inherited own economic system, which for that time of Ukrainian statehood was not able to meet the needs of Ukrainian people. It should be emphasized that for 17 years, Ukraine has been trying to bring the economy out of crisis phenomena, which repeatedly causes a depressive process in the economic situation in Ukraine, affecting both the regional level and the state as a whole. From 2014, Ukraine has confirmed the course toward integration with the European Union. From this period, a new stage of economic development has also begun in all spheres. Nevertheless, unfortunately, it should be noted that still, the Ukrainian economy is coming out of a protracted crisis. At the current stage of state establishment, Ukraine’s integration into the European Union is an integral part of the further democratization of our country, the formation of civil society (Medvedev, 2014). Therefore, the radical socio-economic transformations that have taken place over the last decade have caused both positive and negative changes in modern Ukrainian society (Pavlenko, Sevruk, Kobko, 2017). Because of the changes in society, along with positive tendencies, individual negative ones appear and largely hinder the development of statehood in Ukraine. A serious concern is the problem of economic stability (Mohilevskyi, Sevruk, Pavlenko, 2017). It should be emphasized that the development of the Ukrainian economy in recent years demonstrates unsustainable dynamics that confirms various adaptations of its branches to the challenges of the present, and results in lower investment and innovation activity and competitiveness. In addition, Ukraine is steadily “honourable” among the most corrupt countries (Kondratenko, 2018). According to the results of a survey conducted by investment company Dragon Capital (Kyiv) and the European Business Association, there is a widespread corruption in Ukraine and a lack of trust in the authorities, judiciary and law enforcement bodies. Interfax-Ukraine informs that as stated by a joint press release of organizations, respondents rated the indicated obstacles at 8.5 and 7.5 points according to the 10-point scale of importance (rates are equal with last year’s – ed.). The third place in the rating was the factor of monopolization of markets and the seizure of power by oligarchs (5.9 points), while the military conflict with Russia and unpredictable exchange rate (5.6 points each) respectively occupied the fourth and fifth positions. The repressive actions of law enforcement bodies occupy the sixth position in the ranking (4.6 points). This is due to the widespread unlawful actions of the Prosecutor’s Office, the Security Service, and Police. Other positions belonged to a constant change in statutory regulation, complex administration of taxes, and currency restrictions. Furthermore, in 2014, a significant deterioration of the economic situation was due to the military operations in the east of Ukraine, which caused a chain reaction of imbalance in all macroeconomic indicators. Affected by the events of 2014, the current economic situation is characterized by further deterioration. Among the main factors that determined economic trends in 2015 were low external and domestic demand because of economic growth inhibition; decrease in purchasing power of the population because of real incomes reduction; complicated relations with major trading partners and outflow of investments. Under the absence of appropriate measures to stabilize the situation, the complex interaction of indicators led to increasing economic decline. Ukraine suffered territorial losses, faced with the threat of economic collapse and the loss of statehood because of aggression on the part of Russia, a nuclear-weapon state. During 2014, the Ukrainian economy was operating in extremely unfavourable conditions. Russian aggression caused Ukraine unprecedented humanitarian and social losses and serious destructive processes, including the destruction of infrastructure on the territory of combat operations, disruption of established production linkages and crucial supply of resources, partial loss of external markets and export potential. Meanwhile, radical reform of domestic economic mechanisms, absolutely indispensable for the country, remained vague, and some changes were introduced very slowly (Tiutiakh, 2017). Reforms of the system of social support in Ukraine should be based on the principle of purposefulness, which will enable real social measures to be provided to those members of society who really need this help, according to their life circumstances. The provided social assistance should include the targeted activities authorized by law state bodies. It is aimed at supporting individuals who have difficult life situations and who for objective reasons cannot independently provide their means of subsistence at a level not lower than the subsistence level, which is determined by law. The effective legal regulation and ensuring equal access to state social support in the form of subsidies will contribute to the introduction of amendments and additions to the Law of Ukraine “On Housing and Communal Services” regarding the accounting of actual amounts of income during the calculation of subsidies to individuals providing social services. Considering some of existing economic disparities in the purpose of subsidies, subsidies should be monetized urgently and the real income of recipients of social support should be verified to confirm the right to benefits. This will enable to introduce a single approach to such a form of social assistance as a subsidy aimed at supporting the life of the poorest group of Ukrainian population (Tyshchenko, 2018). According to analysts, from 2017 to 2018, Ukraine’s economy continues the recovery trend after a positive breakthrough in 2016, which led to an increase in the gross domestic product by about 1.5%. Leading Ukrainian economists expect that GDP growth may accelerate by 2.1% in the coming year, industrial production will grow by 2.5%, and inflation will slow down to 10% from 12-13% in 2016 (Obukhovska, 2017). One of the main problems facing Ukraine, as a European state, is the need for the rapid economic shift to the path of innovative development. The current crisis has demonstrated the danger and hopelessness of focusing on the export-raw material development model and the use of benefits associated with the relatively low cost of labour. The overcoming of the crisis and transition to sustainable growth depend on the effectiveness of state and business efforts in deploying diversification of the economy, raising its level of innovation usage, and creating conditions for the realization of creative abilities of the population that has a European level of education in Ukraine. 467-524-1-PB