№ 5/2019

Fìnansi Ukr. 2019 (5): 7–36https://doi.org/10.33763/finukr2019.05.007

FINANCES OF THE INSTITUTIONAL SECTORS

DANYLENKO Anatolij ¹

¹Institute for Economics and Forecasting of NAS of Ukraine
OrcID ID : https://orcid.org/0000-0002-9753-5831

The state of Ukraine’s real economy: trends over the years of independence

The article looks into the reasons for economic decline in Ukraine and the impact of new owners, including foreign ones, on the condition and prospects of industries from the state’s point of view. The article takes into account corporate and experts’ reports, findings of earlier studies of the Ukrainian Institute for Economics and Forecasting and National Institute for Strategic Studies, other Ukrainian and international researchers. Ukrainian industrial development has suffered heavy losses since 1991, especially in machine building, metallurgical and chemical industries, the former economic drivers. A deep analysis of economic development in 1991–2017 facilitated the identification of key reasons for huge losses in national wealth. On the one hand, Ukraine has agriculture and food processing that enjoy investors’ support and booming exports. On the other hand, if the Government does not start supporting higher value-added enterprises (machine building, deeper processing of Ukrainian raw materials, import substitution), wider current account deficit and fiscal deficit may follow. Privatization of corporations was one of the ways to attract investment and boost competitive production. By early 2017, 132,050 enterprises were privatized. However, our study shows that the privatization has not yielded equally good results across the economy. Food-processing and especially tobacco companies achieved the best results aided by funds from international strategic investors. Metallurgy companies are in a somewhat worse state. However, some of them have undergone fixed capital renovations (to varying degrees). Other privatized enterprises invested, inter alia, in fixed capital modernization to supply products on domestic and foreign markets, although these products were mostly unprocessed commodities or less-processed products. Some companies from the latter two groups were closed because they could not raise funds or their products were not competitive.

Keywords:Keywords: financing modernization of fixed assets, competitive production, private property, export, import replacement, transformation of industry’s structure, TNE.

JEL: F23, L16, L52

Danylenko A. . The state of Ukraine’s real economy: trends over the years of independence / A. . Danylenko // Фінанси України. - 2019. - № 5. - C. 7-36.

Article original in Ukrainian (pp. 7 - 36)

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