Saturday, April 20, 2013

Development in Ukraine

Ukraine development

The economy of Ukraine is an emerging free market   In 2008, Ukraine's economy was ranked 45th in the world according to 2008 GDP (nominal) with the total nominal GDP of 188 billion USD, and nominal per capita GDP of 3,900 USD   The Ukraine’s GDP fell sharply for the first 10 years of its independence from the Soviet Union and then experienced rapid growth from 2000 until 2008  

The country's economy experienced a deep recession during the 1990s, including hyperinflation and a drastic fall in economic output  In 1999, at the lowest point of the economic crisis, Ukraine's per capita GDP was about half of the per capita GDP it achieved before independence.

Ukraine a major global producer of grain and sugar, and future global player on meat and dairy markets  It is the world's largest producer of sunflower oil, and is also one of the largest producers of nuts.  Ukraine also produces more natural honey than any other European country.  

Since Ukraine possesses 30% of the world's richest black soil, its agricultural industry has a huge potential.  However, farmland remains the only major asset in Ukraine that is not privatized, hampering access to international investments and the best farming technologies  The agricultural industry in Ukraine is already one of the worlds larges production areas, however according to analysts its outputs could still rise up to fourfold

Ukraine is rich in mineral deposits, including iron ore, manganese ore, mercury, titanium, and nickel
Ukraine is one of the world's most important mineral producing countries, in terms of both the range and size of its reserves  There are nearly 8,000 separate deposits, harboring some 90 different minerals, of which about 20 are economically significant  About half of all the known deposits are under exploitation  

Coal reserves in Ukraine amount to 47.1 billion tons.  The annual domestic demand for coal as fuel is about 100 million tons, of which 85 percent can be satisfied by domestic production.  Ukraine has oil and gas fields that meet 10 percent of her oil and 20 percent of her gas consumption, respectively.   Ukraine contains natural gas reserves of 39..6 trillion cubic feet, but only about 20 percent of the country's demand is met by domestic production   Deposits of iron ore (estimated at 28 billion tons), manganese ore (3 billion tons), chalk and limestone (1 5 billion tons) are also extensive in Ukraine  

Ukraine has a major iron mining and smelting industry, which produces, cast iron, steel, structural shapes, and pipe and supplies for the oil and gas industry.    As of 2010, Ukraine was the world's eighth largest steel producer.    Manufactured goods include metallurgical equipment, diesel locomotives, tractors, and automobiles  The country possesses a massive high-tech industrial base, including much of the former USSR's electronics, arms industry, and space program  However, these fields are state-owned and economically underdeveloped  at this time.

Ukraine is also among the top 10 arms exporters in the world.  The signing of recent large contracts may put Ukraine into 6th place among biggest arms traders, after the United States, Russian Federation, France, Germany and Israel. The output of Ukrainian defense plants grew 58% in 2009, with largest growth reported by aircraft builders (77%) and ship builders (71%) [23]

Oil & Fuel industry
Ukraine imports 90% of its oil and most of its natural gas.  Russia ranks as Ukraine's principal supplier of oil, and Russian firms now own and/or operate the majority of Ukraine's refining capacity.  Natural gas imports come from Russia - which delivers its own gas, as well as the gas from TurkmenistanUkraine also transports Russian gas to the EU through its well-developed gas pipelines system, which is a vitally important inter-connection system for all of Europe.  

Ukraine is independent in its electricity supply, and exports power to Russia and other countries of Eastern Europe.  This is achieved through a wide use of nuclear power and hydroelectricity.  Ukraine is a partner country of the EU INOGATE energy program which has four key topics: enhancing energy security, coordination of member state energy markets and distribution grids, supporting sustainable energy development, and attracting investment for energy projects of common and regional interest

Communications & Information technology
Ukraine has a long standing reputation as a major technology region, with a well-developed scientific and educational base.  In March 2013 Ukraine ranks fourth in the world in number of certified IT professionals after the United States, India and Russia.    In 2011 the IT labor market experienced 20% growth, and the number of IT specialists working in the industry reached 25,000 people. The volume of the Ukrainian IT market in 2013 was estimated to be up to 3 6 billion US dollars/

Ukraine ranks eighth among the world’s nations in terms of the Internet speed with the average download speed of 1.2 Mbps.  Five national providers of fixed (DSL, ADSL, XDSL) internet access — Ukrtelecom, Vega Telecom, Datagroup, Ukrnet, Volia, and 5 national operators of mobile internet — MTS, Kyivstar, PEOPLEnet, Utel, and Intertelecom are currently operating in Ukraine.  Every regional center and large district center has a number of local providers and home networks.

Almost 20 million Ukrainians had Internet access in December 2012.  In Kyiv 90% of population had internet access.  The number of Internet users in Ukraine was expected to nearly double by 2015
The mobile-cellular telephone system's expansion has slowed, largely due to saturation of the market which has reached 125 mobile phones per 100 people.

Financing, banking, and Investments
The EU is Ukraine's largest trading partner, with 27 1% of exports and 33 7% of imports in 2008; and trade with EU has seen strong double-digit growth in recent years.  The Russian Federation is Ukraine's second largest trading partner, with 21 1% of exports and 28% of imports in 2009.   Overproduction in the world steel market, especially from China, threatens prospects for Ukraine's principal exports of non-agricultural goods such as ferrous metals and other steel products.  Although exports of machinery and machine tools are on the rise, it is not clear if the rate of increase is large enough to make up for probable declines in steel exports, which today account for 46% of the country's overall exports .

In 1992, Ukraine became a member of the IMF and the World Bank.  It is a member of the European Bank for Reconstruction and Development and in 2008 the country joined World Trade Organization. The IMF approved a $2.2 billion Extended Fund Facility (EFF) with Ukraine in September 1998.  In July 1999, the 3-year program was increased to $2 6 billion.  Ukraine's failure to meet monetary targets and/or structural reform commitments caused the EFF to either be suspended or disbursements delayed on several occasions.  The last EFF disbursement was made in September 2001

A political crisis in the middle of 2006 was feared as a threat to economic and investment stability, however, despite the forecasts, the political situation has not scared investors.  The GDP showed a good growth rate of 7% in 2007, compared to the previous year.  Industrial output has increased  and car sales soared, while the banking sector has expanded, thanks to the arrival of several major European banks.

Ukraine encourages foreign trade and investment  The Parliament of Ukraine has approved a foreign investment law allowing Westerners to purchase businesses and property, to repatriate revenue and profits, and to receive compensation if the property is nationalized by a future government  However, complex laws and regulations, poor corporate governance, weak enforcement of contract law by courts, and corruption all continue to stymie direct large-scale foreign investment in Ukraine. While there is a functioning stock market, the lack of protection for shareholders' rights severely restricts portfolio investment activities

State enterprise InvestUkraine was created under the State Agency for Investment and National Projects to serve as a One Stop Shop for investors and to deliver investment consulting services.  Ukraine signed a shale gas exploitation deal with Royal Dutch Shell on 25 January 2013.  The $10 billion deal was the largest foreign direct investment ever for Ukraine.

Saturday, February 9, 2013

This blog is being created as an assignment for my Geography 102 class at the University of New Mexico, located in Albuquerque, New Mexico.

The Place I have chosen is Kiev  in the Ukraine.   My brother’s girlfriend Yulia is from this area and I always have wondered what it is like.  Additionally, one of my favorite musical pieces is the “Great Gate at Kiev” by Mussorgsky, and I always wondered about why the Piece was composed.
The area looks to be very densely populated, but that is to be expected since it is A very old city, first founded as a trading center on the Dnieper River around 500 CE  The city is the Capital of the Ukraine and has been the capital for several other cultures and empires, including the Kievan  Rus who were Viking Traders from Scandinavia.
The first thing I notice about the area when looking at the satellite image was how green it is and how much it looks like Northern Wisconsin, an area I am familiar with.  Both areas are located in the Cold Mid latitude Humid Continental climate type, and they look very much alike, both from the satellite photos, and from ground level photos.  From a high altitude view, the area is obviously covered with large areas of forest, along with the familiar pattern of farmer’s fields.  The area is dominated by the Dnieper River, one of the major rivers of Eastern Europe.  Looking at some of the Panorimo photos along the river reminds me very much of the northern Mississippi river between Wisconsin and Minnesota.
The most striking examples of human modification on the area would be the Kiev Hydroelectric  dam built North of the old city by the Soviets in  1960 to create the Kyivske Reservoir.  Additionally, in this same area are large “urban development” areas that are strangely regular.  On closer look they are very large areas of high density apartment units.  My friend Yulia says that they were built by the Soviets after World War II, and that they are still occupied since the people in the area have no other options.  In looking at the Panorimo pictures, one can see that while the areas are beautifully landscaped, the buildings appear to be all the same.


However, in looking at photos from other sources, one can many photographs of the Old City, and can see that it was a cultured and prosperous area for many centuries.


The author of our class textbook, Dr. Paul  Rubenstein said in the book that “Several Eastern European countries, most notably Russia, have negative NIRs [Natural Increase Rate]….Eastern Europe’s relatively high death rates and low birth rates are a legacy of a half-century of Communist Rule.”  Since I have chosen the City of Kiev in the Ukraine as my area of interest, this struck me as an interesting phenomenon since Malthus and many other scholars predict that the world’s population will always increase at a geometric rate.  Obviously this is not true in Russia, Ukraine, and some of the other republics of the former Soviet Union. 
 The Ukraine and the other republics are obviously in Stage 4 population growth model..  As can be seen in the nearby graph, not only have they achieved Zero Population Growth, they are actually experiencing negative population growth.  Dr. Rubenstein states that this is due to, “[h]igher death rates, which may be a result of inadequate pollution controls…  [and] [l]ower birth rates may stem from very strong family-planning programs and deep seated pessimism about having children in an uncertain world. " 

 Looking into the issue further, the higher death rates in the former Soviet republics can also be linked to poor diets and deteriorating medical care in many of these areas, and also to personal choice factors such as wide spread smoking and alcoholism.    Ukraine also has had one of the lowest birth rates of any MDC over the last ten years.  Their birth rate reached a catastrophic level of 1.1 in the late 1990s and early 2000s.  This is far below the accepted natural replacement rate of 2.2-2.4 [Source:  The Ukrainian Week, (International Editions) March 14, 2012;]  Infant mortality has been a problem also, with two of the biggest problems for Ukrainian children being poverty and poor health care.
 The lower birth rates and increased infant mortality during the two decades after the break up of the Soviet Union in 1991 can be easily seen by comparing the Ukrainian population structure graphs below for the years 1985 and 2012.   The 1985 structure (six years before the Soviet breakup) shows a fairly normal “pyramid” shape that would be typical of MDCs.  However the 2012 graph shows a marked decrease in the under 20 year old population, and the structure is transitioning to a diamond shape, with the largest percentage of the population in the 30 to 60 age groups.
 However, the rate of population decline has recently slowed, with average life expectancy increasing and infant mortality decreasing  from 10.4 to 8.9 per 1000 [op.cit. Wikipedia]  Additionally, according to The Ukrainian Week, The generation shift and partial adjustment of the population to the new socio-economic environment in the early 2000s brought the first signs of improvement of the demographic scene, further supported by targeted steps of the new government that came to power after the Orange Revolution. These included financial aid to mothers, specifically increased child birth benefits. Over 2001-2009, the number of births rose by 36%, the birth rate per one woman grew by 34%. “[Op.Cit. Ukrainian Week]

 This information would tend to indicate the Dr. Rubenstein’s prediction that, “Eastern Europeans may display birth and death rates more comparable to those in Western Europe”, is actually occuring with the improved political stability and economic progress that the Ukraine has seen since 2008.