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Ukrainian Transitional Experience. Matthew Buening . Background Facts . Independence Day is August 24,1991 Slightly smaller than Texas 2nd largest in Europe Capital is Kiev . Early History. Kievan Rus was once the greatest country in Europe Mongol Invasion in 13 th Century

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Presentation Transcript
background facts
Background Facts
  • Independence Day is August 24,1991
  • Slightly smaller than Texas
    • 2nd largest in Europe
  • Capital is Kiev
early history
Early History
  • Kievan Rus was once the greatest country in Europe
  • Mongol Invasion in 13th Century
  • Part of Polish-Lithuanian Commonwealth
    • Imposition of serfdom, Suppression of the Orthodox Church
  • Russian Betrayal
modern history
Modern History
  • Partitions of Poland in 1772, 1793, 1795
    • West split between Russia and Austria
  • Following the fall of imperial Russia, Ukraine experienced a short lived independence
    • Ended by Polish-Soviet War
  • Following World War II, the country was united under Soviet rule
  • Famous People- Nikita Khrushchev, Leonid Brezhnev
east and west
East and West
  • East
    • Favors ties with Russia
    • More Urban and Industrial ex: Sumy and Poltava
    • Better transportation
    • Closer to large industrial centers
  • West
    • Favors ties with the West
    • More agricultural
    • Higher rates of poverty
ukrainian government
Ukrainian Government
  • Parliamentary Democracy
  • President and Prime Minister
  • 450 seat parliament- Rada
socialistic tendencies
Socialistic Tendencies
  • Skeptics say it is socialism with a few market elements
  • Decisions on allocation of resources decentralized
  • Socialistic aspects
      • Soft budget constraints
      • Enterprises maximize production and employment instead of profits
      • Goods are sold by barter in late 90’s
promising economy
Promising Economy
  • Rich farm land
    • 57% of the country is arable
  • Well developed industrial base
  • Highly trained labor
  • Good educational system
  • Rich in natural resources
inflation
Inflation
  • Decline in taxable income
    • No need for military goods
  • Funds to large inefficient companies
  • The government began printing money to stay one step ahead of public expectation
  • Changes
    • Limiting the aid given to state owned companies
    • Suspension of salaries of state employees
introduction of the hryvnia
Introduction of the Hryvnia
  • Introduced in 1996
  • Cut 5 zeros off of the karbovanet
  • Brought in money from the shadow economy
  • Resulted in public panic
    • Government ordered a freezing of prices
privatization independence 1999
Privatization: Independence – 1999
  • 1991-1994
    • Little real privatization
  • 1995-1999
    • Every citizen received vouchers to be exchanged for shares in a company
    • 100-500 companies privatized a month
    • Companies generally small to medium size firms
    • Ex: Obolon
privatization 1999 present
Privatization: 1999-Present
  • Dominated by sale of large companies
    • Ex: Donbasenergo
  • Slow process due to government apathy and litigations
    • Ex: Rivne Azot
  • Marked by corruption
    • Ex: Kryvorizhstal
  • Hurt Foreign Direct Investment
foreign direct investment fdi
Foreign Direct Investment (FDI)
  • Low in the region
    • In 2004 Ukraine had $7 Billion Poland had $50 Billion
  • Passed few laws to encourage FDI
  • Orange revolution gives hope
  • Only way to boost FDI is to continue selling large state enterprises
    • Ex: Ukrtelecom, Resell of Kryvorizhstal
trade
Trade
  • Chief Exports
    • Steel, Energy, Chemical, Agricultural Products
  • Metallurgical market
    • 2003 Growth
    • 2005 slump
  • Exports: Europe- 39% Asia- 25% CIS countries- 25% Other- 11%
  • Imports: CIS counties- 50% Europe- 32% Other- 18%
trade continued
Trade Continued
  • Common Economic Area with Russia, Belarus, Kazakhstan
  • Problems with Russian oil dependency
    • Putin blocks delivery of crude oil
    • Ukrainian response
pre 1999 gdp
Pre- 1999 GDP
  • Low GDP due to
    • 1)complex laws and regulation of businesses
    • 2)Weak enforcement of contract law
    • 3)Low bank lending
  • By 1999 barter operations had surpassed 50%
gdp 1999 2004
GDP: 1999-2004
  • Jump started by then Prime Minister Viktor Yushchenko
  • Economic growth due to
    • 1)Simplified taxation
    • 2)Increase in privatization and development
    • 3)Rising world prices in metal
  • Bank lending increasing 50% per year during period
  • Industrial sector increase has greatly helped GDP growth
post elections
Post Elections
  • January 2005- Viktor Yushchenko became President
  • Conflict between President and Prime Minister
  • Economic policy has been derailed since Yushchenko became President
  • March 2006- Constitutional changes gives power from the President to the Prime Minister
closing question
Closing Question
  • This month the country will hold parliamentary elections
  • How will the outcome affect the country’s transition