The Ukrainian Economy Essay Research Paper Since

The Ukrainian Economy Essay, Research Paper

Since moving into a market economy, the Ukraine has faced many problems which have

threatened its very existence. High unemployment, inflation, a lack of money to pay for

social and economic programs, the effects of the Chernobyl nuclear disaster, and an

overall slow move to a free market economy have combined to cause great poverty and

suffering for the Ukrainian people . Despite everything going against it, the Ukraine has

taken the first steps to turning its situation around, and alleviating the pain and suffering of

her ailing citizens.

The Ukraine has tremendous economic potential. The vast mineral resources

within the Ukraine, which includes large reserves of coal, iron-ore, manganese, bauxite,

titanium, and salt, allow for a large industrial base to be established ( Ukraine- Economy,

1). As a result of the vast resources available, the Ukrainian economy is highly

industrialized, with industry accounting for more than 40% of the countries net material

product, and 25% of the total employment (Ukraine- Economy, 1).

The Ukraine is also heavily reliant on its agricultural background as a key part of

it.s economy. The total amount of arable land within the Ukraine amounts to 40, 782, 000

hectares (Detail information about Ukraine, 1). The .bread basket of Europe. is a major

exporter of wheat, sugar beets, potatoes, sunflowers, and flax. In total, agriculture

accounts for 30% of the NMP, and 25% of all employment (Ukraine- Economy, 1).

The Ukraine is also a huge producer of energy, though it is still heavily dependent

on other CIS states for much of its oil and natural gas needs (Ukraine- Economy, 1). Coal

accounts for 30% of the nations energy output, while nuclear power, having been

downscaled since the Chernobyl disaster, accounts for only 25% (Ukraine- Economy, 1).

The rest of the required energy is brought in from Russia and Belarus.

The Ukrainian economy currently has a GDP of $205.4 billion, which is constantly

rising with the growing amount of export goods being shipped abroad since the market

was opened up (Nato Colloquium 1995, 3). The main exports of the Ukrainian economy

are ferrous metals, engines, equipment, appliances, chemicals, minerals, and vehicles,

which totaled 74% of total exports (Ukraine- Economy, 1). The major imports are oil,

gas, oil products, automobiles, and plastic and rubber products (Ukraine- Economy, 1).

Despite the huge amounts of natural resources possessed by the country, the

Ukraine entered the post-communist era in a mess. A huge national debt, mixed with a

heavy reliance on other nations for energy, and the political instability within the country

during the move to a market economy has put a tremendous strain on the Ukrainian

economy (Ukraine- Economy, 1).

One of the main causes of the huge national debt of the Ukraine is its reliance on

imported fuel. The reliance on foreign fuel was so high, in fact, that the Ukraine had a

trade balance of $-1 billion annually, while the national debt rose an average of $5.5 billion

dollars a year during the early 90.s (Nato Colloquium, 2). The huge debt, which resulted

due to poor government decisions, a lack of foreign trade, and the reliance on foreign

energy sources, created a desperate situation for many citizens (Welcome to Ukraine, 1).

The situation was, as it still is, so desperate that many workers haven.t been paid for

months, sometimes years (Conclusions, 1). Ukrainian miners alone are owed a total of

$367 million (Shafted, 1).

Another factor which hindered the Ukraine.s progress in its early days of

Capitalism was the lingering effects of the Chernobyl disaster, most noticeably the loss of

agricultural trade as a result of radioactive contamination (Ecology and Health, 1).

Other serious problems which occurred at the beginning of the Ukraine.s

independence were high unemployment and inflation rates (Ukraine- Economy, 1). In

1991 the unemployment rate was a whopping 19%, but by 1997 it had shrunk to 10%,

slightly higher than Canada.s rate (Microsoft Encarta Explorer- Ukraine, 4).

Due to the effects of the high debt, inflation, and unemployment, the Ukrainian

government has been forced to beg for money (Karon, 1). In 1992 the Ukraine was given

over $1.5 billion in aid, including $900,000 from the US to aid in the dismantling of the

Ukraine.s nuclear arsenal and to solidify Ukrainian independence from Russia (Karon, 1).

As a result of all the problems facing the Ukraine before it even had a chance to

improve its circumstances, the move to a market economy has been slower than in other

nations, such as Romania and China (Nato Colloquium, 5). As such, the economy has not

yet fully converted, and the situation has not been able to improve.

The Chernobyl nuclear disaster has also had a profound effect on the lives of

millions of Ukrainians, and deadly effects on the Ukrainian econom

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