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№ 2023/1

Creative discussions on systemic problems of social development

KREHIVSKYI Oleh Volodymyrovych¹

¹Secretariat of the Cabinet of Ministers of Ukraine

Dependences and ways to eliminate them: a past that resonates with the present

Ekon. prognozuvannâ 2023; 1:31-75

https://doi.org/10.15407/eip2023.01.031

ABSTRACT ▼

The invasion of Russian troops into Ukraine has showed, on the one hand, the high cohesion and patriotism of Ukrainian society and their perception of independence as a higher value; on the other hand - the inability to preserve it with the resources of the national economy alone, and therefore - a high external dependence on the decisions of global leaders on the provision of aid and the use of the industrial base of the West to ensure the defense and security of Ukraine. Updated by S. Mariotti, the issue of "global protectionism" needs to be considered via the prism of the contextual economic conditions for the implementation of such a policy (wars, post-war recovery, crises). The purpose of the article is to investigate, based on the experience of the pioneer of industrial revolution and the adept of free market - Great Britain, the historical facts regarding the elites’ reaction to new challenges and threats of the beginning of the 20th century, and policy measures to encourage and protect national producers and their consequences, as well as to visualize various recent examples of protectionism, and draw conclusions for Ukraine.
Historical parallels between the situation at the beginning of the 20th century and the events of recent years give grounds for assuming that the answer to the question "How to speed up the recovery of Ukraine's economy during the period of severe war test?" should not be sought in modern policy measures of developed countries (where a powerful industrial potential has been created by the joint efforts of government and business over many years and the governments’ activities are focused on managing the crises to preserve and strengthen this potential), but rather in retrospective mechanisms that ensured the expansion of the existing and creation of new industries to strengthen the economic efficiency and national security.
The author shows that the state financial incentives and protectionist tariffs, introduced in Great Britain in the national interest in response to new challenges and threats, were effective for more than 40 years, which helped this country develop key industries, reduce dependence on imported strategic goods, and prepare for new challenges.
It is substantiated that the stimulating and protective mechanisms of India's policy, which have been launched recently to reduce dependence on the supply of strategic goods from China, are a reflection of the measures implemented by Great Britain at the beginning of the 20th century to reduce dependence on supplies of important goods from Germany. Similar mechanisms are being introduced by the United States in accordance with the interests of national security.
The author demonstrates that Ukraine has lower protective tariffs not only compared to Asian countries that are developing and protecting their own industry, but also to the EU. It is substantiated that when forming a strategy for economic independence and post-war recovery, Ukraine should take into account both the historical experience of Great Britain and the modern practices of introducing policy mechanisms to encourage and protect own industries for defense and security purposes.

Keywords:war, external dependence, industry, economic policy, free trade, protectionism, subsidies, licensing, tariffs

JEL: L52; L65; O14; O32

Article in Ukrainian (pp. 31 - 75)

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№ 2023/1

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