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№ 4/2022
SALIKHOVA Olena Borysivna1, KREHIVSKYI Oleh Volodymyrovych2
1Institute for Economics and Forecasting, NAS of Ukraine
2Secretariat of the Cabinet of Ministers of Ukraine
The state in the post-war industrial recovery and economic renewal: historical parallels and approaches for Ukraine
| Ekon. prognozuvannâ 2022; 4:7-42 | https://doi.org/10.15407/eip2022.04.007 |
ABSTRACT ▼
In 2022, Ukrainians are experiencing the most tragic events since the Second World War - the full-scale invasion of Russian troops into Ukraine has led to numerous casualties, the destruction of cities, and the disruption of infrastructure and industrial facilities. Since the first days of the war, the dependence on the industrial imports (primarily for military purposes) became obvious, as well as the fact that the ensuing socio-economic crisis cannot be overcome with domestic resources alone - both now and even after the end of the war. This prompts the search for mechanisms to ensure the stability and recovery of Ukraine’s economy. The purpose of the article is to generalize the global experience of prioritizing the industry in the state policy of the leading countries of the world under the conditions of severe tests, to illustrate the implementation by the state of the functions speeding up economic recovery; and to propose conclusions and recommendations for Ukraine.
The article shows the place of industry in the policy of recovery, gaining economic independence and increasing the country’s power. Using historical examples, the authors demonstrated that during 300 years the state has influenced the industry through targeted political levers and institutional frameworks, generating the optimal results of measures aimed at restructuring to overcome the consequences of wars, epidemics and crises. It is substantiated that under the severe ordeals, the state has played a leading role in economic recovery, implementing a number of functions - administration and moderation, stimulation and catalysis, integration and cooperation, entrepreneurship and consumption, conservation and protection - to speed up the development of national industry as a source of the stabilization of employment, domestic and foreign investment, inflation, foreign trade and the financial sector, contributing to national social balance and well-being. The authors propose a conceptual approach to the functions of the state during post-war recovery of Ukraine’s economy, ensuring economic stability and growth based on the national industry.
Keywords:war, economic recovery, industry, industry, state, politics, functions of the state
JEL: L52; L65; O14; O32
| Article in Ukrainian (pp. 7 - 42) | Download | Downloads :311 |
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№ 1/2023
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) | Download | Downloads :210 |
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№ 2/2023
SALIKHOVA Olena Borysivna1, KREHIVSKYI Oleh Volodymyrovych2
1Institute for Economics and Forecasting, NAS of Ukraine
2Secretariat of the Cabinet of Ministers of Ukraine
Foreign investment: a panacea or a threat
| Ekon. prognozuvannâ 2023; 2:8-32 | https://doi.org/10.15407/eip2023.02.008 |
ABSTRACT ▼
The resources of Ukrainian industry were already depleted prior to the start of Russia’s large-scale military aggression in February 2022; while the forthcoming physical destruction of manufacturing facilities and infrastructure, and the migration of qualified personnel and promising innovators further worsened the situation. Before the outbreak of war, only individual manufacturers of technologically complex products had research units, made innovation, and were able to compete in international markets. Some industries were only based on one or two companies, who mastered unique high-tech competence; these manufacturers paid taxes to budgets of all levels; provided employment, and helped to improve incomes and social stability.
At present, the resources possessed by Ukraine’s private sector are critically low; so the country’s leaders are pinning their hopes on foreign investment as a means to solve the complex postwar issues such as the restoration of basic conditions for economic growth, the promotion of stability and the creation of an enabling environment for sustainable development. The goal of the article is to demonstrate some historical examples as to the obstacles and threats of foreign direct investment for host countries, which Ukraine may face in its post-war economic recovery.
The author reveals that the foreign investments along with the well-known positive side, also have a lesser known negative side. The paper shows that transnational corporations as major investors, having economic power and political influence, have the potential not only to speed up but also to slow down the development of the host country’s companies, which can have an adverse impact on business results and lead to significant problems including the denationalization of assets, loss of technological competencies and industries, increased external dependence, and various threats to national security and economic sovereignty.
On the example of the pharmaceutical industry in Mexico, which appeared and started actively developing after the end of World War II, the key challenges and threats (caused by denationalization and transfer of production control to foreign business) are shown. The author formulates the basic warnings for Ukraine. It is substantiated that the determining factor whether foreign investment will stimulate economic modernization and structural changes or will slow down the country’s development, lead to de-industrialization, and denationalization of the economy and mass unemployment is the extent to which that investment will be integrated by the Government into national development plans, also to what extent the absorption potential of domestic economic entities will be able to implement investments and ensure their maximum effects.
Keywords:: post-war economic recovery, foreign direct investment, transnational corporations, industry, denationalization
JEL: L52; L65; O14; O32
| Article in Ukrainian (pp. 8 - 32) | Download | Downloads :306 |
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