Ukraine’s place in the international economy
The most composite indicator describing the country’s economy is per capita GDP (nominal). According to the World Bank ratings the highest per capita GDP has since 2004 been in USA, Austria, Germany, France and Great Britain. Ukraine is somewhere at the bottom of the list with per capita GDP considerably lower than in such neighbouring countries as Poland, Russia, Turkey and Belarus. Moreover, BMI Research predicts that by 2020 the situation will not change.
The same can be said for the increase of foreign direct investments measured in billions of dollars. Their amount is very small. Even the made-up prospects by the Ministry of Economic Development say that the level of investments will remain at approximately $5 billion over the next three years. Let’s compare these $5 billion with something substantial. For example, it can be the construction cost of one and a half bridges between islands in Shanghai. Or it can be two and a half times the GDP of Bhutan, the country with one of the world’s smallest economies. So who are we looking up to? I would think we should take our lead from well-developed countries with huge infrastructure projects that one can see with one’s own eyes. And instead we are humiliating ourselves by claiming that in the next three years we will not exceed the one-and-a-half-bridge level.
Admittedly, international ratings also give Ukraine not very favourable predictions. Our Innovation Index hasn’t changed a bit over the period of 2012-2015. A few isolated projects, however sensational, do not change the rate of the whole country. The Index of Economic Freedom also does not give any ground for optimism: Ukraine lies in 162nd place out of 178. Many businessmen often think of this information, for it is reflective of the state of our business environment.
Prospects for Ukrainian business
The only rating showing any considerate progress of our country is the Ease of Doing Business Index: Ukraine has moved from 149th to 83rd place. This fact is often reported by the government and President and confirmed by foreign consulting companies. And it is so despite the fact that we have just started talking of radical changes. Of the 17 reforms I know of that were declared over the “post-Maidan” period only eight are more than 70% complete.
Delphi analysis of Ukraine’s major economy drivers for 2020-2030 shows that we have many areas that are worthy of investing. And surprisingly enough tourism, which we consider one of the most promising spheres, has the lowest potential. And the leading areas are agriculture, which is a great economy driver, and military industrial sector. The middle positions are taken by nanotechnologies, alternative energy and information telecommunication technologies. Given professional management, any of these areas has more than a 50% chance to become a success.
In reference to Ukrainian business I maintain the so-called “economic egoism”. It means that we have to let go of such things as modesty and inferiority complex and dare to admit that foreign companies are not better. We should stop listening to those foreigners telling us we are underdeveloped, not capable of anything, lacking equipment, money or other things. We need to cooperate and protect our interests.
As soon as the number of local manufacturers ready to fight this battle reaches critical mass, foreigners start acquiring professional associations and pressuring us with publicity moves. Local companies do not give up and continue protecting their interests. They literally tell those major international players: “Guys, take your legislature, translate it word for word, and we will adopt it here. We are ready to compete on your terms”. However very few will agree to this for in the eyes of the West Ukraine is a consumers society that is too large, not ready to be regulated and dependant on foreign borrowings. And thus we are bribed to silence, foreigners have one condition: if we want to keep receiving financial investments, we must play by their rules.
And this is where we should turn our economic egoism on and actively position ourselves in the world as a country of production, not consumption. The more processing takes place on our territory, the higher will be the returns, the stronger we will be as a competitor in global economy.
Taking into consideration the figures I mention in the beginning of this article, I am 100% sure that economic egoism is a big chance not just for our business, but for the whole country. We should love our country and try to do something for it. On one condition: we, the citizens, have top priority. All the rest come after. These are the rules.