Business and Economics
With a large and relatively diverse industry, since the 1880s built around significant assets of mainly coal but also ore, Ukraine is one of Europe’s major industrial nations. Moreover, since the country has good conditions for agriculture, especially for the cultivation of cereals and root vegetables, Ukraine held a central position in both the Tsarist Russian and Soviet business. During the Soviet period and the first years of independence, Ukraine’s business sector was integrated with the current Russian Federation, including within the so-called ruble zone, and the country’s economic potential was not fully realized. With very significant reductions in production in many industries, especially in the metallurgical and heavy engineering industry but also in agriculture, both the population and the business sector were subjected to great stress.
Following the election of Leonid Kuchma as president in July 1994, an economic reorientation began. Privatization of state property began with the sale of small and medium-sized enterprises. Privatization was slow and foreign investment failed. The industries that were privatized ended up to a large extent with a few oligarchs.
It was not until the beginning of the 1990s that an economic upturn began. This was mainly due to economic reforms that led to increased tax revenue while the Russian Federation, which is the most important export market, experienced strong economic growth. The financial crisis in 2008–09 hit the country hard and the important industrial production fell sharply. With the exception of a few years in the beginning of the 2010 century, Ukraine has failed to break a crisis situation with rising unemployment, foreign loans and budget deficits. Widespread corruption, a lack of legal certainty and the national strife in eastern Ukraine, in particular, are contributing causes of the country’s economic crisis.
Agriculture and fishing
Abbreviated as UKR by abbreviationfinder.org, Ukraine has large areas with very fertile land and favorable climate, which means that the primary sector of tradition has played a very big role in the economy. More than half of the country’s area is cultivated or usable for agricultural purposes. However, erosion and poisonous emissions from the industry have helped to reduce returns in many places. However, during most of the 20th century, the agricultural organization must have been the main cause of the often low productivity in both agriculture and animal production. At the collapse of the Soviet Union, cooperative agriculture accounted for 70 percent and state-owned agriculture 22 percent of the area cultivated. The remainder consisted of small private lots. Today, private, family-based farming is again permitted but has encountered difficulties of an administrative, technical and economic nature.
Cereals, potatoes, sugar beets, fruits and vegetables are the most important crops. There is considerable export potential, and Ukraine was already a major producer of wheat during the Tsarist period, which was shipped via the Black Sea and Baltic ports.
Fishing is primarily conducted from ports on the Black Sea, which, in addition to certain high sea fishing, have remained the fishing fleet’s most important water. Phishing and perhaps above all environmental degradation, mainly in the Azov Sea but also in the Black Sea, have contributed to a reduction in landings. Inland fishing, which is mainly conducted in the country’s large rivers, has also been largely eliminated by pollution and environmental toxins.
Access to economically valuable minerals forms the basis for much of the country’s industry. Ukraine is one of the world’s leading producers of a number of important minerals, including titanium minerals (rutile, titanium sponge and ilmenite), iron and manganese ore, pig iron, steel and uranium. The mining industry contributes about 6 percent to GDP.
In particular, the iron and steel industry has been able to benefit from large deposits of iron ore and some alloys. Iron ore is obtained from Kryviy Rih (Russian Krivoj Rog), Dnipro (until 2016 Dnipropetrovsk) and Krementjuk central parts of the country, where rich deposits of the mineral magnetite have long been mined in mines and shafts. Over time, however, worse qualities have been used. In total, Ukraine has iron ore reserves amounting to 20 billion tonnes. The production of manganese at Nikopol (Dnipro) is also of great importance for steel production. However, for many metal producers, the high electricity price is hampering competition against cheap imported iron alloys. Industrial minerals such as cement, clay, lime, salt, and sodium carbonate are also produced.
Domestic uranium mining accounted for 30 percent of uranium consumption in Ukraine’s nuclear power plant. The uranium ore is transported to the Russian Federation for enrichment.
Ukraine’s energy supply is dominated by domestic production of mainly coal, nuclear energy and natural gas. 40% of the energy demand is covered by imports, mainly from natural gas but also from oil products and coal. Natural gas and oil are mainly imported from the Russian Federation. Of the total energy supply (2009), approximately 80 percent consists of fossil fuels and only 2 percent of renewable fuels. Electricity production is dominated by coal and nuclear energy (over 80 percent), followed by natural gas and hydropower; 5 percent of the electricity produced is exported.
The only significant renewable energy source currently utilized is water energy that was expanded during the interwar period. The Dnieper River has subsequently been gradually regulated; The Krementjuk reservoir north of Kiev is the world’s largest water reservoir (see Krementjuk). Dnestr has also been expanded for the same purpose. The total installed power is approximately 4,500 MW. The wind energy is under strong expansion, but with 150 MW installed power (2011) is still modest. In 2011, the solar park in Perovo was opened in Crimea, which with an installed capacity of 100 MW is one of the largest in the world. The goal is to reach 12 percent electricity supply from renewable sources by 2020.
Coal is produced in about 160 mines, mainly in the eastern parts of the country, mainly in the Donetsk basin (Donbass), Dnipro (until 2016 Dnipropetrovsk) and Luhansk. Also at Lviv and Volyn in western Ukraine there are breakable occurrences. Oil recovery on a larger scale only started during the post-war period, but is relatively limited. The extraction is mainly from sources in the northern and western parts of the country and between the Dnieper and the Donets. Natural gas production is also relatively limited. The natural gas deposits are concentrated to the area between the Dnieper and the Don as well as to the Black Sea and the Azovska Lake.
In recent decades, nuclear energy has been expanded on a large scale. In total, the country has 15 reactors of just over 13,000 MW distributed over five plants. They are often located in connection with important industrial regions. Ukraine has also been the country that most significantly experienced the risks of nuclear power plants in the 1986 Chernobyl accident.
The country’s industrial base is nominally impressive. At the collapse of the Soviet Union, industry was the backbone of Ukraine, accounting for 35 percent of employment and 60 percent of GDP. However, several years of drastic economic and political change have shaken the foundations of much of industrial activity. In addition, the production apparatus is to a large extent technologically outdated and physically worn; this applies in particular to the production of steel, chemicals and building materials.
In the engineering industry, machine building (including weapons and defense-related electronics) has a strong tradition. Other important branches are metallurgy, especially steel production, and the manufacture of vessels and means of transport. Steel production is concentrated in plants in Kryvyj Rih, in the Middle Dnieper and in Donbass. The chemical industry is partly built around oil refineries and coal and gas deposits. It produces bands of other fertilizers, synthetic fibers and pharmaceuticals.
In addition to the engineering industry, the food industry is traditionally the most important industry branch. It is spread throughout the country, though noticeably sparser in the eastern part of Ukraine, and is also an important sector of employment. In essence, manufacturing is organized around the processing of local agricultural products. Other light industries are represented by a large number of companies, but like other parts of the industry, the demand has been sharply reduced.
During the Soviet period, Ukraine served for a long time as a supplier of minerals, heavy workshop products, weapons and foodstuffs to the rest of the Union and, first of all, the RSFSR. The actual foreign trade, which was severely limited, consisted of other exports of ore, steel and engineering machinery to Eastern Europe. Imports consisted mainly of energy and minerals (including iron ore from nearby Kursk) and engineering industrial products. Most of the import needs were covered by trade within the Union.
- COUNTRYAAH: Find major trading partners of Ukraine, including major exports and major imports with latest trade value and market share as well as growth rate.
With independence, the pattern has changed. Trade in the CIS has declined significantly, and particularly the loss of safe and subsidized oil and gas supplies to Ukraine has been felt. The reorientation of trade has not been as rapid and pervasive as would have been needed to offset the decline of the previously dominant market. Imports of food and consumer goods have increased, while exports of engineering industrial products have had major difficulties.
Tourism and gastronomy
Ukraine’s tourism industry has developed strongly during the 1990s. In 2010, the country was visited by approximately 21 million people. Most come from the Russian Federation, but the number of visitors from Western Europe has increased. A large proportion of these visit one of the many resorts of the Black Sea where the subtropical climate attracts visitors year-round. The most famous seaside resorts are Yalta in the Crimean peninsula and Odessa. In addition to these, there are interesting historical city centers in several cities, especially the one in Kiev where the mighty Sofia Cathedral and the impressive Mary Palace dominate.
Note: the capital city of Ukraine is Kiev with a population of 2,762,000 (estimated 2012). Other major cities include Kharkiv with a population of 1.5 million, Dnipropetrovsk with a population of 1 million, Donetsk with a population of 980,000, Odessa with a population of 980,000 (estimate 2012).
Ukraine’s strong agrarian traditions remain in the country’s kitchen. Seeds are included in many recipes. Bread in many different forms is available, from the everyday Ukrainka to the wedding party’s korovaj and the many sweet pastries in shape croissants – perklanadets, bulotjky, rohalyky. Almond, honey, rose petals, nuts, fruits, cheese; the fillings are innumerable. Meat and fish dishes are also often prepared with bread, with thick breads that suck in butter and cream. The most famous dish outside Ukraine, Kiev chicken, is no exception: the chicken breasts are pounded thin, rolled with ice-cold butter, provided with thick breading and should properly cooked send up a cascade of melted butter to the one who puts the fork in the finished deliciousness.
Cabbage, beet, blast and turnips are other important ingredients. Beetroot soup (borscht), cabbage dumplings (holubtsia) and cabbage soup are some examples. Fish such as herring, mullet and carp, pike and perch are well represented in the recipe flora. Sausages (eg balyk and sardelky) are also included in the everyday kitchen.