Sunday, October 03, 2010

Ukraine Economy

This empty barge on the Dnieper River near Zaporozhye is symbolic of the economic malaise that has beset this country (and many others) since 2008. It was one of the very few commercial vessels I saw in a nearly 6 day trip down the Dnieper River in late July-early August. GDP in Ukraine is estimated to have fallen about 15 per cent last year, but it expected to recover by about 4 per cent this year.
Ukraine has many resources, including some of the best agricultural land in Europe, timber, coal and minerals, as well as a highly literate population. However, its economy is beset by corruption and by the fact that in Soviet times factories in general were not efficient by free market terms. And Ukraine was especially hard hit by the economic crisis that is affecting us all.
Two lecturers on the cruise spoke of corruption, which adds an unspoken cost of about 30 per cent to most transactions, and makes foreign investors wary of sinking money into the country. According to one university lecturer, little has improved since the Orange Revolution of 2004, which was supposed to install a more modern and democratic system. She said instead one group of oligarchs just replaced another, and the hopes some Ukranians held of the country's eventually qualifing for membership in the European Union have been abandoned.


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