ECONOMIC REFORM IN UKRAINE.   Term Paper ID:22625 Click to get this paper

Essay Subject: Examines policies & problems from 1985 to 1995. Growth, politics, collapse of Soviet Union, perestroika, central control, incentives, leadership, liberalization.... More...

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Paper Abstract: Examines policies & problems from 1985 to 1995. Growth, politics, collapse of Soviet Union, perestroika, central control, incentives, leadership, liberalization. Paper Introduction: ECONOMIC REFORM IN UKRAINE Introduction This research examines economic reform in Ukraine. Ukraine became an independent country in December 1991, in the wake of the dissolution of the Soviet Union. Economic reform in the Former Soviet Union was initiated prior to that country’s dissolution. Therefore, this examination of economic reform in Ukraine covers the period from 1985, when former Soviet leader Mikhail Gorbachev initiated Soviet economic reform, through the fall of 1995. Economic reform in Ukraine has been inhibited by both internal and external factors. Internally divisions within the country’s population over both the character and pace of economic reform has impeded implementation of change. Externally, Ukrain Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Externally, Ukraine's dependence upon Russia forenergy and trading relations with other independent states of the FormerSoviet Union have cause Ukrainian leaders to be cautious in the pursuit ofeconomic reform. Meanwhile, tension between Ukraine'snationalist west and pro-Russian east has been reduced by the shock ofRussia's assault on Chechenia, and Ukraine has taken firm legislativeaction to deal with the militant separatist regime in Crimea region of thecountry. Inhatowycz, "Ukraine: Breadbasket or BasketCase?" Business Week, 5 October 1992, 58. The prime impetus for the economic initiatives of Soviet PresidentGorbachev was a dissatisfaction with the direction of economicperformance.[iv] Economic growth in the Soviet Union had become stagnant.Consumer demands were not being met, and productivity was declining. Therefore, this examination ofeconomic reform in Ukraine covers the period from 1985, when former Sovietleader Mikhail Gorbachev initiated Soviet economic reform, through the fallof 1995. [xii]"Hard Labor," Economist, 327 (21 November 1992): 63. 5. [xvi]"Ukraine on the Brink," Economist, 328 (4 September 1993): 45. Discharge inefficient employees. [ix]Ibid. Solchanyk, "Ukraine: The Politics of Economic Reform," RadioFree Europe-Radio Liberty Research Report, 1 (2 November 1992): 1. 4. Religious conflict and unattributed politicalassassinations caused further alarm. Ukraine, however, faced several problemssuch as natural gas debts to Russia and pressure from Germany to close itsChernobyl nuclear power plant. [viii]Ibid. The second stage of economic reform involved a loosening of centralcontrol over small enterprise.[viii] To a great extent, these reformssimply provided official recognition and approval of activities that hadbeen occurring in the country's underground economy for decades. Ukraine's traditional immunity to political extremism came understrain as the changes of independence and economic reform divided groupsand regions.[xvii] The Western Ukraine has long had ultra nationalistelements, most notably the Ukrainian National Assembly and its paramilitaryarm, the Ukrainian People's Self-Defense. Ukrainian nationalists spurred the collapse of Ukraine's economyby forming a coalition with the Communists instead of overthrowing themaltogether.[xvi] Economic reform policies, thus, were bogged down bypower struggles, and privatization became a slow and corrupt process.Rescuing the country's economy represented a daunting task for thegovernment. Sekarev, "Ukraine's Policy Structure," Radio Free Europe-Radio Liberty Research Report, 1 (14 August 1992): 6 . The president's agriculturalpolicy threatens to break the stranglehold of the powerful agrarian lobbyon the rural electorate. Summary and Conclusion This research examined economic reform in Ukraine. The economic reforms, however, now are being increasinglyopposed by both industrialists and government administrators, as they fearthat they will lose the state patronage on which they heavily depend. "Where Is Ukraine Headed?" Current Digest of the Post Soviet Press, 46 (3 August 1994): 4.Solchanyk, R. EU foodsurpluses may also be sent to Ukraine, where they can be sold by theUkrainian government to raise funds for agricultural inputs. Wage levels, where only family members were involved, couldbe established by the enterprises. Kaminski, "Ukraine Struggles Toward Farm Reform," FinancialTimes, 14 July 1995, 25. [vi]T. Kuchma said that heplanned to reform Ukraine's economy by enhancing cooperation with the Westand Russia, and that he believed that existing conditions do not favorfederalization. "Ukraine At the Crossroads." Journal of Democracy, 6 (January 1995): 117-13 .Meek, J. Significant improvements in laborproductivity resulted from these efforts; however, improvements required inthe Soviet economy demanded much more than that which could be achievedthrough labor productivity improvements alone. Meek, "Ukraine Treads Capitalist Road," Guardian, 29 March1995, 11. [xv]R. Naylor, "Changing the Economic Mechanism in the SovietUnion," Planning Review, 14 (8 February 1986): 3 -37. The privatization programhas begun, and prices for many goods have been allowed to reach a freemarket level. 3. Improvements in labor productivity were pursued throughprograms ranging from a reduction in alcoholism to the dismissal ofinefficient industrial managers. Economic reform in the Former Soviet Union was initiatedprior to that country's dissolution. [xiv]R. M. "Ukraine Treads Capitalist Road." Guardian, 29 March 1995, 11.Nahaylo, B. [xxiii]J. [xviii]"The Anatomy of the Beast," Economist, 331 (7 May 1994): U8. Gradual economic reforms slowlybegan to improve the situation, and subsequent agreements with the WorldBank and International Monetary Fund should keep Ukraine on the course ofeconomic reform. The temptation to quit economic reform in Ukraine is high.[xxv]Viktor Pyrizenyk, the deputy Ukrainian prime minister for the economy,says, however, that Ukraine will stick to the tough budget and monetarypolicy needed to qualify for International Monetary Fund loans. The inaction of the Ukrainian government in efforts to reform thecountry's economy, caused inflation to spiral out of control.[xviii] Thegovernment is filled with ex-Communist officials who perpetuatebureaucracy. Many problems remain, includingmonopolistic agricultural trading structures. Rockwell, "Ukraine's Economic Reforms on Thin Ice DespitePact," Journal of Commerce and Commercial, 4 2 (4 October 1994): 7A. "Ukraine: The Politics of Economic Reform." Radio Free Europe- Radio Liberty Research Report, 1 (2 November 1992): 1."Ukraine in EU Spotlight." East European Markets, 14 (13 May 1994): 3."Ukraine on the Brink." Economist, 328 (4 September 1993): 45-46."Ukraine: Reformers Anonymous." Economist, 336 (2 September 1995): 48-49.World Bank. The economies ofthese newly independent nations-including Ukraine, thus, were not preparedfor the sudden implementation of market economy reforms, and,simultaneously, the economic organizations within these economies werestripped of the support systems on which they had relied during the Sovietera. In that first year ofindependence, industrial production in Ukraine declined by 15 percent andinflation reached a rate of 3 percent per month.[xiv] Ukrainian Prime Minister Vitold Fokin submitted his resignation aftercoming under intense pressure from oppositionist parliamentarians.[xv] Theefforts to unseat Fokin had long been underway, as the opposition formed acoalition to obtain a no confidence vote on the former Prime Minister. 2. Ukraine must now followthis example if they are to benefit from the collapse of communism. [xx]Y. Although President Kravchukrestructured his government and appointed people who shared his vision, theindecisiveness shown in the stimulation of enterprise delayed thetransition from a centralized national economy. In spite of economic hardships, Ukrainians appearto have kept faith in democratic institutions, backing the proposedtransition to a market democracy. Economic reforms for smallbusinesses were implemented throughout the country at one time, and alldecentralization prerogatives were delegated simultaneously. Former supporters of Kravchuk are likely to cooperate withKuchma in his efforts to implement economic reforms. "Ukraine." Radio Free Europe-Radio Liberty Research Report, 3 (22 April 1994): 42-49.Naylor, T. Economic Reform Prior to December 1991 Meaningful economic reform was implemented in the Soviet Union beforethe country's collapse.[iii] These reforms, however, were not completedprior to the collapse, and, as a consequence, the former Soviet SocialistRepublics became politically sovereign countries with economies that wereneither fully centrally-planned nor fully market-driven. Ukraine may receive help from the European Union (EU) if some effortis made by the Ukrainian government toward economic reform, because the EUis concerned about the consequences of political and military instabilityin Ukraine.[xix] Food shortages and energy are seen as key areas by theEU, and a proposal has been made to help fund two now nuclear powerstations in order for the Chernobyl power plant to be shut down. Endnotes Bibliography"The Anatomy of the Beast." Economist, 331 (7 May 1994): U8-U1 .Brady, R., and Inhatowycz, R. Brady and R. H. [v]World Bank, World Development Report (New York: Oxford UniversityPress, 1992), 235. [vii]Pringle, 15-17. The International Monetary Fund demonstrated its confidence inUkrainian economic reform in March 1995, by approving a US$1.8 billionloan.[xxiii] President Kuchma outlined a program to privatize 8, mediumand large enterprises in 1995. Theprincipal elements of the reforms applied to small enterprises were asfollows: 1. [xiii]A. Threedetailed economic policy programs were drafted by the Ukrainian governmentin its first year of independence. Ukraine is making some progress in its efforts to reform the farmingsector, in spite of opposition from traditionalists.[xxiv] The Kuchmagovernment identified land reform and private farming as vital to thecountry's economic reform program. "Inside the Soviet Debt Machine." Euromoney, January 1987, 46- 54.Sokolovskaya, Y. The president's far-reaching program of economic reform included foreign trade liberalization,cuts in taxes and subsidies for food and fuel, a market-based foreignexchange system, and price liberalization. The third, and most significant, of the economic reform programsimplemented was that directed at primary industry and large enterprise.[x]While Gosplan, the state's central planning agency, continued to play amajor role, individual enterprises will be permitted to make majordecisions related to products to be produced, quantities to be produced,and product quality. Corruption and over-regulation plague local governments. Karatncky, "Ukraine At the Crossroads," Journal of Democracy, 6(January 1995): 117. Theincremental aspect of the perestroika economic reforms lay in the fact thatreform for small enterprises and large enterprises, and for the industryand agriculture as sectors were implemented at different times. 2. The transition from a centrally planned to a free market economy wasmuch more difficult in Ukraine than its people expected, and severe earlyhardships such as hyperinflation resulted. [xxv]"Ukraine: Reformers Anonymous," Economist, 336 (2 September1995): 48. "Ukraine Struggles Toward Farm Reform." Financial Times, 14 July 1995, 25.Karatnycky, A. Gorbachev, Perestroika: New Thinking for Our Country and theWorld (New York: Harper & Row, Publishers, 1987), 149. [xix]"Ukraine in EU Spotlight," East European Markets, 14 (13 May1994): 3. Nahaylo, "Ukraine," Radio Free Europe-Radio Liberty ResearchReport, 3 (22 April 1994): 42. One requirement imposed by the state was thatsuch endeavors must not impinge on the regular (officially recognized)employment of any individual. The government is now seeking to withdraw fromagriculture, but is proceeding cautiously. The main aspects of thetransition to a market economy are stabilization, liberalization,institutional restructuring, and privatization. H. "Gorbachev's Economic Reforms." Banker, 8 (February 1987): 15- 17.Rockwell, . "Ukraine's Policy Structure." Radio Free Europe-Radio Liberty Research Report, 1 (14 August 1992): 6 -63.Shirreff, D. The principal economic goal of the perestroika reforms was an increasein economic productivity.[vi] While perestroika changes did not representa shift completely away from socialism, they hold the promise to radicallychange the Soviet economic mechanism. [iii]R. Therefore, this examination ofeconomic reform in Ukraine covered the period from 1985, when former Sovietleader Mikhail Gorbachev initiated Soviet economic reform, through the fallof 1995. The Ukrainians can draw lessons from the experience of Poland,which began its move towards capitalism in 1989. 3. Retain profits for reinvestment within the individualenterprises. Improve productivity through incentive compensation. None of the country's political parties actively advocatedeconomic reform. These large enterprises were given the power andauthority to: 1. Pringle, "Gorbachev's Economic Reforms," Banker, 8 (February1987): 15-17. Ukraine became anindependent country in December 1991, in the wake of the dissolution of theSoviet Union. Ukraine's economic future remained uncertain, however, in spite of thecountry's new economic reform plan and an agreement negotiated with theInternational Monetary Fund for a $36 million loan from the agency.[xxi]The economic program formulated by Kuchma promised to reduce the budgetdeficit to 1 .5 percent of GDP (gross domestic product) in the second-halfof fiscal 1994, and included plans to form a foreign exchange market andprivatize state-run companies. [xxiv]M. "Ukraine's Economic Reforms on Thin Ice Despite Pact." Journal of Commerce and Commercial, 4 2 (4 October 1994): 7A.Sekarev, A. The enterprises covered by these reforms were quite small.[ix] Moreoften than not, they employed only family members, and they were often part-time, after-hours endeavors. [xvii]B. New York: Oxford University Press, 1992.----------------------- [i]A. The economic reforms in the Soviet Union were implemented in a three-stage process.[vii] Initially, improvements were sought in laborproductivity. World Development Report. "Ukraine: Breadbasket or Basket Case?" Business Week, 5 October 1992, 58.Gorbachev, M. [xi]M. In the summer of 1994, a change in government occurred in Ukraine.[xx] The support of the Socialist-Communist bloc and public opposition to thepolicies of former president Leonid Kravchuk facilitated Leonid Kuchma'svictory in Ukraine's 1994 presidential elections. [iv]D. Within asector or industry group, however, full reform was implemented at one time. Prices, to a great extent, could be established by theenterprises. Decisions concerning products offered or withdrawn could bemade by the enterprises. Perestroika: New Thinking for Our Country and the World. [xxi]K. ECONOMIC REFORM IN UKRAINE Introduction This research examines economic reform in Ukraine. Ukrainians appear to realize thateconomic reform must be a priority in 1995 and the remaining years of thiscentury. Shirreff, "Inside the Soviet Debt Machine," Euromoney, January1987, 46-54. Kuchma criticizedmarket reforms during the presidential campaign, but almost as soon as heassumed office, the new leader committed to reform programs and designatedofficials who will undertake such initiatives. Friction with Russia, whichsupplies the Ukraine's energy, fueled the growth of both pro- and anti-Russian extremist groups. At the end of 1993, the inflation rate in Ukraine was 1 , percent.[xxii] That economic performance both prompted the change ingovernment and the new commitment to reform by Kuchma. Inaddition, several groups attempted to force a dissolution of parliament.President Leonid Kravchuk formed a new government headed by Leonid Kuchma,who at that time stated that he did not favor radical economic reformmeasures. Sokolovskaya, "Where Is Ukraine Headed?" Current Digest of thePost Soviet Press, 46 (3 August 1994): 4. In the context of food supply, the population of the Soviet Unionremained adequately fed.[v] While providing sufficient calories, however,the state often was required to supplement Soviet agricultural productionwith imported grains, and food quality and variety was often inadequate.The importation of grain created a significant drain on Soviet hardcurrency reserves, and inadequate food quality and variety generatedconsumer discontent, which grew to the level of a national scandal. New York: Harper & Row, Publishers, 1987."Hard Labor." Economist, 327 (21 November 1992): 63."How To Wreck An Economy." Economist, 331 (7 May 1994): S5-S7.Kaminski, M. "Changing the Economic Mechanism in the Soviet Union." Planning Review, 14 (8 February 1986): 3 -37.Pringle, R. [ii]"How To Wreck An Economy," Economist, 331 (7 May 1994): S5-S7. Economic reform in Ukraine has been inhibited by both internal andexternal factors.[ii] Internally divisions within the country's populationover both the character and pace of economic reform has impededimplementation of change. [x]Ibid. [xxii]Karatnycky, 118. The large enterprises themselves had an incentive to become moreproductive, because, in most instances, the state, under the reformpolicies, was prepared to permit inefficient enterprises to fail.[xi] Thisfeature was truly new to the Soviet economic system.[xii] Economic Reform Subsequent to December 1991 Ukrainian President Leonid Kravchuk promised to implement radicaleconomic reforms during his inaugural speech in 1992.[xiii] Despite havinglaid down the foundations for economic reform, the slow progress has raiseddoubts over the Ukrainian government's commitment to market reforms. M. Profits could be retained by the enterprises. Progress is slow, with private farmsaccounting for only 2.5 percent of the country's total acreage, whilecollective farms continue to account for 7 percent, and state farms forapproximately 15 percent. Individual workers could be discharged for inefficiency. Ukraine became anindependent country in December 1991, in the wake of the dissolution of theSoviet Union.[i] Economic reform in the Former Soviet Union was initiatedprior to that country's dissolution. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.