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How EU could contribute to modernization of Ukraine

Author : Stepan Kubiv

18:46, 2 March 2017
How EU could contribute to modernization of Ukraine

Author : Stepan Kubiv

Ukrainian industry has long remained out of active global industrial innovation and economic jump

18:46, 2 March 2017

Read the original text at eurointegration.com.ua.

 

Open source

The world is on the threshold of the fourth industrial revolution with a new type of post-industrial production, Internet, cloud technologies, big data, and commercial missions to Mars.

But what about Ukraine? What is being done to speed up our economic growth and bring it closer to the world level?

Once Ukraine has been following industrial course that allowed to form and develop a powerful industrial complex. In 1992, the industry accounted for almost 51% of GDP and now it barely exceeds 20%. In addition, in 1992, production was 43.5% of GDP, and in 2015, it is just over 14%. Specifically, it provides high value-added products, jobs and promotes the growth of GDP.

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Unfortunately, Ukrainian industry has long remained out of active global industrial innovation and economic jump. After the Soviet times, our industrial output was organically "mounted" in Soviet industrial chain, forming complete production cycle together with Russia and CIS countries.

Already in 2011, the share of industrial exports to Russia accounted for almost 70%. In some time Ukraine could eventually become the only satellite in the economic and political orbit of Russia.

In November 2013, we have chosen a different path of development, which resulted in the loss of a large market. We have mobilized our own forces and resources to carry out systemic reforms that would provide Ukraine rightful place in the world's developed markets.

And the efforts gave some result - the economy has reached macro-stabilization, and in 2016 we obtaied + 2.2% of GDP.

The strategy of markets reorientation could also be called successful. Over the last three years trade with Europe increased to 38%, and Russia’s position has declined by 9.9%.

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The farmers showed the best results in reorientation of sales; the EU market fully replaced Russian Agricultural Products (31.5% of total exports, or $ 4.24 billion).

Changes in the areas of engineering, construction, chemical industry are less visible. Break of long industrial relations with Russia forced Ukrainian producers to search for new partners and markets.

March 1, together with my colleagues, we go to Brussels to participate in the inaugural meeting on high-level Industrial dialogue between Ukraine and the EU.

Its strategic goal is creation of a joint industrial area between Ukraine and the EU. This will allow Ukraine to establish the best possible supply of industrial products to European countries, and the EU would get a new powerful and promising partner.

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Together with the European Commission, we have developed a roadmap project of Industrial dialogue. It provides specialized work areas such as engineering, light industry, aviation industry, shipbuilding, etc. The most important thing is the industrial segment of the Dialogue, so it is important to work out immediate tools for attracting Ukrainian companies to the pan-European production chains.

The first meeting will focus on the automotive industry, but we plan to start cooperation in all areas.  There is a lot of work ahead, because a significant part of Ukrainian industry is far from modern innovation. Only 11% of the total industry is equipped with high-tech production.

The level of wear and tear of fixed assets of machinery and equipment is about 58%, and 60% in industry.

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Under these conditions, our economy consumes three times more energy by 1% of GDP, rather than, for example, German one. All this increases the cost and reduces the competitiveness of Ukrainian products in foreign markets.

Of course, the government encourages large companies to upgrade their equipment and buy it from the Ukrainian manufacturers. Significant impact on infrastructure and related industries would be made by creating the Road fund. Improvement of roads would positively influence on regional development and logistics; it would stimulate the flow of investment to many sectors of the economy.

The government combines these solutions with finding systemic mechanisms that stimulate major changes in the industry. Therefore, the government established the National Committee for Industrial Development, headed by the Prime Minister.

The National Committee should unite efforts of the Government, businesses, and the public to create a strategy of building industry, focusing on innovative solutions and modern technologies.

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Last year, HiTechOffice opened in Kyiv, the aim of which is to find our Ukrainian "Elon Musk" and support their initiatives in the development of innovative solutions. A key condition for the inventor - not to move to other countries, but to develop their inventions, contributing to Ukrainian technologies and manufacturing.

That is why it is important to combine experience and expertise of our partners, including European ones.

It would essentially help Ukraine to successfully implement its ambitious plans.

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Current reforms supported by the European Union will allow Ukraine to occupy an important place in the global innovation economy of modern industrial production.

Then we would be able to compete for a decent level of accommodation of powerful industries in Ukraine. For instance, Tesla. Or we could find some scientific breakthrough like Elon Musk.

Because all revolutionary changes start with rational but a little crazy dream.

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