Industry or agriculture: What Ukraine needs to bet on?

Author : Bohdan Danylyshyn

Source : 112 Ukraine

Industrial policy is the only right strategic decision to achieve advantages in international competition
22:17, 9 December 2019

Open source

The media asked me to comment on some officials’ statements regarding the prospects of industrial policy in Ukraine.

Firstly, the very tonality of statements regarding the prospects of industrial policy is, at least, controversial.

For example, in terms of falling industrial production, Ukraine does not always move in a global trend. So, in the eurozone, industrial production is really declining in 2019. Let's take a closer look at the countries.

On the one hand, in January-September industrial production fell by 0.7% in the UK, by 1.2% in Japan, by 1.1% in Italy, and by 1.4% in Brazil.

On the other hand, the growth of industrial production in China in January-September 2019 amounted to 4.7%, in Russia – to 2.7%, in the USA and India the growth was 1.4%, in Canada - 0.8%, in France - 0.6%.

That is, it is not entirely correct to assert that the drop in industrial production in Ukraine is following global trends. Therefore, the phrase "industrial recession in the world" is not entirely truth. The numbers indicate that there are countries with positive dynamics of industrial production, and there are countries with negative dynamics.

And the question arises: do we really need a strategy of industrial policy”?

Rather high growth rates of the Ukrainian economy are now associated with good dynamics of gross value added in wholesale trade and agriculture. In industry, things are much worse - for five months, industrial production in Ukraine is falling.

In fact, we do not have a qualitative growth of the economy. I want to note that the scope of the Ministry of Economic Development is not limited to trade and agriculture.

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I don’t understand why we have such a popular discourse that Ukraine should first of all be an agricultural superpower, secondly, to develop the services sector, further focus on the development of trade, and only then, if possible, think about industry.

Industrial policy is the only right strategic decision to achieve advantages in international competition. Especially in the last two centuries - these are always strategies that are strongly permeated with the pursuit of technological advantages. It is not realistic to achieve technological advantages in the markets at random. Therefore, we need industrial policy and its strategy.

Over the past century and a half there have been practically no countries in economic history in which there was a long and sustainable economic prosperity without a developed industry (perhaps Hong Kong and Singapore are the only exceptions, but the triggers of their economic growth are the factors that are absent in Ukraine).

As there are no countries that achieved success without having an industrial policy during the period of national economies transformation or their transition to new economic and technological realities.

I’m not very pleased to talk about this, but when you see "defeatist" sentiments regarding the development of national industry, the idea comes up - pursuing an industrial policy will require serious moral efforts from domestic elites.

I admit that those who declare rejection of industrial policy are simply not ready for these efforts. It is easier for them to roll along the plane of primitivization and de-industrialization of the economy.

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