ECONOMY

Date: 2015-10-07; view: 539.

Regionalism

There are not only clear regional differences on questions of identity but historical cleavages remain evident at the level of individual social identification. Attitudes toward the most important political issue, relations with Russia, differed strongly between L'viv, identifying more with Ukrainian nationalism and the Greek Orthodox religion, and Donetsk, predominantly Russian and favorable to the Soviet era, while in central and southern regions, as well as Kiev, such divisions were less important and there was less antipathy toward people from other regions. However, all were united by an overarching Ukrainian identity based on shared economic difficulties, showing that other attitudes are determined more by culture and politics than by demographic differences.

In Soviet times, the economy of Ukraine was the second largest in the Soviet Union, being an important industrial and agricultural component of the country's planned economy. With the collapse of the Soviet system, the country moved from a planned economy to a market economy. The transition process was difficult for the majority of the population which plunged into poverty. Ukraine's economy contracted severely following the years after the Soviet collapse.

In 1991, the government liberalized most prices to combat widespread product shortages, and was successful in overcoming the problem. At the same time, the government continued to subsidize state-run industries and agriculture by uncovered monetary emission. The loose monetary policies of the early 1990s pushed inflation to hyperinflationary levels. For the year 1993, Ukraine holds the world record for inflation in one calendar year. Those living on fixed incomes suffered the most.

Prices stabilized only after the introduction of new currency, the hryvnia, in 1996. The country was also slow in implementing structural reforms. Following independence, the government formed a legal framework for privatisation. However, widespread resistance to reforms within the government and from a significant part of the population soon stalled the reform efforts. A large number of state-owned enterprises were exempt from the privatisation process.

In the meantime, by 1999, the GDP had fallen to less than 40 percent of the 1991 level, but recovered to slightly above the 100 percent mark by the end of 2006. In the early 2000s, the economy showed strong export-based growth of 5 to 10 percent, with industrial production growing more than 10 percent per year. Ukraine was hit by the economic crisis of 2008 and in November 2008, the IMF approved a stand-by loan of $16.5 billion for the country.

Ukraine's 2007 GDP (PPP), as calculated by the CIA, is ranked 29th in the world and estimated at $359.9 billion. Its GDP per capita in 2008 according to the CIA was $7,800 (in PPP terms), ranked 83rd in the world. Nominal GDP (in U.S. dollars, calculated at market exchange rate) was $198 billion, ranked 41st in the world. By July 2008 the average nominal salary in Ukraine reached 1,930 hryvnias per month. Despite remaining lower than in neighbouring central European countries, the salary income growth in 2008 stood at 36.8 percent. According to the UNDP in 2003 4.9 percent of the Ukrainian population lived under 2 US dollar a day and 19.5 percent of the population lived below the national poverty line that same year.