Economics and management of national economy

Assessment of the level of penetration of import dependence in the context of the import substitution policy in Ukraine

Economic Annals-XXI

Economic Annals-ХХI: Volume 167, Issue 9-10, Pages: 13-17

Citation information:
Vasyltsiv, T., Lupak, R., & Osadchuk, Yu. (2017). Assessment of the level of penetration of import dependence in the context of the import substitution policy in Ukraine. Economic Annals-XXI, 167(9-10), 13-17. doi: https://doi.org/10.21003/ea.V167-03

View Full-TextDownload PDF

Taras Vasyltsiv
D.Sc. (Economics),
Professor,
Lviv University of Trade and Economics
10 Tuhan-Baranovskyi Str., Lviv, 7900, Ukraine
tgvas77@ukr.net
ORCID ID: http://orcid.org/0000-0002-2889-6924

Ruslan Lupak
PhD (Economics),
Associate Professor,
Lviv University of Trade and Economics
10 Tuhan-Baranovskyi Str., Lviv, 7900, Ukraine
economist_555@ukr.net
ORCID ID: http://orcid.org/0000-0002-1830-1800

Yuliia Osadchuk
PhD (Economics),
Khmelnytskyi Cooperative Institute of Trade and Economics
3 Kamianetska Str., Khmelnytskyi, 29000, Ukraine
julia_osadchuk@ukr.net
ORCID ID: http://orcid.org/0000-0001-7466-2558

Assessment of the level of penetration of import dependence in the context of the import substitution policy in Ukraine

Abstract. Introduction. A situation when factors that stimulate an increase in the volume of imports have a growing impact and barrier and compensatory countermeasures are not formed is typical of the current stage of development of the Ukrainian economy. When solving this problem in the context of the import substitution policy in Ukraine, it is necessary to assess the level of import penetration into the domestic market and to find out the dependence of the national economy on its scale. The purpose is to conduct an assessment of the level of import dependence when planning the import substitution policy in Ukraine and to consider the world experience which should be taken into account when implementing it. Methods. As a methodological basis of the study, the authors use the provisions of statistical, structural system and comparative analyses, as well as theories of economic growth, along witgh modern concepts of institutional economy and transitional economic systems. Results. The results of the assessment of the level of penetration of import dependence into the Ukrainian economy are presented in the article, according to which conclusions are drawn about the country’s high dependence on the flows of imported goods (services) and the inability of domestic enterprises to produce products which may have a high consumer demand in the domestic market and can compete and replace similar imported products. The authors of the article emphasise the experience of individual, which should be taken into account when planning Ukraine’s public policy of import substitution, and suggests a number of appropriate measures which can be successfully implemented with regard to the real state of the national economy. Conclusions. The article reveals a high level of penetration of import dependence in the Ukrainian economy and the relevant negative trends. Given the volume of imported goods (services) flows and the real capacity of the domestic market, the authors determined that the level of import dependence of the national economy is critical. It fluctuated between 54.1% and 65.7% during the period of 2005-2016, and the tendency remains in 2017. Such a situation is also evidenced by the faster growth of imports of goods and services over the country’s GDP and the high share of imported goods (services) in GDP (from 48.1% to 60.6%). It has been proposed to focus on the formation and strengthening of structural changes in the Ukrainian economy by creating a suitable institutional environment for this purpose.

Keywords: Import Dependence; Import Substitution; Public Policy; Domestic Market; Domestic Production; Competitiveness

JEL Classification: F17; F42; H11; O20

DOI: https://doi.org/10.21003/ea.V167-03

References

  1. Yilmazkuday, H. (2017). Forecasting the Great Trade Collapse. International Economics, 147, 145-154.
    doi: https://doi.org/10.1016/j.inteco.2016.05.001
  2. Felbermayr, G., Jung, B., & Larch, M. (2015). The welfare consequences of import tariffs: A quantitative perspective. Journal of International Economics, 97(2), 295-309.
    doi: https://doi.org/10.1016/j.jinteco.2015.05.002
  3. Kasahara, H., & Lapham, B. (2013). Productivity and the decision to import and export: Theory and evidence. Journal of International Economics, 89(2), 297-316.
    doi: https://doi.org/10.1016/j.jinteco.2012.08.005
  4. Collier, P., & Venables, A. J. (2011). Illusory revenues: Import tariffs in resource-rich and aid-rich economies. Journal of Development Economics, 94(2), 202-206.
    doi: https://doi.org/10.1016/j.jdeveco.2010.01.015
  5. Cook, S., & Watson, Ph. (2011). A Comparison of Regional Export Enhancement and Import Substitution Economic Development Strategies. The Journal of Regional Analysis and Policy, 41(1), 1-15.
    Retrieved from http://www.jrap-journal.org/pastvolumes/2010/v41/cooke_watson_41_1.pdf
  6. Barhoumi, K. (2006). Differences in long run exchange rate pass-through into import prices in developing countries: An empirical investigation. Economic Modelling, 23(6), 926-951.
    doi: https://doi.org/10.1016/j.econmod.2006.04.006
  7. Corupai, R. (2016). Import substitution: what to take from the experience of the Asian countries?
    Retrieved from http://kavpolit.com/blogs/special_opinion/14333 (in Russ.)
  8. Pavlova, G. (2016). Import substitution should start from the ground. The Economist, 1, 46-57 (in Russ.).
  9. Kokarev, S. (2015). State crisis management. Financial Newspaper, 24, 34-50 (in Russ.).
  10. Zahid, A. S., Anwar, S., & Valadkhani, A. (2012). Macroeconomic consequences of increased productivity in less developed economies. Economic Modelling, 29(3), 621-631.
    doi: https://doi.org/10.1016/j.econmod.2011.11.005
  11. Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114(493), 22-49.
    Retrieved from http://courses.wcupa.edu/rbove/eco338/040Trade-debt/globalization/040200trade_pov.pdf
  12. Alexeev, V. V. (2004). Essays on the economy of Japan. Moscow: Moscow State Institute of International Relations (in Russ.).
  13. Patibandla, M., Kapur, D., & Petersen, B. (1999). A Byproduct of Import Substitution and Competitiveness out of International Orientation: a Brief Story of Inda’s Software Industry and Policy Implications. Working paper, 14, 1-26.
    Retrieved from http://openarchive.cbs.dk/bitstream/handle/10398/6566/wp14.pdf?sequence=1
  14. Serven, L. (1995). Capital goods imports, the real exchange rate and the current account. Journal of International Economics, 39(1-2), 79-101.
    doi: https://doi.org/10.1016/0022-1996(95)01379-K
  15. Baer, W. (1972). Import substitution and industrialization in Latin America: experiences and nterpretations. Latin American Research Review, 7(1), 95-122.
    Retrieved from http://www.jstor.org/stable/2502457
  16. Vlasyuk, A. S. (2016). National security of Ukraine: evolution of domestic policy. Kyiv: National Institute for Strategic Studies (in Ukr.).
  17. Sukhorukov, A. I., & Kropelnytska, T. P. (2015). Promising directions and tools of a policy of import substitution in industry of Ukraine.
    Retrieved from http://www.niss.gov.ua/articles/885 (in Ukr.)
  18. Karaseva, N. A. (2015). Strategy of import substitution and export-oriented development in the agricultural sector. Bulletin of the Odesa I. I. Mechnikov National University, 20(3), 41-45 (in Ukr.).
  19. Kremets, V. M., & Kremen, O. I. (2014). Financial statistics. Kyiv: Centre of Educational Literature (in Ukr.).
  20. Tiurina, N. M., & Karvatska, N. S. (2013). Foreign economic activity of enterprise. Kyiv: Centre of Educational Literature (in Ukr.).
  21. Soskin, O. I. (2013). The Role of state regulation in formation of modern economic model: changing imperative in the conditions of chaos. Economic Annals-XXI, 1-2(1), 3-7.
    Retrieved from https://ea21journal.world/index.php/ea-v125-01/ (in Ukr.)
  22. Zhalilo, J. A. (2012). The priorities of the policy of import substitution the strategy of modernization of industry of Ukraine. Kyiv: National Institute for Strategic Studies (in Ukr.).
  23. Horbulin, V. P., & Kaczynski, A. B. (2010). Strategic planning: meeting the challenges of national security. Kyiv: National Institute for Strategic Studies (in Ukr.).
  24. Varnalii, S. (2007). State regional policy of Ukraine: features and strategic priorities. Kyiv: National Institute for Strategic Studies (in Ukr.).
  25. State Statistics Service of Ukraine (2017). Official web-site.
    Retrieved from http://www.ukrstat.gov.ua (in Ukr.)
  26. Financial portal MinFin (2017). Exchange rates by the National Bank of Ukraine.
    Retrieved from http://index.minfin.com.ua/chart/?1&USD (in Russ.)
  27. The Ministry of Economic Development of Ukraine (2013). On approval of guidance on the calculation of economic security of Ukraine No. 1277 as of 29.10.2013. Order of the Ministry of Economic Development of Ukraine.
    Retrieved from http://www.me.gov.ua/Documents/List?lang=uk-UA&tag=MetodichniRekomendatsii (in Ukr.)
  28. The World Bank (2016). World Integrated Trade Solution.
    Retrieved from http://data.worldbank.org/topic/trade
  29. A brief report on pharmaceutical industry in India (2016).
    Retrieved from http://www.asa.in

Received 16.05.2017

View Full-TextDownload PDF
In, , , , ,

More Papers