The Ukrainian economy in the world trump

The promises made by Donald trump, the American voters, almost guaranteed in the coming years a lot of turmoil in the world economy. We can now safely say that trump really does not like free trade, but to defeat Hillary Clinton, he could only dragging on his side of workers who lost their jobs due to the fact that those were moved to the framework agreement North American free trade area (NAFTA) to Mexico, to China and South-East Asia.

The transfer of Assembly plants has enabled American corporations to reduce production costs and made their products more competitive. However, soon they were followed by Western European and Japanese firms, and the effect of the removal of production to other countries were offset. As a result, the winners are the countries that have adopted these industries, the standard of living of industrial workers in these countries increased, and the loser left the American, Western European and Japanese workers, whose standard of living is relatively decreased.

First decided to “get out of this game” English industrial workers, voting for a British exit from the EU is quite possible withdrawal from the free trade zone of the EU. After the success of Breccia Trump had nothing to do, how to join this strategy.

Already announced the US withdrawal from the TRANS-Pacific partnership (trump signed the corresponding decree on January 23) and it is possible revision of the agreements on NAFTA leads to the fact that under the blow will be all low-margin industrial manufacturing. For example, the automotive industry.

But in the production of expensive cars, the car manufacturers don’t depend too much on import duties. For example, one Cayenne SUV of the German carmaker Porsche earns about 17 thousand euros. Raising taxes on expensive cars will make the export of such products somewhat less favorable, but the export budget runabouts, which have a very substantial volume production automakers, may be unprofitable in the case of import duties, because the producers earn only a few hundred dollars per unit.

If they want to place their production in the US, where the road labor and high cost of services and rentals as required by trump? Is not the fact. Such large investments as the construction of the plant, are of a strategic nature, and some analysts say that the presidency of the trump, as at the time of Jimmy Carter, may be limited to only one term in office. It is very split today was the American nation which we have seen recently unprecedented since the Vietnam war demonstrations on the streets of American cities.

Therefore, the likely protectionist actions trump, temporarily creating jobs in American traditional industrial sectors, can lead to stagnation in international trade, and indirectly to cause the American economy significant damage. Will decrease the purchasing power of many American consumers (many competitive U.S. companies benefit from international trade) that will reduce demand for American cars, to the sales decline (and it will be a factor in the reduction of jobs in the American automobile industry, that will be an unpleasant surprise to the trump).

The world economy has now entered a period of turbulence and not a lot we can say about how these processes will develop in the near future. Will show if trump and persistence and will promote the return of American businesses in the country, or seeing the decline of American industrial power in international markets, will stop and return to the policies of the American elite held at the last Board of representatives of the democratic party? We don’t know.

But if we assume that the tramp will carry out promised economic policy, how will this affect the Ukrainian economy? I believe that nothing good awaits us.

Ukraine is in the economic zone of uncertainty, which today is expected to “blow.” 25 years of independence our economic policy was the desire to integrate into the world economy, become a player, the maximum included in the international production chain. Private owners of large industrial giants, established after the collapse of the Soviet Union control over them and received significant benefits. It was also beneficial to the employees of these enterprises, as well as the owners and workers of some other sectors of the economy (the so-called “related companies”).

If international free trade policies had continued, we would gradually begin to include in these chains and other sectors of our economy, building on the initial success of metallurgists and agricultural producers. However, the trend of the dominance of free international trade is finished, or at best will be greatly adjusted due to the protectionism of certain sectors of American and Western European economies.

Then we should expect a deceleration regenerative processes in the Ukrainian economy, which we have seen in the last year, and which we associate mainly with international trade. How can we be in this case?

One way out of this situation, I see temporary waiver of the optimization of our economy under the Ricardian theory of comparative advantage and the transition to the extended version of the diversification of our economy based on the domestic market. This is our policy, of course, will not be able to be strategic in nature, because international trade is mutually beneficial and in the long term, I’m sure the world will go back to her. Perhaps, significantly reducing the degree of dangerous and risky financial globalization, but retaining the globalization of the commodity. But in the near future, diversifying our domestic economy will enable us to overcome its known inhibition caused by a likely slowdown in international trade.

Therefore, our government and the NBU will soon need to begin developing operational activities that will tempfilepath future trade shocks, if they occur, and the probability of this is, as the global economy is in the nature of “communicating vessels” and it’s all very much intertwined. We can’t even imagine where and how can negative (and in specific sectors and positively) impact the new administration’s actions trump on our economy. We can only to assume. But these assumptions need right now.


I’d rather prepare for the worst. It would be a smart move. The creation of centers of growth of the Ukrainian economy within the country in the non — tradable sector of the economy- construction, infrastructure, health, education, science, public services — can give us some breathing room to understand as now the world economy, and whether these changes are sustainable. All it is necessary to develop our competitive strategy and to ensure that our economy did not start to lose jobs, and the material level of workers has not decreased. And it can be now quite inappropriately — at a time when Ukraine’s economy is already beginning to recover organically.

Bohdan Danylyshyn, academician of NAS of Ukraine.