Ukraine’s export diversification: the impact of economic integration and disintegration

Using the Herfindahl-Hirschman Index (HHI), Gini index and Thiel index, the paper outlines the consequences of the parallel acceleration of the economic integration and disintegration processes of Ukraine with its main trade partners - the EU and Russian Federation (RF) - in 2013-2018 for the country’s export diversification. It tests the hypothesis that the enhanced trade barriers under the economic disintegration increase commodity and spatial concentration of exports, mainly due to physical reduction in the trade volumes while the economic integration provides for export diversification: the overall impact of economic integration and disintegration on the export diversification depends on the depth and scope of the trade barriers increased and reduced and exporter’s ability to adapt to new terms of trade. Consequently, the results of HHI computation gave evidence of the gradual diversification of the commodity and spatial structure of the Ukrainian exports. It was revealed as a result, that the commodity nomenclature had increased to the largest extent for the following positions: products of chemical and related industries; textiles and products made there of; non-precious metals and products made thereof; machinery, equipment and mechanisms, electrical supplies. The research of the consequences of the parallel processes of trade liberalization (with the EU countries) and imposition of trade barriers (between Ukraine and RF) confirms the author’s hypothesis that the commodity and spatial concentration of the Ukrainian exports has decreased given the abovementioned terms of trade. As a result, the research highlights the ability of domestic manufacturers to adapt to new challenges of foreign trade and compensate the losses of commodity positions at the markets in RF, whereas the demand in the EU market is determined as a core driver for diversification of the commodity structure of the Ukrainian exports, including the ones to third countries.