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Models of optimization of the structure of industry in Ukraine

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  • L. Sozanskyy

Abstract

A comparative analysis of the structural advantages of the industry in Ukraine and the EU member states has been carried out on the indicators of the share of gross value added (GVA) in the industrial output and the share of industry in total output. A similar analysis has been done in terms of industrial activities (mining and quarrying, processing industry, electricity, gas, steam and air conditioning, water supply, sewage, and waste management). It is found that the key problem of Ukrainian industry is its low efficiency - the 28th place among the EU member states in terms of the GVA share in the output. The least effective are the processing industries, in which the share of GVA in the output is only 19.63%. The above shows the domination of the material and energy components, which confirms the raw material orientation of domestic industry, in particular, in processing industry. Based on the study of Poland's experience in restructuring the industry, the conditions and directions for optimization in the industrial sector (by types of industrial activities) are justified in order to move from the raw-type economy to innovation. With the help of developed economic and mathematical models, the author constructs optimized structures of output and GVA in the Ukrainian industry in accordance with the criteria of increasing the level of profitability and production technology. Proposed measures on structural adjustment of Ukraine's industrial sector: reducing the extraction of stone and brown coal with increased extraction of crude oil and natural gas; increasing the efficiency of electricity, gas, steam and air conditioning supply by way of reducing the share of heat energy, with a simultaneous increase in the volumes and share of alternative, nuclear and hydro power; tariff liberalization and cost reduction and organizational reform of water supply, sewage, and waste management. It is determined that the key priority of the new industrial policy in Ukraine should be the development of manufacturing industries, for which a number of state policy measures are proposed. Among them are the increase in the share of state capital in high-tech and high-tech industries, the use of selective subsidy levers, and preferential taxation and government orders for non-tolling raw materials.

Suggested Citation

  • L. Sozanskyy, 2018. "Models of optimization of the structure of industry in Ukraine," Economy and Forecasting, Valeriy Heyets, issue 1, pages 79-97.
  • Handle: RePEc:eip:journl:y:2018:i:1:p:79-97
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