The new authorities of Ukraine continue to build Napoleonic plans for the development of their state. Now the government of the country has announced that, which in the foreseeable future will raise Ukraine's GDP by 40%. true, how Kiev plans to achieve similar results, not very clear.
Will the sale of land allow to increase GDP??
In fact, you shouldn't laugh at the plans of the Kiev government right away.. During 2018 of the year Ukraine's GDP has indeed grown somewhat. FROM 2,5% at 2017 godu to 3,3% at 2018 year. That is, the growth of the Ukrainian economy, although not impressive, but really present. However, one should not even be hopeful about a possible serious increase in this indicator..
The thing is, that a favorable background is needed for real GDP growth, allowing to attract investments and modernize the Ukrainian economy. The Ukrainian government is pinning high hopes on allowing the sale of land to private owners, what many political forces of the country opposed before.
The formation of a free land market is a chance for Ukraine to slightly improve its well-being., and this is well understood by the current head of state Volodymyr Zelensky. Moreover, the economic situation of the Ukrainian state is as follows, that it is no longer possible to think only about the image of the government in the eyes of the population and about political prestige.
The Ukrainian leadership is no longer up to the reaction from especially "frostbitten" nationalists, the main task is to make ends meet, otherwise, the economic situation of the population may deteriorate so much, that a new Maidan is coming, which will sweep away the new rulers of the Square.
Now the Ukrainian government has finally decided to open the land market. And given the overall attractiveness of Ukrainian lands, there is no doubt, that investors will be found, primarily among foreign corporations. Respectively, the state will have additional opportunities for development, GDP will grow. I.e, the sale of land is seen as the primary way to achieve growth in gross domestic product in Ukraine.
However, in the current situation, when Ukraine accumulated a huge amount of debt from Western countries and the IMF, almost all funds, proceeds from the sale of land, may go to pay off debts. It turns out, that Kiev will actually pay off the Ukrainian land for its debt obligations. Only Ukraine has no other land. And having paid the debts today with the proceeds from the sale of land with money, tomorrow Kiev will be without land, and without money.
Unlike even natural resources, land is a resource that depletes very quickly. Today Ukraine has free land available, which foreign investors may be interested in, and tomorrow they will not be available, as all the free land will be sold out. And not the whole territory of Ukraine, to be frank, is of interest to foreign companies. Firstly, will buy out, of course, lands of the southern part of Ukraine, seaside territories. But you can't sell land in the same Donbass., even in the territories controlled by the Armed Forces of Ukraine.
Loans will allow you to live well, but not for long
The second way to increase GDP is to reduce lending rates for the population. properly, and in Russia now the level of debt load of the population is very high. This is explained not only by the insufficient level of wages, but also by growing needs - people want to live better, in more comfortable apartments, use cars, be able to visit resorts - at least domestic. Loans help people not feel so much the decline in living standards during inflation of goods and services.
Most of the population of Ukraine today is in a deplorable financial situation. Even excluding high unemployment, and working people have a low standard of living. The purchasing power of Ukrainian salaries is declining, at the same time, the country has very high lending rates. And many Ukrainians cannot even use loans..
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Therefore, increasing the availability of lending would become a "lifesaver" for a part of the Ukrainian population.. People would increase their consumer activity, accordingly, new money would be poured into the Ukrainian economy, which would stimulate the growth of a number of sectors of the economy, primarily financial, trade, construction.
Ukrainian government may lower lending rates, so that they do not exceed 10% per annum. Thus, Ukrainians will be able to take money on credit and direct it to address any needs.. Another thing, that in this case, the Ukrainian authorities will have to ensure a relatively stable and high exchange rate of the hryvnia.
But how to stabilize the hryvnia exchange rate? The Ukrainian authorities can no longer answer this question.. And making it harder, how to allow the free sale of fertile Ukrainian lands to foreign investors. Therefore, the second way to increase GDP seems to be much more difficult to implement., than the first, although, of course, you can't talk about the complete hopelessness of the project.
Demonopolization of the electricity and gas industry
There is also a third way - demonopolization of the housing and communal services market., primarily energy. Today Ukrainians are paying more and more for gas, for electricity, but at the same time the company, gas and electricity suppliers, in fact, can be called monopolists. They are free to determine the value of the goods supplied., they have no competitors, who could achieve lower prices for gas and electricity.
As a result, not only ordinary citizens are individuals, but also small and medium entrepreneurs can hardly pay the rising tariffs. And here it is worth noting, that for businesses high electricity and gas tariffs are a direct obstacle to scaling, development, since many entrepreneurs simply will not find the funds to pay for the services provided when trying to expand their business.
Electricity and gas prices must match demand, which will significantly improve the situation with the consumption of these resources. And then Ukrainian business will be able to breathe easy, not to survive, paying overwhelming money to natural monopolies. But the current authorities of the country for some reason bypass this issue., at least, turn to him much less willingly, than discussing the topic of selling land. After all, the West also insists on raising gas prices for the population., what the Ukrainian government tried to disagree with, knowing, that the increase in utility tariffs will be another time bomb.
Gas is much more complicated., than with electricity. The thing is, that Ukraine receives the bulk of its gas from Russia and here everything depends to a large extent on, what political relations are developing between the two states. While Russia has not cut gas to Ukraine yet, but if it cuts off, then very sad times will come for Kiev.
Another serious problem is the obsolescence of the infrastructure. In Ukraine, the situation with housing construction, especially with communications, supplying gas, shine, water to residential buildings, even more deplorable, than in the Russian province.
But, on the other hand, modernization of housing and communal infrastructure is one of the most effective ways to acquire funds within the country itself, since enterprises, receiving orders for the same pipe production, different communication components, will work and sell their products in Ukraine, and the buyer of this product will, and guaranteed.
Backward industry and weapons complex as the only hope
One of the main troubles of modern Ukraine is the backwardness of those industries, which before 1991 years were considered decisive in the Ukrainian economy. First of all, we are talking about metallurgy and mechanical engineering. Ukraine has always been famous for its metallurgical enterprises. It has been this way since pre-revolutionary times., and during the Soviet period of history, the Ukrainian SSR experienced rapid industrialization.
In a number of cities of the union republic, powerful metallurgical enterprises arose. Mechanical engineering also developed. However, the collapse of the Soviet Union entailed a weakening of the existing economic ties between the Union republics.. In Kiev, they saw with horror, that the West is in no hurry to buy Ukrainian products. Nevertheless, post-Soviet Ukraine managed to drift on a foundation, laid down in the Soviet period.
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Everything began to change rapidly after 2014 of the year. The quarrel with Russia and the imposition of sanctions on Ukrainian products led to, that in a number of areas Ukrainian enterprises simply could not work. For thirty post-Soviet years, no one has dealt with the modernization of Ukrainian metallurgy, engineering industry. Therefore, today the products of Ukrainian metallurgical enterprises, more precisely those of them, what still continues to function, turns out to be less and less competitive in international markets.
How modern Ukraine can compete with the same China, with Brazil? Kiev does not yet have real opportunities to modernize the metallurgical industry. And this is not talking about high-tech industries.. The only one, still retaining some prospects, is the defense industry, the foundation of which was also laid during the Soviet era.
Ukrainian defense industry has reliable clients in third world countries, primarily on the African continent and South Asia. Therefore, many experts are convinced, what if modern Ukrainian industry has some kind of industry, which can be called a flagship, then this is the defense industry. The arms market still brings good profit to Kiev and not to be left without it, modern Ukraine needs to further develop its military-industrial complex.
Another thing, that the West is not interested in the development of the Ukrainian arms industry. Ukrainian weapons in third world countries, like Chinese, by the way, are in wide demand precisely because of the lower cost, than American or European-made weapons.
Ukraine, of course, cannot be called a serious competitor of the USA or France in the world arms market, but it still pulls some buyers in specific directions. Therefore, the Ukrainian government needs to maintain independence in the future of the arms industry.. Another thing, what's in the country, actually under the "external control" of the United States, there is no need to talk about the independence of the government.
Ilya Polonsky