The economy and society of the ukraine

2 Main characteristics and the socio-economic structure of the Ukraine of today 1. 3 Ongoing reforms and prospects for the future Chapter II. FACTORS OF ECONOMIC GROWTH 2. 1 What makes economies grow? An outline of mathematical models of growth with emphasis put on the Solow’s model and Cobb-Douglas production function 2. 2 What makes economies grow? A brief literature review on factors driving economic growth 2. Since then, the country has undergone crucial social, political and economic changes driven by both global and internal pressures. However, between 1991 and 1994, the nation faced tough economic times because of the collapse of the connections that resulted from hyperinflation, Russia’s business surroundings, creation of nation's commercial systems and privatizations (Puglisi, 2003). Economic history Ukraine`s governments successfully established a national currency which cushioned the nation from the effects of inflation witnessed before and fluctuations in the international markets.

Macroeconomic indicators tracing the nation’s economic performance has seen tremendous economic transformations over the last decade.  The country's gross domestic product showed positive dynamics since the beginning of the millennium, with an annual change estimated at around 5. 7 billion (Akimova, 2010). Population history Ukraine has been considered as part of Eastern Europe since its independence, with her population comprising 78% of Ukraine origins, 17% of Russian origin, 0. 6% of Bella Russian origin, 0. 4% of the Bulgarian origins and other minorities. Since Ukraine's independence, the population had been declining with her initial population at 55 million in 1991.   The low fertility rates have, however, been worsened by a relatively high death rate of 15 deaths per population of 1000. Over time, the birth rates have been 9. 6 births per population of 1,000. The high death rates over birth rates have been the main reason for the decline in the country’s population from 55 million in 1991 to 45 million in 2018.

14 % of the population is between the ages of 0-14, while 12 % is between 15 and 24 years.   The nation has undergone substantial social political and economic changes driven by both global and internal pressures. However, in 1991, the collapse of connections between Russia’s business surrounding, privatization problems, hyperinflation, and the formation of the national business systems led to the economic instabilities in the country (Puglisi, 2003). History of unemployment in Ukraine The rate of employment has varied since the nation's inception in 1991. The country plunged into a massive unemployment crisis during its inception following the collapse of most soviet-sponsored institutions, such as integrated management bodies. Positive recordings for unemployment have been recorded in the past year since jobless rates in the country reduced by 9% in the 4th quarter of 2018.

In the third quarter of 2018, the unemployment rate dropped to below 8%, which is considered the threshold for competitive economies. The positivity of economic growth was reflected in employment rates, where an increase from 55. 7 was realized in the last fiscal year (Simionescu, 2017). 2 Main characteristics and the socio-economic structure of the Ukraine of today Economic characteristics Like other post-Soviet states, the economy of Ukraine can be described as a rising open market.  The economy exploded between 2000 and 2008 when the global economy was witnessing a great recession. The Ukrainian industrial sector and economy are run by company owners.  These groups decide on the manner in which resources are used within the economy. Major Ukrainian businesses are individually owned, while some are owned by the government.

According to the World Bank, Ukraine is run by private enterprises comprising 93% of the overall business ownership within the economy. The rest is shared between the government and other corporations, which may be pursuing socialist ideologies such as universal care and benefit. Although most enterprises within the economy strive to go beyond profit, their existence is beyond serving the needs of the community. Though the products and services may satisfy human needs, they are in reality if consumers have capabilities to make payments for these goods and services. Business formation involves a group of people leveraging unique interests, skills, and desires to trade with one another voluntarily. The underlying principle in the creation of these economies is the fact that individuals trade because they have a common belief that it makes them better.

The expectations of financial rewards are based on values that people specialize in more valuable things. The Ukrainian government regulates specific industries, and own other sectors deemed sensitive to be in the hands of the private sector. A purely capitalist market such as Ukraine is characterized by the fact that the market is the solemn price setter since prices are majorly based on demand and supply. These market forces then become the structures that determine profit margins. Ukrainian government exists to protect the economic forces from risks related to recession, corruption and promote competitiveness. Ukrainian law protects mortgages, property rights, liens, and other factors since most of these tasks are within government agencies. Monopolies exist in environments where competitiveness is not in existence.

Sellers and buyers become price setters contrary to the country's characteristics of being a capitalist republic. One of the common promoters of economic competitiveness is the size of governments within economies. The size of the current Ukrainian government has become a one-factor promoting economic growth for its small size. Income tax rates for top-earning individuals have remained at 20% while the top corporate tax remains at 18%, which is favorable. According to the international monetary fund, the nation ranks number 50 globally in terms of gross domestic product with a purchasing power of $353 billion. Ukraine's economy and society is characterized by multi-sectoral industries, agriculture, and services. A growth of 2% characterized the country's economy between 2017 and 2016 after a series of continuous declines (Hayoz, 2017). These subsectors form a universal characteristic of a competitive economy.

5)     Willingness to change The last factor characterizing the Ukrainian economy is the capability to conform and adjust regarding the changing environment. According to the committee on the emancipation of discrimination against women, there are austerity measures that affect Ukrainian women because of war. The ongoing reduction of the public sector affects women the most since women depend on state support and are most of the employees in the public sector. In the third quarter of 2018, the unemployment rate dropped to below 8%, which is the threshold for competitive economies. The conflicts between the nation and Russia continue to detach the other parts of the population from the nation mainly the Russian speaking Ukrainians. The conflict increases the levels of gender-based violence and lessens the amount of support to its survivors and victims.

14 billion in 2014 (Moroz, 2017). The GDP has maintained an average of 3. 6% between March 2002 and December 2018 with an all-time high data being recorded in 2004, which was at 14%. A record low GDP was recorded in March 2009 when a GDP of -19. 7% was recorded. 15 billion, with the value representing 0. 18 % of the world's economy. The country's GDP averaged 90 billion US dollars since its independence in 1991, reaching an all-time high in 2013. Figure 2. Annual GDP (1991-2018), in US$ million Source: Compiled by the author based on the data of Trading economics database The last documented GDP constant price stood at 283,791, while the gross fixed capital formation was recorded at 73,438. The recorded GDPs were adjusted based on acquisition ability equivalence. The GDP of Ukraine, when modified using the investment capability parity, was found to be equivalent to 45% of the world's average PPP.

GDP per capita PPP averaged 7056. 17 dollars between 2017 and 1991 with all-time high recordings made in 1991 of 104,643. 95, while the lowest record was witnessed in 1998 averaging 4451. 3 recorded in 2016. Ukraine’s AU: BOP and current account balance are updated yearly and with an average of -1. 316 between 2017 and 1994. This average incorporated 24 averages from 24 observations taken every year. This data was at an all-time high in 2004 when a recording of 6. 67% (Aizenman, 2018). Although the current charges for the use of intellectual property continue to be influenced by market dynamics, the balance of payment has a significant influence. In 2017, the balance of payment current account charges for the use of the intellectual property was estimated at 430million USD, which was an increase from a previous record of 357million USD.

Record for the balance of payment in using the intellectual property has been recorded since 2000. Eighteen observations were made with the highest register in 2013 at 1. For both products and services, the data for 2018 was recorded at 53. 8 billion increase from the previous readings of 46 billion dollars. The average BOP for both goods and services was reported at 44. 3 billion from the period between 1994 and Jan 2018 (Aizenman, 2018). The highest BOP recordings for both products and services were made in 2012 at 86 billion dollars, while the lowest was recorded in 1994 at 16 billion dollars. Reforms have not only been within the financial sector but have also extended to other spheres such as housing, mortgage, employment, technology and innovation, health and wealth distribution. Reforms in the housing sector Integrating Ukraine’s economy to the European Union saw the adoption of European housing regulations.

The housing market is a significant determinant of both the prosperity and the living conditions of the Ukrainian population. Despite the country’s slow economic conditions, the housing market continues to rejuvenate following the injection of subsidies on construction factors. Secondary market apartments in cities such as Kiev increased by almost 7% after the change of inflation during the third quarter of 2018 to an average price of 1070 dollars per square foot (Matviichuk, 2017). New customers would not be considered in the new lending approaches. The fall in housing prices over the past five years can be attributed to the devaluation that resulted from the conflict with its neighbor Russia. Because of the restructuring of the financial sector, the housing sector has incorporated various housing techniques, such as communal apartments and single-unit homes.

Currently, the inflation-adjusted prices are over 70% lower compared to what was recorded in 2008. However, economic growth is expected to hit 4% margins in 2024, which may influence the housing market. According to the National Bank of Ukraine, the global rate problems are at 33. 2% of the overall internal incomes, which is considered favorable for economic progression. Over the past years, the Ukrainian government has spent around 43% of the State’s GDP. Deficits in state budgets have averaged 2%, which is considerable for growth despite the public debt being at 75 % of the GDP (Mitra, 2015). The downsizing of this sector has not only reduced recurrent expenditures but has also led to increased budget allocations for development projects. The Ukrainian economy has minimized barriers to free-market activities and allowed most essential players to take part in the market characterized by taxes, tariffs, licensing requirements and subsidies.

To further promote the move to open markets, the government has promoted unionization, subsidies and other activities or practices that function concurringly with natural functions. Introducing laws promoting fair competition and trust laws has removed barriers of entry while keeping regulatory restrictions in place. Although the government has a hand in regulating some economic underpinnings, other aspects of the economy such as pricing, demand and supply have eliminated discrimination. Buyers and sellers from within and beyond the economy may freely contract without the state’s interference by imposing quotas, tarries and subsidies. Restructuring of the energy sector Ukraine has worked to redefine its energy sector by promoting the use of electricity over petroleum to reduce the overdependence on imported crude. Forces within the international markets control most of Ukraine’s fuel and energy economy.

This is because the country's fuel and energy complexes do not meet the overall demands (Kurbatova, 2015). The nation has significantly increased exploitation of its reserves of coal, natural gas, and crude. The leading sectors within the oil and gas industry include drilling works, technical upgrades of capacity and wells work-over operations, fracturing, drilling, and rig management. Subsidies have also been placed on agricultural product and machinery such as tractors and harvesting machines, to increase efficiency while reducing losses. The agricultural status allowed the nation to be ranked sixth globally in terms of countries exporting grains. Over the same period, the nation's grain harvest mounted for approximately 50million tons, while in 2013, the yield increased to 63 million tons. In 2014, with the exclusion of Crimea, the nation harvested almost 64mnillion tons of both legumes and grain, which became the nation's record since independence (Zinchuk, 2017).

The households, being the other producer, have been streamlined to increase their production efficiency through subsidies and provision of a ready market for cereals. The most promising fact is the new type of leadership the country has at the moment. The government is headed by Volodymyr Zelensky as the president and Volodymyr Groysman as the prime minister; a combination deemed to incorporate various ages and diversities within the cabinet. Moving into democratic practices into the future, the nation has been ranked among top nations in terms of nurturing new leaders. This offer hopes for future competent leadership that would steer the country into better democratic and economic competence. Despite the good possibilities the nation has from its engaging and investing in the next generation, the backbone of its success still lies in the current economic performance.

The model addresses the scale effect problem, directed technological change, long-run divergence, and wage inequality evolution between the imitating and the innovating parties (Lee, 1997, p359). The model speculates that cash is subject to declining yields in a closed economy. When there is no technological growth or growth in labor, shrinking returns means that the size of cash formed suffices to gather for the current investment. This is because of the presence of depreciation in a closed economy. When there is no industrial or labor expansion development, the economy stops to advance. L- =Lyt+Lat The allocation of labor proportion for workers producing output is denoted as (1-l-) while those producing ideas is denoted as l-. Lyt= (1-l-) L- Lat= l-L- Where Ltt and Lat are the endogenous variables and –l-) L- together with i-L- being parameters i-, L- Production in the model also considers output and ideas.

The output is produced using the stock of existing knowledge denoted as At and stock of existing workers denoted as Lyt. Output also acknowledges constant return to objects and increasing returns to objects and ideas as the main function for production. Ideas, on the other hand, are produced using the stock of existing knowledge at and workers Lat. In this model, there are no stable reasons to have economies with balanced growth.  The output is denoted as a function of capital stock, while capital is deemed necessary for production. The limited production of investment is constant, while the production function exhibits steady returns to scale (Sato, 2004, p380). The product of output and savings rate equals savings, which are also equal to investments.

The amount of variation in the capital stock is like the investments when depreciation of capital stock has been factored out. Where the output elasticity is over 1, the production function becomes elastic. With the Cobb-Douglas production function, output elasticity is easily measured as (∂Q/Q) / (∂L/L) = (∂Q/∂L) / (Q/L) [ Aβ L(β-1) Kα ] / [ A Lβ Kα / L ] Which is equal to β The yield elasticity is constant to β meaning that if β is 1, then labour is expected to increase by 50% while output decreases by 1%. The frequency of change of the capital-labour ratio acts as the dissimilarity between the terms representing an increase in capital and labour. 2 REVIEWS ON FACTORS DRIVING ECONOMIC GROWTH Economic development concepts focus on the various ways where the current economic activities can influence forthcoming commercial developments.

The measurement of this increase must exclude inflation to improve measurement accuracy. To understand economic growth, understanding factors promoting economic growth is essential. Long and Short-run economic changes become the basis to which the elements of economic growth can be ascertained. Uncertainties and changes in market forces majorly cause fluctuations in economic growth. Determining the factors of production entails mastering the factor outputs per element of work input, percentage of the working-age population and hours worked. Economic growth is often limited by various factors, including poor health, low levels of education, infrastructure, and political instabilities (Bassanini, 2002, p52). Reshaping labor is also determined by financial balance, which are the cost advantages that industries get because of their size. With the use of a production function, the process to which competitive outputs are transformed from low-value inputs is obtained.

Incorporating labor into a combination of machinery and raw materials is then analyzed using the ratios of contribution to the output (Boeri, 2002, p71). The intensity, skill, and expertise entailed in labor determine the competitiveness of firms within an economy.  This means that competitive economies entail competitive firms that incorporate highly skilled labor units. Economic growth depends on the level of infrastructure to which factors of production and the production process rely upon (Esfahani, 2003, p442). Higher productivity because of efficient infrastructures increases the output required to maintain competitive economies and improve economic growth. Having a robust infrastructure reduces the inefficiencies that exist in the manufacture and supply of goods and services, which in turn increases the gross domestic product. Infrastructure has a two-means connection with financial support, which can be described as symbiotic.

The foundation encourages economic development, and monetary development changes the infrastructure. This proportion increases to about 10% in middle-income economies and 12% in high-income economies (Esfahani, 2003, p451). In this sense, infrastructural developments are essential for not only economic growth but also poverty reduction. Reduction in poverty reduces the high levels of inequality and disparities in income. Infrastructural development has been found to enhance globalization and technological innovation in manufacturing. In low-income economies, necessary infrastructures are essential, while demand for transport in middle-income economies goes fast. Ownership rights allows contractual with other parties. In this sense, economic growth is achieved if the law recognizes property rights and allows property owners to enter contracts. The field of contractual rights is another sphere to which economic growth is bound to dictates of the law.

Economies that offer robust freedoms to parties that own property has a chance of high economic growth compared to restrictive economies (Levine, 1999, p28). In a community with considerable wealth and vowed privileges, producers and agents of economic growth are given a chance to fulfil their course of existence, which is geared to economic growth. The presence of an efficient labor force using abundant natural resources means that quality outputs become a possibility (Gylfason, 2001, p857). 5 Political environment How an economy operates can have dramatic consequences on development. The government-enforced policies and administrative norms in the form of political factors increase or decrease the standards of living by transforming traditional production cultures to industrialized economies. The political environment influences economic growth by supporting or disrupting the development process.

The political factors that have a high impact on economic growth include administrative management, regime type, political stability or instability, corruption, and trade laws.  According to the World Trade Organization's 2011 statistics, over 26,000 people worked as IT specialist depicting a 20percent growth (Jennex, 2018, p13). The sector’s volume was estimated to cost over 5billion dollars in 2018, positioning the country among top nations that have invested heavily in information technology. Investments in technology have been promoted by the adoption of new technological approaches in other subsectors such as agriculture, mining, infrastructure, aerospace industry, automotive sector, and the strategic and defense complex.  In 2018, the country was found to have many interior and global IT firms. According to the International Association of Outsourcing Professionals (IAOP), 13 IT companies from Ukraine were ranked among the global outsourcing 100.

2) Natural resources Most of Ukraine's industries are engaged in natural resources or depend on natural resources generated by other sectors within the economy. The most significant sectors handling natural remedies include the mining sector, chemical and petrochemical industries, Wood and lumber sector, the food sector, and construction. These industries, in combination, accounted for 29% of the gross domestic product in 2015 (Burlutski, 2015, p264). With the help of the tech industry, the nation has tapped into potential hybrid industries combining natural resources and technology such as electronics, the weapons industry, and the space program. Ukraine is ranked among the first important nations globally for mineral products with the country being a host to nearly 10,000separate deposits. Ukraine's strategic defense complex is one amongst the biggest consumers of natural resources, considering that its potential has improved in recent years.

The sector incorporates over 130 companies, most of which almost 1% of the 92 mineral resources within the country (Burlutski, 2015, p271). 3) National Payment system The restructuring of Ukraine's national payment system has turned out to be the biggest sponsor of economic development. The banking sector has been regarded as one of the most efficient sectors offering the best investment and financing options to economic players. According to the National Bank of Ukraine, the banking sector has stuck to its mandate and operated within the stipulated guidelines (Gutenbrunner, 2018, p339). According to the world trade organization, Ukraine was recorded to have 143 non-tariff measures under implementation (Mitra, 2015). The easing of tension between Russia and Ukraine has allowed easing of investment flows. This has rescued state-owned businesses from distorting the Ukrainian economy.

The most significant driver of economic growth has been the fact that about 67percent of adult Ukrainians have access to bank accounts. This means they have access to conventional banking and potentially forms of financing which instigate economic growth. Corporates commonly report harassment by tax and customs officials, ruining the potentialities of good relations between businesses and government entities. The dysfunctional court systems have cemented this harassment, as justice and conflicts are never given a chance for arbitration. Business relations have become more strained because of the absence of a fair adjudication of business disputes. The country has also proven reluctant to engage in reforms. According to transparency international, Ukraine is ranked at position 130 out of the 180 nations in terms of corruption rates.

The most common reason provided for the constant interest rates is the need to cushion the country from inflationary risks. Despite the stagnation of interest rates, inflation has continued to grow from 8. 6percent recorded in January 2019 to 8. 8percent in May 2019. Interest on deposits continues to decline following a high-interest rate recorded in December 2018 gradually. This also has limited export financing resources. Although corporate taxes remain within a reasonable range, the individual tax remains skewed against the rich as they are subject to 20% tax (Puglisi, 2003). This tax discourages wealth creation and the need for economic progress. The opaque and costly regulatory environment siphons resources that could have otherwise been used to boost economic growth. c) Political instability Ukraine has been in a negative relationship with its biggest trading partner, Russia, over the last decade with the worst exchanges realized in 2014.

Despite this effort, the market continues to be dominated by black markets and transactions based on irregular procedures.  Ukraine's governance can be described as over-centralized, excessively regulated, and dysfunctional. The problem of fiscal decentralization has increased local budgets by an estimated 30%, introducing new systems of public procurement based on flawed rules and non-adherence to market rules (Leitner, 2018,164).   The systemization of these rules has created an overtly flawed market that suppresses small players within the market, creating unfair competition.    References Aizenman, J. International Journal of New Economics and Social Sciences (IJONESS), 6, pp. Cajka, P. , Jaroszewicz, M. and Strielkowski, W. Migration incentives and flows between Belarus, Moldova, Ukraine and the European Union: A forecasting model. Tourism and geopolitics: Issues and concepts from Central and Eastern Europe.