SUBSTITUTION OF IMPORTS FROM THE RUSSIAN FEDERATION AND THE REPUBLIC OF BELARUS TO UKRAINE, THE EU, and THE WORLD with UKRAINIAN GOODS

07.02.2023

This research was conducted by the NGO Center for Market Economy Development ("CMD – Ukraine") – a community of experts, scientists, and industry specialists, united by the common goal of modernizing the Ukrainian economy on the basis of the development of high-tech branches of the manufacturing industry and services and the integration of the domestic economy into the global economic space through production of goods with a high degree of processing and added value. To this end, "CMD – Ukraine" constantly interacts with manufacturers, the Federation of Employers of Ukraine, the Verkhovna Rada of Ukraine Committee on Economic Development, ministries, and local self-government bodies, in order to develop and implement an optimal industrial and foreign trade policy that will ensure qualitative structural shifts in economy of Ukraine on the basis of the development of industrial potential. An important area of activity of "CMD – Ukraine" is the study of the best international experience in industrial modernization and the enhancement of production and export potential, the search for relevant elements of the economic policy of other countries, and the development of effective solutions for Ukraine based on them in the "Experts-Business-Government" triangle.

At present, "CMD – Ukraine" is working on a complex of issues closely related to the post-war development of Ukraine's manufacturing. In particular, with the participation of "CMD – Ukraine" and on the basis of the VRU Committee on Economic Development, a research was carried out on the restoration and further development of the manufacturing industry of Ukraine. The purpose of the conducted research was to analyze the available opportunities for development, to create manufacturing industry enterprises in Ukraine, and to develop tools (both legislative and administrative) that would ensure the accelerated post-war development of the national economy through qualitative structural shifts – the transition from the raw material production to the predominant production of goods with a high degree of processing and added value. In the course of the research, key niches for the emergence of new manufacturing enterprises were identified, namely:

­   - Processing of raw materials currently exported in a raw form;

­   - Covering the needs of the state;

­   - Covering the needs of the private sector; and

­   - Substitution of imports from the Russian Federation and the Republic of Belarus in Ukraine, the EU, and the world.

Among the priority measures of the state policy necessary to promote the development of the manufacturing industry in the post-war period, the following activities were identified:

­   - Insurance of investments against military risks;

­   - Provision of an available financial resource (soft loans, grants, non-refundable financial assistance for financing the construction of enterprises, etc.);

­   - Compensation of part of the investment through taxes;

­   - Ensuring guaranteed access to public procurement; and

­   - Support and stimulation of access to foreign markets.

Therefore, the research Substitution of imports from the Russian Federation and the Republic of Belarus in Ukraine, the EU, and the world is one of the stages on the way to the development of the concept for building up the manufacturing industry of Ukraine in the post-war period. The research was developed to answer the following questions:

1)     In which industries Ukraine can enhance its own production and export potential, taking advantage of the fact that the leading economies have imposed large-scale sanctions against the Russian Federation and the Republic of Belarus, including restrictions/bans on the import of products for a number of commodity items (ferrous metals, wood products, cement, some mechanical engineering products, and chemical products), and therefore will need new suppliers, which can be domestic manufacturers;

2)     Regarding which types of products it would be expedient to initiate new sanctions on the part of Western countries on imports from the Russian Federation and the Republic of Belarus for reasons of their replacement by supplies of the Ukrainian-origin products; and

3)     In which product groups Ukraine still remained dependent on imports from the Russian Federation and the Republic of Belarus, and therefore must take care of import substitution at the expense of its own production in the near future.

The answers to these questions will make it possible to determine new possible sanctions against goods from the Russian Federation and the Republic of Belarus in Ukraine, the EU, and other partner countries; to supplement the priorities of the industrial policy in view of the available opportunities for the development of manufacturing enterprises; and to clarify the tasks for trade diplomacy in terms of substituting Russian and Belarusian goods with Ukrainian analogues.

 

 
 

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