Ukraine

The nation’s military expenditure was increased again in 2014, when the Crimean crisis began. In 2014, the defence budget of Ukraine was increased by some 13.4 billion UAH (approximately 447 US$ million), reaching 27 billion UAH (approximately 1.2 US$ billion).  This increasing trend continued in 2015, when the defence budget amounted to 46.7 billion UAH (almost 1.8 US$ billion).

Ukraine is situated in the Eastern part of Europe. It borders Belarus to the northwest, the Russian Federation to the east and northeast, Poland, Slovakia and Hungary to the west, Romania and Moldova to the southwest and the Black Sea and the Sea of Azov to the south. It’s the second largest country in Europe (behind only Russia) and its population is around 44.2 million. Kiev is its capital and largest city.

Ukraine declared its independence in 1991 with the dissolution of the USSR at the end of the Cold War. Five years earlier, in 1986, the Chernobyl accident took place at the Chernobyl Nuclear Power Plant, which is located at the northern part of the country, then known as Ukrainian SSR (Soviet Socialist Republic). Until the early 00s, the country managed to apply reforms to a small degree, as it was plagued by high levels of corruption and a lack of a legislative framework suitable for development. During this period, the country lost 59.6% of its GDP; going from 77.465 billion in 1991, to 31.262 billion in 2000. This tense atmosphere lead to the Orange Revolution, a peaceful massive movement right after the elections at the end of 2004.
 
More recently, in 2014, the Crimean Crisis took place, as Crimea was annexed by the Russian Federation. Peace was restored in February of 2015 with the Minsk-2 Agreements, when the leaders of Ukraine, Russia, Germany and France negotiated and signed a ceasefire deal.

Ukraine is member to numerous world and regional international bodies, including the United Nations (UN), the OSCE (Organization for Security and Co-operation in Europe), the WTO (World Trade Organisation), the Council of Europe, the EU Energy Community and the GUAM (an Organization for Democracy and Economic Development of 4 former Soviet States, namely Georgia, Ukraine, Azerbaijan, and Moldova).

The economy of Ukraine is an emerging free market. The EU and Ukraine agreed to the “Deep and Comprehensive Free Trade Agreement” (DCFTA), which brings new economic benefits to both sides from the beginning of 2016 and aims to increase the amount of good and services traded between them.

Ukraine has tremendous agricultural potential; 71.2% of the country’s land is considered agricultural. This fact has not been fully exploited, mainly due to the lack of modernization within the sector. More specifically its terrain mostly consists of fertile black soils, over 30% of world’s reserves, with few mountains located near the west (the Carpathians), and east borders. The growing international need for food products, is helping the local agricultural sector develop rapidly.

Additionally, Ukraine is rich in natural resources such as coal, iron ore, manganese, nickel, uranium and others. According to the State Statistics Service of Ukraine, the mining and quarrying sector was around 5% of the total GDP of the country in 2013.

Apart from the above, the country’s heavy industry can produce a great variety of equipment. This sector was particularly developed during the Soviet era, as Ukraine was a very important part of the USSR’s production supply chains. On the other hand, and according to the CIA World Factbook, the country’s energy sector depends on imports to meet 75% of its annual oil and natural gas needs and 100% of its respective nuclear fuel requirements.

Under the same context, the services’ sector share on the economic output of the country was around 60% in 2015, while 67.8% of the labour force was occupied within the sector (2014 data).  

Ukraine’s economic development was inclusive, helping the society to further develop. It is indicative that according to the World Bank, the poverty headcount ratio at national poverty lines was 83.3% in 2002, which is extremely high compared to the much improved 6.4% in 2015. The fact that Ukrainian society has been developing, can be also perceived by the country’s score in the Human Development Index (HDI) indicator. HDI measures human development and is published by the United Nations Development Program (UNDP). The factors that are taken into consideration in order to form the aforementioned index are life expectancy, education (measured by adult literacy and gross enrolment in education) and standards of living (measured by purchasing power parity, PPP, income). In 2014, the HDI value for Ukraine was 0.747, which ranks the country in 81st position out of 188 countries (placing it in the “high human development” category). Since 1990, the HDI value of Ukraine has increased from 0.705 to 0.747, a very sizable 6% improvement. Also the country has recorded a substantial progress in each of HDI indicators. Life expectancy at birth increased by 1.2 years, mean years of schooling and expected years of schooling increased by 2.8 years and 2.2 years respectively, while the Gross National Income (GNI) per capita, decreased by 24.38%, over the same period (1990-2014).