Determinants of the Ukrainian-Russian foreign trade
Journal Title: Регіональна Економіка - Year 2016, Vol 82, Issue 4
Abstract
Determinants of the mutual trade between Ukraine and Russia and its effects on GDP growth in the former are estimated, with the use of quarterly data for the 2000-2016 period. Our results provide evidence that demand for imports from Russia is not dependent on Ukraine’s output, while being stimulated by Ukraine’s exports to Russia and a decrease in the energy prices. It is found that Ukraine’s exports to Russia are increased in line with economic growth in both countries and higher world crude oil prices. As expected, exports to Russia contribute to GDP growth in Ukraine, while imports from Russia are restrictionary. <br>Devaluation of the hryvna is a factor behind a decrease in both Ukraine’s output and imports from Russia, while there is no an expected expansion of exports to Russia. At the same time, there is a direct link between Ukraine’s exports to Russia and world prices for crude oil. As more expensive crude oil contributes to a decrease in Ukraine’s imports from Russia, an improvement in the bilateral trade balance is expected, but the crude oil prices seem to be neutrality in respect to GDP growth. <br>Ukraine’s accession to WTO has contributed to imports from Russia, but entering of WTO by Russia has had an opposite effect upon Ukraine’s exports to Russia. Our results do not support a hypothesis by many Russian researchers that Ukraine’s accession to WTO had an inferior effect upon country’s exports to Russia. It is likely that Russia’s accession to WTO initiated either an import substitution away from Ukrainian goods or reallocation of investment activities to Ukraine, for instance, in sectors that have been most affected by stronger foreign competition (agricultural and construction machine-building, energy equipment, electronics). <br>Also, there is no support to another assumption by Russian authors that a build-up of banking credit financed by cheaper foreign loans in the way of WTO-imposed trade liberalization in trade in services had contributed to demand for imports from Russia. Also, it is confirmed that foreign borrowings by commercial banks do stimulate Ukraine’s economic growth.
Authors and Affiliations
Viktor O. Shevchuk, Ostap B. Yakym
Keywords
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