Akademičnij Oglâd (Feb 2023)
MODELS OF ECONOMIC OPENNESS OF EUROPEAN COUNTRIES AND UKRAINE: A COMPARATIVE ANALYSIS
Abstract
The article raises the question of whether the openness of an individual country’s economy corresponds to the level of its economic development. Retrospective analysis indicates the existence of a long-term close interdependence of the growth of international trade and world GDP with an accelerated increase in the share of exports. But in recent years, this share, having reached its maximum in 2008, has demonstrated an amplitude fluctuation with a range of 30%. Therefore, a hypothesis has been put forward regarding the existence of a probable limit of export-led growth and economic development at the expense of increasing the level of openness of the national economy. In the study, the authors conduct an analysis of the models of economic openness used in a number of European countries, compare them with the Ukrainian model, and put forward proposals regarding the principles of building a post-war foreign economic model of Ukraine. In the process of research, the authors have designed a system of absolute and relative indicators of economic openness and determined a number of factors affecting the degree of economic openness. The concepts of financial openness and foreign trade openness have been specified. It has been proved that the state has more freedom of choice in the formation of financial openness than foreign trade openness. Based on the analysis of a sample of countries (8 countries of the European Union with different levels of economic development, including former socialist countries and Ukraine), the authors have explored the dynamics of foreign trade openness over the past ten years. As a result, two groups of countries have been identified: a group with a certain fluctuation of the indicator and a group with a clear direction of the change in the indicator (either decrease or increase). It has been found that more developed countries, as a rule, belong to moderately open economies. In contrast, countries that relatively recently have become members of the European Union have ultra-open models. A more detailed analysis of economic openness has been carried out by calculating the ratio of net exports to GDP. This made it possible to qualify countries in another way: economies where the indicator fluctuates within 1-2% and economies with a dynamic indicator. It has been determined that states that have recently switched to a mixed economic model tend to show an increase in the positive net exports. Given the fact that there are no generally accepted indicators of financial openness, the authors have proposed to use a two-fold excess of the country’s GDP by the sum of foreign assets and liabilities as a criterion of openness. According to this criterion, only Ukraine and Poland should be classified as countries with moderate openness. All other economies can be considered ultra-open. The analysis of the net investment position allows, firstly, to identify a country as a net recipient or a net investor, and secondly, to assess the degree of influence of this indicator on internal processes in comparison with GDP. The relative indicators of openness and pair correlation have been also calculated for the indicators used to determine the level of foreign trade openness and financial openness of the countries under study, in particular: exports of goods and services; foreign direct investment, GDP and export quota. Based on the results of the study, it has been found that Ukraine’s foreign trade model should be dynamic, changing its type from decreasing to growing with a gradual transition to a positive net export value. The model of financial openness should change in the direction of transition from the existing model to dynamic one with positive dynamics of the openness indicator. However, growth should be driven by non-debt-creating foreign exchange flows, since the level of public debt (in particular, external debt) will be too high anyway. Under this condition, the growing negative value of the net international investment position will not create an additional threat to the country.
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