Bìznes Inform (Mar 2020)
Evaluating the Efficiency of Ukraine’s Trade with the EU Countries
Abstract
The article is aimed at evaluating the efficiency of Ukraine’s trade relations with the EU countries by calculating the complementarity index and making use of various methods of empirical analysis. An analysis of the dynamics and structure of Ukrainian foreign trade in goods and services with the EU countries shows that the European Union remains one of Ukraine’s main trading partners. The balance of foreign trade in goods remains negative and in the service sector it remains positive. On the basis of empirical analysis, it is proved that cooperation with the EU is beneficial for Ukraine, as it contributes to the growth of domestic GDP twice as much as with the CIS countries. The Scatterplot study supports the hypothesis of the gravitational model that a significant distance between countries negatively affects the trade turnover between them. The authors have justified that each additional kilometer of distance is accompanied by a decrease in turnover by 0.7%, which is due to the additional costs of transporting the goods, significant linguistic and cultural differences, etc. The economic structure of relations between Ukraine and the EU is complementary (mutually reinforcing), with the highest complementarity observed with Ireland – 62.07, and the lowest - with Malta. Based on the calculation of the ТСІ index, taking into account the commodity specification, it was revealed that the most complementary goods in the structure of trade relations «Ukraine – European Union» 2018 were: fats and oils of animal or vegetable origin, cereals and black metals, which indicates the interest of partner countries (among the EU) in Ukrainian commodity positions, because especially for these products Ukraine has competitive advantages. In general, the evaluation of the efficiency of bilateral relations has shown that the EU countries are partners which cooperation is beneficial for Ukraine and has significant prospects for development, as evidenced by the calculation of the complementarity index and the empirical analysis results.
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