Exports from Ukraine to the European Union: macro-, micro- and political economy determinants

This thesis deals with the exporting performance of Ukraine. Focusing on the reorientation of merchandise exports, both in terms of geography – from East to West – and in terms of commodity composition, it explores the multi-level determinants of the observed picture. While until 2003-2004 reorientation from East to West appeared to be a steady trend, in 2005 this trend reversed and CIS re-emerged as a leading destination market for Ukraine’s exports. The commodity composition in trade with the EU has also hardly improved, and was more positive in trade with the CIS. Marginal improvements were observed on a more disaggregated level. These findings were confirmed in the macro-level analysis – Ukraine tends to under-trade with the external trade blocs – EU-15 and the then CEFTA, and over trade with the internal trade bloc of CIS. On a micro-level, the analysis has not revealed that trade with the EU has been associated with firm-level industrial upgrading, although FDI does increase the likelihood to export to the EU. Trade with the CIS has been associated with higher commodity diversification, which in turn is known to be associated with higher growth potential. On the level of policy lobbying, on the other hand, business elites have shown an increasing interest in the Western vector of integration.