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Russia and Ukraine

Russia and Ukraine

Introduction

Political turmoil and conflicts between Russia and Ukraine have made news headlines for decades now. The two neighboring countries have had a long-lasting fraught relationship based on political, economic, and regional factors. Similar to the majority of political phenomena, the Russia–Ukraine conflict is multidimensional and highly complex, and remains an illusion to most individuals, players, and observers worldwide (Larrabee, 2010). The conflict has seemingly worsened in the recent times when the two states continue to engage in unending political divides and fruitless ceasefire agreements (StopFake.org, 2014). Russia and Ukraine first established political ties in 1991 following the collapse of the Soviet Union when they were declared independent republics (BBC News, 2015). Through the years, their bilateral relations have gone through ups and downs signified by hatred and intolerance between them. Russia has continued to wage the war as it tries to regain control over Ukraine as a USSR state (StopFake.org, 2014). The question that remains a puzzle is whether peace is possible between the two countries. For the purpose of this paper, a different perspective is taken, specifically an economic point of view in discussing the economic development of Russia and Ukraine; this paper also examines whether they are developed or developing nations. The discussion will be in light of the recent and ongoing conflict between Russia and Ukraine.

Russia and Ukraine: Developed or Developing Nations?

The discussion about whether Russia and Ukraine are developed or developing nations is a complex one. According to the United Nations statistics division, no sound convention has been established as a basis for designating nations as either developed or developing. These designations are just meant for statistical convenience rather than passing judgment on the development levels achieved by a country (Balassa, 2013). This paper will consider such elements as the Gross Domestic Product (GDP), Gross National Product (GNP), and Per Capita Income. Other important factors that will be considered include industrialization, technology, and infrastructure.

Ideally, both Russia and Ukraine are developing rather than developed countries. Different people have had various misconceptions that Russia and Ukraine are developed countries due to the fact that they initially belonged to an industrialized and economically stable United Soviet Socialist Republics (USSR) up to 1991. The USSR had massive resources to drive its great development initiatives for the benefit of all states. However, the Soviet Union began to decline under the influence of the reformist policies of Mikhail Gorbachev, the General Secretary of the Communist Party of the time (Larrabee, 2010). After ascending to power, he ruled with coercion and force thus weakening Soviet’s mechanisms to maintain control. In addition, the Soviet’s ability to hold onto possessions and stave off all internal challenges was undermined. The results were a disintegration of the Soviet Union, which made different nations run independently.

As such, the period after 1991 saw the post-soviet countries separate from the development strategy initiated by Joseph Stalin, the longtime leader of the Soviet Union. He had intended that the countries under the USSR political block would be subjected to socialist industrialization, an entirely state-driven strategy based on a centralized directive planning (Allrussias.com, 2015). Immediately after Soviet’s dissolution, Russia and Ukraine established strong political ties with the intention of developing together as ally nations. However, this did not last for long considering that the two states soon began having a fraught relationship. For close to three decades now, the two nations continue to fight each other.

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Russia

From a reflection of Russia after its long-time involvement in a war against Ukraine, Russia is a developing rather than a developed nation. In this section, various reasons will justify the statement that Russia is a developing nation.

Firstly, Russia’s economy relies heavily on the exportation of natural resources only, which include oil and natural gas. The situation of Russia’s economy is far from being considered developed taking into account that it lacks dominance in other sectors besides defense and energy (Szporluk, 2000). In contrast to nations such as the United States, the United Kingdom, Australia, Japan, Canada, and Korea, among others, Russia lacks dominance in sectors such as the automobile industry, the construction industry, machinery assembly, chemical manufacturing, manufacture of health-related products, and technological products, among others. As such, Russia exports oil and gas, and the same foreign exchange earned is spent on the importation of goods and services it is unable to produce. Russia’s economic performance stalls from time to time, especially in the time of financial crises affecting the world markets. For instance, the overreliance on foreign exchange from oil and gas makes Russia suffer economically when oil prices decline. Thus, Russia can be seen not to have achieved a stable economy considering that it is faced with numerous challenges that it is unable to solve.

Secondly, Russia should be examined from economic perspective where economic elements such as the Gross Domestic Product, Gross National Product, and the per capita income are considered. According to the estimates of the International Monetary Fund, Russia has an estimated GDP of 3.5 trillion US Dollars, a GDP per capita of about 24,100 US Dollars, a nominal GDP of about 1.18 trillion US Dollars, and a nominal GDP per Capita of 8,184 US Dollars (Samokhvalov, 2007). These statistics are in a range of what is considered ideal for a developing nation.

The third element is industrialization, which is a part and parcel of the modernization process in any country. In Russia, the levels of industrialization have not reached a level to be designated “developed.” In historical context, Russia remained an agricultural economy presumably because of government’s social industrialization approach, in which all industries were to be totally state-driven based on a centralized directive planning. Additionally, as a result of the global isolation of the USSR from the rest of the world, it was less likely that it relied on foreign credits and external assistance to finance its ambitious industrial expansion (Szporluk, 2000). When the USSR broke, Russia had to struggle to mobilize funds independently from internal sources such as agriculture and taxation. Since 1991, Russia has undergone a slow transition from an agricultural to an industrialized economy. However, the industrial production is geared for domestic consumption, and thus, its industries remain uncompetitive on the global scale. In comparison to the United States, the United Kingdom, France, Germany, Spain, Korea, Japan, Australia, and Canada, Russia is somewhere near the entry to the developed countries’ list.

Fourthly, there is inadequate infrastructure. Due to Russia has continued waging war against Ukraine and thus the whole world, it faces persistent economic sanctions and isolation from the West. As such, it lacks the financial support it requires to develop its infrastructure (Szporluk, 2000). Finally, there are technological challenges. Even though Russia has vast technical expertise and knowledge in various aspects of production, it continues to face increasing technological challenges (Koshkin, 2015). Most innovative ideas in Russia are not commercialized because of Russia’s global isolation. As such, despite the prominent role of Russia’s science and its potential, it continues to lag behind in nurturing modern technologies and innovating its economy.

Ukraine

Similar to Russia, Ukraine is a developing rather than a developed economy. Ukraine became an independent republic after the collapse of the Soviet Union in 1991. Since that time, the country has undergone a series of significant political, economic, and social changes. Between 1991 and 1995, Ukraine suffered difficult economic times as a result of the breakdown of the open connections with the post-Soviet business environment, hyperinflation, privatization issues, and social business system formation (C.W., 2014). Today, a reflection of Ukraine’s economy in the face of the long waging war shows that it is a developing economy.

Firstly, Ukraine should be observed from an industrialization perspective. Despite the effects of its frustrating relations with Russia, Ukraine has managed to fast transform from an agricultural to an industrialized and service-oriented economy. The country has an extensive footprint of industrial establishments (Szporluk, 2000). Major industries include but not limited to coal, electric power generation, chemicals, machinery, food processing, and woodworking. Ukraine is also known for the production and supply of highly developed military equipment to countries worldwide. The leading service industries include the banking and financial industry and the tourism sector. However, the country has not completely exploited its natural resources and thus cannot be classified as a developed nation.

Secondly, there is the overreliance on agriculture. Most of the domestic consumption of the people of Ukraine depends on agriculture. Ukraine has a moderate climate and is mostly a flat territory very favorable for agricultural production. Most of Ukraine’s agricultural land consists of cultivated land, orchards, gardens, vineyards, and pastures. The most important agricultural products include winter wheat, corn, barley, spring barley, sugar beets, and sunflowers, among others.

Thirdly, Ukraine is examined from an economic perspective. Various macroeconomic indicators can show that the national economy is performing moderately in spite of the devastating Russia-Ukraine conflicts, as well as the fact that the nation is in a transitional process. For instance, starting from the year 2000, Ukraine’s GDP showed a dynamic and active growth at an annual rate of 5.58 percent until 2009 when it declined by 15.1 percent as a direct consequence of the troubling world financial crisis and the strengthened conflicts with Russia. The inflation rates in Ukraine remain relatively high at an estimated rate of between 10 and 20 percent (The Library of Congress, 2011). The lowest inflation rate was recorded in 2002 at 0.7 percent while the highest was at 28.2 percent and 25.2 percent in 2000 and 2008 respectively. Between 1999 and 2005, the value of the current balance account has a surplus, with the highest value being 6.9 billion US dollars in 2004. However, the periods between 2006 and 2009 reflected a deficit, with the lowest value being 12.8 billion dollars in 2008 (The Library of Congress, 2011). By 2010, 50 percent of the country’s GDP was controlled by only fifty wealthy individuals (McMahon, 2014). According to the United Nations, these values depict a developing country.

Finally, Ukraine lacks adequate infrastructure in communication and transport. Initially, the country had an extensive infrastructure. However, after the decline of the USSR, and the effects of war with Russia, the condition of the infrastructure has continued to decline due to little government intervention. Most highways and airports are paved, but lack sufficient maintenance (Szporluk, 2000). The railway network is relatively short and aging. As such, the country lacks adequate infrastructure for it to be designated developed.

Conclusion

In this paper, it was discussed whether Russia and Ukraine are developed nations considering their long-time involvement in constant conflicts. It was noted that in spite of Russia and Ukraine having bilateral relations, they have been characterized by intolerance and hatred proven by Russia’s continued waging war against its neighbor state, Ukraine, based on regional, political, and economic factors. The most recent attacks have been characterized by cross-border attacks, with the effects being felt both on a local and global scale. The outcomes of the conflicts have significantly affected the political, economic, and social structure in both countries. Subsequently, economic performance has been impacted adversely. According to the discussion, both Russia and Ukraine are developing rather than developed economies. The opinion is based on various reasons. For instance, both countries depict general poverty as indicated by low GDP per capita, inadequate infrastructure, underutilized natural resources. In contrast, to the notion that Ukraine and Russia are developed for they initially belonged to an economically stable block is untrue. When the USSR was dissolved, the countries lost their industrial powers, and their later years were characterized by economic problems. Therefore, the paper concludes that both Russia and Ukraine are developing nations.