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Ukraine, Economy

Soviet government, free enterprise, IMF, International Monetary Fund, dramatic rise

Ukraine was the second-ranking Soviet republic in industrial and agricultural production, after Russia. Long known as the “breadbasket of Europe,” Ukraine traditionally had a highly developed agricultural sector because of its vast, fertile lands. It generated more than one-fourth of the total agricultural output of the Soviet Union. Industrial development was a high priority of the Soviet government. In the 1930s Ukraine experienced a rapid and extensive industrial upsurge, mainly in the mineral-rich Donets’k and Kryvyy Rih regions. Because of Soviet development, which emphasized heavy industry, Ukraine possesses one of the most industrialized economies of Europe. However, its industries are highly inefficient and in pressing need of modernization.

The collapse of the Soviet Union brought a dramatic rise in energy costs and a reduction in demand for Ukraine’s products, causing a catastrophic decline in production. The problems were compounded by high rates of inflation and sluggish reforms to increase private ownership of enterprise. In 1995 and 1996, however, inflation was significantly reduced and reforms toward a system based on free enterprise were accelerated. In addition, the United States as well as the International Monetary Fund (IMF) and other international organizations provided large grants and loans.

The value of Ukraine’s gross domestic product (GDP) in 2000 was $31.8 billion. Agriculture, which includes forestry and fishing, accounted for 14 percent; industry, which includes mining, manufacturing, and construction, accounted for 38 percent; and trade and other services accounted for 48 percent.

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Article key phrases:

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