THE IMPACT OF GLOBAL COMPETITION ON THE STATE OF MANUFACTURING IN UKRAINE AND DEVELOPED COUNTRIES

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  Kateryna Shatnenko

Abstract

At the end of the 20th century, the economic structure was changed fundamentally in some countries. It was mostly related to the growth of global competition. One of the consequences of this process was the decline in manufacturing production in developed countries and in the post-Soviet countries. The purpose of this article is to define the meaning and consequences of the decline in manufacturing production in developed countries and in post-Soviet countries on the example of Ukraine. Methodology. This study is based on some general theoretical approaches such as analysis and synthesis, induction and deduction, etc. Also, statistical analysis was used for discovering some economic trends. Structural analysis was helpful for examining shifts in economic structure. Correlation between different facts, which is crucial for the understanding of the transformation of manufacturing, was identified by applying the systems approach. The aim of the article is to reveal the impact of global competition on the state of manufacturing and to define the manufacturing development trend. Results of this research showed that the decline in the rate of profit causes the transformation of economic structure. Global competition made the production of some goods in developed countries less profitable due to the relatively high costs. The ability to transfer labour-intensive production to developing countries transformed economic structure in developed countries. It was the reason for a sharp decline in manufacturing production, which caused some economic and social problems. Post-Soviet countries had serious economic and social problems too. Liberalization of trade made these countries face with global competition. This competition revealed extremely weak competitive positions of a great range of products. There was a massive decline in manufacturing production in Ukraine. This study proves that the transformation of manufacturing is far from the end. First of all, it is related to the rising wages in developing countries. It makes labour-intensive production less profitable. The Factor Price Equalization Theorem shows that there is no further perspective to stay competitive using cheap labour force. That is why it is crucial to create favourable conditions for the development of innovations. By its nature, manufacturing is more diversified than other sectors, which gives more chances to produce innovations. Strong manufacturing basis is also beneficial for providing employment, better standards of living, and sustainable economic growth. Practical implications. Developed countries can apply new approaches to their economic policies because they already have a quite strong innovative basis. These approaches should take into account current trends, which are considered in this article. Ukraine, bearing in mind the deepening of its integration into the global economy, should substantially improve its competitive positions. That is why it is important to launch a long-term strategic program, which is relevant to Ukrainian specific conditions. Value of the study is in distinguishing of different nature of the same process in developed countries and in Ukraine. It helps to define some perspectives of economic development. The results of the study can be used for creating economic programs.

How to Cite

Shatnenko, K. (2017). THE IMPACT OF GLOBAL COMPETITION ON THE STATE OF MANUFACTURING IN UKRAINE AND DEVELOPED COUNTRIES. Baltic Journal of Economic Studies, 3(3), 70-76. https://doi.org/10.30525/2256-0742/2017-3-3-70-76
Article views: 739 | PDF Downloads: 21

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Keywords

manufacturing, deindustrialization, global competition, innovations, economic development.

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