UNLOCKING UKRAINE’S INDUSTRIAL AND EXPORT POTENTIAL: KEY INFANT INDUSTRIES FOR SUSTAINABLE GROWTH

Abstract

The article looks into identifying promising sectors for industrial and export diversification in Ukraine, aiming to address the challenges posed by its inefficient international specialisation in raw materials and primary processed goods. By applying the concept of infant industries, the study provides a rationale for targeted sectoral policies designed to facilitate Ukraine’s more productive integration into global value chains and, consequently, foster sustainable economic development. The research is methodologically grounded in the theory of economic complexity and the product space framework, utilising their analytical tools to estimate opportunities for industrial and export diversification in Ukraine. The gravity model was additionally employed to evaluate the unrealised export potential of manufacturers within infant industries. The findings of the study identify several product groups as promising areas for the diversification of Ukrainian exports, based on available opportunities and anticipated benefits. These include various rubber and plastic products, boilers, pumps, laboratory equipment, centrifuges, road equipment, agricultural machinery, bearings, electric motors and generators, transformers, lighting equipment, as well as certain devices and apparatuses. Ukrainian manufacturers in these industries have established modest production and export capacities, many of which have been severely impacted by the full-scale war that began in 2022. Despite these challenges, their current presence in the global market supports the classification of these sectors as infant industries with substantial potential to evolve into important drivers of the country’s export growth. The article proceeds to discuss the most effective tools and mechanisms for enhancing the production and export potential of these industries. It evaluates existing government instruments and policies that could be leveraged to support the scaling of production, expand export capabilities, and attract investment in the economy’s priority sectors. The study concludes that, given the severe constraints on available resources and the limited capacity for state-led economic stimulation, scarce resources should be strategically allocated to support the most promising industries, as identified through rigorous and objective analysis. It is essential to systematically monitor the utilisation of state support and its impact on the economic performance of these sectors. Additionally, the list of priority industries should be periodically reviewed to reflect shifts in global economic trends and the evolving structure of the Ukrainian economy.