The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas
The comparative analysis of the economic indicators of the European Union, Ukraine and the Donbas as part of it. It is shown that an increase in the level of wages, the wage share in the cost of production, the share of the domestic market in total sales, small business development in Ukraine and Do...
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irk-123456789-1093152016-11-25T03:02:22Z The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas Kolosov, A.M. International and Regional Economics The comparative analysis of the economic indicators of the European Union, Ukraine and the Donbas as part of it. It is shown that an increase in the level of wages, the wage share in the cost of production, the share of the domestic market in total sales, small business development in Ukraine and Donbas are possible only on the basis of significant European investment, but not only in the export enterprises, but also in the development of the internal market for the production of domestic consumption. It must inevitably be a factor in the progressive increase in wages and other incomes. The central point of the launch of this mechanism, excluding inflation, is to provide a dynamic balance between the volume coming to the domestic market additional products and an inic consumption. Наведено порівняльний аналіз економічних показників Європейського Союзу, України та Донбасу, як її частини. Показано, що підвищення рівня оплати праці, частки заробітної плати в собівартості продукції, частини внутрішнього ринку в загальному обсязі продажів, розвиток малого бізнесу в Україні та Донбасі можливі тільки на основі значних європейських інвестицій, але не тільки в експортні підприємства, але й в розвиток внутрішнього ринку для виробництва продукції внутрішнього споживання. Це неминуче має стати фактором поступального підвищення заробітної плати та інших доходів громадян. Центральним моментом запуску даного механізму, що виключає інфляційні процеси, є забезпечення динамічної рівноваги між обсягом додаткової продукції, що надходить на внутрішній ринок, і зростанням оплати праці у сфері виробництва продукції внутрішнього споживання. Приводится сравнительный анализ экономических показателей Европейского Союза, Украины и Донбасса, как ее части. Показано, что повышение уровня оплаты труда, доли заработной платы в себестоимости продукции, части внутреннего рынка в общем объеме продаж, развитие малого бизнеса в Украине и Донбассе возможны только на основе значительных европейских инвестиций, но не только в экспортные предприятия, но и в развитие внутреннего рынка для производства продукции внутреннего потребления. Это неизбежно должно стать фактором поступательного повышения заработной платы и других доходов граждан. Центральным моментом запуска данного механизма, исключающего инфляционные процессы, является обеспечение динамического равновесия между объемом поступающей на внутренний рынок дополнительной продукции и возрастанием оплаты труда в сфере производства продукции внутреннего потребления. 2015 Article The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas / A.M. Kolosov // Економічний вісник Донбасу. — 2015. — № 4 (42). — С. 33-37. — Бібліогр.: 13 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/109315 330.341+331.2:658.8(477.62) en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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International and Regional Economics International and Regional Economics |
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International and Regional Economics International and Regional Economics Kolosov, A.M. The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas Економічний вісник Донбасу |
| description |
The comparative analysis of the economic indicators of the European Union, Ukraine and the Donbas as part of it. It is shown that an increase in the level of wages, the wage share in the cost of production, the share of the domestic market in total sales, small business development in Ukraine and Donbas are possible only on the basis of significant European investment, but not only in the export enterprises, but also in the development of the internal market for the production of domestic consumption. It must inevitably be a factor in the progressive increase in wages and other incomes. The central point of the launch of this mechanism, excluding inflation, is to provide a dynamic balance between the volume coming to the domestic market additional products and an inic consumption. |
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Article |
| author |
Kolosov, A.M. |
| author_facet |
Kolosov, A.M. |
| author_sort |
Kolosov, A.M. |
| title |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas |
| title_short |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas |
| title_full |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas |
| title_fullStr |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas |
| title_full_unstemmed |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas |
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factors of economic mechanism for recovery the domestic market of donbas |
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Інститут економіки промисловості НАН України |
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2015 |
| topic_facet |
International and Regional Economics |
| url |
http://dspace.nbuv.gov.ua/handle/123456789/109315 |
| citation_txt |
The Factors of Economic Mechanism for Recovery the Domestic Market of Donbas / A.M. Kolosov // Економічний вісник Донбасу. — 2015. — № 4 (42). — С. 33-37. — Бібліогр.: 13 назв. — англ. |
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Економічний вісник Донбасу |
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| fulltext |
A. M. Kolosov
33
Економічний вісник Донбасу № 4(42), 2015
UDC 330.341+331.2:658.8(477.62)
A. M. Kolosov,
DrHab (Economics),
Luhansk National University by Taras Shevchenko, Starobilsk
THE FACTORS OF ECONOMIC MECHANISM FOR RECOVERY
THE DOMESTIC MARKET OF DONBAS
Problem Statement. The discussions about cur-
rent state and future of Donbas on the backdrop of the
military confrontation in the Ukrainian society ex-
pressed different and sometimes contradictory, opin-
ions. Along with understanding the need for a subse-
quent resumption of the effective functioning of the
Donbas sound and appeals for a complete economic
blockade of Ukraine uncontrolled part of it. In this opin-
ion often manifested the military-political aspects of the
problem, while the economic impact of such a move se-
riously not taken into account. It does not take into ac-
count the role previously played, and again, after the res-
olution of the conflict, will play Donbas, which earlier
formed 25% of the export potential of the country.
Against the background of the controversy about
the benefits and problems associated with the beginning
of 2016 a free trade regime with the European Union
(EU), out of sight remain questions about the status of
the domestic market of Ukraine, in particular, its devel-
opment with the involvement of European investments.
And above all – investments in enterprises of Donbas,
which, after the resolution of the military-political crisis,
on the background of mass unemployment and an end-
ing of the traditional investment from the Russian Fed-
eration, will be the most attractive targets for cheap in-
vestments. Obviously, it will need to run an effective
economic mechanism of recovery of the domestic mar-
ket of Donbas, which factors are discussed in this article.
Analysis of Researches and Publications.
Sources of different relationships to the Donbas, includ-
ing the requirement of its economic blockade, most fully
revealed in his latest works V.P. Gorbulin [1]. Unfortu-
nately, the position of the blockade maintains a certain
part of the Ukrainian political class, in particular, the
leadership of the Lugansk regional military and civil ad-
ministration [2]. In [1] carefully analyzed the economic
losses of Ukrainian from the blockade of Donbas. How-
ever, the lack of a unified state policy in this matter puts
the companies in occupied area of Donbas, which oper-
ate in the legislative field of Ukraine, in difficult condi-
tions. So, of the 25 largest enterprises in the Luhansk
region 17 are located in the occupied territory, which
creates difficulties with the organization of production
and sales of products, transfer taxes. Despite this, the
contributions of these enterprises to the budget of
Ukraine at the end of 2015, only in the Luhansk region,
will be about 1 billion dollars US. And the loss of these
enterprises in the case of the blockade would lead to a
loss of consumer market of the region in a volume of
about 20 billion dollars US per annum [2].
In the current situation of Donbas is a clear the
need to shape the future economic mechanism of recov-
ery its domestic market on the basis of the country's
overall development strategy, some provisions of which
are being developed by A. Galchinskiy and V. Geets [3],
Y. Zhalilo [4], E. Labinskaya [5]. They note that the
strategic goals of the country's economy cannot be
achieved without serious foreign investment, the
sources of which will expand as Ukraine will move into
EU structures. Determined that the priority areas to at-
tract and support strategic investors may be those in
which Ukraine has the necessary resource potential and
forms a significant market need in the relevant product.
It is noted that the highest investment attractiveness has
export industry [6], the biggest sectors of which are the
most developed precisely in Donbas. At the same time
are considered the risks to invest in domestic enter-
prises. Determined that investors in most cases dis-
missed what would take on all the risks [7]. It requires
the study of the economic factors, management that
could ensure effective investment in enterprise of Don-
bas in order to restore its domestic market.
The objective of the article – the consideration the
factors of economic mechanism for recovery of the in-
ternal market of Donbas.
Presentation of the Main Material. The starting
point of the assessment of the internal market of Donbas
is the comparison of its performance for the European
Union, Ukraine and the Donbas as part of it. Consider
such factors as:
gross domestic product (GDP) per capita, thousand
dollars;
the share of wages in production costs – ShW, %;
domestic market share in total volume of the sales –
ShDM, %;
the share of small business in GDP of the country
and the region – ShSB, %;
the tax burden on labor.
If the gross domestic product (GDP) per capita in
the most EU countries ranges from 14 to 30 thousand
dollars, in Ukraine this figure with the current rate of the
national currency in all forms of the definition will be in
the range of 2-3 thousand dollars. In Donbas is expected
much lower value of this indicator because of the huge
number of unemployed.
A. M. Kolosov
34
Економічний вісник Донбасу № 4(42), 2015
The share of wages in the cost structure of produc-
tion in Ukraine is 6-10 percent, whereas in many Euro-
pean countries – at least 40, and at the same time wage
level in Ukraine is also much lower than in the EU [8].
In the structure of sales in Ukraine only 20% of domes-
tic market share, while in the world practice, the ratio is
the opposite meaning [9], in Poland, for example, the
internal market covers about 60% of sales [10]. The
share of the population employed in small and medium
business in Ukraine in general up to 30% (including the
informal sector), the same level of performance to be
expected in the Donbas, as during the occupation of this
kind of employment remained the only option for the
population is there. In Europe, small and medium-sized
enterprises employing more than 50%, in the US – up
to 90% of the population [11]. In Poland, for example,
small and medium enterprises produced 48,4% of GDP
[10].
At relatively low wages in Ukraine total tax burden
before 2016 amounted to 69% of payroll. It is the largest
tax burden on wages in Europe, where in most countries
it is between 35 and 50% [12]. However, by reducing
the rate of the single social contribution in accordance
with the tax legislation in 2016 should expect a signifi-
cant reduction in the tax burden on wages in Ukraine.
Let the tax burden beyond further consideration,
because of the legislative nature of its formation and,
most likely, unchanged for a certain period, and remain
other four considered indicators in a comparable form of
the diagram in Fig. 1.
Fig. 1. A comparison of the socio-economic indicators of countries
Of European Union (EU), Ukraine and the Donbas
It is obvious certain correlation between consid-
ered rates. Higher levels of any of them correspond to
larger values of others. The indicator for the European
Union is higher than for Ukraine in general, and for
Donbas, including. The arrows in Fig. 1 show the re-
quired direction of changing the values of economic in-
dicators for Ukraine and the Donbas, but the questions
arises: how to run a mechanism for increasing the values
of these indicators, with some indicators should begin as
prevent inflationary process?
Obviously, the start-up of the domestic market re-
quires a systematic effect on the shift on values in Fig.
1 in side of the bands specific to the EU. Is it possible to
improve the existing structure of strong performance by
anyone of the main chains? It is clear that a small share
of wages in the cost of production in Ukraine is due to
low wages that determines the generally low income
levels, and this in turn is reflected in the low share of the
domestic market. The average salary in Ukraine is about
4000 UAH, but this figure is calculated taking into ac-
count the very high (up to 100 thousand UAH) salary of
senior executives of enterprises, banks and other organ-
izations that share in the number of workers is insignif-
icant. Therefore, the "median" salary, that is the salary
of the average Ukrainian, about 30% lower. Namely, the
median wage determines solvency of the population in
the domestic market, in particular – respect to domestic
products, while paying of segment of the population
with the biggest income designed for the purchase of im-
Donbas
ЕU
EU
GDP,
th. doll.
30
ShW,
%
ShDM,
%
ShSB,
%
14
40
10
6
4
2
80
50
20
15
50
30
12
Ukraine
Donbas
Ukraine
Ukraine
Donbas Ukraine
Donbas
ЕU
EU
A. M. Kolosov
35
Економічний вісник Донбасу № 4(42), 2015
ported luxury items, expensive cars, foreign real estate,
and so on.
However, we cannot get a definite answer to the
question: low wages in Ukraine – it is a consequence or
a cause of the weak domestic market? It is understood
that the mechanical increase in wages without an in-
crease in sales volumes in the domestic market – a direct
path to inflation. On the other hand, increasing the vol-
ume of sales on the domestic market is impossible with-
out major investments in companies, whose products are
not intended for export, but for internal consumption.
Unfortunately, the benefits of the Association of
Ukraine with the EU by the new investment opportuni-
ties of the European capital in the development of the
domestic market of Ukraine, still remains out of focus.
About the role that EU could play in this direction
can be seen on the example of Eastern European coun-
tries. For example, Slovakia, which had earlier approxi-
mately equal to Ukraine its socio-economic indicators,
after spending several years in the EU as a result of the
extensive investment program increased its GDP per
capita up to 23 thousand dollars. Also, Poland, which
had a much worse initial conditions than Ukraine, be-
coming in 2004 a full member of the European Union,
through the German investment became sixth econom-
ics in the European Union (EU) [10]. Similar processes
are common to other Eastern European countries in-
cluded in the EU, so we can expect decisive for Ukraine
could become a serious investment from Europe to the
development of the domestic market of Ukraine, and es-
pecially the Donbas.
The fact of last massive investment of Russian cap-
ital into Donbas is a testament to its high investment at-
tractiveness. Thus, the first and largest facility of Rus-
sian investment in the Luhansk region was Lisichansk
refinery. In 2010-2011, under the control of Russian
business moved Alchevsk Metallurgical Plant, a Rus-
sian company then bought Luhansk locomotive Plant,
major Russian capital invested in Stakhanov Wagon
Works and other businesses. Termination of Russian in-
vestment prepares the base for the arrival of investment
from the EU.
It becomes evident next shown in Fig. 2 chain of
factors of recovery the internal Donbas market.
Fig. 2. The chain of the factors of economic mechanism of recovery the internal market of Donbas
ЕU investments in economy
of Donbas
In the domestic
market
In export
enterprises
In the growth
of employment in
small business
In the creation
of new businesses
An increase
of the share of wages
in production costs
Incomes growth The increase in
production
The condition of the mechanism:
С = P
The increase in domestic
consumption С
The increase in supply in
the domestic market P
Increase in supply
for export
A. M. Kolosov
36
Економічний вісник Донбасу № 4(42), 2015
The central point of this mechanism is additional
investment in the economy of Donbas aimed to increase
wages in the sphere of production of domestic consump-
tion.
That would increase of purchasing power of the
population did not stimulate growth in consumer prices,
it is necessary to control a proportional growth of wage
in the production of items of domestic consumption and
the growth of share of the domestic market in total sales.
This would support a dynamic balance between the
growth of purchasing power in the domestic market C
and additional products in this same market P, i. e.
C = P.
The launch of this mechanism requires the con-
certed action of a legislative nature, governmental deci-
sions and decisive action with regard to the business in-
crease hourly rates of wages, salaries, additional pay-
ments from profits on the background of falling tax bur-
den on labor, the introduction of a progressive scale of
taxation of high incomes.
Conclusion. Non-inflationary economic mecha-
nism of recovery the internal market of Donbas should
be based on attracting foreign investment in additional
production volume in the domestic market, balanced
with an increase in purchasing power of population of
region.
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Колосов А. М. Чинники економічного меха-
нізму відновлення внутрішнього ринку Донбасу
Наведено порівняльний аналіз економічних по-
казників Європейського Союзу, України та Дон-
басу, як її частини. Показано, що підвищення рівня
оплати праці, частки заробітної плати в собівартості
продукції, частини внутрішнього ринку в загаль-
ному обсязі продажів, розвиток малого бізнесу в Ук-
раїні та Донбасі можливі тільки на основі значних
європейських інвестицій, але не тільки в експортні
підприємства, але й в розвиток внутрішнього ринку
для виробництва продукції внутрішнього спожи-
вання. Це неминуче має стати фактором поступаль-
ного підвищення заробітної плати та інших доходів
громадян. Центральним моментом запуску даного
механізму, що виключає інфляційні процеси, є за-
безпечення динамічної рівноваги між обсягом до-
даткової продукції, що надходить на внутрішній ри-
нок, і зростанням оплати праці у сфері виробництва
продукції внутрішнього споживання.
Ключові слова: Донбас, Україна, Європейський
Союз, економічний механізм, чинник, рівень оплати
праці, частка заробітної плати в собівартості про-
дукції, частка внутрішнього ринку, зайнятість у ма-
лому бізнесі, інвестиції, внутрішній ринок, обсяг
пропозиції, обсяг споживання.
A. M. Kolosov
37
Економічний вісник Донбасу № 4(42), 2015
Колосов А. Н. Факторы экономического ме-
ханизма восстановления внутреннего рынка
Донбасса
Приводится сравнительный анализ экономиче-
ских показателей Европейского Союза, Украины и
Донбасса, как ее части. Показано, что повышение
уровня оплаты труда, доли заработной платы в себе-
стоимости продукции, части внутреннего рынка в
общем объеме продаж, развитие малого бизнеса в
Украине и Донбассе возможны только на основе
значительных европейских инвестиций, но не
только в экспортные предприятия, но и в развитие
внутреннего рынка для производства продукции
внутреннего потребления. Это неизбежно должно
стать фактором поступательного повышения зара-
ботной платы и других доходов граждан. Централь-
ным моментом запуска данного механизма, исклю-
чающего инфляционные процессы, является обеспе-
чение динамического равновесия между объемом
поступающей на внутренний рынок дополнитель-
ной продукции и возрастанием оплаты труда в сфере
производства продукции внутреннего потребления.
Ключевые слова: Донбасс, Украина, Европей-
ский Союз, экономический механизм, фактор, уро-
вень оплаты труда, доля заработной платы в себе-
стоимости продукции, доля внутреннего рынка, за-
нятость в малом бизнесе, инвестиции, внутренний
рынок, объем предложения, объем потребления.
Kolosov A. M. The Factors of Economic Me-
chanism for Recovery the Domestic Market of Don-
bas
The comparative analysis of the economic indica-
tors of the European Union, Ukraine and the Donbas as
part of it. It is shown that an increase in the level of
wages, the wage share in the cost of production, the
share of the domestic market in total sales, small busi-
ness development in Ukraine and Donbas are possible
only on the basis of significant European investment,
but not only in the export enterprises, but also in the de-
velopment of the internal market for the production of
domestic consumption. It must inevitably be a factor in
the progressive increase in wages and other incomes.
The central point of the launch of this mechanism, ex-
cluding inflation, is to provide a dynamic balance be-
tween the volume coming to the domestic market addi-
tional products and an inic consumption.
Keywords: Donbas, Ukraincrease in wages in the
sphere of production of domeste, European Union, eco-
nomic mechanism, factors, level of wages, wage share
in the cost of production, share of the domestic market
in total sales, small business development, investment,
domestic market, volume of supply, volume of con-
sumption.
Received by the editors: 26.10.2015
and final form 28.12.2015
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