I extend the standard New-Keynesian DSGE model to study the macroeconomic consequences of the minimum wage increase in an economy with wage underreporting. The model is calibrated and estimated for Ukraine. According to the model predictions, the larger is the degree of wage underreporting in the economy the less responsive is the economy to the minimum wage increase. When the degree of wage underreporting is large, the minimum wage increase: 1) affects production costs mostly through higher taxes, 2) has less strong negative effect on hours worked and 3) can lead to an increase in tax revenues.
The aim of this study is to explore the relationship between gender employment gap and economic growth in transition countries for the latest available data between 2000 and 2017, using 2SLS model, and estimate the potential economic gains from closing employment gap in terms of GDP per capita for 2017. The results show that 1 pp. higher employment gap on average has less GDP per worker by 4%. The economic effects estimation present potential benefits in GDP per capita from closing the employment gender gap from 6% in Mongolia to 45% in the Kyrgyz Republic. Gender differentials in employment rates can be explained to a considerable extent by maternity benefits, education gaps, and nondiscrimination laws. Therefore, to decrease employment gender gap and provide better analysis of gender gaps several policies are needed: concerning childcare benefits, availability of part-time employment on high-quality occupations, and better gender data collection.
Did the UK move closer to the US as a result of Brexit referendum? This thesis examines the change in connection between the UK stock market expectations and the US stock market before and after Brexit referendum, which was held on May 23, 2016. Using OLS regression, we found that the US and UK stock market became somewhat less integrated for four-month period after the Brexit referendum than for five-month period before it. S&P500 Index returns had a statistically significant impact on implied volatilities of FTSE 100 only before the Brexit referendum. However, British risk-free rate (LIBOR) became a statistically significant factor affecting FTSE 100 implied volatilities only after the Brexit referendum.
Artem Oharkov: “SURVIVAL IN TRANSITION: INFORMAL PAYMENTS IN HEALTHCARE”
Informal payments are often considered as the response of the public system for being underfunded. Informal payments allow people, who provide public services, to survive while being underpaid. That does explain why all countries of former Eastern Bloc had a high rate of informal payments at the beginning of their transition to the market economy. Still, informal payments themselves managed to survive in some countries over the decades since the transition. They spoil the system, by undermining justice and increase the real cost for patients. This work studies determinants of informal payments in healthcare based on the third round of Life in Transition Survey, carried in 2016.
Danylo Tavrov: “IMPLICATIONS OF LAND MARKET IMPERFECTIONS ON POLICY DESIGN”
Land markets all over the world are diversely regulated, although a vast stock of empirical literature seems to suggest that unrestricted land market is the best policy design option. Since diversity of regulations proves this unlikely, it is surprising that little attention is paid in the academic literature to the theory that would allow to choose land market design based on welfare implications of various restrictions.
In this work, we build upon the framework described in the literature in order to derive an optimal choice of maximum land holdings restrictions in the presence of land market imperfections. Imposing such restrictions together with reduction of transaction costs in land markets could reduce market imperfections and improve welfare in the economy by reallocating the land between large and small economic agents according to their marginal productivities.
This thesis revisits the issue of the impact of socio-cultural characteristics on economic outcomes. Specifically, it considers the effect of foreign aid on economic growth and its dependency on social capital. To contribute to the topic, I use the wide data sample including 80 developing countries covered in World Value Surveys from 1984 to 2014. Developing the previous groundwork, I advance the idea that social capital is more meaningful when regarded as multi-dimensional. In this thesis, I use PCA in order to get a composite social capital measure. Robustness check shows that this way it performs a way better than using single cultural measures or simpler definitions. Finally, it is found that the higher the social capital, the higher the return from foreign aid to economic. Moreover, this relationship holds when human capital and previous development are accounted which supports the previous findings in the research of economic growth and social capital.
The ability to produce high-quality inflations forecasts, including those of inflation, is of crucial importance to modern central banks. Good nowcasts and short-run forecasts are important to keep a finger on the pulse of current economic situation, to evaluate previous actions and policy decisions in terms of how their actual and expected effects differ from each other, as well as to enhance credibility of a Central Bank in the eyes of the society. The purpose of the paper is to build and evaluate a data-driven model for forecasting core inflation in Ukraine. The main model is based on the disaggregation approach and ARMA process with data-based dummies that controls for fluctuations with exogenous nature. The model considerably outperforms standard structural model and models simple ARMA models, in particular in terms of forecasting performance in 6 months ahead horizon.
Kateryna Bobylova:“EXCESSIVE SEA PORT TARIFFS, PORT EFFICIENCY AND UKRAINIAN TRADE”
Sea-port tariffs are extremely high in Ukraine compared to other Black Sea ports and, generally speaking, elsewhere in the world. This research analyzes the effect of the excessive Ukrainian sea-port tariff rates on port efficiency and Ukrainian sea-borne trade using a two-stage approach. First of all, it estimates port efficiency scores by the using stochastic frontier approach. In the second stage, a fixed effect panel data model is used to estimate the effect of port tariffs on sea-borne trade and port efficiency. Furthermore, this research creates a rating of Ukrainian sea ports using their efficiency scores. The research is based on the panel of performance indicator of all 18 Ukrainian ports for 2006-2018. Empirical results demonstrate a significant negative effect of port tariffs on ports’ efficiency when a 1% increase in tariffs will reduce efficiency by 1.1%. Port tariffs also have a negative effect on the sea-borne trade, especially on the exports of dry bulk and general cargo with -1.04 elasticities on average. The estimated efficiency scores clearly have positive effects on Ukrainian cargo handlings. All these results imply that Ukrainian policy makers should review sea-port tariff rates and redirect future money flows on the improvement of sea ports’ technical characteristics.
Kateryna Kostash: “STATE SUPPORT AND FARM STRUCTURES IN UKRAINE”
This thesis provides a farm-level analysis of the effect of state support on farm output shares dynamics in Ukraine in 2007-2014. The study uses descriptive methods, parametric regression analysis of production functions and cluster analysis. Investigated dataset contains broad accountant records of 10,529 Ukrainian agricultural firms. The analysis showed that state support policies in all cases have a positive impact on output share. We find evidence of selectivity in providing support. In particular, in three sectors out of six were found that larger farms will tend to receive more aid. Also, it is noticed that in livestock sectors, the highest support obtains on the average more consolidated sector. Coupled with the effect of support such situation may distort market incentives and lead to misallocation of outputs and inputs.
The study analyzes the impact of digital piracy on bilateral international trade in three groups of good in Cultural and Creative Industry such as Film, Audiovisual, and New Media industries. The thesis re-estimates findings by Lionetti and Patuelli (2009) with the newest UNCTAD panel data for 2002-2015 years using augmented log-transformed gravity model and Poisson specification with the eigenvector spatial filtering technique. According to the half of zero trade flows, the pooled Poisson regression better describes the trade data in the Film industry. In contrary, the ordinary pooled OLS model is sufficient to use for trade flows in Audiovisuals and New Media industries due to the low presence of “zeros”. The results claim that five out of six coefficients have a negative association with exports. The higher level of digital piracy in both domestic and destination country decreases exports in Audiovisuals and New Media industries. However, when digital piracy in the destination country negatively associated with higher export in the Film industry, the higher level of digital piracy in the domestic country is associated positively. Thus, reducing the digital piracy of the economy decreases the level of exports in the Film industry and increases exports in Audiovisuals and New Media industries.
The issue of the effect of foreign aid on economic outcomes is relatively old – dating back to 1960s literature. This thesis looks into whether the decomposed aid has any effect on consumption inequality. The variable of assistance was split into grants and loans with the central hypothesis of the differing non-linear impact of each with the impact of loans being convex and grants concave. Another hypothesis that the thesis tests is the influence of episodes of violent regime change on inequality. The thesis used a dataset on 75 countries covering 1960-2010. The thesis confirms the central assumption regarding the direction and the type of impact that foreign assistance has on inequality. The hypothesis regarding the effect of Coup d’états hasn’t been confirmed by the models in the thesis.
Economic consequences of armed conflicts have been an attractive topic for many scholars, but there are still only a few empirical researches in this direction. Ukraine has been suffering from the hostilities on the East since 2014, so it is suitable evidence to proceed with a study on this topic. In this work we examine whether total factor productivity of Ukrainian firms was affected by armed conflict and how did this effect vary over time and through different proximities to the demarcation line. We found that there is a significant and negative effect of war on the productivity of Ukrainian firms. Moreover, this effect diminishes with the distance from the demarcation line and in time. In 2016 this effect died out.
Oleksandra Abrosimova: “UNDERSTANDING MOTIVES BEHIND DISPLACEMENT DESTINATION CHOICE: THE CASE OF IDPS IN UKRAINE”
Forced migration was always highly debatable topic among economists, because of its complex and specific framework. One of the manifestations of this phenomenon is a big internal displacement of people, in which certain trends are evolved. The center of attention in this thesis is dedicated to the motives of displacement destination choices of Ukrainian Internally Displaced Persons. Utilizing seemingly unrelated regression we find that such motives as access to basic and health services, work, safety, as well as family and friends networks are the most popular motives. During the analysis we discovered that certain groups of people are driven by specific motives. We suggested certain policy implications, which we assume will help to build future policy regarding Internally Displaced Persons in Ukraine.
In this research, we investigate the long-term relationship between real exchange rate and trade balance. The aim is to test Marshall-Lerner condition, which indicates the responsiveness of the trade balance to currency depreciation. The focus is on trade flows between Ukraine and its four major trading partners – Eurozone countries, Russian Federation, China and Turkey. For this purpose, we employ two most appropriate models to estimate the coefficients of the single trade balance equation – VECM and ARDL, which can deal with cointegrating vectors and non-stationarities of the data. The results provided by these two models appeared to be consistent. We find a strong evidence for M-L condition to hold in all cases except for Russian Federation, meaning that depreciation of hryvnia is going to improve trade balance of Ukraine while trading with Eurozone countries, China and Turkey.
Inflation expectations gained much attention in a recent couple of decades. Still, despite the agreement on their importance in the decision-making process, there is no agreement on how exactly they affect the decisions of economic agents. While there are studies for advanced economies with extremely low levels of inflation and a long history of communication practices, emerging market economies with double-digit inflation were not covered yet. This thesis focuses on the effects of inflation expectations on firms’ decisions, such as investment and employment in the emerging market economy with high inflation variation. We find that after controlling for the situation at the firm, and its overall outlook regarding the economic development, inflation expectations do not have much effect on the willingness to increase investment and employment. It implies that in an emerging economy environment, firms pay more attention to the situation at the firm, and expectations regarding the general situation in the country rather than some specific indices such as inflation.
Ukraine, being among the leaders on exceptionally fertile soil, is one of the top exporters of agricultural commodities in the world. However, Ukraine is still far from realizing fully its significant agricultural potential and land moratorium is among the reasons leading to this gap. This paper aims to assess the effect of land moratorium on agricultural productivity as well as other factors that may determine it using a rich 1995-2014 farm level data. Controlling for macroeconomic situation and tax support of agricultural producers in Ukraine along with developments on world agricultural commodities market and farms’ characteristics, introduction of land moratorium appeared to have significant negative effect on TFP growth and technical efficiency in crop production.
In this thesis we investigate the impact of outsourcing services on the productivity of agricultural firms. In Ukraine such services became popular in the 1990s. Moreover, starting from 2007 all Ukrainian farms with non-missing information about costs of services provided by third parties have recoursed to outsourcing. Based on the unique firm-level dataset collected by the State Statistic Service of Ukraine on the basis of individual responses (form 50SG) of Ukrainian agricultural producers during 2001-2014, it is shown that there is a significant positive effect of outsourcing services by agricultural firms. It is an advantageous practice to maintain business processes and boost agricultural productivity.
Solomiia Brychka: “DECIPHERING AGRICULTURAL COMPETITIVENESS IN UKRAINE”
Ukrainian agriculture increasingly contributes to national economy and to global food security, giving grounds to the broad policy-making and private sector discussion on the levels of the competitiveness of agricultural producers and its key determinants. The main goal of this research is to assess the key drivers effecting competitiveness‟ development, using the cost measure of competitiveness – Social Cost Benefit ratio. The analysis was performed using a detailed 2010-2014 panel of the farm level accounting data and found that the major driver of agricultural competitiveness is land market that contributes 84.5% to competitiveness given at mean productivity, and implies a paramount implication of the land market liberalization for competitiveness growth. The second major driver of is productivity (efficiency) that accounts for 8.9% of cost competitiveness. Growing labor costs considered to have a negative effect on competitiveness, when inflation, which may capture devaluation effect, global commodity prices and the level of infrastructure development contribute positively to the cost competitiveness. Direct government support reveals to be an inefficient instrument of competitiveness stimulus, suggesting no effect on the cost competitiveness, whereas indirect market price support contributes negatively to the competitiveness of agricultural producers.
Roman Koshovnyk: “LAND MARKET INSTITUTIONS AND AGRICULTURAL PRODUCTIVITY IN UKRAINE”
Ukraine’s agriculture increasingly contributes to global food security. However, there is a significant untapped agricultural production and export potential with the country. Weak land governance and institutions, including the moratorium on farmland sales, are generally recognized as the major source of a significant agricultural productivity gap in Ukraine. In this thesis we match a rich farm-level accounting data with a unique set of land governance indicators to measure the role of land institutions in enhancing agriculture productivity. Controlling for farm specific characteristics, land institutions turned out to have quite sizable impact on productivity.
This study examines the effect of school spending on the results of External testing of graduates from Ukrainian schools, using the school-level data in 2016 and 2017. The effect of spending per pupil is highly significant in urban areas and has a hump shape form. However, in rural areas it is insignificant in 2016 and is significant only in some specifications in 2017. We also find that specialized schools such as gymnasium or lyceum in urban area are the best performing schools in Ukraine, while schools in rural areas having a low number of students and low average class size show the worst performance. In the process of reforming the secondary education, policymakers should take the priority attention to the school network. Small schools with a very small class size are not competitive and students from that schools show bad results of external testing, even in urban areas. That is why the optimization of the school network and creation of base schools are necessary steps to improve the quality of secondary education in Ukraine.
Volodymyr Massakovskyi: “THE EFFECT OF OVERWORKING ON HEALTH IN TRANSITION COUNTRIES”
The optimal number of working hours is an indubitably enticing item for economists due to its effect on productivity and consequently on economic growth and development. We studied how human capital could be affected by utilizing health-related indicators of economic agents. The innovative approach and findings of this paper present a case that overworking has a negative effect on health of laborers. It has never been done before for transition countries, as the only particular developed countries fell under the study in most of the previous research we could find.
This work examines the effect of the railroad tariffs on the transportation of good by Ukraine railway company using OLS estimation. Moreover, this paper shows the influence of assets on the performance of Ukrzaliznytsia. Based on the Ukrstat and the Main information center of Ukrainian railways data for 2002 – 2017, it is shown that the effect of the tariff is not big in magnitude. This is explained by the undervalued tariffs due to the dependence of UZ from government and politicization of increasing its tariffs. Regarding performances, a positive effect have average daily mileage of a locomotive, average load on a wagon and fleet of locomotives. These results imply that UZ could raise its tariffs and use its profit on the main assets.
This study investigates the issue of child labor in Ukraine using the individual-level data from “Ukraine national child labor survey” conducted in 2014-15. In particular, it explores whether the household characteristics affect child’s decision regarding work, and checks the existence of a trade-off between work and schooling choices for children in Ukraine. The research shows that income-related characteristics of households affect child’s decision to start working in rural areas noticeably, whereas such decisions are not responsive to income-related characteristics in urban areas. In the case of urban areas, child’s decisions depend to much extent on the family characteristics such as family composition, and number of members. In its turn, the trade-off between child labor and schooling was not found. And even though this finding contradicts the literature, it highlights that children in Ukraine are more likely to combine work with schooling, rather than sacrifice school attendance for work as it often happens in lower-income countries
Mathematical Economics and Econometrics
Dmytro Bezushchak:“THE LONG-LASTING EFFECT OF CHORNOBYL’ ACCIDENT ON INCOMES IN UKRAINE”
With the use of longitudinal data for Ukraine, for the periods 2003 – 2012, the effect of Chornobyl’ disaster and subsequent radiation exposure on health and therefore the productive labor performance was analyzed. Using the approach similar to the Miguel and Roland (2006) the instrumental variable approach was developed, using the non-random geographic place of residence of each individual, exploiting the distance from the epicenter and the radiation spread. The accident was considered as an instrument to verify the link between health status and labor performance in terms of incomes, similar to Lehmann and Wadsworth (2009). There appears to be observed the high correlation between local-area radiation dosages after the accident and self-reported health status. Whereas the local-area radiation in this work was determined only due to Chornobyl’ disaster, other radiations omitted, comparing the distance from the epicenter and health for different individuals controlling for sociodemographic characteristics. The findings indicate that the variable health is affected by unobserved endogeneity, so it was instrumented by the distance showing that the distance from epicenter and corresponding contamination have a significant effect on health status and therefore productivity in terms of wages for each of the periods analyzed and therefore, individuals more exposed to radiation appear to have significantly lower wages even many years on.
Territorial reform can be considered as one of the most widespread public reforms. Economies of scope and scale are the main justifications behind, but is it enough to overcome all difficulties and transaction costs?
Almost all developed countries went through such transformation, and many articles measure the effects, but conclusions vary. This research analyzes the case of Albania, one of the most recent, implemented in 2015. To test the effectiveness of the reform, the data of the different public expenditure categories at the local level and some proxies for quality have been used. The evaluation relies upon the difference-in-difference method with a careful comparison of the expenditures before and after the reform and innovative approach to identify treatment and control groups. Results turned out to be inconclusive: two years after the reform the per capita costs went down only in one category of public expenditure, but it did not help weaker municipalities as expected
Online job sector has been developing rapidly attracting workers from all over the world. Ukrainians appear to be among leaders in terms of workers involved in the freelancing and total hours worked, especially in the IT sphere. However, in a line with the availability of appealing opportunities, the freelance platforms are poorly regulated. In order to contribute to the issue of finding the proper policy intervention, this thesis investigates the question of the wage determinants of online jobseekers using the data from a digital work platform. The regression analysis suggests that the gender gap in terms of expected wage occurs for the older workers but remains insignificant for younger ones. In addition, wage expectations of the older cohort of freelancers are more sensitive to the economic factors of the living region. Apart from the above, online platform’s distinctive features such as customer reviews on the freelancers’ performance also seem to be important in wage setting.
The paper investigates the link between demographic factors and economic growth in a framework of conditional convergence using panel data for Ukrainian regions in 2000-2017. The first finding is that initially poor regions do not grow faster converging to the rich ones and demographic factors do not influence this result. However, there is a strong negative relationship between the dependency ratio and GRP growth rate. Young dependency ratio is found to have a large and significant negative impact on economic growth, while the old dependency ratio has almost no effect. It implies that Ukraine has benefited from the demographic transition, which led to a decrease in youth share in all regions for the analyzed period. Yet the current population ageing reduces the relative number of working-age people, which is likely to have a negative impact on future economic growth and production.
This work estimates the effects of specific type of Non-tariff measures (NTMs), namely Sanitary and Phytosanitary measures (SPSs) on the agricultural trade between Ukraine and the European Union. There exists a wide variety of studies concerning the NTMs and their influence on trade, however this branch of research it is underrepresented for Ukraine. NTMs are considered problematic by the World Trade Organization, theirs effect on trade is ambiguous, so it is important for us to address their importance in case of Ukraine. We believe that SPSs imposed by the EU present a barrier to trade for the Ukrainian exporters. In our analysis we are using Gravity Model approach with the use of Poisson Pseudo Maximum Likelihood estimator to address large amount of zero trade flows. Our research is conducted inside the European market for year 2017. We found that for 5 out of 10 analyzed groups of agricultural products SPSs are indeed significant impediments to trade, same result was observed for non-group specific data, meaning that on average Ukrainian exporter is more likely to face trade barriers in form of SPSs when trading with the European Union.
In this work, import and export elasticities of exchange rate are estimated by two-digit HS code of Ukraine’s top three trading partners of both import and export using data from UN Comtrade. Real exchange rates are calculated using data from the National Bank of Ukraine’s archives and CPI data for Ukraine and each respective partner nation. A log-log OLS model with a lag for exchange rate is used to account for the trailing adjustment of trade decisions in response to changes in purchasing power.
Business and Financial Economics
Traditional development economics theory suggests that all the developed economies went through or are going through the three stages of development – agriculture, manufacturing and services. The development process of the first two areas in Ukraine is up to a significant debate. Yet there are reasons to consider Ukraine an emerging economy. Financial markets started their development right after the proclamation of Ukrainian independence in 1991. No standards were outlined, no regulations defined, no legislation suggested and no technology besides phones and basic computers available. Yet, the first banks realized the massive potential of Ukrainian financial markets and started investing into a semi-brokerage houses that were closely connected with the registrars (that were soon after renamed custodians). First issues of stocks and shares were met with excitement and international partners were keen on purchasing factories for their own benefit (an issue that can be discussed for a while as well). To accommodate for such demand Ukrainian government introduced a legal status for entities that are now known as public joint stock companies. The main idea was to create a legal mechanism that allowed stocks and shares of enterprises to be sold.
Daryna Sydorova: “SOLAR ENERGY PRODUCTION PROSPECTS IN UKRAINIAN REALITY”
The solar power industry, which is the focus of this study, is a good eco-friendly alternative to fossil fuels and coal-related sources of electricity. Ukraine is a lucky country because has better solar irradiation than Germany, while the last has a bigger growth in solar energy capacity.
In this term paper we are talking about the solar energy market as it is in Ukraine and in the world as a whole. There are a lot of key growth drivers of this industry. Year by year the cost of installing solar systems, developing and making a service for them, is falling and becoming more real for citizens.
Isaiah L. Valdez: “AN ANALYSIS OF THE IT SERVICES INDUSTRY IN UKRAINE”
In the five forces analysis, the author found that the industry rivalry and the bargaining power of suppliers are high, the bargaining power of buyers and the threat of entry are medium, and the threat of substitution is low. The author found that the largest limiting factor in the IT market is the shortage of human capital. This shortage of human capital will cause the market to grow at a slower rate in 2019–2023 compared to 2016–2029. To fight the shortage, the government should increase spending on IT programs in secondary schools to increase awareness and interest in IT; however, these effects will take four or more years to realize. To receive more-immediate results, the government and/or private companies need to create and fund more crash-course IT schools where non-IT majors can become junior software developers in a year or less.
Nataliia Soldatenko: “INVESTMENT OPPORTUNITY OF UKRAINIAN ORGANIC MARKET”
Provided industry analysis links the world’s trends in organic agriculture to the ones taking place in Ukraine and shows the potential of the country to become the key supplier of unprocessed goods on the EU organic market. Moreover, competitive landscape analysis reveals a few major players in the Ukrainian organic market, while further product benchmarking uncovers different attitudes towards product portfolio construction. When examining the historical financial position of the organic company by comprehensive horizontal and vertical analysis of the income statement and balance sheet, findings lead to the fact that agribusiness exhibits strong financial performance. Conducted PEST, SWOT and driving forces analysis outline the favorable environment of the organic industry.
Nazarii Hrechanyk: “ELECTRIC VEHICLE MARKET IN UKRAINE”
As a result of my analysis, it is recommended that it is not right time for the EV car producers to enter Ukrainian market. From the one hand, it is likely to predict the growing demand for EVs due to they are more economically efficient which makes them in favor during the decision-making process relative to ICE cars. On the other hand, the following aspects of the market: undeveloped market infrastructure; tax free regime; high cost of purchase and predominance of used EVs (89% of total sales) prevent recommendation from being positive. Thus, I expect that if EV producers decide to enter the Ukrainian market, it is very likely that they will not achieve the acceptable level of return due to Ukrainians will continue importing used EV cars because of favorable taxation policies and lack of funds for new EV for the majority of society
The objective of this paper is to describe the study of banking sector industry and analyze in details the market of the banks with implemented Financial Technologies.
The study included a detailed outlook of the current banking sector state and short overview of events, which caused that type of conditions. The banking sector overview includes the analysis of banks’ shares at the industry, the key indicators of their performance, amount of non-performing loans in their portfolio. The deep analysis of banks with adoption FinTech is built in the following way: using Five Forces framework it was found out the key facts of the market, than provided the comparison of banks with FinTech to those, which operates without and by using SWOT analysis highlighted main features of FinTech adoption.
Performed market analysis of specific segment of airlines industry is focused on the determination of the fundamental prerequisites and key features of low-cost carriers’ development as an attractive to customers mode of transportation. Moreover, we analyzed the current market situation in Ukraine and considered the potential of Ukrainian low-cost carrier SkyUp Airlines to grow and expand further its operations with recommendations on further possible activities that might be launched in the future
This report was conducted to examine the capability of Ukrainian cloud computing firms to expand their market share, types of industries that are the most interested in cloud computing service, services are the most common among national and international providers and possible solutions for Ukrainian cloud providers to gain a competitive advantage against their foreign rivals
All world countries’ trade flows are highly dependent on the quality of logistics services – those who invest into transportation systems’ modernization are always one step ahead of those who don’t, with no exceptions. However, it is quite hard to tell how exactly such investments will affect the flows in numerical terms. That is among possible reasons why governments hesitate to put more money into their countries’ logistics and keep up with the pace of world’s progress.
This research focuses on distinguishing the effect of modernization of particular logistics segment with the help of Logistics Performance Index, also referred to as LPI, – a special instrument introduced by World Bank, which demonstrates what is the level of development of country’s logistics in 6 different segments. It also discusses about current Ukrainian logistics’ state and provides a solid argumentation on why Ukraine should concentrate on its logistic systems’ improvements.
We found that focusing on improving the LPI dimensions scores has significant and reliable positive effect on both country’s import and export, which allows us to use this result for policies development and implications, particularly for Ukraine.