Friday, February 21, 2014

Ukraine: It's All About The Money

You know what they say about elections-- "it's about the economy, stupid" ?  Well, it's basically the same thing with Ukraine.

Ukraine's protesters want to pry their country away from Russian influence and move closer to the European Union.  You just have to look at neighboring Poland (which did just that) to know why.

The two countries emerged from the collapse of the Soviet Union two decades ago in roughly similar economic shape. But Poland joined the EU and focused on reforms and investment — and is now three times richer than Ukraine.

Ukraine, on the other hand, sank into a post-Soviet swamp of corruption, bad government and short-sighted reliance on cheap gas from Russia.

Even when adjusted to the lower cost of living, Ukraine's per capita economic output is only around $7,300, compared to $22,200 in Poland and around $51,700 in the United States.  In terms of economic output, Ukraine ranks 137th worldwide, behind El Salvador, Namibia, and Guyana.

But it doesn't have to be that way.  Ukraine has a large potential consumer market (46 million people), an educated workforce, and a rich potential export market next door in the EU. It has a significant industrial base and good natural resources, in particular rich farmland.

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