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“This was a survival model, not one of development. Ukraine remained a raw materials appendage, and we ourselves accepted that. It generated some foreign currency earnings but did not create value added within the country. It did not build either a stable economy or a technological breakthrough. Shifting from a raw materials export model to a technological economy is task number one,” says Alona Lebedieva, owner of the Ukrainian multi-profile industrial and investment group “Aurum Group.”
With the onset of the full-scale war, the weaknesses of this model became especially evident: logistics chains were destroyed, delivery costs skyrocketed, and competition for foreign markets became even tougher. Against this backdrop, the government announced a course change – Ukraine must move towards producing goods with high added value.
“This is a strategically correct decision. If we want to be competitive on the global market, Ukraine must not only extract resources but also produce complex goods – those that undergo deep processing, those that keep value chains within the country instead of beyond its borders,” Lebedieva explains.
A proactive state economic policy is needed like air. This is the only way to give an impulse to the development of the Ukrainian economy. Ukraine needs a policy that will unlock the potential of its promising industrial sectors.
By 2030, the plan is to increase exports from $51 billion to $77 billion, raise its share of GDP from 25% to 33%, and reduce the share of raw materials in exports from the current 74% to 59%. The strategy includes grants for developing processing, stimulating production in de-occupied territories, and developing mechanical engineering and AgroTech.
“Support exists, and that’s good. But if we want systemic changes, targeted grants are not enough. Ukraine needs to resolve the basics: ensure stable energy supply, provide access to long-term affordable loans, and create a clear and predictable tax system. Without predictability, business doesn’t work. No investor enters where the rules of the game change every six months,” Lebedieva emphasizes.
An equally important aspect is the institutional capacity of the state.
“Value-added production doesn’t appear out of nowhere. It is based on long-term investments. And investment flows only where there is trust. If the
judiciary doesn't work, raiding remains unresolved, and property rights exist only on paper – large-scale projects will not happen. Business doesn’t take risks where there are no rules or no one follows them,” Lebedieva is convinced.
Overall, the state strategy seems right. But…
“The economy cannot be changed with declarations. What is needed here is system and professionalism. Ukraine must not only declare a course toward added value but also create all the conditions to make it a reality – from courts to infrastructure. And most importantly – provide business with calm and trust. Because the economy loves stability, not slogans,” Lebedieva concludes.
Dependence on the export of raw materials and semi-finished products keeps the country at a low level of economic development and prevents it from successfully integrating into the international division of labor. Ukraine will not be able to thrive by exploiting its natural resources – be it our unique black soil or iron ore deposits. It is necessary to urgently implement a structural shift from a raw material–biased economy to a modern industrial and information economy.
Alona Lebedieva
Aurum Group
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