Key factors of Kyiv’s economic development
Ukraine’s National Academy of Sciences says machine-building, pharmaceuticals, communications, engineering, and trade will determine Kyiv’s investment profile over the next 14 years
Engineering and high-tech industry are the two key factors Kyiv must rely upon to keep Ukraine’s economy ticking for the next 14 years, said experts and participants in the third session of the 2025 Kyiv Development Strategy Consortium’s Public Council. They also believe these sectors will help secure the Ukrainian capital’s stable GDP growth and thus improve Kyiv’s socioeconomic situation.
“We’re talking high technologies as a component of the city’s economy,” declared the person in charge of the Spatial Economic and Urban Self-Government Development Department at the National Academy’s Institute of Economics and Prognostication while presenting the institute’s long-term Kyiv regional output forecasts.
According to the academy’s experts, Kyiv’s economic potential is based on engineering, business services, construction, machine-building, metal-working, and chemical-processing (musty pharmaceutical. — Author). The electronics, transport, communications, utilities, personal services, sports, trade, and car and household appliance repair sectors are also of import.
The experts are reasonably sure that such Ukrainian companies as Antonov Aviant, Artem, Luch, Arsenal, Darnytsia (the pharmaceutical company in Kyiv’s Borshchahivka district), Farmak, and Kyiv Medpreparat can secure Kyiv’s economic growth and place it among Europe’s advanced capital cities.
Andrii Lobach, the chief manager of the Effective Management Foundation, says these National Academy findings are premature for submitting recommendations to the 2025 Kyiv Development Strategy: “These so-called growth points embrace 70 percent of the capital city’s economy.” He adds that no tangible results could be achieved by such generalization. For example, public transport is a hole in the municipal purse by definition.” Other experts concurred.
Heated debates were caused by such giant production facilities as Antonov and Arsenal. Natalia Yaresko, Horizon Capital’s founder and current CEO, said there was little sense in banking on any, considering that both might have exhausted their potential, so categorizing them as strategically important appeared premature, indeed. She commented on the local pharmaceutical companies, saying most of those large businesses could remain competitive and profitable for as long as the Ukrainian in the street remained poor; that most of their products were sham because genuine medical drugs cost so much.
Yaresko believes the situation could be improved, except that the Kyiv City can’t afford this single-handedly. She emphasized the need for modernization in all hospitals and health facilities in Ukraine, and suggested providing a boost to the health insurance market.
Vladyslav Radysh, director in charge of government-run educational establishments and research facilities, says engineering spells quick and big revenues at a relatively low cost; that the city has a cheap material and technical base, and that Kyiv has favorable initial conditions, with a number of European countries having acknowledged Ukraine’s engineering achievements.
None of those present challenged engineering as a promising field of endeavor.
Yaresko suggested the Kyiv City Council benefit from the experience of their counterparts in Costa Rica, which developed its IT market and made it work for the good of the city rather than foreign economies (as is the case in Ukraine). They joined a roundtable with the world’s IT giants, Microsoft and Intel, and asked what they needed to start their offices in that country. None showed an interest in the material and technical base. Both were interested in intellectual support, and were prepared to pay for long-term contracts.
Says Yaresko: “IT corporations will start operating here when they see business prospects rather than 30-40, even 100 talented programmers; when they are convinced that hundreds, thousands of such gifted young people will start working here several years from now, making brilliant contributions in terms of innovative technologies. That is why the municipal authorities should support such education projects.”
Kyiv State Administration plans to finish drafting the 2025 Kyiv Development Strategy, so the document can be submitted to foreign companies willing to invest in Kyiv.
The Day’s FACT FILE
The 2025 Kyiv Development Strategy project was initiated by the Kyiv City State Administration. A consortium was founded to implement this project. It comprises the Effective Management Foundation, Boston Consulting Group (BCG), Ukrainian National Academy’s Institute of Economics and Prognostication, Institute of Demography and Social Studies, Razumkov Center, and the Institute for Kyiv’s Socioeconomic Master Plan. BCG launched its Kyiv office in 2007.
