Struggling Ukraine Economy in the Early 1990’s

The recent emergence of change in the Ukraine government and their issues can be traced back to the wide variety of conflicts that have affected their economy since the early 1990s. Before the 1990’s, the USSR was in complete control of Ukraine policies.During this period of time the Soviet Union collapsed, leaving Ukraine to declare independence and stand on their own. On Jul 16, The Ukraine Parliament approved a declaration of State Sovereignty. A new system was set up for the first time and the first president of Ukraine was elected, Leonid Kravchuk won. Many saw independence as the start of creating a well developed country, but that was not the case. When they finally disassembled from the Soviet Union they made the mistake of not realizing how reliant they were on them for oil and gas, important resources. Two of the top funding resources being unavailable to your country is going to lead to a term of failure. Ukraine began to suffer a huge downward spiral into a recession.

One way cooperation helped Ukraine was the fact that one third of the Soviet Unions nuclear weapons were still on Ukraine land. They reached an agreement with the United States, Russia, and Britain for security assurance in return for the weapons. This can be related to the cooperation theory in class where it is a better outcome for both parties to cooperate then not, specifically when future encounters are very likely.

“Its heavily indebted economy was shrinking fast. Ukraine’s economy shriveled by almost 18% year on year in the first quarter”.  Right after becoming independent, they became one of the most unproductive countries and their inflation rate skyrocketed. They had little to no resources and lacked access to financial markets as well. People began to lose savings and there was a lack of fuel available to Ukraine. CODY - ukraine graph

“By the time the 1990s were almost over Ukraine had suffered severe economic damage, almost half of their GDP was cut”. Political instability lead to corruption and revolts within their community. During the Yanukovych era, with all the corruption it was impossible to form a correct law and government institution and the economy in turn suffered tremendously. In order for the country to progress its essential that the government eliminate corrupt practices.

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6 thoughts on “Struggling Ukraine Economy in the Early 1990’s

  1. Thank you for this informative post. Learning how reliant Ukraine was on certain resources from Russia now allows me to understand why Ukraine was running into its economic problems. I am surprised to learn how unproductive Ukraine became after gaining its independence. I definitely see how economic and political problems have led for Ukraine’s citizens to become very distressed. Ukraine’s economic problems makes me wonder how they could get their economy to grow.


  2. As mfigueroa25 mentioned, I am also very understandable to Ukraine’s economic problems and conflicts between Russia. It was very interesting that early Ukraine was not quite ready for it but many early Ukrainian saw their independence would be “the start of creating a well developed country” without specific plan for the future. Ukraine’s curruption of economic was destined for it. I also like to know how to get their economy grow.


  3. This post really shed light on the background to what is going on in Ukraine. The political instability all goes back to the fall of the Soviet Union. Ukraine really relies on the resources the Russia has. It was useful when they were part of the Soviet Union, but now since they are an independent country it makes things more difficult. When you deal with a new independent country and huge contracts that come with gaining resources there is sure to be corruption involved. That is what has been going on in Ukraine for quite some time. It helps to show how Russia has such a foothold in that country.


  4. I do not have a lot of knowledge on this Ukraine topic, so this article helps me understand it. As other people mentioned, Ukraine had to deal with the resource problems after they became independent because they had not been one of the members of Soviet Union. Because Ukraine was too late to realize the problem, its economy became downward after their independence. Also political instability is rife in Ukraine. For these reasons, this post concludes that stopping corruption must be important to progress. I agree with the idea and I want to think more about the resolution. I think one of the solutions to stop the corruption is to introduce the way of the private company’s management. That is called as New Public Management(NPM), which thinks the efficiency more important and is based on the achievement of the government. It could be one of the ways helping avoid the corruption.


  5. The cooperation theory is a great way to describe the way that Ukraine interacted with Russia and the US. Ukraine was fairly reliant on oil and other resources, which is predictable due to being attached to Russia for so long. I see how the corruption trickled down to Ukraine government, which also made the transition hard for the newly created government of Ukraine. Russia was a major player in the building as well the economic fall of Ukraine. I think this shows how Ukraine is doing now and why they are acting they way they are.


  6. Ukraine is by no means a wealthy country. Many former Soviet States face the same problems as Ukraine. The Soviets would show up and strip the land for as much as they could, and with the breakup of the Soviet Union these countries would never see any of those resources again in any form.


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