Ukraine accession to WTO in April 2008 as well as the anticipated signing of a free trade agreement with the EU require from Ukraine the implementation of an active economic policy with emphasis on improving the competitiveness of the economy. Until recently adequate attention has not been given to the support to the development of small and medium enterprises (SME) producing high-value added products. The global economic crisis hit Ukraine very seriously with severe increase of unemployment and decline of the living standard. In this context, the Ukrainian-German technical cooperation project “Economic and Employment Promotion” was launched by the Ukrainian and German governments in 2009. Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH implements this Project with its Ukrainian partner organizations.
The total project period is five years (from 01/2009 to 12/2013).
The duration of its Phase I is 3 years (from 01/2009 to 12/2011).
The project "Economic and Employment Promotion" assists Ukraine in supplementing its efforts to promote the SME development with innovative instruments, regional approaches and concepts to develop competitive regional economies.
Regional economic development, adoption of the regional economic policy and the national structural policy in line with instruments of the European Union
Instruments to support regional and national economic development are improved.
Project consists of two components:
- Component 1: Regional economic development
Objective: The general framework for small and medium enterprises is improved.
- Component 2: Professional dialogue and advice on national level to strengthen regional economic and structural policy
Objective: National economic development and structural policy is in line with regional economic potentials.
At the meso level project is focused on the establishment of closer links between major private companies, public institutions and NGOs that provide services to enterprises. Numerous activities that aimed at improving business environment, improving relations between different links of production, cooperation and coordination between regional actors and promoting of innovation products and processes are supported with assistance of NGOs in project regions. At the macro level, project activity is focused on the strengthening of regional economic policy and promoting of regional structural policy.
The project partners at the national level are the experts and personals of the relevant ministries and state committees (Ministry of Economic development and trade, Ministry of Regional Development and Construction, State Agency on Science, Innovations and Informatization, Union of Entrepreneurs of Small, Middle-Sized and Privatized Enter-prises and Ukrainian Union of Industrialists and Entrepreneurs (USPP)) along with different NGOs. The partners at the regional level are mainly specialists of local and regional government structures which are engaged in economic promotion, non-governmental organizations, chambers of commerce and industry, associations and institutions promoting innovation.
Projects regions are AR the Crimea, Donetsk oblast and Chernivtsi oblast.
The DONETSK REGION is situated in the south-eastern Ukraine and borders on Russia. The population is about 4.6 mln. people (it is about 10% of the total population of Ukraine). Donetsk city is the capital of the region (approx. 1 million inhabitants). The Donetsk region has almost the fifth part of the major industrial and production funds of Ukraine, it provides almost 20 % of the national industrial production.
The dominance of heavy industry and its export orientation (share of heavy industry in total exports from the Donetsk region is 74%) resulted in heavy losses during the global crisis, due to falling of world prices for products of heavy industry. In 2009 the level of industrial production fell by 21.8% comparing to 2008. The reduction in demand for domestic goods and services generated by the crisis also makes a decisive influence on the situation of small private enterprises. Political leaders in the region are aware that at present positive results can only be achieved through strengthening small and medium enterprises and improving the framework conditions for entrepreneurial activity. In this direction, Donetsk region is supported by the project "Promoting economic development and employment”.
The Project activities in the Donetsk region are divided into 3 main blocks:
1. Contemporary regional economic development models in line with European standards,
2. Improvement of regional business environment (SME support; improvement of SME regulatory environment and capacity building of local business support institutions)
3. Improvement of instruments for support to regional economic development (communal economic promotion; cluster development; territorial marketing; promotion to Innovative activity development and improvement of regional investment attractiveness”).
AUTONOMOUS REPUBLIC OF CRIMEA
AUTONOMOUS REPUBLIC OF CRIMEA is located on the Crimean peninsula, in the Southern part of Ukraine. Total number of the population is about 2 mln. people. The administrative center of the Crimea is Simferopol city (population is 362 thousand inhabitants).
Industry plays an important role in the Crimea with about one fifth of the regional gross added value on its part. Most important are food, chemical and petrochemical industry, machine building and metal processing and fuel industry. Export plays a significant role in the Crimean economy (e.g, titanium). Agriculture is also an important sector of the Crimea; the main branches are viticulture, winemaking, gardening, cultivating tobacco-plants and aromatic crops, poultry farming and sheep breeding. Tourism includes health and medical services with more than 5 million visitors and over 500 thousand tourists and is a major source of employment. There are numerous hotels and more than 550 sanatoriums and resorts. The main part of the tourist facilities is located on the south coast. Only some of them meet western standards.
Financial and economic crisis adversely affected primarily the tourism and industry. Increasing unemployment in Ukraine, Russia and Belarus led to decreasing demand on travel, health and medical services by 40%. The main problem of the Crimea is the decline of tourists, inflexible economic and administrative structures and lack of perception of market principles. One positive factor is the willingness of the local government to cooperate with donors, including the project "Promoting economic development and employment”.
The Project activities in the region are divided into 3 main blocks:
1. Promotion SME development (improvement of regional business environment, Capacity building of new and existing SME, facilitate international business cooperation)
2. Improvement and expansion of instruments for regional economic development (cluster development, Innovative activity development and technology transfer, rural development)
3. Development of tourist and resort potential of the Crimea (monitoring of tourist and recreational complex of the Crimea and developing of the recommendations for the stabilization of the tourism industry, developing of new types of tourism, improving the quality of tourist service, developing of new tourist product, developing of the Strategy for the tourism).
The CHERNIVTSI REGION is situated in Western Ukraine and borders on Romania and Moldova. Total number of the population is 904 thousand people, most part of it is rural (60,0%). Regional center is the City of Chernivtsi (approx. 250 thousand inhabitants).
Agriculture and forestry play an important role in the regional economy (respectively, food and wood processing industry). Moreover, energy (gas and hydropower) and metal processing are of great importance for economic and social development of the region. Quite important factor for the region's economy is tourism. Between the years 2000 and 2008 the number of tourists, visiting Chernivtsi region, had almost doubled (from 44 000 to 81 000 people per year).
The main problem of the Chernivtsi region is low competitiveness. The Chernivtsi region is mainly dominated by rural areas, characterized by a number of small towns with population up to 20.000 inhabitants. The analysis of the economic development of these towns indicates the existence of many problems, including: migration due to lack of jobs and poor quality of life (especially young people); insignificant community’s tax revenue; low level of utilization of existing potentials and lack of active promotion of local economy by communities. These and other factors dramatically worsen the employment situation, especially in rural areas and further raising in the level of labor migration.
It is difficult to achieve integrated regional development without partnership and cooperation between community and authorities. The cooperation between local authorities, education, civil society and business will have great importance. Therefore all activities within the project "Promoting economic development and employment” in the Chernivtsi region aimed at:
1. Improvement of the regional business environment and promotion to SMEs potential development (improvement of SME regulatory environment and capacity building of local business support institutions, support to creation and development on existent business entities);
2. Promotion of economic development of priority industries (tourism, agro production, timber processing);
3. Rural development and improvement of instruments for promotion regional economic development (clusters development, activation of the local population for solving the socio-economic problems, promoting innovative development, increasing regional investment attractiveness).