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A territorial analysis of Ukraine

3. Declining regional disparities, rising concerns

Income regional disparities are very high: in 2010 income is more than twice higher in the City of Kiev than national average (Map 10).

Map 10 – Incomes, 2010

The East runs second. The lowest incomes are in the West, that is to say in territories neighbouring EU countries. Since the collapse of the Soviet Union, in the Eastern industrial regions wages have been severely declining as compared with national average. On the contrary, during the modern nation-state building era, the relative average amount increased in the West and especially in Kiev (Map 11).

Map 11 – Wages regional disparities, 1995-2010

Figure 2 shows the impressive rise of the average wage in the capital city compared to national average, a typical phenomenon in any nation-building process and in particular in post-Soviet countries.

Figure 2 – Salaries in the Ukrainian regions (national average = 100), 1995-2010: the boom of the City of Kiev

The East remains the main source of Ukrainian exports: exports per capita value is particularly high in the regions of Donetsk and Dnipropetrovsk, which provide more than a third of the country exported goods, mainly iron ore, rolled steel, basic chemicals and fertilizers. The city of Kiev also appears as an important exporter since it hosts the headquarters of many important companies whose production units are located in other regions (regionalised data on foreign trade are always questionable). But the import of Kiev is even larger, thus its trade balance is highly negative (Map 13).

Map 12 – Ukrainian exports, 2013: a geographical divide

Therefore, Ukraine earns most of its foreign trade revenues thanks to industrial exports from its Eastern part. CIS countries, especially Russia, are its main trade partners, particularly when considering that national statistics does not distribute by regions 8% of the foreign trade, which mostly consists in “undocumented” natural gas coming from Russia. Ukraine and Russia have for centuries belonged to the same single economic space, and economic links inherited from Soviet times are still strong especially in the East.

Map 13 – Trade balance of the Ukrainian regions, 2013