Analyzing the Challenges of Diversifying the Future Economy of Ukraine

Abstract

Ukraine encounters a multitude of obstacles that necessitate resolution in order to enhance its economy. Key factors such as GDP growth, foreign direct investment flows, government efficiency, interest rates, research and development investment, and trade openness have a significant impact on diversification processes. Managing these characteristics can be highly demanding when striving to develop a resilient and diverse economic structure. The analysis illustrates the influence of several economic conditions on Ukraine's diversity from Q1-1996 to Q4-2022. The autoregressive distributed lag (ARDL) method is employed to examine the relationship between series. The ZA unit root test determines the stationarity of data using a mixed order of integration. The Gregory-Hansen and the bound ARDL co-integration tests confirm the presence of co-integration among series. The findings indicate that GDP, RIR, and TO have a detrimental influence on DIV, whereas FDI, GOVEF, and R&D have a notable beneficial impact on it. The short-term data produced comparable results, albeit in smaller amounts. The inclusion of the co-integrating element in the model facilitates the convergence towards a long-term equilibrium state with an annual growth rate of 18.39%. The utilization of the wavelet method is applied for evaluating diversification because it can identify both short-term variations and long-term patterns in non-stationary data. Overall, the research suggests that it is advisable to use thorough and flexible diversification techniques to increase the variety of traded goods and develop a strong institutional framework to minimize the effects of unforeseen disruptions and inefficient resources Ukraine.