ECONOMIC HISTORY NOTE

The economy of Ukraine has been historically formed by such factors as its advantageous geographic location (at the crossroads between Europe and Asia), availability of fertile black soils, a rich natural resource base and a productive labour force. Metal and mineral resources are abundant in Ukraine: coal, iron ore, gas, stone, salt etc. Ukraine possesses 40% of the world's manganese ore while the deposits of ozocerite and of sulphur are the biggest in the world. The country also maintains the largest deposits of graphite on the European continent.
When Ukraine proclaimed independence in August 1991, it had one of the highest indicators of gross national income and also per capita industrial and agricultural production in the former USSR. Ukraine used to produce approximately 5% of industrial output of the world: 10% of its cast iron production, 9% of the world's steel, and 8% of the coal mined.
At the same time, the economy's pattern in the 1980-90s was irrational and with a very large emphasis on heavy industries and machine building. More than 80% of industrial manufacture had no complete production cycle, and the proportion of consumer goods was extremely low.
During 1991 - 1994, the economy of Ukraine suffered considerable losses. During this beginning of transformation, GDP dropped by 40.4%, hyperinflation in 1993 reached record-high level - 10.256%.
Starting in 1994, the government defined a common strategy of economic reforms and the mechanisms to overcome the in-depth crisis of the Ukrainian economy. The primary results of this stage included lower inflation, macroeconomic stabilization and the halted decline of production. Direct foreign investments in 1995 - 1998 increased in 5.8 times.
A phase of economic stabilization and growth started in the first half of 1997, but ceased development for some time due to the Russian financial crisis in 1998. The process recommenced in the second half of 1999, with positive results in almost every economic indicator. After a decade-long economic collapse, GDP growth in 2000 - 2003 totaled 33.1%.