Economic European Integration: Assessment and Modelling of Superficial and Hidden Factors of Divergence between Ukraine and the EU

Abstract

The article analyses the current European integration processes and measures implemented by Ukraine over the past five-six years in terms of its social and economic development. The study has shown that Ukraine's involvement in European integration processes has questioned the economic performance of the domestic economy sector, the wealth of Ukrainian citizens, infrastructure upgrade and industrial re-equipment. The Agreement on Deep and Comprehensive Free Trade Area with the EU countries, signed and implemented by Ukraine, has not had a critical impact on the improvement of Ukraine's leading macroeconomic indicators. Thus, the GDP recovery, investment and infrastructure renewal rate was very low, with depressed and unstable social and economic projects in 2014 - 2019;in general, this prevented from moving toward the EU standards. It is also noted that with the growth of EU's GDP by USD 1, the foreign trade turnover of all goods will increase by USD 0.887, and bilateral turnover of agricultural and industrial goods - by USD 1.693 dollars;Ukraine's GDP growth has a much smaller impact, which can be explained by the difference in the EU and Ukrainian economic scales. Based on modelling study, forecasting and analysis of time series within the last five-six years, it is proved that without regular investments, supporting measures to trigger the development of high-tech sectors of Ukraine's economy and without its production and logistics partnership and involvement in the global most powerful economic centres, the domestic social and economic segments will continue to worsen and be exposed to the globalized economic risks. Therefore, it is proposed to develop new approaches to the European integration process based on pragmatism and successful experience of Central and Eastern European countries, namely to implement the relevant measures and a strategic level program in Ukraine to propel and develop high-tech and high-margin industrial sector. This requires triggering of state policy on strong involvement of co-financing of structural funds, as well as EU's framework and targeted programs;attracting investment, reducing the influence of oligarchic clans and corruption on the social and economic system of Ukraine. In addition, it is urgent to launch a strategic level program in Ukraine to develop a policy with priority initial stage focusing the key resources on the development of IT sector, which can a priori be integrated and rapidly developed in course of implementation of EU's current industrial innovation strategy.