According to Trade Map data for 2021, Estonia has been exporting nearly 30 times more value-added goods per person compared to Ukraine. With a population of 1.3 million, Estonia exported $15 billion, which averages slightly over $11,000 per person. In contrast, with a population of 43.7 million, Ukraine earned $17.3 billion, resulting in only $394 per person. Similar patterns are observed in Poland and Israel, where exports per capita amounted to $6,600 and $4,300, respectively. It’s noteworthy that these statistics predate Russia’s full-scale invasion of Ukraine.
Dmytro Shvets, the director of the consulting company Start Global, which helps businesses enter international markets, spoke to The Ukrainian Week about comparing high-value-added goods exports per capita. Shvets is the author and host of the Start Global Insights podcast for exporters. He pointed out that in absolute figures, including raw materials, the export situation is somewhat different. However, it is evident that Ukraine exports very little compared to other countries. For instance, in 2021, Ukraine exported $68 billion, while Estonia, with a population of only 1.3 million, exported $22.3 billion. Israel placed its goods and services on international markets at $60 billion and Poland at $317.8 billion.
– What is the significant difference in export volumes in monetary terms between Ukraine and other European countries attributed to?
– In my opinion, there are several factors that contribute to the growth of exports in countries like Israel, Estonia and Poland. For instance, Israel and Estonia are forced to focus on external markets due to their small domestic markets. Besides, factors such as innovation, processing, and creation of greater added value also play a crucial role. Furthermore, production efficiency, automation, and robotisation are significant contributors to the growth of exports. On the other hand, in the case of Poland, integration into the EU has played a vital role in boosting export growth. Notably, significant export growth began after 2004 when Poland became a member of the European Union on May 1, 2004.
Several factors can affect entrepreneurship in a country, including the number of entrepreneurs, the trend towards entrepreneurship, access to funding, awareness of exporting, state support, and a strategic focus on exports. In Poland, there are many opportunities to obtain funding to start a business. Our partners in Poland have reported an oversupply of funding for startups, surpassing the number of available projects.
Currently, Ukraine is forced to shift its focus towards export markets. In the past, the size and potential of the domestic market made this a less pressing issue. It is important to encourage and support entrepreneurship with a global outlook through education, financing, and development.
– What is the extent to which Ukraine could increase its exports if it were to fully realise its potential?
– Speaking broadly about the export of goods and services, Ukraine’s untapped potential reaches $30 billion, according to data from the Export Potential Map for 2024.
Within the agro-industrial complex, nearly $12 billion of export potential remains untapped. The highest potential lies within commodity groups, including vegetable oils and fats, cereals excluding wheat and rice, plant residues, animal feed, oilseed seeds, poultry meat, and processed or canned food products.
Nevertheless, there’s not a lot of untapped potential remaining, particularly in raw materials. We’ve largely already tapped into over 60–70% of the potential. When it comes to value-added products, nearly everything falls below the 50% mark. Take ready-made and pet food, for instance; their potential is only realised at 21%.
– We often hear European concerns regarding the surge of Ukrainian exports to the EU market. Are Ukrainian exports a fit for the EU market structure?
– The same story happened with Poland. In my opinion, it’s a matter of time and distribution. There has been a lot of political speculation regarding Ukraine, but it often doesn’t reflect reality, and everything has happened very quickly.
People are accustomed to thinking of Ukraine as the ‘breadbasket’ of the continent. However, it turned out that Ukraine is capable of providing more than just grains – and at a commendable level, too.
Our mission is to increase productivity and create value to generate more revenue. We must shape a new image of Made in Ukraine overseas by presenting high-quality innovative products and services.
And this shift is already underway. Regrettably, a considerable portion will be taken up by products linked to the military sector, encompassing weaponry and supporting technologies. Ukraine stands as a vast testing ground and innovation centre in this realm, unmatched globally. However, military advancements eventually spill over into civilian applications, spawning numerous innovations worldwide. Consider the USA, where the Internet, once a military creation, now permeates every aspect of civilian life.
Another global trend gaining momentum is reshoring, which involves relocating production closer to the market it serves. Europe is shifting away from concentrating production in distant Asian countries. Logistic challenges and political and economic instability compel Europeans to reassess their reliance on suppliers located far from home. This is precisely where our opportunity lies. Ukraine has the potential to serve as a partial replacement for China, completely for Russia and other distant nations, emerging as a manufacturing hub for the EU and eventually for America too.
