Abstract:
This paper explores the position of the Ukraine economy in the international division of labor. It is based upon sectorally disaggregated data on trade, factor endowment and labor costs for the manufacturing sector of the Ukraine and of the member countries of the enlarged European Union. The empirical analysis reveals that the trade structure of the Ukraine is not governed by comparative advantage, but basically reflects the legacy of central planning. The paper concludes that market-oriented reforms of industrial policy are required if the Ukraine wants to take better advantage of economic relations with the enlarged European Union.