In this article we want to share a small analysis, facts and figures of the situation on the export of services from Ukraine.
As you can see in the chart above – the export of levers has always been present in the export activities of Ukrainian business. According to world statistics, Ukraine exports services annually worth about 15 billion dollars. The figure ranges within 25% of the past 10 years from a low of 12.4$ billions in 2015 and 2016 to a maximum of 22.1$ billions in 2012. The distribution of the type of service contribution ranges from statistics of various resources and years, but transportation services occupy the largest share at all sources and years – from 35% to 60% with the vast part of pipeline services up to 6 billion dollars a year and freight transportation up to 3.5$ billion.
However, let us focus on services that can be provided by small and medium-sized businesses. For example, IT services. They, accordingly to various estimates, we export about $ 2.5 billion annually. The author of this text made his smallest efforts to this figure, adding a small percentage in official receipts to the information services section -16.3% of the total export of IT services in Ukraine, but the main share is occupied by computer services, which account for 79.2 percent of all IT services. This includes the development and design of sites, seo and, probably, mining bitcoins, and all other IT services, if the receipt of payments for them was made by swift transfer to a foreign exchange account. That makes it clear that the total volume of IT services is several undervalued by under-calculated payments freelance exchanges and the use of alternative payment schemes.
Interesting, in our opinion, that services, can be noted as business services worth $ 1.1 billion, consisting of
- research and development services,
- professional and consulting services,
- scientific and technical services.
Services of franchise exports and use of TM about 5,5 million$, tourism services are 1,45$ billion (yes, it is billions), mostly personal.
An interesting situation with audiovisual services. According to the State Statistics Service, Ukraine provides such services in the amount of 12.4 million$ (2019), and according to international statistical services such services were exported in 2014 in the amount of 14$ million, and in 2019 – more than twice – 32$ million. Judging by the fact that the State Statistics Service in determining these volumes uses again exclusively information from the NBU and the Fiscal Service, and international sources use a wider channel of information and adjusting the coefficients, we can rely on the increased figures of this service.
So, keep in mind that in terms of exports of services, Ukraine already occupies some niches, comparing to neighbouring Poland —Ukraine remains 59th place in terms of the total amount of exported services, even in the developed IT sector. Poland ranks 39th according to 2019 data, exporting transport services, tourist and business services. But, for example, the sum of one service business alone is 17 billion in Poland, with 9.6$ billion in professional and management consulting, technical and sales of approximate services of 5.8 billion, R&D direction of 1.7 billion. In Ukraine, the business of services is only 1.1 billion exports, as shown above. Thus, there is an understandable factor that limits the volume of exports of services and causes the difference between us and Poland – a low level of English-language. But looking at the local monopolies of the agricultural sector, technical preconditions for exports of the industrial sector on one hand, and the improved situation with the trade development, marketing infrastructure in Ukraine compared to the eurozone countries on the other hand, we can safely determine the enormous potential of exports of business consulting from Ukraine.
According to the analytical materials of Harvard University’s Growth Laboratories, Ukraine can improve economic growth using the existing technological know-how of developments and available export potential, being on the capability map alongside Switzerland and China.
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The article uses information from harvard university resources, Trade Map, State Statistics Service of Ukraine, Database of trade in goods and services Statistics of Eurostat.
P.S. Already after this article has been written a tender from USAID was announced for audiovisual production. So, we are in trend with our direction of thinking!
