On 26th of December 1991 USSR was formally dissolved, just after Mikhail Gorbachev had resigned on the day before. 15 states were separated being given a chance to set up new directions from scratch.
Ukraine has possessed all the sources to be considered a second largest economy within all USSR. The region is rich for fertile soil, in past its production covered over 25% of USSR demand, whereas south-eastern area centralised steel, coal and chemical manufacturing (Ukraine Country Report, 2010).
90’s were hard times in history of both countries. Providing a new currency without a proper knowledge turned into economic disaster. From 1989 until 1999 Ukrainian total output dropped by 54%. Inflation reached 10,000% in 1993 (Aslund, 2005). Georgia’s GDP fell by 21% in 1991, consequently it remained in such recession for four years (Nodar, 2005).
The beginning of 21st century has been successful for both regions. In 2004 Ukrainian GDP growth peaked at 12.1%, whereas Georgia had only 5.8%. However, three years later Georgia reached its peak of 12.3% just before financial crisis, Ukraine had 7.9%. 2009 was the most difficult year for both regions, however Ukraine experienced much bigger GDP decrease: -14.8% and -3.8% relatively (World Bank Statistics).
The two biggest problems Ukraine had with Georgia in common were probably corruption with high level of bureaucracy. These two factors stimulated significant growth of shadow economy. Some people (oligarchs) became enormously rich and influential; therefore government protected mostly their interests rather than anybody else’s interests (Ukraine Country Report, 2010; Georgia Country Monitor, 2010). Economic problems were opportunities for new emerging oligarchs to privatise industries for cheap price. Particularly in the beginning of 90’s government provided a massive share emission of government companies and gave these shares to people. Simple... [continues]
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