How to Strengthen the Potential of Ukrainian Manufacturing — a Column by Oleksiy Herashchenko Based on the Dialogue “Made in Ukraine: Opportunities and Priorities in 2025”

Published on Ekonomichna Pravda

Nine steps to enhance the potential of Ukrainian manufacturing

The global world, once promising a win-win outcome for all, has failed to live up to overly optimistic expectations. It turned out that once certain players gained an advantage, they fiercely guarded it, keeping competitors far from the top.

At first glance, the festive diversity on the shelves of Ukrainian stores—where Polish cheese sits next to Spanish tuna and Norwegian herring recommends you add some Israeli hummus and Mexican guacamole to your basket—seems delightful. But it soon raises a question: Do our purchases include too few domestically produced goods?

And that’s not to mention industrial products, where even simple items make a long journey from China to eventually edge out their non-competitive Ukrainian counterparts.

The model of a persistently negative trade balance—an ailment of our economy—can only be afforded by countries like the United States, which sells its national debt to the world and easily covers deficits with it. Even so, the U.S. has been trying to change this longstanding paradigm.

Since the Trump administration, the world risks abandoning traditional international trade rules in favour of protectionism. In such a reality, relatively autonomous economies that are less dependent on foreign markets will thrive. Meanwhile, open and fragile economies like Ukraine’s could be left holding the bag.

Ukraine aims to join the club of developed European economies in its European integration aspirations. For instance, according to Minister of Economy Yulia Svyrydenko, the manufacturing sector should account for 20% of GDP instead of the current 10%. Without thousands of new enterprises and investments in competitive domestic products, this won’t be possible.

Nine steps to support manufacturers

The Aspen Institute Kyiv hosted a dialogue titled “Made in Ukraine: Opportunities and Priorities in 2025.” Its participants—representatives from various business sectors and scales—voiced key issues and outlined a direction that could lead the economy toward sustainable growth.

According to business leaders, the following steps are needed to boost the potential of Ukrainian manufacturing:

Support Programs: Communication, Effectiveness, Reach

• Communicating existing support programs. Many economic actors are unaware of the opportunities already available for business development.
• Focusing on the most effective programs. Rather than scattering limited resources across many small initiatives, it is more reasonable to concentrate on programs with measurable, impactful outcomes.
• Who pays the bill? Every business can articulate what support it needs, but funding such support comes from the state—that is, from taxpayers. That fact must be considered when designing programs.
• Expanding beyond the 5-7-9 Program. While this program credits a select group of interested businesses, others fall outside its scope. Policymakers should find ways to support those excluded, e.g., allowing companies to reduce taxable profits by the amount invested in production under capital expenditures. This is especially critical when expensive loans and the lack of project financing in the banking sector make it hard to scale.

Wider Policy Focus: Big Business and Arms Exports

• Removing regulatory barriers for arms manufacturers, including opening export opportunities. Currently, Ukraine’s Ministry of Defence can only purchase a fraction of what domestic arms manufacturers can produce. Arms exports would improve the financial health of these enterprises and ultimately support Ukraine’s military.
• Big business needs government cooperation too. While political expediency might push the government to keep its distance, ignoring big business slows national development. Thousands of SMEs serve as suppliers or partners to large enterprises, forming ecosystems that can’t be overlooked. Large manufacturing businesses must be part of the policy focus.

A separate focus on tax reform. The “FOP-ization” of the economy (i.e., operating businesses via individual entrepreneurs) creates issues. It prevents businesses from playing by civilized rules and stifles investment, credit access, and growth. The legal and actual realities diverge more and more.

Demography and Culture

• Demographics are central to economic planning. Who are we building for? Birth rates in Ukraine are among the lowest globally—under 1 child per woman, while 2.1 is needed for simple population replacement. The situation is further worsened by migration due to the war. Only by offering self-realisation and a positive outlook can we encourage Ukrainians to return.
• Culture is essential to societal resilience. It is the invisible glue binding people and organizations. Culture sets the ethical tone regarding a business’s role, mission, and responsibility in society.

Despite war and financial hardships, Ukraine still holds significant untapped potential for greater productivity, cohesion, and progress. Ukrainian entrepreneurs are often contrarians who embrace challenge—and could become the engine of rapid economic growth.

There are always thousands of justifications not to act, not to take risks, not to grow. But strong people find reasons to live and create here and now—overcoming obstacles, disappointments, and defeats. They reshape our world—for the better.

The Aspen Institute Kyiv initiated the event within the UNDP Ukraine program as part of the “Transformational Recovery for Human Security in Ukraine” project, funded by the Government of Japan and implemented by UNDP.