Model evaluations of interrelation between Ukrainian and EU economies

Abstract

Introduction. In terms of world globalization processes Ukrainian course for European integration is one of the high priority directions of external policy of our country, as far as it proposes creation of conditions for more progressive economic development. That is why investigation of Ukrainian potentials for European integration is one of the actual challenges for scientific society nowadays.

Purpose of the article is to evaluate character and strength of interrelations between economies of Ukraine and EU, to explore the dynamic of their interdependence and so to identify the place of Ukraine on its way of European integration.

Methodology. Assessment of interrelation between Ukraine and EU is based on the investigation of coefficients of vector autoregressive model (VAR-model), its impulse functions and variance decompositions of the main factors, which the model includes.

Results. On the basis of the quarterly data of GDP per capita of Ukraine, EU GDP growth, amounts of foreign direct investments from EU to Ukraine, import and export of EU- Ukraine, VAR-model is built. The main hypothesis is the confirmation of positive interrelations between economic growth of EU and welfare of Ukraine. Also impulse functions demonstrate the system tendency to balance in long-run period, and variance decompositions of main factors of the model show increase of interdependence between Ukrainian and European economies in the last five years. Confirmation of existence of actual interrelationship between economies of EU and UA, and raising dynamic of such relation are important results of the model, which have significant practical value as far as they provide empirical evidence of the effectiveness of the official course of Ukraine regarding European integration.