Regionalization, economic

Regionalization, economic. The territorial subdivision of a larger economically integrated territory, such as a country, a bloc, or the world, into constituent parts that commonly differ from one another in economic specialization or the division of labor. The beginnings of economic regionalization of Ukraine may be traced to the end of the 18th century, when in both the Russian Empire and the Austrian Empire descriptions of Ukrainian lands were written and projects for their economic regionalization undertaken for the purpose of taxation or for military-strategic planning. The first scientific contributions to economic regionalization were geographical studies of the Russian Empire by Petr Semenov-Tian-Shansky (1880), D. Mendeleev (1893), A. Rikhter (1898), and others, which involved the subdivision of Ukraine (among other parts of the Russian Empire) into natural-economic regions. More specialized schemes for agricultural regionalization of the European part of the Russian Empire (which also included Ukraine) were made at the end of the 19th century by the Russian agricultural economists A. Fortunatov (1896), A. Chelintsev (1910) and A. Skvortsov (1914). A most innovative study of spatial distribution of Russian government income and expenditures was made by the Ukrainian economist Mykola Yasnopolsky (1891–97), who started the first school of territorial financial econometrics. The industrial regionalization of Ukraine was studied by Serhii Podolynsky (1880). Important works involving the economic regionalization of Ukraine were written by P. Fomin (1914), Ivan Feshchenko-Chopivsky (1918), and Kostiantyn Vobly (in several editions from 1919).

Industrialization in the last quarter of the 19th and the beginning of the 20th centuries developed by sectors in specific regions. Agricultural machine building emerged in Southern Ukraine and Central Ukraine; sugar-beet processing and refining in the forest-steppe; coal mining, metallurgy, and chemical industry and metallurgical industry in the Donets Basin and Dnipro Industrial Region; and food processing throughout Ukraine. Heavy-machine building (shipbuilding, locomotive industry) developed in the Black Sea ports and near the Donets Basin. Agricultural regional specialization progressed with commercial development. The livestock raising in the steppe in the early 19th century gave way to grain production, which was geared to export via Black Sea ports to Western Europe. Sugar-beet production gained commercial prominence in the forest-steppe of Right-Bank Ukraine. The western Ukrainian lands under Austria constituted an economic hinterland for that empire; they remained a distinct underdeveloped agrarian region (although small pockets of intensive agriculture catered to local urban markets).

In conjunction with the nationalization of the economy and the introduction of state economic planning, economic regionalization became a tool for the planning and implementing of state policies for centralized management of the national economy during the Soviet period. A struggle developed between the government in Moscow, which aimed to establish its undisputed control over all the economic regions of the USSR, and the republics and other territorial-administrative units, which wanted to preserve or even broaden their prerogatives for autonomous economic decision-making.

The struggle around the economic regionalization of the Ukrainian SSR began in 1920–1. With the support of some leaders of the Russian Communist Party (Bolshevik) (such as F. Artem, M. Kalinin, Joseph Stalin, and Grigorii Zinovev) and scientific establishments and commissions (such as the Commission for the Study of Productive Forces, affiliated with the Academy of Sciences of the USSR), a number of prospectuses (such as those by Ivan Aleksandrov, G. Krzhizhanovsky, M. Vladimirsky) proposed the subdivision of Ukraine into three or two administrative units. Those projects limited the Ukrainian SSR mostly to the forest-steppe of Right-Bank Ukraine, and excluded from it all the industrial regions (the Kharkiv region, the Donets Basin, the Dnipro Industrial Region, and the Black Sea littoral with its ports) because those areas were not dominated by the Ukrainian proletariat. The projects represented the renewal of the concept of Russian proletarian territories, such as the Donets–Kryvyi Rih Soviet Republic and the Odesa soviet republic, which had arisen in those areas in 1918–19. Ukrainian national communists countered those projects with the argument that a nonproletarian agrarian Ukrainian SSR would not be viable. They proposed to bring the Soviet government to the population by retaining Ukraine intact and by subdividing it into several dozen urban-centered economic-administrative provinces and several hundred regions, united in a centralized Ukrainian SSR. Despite the opposition of the RSFSR, the the All-Ukrainian Central Executive Committee declared (October 1922) the proposal as the basic principle for the economic-administrative regionalization of Ukraine. The proposal was successfully defended by the Ukrainian delegation (Mykhailo Poloz and others) in Moscow, and the 12th Congress of the Russian Communist Party (Bolshevik) adopted it as a basic principle that was extended (1924–9) throughout the USSR. Nevertheless, in February 1924 the Ukrainian SSR lost the eastern Donets Basin (the predominantly Ukrainian Shakhty and Tahanrih okruhas) to the RSFSR. That measure of reorganization disrupted the integrity of the Donbas economic region but provided an urban-industrial component for the largely rural Don region. In 1931–2 the okruhas of Ukraine were replaced by the larger oblasts, whose Party organs were subordinated to both Kyiv and Moscow. That centralization remained a major factor in the administration and planning of local industry, agriculture, and cultural activities.

The formation of economic regions in industry and agriculture, both in the Ukrainian SSR and in the USSR as a whole, proceeded during the New Economic Policy as it did before the October Revolution of 1917. Until 1923 in the Ukrainian SSR there were 19 territorial-branch industrial trusts and a number of syndicates and associations. Until 1929 control over those trusts was vested in the hands of the government of the Ukrainian SSR, which also restricted their competition with the trusts of the RSFSR. With the establishment in 1932–4 of centralized all-Union and Union-republican people’s commissariats (after 1946, ministries) for various branches of industry, the existing economic region-forming processes were significantly altered. First, enterprises were subdivided and subordinated to various government organs or Communist Party authorities responsible either directly to Moscow or through Kyiv to Moscow. Second, a policy was initiated which involved the planned reallocation of resources and the accelerated development of some economic regions at the cost of the neglect or exploitation of others.

In the First Five-Year Plan, targets were set for the entire USSR within the framework of 24 economic regions. The Second Five-Year Plan involved 32 economic regions, and the Third Five-Year Plan, 19. The national economy of the Ukrainian SSR was planned as a republican unit, but within that framework special plans were designated for the Donets Basin, for the Kryvyi Rih Iron-ore Basin, and so forth. From 1930 the eastern regions of the USSR (the Urals, Siberia, Kazakhstan, and northern RSFSR) were designated for accelerated development mostly at the expense of Ukraine. Since the capital investment and human resources were not returned to Ukraine, they were not loans, nor was there a repayment of interest for lost time. Their shift from Ukraine constituted an outright economic exploitation of the republic. Approximate estimates for the periods 1928–40 and 1950–70 suggest that the capital transfers from Ukraine alone to other regions of the USSR amounted to about 135 billion rubles (1961 valuation). Since capital invested in the eastern regions yielded 20–25 percent lower recoupment than in the Ukrainian SSR, the economic loss was suffered not only by Ukraine but also by the Soviet economy as a whole. Advantages accrued only to the regions that received the investments.

The acceleration of the development of the eastern regions during Joseph Stalin’s rule was motivated by the needs of strategic defense and, after the Second World War, by an inflated evaluation of the regions’ natural-resource base. The main theoretical supporters of the development of the eastern regions were the leaders of the Council for the Study of the Productive Forces of the USSR of the Academy of Sciences of the USSR and the State Planning Committee of the USSR (Gosplan SSSR). The State Planning Committee of the Ukrainian SSR (Derzhplan URSR) and the Council for the Study of the Productive Resources of the Ukrainian SSR were among the agencies opposed to such plans. Both Stalin and, after his death, the leadership of the Communist Party of the Soviet Union consistently supported a policy of developing the eastern regions. During the entire period approximately 40–50 percent of all capital allocations were invested there.

The economic regionalization of Ukraine was in fact part of the economic regionalization of the USSR as a whole. During the period of highly centralized economic planning, economic regions had no prerogatives. They served Moscow as convenient spatial units for the purpose of planning output and accounting for performance. Already during the last two prewar five-year plans the economic regionalization of the USSR was being geared to military-strategic plans. In the first postwar decade the USSR five-year plans distinguished 13 large economic regions (with Ukrainian SSR and Moldavian SSR combined into one such region). Within that framework the State Planning Committee of the Ukrainian SSR subdivided Ukraine in 1956 into seven economic regions for the purpose of its own planning: Donbas, Dnipro, Left-Bank, Right-Bank, Western, Polisia, and Southwest.

A brief change occurred after Joseph Stalin’s death when Nikita Khrushchev attempted to decentralize industry and construction according to the territorial principle (1957–64). The entire USSR was subdivided into 105 economic-administrative regions, called regional economic councils, with some managerial and planning prerogatives. Within the Ukrainian SSR there were 11 such units. The administration of so many units directly from Moscow proved somewhat unwieldy. Their self-administration, however, was viewed as a threat to central control. Above all, military considerations (nuclear warfare) prompted their subordination in 1961 to 17 (and in 1963 to 18) large economic regions of the USSR. The regional economic councils too were reduced in number, to 47, so within the Ukrainian SSR there were 7 in 1962.

With the ouster of Nikita Khrushchev and the return to centralized management in 1965 under Leonid Brezhnev, the regional economic councils were abolished, although the large economic regions were retained. Two principles formed the basis of the large economic regionalization—economic self-sufficiency of each region in the event of war, and the continued ability to develop the eastern regions during peace. Each large economic region had a planning commission and a council for co-ordination, subordinated directly to Moscow. Three large economic regions constituted the Ukrainian SSR from 1961, the Donets-Dnipro, the Southwest, and the South (see the table). In the 1970s, proposals were even raised to limit the significance of the republics and to transform the economic regions into autonomous units of the USSR. By contrast, in Ukraine, as in other republics, the directors of the Derzhplan URSR (F. Khyliuk, P. Rozenko) demanded integrated planning of the entire national economy of the Ukrainian SSR and the reporting of Union enterprises to the republic’s government.

Despite its unequal regional development Ukraine retained a specific presence within the economy of the USSR. Nevertheless, Ukraine’s share in the economy of the USSR had declined as a result of the growth of the economy of central RSFSR and the eastern regions after the Second World War. Notably, the economic interaction between the Ukrainian SSR and RSFSR had lost its previous significance. The shipment of metal from the Ukrainian SSR to RSFSR, for example, declined from 60 percent of the production of the Ukrainian SSR in 1940 to 24 percent in 1960 and only 10 percent in 1970. Similarly the shipment of coal from the Donets Basin to RSFSR declined from 30 percent of production to 14 percent and 12 percent respectively.

At the same time the Ukrainian SSR’s external economic relations diversified, with a growing share of interaction with the Belarusian SSR and the Baltic republics, the Eastern European countries of the Council for Mutual Economic Assistance (CMEA), and, in the 1980s, the countries of Western Europe, North Africa, and Japan. Now politically independent and situated between the Russian Federation, Eastern Europe, and the Black Sea–Mediterranean basin, Ukraine has all the requirements for functioning as an independent economic power.

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Vsevolod Holubnychy, Ihor Stebelsky

[This article originally appeared in the Encyclopedia of Ukraine, vol. 4 (1993).]

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