Belarus, Moldova, Ukraine: machine industry report

There is the common view that as a result of Soviet heritage, the machine building sector continues to make up a large segment of the economies of Belarus, Ukraine, and Moldova. The main goal of this paper was to review the current state of the machine building sectors in Belarus, Ukraine, and Moldova, and to assess their vulnerabilities. A comparative analysis of developments, trends, and the institutional background of the machine building sector showed that machinery can be considered more vulnerable in Belarus and Ukraine, while it appears less vulnerable in Moldova. Common vulnerability factors for Belarus and Ukraine are low capacity utilization, weak export diversification, the relatively low quality of products, outdated equipment and technology, labor-intensive production and the low quality of management. Specific machinery-related issues in Belarus include excessive employment and high levels of governmental interference in industrial policy. Ukraine-specific issues are poor corporate governance and underinvestment. The key challenge for machinery in Moldova is the improvement of corporate governance along with the stimulation of small and mediumsized enterprises (SMEs) in the sector.