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Value chain: essence of the category and methodological significance

Author(s) Грабек Я. А., , ,
Category Economics
year 2023 issue Issue number 102. Part 2
pages 26-35 index UDK 330.143.2
DOI 10.32782/2415-8240-2023-102-2-26-35 (Link)
Abstract Reforming of the Ukrainian economy has been going on for over thirty years, but this process is far from over. This is evidenced by a large number of unresolved socio-economic problems characteristic of the transformational period of the development of social production: galloping rate of inflation, low level of national savings, deficit of capital investments, negative balance of trade balance, mainly raw material nature of exports, low rate of introduction of innovations, high level of shadowing of the economy, low standard of living of the population, threatening scale of labor emigration, etc. One of the most acute problems of the Ukrainian economy is the predominantly raw material nature of production and foreign trade. A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product to the end customer. It is the sum of added values created at each stage that provides the highest value of the labor product – the ability to meet the specific needs of the buyer. So, the value chain is the movement of social production from the input stage – production/mining/supply of raw materials to the output stage – sale of finished products. An individual enterprise can create value in one link of the value chain, or it can create value in several links of the value chain. The concept of the value chain is of great importance for the Ukrainian economy – it explains the loss of social production from the disruption of the domestic value chain in favor of the global one. The destruction of inter-industry ties within the framework of inter-industry complexes gradually turned the Ukrainian economy into a supplier of raw materials for the global market. As a result, the production/extraction of raw materials began to be concentrated on the territory of the country - this is the link with the lowest share of added value. Instead, a significant amount of industrial processing of raw materials was exported - the link with the highest share of added value. In the end, this resulted in the deterioration of the terms of trade and the loss of a large part of the income for the Ukrainian economy
Key words value chain, Porter M., added value, inter-industry complex, raw materials, foreign trade
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