Poverty in Ukraine: evolution of interpreting and analysis of impact factors

Abstract

Purpose. The purpose of the article is to analyze the evolution of interpretation of the poverty as a category. In addition, among the aims of the article is analysis of the dynamics of the poverty level in Ukraine and Lviv region as well as determination of the most effective economic factors affecting the poverty level. Methodology / approach. An analysis of the importance of the impact of annual growth of Ukraine’s GDP, GDP per capita, unemployment rate, and other possible factors on poverty level was carried out using statistical tools, namely the Pearson’s, Kendall’s, Spearman’s and Fechner’s correlation coefficients. Research methodology is a systematic approach to the study of the phenomenon of poverty using general scientific methods, as well as statistical methods. The questionnaire method was used to interview residents of cities and villages of Lviv region; methods of correlative-regression analysis were used to assess the importance of individual factors on the poverty level in Ukraine. Authors built VAR-model for the optimal analysis of the poverty level in Ukraine and factors of its influence. Results. After analyzing the value of the coefficient of determination, the authors concluded that the most significant factors of poverty in Ukraine are GDP per capita, PPP (R2 = 0.50), unemployment rate (R2 = 0.42), interest rates on loans (R2 = 0.21), inequality of income distribution (Gini index) (R2 = 0.20), taxes on income and profits (R2 = 0.15). GDP annual growth rate accounts for more than 64% of changes in poverty level in the second period. The value of the inequality of income distribution measured by the Gini index in the dynamics of the poverty level increases from 3.9% in the second period to 5.2% in the 10th period. In addition, value of the interest rate on loans and NBU’s account rate increase over time, accounting for approximately 10.0% and 2.4% of the variation in the level of poverty, respectively. Thus, level of interest rates is an important factor influencing the dynamics of poverty level in Ukraine. Originality / scientific novelty. An analysis of the dynamics of the poverty level in Ukraine was conducted, including a survey of residents of towns and villages in the Lviv region. A direct relationship between the interest rate on loans and the level of poverty has been established. In addition, the direct relationship between the inequality of income distribution and poverty level was confirmed. Practical value / implications. It is proposed to use the correlation coefficients of Pearson, Kendall, Spearman and Fechner to calculate the strength of connection between the poverty level and its economic factors. Authors suggest applying VAR-model for optimal analysis of the poverty level in Ukraine.