Problematic Issues of Localization-Based Development of Mechanical Engineering in Ukraine

Abstract

Introduction. Mechanical engineering in synthesis with IT forms the economy sector with the highest potential for creating innovations, which in the postwar recovery should become major drivers of the socio-economic development of Ukraine and ensure itsadequate competitive ability in the world market.Problem Statement. The critical state of mechanical engineering in Ukraine requires the use of effective tools to stimulate the development of production, in particular on the basis of localization. The recovery plan of Ukraine foresees the localization of at least 60%.Purpose. The purpose of this research is to substantiate proposals for stimulating the localization-based development of Ukraine’s mechanical engineering in the context of strengthening the national economic security.Material and Methods. Economic analysis; the method for the calculation of localization, the authors’ method for determining the production localization level. The cost-output datasheets for Ukraine and the OECD have been used as information base of the study.Results. The consequences of the negative effect of economic globalization on the domestic mechanical engineering enterprises in the absence of the state protectionism have been analytically established. A new methodological approach to determining the production localization level has been developed and tested. It is based on calculating the share of the domestic component in each basic segment of the sectoral cost structure. The authors’ proposals on the non-tariff stimulation of the development of Ukraine’s mechanical engineering corporations on the basis of localization, in order to defend the interests of domestic manufacturers in terms of the elimination of the consequences of the Russian aggression and the postwar recovery of Ukraine’s economy, structural transformations and increased competition in world markets have been substantiated.Conclusions. The authors’ approach to calculating the production localization level allows determining the key elements (in terms of types of economic activity) of the production cost and the weight of the domestic component in them while forming the strategic nomenclature of mechanical engineering in Ukraine.