Stages of Industry Formation in the Eastern Regions of Ukraine
The article investigates the economic and sociopolitical aspects of industry establishment in the eastern part of Ukraine.
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Інститут економіки промисловості НАН України
2013
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| Назва видання: | Економічний вісник Донбасу |
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| Цитувати: | Stages of Industry Formation in the Eastern Regions of Ukraine / O.Yu. Kudrina // Економічний вісник Донбасу. — 2013. — № 4 (34). — С. 67–70. — Бібліогр.: 4 назв. — англ. |
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nasplib_isofts_kiev_ua-123456789-1233832025-02-23T17:20:32Z Stages of Industry Formation in the Eastern Regions of Ukraine Етапи формування промисловості в східних регіонах України Этапы формирования промышленности в восточных регионах Украины Kudrina, O.Yu. International and Regional Economics The article investigates the economic and sociopolitical aspects of industry establishment in the eastern part of Ukraine. У статті досліджено економічні і соціально-політичні аспекти становлення промисловості сходу України. В статье исследованы экономические и социально-политические аспекты становления промышленности востока Украины. 2013 Article Stages of Industry Formation in the Eastern Regions of Ukraine / O.Yu. Kudrina // Економічний вісник Донбасу. — 2013. — № 4 (34). — С. 67–70. — Бібліогр.: 4 назв. — англ. 1817-3772 https://nasplib.isofts.kiev.ua/handle/123456789/123383 332 en Економічний вісник Донбасу application/pdf Інститут економіки промисловості НАН України |
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Digital Library of Periodicals of National Academy of Sciences of Ukraine |
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English |
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International and Regional Economics International and Regional Economics |
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International and Regional Economics International and Regional Economics Kudrina, O.Yu. Stages of Industry Formation in the Eastern Regions of Ukraine Економічний вісник Донбасу |
| description |
The article investigates the economic and sociopolitical aspects of industry establishment in the eastern part of Ukraine. |
| format |
Article |
| author |
Kudrina, O.Yu. |
| author_facet |
Kudrina, O.Yu. |
| author_sort |
Kudrina, O.Yu. |
| title |
Stages of Industry Formation in the Eastern Regions of Ukraine |
| title_short |
Stages of Industry Formation in the Eastern Regions of Ukraine |
| title_full |
Stages of Industry Formation in the Eastern Regions of Ukraine |
| title_fullStr |
Stages of Industry Formation in the Eastern Regions of Ukraine |
| title_full_unstemmed |
Stages of Industry Formation in the Eastern Regions of Ukraine |
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stages of industry formation in the eastern regions of ukraine |
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Інститут економіки промисловості НАН України |
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2013 |
| topic_facet |
International and Regional Economics |
| url |
https://nasplib.isofts.kiev.ua/handle/123456789/123383 |
| citation_txt |
Stages of Industry Formation in the Eastern Regions of Ukraine / O.Yu. Kudrina // Економічний вісник Донбасу. — 2013. — № 4 (34). — С. 67–70. — Бібліогр.: 4 назв. — англ. |
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Економічний вісник Донбасу |
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2025-11-24T02:27:09Z |
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| fulltext |
67
Економічний вісник Донбасу № 4 (34), 2013
UDC 332
О. Yu. Kudrina,
PhD (Economics)
Luhansk Taras Shevchenko National University
STAGES OF INDUSTRY FORMATION IN THE EASTERN
REGIONS OF UKRAINE
Problem Statement. The evaluation of contemporary
industrial capacity of the Eastern part of Ukraine and
the creation of proposal on the improvement of regional
economy are impossible without a profound historic
and economic analysis of the establishment and
development of industry in Donbas, mainly the industry
of Luhansk region.
Analysis of Researches and Publications. The
problem of industry establishment in Donbas was
considered in the works of H. Bakuyev, B. Dontsov,
O. Druzhinina, V. Zhglo, V. Podov, B. Rozen, I. Time,
as well as a great number of historical archives,
collections of statistical records etc.
The objective of the article is to investigate the
economic and socio-political aspects of industry
establishment in the eastern part of Ukraine.
Presentation of the Main Material. The discovery
of hard-coal and iron ore deposits on the territory of
Donbas in the year of 1721 gave momentum to the
industrial development of the region.
On the edge of the XVIII and XIX centuries, due
to the large reserves of natural resources, the birth of
the coal, iron and steel industry took place in the economy
of Donetsk region. At the beginning, the ore mining and
smelting industrial complex was presented by two state-
owned enterprises, including Luhansk foundry plant and
the first colliery of the basin in Lisya Balka (present-
day region of Lysychansk in Luhansk region).
On November 14, 1795 Tsarina Yekaterina II
signed the decree “On the Foundation of the Foundry
in Donetsk District at the River Lugan and the
Establishment of Coal Quarrying, Found in the Country”.
It should be noted that the Decree became an
important landmark on the way of development of
productive forces in Donbas; it heralded the emergence
of coal and metallurgical complex of Donetsk basin [3].
In accordance with the considered Decree, Luhansk
(Каterynoslav) plant, the first enterprise of the southern
metallurgy, was built in the settlement of Kamianyi Brid
near the river Lugan until the year of 1800.
As a natural result, the development of coal mining,
coal iron and steel industry produced the urban growth
and development. The settlement near the foundry, which
later was named Luhansk plant, grew at a rapid rate.
In September 1882 the imperial decree approved
the provisions for the foundation of Luhansk town, based
on the settlement of Luhansk plant.
Luhansk foundry plant became the pioneer of
development of coal iron and steel industry not only in
Donbas but also in the whole south of the Russian
Empire.
The plant became the first large metallurgical
enterprise of Donbas, which was the pioneer in the
development of iron smelting in mineral fuel blast
furnaces, which played a notable role in the development
of metallurgical enterprise both in the territory of
Donbas and the whole Russian Empire, being the basis
of integrated development for the natural resources of
Donetsk basin. In the end of the XIX century Luhansk
plant was closed due to the solved issues, which were
the reason for its creation, as well as due to the exhaustion
of its potential.
It should be noted that the development and
depression of manufacturing now and in the ХІХ century
changed each other on the principle of the curve.
However, the advanced industrial experience,
gained during the decades, appeared to be popular,
though in absolutely new concept. In 70 – 80-th. of the
XIX century new industrial factories and works were
founded in Luhansk, the biggest of which were Luhansk
ammunition factory (restructurised from the foundry)
and Hartman locomotive works.
We would like to emphasize on as follows: all
contemporary processes of the XXI century on the
restructurisation of the industry as a result of changes
in the market conditions, tend to be the direct analogy
of processes, which were already experienced by the
society in the XIX century. A case in point is the
dependence of coal mining and metallurgical industries.
The XIX century became an important period in
the development of coal mining industry of the region.
The economy rules undoubtedly dictate the terms
of development of the economy. A classic of the genre
is as follows: the increase in supply at the merchandise
market results in the drop of prices for the merchandise
without the increase in demand and, respectively, to
the decrease of profitability and other financial indicators
in the activity of the economic entity.
О. Yu. Kudrina
68
Економічний вісник Донбасу № 4 (34), 2013
The specified axiom works, worked and will
always work. The condition of the coal mining industry
of Donbas of the XIX century is a demonstrative
example of action of the analyzed law.
With the discovery of Grushevsk antracite deposit
in the lower course of the Donets in the middle of 30-th
of the XIX century, the structure and condition of the
coal market changed completely.
Grushevsk antracite mines within the then
competition at the coal market won the competitive
struggle from other mines for the extent of production
and sale, and became real monopolists for the supply
of coal for sale into the sea ports and the Black Sea
Fleet. As for clarification, according to the statistical
data, the main consumer of coal was Luhansk foundry
plant until the end of thirties of the XIX century,
starting from the year of 1837 (when Chernomorsk
ocean company was founded) Chernomorsk ocean
company became the main consumer of coal. In the
fiftieth the shipping company consumed 29% of coal,
which was mined in the region, while Luhansk plant
got only 8% [3].
It should be noted that until the end of the fiftieth
of the XIX century the rate of Grushevsk mines was
about seventy three per cent of the whole crop in
Donbas. As a natural result, the centre of the coal mining
industry of the basin moved into the lower course of
the Donets, where the deposit of Grushevsk mines was
located.
In the eightieth of the XIX century the industrial
revolution took place in the Russian Empire. Railways
developed rapidly, which caused the current increase
in the demand for coal. In that connection, railways
became not only a reliable vehicle for coal delivery, but
also its largest end consumer. For example, the railway
consumed about 36% of coal, produced in Donbas.
Another important consumer of coal was the
metallurgy industry, which received 29 per cent of the
produced coal. Besides, ocean and inland navigation
companies, as well as other industrial enterprises, needed
the coal fuel, including the mines; coal was also used
for the accommodation heating.
For example, if during the five-year period, from
1860 to 1865, the production of coal in Donbas
increased 1.5 times only, from 6 mln. to 9.8 mln poods,
with the emergence of railways the consumption of
coal increased respectively. In the year of 1880 the
extent of production reached 86.3 mln poods, which
exceeded the production level of the year of 1860
14 times [4].
The presence of considerable fuel reserves and
the developed infrastructural network became the
catalyst of the development of the coal mining industry
itself as well as industrial enterprises, which use the
transport networks and junctions.
The important thing was that metallurgical plants
opened their own coal mines for the provision with fuel.
This happened with Alchevs’k, Sulins’k, Mariupil,
Kramatorsk, Druzhkivsk, Olkhovsk and other metallurgical
plants, turning them into complex enterprises.
We can draw some logical conclusions based on
the historic material.
First of all, the conducted historical and economic
analysis proves that it was the private industry that gave
a stimulus for the recovery of coal-mining industry of
Donbas after its continuous standstill, caused by the
absence of national orders for coal and metallurgical
products because of the termination of military
campaigns.
Second, state management of the coal-mining
sphere showed considerable advantages over the private
sector for hundreds of years, if not to say it hotter.
A private owner, applying the principles of the
entrepreneurial initiative, knowledge of the sale markets
and other personal factors, shows more considerable,
compared with the government, interest to timely reorient
a lossmaking state (public) enterprise and to tailor its
efficient functioning.
And the third is that the experience of the past
centuries witnesses that nothing lasts forever. Donbas
already underwent the stages of recovery and decline
more than once. Besides, the development of coal-
mining and metallurgy industry (and historic experience
proves that) cannot exist and develop only at the
expense of state subsidies, dotations and transfers.
The process of overcoming the crisis for districts,
regions and certain industrial enterprise should have
an objective economic basis. Otherwise, if not to take
into account the state influence, the economy will
always be lossmaking and constantly swallow up the
additional allocations without getting any economic
benefits from it.
But let us come back to the subject of our scientific
analysis. Until the end of the XIX century 209 coal pits
already worked in Donbas, with 289 coal mines.
In particular, the development of industrial
production made it possible to notably develop the coal
mining field: For forty years, i.e. the period from 1860
to 1900 coal production in Donbas increased over 111
times [1].
It should be noted that the development of coal
mining industry as well as other industry fields, was
intermittent during the analysed period. This was
expressed in the periodic changes of growth stages as
О. Yu. Kudrina
69
Економічний вісник Донбасу № 4 (34), 2013
well as economic crisis stages. The first manifestation
of a crisis took place in the seventies of the analyzed
century. In particular, the production of coal in
Slovyanoserbsk district decreased from 157 thous. tons
in the year of 1872 to 44 thous. tons in the year of
1874. Moreover, only eight mines remained active among
the existing twenty [4].
After another boom in the sphere of coal-mining,
which took place in the second half of the seventieth,
the beginning of the eightieth, a new rapid decline of
coal production took place in Donbas, as well as the
decrease of price for fuel. As a result of the absence of
sale (!) of coal in Donbas in the year of 1883 only ninety
three coal pits were active, while one hundred and twenty
four pits worked in 1882.
In fact, the then history is repeated with almost
the same scenario now. Both then and now the
temporary local coal production increase took place due
to the increase of the number of employees. Thanks to
the low workforce price neither local, nor foreign mine
owners were interested in the mechanization of
operations. The imported mining equipment, due to its
high cost, was accessible only to the limited number of
enterprises.
Both now and then, in the eightieth of the
XIX century, the development of coal mining industry
in Donbas demanded huge capital investments.
Moreover, the domestic entrepreneurs unwillingly
invested their funds into the industry; they were more
interested in the consumer goods industry, where the
profit could be received much faster.
The countries of Western Europe accumulated some
excessive capital at that time, and the industrialists of
some West-European countries turned their views
to Donbas, which had cheap workforce, and expected
high (by European standards) returns. After the increase
of excise duty for foreign coal and import of coal
equipment by the royal government, it became more
profitable for western industrialists to import their capital
into Russia.
Development of coal mining industry was
accompanied with the concentration of production.
Thus, if in the sixtieth of the pre last century the largest
coal mines produced not more than 200 – 300 thousand
of poods per year/ In the end of the seventieth 18 largest
enterprises exceeded the millionth barrier of the crop,
and in 1900 seven most powerful enterprises produced
over 20 mln poods each.
Until the end of the XIX century Donbas basin
turned into the largest industrial centre of the country;
coal production increased one hundred and twenty times
over forty post-reform years. At the point of the new
XX century Donbas produced 671.7 mln poods of iron,
which made 91.5% of the all-Russian annual output (not
to take into account Poland). For better understanding,
only one Yuz Novorussian society produced 50 mln
poods of coal annually [3].
Despite the impressive statistical; figures, Donbas’
metallurgy developed rather slowly if compared with the
countries of Western Europe. From our point of view,
which is based on the position of the outstanding history
scientists and economists, one of the reasons of such
underdevelopment was permanent mistaken policy of the
royal government in the sphere of tariff and state duty
for the import of cast iron, iron and machines from
abroad. In the year of 1861 the government allowed the
duty-free import of the indicated commodities for the
machine-building plants, and in 1864 these benefits
referred already to all mechanical plants with steam or
water-power engines.
Such protecting policy towards foreign-
manufactured production made the domestic industry
dependent from the metal, machines and equipment,
imported from abroad, and consequently delayed the
development of native metallurgy.
However, the government realized the fault of the
economic policy rather quickly and changed the situation
for the better. Thus, in the year of 1866 the Russian
Empire adopted the law, which stated that all orders,
connected with the development of railway transportation,
should be performed by native plants only.
Moreover, the government established bounties for
the production of engines and carriages, as well as steel
metals on the state enterprises.
These novations turned out to be in favor of the
development of domestic metallurgy industry and
machine manufacturing. Foreign investors always
tended to invest into the production of ready industrial
products on our territory in order to get additional
preferences from the government. Particularly, John Yuz
bought back the concession right in Duke Kochubey
for twenty four thousand sterling in the year of 1866,
which was provided by the Russian Government for
the construction of the rail plant. Yuz concluded an
agreement with the Committee of Ministers for the
creation of Novorussian society of coal-mining, iron
and rail production, as well as the society of railway
branch from Kharkiv-Asov line [2].
And there are lots of examples of impressive
construction of metallurgical giants. Private investor,
thanks to previously considered strategy, so to say with
present-day language of “state industrial policy” gave
occasion to the boom in industrial production, putting
the technically underdeveloped Russia at the level, which
О. Yu. Kudrina
70
Економічний вісник Донбасу № 4 (34), 2013
is more or less close to the development of Western
European countries.
Conclusion. The indicated data is not a mere
formal presentation of historic information, but the
analysis of laws of development and decline in the
regions, districts, and certain industrial enterprises.
Knowledge of basic principles for industry functioning,
depending on political, social and other factors, makes
it possible to predict the contemporary scenario,
efficiently use the centuries-long empiric and social
experience, as well as to avoid the unwanted negative
effects of the present-day reality.
References
1. Bakuev G. D. Razvitie ugol’noy promyshlennosti
Donetskogo basseyna [Development of Coal Mining
Industry of Donetsk Basin]. – Moscow. 1955. – 128 p.
(in russian). 2. Donetsk, istoriko-ekonomicheskiy ocherk
[Donetsk, historic and economic sketch] p. 31. (in
russian). 3. Podov V. I., Kurylo V. S. Istoriya Donbassa
vek ХІХ [History of Donbas of ХІХ Century]. Luhansk.
2001. P. 177. (in russian). 4. Sbornik statisticheskih
svedeniy po Ekaterinoslavskoy gubernii, T.ІІ,
Bahmutskiy uyezd, razdel Promysel [Collection of
statistical information on Yekaterinoslav Province,
Volume II, Bakhmut district. Section Industry]. (in
russian).
О. Yu. Kudrina
Кудріна О. Ю. Етапи формування промисло-
вості в східних регіонах України
У статті досліджено економічні і соціально-
політичні аспекти становлення промисловості сходу
України.
Ключові слова: розвиток, вугільна й металур-
гійна промисловість, Донбас, соляна промисловість,
хімічна і скляна промисловість.
Кудрина О. Ю. Этапы формирования про-
мышленности в восточных регионах Украины
В статье исследованы экономические и соци-
ально-политические аспекты становления промыш-
ленности востока Украины.
Ключевые слова: развитие, угольная и метал-
лургическая промышленность, Донбасс, соляная
промышленность, химическая и стеклянная промыш-
ленность.
Kudrina O. Yu. Stages of Industry Formation
in the Eastern Regions of Ukraine
The article investigates the economic and socio-
political aspects of industry establishment in the eastern
part of Ukraine.
Key words: development, coal mining and
metallurgical industry, Donbas, salt industry, chemical
and glass industry.
Received by the editors: 23.09.2013
and final form in 04.12.2013
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