Regional Corner: Kharkiv, Ukraine

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**October 1998**
by Shawn Levsen
Kharkiv is known as one of Ukraine's industrial and research centers.  Like many other regions in Ukraine, it has suffered enormoussetbacks since independence.  Kharkiv, however, boasts a strong production and research foundation that if rebuilt could bring back manyof the losses sustained over the last six years.   
**Geography and Resources**
Kharkiv is located in eastern Ukraine on the Russian border.  Its territory is not overly large at 14,300 square kilometers, but with 3 millionpeople, Kharkiv is the third most populous region in Ukraine.  The region is rich in natural resources:  natural gas and oil deposits arelocated at Shebelinka, Krestyshchivka, and Kegychivka, and sand, clay, and limestone deposits support a hearty construction materialsindustry.  
Kharkiv produces almost half of Ukraine's natural gas output.  Firms such as Kharkivtransgaz, Shebelinkagazprom, Kharkivoblenergo,Zmiivka SRPP, Kharkiv Heat Networks, and Kharkivteploenergo tap into the estimated 2.7 billion cubic meter natural gas reservesduring production. 
**Industry**
Kharkiv's heavy industrial plants play an important role in the region's activity.  The Malyshev Plant produces improved military tanksand has recently completed a major deal with Pakistan. The Kharkiv Tractor Plant is outfitting its tractors with motors from Sweden andGermany and is still making sales internationally.  The turbine manufacturer Turboatom continues to resupply its past customersworldwide.  
Research facilities play a major role in the region.  Much of the Ukrainian aerospace industry is also located in Kharkiv.  The Monolitcompany produces circuitry, while the Kommunar enterprise supplies control systems for Russia's Soyuz and Proton programs, as wellas the Ukrainian Zenit rocket.  The Kharkiv Aviation factory is designing aircraft upgrades, including the  AN-74 passenger jet.
While these gigantic companies are striving to find direction, many smaller companies have sprung up in the region.  Since 1992, about3,000 enterprises have been privatized.  The region has been rated fifth in privatization among the Ukrainian regions, and second inprivatization of medium and large enterprises.
**Agriculture**
Kharkiv Oblast has 490 collective agricultural enterprises and 1,160 private farms.  Output in the region is fairly evenly split between cropsand livestock.  Arable land accounts for 1.9 million hectares in the region, with outputs as follows:  grains, 30 percent; sugar-beets, 33.4percent; sunflowers, 14 percent; and vegetables, 5.3 percent.  Meat ouput consists of  80 percent cattle, 9.6 percent pork, and 7.9 percentpoultry.
**Foreign Business Activity**
In 1997, the region ran an international trade deficit, exporting US$402 million and importing US$582 million. The region's majorexports are machines and equipment, most of which goes to Asia.  Machinery is also the region's major import, followed by mineralsand fuel.  Seventy-seven percent of imports come from Europe.
Foreign investment in Kharkiv over the last six years totals US$50.4 million.  U.S. companies registered in the region are involved incasein production, foreign trade, and car sales.  American companies are also involved directly with Ukrainian firms, such as theUkrainian-Russian-U.S. company Spets (consumer products), the KarMa joint venture (manufacturer of bicycles), Kharkivyuvelirtorg(jewelry), and Interior International (furniture and wood).
Restructuring of major firms and the development of smaller, more consumer-oriented companies must take place for the region toflourish to its potential.  Regardless, Kharkiv is a region full of possibilities, given its resource base and head start in attracting foreigninvestment.
*For more information about Ukraine, visit BISNIS OnLine at www.mac.doc.gov/bisnis/country/wstnis.htm. 
Shawn Levsen formerly covered Ukraine for BISNIS.
***This report is provided courtesy of the Business Information Service for the NewlyIndependent States (BISNIS)****