What caused the end of the convergence episode for Ukraine in 2009?

Abstract

The convergence theory posits that low-income and middle-income countries tend to catch up with developing nations as they can replicate advancements observed in developed countries. Several factors influence the convergence of economies, with globalization affecting both convergence and divergence processes. Political instability and socialstructural factors can end convergence, as was the case for Ukraine in 2009. Given the economic trend before and after 2009, it is possible to pinpoint when Ukraine’s convergence episode ended. The heavy reliance on unfinished product exports meant that Ukraine was more vulnerable to external economic shocks from the US banking crisis. It also meant the country had low foreign exchange reserves to cushion it from external shocks. Events surrounding Ukraine’s end of convergence show how the decline of large countries, such as the United States and China, could easily affect its trading partners. It reveals how underdeveloped nations could face severe economic shocks when relying entirely on industrialized economies.