Synchronization of Business Cycles of Ukraine and Its Neighbor Countries

The paper is dedicated to synchronization between business cycles of Ukraine and its neighbor countries (Poland, Hungary, Slovak Republic, Romania, Belarus and Russia) in 2010-2020. Authors have used factor analysis model to study which of the Ukrainian neighbor countries is more synchronized with economy of Ukraine. Factor analysis research methodology has been divided into four stages: data collection and compilation of correlation matrix, removal of orthogonal factors or factorization with principal component analysis, factor rotation with Varimax rotation method using Kaiser normalization and data interpretation. Results of the study contribute to the general idea about geographical proximity as a factor fostering business cycles synchronization. The research has revealed similar dispersion of variables between factors of Ukraine, Poland and Hungary. The study has shown that in 2010-2020 business cycles of Ukraine were more synchronized with economic cycles of its western neighbors (Poland and Hungary) comparing to those of Russia and Belarus. The study has also revealed that Ukraine and Poland have similar trade component of analysis that can contribute to the thesis concerning trade impact on business cycles synchronization.