Elements of Economics Sean Gosse

Chicago is one of America’s most diverse cities with hundreds of different immigrant communities throughout the Chicagoland area. For this project, I decided to focus on studying the demographics and history of Ukrainian Immigrants. While there are many Ukrainian Immigrants spread throughout the city, a vast majority of these immigrants began living in the “Ukrainian Village” neighborhood. Chicago’s Ukrainian Village Neighborhood is located on the West side of the City with boundaries that include “Division Street to the north, Grand Avenue to the south, Western Avenue to the west, and Damen Avenue to the east” (Ukrainian National Museum of Chicago). With an average household income of $92,102, Ukrainian Village has a total population of about 52,131 (Onboard Informatics).

Chicago's Ukrainian Village Neighborhood

Chicago has a long history of welcoming Ukrainian immigrants beginning around the 1870’s when the first families began arriving from Ukraine which “was divided between the empires of Austria-Hungary and Russia at the time” (Miziuk). As a result, many of the Ukrainian Immigrants who arrived between 1870 and 1900 were actually listed as being Russian, Austrian or Hungarian. Around this time period, both the Russian Empire and the Austro-Hungarian empire outlawed slavery which had historically forced millions of Ukrainians into captivity and poverty. At the time, millions of Ukrainians were poor former slaves who were inspired to immigrate to America because of the endless job opportunities. Therefore, the first large increase in Ukrainian Immigrants traveling to the United States were members of the economic working class seeking new job opportunities. According to Chapter One of our textbook, every single action that is taken has an opportunity cost, or something that is given up in order to receive that new item. This concept can be applied to the Ukrainian Immigrants who had to make the difficult decision to give up their home country, land and jobs in Ukraine to have a chance at a better life in America. The large number of available job opportunities in America was an incentive for Ukrainians to make the effort to immigrate from Ukraine to America.

Ukrainian immigrants have a long history of building successful lives here in the Chicagoland area. Seeking new job and entrepreneurial opportunities, many Ukrainian immigrants have made the tough decision to sacrifice the opportunity cost of leaving their land, friends and home country behind them for the incentive of a better life in America. Since the early 1800’s, Chicago has seen hundreds of Ukrainian-owned businesses begin to flourish throughout the city and also began to extend their economic successes to neighborhoods outside Chicago. Throughout the 1900’s, the number of Ukrainian Immigrants seeking the incentive of better job opportunities in America began to rise. Industrial cities such as Chicago began noticing the economic benefits of welcoming new working class families. These new immigrants quickly began contributing to the increase in economic development by establishing successful firms and households. A firm refers to a business that decides who to hire and what to make, while a household represents families who decide which firms to work for and what to buy with their incomes.

One particularly successful Ukrainian business that first opened in Chicago’s Ukrainian Village neighborhood, which has since expanded to a second new store in Buffalo Grove, is an excellent example to demonstrate the concepts we have learned in Chapter 4 of our textbook. Located at 2130 W Chicago street in the Ukrainian Village Neighborhood, “Nuts 2 U” was opened by a Ukrainian Immigrant in the early 2000’s who sought to bring his favorite Ukrainian candies to his new home in the City of Chicago. The store quickly became popular among Ukrainian immigrants and other Chicagoans who were seeking the unique candies that were previously not sold anywhere else except for Russia and Ukraine. After seeing many years of successful business, Nuts 2 U opened a secondary shop in Buffalo Grove which attracted an even greater number of customers throughout the Chicagoland area.

One of the main reasons why “Nuts 2 U” has been so successful is primarily because the market demand for their products are very high. A product’s market demand refers to “the sum of all the individual demands for a particular good or service” (Mankiw). In the news article “Just Opened: Nuts 2 You, a Ukrainian Candyland,” Mike Sula describes how the Chicagoland area does not have any other stores that focus on selling Ukrainian and Russian candies. Therefore, the demand for these products are great because they are relatively scarce, hard to find and there are high number of individual demands. Sula describes his own individual demand for the products, which is graphed in Figures 1 and 2. In order to determine the market demand, or the sum of all individual demands, we must focus on the demand schedules for two different individuals in the market. For this example, I will add the sum of the quantities demanded by both myself (figure 3) and Mike Sula (figure 2) in order to determine the market demand (figure 4).

Figure 1
Figure 2
Figure 3
Figure 4

As you can see from Figure 4, the market demand curve directly corresponds to the demand schedules of the individuals within the market. In this case, the two individuals are both myself and the author Mike. In his article about the store, Mike describes in detail how he purchased three pounds of candy at $5.79 per pound. Mike explained how he was further influenced to purchase each pound of candy because they mainly “consist of chocolate-enrobed wafers, nougats, marshmallows, and fudges” (Sula). Graphing the market demand curve for this particular store is an excellent demonstration to help us analyze how markets function.

This store is also an excellent opportunity to help us understand how shifts in demand can occur. A shift in demand can occur for many different reasons, but the effect it has on the market demand curve is one of two outcomes- it will either shift the demand curve to the right (increase in demand), or it will shift the demand curve to the left (decrease in demand). There are many different reasons why the demand for candies would change- some of the most prominent including changes in income, prices of related goods, tastes, expectations, and the total number of buyers. As time progresses, there is an increase of Ukrainian immigrants living in the City of Chicago who want to purchase Ukrainian candies. Therefore, the increase in the number of candy buyers will have a dramatic effect on the market demand curve. Increasing the number of buyers will subsequently increase the quantity demanded in the market therefore increasing the price of candy per pound. This would ultimately shift the market demand curve to the right which represents an increase in demand. Figure 5 represents the new market demand curve has been shifted to the right (blue line) in order to account for the increased number of Ukrainian-Americans who want to purchase these types of candies.

Figure 5

Every person in the Chicagoland area, regardless of whether or not they are an immigrant, consumes different goods and services that are produced by many other people here in the United States and also from around the world. Chapter three has been especially interesting because it mainly focuses on teaching us the benefits of interdependence and trade. Economic interdependence refers to an economic system in which the participants obtain the products they cannot efficiently produce for themselves. One important note from the book suggests that free trade is a good thing because of the fact that it is not like war, where there are only winners or losers. Trade is very different since both parties involved in the trading process have the ability to benefit because it allows everyone to enjoy a greater quantity of variety of goods and services.

This concepts can be applied to virtually any scenario between two participants in an economic system. The “Nuts 2 U” (located at 2130 W Chicago Street), was opened by a Ukrainian Immigrant in the early 2000’s who sought to bring his favorite Ukrainian candies to his new home in the City of Chicago. The store quickly became popular among Ukrainian immigrants and other Chicagoans who were seeking the unique candies that were previously not sold anywhere else except for Russia and Ukraine. After seeing many years of successful business, Nuts 2 U expanded their opportunities by opening a secondary shop in Buffalo Grove and beginning to participate in international trade through imports and exports. Imports refer to the items that are produced abroad and sold here domestically. Exports are good which are produced locally and sold abroad in other countries.

The “Nuts 2 U” candy store in the Ukrainian Village Neighborhood is a perfect example to help us understand the contents of chapter three in the textbook. While I was initially reading the chapter, I was having a difficult time understanding the concepts of Absolute Advantage vs. Comparative Advantage. It wasn’t until the text used the example of Tom Brady and Forrest Gump mowing laws that everything was clarified and made perfect sense. The term Absolute Advantage is used to “comparing the productivity of one person, firm, or nation to that of another. The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good” (Mankiw). On the other hand, “economists use the term Comparative Advantage when describing the opportunity costs faced by two producers. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X and is said to have a comparative advantage in producing it” (Mankiw).

Let’s hypothetically say that the “Nuts 2 U” store has the ability to produce 5 pounds of chocolate candies in one hour. In that same amount of time, the store could have produced 30 pounds of jelly beans in one hour of work. On the other side of the world in Mariupol, Ukraine there is another candy store which has the ability to produce 40 pounds of chocolate candies in one hour of work. In that same amount of time, the store could have produced 10 pounds of jelly beans. In this example, “Nuts 2 U” has an absolute advantage in producing jelly beans because they can produce 3x as many in the same amount of time when compared with the other store. On the other hand, the store in Mariupol has an absolute advantage in producing chocolates because they can produce 7x as many chocolates in the same amount of time it takes “Nuts 2 U” to produce.

If “Nuts 2 U” primarily focused on producing chocolate candies, the store would face an opportunity cost of 30 pounds of jelly beans. In the event that they primarily focus on producing jelly beans, the result would be an opportunity cost of 5 pounds of chocolate candies. The candy store in Mariupol Ukraine experiences an opportunity cost of 40 pounds of chocolates if they only produce jelly beans, and they would face an opportunity cost of 10 pounds of jelly beans if they only produced chocolates. Therefore, “Nuts 2 U” has a comparative advantage in producing jelly beans because that only results in an opportunity cost of losing of 5 pounds of chocolates, compared to the 40 pounds of chocolate that would be lost by the store in Mariupol. On the other hand, the store in Mariupol has a comparative advantage in producing chocolates because the opportunity cost is only 10 pounds of jelly beans when compared with the 30 pounds of jelly beans that “Nuts 2 U” would lose. According to Chapter three- “Unless two people have the same opportunity cost, one person will have a comparative advantage in one good, and the other person will have a comparative advantage in the other good” (Mankiw).

One of my best friends is Ukrainian, and I had a chance to interview him about his traditions, customs, experiences and how this all relates to the local economy. When I showed him my discussion post regarding my name not having a translation to Ukrainian, he said that I was wrong and that there is in fact a translation for “Sean” to the Ukrainian language. According to Damian, my first name directly translates to Шон, which is pronounced “Shon.” He told me about how important naming their children is to the Ukrainian people, especially because it will remain with them for the rest of their lives and be a strong representation of who they are as a person.

Damian, my friend that I interview for this project, is not directly an immigrant himself but both his parents have immigrated from Kiev, Ukraine in early 1990. Damian explained that his parents made the tough decision to leave behind their property, extensive family and home country to seek better economic opportunities in the United States. Even though the decision that Damian’s parents made to leave Ukraine would have a negative effect on the overall GDP of Ukraine, their immigration conversely helps the United States improve its GDP, quality of living and our overall economic prosperity. When moving to the United States, Damian’s parents had several options as to which city they wanted to live in. Fortunately for them, they were in contact with another family member who had previously moved to Chicago and was living a successful life in the Ukrainian Village Neighborhood. Damian’s parents also moved to the Ukrainian Village Neighborhood because they heard that Chicago is a city that is welcoming to immigrants and there are programs such as the Ukrainian Youth Association and Ukrainian Village Neighborhood Association which both provide assistance to new immigrants. Both of Damian’s parents worked hard for many years which allowed them the financial comfort to move from the Ukrainian Village Neighborhood to Glenview where I met my friend Damian in high school at Glenbrook South.

As chapter seventeen describes, there is a wide variety of economic prosperity when it comes to other countries around the world. Because of the fact that the world’s richest countries have an average income of more than ten times in the world’s poorest countries, there is an incentive for highly educated people to move to richer countries because they can find better financial opportunities than those available their own countries. This can be a problem for some of the poorer countries, since their time and money has already been spent on giving that child an education. Oftentimes that educated person won’t want to stay in their poor country because of the lack of a proper average income. This can be a detrimental cycle to the poor countries because all of their skilled workers are seeking better job opportunities in countries with higher incomes. This causes the poorer country to remain in the cycle of poverty, therefore having a more difficult time with long-term economic growth.

The quantity of goods and services produced from each labor of input, better known as the Productivity of a country, has a large impact on the overall economic success and living standards of a country. Over the past few years, hard-working Ukrainians living in the far Eastern portion of the country have experienced many economic hardships as a result of a war between Ukraine and the People’s Republics of Donetsk and Luhansk (Russia). The situation in Eastern Ukraine has become desperate for the people living there because a large percentage of their Physical Capital has been destroyed in the crossfire. Physical Capital refers to the equipment and buildings that are used to produce goods and services. Hundreds of factories, stores, buildings and even homes in Eastern Ukraine have been destroyed during war that is still currently raging there today. As a result, the people living in the region have no way of making an income because the tools they use to work are now useless.

Sadly, physical capital is not the only productivity factor that has been destroyed in Eastern Ukraine. Since the war began in April of 2014, hundreds of Ukrainian Civilians have lost their lives while in the crossfire between Ukraine and Russia. As a result, Ukraine lost a lot of extremely valuable Human Capital, which is “the knowledge and skills that workers acquire through education, training, and experience” (Mankiw). Human Capital was lost because the Ukrainians had spent a lot of time and effort acquiring knowledgeable skills, which was also lost when they lost their lives.

In addition to physical and human capital being lost, there is another very important factor of productivity that has been disrupted during the war in Eastern Ukraine- Natural Resources. Natural Resources specifically refers to “the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits” (Mankiw). As you can see from the image below, a very large portion of Eastern Ukraine including land, rivers and other key natural resources have all been lost to armed rebel groups supported by Russia. The loss of valuable natural resources has a significant impact on the level of productivity that is possible for Ukraine to achieve. Since there are currently many aspects that negatively affect or even destroy the productivity factors of Eastern Ukraine including physical capital, human capital and natural resources, many Ukrainians are experiencing very difficult economic hardships. This is why many of the highly educated or highly skilled workers have felt a need, especially in the past few years, to move away from Ukraine to a country with a higher average income, working physical capital, and without the risk of being killed in a war.

The war in Ukraine has had an especially significant impact on the overall well-being of the Ukrainian economy. Physical Capital, Human Capital and Natural Resources have all been destroyed as a result of war’s destructive nature. This will have a very significant impact on the long-run growth of Ukraine’s economy because it is now missing many of the key aspects of productivity which contribute to economic growth. In addition, it has been well documented that hundreds of educated and skilled Ukrainians have decided to move to the United States for several reasons. Firstly, a lot of the physical capital that these workers need to successfully complete their jobs has been destroyed or captured by enemy forces. Secondly, Ukraine is a relatively poorer country when it is compared to the United States, therefore highly skilled workers could make a larger average income if they move to the U.S.. Third, many families found their homes directly in the middle of “no-mans land,” or the area that has the most intense fighting and contains “the land that is unoccupied or is under dispute between parties who leave it unoccupied due to fear or uncertainty” (The Economist). Therefore, civilians who directly feel the impacts of economic hardships feel a need to move to countries such as the United States with higher average incomes in order to achieve successful lives.

Even though it may have a negative effect of Ukraine’s economy, the larger number of Ukrainian immigrants moving to America will ultimately have a positive impact on the overall economy of the United States. American communities and quality of living are both improved when immigrants arrive in the United States because they are like any other American who helps contribute to the overall GDP and success of the economy. Countries are significantly better off when they engage with other countries through immigration, trade and diplomatic relationships because they all contribute to the overall well-being and GDP of their economy. Therefore, I strongly believe that welcoming immigrants such as those from Ukraine is an important American value because they improve our communities and quality of living throughout the United States.

I strongly believe that the economic development of the Chicagoland area has a direct connection with the successes of immigrant families and their children. Families immigrating from Ukraine to the United States have demonstrated their ability to create successful entrepreneurial businesses that directly benefits the overall economy and GDP of the United States. Therefore, I think that welcoming all immigrants and promoting entrepreneurship will continue to have a positive impact on the local economy. I also believe that international trade has the ability to benefit everyone in society since it allows producers to specialize in activities in which they have a comparative advantage. Using the “Nuts 2 U” scenario, we can see that all parties involved here would benefit from internationally trading with each other as long as the trading price stays between each parties opportunity cost. This scenario can also be applied to virtually any other trading instance because the same economic forces are at work- “The principle of comparative advantage shows that trade can make everyone better off” (Mankiw). Therefore, interdependence and trade are both very important beneficial aspects that contribute to every successful economy throughout the world.

Now that I have had a chance to fully study the experiences of Ukrainians who immigrated to the United States, I have a completely different picture of the Ukrainian Community in my head than I had before doing all the research. I now have a tendency to keep track of the news that is happening across Ukraine, because I have found that I really care for the people who live there. I have a few close friends who are Ukrainian, and it’s really interesting how this project gave me a deeper connection with them and the ability to openly talk to them about their own experiences, traditions and nationality. I also think that one of the most important lessons that I have learning while researching this project is to not “judge a book by its cover” and make preconceived notions about a culture by forming an opinion about without adequate evidence. I thought I had a complete understanding of the Ukrainian people, but this project has made me realize that what I knew before I started researching the topic was just the tip of the iceberg.

In conclusion, this project has a contributed to deeper connection that I have with my Ukrainian friends because it allowed me to ask personal questions about their own experiences, traditions, and nationality. I think that it’s extremely important that we invest time in researching the positive affects that immigrant groups have on our society and quality of living. With all of the anti-immigrant rhetoric that is unfortunately more common this year, I think that it’s important that we do not simply label immigrant groups as bad because of the fact that America was founded by a nation of immigrants. Immigrants are at the core of American values, and I also think it’s important that we continue to welcome immigrants from all countries into the U.S. with open arms regardless of their race, ethnicity, nationality, economic status or religion.

Work Cited

Miziuk, George A. “Ukrainians in the U.S.” (2016) Ministry of Foreign Affairs of Ukraine. http://usa.mfa.gov.ua/en/ukraine-us/ukrainians-in-us

Mankiw, Gregory N. “Essentials of Economics”. 7th ed. Stamford, CT: Cengage Learning, 2015. Print.

Onboard Informatics. “Ukrainian Village Demographics.” Brooklyn, NY. Points 2 via (2016) Onboard Informatics Inc. http://www.point2homes.com/US/Neighborhood/IL/Chicago/Ukrainian-Village-Demographics.html

Sula, Mike. “Just Opened: Nuts 2 You, a Ukrainian Candyland”. The Reader, 2017 Sun-Times Media, LLC. Monday, January 4, 2010. http://www.chicagoreader.com/Bleader/archives/2010/01/04/just-opened-nuts-2-you-a-ukrainian-candyland

The Economist. “Ukraine’s conflict with Russia is also financial- Russia may extract $3bn from Ukraine.” The Economist Newspaper, January 21, 2017. Retrieved 22 Feb. 2017. http://www.economist.com/news/business-and-finance/21714931-russia-may-extract-3bn-ukraine-ukraines-conflict-russia-also

Ukrainian National Museum of Chicago. “Chicago’s Ukrainian Village.” 2249 W. Superior St. Chicago, Illinois 60612, 2016. http://ukrainiannationalmuseum.org/chicagos-ukrainian-village/

Image Sources

"The Situation in the Eastern Regions of Ukraine" http://www.rnbo.gov.ua/files/2014/RNBO_map_11_07_eng.jpg

"Ukraine Flag" http://il2.picdn.net/shutterstock/videos/7545547/thumb/9.jpg?i10c=img.resize(height:160)

"Ukraine and U.S.A. Flags" http://img.112.international/original/2016/04/14/224088.jpg

"Ukrainian Village, Chicago" http://forestsecurity.com/wp-content/uploads/2016/12/Ukrainian-Village-Chicago.jpg

"Ukrainian Village Chicago Real Estate" https://static1.squarespace.com/static/572184abc2ea51fed1cdb89f/t/589ceec32994caaa85bcfe6e/1486679770339/Ukrainian+Village-+Chicago+Real+Estate.jpg?format=1500w

"Ukrainian Village Sign" http://ic.pics.livejournal.com/peacetraveler22/49370105/137255/137255_900.jpg

"U.S.A. and Ukraine Flags in Ukrainian Village Neighborhood" https://www.inman.com/wp-content/uploads/2016/02/Ihor-Pasternak_364124261.jpg

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