Ph.D. S.O.Gerashchenko, Ph.D. T.M. Cherkavskaya

National Mining University, Ukraine

Investment climate in the economy of Ukraine.

The investment climate is a set of economic, political, legal and social factors that determine the level of risk for foreign investment and the possibility of their effective use in the country or separate territory. Generally, the investment climate is determined by a large set of factors which are difficult to analyzed. We will analyze the basic components of the investment climate in this research work: investment potential and investment risks for the Ukrainian economy. We will try to give recommendations on improving the investment attractiveness of Ukraine based on advantages and disadvantages of the component of the investment climate.

Ukraine has a certain investment potential. Most important components of them are: relatively high level of skills in the labor force at low cost. Average monthly salary in Ukraine amounted to 01.01.16 4362 UAH in line with 160$ [1]. According to the ranking of countries by level of education undertaken by the United Nations development programmer at the maximum value of the coefficient of education level 1, in Ukraine, this ratio was 0,799 for 2014 and the list of countries it occupied 36th place among 188 countries [2]; developed railway network, as a rather important component of transport infrastructure; quite a large domestic consumer market. Only one parameter population, nearly 42.6 million persons says a lot about this market; favorable geographical location - in the heart of Europe, on the border of the enlarged EU. EU enlargement to the East, which has occurred in recent years, will have a positive impact on the flows of direct European investment in Ukraine; Ukraine has major reserves of natural resources, has significant agricultural potential (favourable climate, fertile soil); high level of research and development in many areas of science and technology and the significant scientific and technical potential; formed the legislative base on issues of foreign investment, which, in particular, introduces the national regime of activity for firms with direct investments; strengthening ties with the EU, membership in WTO and the like.

But despite a certain investment potential serious threat to investment attractiveness of Ukraine to foreign investors constitute investment risks.

The position of Ukraine in the major international indices presents in Table 1, characterize the investment attractiveness of Ukraine.

Table 1.

The place of Ukraine in global ratings for the period 2010-2016.












Global Competitiveness Index (GCI)


( 143)


( 144)


( 144)


( 148)


( 144)


( 140)


( 138)




Doing Business


( 183)


( 178)


( 183)


( 184)


( 189)


( 185)


( 190)



The corruption perception index (Transparency International)


( 178)


( 182)


( 174)


( 177)


( 175)


( 167)


( 176)



The index of economic freedom (Heritage Foundation)


( 179)


( 179)


( 179)


( 179)


( 179)


( 178)


( 178)


The index of invest-ment attractiveness (BDO International Business Compass)




( 174)


( 174)


( 174)


( 174)


( 174)



Source: developed on the basis of [3-7].


The data presented in table 1 indicates that the country has not been significant progress in improving the investment climate. Only according to Doing business index, Ukraine has improved its ranking by 16 points over the last 7 years. This improvement was largely achieved through certain reforms that were implemented in the national economy.

Overall, Doing Business is intended to exclusively assess the quality of regulations of business activities in the country and absolutely nothing to do with macroeconomic indicators, in particular such as the stability of the financial system, quality of fiscal management, skill level of the workforce and other aspects of macroeconomic stability.

According to the global competitiveness index between 2010 and 2016, Ukraine's position in the ranking has not changed significantly: in seven years, Ukraine has risen just by 4 positions, in addition for 2016 compared to 2015 fell by 6 positions.

Ukraine has lost the most positions over the past two years among the components of the global competitiveness index in terms of the macroeconomic environment. In this components: efficiency of labor market, level of development in financial market, health and primary education country has lost so many position [4]. The indicator of the macroeconomic environment has deteriorated, primarily through inflation. The level of development of the financial market deteriorated, primarily through the decline of the business ability to obtain financing on the domestic stock market and regulation of the stock market and also decline in the index of legal rights.

Ukraine tops the list from the end for some items, in particular, on the strength of us banks for the second year in a row rated among the evaluated countries, among 138 countries for regulation of securities exchanges, we got the last place for inflation 136, road 134. We are lagging behind with the development of infrastructure and other components of global competitiveness Index.

The level of perception corruption index in Ukraine is on the 131th place out of 176 places in the ranking of international non-governmental organization Transparency International. And this figure practically did not change today since 2010. (in 2010 - 134 place out of 178 countries).

The index of economic freedom is calculated on the basis of 10 quantitative and qualitative factors, grouped into four broad categories or pillars of economic freedom: rule of law (property rights, freedom from corruption),limitation of government (fiscal freedom, government spending, regulatory efficiency (business freedom, freedom of the labor market, monetary freedom), open markets (trade freedom, investment freedom, financial freedom). Ukraine in 2016 in the rating ranked 162 out of 178 countries in the world and recognized as a country with non-free economy − the Index of economic freedom is 46.8 points out of a possible 100.

Ukraine has become a country in which took place the biggest in the world (among 174 countries surveyed) the fall of the investment attractiveness index by 41 points (from 89 locations in 2015 to 130 seats in 2016) according to the rating of investment attractiveness of countries in 2016. Since the index consists of economic, legally-political and socio-cultural conditions in the country, respectively, there was a significant deterioration in all the above conditions. Specified rating is very negative for the investment attractiveness of Ukraine.

Thus, the investment climate in Ukraine is not attractive from the point of view of most international rankings. We are talking mainly about economic instability in the country (macroeconomic situation), the legal gaps in legislation, high level corruption, weak judicial system and financial support received the oligarchs which close connections with leading politicians, corruption, political instability, inflation, inefficient government bureaucracy, inadequate access to Finance, frequent changes of government, high tax rates, complexity of tax legislation, the foreign exchange market regulation, inappropriate quality of infrastructure, restrictive labor market regulation, poor quality of health care. We can add Russian aggression and the anti-terrorist operation in the East of Ukraine for all political, legal and economic troubles. As a result of all this problems the situation with the investment climate looks even more alarming.


1. The site of the State Statistics Service of Ukraine //

2. Ranking countries by level of education // /ratings/ education-index.

3. The Doing Business //

4. Global Competitiveness Index //

5. Corruption perceptions index//

6. The Heritage Foundation The index of economic freedom // - Index of Economic Freedom 2016).

7. The index of investment attractiveness//