STATE OF FOREIGN INVESTING TO UKRAINE: PROBLEM AND
WAY OF THEIR DECISION
National University of
Food Technologies
The dynamics of foreign investments volumes to Ukraine
in 2000-2009 is analyzed. Priority industries of domestic economy for foreign
investors are selected. Problems of attracting foreign investments to Ukraine
are defined. The ways of improvement investment climate in a country are
offered.
Key words:
investments, sourcings projects, investment climate, investment attractiveness,
fixed assets.
Analysis of international experience confirms that
foreign investment helps to solve the problem of insufficiency of own sources
of funding. Using its money efficiently country can not only compensate for the
lack of domestic investment resources, but also increase the efficiency and
competitiveness of domestic products due to the introduction of new
technologies and analysis of progressive management experience in other
countries. In addition, due to attracting foreign investment a country gets an
access to world markets, establishes links with the global economy and helps
overcomes the economic crisis [1, p. 3-4]. Thus without increasing foreign
investment in Ukraine the national economy will not improve its condition and
will not effectively enter the current world economic system.
Investment attractiveness plays an important role in
regional and interstate movement of capital. As a result of significant territorial
uneven distribution of economic factors countries and regions are the
competitors in the struggle for resources. An important factor is the
investment climate as a set of political legal economic institutional and
social conditions that determine the attractiveness and feasibility of
investing of certain economic system [3, c. 256]. One of the prerequisites of
sustainable economic development of the country and its regions is to create
and support a favorable investment image in the minds of potential investors.
Despite the positive trend of investments in fixed assets, there is a lack of
domestic investment resources that determine, firstly, a prolonged period of
decline of domestic production that
leads to a lack of investment resources of enterprises to upgrade and
modernization of fixed assets. On the other hand, a sharp drop in income of the
population of Ukraine is the cause of the lack of household savings for direct
and portfolio investment. In addition, capitalization of Ukrainian banking system is insufficient that limits the
possibilities for large-scale investment projects.
Total foreign direct investments in Ukraine on 1
October 2009 amounted to $ 38,591,6
million which is 8.3% more than at the beginning of 2009.
In 2009, investments in Ukraine came from 125
countries. According to the State Statistics Committee of Ukraine the following
top ten investor countries account for almost 81% of total direct investment:
Cyprus - $ 8.2017 billion, Germany - $ 6.5808 billion, The Netherlands - $ 3814,
2 million, Austria - $ 2.5648 billion, United Kingdom - $ 2.3485 billion,
Russian Federation - $ 2.0615, France - $ 1.5896 billion, United States America
- $ 1.3815 billion, Virgin Islands,
British Isles - $ 1.3405 billion and Sweden - $ 1.2564 billion.
However, during 2009 – 2010 foreign investment
decreased several times due to the
global financial crisis. Many foreign companies will cancel plans for expansion
into new markets and acquisitions of competitors. In economy of Ukraine $ 3.95
billion direct investment was invested
by foreign investors in January - September 2009, i.e. 46.3% of total
investments for the corresponding period of the previous year. In particular,
the EU countries invested $ 3.1254 billion (79.1% of total), the CIS - $ 398.0 million
(10.1% of total), other countries - $ 424.9 million (10.8% of total). At the
same time non-resident capital decreased by $ 845.4 million. In general, the
growth of foreign capital in the economy, given its revaluation, losses and
exchange differences amounted to $ 2.9721 million, representing 36.8% of the
corresponding period of the previous year [2].
According to both domestic and foreign economic
entities, investment climate in Ukraine remains unfavorable. The main reasons
for the unfavorable investment climate in Ukraine and hinder economic
development are instability of Ukrainian legislation, overregulation of most
markets, lack of market infrastructure, a strong tax burden, bureaucracy and
corruption in local and central authorities.
LIST OF REFERENCES
1. Moskvin S. Investment Market of
Ukraine and problems of its state regulation / S. Moskvin // Financial Markets
Ukraine. - 2010. - ¹ 2. - 3-4 p.
2. The official site of the State Statistics Service. // [Electronic
resource]. - Access: http://www.ukrstat.gov.ua/
3. Pavlenko I. International trade
and investment. Teaching users / I.
Pavlenko, O. Varyanychenko, N.
Navrotska - K .: Center of educational literature, 2012. - 256 p.