WEB-ресурс научно-практических конференций

Vinnikova L.V. , Kozakova A.I.

The East-Ukrainian National University named after Volodymyr Dahl, Lugansk, Ukraine

FOREIGN INVESTMENTS AS A MOVER OF UKRAINIAN INTEGRATION INTO THE GLOBAL FINANCIAL SYSTEM

As it is known the transformation processes in Ukraine during the years of independence were accompanied by a deep economic crisis. In this regard, the issues of resource support of economic development became especially sharp as to the financial component.

One of the crucial problems which are now in Ukraine is the problem of raising funds for its further successful development. Significant reductions in output, high inflation, low quality products, unemployment, restructuring of production all this requires significant cash resources.

Deregulation of the financial system of the state, the lack of domestic savings objectively led to the need for external funds to restore economic balance, ensuring sustainable economic growth [3].

The capital inflow from abroad may take place in two main forms: as a loan or investment in production, its specific industry or enterprise. Certainly, the investments are more attractive and effective form of mobilization foreign capital than obtaining and using credit as an opportunity to solve strategic tasks of economic development through the introduction of scientific and technical progress and improvement in management.

Foreign investments are also important for achieving some medium-term goals – to get out of the socio-economic crisis, to have the rise of production, rising living standards [2].

However, one should keep in mind that the economic interests of foreign investors and Ukrainian side do not always coincide. Yes, Ukraine is interested in restoring their productive capacities, structural transformation of production and consumer market, saturated it with inexpensive high quality goods involved in the production of advanced machinery, technology, and management culture. Foreign investors are interested primarily in profits received by the natural resources of Ukraine , skilled and cheap labor, the achievements of national science and technology, lack of competition in the domestic market. Therefore, Ukraine is facing a challenge: to create favorable conditions for attracting foreign capital and use it as the national interest [3].

Thus, the priority of Ukraine 's integration into the system of international finance today is to involve foreign investment into the national economy.

World experience shows that attracting foreign capital in the form of investments has a number of significant benefits to the host country, compared with the other forms of economic cooperation. Foreign investment is more than just financing investments in the economy. Foreign investment is also a way to increase productivity and technological level of the Ukrainian enterprises. By placing its capital in Ukraine , a foreign company brings some new technologies, new means of production and offers a direct access to the world market [2].

Foreign investments mean the material basis of formation and functioning of specific foreign sector in the economy capital investment country. This sector is a part of the national economic potential, controlled by foreign economic actors.

At this stage, the foreign sector exists in every country with market economy. No country can successfully develop its economy without foreign investments.

A significant and growing role of foreign sector in the national economic development determines the appropriate policy aimed at encouraging foreign investment. In the last decade, the competition between the countries abroad to obtain foreign capital has increased significantly. Capital investment countries apply a variety of benefits, significantly increased costs in these countries to attract foreign investors [1].

An important attention is paid to attracting foreign capital in the form of foreign investment without investment resources, which is typical for the so-called transformation economies. It is evidenced by the recent experience of Central and Eastern Europe , where the attraction and effective use of foreign investment was a key stabilizing factor. In particular, indicators of economic development of Poland indicate that the steady growth of GDP in the country started in parallel with the substantial increase in capital investments in its economy, including foreign investment.

Nevertheless, the analysis shows that a significant increase of foreign investment in the economy is only the beginning of the intensification of domestic investors [2].

Consequently, foreign investors invest only when having a competition with domestic investors. After all, private foreign capital will flow into the economy of paralyzed domestic investment activity.

Why is the Ukrainian economy attractive for investors? Many in the Ukrainian business community feel that the economy of Ukraine , at least for today, is too unstable for long-term investment. Businesses do not use their savings for investment within the country and for lending abroad. Company-exporters tend to retain their earnings in accounts in foreign banks, rather than bring it back to Ukraine and be aimed at new investments.

The problem of currency outflow from Ukraine is now an extremely painful for the domestic economy. Thus, at the end of last millennium the loss of currency from non-return export, foreign exchange earnings, non-receipt of goods and services and export prices of the imported products was estimated more than 1.5 billion U.S. dollars.

Developing and implementation of investment today is a key factor of sustainable economic growth. Underinvestment and high risk of depreciation of capital generate decapitalization , i.e. the lack ?? of investments. This situation urgently requires the reinvestment of profits in production development. But in terms of debts and social problems these hopes are useless. Because the most actual way to get out of this situation for the Ukraine ’s economy is to increase the inflow of foreign capital. Unfortunately, the overall share of investment (domestic and foreign) in Ukraine 's economy currently does not exceed 20% of GDP, while in Hungary , Poland and Russia it is 70-80%.

In Ukraine , where the major part of the economy is controlled by the state, foreign investment is both an economic and political issue. Today one should think not only about increasing the attractiveness of the Ukrainian economy to foreign investors, the challenge is to use their ability to expand domestic purchasing power demand, enhance innovation impact on domestic production [3].

The business circles of Ukraine and foreign countries should be more informed about specific investment opportunities and the most attractive features of their attachment. The increase of the Ukrainian international prestige provides well-organized presentation of investment projects, the participation of domestic producers at the international exhibitions and fairs.

Today, the most investment-attractive phenomenon in Ukraine as well as around the world is investing the capital into the nation's intellectual capacity and scientific and technological innovation, the use of which significantly changes the amount and quality of national production and consumption.

To sum up, we should say that the limited investment resources in Ukraine and the situation with the external debts determine the need for creativity the most favorable investment environment.

The list of references:

1. Мельник В.В. Міжнародна інвестиційна д іяльність / В.В. Мельник, В.В. Козюк . – Тернопіль : Карт-бланш, 2003. – 249 с .

2. Міжнародна інвестиційна д іяльність : п ідручник / Д.Г. Лук’яненко , Б.В. Губський , О.М . Мозговий та ін .; за ред. Д.Г . Лук’яненка . – К.: КНЕУ, 2003. – 387 с.

3. Сприяння сталому економічному зростанню в Україні / з а ред. Ш. фон Крамона-Таубаделя та І. Акімової . – К.: Альфа-Принт , 2001. – 347 с .