Vasylieva D.I., Reutskova O.M., Kyrychenko E.O.

Oles Honchar Dnipropetrovsk National University, Ukraine

THE CURRENT STATE OF FOREIGN INVESTMENT IN UKRAINE

In today's globalizing economic development of Ukraine depends on the effectiveness to use not only traditional but also international resources. This can be done through the implementation of open economic models adapted to the Ukrainian environment.

Very important and urgent issues of the world economics is the development of investment, attracting and using foreign investments.

Forming the ways of transfer of resources (financial and material), innovations (technological, organizational and economic), international investment can be a catalyst for investment activity. It also plays an important role in the development and restructuring of our economy. A number of countries effort to increase the investment attractiveness of foreign investments and increase their volume to the national economy.

General legal, economic and social conditions of investment activity in Ukraine are defined by the Law of Ukraine "On investment activity" of 18.09.1991 № 1560-XII, which proclaims equal rights, interests and property of subjects of investment activities. Foreign investments have to obligate state registration in accordance with Art. 395 Civil Code ofUkraine, Chapter III of the Law of Ukraine "On foreign investments".

According to the Law of Ukraine "On foreign investments" of 19.03.1996 № 93/96-VR foreign investment can be realized on the basis of concession agreements, agreements on production cooperation, joint production and the other forms of joint investment.

Investment climate in Ukraine leaves much to be desired, but in general the number of foreign investments in Ukraine is increasing. The positive dynamics in the economics has been observed since 2010. The main drawbacks for investment activity in Ukraine are still a high level of corruption and non budget funds turnover.

 According to the State Statistics Service of Ukraine, in the first half of 2011 56.4% of direct investment ($2,788.2 million), more than the same period last year, was invested in Ukrainian economy by foreign investors.

 Foreign direct investment increased by almost 16%. Almost all investments (82%) came from EU countries for 3 quarters in 2011.

Investments carried out mainly in the form of cash contributions totaled $ 2,356.9 million (84.5% of invested amount).

Increase of foreign equity capital in the economy was totaled $ 2,452.4 million (taking into account: its revaluation, losses, exchange rate differences, etc.), for the first half of 2011.

The largest investor in Ukraine is Cyprus – ($ 11,619.6 million), followed by Germany – ($ 7,365.5 million), Netherlands – ($4,779.5 million), Russia – ($ 3386.1 million),Austria – ($ 2,855.8 million).

Besides, $8,056.8 million was invested in Dnipropetrovsk’s region by October 2011. In early 2010, the volume of direct investments amounted to $2813.6 million. The largest investor was Germany ($4,648.7 million), Cyprus ($2,351.1 million), Virgin Islands (Great Britain ($231.1 million), Netherlands ($136,3 million).

Basically, foreign investment in industry aim mainly at manufacturing, construction, and the enterprises engaged in real estate business. Ukraine has seen irrational distribution of foreign investment across economic sectors. Despite the fact that Ukraine is rich in natural resources, only a small proportion of foreign investment is aimed to the mining industry.

The correct and rational distribution of investments among sectors of the economy will provide significant economic development of Ukraine in future.

Thus trust to Ukraine as an economic partner has increased in recent years. There are several activities that have recently been made to stimulate investment: The State Agency for Investments and the Council of domestic and foreign investors. Also, the government of Ukraine has established tax incentives for foreign investors. Economic activity of individual economic agents and the country is largely characterized by the amount of ongoing investment.

Unfortunately, we still have problems that prevent the effective attraction of foreign investments (political instability, cumbersome and imperfect legislation, investment climate, bureaucracy and corruption).

Solution of the problems will improve Ukraine's investment climate, attract investments and create the foundations for long-term economic development of our country.

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