Papoyan L., Lobanova V., Fedorova V.

Oles Honchar Dnipropetrovsk National University


Today, the number of investment resources available to Ukraine cannot fully meet the needs of all sectors of activity, both economic and social, which significantly impedes economic growth. That’s why Ukraine has to attract new investment resources as it is vital for further development.

Over the last 5 years the number of foreign investments in Ukraine increased 2 times and at the end of 2012 amounts to 54.5 billion dollars [1, p. 10]. Even during the global crisis of 2008–2010, the flow of foreign capital continued growing, though the annual growth rate declined from 36.6% to 12.6% [2, p. 16]. It should be noted that 10 major investing countries invest almost 83% of total direct investment in Ukraine, but the largest share of invested resources belongs to Cyprus (31.7% of total) – 17.3 billion, Germany (11.6% ) – 6.3 billion and the Netherlands (9.5%) – 5.2 billion [1, c. 10]. Unfortunately, this diversification of foreign direct investment to the investor country is somewhat risky because it can lead to Ukraine's economy dependence on the policies of several countries – major investors.

You should pay attention to the fact that foreign funds are used in developed areas of economic activity. Based on data from the State Statistics Committee of Ukraine, the main directions of foreign investment is an industry where 17.2 billion dollars (31.5% of total direct investment in Ukraine) are concentrated, including manufacturing (14.1 billion dollars) and mining (1.5 billion dollars). 16.1 billion dollars (29.6%) of direct investment are accumulated in financial institutions, which is 3.5% less than in the same period of the previous year [1, c. 20]. As we see there is irrational distribution of foreign investment across sectors in Ukraine. Much attention is focused on investing in the manufacturing industry. Despite the fact that Ukraine is rich in natural resources mining industry seeks a small share of foreign investment.

Recently, Ukrainian government has significantly increased its investment activity, but it is still in the list of countries with the lowest investment attractiveness. The share of Ukraine in the global flow of direct investment account 1% [3]. The reason is the unfavorable investment climate and conditions for foreign investors. Index of investment attractiveness ratings which was published by the European Business Association (EBA) showed deterioration in business investment climate in Ukraine. Following 2012, this figure dropped to 2.12 points on a 5-point scale compared to the 2nd quarter of 2011, when it reached its maximum value (3.39). The biggest problems the members of the association see are the fiscal policy of Ukraine – 25% of respondents think so, the government policy – 26% and constant pressure from the government – 18% [4]. During 2009–2010, Ukraine demonstrates regression in most of the world rankings. This is mainly due to unresolved institutional issues (low transparency and inefficiency of public policy, the lack of an independent judiciary and the protection of property rights, waste of public funds). Almost all ratings showed that Ukraine's position worsened due to increased corruption rate, which is among the highest in Europe.

Thus, the main factors that create an unfavorable investment climate in Ukraine are economic and political instability, poor logistics, underdeveloped infrastructure base and negative factors of a social nature.