Increasing in the recent years, the FDI flux into Ukraine have slowed down due to the global recession and the severe economic crisis affecting the country. After having recovered in 2010 (23.7% increase on 2009), the FDI flux dried, declining from 4.13 billion USD in 2012 to 2.86 billion USD in 2013.
The failure of establishing a closer relationship with Brussels and the uncertainty regarding the government's unwillingness to comply with the IMF's demands have both negatively affected investor confidence.
Apart from the economic downturn, the inefficient and corrupted legal system, complexity of legislation and regulation, poor contract enforcement and poor governance constitute serious impediments to investment. This is so despite the fact that the country has its strengths: a large domestic market, proven agricultural potential, energy and mineral resources and a strategic geographic location which makes it a transit hub and a gate to Europe.
The main investors in Ukraine are Cyprus, Germany, The Netherlands, UK, Austria, the United States and Russia. Apart from the energy sector, direct foreign investment is concentrated mainly in the banking and food processing sectors. You can refer to the Invest in Ukraine website for more information.
|Ukraine||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||5.0||7.0||7.0||5.0|
|Index of Manager’s Responsibility**||2.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||4.7||5.9||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||7,207||7,833||3,771|
|FDI Stock (million USD)||65,485||73,637||76,719|
|Performance Index*, Ranking on 181 Economies||26||-||-|
|Potential Index**, Ranking on 177 Economies||22||-||-|
|Number of Greenfield Investments***||70||60||89|
|FDI Inwards (in % of GFCF****)||23.7||23.5||11.2|
|FDI Stock (in % of GDP)||40.1||41.8||43.1|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: February 2015