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  • 22.05.2010

    FDI Promotion in Ukraine: Blueprint for a Restart

    (Code:PP_04_2010)

    The attraction and promotion of foreign direct investments (FDI) is an important component of Ukraine’s economic reform agenda. FDI could act as a motor for economic growth and welfare. Using the positive effects of FDI, Ukraine could catch up to the competitiveness level of the globally leading industrial economies much faster than by relying only on strengthening domestic firms. ‘Could’, because Ukraine’s current stock of FDI is still too small and powerless. Although Ukraine has benefited from the prosperous global FDI market in the years 2005-2008 before the global crisis, it was not able yet to reach pre-crisis the level of FDI inflows. Other Eastern European economies have been much more successful in continuously attracting and promoting FDI, thus enjoying a higher level of welfare.

    Behind this background, the Ukrainian government decided to redesign the institutions that are involved in FDI promotion. The most recent action has been the liquidation of ‘InvestUkraine’ – the Ukrainian center for foreign investment promotion. Ukraine has now the chance for a restart for FDI attraction and for rebuilding an investment promotion agency. This paper sketches a blueprint for a globally competitive investment promotion agency and explains the necessary steps to be undertaken. The focus is on greenfield and expansion investments rather than M&A or privatisation transactions.

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