According to diagram 4 we can see that the biggest part of all foreigh investments belongs to countries of EU, i.e. it is profitable for EU countries to invest money in Ukraine economy. But despite the collaboration between Ukraine and countries of EU, Ukraine is not becoming the part of EU and like it was said earlier Ukraine is still not attractive for foreigh capital investments.
On the basis of statistical data lets draw the chart which shows the incoming direct foreigh investments in Ukraine compared to those in Poland.[1,2]
Now lets analyse the dynamics of the direct foreigh investments in Ukraine compared to Poland. As we mentioned before both countries have the same location conditions. To avoid the difference in country size the data provided per capita. Diagram 5 shows us that 1995-2000yy Poland was experiencing stable dynamic of foreigh capital investments growth, same in Ukraine, but the amount of investments in Poland is $120 per capita higher than in Ukraine. If we turn ourselves to history back to year 1995 after the president's election in Poland the country was in identical situation as the Ukraine 2004-2007. The whole country was two-sided. After the parliamentary elections in 1997 Polish parlament was also oppositional to the President, but [Kcasnevsky] managed the situation not making concessions, and later in 2000 he was re-elected for the second term. Situation with the elections in Poland could serve as the reason for the decrease in the foreign investments in 2001-2003. Probably, the stabilisation of political situation has stopped investors from obtaining extra-profit from risky investments. We can see that 2002-2003 the detachment in a amount of investments in Poland and Ukraine considerably decreased. In 2004 Poland enters the EU and the amount of investments begins grow with each year again. And now Poland is one of the the most attractive countries for investing your money in.
It is possible to isolate 3 factors, which are determining the attractiveness of the country:
- Political-lawful environment.
It is not the secret that Ukraine is in difficult political situation, especially if we consider last events. The head of the problem is instability. No one can say what will happen tomorrow and who will be rule the country. In my opinion, it is terrible fact that unrealized ambitions of the group of people are interfering the stable development of the country. The normative- lawful base of owner's and investment activity is also characterized by instability, there is no guarantee of the equality of the property forms and investments in the transition period.
In my view, this situation will exist thus far our people will “dance under the pipe” of our politicians and hold mass-meetings in the squares. Indeed, very soon the time of on-duty legitimate elections, where any of us will be able to vote the way he wishes and won’t frighten foreign investors, will arrive.
- Economic environment
The situation with the economic environment in Ukraine also is not good: the instability of national currency, high enough rates of the inflation, undeveloped fund market and financial - credit system, not always correctly selected regime of the tax collection and currency exchange regulation and so on.
- Resources and infrastructure, sociocultural environment, ecology.
Ukraine is provided with resources country, but authority not always manages these resources correctly. Infrastructure needs further development. If talking about ecology - it is in the terrible state.
But, in spite of these aspects, Ukraine, as Poland, obtains a large quantity of foreign investments, although in contrast to Poland, it is not as attractive. This is connected with the fact that investment into the transitional economy, such as our, is always a large risk, but also profit of such investments is the greatest. It means that Ukraine for the investors is first of all the object of short term investment for, as a rule, the speculative profit.
If Ukraine develops at the same tempo, then 2 versions are possible: 1). The quantity of investments into Ukraine will begin to decrease as it was in Poland in 2001, 2002, 2003. It’ll happen because the situation will stabilize. 2). Everything will remain the same and Ukraine will continue to develop according to the forecast built on Diagram 3.
What are mechanisms of the international investments attraction for Ukraine?
First of all, it is necessary to stabilize political situation, since precisely it is the main problem for Ukraine today.
Secondly, it is needed to stabilize economic environment, namely to develop mechanisms for the national currency stabilization, to conduct control of the inflation rates, to develop fund market and financial - credit system, using the experience of more developed countries, to use more effective methods of the tax collection.
Thirdly, it is required to use resources more effectively, to develop the infrastructure of the country, to control ecological situation.
It is also necessary to pay attention, that the decision to conduct the European football championship – 2012 in Ukraine and Poland will also become enormous step towards the attraction of foreign investors into both countries and it will permit to improve the position of Ukraine by all three factors of attractiveness.
References
1. Invest in Poland
URL: http://www.paiz.gov.pl/
2. Недержавний комітет статистики
URL: http://ukrstat.com.ua/
