How important is FDI for Ukraine?
To accelerate Ukraine’s economic growth, policymakers consistently highlight the need for targeted measures to attract direct foreign investment (FDI). This concept is consistent with the economic literature. However, the longer-term impact of FDI companies on Ukraine’s economy has not yet been comprehensively quantified nor empirically assessed. Against this background, our study seeks to help address this gap. It builds on the study by Saha et al. (2018) analysing the economic effect of FDI companies in Ukraine by comparing their performance relative to companies without foreign capital. Saha et al. (2018) observed output and productivity outperformance by foreign companies using data for 2016. In our current analysis using statistics for 2024, we find that this structural performance gap remained. This result reiterates the significance of FDI for lifting productivity and economic growth in Ukraine, even during the war.
Background
FDI implies control or a significant degree of influence. This is achieved where a foreign investor owns ≥10% of the voting power in the management of an enterprise that is resident in another economy, according to the OECD Benchmark Definition of Foreign Direct Investment (OECD, 2009). A broad range of economic literature considering emerging market economies demonstrates that FDI positively affects the transfer of advanced technologies, supply chain integration and competition stimulation and thus economic growth.
Ukrainian policy makers regularly highlight FDI as key factor in stimulating economic growth, in particular during recovery and reconstruction. However, for Ukraine during the war, there is a lack of empirical assessment. In a recent study (Poluschkin, Kirchner, and Kravchuk 2026 forthcoming), we try closing this gap. We built upon the methodology by Saha, Kravchuk, Kirchner (2018) comparing performance indicators of companies with foreign capital to companies without foreign capital in Ukraine. For that purpose, we analysed a dataset of financial indicators of foreign companies in Ukraine provided upon request by the State Statistics Service of Ukraine (Ukrstat) for 2024. We compared this dataset with indicators for all companies that are published by Ukrstat (2026b) as part of its regular statistics. By subtracting the data for FDI companies from the one for all companies, we get data for non-FDI companies.
FDI development in Ukraine
Just before the war, the inward FDI stock in Ukraine reached a peak of USD 66 bn. In 2022, the stock declined significantly to USD 52 bn. We find that exchange rate movements were the primary driver accounting for 82% of the decline in 2022. Since 2023, the FDI stock has started to grow, although the pre-war level has not yet been restored. The positive contribution of transactions and revaluations has more than offset the negative contribution of exchange rate depreciation, resulting in renewed growth. In 2025, the FDI stock reached USD 60.4 bn, equivalent to 28% of Ukraine’s GDP. In a comparison with peer EU candidate countries and neighbouring member states, Ukraine’s FDI ratio to GDP and per capita lags significantly behind.
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FDI development by source countries
Looking at source countries, Cyprus and the Netherlands clearly stand out, jointly accounting for 52% of the FDI stock in 2025, which partially can be explained by FDI roundtripping transactions, according to the NBU (2026b). Each of the other source countries among the Top-10 accounted for at least USD 1 bn. However, the ranking has changed since 2021. The US rose to fifth place between 2021 and 2025, its FDI stock in Ukraine increased by 66%. The French FDI stock increased by 73%, making France the sixth-largest source country in 2025. Germany fell from fifth place to seventh place, its FDI stock declined by 24% (NBU, 2026a).
FDI development by sectors
In 2021, the inward FDI stock in industry accounted for 46% of the total; by 2025, the sector’s share declined to 38%. By contrast, the share of agriculture increased from 5% to 8%, while that of services rose from 49% to 54%. Thus, a clear shift can be observed. On a more disaggregated level, the sector with the largest FDI stock is manufacturing, with an inward FDI stock of USD 13 bn in 2025, followed by the trade sector. The FDI stock in the mining sector, which used to be the third largest sector in 2021, almost halved by 2025, and was overtaken by the financial and the agricultural sectors (NBU, 2026a).
Performance of FDI vs non-FDI companies
The number of FDI companies, their aggregate capital stock, and their total employment are significantly lower in absolute terms. This difference has even deepened since 2016. So, companies with foreign capital still play a minor role in Ukraine’s economy.
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However, on average FDI companies were larger and more productive. The average FDI company employed 5.3 more staff, held a 6.5 times higher capital stock, produced 11 times more output and were twice as much productive as a non-FDI company in 2016.
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ur study confirmed this result with 2024 data, although the gap declined very slightly across all categories. Overall, FDI companies kept their structural advantage and employed 4.5 times more staff, recorded 6.4 times larger capital stock, produced 8.3 times more output per company and were almost twice as much productive as non-FDI companies in 2024.
The distribution across sectors is uneven, however. While FDI companies in advertising/market research outperform non-FDI companies significantly in terms of productivity, they underperform e.g. in the construction sector.
Conclusion and policy recommendations
Our analysis clearly demonstrates that Ukraine’s economy benefits strongly from existing FDI, in labour demand, capital stock, output and productivity. For Ukraine’s economic policy this result suggests an increasing effort in attracting foreign companies with well-targeted measures and in providing a well-suited investment climate. In addition, Ukraine’s partner countries can increase their effort using guarantees and risk insurance system to incentivise foreign companies to enter Ukraine. Facilitating private sector growth in Ukraine indirectly decreases the financial needs covered by taxpayers’ money. A win-win for Ukraine’s economic growth trajectory and its partner countries with a reduced reliance on external aid.
This newsletter is based on the forthcoming Policy Study: “Economic impact of FDI in Ukraine during the war”
Sources
- The Organisation for Economic Cooperation and Development (2009), OECD Benchmark Definition of Foreign Direct Investment (Fourth Edition), OECD Publishing, Paris. https://doi.org/10.1787/9789264045743-en
- National Bank of Ukraine (2026a). Direct Investment In Ukraine (inward direct investment): Positions: Direct Investment Positions by Instruments, Regions, Countries, Types of Economic Activity. Latest retrieved on 03 July 2026 from: https://bank.gov.ua/en/news/all/otsinka-obsyagiv-pryamih-inozemnih-investitsiy-v-yakih-kintsevim-kontrolyuyuchim-investorom-ye-rezident-round-tripping-za-2010-
- National Bank of Ukraine (2026b). Estimation of round tripping transactions for 2010 – 2025. National Bank of Ukraine Statistics and Reporting Department. Latest retrieved on 03 July 2026 from: https://bank.gov.ua/en/news/all/otsinka-obsyagiv-pryamih-inozemnih-investitsiy-v-yakih-kintsevim-kontrolyuyuchim-investorom-ye-rezident-round-tripping-za-2010-
- Saha, D., Kravchuk, V. and Kirchner, R. (2018). The economic impact of FDI on Ukraine. German Advisory Group, Institute for Economic Research and Policy Consulting. Policy Study Series 01.
- State Statistics Service of Ukraine (2026a). Показники по підприємствах з ознакою наявності прямих іноземних інвестицій (Показники по підприємствах з ознакою наявності прямих іноземних інвестицій). Data provided on request.
- State Statistics Service of Ukraine (2026b). [Data bank]. Monetary and finance statistics. https://www.ukrstat.gov.ua/ . Latest retrieved on 13 July 2026.
