Newsletter Issue No. 115 | May 2018

Economic effect of foreign direct investment in Ukraine

Recent research by the German Advisory Group shows that foreign direct investment (FDI) strongly benefits Ukraine. FDI companies, which are at least 10% owned by a foreign investor, make up only 4.6% of companies in Ukraine. Yet these relatively few FDI companies account for over 20% of employees, own 24% of the total capital stock of Ukraine and produce almost 35% of total gross value added, a measure of output. Hence, FDI companies are not only much larger than purely domestically owned companies; they are also significantly more productive. The economic benefits of FDI to Ukraine are therefore large, despite the hit that the value of the FDI stock has taken in recent years due to difficult economic circumstances.

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