PERSPECTIVES FOR POST-WAR RECOVERY IN UKRAINE IN THE SPHERE OF ATTRACTING FOREIGN DIRECT INVESTMENTS

Abstract

This article examines the trajectory and potential resurgence of foreign direct investment (FDI) in post-war Ukraine. The purpose of this study is to determine how geopolitical and economic conditions, external aggression, political instability, and the COVID-19 pandemic have impacted FDI in Ukraine over the past few years. The declining and recovering trends of FDI in Ukraine are examined using historical analysis and a comprehensive review of policies and economic indicators. Regional conflicts and political unrest led to a sharp decline in foreign direct investment in 2014 and 2015, followed by a revival beginning in 2015, with the exception of a brief lapse in 2017. However, the global COVID-19 pandemic again led to a decline in foreign investments, with an increase in 2021 due to improvements in the country's response to the pandemic and its economy. Notably, this increase in FDI was made possible by advancements in shareholder rights protection, open databases for beneficiaries, and simplifying construction permit procedures. The results highlight the effects of war and political instability on the confidence of foreign investors in Ukraine, with the war notably diminishing the investment attractiveness of Ukrainian firms, delaying key reforms, and shifting the geographic focus of FDI. In addition, the harmful effects of the war on living standards have affected domestic demand for goods and services. In terms of its practical value, the article argues that the post-war economic recovery of Ukraine is contingent on creating an environment conducive to direct foreign investment. It promotes the development of investment-attractive projects, particularly in sectors such as ecosystems, energy, agriculture, food, and national industry, while considering ESG sustainability criteria. It emphasizes that the path to recovery requires capitalizing on unique investment opportunities and calls for proactive reform and change management by the political leadership of the country. Consequently, our study provides valuable insights into the potential mechanisms for boosting FDI, ultimately guiding the reconstruction of the war-ravaged Ukrainian economy.