For example, the Czech Republic has received more than 20 billion during this time.

For example, the Czech Republic has received more than 20 billion during this time.

Relevant areas of further research include, in particular, the problem of balancing national interests and the interests of civil society, determining how in real practice the features of the relationship of these interests and how they affect the nature of social partnership.


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Transnational corporations in Ukraine: investment activity. Abstract

Analysis of the investment climate in Ukraine. The impact of TNC branches on the competitiveness of Ukraine’s economy

Analysis of the investment climate in Ukraine

After gaining independence in 1991, Ukraine embarked on a path of market transformation, one of the elements of which is the active attraction of foreign investment. However, the pace of economic reforms and the results of attracting foreign capital to Ukraine are quite slow. Let’s analyze the investment climate and the impact of FDI on the national economy of Ukraine.

Ukraine has adopted a number of legislative acts regulating foreign investments. Among them — the laws «On foreign economic activity» «On investment activity» «On entrepreneurship» «On corporate income tax» «On the state program to encourage foreign investment» «On the general principles of creation and operation of special (free) economic zones «» On the regime of foreign investment «.

The main document regulating the inflow of foreign direct investment into Ukraine is the Law of Ukraine «On the Foreign Investment Regime» (1996). It guarantees foreign investors equal rights with domestic enterprises, protection against expropriation, free export of profits and dividends, certain benefits when conducting import operations. Thanks to these benefits, a foreign investor can import equipment and other property duty-free as a contribution to the company’s authorized capital. According to the law, a foreign investor also receives a guarantee that the benefits provided by the law «On the regime of foreign investment» will be valid for at least 10 years.

In Ukraine, in the following sectors of the economy there are restrictions on the share of foreign property in the authorized capital of the company: insurance, publishing, telecommunications, weapons and alcohol — 49%; strategic enterprises (their list is approved by the government after coordination with the parliament), including television and radio stations — 30%.

According to the Ukrainian antitrust regulation, any established enterprise or merger or acquisition with the participation of a foreign investor must be approved by the antimonopoly committee. As a result, almost all foreign investors are forced to go through a lengthy and not always open procedure for obtaining a permit from the Antimonopoly Committee before starting their activities in Ukraine.

As for privatization, until mid-2000, foreign investors did not participate in the privatization process. The situation changed in May 2000, when parliament amended the legal framework for Ukrainian privatization. Under the new rules, privatization began only on a cash basis. The new policy allowed the Ukrainian government to receive more than 2.7 billion hryvnias from privatization in 2000.

Much of the privatization proceeds came from the sale of large stakes in machine-building, metallurgical and oil refineries. According to most foreign investors, Ukraine’s tax system is precisely the factor that has an extremely negative impact on its investment climate. This is due to the general high level of taxation, as well as the complexity and complexity of the procedure of taxes and fees.

A study conducted by the International Finance Corporation showed that of the CIS countries, the worst situation in the tax sphere is observed in Ukraine. This is due to the following reasons:

almost complete lack of control over the activities of the State Tax Administration; the presence of a large number of different taxes; high level of taxes: VAT — 20%, corporate income tax — 30%, progressive income tax — from 10 to 40%, income tax on dividends — 30%, income tax on royalties and deposits — 15%, tax on repatriation of dividends for border — 15%; uncertainty in the interpretations of the tax service and judicial authorities of regulations and legislation of Ukraine.

The existence of such a negative situation in the tax sphere of Ukraine leads to the fact that most business entities operate in the shadow economy. This situation is extremely unacceptable for foreign investors. This is due to the fact that for TNCs operating worldwide, the image of an «honest company» is more important than the quick profits from operations in the shadow economy. Therefore, most strategic foreign investors in Ukraine operate legally, which puts them in a discriminatory position compared to businesses in the shadow economy, whose costs are lower due to the lack of customs and tax payments.

Increasing the attractiveness of Ukraine for foreign investors depends on the pace of market transformation of the economy, macroeconomic stabilization, the nature of structural changes. The presence of a developed domestic capital market is an important prerequisite for creating a competitive investment climate in the country. The underdevelopment of the stock market and financial infrastructure significantly complicates the process of attracting foreign investment.

The usual environment of a foreign investor includes effective relations with banks, financial, auditing, consulting and law firms. The availability of such business structures and the quality of their services can significantly affect the motives for the arrival of TNCs in the country.

At present, the efficiency of investment policy depends on the renewal of production, modernization and expansion of fixed assets of economic enterprises, the success of structural adjustment of the economy, the solution of social and environmental problems. It should be noted that in the current environment, the inflow of foreign investment into the economy is a factor in GDP growth, an important source of job creation, and ultimately contributes to the successful integration of Ukraine into the European and world economy.

The impact of TNC branches on the competitiveness of Ukraine’s economy

Ukraine, as a host country for TNCs, has not taken its rightful place in their activities. Despite some natural advantages, it has one of the lowest rates of attracting foreign direct investment among the countries of Central and Eastern Europe, the CIS. Foreign direct investment in the thirteen years of independence to only $ 5.3 billion. For example, the Czech Republic has received more than $ 20 billion during this time. Annual investments in Poland amount to 4-5 billion dollars, while in Ukraine — 0.5 billion. In terms of foreign investment per capita, Ukraine is even inferior to Albania and Kazakhstan.

Among the companies that have invested directly abroad in the Ukrainian economy, the leading position is occupied by American corporations.