nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2005‒01‒23
one paper chosen by
Anna Y. Borodina
Perm State University

  1. European Union Foreign Direct Investment into Ukraine By Kirby Adam J.R. Faciane

  1. By: Kirby Adam J.R. Faciane (Kirby Faciane / KAJR Faciane)
    Abstract: Theoretically, FDI and international trade can be regarded as substitutes or complements. This paper examines the relationships between the inflows of foreign direct investment (FDI) into Ukraine, as well as the level of imports to and exports from the country. Empirically, the paper reveals that FDI from the European Union (EU) into Ukraine in extractive industries is mostly export-oriented and consequently complements trade, whereas FDI into manufacturing industries tends to substitute for imports. It is argued that primary- industry FDI from the EU is motivated by Ukraine’s comparatively abundant and cheap natural resources, whereas secondary-industry FDI is motivated by cost factors in Ukraine such as low labor cost and on the revenue side by its large and relatively untapped substitution, although tests of this hypothesis at aggregate levels were inconclusive.
    Keywords: European Union; investment; capital budgeting; Ukraine
    JEL: E E0 F1 F2 O
    Date: 2005–01–16

This nep-cis issue is ©2005 by Anna Y. Borodina. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.