Impact of Transnational Corporations Activity on the Economic Development of Ukraine

Abstract

Transnational corporations, through foreign direct investments, have transformed the world economy into international production, ensured the development of scientific and technological progress in all its directions, which created a significant basis for the study of this topic for the introduction of changes in Ukraine. Ukraine is characterized by a rather low indicator of transnationalization of the economy. However, using vector autoregression framework, it is found that foreign capital inflows, especially foreign direct investment, have certain impact on the country's economic development. The major countries investing in Ukraine are Cyprus and the Netherlands, while the main areas of investment are manufacturing, trade, real estate operations, financial, and insurance activities. Quite a few corporations that are formally controlled by foreign investors are represented on the territory of Ukraine, which in general have an impact on both the country’s income and the formation of trends in particular economic sectors. Transnational corporations of Ukrainian origin are relatively small, but some have entered international markets and are significant competitors. At the same time, the main strategy used by these corporations to expand is tax evasion by using different tax systems. The need for state-level change in the investment climate and stimulation of the reorientation of Ukrainian companies to high-tech markets is confirmed.