Y. Kvashnin (firstname.lastname@example.org),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation
Preliminary results of investment cooperation between Russia and Ukraine after the Ukrainian crisis are somewhat contradictory. On the one hand, the deterioration of bilateral relations and economic recession in Ukraine have led to a significant reduction of both inward and outward stocks of mutual FDI, the closure of several large enterprises and restrictive measures imposed by the new Ukrainian authorities on the Russian companies, businessmen and governmental officials. The alternative calculations provided by the experts of IMEMO give evidence that, contrary to official statistics, the mutual investments are still declining, the number of discontinued projects is increasing and the sectoral composition of FDI is becoming more and more primitive. On the other hand, many companies, both Russian and Ukrainian, demonstrated their ability to quickly adapt to changing circumstances, to improve their business operational processes, to establish new corporate brands and to find opportunities to circumvent the existing restrictions. The author concludes that the future of Russian-Ukrainian investment ties is quite murky. The anti-Russian consensus in Ukraine will hamper further investments even if the country’s economy will grow at a stronger pace, because some of Russian companies are waiting for a more favourable business environment to sell their assets. In the long run, the so-called neighborhood effect, which was previously a serious incentive for mutual investment, will come to naught. When making investment decisions Russian companies will pay more attention to other factors, such as political conditions, business climate and Ukraine’s new trade opportunities with the EU. As for the Ukrainian investments, they will mainly depend on the state of affairs in the Russian economy.
Russia, Ukraine, business, foreign direct investment, Ukrainian crisis, investment strategies, nationalization, sanctions
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