Foreign Direct Investment and Growth in Russia, Poland and the Ukraine

Abstract

The transformational period from command to market economy shows the necessity of the systematic transformation in all spheres of economy. The search for a way out of the unstable situation in Russia and the Ukraine, the detection of the basic reasons for the economic recession and substantiation of means for overcoming it, and the determination of the basic premises of economic stabilization and growth are the fundamental tasks of transition. This paper aims to explain the paradox of low flows of capital and goods under the influence of comparative advantage and better capital return as well as to study the impact of foreign trade promotion and foreign direct investment (FDI) on the stabilization process in Russia and the Ukraine. The following economic hypotheses will be examined: favorable economic policy influences increased FDI and foreign trade in transition countries; FDI and foreign trade play a major role in the process of stabilization and create a premises of economic growth in Russia and the Ukraine.