Threats and Prospects for Attracting Foreign Investment in the Ukrainian Territorial Communities’ Activities

Abstract

The process of reforming local self-government in Ukraine began recently and faces a large number of threats that require detailed study and determination of development prospects. The study aims at identifying the threats and prospects for attracting foreign investment in the Ukrainian territorial communities’ (UTC) activities. It provides an overview of the current state of foreign investment in Ukraine and analyzes the legal and regulatory framework for attracting foreign investment. The research is based on a comprehensive analysis of existing literature and UTCs’ reports, as well as primary data collected by the official website of the decentralization of Ukraine. The study finds that Ukraine has significant potential for attracting foreign investment, but there are several threats that hinder this process. These threats include a lack of transparency, corruption, an unstable political and economic environment, acts of war, and a weak legal and regulatory framework. These factors make it difficult for foreign investors to operate in Ukraine and negatively affect the country’s investment climate. Despite these threats, there are several prospects for attracting foreign investment in Ukrainian territorial communities’ activity. These prospects include the decentralization of power, which has created a favorable environment for local economic development and investment. Additionally, Ukraine has a highly educated workforce, abundant natural resources, and a strategic location at the crossroads of Europe and Asia, making it an attractive investment destination. To realize these prospects, the study recommends that the Ukrainian government take steps to improve the investment climate, including strengthening the legal and regulatory framework, combating corruption, and providing greater transparency. It also recommends that territorial communities develop investment strategies, promote their investment potential, and establish partnerships with foreign investors. By means of SWOT and TOWS analyses, taking into account trends, information provided about the strengths and weaknesses of the community, its capabilities, and threats, in order to attract foreign investment in Ukrainian territorial communities’ activities, the "strengths-opportunities" strategy was chosen. The research emphasizes the common features of UTCs, but developing an investment strategy for each region takes into account its peculiarities. Thus, the choice of a strategic goal is based on the community’s position regarding its advantages and capabilities, existing strengths, and a parallel focus on solving the most pressing problems. This combination will give a powerful impetus to the UTCs’ development and, if implemented, the opportunity to eliminate weaknesses and threats. Overall, the study concludes that Ukraine has the potential to attract significant foreign investment, but this requires a concerted effort from the government and territorial communities to address the threats and capitalize on the prospects.