STUDY OF THE DEPENDENCE OF INEQUALITY AND POVERTY IN UKRAINE WITH FOREIGN DIRECT INVESTMENT

Abstract

The modern world economy, which is formed under the influence of globalization processes, is characterized by the growing role of foreign direct investment, which plays an important role as a means of achieving national development strategies, and host economies become part of their reproductive process. At the same time, a number of significant changes have been observed in the global structure of foreign direct investment in recent decades, the growth rate of which is likely to increase in the short and medium term. The position of developing countries and countries with economies in transition as targets and sources of global foreign direct investment is growing. The article uses data from Ukraine for 2010–2020 to analyze whether foreign direct investment has an impact on inequality and poverty; we also conducted a study of the impact of the average number of full-time employees on the Gini index using seven different models. The results confirm the direction and type of impact that foreign direct investment has or does not have on inequality and poverty in Ukraine. Developing countries and countries with economies in transition are liberalizing investment regimes to attract foreign direct investment. It has long been known that the benefits of attracting foreign direct investment can be quite significant, which is manifested in the acquisition of new technologies, increasing the country’s involvement in international trade, improving the competitive environment, human capital formation and more. Moreover, moving cleaner technologies to the investing country leads not only to an improvement in the environment, but also to the formation of socially responsible business policies. All these benefits contribute to economic growth, which is the main tool for overcoming poverty in these countries. The purpose of the article is to study the relationship between social indicators: the Gini index, the poverty rate of Ukraine and foreign direct investment. During the study period, there is an inverse relationship between the growth of foreign direct investment and poverty. Attracting foreign direct investment helps boost business activity, increase income, and increase consumption and savings.