Estimating the impact of the country’s financial stability on foreign direct investment inflows

Abstract

It is shown that the Ukrainian government has repeatedly stated its intention to significantly increase foreign investment flows in the domestic economy. Now, in a time of war, raising additional funds is a matter of the state's survival.Today, when there is war in Ukraine, the outflow of foreign direct investment in the first quarter of 2022 amounted to $470 million. But, in the second quarter of the same year, foreign direct foreign investment increased to $260 million. The dynamics of foreign direct investment in Ukraine is analyzed. It is shown that attracting investment is necessary to achieve financial sustainability. It is shown that there is a significant direct dependence (correlation) between foreign direct investment, external debt and GDP. The model of dependence of direct foreign inflows on the integrated index of financial sustainability and other macroeconomic indicators was constructed. This model allows to predict the direct foreign inflows on the basis of the forecasted growth of GDP and external debt.It is proposed that it is necessary tocreate a program of investment development of the country on the basis of a comprehensive analysis of the financial sustainability of the economy.