About Safe Investments

In the conditions of potential full-scale Russian aggression, the investment intentions of both domestic and international businesses in general are noticeably weakening. What to do with it?

The recent remarks of the Foreign Minister that Ukraine has asked the United States to expand its training mission for the Armed Forces may be significant not only in a political or security context.

For decades, the Ukrainian government has shown extremely low efficiency in attracting investment. And in the conditions of potential full-scale Russian aggression, the investment intentions of both domestic and international business are noticeably weakening. Obviously, significant signals are needed for businesses that despite the external military threat and internal Ukrainian troubles, their investments in the country will be able to be preserved and protected.

The factor of military presence of partner countries — even in the form of long-term training missions — can be a significant catalyst for improving the investment environment of the country. Empirical and statistical studies confirm the importance of the presence in the country of missions involving military instructors (primarily from the United States, but also from Canada, Great Britain) for investment and trade. Of course, these are both national and foreign direct investments, for which the security factor is one of the determinants.

Under such conditions, investments in infrastructure (primarily information and communication), construction (roads, ports, housing), medical care, and services are significantly expanding. Moreover, such investment is not only directly related to the activities of the missions. Positive feedback is triggered, and investment expansion is significantly growing and accelerating for other industries and spheres, since investors are freed from the fear of aggression, feel more confident and more secure in the region and the country as a whole. In turn, the entry of foreign investors into business and infrastructure networks around missions is in itself an additional factor of regional security.

The missions support such investment expansion and lead to creation of an environment of sustainable demand for goods and services. This encourages national and local businesses to expand production, promotes the interpenetration of needs and business opportunities of national and foreign companies, which provide services to these missions, improves the competitiveness of national and regional businesses. For instance, when it comes to road construction, it is the quality of roads (which will function for decades) and applies not only to roads, which are directly adjacent to the missions, but to the general transport network in the region.

At the same time, the expansion of production needs and infrastructure means a significant increase and formation of sustainable demand for labour (in various fields and of various qualifications), whilst the wages of employees who work or fulfill orders are usually much higher, which improves mobility and quality of labour in the region.

Moreover, economic and infrastructural activation creates additional "secondary" effects that are related to social development. In particular, spending (from central and local budgets) on both health care and social infrastructure is increasing, also thanks to the availability of additional opportunities provided by the missions to employees and their families.

Although there is a widespread myth that missions can increase interference in the internal affairs of the host country, the presence of missions can in no way be a sign of interference in the democratisation processes and activities of the political institutions of the country. Analogically, the "threats" of the loss (through missions) of national interests or the dominance of "external governance" are unfounded. On the contrary, local corrupt and criminal "elites" significantly reduce their activities and interference in socio-political processes in the regions, where such missions are located.

For many years to come, Ukraine will feel the aggressive intentions of its dangerous neighbour. In such conditions, the investment readiness of domestic and international investors will be extremely limited, which will significantly constrain socio-economic transformations in the country. Therefore, the importance of this formal appeal (if it really takes place) to the US government should not be underestimated. Although implementation takes time, the fact of such an appeal, if properly implemented, could be a significant step towards stability and peace, as well as economic and investment acceleration in the country.

Vasyl Yurchyshyn

Director, Economic Programmes

Born in 1955 in Kamyanets-Podilskyi.


T. Shevchenko Kyiv State University, Department of Cybernetics (1977).

Institute of Public Administration and Local Government at the Cabinet of Ministers of Ukraine (1994).

Professor in Public Administration. Author of nearly 100 scientific works.


In 1977–1993, worked at the Kyiv University as an engineer, research fellow and senior research fellow;

1994–1999 — head economic researcher at the International Centre for Policy Studies, Fund for Banking and Finance Development;

1999–2004 — Assistant Professor, Department of Economic Policy of the Ukrainian (currently, National) Academy of Public Administration, office of the President of Ukraine;

1999–2004 — Research Director at the Agency of Humanitarian Technologies, later — Agency for Social Analysis;

2002–2003 — advisor to the Minister of Economy of Ukraine;

since April, 2004 — Professor, Department of Economic Policy of the National Academy of Public Administration, office of the President of Ukraine;

since June, 2005 — Economic Programmes Director at Razumkov Centre.

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