Neo-industrialization in Ukraine: are there macroeconomic background and investment potential?
Economy and Forecasting, 2016, issue 4, 48-69
The article estimates the level of investment readiness of Ukraine's economy for the new industrialization. Macroeconomic analysis has shown that the lack of investments is caused by significant decapitalization of the economy as a whole and in particular the non-financial corporations. The dominating trends towards reduction of the rate of net savings and the losses of capital reflect the sorry state of the real sector. The instability of financial conditions of the companies causes lack of equity and debt bondage, and prevents them from maintaining a proper level of gross savings, and hence that of gross fixed capital formation. The high rate of debt bondage of the companies combined with ultra-high lending rates lead to increased costs of servicing and repayment of the debts, payment of property incomes, rise in production costs and consequently reduction of financial results. Such as financial results are the source of savings and the tax base their decrease causes the further reduction of investment resources in the economy and budget revenues. Due to the long-term shortfall of gross disposable income in the real sector, which was caused by disruption of the economically grounded distribution of income among the institutional sectors and withdrawal of capital from economic turnover owing to shadowing and growing share of the offshore economy, the narrowing of the main sources of the fixed capital formation and shortage of investment resources in the economy happens. As a result, instead of investment progress, which is necessary for the neo-industrialization, there is an investments decline. The author proposes various conceptual approaches to reviving investments for the transition to the model of economic development based on new industrialization.
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