Following in Russia's footsteps?
So far, foreign direct investment in Ukraine has been almost non-existent. Although there are a number of foreign companies operating around Kiev in the mechanical engineering, metalworking, retailing, and food processing sectors, per capita FDI is even lower than it is in Russia. Total FDI since independence has been barely $1.5 billion, less than the amount of a single debt issue by the Russian gas producer Gazprom. Outside the capital, Kiev, little has changed since Soviet times in terms of industrial restructuring.
Ukraine has the largest land mass of any European country other than Russia. Its population of 52 million makes it the fifth largest European country. It benefits from a highly educated labour force, fertile agricultural land and natural resources which need to be exploited further to reduce Ukraine's dependence on costly imports.
Historically, the Ukraine was the bread basket of the former Soviet Union. The agricultural sector presently accounts for over a quarter of GDP. Ukraine is one of the world's most important mineral producing countries, in terms of both the range and size of its reserves.
Given that most fund managers will stay away from the country for the foreseeable future, the investment banks that remain in Kiev will now be drawing their attention towards developing interest among direct investors who have yet to move into the region.