Investment potential forecast and strategies for its expansion: case of Ukraine
-
DOIhttp://dx.doi.org/10.21511/imfi.17(1).2020.28
-
Article InfoVolume 17 2020, Issue #1, pp. 329-347
- Cited by
- 826 Views
-
87 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
In the current conditions of capital market liberalization, developing countries achieve a faster economic growth rate by actively attracting various types of foreign investment. The steady rise in the volume of foreign investment into the country could be achieved only due to its high investment potential.
Therefore, this study aims to develop the methodology for determining the dynamic changes in the country’s investment potential, and its relevant medium-term indicators identify the degree of informational technology influence on Ukraine’s investment potential. It is essential to define the position of Ukraine in the global context in terms of the level of information technologies as the catalyst for investment attractiveness.
The relevant indicators defining Ukraine’s investment potential were forecasted using the Brown-Meyer exponential smoothing model. To calculate the integral indicator of the investment potential, the Hurst exponent was applied. Kohonen self-organizing maps were used to group the countries according to their informational technology parameters.
Ukraine’s investment potential was found to decrease since 2019 and is equal to 0.6493 units in 2020 and 0.6407 units in 2021 due to the decline of the indicators describing the human capital, infrastructure, technological development, and socio-economic conditions. Technology has a significant influence on Ukraine’s investment potential. Its impact is rising each year from 1.70% to 5.17% and 13.04% between 2019 and 2021, respectively. According to the level of technology, Ukraine is in the group with Spain, Romania, and Poland since 2017.
The decreasing investment potential forecast and the positive influence of technology level on it bring the opportunity to form the priority areas for expansion of investment potential based on the adaptation of world instruments to implement the investment policy within national economic conditions.
- Keywords
-
JEL Classification (Paper profile tab)С53, Е22, P45
-
References28
-
Tables7
-
Figures5
-
- Figure 1. Graphical interpretation of retrospective and forecasted values of time series in the context of information technologies for 1999–2018
- Figure 2. SOMs in the context of the grouping the countries according to their level of technology
- Figure B1. Graphical interpretation of retrospective and forecasted values of time series in terms of socio-economic conditions and infrastructure for 1999–2021
- Figure B2. Graphical interpretation of retrospective and forecasted values of time series in the context of science and education, as well as environment and human health, for 1999–2021
- Figure B3. Forecasted levels of investment potential of Ukraine based on the Hurst exponent, taking into account the dynamics of technology growth and without it for 2019–2021
-
- Table 1. Interim calculations of the trend equation of adaptive forecasting in terms of socio-economic conditions and infrastructure for 1999–2018
- Table 2. Interim calculations of the trend equation of adaptive forecasting in the context of science and education, as well as environment and human health, for 1999–2018
- Table 3. Intermediate calculations of the trend equation of adaptive forecasting in the context of information technologies for 1999–2018
- Table 4. Estimated and forecasted values of the components of Ukraine’s investment potential based on the Hurst exponent in 2013–2021
- Table 5. Grouping of the countries according to their level of technology using SOMs
- Table A1. Information base for the study of investment potential of Ukraine in 1999–2008
- Table A2. Information base for the study of the investment potential of Ukraine in 2009–2018
-
- Abel, A. B. (1983). Optimal investment under uncertainty. American Economic Review, 73(1), 228-233.
- Abel, A. B., & Eberly, J. C. (2016). A Unified Model of Investment under Uncertainty. American Economic Review, 84(5), 1369-1384.
- Benhabib, J., & Spiegel, M. M. (2000). The role of financial development in growth and investment. Journal of Economic Growth, 5(4), 341-360.
- Bojanc, R., Jerman-Blažič, B., & Tekavčič, M. (2012). Managing the investment in information security technology by use of a quantitative modeling. Information Processing and Management, 48(6), 1031-1052.
- Chevalier-Roignant, B., Flath, C. M., Huchzermeier, A., & Trigeorgis, L. (2011). Strategic investment under uncertainty: A synthesis. European Journal of Operational Research, 215(3), 639-650.
- Desierto, D. A. (2016). State controls over available remedies in investor-state arbitration. In Reassertion of Control over the Investment Treaty Regime (pp. 259-282). Cambridge University Press.
- Dixit, A. K., & Pindyck, R. S. (2012). Investment under Uncertainty (468 p.). Princeton University Press.
- European Business Association (2019). Indeks investytsiinoi pryvablyvosti Ukrainy [Index of investment attractiveness of Ukraine]. (In Ukrainian).
- Fama, E. F., & French, K. R. (2006). Profitability, investment and average returns. Journal of Financial Economics, 82(3), 491-518.
- Giel, B., Issa, R. R. A., & Olbina, S. (2019). Return on investment analysis of building information modeling in construction. In EG-ICE 2010 - 17th International Workshop on Intelligent Computing in Engineering. Nottingham.
- Gomes, J. F. (2001). Financing investment. American Economic Review, 91(5), 1263-1285.
- Gourio, F. (2015, January 1). Discussion of “uncertainty, investment and managerial incentives” by Glover and Levine. Journal of Monetary Economics.
- Hu, X. (2011). The Tension of the Concept of Human Capital and the Evolution of Its Scope of Investment in the Creative Economy Times (6 p.). Institute of Electrical and Electronics Engineers (IEEE).
- Kasaeva, J. (2019). Developing the Methodology of Assessing the Potential of Countries to Attract Foreign Direct Investment. Marketing and Management of Innovations, 4, 292-307.
- Komarynska, Y., Kryshevych, О., Linnyk, N., Karelin, V., & Kofanova, O. (2019). Public-private partnership as an effective mechanism for attracting private investment in achieving the aims the socio-economic development of Ukraine. Problems and Perspectives in Management, 17(4), 469-479.
- Kulish, A., Petrushenko, M., Reznik, O., & Kiselyova, E. (2018). The relations unshadowing in business activities: The economic and legal factors of security at the macroeconomic level. Problems and Perspectives in Management, 16(1), 428-436.
- Lagendijk, A., & Hendrikx, B. (2009). Foreign Direct Investment. In International Encyclopedia of Human Geography (pp. 243-254). Elsevier Inc.
- Lang, L., Ofek, E., & Stulz, R. M. (1996). Leverage, investment, and firm growth. Journal of Financial Economics, 40(1), 3-29.
- McDonald, R., & Siegel, D. (1986). The Value of Waiting to Invest. Quarterly Journal of Economics, 101(4), 707.
- Meltzer, J. P. (2015). Investment. In Bilateral and Regional Trade Agreements: Commentary and Analysis (pp. 245-298). Cambridge University Press.
- Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
- Perrotta, C. (2018). Investment in human capital. In Unproductive Labour in Political Economy (pp. 102-115). Routledge.
- Richard, B. W., Holton, E. F., & Katsioloudes, V. (2014). The use of discrete computer simulation modeling to estimate return on leadership development investment. Leadership Quarterly, 25(5), 1054-1068.Richard, B. W., Holton, E. F., & Katsioloudes, V. (2014). The use of discrete computer simulation modeling to estimate return on leadership development investment. Leadership Quarterly, 25(5), 1054-1068.
- Sauvant, K. P., & Sachs, L. E. (2009). The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (794 p.). Oxford University Press.
- Schill, S. W. (2009). The Multilateralization of International Investment Law (451 p.). Cambridge University Press.
- Schultz, W. T. (1961). American Economic Association Investment in Human Capital. American Economic Review, 51(1), 1-17.
- Social Impact Investment (2014). Impact Investment: the Invisible Heart of Markets.
- World Bank. (2019). World Development Indicators.