Russian foreign direct investment in Ukraine

Nataliya Blyakha                                                                                       PEI Electronic Publications 7/2009 

www.tse.fi/pei 

 

 

2  Russian-Ukrainian economic relations 

As of today the Russian Federation is by far the most important strategic trade partners 

of the Ukraine (Figure 1). The share of Russia in the total amount of Ukraine’s foreign 

trade is over 20%. Ukraine is the fifth among Russia’s largest trading partners, after 

Germany, the Netherlands, China and Italy. Furthermore Ukraine is Russia’s second 

most significant partner in the CIS aeter Belarus. 

Figure 

1 

Ukraine's main export and import partners in 2008, % 

 

Exports

2.7

2.9

3.1

3.5

4.3

6.9

23.5

Russia

Turkey

Italy

Poland

Belarus

USA

Germany

Imports

3.3

3.6

6.5

6.6

8.4

22.7

5.0

Ru

ss

ia

Ge

rm

an

y

Tu

rkme

nis

tan

Ch

ina

Pol

an

d

Ka

za

kh

sta

n

Belar

us

 

Source: State Statistic Committee of Ukraine 

 

The Russian Federation is the largest market for traditional Ukrainian export goods, 

namely, agriculture, mechanical engineering, the metallurgy and chemical industries. In 

turn, Ukraine imports raw materials, gas, oil, mineral oil, nuclear fuel and mechanical 

engineering production from the Russian Federation. (Crane, Larrabee 2007) 

In comparison with 2007, Russia's exports have grown by 24%, to $3.1 billion in 2008. 

Import from the Ukraine in 2008 increased by 15%, to $2.6 million. Ukraine’s share in 

Russia’s foreign trade turnover in 2007 was 5.5% and has share in Ukraine’s market 

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Nataliya Blyakha                                                                                       PEI Electronic Publications 7/2009 

www.tse.fi/pei 

 

 

was 29%. Since 2002 there has been a steady growth in the volume of Russian-

Ukrainian trade and in Russia’s share of Ukraine’s goods turnover. The Figure 2 

illustrates the growth of Ukraine's foreign trade with Russia. 

Figure 2 

Ukraine's foreign trade with Russia during 2004-2008, $ bln 

 

15.7

12.6

8.6

7.4

5.8

19.4

16.8

13.7

12.8

11.8

2004

2005

2006

2007

2008

Exports

Imports

 

Source: State Statistic Committee of Ukraine 

 

The amount of trade circulation between Ukraine and Russia is stable. From among 

main products that are exported to Russia leading place is occupied by mineral 

products (47%). In 2007 the value of mineral goods, that were exported, gained $7.7 

billion. The rates of export of cars, equipment and transport vehicles are growing, 

having increased to 20% from total exports. Mechanic and technical production (36% of 

all Russian imports from Ukraine) and also metals and metal products (31%) have 

increased by 58% in the import structure of goods from Ukraine in terms of the volume 

of deliveries. Deliveries of metals and metal products stably maintain their import share 

at a level of 13%. (Volkov 2007) 

Besides trade partnership, a special place in Russia and Ukraine relations is allotted to 

investment cooperation. According to the official source of Ukraine’s statistic indicators, 

State Statistics Committee of Ukraine, the investments from Russia in 2008 amounted 

$1.851 billion. Russia has 5% share of the total amount of foreign direct investments in 

Ukraine and occupies sixth place by volume of investments (table 1). 

 

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Nataliya Blyakha                                                                                       PEI Electronic Publications 7/2009 

www.tse.fi/pei 

 

 

Table 1 

FDI inflow in Ukraine by investing countries in 2008, $ bln

 

 

Country 

Volume of direct 

investment 

In % to the total 

Cyprus 

0.8 21.5 

Germany 

0.6 17.9 

The Netherlands 

0.3 8.9 

Austria 

0.2 6.8 

United Kingdom 

0.2 6.4 

Russian Federation 

0.2 5.2 

Source: State Statistic Committee of Ukraine  

 

One might wonder why Russian Federation is rated only sixth by the size of direct 

investments in Ukraine’s economy, while being the leader in terms of foreign trade. 

This can be explained by the tendencies of Russian companies to invest in Ukraine 

through offshore units and investment companies located in Cyprus, the Netherlands 

and British Virgin Islands. In other words Russians find it easier to invest in Ukraine 

from offshore zones than from their home country.

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 In reality, one may conclude, that 

the north-eastern neighbor is one of three largest investors of Ukraine. 

Additionally, it is important to underline substantial growth of officially registered foreign 

direct investments from Russia. Figure 3 indicates rapid augmentation of Russian 

investments in Ukraine during the past several years. Furthermore, for the period of 

2008, investment that came from Russian Federation increased by 27% as well as 

additional 2131 enterprises from Russia were investing in Ukraine. Intensification of the 

Russian investments is entailed not only by the absolute growth but also might be 

caused by relative growth, as the investments increasingly started to inflow legally. 

(Kovalenko 2009) 

 

 

 

 

                                                 

3

 For more detailed information see earlier reports of the Pan-European Institute that have dealt 

with Russian investments (Vahtra 2005; Vahtra 2007). 

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