The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the 2021 ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Ukraine offers a large consumer market, a highly educated and cost-competitive work force, and abundant natural resources. The government continues to advance legislation to capitalize on this potential.  In March 2020, parliament passed a law to lift the decades-old moratorium on the sale of agricultural land, effective July 1, 2021.  The World Bank projects that the establishment of the agricultural land market could attract $5 billion in investment.  Ukraine has continued to pass necessary legislation on intellectual property rights (IPR), including a new patent law bringing Ukraine’s patent regime closer in line with EU patent conventions.  The government also launched a new centralized body to speed up the review and issuance of patents.  On March 30, 2021, the Rada lifted a block on large privatizations and is looking at ways to facilitate the privatization process.

Ukraine’s Association Agreement with the EU gives the country preferential market access and is accelerating its economic integration with the bloc.  Many U.S. companies have found success in Ukraine, particularly in the agriculture, consumer goods, and technology sectors.  Ukraine is an agricultural powerhouse and the world’s second-largest grain exporter.  Ukraine has long had a skilled workforce in the IT service and software R&D sectors.  In recent months the Ukrainian government has increased its targeted recruitment of high-level IT talent into Ukraine.

Despite Ukraine’s potential, foreign direct investment (FDI) remains low. Ukraine experienced a net outflow of investment in 2020.  In addition to the pandemic, foreign investors cite corruption, particularly in the judiciary, as a key challenge to doing business in Ukraine.  To attract foreign investment the government adopted a new law in early 2021 granting considerable financial and operational incentives to companies that make large investments in Ukraine.

The April 2019 election of President Zelenskyy raised hopes that Ukraine would make the breakthrough reforms necessary to unlock its vast economic potential.  The government has worked to protect the gains of recent years and to implement many of the administration’s promises. Vested and corrupt interests, however, have resisted and even succeeded in rolling back some of the critical reforms enacted since the 2014 Revolution of Dignity.

Since 2014, Ukraine passed numerous reforms, including the launch of a number of anti-corruption institutions.  In fall 2020, however, the Constitutional Court of Ukraine invalidated key provisions of laws underpinning two of these institutions — the National Anti-Corruption Bureau (NABU) and the National Agency on Corruption Prevention (NACP).  These rulings have rolled back key provisions of prior IMF programs, preventing new disbursements of IMF, World Bank, and EU concessionary loans.  The Constitutional Court is also reviewing cases challenging the constitutionality of the High Anti-Corruption Court (HACC) and the Deposit Guarantee Fund.  The government and parliament are negotiating with international partners on legislation to reverse the effects of the rulings.