Ukraine's European integration as a factor in the transformation of foreign investments: challenges and prospects

Abstract

Ukraine’s European choice necessitates a profound transformation of its economic model, particularly through the attraction of foreign capital as a source of financing for recovery, innovation-driven development, and integration into global production networks. In the context of agreements with the European Union and the current multifaceted challenges, the analysis of the impact of European integration on the dynamics and structure of foreign direct investment (FDI) has gained particular relevance.

The purpose of this article is to investigate how the process of European integration influences the transformation of the dynamics, structure, and nature of FDI in Ukraine, as well as to identify key challenges and prospects for the development of the investment environment amid geopolitical instability. The study presents a periodization of the main stages of Ukraine's European integration. It includes an analysis of statistical data on FDI dynamics and an assessment of institutional and security-related factors affecting investment activity.

The results confirm a strong correlation between the depth of integration into the European economic area and increased trust from foreign investors. At the same time, a number of challenges hindering sustainable FDI growth have been identified. Particular attention is paid to the shift in the sectoral structure of FDI: the decline in investment in trade and telecommunications contrasts with growing capital flows into industry, energy, and infrastructure projects, which aligns with the strategic priorities of post-war recovery. It has been found that a significant share of investments in 2024 is in the form of reinvested earnings, indicating the adaptation of foreign businesses to new operating conditions in the Ukrainian market.

The conclusions emphasize that European integration is not only a political direction but also an economic tool for transforming Ukraine’s investment model. Successful implementation of the European integration course requires strengthening institutional capacity, developing the legal framework, enhancing financial integration with the EU, and establishing a transparent, partnership-based model of investment cooperation. This will not only help overcome existing barriers but also lay the foundation for long-term growth and increase Ukraine’s role in European value chains.