PROFITS AND INVESTMENTS OF UKRAINIAN ENTERPRISES IN THE CONTEXT OF SUSTAINABLE DEVELOPMENT POLICY
Abstract
The article is devoted to evaluation of the Ukrainian business’ propensity to generate benefits for counterparties and stakeholders of its activities through investing the profits received in capital assets. For the evaluating, a model of the functional connection between the averaged over three years amounts of net profit of enterprises and the averaged over three years amounts of investments in capital assets financed at the expense of the enterprises' own resources was built. The advantage of the applied model is that it takes into account the time lag that occurs between the expansion of the financial capabilities of enterprises and the moment of investment in capital assets. We used a special procedure (the moving average method) to ensure that the time lag between the moment of making profits (creation of the potential for investment expansion) and the period of investment of the received (and accumulated) profits is taken into account. Empirical evidence has been obtained that the relationship between the dynamics of investments by groups of large, medium and small enterprises is compensatory in nature: larger increases in one group are compensated by smaller ones in others and the aggregate fluctuations are levelled out. That is, during the retrospective period, on the scale of Ukraine's entire national economy, competition and substitution relations prevailed between the sectors of large, medium and small enterprises. Empirical evidence was obtained in favour of the fact that the relationship between the dynamics of investments by groups of large, medium and small enterprises has a compensatory nature: larger increases in one group are compensated by smaller ones in others and the aggregate fluctuations are levelled out. Confirmation of the high sensitivity of capital investments financed by the enterprises' own resources to the amounts of profits received was also obtained. This is interpreted as evidence in favour of the great potential of those levers of sustainable development policy that encourage enterprises to generate benefits for counterparties and stakeholders of their activities, using the opportunities provided by the growth of profits. In particular, since the marginal and average propensity of business to invest the profits received is above unity, it can be expected that tax breaks will be an effective (from the standpoint of increasing social welfare) means of stimulating business investment activity.
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