THE IMPACT OF TRANSNATIONAL CORPORATIONS’ INVESTMENT ACTIVITIES ON UKRAINE’S EXPORT POTENTIAL IN THE CONTEXT OF GLOBAL DIGITAL TRANSFORMATION AND EUROPEAN INTEGRATION

Abstract

The aim of the study is to analyze the inflow of TNC foreign direct investment (FDI) into the Ukrainian economy and to assess its impact on the country’s export potential in the context of global digitalization and European integration. The methodology includes a longitudinal analysis of TNC FDI inflows in 2001-2024 (with identification of key phases), a structural examination of FDI components and sectoral distribution, and an econometric evaluation of FDI’s influence on macroeconomic indicators using a Granger causality test (covering FDI, GDP, and exports over 2000-2024). The results show that TNC FDI flows to Ukraine are cyclical and volatile under global and domestic shocks. During the war period, new investments remain minimal under high risk, while reinvested earnings by existing foreign affiliates have become the primary source of FDI, underscoring the dominance of reinvestment over new capital. The current FDI stock is largely concentrated in manufacturing, trade, finance, real estate, energy, and ICT. This forms a foundation for expanding export capacity by integrating Ukrainian industries into TNCs’ global production networks, facilitating technology transfer and the adoption of EU standards. Digitalization reduces trade costs and expands opportunities in the IT sector and e-commerce. European integration further amplifies FDI’s positive impact by opening access to the EU single market, fostering regulatory harmonization, and integrating Ukrainian producers into European value chains. Granger test results indicate that FDI has no immediate statistically significant effect on GDP or exports (one-year lag), but a positive influence emerges over a 2–3 years, particularly boosting service exports, reflecting the time needed for investments to translate into output and trade growth. These findings confirm the significant role of TNC FDI as a driver of Ukraine’s post-war recovery, industrial modernization, and export-led growth. The combined effect of investment inflows and the European integration process provides a foundation for sustainable macroeconomic development. However, persistent war-related risks and institutional barriers (especially corruption) continue to severely constrain investment activity and limit Ukraine’s integration into European production networks, hindering the full realization of its export potential. Overcoming these obstacles is crucial to fully leverage the benefits of TNC investments in line with Ukraine’s strategic course toward European integration.