Essential characteristics of the Ukrainian economy internationalization

Authors: 
Il’chuk P. G.

In the current global economic system businesses normally operate in many geographic
markets and therefore the study of the key problems of business internationalization, such as an
enterprise entering a foreign market or foreign market presence activities is very relevant at the
moment.
In this article, we systematize different approaches used by international and local
researchers to reveal the essence of “internationalization” category as well as their own
definition of “internationalization”. We also examine actual status and the dynamics of
internationalization of the Ukrainian economy.
In our article, we analyze the current state and possible vectors of cooperation between
Ukraine and other countries. In particular, we review the geographical structure and the dynamics of
Ukraine’s foreign trade in goods and services, the number and geographical locations of the
representative offices of Ukrainian companies abroad, the amounts of Ukrainian direct investments
in the foreign economies. It appears, that Ukrainian economy is ready for entrepreneurial activity in
foreign markets. First of all, it means an export of the goods produced in Ukraine, setting up the representative offices overseas, direct investments (share capital) as the enterprise finance source in
the markets abroad. The investigation of the geographical structure of Ukraine’s foreign trade in
goods and services reveals, that Ukrainian companies focused their activities (apart of the local
market) on the three main geographical markets – European, Asian and CIS (Commonwealth of
Independent States). First of all, this is explained by the geographical proximity of this markets to
Ukraine. As for the Ukraine’s services export, the main importers are CIS and European countries
followed by Asian and American regions. Hence, the enterprises working with services delivering
expand to the foreign markets more actively.
The systematization of the information concerning representative offices of Ukrainian
companies abroad has shown their presence in five geographical regions: 1 in Africa,4 in
America, 13 in Asia, 15 in Europe and 134 in CIS countries. The geographical location of the
highest fraction of the representative offices abroad coincides with the geographical regions
where Ukraine exports most of the goods and services. This is explained by the mental and
cultural connection of Ukraine with CIS countries, where Ukraine exports as much as 34,85%
of goods and 41,25% of services. Based on the consolidated data concerning Ukrainian direct investments abroad, it was
found out that 88,49 % of Ukrainian direct investments were placed in Cyprus. This fact
confirms, first of all, the efforts to disguise the real profits of Ukrainian enterprises via
collaboration with Cyprus offshore companies.
One of the results of the undertaken research is the definition of the essence of
“internationalization” category used by international and local researchers in their studies.
Taking into consideration different approaches of international researchers and the necessity
to adopt to the business conditions of foreign markets we propose author definition of the
“internationalization” concept as the “expansion and/or the transfer of the entrepreneurial
activities outside the national home market to the foreign markets taking into account and
adopting activities to the business conditions in these markets”.