Many see foreign direct investment as a key prerequisite for an economic breakthrough in Ukraine. Yet, as this Financial Times article reports, political and security problems in Ukraine prevent FDI from climbing back to its pre-war levels. With the onset of the conflict with Russia, FDI flows to Ukraine experienced an unprecedented decline, falling from $8.5bn in 2012 and $4.5bn in 2013 to just $410m in 2014. Despite a certain rebound, driven by the recapitalisation of foreign-owned banks, FDI has so far failed to return to previous levels.
It is important to note, though, that foreign investment in Ukraine has often served as a veil for local (and sometimes Russian) big business, which uses special purpose entities in Cyprus and other tax havens to secure special legal treatment, conceal the ownership of assets and minimise taxes.
According to President Donald Trump, Mexico is “beating the US badly on trade” and a big part of the reason is Nafta. In truth, however, the real question is not why Mexico has benefited so much from Nafta, but rather why the economic benefits have been so small.
Of course, as President Trump likes to point out, it is certainly the case that Mexico’s trade surplus with the US has ballooned under Nafta. When the treaty came into force in 1994, Mexico actually ran a small annual trade deficit with the US of $1.3bn. But by 2015, this had shifted to a surplus of $67bn. What’s more, while the US runs a surplus in services and also earns significant sums on its investments in Mexico, these are more than offset by the outflow of remittances from Mexicans working north of the border. All told, Mexico’s current account surplus with the US was around $75bn in 2015. Read more
By Nick Kochan
The 250,000 protesters on the streets of Bucharest yesterday will not welcome it, but Romania’s new government are to be congratulated for reversing what has become a national obsession with corruption.
The announcement that they are planning to decriminalise some forms of official misconduct, pardon some 3,000 people convicted of minor acts of graft –the legal measure covers those who stole less than $50,000 from the state – and release them from jail not only frees up the prisons but sounds a warning to its over-zealous National Anti-Corruption Directorate (DNA). Read more