The impact of the shadow economy on Ukraine's investment climate remains a pressing issue in the context of economic stability and attracting foreign investments. The aim of the study is to determine the scale of the shadow sector and its influence on the country’s economic attractiveness. The research was conducted using a comprehensive analysis of scientific publications, legislative acts, and statistical data, as well as a comparative analysis of international experience and methods for assessing the shadow economy, including the expenditure approach, the monetary approach, the electricity consumption method, and the enterprise loss method. The main hypothesis of the study assumes that reducing the shadow sector directly increases the country’s investment attractiveness and promotes the development of formal business. Methods employed include content analysis, economic-statistical modeling, and systematic data generalization. The study evaluates the scale of the shadow economy in Ukraine and other countries, characterizes its components, and establishes its relationship with legal, economic, and social factors. The main causes of the shadow economy’s development are identified, legislative and regulatory measures for shadow economy reduction are systematized, and proposals are formulated to improve the investment climate. Recommendations are provided for state authorities and businesses to stimulate legal economic activity. The theoretical significance of the study lies in expanding scientific understanding of the shadow economy’s impact on the investment climate. The practical significance is in the applicability of the results for developing state programs aimed at reducing the shadow sector and promoting investments. The originality of the study lies in the comprehensive analysis of economic, social, and legal factors affecting the country’s investment attractiveness and the formulation of practical recommendations for its improvement. The study also takes into account the socio-cultural and ethical aspects of the shadow economy, particularly societal tolerance toward illegal activities, which influences the behavior of businesses and citizens. The results obtained can serve as a basis for developing effective state strategies for shadow economy reduction. Future research prospects include analyzing the impact of modern digital technologies and automated control systems on reducing the shadow sector.
Heorhii Tamrazian (Wed,) studied this question.