Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"

de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia

Maracaibo, Venezuela

Esta publicación cientíca en formato digital es continuidad de la revista impresa

ISSN-Versión Impresa 0798-1406 / ISSN-Versión on line 2542-3185Depósito legal pp

197402ZU34

ppi 201502ZU4645

Vol.41 N° 76

Enero

Marzo

2023

Recibido el 29/10/22 Aceptado el 14/12/22

ISSN 0798- 1406 ~ De pó si to le gal pp 198502ZU132

Cues tio nes Po lí ti cas

La re vis ta Cues tio nes Po lí ti cas, es una pu bli ca ción aus pi cia da por el Ins ti tu to

de Es tu dios Po lí ti cos y De re cho Pú bli co “Dr. Hum ber to J. La Ro che” (IEPDP) de la Fa-

cul tad de Cien cias Ju rí di cas y Po lí ti cas de la Uni ver si dad del Zu lia.

En tre sus ob je ti vos fi gu ran: con tri buir con el pro gre so cien tí fi co de las Cien cias

Hu ma nas y So cia les, a tra vés de la di vul ga ción de los re sul ta dos lo gra dos por sus in ves-

ti ga do res; es ti mu lar la in ves ti ga ción en es tas áreas del sa ber; y pro pi ciar la pre sen ta-

ción, dis cu sión y con fron ta ción de las ideas y avan ces cien tí fi cos con com pro mi so so cial.

Cues tio nes Po lí ti cas apa re ce dos ve ces al año y pu bli ca tra ba jos ori gi na les con

avan ces o re sul ta dos de in ves ti ga ción en las áreas de Cien cia Po lí ti ca y De re cho Pú bli-

co, los cua les son so me ti dos a la con si de ra ción de ár bi tros ca li fi ca dos.

ESTA PU BLI CA CIÓN APA RE CE RE SE ÑA DA, EN TRE OTROS ÍN DI CES, EN

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nes Cien tí fi cas y Tec no ló gi cas Ve ne zo la nas del FO NA CIT, La tin dex.

Di rec to ra

OIRALITH

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Vol. 41, Nº 76 (2023), 116-135

IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ

Prospects for the development

of investment and innovation

activity in Ukraine

DOI: https://doi.org/10.46398/cuestpol.4176.06

Taliat Bielialov *

Iryna Shtuler **

Dina Tereshchenko ***

Nataliia Horiachova ****

Lesia Pashniuk *****

Abstract

The article is based on general and special scientic knowledge

methods by means of which the main investment trends in

Ukraine and in the leading economies of the world are revealed.

It highlights the prerequisites for stable economic development

of the country and, at the same time, investigates the factors

of investment attraction. The main problems of the development of

investment activities on the territory of Ukraine are described and strategic

guidelines for the formation of a positive investment climate are given.

As a result of the research, the short- and long-term policy prospects for

improving investment and innovation activities in war and post-war times

have been determined. In addition, the priority directions of foreign capital

investments are considered, which include defense industry, energy,

information technologies, processing industry, nancial activity and trade.

It was concluded that stimulation of intellectual and investment activities

in Ukraine requires the introduction of an eective tax system, promotion

of international cooperation, improvement of legislation and provision of

adequate protection of intellectual property rights.

Keywords: strategic investments; investment activities; innovations;

human capital; intellectual capital.

* Doctor of Science in Economics, Associate Professor, Head of Department of Entrepreneurship and

Business, Kyiv National University of Technologies and Design, Kyiv, Ukraine. ORСID ID: https://

orcid.org/0000-0003-4019-755X

** Doctor of Economics, Professor, First Vice-Rector, National Academy Management, Kyiv, Ukraine.

ORСID ID: https://orcid.org/0000-0002-0852-8526

*** Doctor of Sciences in Public Administration, Professor, Professor of Department of sociology and

public administration, National Technical University «Kharkiv Polytechnic Institute», Kharkiv,

Ukraine. ORСID ID: https://orcid.org/0000-0003-0633-0097

**** Ph. D. in Economics, Detached structural subdivision "Mariupol Professional College of the State Higher

Educational Institution "Pryazovskyi State Technical University", Dnipro, Ukraine. ORСID ID: https://

orcid.org/0000-0001-9889-3713

***** Ph. D. in Economics, Deputy Director of Economics, Selyshchanskyi Granite Quarry, Ltd, Rivne,

Ukraine. ORСID ID: https://orcid.org/0000-0002-6264-4368

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Vol. 41 Nº 76 (2023): 116-135

Perspectivas políticas para el desarrollo de la actividad

de inversión e innovación en Ucrania

Resumen

El artículo esta basado en métodos de conocimiento cientícos generales

y especiales mediante los cuales se revelan las principales tendencias de

inversión en Ucrania y en las principales economías del mundo. Se destaca

los requisitos previos para el desarrollo económico estable del país y, al

mismo tiempo, se investiga los factores de atracción de inversiones. Se

describen los principales problemas del desarrollo de las actividades de

inversión en el territorio de Ucrania y se dan pautas estratégicas para

la formación de un clima de inversión positivo. Como resultado de la

investigación, se han determinado las perspectivas políticas a corto y largo

plazo para mejorar las actividades de inversión e innovación en tiempos de

guerra y posguerra. Además, se consideran las direcciones prioritarias de

las inversiones de capital extranjero, que incluyen la industria de defensa,

la energía, las tecnologías de la información, la industria de procesamiento,

la actividad nanciera y el comercio. Se concluyó que la estimulación de las

actividades intelectuales y de inversión en Ucrania requiere la introducción

de un sistema scal ecaz, la promoción de la cooperación internacional,

la mejora de la legislación y la provisión de una protección adecuada de los

derechos de propiedad intelectual.

Palabras clave: inversiones estratégicas; actividades de inversión;

innovaciones; capital humano; capital intelectual.

Introduction

The most important source of economic growth of any country is

investment, the economic nature of which is determined by the laws of the

process of extended reproduction. It consists in using an additional share

of the social product, national income, to increase the number and quality

of elements of the productive forces of society. Lack of investment slows

down economic growth, which leads to crises, a decrease in the production

of goods and services, a decrease in employment, ination, etc. (Lazorenko,

2017).

In modern economic conditions, the eciency of the investment

process is the key basis for the successful functioning of the state economy

and individual enterprises. Among the key factors that inhibit the inow

of investments, scientists single out corruption, currency instability and

stalling of reforms, an inecient judicial system (impossibility to protect

property rights or fairly resolve a business dispute), the issue of land

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Taliat Bielialov, Iryna Shtuler, Dina Tereshchenko, Nataliia Horiachova y Lesia Pashniuk

Prospects for the development of investment and innovation activity in Ukraine

allocation and value added tax reimbursement, as well as overcoming

technical trade barriers and passing customs procedures (Kushnir, 2020).

This issue is especially relevant for modern Ukraine, which in the last

few years has faced a number of problems that have signicantly aected

its economic system. The war on the territory of Ukraine, the annexation

of its separate territories, the instability of the economic and political

system caused the process of reducing the inow of foreign investments

into the country and, at the same time, determined the inability to achieve

economic development in all spheres of life at the expense of one’s own

nancial resources. Under such circumstances, many questions arise: did

investors manage to save their fortunes? How many of them are currently

motivated to invest in business in Ukraine? What priority investment areas

should be chosen?

Also, one of the main problems in the development of the vast majority

of industries is the lack of capital, so improving investment attractiveness

and establishing a stable investment process in the country are of great

importance. In the conditions of the innovative economy, investments in

the human capital of the enterprise are made with the aim of increasing

the pace of innovative development and obtaining, on this basis, a positive

socio-economic eect in the current and future periods (Slastyanikova,

2020).

Innovations and intellectual capital are key factors in the modernization

of the economy and further economic growth, which is indirectly conrmed

by the research of Miyamoto and Hulten (Miyamoto, 2008; Hulten, 2013).

Based on the analysis of statistical information from many countries,

including developing ones, they testify that investment in intellectual

capital and innovation is an important source of economic growth and is

positively correlated with gross domestic product per head.

Socio-economic transformations taking place in Ukraine require proven

technologies of management and capital building. The accumulation and

application of innovative knowledge has become crucial as an intellectual

factor in the formation of a new type of production. Under such conditions,

intellectual capital appears not only as a means of increasing general capital,

but also as, in principle, an adequate reection of reality and determination

of priority directions for the transformation of the national economy

(Ostropolska et al., 2020).

Taking into account the global diculties, at the stage of formation of

a developed market economy in Ukraine, the solution of problems related

to the introduction of innovations in all spheres of social life in the war

and post-war period is becoming more and more urgent. After all, due to

objective circumstances, the economy of Ukraine lags behind the world

level, and the development and implementation of innovations requires the

use of a comprehensive approach and taking into account defense costs.

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Thus, the relevance of the research topic is determined by the importance

and complexity of investing in innovative projects, human and intellectual

capital, the specics of the functioning of the Ukrainian economy in

wartime conditions, and the insuciency of the treatment of certain issues

in scientic and special literature.

1. Methodology of the study

The theoretical and methodological basis of the article is the scientic

works of domestic and foreign scientists on economic theory, investment

theory, human and intellectual capital.

The following methods of research of economic phenomena and processes

were used to solve the problems: dialectical and abstract-logical method of

cognition - when summarizing theoretical and methodological aspects of

investment innovation activity in Ukraine and other leading countries of the

world, as well as when forming conclusions; monographic method - when

studying the experience of regions and countries in the growth of innovative

and intellectual investments to ensure the quality of life; analytical grouping

method - when grouping the countries of the world according to the level of

investment and innovation activity and the development of human capital;

the method of building an econometric model and the method of scenario

modeling - when evaluating and developing directions for the development

of investment and innovation activities.

The information base of the study consists of ocial analytical and

statistical materials and publications of the World Property Organization

WIPO, results of scientic, scientic and technical, innovative activities,

technology transfer, as well as data of the State Statistics Service of Ukraine,

monographs and periodical literature, analytical materials of national and

foreign research institutes institutes and centers.

2. Analysis of recent research

Paying tribute to the scientic development in the direction of researching

investment activity at the macro and national levels, it is necessary to state

that scientic works have not nally resolved the issue of substantiating

the integral direction of the formation of state policy in the sphere of

investment in innovation and human capital under conditions when the

main eorts of the state are aimed at restraining foreign aggression, which

not only signicantly complicates the adequate modernization of the

national economy, but also calls into question the existence of many state

formations.

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Prospects for the development of investment and innovation activity in Ukraine

Under such conditions, there is a real threat of losing not only resources to

ensure overall economic development, but also the paradigmatic principles

of regeneration of eective social existence and stable functioning of the

economic system (Ostropolska et al., 2020).

In view of this, the purpose of the work is to research the world’s leading

investment-innovative economies and to develop, based on this, prospects

for attracting investments to the economy of Ukraine in the war and post-

war period.

3. Results and discussion

3.1. General characteristics of investment innovation activity

Investments play a key role in the maintenance and growth of the state’s

economic potential, acting as a guarantor of its sustainable economic

development. Without them, it is impossible to implement the tasks

set at the enterprise, to carry out modernization, which will increase the

technological level of both the enterprise and the industry as a whole, will

provide an opportunity to increase the gross national product, increase the

level of competitiveness in the foreign market, as well as the implementation

of social programs and high wages for employees.

According to the Law of Ukraine «On Investment Activities»:

«investments are all types of property and intellectual values that are

invested in objects of entrepreneurial and other types of activity, as a result

of which prot (income) is created and/or social and environmental eects

are achieved» (On Investment Activity, 1991).

Investments are necessary to ensure the eective functioning and

development of the enterprise. They perform a number of functions:

ensuring the growth of the market value of the enterprise; a tool for the

implementation of innovation policy; source of formation of production and

resource potential; asset structure optimization mechanism; formation of

long-term capital structure; a mechanism for ensuring simple and extended

reproduction of xed assets and intangible assets.

From the standpoint of reforming the economy, increased investment

activity is the basis for obtaining an economic eect. Without an increase in

the rate of investment growth, an increase in the share of investments in the

gross domestic product, it is impossible to overcome the gap in the growth

of the gross domestic product and industry, low protability of production,

low wages of employees (Horyachova, 2020).

Thus, investments can be characterized as a reection of relations,

which is associated with the early investment of nancial, property and

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intellectual values invested in the objects of the enterprise, in xed assets

and scientic and technical development of the enterprise, obtaining in the

future economic eect and net income

Certain authors, dening the term «investments», believe that they exist

only in monetary form. But capital investment can also be made in any

property form or in the form of non-property assets; totality of technical,

technological, commercial and other knowledge; production experience;

the right to use land, water, resources, buildings, as well as other property

rights (Mayorova, 2009).

Innovation means newly created (applied) and (or) improved competitive

technologies, products or services, as well as organizational and technical

solutions of a production, administrative, commercial or other nature,

which signicantly improve the structure and quality of production and

(or) the social sphere; these are real processes of creating new knowledge,

systems and means of production, technologies and their implementation

in the sphere of economy or public administration, trade or international

relations (Guk et al., 2022).

The relevance of investing in innovative activity lies in the fact that in

Ukraine the investment process is mostly considered separately from the

innovation process, and in order to make positive changes, it is necessary

to determine the main problems and prospects for the development of the

investment and innovation market itself.

The signicant impact of the state innovation policy on the innovation

sustainability of the country was emphasized by Freeman, who understood

the national innovation system to be a network of public and private

institutions, thanks to their cooperation, new technologies are initiated,

imported, modied and disseminated (Freeman, 1987). Therefore, eective

innovation investment involves the synergy of the state and private

resource base with the aim of forming a full-edged infrastructure, avoiding

discrimination, encouraging partnerships at various levels of the innovation

and business ecosystem, implementing the concept of sustainable economic

development for the sake of a high quality of life.

The development of the innovation and investment system in the

conditions of a market economy is an objective and practically unceasing

phenomenon that requires regulatory organizational and economic

mechanisms and levers that will allow to eectively inuence the dynamics

and structure of changes in the economic system, since investments have a

powerful transforming eect on the national economy. Thanks to a correctly

formed innovation and investment policy, it is possible to create such a

structure of the national economic complex that would ensure the most

ecient use of available resources and prerequisites for the sustainable

development of the country.

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Prospects for the development of investment and innovation activity in Ukraine

3.2. Leading global practices of investment innovation activity

The development of the world economy is characterized by the

acceleration of the innovation process, the growth of labor productivity,

and the intensication of competition on the world market. Under such

conditions, an important indicator that characterizes the external inuence

of factors and aects innovation activity is the indicator of costs for

innovation activity, since it characterizes not only the use of production

potential, but also the presence of demand for competitive products to

improve the economic status of the enterprise and the country.

As the experience of developed countries shows, the main factor in

the development of innovations is a stable political environment, socio-

economic, informational, technical condition and other factors, in particular,

the use of labor resources that are able to perform both intellectual and

physical work as eciently as possible.

To assess the state of innovative activity in the world and the spread

of progressive practices and models, the World Intellectual Property

Organization (WIPO) annually compiles a ranking of countries – the

Global Innovation Index, which is formed by 2 groups and 7 subgroups of

indicators, 82 variables (Global Innovation Index, 2021).

Since 2011, Switzerland has remained the leader in innovative activity.

The 20 leading countries in terms of innovation include 5 Asian countries

- the Republic of Korea (5th place), Singapore (8th place), the People’s

Republic of China (12th place), Japan (13th place), Hong Kong (14th place).

In 2021, the record number of Hague system applications was recorded by

Asia with 22% of the total number of applications, while Europe’s share

is more than 70%. The most active users are applicants from Switzerland,

Germany, the United States of America (hereinafter – the USA, the Republic

of Korea, the Netherlands, Japan, France, Great Britain and Turkey (World

Investment Report, 2021).

General statistics for 132 countries ranked by the Global Innovation

Index (Global Innovation Index, 2021) prove a direct relationship between

the level of economic development and innovation. But the issue is not only

the availability of resources, but also the quality of resources. And since

innovations are primarily intellectual capital, we can state the exceptional

importance for every country of building an eective education system and

ensuring equal access to it for all social groups.

The countries of North America and the USA are among the leaders

among the regions of the world in innovative activity and the production

of high-tech products. Due to the large scale of the US market, businesses

have the opportunity to mass sell their products. After the emergence of

competition in this direction from Japan and Germany in the 1970s and

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1980s, the leadership of these countries began to pay more attention

to the development of innovative activities, as well as to increasing the

competitiveness of products produced in the country.

Thus, in 1980, the USA nanced 60% of inventions and had 28,000

patents, of which only 4% were implemented at enterprises. Almost 33%

of the state budget is allocated for the salaries of scientists engaged in

development. 90% of nancing for innovative activities is carried out by

large companies at their own expense (World Investment Report 2021).

In the US, innovation investment volumes are closely related to the

country’s budget and large industrial enterprises in the agricultural sector,

nanotechnology, materials science, and medicine. Representatives of large

industrial enterprises are interested in receiving long-term innovative

projects nanced by state budget funds. The main areas of development

of innovative activity in this country in recent years are: “industry of

medicine, transport industry, infrastructure development, energy-ecient

technologies, technologies in education, space research, development in

the eld of computer technology” (Horyachova, 2020: 101).

Innovative activity in the USA is mostly created at the expense of

enterprises. At the same time, the country has a stable legislative framework

for the protection of intellectual property objects, obtaining preferential

loans, and the economic interest of enterprises. Considerable attention is

paid to the support of scientic and technical knowledge, as well as scientic

research laboratories and universities that are engaged in research work

and have a connection with industrial enterprises.

It is worth noting that the innovative activity of the USA occupied the rst

place in the world for some time and despite the fact that the submission

of applications for the object of industrial property has decreased in the

country, the quality of innovative products is more qualitative than the

products of China and most countries of the European Union.

China scores highly in the global innovation index for the number of

trademarks, patents and industrial designs, but lags behind other countries

in areas such as human capital and higher education. China is the leading

country in the world in submitting applications for industrial property

objects and spending on innovative activities. The number of applications

submitted for the period from 1985 to 2021 is about 22 million applications

for: inventions – 36%, utility model – 37%, industrial design – 27% (World

Investment Report, 2021).

The most developed innovative industries in this country are: electronic

and information technologies, biotechnology, technologies of new medical

preparations, aerospace technologies, nuclear technologies, marine

industry, new materials and technologies and their implementation,

energy-saving technologies, environmental protection, agricultural

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Prospects for the development of investment and innovation activity in Ukraine

technologies. The most famous in China are the following technology parks:

«Zhongguancun» technology park in Beijing; open technology zones in

Guangzhou and Nanjing; high-tech parks «Zhangjiang» in Shanghai and

Tianjin.

During the period from 2010 to 2021, there was an increase in all types of

industrial property objects in the PRC. The largest number of applications

were submitted for trademarks, inventions and industrial designs, which

indicates that innovative products of the PRC are in demand on the world

market. At the same time, the growth of industrial production decreased

somewhat (World Intellectual Property Organization WIPO). In general, as

evidenced by our analysis, innovative activity in China is developing every

year.

Great Britain is increasing its innovative potential in the eld of

nancial technologies, and is currently one of the world leaders in this area.

There are 2,500 ntech rms operating in the country, which currently

focus on managing investments in the technology space. Today, the focus

is shifting from nancing servers and physical assets to cloud capabilities

and data usage. Leading investment managers allocate about 50% of the

budget to these most important strategic priorities, and the automation

and robotization of business operations are among the strategic priorities,

which is due to the need to constantly increase margins and the need for

companies to meet the requirements of regulatory documents (Guk et al.,

2022).

The specied areas of innovation are among the most expensive.

Investment managers are paying more attention to investing in ntech

companies: in 2021, a record number of nancing rounds with a total

amount of $4.5 billion, in which investment companies participated, was

recorded. And some medium and large investment managers are expanding

their activities and providing services to other smaller fund managers. The

collaboration model helps not only to increase prots, but also to retain

customers due to a more customized set of services (Painter, 2022).

High rates of scientic and technical progress require simultaneous

transformations in education, mastering of digital technologies and

constant updating of knowledge. Therefore, the issue of improving the

quality of education is one of the priorities in Germany as well. And since

innovative development is determined by a complex of factors, increasing

the eciency of innovative activity requires consistency of strategies and

coordination of actions of the relevant line ministries, a clear numerical

expression of target benchmarks, etc.

Previously, the leading direction of investment in Norway was the

development of the oil industry. Currently, the country is implementing a

diversication model and is refocusing on the development of biotechnology

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and agriculture as new promising directions. But at the same time, Norway

felt a shortage of specialists and knowledge in these areas of activity.

The standard in today’s conditions is the experience of investment

innovation activity of the leader of the global innovation index rating -

Switzerland. A signicant factor in the country’s leadership in innovation is

the large amount of nancing for innovation. It is one of the countries with

the highest R&D expenditures relative to their gross domestic product. The

private sector accounts for more than two-thirds of Swiss spending on such

works, currently accounting for more than 3% of gross domestic product, or

about 22 billion Swiss francs. The state’s participation in funding research

depends mainly on the proactive work of researchers, the principle of

competition and international cooperation. State institutions at various

levels invest in research. Projects for funding are selected on a competitive

basis (Research and Innovation in Switzerland, 2021).

Switzerland is active in various areas to create a favorable innovation

and investment climate. The priority tasks of the state policy of

innovative development include ensuring: the quality of education at all

levels; accessibility of their state institutions; reliable political and legal

environment.

In Switzerland, at the legislative level (Our activities and objectives.

Division of Business and Economic Development, 2022), the support of

the Confederation of Innovation Infrastructure, namely: the Swiss National

Science Foundation (SNSF) and the Swiss Agency for the Promotion of

Innovation (Innosuisse), 30 research institutions of national importance, is

established , the Swiss Academy of Arts and Sciences, the institution «ETH»

environment. The country also participates in numerous international

research organizations and research programs, such as CERN and multi-

annual framework programs of the European Union, and also promotes

bilateral research cooperation with certain priority countries (Research and

Innovation in Switzerland, 2021).

From the above, we can conclude that the factors of an eective innovative

development model in Switzerland are: sucient amounts of funding for

innovative activities, strong state support; adherence to the principles of

competition, which allows eective use of state nancial resources; creation

of parity conditions for the development of science and research in dierent

regions.

In general, the leading countries of the world have a balanced resource

potential of innovative activity and the results of innovation, and about 80%

occupy leading positions in ve out of seven criteria, namely: according

to the resource potential of innovative activity, it is institutional support;

according to the results of the implementation of innovations, this is the

development of technologies and the economy; results of creative activity;

human capital and research; business development.

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Prospects for the development of investment and innovation activity in Ukraine

The analysis of the state of the global investment market made it

possible to identify the following trends: 1) annual increase in costs

for innovative activities (primarily Switzerland, the Republic of Korea,

the USA, other countries of Asia and the European Union); 2) close

cooperation of universities and research organizations with business

and enterprises brings signicant income to the economy of the leading

countries of the world, which creates the basis for the implementation of

innovative developments and their commercialization; 3) in general, the

quality of innovative developments of the USA is higher than the quality of

innovative developments of most EU countries and Asian countries; 4) for

several years in a row, Switzerland has taken the rst place among the EU

countries as a country with high innovative development (it is this model of

investment activity that can become a benchmark for Ukraine).

3.3. Ukrainian prospects of investment and innovation activity

It is dicult to overestimate the role of the state in the formation of

an eective national innovation system. In view of the purpose of our

research, as well as taking into account the questions that were revealed in

the previous sections of the scientic article, we consider it appropriate to

consider the priority directions of foreign capital investments in Ukraine.

One of the key means of ensuring economic growth and progressive

development of Ukraine is foreign investment. According to the analysis

of past years, the most priority industries in Ukraine were: processing

industry (25%), nancial activity (15%), trade (10%) and other directions

of foreign capital investments (27%). The lowest priorities include:

electricity production and distribution (1%), agriculture (2%), extractive

industry (3%), transport (4%) and construction (5%) (Huk et al., 2021 , p.

17). However, the war in Ukraine forced a reassessment of the attitude to

investment. Some tools proved to be reliable, some were underestimated,

and some did not work at all.

It is necessary to single out the conceptual problems of the development

of investment and innovation activity in the economy of Ukraine: the

imperfection of the legislation regarding the development of innovation

activity; indeterminacy of priorities for the development of basic

sectors of the economy and lack of favorable conditions for attracting

investments in order to ensure the development of high-tech production;

underdevelopment of innovation infrastructure (innovation centers,

innovation business incubators, technopolises, technology parks, science

parks, technology transfer centers and industrial clusters); low rates of

introduction of high technologies; high energy intensity of the domestic gross

product; insucient volume of savings of the population, funds of business

entities and the state for investment in order to implement investment and

innovation projects; the uncertainty of the legal instrument for attracting

non-state investments for the purpose of economic development.

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In particular the mechanism for ensuring the development of public-

private partnerships; depreciation of xed assets; non-compliance by

business entities with the requirements of legislation regarding the

registration of objects of intellectual property rights and the absence of a

mechanism to encourage the introduction of such objects into commercial

circulation; imperfection of the mechanism of commercialization of the

results of scientic research and development; a small number of domestic

manufacturers of high-tech products participating in the international

exchange of technologies; insucient state support for the introduction

of innovations to ensure the development of small and medium-sized

enterprises.

Among the reasons for the unfavorable investment climate in Ukraine

and, therefore, the restraint of economic development, numerous domestic

and foreign studies note the instability of Ukrainian legislation, excessive

regulation of most markets, insuciently developed market infrastructure,

including the stock market, strong tax pressure, bureaucracy and

government corruption.

As rightly noted in the scientic literature, transformational processes

that take place in the national economy and aect changes in the investment

system are caused by improper organization and institutional support

of the investment process (Guk et al., 2021). For example, one of the

biggest problems in Ukraine regarding the introduction of innovations in

the industrial sector is: low level of development of clusters; insucient

procurement of technological equipment by enterprises due to lack of

nancing; low level of foreign investment attraction and technology

transfer.

Analyzing the investment and innovation activity of Ukraine, it should be

emphasized that despite the availability of stable resources, in recent years,

trends towards the country’s loss of human capital have been observed.

In the conditions of war, and this is not surprising, insucient funds are

allocated for the development of innovations in Ukraine. Real reforms in the

eld of higher education are necessary, on which human capital depends on

the further development and implementation of intellectual investments.

Tax policy has a signicant inuence on the stimulation of investment

activity, however, due to the high tax burden and signicant dierentiation

of taxes by type of activity, nancial resources are washed out of industry

in favor of the nancial and trade spheres, which leads to a decrease in

industrial potential, i.e. technologically complex and knowledge-intensive

industries lose their nancial resources, which cannot contribute to

investment in innovation and modernization of the economy (Mytyai and

Slatvinsky, 2014).

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Prospects for the development of investment and innovation activity in Ukraine

Therefore, it is necessary to revise and introduce schemes for tax

incentives for innovative activities, to conduct a favorable state policy for

venture nancing; provide tax benets only to those investors who nance

projects that correspond to the priority directions and strategy of innovative

development of the state (Tymoshenko et al., 2022).

Investment attraction is also inuenced by regulatory and legal

regulation of investment activity and its institutional support. Despite the

fact that the regulatory and legal framework in Ukraine is quite developed,

at the same time, its multi-level and complexity makes its implementation

quite dicult, therefore, accordingly, it needs to be simplied.

Under the existing socio-political and economic situation in Ukraine, in

order to stimulate investment in modernization on an innovative basis in

the short-term, it is necessary rst of all to radically improve the investment

climate, as well as to increase the eciency of the functioning of state

institutions, provided: the formation of legal foundations, the reduction

of investment risks based on the improvement of the functioning of the

judiciary systems and improving the quality of guarantees for the protection

of investors’ rights; implementation of a set of measures in which all

participants in the investment process will participate on an equal basis –

both the state and enterprises; reorientation of the nancial and monetary

systems in accordance with modern requirements for the needs of updating

industrial production and modernization of the economy, in particular,

promoting the reduction of interest rates to a level corresponding to the

eciency of capital investments in xed assets.

In the long term, it is necessary to take into account the development

model of countries (rst of all, the USA, Switzerland, Germany and other

EU countries), which provide for an orientation towards innovation. Since

the use of innovations is related to ensuring exibility in the conditions

of the market environment, it is necessary to create conditions for doing

business. It should be understood that strict regulation of the economy

negatively aects investment in innovation and modernization. Thus, we see

the feasibility of simplifying the administrative regulation of the economy

and creating conditions for the interest of enterprises in innovation and

modernization, which will stimulate investment.

Undoubtedly, each country has its own model of innovative development

and its “blind” copying is impractical for Ukraine with its own characteristics,

however, common for any country is the achievement of the eect of

building eective interaction at various levels for the purpose of progressive

development and improving the quality of life. At the state level, direct and

indirect measures to stimulate innovative activity should be developed,

a favorable investment climate should be created; at the level of private

business, investments in the production of innovations and technology

transfer should be implemented; at the level of other participants of the

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ecosystem, the formation and development of innovative infrastructure

should be ensured.

In July 2022, at a conference in Lugano, Ukraine presented a powerful

and comprehensive plan for the recovery of the country. The implementation

of this strategy is designed for 10 years and it received favorable evaluations

and support from international partners. Ukraine sets itself an ambitious,

but quite realistic goal: by 2032, to make the leap from a transitional

(transit) economy to a developing economy.

In order to attract foreign investors to the Ukrainian economy, a unique

electronic platform Advantage Ukraine has already been created, which

collects more than 500 investment projects and opportunities in 10 sectors

of the economy. Each potential investor, after registering on the platform,

will receive comprehensive information about investment opportunities,

specic projects and the benets that he will have from investing in the

economy of Ukraine (Koznova, 2022).

It should be pointed out that the Government of Ukraine is doing a lot of

work to improve the conditions for doing business and unlocking obstacles

to business development. Current deregulation in wartime conditions

makes it possible to optimistically assess the prospects for the recovery of

entrepreneurial activity under the conditions of a favorable course of the

wartime situation. An example is the relocation of enterprises, because the

recovery of the Ukrainian economy largely depends on the activation of

Ukrainian business.

Thus, from the start of the relocation program until August 3, 2022,

almost 700 enterprises moved to safe regions as part of the relocation

program, and 692 companies moved to safe regions, of which 484 started

working. Among the relocated enterprises that have already resumed

their activities, the largest share is the companies of wholesale and retail

trade, repair of motor vehicles and motorcycles (39% of the total number),

processing industry (33%), information and telecommunications (6%),

professional, scientic and technical activities (5%) (projects (Overview of

business support tools during the martial law in Ukraine, 2022).

At the same time, it is expedient to create a separate plan of measures

to increase lending to small and medium-sized enterprises on terms

acceptable to business. To this end, it is necessary to speed up the unblocking

of obstacles to the functioning of programs and nancial mechanisms

introduced by the state, as well as the attraction of funds from micronance

organizations and donor countries for the implementation of important

socially signicant projects (Overview of business support tools during

martial law in Ukraine, 2022).

Also, the war against Ukraine and the possibility of an energy crisis

accelerated the development of «green» initiatives. It is important for

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Prospects for the development of investment and innovation activity in Ukraine

investors to consider this fact when forming and adjusting their long-term

investment strategies. There are many companies that are structurally

important to the green market. These are both producers of green energy

(wind, solar) and companies that supply raw materials (rare earth metals,

components for technological solutions, etc.).

Quickly restoring the power system after damage is a dicult task, so

the issue of attracting technical and grant assistance for the restoration of

the power system is very important. The Government of Ukraine in general,

and the Ministry of Energy in particular, are working hard to attract funds

and resources from international partners so that energy workers have

everything they need to eliminate the results of shelling. For example, it

was recently announced that the European Investment Bank had provided

EUR 550 million for the restoration of energy infrastructure. Separate

purchases are made by USAID at the expense of international donors

within the framework of programs implemented by the Ministry of Energy

(Bondarchuk, 2022).

The results of an online survey of 430 private investors from all regions

of Ukraine regarding investment initiatives are interesting. Thus, 40% of

respondents intend to continue to spend free funds to help the country,

the military, and volunteer initiatives during the war. This high indicator

is quite expected and understandable, because the help of the army and

volunteering is the main «investment» in the future of Ukraine, without

which all other projects are unlikely to be successful. A third, or 33% of

respondents believe that investments in the domestic economy can become

one of the tools that will help avoid devaluation risks. So, we have another

conrmation of quite serious intentions of a retail investor – to support the

country in the most dicult times (Karpilovskyi, 2022).

In addition, according to the results of the survey, the most promising

industries for the retail investor were those related to basic human needs,

which is quite similar to Maslow’s pyramid. Agriculture and construction

received 56% and 50% of responses, respectively. Next come infrastructure

(transport, warehouses, post) and processing - 41% and 40% (Karpilovskyi,

2022). According to some analysts, after the war, Ukraine will need

businesses in the following areas: logistics (creating rail connections with

European capitals); processing of agricultural products; construction;

services; Light industry; creation of new technologies (in particular, in

combination with the defense industry); a new system of education and

training of specialists; development of energy eciency (Business and

investment in the conditions of war: how Ukrainian entrepreneurs are

looking for new opportunities for development). Considering the state of

war in which Ukraine is today, we believe that in the near future we should

expect the emergence of startups in Ukraine in such areas as defense, cyber

security, green energy, medicine and construction. And here, without a

doubt, state support will be needed.

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We share the point of view of scientists, that in view of the importance

of the prospective development of the domestic production of weapons

and military equipment in order to ensure the territorial integrity and

independence of Ukraine, to minimize threats to national security, venture

capital, under the condition of state support and the appropriate defense

industry policy, can become a locomotive for the innovative development

of the defense industry, which will give an impetus to the active shift of

the innovative «center of gravity» to civilian sectors of the economy, while

ensuring the rapid development of high-tech projects (Tymoshenko et al.,

2022).

There is no doubt that the eective post-war recovery of the country is

possible only if appropriate state policy is implemented, including a liberal

innovative economy (creating conditions for fair business competition

and cooperation, attracting investments and forming a high level of trust

in the state; developing human potential; stimulating the development

of innovations and modernization (including digitization) of the

economy, barrier-free movement of capital and anticipatory development

(recognition) of virtual assets, etc. (Dligach, 2022).

Finally, we note that in the conditions of war in which Ukraine found

itself, the development of a full-edged innovative infrastructure in all

regions will be facilitated by: paying signicant attention to the factor

necessary for innovative development – quality education; encouragement

of international cooperation, which will contribute to eective export-

import of innovations, attracting additional funding from the European

Union to improve the quality and eectiveness of innovative activities.