FINANCIAL STABILITY OF UKRAINE'S INNOVATION SECTOR UNDER MACROECONOMIC INSTABILITY: AN ANALYSIS

Abstract

Introduction. Innovation activity represents one of the primary drivers of structural economic transformation while remaining exceptionally sensitive to external disruptions. Under conditions of full-scale military aggression, the financial stability of Ukraine's innovation sector has become a matter of acute policy concern: conventional financing mechanisms have come under severe strain, and the investment environment has been substantially destabilised.

Purpose. To analyse the current state of financial stability of Ukraine's innovation sector under macroeconomic instability, identify the key determinants thereof, and substantiate priority directions for its strengthening.

Materials and methods. The information base comprises data from the State Statistics Service of Ukraine, the National Bank of Ukraine, World Bank reports, and the scholarly literature on innovation finance and entrepreneurial ecosystems. The methodological framework integrates comparative analysis, synthesis, SWOT analysis, and statistical generalisation.

Results. The study establishes that the financial stability of Ukraine's innovation sector is structurally asymmetric, concentrating predominantly within the IT industry while the manufacturing-innovation segment faces critical pressure. Four principal stabilising factors are identified: state support through the Diia.City special regime, international financial assistance, digitalisation of business processes, and sustained IT services exports (USD 6.3 billion in 2023, exceeding 42% of total services exports). A SWOT matrix reveals the central strategic dilemma: Ukraine possesses genuine competitive assets in the innovation domain, but their realisation remains blocked by systemic financial and security constraints. The Diia.City regime had attracted over 700 resident companies by early 2024, providing a preferential tax and regulatory environment for technology firms. International donor programmes including EU4Business, USAID Competitive Economy Program, and EBRD instruments have partially substituted for the collapse of domestic capital markets, though their project-based nature limits capacity to build sustainable financing infrastructure. Priority directions for strengthening financial stability include expansion of R&D tax credit mechanisms beyond the IT sector; development of a domestic venture capital market through a fund-of-funds model with public co-investment; introduction of blended finance instruments and revenue-based financing for innovative SMEs; and full engagement with European innovation financing programmes — Horizon Europe, the European Innovation Council (EIC), and the Digital Europe Programme.

Discussion. Further research should focus on quantitative modelling of the relationship between specific financial stability factors and the innovation activity of enterprises, as well as on evaluating the effectiveness of individual state support instruments in the context of post-war reconstruction and European integration.