Financial instruments for supporting innovation activities under an unstable investment climate

Abstract

The article explores the relevance of financial support for innovation activities under an unstable investment climate caused by military, economic, and institutional challenges. The decline in investment activity in Ukraine during 2023–2024 has been accompanied by a reduction in capital inflows to key sectors and regions, underscoring the urgent need for adaptive financial solutions to support innovation. The study aims to identify effective financial instruments supporting innovation in current conditions and develop practical implementation recommendations. The research employs methods of comparative analysis, statistical data generalization, systematization of financial instruments, structural-logical modeling, and graphical presentation of results. Results. The study reveals that between 2021 and 2024, Ukraine experienced a decline in foreign direct investment, particularly in traditionally attractive sectors such as IT, trade, and agriculture. Comparative analysis of the sectoral and regional structure of investments indicates a shift toward capital concentration in relatively secure regions and growing interest in manufacturing and real estate. The key factors driving the transformation of the investment climate are military aggression, macroeconomic instability, regulatory uncertainty, and infrastructure degradation. Based on this, a set of financial instruments with adaptive potential for unstable conditions and capacity to stimulate innovation is outlined, including government support programs, international grant mechanisms, venture capital for startups, digital crowdfunding platforms, tax incentives for innovation, and public-private partnership mechanisms. Conclusions. To ensure effective and sustainable financial support for innovation in Ukraine, it is necessary to implement a comprehensive and coherent national policy that combines traditional and alternative financing tools, strengthens institutional and technological infrastructure, encourages collaboration between public and private sectors, and promotes deeper integration into the global innovation and investment ecosystem.