Mechanisms for attracting foreign investment for the digitization of the real sector of the economy of Ukraine: from project financing to venture models
Abstract
The article examines mechanisms for attracting foreign investment to the digital transformation of Ukraine’s real sector under wartime and post-war recovery conditions. The theoretical foundation combines project finance theory, venture capital theory, institutional economics, and public-private partnership models, enabling a comprehensive analysis of how investment instruments have evolved from traditional debt schemes to flexible venture formats. The study finds that foreign capital inflows into the digitalization of the domestic real sector are fragmented: project financing by international financial institutions mainly targets infrastructure and energy assets, while venture capital concentrates in information technology and defense innovation, leaving the digital modernization of traditional industry underfunded. Three systemic obstacles remain: high war- and currency-related risks that constrain long-term debt financing; an institutional gap between the venture ecosystem and industrial enterprises; and the lack of adapted hybrid instruments that combine grant, debt, and equity capital. A three-tier model for attracting foreign investment is proposed, combining blended finance based on international financial institutions’ guarantee mechanisms, state-co-financed sectoral venture funds on a fund-of-funds basis, and digital tools to support investment deals through smart contracts and disbursement-monitoring systems. The organizational and economic conditions for scaling these mechanisms include harmonizing the regulatory environment with EU requirements, extending the DiiaCity regime to industrial digital projects, developing an investment risk guarantee institution, and training personnel to manage mixed investment structures. Keywords: foreign investment, digitalization, real sector of the economy, project financing, venture capital, blended finance, public-private partnership.