DIGITALIZATION AS A CATALYST FOR ATTRACTING FOREIGN DIRECT INVESTMENT IN POST-CONFLICT ECONOMIES: LESSONS FOR UKRAINE

Abstract

The relevance of this study stems from the fact that armed conflicts and full-scale war systematically damage the very foundations on which the investment attractiveness of a national economy traditionally rests: physical security, transport and energy infrastructure, the stability of the judicial system, and the continuity of public administration. When these conventional determinants of the investment climate are impaired, post-conflict and war-affected economies face the difficult task of finding alternative channels through which foreign investors can regain confidence in the state's institutional capacity. The article addresses digitalization of public governance and business regulation as one such potential alternative channel, and raises the question of whether, and under what conditions, digital transformation can function as a catalyst for attracting foreign direct investment (FDI) when other pillars of the investment climate remain weakened by conflict. The paper discusses the theoretical mechanisms through which digitalization may influence investor behavior, including the reduction of transaction costs associated with business registration and licensing, increased transparency of public procurement and regulatory procedures, the possibility of remote due diligence and monitoring by foreign partners, and the signaling function of digital government platforms as evidence of residual institutional capacity even amid physical destruction. Particular attention is devoted to the international experience of Rwanda and Georgia, two countries that pursued digitalization of public services and governance in the aftermath of, respectively, the 1994 genocide and the 2008 armed conflict, and to the question of which elements of their experience are structurally comparable to the conditions of Ukraine. The article further raises for discussion the case of Ukraine's Diia digital government platform, examining how its expansion has coincided with the period of full-scale war, and posing questions about the extent to which the scale of digital public-service adoption by the population can be interpreted as a proxy for the resilience of state institutions in the eyes of foreign investors, and about the limitations of digitalization as a stand-alone tool absent complementary progress in physical security, energy supply, and judicial reform. The discussion is intended to open a broader debate on how post-war Ukraine could strategically position its digital governance achievements within its overall investment promotion policy, and on the methodological challenges of isolating the investment-attracting effect of digitalization from other concurrent drivers of FDI dynamics in a wartime economy.