FOREIGN FINANCING OF DIGITALIZATION OF THE REAL SECTOR OF UKRAINE'S ECONOMY: MODERN MECHANISMS AND INVESTMENT CONTINUUM
Abstract
The article substantiates that, amidst full-scale war, limited budgetary resources, and a strategic course toward European integration, foreign funding is becoming a decisive source for the digital transformation of Ukraine’s real economy – specifically in industry, the agro-industrial complex, energy, transport, and logistics. It demonstrates that the digitalization of production and management processes in these sectors is impossible without mobilizing grant, loan, guarantee, and investment resources from international partners, particularly given the wartime and post-war risks that restrict access to commercial capital. The study systematizes modern mechanisms for the foreign financing of digitalization in the real sector: grant funding and technical assistance, concessional (soft) lending, risk-sharing blended finance, partner bank credit lines backed by donor guarantees, venture and equity financing, and foreign direct investment. It also outlines the activities of key development institutions, including the European Union (Ukraine Facility, EU4Digital, EU4Business), the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank Group (IBRD, IDA, IFC), USAID, and other donors. The author substantiates a concept of the investment continuum for foreign financing of digitalization, reflecting a sequential transition from donor subsidies (grants, technical assistance) – through concessional lending and blended finance – to commercial credit lines and, ultimately, to equity capital and foreign direct investment, as risks decrease and the digital maturity of real-sector enterprises grows. Examples of the practical implementation of these mechanisms are provided across various sectors – industry, SME lending, high-tech manufacturing (the Diia.City regime), customs and logistics infrastructure, and energy – with a focus on the managerial and economic impact of their adoption. The study identifies key obstacles to attracting foreign financing for real-sector digitalization (war-related risks, a shortage of guarantee instruments, limited enterprise absorption capacity, and a lack of digital skills) and outlines ways to overcome them. It is concluded that the effective use of the investment continuum and the combination of various forms of foreign financing are crucial prerequisites for accelerating the digital transformation of Ukraine’s real economy and its integration into the EU Single Digital Market.