TRANSFORMATION OF UKRAINE'S INNOVATION POTENTIAL IN THE SYSTEM OF ECONOMIC SECURITY AND EUROPEAN INTEGRATION

Abstract

The article presents a comprehensive comparative analysis of innovation development in Ukraine and selected European Union countries based on the European Innovation Scoreboard methodology for the period 2018–2025. It is substantiated that innovative development serves not only as a driver of competitiveness but also as a system-forming element of a state’s economic security, as it determines the economy’s capacity to withstand internal and external threats, ensure technological sovereignty, and maintain resilience to crisis shocks. It is established that Ukraine significantly lags EU countries in most innovation indicators, which is due to both chronic structural imbalances (low levels of funding for research and development, weak innovation activity of businesses, and limited commercialization of research results) and the consequences of the full-scale war. Such a gap creates critical risks to economic security, particularly due to dependence on imported technologies, limited recovery capacity, and a low level of innovation autonomy. The study analyses the dynamics of the Summary Innovation Index and its components, including human capital, public and private R&D financing, patent activity, collaboration among small and medium-sized enterprises, innovation expenditures, and export potential. It is found that Ukraine’s innovation system is characterized by structural asymmetry: a relatively preserved human capital is combined with a critically low capacity for innovation commercialization and the formation of a closed innovation cycle. This reduces the effectiveness of transforming knowledge into drivers of economic security and increases the economy’s vulnerability to structural and wartime shocks. Therefore, martial law has not only exacerbated existing imbalances but also led to the destruction of certain segments of the innovation ecosystem that previously ensured relative competitive advantages. It is shown that Ukraine’s lag is predominantly structural in nature and does not diminish even during periods of economic stabilization. At the same time, potential growth directions are identified, associated with preserved human capital and the partial resilience of high-tech exports. On this basis, key priorities of state innovation policy are defined, aimed at increasing R&D funding, stimulating business innovation activity, developing institutional infrastructure, and integrating into the European Research Area.