# 77 379-384 View full article

УДК 338.24:330.341.1:332.1

DOI: https://doi.org/10.36887/2415-8453-2025-4-77

Pavlovsky Serhii Anatoliiovych,
Doctor of Medical Sciences, Professor,
Director of the Municipal Research Institution "Research Institute for Socio-Economic Development of the City",
https://orcid.org/0000-0002-4087-6256

JEL classification: O18, O31, R11, D02

Published: 19.12.2025

The article is devoted to a comprehensive study of the theoretical and applied principles of the formation of an institutional mechanism that ensures the sustainability of investment and innovation development of the business sector. It is substantiated that, in the context of globalization and increased competition, the relationship between investment and innovation is the determining factor in the survival and growth of enterprises. The paper analyzes in detail the role of investment resources as a financial base for R&D, as well as the reverse effect of innovations on increasing companies’ investment attractiveness through the creation of unique competitive advantages. Attention is paid to the analysis of the current state of Ukraine’s investment climate under martial law. The dynamics of the Investment Attractiveness Index and the structure of foreign direct investment (FDI) are studied, and significant regional disparities are identified, with capital concentrated in Kyiv amid investment outflows from frontline regions. The importance of state policy as an institutional coordinator is emphasized, which should guarantee security, transparency in justice, and the development of the infrastructure for insurance against military risks to attract international capital. The scientific novelty of the study lies in the development of a mechanism to sustain the management system for the sustainable development of industrial entrepreneurship within regional clusters. A model of a “digital cluster” is proposed that integrates business, government, science, and education based on “network logic” and the principles of smart specialization. The article identifies promising areas of smart specialization (using the example of the Kyiv region), such as functional nutrition, energy-efficient solutions, biopharmaceuticals, and innovative construction. The conclusions emphasize the need for digital transformation (“Industry 4.0” and “5.0”), the implementation of circular-economy principles, and the strengthening of cities’ roles as cores of innovation ecosystems. Local governments and state authorities can use the study’s results to refine strategies for sustainable territorial development and enhance the competitiveness of Ukrainian cities in the global environment.

Keywords: investment and innovative development, entrepreneurship, institutional mechanism, sustainable development, economic clustering, investment attractiveness, regional development, urban economy.

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Quote article, APA style

Pavlovsky S. Formation of an institutional mechanism of sustainability in ensuring investment and innovative development of entrepreneurship at the city and regional levels. West Ukrainian National University. 2025. №4. 379-384 pp. https://doi.org/10.36887/2415-8453-2025-4-77

Quote article, MLA style

Pavlovsky S. Formation of an institutional mechanism of sustainability in ensuring investment and innovative development of entrepreneurship at the city and regional levels. West Ukrainian National University. https://doi.org/10.36887/2415-8453-2025-4-77