Baltic Journal of Economic Studies  

48

Vol. 11 No. 1, 2025

This is an Open Access article, distributed under the terms 
of the Creative Commons Attribution CC BY 4.0

1 Donetsk State University of Internal Affairs, Kropyvnytskyi, Ukraine (corresponding author)
E-mail: ppvr@ukr.net
ORCID: https://orcid.org/0000-0002-0655-5256
2 Scientific Institute of Public Law, Kyiv, Ukraine 
E-mail: nblazhivska@gmail.com
ORCID: https://orcid.org/0000-0005-2232-2708
3 Donetsk State University of Internal Affairs, Kropyvnytskyi, Ukraine 
E-mail: kovaleva.olga@meta.ua
ORCID: https://orcid.org/0000-0003-4555-0172

DOI: https://doi.org/10.30525/2256-0742/2025-11-1-48-57

HISTORICAL DEVELOPMENT OF THE CONSTRUCTION INDUSTRY  
AND ITS IMPACT ON THE ECONOMIC SECURITY OF THE STATE

Volodymyr Buha1, Natalia Blazhivska2, Olha Kovalova3 

Abstract. The purpose of the article is to analyse the historical development of the construction industry and its 
impact on the economic security of the state. Methodology. The article uses general scientific methods of formal 
logic (analysis, synthesis, deduction, induction, analogy, abstraction and modelling) and a special method (historical 
and legal) to reveal the historical development of the construction industry and its impact on the economic security 
of the state. Results. The genesis of the formation and development of legal regulation of the construction industry 
in Ukraine was formed under the complex influence of numerous political, social and systemic legal factors and 
covers separate periods of development: I (IX – early XIV centuries) – the period of existence of Kyivan Rus and 
feudal fragmentation in the Ukrainian lands, codification of construction legislation and workshop organisation 
of construction, but almost all construction activities were of a "defensive" nature; II (XIV – XVI centuries) – the 
period when Ukrainian lands were under the rule of the Grand Duchy of Lithuania and the Kingdom of Poland – 
the beginning of development planning, taking into account the successful use of territories, ensuring the proper 
functioning of military and administrative facilities, as well as fire safety; III (XVI – XVIIІ centuries) – the existence 
of the Cossack-Hetman state – legal regulation and management of construction was limited to purely technical 
works aimed at strengthening the defence capability of the Zaporozhian Army, therefore it was of exclusively 
strategic importance; IV (late 18th – early 20th century) – the period when Ukrainian lands were under the rule of 
the Austrian (Austro-Hungarian) and Russian Empires – the creation of the first specialised agencies authorised to 
issue permits for certain types of economic activity and to supervise and control construction; V (early twentieth 
century – 1991) – the period when Ukraine was part of the USSR – a gradual transition to industrial construction 
methods; consolidation of construction organisations; improvement of design and estimate documentation; 
growth in labour productivity, quality of work and the formation of the first trade unions at construction enterprises 
and associations; subsequently, the unification of functions between the main participants in construction – the 
customer and the contractor – led to a reduction in the contractor's liability; adoption of the first consolidated 
regulatory act – the Code of Ukraine on Administrative Offences – aimed at regulating administrative and legal 
relations in the construction sector; Period VI (from 24 August 1991 to the present) – the period of modern Ukraine – 
consists of two stages 1) in terms of regulatory development, it was marked by the active development of the 
national legislative framework, and in terms of functionality – by a total reduction in demand for construction 
products, inflation, which led to a decrease in working capital, imperfect depreciation policy and massive fraud in 
the housing market; 2) definition of national standards and rules for construction, emergence of new norms in the 
sectoral legislation and establishment of various sanctions for their violation, formation of the institutional system 
of the construction industry with subsequent winding up, reorganisation, etc. Practical implications. When studying 
the current problems of administrative and legal support in the construction sector and starting to develop a 
mechanism for the prevention of administrative offences, it should be borne in mind that its regulatory, technical, 
organisational and managerial effectiveness depends on the state of economic security in the country as a whole. 

Keywords: historical development of the construction industry, construction industry, economic security,  
economic security of the state, security, construction.

JEL Classification: L74, F52



Baltic Journal of Economic Studies  

49

Vol. 11 No. 1, 2025

1. Introduction
The construction industry is one of the most 

important branches of the national economy, on 
which the efficiency of the entire economic system of 
a country depends. The importance of this industry 
for the economy of any country can be explained as 
follows: capital construction creates a large number 
of jobs and consumes the products of many branches 
of the national economy. The economic impact of 
the development of this industry consists in the 
multiplier effect of the funds invested in construction.  
After all, the development of the construction 
industry promotes the development of the production 
of building materials and related equipment, 
machine building, metallurgy and metal processing, 
petrochemistry, glass production, woodworking, 
porcelain and earthenware, transport, energy, etc.  
In addition, construction contributes more than any 
other sector to the development of small and medium-
sized enterprises. The development of the construction 
industry inevitably leads to the economic growth  
of the country and the solution of many social  
problems (Biba, Hatash, 2013).

It should be noted that studying and understanding 
the legal phenomenon of "regulation of construction 
activity" is an acute and urgent necessity of today for 
a number of reasons. Firstly, the construction industry 
creates the basis for ensuring and realising economic 
and other interests of the society by ensuring safety 
of construction, durability of building constructions, 
stimulating measures related to energy saving, 
protection of the surrounding natural environment 
for citizens. Secondly, the knowledge of historical  
and legal prerequisites for the development of the 
construction industry will make it possible to more 
fully reveal the essence of construction activity  
and to create effective mechanisms of influence on 
this activity. Therefore, the study of the development 
of construction industry will provide an opportunity 
to more fully reveal the essence of construction 
activity, since the essential characterisation of any 
legal phenomenon is perfectly complemented by the 
knowledge of the formation and further development 
of construction industry on the territory of Ukraine 
(Stukalenko, 2016).

The study of the relevant legislative history in 
Ukraine occupies a leading place in the identification  
of modern problems of administrative and legal 
prevention of building offences (Buha, 2023).

In the field of domestic scientific research, the 
issues of historical development of the construction  
industry and its impact on the economic security  
of the state have been studied in the works of such 
scientists as Bondareva N., Melnyk N., Stukalenko 
O., Okolovich M. and others. However, the 
disclosure of a number of problematic issues requires 

special attention, which underlines the relevance  
of this article.

The purpose of the article is to determine a  
historical development of the construction industry  
and its impact on the economic security of the state.

2. The First Stage – The Period of Kyivan Rus 
and the Feudal Fragmentation of Ukrainian Lands 
(9th Century – Early 14th Century)

Official references to construction date back to 
the Paleolithic era, when huts dug shallowly into the  
ground were used as dwellings. In the Neolithic 
period, dugouts with a stitching floor made of skins 
or bark appeared on the territory of Ukraine. The 
Trypillian culture, in turn, left entire villages that were 
open and located mainly on the hills or valleys (along 
small rivers), and the dwellings were rectangular 
in shape with a molded post structure. During the  
Neolithic and Bronze Age, open agricultural  
settlements were built near military-type settlements 
located on high coastal cliffs, where dwellings were 
made of branches and clay (Encyclopedia of Ukrainian 
Studies, 1993; Encyclopedia of Modern Ukraine,  
2004; Bondareva, 2023).

However, the origin of domestic administrative  
law is associated with the existence of Kievan Rus, 
which was formed at the end of the 19th century  
(Sabat, 2011). It is worth noting that the codified 
collection of Russkaya Pravda, which most fully 
regulated the procedure for consideration of conflicts 
arising in society in this historical period, was a codified 
collection of Russkaya Pravda in three editions: Short 
Edition (Kratkaya Pravda), the Extensive Edition 
(Prostrannaya Pravda), and the Abridged Edition 
(Sokrashchyonnaya Pravda). It was the Extensive Edition 
that contained the rules of procedural law formed by the 
legislator and those that had been known in practice 
for several centuries (Malyarenko, 2005; Ivashchenko, 
2012; Zelensky, 2011).

Thus, this period is characterised by the emergence 
of workshop-organised construction and the formation 
of construction rules, reflected in the Construction 
Statute and Russkaya Pravda. However, almost all  
urban planning activities had a defensive significance 
and orientation (Buha, 2023).

3. The Second Stage –  
The Period of Ukrainian Lands Under 
the Rule of the Grand Duchy of Lithuania  
and the Kingdom of Poland  
(14th–16th Century)

When the Ukrainian lands were under the rule of 
the Grand Duchy of Lithuania and the Kingdom of 
Poland, the adversarial legal process inherited from 
the old Russian one was preserved. The main source of 



Baltic Journal of Economic Studies  

50

Vol. 11 No. 1, 2025
law regulating relations at that time was the Lithuanian 
Statutes (Kovaleva, 2008) in three editions: 1529, 
1566 and 1588. 

The judicial process in this period continued to 
be characterised by the unity of civil and criminal 
proceedings. The plaintiff was responsible for  
gathering and presenting evidence during the trial 
and could withdraw his claim or accusation at any 
stage of the proceedings (Statutes of the Grand Duchy 
of Lithuania, 2004). It is worth noting that legal 
proceedings in the Ukrainian lands under the rule of 
the Kingdom of Poland were conducted on the basis 
of customary law, the Russkaya Pravda, the Lithuanian 
Statutes, the Magdeburg Law, royal acts and judicial 
practice (Getmantsev, 2013). At the same time, 
royal charters were extended to the Ukrainian towns,  
granting each town the Magdeburg Law. The 
charters combined the norms of the Saxon Charter, 
Lithuanian statutes and local customs. In particular, the  
Saxon Mirror incorporated the norms of criminal and 
private law, it regulated all relations, while separately 
establishing rules for the maintenance of houses 
(Avramova, 2019).

Housing was not defined as a separate legal category, 
as in Roman law, but was correlated with the general 
concept of a building. There was a separate concept 
of an estate, which was a combination of a building 
and land. Ownership of a building gave the right of 
residence. There were basic rules for the maintenance 
of residential property, which were related to the 
interests of neighbours and safety rules. In other words,  
the ХІV century saw the emergence of the primary 
elementary rules of life in housing, its safety and the 
relationship between the interests of homeowners  
and neighbours (Buha, 2023; Avramova, 2019).

Thus, under the influence of the Magdeburg Law in 
a part of the Ukrainian lands, the issue of regulation of 
the construction sector reached a new level, because 
firstly, development planning was carried out not only 
in cities, but also in rural areas; secondly, under the 
influence of Western culture, attention was paid to the 
aesthetic appearance of the city; thirdly, development 
was carried out not only from the point of view of 
efficient use of territories and ensuring the proper 
functioning of military and administrative facilities, 
but also taking into account the necessary level of fire 
protection (Tarasyuk, 2021).

4. The Third Stage –  
The Period of the Cossack-Hetman State 
(16th–18th Century)

In the mid of XVI century, the Zaporozhian Sich  
was formed on the territory of Ukraine, which  
developed its own judicial system. The court was not 
separated from the administration, and the highest 
judicial authority was the general Cossack council. 

The judicial functions were performed by the оtaman 
and a military judge, and cases were considered  
on the basis of customary law, with equality of arms 
guaranteed (Zelensky, 2011). 

In the Cossack customary law, the concept of 
a Cossack offence meant damage to life, health, 
property and honour of the entire Zaporozhian troop 
(Makarenko O.V.). The court in the Zaporozhian  
Sich was quite simple: all cases had to be solved 
according to the principle of justice (Panyonko, 2010). 

However, the development of construction was 
exclusively connected with the development and 
formation of the military sphere and thus had 
a defensive significance. This period is characterised 
by the construction of exclusively Ukrainian Cossack 
buildings (Buha, 2023).

5. The Fourth Stage –  
The Period of Ukrainian Lands Under  
the Rule of the Austrian (Austro-Hungarian) 
and Russian Empires (Mid-18th Century – 
Early 20th Century)

In accordance with the provisions stipulated in the 
Decree of 1763, urban redevelopment initiatives were 
initiated on a consistent basis. The commission was 
entrusted with the responsibility of formulating local 
development plans. During the implementation of this 
decree, two distinct areas of typification were identified: 
private and residential construction, and public 
construction. Typical projects, otherwise referred to 
as "exemplary projects", were utilised and endorsed 
in conjunction with municipal development plans. 
In 1811, the "Lesson Registers for Civil Engineering 
and Military Protection" were formally adopted, 
encompassing stipulations pertaining to labour costs 
and the requisite materials for construction. In 1832, 
a general regulatory collection "Lesson Regulations 
on Construction Works" was published (Kvasnitska,  
2012; Okolovich, 2018). 

These and other legal acts largely regulated 
various aspects of religious and palace construction, 
which began in the middle of the ХVІІІ century  
(Tarasyuk, 2021). 

Later, in 1840-1842, the Code of Laws of the Russian 
Empire (Reznik O.I.) was enacted on the territory 
of Ukraine. The construction management was 
carried out on the basis of the Construction Statute  
of 1857, which was a part of the "Code of Laws of the 
Russian Empire" and was supplemented and amended 
with the accumulation of experience. It contained 
some technical conditions for the performance and 
acceptance of works and also regulated the relationship 
between individuals and organisations involved in 
construction (Lubenets, 1995).

The Technical and Construction Committee 
implemented the "Lesson Regulations", which 



Baltic Journal of Economic Studies  

51

Vol. 11 No. 1, 2025
governed the procedure for preparing drawings and 
determining the cost of construction, execution of 
works and acceptance of finished construction products.  
In accordance with the regulations and prevailing 
practice, contracts for the construction of facilities  
were entered into with contractors who were  
responsible for the cost, time and quality of 
construction. They were also responsible for preparing 
the project documentation. There were no state-owned 
construction organisations (contractors). Instead, 
large contractors who received construction contracts 
through tenders subcontracted their components to 
small contractors who were directly involved in the 
organisation of construction and installation works, 
hired construction teams and made payments to  
them (Okolovich, 2018; Lubenets, 1995).

6. The Fifth Stage –  
The Period of Ukraine as Part of the USSR 
(Early 20th Century – 1991)

In 1917-1922 (the period of existence of the  
Ukrainian People's Republic, the Skoropadskyi 
Hetmanate and the Directory), the authorities actually 
recognised the entire body of legislation of the 
previous period and constantly made changes related 
to the regulation of the activities of military justice 
institutions and their jurisdiction (Zemlyanska, 2002).  
During the period under review, the existing judicial 
system was radically transformed, in particular, 
all existing judicial institutions on the territory of 
Ukraine were liquidated, as well as the institutions 
of prosecutorial supervision, investigators, notaries, 
bailiffs (Tatarenko, 2009). 

The period of fundamental changes in legislative 
support for the construction sector in Ukraine is 
associated with the establishment and dominance  
of the Soviet regime in Ukraine. The ideology of 
the political regime had a significant impact on the 
development of state policy to ensure the rights 
of citizens to housing. The Central Executive 
Committee of the USSR adopted a resolution entitled  
"On Housing Co-operation" on August 19, 1924. This 
resolution outlined a strategy to address the prevailing 
housing crisis through the development of housing  
construction and the promotion of the most  
economical use of existing residential buildings, 
facilitated by amateur activity. The Central Executive 
Committee and the Council of People's Commissars 
of the USSR were to decide on the composition of  
housing co-operative societies, with citizens of the 
USSR permitted to voluntarily unite in such societies 
to meet their housing needs. The composition of 
these societies was to be divided into: a) housing and 
rental co-operative societies; b) workers' housing 
construction societies; c) general civil co-operative 
societies (Okolovich, 2018).

Subsequently, in 1938, the Council of People's 
Commissars of the USSR adopted Resolution No. 233, 
entitled "On Improving Design and Estimating and on 
Streamlining Construction Financing". This resolution 
was accompanied by: "Instructions for drawing up 
projects and estimates for industrial construction", 
"Rules for financing construction by an industrial  
bank", "Rules on construction contracts". However, 
according to O. Kvasnytska, the pre-war period of 
regulation of the construction sector in the USSR in 
general and in Ukraine in particular was characterised 
by a considerable number of departmental standards  
and technical specifications, which were not  
coordinated with each other and were "littered" 
with private recommendations (Kvasnitska, 2012; 
Okolovich, 2018).

In the post-war period, much attention was paid 
to rural housing. Schools were rebuilt in villages,  
buildings for medical, cultural and consumer services 
were constructed, etc. Due to the growing volume of 
work, the People's Commissariat of Construction was 
dissolved in 1949 and three ministries were created 
on its basis. By 1956, there were seven ministries 
of construction of three types: all-Union, Union-
Republican and Republican. The management was 
based on the sectoral principle, i.e., each ministry 
specialised in construction and installation works 
for specific industries (Okolovich, 2018; Strategy of 
Economic Security of Ukraine for the Period Until 
2025, 2021).

In the 1950s, architectural planning was aimed at 
solving the housing problem as quickly as possible.  
The timing and cost of housing construction was 
significantly reduced through the use of standard 
designs, the introduction of industrial large-block and 
then large-panel construction. At the same time, thanks 
to the relocation of many families who had previously 
lived in uninhabitable premises and dilapidated 
temporary barrack-type housing to capital buildings, 
the volume of new housing construction exceeded  
the growth of the housing stock.

The legal acts that defined the legal framework of 
Soviet housing construction in the 50s and 60s of 
the twentieth century were as follows: Resolution 
of the Central Committee of the CPSU and the 
Council of Ministers of the USSR of July 31, 1957,  
No. 931 "On the Development of Housing  
Construction in the USSR" and Resolution of the 
Central Committee of the Communist Party of Ukraine 
and the Council of Ministers of the Ukrainian SSR 
of August 24, 1957, No. 988 "On the Development 
of Housing Construction in the Ukrainian SSR", 
Resolution of the Council of Ministers of the Ukrainian 
SSR of April 30, 1958, No. 514 "On Approval of the 
Regulation on Housing Construction Collectives 
and Individual Developers in Cities and Urban-Type 
Settlements of the Ukrainian SSR". In the relevant  



Baltic Journal of Economic Studies  

52

Vol. 11 No. 1, 2025
legal acts, the Soviet leadership set the task of 
eliminating the housing shortage as soon as possible 
in order to provide good living conditions for all  
workers (Tarasyuk, 2021).

It should be noted that the territorial principle  
became the main principle of construction management 
in the 50s and 60s. This period corresponded to the 
system of management of the national economy 
introduced in the country through territorial  
councils of national economy (sovnarkhozes).  
The sovnarkhozes amalgamated the functions of the 
primary participants in the construction process –  
the client and the contractor – which resulted in 
a reduction in the responsibility of each contractor. 
A significant drawback that affected the timing,  
quality and cost of construction and installation 
works was that construction as a sector of economic 
production played a secondary role. Therefore, in 
1963, republican ministries were created, within which 
territorial construction departments were established 
(Okolovich, 2018; Melnyk, 2013).

At the beginning of 1986, there were two general 
construction ministries in Ukraine: the Ministry of 
Heavy Industry Construction (Minvazhbud) and the 
Ministry of Industrial Construction (Minprombud) 
(Lubenets, 1995). However, in the same year, the 
Ukrainian SSR began new transformations in the 
management of the state economy, which initiated 
the next stage of development of the studied sphere 
(Melnyk, 2013). 

7. The Sixth Stage –  
The Period of Independent Ukraine  
(August 24, 1991 – Present)

The collapse of the Soviet Union and the adoption 
of the Verkhovna Rada of Ukraine in July 1991.  
The Declaration of State Sovereignty and the 
proclamation of Ukraine as an independent  
democratic state (Ukraine) in August 1991 opened 
a new milestone in the formation and development  
of the construction industry, including its  
administrative and legal support. In the early 1990s, 
the construction industry in Ukraine encountered 
significant challenges due to the prevailing economic 
downturn, financial crisis, the inadequacy of public 
administration reforms, and the inadequacies of state 
policy within the construction sector. Consequently, 
the issue of developing national legislation was  
brought to the fore (Kalinnikov, 2020). 

On September 12, 1991, the Verkhovna Rada 
of Ukraine adopted the Law of Ukraine "On Legal 
Succession of Ukraine". As stated on page 3 of the 
legislative act, the laws of the Ukrainian SSR, along 
with other acts adopted by the Verkhovna Rada 
of the Ukrainian SSR, are valid on the territory of 
Ukraine, provided that these do not contradict the 

laws of Ukraine adopted after the declaration of  
independence (The Law of Ukraine "On Legal 
Succession of Ukraine", 1991). Consequently, 
a considerable proportion of the legislative acts  
of the Soviet period continued to be utilised in 
the nascent Ukrainian state, which had not yet 
succeeded in developing its own system of legislative  
regulations at that time. In particular, the 
Decree of the Cabinet of Ministers of Ukraine  
No. 46-93 "On Standardisation and Certification" 
of May 10, 1993 equated the norms of the socialist 
period with the state norms of Ukraine and took their  
place among other sources of construction legislation.

8. The Impact of the Construction Industry  
on the Economic Security of the State

Today, any sovereign state faces all levels of threats 
to its national security (international, regional, state), 
as well as all its manifestations (political, economic,  
social, military, environmental, etc.). 

Danger is understood as "an objectively existing 
possibility of a negative impact on a social organism 
that can cause it significant damage, lead to the loss of 
the ability to reproduce its socio-economic identity,  
and give its development undesirable dynamics or 
parameters (nature, pace, forms, etc.)" (Nyzhnyk, 
Sytnyk, Bilous, 2000; National Security of Ukraine, 
1994-1996, 1997).

The categorisation of dangers is contingent on several 
parameters, namely: 1) the degree of probability: real, 
potential; 2) the level (scope and scale of negative 
consequences): international, national, local and 
private; 3) areas of public life; 4) types of human activity.

A number of sources use the following terms as 
synonyms for danger: challenge, risk and threat. Despite 
the fact that these concepts are similar in meaning  
and are types of adverse conditions, they differ in the 
nature of their target and the role of the subjective 
factor. According to levels: risk – threat – challenge – 
danger (Nyzhnyk, Sytnyk, Bilous, 2000). 

The following definition of "security" is provided by 
scholars specialising in domestic studies: "a specific 
state and degree of security of any state and its ability 
to withstand changes in the conditions of functioning" 
(Kosevtsov, Binko, 1996); "the state of an object in 
its environment in terms of its ability to survive and 
evolve in the face of existing or probable internal and 
external threats, as well as unforeseen and difficult-
to-predict threatening objective or subjective factors" 
(Goncharova, 2001).

In other words, security as a result of activities  
aimed at ensuring the security of an individual, society 
and the state has a complex, multiple subject matter: 
in one aspect it is the ability of the system to prevent 
possible harm to the interests of an individual, society 
and the state, in the second – the manifestation of 



Baltic Journal of Economic Studies  

53

Vol. 11 No. 1, 2025
the state to protect their interests, in the third – the 
manifestation of security measures.

The ability to properly understand and clearly 
articulate overall national economic interests helps 
to distinguish national wisdom from political  
adventurism and self-serving group interests. It is 
important to note that national economic interests 
are inseparable from the country's history, culture, 
traditions, value system and spiritual development of 
the people, which have been formed over centuries.

The national economic interests of a state have 
always been manifestly evident. Consequently, the 
fundamental objective of a state's domestic and foreign 
policy has been to ensure the stability of production 
conditions, with the subsequent enhancement of 
economic power and prosperity.The promotion 
and protection of domestic entrepreneurship,  
construction, agriculture, industry and trade,  
irrespective of the forms and types of economic activity, 
as well as class or other group interests, have been 
recognised as the primary national economic interests. 
Subsequent to this, the development of national  
science and education was identified as a pivotal  
factor in attaining economic prosperity.

In this context, it is imperative to acknowledge 
the inherent threat to national economic interests 
that emanates from within. Frequently, this pertains  
to the prioritisation of narrow group and individual 
interests: monopolistic groups and regional entities, 
construction, trade and intermediary structures, and to 
a certain extent, mafia-affiliated entities, management 
apparatuses, and so forth. Today, construction is a  
complex business process that involves constant 
interaction over time between the developer, 
contractor, investor, regulators and individuals, 
involving large amounts of money and a series 
of actions aimed at completing construction and 
successfully commissioning the facility. For its further 
development, the construction industry requires 
significant investment, which can be provided by 
both domestic and foreign investors. The procedure 
for attracting investment requires an assessment of 
the business activity of enterprises (Methodology for 
Integral Assessment of Investment Attractiveness of 
Enterprises and Organisations) and the reliability of the 
state's economic security. In view of this, the concept of 
"economic security" should be based on the following 
principles:

1) Economic independence is the ability to 
independently formulate and implement its own 
economic policy and to define and implement  
national economic interests; the ability of the state 
to exercise control over national resources and  
property; the ability to attract and retain capital on its 
own territory; the ability to participate on an equal 
footing in the international division of labour and  
world trade.

2) Stability of the national economy is the stability 
and reliability of the economic system as a whole and all 
its elements; the ability of the state to protect all forms 
of property; the creation of state guarantees for business 
activities; the containment or overcoming of factors 
destabilising the functioning of the economy.

3) The ability to economic self-development is 
the ability of the economic system to sustainably  
expand reproduction, development of the country's 
economic, labour and intellectual potential; 
competitiveness of the national economy in 
international relations.

4) A high degree of self-sufficiency of the economy - 
providing it with natural, labour, financial, intellectual, 
information resources or safe replacement of some of 
them by importing them.

5) Derivation from the tasks of economic growth 
is dependence of the level of economic security on 
internal and external conditions at a given stage and 
national interests in this period (Yermoshenko, 2001).

Given the subject of this study, it is advisable to 
consider threats to economic security at the following 
hierarchical levels:
– Threats to the security of the economic system as a 
whole;
– threats to economic security from individual 
industries (construction).

Internal economic threats to the system as 
a whole include crisis phenomena that arise within 
the economic system due to defects in its economic 
and institutional structure. This category includes 
most of the threats associated with the growth of crisis  
trends in the production, investment and financial 
sectors. These threats, according to the authors, can be 
grouped into separate groups of problems that need to 
be addressed:
– Crisis phenomena caused by the limited ability  
of the economy to adapt to new conditions due to the 
"martial law" state of the economic system;
– growth of the "shadow" economy;
– unresolved problem of resource, financial and 
technological dependence of the national economy on 
other countries;
– a deformed production structure (dominance of 
extractive and basic industries with a low degree of 
processing of raw materials), outdated technologies in 
most industries;
– inefficient search for own investment resources.

The weaknesses of the domestic economic 
environment at the group level, in particular, as 
illustrated by the construction sector, include:
– Low level of investment activity;
– inefficient tax and banking systems;
– imperfect budget system, inefficient control over 
budget expenditures;
– legal, organisational and institutional incompleteness  
of the control and audit reform.



Baltic Journal of Economic Studies  

54

Vol. 11 No. 1, 2025
In addition to the above-mentioned threats to 

Ukraine's economic security, there is also the presence in 
Ukraine of a certain class of nomenclature which, on the 
eve of independence and within fifteen years afterwards, 
i.e., during the period of initial capital accumulation 
and privatisation, largely deliberately created a situation 
which allowed it to freely and legitimately maintain 
dominant socio-economic positions and legalise 
accumulated capital and real estate.

Initially, the ruling bureaucracy was frightened  
by the threat of a market that would deprive it of its  
power over the economy, which had generated significant 
profits in the context of the commercialisation of 
command and control relations in Soviet times, but 
later it realised that market relations come in different 
forms and that it was better prepared for them  
than the rest of the population. As a result, it began 
to implement reforms to the extent that they met the 
interests of the ruling nomenklatura. It adapted the 
transformation processes to its economic and political 
problems. Taking advantage of its privileged position 
as the distributor of state property, the nomenklatura 
began to appropriate state property and turn it into 
the object of its private enterprise. It soon became 
clear that the nomenklatura was first and foremost an 
economic entity, unwilling to accept Western-style 
market relations. It sought to preserve the monopoly 
position of its companies and resisted attempts to 
introduce free competition, because it was used to 
preferential state loans and free subsidies, as well 
as guarantees against bankruptcy. The directorate  
wanted to make a profit, as in capitalism, but not to be 
liable with its own capital for losses and commercial 
risks, as in socialism. Nomenclature capitalism began to 
take shape. As a result, a very peculiar socio-economic 
model of state-bureaucratic, oligarchic capitalism was 
created, characterised by a monopolised market with 
very limited competition and low economic efficiency; 
criminalisation of the state bureaucracy, its merger  
with entrepreneurship, which is parasitic on close 
ties with the government, and the monopoly of the 
nomenclature on state power.

The challenge in eradicating this phenomenon stems 
from the fact that the economic mechanism established 
on the old foundations cannot be simply destroyed 
without adversely impacting the country's economic 
development. In the contemporary context, it is  
evident that the construction of industrial facilities 
is virtually non-existent. This is primarily due to  
the fact that such construction requires substantial 
investments, which the state is not inclined to 
undertake. Additionally, investors, both domestic and 
foreign, are reluctant to risk investing significant sums 
of money in the current economic climate in Ukraine. 
The construction of social infrastructure (schools, 
kindergartens, etc.) and municipal infrastructure 
(pipelines, networks, etc.) depends entirely on the 

financial content of local budgets, the will of local 
authorities and the economic situation that would 
allow launching a relevant construction programme 
(Adamska, 2019).

In order to counter threats from economic crime, it 
is necessary to define the system of national interests 
on which the state's actions will be based quite clearly 
(Tylchyk, Dragan, Nazymko, 2018). Among them are 
the following:
– Сomprehensive protection of the economic sphere 
of the state from illegal encroachments;
– establishment of real audit control, localisation  
and overcoming of destructive manifestations;
– identification and prosecution of offenders; 
– elimination of the causes and conditions for the 
existence of illegal activities (an effective mechanism  
for preventing offences is needed);
– promotion of legal economic and market relations  
in Ukraine;
– strengthening the role of the state as a guarantor 
of economic security of individuals and legal entities, 
society;
– ensuring guarantees of the rights of citizens and  
legal entities in the course of measures to combat 
economic unlawfulness.

To do this, it is necessary to:
– Сreate legal (in particular, to formulate a new 
Strategy for the Prevention of Economic Offences that 
would meet the interests of a society with a market 
economy, including under martial law; to develop 
and implement a strategic programme for combating 
economic offences, etc.), organisational, logistical 
and other conditions for effective counteraction to 
economic crime. Іt should be reminded that in 2021, 
the Economic Security Strategy of Ukraine for the 
period up to 2025 was approved. According to this 
document, Ukraine's national interests include the 
sustainable development of the national economy, 
Ukraine's integration into the European economic area, 
and the development of equal and mutually beneficial 
economic co-operation with other states.
– Establish the necessary mechanisms to identify 
and eliminate or neutralise negative processes and 
phenomena that generate or contribute to economic 
illegality.
– Help prevent the shadowing of the Ukrainian 
economy.
– Increase the level of detection of all types of 
economic offences (in particular, in the construction 
industry) and the perpetrators.
– Ensure priority in the financial support of the  
offence prevention mechanism.
– Take measures aimed at ensuring the activities of 
business entities, both residents and non-residents of 
Ukraine. 
– Conduct ongoing monitoring of illegal processes 
in the economic and related spheres of the state and 



Baltic Journal of Economic Studies  

55

Vol. 11 No. 1, 2025
prepare relevant information and analytical materials 
on combating offences.
– Take measures to ensure compensation for  
damages caused to the state, as well as to individuals  
and legal entities.
– Ensure exposure of the facts of establishing corrupt 
ties with civil servants and officials of all levels by 
involving them in illegal activities.
– Take measures to select, deploy, train and retrain 
personnel for law enforcement and control and audit 
bodies. 
– Provide material and moral incentives to citizens 
who assist in detecting offences. 
– Constantly inform the population of the country 
about the state, dynamics and results of the fight  
against economic crimes through the media.

9. Conclusions
Economic security is the basis of national security, 

and the distribution of external and internal threats  
has shown a constant tendency to increase their  
negative impact on the priority sectors of the national 
economy. The construction industry is no exception,  
the degree and duration of the influence of threats on 
which hinders the realisation of economic interests, 
worsens the investment climate and affects the 
stability of socio-economic processes. Therefore, one 
of the priority areas of the state policy should be the 
strengthening of the economic security of the country 
in the context of protection of the construction 
sector, namely the creation and implementation  
of the mechanism for the prevention of offences by 
means of regulatory and organisational support of 

the activities of the authorised bodies, in particular  
those of supervisory, control and audit, law enforcement 
agencies and local self-government bodies, the 
establishment of close interdepartmental co-operation, 
effective methods of control and supervision of their 
activities.

The system of building development and its 
management has undergone a long evolution that 
continues to this day. Each of the identified and  
analysed stages of its historical development is 
characterised by certain features which, on the one 
hand, reflect the economic and social development 
of the state in a given period and, on the other hand,  
have an impact on the peculiarities of building 
development as a specific area of state administration 
and regulation of its activities. When implementing 
reforms in the field of construction and housing  
policy, it is necessary to avoid repeating mistakes 
and develop further steps and ways of optimising  
the industry based on the relevant interests of the 
domestic environment and people in a particular 
historical period. Therefore, the prospects of further 
research in this area may be related to the development 
of appropriate mechanisms for improving the currently 
operating organisational forms of construction 
management (Melnyk, 2013).

Therefore, when studying the current problems of 
administrative and legal support in the construction 
sector and when starting to develop a mechanism  
for the prevention of administrative offences, 
it should be borne in mind that its regulatory,  
technical, organisational and managerial effectiveness 
depends on the state of economic security in the 
country as a whole. 

Refеrences:
Biba, V., & Hatash, V. (2013). Status and prospects of development of the construction industry in Ukraine. 
Available at: https://reposit.nupp.edu.ua/bitstream/PoltNTU/549/1/%D0%A1%D1%82%D0%B0%D1% 
82%D1%82%D1%8F_%D0%93%D0%B0%D1%82%D0%B0%D1%88%20%D0%92.%28%D0%B2%D0%B8% 
D0%BF%D1%80.%29.pdf
Stukalenko, O. (2016). Historical and legal prerequisites for the emergence and formation of the construction 
industry in Ukraine. Available at: http://www.jurnaluljuridic.in.ua/archive/2016/3/21.pdf 
Buha, V. V. (2023). Formation and development of the construction industry and its impact on the economic 
security of the state. Law and society, Vol. 3, p. 433‒439. Available at: http://pravoisuspilstvo.org.ua/
archive/2023/3_2023/65.pdf
Encyclopedia of Ukrainian Studies (1993). Kyiv: Khlobus. Preprinted edition. 1955-1984 pp. T. 1: A – Kh., 399 p. 
Encyclopedia of Modern Ukraine (2004) / ed. col. I. M. Dzyuba et al.; NAS of Ukraine, National Scientific Research 
Center. Vol. 3: Bio-Bya. Kyiv, 696 p. 
Bondareva, N. V. (2023). Historical stages of the development of construction in Ukraine. XIV International 
Scientific Internet Conference ADVANCED TECHNOLOGIES OF SCIENCE AND EDUCATION. Available at: 
http://intkonf.org/bondareva-nv-istorichni-etapi-stanovlennya-budivnitstva-nateritoriyi-ukrayini/ 
Sabat, P. V. (2011). Church statutes of princes Volodymyr the Great and Yaroslav the Wise from the  
handwritten Kiev Trebnik (15th – early 16th centuries) of the Apostolic Vatican Library from the Borgio-Illyricum 
Fund No. 15. Scientific Bulletin of the Uzhhorod National University. Series: History, Vol. 26, p. 242–246. 
Malyarenko, V. T. (2005). Restructuring the criminal process of Ukraine in the context of European standards. 
Kyiv: Yurinkom Inter, 511 p. 
Ivashchenko, O. V. (2012). Historical and legal prerequisites for the emergence and development of the institution 
of informing participants in criminal proceedings before the judicial reform of 1864: some aspects. Scientific and 
informational bulletin of the Ivano-Frankivsk University of Law named after King Danylo Halytsky, Vol. 6, p. 113–119.



Baltic Journal of Economic Studies  

56

Vol. 11 No. 1, 2025
Zelensky, S. M. (2011). History and prospects for resolving criminal cases in court in Ukraine. Journal of the National 
University "Ostroh Academy". Series: Law, Vol. 2. Available at: http://lj.oa.edu.ua/articles/2011/n2/11zsmpvu.pdf
Kovaleva, S. G. (2008). Judiciary and judicial proceedings in the Ukrainian lands of the Grand Duchy of  
Lithuania. Mykolaiv, 200 p. 
Statutes of the Grand Duchy of Lithuania (2004): in 3 vols. / ed.: S. V. Kivalov et al. Odesa: Juryd. lit., 2004. T. 3, 
book 1: Statute of the Grand Duchy of Lithuania of 1588. 665 p.
Getmantsev, O. V. (2013). Formation and development of civil procedural legislation in Ukraine: issues of historical 
periodization. Journal of Yuriy Fedkovych Chernivtsi National University, Vol. 644, p. 82–87. 
Avramova, O. E. (2019). Formation of housing legal relations. Civil law and process, Vol. 11. Available at:  
http://pgp-journal.kiev.ua/archive/2019/11/2.pdf
Tarasyuk, Yu. V. (2021). Administrative and legal support of housing construction in Ukraine: dissertation 
...candidate of law: 12.00.07. Sumy, 227 p. 
Makarenko, O. V. Customary law of the Zaporozhian Sich. Available at: http://intkonf.org/makarenko-ov-
zvichaeve-pravo-zaporozkoyi-sichi/
Panyonko, I. (2010). Crimes and Punishments of the Cossack Era. Scientific Papers of Lviv University of Business and 
Law, Vol. 5, p. 158–163. 
Kvasnitska, O. O. (2012). Historical Development and Formation of Construction Legislation in the Legal 
Experience of Ukraine. Scientific Works of the National University "Odesa Law Academy", Vol. 12, p. 370–382. 
Available at: http://nbuv.gov.ua/UJRN/Nponyua_2012_12_39
Okolovich, M. E. (2018). Administrative and Legal Regulation of Urban Planning Activities by Local Self-
Government Bodies: Dissertation … Candidate of Law: 12.00.07. Odesa, 258 p. 
Reznik, O. I. The system of sources of Ukrainian law of the 18th century: analysis through the prism of codification 
of the law of the Hetmanate. Available at: http://lib.chdu.edu.ua/pdf/naukpraci/sociology/2012/183-171-6.pdf 
Lubenets, V. G. (1995). Fundamentals of construction production management: textbook. Kyiv: Higher School, 
194 p. 
Zemlyanska, V. V. (2002). Criminal procedural legislation of the Central Rada, the Skoropadsky Hetmanate and 
the Directory: author's abstract of the dissertation of the candidate of legal sciences: 12.00.09. Kharkiv, 20 p. 
Tatarenko, V. B. (2009). The state legal process of development of the judiciary of Ukraine in the 20th century. 
Scientific works. Series: Political Science. Vol. 110. Issue 97. P. 118–122. 
Torba, V. V. (2019). Tool «GREEN GUIDE CALCULATOR» for the Ukrainian system of environmental 
certification of building materials. 96 p. Available at: https://krs.chmnu.edu.ua/jspui/bitstream/123456789/264/
1/%d0%a2%d0%be%d1%80%d0%b1%d0%b0-aref.pdf 
The Decree of the President of Ukraine "On the Strategy of Economic Security of Ukraine for the Period up to 
2025" of 11.08.2021 No. 347/2021. Available at: https://www.president.gov.ua/documents/3472021-39613
The Resolution of the Council of Ministers of the Ukrainian SSR "On Approval of the Regulation on Housing 
Construction Collectives and Individual Developers in Cities and Urban-Type Settlements of the Ukrainian SSR" 
of 04.30.1958 No. 514. Available at: https://zakon.rada.gov.ua/laws/show/514-58-%D0%BF#Text 
Melnyk, N. (2013). Historical stages of development of organizational forms of construction management in the 
territory of Ukraine. Bulletin of the Tavria National Economic University, Vol. 4, p. 69–76. 
Kalinnikov, O. V. (2020). Genesis of legislation on pre-trial investigation in the absence of a suspect (in absentia) 
during the period of independence of Ukraine. Scientific Bulletin of the National Academy of Internal Affairs,  
Vol. 1 (114), p. 88–99.
The Law of Ukraine "On Legal Succession of Ukraine" of September 12, 1991 No. 1543-XII. Available at:  
https://zakon.rada.gov.ua/laws/show/1543-12#Text
Nyzhnyk, N. R., Sytnyk, G. P., & Bilous, V. T. (2000). National Security of Ukraine (methodological aspects, state 
and development trends): teaching manual. Irpin, 304 p. 
National Security of Ukraine, 1994-1996 (1997): scientific assistant. NIDS / editor O. F. Belov (head) and others. 
Kyiv: NGSD, 197 p. 
Kosevtsov, V. O., & Binko, I. F. (1996). National security of Ukraine: problems and ways to implement priority 
national interests: monograph. Kyiv: NISD, 61 p. 
Goncharova, V. O. (2001). The influence of the shadow economy on the economic security of the state. Kharkiv: 
KhNU, 194 p. 
Methodology for the integral assessment of the investment attractiveness of enterprises and organizations. Available 
at: https://zakon.rada.gov.ua/laws/show/z0214-98
Yermoshenko, M. M. (2001). Financial security of the state: national interests, real threats, security strategy. Kyiv: 
Kyiv National Trade and Economic University, 309 p.
Adamska, I. (2019). Current state and trends in the development of the construction industry of Ukraine. Galician 
Economic Bulletin, Vol. 5 (60). DOI: https://doi.org/10.33108/galicianvisnyk_tntu2019.05



Baltic Journal of Economic Studies  

57

Vol. 11 No. 1, 2025
Tylchyk, O., Dragan, O., & Nazymko, O. (2018). Establishing the ratio of concepts of counteraction to legalization 
(laundering) of illegally-obtained income and counteraction to the shadow economy: the importance for 
determining performance indicators of the european integration processes. Baltic Journal of Economic Studies.  
Vol. 4, No. 4. P. 341–345.
36. Melnyk, N. (2013). Historical stages of development of organizational forms of construction 
management in Ukraine. Available at: http://dspace.wunu.edu.ua/bitstream/316497/9317/1/%D0%9C 
%D0%B5%D0%BB%D1%8C%D0%BD%D0%B8%D0%BA%20%D0%9D..pdf

Received on: 12th of January, 2025
Accepted on: 25th of February, 2025

Published on: 13th of March, 2025