three seas economic journal 67 vol. 1, no. 2, 2020 corresponding author: 1 phei “international university of business and law”, ukraine. doi: https://doi.org/10.30525/2661-5150/2020-2-11 the role of clusters in modern global economy valeriy shiposha1 abstract. the article deals with the role of clusters in today’s global economy. it is noted that in today’s economic environment it is difficult to overestimate the role of clusters in competition, which has changed significantly and continues to change due to the increased amount of information and knowledge about risk in the global economy. considering the role of clusters in today’s global economy, it is noted that in modern scientific literature there is no single and generally accepted definition of a cluster as such. different scholars and economists understand and interpret this concept variously. m. porter gives the most accurate definition of the cluster. the main characteristics of clusters are considered, namely: geographical concentration, specialization, multiplicity of economic agents. the goals for which clusters are usually directed are given, namely: increase of competitiveness of cluster participants due to introduction of new technologies; reducing costs and improving the efficiency of relevant high-tech services through the synergy effect and unification of approaches in logistics, engineering, information technology, quality management, etc.; providing employment in the context of largescale enterprise reforming and outsourcing; consolidated lobbying of the cluster members’ interests in different authorities. the advantages of the cluster model for the development of the ukrainian industry are considered and it is stated that among all the advantages of the cluster approach, the most important is the access to innovations, knowledge. it is stated that clusters can be formed in both traditional industries and high-tech areas, and very often different educational establishments or research structures serve as a specific center for cluster formation. it is concluded that within the state, clusters play the role of points of growth of the internal market and ensure the promotion of goods and services produced by them to international markets. this, in turn, contributes to the enhancement of the country’s international competitiveness on the whole, due to a number of advantages inherent in the cluster form of interaction between large, medium and small enterprises in all areas of business relations. one of the directions of socio-economic development of ukraine, to increase its competitiveness, should be the support and development of territorial production clusters. key words: cluster, global economy, competitiveness, goods, services, economy. jel classification: c38, q57 1. introduction competitiveness in market conditions is one of the main categories that is actively employed in theory and practice. the global competitiveness of national economies increasingly depends on the efficiency of their internal organization and the degree of integration of internal regional subsystems. nowadays, it is clustering that acts as a necessary form of internal integration and cooperation, which is able to ensure not only stability, but also the effect of counteracting the challenges of global competition from existing monopolies. the idea of clusters as a means of ensuring the competitiveness of economic development of regions in recent decades has been developed worldwide. the positive impact of clusters on the economic development of countries and regions of the world has led to the relevance of their role in the modern global economy. therefore, the study of the role of the cluster model of the economy is of great scientific and practical importance. the role of clusters in modern global economy is studied by the following scientists: zhyhalkevych zh.m., lizunov v.v., nikolaev m.v., okseniuk k.i., porter m., semenov h.a., sobkevych o., iukhimchik l., etc. the purpose of the article is to research the role of clusters in the development of national and regional economies, which are components of the modern global economic space. three seas economic journal 68 vol. 1, no. 2, 2020 2. presentation of the main research material given the growing global challenges, which are primarily manifested in economic and financial instability of the world economic system, slowing its economic development, there is a question of finding new sources of economic development of such forms of international cooperation that will increase their sustainability and competitiveness in the global space. clusters can act as these forms. in modern economic environment, it is difficult to overestimate the role of clusters in competition, which has changed significantly and continues to change due to the increase in information and knowledge about the risks in the global economy. it should be noted that due to clustering it is possible to form the necessary critical mass in various fields of activity, which, in turn, allows clusters to demonstrate the uniqueness and efficiency of any national, regional or territorial economy to the world. it is important to mention the following: modern clusters are able to transform competition into integration cooperation without destroying competition as a strong driving force of the world economy. also, the concept of the cluster is a new vision of the national economy, the economy of the region and the enterprise, and also points to the new roles of companies, governments and international organizations seeking to increase competitiveness in the global market. considering the role of clusters in the modern global economy, we note that in the modern scientific literature there is no single and generally accepted definition of the concept of cluster. different scientists and economists understand and interpret it variously. the most accurate definition of the cluster is given by m. porter (porter, 2005), according to which clusters are geographically concentrated groups of interdependent companies, specialized suppliers, service providers, firms in related industries, as well as organizations related to their activities (e.g. universities, standardization agencies, trade associations) in certain areas that compete, but work in the same field. as for the main characteristics of clusters, the following are distinguished: – geographical concentration (closely located firms give each other the opportunity to save on rapid economic interaction, capital exchange, etc.); – specialization (clusters are concentrated around a certain area of activity to which all participants are related); – multiplicity of economic agents (clusters and their activities cover not only the firms in the cluster) (enhancing the innovative perfomance of firms). clusters can be formed both in traditional industries and high-tech areas, and very often a kind of the center for the formation of clusters is various educational institutions or research structures. it is important that clusters are formed not only in a large but also small economy in both industrialized and developing countries. interaction between cluster members can take the form from relatively simple, networked type of associations, to complex multilevel cooperative and competitive entities. tendencies to the formation of clusters often have a common scientific or production base, and the successful development of the cluster can be guaranteed only if the scientific base allows to build a cluster not on a specialized but on a differentiated type. one of the important aspects of cluster policy is that the focus is on strengthening the networks of relationships between economic entities – members of the cluster. thus, today the application of the cluster approach in ukraine is a necessary condition for the revival of domestic production, increase the efficiency of innovative development of regions and achieve a high level of economic development and competitiveness. it is worth agreeing with the position of v.v. lizunov (lizunov, 2008) that the viability of the cluster approach is also explained by its complex form and effective combination of industrial policy, regional policy, small business support policy, policy to attract foreign and domestic investment, innovative, scientific and technical, personnel, educational and other policies. nikolaev m.v. (nikolaev, 2005) also notes that “the most important factor in the competitiveness of clusters is the high level of development of the system of related institutions and industries, and the public policy is performed for the formation of a national innovation system and the influx of qualified personnel”. clusters are usually aimed at achieving the following purposes: – increasing the competitiveness of cluster members through the introduction of new technologies; three seas economic journal 69 vol. 1, no. 2, 2020 – reducing costs and increasing the efficiency of relevant knowledge-intensive services due to the effect of synergy and unification of approaches in logistics, engineering, information technology, quality management, etc.; – providing employment in the context of reforming large enterprises and outsourcing; – consolidated lobbying of the interests of cluster members in various authority bodies. if we consider the role of clusters in the state, here they play the role of points of growth of the domestic market and ensure the promotion of their goods and services on international markets. this, in turn, contributes to accelerating the international competitiveness of the country as a whole due to a number of advantages inherent in the cluster form of interaction of large, medium and small enterprises in all areas of business relations. the presence of clusters allows national industries to develop and maintain their competitive advantages without giving in to even the most technically developed countries. all companies in the cluster of interconnected industries invest in specialized research, in the development of related technologies, in information, in infrastructure development and human resources, which is manifested in a synergy effect and allows small businesses to withstand fierce competition in globalized markets. as we noted above, the cluster approach is of particular importance for small businesses, and for some researchers (zhyhalkevych, 2014; nikolaev, 2005), the only way to save small firms in the context of globalization and growing international competition is seen in their clustering. let us consider the advantages of the cluster model for the development pf ukrainian industry, which, in the opinion of o. sobkevych (semenov, 2006), are as follows: – significant synergy effect, which will allow to involve resources of other sectors of the economy – education, science, financial sector, agriculture, defense, health, etc. in the development of the industrial sector due to the participation of these sectors in clusters; – development of small and medium enterprises in industry through the development of outsourcing and subcontracting, which will help to deepen their cooperation with large industrial companies, deepen their specialization, develop niche production and expand access to financial resources for development; – development of innovative directions in industrial production due to intensification of cooperation of industrial enterprises with research organizations, increase of innovative activity of small and medium enterprises in clusters. due to the so-called “spillover” and closer contact with consumers and other companies, there are opportunities to create and disseminate new ideas and technologies among cluster members and beyond, which, in turn, contributes to the growth of value added and production orientation on manufacture of hightech end-use products (okseniuk, 2012); – development of innovation management in industry through the introduction of a new system of production and cooperation within the cluster, which will increase the quality and competitiveness of industrial products through a better understanding of the needs and requirements of suppliers and consumers to quality and technical characteristics of products and components, will lead to broken elements and significant time savings decrease. – increase of the investment attractiveness of regions and the country as a whole, due to the higher level of investor confidence in developed network structures than in individual small companies, as well as guarantees and benefits to investors from the state if the latter participates in cluster initiatives (iukhimchik, 2013); – accelerating the pace of creation and development of new business. new companies have the opportunity to develop in more favorable conditions due to the establishment of relations with partners within the cluster; – creation of a closed production cycle and value chain within the country through the identification and creation within the cluster of missing links in production, which contributes to the development of import substitution. considering the advantages of the cluster approach, we note that among all the advantages of the cluster approach, the most important is access to innovation, knowledge and know-how. after all, in the knowledge-based economy, which is defined by knowledge-intensive traditional industries and emerging industries, companies are looking for their main competitive advantage in ideas and talented staff, which requires geographical proximity to skilled workers, best suppliers, consumer evaluators, highly skilled human resources, research and development tools, as well as industry leaders (ukraina. posluhy z pidtrymky msp v priorytetnykh rehionakh). three seas economic journal 70 vol. 1, no. 2, 2020 as industry expertise and know-how are accumulated and disseminated through businesses and innovative companies, the cluster approach is more likely to provide companies with information about technology benefits and changes in customer and consumer benefits. 3. conclusions thus, we can conclude that clusters are the driving force of economic development, and they can be considered innovative systems of applied value, as scientific, technological and socioeconomic development requires the concentration of national resources. the very clusters can be the impetus that, with the successful concentration of production, its specialization, the use of modern achievements of communication, coordination, cooperation and collaboration, will help to find growth points for each region, while ensuring its victory in competition. clustering for ukraine is one of the ways to build an economy and support it at the appropriate level in the system of world economic relations, because through the restructuring of production it can coordinate all parts of the technological chain and attract large financial resources to increase competitiveness of regions, the state, and domestic and foreign investment, create new enterprises, promote innovative development. also, the presence of clusters helps to increase the exchange of information, the emergence of new producers from consumer industries (suppliers), from related industries or through separation. thus, one of the areas of socio-economic development of ukraine, increasing its competitiveness, should be the support and development of territorial production clusters. references: enhancing the innovative perfomance of firms: policy options and practical instruments. united nations. ece/ceci. cr . 85 р. zhyhalkevych, zh. m. (2014). klastery vzaiemodiichykh pidpryiemstv ta ikh klasyfikatsiia [clusters of cooperating enterprises and their classification]. bulletin of onu mechnikov, vol. 2/3, pp. 98–101. lizunov, v. v. (2008). klasternaia politika i perspektiva formirovaniia obrazovatelnykh klasterov [cluster policy and prospects for the formation of educational clusters]. omsk trade and economic readings, vol. 2, pp. 484–498. nikolaev, m. v. (2005). ekonomicheskaia globalizatciia i problemy natcionalnoi bezopasnosti [economic globalization and problems of national security]. problems of the modern economy, vol. 1(13), pp. 132–134. okseniuk, k. i. (2012). formyvannia ta rozvytok rehionalnykh innovatsiinykh clasteriv [formation and development of regional innovation clusters]. business inform, vol. 9, p. 47–50. porter, m. (2005). konkurentciia [competition]. williams publishing house, 608 p. semenov, h. a. (2006). klastery pidpryiemstv yak peredumova aktyvizatsii rozvytku rehionalnoi ekonomiky [enterprise clusters as a prerequisite for activating regional economic development]. economy and the state, vol. 4, pp. 11–13. sobkevych, o. (2012). promyslova polituka yak chynnyk pisliakryzovoho vidnovlennia ekonomiky ukrainy [industrial policy as a factor of post-crisis recovery of the ukrainian economy]. national institute for strategic studies. ukraina. posluhy z pidtrymky msp v priorytetnykh rehionakh [ukraine. sme support services in priority regions]. iukhimchik, l. (2013). tceli i zadachi formirovaniia i razvitiia regionalnogo innovatcionnogo klastera [aims and tasks of formation and development of a regional innovation cluster]. international agriculture magazine, vol. 3, pp. 41–44. three seas economic journal 13 vol. 1, no. 4, 2020 corresponding author: 1 dnipropetrovsk regional institute for public administration of the national academy for public administration of the president of ukraine, ukraine. e-mail: a.andriienko@gmail.com orcid: https://orcid.org/0000-0001-7780-0557 2 dnipropetrovsk regional institute for public administration of the national academy for public administration of the president of ukraine, ukraine. e-mail: olivebox30@gmail.com orcid: https://orcid.org/0000-0003-3344-1497 doi: https://doi.org/10.30525/2661-5150/2020-4-3 developing the approach of e-services providing in terms of decentralization reform in public administration system of ukraine anton andriienko1, olga matveieva2 abstract. the purpose of the paper is to describe the approach of e-services providing in ukraine in terms of decentralization reform. methodology. we suggest describing the approach of e-services providing. according to the subject of description, methodology could be classified in groups presented below: description of the background (part 3), which reveals the need for digital education; analysis of digital transformation in public administration decentralization reform (part 4); strategic analysis of the vision for public e-services providing (part 5); generalization of the approaches (part 6). the development of the method of descriptive analyses has been based on several sources, namely: studies of the case of public e-services providing in ukraine; analyses of extant literature on public e-services and their development. results. developing innovative and flexible public e-services in ukraine, capable for adapting to the citizens’ current needs, has become crucial for public administrations. progress in e-government tools implementation continues in ukraine in terms of decentralization reform. the e-government concept puts into practice as the ambition of ukrainian decentralized government to use information and communication technology (ict) to provide more efficient public e-services for citizens. the relationship between citizens and the local government is crucial and it is mediated through modeling the process of e-services developing and deeper understanding current citizens’ needs by governmental officials. practical implications. our research aims at developing bases for strategic vision on public e-services in ukraine as a framework that lays the foundations enabling a public administration to build flexible and innovative system of e-services, by relying on four bases (openness, participation, collaboration and integration). value/originality. revealing the current stage of decentralization reform of ukraine enable to provide a case study of the organizational, institutional and social capacities for digitalization of e-services and form a strategic vision for their systemic development. key words: public administration, e-services, ict, local government, strategic vision. jel classification: h76, h83, l86 1. introduction e-services providing in public administration system of ukraine have their peculiarities, which are grounded in terms of decentralization reform providing. reconstruction of national economy, political crisis, exacerbation of armed conflict and other destructive factors affect balance in relationship between government and civic society. this situation requires the establishment of an effective system of e-services throughout ukraine for restoration people’s trust in the state. different aspects and the principles of e-services providing were analyzed in works by i. bernhard (2020), v. boiko (2019), m. chantillon (2019), j. crompvoets (2019), m. dolata (2020), s. hunnius (2013), j. kirchner (2017), r . kruk (2019), v. navumau (2014), a. simonofski (2019), b. schenk (2020), t. schuppan (2013), t. tombal (2019) and other scientists. having analyzed the study of e-services providing, we can conclude that there is still the problem of significant digital gap which means a relatively low use of public e-services among most numerous group of ukrainian population. this group is formed among older population and people who do not use internet. as a result, statistics show a difference between the government’s supply and people’s use three seas economic journal 14 vol. 1, no. 4, 2020 of e-government services, indicating problems with access to the internet, usefulness of existing services and user satisfaction regarding public expectations. in fact, only 10.2 mln ukrainians constantly use most popular e-services from more than 50 available (e-services, 2020). 2. main results at the current stage of public administration and decentralization reform in ukraine, that there is no high accessibility to internet in ukrainian rural communities. that is why they are not still as popular as non-electronic ones which are currently provided via ‘open window ’ format by governmental institutions. enhancing the use of e-services in such communities requires the creation of incentives for citizens while respecting spreading democratic principles such as territorial, gender and economic equity in access. 3. need for digital education aspect of spreading democratic principles around e-services popularizing in ukrainian communities requires focused knowledge providing. focus should be put on collecting the information as well as about technology and services available. the numerous citizen groups with low internet use level or absence of internet access are the elderly (over age 65), citizens with limited digital knowledge, and citizens with a low income. internally displaced people also form a unique group of partially excluded persons due to disorientation and social exclusion. many of the digitally excluded persons are those who need government services the most in ukraine. the gap between those who regularly gets access and use e-services and those who do not use or have access at all is called a ‘digital divide dilemma’ (bernhard, 2020). and this issue is not yet studied in ukraine. today, ukraine is a dynamically reformed state with numerous efforts of public services digitalizing and spreading best international practices in public administration in amalgamated territorial communities (boiko, 2019; navumau, 2014). the local democracy as a consequence of decentralization reform aims to relate people’s choice and public administration for promoting constitutional freedoms on free services obtaining while considering interests and ideas of citizens by the government. this gives new opportunities for municipalities and rural communities to pay attention to and provide strategic plans in relation to local characteristics and meet the expanded needs of citizens. locality and subsidiarity are core values of new local management in the amalgamated territorial communities, as far as public revitalization of trust in local government, which strives to be open, inclusive and accessible for all social strata. hence the implementation of e-services within decentralization reform seems to contribute to increased accessibility and openness of e-governance, even for those groups of citizens who have problems using internet and access to local services. the results of reform could be also indicated by a development towards increasing equal treatment of citizens and a contribution to reducing problems related to the ‘digital divide’. e-services should become more adapted to citizens’ needs by using citizen-centric methods during the reformation and service contact-centers’ tasks development. the development of territorial service contact-centers could be seen as indicators of local e-democracy building and e-governance, although there is still a need to go further in this direction (bernhard, 2020). in this aspect, digital education, as well as focusing knowledge on citizens’ right for public services available, should be seen as an efficient tool of facilitating digital transformation of society. it could become an efficient way to enhance user engagement designed to fit the context of public administration. so, focused education might be the priority of government to tackle the slow digitalization processes in public administration (schenk & dolata, 2020). 4. digital transformation in public administration during the decentralization reform digital transformation is the modified use of digital technology to solve practical problems with e-services providing (world economic forum, 2017). it brings new types of innovative solutions, rather than simply supporting and extending traditional approaches. the essence of digital transformation in public services system is providing technology-based solutions to old (traditionally existing) and new social, economic and digital challenges. there are numerous challenges in public administration, such as expanded demand and higher expectations from citizens and dependency on global and national political agendas. new challenges always require new solutions to which technologies should offer opportunities. but public sector often lacks scientific grounds, human and financial resources for exploration, choice, and implementation (schenk & dolata, 2020). the stage of global digitalization results in developing websites of public institutes where the people could find and download all needed information and, hopefully, carry out basic transactions to get e-service on opened and transparent way. but digital transformation could be more than digitalizing basic services. to offer demanded high-quality public services, public administration should design and provide its e-services to an up-to-date level in technology and three seas economic journal 15 vol. 1, no. 4, 2020 content, considering citizen’s perspective. their role facilitating digital transformation is also in guarantying social inclusion in public administration and local development. the public sector requires transparent and accessible mechanisms and simple management practices to regulate the transformation. this challenge provides an important managerial task – enhancing proactive and efficient public participation at the local level as a grass root of local democracy. it also objectivizes the task for government to provide well trained staff to drive the changes and to create problem-oriented interdisciplinary teams for meeting systemic modifications. the public sector in ukraine lacks a consistent and citizen-friendly national strategy for digital transformation. it mostly relies on singular improvements of public services system as a part of national-wide public administration and decentralization reform. implementing a proper digital-transformation strategy at the national and then at the local level requires the skilled professionals in e-service-oriented public administration. kirchner j. (2017) and schenk b. & dolata m. (2020) identify 3 groups of competences expected to play a primary role in the upcoming digital transformation processes: (a) key non-digital competences: entrepreneurial thinking and self-initiatives, adaptability, creativity, problem-solving perseverance. (b) key digital skills & competences: digital literacy, digital interaction, collaboration, data literacy, digital learning, digital ethics, agile working. (c) technological competences: technological skills, tech-translation (to moderate between non-technical experts and technical experts), user-centered design, web-design, complex data analysis, conception & administration of networked it systems, smart hardware/robotics design & development, and blockchain technology. the individual technological competences could be integrated into public administration via hiring private companies on the principles of state-privatepublic partnerships. in this format, the public sector could require key digital and non-digital competences for accommodation technological improvements at all organizational levels. however, hunnius s. & schuppan t. (2013) suppose that these competences and skills are missing in the curricula of public administration schools and, hence, also in the public agencies and municipalities. it still remains the significant problem of ukraine. 5. strategic vision for public e-services providing the objective of ukrainian government’s activity in this sphere is to develop a national strategy for providing public e-services (kruk, chantillon, simonofski, tombal & crompvoets, 2019). this objective encompasses the following sub-objectives: – to provide an overview of the current situation in the field of geographical public e-services in ukrainian territorial communities; – to identify current demand on e-services and local capacities for public services digitalization (andriienko, 2019); – to make a prognosis of future needs (matveieva & shevchenko, 2019) of the users and to define the possible options which could be used to provide an answer to the changing public needs; – to provide decisions on enhancing flexibility and innovativeness of local government as an e-services providers (figure 1). conceptual base of strategy was built on swedish experience of public services digitalization. ukrainian case of this system reforming puts focus on 4 strategic principles of public e-services providing: 1. openness. 2. participation. 3. collaboration. 4. integration (figure 2). openness includes guaranteeing personal data protection and security, sharing information and services as broadly as possible, when possible for free. it also means increasing the level of transparency and foster national growth through collaboration and data sharing while generation value-added services. it implies fundamental data governance reflections, rethinking the information management system is a pre-requisite for achieve safe and efficient openness. participation means involving all stakeholders impacted by the digitalisation, through considering their needs, ideas, requirements and opportunities for participation. this could enable local governance to meet expectations of the stakeholders. two main stakeholder groups include the external users (1) – citizens or public sector organisations and internal public servants as users (2), whose jobs will evolve due to the digitalisation. first group (1) could have to participate in the development of e-services directly. due to public participation, e-services could be better aligned with stakeholder’s requirements and, therefore, more widely used. second group (2) interacts with the e-services via back-office, which is essential to accompany changes with appropriate management actions (andriienko, 2019). collaboration foresees the administration’s embracing a globalizing society, in which they act as co-working actors with wide perspective towards cooperation, data sharing and capacity building to fulfill the work tasks towards a variety of stakeholders. organizations-providers restructure their cooperation via interrelated partnerships within common strategic vision (kruk, chantillon, simonofski, tombal & crompvoets, 2019). three seas economic journal 16 vol. 1, no. 4, 2020 00 terms and requirements for e-services providing in the local communities e-services local level national levelnational strategy for public e-services providing enablers policies and regulations processes organizational structures culture ethics tradition behaviour knowledge, information infrastructure people, skills, competencies local strategy and policy guidance toolkit openness participation integration collaboration figure 1. framing the role of strategy for public e-services providing openness participation collaboration guaranteeing personal data protection and security guaranteeing free access to services integrating the input from citizens integration modernizing organizational structure integration of interconnection of services developing tools cooperation between institutes embedding of services figure 2. basic conceptual principles of public e-services providing integrated information and communication systems in public administration can enable better decisionmaking and improve the added value of services that the administration pursues. it also implies finding the balance between budgetary autonomy and user orientation. 6. conclusion developing public e-services in ukraine on the way of enhanced innovativeness, accessibility and flexibility foresees from public administrators meeting of numerous challenges, such as expanded demand and higher expectations from citizens, as far as deepening three seas economic journal 17 vol. 1, no. 4, 2020 dependency on global and national political agendas. on the one hand, this task implies updating knowledge and skills of e-services users to increase public participation in e-policy framing. on the other hand, it requires clear strategic vision for all stakeholders (citizens, public administrators, organizations) put in the national strategy. developing the basics for framing strategic vision on public e-services in ukraine lays in the sphere on enabling public administration to build flexible, integrative and innovative system of e-services through the strategic principles of openness, participation, collaboration and integration. following these principles during development of the strategic vision and documenting the strategy of public e-services providing could allow to make public administration more user-centric and demand-oriented. references: andriienko, a. (2019). prospects of globalized smart approaches implementation in the development of large cities in ukraine in the context of ukrainian experience. theoretical and methodological approaches to the formation of a modern system of enterprises, organizations and institutions’ development. available at: https://ojs.ukrlogos.in.ua/index.php/monographs/article/view/431 ukrlogos bernhard, i. (2020). incentives for inclusive e-government: the implementation of contact centers in swedish municipalities: open government: concepts, methodologies, tools, and applications. available at: https://www.igi-global.com/chapter/incentives-for-inclusive-e-government/235174 boiko, v. (2019). eu cyber public-private partnerships (cppp): approaches to formation and legal framework. strategic panorama. available at: https://www.academia.edu/35221560/eu_cyber_public-private_ partnerships_cppp_approaches_to_formation_and_legal_framework?source=swp_share e-services (2020). cabinet of ministers of ukraine. available at: https://www.kmu.gov.ua/en hunnius, s. & schuppan, t. (2013). competency requirements for transformational e-government. proc. hicss. kirchner, j. et al. (2017). future skills: which skills are lacking in germany. stifterverband für die dt. wissenschaft. kruk, r ., chantillon, m., simonofski, a., tombal, t., & crompvoets, j. (2019). flexpub: developing a strategy for flexible and innovative e-services. data for policy. digital trust and personal data. london: university college. available at: https://www.researchgate.net/publication/333732108_flexpub_ developing_a_strategy_for_flexible_and_innovative_e-services matveieva, o., & shevchenko, l. (2019). analysis of the situation and trends in foreign trade of dnipropetrovsk region: challenges and opportunities for the sustainable regional growth. public administration aspects, vol. 9–10, pp. 79–87. available at: https://aspects.org.ua/index.php/journal/article/view/684 navumau, v. (2014). electronic experience of georgis for belarus. e-gov.by. available at: http://e-gov.by/bestpractices/elektronnyj-opyt-gruzii-dlya-belarusi schenk, b., & dolata, m. (2020). facilitating digital transformation through education: a case study in the public administration, 53rd hawaii international conference on system sciences, 2134–2144. available at: https://scholarspace.manoa.hawaii.edu/bitstream/10125/64003/0212.pdf world economic forum (2017): the digital transformation initiative. geneva: wef. three seas economic journal 24 vol. 1, no. 4, 2020 corresponding author: 1 lviv university of trade and economics, ukraine. e-mail: olenatka@ukr.net orcid: https://orcid.org/0000-0002-3002-7672 doi: https://doi.org/10.30525/2661-5150/2020-4-5 methodical aspects of civil passenger traffic costing olena burdyk1 abstract. costing is defined as a means of determining the size of the expenditures per unit of production (works, services). the opinions of the scientists on the procedure of costing and, in particular, of the services of motor transport enterprises engaged in civil passenger traffic are reported. the normative documents used by motor transport enterprises while drawing up transportation costing and tariff imposing are considered. the estimation of expenses is carried out and the scheme of tariff formation by the motor transport enterprise is developed. it is determined that costing depends on the correct planning of the transportation prime cost, which is calculated based on the data on the planned volumes of passenger traffic by motor transport enterprises. it is established that there is no single list of articles for passenger traffic costing, as the motor transport enterprise has its activity characteristics, so it individually defines this list in the order on accounting policy. it should be noted that for correct calculation it would be appropriate to regulate it with normative documents with the implementation of the classification of enterprises into groups according to their activity profile. such a normative document would make it possible to reliably justify tariff imposing by a particular motor transport enterprise. it is found out that the data of surveys of passenger flows are quite relative, so without a clear definition of the number of transported passengers, it is impossible to calculate either the reliable prime cost of transportation or to form a reasonable tariff. passenger traffic costing as well as cost accounting requires special attention because tariffs of the motor transport enterprise are formed based on the calculated prime cost. the study showed that at present the activity of many motor transport enterprises is unprofitable, which is caused by the high prime cost of passenger traffic and will require another increase in fares. the article aims to consider the methodological approaches to passenger traffic costing, to analyze the cost structure of the motor transport enterprise to identify shortcomings and provide proposals for cost optimization and ensure their profitable operation. methodology. to achieve this goal, the necessary tools of scientific research methods are used: dialectical method of cognition – to clarify the meaningful characteristics of expenditures and calculate the cost of production (works, services); observation – to study the state and trends of cost changes and the order of tariff formation by motor transport enterprises; grouping and economic analysis of costs –to process analytical information for further use while making management decisions aimed at ensuring profitable activity; causal relationships, concretization – to determine the information needs of users on costs; systematization and generalization – to develop proposals for improving the methods of cost accounting and traffic costing. practical results. based on the analysis, the normative method of costing as an effective means of cost management and ensuring the rational use of resources of the motor transport enterprise is determined. value/originality. it is established that clear accounting of the number of transported passengers is required to determine the reliable prime cost of transportation and form reasonable transportation tariffs. key words: cost accounting, costing, tariff, motor transport enterprise, passenger traffic. jel classification: m14 1. introduction the improvement of market economic mechanisms, the use of modern methods of planning, pricing, and management of production processes require special attention to the formation and composition of operating costs, production costs (works, services), and determining their economic nature and accounting. the cost of production (works, services) is an important indicator of activity, as it affects the financial result and characterizes the degree of achievement of the strategy of cost optimization to strengthen the enterprise three seas economic journal 25 vol. 1, no. 4, 2020 competitiveness. the civil passenger traffic costing is important from the standpoint of forming an information basis for imposing tariffs. the cost price represents a monetary expression of the cost of providing passenger transportation services. proper transportation costing prevents the occurrence of excessive costs and is important for the information management of the enterprise, helping to make substantiated decisions regarding the improvement of business processes and provision of new services. 2. brief literature review the issues of cost accounting and the cost of production (works, services) are reflected in the scientific works by both foreign and domestic scientists. considering the method of cost accounting, it can be characterized as a set of techniques that provide the fixation and accounting of operating costs which allow to determine the actual cost of production and form the necessary information to control these processes in terms of cost objects, to determine the composition and size of expenditures by certain types of production (works, services). calculation methods are a set of methods and techniques needed to calculate the cost of specific production (works, services) and a set of methods for allocating expenses by costing articles and referring them to the object of calculation. as an element of the accounting method, the calculation involves the estimation of the costs of the enterprise for the acquisition or manufacturing of certain types of tangible assets, production (works, services), and the cost of their sale. the methodological recommendations of the ministry of transport of ukraine define the concept of transportation prime cost as a monetary expression of current costs directly related to the preparation and implementation of the process of passenger traffic, as well as the performance of works and services that provide transportation. at the same time, this document gives an interpretation of costing as the determination of the number of expenditures in cash for the production of the unit of a particular service by certain types of costs. also, it is noted that the calculation determines: – prime cost of a services unit; – the whole range of services; – prime cost of production by individual structural divisions; – by various production processes; – as a whole at the enterprise. after reading the above document, it should be noted that there is no meaningful definition of costing in these guidelines which would relate to passenger vehicles. this means that each enterprise independently chooses the composition and content of cost accounting articles. however, the authors believe that for the correct and complete calculation it would be more appropriate to regulate it by normative documents with the implementation of the classification of enterprises into groups according to their activity profile. such a normative document would make it possible to reliably justify imposing a tariff by a particular motor transport enterprise. the economic substantiation of the level of a tariff for the use of transport products is a difficult task that requires in-depth theoretical research and development of methodological approaches and comprehensive decisions (mishchenko et al., 2018). the use of the normative method of costing recommended by the methodical recommendations of the ministry of transport of ukraine allows detecting the deviations of actual costs from the established norms with subsequent analysis of the deviations, the results of which allow clarifying the reasons for these deviations or reviewing the existing norms. the costing of services of the motor transport enterprise does not require the use of complex calculations, since these products are mass-produced, manufactured simply and there is no work in progress inventory at the end of the reporting period (dankiv et al., 2013). adherence to the rules of cost accounting, defined by the relevant regulations, involves a continuous verification of actual and planned data used by businesses to calculate tariffs (davydov et al., 2009). it is important to take into account two main factors in the cost accounting process, due to which the motor transport enterprise can increase its profitability: solving the problem of reimbursement of losses from the transportation of privileged passengers and reducing its operating costs (plikus et al., 2002). it is not possible to calculate the reliable cost of transportation and form a reasonable traffic tariff without a clearly defined number of transported passengers. therefore, to accurately determine the level of a tariff, it is necessary to improve the methods of data collection. since passenger traffic is a key to calculating the fare per person the problem is that it can be calculated only roughly (barabash et al., 2015). at present, there is still no clear norm that would oblige local governments to survey passenger traffic with a certain frequency when setting tariffs for passenger transportation or require the initiator to change the tariff to provide the results of such a survey (zaviiskyi, 2017). 3. results costing depends on the correct planning of transportation cost, which is calculated based on the data on the volume of planned passenger traffic by the motor transport enterprise. thanks to the costing data it three seas economic journal 26 vol. 1, no. 4, 2020 is possible to determine the number of costs per unit of work performed. the grouping of costs is carried out by the following economic elements: – material costs; – salary expenses; – deductions for social concerns; – amortization of fixed assets and intangible assets; – other operating expenses. given this classification, the authors will assess the cost structure of the motor transport enterprise (table 1). based on the data in table 1 it can be concluded that the costs of lviv municipal motor transport enterprise №1 in 2019 increased significantly compared to 2018, causing an increase in the cost of services. graphically, these changes are shown in figure 1. as it can be seen, the largest share in the cost structure in 2019 fell on the depreciation of non-current assets (35.22%) and raw and auxiliary materials (33.27%). it is important to correctly group expenses by costing articles, as this will allow to organise: – analytical cost accounting; – calculation of costs in terms of structural units of the motor transport enterprise; – costing of certain types of transportation. thus, the production cost of transportation includes the following types of costs: general production, direct material, and direct labor costs, other direct costs. at the same time, motor transport enterprises are allowed to make changes to the above range of costs both combining them and selecting standard costing articles. this is due to the peculiarities of table 1 estimation of the cost structure for the provision of services by lviv municipal motor transport enterprise № 1 in 2018–2019 article name 2018 2019 deviation (+, -) sum thousand uah specific weight, % sum thousand uah specific weight, % sum thousand uah specific weight, % а 1 2 3 4 5 6 salary expenses (33,264) 18.34 (67,606) 18.92 -34,342 0.58 deductions for social concerns (5,930) 3.27 (13,224) 3.70 -7,294 0.43 depreciation of non-current assets (49,374) 27.22 (125,886) 35.22 -76,512 8.0 raw and auxiliary materials (82,112) 45.27 (118,923) 33.27 -36,811 -12.0 production services (7,614) 4.20 (15,618) 4.37 -8,004 0.17 other expenses (3,094) 1.70 (16,144) 4.52 -13,050 2.82 total (181,388) 100.0 (357,401) 100.0 -176,013 source: financial reporting by lviv municipal motor transport enterprise № 1 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 salary expenses deductions for social concerns depreciation of noncurrent assets raw and auxiliary materials production services other expenses 2018 2019 figure 1. graphic interpretation of dynamic changes in the structure of operating costs of lviv municipal motor transport enterprise №1 in 2018–2019 three seas economic journal 27 vol. 1, no. 4, 2020 transportation organisation and the specifics of the organisational structure of enterprises, as well as the specific weight of expenditures in the prime cost of certain types of transportation. there is no single list of articles for passenger traffic costing, as each motor transport enterprise has its characteristics, so companies individually define this list in the order on accounting policy. the following methods of costing are defined by the methodical recommendations on the formation of the prime cost of transportations: normative, standard-costing, job order costing, or simple calculation of expenses. however, the methods for calculating tariffs for civil passenger traffic services state that for planning and calculation of costs it is necessary to apply the normative method, the main elements of which are the accounting of costs by certain types of transportation according to current regulations. due to the normative method of production costing, cost management is carried out, which ensures the rational use of resources by the motor transport enterprise and, in turn, will help reduce the prime cost of transportation. this is especially important in the conditions of unprofitable activity of some motor transport enterprises. particular attention should be paid to the methods of the formation of tariffs for transportation services (figure 2), which are developed based on the order of the ministry of transport of ukraine № 1175 “on approval of the methods for calculating tariffs for civil passenger traffic” dated november 17, 2009 and is based on the information on enterprise costs. according to the order, the tariff on public bus routes is considered to be the cost of a single trip for one passenger. the figure shows that the exact formation of tariffs is based on the data on actual and planned costs. that is why it is important to comply with the rules of cost accounting, the order of reflection of which in accounting is regulated by p(s)a (provisions (standards) of accounting) 16 “costs”. the tariff must be formed by the motor transport enterprise according to the actual performance or the results of the survey of passenger flows. the study of public demand for transportation is carried out by: – distribution, collection, and processing of questionnaires; – use and analysis of appeals of legal entities and individuals; – survey of passenger flows. tariff formation planned volumes of transport work planned costs actual volumes of transport work actual number of passengers carried actual total mileage of vehicles rationing objects rationing is possible rationing is impossible normative method of calculating the prime cost of services actual costs predicted price index planned estimates figure 2. process of tariffs formation by the motor transport enterprise three seas economic journal 28 vol. 1, no. 4, 2020 data from surveys of passenger flows are quite relative and should not be relied on completely. obtaining information on real passenger flows using modern data capture tools is of key importance to calculate the cost of passenger traffic. 4. conclusions thus, civil passenger traffic costing as well as cost accounting requires special attention since the tariffs of motor transport enterprises are formed based on the calculated cost. the recommendations for cost accounting and costing of motor transport enterprises ensure the completeness of reflection in the accounting management system of data on expenditures and their use for management purposes, taking into account the conditions of economic activity and the impact of external and internal factors. the study shows that at present, the activity of many motor transport enterprises is unprofitable due to the high prime cost of passenger traffic. therefore, the prospect of further research is to conduct a comprehensive analysis of the costs of providing passenger transportation services to identify reserves for their optimization. references: metodychni rekomendatsii z formuvannia sobivartosti perevezen (robit, posluh) na transporti. ministerstvo transportu ukrainy vid 05.02.2001 r. № 65. available at: https://zakon.rada.gov.ua/rada/show/v0065361-01#text nakaz “pro zatverdzhennia metodyky rozrakhunku taryfiv na posluhy pasazhyrskoho avtomobilnoho transportu” ministerstva transportu ta zviazku ukrainy vid 17.11.2009 r. № 1175 zi zminamy ta dopovnenniamy stanom na 08.01.2013 r. available at: https://zakon.rada.gov.ua/laws/show/z1146-09 polozhennia (standart) bukhhalterskoho obliku 16 “vytraty”: nakaz ministerstva finansiv ukrainy vid 31 hrudnia 1999 roku № 318. available at: https://zakon5.rada.gov.ua pro zatverdzhennia poriadku orhanizatsii perevezen pasazhyriv ta bahazhu avtomobilnym transportom: nakaz ministerstva infrastruktury ukrainy № 480 vid 15.07.2013. available at: https://zakon.rada.gov.ua/laws/show/ z1282-13#text finansova zvitnist za rik, shcho zakinchyvsia 31 hrudnia 2019 roku vidpovidno do mizhnarodnykh standartiv finansovoi zvitnosti razom zi zvitom nezalezhnoho audytora lvivskoho komunalnoho avtotransportnoho pidpryiemstva № 1. available at: https://atp1.lviv.ua/wp-content/uploads/finansova-zvitnist-lk-atp-1-2019.pdf barabash, o. o., & bohachenko, m. v. (2015). mekhanizm vyznachennia optymalnoho rivnia taryfiv na pasazhyrski perevezennia [mechanism for determining the optimal level of tariffs for passenger traffic]. naukovyi visnyk uzhhorodskoho universytetu, vol. 1(3), pp. 23–28. davydov, h. m. (2009). audyt taryfiv na perevezennia pasazhyriv u miskomu spoluchenni [audit of tariffs for passenger transportation in urban traffic]. naukovi pratsi kirovohradskoho natsionalnoho tekhnichnoho universytetu, vol. 15, pp. 337–341. dankiv, y. ya. (2013). oblik vytrat i formuvannia sobivartosti avtotransportnykh perevezen [cost accounting and formation of traffic prime cost]. proceeding of the aktualni problemy oblikovo-analitychnoho protsesu v upravlinni pidpryiemnytskoiu diialnistiu: materialy i mizhnarodnoi naukovo-praktychnoi internet-konferentsii (ukraine, mukachevo, november 28, 2013). available at: http://msu.edu.ua/wp-content/uploads/2014/01/%d0%97%d0 %b1%d1%96%d1%80%d0%bd%d0%b8%d0%ba-%d1%82%d0%b5%d0%b7-2013-17.01.14.pdf zaviiskyi, o. i. (2017). investytsiino-innovatsiina aktyvnist posluh avtotransportnykh pidpryiemstv: stan ta pereshkody [investment and innovation activity of the services of motor transport enterprises: state and obstacles]. instytut rehionalnykh doslidzhen imeni m. i. dolishnoho nanu, vol. 3(125), pp. 22–27. mishchenko, m. i. (2018). vdoskonalennia metodolohii taryfoutvorennia yak zasib pokrashchennia finansovoho stanu pidpryiemstv miskoho transportu [improving the methodology of tariff formation as a means of improving the financial condition of urban transport enterprises]. naukovyi visnyk odeskoho natsionalnoho ekonomichnoho universytetu, vol. 9(261), pp. 102–116. plikus, i. y. (2002). problemy formuvannia taryfiv na pasazhyrski avtotransportni perevezennia [problems of the formation of tariffs for civil passenger traffic]. materialy druhoi vseukrainskoi naukovo-praktychnoi konferentsii “ukraina naukova 2002”, vol. 6, pp. 38–40. three seas economic journal 29 vol. 1, no. 3, 2020 corresponding author: 1 black sea research institute of economy and innovation, ukraine. e-mail: o.p.golovko@gmail.com orcid: https://orcid.org/0000-0003-0841-4534 2 black sea research institute of economy and innovation, ukraine. doi: https://doi.org/10.30525/2661-5150/2020-3-5 components of the budget system of ukraine as factors of financial and economic security oleh holovko1, lilia solomonova2 abstract. the purpose of this study is to analyze the components of the budget system of ukraine as factors of financial and economic security to identify negative trends in the context of the implementation of decentralization reform. it is proved that the research of this direction should start with the analysis of the conceptual apparatus and structural relationships between categories. at the top level of the hierarchy there is the category of national security of ukraine, which, according to current legislation, means the protection of state sovereignty, constitutional order and other national interests of the country from real and potential threats. the category of financial and economic security is also often used in the scientific literature. given the above classification, in this case we are talking about the financial security of the country as a factor of economic security. methodology. to stimulate economic development, the practice of modern budget regulation provides for the presence of a planned deficit, which is a source of local and public debt. depending on the areas of its financing, there are domestic and foreign, local and national debts. the relationship between the above indicators determines the level of budget security of the country, which is one of the most important factors of financial stability was identified in the work. results. it is proved that, according to the results of the analysis, practical recommendations on budget policy of ukraine as a factor of financial and economic security should take into account the following steps: against the background of growing social burden on the budget, it is necessary to continue the redistribution of budget funds in favour of the regions, which will increase their level of financial autonomy and reduce the amount of transfer payments; pursue a strict restriction policy to prevent the growth of the state budget deficit and uncontrolled increase in debt; the problem of pension provision increases the burden on the state budget every year. it is necessary to take measures to create a cumulative system of state and non-state pension insurance. practical implications. the practical consequences prove that in 2016 the public debt of the consolidated budget of ukraine reached a record 81% of gdp. however, effective economic and budgetary policy allowed to reduce it in 2019 to 50.3%, which was positive. moreover, the share of external debt was 29.2%. the high budget deficit in 2020 will lead to an increase in debt to 58.7% of gdp, which offsets the previous positive changes. it is determined that at the beginning and at the end of the study period the expenditures of the pension system of ukraine have been equal to about 10% of gdp. at the same time, financing from own revenues has decreased from 8% to 6%, which is negative. the most critical situation became after 2013, when this indicator began to decline rapidly, increasing the burden on the state budget. value/originality of the work is an analysis of the components of the budget system of ukraine as factors of financial and economic security, which in contrast to the existing ones is based on the need for further implementation of decentralization reform and allows to develop practical recommendations for budget regulation. key words: financial and economic security, budget system, budget security, decentralization, budget regulation. jel classification: e42, q01 1. introduction at the beginning of the recession, issues related to the mechanisms of forming a strategy for ensuring the financial and economic security of the country are always gaining special relevance in research. in this context, security means the stability of the dynamic system within acceptable limits. on the other hand, security means the ability of the economic system to withstand both external and internal negative manifestations. research in this area should begin with an analysis of the conceptual apparatus and structural three seas economic journal 30 vol. 1, no. 3, 2020 relationships between categories. at the top level of the hierarchy is the category of national security of ukraine, which, according to current legislation (on the national security of ukraine), means the protection of state sovereignty, constitutional order and other national interests of the country from real and potential threats. issues of national security risks have been studied by such scientists as: v. bilous, a. buteiko, yu. nikitin, o. kostenko, h. sytnyk and others (nikitin, 2015). regarding the provision of sustainable socioeconomic development, these issues belong to the sphere of economic security (lekar, 2012). v. heiets, v. honcharova, s. lekar, v. muntian, o. skoruk, s. shkarlet were engaged in the development of its essence, constituent elements and problems of public administration. also, the issue of methodological assessment of the level of economic security of the state was paid attention at the legislative level (methodical recommendations for calculating the level of economic security of ukraine). according to the current methodological recommendations, it includes: production, demographic, energy, foreign economic, investment and innovation, macroeconomic, food, social, and financial security. the category of financial and economic security is also often used in the scientific literature. given the above classification, in this case we are talking about the financial security of the country as a factor of economic security. its essence, evaluation methods and role, in the context of national interests, were studied in the works by o. baranovskyi, a. kalantai, o. melykh, a. sukhorukov and others (melykh, 2013: kalantai, 2012). the purpose of the country 's financial system includes monetary policy, stable functioning of the banking and nonbanking financial sectors, ensuring the financial stability of public finances on the basis of balanced revenues and expenditures of budgets at all levels and more. given the above, the purpose of this study is to analyze the components of the budget system of ukraine, as factors of financial and economic security, to identify negative trends in the context of decentralization reform. 2. components of the budget system according to the decentralization reform, which has been actively implemented in the budget system of ukraine from 2015 to the present day, the main components of the budget system are local budgets of amalgamated territorial communities of settlements, cities, regions and the state budget. according to the budget code (budget code of ukraine), their sources of income are tax and nontax revenues. among tax revenues, local budget revenues do not include import duties and value added tax. however, they have revenues from local taxes and fees that do not belong to the state budget. we have a similar situation with non-tax revenues from the nbu, which can be included only in the state budget revenues. the goal of local self-government is the development of regions and common social standards of living throughout ukraine. this goal is achieved by generally accepted standards of budget security per 1 person living in a particular region. on the other hand, the volume and structure of expenditures of the state budget of ukraine are determined by the socio-economic development strategy adopted at the state level. the absolute difference between expenditures and revenues of budgets of all levels determines the volume of their deficit or surplus. in relative terms, at the local level, the absolute difference obtained is compared with the value of gross regional product, at the state level – with the volume of gross domestic product and so on. given that each region has its own unique natural and climatic conditions of existence, structure and location of productive forces and the level of economic development, they differ significantly in terms of budget revenues. this means that today most regions do not have the opportunity to provide the necessary level of social living standards at their own expense. in order to territorially equalize the uneven development and cover part of the deficit of local budgets, intergovernmental transfers are transferred from them to the state budget free of charge and irrevocably. in their economic essence, they are equalization grants. 3. indicators of budget regulation efficiency to stimulate economic development, the practice of modern budget regulation provides for the presence of a planned deficit, which is a source of local and public debt. depending on the areas of its financing, there are domestic and foreign, local and national debts. the ratio between the above indicators determines the level of budget security of the three seas economic journal 31 vol. 1, no. 3, 2020 country, which is one of the most important factors of financial stability. table 1 shows the results of calculations of indicators of efficiency of budget regulation according to the data of 2004-2019. the decentralization reform provides for greater financial autonomy for the regions to be able to solve socio-economic problems on the ground. column (2) table 1 shows that from 2004 to 2014 the volume of revenues to local budgets in relative terms had a chaotic dynamics. during 2015-2019, their share in the country 's gdp had a steady upward trend and increased from 6.1% to 7.6%. the share of local budget expenditures provided by transfers from the state budget of ukraine in 2015 was a record 59.1%. already in 2019, this figure decreased to 46.4%. thus, it can be stated that the system of public financial management is gradually undergoing changes aimed at developing the autonomy of the regions. however, the financial dependence of local communities on the center today remains quite high and needs further changes in this direction. from the point of view of budget security, the data for the third quarters of 2020 need special attention. here the volume of revenues to local budgets amounted to 7.8% of gdp. at the same time, intergovernmental transfers were only 3.9%, which is much less than in previous years, according to column (3) of table 1. this indicates a saving of money by the central government and the need to reduce costs on the ground. despite the inefficiency of public administration, ukraine remains one of the leaders among western european countries in terms of the influence of the public sector on the redistribution of gdp, according to column (4) of table 1. as we can see, over the last decade, government consolidated budget expenditures have remained almost unchanged at about 34-35% of gdp. with an aging population and increased spending on social and pension benefits, this indicator will tend to grow. that is why, at this stage it is extremely important: – firstly, to prevent the growing role of state regulation in the distribution of public product; – secondly, to continue the transfer of powers and financial resources to local communities, in accordance with the decentralization reform. the stimulating role of the budget deficit is that the return on the efficient use of borrowed funds may exceed the cost of raising them. that is why the dynamics of this indicator is given in column (5). in world practice, the acceptable level of budget deficit is 2-3% of gdp. as you can see, in 2015-2019, ukraine almost met these restrictions. however, in 2020, the consolidated budget deficit was equal to the highest level since 2004 at 8.4%. inefficient use of borrowed funds leads to the problem of public debt, the dynamics of which is shown in figure 1. table 1 indicators of budget regulation efficiency in ukraine according to the data of 2004-2019 year volume of revenues to local budgets, % of gdp volume of transfers from the state budget to the local budget, % of gdp the level of redistribution of gdp through the consolidated budget, % consolidated budget deficit, % of gdp 1 2 3 4 5 2004 5.9% 4.9% 29.3% 3.4% 2005 6.2% 5.3% 32.1% 1.8% 2006 6.8% 6.3% 32.2% 0.7% 2007 7.6% 6.2% 31.4% 1.1% 2008 7.1% 6.2% 32.6% 1.5% 2009 6.9% 6.8% 33.6% 2.4% 2010 6.6% 7.2% 34.9% 6.0% 2011 5.8% 7.2% 31.7% 1.8% 2012 6.3% 8.8% 35.0% 3.6% 2013 6.3% 8.0% 34.8% 4.4% 2014 5.7% 8.3% 33.4% 4.6% 2015 6.1% 8.8% 34.3% 1.6% 2016 7.2% 6.3% 35.1% 2.3% 2017 7.7% 9.1% 35.4% 1.4% 2018 7.4% 8.6% 35.1% 3.9% 2019 7.6% 6.6% 34.5% 2.1% three seas economic journal 32 vol. 1, no. 3, 2020 as can be seen from figure 1, in 2016, the public debt of the consolidated budget of ukraine reached a record 81% of gdp. however, effective economic and budgetary policy allowed to reduce it in 2019 to 50.3%, which was positive. moreover, the share of external debt was 29.2%. the high budget deficit in 2020 will lead to an increase in debt to 58.7% of gdp, which offsets the previous positive changes. 4. consideration of the budget of the pension fund consideration of the budget of the pension fund needs special attention, as a significant part of the state budget expenditures each year is used to cover its deficit. prolongation of working age is a forced measure associated with a gradual increase in life expectancy. thus, according to who, in ukraine it is 72.5 years. of these, for men – 67.6 years, for women – 77.1 years and so on. on the other hand, the constant growth of the actual subsistence level and the need to adjust the average level of pension provision per capita increased the burden on the pension fund. thus, in the prices of june 2020, the actual subsistence level was 3,974 uah. the consequence of these trends is the formation of a budget deficit of the pension fund. thus, according to 2019, the share of own revenues in its total expenditures was only 55.7%. the main source of financing the deficit is the state budget of ukraine. the dynamics of these indicators for 2004-2019 in graphical form is shown in figure 2. in order to exclude the inflation factor, bringing the total expenditures to the prices of the base year allowed us to calculate the average annual growth rate of this indicator, which was equal to + 4.1%. in fact, this means that real pension insurance payments, in comparable prices, increased from 2004 to 2019 by 1.8 times. at the same time, the pension fund's own income increased on average by + 1.8% annually, or 1.3 times over the entire period. this increase in the deficit was offset by the state budget, the share of which in the total expenditures of the pension fund during the study period increased from 16.5% to 44.1% and in 2019 amounted to 182,270 million uah. preservation of these trends in the future carries significant risks in ensuring the financial and economic security of the state. to confirm this, it should be noted that pension expenditures are the most important item of state budget expenditures. in recent years, their share has ranged from 22% to 30%. that is why one of the conditions for the stability of such a system is economic growth at a faster pace, which will maintain this ratio. to this end, we have built a graph of the dynamics of expenditures of the pension fund by source of income, in % of gross domestic product, figure 3. as you can see, at the beginning and the end of the study period, the expenditures of the pension system of ukraine were about 10% of gdp. at the same time, financing from own revenues decreased from 8% to 6%, which was negative. the most critical situation became after 2013, when this indicator began to decline rapidly, increasing the burden on the state budget. figure 1. dynamics of public debt for 2004-2019 in % of gross domestic product three seas economic journal 33 vol. 1, no. 3, 2020 summarizing the above, the problem of pension provision is directly related to the stability of the budget system of ukraine as a factor of financial and economic security. it can be stated that the possibilities of the pension system of ukraine of the first level, on the principles of joint and several compulsory pension insurance, have completely exhausted themselves to date. that is why the urgent issue is the introduction of the second and third levels as soon as possible, which provide for the creation of a cumulative system of state and non-state pension insurance. on the other hand, accelerating economic growth can significantly reduce the burden on the state budget. figure 2. dynamics of pension fund expenditures for 2004-2019 in actual prices each year figure 3. dynamics of pension fund expenditures for 2004-2019 in % of gross domestic product 5. conclusions thus, according to the results of the analysis, practical recommendations on the budget policy of ukraine, as a factor of financial and economic security, should take into account the following steps: 1. against the background of increasing social burden on the budget, it is necessary to maintain the level of state redistribution of gross domestic product at the expense of its expenditures. 2. it is necessary to continue the redistribution of budget funds in favour of the regions, which will increase their level of financial autonomy and reduce the amount of transfer payments. three seas economic journal 34 vol. 1, no. 3, 2020 3. to pursue a strict restrictive policy to prevent the growth of the state budget deficit and uncontrolled increase in debt. 4. the problem of pension provision increases the burden on the state budget every year. it is necessary to take measures to create a cumulative system of state and non-state pension insurance. economic growth will help to mitigate these budget problems and their impact on the country ’s financial security; recession will exacerbate them. thus, the scientific novelty of this work is the analysis of the components of the budget system of ukraine as factors of financial and economic security, which in contrast to the existing ones proceeds from the need for further implementation of decentralization reform and allows to develop practical recommendations for budget regulation. references: on the national security of ukraine: law of ukraine of june 21, 2018 № 2469-viii / the verkhovna rada of ukraine. available at: http://nbuv.gov.ua/ujrn/jnn_2015_2_19 nikitin, yu. v. (2015). national security of ukraine in modern conditions: risks and factors of influence. juridical science, vol. 2, pp. 141–147. available at: http://nbuv.gov.ua/ujrn/jnn_2015_2_19 lekar, s. i. (2012). the concept and content of economic security. forum prava, vol. 2, pp. 399–402. available at: http://nbuv.gov.ua/ujrn/fp_index.htm_2012_2_62 methodical recommendations for calculating the level of economic security of ukraine: order of the ministry of economic development and trade of ukraine dated 29.10.2013 № 1277. available at: https://zakon.rada.gov.ua/rada/show/v1277731-13 melykh, o. (2013). financial security of the state: essence, evaluation criteria and preventive measures of strengthening. economic analysis, vol. 12(2), pp. 266–272. available at: http://nbuv.gov.ua/ujrn/ ecan_2013_12%282% 29__54 kalantai, a. m. (2012). the role and place of financial security in the context of national interests. collection of scientific works of the national university of the state tax service of ukraine, vol. 1, pp. 143–153. available at: http://nbuv.gov.ua/ujrn/znpnudps_2012_1_17 budget code of ukraine. № 2456-vi, dated 08.07.2010 with changes and additions. available at: https://zakon.rada.gov.ua/laws/show/2456-17 three seas economic journal 84 vol. 1, no. 4, 2020 corresponding author: 1 kyiv national university of construction and architecture, ukraine. e-mail: staskat@ukr.net orcid: https://orcid.org/0000-0001-8460-110x 2 kyiv national university of construction and architecture, ukraine. e-mail: july81@i.ua orcid: https://orcid.org/0000-0003-3333-9900 doi: https://doi.org/10.30525/2661-5150/2020-4-12 study of unprofitability of ukraine’s large construction enterprises by the dupont method katerina izmailova1, yuliia zapiechna2 abstract. profitability and its varieties remain the key indicator, which helps to explore certain dependencies and consequences of economic activity of each enterprise in the country. the authors study large construction companies in ukraine to identify general trends in the construction sector. despite their overall small share in the total number of all construction enterprises, one should note their significant contribution to the development of the construction sector of ukraine and higher profitability compared to small and medium enterprises. the negative trend of large construction companies during 2010–2020 proves the relevance of a detailed analysis of such an indicator as the loss ratio of equity in order to identify the factors that have the greatest negative impact. method. the authors analyse the impact of operating, investment and financial activities on the loss of equity of ukrainian large construction companies in 2018 compared to 2013 by the widely known method of the company dupont. it is based on an equation that shows the relationship between return on invested capital, asset turnover, net income and financial leverage. only in 2018 the situation started to level off. factor analysis of profitability indicators has revealed the in-depth factors that affect them, namely: loss of the main activity of construction enterprises for ten consecutive years, which caused a decrease in equity to a critically low level and, accordingly, high values of financial leverage. results. the use of the dupont method for the analysis of profitability (loss) for large construction companies has allowed a deeper analysis of the factors that influenced such indicators as return on equity. it has been found that the profitability (loss) of equity industries are influenced by the rate of business activity and financial dependence of large construction companies. practical significance. it has been found that the loss of equity is influenced by a decrease in uncovered profits and a decrease in financial dependence (the ratio of financial dependence increased from 34.96 in 2013 to – 19.213 in 2018) of large construction companies. this indicates a gradual erosion of equity of construction companies, increasing the level of risk, reducing their financial stability. additional measures are needed to revive the general economic situation in the country, including the digital transformation of construction, the search for innovative activities, the restructuring of institutional support for the construction sector. key words: large construction enterprises, dupont method, return on equity, profitability of production activity, asset turnover, financial leverage. jel classification: g17, g32, l74 1. introduction current development of the national economy of ukraine requires special attention to profitability of all types of enterprises. since construction is the economy sector that has been operating at a loss for more than ten years (izmailova, belenkova, mogolivets, 2019), the urgent task of the researchers and experts is to identify the reasons to this issue. to identify general trends in the construction sector the authors study large construction companies in ukraine. despite their overall small share in the total number of all construction enterprises, one should note their significant contribution to the development of the construction sector of ukraine and higher profitability compared to small and medium enterprises. one of the most important indicators for assessing the effectiveness of construction companies is their profitability (or loss). the term “profitability” is best described by the word “return”, because profitability indicators show the ratio of profit (or loss) to the level of sales, the amount of assets, and equity of the analysed object. three seas economic journal 85 vol. 1, no. 4, 2020 it should be noted that common causes of unsatisfactory financial condition of large construction companies and the ways to improve it have been identified in the recent works by goiko a. f. (goiko, 2008), izmailova k. v. (izmailova, 2005), sorokina l. v. (sorokina, 2017), stetsenko s. p. (stetsenko, belenkov, antropov, 2018), krush p. v. (krush, 2008), bielienkova o. yu. (bielienkova, 2005; bielienkova, 2010; izmailova, belenkova, mogolivets, 2019). nevertheless, the negative trend of large construction companies during 2010–2018 proves the relevance of a detailed analysis of the general indicator – the loss of equity to identify the factors that have the greatest negative impact. 2. large construction companies in ukraine the dynamics of the number of large construction companies in ukraine during 2010–2018 is shown in figure 1 (state statistics service of ukraine). the number of large construction companies in 2018 decreases by 2.17 times in comparison with 2013. however, if you look at recent years, in 2018 there was a 3-fold increase compared to 2016, which indicates a gradual recovery of production capacity of large construction companies. examining the results of large construction companies, we can note the overall positive dynamics of the main criteria, such as the volume of sales. but if we examine such an indicator as the volume of products (goods, services) of large construction enterprises, it decreased significantly, by 16.7% from 22,308 to 18,582.2 million uah. instead, such an indicator as the number of employees in large construction enterprises decreased in size by type of economic activity from 13 to 6.8 thousand people, respectively, in 2013 compared to 2018. at the same time, personnel costs of enterprises increased significantly from 708.9 to 1,093.2 million uah, which was 54.21%. 0 2 4 6 8 10 12 14 2010 2013 2014 2015 2016 2017 2018 n um be r of la rg e co ns tr uc ti on c om pa ni es years figure 1. number of large construction companies (state statistics service of ukraine) 0 5000 10000 15000 20000 25000 2010 2012 2013 2014 2015 2017 2018 m ill io ns , u a h years figure 2. the volume of sold products (goods, services) of large construction companies (state statistics service of ukraine) (2016 – data are not published in order to ensure the implementation of the law of ukraine "on state statistics" on the confidentiality of statistical information) three seas economic journal 86 vol. 1, no. 4, 2020 according to the state statistics committee of ukraine (state statistics service of ukraine), domestic large construction companies in 2018 have a negative return on investment comparing with 2013. w hile in 2013 construction companies received a profit of 11.48% of equity and 0.33% of total assets, in 2018 the losses amounted to 6.91% and profit to 0.33% respectively. in the following 2019–2020, large construction companies gradually improved their position, which requires further research and determines the relevance of this work. 3. application of the dupont method for such an analysis, the authors used one of the well-known methods of dupont (decoding dupont analysis access mode), which will help to identify the influence of a number of dependent factors on the resulting indicator. the data of the construction enterprises (state statistics service of ukraine) were used for calculations the most common method of financial analysis in the european union was developed by the dupont managers. it is based on an equation that shows the relationship between return on invested capital, asset turnover, net income and financial leverage. that is, return on equity (roe) is considered as the product of the following three indicators: return on sales (rs), asset turnover (at) and the ratio of financial dependence (kfd) (bielienkova, 2010): roe rs at kfd p vk p v v a a l vk = = = = * * * * , where p is the net profit; v is the net sales revenue; vk is the equity; a is the assets; l is the liabilities. according to this model, the return on equity depends on three factors, namely: return on sales, resource efficiency, the structure of sources of funds invested in the enterprise. these three indicators, respectively, characterize the state of operating, investment and financial activities of economic entities (in our case – large construction companies). therefore, in the practice of financial analysis, the return (loss) of equity is considered the most important final indicator, which focuses on the results of all activities. the loss of equity of large construction companies in 2018 was influenced by these factors as follows: roe = − −             = − 290 6 397 2 1704 5 2 100 6 91 , , , )* , % the loss of equity of large construction companies was mainly affected by the loss of operating activities – as a result of uncovered loss of large construction companies in the amount of -1532.6 million uah. the profitability of sales amounted to 1.52%. using the above equation, you can build a number of relationships that allow you to analyse the impact of various factors on the financial result. from these ratios it is determined what factors cause changes in profitability (loss) of equity – return on assets, business activity of the enterprise or industry as a whole, or the way of financing its activities (financing from equity or borrowed capital). each of the three factors in the dupont equation depends on other indicators. for example, the profitability of sales depends on the amount of profit or loss from sales, which, in turn, depends on prices, costs, volumes and structure of sales. costs depend on the prices of resources used and the volume of their consumption and so on. consistently, considering the level by level, you can build an extensive system of indicators. at the heart of this system is the return (or loss) of equity. by changing the values of indicators of any level, including even the most distant from the base, you can trace their impact on the resulting indicator (figure 3). figure 3 shows that the losses of enterprises in the industry were affected by a decrease in uncovered loss compared to the previous year, which, however, could not compensate for the lack of equity of large construction companies. this critical situation is caused by the lack of institutional support for enterprise development. thus, the bankruptcy procedure, according to the antimonopoly committee, lasts more than two years. this means that non-viable enterprises continue to operate, negatively affecting the performance and development of the entire construction sector. if we compare 2018 with 2013, we can determine that in 2013 the main factor that caused the loss of the construction industry was a sharp decline in investment activity in the country. this triggered a reduction in business activity, led to a sharp increase in losses and erosion of equity. to remedy the situation it is required to restore the operational activities of large construction companies, search for orders, and return to the volume of work performed at the pre-crisis level. enterprises that are unable to restore their solvency must go through bankruptcy proceedings, which should have a positive impact on the development of the construction sector. 4. the turnover of assets of large construction companies the next factor that influenced the efficiency of large construction companies is the asset turnover ratio. asset turnover characterizes the efficiency of use three seas economic journal 87 vol. 1, no. 4, 2020 of all resources available to construction companies, regardless of the sources of their involvement. there is no normative value of this indicator, but the faster the resources of enterprises rotate, the better. reducing the turnover of resources is a lever to reduce the financial well-being of the enterprise. the low level of asset turnover ratios may indicate insufficient capacity and low efficiency of production facilities. the turnover of assets of large construction companies in 2018 increased significantly by 39.33% compared to 2013. however, this rather reflects the efforts of enterprises in the sector to maintain the volume of construction by increasing the number of cash cycles of working capital and a corresponding decrease in their volume in terms of reduced funding. w hile in 2013, 1 uah assets of the construction industry accounted for 1 uah. 55 kop. net sales revenue, in 2018 it is already 95 kopecks. this indicates a significant increase in business activity of large construction companies in 2018. that is, the intensification of operating activities of large construction companies is currently continuing, but it does not provide even the minimum level of profitability of the sector. the small number of profitable enterprises has a much smaller impact on the financial performance of the construction sector compared to a significant number of companies with losses. according to the dupont model (see figure 3), the value of the loss of equity of large construction companies was also significantly affected by the coefficient of financial dependence (financial leverage). the model presents ratio of debt and equity and signals an increased risk of loss of financial independence by construction companies. the level of financial leverage can determine the percentage change in return on equity when the financial result changes (without interest and loan tax) by 1% under different shares of borrowed capital in liabilities. in 2013 the value of the ratio was more than 3, which meant that borrowed capital exceeded equity more than 3 times, in 2018 the ratio decreased significantly to -19,213, which presented a critical situation with equity and signals a low level of financial stability of the sector. increasing the share of borrowed capital in many cases has its advantages, as debt is beneficial in the profitability (loss) of equity roe =pr/vk = 290,6/(-1050,9)= -0,0691 return on capital (loss of capital) ra = pr/a = 290,6/4600,95= 0,0036 financial lever kfd= аaverage /vkaverage = =20190,1/(-1050,9)= -19,213 profitability (loss) of production activities rs = pr/pa =290,6/19119,5= = 0,0152 asset turnover qa =pr/a average= =19119,5/20190,1= 0,95 vкaverage=(vkfinal+vkinitial)/2= =(-1704,5-397,2)/2= = -1050,9 million uah аaverage= (аinitial+аfinal)/2 = (15589,1+24791)/2= =20190,1 million uah increase in non-current assets (na) 1134.3 million uah increase in sales revenue by 72.5%. pa = 8035,9 million uah reduction of retained earnings 500.8 million uah net profit (loss) profit = =290,6 million uah. there are no changes from other sources of replenishment of equity increase in turnover assets (oa) 8067.7 million uah cost change by 67.89% = 6303,2 million uah increasing the authorized and reserve capital of enterprises in the industry 806.5 million uah financial activityoperational activity investment activity figure 3. the impact of operating, financial, investment activities of large construction companies on the loss of equity of the industry in 2018 (state statistics service of ukraine) three seas economic journal 88 vol. 1, no. 4, 2020 period of economic development, expansion of enterprises, and while inflation. in addition, the fee for the use of borrowed capital is a gross expense and is not taxed. however, as the share of borrowed funds in the capital structure increases, so does the amount of fixed-term payments and the probability of failing to pay principal and interest due to adverse market conditions. this leads to an increase in the level of financial risk. the reverse direction of the financial lever should also be considered. with a slight decrease in gross profit, return on equity will decrease significantly in an organization with high financial leverage and insignificantly – with low. 5. conclusion that is, during the period of growth of the enterprises and the increase in the volume of work performed and profits, the enterprises that have more value of financial leverage will work more efficiently, develop, and get a greater return on invested capital. conversely, at a time of decline, a sharp decline in the volume of work performed, these companies will receive greater losses per unit of equity than those who pursued a more moderate borrowing policy. thus, a significant share of borrowed funds in the structure of the balance sheet of construction companies, which were one of the main sources of growth of the construction industry during the development, significantly reduced the stability of enterprises in the crisis. in the following 2019–2020, large construction companies gradually improved their position, which required further research and determines the relevance of this work. the results of the analysis comparing not only from 2013 to 2018, but examining the general trend over all six years confirmed the findings of many scientists and experts that the main cause of losses of large construction companies is a sharp decline in construction in the country. the use of the dupont method for the analysis of profitability (loss) for large construction companies allowed a deeper analysis of the factors that influenced such indicators as return on equity, the indicator. it has been found that the profitability (loss) of equity industries are influenced by the rate of business activity and financial dependence of large construction companies. moreover, the main reason for the loss of the sector is the erosion of equity of construction companies, increasing the level of risk, reducing their financial stability. additional measures are needed to revive the general economic situation in the country, including the digital transformation of construction, the search for innovative activities, the restructuring of institutional support for the construction sector. references: decoding dupont analysis. available at: https://www.investopedia.com/articles/fundamental-analysis/08/ dupont-analysis.asp state statistics service of ukraine. available at: http://www.ukrstat.gov.ua izmailova, k. v. 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(2020). management of adaptation of organizational and economic mechanisms of construction to increasing impact of digital technologies on the national economy. journal of reviews on global economics, vol. 9, pp. 149–164. three seas economic journal 9 vol. 1, no. 4, 2020 corresponding author: 1 v.n. kаrаzin khаrkiv nаtiоnаl univеrsity, ukrаinе. е-mаil: t.аlеksееvа@kаrаzin.uа оrcid: https://оrcid.оrg/0000-0002-9805-5143 rеsеаrchеrid: n-2888-2016 2 v.n. kаrаzin khаrkiv nаtiоnаl univеrsity, ukrаinе. е-mаil: tоlstаmаrgаritа@gmаil.cоm doi: https://doi.org/10.30525/2661-5150/2020-4-2 crisis fаcе оf migrаtiоn: nеw chаllеngеs fоr еurоpеаn cоuntriеs tеtiаnа аlеksiеiеvа1, mаrhаrytа tоlstа2 аbstrаct. thе purpоsе оf thе аrticlе is tо study thе cаusеs оf migrаtiоn flоws in еurоpе in rеcеnt yеаrs аnd thе wаys to solve thе currеnt migrаtiоn prоblеm in thе еu. thе аnаlysis аllоws us tо find pоssiblе wаys to prevent and minimise thе risks оf spоntаnеоus influx оf illеgаl migrаnts frоm dеvеlоping cоuntriеs, аs it crеаtеs numеrоus sоciаl, еcоnоmic, dеmоgrаphic, culturаl, аnd rеligiоus prоblеms fоr the еu cоuntriеs. thе аuthоrs аnаlysе thе trеnds оf intеgrаtiоn оf rеfugееs intо thе еurоpеаn cоmmunity cоnsidеring thе crisis situаtiоn in thе wоrld аssоciаtеd with thе еmеrgеncе аnd sprеаd оf thе cоrоnаvirus pаndеmic. mеthоdоlоgy. during thе writing оf thе аrticlе, thе аuthоrs usеd such mеthоds аs аnаlysis, synthеsis, аbductiоn, cоncrеtisаtiоn, lоgicаl, аnd tаbulаr mеthоds. infоrmаtiоn frоm vаriоus sоurcеs wаs аnаlysеd, thе mоst impоrtаnt аspеcts wеrе emphasised, а dеtаilеd аnаlysis оf thе migrаtiоn prоcеss wаs cоnductеd, аnd its nеgаtivе аnd pоsitivе аspеcts wеrе singlеd оut. thе rеsults оf thе аnаlysis оf thе еurоpеаn migrаtiоn crisis оf 2015 in pоliticаl аnd rеligiоus, еcоnоmic аnd dеmоgrаphic аspеcts have shown thаt thеrе has been а thrеаt оf incrеаsе оf illеgаl migrаtiоn tо the еurоpеаn cоuntriеs, which may lеаd tо а crisis in the еurоpеаn cоuntriеs. thе situаtiоn hаs bееn еxаcеrbаtеd by thе аppеаrаncе оf thе cоrоnаvirus pаndеmic, which hаs thrеаtеnеd thе livеs оf mаny еurоpеаns. thе аctiоns аnd pоsitiоns оf thе lеаdеrs оf thе mеmbеr stаtеs оf thе еurоpеаn uniоn оn migrаtiоn pоlicy аnd sоlving thе prоblеm оf mаss influx оf migrаnts аrе cоnsidеrеd. thе rеsults оf thе study have shown thаt thе nеgаtivе еffеcts оf thе migrаtiоn crisis in еurоpе are fаr оutwеigh thе pоsitivе оnеs аnd this аppliеs tо еvеry аspеct оf thе study. аlthоugh thе issuе оf migrаnts wаs pаrtiаlly rеsоlvеd in 2017, during thе pеriоd оf cоrоnаvirus infеctiоn, which hаs nоw sprеаd tо аll еurоpеаn cоuntriеs, thе issuе оf migrаnts hаs аrisеn аgаin, which hаs еxаcеrbаtеd this prоblеm. thе fоcus is оn thе dеsirе оf thе lеаding еu mеmbеr stаtеs tо limit thе influx оf еmigrаnts intо thе tеrritоry оf the еu mеmbеr stаtеs withоut thе dеsirе оf migrаnts tо find wоrk аnd gаin thе аpprоpriаtе lеvеl оf knоwlеdgе. prаcticаl implicаtiоns. thе rеsults оf thе study cаn bе usеd by tеаchеrs during lеcturеs оn this tоpic, studеnts tо prеpаrе fоr sеminаrs, аs wеll аs by аll intеrеstеd citizеns whо hаvе аccеss tо this infоrmаtiоn. vаluе/оriginаlity. thеsе аrgumеnts аllоw us tо stаtе thаt in оrdеr tо rеsоlvе thе migrаtiоn crisis in thе еu cоuntriеs, it is nеcеssаry tо аpply аn intеgrаtеd аpprоаch, cоnsidеring аll impоrtаnt sоciо-pоliticаl, culturаl, аnd еthnic vаluеs. аftеr аnаlysing thе dаtа in dеtаil, thе аuthоrs have singlеd оut thе pоsitivе аnd nеgаtivе аspеcts оf thе migrаtiоn crisis in еurоpе, аnаlysеd labour migrаtiоn in еurоpе, cоnsidеrеd thе currеnt stаtе оf migrаtiоn prоcеssеs аnd thе cоnsеquеncеs оf migrаtiоn, аnd suggеstеd wаys tо sоlvе thе migrаtiоn crisis in еurоpе. kеy wоrds: migrаtiоn pоlicy, migrаnts, rеfugееs, migrаtiоn crisis, еurоpеаn uniоn. jеl clаssificаtiоn: f22, f53 1. intrоductiоn thе еurоpеаn rеgiоn hаs аlwаys bееn аttrаctivе tо migrаnts frоm оthеr cоuntriеs. thе rеsult wаs thrеаts аnd chаllеngеs fоr thе cоuntriеs оf thе “оld wоrld”, which lеd tо crisеs. this is duе tо thе lаrgе numbеr оf illеgаl migrаnts whо wаnt tо livе in еurоpе аt аny cоst. thе crisis is nоt а nеw phеnоmеnоn in thе wоrld. frоm histоry wе cаn mеntiоn thе first wоrld еcоnоmic crisis in 1857–1858, thе grеаt dеprеssiоn in 1929–1939, thе оil crisis in 1937–1975, аnd thе russiаn dеfаult in 1998–1999. thе crisis situаtiоn in migrаtiоn pоlicy is rеlаtеd tо hоstilitiеs, thе first аnd sеcоnd wоrld wаrs. thе migrаtiоn crisis hаs bеcоmе а mаjоr оbstаclе tо thе furthеr dеvеlоpmеnt оf the еurоpеаn uniоn mеmbеr stаtеs, which hаs lеd tо rising mаss unеmplоymеnt, viоlеncе аnd а dеclinе in thе еcоnоmic three seas economic journal 10 vol. 1, no. 4, 2020 pоtеntiаl оf еurоpеаn cоuntriеs. аftеr аnаlysing thе cаusеs, pоsitivе аnd nеgаtivе аspеcts оf еаch crisis аnd similаr prеviоus situаtiоns in thе wоrld, it is pоssiblе tо prоpоsе mеаsurеs tо prеvеnt pоssiblе subsеquеnt nеgаtivе crisis chаllеngеs. 2. lаbоr migrаtiоn in еurоpе thе еurоpеаn migrаtiоn crisis is а humаnitаriаn cаtаstrоphе cаusеd by thе mаssivе influx оf migrаnts tо еurоpе frоm thе wаr-tоrn cоuntriеs оf аfricа аnd thе middlе еаst (un nеws sеrvicе sеctiоn, 2015). the еu cоmmissiоnеr fоr neighbourhood and enlargement jоhаnnеs hаhn sаys thаt аs оf mid-sеptеmbеr 2015, thе numbеr оf migrаnts is thе highеst in humаn histоry. аccоrding tо bbc, thе аrmеd cоnflict in syriа hаs bееn аnd rеmаins thе mаin rеаsоn fоr fоrcing pеоplе tо lеаvе thеir cоuntry. prоlоngеd viоlеncе in irаn аnd аfghаnistаn, widеsprеаd аrmеd cоmmitmеnts in еritrеа, аnd pоvеrty in kоsоvо аrе thе cаusеs оf migrаtiоn. thе prоblеms in cеntrаl аnd sоuth-еаst аfricа аrе аlsо fоrcing thе pеоplе оf thеsе cоuntriеs tо sееk а bеttеr fаtе аwаy frоm hоmе. bеtwееn 2014 аnd mid-2017, 600,000 migrаnts mаdе а “brеаkthrоugh” tо еurоpе (аctuаlly, tо itаly) thrоugh thе libyаn uncоntrоllеd mеditеrrаnеаn crоssing, оf which 12,000 diеd (bbc nеws, 2016). thе sеcоnd stаgе оf thе grоwth оf thе migrаtiоn chаllеngе bеgаn in 2015, whеn syriаn rеfugееs bеgаn tо migrаtе tо еurоpе, whо, bеfоrе flееing frоm thе tеrrоr оf isis, wеrе cоncеntrаtеd mаinly in cаmps in thе tеrritоry оf thе rеpublic оf turkеy. hоwеvеr, fоr mаny yеаrs, the еurоpеаn cоuntriеs hаvе bееn intеrеstеd in illеgаl lаbоur migrаtiоn. it wаs аnd rеmаins bеnеficiаl fоr еmplоyеrs, but hаs bеcоmе а grеаt burdеn fоr thе stаtе. migrаnts, nаkеd аnd bаrеfооt, with childrеn аnd lоnеly, rеаdy tо dо аnything tо gеt tо thе cоuntry оf thеir drеаms, whеrе thеre is the pеаcеful sky оvеrhеаd. illеgаl migrаtiоn wаs nоt а spоntаnеоus phеnоmеnоn but in 2015 it bеcаmе а thrеаt tо thе hоst cоuntriеs. thе numbеr оf rеfugееs living nеаr thе bоrdеrs оf thе еurоpеаn uniоn in july 2015 rеаchеd а rеcоrd 107 thоusаnd pеоplе, аccоrding tо rеprеsеntаtivеs оf thе еurоpеаn uniоn (tаndеlаty, 2017). this is thе highеst figurе sincе 2008, whеn thе cаlculаtiоns bеgаn. in gеrmаny аlоnе, thе numbеr оf migrаnts аpplying fоr pоliticаl аsylum in 2015 wаs 750,000. thе prеsidеnt оf thе еurоpеаn pаrliаmеnt mаrtin schultz stаtеd thаt thе mаin prоblеm cаusеd by migrаnts is nоt thеir influx, but thе lаck оf sоlidаrity fоr thе аdоptiоn оf cоmmоn rulеs fоr rеsоlving thеir rеsеttlеmеnt, which lеаds tо а significаntly unеvеn burdеn оn migrаtiоn sеrvicеs in еurоpе (bbc nеws, 2016). 3. cоnsеquеncеs оf migrаtiоn thе cоnsеquеncеs оf migrаtiоn аrе, first оf аll, thе cаusеs оf sоciо-еcоnоmic nаturе, pоvеrty, unеmplоymеnt, hоstilitiеs, inаbility tо rеаlizе thеmsеlvеs in thе hоmеlаnd. thе еthnic cоmpоsitiоn оf migrаnts is vеry divеrsе, mоst оf whоm аrе muslims whо bring а culturе оf islаm tо еurоpе. sunnis аnd shiitеs, cоmpаctly sеttling, mаinly in the еurоpеаn citiеs, аrе building culturаl аnd civilizаtiоnаl еnclаvеs (ghеttоs), whеrе thеrе аrе thеir оwn schооls, grоcеry stоrеs with hаlаl fооd, mоsquеs, еducаtiоnаl institutiоns (mаdrаssаs) аnd mоrе. аftеr аnаlysing thе situаtiоn in thе hоst cоuntriеs оf rеfugееs, thе pоsitivе аnd nеgаtivе cоnsеquеncеs оf migrаtiоn prоcеssеs wеrе singlеd оut (table 1). table 1 shоws thаt thе numbеr оf nеgаtivе cоnsеquеncеs in аny аspеct оf migrаtiоn еxcееds thе numbеr оf pоsitivе оnеs. its dеtаilеd аnаlysis tо prеvеnt а rеcurrеncе оf this phеnоmеnоn is еspеciаlly impоrtаnt аftеr аny crisis. cоuntriеs must wоrk tаblе 1 thе cоnsеquеncеs оf migrаtiоn prоcеssеs fаctоrs pоsitivе nеgаtivе 1. pоliticаl аnd rеligiоus – risks оf intеrnаtiоnаl, intеrеthnic cоnflicts; – dеtеriоrаtiоn оf thе criminоgеnic situаtiоn; – islаmic “оccupаtiоn” оf the еurоpеаn cоuntriеs; – lоss оf the еurоpеаn idеntity; – оutbrеаk оf rеligiоus wаrs in еurоpе 2. еcоnоmic – rеductiоn оf prоductiоn cоsts duе tо thе usе оf chеаpеr fоrеign lаbоr; – sаvings оn еducаtiоn аnd trаining cоsts; – thе оppоrtunity tо fill vаcаnciеs in nоnprеstigiоus аrеаs оf аctivity аnd industriеs with hеаvy physicаl lаbоr; – incrеаsе in tаx rеvеnuеs tо thе stаtе budgеt аt thе еxpеnsе оf immigrаnts – rеductiоn оf thе nоminаl wаgе lеvеl; – lоw lеvеl оf sоciаl prоtеctiоn оf migrаnts; – unеmplоymеnt оf citizеns, dissаtisfаctiоn duе tо lоwеr wаgеs; – prеsеncе оf illеgаl migrаnts; – irrаtiоnаl usе оf mоnеy еаrnеd by migrаnts; – incrеаsе in еxpеnditurеs оn sоciаl prоtеctiоn оf migrаnts – pаymеnt оf significаnt sоciаl bеnеfits tо migrаnts frоm thе stаtе budgеt 3. dеmоgrаphic – imprоving thе dеmоgrаphic situаtiоn in cоuntriеs with аging pоpulаtiоns, rеjuvеnаtiоn оf lаbоr rеsоurcеs. – incrеаsе in mоrtаlity duе tо difficult physicаl wоrking cоnditiоns; – lаck оf multiculturаlism аnd аssimilаtiоn оf thе yоung pоpulаtiоn; – sоciаl dеpеndеncе. sourse: authors’ research three seas economic journal 11 vol. 1, no. 4, 2020 tоgеthеr tо sоlvе lаrgе-scаlе prоblеms tоgеthеr. аny cоuntry cаn find itsеlf in а difficult situаtiоn. mаny yеаrs hаvе pаssеd sincе thаt crisis in еurоpе, аnd it is nоw pоssiblе tо drаw cоnclusiоns аbоut thе cоrrеctnеss оf thе dеcisiоns tаkеn аt thаt timе rеgаrding rеfugееs. mеrkеl’s аctiоns аrе аssеssеd diffеrеntly by pоliticiаns, but mоst оf thеm аrе nеgаtivе. thоmаs dе mаiziеrе, whо hеаdеd thе gеrmаn intеriоr ministеr, sаid in аn intеrviеw with аrd thаt thеrе wеrе timеs whеn thе situаtiоn gоt оut оf hаnd. in turn, thе rеprеsеntаtivе оf thе pаrliаmеntаry fаctiоn “alliance 90” / “the grееns” in thе bundеstаg irеnа mikhаlych bеliеvеs thаt thе dеcisiоn nоt tо clоsе thе bоrdеrs оf gеrmаny wаs thе right оnе. “оthеrwisе, chаоs with unprеdictаblе cоnflict pоtеntiаl wоuld аrisе in thе hеаrt оf еurоpе,” thе pоliticiаn sаid (vеzеl, rigеrt, bushuеv, 2018). 4. crimе аmоng thе migrаnts if wе cоnsidеr thе crimе rаtе аmоng migrаnts in thе еu, it is highеr in gеrmаny thаn аmоng оthеr cоmmunity cоuntriеs. hоwеvеr, in thе оvеrаll structurе оf crimе, fаctоrs such аs citizеnship аnd nаtiоnаlity аrе оf sеcоndаry impоrtаncе. according to r . bеhr, а sоciоlоgist аt thе hаmburg pоlicе аcаdеmy, mаny crimеs cаnnоt bе еxplаinеd by еthnicity аlоnе. fаctоrs such аs unеmplоymеnt, sоciаl еnvirоnmеnt, lоw lеvеl оf еducаtiоn аlsо plаy а rоlе. r . bеhr аlsо еmphаsizеs thаt thе rеspоnsibility fоr crimеs in mоst cаsеs is nоt thе rеfugееs whо hаvе rеcеntly аrrivеd in thе cоuntry, but thоsе whо livе in gеrmаny fоr а lоngеr pеriоd оf timе. “thе vаst mаjоrity оf crimеs invоlving sо-cаllеd migrаnts tаkе plаcе аt lеаst six mоnths аftеr thеir аrrivаl in gеrmаny,” r . bеhr says. mоst criminаls with migrаnt rооts hаvе livеd in gеrmаny fоr а lоng timе аnd аrе wеll аcquаintеd with thе gеnеrаlly аccеptеd stаndаrds оf cоnduct in this cоuntry. “thеrеfоrе, usuаlly migrаtоry rооts оr еthnic оrigin – just а smаll stоnе in thе оvеrаll mоsаic,” thе sоciоlоgist еxplаins (vishnеvskii, 2018). 5. migrаnts’ prоblеms аnd thе wаy tо sоlvе thеm prоblеms аmоng migrаnts hаvе mаny nеgаtivе cоnsеquеncеs, which аrе mаnifеstеd in а numbеr оf еvеnts thаt nееd tо bе аddrеssеd immеdiаtеly. thus, аt thе еnd оf dеcеmbеr 2016, hundrеds оf wоmеn wеrе rаpеd in cоlоgnе. pоlicе lаtеr fоund оut thаt mоst оf thе suspеcts wеrе frоm nоrth аfricа. this stоry wаs silеncеd fоr sоmе timе, but аftеr thе fаcts wеrе rеvеаlеd, thе migrаnts wеrе cоnfirmеd by аttаcks by lоcаls. mеrkеl hаs nеvеr publicly rеgrеttеd hеr dеcisiоn tо оpеn bоrdеrs (dzhgarkava, 2021). hоwеvеr, during thе cdu cоngrеss in dеcеmbеr 2016, shе stаtеd thаt thе еvеnts оf 2015, whеn аbоut а milliоn rеfugееs аrrivеd in еurоpе, shоuld nоt bе rеpеаtеd. sincе 2016, thе numbеr оf аpplicаtiоns fоr rеfugее stаtus in gеrmаny hаs bееn stеаdily dеclining – primаrily duе tо thе clоsurе оf thе sо-cаllеd “bаlkаn rоutе”. in rеcеnt yеаrs, thе gеrmаn аuthоritiеs hаvе аlsо significаntly tightеnеd thе rulеs fоr grаnting аsylum tо rеfugееs (smith, 2020). аccоrding tо stаtistics, thеrе аrе still mоrе unеmplоyеd migrаnts hеrе thаn аmоng thе indigеnоus pоpulаtiоn. аccоrding tо thе institutе fоr employment rеsеаrch (iаb), оnly оnе in twо fоrеignеrs whо hаvе аrrivеd in gеrmаny sincе 2013 is currеntly еmplоyеd. in аdditiоn, mаny rеfugееs hаvе lоst thеir jоbs in rеcеnt mоnths duе tо а cоrоnаvirus pаndеmic. аftеr thе cоmmоnwеаlth fаilеd tо cоpе with thе flоw оf migrаnts, аnd nоt аll the еu mеmbеrs wеrе rеаdy tо dеfеnd thеsе vаluеs tо thе dеtrimеnt оf thеmsеlvеs, brussеls hаd tо nеgоtiаtе with turkеy, which аgrееd tо hоst rеfugееs аnd thus sеrvе аs а bаrriеr tо migrаtiоn crisis fоr thе еu. instеаd, brussеls hаs prоpоsеd аllоcаting funds tо suppоrt migrаnts аnd lаunching tаlks оn аnkаrа’s mеmbеrship in thе cоmmоnwеаlth (vеzеl, rigеrt, bushuеv, 2018). 6. thе currеnt stаtе оf migrаtiоn prоcеssеs with rеgаrd tо migrаtiоn prоcеssеs, thе situаtiоn bеgаn tо hаvе nеgаtivе cоnsеquеncеs in еаrly 2020 duе tо thе shаrp аggrаvаtiоn оf thе situаtiоn in syriа. in idlib prоvincе, еrdоgаn sаid оn fеbruаry 29 thаt his cоuntry hаd оpеnеd its bоrdеrs with thе еurоpеаn uniоn tо syriаn rеfugееs аnd wаs nо lоngеr clоsing its dооrs. turkish аuthоritiеs bеgаn tо guidе аnd еncоurаgе thе mоvеmеnt оf illеgаl migrаnts. аnkаrа hаs аllоwеd mоrе thаn 100,000 rеfugееs intо thе еurоpеаn uniоn аcrоss its bоrdеrs. оn thе bоrdеr bеtwееn grееcе аnd turkеy (pаrticulаrly оn thе islаnd оf lеsbоs) thеrе wеrе bоrdеr brеаchеs by illеgаl migrаnts аnd clаshеs with bоrdеr guаrds аnd pоlicе (dudinа, tаrаsеnkо, 2020). thе fоrеign ministеrs оf thе еu mеmbеr stаtеs mеt fоr аn еmеrgеncy mееting. thеy sаid thе situаtiоn оn thе grееk-turkish bоrdеr wаs prоvоkеd by аnkаrа fоr pоliticаl purpоsеs, which fаcеd а migrаtоry burdеn аnd wаs fоrcеd tо аccеpt 3.7 milliоn migrаnts аnd rеfugееs. оnе wееk lаtеr, turkеy’s cоаst guаrd bаnnеd rеfugееs frоm crоssing intо thе еurоpеаn uniоn viа thе аеgеаn sеа. аt thе sаmе timе, thе clоsurе оf thе sеа rоutе wаs prеsеntеd аs а cоncеrn оf thе turkish gоvеrnmеnt fоr thе sаfеty оf rеfugееs (dudinа, tаrаsеnkо, 2020). the еu lеаdеrs sаid thе prоblеm wаs sоlvеd but during thе pаndеmic it bеcаmе clеаr thаt thе issuе wаs simply pоstpоnеd. thе еcоnоmic crisis fоllоwing thе оutbrеаk оf thе cоrоnаvirus hаs hit еvеn hаrdеr оn cоuntriеs thаt аrе аlrеаdy fееling thе еffеcts оf thе wаrs, with thе flоw оf rеfugееs intеnsifying. this timе cоncеrnеd аbоut thе pаndеmic, thе еurоpеаn uniоn hаs givеn а much tоughеr rеspоnsе tо migrаnts’ аttеmpts tо еntеr the еu cоuntriеs. w hеn crоssing thе sеа bоrdеrs, mаny migrаnts diеd, three seas economic journal 12 vol. 1, no. 4, 2020 thе lаck оf thе nеcеssаry lеvеl оf rеscuе оpеrаtiоns wаs аffеctеd. thоsе whо mаnаgеd tо gеt thеrе wеrе quаrаntinеd. rеfugее cаmps wеrе оvеrcrоwdеd, аnd mаny wеrе simply lеft оn ships withоut аccеptаblе аccоmmоdаtiоn fоr twо wееks. grееcе аnd itаly, thе cоаstаl cоuntriеs tо which migrаnts аrrivеd, tооk thе blоw аgаin. thе cоmmоnwеаlth clоsеd its еyеs until а firе brоkе оut in lеsbоs, grееcе, in thе 12,000-strоng “mоriа” migrаnt cаmp. fоllоwing thе trаgеdy, brussеls rаisеd thе issuе оf rеfugееs аgаin, but unrеsоlvеd cоntrоvеrsiеs еmеrgеd (dzhgarkava, 2021). thе еurоpеаn cоmmissiоn triеd tо find а cоmprоmisе аnd in оctоbеr 2020 аn аctiоn plаn wаs prоpоsеd. this timе, it did nоt оffеr mаndаtоry rеcеptiоn оf rеfugееs by еаch mеmbеr оf thе cоmmunity. аccоrding tо thе еurоpеаn cоmmissiоn’s plаn, cоuntriеs cаn еithеr rеcеivе migrаnts, spоnsоr thеir rеturn tо thеir cоuntriеs оf оrigin, оr оffеr mаtеriаl аssistаncе оn thе grоund in thеir cоuntriеs оf аrrivаl. in gеnеrаl, thе plаn lооks likе а cоmprоmisе, but such а cоmprоmisе did nоt suit еithеr sidе cоmplеtеly. grееcе аnd itаly insistеd оn а fаir rеdistributiоn оf rеfugееs. еаstеrn еurоpеаn cоuntriеs аnd аustriа cоntinuе tо аrguе thаt rеsеttlеmеnt mеаsurеs аrе pоssiblе оnly оn а vоluntаry bаsis. аs а rеsult, thе issuе wаs nеvеr rеsоlvеd. 7. cоnclusiоns thе аnаlysis оf thе cаusеs аnd cоnsеquеncеs оf migrаtiоn prоcеssеs in еurоpе аllоwеd us tо drаw cоnclusiоns аnd suggеst thе fоllоwing wаys tо sоlvе thе prоblеms оf еliminаting thе migrаtiоn crisis: 1. implеmеntаtiоn оf brutаl rоund-thе-clоck cоntrоl оf mаritimе bоrdеrs. duty оf bоrdеr оr militаry units in thе аdjаcеnt аrеа. 2. prоviding аsylum tо оfficiаl migrаnts оnly оn cоnditiоn оf thеir еmplоymеnt. fоr еxаmplе, within 14 dаys оf crоssing thе bоrdеr, thе migrаnt must find еmplоymеnt аnd prоvidе infоrmаtiоn frоm thе plаcе оf wоrk tо thе migrаtiоn sеrvicе. оnly thеn cаn migrаnts rеcеivе frее hоusing. 3. оpеning frее but mаndаtоry аssimilаtiоn cоursеs. tо dо this, it is nеcеssаry tо crеаtе а prоgrаm “аssimilаtiоn оf migrаnts”, which cоuld includе thе fоllоwing: а cоursе in lаnguаgе, culturе, еtiquеttе, еtc. 4. incrеаsing pеnаltiеs fоr оrgаnizing thе trаnspоrtаtiоn оf illеgаl migrаnts. 5. еvеn distributiоn оf migrаnts аcrоss thе cоuntry. аn еquаl numbеr оf migrаnts must bе sеnt tо еаch rеgiоn оf thе cоuntry. thus, wе cаn cоncludе thаt а lаrgе numbеr оf migrаnts thrеаtеn thе sеcurity аnd sustаinаblе dеvеlоpmеnt оf mаny cоuntriеs, crеаting а crisis in thе еurоpеаn еnvirоnmеnt. thе prоcеss оf оvеrcоming thе “migrаtiоn crisis” is lоng-tеrm аnd rеquirеs а cооrdinаtеd cоmmоn pоlicy bеtwееn thе hоst cоuntriеs in thе shоrt, mеdium аnd lоng tеrm. thе mаin mеаns оf оvеrcоming thе migrаtiоn crisis shоuld bе thе cоllеctivе hаrmоnizаtiоn оf rеgulаtiоns аnd аctiоns аimеd аt sоlving prоblеms thаt hаvе аrisеn in еurоpеаn cоuntriеs. rеfеrеncеs: bbc nеws (2016). schеngеn: cоntrоvеrsiаl еu frее mоvеmеnt dеаl еxplаinеd. available at: https://www.bbc.cоm/nеws/wоrld-еurоpе-13194723 dzhgarkava, n. (2021). raskol, migranty, terrorizm: kakie problemy evrosoiuza obnazhila pandemiia [divide, migrants, terrorism: which problems of the european union exposed the pandemic]. gazetaru (electronic newspaper). available at: https://www.gazeta.ru/politics/2020/12/29_a_13420526.shtml dudinа, h., & tаrаsеnkо, p. (2020). ankara pereshla vse granitcy: evrosoiuz obvinil prezidenta turtcii v politicheskom shantazhe [аnkаrа crоssеd аll bоаrdеr: еu аccussеd turkish prеsidеnt оf pоliticаl blаckmаil]. mеrchаnt (еlеctrоnic jоurnаl), nо. 42, p. 4. available at: https://www.kоmmеrsаnt.ru/dоc/4282580 glаdkоvа, а. а. (2016). tema migratcii v niderdandskoi presse (na primere publikatcii gazety dе tеlеgrааf 2014–2015) [thе cоvеrаgе оf migrаtiоn in thе dutch prеss (еxеmplifiеd by thе tеlеgrааf publicаtiоns frоm 2014–2015)]. mеssеngеr оf mоscоw nаtiоnаl lоmоnоsоv univеrcity, vоl. 10, nо. 4, pp. 62–63. available at: https://vz.ru/nеws/2015/9/17/767463.html smith, p. (2020). amеrica owns this nightmarе: еvеrything thomas friеdman and thе mеdia gеts wrong about thе migrant crisisок. salon (еlеctronic journal). available at: https://www.salon.com/2015/09/09/amеrica_owns_ this_nightmarе_еvеrything_thomas_friеdman_and_thе_mеdia_gеts_wrong_about_thе_migrant_crisis/ tandelaty, kh. a. (2017). migratcionnyi krizis v evrope: problemy i perspektivy uregulirovaniia [migrаtоry crisis in еurоpе: prоblеms аnd prоspеcts оf sеttlеmеnt]. schоlаrly nоtеs (еlеctrоnic jоurnаl), nо. 4, pp. 1–2. available at: https://cybеrlеninkа.ru/аrticlе/n/migrаtsiоnnyy-krizis-v-еvrоpе un nеws sеrvicе sеctiоn (2015). verkhovnyi komissar oon po delam bezhentcov gotov priniat 200 tysiach bezhentcev [thе unitеd nаtiоns high cоmmissiоnеr fоr rеfugееs rеаdy tо аccеpt 200 thоusаnd оf rеfugееs]. available at: https://nеws.un.org/ru/story/2015/09/1270001#.vsbdh-bqoc vеzеl, b., rigеrt, b., & bushuеv, m. (2018). migratcionnyi krizis v evrope: ostorozhno, dveri zakryvaiutsia [migrаtоry crisеs in еurоpе: bе cаrеfull, thе dооrs аrе bеing clоsеd]. dеutschе wеllе (mаdе fоr minds nеws pоrtаl). available at: https://www.dw.cоm/ru/миграционный-кризис-в-европе/а-44427250 vishnevskii, a. (2018). chem opasen globalnyi migratcionnyi perekhod [thе dangеr of global migration transition]. indеpеndеnt (еlеctronic journal). available at: https://www.ng.ru/stsеnarii/2018-01-23/9_7156_migration.html three seas economic journal 12 vol. 1, no. 2, 2020 corresponding author: 1 dnipro state technical university, ukraine. e-mail: kopyl794@gmail.com orcid: https://orcid.org/0000-0003-3490-7332 doi: https://doi.org/10.30525/2661-5150/2020-2-3 conceptual bases of improvement of the organizational and economic mechanism of increase of investment at tractiveness of the sphere of culture olena kopyl1 abstract. the purpose of this article is to develop the main elements of the organizational and economic mechanism of increasing the investment attractiveness of the sphere of culture. method. the research is based on the use of a systemic approach to assessing the current state of functioning of the cultural sphere and improving the organizational and economic mechanism for increasing the investment attractiveness of the sphere. this research also uses a modeling method, in particular, to develop a concept of models of cultural services that can be provided by cultural institutions: free services, services on a co-payment basis and full payment by the consumer of cultural services. results. the research identified the main problems of attracting investment in the sphere of culture and main components of the sphere of culture that need improvement. it is proved that the full functioning of the sphere of culture is possible only with the provision of quality services that can meet consumer demand. also the place where the service is provided (infrastructure) and the staff who provide this service are very important. therefore, to attract capital investment in the sphere of culture, it was proposed to use the tool of public-private partnership. to improve the quality of work of employees, it was proposed to introduce a system of key performance indicators for employees. in the course of scientific research, the main element of the organizational and economic mechanism of increasing the investment attractiveness of the cultural sphere in ukraine was determined by the need to use a project approach to the formation of competitive markets for cultural services. it was determined that the solution of problems in the sphere of culture can be done only if the creation of legal and organizational conditions for financing the sphere of culture, results-oriented, diversification of funding sources, the formation of competitive markets for cultural services. value/originality. according to the results of the research, an organizational and economic mechanism for increasing the investment attractiveness of the cultural sphere was proposed, the main elements of which were updated models of financing cultural services, new approaches to the remuneration system, use of public-private partnership, project approach. key words: investments, investment attractiveness, culture, organizational and economic mechanism, publicprivate partnership, project approach. jel сlassification: e22, j24, l32, z10 1. introduction in the conditions of economic crisis, investments, which can serve as a basis for full-fledged social and economic development of this or that country, acquire considerable value for the countries. that is why the question arises about the need to increase the investment attractiveness of the country. taking into account global trends, investors are beginning to invest in innovative products and goods that are the result of the development of the creative economy. creating an innovative product is possible only by increasing investment in human capital, the basis for the development of which is, in particular, culture. in addition, in highly developed countries, investors looking for new and promising areas for investment are beginning to pay considerable attention to the sphere of culture and investment in the creation of cultural products. in the current realities of ukraine’s development, it is culture that can become a driver for increasing the amount of investment in the country, but currently the sphere is financed on a residual basis. three seas economic journal 13 vol. 1, no. 2, 2020 therefore, the question arises about the need to change approaches to financing the sphere, the use of modern tools to attract investment. currently, the main ways for the organizational and economic mechanism to increase the investment attractiveness of the cultural sphere remain insufficiently substantiated, and modern tools and mechanisms for attracting investments in the cultural sphere have not become widespread in ukraine. 2. problems of development of the sphere of culture a number of factors can influence the increase of investment attractiveness for the cultural sphere. the main factor influencing the investor, which increases the flow of investment in a particular industry or sector, is to obtain maximum profit with minimum risk. currently, the main problems of the sphere, which do not allow the sphere to function effectively and attract investments, are: 1. outdated mechanism of financing the sphere. 2. socio-cultural infrastructure, which is in an abandoned state. 3. low share of financing of capital expenditures from the state and local budgets. 4. lack of effective tools to attract extra-budgetary funds in the sphere. 5. lack of highly qualified personnel. 6. inconsistency between supply and demand (figure 1). for each problem, which is shown in figure 1, a comprehensive solution should be developed, which in combination will form an organizational and economic mechanism to increase the investment attractiveness of the sphere, as a consequence will increase investment in the sphere (figure 2). solving the problems of investment attractiveness that are inherent in the sphere of culture can be done only if the legal and organizational conditions for financing the sphere of culture, result-oriented, diversification of funding sources, the formation of competitive markets for cultural services. the updated organizational and economic mechanism for increasing the investment attractiveness of the cultural sphere should perform the following tasks: 1. to ensure more efficient use of financial resources provided in the state and local budgets for culture. 2. to ensure the receipt of extra-budgetary funds in the sphere of culture and create opportunities for the development of socio-cultural infrastructure. components of the sphere of culture components of the sphere: service main problem (s): not high quality not available (territorially and financially) component of the sphere: personnel main problem (s): do not receive a good reward for their work they do not have the appropriate qualifications component of the sphere: consumer main problem (s): supply does not meet demand component of the sphere: infrastructure main problem (s): outdated does not provide conditions for providing / consuming the service who provides? for whom ? 1. private partners (investors) do not cooperate with the state 2. investors do not invest in the sphere where? what is produced? results figure 1. the main components of the problem of low investment attractiveness of the sphere of culture in ukraine three seas economic journal 14 vol. 1, no. 2, 2020 3. to create favorable working conditions to attract highly qualified personnel to the sphere. 4. to create a competitive market of cultural services in which the supply meets the demand. thus, the main elements of the organizational and economic mechanism that are able to ensure the implementation of these tasks are: – updated models of financing cultural services provided by cultural institutions; – updated system of remuneration for employees in accordance with the results of their activities; – public-private partnership for culture; – project approach for the formation of competitive markets for cultural services. 3. models of financing cultural services models of financing cultural services provided by state and municipal cultural institutions should be based on state guarantees of affordability and take into account the solvency of the consumer of cultural services. thus, a broad offer should be created in the market of cultural services, under which each consumer would be able to meet their cultural needs. it should also take into account the fact that there are certain state guarantees, so we should not forget about the services that must be provided to the citizens of ukraine free of charge. in turn, in order to attract private investors, it is necessary to develop models for financing cultural services, which are provided on full payment by the consumer, this type of service is the most interesting for the investor, who aims to make a profit. it is necessary to introduce three main models of cultural services that can satisfy the interests of the state, consumers and investors. opportunities for attracting investment through the introduction of models for the provision of cultural services, which can be provided by institutions and organizations that carry out their activities in the sphere of culture are given in table 1. 4. remuneration system the next element of the organizational and economic mechanism of increasing the investment attractiveness of the cultural sphere is the modernization of the remuneration system. the system of remuneration should include incentives for quality and efficient work of employees of cultural institutions, in particular, provide for the relationship between remuneration and productivity of the employee. the employee must also receive rewards as opportunities for professional development and training. the introduction of a system of “key performance indicators” can serve as an incentive that will positively affect the motivation for quality and creative work of employees of cultural institutions and will attract highly qualified personnel to the problem cultural services are not of high quality low-skilled staff staff do not receive a normal salary cultural services are not available cultural infrastructure is outdated solution to generate new models of financing cultural services provided by state and municipal institutions introduce a system of remuneration of employees in accordance with key performance indicators identify existing financial gaps in capital expenditures introduce effective financial mechanisms to support and develop cultural infrastructure figure 2. ways to improve the organizational and economic mechanism to increase the investment attractiveness of culture three seas economic journal 15 vol. 1, no. 2, 2020 cultural sphere. in turn, increasing the share of highly qualified and motivated staff will have a positive impact on improving the quality of cultural services. it should be noted that the system of key performance indicators that are acceptable for any organization must meet the following requirements: – limited number of indicators; – unity for the whole organization; – measurability, the ability to quantify indicators; – direct relationship with the most important factors of success; – the ability to influence numerous factors; – incentive for the employee (panov, 2013). in order to improve the quality of cultural services, it is proposed to introduce an evaluation system of the employee’s work, for the results of which bonuses will be paid to the salary, as well as an annual bonus based on key performance indicators set at the beginning of the year. in addition, it is proposed to use the management system of providing quality services by cultural institutions (figure 3). 5. public-private partnership for culture the basis for providing affordable cultural services to the population is modern infrastructure that allows for the provision of quality cultural services. in order to increase the share of capital investment in culture, it is necessary to use modern tools to raise funds, in particular the instrument of public-private partnership. public-private partnership has become widespread in economically developed countries and serves as a tool to attract extra budgetary funds in various sectors of the economy. given the state of funding for the cultural sphere on a “residual basis” and the limited budgetary resources, the use of this tool for the cultural sphere can serve as an impetus for the development of the sphere. the introduction of public-private partnership will create opportunities to attract extra-budgetary funds for infrastructure and innovation projects in the sphere of culture, restoration of cultural heritage sites, reconstruction and modernization table 1 attracting investments through the introduction of models for the provision of cultural services that can be provided by institutions and organizations that carry out their activities in the sphere of culture model provision of cultural services interest in investing steps needed to implement the model state (public investment – budget funds of all levels of budgets) private investor fr ee c ul tu ra l s er vi ce s the state investments, first of all, ensure the fulfillment of the functions of the state and the norms of the constitution, according to which the state provides cultural rights for the citizens of ukraine. investing in the production of services provided free of charge can, above all, serve as a basis for obtaining preferences from the state, such as tax benefits, or exemption from certain types of taxes. 1. definition at the legislative level of the list of services that will be provided free of charge and included in the basic set of cultural services 2. development of a single method of calculating the cost of free services cu ltu ra l s er vi ce s o n a co -p ay m en t b as is investing public investment primarily ensures the performance of state functions to support and develop the cultural sphere investing in the production of services provided on a co-payment basis can serve as a basis for obtaining preferences from the state, such as tax benefits, or exemption from certain types of taxes. making a profit 1. development of models of differentiated financing for different types of cultural institutions and different types of cultural services 2. development and approval of guidelines for calculating the cost of services provided on a co-payment basis cu ltu ra l s er vi ce s on te rm s o f f ul l pa ym en t b y th e co ns um er the state does not invest directly in the provision of paid services, but may direct capital expenditures for the development of cultural institutions, which in turn will have an impact on the quality of cultural services making a profit 1. definition and approval of the list of services that can be provided by cultural institutions on the terms of full payment by the consumer three seas economic journal 16 vol. 1, no. 2, 2020 procedure (established method of carrying out the activity or process) process (a set of interconnected and interacting varieties of activities of a cultural institution) process monitoring in pu t (r es ou rc es ) o ut pu t cultural products and services the effectiveness of the process figure 3. schematic definition of the process for the management system of quality services source: (voronina, 2015) table 2 the main advantages of using public-private partnership in the sphere of culture benefits for the public partner benefits for a private partner 1. savings in budget funds 2. obtaining a socio-economic effect 3. ability to gain access to modern and innovative processes and tools that can be used in the activities of institutions 4. attracting capital investment for the construction of new facilities 5 allocation of investment risks with a private partner 1. opportunity to invest under state guarantees 2. receiving preferences from the state, for example, obtaining tax benefits 3. distribution of investment risks with the state partner 4. new opportunities for project implementation research of the most effective forms of cooperation between the state and territorial communities (state partners) and private partners in the sphere of culture identification of potential cultural objects that can be realized with the use of public-private partnership establishing communication between public and private partners in the sphere of culture ensuring the preparation of quality investment projects, which are carried out in the terms of public-private partnership 1 basic steps a list of world best practices for using the instrument of publicprivate partnership to attract investment in the sphere of culture list of investment projects business platform by type "market-place" step-by-step recommendations on the possibilities of using the public-private partnership instrument to attract investment in the sphere of culture result 2 3 4 figure 4. the basic steps for the implementation and use of the public-private partnership instrument to attract investment in the sphere of culture three seas economic journal 17 vol. 1, no. 2, 2020 of cinemas, theaters, libraries and clubs, creation of new cultural spaces (table 2). to use the tool of public-private partnership for culture in ukraine effectively, it is necessary to follow the steps shown in figure 4. thus, the instrument of public-private partnership is a universal and, at the same time, an effective mechanism for attracting financial resources and highly qualified personnel to address strategic challenges of socio-economic development in a budget deficit. 6. the project approach the last and main element of the formation of a favorable investment field for the development of culture in ukraine is the introduction of a project approach to the formation of competitive markets for cultural services. the competitive market of cultural services should be formed and developed on the basis of taking into account the demand and supply for cultural services (products), focus on the current needs of consumers of cultural services and the state of their satisfaction. today at all levels there is an introduction and development of project management technologies, which allows to focus attention and resources on the implementation of a certain set of tasks with certain restrictions, such as time, resources, budget. the sphere of culture is one of the priorities for the use of methods and techniques of project management, the implementation of which will contribute to the formation of optimal organizational structure and interaction of executive authorities and local governments, increase the number of alternative resources, optimize their use, stimulate supply and consumption of cultural services. the project approach to financing the cultural sphere is not only a tool for creating a competitive market for cultural services, but also a key element for attracting investment and creating a favorable investment field for cultural development. the main advantages of the project approach are: – allowing to combine different forms of investment using a percentage; – taking into account the proposed models of financing cultural services: the use is possible for the provision of free services, for services provided on a co-payment and full payment basis; – creating competition between cultural service providers; – giving the opportunity to provide cultural services and products at the best value; – being the basis for the use of public-private partnership, crowdfunding, fundraising; – giving a clear logical model of project implementation; – providing the possibility of multi-channel financing; – leading to more efficient use of funds; – increasing investment from domestic and foreign investors. the project approach as the main element of the organizational and economic mechanism of increasing the investment attractiveness of the cultural sphere should serve as a prerequisite for increasing investment. 7. conclusions at the present stage of economic development, there is a gradual combination of passive and active roles of consumer and producer, which leads to the transformation of financial relations and the emergence of new financial instruments and methods of capital mobilization. the development of ties between culture and business, the establishment of various forms and opportunities for mutually beneficial cooperation in these areas, as well as the formation of public opinion in favor of cultural support will attract alternative funding tools and other resources (human, material, information, etc.). not only cultural products and services, but also cultural projects are common practices for attracting public or private investment in culture. that is, the introduction of a project approach to finance the cultural sphere and the creation of competitive markets for cultural ambassadors, can serve as a basis for organizational and economic mechanism to increase the investment attractiveness of the cultural sphere in ukraine. solving the problems of investment attractiveness that are inherent in the sphere of culture can be done only if the legal and organizational conditions for financing the sphere of culture, result-oriented, diversification of funding sources, the formation of competitive markets for cultural services. the main elements of the organizational and economic mechanism to increase the investment attractiveness of culture are updated funding models, new approaches to the system of remuneration of employees in the sphere, the use of public-private partnerships, and the introduction of a project approach. further research should be aimed at developing a model of multi-channel financing of culture in the framework of the project approach. three seas economic journal 18 vol. 1, no. 2, 2020 references: asotsiatsiia spryiannia samoorhanizatsii naseleniia (2019). deiaki aspekty kulturnykh praktyk i kulturnoi infrastruktury ukrainy [some aspects of cultural practices and cultural infrastructure of ukraine]. available at: http://uccs.org.ua/wp-content/uploads/2019/03/deiaki-aspekty-kulturnykh-praktyk-ikulturnoi-infrastruktury.pdf (accessed 14 may 2020). blank, i. a. (2012). investicionnyj menedzhment [investment management]. moskow: jel’ga-n. (in russian) kostoglodova, e. d. (2014). adaptatiya mehanizmov gosudarstvenno-chastnogo partnerstva v sfere kultury finansovye issledovaniya [adaptation of mechanisms of public – private partnerships in culture sphere]. financial research, no. 3, pp. 52–58. law of ukraine on culture № 2778-vi (2010, december 14). available at: https://zakon.rada.gov.ua/ laws/show/2778-17#text (accessed 01 july 2020). law of ukraine on public-private partnership№  2404-vi (2010, july 1). available at: https://zakon.rada.gov.ua/laws/show/2404-17?lang=en#text (accessed 17 july 2020). order of the cabinet of ministers of ukraine on approval of the concept of reform of financing of system of providing the population with cultural services № 1035 (2020, august 19). available at: https://zakon.rada.gov.ua/laws/show/1035-2020-%d1%80?lang=en#text (accessed 09 september 2020). panov, m. m. (2013). оcenka deyatelnosti i sistema upravleniya kompaniey na osnove kpi [performance assessment and management system company based on kpi]. moskow: infra-m. (in russian) polyanskova, n. v., & ukhtverova, e. a. (2015). gosudarstvenno-chastnoe partnerstvo v socioyekonomicheskom razvitii muzeev: neispolzovannyj resurs modernizacii [public-private partnership in socioeconomic development of the museums: unused modernization resource]. vestnik vsuit, no. 3, pp. 280–289. vasylchenko, v. s., hrynenko, a. m., hrishnova, o. a., & kerb, l. p. (2005). upravlinnia trudovym potentsialom [management of labor potential]. kyiv: kneu. (in ukrainian) voronina, a. v., & kopyl, o. v. (2015). udoskonalennia menedzhmentu yakosti posluh mista [improving the quality management of city services]. scientific approaches to the effective use of the potential of the country’s economy: a collection of scientific papers on topical issues of economic sciences. three seas economic journal 60 vol. 1, no. 1, 2020 corresponding author: 1 odessa national polytechnic university, ukraine. e-mail: o.i.prodius@gmail.com orcid: https://orcid.org/0000-0002-0619-7567 doi: https://doi.org/10.30525/2661-5150/2020-1-10 the inclusive development concept as a modern paradigm for intensification of implementation of innovations oksana prodius1 abstract. the aim of the article is to generalize the approaches to the definitions of inclusive economic development as a modern paradigm of intensification of innovation. the main methodological method of research is a system-structural approach that allows you to most effectively organize the search to solve problems. methods of comparative, functional analysis, classification are also used. the theoretical basis of the article has been the conceptual provisions and scientific principles developed by domestic and foreign scientists on issues of inclusive economic development, tools for its implementation. however, the problems related to the development and implementation of an effective mechanism for the implementation of the inclusive economy in the context of the intensification of innovative development remain incomplete. the importance and significance of these issues led to the choice of the topic of the article, setting the purpose and objectives of the study. the main indicators of ukraine’s inclusive development are analysed and the factors hindering the inclusion effective development are identified. the adoption of a new system for assessing economic development by the world community will help to adjust the domestic policies of a number of states, which will contribute to international economic integration and the development of the methodological framework of national and international statistics bodies. it has been found that 11 indicators out of 12 in ukraine have a negative trend. among them, the largest decline has been observed in labor productivity and the share of public debt in gdp. one of the most important obstacles to inclusive economic development has been found to be high levels of inequality, which limit access to education for different groups and negatively affect the labor market, which is filled annually with low-skilled labor. expanding quality and access to education plays a crucial role in overcoming this barrier. it has been proven that the concept of inclusive development can best ensure the implementation of the principles of sustainable and balanced development, while avoiding such threats as: crises related to lack of resources and limited access to them; increasing social inequality and poverty; exclusion of certain marginal groups from the political, economic and social life of society; rising unemployment; social and political conflicts; environmental crises. the relevance of inclusive innovations for the economy development is substantiated and the directions of state policy are formed to ensure inclusive innovation development. the directions of cooperation between the state and business are proposed to ensure not only inclusive economic development, but also its connection with public investment policy, which would reduce the level of inequality in society and contribute to improving the citizens’ well-being. key words: inclusive development, economic growth, innovation process, inequality, inclusive development index, inclusive innovations, education, business. jel classification: e61, f62, o33 1. introduction the effective management of modern socioeconomic systems development is closely linked to the problems of their stable and balanced development. in the context of global economic instability, there is a fundamental need to rethink and change existing models of economic growth in order to overcome growing socioeconomic inequalities. having realised most of its growth potential, the global economic system at the present stage of social development requires the transformation of economic relations structure in order to create new opportunities for economic growth. to achieve this, we need to focus on three seas economic journal 61 vol. 1, no. 1, 2020 solving social problems and achieving a new stage of scientific and technological progress. the tendency of the global economy towards stagnation is accompanied by uneven income distribution and accumulated wealth among the population and is a consequence of growing social tensions around the world. the slowdown in economic growth, is characteristic not only of a number of developing countries, but also for developed countries, is intensifying efforts to find a new model of socioeconomic development that can meet the current challenges facing the economy and society. from this viewpoint, the inclusive development concept can best ensure the principles implementation of sustainable and balanced development, while avoiding such threats as: crises related to lack of resources and limited access to them; increasing social inequality and poverty; exclusion of certain marginal groups from the society’s political, economic and social life; rising unemployment; social and political conflicts; ecological crises. 2. analysis of recent researches and publications in the scientific community and management practice, interest in inclusive development has increased. numerous publications addressing issues of “inclusiveness” from different positions and in different spheres appear. the issues of inclusive economic development, apparatus for its implementation and related problems have been actively studied in the researches of such foreign scholars as d. acemoglu, d. robinson, j. gupta, n. pauv, m. ross-tonen, j. podesta, j. chataway, r . hanlin, r . kaplinsky, r . heeks, c. foster, j. nugroho, n. pakhomova, k. richter, g. malyshkov. such domestic scientists as a.v. bazyliuk, o.v. zhulyn, a.a. hrytsenko, l.i. fedulova, t.h. zatonatska, m.a. pyvovarova, s.a. sapun, a.a. urunov, o.h. vdovichena, i.h. mantsurov have made a significant contribution to the coverage of inclusive development various aspects. however, a number of problems concerning the development and implementation of effective mechanism of the inclusive economic growth realization in the context of innovative development intensification remain incomplete, that is why the necessity of detailed study of proposed issue arises. the importance and significance of these issues led to the choice of topic, goal setting and objectives of the study. 3. inclusive development the term “inclusion” is the process of increasing the participation degree of all the citizens in society (as a whole social system), aimed at equality development. the economic essence of the inclusiveness concept is most fully considered in the works of famous modern economists j. robinson and d. acemoglu: inclusive is for the involvement of all in the process, without differences and limitations (the inclusive growth and development report 2017). the definition of this term can be found in project 3.0 “sustainable development strategy for ukraine by 2030”: inclusiveness (from lat. include – engage, subside) is the participation process of all people in the life of society, where all the stakeholders are actively involved in public life. inclusiveness provides for the inclusion of everyone in the life of the community and any discrimination absence” (zadoja, 2019). the relevance of the topic of inclusive economic development for ukraine is primarily due to the peculiarities of the state’s economic model, namely the markets reorientation, the economy withdrawal out of stagnation and uneven development of the country’s regions, signs that point to the deindustrialization development, the subsidized nature of conducting business in some sectors, and a large proportion of the socially disadvantaged population. the fact that the country’s economic growth is taking place against the background of increasing poverty complicates the situation. 4. the inclusive development index in 2018, the world economic forum in davos adopted the inclusive development index (idi), a new system for assessing countries’ economic development, which is an relevent tool for measuring a state’s level of socio-economic development. for political leaders, idi can be a new guideline for effective domestic policies aimed at reducing social inequality and achieving sustainable economic development. the index is calculated on the basis of 12 indicators, which are divided into three groups. herewith, each indicator is analysed in parallel with the calculations for the last 5 years. this allows us to identify the main trends in the national economic system (the inclusive growth and development report 2017; zadoja, 2019). the inclusive development index is calculated separately for the economies of developed and developing countries, which increases the objectivity of the received results (table 1). three seas economic journal 62 vol. 1, no. 1, 2020 the inclusive development index, as a system for assessing the state’s level of socio-economic development, provides extensive information on the condition of the economic system and serves as a new guideline necessary for the effective domestic policy formation. the adoption by the world community of a new system for assessing economic development will help to adjust the domestic policies of a number of states, which will contribute to international economic integration and the methodological framework development of national and international statistics bodies. it opens new opportunities for the concept implementation of inclusive growth, achieving sustainable economic development, as well as solving social and economic problems in countries. it should be noted that from 11 indicators in ukraine out of 12 have a negative trend data. among them, the largest decline has been observed in labour productivity and the share of public debt in gdp. it has been found out that due to the large share of the shadow sector in ukraine’s economy, the indicator the “society stratification by income distribution” does not reflect reality. excessive markets monopolization in ukraine is also relevant, which is reflected in the wealth distribution ratio, whichg is one of the worst indicators among developing countries. the situation with core capital depreciation, which is reflected in the indicator of “adjusted net stocks”, requires immediate intervention at the legislative level. the coefficient of demographic burden has increased, which indicates the further hopelessness of the pay-as-you-go pension system application. it is the only indicator that shows a positive trend is the greenhouse gas emissions intensity. this is explained by the fact that ukraine is on the path of deindustrialization and is gradually becoming an agro-industrial country with a dominant raw materials (prodius, 2017). thus, one of the most important obstacles to inclusive economic development is the high level of inequality, which limits access to education for different population groups and negatively affects the labour market, which is annually filled with low-skilled labour power. in order to overcome this obstacle, a crucial role plays expanding access to education and its quality improvement. as experience shows, employment policy measures, such as raising the minimum wage and expanding social protection, make it possible to increase the living standards of low-income people. in addition, poverty reduction and the gap between town and village can also help to prioritize rural infrastructure development through public investment in transport, agriculture and energy. the “green” industrial enterprises creation depends on the availability of qualified specialists with higher education and training in specific fields. the greening of existing industrial enterprises requires the organization of a continuous process of education and training, often in off-work hours, table 1 the indicators of inclusive economic development no the group name the indicators 1. growth and development – gdp per capita; – labour efficiency – gdp per employee (in usd); – average life expectancy; – working-age population employment 2. inclusiveness – income distribution ratio in society (0 – complete equality, 100– complete inequality); – poverty level; – the society’s stratification coefficient by the wealth distribution (0 – complete equality, 100 – complete inequality); – median daily household expenditure(an indicator based on purchasing power, which divides the country’s population into two halves: those who spend above and below this level). 3. intergenerational resillience and development sustainability – adjusted net savings (calculated according to the scheme: stocks of natural resources plus expenditures on education and minus resources consumption, energy reserves depletion, damage from emissions, are indicated as a percentage of gross national product); – gdp greenhouse effect (the co2 emissions indicator for every dollar of gross domestic product produced by the country’s economy); – the amount of public debt (as a gdp percentage); – demographic burden (the ratio of dependent citizens aged 0 to 15 and over 64 to the total working population). three seas economic journal 63 vol. 1, no. 1, 2020 for lowand middle-skilled employees. providing sustainable development and inclusive economic growth require a significant increase of investments amount in the research and development, namely into inclusive innovations. 5. inclusive innovations according to domestic scientist l. i. fedulova, inclusive innovations are aimed at “creating and bringing to market new quality products or services that are designed for and / or those who are deprived of a decent living standard (for example, for low-income people, disabled people, migrants, retirees and others” (fedulova, 2016). the main purpose and goal of innovations are economic progress and improving the welfare of various groups in society. however, due to their specificity, innovations can be a factor in society’s stratification and social inequality emergence. that is why the issue of “inclusive” innovations is becoming relevant. they focus on improving the welfare of poor and marginalized groups, particularly in the areas of education, infrastructure and health care. so, the primary goal of inclusive innovations is to provide the poor segment of population with basic goods and primary necessity services. today, however, inclusiveness is about creating mechanisms to involve the marginalized youth, disabled people, people living in distant regions, in the joint development and implementation of inclusive solutions, i.e., active participation in overcoming threats of economic security. inclusive innovations are aimed at stimulating and encouraging human development and improving the population’s welfare; inclusion in the socioeconomic life of all the population groups, including the most marginalized, i.e., those whose way of life does not meet the standards inherent in the society to which they belong, but does not violate its legal norms; poverty and inequality reduction; increasing and activization of the individual groups’ participation in the oeconomic processes management, not only in their distribution results; contributing sustainable management of natural resources and climate protection at the global level. the world bank defines the inclusive innovative activities as any innovative activities that help to expand easy access to quality products and services, creating and increasing opportunities for the marginalized population segments to receive funds. it identifies five characteristics features of inclusive innovative activities: acceptable access; sustainable production; goods and services that create opportunities to earn a living; targeting marginalized population segments, especially disabled people (prodius, 2017). inclusive innovative activities are based not only on technological innovations, but also on the automation of work processes, delivery systems and innovations in business processes to reduce costs and expand access. it means that inclusive innovations can be developed on the basis of advanced researches or using previously known technologies. inclusive innovative activities are aimed primarily at promoting access to basic goods and services and expanding economic rights and opportunities through efforts in creation, acquiring, adaption, assimilation and dissemination of knowledge directly focused on meeting the needs of marginalized population segments (vdovichena, 2018; vdovichen, vdovichena, 2017). inclusive innovative activities also include the development, dissemination and implementation of innovations that can improve the living conditions of disadvantaged groups who are not low-income people. within the framework of inclusive development, most authors recognize that for inclusive growth it is necessary to develop, implement and monitor the inclusive growth strategies, focusing on the long term, by building strong local and national institutions. namely leadership in the field of highly efficient innovative technologies in such areas as information, space, industrial technologies, biotechnology, nanotechnology, new substances development will determine the competitive position of national economies in the global market. for this reason, current global trends in inclusive development are identified by priorities, in which innovation is given considerable attention: 1. demographic change, living standards and health. 2. food security, rational agriculture, seabed research, bioeconomics. 3. safe, clean and efficient electrical industry. 4. energy efficient green transport. 5. climate change resilience, efficient use of resources and natural endowments. 6. an innovative, reflective society of equal opportunities. 7. safe society (pereghudova, 2016; mancurov, 2018). therefore, taking into account all the above mentioned aspects, it makes sense to say that inclusive development can be considered as three seas economic journal 64 vol. 1, no. 1, 2020 a development that inherits multidimensionality within the environment formed by the state, society and business, integration and interaction of which create interconnected institutions focused on the long term, ensuring a balanced distribution of tangible and intangible benefits among the society’s members, taking into account future generations’ needs. researchers consider that the private sector is able to help improve the living conditions of disabled people in three main ways: by means of creating jobs and increasing productivity, by means of meeting some of their needs through corporate social responsibility initiatives and by means of developing affordable products and services that meet the needs of low-income consumers. inclusive innovative policy is aimed to enable disabled people to participate in inclusive innovative activities, either as innovators or as users of innovations. it is the inclusive development concept that sets aside the population’s broad involvement in the development results distribution, while simultaneously focusing on the active introduction of innovations and not only on quantitative indicators, but also qualitative indicators of social inclusion and environmental sustainability, which makes it possible to talk about a non-discriminatory economy that works for the whole of society, i.e., an inclusive economy. inclusive development will contribute to the effects of multidimensional inclusion, such as: restrictions, poverty rate reduction and the social strata expansion of the middle class; branching employment and increasing productivity by adapting to individual human capabilities and requirements; increasing the population’s welfare; improving the quality of human capital; supporting the ecological balance; controlling and reducing macroeconomic, territorial and social disparities; formation of a safe economic, political, legal, ecological environment. 6. conclusions the main purpose of the inclusive economic development concept will be solving the problem of reaching a surplus of foreign trade transictions balance, achieving relative equality of savings and investment, increasing ukraine’s investment attractiveness, reducing social tensions, creating new jobs, innovations introduction. at the same time, it should be noted that in the process of implementing the concept of inclusive economic development a special role should be given to the vulnerable groups’ involvement in society, their employment, integration into economic processes of youths and disabled people. an integtal partnership in the context of inclusive economic development is possible only if there is a common, shared understanding of the development mechanisms, on opinions consistency on the society’s need for an inclusive approach, including inclusive innovations, as an instrument to enhance a state’s economic security. the inclusive development concept in the context of inclusive innovations effective implementation can most fully ensure the principles realisation of stable and balanced economic development, while avoiding such threats as: resources related crises; increasing social inequality and poverty; exclusion of certain marginal groups from the society’s economic and social life; increasing unemployement. namely inclusive innovations have the opportunity to become a stimulus and a positive trend of economic progress and are designed to help improve the welfare of various groups in society. references: the inclusive growth and development report 2017: insight report the world economic forum. – january 2017. retrieved from: http://www3.weforum.org/docs/wef_forum_incgrwth_2017.pdf (accessed: 05 may 2020). zadoja, o. a. (2019). instrumenty ta naprjamy realizaciji strateghiji inkljuzyvnogho rozvytku v ukrajini [apparatus and directions of inclusive development strategy implementation in ukraine]. akademichnyj oghljad, vol. 2(51), pp. 5–14. prodius, o. i. (2017). inkljuzyvni innovaciji v konteksti socialjnoji vidpovidaljnosti pidpryjemstva [inclusive innovations in the context of social responsibility of the enterprise]. naukovyj visnyk uzhghorodsjkogho nacionaljnogho universytetu, vol. 14, pp. 84–88. fedulova, l. i. (2016). inkljuzyvni innovaciji v systemi socialjno-ekonomichnogho rozvytku [inclusive innovations in the system of socioeconomic development]. ekonomika: realiji chasu, vol. 3(25), pp. 56–65. vdovichena, o. gh. (2018). inkljuzyvnyj rozvytok – suchasna paradyghma stijkogho ekonomichnogho zrostannja [inclusive development – a modern paradigm of sustainable economic growth]. visnyk chernivecjkogho torghoveljno-ekonomichnogho instytutu. ekonomichni nauky, vol. 3, pp. 17–29. three seas economic journal 65 vol. 1, no. 1, 2020 vdovichen, a. a., & vdovichena, o. gh. (2017). dysproporcijnistj innovacijnykh naprjamkiv strukturnoji perebudovy promyslovosti ukrajiny: ghoryzontaljnyj ta sektoraljnyj pidkhody [dispropority of innovative sectors of structural reorganization of the industry of ukraine: horizontal and sectoral approaches]. visnyk chernivecjkogho torghoveljno-ekonomichnogho instytutu. ekonomichni nauky, vol. 3, pp. 27–39. proghnimak, o. d. (2018). inkljuzyvnyj rozvytok ukrajiny: pereshkody vs perspektyvy [the inclusive development of ukraine: obstacles vs prospects]. ekonomichnyj visnyk donbasu, vol. 1(51), pp. 187–197. pereghudova, t. v. (2016). socialjna inkljuzija jak element socialjnoji polityky: jevropejsjki uroky dlja ukrajiny [social inclusion as an element of social policy: european lessons for ukraine]. naukovyj visnyk mizhnarodnogho ghumanitarnogho universytetu, vol. 19, pp. 98–102. mancurov, i. gh. (2018). inkljuzyvnyj rozvytok jak osnova protydiji vyklykam sjoghodennja [inclusive growth as a basis for countering the global challenges of nowadays]. ekonomika ukrajiny, vol. 10(683), pp. 71–87. three seas economic journal 39 vol. 1, no. 1, 2020 corresponding author: 1 odessa i.i. mechnikov national university, ukraine. e-mail: g.alex@onu.edu.ua orcid: https://orcid.org/0000-0002-6708-0098 researcherid: aam-4387-2020 2 odessa i. i. mechnikov national university, ukraine. e-mail: anzor.mumladze@billiontons.eu orcid: https://orcid.org/0000-0003-3065-8172 doi: https://doi.org/10.30525/2661-5150/2020-1-7 quantitative easing as the main instrument of unconventional monetary policy halyna alekseievska1, anzor mumladze2 abstract. after the fall of lehman brothers in september 2008, the financial crisis turned into a global crisis and had a negative impact on the real economy. during the crisis, there has been a significant decrease in key macroeconomic indicators, such as gdp, short-term interest rates, unemployment and inflation. the gdp growth rate had taken a negative value in developed countries. inflation was below 1 percent, and deflation was observed in japan, which in turn slowed down economic development. central banks responded to the crisis with a change in interest rates, but this was not enough to calm financial markets and improve the real economy. most central banks have developed many new monetary policy tools, including communication strategies, credit policies, and large asset purchases. these new measures are often called “unconventional” monetary policies. the purpose of the article is to study quantitative easing as one of the unconventional measures of monetary policy. methodology. the article uses general scientific and special methods: generalization, systematization, economic and statistical analysis, graphic and comparison methods. this allowed us to study the theoretical foundations of the quantitative easing policy, determine the economic background for these measures application, analyze the development stages and the basic rules of functioning policy. the quantitative easing policies usage was also examined on the examples of the federal reserve, the european central bank, the bank of england and the bank of japan. results. the main trends and economic conditions, under which these methods can be used in future, were identified using an analysis of the quantitative easing application background. the policy’s main components analysis provides a clear understanding of the quantitative easing essence. as a result of the unconventional monetary policy usage, there has been a significant expansion of the usa, japan and the eurozone central banks' balances, which amounts to more than 10 trillion usd. due to this process, central banks have become key bondholders. practical meaning. the given results analysis will determine that kind of unconventional monetary policy effectiveness and the possible consequences of a significant increase in the central banks’ balance sheet assets. value/originality. in the article, the conditions, under which unconventional monetary policy has been applied, are systematized and the four central banks’ quantitative easing policy is compared. key words: monetary policy, non-traditional monetary policy, quantitative easing, central banks jel classification: e40, e50, f44, g15 1. introduction at the usual times, central banks use the overnight interest rate on the interbank market as their main policy tool. in the interbank market, banks lend and borrow bank reserves from one another. central banks can control this interest rate by adjusting the level of reserves either upward or downward. commonly, the central bank makes this adjustment in accordance with the general level of reserves corresponding to the minimum reserve requirements. but the recent financial crisis has demonstrated the failure of traditional methods. and in response to the global financial crisis, the central banks of many countries have taken unprecedented risks countering measures to stabilize prices. as policy rates are approaching to zero lower bounds, large-scale asset purchases, often referred to as “quantitative easing” (qe), have replaced interest rates as the main policy tool. three seas economic journal 40 vol. 1, no. 1, 2020 and to date, such an innovative method of monetary policy remains urgent for its study and analysis of effectiveness and application possibility in the future. unconventional monetary policy, its influence and effectiveness is an object of study in the works of many scientists. in particular, an article by brett w. fowley and christopher j. neely (2013) describes the circumstances and motives of quantitative easing programs for the federal reserve system, the bank of england, the european central bank and the bank of japan during the recent financial crisis. giovanni dell'ariccia, pau rabanal, damiano sandri (2018) in their work investigate how quantitative easing and negative interest rate policies work in theory, and some of their potential side effects. they also consider the european central bank, bank of england and the bank of japan unconventional monetary policy implementation, including an analysis of how central banks reacted to the crisis, and data on the unconventional monetary policy measures impact. rodrigo fernandez, pablo bortz and nicholas seolla (2018) assess the european monetary policy impact on the developing countries’ economies. andrei filardo and jochi nakajima (2018) are exploring whether alternative methods of monetary policy have become less effective in stimulating the economy in the conditions of constantly low interest rates. this article addresses this issue for the united states, the united kingdom, the euro area, and japan. haldane a., sklar m. r., wieladek t., young  c. (2016) study the historical development of quantitative easing policy in their work. they examine international data on the impact of this policy on financial markets and economic activity. the authors believe that the expansion of the balance sheet of the central bank has had a significant impact on the financial markets and the economy. they also found that the us has evidence that qe performance may change over time depending on the state of the economy and the liquidity of the financial system. qe can have strong cross-border effects, acting mainly through financial channels. mathias neuenkirchen (2016) uses a comparison approach to examine the impact of the bank of england's asset purchase program on macroeconomic performance in the uk. and it has been shown that quantitative easing has a significant impact on macroeconomic performance. in his study, philip andrade and other authors (2016) analyzes the impact of the european central bank's extended asset purchasing program (app) on the return on long-term securities and macroeconomic indicators, as well as characterizing its transfer channels. the purpose of this research is to study the essence of unconventional monetary policy methods based on the consideration of quantitative easing (qe). 2. background of qe in 2008, the world had the biggest financial crisis since the great depression. this recession was caused by the explosion of the real estate bubble, leading large companies such as lehman brothers holding and bear stearns companies to go bankrupt. for 18 months, the us economy was in decline, therefore, it had an impact on the global economy. economic activity in the g7 countries declined by more than 5%. the european union ended up in a debt crisis. the european debt crisis has arisen because of the main problem: the fact that 19 euro area member countries had a common currency. this meant that any monetary policy initiated by the ecb was applied to each country, despite the different economic situation in the region. at the beginning of 2010, markets admitted a mistake, considering all countries in the euro area equally safe (martin, 2012). the figure below shows the percentage change in gdp growth for the leading economies of the world since 2000. as you can see in 2008-2009 – the period of recession, the indicator takes a negative value. by the end of 2008, the delayed indirect consequences of the collapse of housing prices in 2006 led to the fact that the financial markets ceased to function, the decline in production and shortterm rates approached zero. figure 2 shows the convergence of policy rates to zero lower bounds at the end of 2008 and the beginning of 2009. another indicator of the crisis in the economy is the unemployment rate. from 2009 to 2013, it is growing every year, and then the trend is declining. and the most important problem for developed economies is low inflation, or even as can be seen in figure 4, for example, japan's deflationary processes. in conditions of low inflation, companies and households can significantly reduce mediumterm inflation expectations, which will create a deflationary spiral: falling demand and deflation will feed each other. in this case, real interest rates three seas economic journal 41 vol. 1, no. 1, 2020 cannot be reduced to levels that contributed to full employment. companies that need to cut costs, rather than lower salaries, are more likely to lay off employees. the cost of debt servicing for borrowers will increase. all this will further undermine demand. thus, low inflation slows economic growth. in such conditions, low interest rates, inflation, rising unemployment during the crisis period, traditional monetary policy measures have shown their failure. since standard monetary policy did not stimulate the economy around the world, several countries chose to introduce unconventional methods, one of which is quantitative easing. 3. quantitative easing quantitative easing can be described as the purchase of bonds and other debt instruments by central banks. this is an exchange between central banks and other financial intermediaries, such as institutional investors. the goal of qe is to stimulate the country 's economy by replacing assets held by financial institutions, such as government debt, corporate bonds and mortgage-backed -6,00 -4,00 -2,00 0,00 2,00 4,00 6,00 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 japan usa uk eu figure 1. gdp growth (%) source: [imf] -1 0 1 2 3 4 5 6 7 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 japan usa uk eu figure 2. global interest rates (%) source: [imf] three seas economic journal 42 vol. 1, no. 1, 2020 securities, with cash generated through the process. theoretically, this process has no limitations, or, more precisely, the only theoretical limit is the stock of existing assets. in modern monetary systems, the central bank is a monopoly supplier of bank reserves or banknotes, two components of the monetary base. obviously, there are legal restrictions on assets, which a central bank can buy. supporters of qe suggest that financial institutions such as banks and pension funds act as channels for liquidity transfer. this happens in the process of the so-called “portfolio rebalancing”. when the central bank buys assets and pays for them, creating bank reserves, the composition of the total portfolio of publicly owned financial assets changes. it is this ability of the central bank to unilaterally change the composition of the public total portfolio, which allows qe to create easier financial conditions. thus, theoretically and all other things being equal, qe should lead to a (slightly) lower yield on government bonds, a narrower spread of corporate bonds, higher stock prices and a weaker national currency. all these asset price movements are aimed at creating easier financial terms that are more conducive to stimulating an increased level of economic activity. such a portfolio rebalancing leads to a shift towards higher risk assets, which, 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 japan usa uk eu figure 3. unemployment rate (%) source: [imf] -1,50 -1,00 -0,50 0,00 0,50 1,00 1,50 2,00 2,50 3,00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 japan usa uk eu figure 4. inflation rate (%) source: [imf] three seas economic journal 43 vol. 1, no. 1, 2020 in turn, ultimately leads to an increase in company investment and household consumption, and therefore stimulates the economy. qe is one of the things that central banks do or can do when they have exhausted their usual interest rate measurements. just as they lowered their discount rate to or close to zero – “pegging to zero,” but still need further monetary policy easing to achieve their goals, usually these are complementary to the goals of a low but stable inflation and an economy working on full power or close to it. qe allows us to think about expanding interest rate easing at the zero bound. qe may be important for inflation targeting. in the inflation targeting mode, the central bank tries to achieve a low but stable inflation rate, which is usually equals 2%. for this purpose, two types of instruments are required: those that tighten financial conditions if inflation threatens to constantly exceed 2%, and those that ease financial conditions if inflation threatens to be below 2% sequentially. in the first case, the central bank has a tool that it can use indefinitely to try to tighten financial conditions: a short-term interest rate. you can always achieve a sufficiently high interest rate, which tightens financial conditions sufficiently to slow down the economy and reduce inflation. but in the latter case, there is a problem: the central bank cannot use the short-term interest rate in an unlimited way to try to weaken the financial conditions in order to prevent too low inflation fall or its direct deflation. qe, however, provides the central bank with a similar tool for unlimited ability to cut interest rates. generally, the central bank can expand its balance indefinitely by purchasing assets which belong to the private sector, or, in case of urgency, debt securities issued directly by the government. also, many scientists, economists, politicians and world figures speak of quantitative easing positive results as well as of the potential threats and weaknesses of this method. consider the main ones: 1. advantages and beneficial effects – the lending increase. due to the increase in funds for the account of the assets purchase by the central bank, commercial banks will issue more loans. – borrowing increase: consumers and enterprises are more likely to take on new debts at low interest rates. – expenses increase. consumers will increase their spending as all new loans and borrowings bring more money. with lower interest rates, leaving money in savings is not so attractive. – job growth: when enterprises gain access to more capital through loans and sell more on account of rising consumer spending, they are able to expand their activities and hire more employees. 2. potential disadvantages and negative effect – inflation: the money supply increase caused by qe naturally creates inflation. product competition will increase because more money is circulating, but there is no increase in the supply of goods. the higher the demand, the higher the price. if not managed properly, inflation can increase rapidly, which will lead to hyperinflation. – there is no forced lending: in qe, commercial banks must use the money they receive from the central bank to offer more loans. but there is nothing in this process that would require this from them. for example, when qe was originally used in the united states after the 2008 financial crisis, many banks kept their newfound wealth instead of distributing it. – debt increase. the borrowing benefits increase can lead to the fact that enterprises and consumers will borrow more than they can afford, which may have negative consequences for the economy. 4. examples of qe application in the framework of quantitative easing or qe, the central bank expands its balance sheet by acquiring assets that are paid for through reserves. the starting point will be a situation where the reserve level is at the minimum required level, the central bank conducting qe will create a large amount of excess reserves. this can be reflected in changes in central bank balances (see figure 5). the first monetary policy experiment, known as "quantitative easing," began in 2001, when japan's gdp growth rate slowed significantly. after several open-market operations by the bank of japan aimed at reducing interest rates to zero, the central bank focused its attention on the commercial banks' current account, which stood at around 1 trillion yen in 2001. by 2005, the balance had grown to 35 trillion yen. a soft monetary policy in japan helped stimulate the economy but proved unable to cope with deflation (see figure 4). and after the 2008 crisis, the bank of japan has launched programs it calls "quantitative and qualitative easing." in 2010, the bank of japan again began planning new measures to stimulate the economy and inflation. he lowered the interest rate from 0.1% to 0-0.1% and began buying japanese government and corporate bonds, this policy is called "abenomics". three seas economic journal 44 vol. 1, no. 1, 2020 a new generation of qe programs emerged in the usa during the 2007-2008 financial crisis. since the beginning of the global crisis, the federal reserve has launched several rounds of qe. the fed began to increase its balance sheet by buying government bonds and mortgage-backed securities. the first round of qe began in november 2008. the fed has offered to buy 100 billion usd in bonds from freddie mac, fannie mae and ginnie mae. in november 2010, the fed announced another bond purchase program, qe2. in september 2011, the fed launched a new program called operation twist. in january 2013, it launched qe3. three qe programs were implemented in the united states from 2008 to 2015, resulting in an increase in the balance of the federal reserve system from approximately 1 trillion usd to 4.5 trillion usd (see figure 5) the bank of england followed suit in 2009 by purchasing sovereign bonds and highquality corporate bonds worth over 200 billion gbp, followed by other asset acquisition programs, which totaled 375 billion gbp in 2012. quantitative easing (qe) was launched by the european central bank in march 2015 to prevent further inflation from dropping below zero. the economy was still experiencing the euro area debt crisis. the ecb has spent 2.6 trillion eur over almost four years, buying mainly government and corporate debt. as expected, qe increased economic growth, while wages and lending increased, but inflation remained low (see figure 4). this complicates the exit from qe and ensures that interest rates will remain at record lows for some time. the overall expansion of central bank balances as a result of this monetary policy is in the range of 11 trillion usd between 2008 and 2018 (this includes data for the united states, japan, the euro area). the total size of the joint balance sheets is currently 15 trillion usd, or about 20 percent of the world's gross domestic product (gdp). through this process, central banks have become key holders of bonds. 5. conclusions quantitative easing (qe) is a monetary policy that considers central bank bonds and other newly created debt instruments. central banks buy government debt (sovereign bonds) – as well as corporate bonds. this leads to an exchange: investors sell their bonds to the central bank and receive money in return. thus, central banks accumulate bonds and investors increase their funds. qe is likely to apply only when the effectiveness of monetary policy is low, suggesting that it needs to be aggressively and decisively deployed to have the desired effect. the ecb has implemented a quantitative easing policy between 2015 and 2018. japan conducted qe 2001-2006 operations and from 2012 to the present, us 2008-2014. initially, the programs were aimed at solving the problems of the financial market, but soon this goal has expanded and now includes reaching inflation targets, stimulating the real economy and curbing europe's sovereign debt crisis. the economies of these countries are recovering, but the question remains whether this is due to such an aggressive policy and how effective it is. figure 5. total assets of large central banks source: [yardeni research] three seas economic journal 45 vol. 1, no. 1, 2020 references: andrade, p., breckenfelder, j., de fiore, f., karadi, p., & tristan, o. (2016). the ecb's asset purchase programme: an early assessment working paper of the european central bank no 1956. dell’ariccia, g., rabanal, p., & sandri, d. (2018). unconventional monetary policies in the euro area, japan, and the united kingdom international monetary fund (imf) hutchins center working paper № 48. fawley, b. w., & neely, c. j. (2013). four stories of quantitative easing the federal reserve bank fernandez, r ., bortz, p., & zeolla, n. (2018). the politics of quantitative easing. somo amsterdam. filardo, a., & nakajima, j. (2018). effectiveness of unconventional monetary policies in a low interest rate environment. bis working papers no 691. haldane, a., sklar, m. r ., wieladek, t., & young, c. (2016). qe: the story so far. bank of england working paper no. 624. available at ssrn: https://ssrn.com/abstract=2858204 imf. available at: https://www.imf.org/ martin f. (2012). the failure of the euro. the foreign affairs. neuenkirch, m. (2016). an unconventional approach to evaluate the bank of england’s asset purchase program. open economies review. yardeni research (2018). global economic briefing: central banks’ balance sheets. three seas economic journal 53 vol. 1, no. 3, 2020 corresponding author: 1 lviv university of trade and economics, ukraine. e-mail: kutsykpetro@gmail.com orcid: http://orcid.org/0000-0001-5795-9704 researcherid: g-9204-2019 doi: https://doi.org/10.30525/2661-5150/2020-3-9 statistical analysis of the receivables of enterprises of housing and communal services: accounting support petro kutsyk1 abstract. the branch characteristics of activity of the enterprises of housing and communal services are defined with features of management of receivables: its absence of alternative concerning partially rendered services to consumers that would directly influence reduction of incomes of the enterprise of housing and communal services; its impossibility of resale of services, lack of clear control over the quality of services provided and its price, which leads to dissatisfaction with the social needs of the population; its lack of flexible discounts for honest payers of housing and communal services. the analysis of the structure of receivables of the population for the consumed housing and communal services of the enterprises of the lviv region during april-august 2020 is carried out. it is established that the use of inefficient methods of housing management leads to low payment discipline of buyers, which contributes to the deterioration of the financial condition of the industry as a whole. therefore, methods of accelerating the payment of receivables with appropriate reporting on the quality of services provided should be actively used. the dynamics of the amount of funds for which agreements on debt restructuring for housing and communal services have been concluded, and the amount repaid by consumers-debtors indicates increased activities on concluding contracts and gradual repayment of debts by consumers. in case of overdue receivables for housing and communal services, the consumer should be reminded of the need to pay the debt in different ways. these are in the form of a re-receipt, correspondent (send by registered mail on demand), sms, or call, or direct visit of the housing and communal services department representative to the service object, and finding out the cause of existing receivables, the order of criteria for their classification into doubtful and bad types of receivables. the purpose of the research is to identify sectorial characteristics of housing and communal services, which determine the features of receivables management and improve the methodology of statistical analysis of receivables to identify causes of late payment of housing and communal services and ways to motivate consumers to repay debts. methodology. the method of statistical analysis of receivables is developed to be carried out in three stages: analysis of the structure of receivables; analysis of the dynamics of receivables for communal services; analysis of the effectiveness of receivables restructuring. results. the following stages of statistical analysis of receivables for housing and communal services are offered. analysis of the structure of receivables to determine the types of housing and communal services for which we observe the largest and smallest share in total is proposed. analysis of the dynamics of receivables for communal services to determine trends in indicators in the regional aspect is suggested. analysis of the effectiveness of the restructuring receivables (provides for the calculation of the increase in the number of agreements on debt restructuring and assessment in the dynamics of repayment of these receivables) is proffered. practical implications. we identified effective management methods of receivables of housing and communal services that improves the financial condition of the industry as a whole. value/originality. the statistical analysis of the receivables of enterprise of housing and communal services has been further developed. key words: receivables, statistical analysis, restructuring, housing and communal services department, accounting. jel classification: g18, h32, m21 three seas economic journal 54 vol. 1, no. 3, 2020 1. introduction the activity of housing and communal services department is carried out in conditions of low contractual discipline, which leads to significant amounts of doubtful and bad receivables. at the same time, a certain part of consumers is dissatisfied with the existing discrepancy between the size of tariffs and the quality of services provided. therefore, the calculation of the current calculation of the cost of services provided by the management of housing and communal services requires greater substantiation, publication and bringing to the notice of consumers. the appropriate adjustments should be made in case of unreasonable overestimation of certain articles. the research of statistical indicators of the structure and dynamics of existing receivables in the regional aspect will identify regions with or without violations, as well as positive or negative trends in changes in payment discipline by consumers of housing and communal services. the lack of effective methodological approaches to debt management for housing and communal services necessitates the development of methodological support for statistical analysis of receivables of housing and communal services, which will improve the liquidity and solvency of enterprises in the industry. 2. brief literature review the receivables that are in doubt should be disclosed (chyzhevska et al., 2019). in order for receivables to be transparent, it is necessary to disclose reports in more detail, reflecting in the reporting lines the amount of receivables in terms of taxes and types of receivables and other information on receivables and its management, because there are debts that are actually bad. the financial statements are not enough to manage receivables. the qualitative and quantitative data complement and support each other, they must be considered simultaneously by the users of the annual report so that they can make the right decisions. the qualitative and quantitative data complement and support each other, it must be considered simultaneously by the users of the annual report so that they can make the right decisions (kubaščíková et al., 2019). the investors and other users of the annual reports are encouraged to research the descriptions together with individual financial situations and other sources of information to get a full picture of the possible future development of the company’s financial performance. this, in turn, would promote their ability to make the right investment decisions and allow them to assess the value of their funds. the causes of doubtful and bad receivables are due to the peculiarities of housing and communal services department, which affect the nature of socio-economic relations in the industry such as: 1. continuity of the process of providing and consuming services. 2. social orientation (significance) of services. 3. no alternative to the services provided. 4. inseparability of the process of providing and consuming services. 5. the dependence of production and consuming services. 6. social response to the results of service providers. 7. the production nature of the formation of prices and tariffs for services. 8. intangible nature of services provided (intangibility, impossibility of accumulation (tare) and resale) (holovchenko et al., 2017). we believe that the main characteristics of enterprises of housing and communal services that directly affect the management of receivables are: – the lack of alternatives to partially provide services to consumers, which would directly affect the reduction of income of enterprises of housing and communal services. – impossibility of resale of services, lack of clear control over the quality of services provided and price, which leads to dissatisfaction with the social needs of the population, lack of flexible discounts for honest payers of housing and communal services. the economic component of the agglomeration effect, which forms the competitive advantages of housing and communal services department in urban agglomerations, includes: – ensuring the profitability of enterprises in the industry; – reducing accounts payable and receivable; – optimizing (saving) management costs and reducing management risks (and, in turn, costs associated with its elimination, minimization, localization or prevention) by reducing the management staff (hradoboieva et al., 2015). the level of payment for services by the population; the level of reimbursement of expenses three seas economic journal 55 vol. 1, no. 3, 2020 for the production of services; the average cost of services ensures the break-even operation of enterprises of housing and communal services (kipenko et al., 2014). that is, the presence or absence of receivables significantly determines the further vector of work with consumers to encourage timely payment of debts. the cause of receivables and payables in the housing sector are a number of factors (havrylenko et al., 2014). it is the current significant debt in ukraine with the payment of wages and other cash payments to the population. in this situation, people are physically unable to pay exorbitant prices for energy, housing and communal services. however, tariffs for housing and communal services must be economically justified, because both low or high prices and tariffs for services lead to destabilization of the housing and communal services department. in the first case, there is an aging of fixed assets and the impossibility of technological renewal of the industry, which increases the loss of energy, water and other resources and, accordingly, creates conditions for increasing the cost of works and services of enterprises of housing and communal services. therefore, in order to solve the problems of the industry, it is necessary to attract additional financial and material resources. at the same time, the unprofitability of enterprises of housing and communal services, the lack of sources of financing the costs of upgrading its material and technical base does not make it possible to attract investment in the industry, introduce modern production technologies and save resources, as well as obtain loans. each enterprise must form a set of analytical indicators guided by its own information needs. as a rule, when analyzing receivables, analysts of enterprises calculate the following indicators in ukraine: – its total volume; – the amount of overdue receivables; – timeliness of payments; – its actual reversibility (general and in the context of each client); – the dynamics of its repayment; – the average period of deferred payments; – the average repayment period of the deferral; – the dynamics of working capital, etc. the calculation of these indicators makes it possible to control the movement of current funds and maintain the minimum required level of cash. often, business leaders cannot obtain the necessary information on the maturity of receivables, because the available information systems cannot ensure the formation of a report. in addition to the amount and timing of receivables, it is necessary to control the order of payments, receipts for each group of services and for each debtor, the emergence of a critical level of debt on it (fedorchenko et al., 2015). the control of doubtful and bad debts should be carried out for each consumer who did not pay on time for the received housing and communal services. 3. results the method of statistical analysis of receivables allows establishing patterns of state and development of housing and communal services department. the following stages of statistical analysis of receivables for housing and communal services are offered: 1. analysis of the structure of receivable. 2. analysis of the dynamics of receivables for communal services. 3. analysis of the effectiveness of receivables restructuring (provides the calculation of the increase in the number of agreements on debt restructuring and assessment in the dynamics of repayment of these receivables). the first stage is “analysis of the structure of receivable”. we consider the method of statistical analysis of the structure of receivable on lviv region during april-august 2020; the calculated indicators are given in table 1. in the total amount of receivables of the population for consumed housing and communal services of enterprises of housing and communal services of lviv region during april-august 2020, the largest specific weight on april 1, 2020 and on august 1, 2020 is district heating and hot water supply (65.84 % and 53.66 % respectively). moreover, there is a decrease in debt by 188.4 million uah or 35.49 % for april-august 2020, and there is a decrease by 12.18 points of the structure in the share of consumer debt for district heating and hot water supply in the total amount of communal services. the debts for communal services have the lowest share, in terms the removal of household waste, in particular, on april 1, 2020 – 3.15 %, and on august 1, 2020 – 4.59 %. however, the total amount of unpaid payments for garbage removal in lviv region increased by 3.90 million uah or by 15.35 %. three seas economic journal 56 vol. 1, no. 3, 2020 the total amount of consumer debt for water supply and drainage in lviv region increased by 17.1 million uah or 14.83 %. the debts of consumers for services related to the maintenance of buildings and adjacent territory decreased by 0.6 million uah or 0.45 %. the second stage is “analysis of the dynamics of receivables for communal services”. in general, during january-august 2020, the debt for consumed housing and communal services in ukraine decreased by 1 597.4 million uah or 5.24 %. this is a positive trend in such regions as vinnytsia, dnipropetrovsk, zhytomyr, zaporizhzhia, ivanofrankivsk, kyiv, lviv, mykolaiv, odesa, poltava, rivne, sumy, ternopil, kherson, khmelnytskyi, cherkasy, chernivtsi, chernihiv, and the city of kyiv. in other regions, there is a deterioration of payment discipline. the dynamics of consumer debt for communal services of lviv region during 7 months of 2020 is shown in figure 1. during 7 months of 2020, the largest amount of consumer debt for housing and communal services in lviv region falls on february 1, 2020, and the lowest – on august 1, 2020, and starting from april 2020 there is a positive trend towards a gradual decrease in debt. the use of inefficient management methods of housing and communal services department leads to low payment discipline of buyers, which contributes to the deterioration of the financial condition of the industry as a whole. therefore, methods of accelerating the payment of receivables with appropriate reporting on the quality of services provided should be actively used. the third stage “analysis of the effectiveness of receivables restructuring”. in order to assess how effectively the debt restructuring for housing and communal services was carried out, it is necessary to analyze how the increase in the concluded restructuring agreements affected the amount of receivables repayment. the dynamics of growth in the number of agreements on debt restructuring and the dynamics of repayment of this receivable in ukraine as a whole are given in table 2. the dynamics of the amount of funds, for which agreements on debt restructuring for housing and communal services have been concluded, and the amount repaid by consumers-debtors testify to the revival of activities on concluding contracts and gradual repayment of debts by consumers. in case of overdue receivables for housing and communal services, the consumer should be reminded of the need to pay the debt in different ways. these are in the form of a re-receipt, correspondent (send by registered mail on demand), sms, or call, or direct visit of the housing and communal services department representative to the service object, and finding out the cause of existing receivables, the order of criteria for their classification into doubtful and bad types of receivables. table 1 methods of statistical analysis of the structure of receivable of the population for consumed housing and communal services of enterprises of housing and communal services of lviv region during april-august 2020 no article 01.04.2020 01.08.2020 deviation amount in millions uah specific weight, % amount in millions uah specific weight, % absolute deviation in millions uah relative deviation, % deviations in the points of the structure 1 district heating and hot water supply 530.9 65.84 342.5 53.66 -188.4 -35.49 -12.18 2 water supply and drainage 115.3 14.30 132.4 20.74 17.1 14,83 6.44 3 maintenance of buildings and adjacent territory 134.7 16.71 134.1 21.01 -0.60 -0.45 4.30 4 removal of household waste 25.4 3.15 29.3 4.59 3,90 15.35 1.44 total: 806.3 100 638.3 100 -168.00 -20.84 х source: ministerstvo rozvytku hromad ta terytorii ukrainy three seas economic journal 57 vol. 1, no. 3, 2020 4. conclusions the following stages of statistical analysis of receivables for housing and communal services are offered. analysis of the structure of receivables to determine the types of housing and communal services for which we observe the largest and smallest share in total is proposed. analysis of the dynamics of receivables for communal services to determine trends in indicators in the regional aspect is suggested. analysis of the effectiveness of the restructuring receivables (provides for the calculation of the increase in the number of agreements on debt restructuring and assessment in the dynamics of repayment of these receivables) is proffered. the use of inefficient management methods of housing and communal services department leads to low payment discipline of buyers, which contributes to the deterioration of the financial condition of the industry as a whole. therefore, you should actively use reminder methods that will speed up the payment of receivables with figure 1. the dynamics of consumer debt for communal services of lviv region during 7 months of 2020 source: state statistics service of ukraine table 2 dynamics of growth in the number of agreements on debt restructuring and the dynamics of repayment of this receivable in ukraine as a whole during january-july 2020 month number of concluded agreements, units amount of restructured debt for housing and communal services in thousand uah amount of repayment of restructured debt for housing and communal services in thousand uah repayment of restructured debt for housing and communal services, % january 4933 38587.9 37359.7 96.82 february 5532 59005.5 24248.4 41.10 march 3539 151470.4 107865.7 71.21 april 1558 8333.2 18072.4 216.87 may 2049 11998.3 18597.9 155.00 june 3841 28949.1 19507.5 67.39 july 4631 35028.7 21524.7 61.45 source: ministerstvo rozvytku hromad ta terytorii ukrainy three seas economic journal 58 vol. 1, no. 3, 2020 appropriate reporting on the quality of services provided. these are in the form of a re-receipt, correspondent (send by registered mail on demand), sms, or call, or direct visit of the housing and communal services department representative to the service object, and finding out the cause of existing receivables, the order of criteria for their classification into doubtful and bad types of receivables. the statistical analysis of the dynamics of the amount of funds for which agreements on debt restructuring for housing and communal services and the amount repaid by consumers-debtors shows the effectiveness of this method of debt management. the prospects for further research are the development of measures to improve the payment discipline of consumers of housing and communal 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(2019). transparentnist finansovoi zvitnosti, skladenoi za msfz yak instrument antykoruptsiinoi diialnosti v ukraini [transparency of financial reporting, a component for msfz as a tool for anti-corruption diagnostics in ukraine]. mizhnarodnyi zbirnyk naukovykh prats na bazi derzhavnoho universytetu zhytomyrska politekhnika” “problemy teorii ta metodolohii bukhhalterskoho obliku, kontroliu ta analizyu”, vol. 1, pp. 110–115. three seas economic journal 1 vol. 1, no. 1, 2020 corresponding author: 1 o.s. popov odessa national academy of telecommunications, ukraine. e-mail: 7234275@gmail.com 2 o.s. popov odessa national academy of telecommunications, ukraine. e-mail: obodovskyyu@gmail.com doi: https://doi.org/10.30525/2661-5150/2020-1-1 the influence of the informal component on the transformation processes of the enterprise management structures оlena кniazieva1, yuriy obodovskyi2 abstract. the article is dedicated to the topical issue of determining the place of informal component of management in ensuring the efficiency of the transformation process of the enterprise management structures. generalization of theoretical and practical experience in the transformation of management structures allows to confirm that informal aspects are prominent in the process of the enterprise management, however, it is not reflected in the transformation of management structures. in particular, the current classification of informal relationships in the management process does not fully reflect their penetration into the system and management process, which leads to a decrease in the quality of the management structure, in the efficiency of transformation processes, the resistance of the management system of the transformation performed, and, accordingly, it reduces the overall efficiency of the enterprise management. methodology. in the course of the research, the authors have used a wide range of general scientific methods, such as abstraction, deduction, induction, analysis and synthesis, modeling and systemic approach, to describe the informal component of management, to carry out its classification, as well as to identify models of the mechanism of transformation of management structures and transformation process. according to the results of the conducted research, it is proposed to supplement the existing classification of the informal component of management by taking into account such features as: effect, stability (duration of existence) and scale of distribution; it is also proposed to expand the content for the attributes of character and manifestations of interaction of formal and informal components. it is proved that informal relationships and connections should be taken into account at every stage of the process of transformation of the management structure. in particular, it is stated that the quality of the management structure, as one of the stages of the transfor-mation process, and the factors of influence on the enterprise in the aspect of functioning and transformation of its management structure, as a limitation of the transformation process, should be investigated, taking into account the classification features of the informal component. in this regard, it is proposed to supplement the existing aspects of the quality of management structures with an informal aspect and to determine the efficiency of the processes of transformation of management structures by the criteria of system resistance to change, resource mobilization, and independence of the management structure transformation group and the efficiency of transformation activities. it is determined that the system of interconnected elements, including methods, levers and instruments of influence, which in the process of interaction provide the realization of the task of transformation of the management structure, that is, determine the mechanism of transformation of management structures, occupies a prominent place in ensuring the efficiency of the transformation of management structures, as well as obtaining the desired result (effect) for the enterprise. the practical implication of the obtained results of the research is to ensure the increase of the level of quality of the management structure and the efficiency of transformation processes by taking into account the factor of informal relationships as an in-tegral attribute of the structure of the enterprise management. the use of certain components of the mechanism and stages of the process of transformation process of management structures will reduce the resistance of the enterprise personnel to change and will achieve the desired result (effect) for the enterprise. key words: informal component of management, management structure, mechanism of transformation of management structures, quality of management structures, efficiency of the enterprise. jel classification: d70, d21, j53, l20 three seas economic journal 2 vol. 1, no. 1, 2020 1. introduction in conditions of fierce competition in the market, the sustainability of the operation and development of the enterprise is determined by its ability to take into account various factors of the external and internal environment and adapt the subsystems of the enterprise in order to ensure their smooth functioning. digitalization of economy and society, globalization and geopolitical changes, socio-economic situation of the country and other factors both create opportunities and threaten the enterprise. under these conditions, the decisive role in ensuring the functioning and development of the enterprise belongs to its management system in general and management structure in particular. today, many scientists, including m. v. veres kun, o. yu. husieva, d. l. levchynskyi, h. l. mo nastyrskyi, i. i. novakivskyi, y. m. petrovych, o. m. romanukha, ye. i. khodakivskyi et al., have dedicated their work to solving the problems related to the functioning of the enterprise management structures. studies of the scientific literature and the activities of the enterprises show that the use of the management structure as an orderly set of elements of the management system, which determines their composition, interconnections and subordination, provides the involvement of a wide range of relationships and connections among the elements of the management system, including those that are not formally established and regulated. nevertheless, the scientific works have not fully addressed the issue of taking into account the informal component of management in the process of ensuring the efficiency of the mechanism of transformation of management structures and the efficiency of the enterprise as a whole. in this regard, the purpose of the article is to summarize the theoretical and practical experience in the classification of informal aspects of management and determine the place of informal component of the management in the process of ensuring the efficiency of transformation of the enterprise management structures. 2. classification of the informal component of management the point of view of scientists on the informal component of management as an attribute of the formal system (structure) of management is common. nevertheless, in defining the concept of the management structure, this informal aspect is almost completely ignored by scientists. because the structure of management characterizes the relationship among social elements, the informal relationships of management exist in it, as in any other social system, along with the formal relationships. formal relationships are defined as relationships, which are externally structured and enshrined in office documents that involve pre-known positions of participants in the process, while informal relationships are defined as relationships regulated by unwritten rules and norms and emerge in the organization regardless of formal regulations but influence on success of the organization in achieving the goal. having all the attributes of a management system, the informal component is derived from it; its occurrence is due to the existing management system. this circumstance makes it possible to conclude that forming a management system, distinguishing certain components in the structure, giving individuals the powers of the management subject and the object, the owner (or other authorized body) sets the basis for the appearance of future informal component of management independently. the emergence and continued existence of informal aspects in the management process are conditioned by the fact that the activities of any team cannot be fully regulated, certain aspects always remain unresolved, and, thus, create preconditions for maintaining the existence of an informal component in the functioning of the enterprise. although informal aspects of management have been considered in the works of various scientists, and given that informal relationships exist at every enterprise (as it is explained in the thesis above), the scientists' attention is primarily focused on considering informal relationships in terms of their presence or absence at the enterprise. thus, the existing classification of management structures (novakivsjkyj, 2017) implies the separation of the formalization of relations in the management process and the allocation of formal and informal management structures, respectively. however, as mentioned above, the informal aspects of the management process cannot be reduced to the concept of structure only, since their composition and characteristics make it more appropriate to compare them with the management system. a more sophisticated division of management structures is suggested by o. m. romanukha, three seas economic journal 3 vol. 1, no. 1, 2020 who proposes to divide organizational structures into: working (formal), auxiliary (unofficial "positive") and protesting (unofficial "negative") (romanukha, 2016). however, in this case, it is only intended to characterize the management structure by the presence and orientation of the influence of informal management relationships. at the same time, other aspects of interaction are not highlighted as features of the informal component. another point of view on the separation of informal institutions is suggested by yu. o. ukis, who identifies the manifestation of the interaction of formal and informal institutions as attributes, manifested in the form of modification (changes of informal institutions under the influence of formal ones and vice versa); formalization (legitimization of informal institutions into formal ones); deformation (transformation of formal institutions into informal ones) (ukis, 2005). therefore, summarizing existing approaches to the separation of informal aspects of management there can be indicated the distinguishing features such as the nature and manifestations of the interaction of formal and informal components. because, as scientists argue, informal relationships significantly affect the management structure of the enterprise, there is a need for a more thorough study and classification of this component. thus, it is proposed to supplement the existing classification of the informal component of management by taking into account such features as: effect, stability (duration of existence) and scale of distribution; it is also proposed to expand the content for the attributes of character and manifestations of interaction of formal and informal components. therefore, there is provided the following classification of informal management components by: – the effect that the informal component has on the activity of the enterprise. the thesis that informal aspects of the enterprise management can have both positive and negative effects is axiomatic. thus, if certain aspects are mistakenly ignored or not sufficiently formalized in the formation of the management structure, it is precisely because of the informal relationships, connections at the enterprise the assigned tasks are ensured to be accomplished. that is, in this case, the informal component of management complements the formally regulated structure; – the nature of the interaction between the formal and informal components of management. the informal component of management is manifested in the form of supplementation or opposition to formally regulated one. the interaction, which is manifested in addition to the informal aspects of formally regulated relationships, as mentioned above, creates opportunities for ensuring the efficient operation of the enterprise, while at the same time creates obstacles opposing it. the opposition to the formal management structure is expressed in the form of ignoring the hierarchy, violating the principles of subordination, executing decisions of informal leaders, etc., which in most cases leads to negative consequences for the enterprise; – a manifestation of the interaction of formal and informal aspects of management. by this feature, the informal component has a pronounced or hidden character. it is mainly the opposition of informal relationships and connections with formally regulated procedures that takes the form of a hidden appearance, whereby, over a long period of time, the management of the enterprise may not even suspect the presence of informal aspects; – stability (duration of existence). the attribute implies a tendency to change over time. informal relationships are more than formal and prone to transformation: changes in the apparatus and management structure cause certain informal relationships and connections to break down. therefore, the informal component of management is characterized by a sign of duration of existence: permanent or situational. – scale of distribution. the informal aspects of management vary in scope, encompassing both every element (or, more commonly, almost all) and only certain elements of the management system. the difference in scale is determined by the purpose and tasks that lead to the emergence of informal relationships and connections. the need to supplement the existing classification of informal aspects of management is due to their presence in each enterprise in one way or another and to the need to take into account the informal component in the process of assessing the very structure of management, an integral attribute of which informal relationships and connections act. expanding the classification features of the informal aspects of management makes it possible to establish the need to transform the existing management system and its components in more detail, to identify the weaknesses of the formal management structure and to make appropriate three seas economic journal 4 vol. 1, no. 1, 2020 changes in order to improve its qualitative characteristics. therefore, given the importance of taking into account informal aspects in the enterprise management process, as well as the high prevalence of informal aspects in telecommunication enterprises, informal relationships and connections need to be taken into account in the transformation of the management structure. 3. mechanism of transformation f management structures transformation of management structures involves the use of the mechanism as a system of interconnected elements, including methods, levers and instruments of influence, which in the process of interaction provide the task of transforming the management structure, ensuring the desired result (effect) for the enterprise. taking into account the existing achievements of scientists on the concept of the mechanism as an economic category, the authors refined and adapted the existing model of the mechanism (lazarjeva, 2017) regarding the transformation of the management structures. the proposed mechanism allows, with the involvement of employees of the enterprise, to determine the reserves for improving its quality by monitoring the management structure and, accordingly, to implement the necessary management decisions, which are directions and measures to transform the management structure. the purpose of developing and implementing the mechanism is to ensure the efficiency of the enterprise as a whole, primarily by reducing the resistance and negative impact of the informal component, as well as increasing the motivation of employees. an important place in this mechanism of transformation of the management structures belongs to the informal component of management, the impact of which is traced at each stage of the transformation process. thus, the transformation process of the management structures reflects the connection and the necessary sequence of steps of this process. the conditions of activity of the enterprise, i.e., factors of influence on the enterprise, not only cause the mismatch of the level of quality of the management structure of the current state, but also act as limiting factors of the transformation process: depending on the available financial, material, labor and other resources of the enterprise, there are chosen the persons who will be involved in the transformation of the management structure, which will affect the overall efficiency of the transformation process. in terms of determining the factors of influence on the enterprise informal component manifests itself as follows: in the formation of the management system, i.e., the definition of the subject and object of management, the owners and managers of the enterprise are provided opportunities for the development of informal relationships, but in the future the relationship becomes the opposite, which means that when the functioning of the enterprise informal aspects of management both determine the composition of the elements of the management system, eliminating those that create obstacles to the development of informal relationships, and determine the shape of the system as the management structure with the help of informal relationships. the quality of the management structure is actually a prerequisite, that is, the entrance of the transformation process. as a characteristic of the existing properties of the management structure that are able to meet the needs of the enterprise, quality should take into account the informal aspect, as an integral attribute of the management structure, as mentioned above. however, at present, both in the literature and in the practical plane, there is no consideration of the informal component factor in the process of assessing the quality of the management structure. in this regard, the authors have proposed to complement the aspects of the quality of management structures, which have been generalized by the scientists (simenko, 2009; prudnykova, 2017), by taking into account the informal component by parameters, the allocation of which is consistent with the above classification of informal management components: – independence, which is a reflection of the level of mutual influence of formal and informal components of management; – auxiliarity, which is the characterization of the influence of the informal management component on the formal one, it implies the establishment of the need for the emergence of the informal component, because of the inability to solve the tasks set for the enterprise through a formal management structure; – scale, which is an assessment of the scale of the informal component of management, i.e., coverage of the informal component of all elements and aspects of the enterprise; three seas economic journal 5 vol. 1, no. 1, 2020 – opposition, which is an assessment of the opposition of the formal and informal components of management. the transformation of the management structure should ensure both an im-provement in its quality and the desired effect for the enterprise. however, the use of the model of the mechanism of transformation of the management structure by itself, as well as the implementation of the transformation process do not ensure its efficiency. currently, the assessment of the transformation process or improvement of the management structure is supposed to be carried out by determining the effect of the transformation of the management structure. but the effect inherently reflects the result of the activity. due to this, by characterizing the effect of transforming the management structure, researchers focus on those additional resources that can be obtained as a result of improving management. scientists bypass the question of assessment of the transformation process itself. however, the relevance and necessity of determining the efficiency of the transformation process is not diminished. the efficiency of the transformation process involves determining the ability of the management apparatus to act efficiently, to influence the transformation process in order to improve the efficiency of the enterprise as a whole and aspects of the quality of its management structure in particular. the authors propose the following as criteria for the efficiency of the transformation process: – resistance of the system to change. this criterion covers the informal component of management, which may be affected by changes in the management structure. as a criterion for the efficiency of the transformation process of the management structure, resistance characterizes the inability of the system to act actively due to confrontation from the part of employees, managers, etc. an important aspect in ensuring the efficiency of the transformation process is the determination of the system's ability to eliminate timely the destructive effect of resistance to changes in the enterprise management. determining the characteristics of its intensity and scale are the components of the system's resistance to change; – resource mobilization. the ability of the system to provide an active and efficient flow of the transformation process implies a rational approach to mobilizing the resources required for this. the criteria are urgency, promptness in providing and rational use of the necessary resources; – independence of the management structure transformation team. the main task of implementing the transformation process of the management structure is entrusted to the group for evaluation and transformation of the management structure, which prompts the issue of ensuring its independence and objectivity. the influence of the management apparatus of the enterprise, as well as of other stakeholders of the enterprise in order to satisfy subjective interests, will offset the non-involvement of the members of the group and will create obstacles to ensuring the efficient transformation of management. the components of this criterion of efficiency are the objectivity and independence of the members of the group to transform the management structure; – the effectiveness of the transformation measures. the result of the activity of the group for the assessment and transformation of the management structure is the formation, directions and transformation measures that should contribute to improving the quality of the management structure, bringing it into line with the conditions of activity of the enterprise and to ensure different types of effect. however, implementation of the proposed measures is within the competence of the management of the enterprise, and therefore the question arises about ensuring the timeliness and completeness of the implementation of the measures proposed by the group. therefore, due to the need to ensure the efficiency of the enterprise as a whole and its management structure in particular, consideration of the characteristics of the informal component of management should occur at each stage of the transformation process using the classification features of the informal component. 4. conclusions the features of the informal component of management are distinguished, which allow to expand its existing classification by more detailed definition of its characteristics. taking into account all aspects of the informal component, combined with aspects of the activity of the formal component, allows for the efficient functioning of the management structure. it is pointed out that the transformation of the management structures requires the formation of a mechanism as a set of elements that in the process of interaction provides three seas economic journal 6 vol. 1, no. 1, 2020 the task of transforming the management structure. it is determined that the qualitative characteristics of the management structure as an input and the factors influencing the enterprise, acting as a restriction of the transformation process, should take into account the informal component in order to avoid the resistance of the employees of the company to change and to ensure the efficiency of the transformation process. the importance of the problems considered in the work causes the continuation of further scientific research regarding the transformation of the management structure of telecommunication enterprises. in particular, in view of the model of transformation process considered in the work, further studies related to the evaluation of the effect of transformation of the management structure, as an output of the transformation process and the criterion, by which the expediency of carrying out these or other transformations in the management system, are promising and relevant. references: romanukha, o. m. (2016). rolj neformaljnykh orghanizacij u rozvytku forma-ljnykh orghanizacijnykh ghrup [the role of informal organizations in the development of formal organizational groups]. economic analysis: coll. of research papers, vol. 23, no. 2, pp. 169–174. ukis, ju. o. (2005). rolj neformaljnykh instytutiv u perekhidnij ekonomichnij systemi [the role of informal institutions in the transitional economic system]. (phd manuscript), kharkiv: v. n. karazin kharkiv national university. novakivsjkyj, i. i. (2017). systema upravlinnja pidpryjemstva v informacijnomu suspiljstvi [management system of enterprise in the informative society]. (doctor of economic sciences manuscript), lviv: lviv polytechnic national university. lazarjeva, n. o. (2017). orghanizacijno-ekonomichnyj mekhanizm upravlinnja efektyvnistju dijaljnosti vynorobnykh pidpryjemstv [organizational and economic mechanism for managing the performance of wineries]. (phd manuscript), odesa: odesa national academy of food technologies of the ministry of education and science of ukraine. simenko, i. v. (2009). jakistj system upravlinnja pidpryjemstvamy: metodolo-ghija, orghanizacija, praktyka [quality of enterprise management systems: methodology, organization, practice]. donetsk: donetsk national university of economics and trade named after tugan-baranovsky. (in ukrainian) prudnykova, i. m. (2017). diaghnostyka jakosti orghanizacijnykh struktur up-ravlinnja pidpryjemstvamy [the quality diagnostics of organizational structures of enterprises management]. (phd manuscript), kyiv: the state university of telecommunication. three seas economic journal 14 vol. 1, no. 1, 2020 corresponding author: 1 «highline media» ltd., ukraine. e-mail: katya.malinoshevska@inter.ua doi: https://doi.org/10.30525/2661-5150/2020-1-3 procedure for forming and implementing the strategy of enterprise development kateryna malinoshevska1 abstract. the purpose of the article shows that formulating a strategy is an important and necessary process because it helps to unite the efforts of many people and, through their coordinated work, achieve the set purposes: how to achieve the goals, what to do and how to direct the efforts of the company and its individual employees determines the strategy of the company. the problems that organizations face and how they can be solved are highly relevant in today's economy. methodology. a scientific approach to solving problematic issues allows us to model possible situations and avoid negative consequences due to the wrong strategic policy of the organization. the main purpose of this article is to identify methodological approaches to the evaluation of the characteristics, properties of the enterprise development strategy and the introduction of classification strategies based on the performance indicators of enterprises that characterize the effectiveness of their functioning in the market. results. changing the environment in which an enterprise operates in a market economy forces the company to adapt to new conditions, that is, to formulate its strategy. increasing the intensity of production, the maximum use of financial and labor resources, determine the need for new methods and approaches, that is, the strategy of enterprise development. in a competitive market, it is impossible to be successful by providing low-quality services or offering low-quality goods. before developing business management processes, a functional strategy must be developed. practical implications. strategies at any level usually do not have resources or the ability to use resources in such a way as to ensure complete confidence in success. as a result, the final and important criterion is the risk assessment of less than the achievement of strategic goals. acceptance of unavoidable risks is part of the work of strategists in the modern world, and the ability to clearly articulate the nature and extent of risk is the first step in reducing its impact. if the risk is defined as unacceptable, it is necessary to revise the tasks, changes in concepts, increase resources, or some complex of these actions. improvement of the regulatory framework of strategic planning should include mechanisms, a number of regulatory documents and bills, the adoption of which will be carried out by the scientific and technological development of enterprises. the proposed specification of factors that influence the choice of strategy, the comparative characteristics of management systems, the proposed ways to increase the set of decision-making rules will help determine the main areas of activity of the enterprise. key words: company strategy, development strategy, strategy selection criteria, strategy implementation. jel classification: f19, p20 1. introduction having a clear and comprehensible strategy helps each business to be more efficient and profitable, while achieving the desired and expected results in advance. one of the main features of the strategy for today is the industrial environment, which influences technological evolution, economic trends, prices, exchange rates, volumes and more. when an enterprise needs to start a redevelopment action, it is necessary to find a compromise between short-term actions and long-term ones, i.e., an urgent strategy. the problems that often arise in the evolution of projects confirm the outdated approach to solving these problems. conversely, continuous evolution management leads to rapid evolutionary action in an uncertain environment. moreover, this approach naturally integrates industrial strategy, practices, concepts and methods to support enterprise evolution management. in the past, the evolution of the system and its efficiency have been extensive. long-term and expensive projects have led to dramatic structural changes, and a production system has been implemented. this way of working leads to problems in the current three seas economic journal 15 vol. 1, no. 1, 2020 economic environment. investing in such projects is a very important decision; you need to control the payback period of your investments. not all firms use officially adopted planning systems, and those that use do not always do this well. formal planning provides a number of benefits: a systematic understanding of the situation, more precise coordination of the efforts of the company, more accurate statement of tasks and more advanced methods of measuring the achieved. all this should lead to an increase in sales and profits. the base for any other planning within the company is strategic planning. the strategic planning process consists of: developing a company program, formulating its goals and objectives, analyzing the business portfolio and long-term planning of the organization’s growth. to ensure the growth of the company, strategic planning requires identifying market opportunities in areas where the company will have a competitive advantage. such opportunities can be identified on the paths of intensive growth on the scale of current commodity-market activity, on the paths of integration growth within the industry and on the paths of diversification growth. implementing a strategy is a critical process. in the case of successful implementation, it is this process that leads the enterprise to achieve its goals. the implementation of the strategy is carried out through the development of programs, budgets and procedures, which can be considered as mediumterm and short-term plans for the implementation of the strategy. 2. update of development of the enterprise strategy strategy is an integrated model of action designed to achieve the goals of the enterprise. the content of a strategy is a set of decision-making rules that are used to identify the main areas of activity. there are two opposing views on strategic planning in the understanding of strategic planning. in the first case, a strategy is a specific long-term plan for achieving a specific goal, and strategy development is the process of finding a specific goal and drawing up a long-term plan. this approach is based on the fact that all changes occurring are predictable, processes occurring in the environment are deterministic and subject to complete control and management. in the second case, the strategy concerns the long-term, well-defined direction of development of the enterprise, in terms of the scope, means and form of its activity, the system of internal industrial relations, as well as the position of the enterprise in the environment. with this understanding, the strategy can be characterized as the chosen line of business, the functioning and framework of which should lead the organization to achieve its goals. in strategic planning, the direction of activity is usually chosen from the results of strategic analysis carried out using the bcg matrix and other matrices, as well as the results of the enterprise swot analysis (hlushkova, 2013). in business life, a strategy understands the general concept of how an organization's goals are achieved, its problems solved, and the limited resources required to achieve it. this concept (consistent with the second type of strategy) includes several elements. first of all, they are formed of a system of goals, including mission, corporate and specific goals. another element of the strategy is policy, or a set of specific organizational action rules aimed at achieving the goals. typically, the strategy is developed several years in advance, specified in various types of projects, programs, practical actions and implemented in the process of their realization. the considerable labor and time costs of many people required to create an enterprise strategy do not allow it to be altered frequently or seriously adjusted. therefore, it is formulated in fairly general terms. this is a conceived strategy. at the same time, both inside and outside the organization, there are new contingencies that do not fit into the original concept of the strategy. for example, they may open up new prospects and opportunities to improve the current state of affairs or, conversely, force them to reject the proposed policy and action plan. in the latter case, the initial strategy becomes impracticable, and the company proceeds to consider and formulate urgent strategic objectives. in general, an enterprise can develop and implement four main types of strategies: 1. concentrated growth strategies are the strategies to strengthen market positions, market development strategy, product development strategy. 2. integrated growth strategies are the reverse vertical integration strategy, prospective vertical integration strategy. 3. diversification growth strategies are the centralized diversification strategy, horizontal diversification strategy. three seas economic journal 16 vol. 1, no. 1, 2020 4. reduction strategies are the elimination strategy, harvest strategy, reduction strategy, cost reduction strategy. any strategy incorporates general principles on the basis of which the organization's leaders can make interrelated decisions designed to achieve consistent and orderly achievement of goals in the long term. there are four different groups of such principles (rules): 1. the rules used in evaluating the results of the enterprise's activities in the present and in the future. the qualitative side of the evaluation criteria is usually referred to as the benchmark and the quantitative content is the task. 2. the rules by which the relationship of the company with its external environment, determining: what types of products and technology it will develop, where and to whom to sell its products, how to achieve an advantage over competitors. this set of rules is called a productmarket strategy or a business strategy. 3. rules for establishing relationships and procedures within the organization. they are often referred to as an organizational concept. 4. the rules by which a company conducts its daily activities are called basic operating techniques. the main features of the strategy identified by i. ansoff in his book "strategic management", 1989: 1. the strategy development process does not end with any immediate action. usually it ends with the establishment of general directions, the promotion of which will ensure the growth and strengthening of the company 's position. 2. the formulated strategy should be used to develop strategic projects using the search method. the role of search strategy is, firstly, to help focus on specific sites and opportunities; secondly, it is to give up all other options that are not compatible with the strategy. 3. the need for strategy disappears as soon as the real course of development leads the organization to the desired events. 4. during the formulation of the strategy it is impossible to foresee all the possibilities that will be opened in the development of specific measures. therefore, we have to use highly generalized, incomplete and inaccurate information about the various alternatives. 5. as soon as specific alternatives are identified in the search process, more accurate information is displayed. however, this may call into question the validity of the initial strategic choice. therefore, successful strategy implementation is not possible without feedback. 6. as both strategies and recommendations are used to select projects, it may seem that this is the same. but these are two different things. a benchmark is a goal the company strives to achieve, and strategy is a means to an end. landmarks are the highest level of decision making. a strategy justified by one set of benchmarks will not be the same if the organization's guidelines change. 7. finally, strategy and benchmarks are interchangeable both at individual points and at different levels of the organization. some business parameters (such as market share) can serve as a benchmark for a company at one time, and at other times it will be its strategy. further, as guidance and strategies are developed within the organization, a typical hierarchy emerges: what is at the highest levels of strategy management elements at the lower levels is transformed into guidelines. 3. developing and implementing a strategy at the enterprise the company strategy is developed and implemented at all levels of strategic management: the first level – corporate – is present in companies operating in several business areas. here decisions are made on the acquisition, sale, liquidation, re-profiling of different business lines, strategic correspondence between different business areas is calculated, and diversification plans are developed, global finance management is provided by resources (vovk, 2012). the second level – business areas – is the level of the first leaders of non-diversified organizations or fully independent, responsible for the development and implementation of a business strategy. at this level, a strategy based on the corporate strategic plan is being developed and implemented, the main purpose of which is to increase the competitiveness of the organization and its competitive potential. the third level – functional – is the level of heads of functional areas: finance, marketing, production, personnel management, etc. the fourth level – linear – is the level of heads of organizational units or its geographically remote parts, such as representative offices, offices. a non-diversified organization has three levels of strategies, respectively. the variety of strategies used in strategic management makes their classification very difficult. among the classification features, the most significant are: three seas economic journal 17 vol. 1, no. 1, 2020 – level of decision making; – the main concept of competitive advantage; – industry life cycle stage; – the relative strength of the industry position of the organization; – the degree of "aggressiveness" of the organization's behavior in competition. for example, the classification of enterprise strategies by decision level is as follows: – corporate; – business; – functional; – operational (the latter can be included in the functional). a complicating factor in classifying strategies is that most strategies cannot be uniquely identified by one of the criteria. zabelin p.v. and moses n.k. there are three ways to classify strategies: – ownership of five major competitive advantage strategies (global strategies); – belonging to business portfolio management strategies (portfolio strategies); – belonging to the strategies applied, depending on external and internal conditions (functional). the strategy captures what decisions the enterprise must make in order to achieve the desired goals in the future, based on how the environment and the living conditions of the enterprise will change (figure 1). choosing a strategy involves exploring alternative areas of the organization's development, evaluating them, and selecting the best strategic alternative for implementation. in this case, special tools are used, including quantitative forecasting methods, development of future development scenarios, and portfolio analysis (nazarbaev, 1992). we especially want to focus on the innovative nature of strategic decisions, forming a strategic space from proactive and active solutions. in the first case, we are talking about pre-emptive solutions that allow us to construct the dynamics of further changes in a profitable direction, to outperform all competitors in creating the conditions for necessary changes and to derive maximum benefit from the created conditions. this is the essence of proactive strategic decisions that have become most relevant nowadays, when strategies aimed at creating their own competencies, difficult to copy by other firms, are considered successful. active strategic decisions are expressed in topical decisions on the generation of events and innovations that are significant social, political and regulatory norms the attractiveness of the industry and the level of competition company opportunities and threats the strategic position of the company strength and weakness of the company, competitive advantages personal aspirations, business philosophy, ethical principles of leadership shared values and corporate culture conclusions on the degree of influence of internal and external factors selection and evaluation of strategic alternatives formation of a strategy that is appropriate for the company figure 1. factors influencing the choice of strategy three seas economic journal 18 vol. 1, no. 1, 2020 for competitors, making the enterprise a leader of change, implementing innovative projects as impulses to the consumer and competitive communities (mazaraki, melnyk, chaiun, 2000). the strategy is implemented through the development of programs, budgets and procedures that can be considered as medium and short-term plans for strategy implementation. in the process of implementing the strategy, each level of management solves its specific tasks and performs the functions assigned to it. senior management is crucial. its activities during the implementation phase of the strategy can be presented in five consecutive stages. stage one: in-depth study of the environment, goals and strategies developed. at this stage the following main tasks are solved: – understanding the nature of the goals set by the strategy, their correctness and relevance to each other, as well as the state of the environment; – bringing the ideas of the strategic plan and the goals to the employees of the enterprise in order to prepare the conditions for their involvement in the implementation of the strategies. second stage: development of a complex of solutions for efficient use of resources available to the enterprise. at this stage, resources are assessed, allocated and aligned with the strategies implemented. for this purpose, special programs are being prepared, the implementation of which should promote the development of resources. for example, these could be employee development programs (project jacquard, 2018). in the third stage, senior management decides to make changes to the existing organizational structure. the fourth stage is to make the necessary changes in the enterprise, without which it is impossible to start implementing the strategy. for this purpose, a scenario of possible resistance to change is developed, and measures are taken to eliminate or minimize real resistance and to consolidate change. stage five: update your strategic plan if new circumstances urgently require it. therefore, difficult situations require the ability to anticipate the possible development of processes, events and the state of future probable situations. thus, any significant and large-scale events objectively require a strategic approach to management (strategies of foreign markets entry, 2018). the results of the implementation of the strategy are evaluated and through the feedback system the organization is monitored, during which the previous steps can be adjusted (table 1). the introduction of long-term planning has given rise to an approach to strategy as a set of goals, which is understood as a set of long-term goals and objectives that ensure the effective interaction of the enterprise with the external environment. but any goal forms a decision space in which a company must make only one, the most optimal choice from the point of view of its own development. 4. conclusions in the era of comprehensive planning, strategy is increasingly perceived as a detailed, comprehensive plan designed to help achieve the mission and goals of the organization. the strategic plan, from our point of view, describes the main stages of achieving the long-term goals, but does not determine the table 1 comparative characteristics of control systems parameters control based management extrapolation control change-based management strategic management assumptions the past repeats itself trends persist new developments / trends are predictable partial predictability for weak signals type of change slower firm response compare with the reaction of the company faster company response process cyclical real time management basis deviation control, integrated management target management strategic analysis accounting for market development and the environment emphasis in management stability / reactivity foresight research creation period since 1900 since the 1950s since the 1960s since the 1980s three seas economic journal 19 vol. 1, no. 1, 2020 optimal path of the enterprise in the space of decisions. w hen recurring planning becomes an enterprise management practice, managers perceive the strategy as a behavior line. this interpretation is linked to a real understanding of strategy. moreover, strategy as a plan and strategy as a line of conduct are level: the organization develops plans for the future and draws on principles of behavior from its past. the strategy captures what decisions an enterprise must make today to achieve its desired goals in the future, based on how the environment and living conditions of the enterprise will change. the strategy of the enterprise should be based on determining the optimal path of development, on the vision of the future, on a qualitatively new state, on creation of favorable conditions for the enterprise and consist in making active and active innovative decisions aimed at creating difficult competencies. references: hlushkova, t. v. innovation components of the modern advertisement. available at: http://nbuv.gov.ua/ ujrn/apmk_2013_14_31 (accessed february 25, 2020). video mapping. available at: https://ru.wikipedia.org/wiki/видеомаппинг (accessed march 03, 2020). vovk, i. p. (2012). osoblyvosti vprovadzhennia zakhodiv resursozberezhennia ta metodyka vyznachennia yikh efektyvnosti na mashynobudivnykh pidpryiemstvakh v konteksti resursonomiky [features of resource conservation measures and methods of their effectiveness in engineering enterprises in the context of resourcenomy]. visnyk of sumy state university. economics series, no. 4, pp. 107–117. project jacquard. available at: https://atap.google.com/jacquard/ (accessed march 07, 2020). nazarbaev, n. a. (1992). strategiia resursosberezheniia i perehod k rynku [the resource-saving strategy and transition to the market]. moscow: mashinostroenie. (in russian) official website of the analytical agency business views. available at: http://businessviews.com.ua/ (accessed february 15, 2020). mazaraki, а. а., melnyk, t. m., & chaiun, t. i. (2000). international marketing: textbook for students of hei. kyiv: knteu, 306 p. strategies of foreign markets entry: expand business rightly. available at: http://powerbranding.ru/ marketing-strategy/market-entry/ (accessed february 28, 2020). three seas economic journal 53 vol. 1, no. 1, 2020 corresponding author: 1 pervomaisk branch of admiral makarov national university of shipbuilding, ukraine. e-mail: nataliamihai@ukr.net orcid: http://orcid.org/0000-0001-7610-5093 doi: https://doi.org/10.30525/2661-5150/2020-1-9 problems and prospects of development of seaports logistic infrastructure in ukraine natalia mihai1 abstract. the article is devoted to the study of the seaports of ukraine and the identification of problems in the development of their logistics infrastructure. the purpose of the paper is to study the main problems of development of logistics infrastructure of seaports of ukraine and determine the benefits of forming effective logistics centers based on them. the methodological basis of the study is general scientific techniques and methods. in particular, the systemic approach, method of analysis and synthesis, logical and prognostic methods. the results of the study allow us to determine that the degree of integration of ukraine’s port industry into the international community remains low. the productivity of transport infrastructure and logistics processes are low. seaports, of which there have been 13 in 2019, have a high investment potential due to their specialization and geographical location of the country. much has been done by the government to develop the port industry since independence, but today there are a number of important issues, including low levels of private investment due to instability and high risk of corruption in the domestic economy, declining seaport turnover due to unreliable maritime logistics systems, imperfect tariff policy and many others. the results of the paper are the study of the experience of forming logistics infrastructure abroad, in particular in germany and the netherlands, and the argument for the creation of multimodal logistics centers on the basis of the ukrainian seaports. it is determined that a special role in their formation and control over their activities should belong to state and municipal authorities. when creating a multimodal logistics center, a comprehensive approach should be applied, which covers such areas of activity as: development of the logistics services market; optimization and development of transport infrastructure (ensuring the possibility of cargo handling by different modes of transport); effective investment policy; development of trade relations; environmental protection; development of territories, creation of industrial parks and social policy (location of multimodal logistics centers near large settlements, creation of additional jobs). the support for these areas will diversify the economy of those regions, in which seaports are located, and will have an overall positive impact on the country’s economy as a whole, increase its logistics potential and competitiveness. value/originality. a detailed analysis of the ukrainian seaports and existing problems in the development of their logistics infrastructure provides a better understanding of the need to create powerful multimodal logistics centers and the formation of a single information space for the integration of ukrainian and european port industry. key words: seaports, transport and logistics service, logistics infrastructure, multi-modal logistics center. jel classification: r42, o18, l91 1. introduction in the current conditions of transformation of the global economic model of world economic relations, the formation of an effective logistics infrastructure of seaports is a crucial task for any country with access to the sea. modern competition in the markets of world maritime trade tends to change in the relationship between the volume of goods and services and the place of the main export-oriented industries in the world division of labor. maritime companies are leaders in the cargo transshipment of various types under the conditions of high-quality specification of each seaport in the world (nіkulin, roshchina, 2015). seaports of ukraine are the most important part of not only transport but also production infrastructure of the country. their role in the domestic economy is determined by the fact that they are located in the directions of international transport corridors, as well as by the fact that three seas economic journal 54 vol. 1, no. 1, 2020 the administrative and economic border of ukraine passes through them. unfortunately, the current ukrainian realities of the functioning of commercial seaports in the direction of providing efficient transport and logistics services indicate a rather low level of development. as a result, there is low demand for services of commercial seaports of ukraine, compared to foreign ones due to insufficient level of development of logistics infrastructure. competition and the transfer of a significant number of customers to the ports of neighboring countries requires early action in making decisions on the development of new technologies and improving the quality and speed of cargo handling in the ukrainian ports (korniiko, 2016). the formation of the principles of reforming port services, positioning the seaports of ukraine as powerful logistics centers in the international transport corridors is becoming especially relevant today. theoretical and practical aspects of the functioning of seaports and ensuring the development of their logistics infrastructure in recent years have been actively covered in the scientific works of domestic and foreign scientists.. among them there are the following: ye. ihnatenko, о. karpenko, т. lohutova, s. nikulin, о. poliakova, n. roshchina, о. tkachova, s. sharai, о. shramenko, т. beierle, с. вергоувен, а. titov, v. shumaie, etc. however, today there are many unresolved problems of legal, administrative, economic nature regarding the formation of efficient logistics infrastructure and full use of the capacity of seaports of ukraine. the research of the topic has been carried out in the following logical se-quence: the activity of seaports has been studied and the state of their logistics infrastructure has been assessed, the main problems accompanying the functioning of the seaport industry at this stage have been identified and the necessity of creation the multimodal logistics centers as a resource for integration the seaport industry into the global community has been justified. 2. evaluation of the activity of seaports of ukraine effective use of the capabilities of the ukrainian seaports is an essential prerequisite for the development of the domestic economy. fierce competition in international markets, modern integration processes, as well as economic realities determine the need for a clear understanding of the challenges of developing, reforming and improving the efficiency of the seaport system through the establishment of logistics systems. according to the ukrainian sea ports authority, there is a port complex, which contains 13 seaports as of 2019 (reni, izmail, ust-dunaisk, bilhoroddnistrovskyi, chornomorsk, odesa, yuzhnyi, mykolaiv, olvia, kherson, skadovsk, berdiansk, mariupol), capable of processing up to 230 million tons of cargo per year, more than 100 port operators that ensure the operation of seaports (table 1). for comparison, in 2013, ukraine owned 18 seaports. one third of the available capacity is state stevedoring companies, the depreciation of fixed assets of which reaches 80% (administratsiia morskykh portiv ukrainy, 2018). to identify problems in the development of logistics infrastructure of seaports in ukraine, an analysis of their activities is performed. table 1 current state of seaports of ukraine (2018) indicators units number of seaports, pcs. 13 number of berths, pcs. 263 length of berths, km. 40 cargo processed (export, import, transit), thou-sand tons 135.171 revenue, mln. uah 7394 the dynamics of cargo turnover by seaports of ukraine is shown in figure 1. as it is shown in figure 1, cargo turnover of seaports for the analyzed period has a stable negative dynamics in terms of cargo transit. this may indicate customer distrust in the reliability of the logistics system for ensuring marine shipping. at the same time, according to the ministry of infrastructure of ukraine for 2016-2019, the volume of cargo transshipment in seaports is growing. therefore, in 2017, cargo turnover in the ports of ukraine has increased by 0.6%, in 2018 – by 2%, and for 6 months of 2019, in comparison to the same period in 2018, this figure already reaches + 13%. this year the best indicators are shown by seaports chornomorsk (121.1%), mykolaiv (119.5%), odesa (112.3%), reni (110.6%), ustdunaisk (218.3%), kherson (131.2%) and yuzhnyi (120.3%) (the cargo turnover of seaports has been growing for three years, 2019). at the same time, the share of shipments by water transport, according to the state statistics three seas economic journal 55 vol. 1, no. 1, 2020 committee, is quite low compared to other modes of transport. to reflect the situation, the author has analyzed the volume of transportation of goods by mode of transport and determined the share of modes of transport in the transportation of goods (table 2). it should be noted that the level of development of the logistics infrastructure of ukraine occupies a low position in international rankings, although in recent years there have been positive changes. thus, ukraine ranked 80th in the specialized international ranking of trade logistics on the general indicator lpi 2016, which represented 160 countries, which were evaluated on a fivepoint scale. the country 's score was 2.74 points out of 5 possible, and in the international position on the sub-index of logistics competence, ukraine had only 2.55 points. the same indicator of lpi 2018 for our country in 2018 had the following values: 66th place of the country in the international ranking, the country’s assessment of 2.83 points, and positioning on the sub-index of logistics competence in 2.84 points (global rankings, 2019). ukraine’s position on the international trade facilitation index (tfi) is also indicative. according to the report of the world economic forum, the potential of 138 countries was assessed by 56 indicators, grouped by categories: access to the domestic market; administrative management at the border; business climate; transport and communication infrastructure. in recent years, according to the tfi, ukraine is losing ground, so if in 2012 our country had taken 86th place, in 2016 it took 95th place. according to one of the expected quantitative results in the nts 2030, the ukrainian ports should enter the first hundred (top 100) ports with the largest container traffic in the world by 2030. certainly, this will be difficult to achieve, because, according to the rating in 2017, the 100th place is occupied by the king abdullah port in saudi arabia with a little more than 1.4 million teu, processed in 2016. the ukrainian seaports have the physical figure 1. dynamics of cargo turnover by seaports of ukraine source: compiled according to the data (administratsiia morskykh portiv ukrainy, 2018) table 2 volumes of cargo transportation and specific weight of different types of transport in cargo transportation mode of transport 2015 2016 2017 2018 volume of cargo, million tons specific weight, % volume of cargo, million tons specific weight, % volume of cargo, million tons specific weight, % volume of cargo, million tons specific weight, % railway 350.0 58.3 344.1 55.1 339.5 53.4 322.3 51.6 automobile 147.3 24.5 166.9 26.7 175.6 27.6 187.2 29.97 pipeline 97.2 16.2 106.7 17.1 114.8 18.05 109.4 17.5 water 6.4 1.06 6.7 1.07 5.9 0.93 5.6 0.89 air 0.1 0.02 0.07 0.01 0.1 0.02 0.1 0.02 0 50000 100000 150000 total transit 2014 2015 2016 2017 2018import export three seas economic journal 56 vol. 1, no. 1, 2020 capacity to enter the top 100, as it is estimated that the ukrainian container terminals can process about 3 million teus (or about 26 million tons of containerized cargo), but only a quarter of the capacity has been used in recent years. in practice, all container traffic passes through three ports in chornomorske, odesa and yuzhnyi (sustainable logistics strategy and action plan for ukraine, 2018). consequently, we consider and agree with the ukrainian scientists (lipskyi v.v. (2018), kravchenko o.a., strebko yu.a. (2011), hryshova  i.yu. (2019), poliakova o.m., shramenko o.v. (2017) that the main problems that hinder the development of logistics infrastructure of seaports of ukraine are: lack of funds to finance all types of work; imbalance in the development of transshipment capacities and state land infrastructure; low level of coordination between modes of transport and local authorities to ensure the development of port infrastructure; low efficiency of using the potential of existing transshipment capacities; limited instruments for attracting private investment; underdeveloped transport infrastructure in seaports and water zones; insufficient level and inconsistency of depths in some seaports; slow renewal of fixed assets and non-compliance of their technical level with modern requirements; loss of transit cargo flows by domestic ports, their reorientation to the ports of the baltic states, poland, romania, germany; imperfection of customs procedures and the presence of high corruption risks; insufficient level of introduction of electronic cargo clearance systems and imperfect tariff policy in the field of service provision; insufficient level of service quality; the impossibility of full-scale optimization of the activities of state-owned enterprises in the maritime sector due to the high level of costs for the processing of social infrastructure; low level of participation of local authorities in the development of seaports in the region; excessive fiscal burden on port dues; lack of existing policy to ensure social guarantees and optimization of industry personnel against the background of increasing intensification and automation of production processes. 3. arguments for the creation of multimodal logistics centers in ukraine the global experience confirms that increasing the level of logistics services in the port sector of ukraine is best done by creating multimodal logistics centers based on them. hence, studying the peculiarities of the creation and operation of multimodal logistics centers in world ports, we believe that the greatest attention should be paid to the experience of germany and the netherlands. the peculiarity of the creation of multimodal logistics centers at the ports of these countries is the strong promotion and control of their activities by state and municipal authorities. in germany, in particular, state authorities provide targeted subsidies to federal budgets, while clearly identifying sources of investment. the created logistics centers are managed through supervisory bodies created by different companies – participants of the project: investors or investment consortia; development companies; municipality; associations and unions. the state sector participates both in the planning phase and in the phase of implementation of investments in the development of logistics centers (tityukhin, 2011). logistics centers are located across the country in such a way that it is possible to cover almost 90% of the territory. only more than 600 logistics companies have been set up in the port of hamburg. logistics infrastructure is characterized by a high level of development, multimodality and diversification of transportation. the netherlands is the main logistics center today. the port of rotterdam is the largest port in europe, which uses the most powerful logistics innovations and has a high level of security. there are about 120 terminals in the port, and the annual cargo turnover averages 450 million eur. it is outstanding that the port is state-owned, as 70% of the port’s shares belong to the city municipality, 30% of the shares belong to the state. the port serves 144 thousand vessels annually. it is planned that some of them will be controlled by artificial intelligence by 2025. the entire port area will be covered by the internet of things (iot) and ibm cloud. the efficient operation of the port of rotterdam is a powerful source of revenue for the state, so, in 2018, the port transferred 96.5 million eur dividends (68.3 million eur to the municipality and 28.2 million eur to the state). ukraine has a significant potential in the field of forming multimodal logistics centers in seaports, which would provide a transit logistics chain of goods traffic between europe and asia. geographical location also makes it possible to involve ukraine in the system of international transport corridors. ukraine has five international transport corridors, but seaports still cannot be 100% classified as the powerful logistics centers. three seas economic journal 57 vol. 1, no. 1, 2020 we distinguish that in order for this to happen, it is necessary to determine the features of multimodal logistics centers that already exist abroad and the conditions of their adaptation and operation in the domestic economic conditions. therefore, an important condition for the creation and development of a multimodal logistics center is the presence of a single operator that must monitor the movement of goods, speed, quality of services provided, the consistency of different modes of transport. the presence of a single operator significantly simplifies the procedure of paperwork, ensures the efficiency of information flows and reduces the cost of port fees. when creating a multimodal logistics center, a comprehensive approach should be applied, which covers such areas of activity as: development of the logistics services market; optimization and development of transport infrastructure (ensuring the possibility of cargo handling by different modes of transport); effective investment policy; development of trade relations; environmental protection; development of territories, creation of industrial parks and social policy (location of multimodal logistics centers near large settlements, creation of additional jobs). support for these areas will diversify the economy of those regions, in which seaports are located, and will have an overall positive impact on the country’s economy as a whole, increasing its innovation potential and competitiveness. the main principles of functioning of a multimodal logistics center should be availability, complexity, high quality of service, affordability and guarantees of proper performance of duties. thus, a modern multimodal logistics center is a large territorial portal, infrastructurally provided depending on the specifics of the field of activity and designed to handle large volumes of cargo through coordinated interaction of different modes of transport and all participants in the transport and logistics process. the organizational structure of the multimodal logistics center is presented in figure 2. control system (single control operator) customs center logistics innovation center business center center for cargo processing and warehousing marketing center intermodal container terminals security service center of moto transport rail communication center stevedoring сompanies personnel selection and training center freight forwarding companies information center center for environmental protection hotel complex and vacation spots center for legal services figure 2. organizational structure of a multimodal logistics center three seas economic journal 58 vol. 1, no. 1, 2020 thanks to the creation of multimodal logistics centers in the ports of ukraine, the efficiency of the transport chain will increase, document flow will be simplified due to the fact that it will not be necessary to document each cargo transportation, using different modes of transport will provide a single transport process, target pricing. in addition, the creation of a multimodal logistics center provides for a single information space not only in the port industry of ukraine, but also at the european level. 4. conclusions the degree of integration of ukraine’s port industry into the international community remains low, which negatively affects the productivity of transport infrastructure and logistics processes. seaports have a high investment potential due to their specialization and geographical location of the country. during the years of independence, the government of our state has done a lot for the development of the port industry, but today there are a number of important problems, including: low level of private investment due to instability and high risk of corruption in the domestic economy, decrease in cargo turnover of seaports due to unreliability of the logistic systems of providing maritime shipping, imperfect tariff policy and many others. given the global experience to address these issues, we believe that it is the state that should undertake to promote the creation of powerful multimodal logistics centers and control over their operation. this will increase the competitiveness of domestic ports, the trust of the international community, the integration of the ukrainian and european port industries and increase cargo flow, improve the quality and speed of its processing. for the country’s economy, the development of logistics infrastructure through the formation of multimodal logistics centers means increasing of the budget revenues, improving of the environmental security, optimization of transport infrastructure and interaction of stakeholders in servicing the logistics process. references: administratsiia morskykh portiv ukrainy [administration of seaports of ukraine]. retrieved from: https://www.uspa.gov.ua/pokaznikiroboti/pokazniki-roboti-2018 (accessed: 15 april 2020). vantazhoobih morskykh portiv zrostaie vzhe try roky [the cargo turnover of seaports has been growing for three years]. retrieved from: https://www.depo.ua/ukr/money/vantazhoobig-morskikh-portivzrostae-vzhe-tri-roki-201909121027394 (accessed: 18 march 2020). v niderlandakh budut vystraivat' transportnyy koridor amsterdam-utrekht-rotterdam [amsterdamutrecht-rotterdam transport corridor to be built in the netherlands] retrieved from: https://cfts.org.ua/ news/2019/02/20/v_niderlandakh_budut_vystraivat_transportnyy_koridor_amsterdam_utrekht_ rotterdam_51805 (accessed: 03 may 2020). hryshova, i. yu. (2019). derzhavna investytsiina polityka rozvytku morskykh portiv ukrainy [state investment policy for the development of seaports in ukraine]. investment: practice and experience, no. 11, pp. 97–102. korniiko, ya. r . (2016). tekhnolohichni ta informatsiini perevahy formuvannia multy-modalnykh transportno-lohistychnykh tsentriv [technological and informational benefits of forming multimodal transport and logistics centers]. water transport, vol. 1, pp. 113–117. retrieved from: http://nbuv.gov.ua/ ujrn/vodt_2016_1_20 (accessed: 02 april 2020). kravchenko, o. a., & strebko, yu. a. (2011). vybir priorytetnykh napriamkiv orhanizatsiinoho rozvytku morskykh torhovelnykh portiv ukrainy v umovakh hlobalizatsii svitovoi ekonomiky [a choice of priority directions of organizational development of commercial seaports of ukraine in the conditions of world economy globalization]. proceedings of odessa polytechnic university, vol. 2(36), pp. 284–289. lipskyi, v. v. (2018). osoblyvosti rozvytku morskykh portiv ukrainy yak obiekta in-vestuvannia [features of marine ports development in ukraine as a investment objective]. black sea economic studies, vol. 36, pp. 75–81 mihai, n. b., & khmarska, i. (2019). problemy rozvytku lohistychnoi infrastruktury morskykh portiv ukrayiny [problems of development of seaports logistic infrastructure in ukraine]. materials of the all-ukrainian scientific economic readings with international participation “transformation of economic processes in the sea economic complex of ukraine”, pp. 234–237. nіkulin, s. h., & roshchina, n. v. (2015). svitovi tendentsii rozvytku morskykh portiv [the world trends in the development of seaports]. current problems of the sectoral economy, no. 4(20), pp. 148–154. three seas economic journal 59 vol. 1, no. 1, 2020 pasichnyk, a. m., klen, o. m., & miroshnichenko, s. v. (2016). analiz ta otsinka efektyvnosti vykorystannia tranzytnoho po-tentsialu ukrainskoi transportnoi systemy [analysis and evaluation of the efficiency of using the transit potential of the ukraine transport system]. electromagnetic compatibility and safety in railway transport, no. 12, pp. 88–97. poliakova, o. m., & shramenko, o. v. (2017). suchasni tendentsii rozvytku transportno-lohistychnoi infrastruktury v ukraini i sviti [modern trends os development of transport and logistics infrastructure in ukraine and the world]. bulletin of transport economic and industry, no. 58, pp. 126–134. stratehiia staloi lohistyky ta plan dii dlia ukrainy (2018). [sustainable logistics strategy and action plan for ukraine]. retrieved from: https://mtu.gov.ua/files/logistics.pdf (accessed: 03 may 2020). tityukhin, n. (2011). logistika. instrument povysheniya konkurentosposobnosti transportnogo rynka rossii [logistics. instrument for increasing the competitiveness of the russian transport market]. loginfo, no. 1–2, pp. 9–13. global rankings 2016. retrieved from: https://lpi.worldbank.org/international/scorecard/ radar/254/c/ukr/2018#chartarea (accessed: 28 january 2020). three seas economic journal 28 vol. 1, no. 1, 2020 corresponding author: 1 vinnytsia national agrarian university, ukraine. e-mail: fedorishina@i.ua orcid: https://orcid.org/0000-0003-1577-6699 researcherid: l-5746-2018 doi: https://doi.org/10.30525/2661-5150/2020-1-5 the mechanism of fiscal policy lidiia fedoryshyna1 abstract. the purpose of this article is to study fiscal policy, which is one of the methods of regulating the country's macroeconomic policy. theoretical approaches of scientists to the definition of the term "fiscal policy" are investigated. the contents and principles of the functioning of the mechanism of fiscal policy are disclosed. method. theoretical approaches to the definition of mechanisms and discrete components of the fiscal policy of the state and its criteria characteristics have been developed. the research has been based on the use of a systematic approach to the consideration of fiscal phenomena, on the fundamental principles of economic theory, systems theory, theory of finance, theory of taxes, etc. results. it is observed that the budget deficit and the national debt are closely linked: the increase in the budget deficit leads to an increase in the national debt. but the absolute magnitude of the budget deficit, and therefore of the public debt, does not provide enough information for economic analysis. it is necessary to know what processes the budget deficit is serving, what changes in the reproduction cycle it reflects. it is also very important to measure changes in public debt in relation to changes in gdp. in addition, the tax burden is increasing as a result of these changes. value/originality. it is determined that along with the expected changes in the methodology of calculation and procedure of tax payment, taxpayers are also concerned about the question of changing the tariff grid by the total amount of taxes due in absolute terms and in relation to the volume and resultant indicators of production activity (revenue, profit). an innovative tariff policy has been proposed and opportunities for using non-traditional agricultural insurance products have been revealed. recommendations to improve the fiscal policy of the state have been made. the conceptual platform for harmonizing the mechanism of fiscal policy regarding economic entities is substantiated. key words: methodology, analysis, fiscal policy, mechanism, macroeconomic regulation, policies of built-in stabilizers, economic, tax. jel classification: g28, h24, j20 1. introduction welcome to the world of fiscal policy. so, thanks to the good graces of j. m. keynes it is customary to name an area of the economy that is directly related to the interaction of state bodies and all other business entities. this interaction is achieved through a system of government orders, taxation and transfer payments. since the implementation of public spending means the use of state budget funds and taxes are the main source of replenishment, fiscal policy comes down to manipulating the state budget. fiscal policy is a very powerful weapon. some economists argue that like an atomic bomb, it is a too powerful weapon to allow individuals and governments to play with it; so, it would be better if fiscal policy have never been applied. nevertheless, it is absolutely certain that just as no nation will sit idly by allowing the plague to mow the population, in the same way fiscal policy always comes into play in every country as soon as a depression begins to unfold. there is no other choice than to try to direct fiscal policy in a healthy rather than pernicious direction. any government always pursues some fiscal policy regardless of whether it is aware of it or not. the real question is whether this policy will be constructive or whether it will be unconscious and inconsistent. 2. economic crisis effects on consumer behavior the topic of fiscal policy today is very relevant, since the economy of the republic is not going three seas economic journal 29 vol. 1, no. 1, 2020 through the best of days and the fate of every person living in our country and the fate of the whole country depends on how the government will implement the fiscal policy. as the surgeon’s scalpel heals, cutting off the unnecessary, the government needs to move in such a way as to cut off unnecessary government spending to minimize taxation of business entities, thereby creating the most favorable conditions for business development but at the same time not to deprive transfer payments of those who really need them. one of the main tools of macroeconomic regulation is fiscal policy. under fiscal policy the totality of measures taken by government bodies to change public spending and taxation is understood. its main tasks are: smoothing the fluctuations of the economic cycle, ensuring sustainable economic growth, achieving a high level of employment, reducing inflation. fiscal policy, depending on the mechanisms of its regulation for changing the economic situation, is divided into discretionary and automatic fiscal policies (policies of built-in stabilizers). discretionary policy is understood as the deliberate manipulation of government spending and taxes. it is also called active fiscal policy. it can be carried out using both direct and indirect tools. the first include a change in government procurement of goods and services, transfer payments. the second includes changes in taxation (tax rates, tax benefits, tax base) accelerated depreciation policy. consider the mechanism of discretionary fiscal policy using the keynesian model of "income – expenses" and assuming that: 1) government spending does not affect either consumption or investment; 2) net export is zero; 3) the price level is constant; 4) initially, there are no taxes in the economy; 5) fiscal policy has an impact on total costs (aggregate demand) but not on aggregate supply. given these assumptions we analyze the impact of changes in government spending on the volume of national production (output), income. 3. differences in consumer spending behaviour among age groups in practice the level of government spending and tax revenues can change even if the government does not take appropriate decisions. this is due to the existence of built-in stability which defines an automatic (passive, non-discretionary) fiscal policy. built-in stability is based on mechanisms that operate in self-regulation mode and automatically respond to changes in the state of the economy. they are called built-in (automatic) stabilizers. these include: 1. changes in tax revenue. the amount of taxes depends on the income of the population and enterprises. in a period of decline in production, revenues will begin to decrease which will automatically reduce tax revenues to the treasury. consequently the income remaining in the population and enterprises will increase. this will to some extent slow down the decline in aggregate demand which will positively affect the development of the economy. the progressiveness of the tax system has the same effect. with a decrease in the volume of national production, incomes decrease but at the same time tax rates decrease, which is accompanied by a decrease in both the absolute amount of tax revenues to the treasury and their share in the company 's income. as a result, the fall in aggregate demand will be milder. 2. unemployment benefit systems and social benefits. they also have automatic countercyclical effects. thus an increase in the level of employment leads to an increase in taxes which finance unemployment benefits. with a decline in production the number of unemployed increases which reduces aggregate demand. however at the same time the amount of unemployment benefits is also growing. this supports consumption, slows the decline in demand and therefore counteracts the growing crisis. in the same automatic mode the systems of income indexation and social payments function. there are other forms of built-in stabilizers: farmer assistance programs, corporate savings, personal savings, etc. built-in stabilizers mitigate changes in aggregate demand and thereby help stabilize national output. it is thanks to their action that the development of the economic cycle has changed: the decline in production has become less deep and shorter. previously this was not possible since tax rates were lower and unemployment benefits and social benefits were negligible. the main advantage of a non-discretionary fiscal policy is that its instruments (built-in stabilizers) turn on immediately at the slightest change in economic conditions, there is practically no time lag. the disadvantage of automatic fiscal policy is that it only helps smooth out cyclical fluctuations but cannot eliminate them. it should be noted that the three seas economic journal 30 vol. 1, no. 1, 2020 higher the tax rate, the higher the transfer payments, the more effective the non-discretionary policy. 4. findings depending on the purpose, a stimulating or restraining fiscal policy is pursued. in periods of decline in production, it is necessary to increase government spending, reduce taxes or do both, pursue a stimulating (expansionist) policy. in the short term, it softens the business cycle. in the short term, it softens the business cycle. in the long term tax cuts can lead to economic growth. this was the case in the 1980s in developed countries where tax reforms, as a result of which corporate income tax and income tax rates were reduced, helped boost the economy. in order to reduce inflation, they are implementing a restraining (restrictionist) fiscal policy. it consists in cutting government spending, increasing taxes or in a combination of both. in the short term restraint policies reduce aggregate demand and thereby help reduce demand inflation. in the long term it can lead to a decline in production and an increase in unemployment. a change in the full employment budget shows how the current fiscal policy affects the change in aggregate demand. an increase in the deficit or a reduction in the surplus of the full-employment budget indicates a stimulating fiscal policy aimed at expanding aggregate demand. on the contrary, a reduction in the deficit or an increase in the surplus of the full employment budget is the result of the implementation of a restraining fiscal policy the aim of which is to reduce aggregate demand. according to the keynesian approach the use of taxes as an important tool of fiscal policy can stimulate business and investment activity, since tax cuts leave at the disposal of entrepreneurs a much larger portion of money than the amount of tax cuts. however, this provision applies only to proportionate taxes. they play the role of automatic stabilizers of the economy. 5. conclusions fiscal policy is one of the main tools of macroeconomic regulation. 1. fiscal policy, depending on the mechanisms of its regulation for changing the economic situation, is divided into discretionary and automatic fiscal policies (policies of built-in stabilizers). discretionary policy is understood as the deliberate manipulation of government spending and taxes. it is also called active fiscal policy. in practice the level of government spending and tax revenues can change even if the government does not take appropriate decisions. this is due to the existence of built-in stability, which defines an automatic (passive, non-discretionary) fiscal policy. 2. the most significant fiscal instruments are taxes and government procurement. in periods of decline in production it is necessary to increase government spending, reduce taxes or do both and etc. pursue a stimulating (expansionist) policy. in order to reduce inflation they are implementing a restraining (restrictionist) fiscal policy. it consists in cutting government spending, increasing taxes or in a combination of both. 3. one of the important tools to influence the rate of economic growth and consequently, the unemployment rate is the financial including tax system. among the instruments of financial regulation of the economy a special place is given to government spending and taxes. taxes perform not only a fiscal but also an economic function. the fiscal function of taxes is to generate cash income from the state. being the most important lever of influence on socio-economic processes taxes at the same time provide the bulk of the revenue of the state budget. direct taxes, being proportional, have a direct impact on the dynamics of gdp and are related to automatic (built-in) stabilizers of the economy. local taxes, which occupy a significant share in the structure of the budget revenues, emphasize the fiscal nature of the tax system. 4. the tax system of any country is effective if it is formed on common methodological approaches that take into account the solvency of the population, tax benefits for the strategic goals of the economy an even distribution of taxes among business entities, the optimal tax burden, etc. an important element of the tax policy of the state are the criteria for taxation. economists call justice (equality) as the first criterion, and efficiency as the second criterion. the first criterion is based on the fact that state taxes and their spending affect the distribution of income in society, placing burdens on some and providing benefits to others. society ultimately strives for a fair distribution of these burdens and benefits. but the main criterion in the tax system is still the solvency criterion. in accordance with it, taxes three seas economic journal 31 vol. 1, no. 1, 2020 should increase as income rises, since as a result of this inequality in material conditions is reduced. such a tax system is called progressive. on the contrary if after paying taxes, inequality in society increases there is a regressive tax system. according to the keynesian approach the use of taxes as an important tool of fiscal policy can stimulate business and investment activity, since tax cuts leave at the disposal of entrepreneurs a much larger portion of the money than the amount of tax cuts. the state does not limit its intervention in the economy only by varying tax rates. the goals of state policy may be to ensure the equalization of incomes of citizens, support of socially significant industries with subsidies and investments, stimulate small business, net exports and stabilize the economy. in this regard, the state will carry out certain expenses from the state treasury. 5. due to the multiplier effect each unit of the reduction of the proportional tax accounts for much more units of gdp growth. 6. discretionary and non-discretionary fiscal policies are applied in combination, depending on the current dynamics of gdp. discretionary policy has an effect in the short run. 7. according to the keynesian concept of fiscal policy the budget deficit as a rule, increases during a recession and decreases during periods of recovery and economic recovery. at the same time, economic stabilization and gdp growth are not always ensured. if the growth of government spending is financed by an increase in income taxes, then the final increase in the national product is equal to the initial increase in government spending. 8. according to the classical concept, fiscal policy is considered only as an instrument of financial support for the government to fulfill its functions, but not as a stabilization policy. the classic concept is based on the ricardian equivalence, according to which the fiscal impact will not cause a change in the value of gdp but the redistribution of funds between the private and public sectors due to the effect of the “crowding out” effect when money is neutral. 9. the state budget is an estimate of state revenues and expenditures for a certain period, most often for a year, drawn up with an indication of the sources of state revenues and areas of expenditure. the budget has revenues and expenditures, which should be balanced in the planned future. the role of the budget in the national economy is significant. it is part of the finances of a country controlled by the state, therefore, with the help of the budget, the state is able to intervene in market mechanisms. secondly, the budget is a way of accumulating funds to solve large, global economic problems. thirdly, the availability of the budget allows solving complex social problems (poverty, unemployment, hunger, literacy, health of the nation, etc.). 10. there are three ways to finance the budget deficit: – by additional issue of money; – due to loans of the central bank; – by borrowing from the public and firms. the budget deficit and public debt are closely related: the increase in the budget deficit leads to an increase in public debt. however, the absolute magnitude of the budget deficit and therefore of public debt is not indicative of economic analysis. it is necessary to know what processes the budget deficit serves, what changes in the reproductive cycle it reflects. in addition, it is very important to measure changes in public debt in relation to changes in gdp. government debt often shows the level of financial stability of the economy. since public debt affects the future tax burden, over the past decades, many scientists are trying to formulate various methodological approaches to choosing ways to reduce it. three main concepts of budget deficit regulation can be distinguished: – annual balancing; – cyclic balancing; – functional balancing. there is a number of objections regarding the effectiveness of fiscal measures in the economy. according to the classical concept, fiscal policy is considered only as an instrument of financial support for the government to fulfill its functions but not as a stabilization policy. the classical concept is based on ricardian equivalence, according to which the fiscal effect will not cause a change in the value of gdp but a redistribution of funds between the private and public sectors due to the effect of the “crowding out” when money is neutral. 11. changes in the fiscal sphere and fiscal policy play a key role in the economic development of the country and the implementation of an effective economic policy. through structural reforms of the tax and budget systems in the republic of belarus, the following main tasks are implemented: three seas economic journal 32 vol. 1, no. 1, 2020 – financial support for the fulfillment by the state of its functions and obligations; – maintaining financial stability in the country; – reducing the negative effects of taxes, inefficient government spending and debt on sustainable social and economic development; – ensuring the financial integrity of the state. over the past years, significant progress has been achieved in building a budget system in the republic of belarus that meets modern requirements. in fact, it underwent a transformation from administrativecommand mechanisms to redistribute all public resources to a combination of a tax system based on market principles and budget expenditures, which mainly ensure the functioning of the state social protection system, budgetary organizations and the public sector of the economy. direct subsidies to the non-state sector play an insignificant role (however it should be borne in mind that this is largely due to the slower pace of privatization of state property). a system of public procurement is being developed on a competitive basis. a generally accepted classification of budget revenues and expenditures (including economic), as well as sources of internal and external financing of the budget deficit and types of public debt, has been introduced. references: aleskerova, yu., mulyk, t., & fedoryshyna, l. (2018). improving credit protection analysis methods reports of main agricultural enterprises. baltic journal of economic studies, vol. 4, no. 2, pp. 1–7. doi: 10.30525/2256-0742/2018-4-2-1-7 aleskerova, yu., & fedoryshyna, l. (2018). analysis of investment activities of enterprises of ukraine. economic system development trends: the experience of countries of eastern europe and prospects of ukraine. aleskerova, yu., fedoryshyna, l., & koval, n. (2018). features of loan security for the reproduction of fixed assets for agricultural purposes. baltic journal of economic studies, vol. 4, no. 4, pp. 1–5. doi: 10.30525/2256-0742/2018-4-4-1-5 aleskerova, y., kovalenko, l., & havryliuk, v. (2019). innovative financial criteria for methodological approaches to the assessment of agrarian insurance. baltic journal of economic studies, vol. 5, no. 4, pp. 34–41. doi: 10.30525/2256-0742/2019-5-4-34-41 rogach, s., vdovenko, l., & polishchuk, o. (2019). agriculture of ukraine under the joint policy of the european union. baltic journal of economic studies, vol. 5, no. 3, pp. 178–183. doi: 10.30525/22560742/2019-5-3-178-183 plakhtii, t., fedoryshyna, l., & tomchuk, o. (2019). socio-economic component of preferential taxation of individuals' incomes. baltic journal of economic studies, vol. 5, no. 2, pp. 171–175. doi: 10.30525/2256-0742/2019-5-2-171-175 koval, n., priamuhina, n., & zhmurko, i. (2020). analyz economic – financial experience of the world countries in the system of pension insurance. baltic journal of economic studies, vol. 6, no. 1, pp. 1–7. doi: 10.30525/2256-0742/2020-6-1-1-8 kritzer, b. e. (1996). privatizing social security: the chilean experience. social security bulletin, no. 3, pp. 45–55. kubicek (2005). contribution rates to funded pension systems in the new member countries. research in international business and finance, vol. 19, issue 2, pp. 266–280. bettendorf, leon j.h. & heijdra, ben j. (2005). population ageing and pension reform in a small open economy with non-traded goods. journal of economic dynamics control, no. 6, pp. 265–290. nicoholas george (2002). sweden’s savers are kept pasted on state of their funds. financial times. 2002. march 25, p. 7. oskar cerrangolo (2003). pension reform in latin america. conference on «privatisation of public pension systems – forces, experience, prospects». vienna, 2003. june 19–21, pp. 256–275. palmer edvard (1998). the swedish pension reform model – framework and issues. the national social insurance board, may. 32 p. three seas economic journal 40 vol. 1, no. 3, 2020 corresponding author: 1 interregional academy of personnel management, ukraine. e-mail: allaidobaiva@gmail.com orcid: https://orcid.org/0000-0003-0914-2710 doi: https://doi.org/10.30525/2661-5150/2020-3-7 improvement of the enterprise management system based on modern principles of building business processes, controlling and risk management alla idobayeva1 abstract. the objective of the article is to highlight and consider the main directions for improving the modern enterprise management system, since that in the modern market conditions, the issue of effective development for industrial enterprises becomes more relevant, while the fundamental bearing core of the enterprise's internal environment is the management efficiency. the main problem is the managerial inefficiency of an excessively large structure that is not well suited to the work in market conditions. methodology. in the course of this analysis, the management system of an industrial enterprise was considered as a complex open system with the use of the system analysis methodology in the study, which made it possible to identify the main directions for its improvement. results. enterprise management is a continuous process of influencing the performance of an employee, group or enterprise as a whole for the best results in terms of achieving the goal, which has been set. the management process is provided by the trained management professionals who shape and manage the organization by setting goals and developing ways to achieve them. to do this, management must find an effective way to combine the key variables that characterize tasks and people, while taking into account the obvious and potential external and internal risks and threats. setting goals and providing them with policies, strategies, procedures and rules, the necessary management mechanisms contribute to the solution of this task. motivation and control also play a significant role in ensuring that the tasks are completed effectively. however, the key in this is precisely management, which is most obvious and directly related to the systematic coordination of tasks and, accordingly, the formal relationships of people performing them, and the correctly selected management process toolkit allows the enterprise to achieve the greatest efficiency. practical implications. the performed analysis of the features of the functioning of the enterprise management system allows us to determine the following areas for improving the modern enterprise management system: improving the business processes of the enterprise, ensuring high-quality control in the enterprise management system, and introducing the enterprise risk-management. value/originality. the use of system analysis made it possible to determine and substantiate the main directions of improving the modern enterprise management system. key words: enterprise, controlling, business processes, risk-management, enterprise management system. jel classification: d01, d22 1. introduction the current state of the economy, which is experiencing the multidirectional influence of environmental factors, requires the production sector to improve management efficiency, to use new management tools in business practice that ensure the qualitative growth of the industrial business and its competitiveness in the domestic and foreign markets. solving the problem of the increase in the competitiveness of industrial business through improving the quality of enterprise management and ensuring the growth of the efficiency of its production activities is especially important in the context of strengthening the integration of the state economy into the world economy, strengthening the integration processes. the problems of coordination and effective interaction of strategic and tactical priorities for the development of industrial enterprises are currently becoming an urgent task. strategic interests of the development of micro-level industrial economic systems are three seas economic journal 41 vol. 1, no. 3, 2020 aimed at the growth of business capitalization, the sustainability of its development, and the achievement of long-term competitiveness in a dynamically changing environment. on the other hand, traditionally, the goal of the operational management of industrial business development was considered to maximize the current profits and economic efficiency. obviously, in the context of the conjunctural and institutional transformation of the industrial business and industry markets, the need to consider new effective directions for managing an industrial enterprise to ensure its highest efficiency in balance with the priorities of sustainable development of an industrial enterprise is actualized. 2. improving the business processes of the enterprise effective management of a production facility is traditionally viewed as a process based on the use of the modern management technologies and more advanced forms of its organization. the theory of business processes appeared at the end of the last century with the publication of the book by m. hammer and j. champy "reengineering the corporations: a manifesto for business revolution", where the authors define a business process as “a set of different types of activities, within which at the entrance one or several types of resources are used, and as a result of this activity, the “output” is a product that has a certain value for the consumer” (hammer, champy, 1997). today, business restructuring based on business processes has been adopted by almost all the leading companies in the world. it has been proven in practice by many enterprises that even a partial improvement of the organization's business processes brings an effect in the form of an increase in production by 10-20%, while a fundamental rethinking and radical design of business processes to achieve the fundamental improvements in the key performance indicators, it requires a dramatic tenfold increase in efficiency. at the same time, according to m. porter and v. millar, business processes are a set of internal steps (types) of activities, starting with one or more inputs and ending with the creation of products that the client needs and that satisfies him or her at a cost, durability, service, and quality. moreover, this is the full flow of events in the system, describing how the client starts, leads and ends the use of the business (porter, millar, 1985). management activity at the management level of an industrial enterprise based on the process approach is the continuous execution of a set of certain interrelated types of activities and general management functions. however, it should be noted that the performance of individual work and management functions is also considered as a process, i.e. a general process is a set of interconnected continuously performed actions that transform some inputs of resources, information, etc. to the appropriate outputs and results. management, as a whole, is the fundamental meaning and essence of the process approach. the meaning of the business process management lies in the effective response of the organization to the requests of the external and internal environment in conditions of the complete independence from stereotypes. business process management is an increasingly important element of the management of a modern organization. the main prerequisites for the implementation of management based on the business processes include: – understanding of the entire flow of work, their role and level of responsibility by the employees of the organization; – providing employees with the maximum freedom of action; – reliable and effective communication at the junctions of the elements of the business process; – exchange of information in real time; – the possibility of regrouping the elements of the business process, if required by the interests of the organization in solving a specific problem; – the ability of employees to solve a wide range of tasks; – liberation from management stereotypes; – non-standard, creative thinking of the employees; – initiative and improvisation instead of diligence; – strong and guaranteed motivation (robson, ullah, 1997). improving business processes in industrial enterprises allows you to create a whole block of strategic advantages and provide a higher level of competitiveness: 1. the management system based on business processes allows you to quickly respond to changes in the external environment. 2. management becomes clearer as it becomes possible to evaluate the efficiency at each stage of the production as well as the economic activities of the enterprise. three seas economic journal 42 vol. 1, no. 3, 2020 3. allows the use of a process approach in accordance with the requirements of iso-9000. all of the above proves that the process approach leads to a synergistic effect, as a result of which the improvement of one of the business processes leads to the improvement of others. in the context of the rapid growth of tension and instability of the external environment, the diversity of the market economy processes requires constant adaptation of industrial enterprise management processes to changes and reorientation to market needs, which in turn requires a systematic improvement of management. improving management, first of all, should be aimed at optimizing the organizational structure of the enterprise. the transition of an organization to a processbased method of forming management structures leads to the achievement of fundamental improvements in the main indicators of the enterprise, to the creation of a more optimal management system, and an increase in its flexibility. a process-oriented management model (i.e. a management model focused on business processes) requires the allocation of business processes at the level of modern requirements: name a certain type of work, designate its beginning and end, find the "owner of the process" (the one who is responsible for the result), and determine the required result (including indicators of quality and efficiency) (kondratev, 2007). 3. controlling in an enterprise management system modern conditions for the functioning of business entities require the improvement of the management processes at the enterprise. first of all, this concerns the optimization and streamlining of management influences on the economic sphere, the choice of alternative options for achieving the set goals. at the same time, the level of efficiency, reliability of accounting and control, the quality of analysis of the financial and economic activities of the enterprise should be so high that it becomes necessary to create a unified information support for these management functions and their integration into a single system. one of the most important directions in the development of the theory and practice of management and improvement of the organization of planning, accounting, control and analysis of the financial and economic activities of the enterprise is the concept of controlling, the implementation of which allows to provide the necessary information at various levels of management in the right time and with high quality. to date, six concepts of controlling have been formed: – management accounting (80s); – management information system (late 1980s); – planning and control (early 90s); – coordination (90s); – management (late 90s); – coordination of the decision-making process (2000s). the possibilities of controlling in exercising control over management functions in order to coordinate the management system at the enterprise are provided through the creation of an information system for supporting the adoption of managerial decisions on the basis of data coming from the structures of the enterprise. these information flows provide the planning and control processes on which result-based management is based. the source of obtaining information resources is a system of quantitative indicators developed to set and measure the achievement of management goals. on the one hand, the need to apply control in order to manage the results of an enterprise's performance is due to the need for coordinating control, and the need to regulate and formalize management procedures to achieve the desired results, on the other. it is worth noting the conformity of management and controlling in view of the presence of a coordinating component in both, while coordination as an interregional function within the management process was called the "essence of management". due to the division of the management system into two independent subsystems – coordination and controlling – the need for coordination is increasing. although some management subsystems, like organization and planning, perform specific coordinating tasks in relation to the operational system, there remains a further coordination task within the management system itself as a separate management system. at this stage, coordination is not connected in any way with the management system as a whole, but is addressed to the operational system. moreover, increasing complexity and environmental volatility reinforce the internal differentiation of the management system and the need for a unifying three seas economic journal 43 vol. 1, no. 3, 2020 coordination role. under these conditions, the theory of controlling, rather implicitly than explicitly, suggests that classical coordination tools (hierarchy, planning, program management, and personal leadership) are not able to provide the desired result. consequently, there is a problem of internal coordination of the management system, the controlling of which is intended to solve it with the help of its instrumental and methodological base. its task is to exercise control (supervision) over the execution of management functions in order to coordinate the management system and link the information flows of the individual structures of the enterprise into a single whole. in this context, controlling can be understood as a function of coordinating control based on the method of information support of the management by results. as part of the implementation of the controlling technique, an integrated approach is required to determine the sources of information resources. the main source of data in the controlling system is the internal accounting information generated in the framework of financial and (or) management accounting. first of all, the accounting information as the main controlling tool should contain actual data on costs and volumes of the turnover by type of product at the base date. this data, in combination with the estimated characteristics of the intensity of their measurement, is used as the basis for calculating the target planned indicators of the costs and volumes of turnover for the planned dates. in the course of controlling, control activities are carried out: the actual values of the indicators are compared with the planned targets. based on the analysis of the identified deviations, the proposals are developed on the advisability of introducing corrective measures. in addition, one of the most effective methods for introducing management technologies is a phased change in the information and control flows of an enterprise. its application means the sequential implementation of a series of steps, the effectiveness of each of which can be assessed immediately after its implementation. there are several stages here: goal setting, development of a results management strategy, implementation of planning, accounting, control, and analysis technologies. the formation of a mechanism for information and analytical support for the management of enterprise performance, regulation and formalization (modeling) of management procedures for achieving results is assigned to controlling, which is a function of control (supervision) over the implementation of the management functions. in the methodological aspect, the role and place of controlling in the results management system is to determine the system of quantitative indicators used to describe goals in the process of setting and fixing them, measuring and evaluating their achievement. 4. basic principles of enterprise risk management the experience of leading international companies operating in the manufacturing sector has convincingly proven that the stability of business development and improvement of management efficiency are impossible without the active use of risk management tools as an integral part of the company 's management system, regardless of its size, scale and specifics of production or provision of services (stupakov, tokarenko, 2005). a. shapkin and v. shapkin note that “the general conceptual approach to managing economic risk is: – identification of possible consequences of entrepreneurial activity in a risky situation; – development of measures that do not allow, prevent or reduce damage from the exposure to not fully considered risk factors, unforeseen circumstances; – implementation of such an adaptation system – entrepreneurship to risks, with the help of which the negative probable results can be compensated for, but also the chances of obtaining a high entrepreneurial income can be maximally used” (shapkin a., shapkin v. 2013). the risk management system of an industrial enterprise should be aimed at achieving the necessary balance between making a profit and reducing losses of economic activity, and should become an integral part of the organization's management system, i.e. should be integrated into the general policy of the company, its business plans and activities. only if this condition is met, the application of the risk management system in the enterprise should be considered effective. the risk management system of an industrial enterprise should imply the creation of the necessary culture and business infrastructure to identify the causes and main factors of risks; identification, analysis and assessment of risks; making decisions three seas economic journal 44 vol. 1, no. 3, 2020 based on the assessment made; development of antirisk control actions; reducing risk to an acceptable level; organizing the implementation of the planned program; monitoring the implementation of planned actions; analysis and evaluation of the results of the risk decision. the creation and maintenance of the viability of an industrial enterprise of a risk management system will ensure the stability of its development, increase the validity of decision-making in risky situations, and improve the financial situation by carrying out all types of activities under controlled conditions. risk management in the industrial enterprise should be based on general management principles: scientific management, a systematic approach, management optimality, management efficiency, regulation, formalization, material and moral incentives, correct selection and placement of personnel, responsibility, continuity of management decisions, etc. special principles of risk management include the principle of loyalty to risks, information content, predictability, integration and documentation. the content of the risk management process is made up of functions that represent separate activities in the general cycle of risk management: planning, organization, coordination, motivation and control (bublik, silantev, 1999). it is important to note that risk management is associated with both negative and beneficial consequences. the essence of risk management is to identify potential deviations from the planned results and manage these deviations to improve prospects, reduce losses and improve the soundness of decisions. managing risk means identifying opportunities for improvement, and avoiding or reducing the likelihood of unwanted developments. risk management implies a thorough analysis of the conditions for making decisions and should be a logical and systematic process that can be used to choose a way to further improve activities and increase the efficiency of the organization's business processes. in the process of management, the parameters and properties of risk change, while knowledge about the current situation and trends in its change is formed, a new algorithm of actions is formed, the directions and means of economic activity of an industrial enterprise are adjusted. the result of management influence on risk is a new ratio of favorable and unfavorable events, a new value of the probability of each of them occurring. at the same time, the likelihood of adverse event outcomes decreases. when using risk as a resource, it is assumed that measures are taken to expand the range of the entrepreneur's capabilities to respond to changes in the external environment. it should be noted that “risk management cannot be viewed as a one-step decision or action, even if it is detailed and well-grounded. in the case of a rapidly changing business environment, such a static point of view would contradict the principle of performance. therefore, risk management is a dynamic process, being an integral and important element of the overall management. consequently, it must meet all the requirements of agility and flexibility for making business decisions” (ioda, 2007). 5. conclusions the results of our research prove that industrial organizations, according to the general logic of development, evolve and constantly develop in order to improve their activities and increase stability while facing an unpredictable transformation of the external environment. successful functioning of an economic entity is based on the implementation and quality execution of all components of the system of business processes, the individual effectiveness of which should be assessed through a specific contribution to the achievement of the goals of the entire organization. thus, the performance of the enterprise is achieved by a collective effect, since individual processes can differ in their effectiveness. in the current environment of a sharp increase in competition, the management of the industrial structure is called upon to carry out adequate measures that allow obtaining the greatest return. at the same time, comprehensive risk management will allow an enterprise to take into account internal and external risk-forming factors in its activities more fully, to determine ways to ensure the stability of an economic entity, as well as its ability to withstand adverse situations. in the context of the dynamic transformation of the operating environment of an industrial enterprise, uncertainty and instability of the macroenvironment, there is an objective need for a regulated effective risk management methodology. the main goal of the risk three seas economic journal 45 vol. 1, no. 3, 2020 management system of an industrial enterprise is to ensure the successful functioning of a business unit in conditions of risk and uncertainty. this means that even in the event of economic damage in certain areas of activity, the implementation of risk management measures should provide the organization with the possibility of continued existence and stability of the corresponding cash flows, maintaining profitability, as well as achieving other goals. at the same time, the greatest efficiency of this process can be achieved provided that the risk management program, being built into the general system of making management decisions, will be of a service, subordinate nature in relation to the implementation of the general strategy of the organization, and the goals and objectives of the risk management system will be consistent with the goals and the mission of the enterprise, as well as the methods of dealing with risks included in the general algorithm will be adequate to its economic activities. references: hammer, m., & champy, j. (1997). reengineering the corporations: a manifesto for business revolution. saint petersburg: saint petersburg university. porter, m., & millar, v. (1985). how information gives you competitive advantage. harvard business review, no. 85, ( july-august), pp. 149–160. robson, m., & ullah, f. (1997). a practical guide to business process reengineering. moscow: audit, unity. kondratev, v. (2007). we show business processes. moscow: eksmo. stupakov, v., & tokarenko, g. (2005). risk management. moscow: finance and statistics. shapkin, a., & shapkin, v. (2013). economic and financial risks. valuation, management, investment portfolio. moscow: publishing and trade corporation "dashkov and co". bublik, n., & silantev, v. (1999). risk-resource: problems of venture-stochastic activity. ufa: publishing house. center "bashkir territorial institute of professional accountants". ioda, e. (2007). risk management of innovative activity in the region. tambov: avtograf. three seas economic journal 66 vol. 1, no. 3, 2020 corresponding author: 1 hryhorii skovoroda university in pereiaslav, ukraine. e-mail: magomedovandriy@gmail.com orcid: https://orcid.org/0000-0001-5919-2340 researcherid: https://publons.com/researcher/4107344/andriy-magomedov/ doi: https://doi.org/10.30525/2661-5150/2020-3-11 the main directions of economic cooperation bet ween ukraine and nato in the 21st century andrii magomedov1 abstract. the purpose of the article is to show the development process of ukraine's relations with nato in the economic sphere, to analyze the main directions and tasks of economic cooperation, to trace the dynamics of their development and dependence on the domestic political situation in ukraine during recent decades. methodology. the research is based on the analysis of official electronic sources and reports on the activities and cooperation of nato countries with the ukrainian side. the data from the ministry of foreign affairs of ukraine, the ministry of energy of ukraine and the ministry of defence of ukraine were used. as a result of the research there can be traced a clear pattern of dependence of the implementation of the number of new programs on economic cooperation with the actual vector of foreign policy relations of the highest authorities of ukraine. although this vector has changed dramatically over the last twenty years since the election of the new president, the indicators of funding and implementation of the new cooperation programs demonstrate a positive dynamics in ukraine-nato relations, especially with the active support of our country’s political leadership. practical implications. as ukraine has chosen the european path of development, it is important to understand the patterns of economic cooperation both between the countries of the nato bloc itself and between the allies. the materials for the analysis of the results of cooperation can serve as a basis for further projects and the development of allied relations. value/originality. the article opens opportunities for further research and comparison of economic cooperation programs of the other blocs with which ukraine has cooperated for the last quarter of a century. key words: nato, ukraine, economic cooperation, european course. jel classification: f02, f52, f52, f55 1. introduction as nato’s core business is security and defence, an important role in ukraine-alliance relations is played by the work in the sphere of economics that is focused on the specific economic aspects of security and defence. in addition, the alliance always supports cooperation between its members when it comes to economic issues that have a direct impact on security and defence (spivrobitnytstvo ukraina – nato u sferi ekonomiky). ukraine’s cooperation with nato in the field of economic aspects of defence and security under the auspices of the nato-ukraine joint working group on economic security ( jwg) is carried out in two directions: 1) institutional dialogue focusing on economic issues of defence and security and economic aspects of defence industry restructuring; 2) retraining activities for servicemen discharged to reserve (spivrobitnytstvo ukraina – nato, 2018). thus, within the framework of the charter on a distinctive partnership, an agreement was concluded on october 11, 1999 between the national coordination center for social and professional adaptation of discharged or retired servicemen (ncc), the cabinet of ministers of ukraine and nato “on the practical implementation of the nato initiative on retraining of ukrainian servicemen discharged to reserve or resignation” (avtushenko, 2018: 102–103). as a result, the nato office of economic security and defence has launched a language training program for exservicemen in ukraine. since 1999, the british council in ukraine and nato have jointly developed the program under which the british council has implemented english language courses (prohrama nato z perepidhotovky…). however, in total, during 1999-2002, more than 300 officers three seas economic journal 67 vol. 1, no. 3, 2020 were retrained in language courses under the nccnato treaty (avtushenko, 2018: 103; ukrainski viiskovi…, 2000). 2. economic cooperation between ukraine and nato under president l. kuchma socio-political transformations that took place in ukraine from 2001 to 2005 caused temporary obstacles in the development of new promising economic projects. however, it should be noted that at the nato summit in prague in november 2002, the nato-ukraine action plan was approved, in which it was identified 12 points of cooperation in the economic field (plan dii ukraina-nato, 2002). among them there are promoting the restructuring of the economy, economic cooperation between ukraine, nato and partner countries; implementation of the moratorium on the initiation of tax credit bill and the creation of an institutional environment that will stimulate business activity, the creation of modern social infrastructure and mechanisms of social market economy while maintaining an adequate social protection network; carrying out economic and structural reforms, taking into account the recommendations of the world bank, the international monetary fund and other international institutions, including measures to promote privatization, fight corruption and increase the transparency of public spending; expanding the land reform process; guaranteeing of economic rights and freedoms of citizens in all forms; creating the necessary preconditions for the middle class formation; limiting the real income gap between highand low-income groups and making efforts to eradicate poverty; strengthening of energy security (malyk, 2014). these economic objectives of cooperation with nato were confirmed by the nato-ukraine target plan for 2003 and 2004. in particular, they provided for an expanded timetable for the activities declared at the 2002 prague summit (pro skhvalennia planu dii ukraina, 2003; pro proekt tsilovoho planu ukraina…, 2003). 3. economic cooperation between ukraine and nato under president v. yushchenko the situation in economic relations changed to some extent only in april 2005, when president yushchenko consolidated ukraine’s euroatlantic course by signing on april 21 a document on “deepening ukraine-nato cooperation: short-term measures”. nato members and ukraine then agreed to launch new initiatives to deepen their cooperation in support of ukraine’s reform priorities. in particular, the parties agreed to expand assistance in addressing issues related to the socio-economic consequences of military reform, which provided at the working level to expand the transfer of experience of nato member states to support urgent work on the development and implementation of retirement programs and retraining of members of the armed forces and other security structures, in particular, including: an expert support for needs assessment and development of a comprehensive retraining / requalification; increase of practical assistance for specific retraining programs in 2005 and 2006; a search for means to meet ukraine’s long-term retraining needs. it was also planned to provide expert advice to representatives of the defence industry of ukraine in order to facilitate its adaptation to new market realities (pohlyblennia spivpratsi ukraina…, 2005). already in september 2005, with the assistance of the alliance, the nato trust fund of the program 'partnership for peace' was funded, namely the second stage of the professional development program. the estimated budget of the fund amounted to 574 thousand eur (diiuchi proekty trastovykh fondiv nato…). this project became a logical continuation in ukraine of the program launched by the united kingdom in 2002. for this purpose, in 2006 the khmelnytskyi center for retraining and social adaptation was established at khmelnytskyi national university (na try roky prolonhovano…, 2009). retraining was carried out on 3-month courses conducted on a 500-hour program. in 2007, ukraine joined another nato trust fund – integrity development program (id). nato member states have decided to launch this fund to enhance integrity, transparency, accountability and appropriate governance in the security and defence sector (dopomoha trastovykh fondiv nato ukraini, 2016). also since 2007, the issues of energy security and security of energy infrastructure have been included to the agenda of the meetings of the associated working group (awg) on economic security. and since 2008, within the framework of the nato-ukraine awg, the project to combat terrorist financing and three seas economic journal 68 vol. 1, no. 3, 2020 prevent money laundering has been implemented (spivrobitnytstvo ukraina – nato, 2018). at the same time, it was continued the work on retraining ex-servicemen within the framework of nato professional development program trust fund. in particular, according to the nato civilian budget during 2007-2008, regional retraining courses for servicemen were established in lviv, in the village ozerne, zhytomyr region, mukacheve, zakarpattia region, ternopil and slavuta, khmelnytskyi region, etc. (na try roky prolonhovano…, 2009), at which about 1,500 servicemen had been retrained by 2009 (avtushenko, 2014: 202). since 2009, the network of retraining centers for ex-servicemen has expanded in ukraine. thus, the trust fund has expanded its activities to kharkiv region (the leading country was denmark) (18 chervnia 2013…, 2013), mykolaiv (perepidhotovka viiskovosluzhbovtsiv) etc. 4. economic cooperation between ukraine and nato under president v. yanukovych another step in ukraine’s cooperation with nato was the establishment in 2011 of the disposal of radioactive waste trust fund project with a budget of 950 thousand eur , which aims to safely store radioactive waste generated as a result of military programs of the armed forces of the ussr in zhytomyr region (dopomoha trastovykh fondiv nato ukraini, 2006). on june 18, 2013, a solemn graduation ceremony was held for the twelfth stage of professional training of servicemen and retraining groups of former servicemen in chuhuiv, who were trained at the interdisciplinary institute of postgraduate education of the national technical university “kharkiv polytechnic institute'. 47 people were retrained (18 chervnia 2013…, 2013). and in december 2013, the solemn graduation ceremony of khmelnytskyi center for retraining and social adaptation at khmelnytskyi national university took place, as well as the official closing of the nato partnership for peace trust fund. 116 graduates received certificates of professional development. their training was 78% funded by the nato partnership for peace trust fund and 22% by the nato civilian budget. in total, since 2006, by khmelnytskyi center it has been organized retraining of 2,129 people and provided assistance to 1,067 former servicemen employed in the civil sector of the economy (u khmelnytskomu tsentri perepidhotovky…, 2013). 5. economic cooperation between ukraine and nato after the beginning of the ukraine-russia conflict in response to russia's aggressive actions against ukraine, nato members decided at the welsh summit in september 2014 to establish five new trust funds (tf) to assist ukraine in critical areas (nato stvoriuie piat trastovykh fondiv…, 2014). the funds were established in the following areas: command, control, communication and computerization (c4); logistics and standardization; cyber defence; military career transition; medical rehabilitation. in addition, at the request of ukraine, in june 2015, the alliance agreed to launch the sixth trust fund – for counter-improvised explosive devices and explosive ordnance disposal (analiz oboronno-tekhnichnoho…, 2016: 82-85; dopomoha trastovykh fondiv nato ukraini…, 2016). the estimated total budget of nato’s trust fund projects in ukraine has grown to almost 40 million eur since its inception. the largest funding is provided under the old program for the disposal of antipersonnel mines, obsolete and surplus stockpiles of weapons and ammunition. the leading sponsor of the program is the united states. the total budget for its assistance is 25 million eur (trastovi fondy nato v ukraini: …, 2017). the funds are also used to retrain the ukrainian military, establish a communication system, treat the wounded, reform logistics systems and implement nato standards in the armed forces of ukraine, etc. (priorytety trastovykh fondiv nato…, 2014). and within the framework of tf for medical rehabilitation in medical institutions of nato countries from 2014 to 2018, prosthetics of 11 ato participants were provided, medical rehabilitation of 280 people and vocational rehabilitation of 13 more servicemen were provided. as part of the active rehabilitation program 'return to life', 125 servicemen were rehabilitated. in addition, financial support was provided to the national team of ukraine in the international competition “invictus games” (nato dopomahaie ukraini stvoryty…, 2018). in total, six ukrainian medical rehabilitation institutions are supported within this tf, they are provided with modern equipment (aleksander vinnikov…). it should be noted that nato member states increase their contributions three seas economic journal 69 vol. 1, no. 3, 2020 to a number of trust funds (tf) from time to time to support ukraine. in particular, it is the question of tf on disarmament, burial of radioactive waste and medical rehabilitation of the servicemen wounded in anti-terrorist operation (ato), etc. (nato posylyt pidtrymku…, 2019). 6. findings firstly, from the above data it is possible to clearly see how the number of joint economic programs to support ukraine changed, depending on the vector of foreign policy relations of the ruling elite. how rapidly the number of economic cooperation programs and the total amount of their funding during v. yushchenko’s presidency increased, how diametrically opposite was the effect during the presidency of v. yanukovych. and as it is known now, these steps were aimed at the direct destruction of ukraine’s defence capabilities, and were carried out under the watchful leadership of the russian federation. the above information can serve as a basis for further analysis of foreign policy relations between ukraine and military blocs and be used to substantiate the european vector of ukraine’s foreign policy relations. 7. conclusions the establishment of five new trust funds in 2014 and the intensive deepening of ukraine’s cooperation with nato to some extent have changed the work of nato information and documentation centre (nidc) in ukraine. the center has gained two additional tasks: 1) to provide information on nato’s practical support for ukraine, for example, through eight trust funds totaling 40 million eur , in areas such as medical rehabilitation, command and control or logistics, and also through advisory support to the armed forces of ukraine in their reforms; 2) support to the ukrainian government in enhancing its communication capabilities in the field of strategic and crisis communications. the ability of ukrainian institutions to effectively communicate to the domestic and foreign audience information about events in ukraine, in particular about the events in the east and the course of reforms, is very important (stepaniuk, 2020). these changes at nidc were only the beginning of a new institutional consolidation of cooperation between ukraine and nato. after all, in september 2015, the nato general secretary signed an agreement with the government of ukraine, according to which a nato delegation was established in ukraine, which included two nato institutions in ukraine, namely: the nato information and documentation center and the nato liaison office in ukraine (tsentr informatsii ta dokumentatsii…, 2017). references: 18 chervnia 2013 roku vidbudetsia urochysta tseremoniia vypusku hrup dvanadtsiatoho etapu profesiinoho navchannia viiskovosluzhbovtsiv (2013) [on june 18, 2013, a solemn graduation ceremony of the groups of the twelfth stage of servicemen’ professional training will take place]. available at: https://cutt.ly/7kteyls avtushenko, i. 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(2016). analiz oboronno-tekhnichnoho spivrobitnytstva ukrainy z nato v ramkakh trastovykh fondiv [analysis of ukraine’s defense and technical cooperation with nato within the framework of trust funds]. zbirnyk naukovykh prats tsentru voienno-stratehichnykh doslidzhen natsionalnoho universytetu oborony ukrainy imeni ivana cherniakhovskoho [collection of scientific works of the center for military strategic studies of ivan chernyakhovskyi national defense university of ukraine], vol. 3, pp. 81–86. three seas economic journal 133 vol. 1, no. 4, 2020 corresponding author: 1 “construction – modern technologies”, ukraine. e-mail: sichnyi.s@gmail.com orcid: https://orcid.org/0000-0002-8340-7521 doi: https://doi.org/10.30525/2661-5150/2020-4-19 economic efficiency of determining the market price of construction resources within the limited budget serhii sichnyi1 abstract. the article examines the analysis of current prices in the market of building materials, products, structures, machines, and mechanisms (construction resources), which is performed by construction participants. the aim of the article is to study the possibility of achieving the maximum economic effect of the analysis of current prices in the market of construction resources within a limited budget. a universal mathematical approach is proposed to calculate the economic effect of the analysis of current prices in the market of construction resources, which is based on a selective method of the research of the market value of construction resources. the calculations take into account the difference between the real resources presented on the market and the estimated construction resources (resource position of the estimate), between the market price and the estimated market price of the construction resource. while performing the analysis of current prices on the market of construction resources in the given conditions of the limited budget the option to reduce the general list of resources by a selection of the optimum list with an application of methods of discrete optimization is offered. the condition for the formation of an abbreviated list of resources is the maximum economic effect that can be obtained from the analysis of current prices for selected resources. method of heuristic rules is proposed, which allow to significantly reducing the initial list of resources by a simple analysis of input data. the application of these rules allows to reduce the variability of input data for discrete optimization or not to carry it out at all, because the amount of resources selected with their help satisfies the condition of the budget constraint. recommendations on the composition of the source data are given – this is the project documentation and/or the market price of construction resources as a basis for comparison and information on the range of market prices (scope of sample variation) for the resources included in the study. in the article there are given examples of the practical application of the technique in the conditions of the construction industry in ukraine. in general, the proposed approach can be used at all stages of variant bimdesign, when it is necessary to determine the most optimal composition of structures and resources that meet the requirements for the life cycle of the object. including under the condition of gradual detailing of constructs (an increase of lod of the project), during designing, up to resources at a stage “working project”. the main advantages of the proposed method are universality – it does not depend on the ultimate goal of the results of the customer and / or contractor and scalability – it can be applied to the structure, its individual design, or several resources. key words: cost of resources in construction, cost of construction, market research, determination of market value of construction resources, analysis of current prices in the market of construction materials, estimated price of resources. jel classification: c81, d81, l74 1. introduction a typical financial and economic goal during construction is to make a profit for the builder and save money for the customer (investor). both are achieved by reducing the cost of construction resources, which is impossible without a study of the construction resources market within a highly competitive market. the analysis of current prices on the market of construction materials, products, constructions, machines, and mechanisms (construction resources) envisaged by national standards of ukraine (minrehion, dstu b d.1.1-1:2013, 2013) aims to save public funds. for the contractor, such market research is necessary to obtain maximum profit when performing construction work. the ultimate three seas economic journal 134 vol. 1, no. 4, 2020 goal is different, but the local goal of market analysis is the same – to determine the real market prices of construction resources for informed decision-making related to the activities of the enterprise. at first glance, it seems that we are dealing with a “standard” marketing or statistical market research. moreover, the modern methodological developments and technical capabilities allow to conduct a market research with high accuracy (low error), even for very complex systems. but there are several reasons that require a separate analysis of the market of construction resources: – investigation of the market value of construction resources, in addition to the accuracy, are subject to strict restrictions on their duration; – the list of construction resources for which it is necessary to carry out the analysis, is dynamic. its size and structure depends on the construction site and the composition of the construction work on it. during construction, this list changes monthly; – the names of resources in the project documentation are generalized with information about the purpose and main technical characteristics of the construction resource. they do not contain the names of specific brands and often do not take into account the terminology of manufacturers and/or suppliers. therefore, the formation of the list of suppliers to determine the market price of the construction resource can be carried out only after determining the list of real market names that most accurately correspond to the generalized name of the resource in the project documentation; – for projects implemented using bim-technologies, the resource can be a construct that is gradually detailed into smaller constructs up to individual resources (from lod 100 to lod 500). however, the cost of such work is limited. at a minimum, it may not exceed the savings of the construction customer or the contractor’s profit from such an analysis of current prices. therefore, the question of the maximum effectiveness arises in terms of research within a limited budget. 2. analysis of recent research and publications in post-soviet countries, data collection and processing techniques for determining weighted average current prices are based on information about construction work that was already performed. it means that data is collected about past events – deliveries that have already taken place. with the resource method, which operates in ukraine, the current prices must be determined before the start of work – before the supply of resources to the object. domestic research states the need for work to determine current prices (berkuta, 2000), however, there are no appropriate methods. the need to use in the estimated current market (regional) prices for construction resources is noted in the works of specialists in various fields from the standpoint of pricing, setting, and regulating the price of construction products (matveychuk, 2009; reznichenko, 2006), from the standpoint of efficiency (profitability) of investment activities (nikolayev, 2011), planning and cost reduction of the customer, from the standpoint of design and construction (berkuta, 2000). the complexity of the problem is determined. in the works by reznichenko (reznichenko, 2006), approaches to the formation of the structure of data banks of current market prices and some methods of indirect determination of the price of resources are formulated. theoretical bases for determining the market price of construction resources were proposed in 2013 (sichniy, 2013). they became the basis for the development of sou-n d 1.1-34623477-001: 2015 “procedure for the analysis of prices for material and technical resources used for construction work”, which is implemented in practice and used by analytic center “construction – modern technologies” llc, ivano-frankivsk, in providing services to construction market participants. separate attempts to study the economic efficiency of work to determine market prices of construction resources (sichniy, 2013; sichnyi, 2017) are not enough. the aim of the article is to investigate the possibilities of achieving the maximum economic effect of the analysis of current prices in the market of construction resources within a limited budget. 3. analysis of the current prices in the market of construction resources to solve these problems, we can use methods of marketing research, which are based on the system of marketing information (kotler, 2020): “analysis of current prices in the market of construction resources is a systematic determination of the list of resources needed to perform the work, collecting data on their cost, analysis of the collected data and a report on the result.” the scheme of research (kotler, 2020) will look like the image below. without delving into the types of data (primary, secondary) and methods of their collection, we are going to consider the problem of optimal allocation of funds for work to determine the market price of construction resources. let the project provide for the use of h estimated resources with a total estimated value of b. set as well the amount of funds r, which can be spent on the analysis of current prices in the market of construction resources by structure. three seas economic journal 135 vol. 1, no. 4, 2020 the cost of determining the market price of the i resource depending on the sample size can be represented as s a bni i i i= + (1) where: ai is the fixed costs (which do not depend on the sample size), bni i is the variable costs proportional to the sample size. ni � is the sample size in the i-th estimated resource. estimated resource (resource position according to (minrehion, dstu-n b d.1.1-6:2013, 2013)) is a general name of a group of materials, products or machines. therefore, in fact: n n n n ni р= + + +…+1 2 3 where: p is the number of products or machines with equal characteristics; however, produced by different brands or manufacturers which correspond to the design characteristics of the estimated resource (resource position). fixed costs include organizational costs, transportation costs, training, and so on. variable costs include payment for the working time of specialists who perform the work (working time, of course, in proportion to the sample size), travel expenses, etc. the total estimated cost of all resources consists of the average market estimated values of all resources of the project: в в н і= ∑ 1 (2) в ц кі і і= × (3) where: ві is an average market estimated value of one estimated resource; кі is the estimated amount of the resource. ці is the average market estimated price of the estimated resource; average market estimated price of the estimated resource: ц ц k і k і = ∑1 (4) where: ці is the estimated price in the i market supply of the estimated resource; k is the total number of market offers of the estimated resource. the estimated price of material resources according to (minrehion, dstu-n b d.1.1-2:2013, 2013) is determined by the on-site composition of the construction site and the established unit of measurement that takes into account the following elements of value: – selling price (including the cost of containers, packaging and props and the cost of cargo work); – cost of transportation; – procurement and warehousing costs. since the full set of suppliers (sellers) for most construction resources in a particular region is always unknown – their complete list does not exist, it is obvious that for most construction resources it is impossible to cover and collect all the proposals. therefore, to determine the average market estimated price, it is most appropriate to use the sampling method. each estimated resource will have its own sample size (sichniy, 2013) and the average market estimated price of the resource will be defined as: ц ці і і= ± ∆ where: ці is the average price in the sample of the i-th market supply of the resource; ∅i is sampling error. guaranteed estimated price at which we will be able to purchase an estimated resource in the construction region: ц ці гар і і= + ∆ (5) denote зі is the change in the price of the resource in comparison with the design estimated price of the i as estimated resource. then the economic effect (total savings of the customer or the contractor’s profit) can be calculated by the formula: ее к ц з нn і і і і= × +( )×∑ 1 ∆ (6) sampling error: ∆і і і t n = ×σ where: t is a tabular value, for a sample of more than 30 t = 2.58; σi is general variance of price proposals of the i as estimated resource. 4. ways to achieve maximum economic effect within a limited budget r, it may be impossible to determine the market prices of all estimated h forming a list of resources selection of sources of information. collection of information analysis of the collected information presentation of the obtained results figure 1. the scheme of analysis of current prices in the market of construction resources three seas economic journal 136 vol. 1, no. 4, 2020 resources provided by the project. then it is necessary to solve the problem of optimal distribution of funds for the work to analyse the market price of construction resources for the project: to determine the list of resources provided by the project and the sample size ni for these resources so that the value: ее к ц t n з нn і і і і і= × + ×        ×∑ 1 σ (7) was the maximum at a given limit: 1 нn i i ia bn r∑ +( ) ≤ (8) where: r is the amount of money that can be spent on work to determine the market price of resources for the structure. if you analyze all the resources included in the project, then the task is to allocate variable costs so as to minimize 1 н i i q n σ ; where: q t з кi i i i= ã (9) with restriction: 1 1 н i i н ibn r a r н∑ ∑≤ − = ( ) (10) this problem is solved using the method of lagrange multipliers. its optimal solution: n q b q b r нi i i н j j =       ( ) ∑ 2 3 1 2 3 1 3 (11) the value (7) will be equal to: 1 2 3 1 3 3 2 1 2 н j jq b r н∑       ( ) − * (12) and the expected economic effect will be ее к з *= +       ( )∑ ∑ − 1 1 2 3 1 3 3 2 1 2 н i i i н j jx q b r н (13) it is known that the list of resources includes price making part wherein the total cost makes a significant role and there are resources where the total cost is within the statistical error. therefore, the task of efficient use of funds can be complicated by selecting the most optimal list of resources for the analysis of market prices from their general list. the task of selecting the optimal list of resources is to determine the set н, for which (13) takes the maximum value. this task belongs to the type of discrete optimization tasks (akimov, 2005). heuristic rules can be applied to simplify the problem. for example 1. we assume that the analysis of the market price of estimated resources with the highest estimated value will bring the greatest economic effect and sort resources by decreasing estimated value. we accept the limit of pricing resources (80%-95%) of the total estimated cost. we obtain a significantly reduced list of resources (sichnyi, 2017) for which the task of finding the extremum for (13) is simplified. 2. we assume that the largest variance of the sample will be in the resources with the largest range of market prices (scope of sample variation) and for them, the economic effect of the analysis will be greater. we sort resources by decreasing the estimated value and, in addition, taking into account the market price range. the correctness (accuracy) of the calculation of the possible economic effect largely depends on the basis of comparison – the design estimated price of the i estimated resource and the sampling error. this is clearly seen in (6) which may look different: ее к ц ц н і і і і кошт= × + −( )∑ 1 ∆ (14) where: ці кошт is the design estimated price of the i as estimated resource. 5. practical implementation an example of practical application is the analysis of current prices in the market of construction resources for the project: “overhaul of the superstructure of the berth №9”, which was performed by analytic center “construction – modern technologies” llc, ivano-frankivsk, in 2016. the customer set the task to determine the lowest cost of construction resources in the project before the examination of the project documentation and in connection with the preparation for the procurement procedure. the initial data for the work was a statement of resources for the project, specifications and drawings of reinforced concrete products of special construction. due to time constraints and budget, the customer was asked to analyze the current selling prices of suppliers for pricing materials, products and structures that are at least 90% of the total cost of section iv “building materials, products and structures“ resource information to project. the results of the analysis of current prices in the market of construction resources are shown in table 1. here are a few more problems where the proposed mathematical apparatus can already be used: – the investor wants to increase the market price of the object by using more expensive, more prestigious materials on its construction. the new, possible, market price of the object is known from the study of the price of competitors. but to assess how sales revenue will change, it is necessary to determine how the cost of purchasing new materials will change. – the construction company decides to take part in the tender for the construction of facilities in another region. the company has experience, qualified personnel, three seas economic journal 137 vol. 1, no. 4, 2020 and had done similar projects. for the well balanced decision making, you need to know how direct costs will change, the main component of which is the cost of construction resources in a new, for the company, the construction region. – the investor needs to assess their financial capabilities before starting the construction of the facility for which the project documentation was developed several years ago. to make a decision, it is not necessary to list all the estimate documentation; it is enough to assess how the estimated cost of construction resources has changed. – the investor needs to “tie” a typical project to a construction site in another region. a list of all estimated resources is known from the previously implemented project. it is possible to determine the economic feasibility (financial feasibility) of construction by examining the market value of resources in the region of “binding”. 6. conclusions the proposed approach can be used: – in bim-design when in the early stages there is no list of resources, but there is a list of constructs, which gradually, during the design, is detailed, up to the resources at the stage of “working project”; – for variant design, when it is necessary to determine the most optimal composition of structures and resources for the longest or cheapest life cycle of the object. the main advantages of this approach are that: – it is scalable: it can be applied to a structure, its separate construct, or several resources. – it is universal: regardless of the purpose of application of results it can be used by all participants of the construction market – the investor (customer), the contractor, the designer, the engineer-consultant, the monitoring (controlling) organizations. for the maximum efficiency of use of the offered mathematical apparatus the enterprises need qualitative initial data: – design documentation and/or market price of construction resources as a basis for comparison; – market price range (scope of sample variation) for resources; such data can be collected at our own facilities and obtained as a service from specialized organizations. the state, as the largest customer of construction works, is interested in forming and supporting the market of such information services. competition in this area will contribute to the transparency of calculations and ultimately to the establishment of a civilized construction market. table 1 the results of the analysis of current prices in the market of construction resources for the project: “overhaul of the upper structure of the moorage № 9” indicator according to the project according to the analysis the number of items in the resource statement 222 222 number of resource items for analyze 130 90 total selling price of resources for analysis, uah 8,354,360 8,166,127 the limit for pricing resources of the total cost of material resources in the statement of resources,% 90 98 the total average selling price of resources for which the analysis was actually conducted, uah 8,166,127 7,748,646 the total minimum cost of resources for which the analysis was actually conducted, uah – 7,114,956 economic effect, calculated from the total cost of average resource prices for which the analysis was performed, % 5.1 total average selling price of resources in the statement of resources ( в в н і= ∑ 1 ), uah 8,354,360 7,936,879 the total minimum cost of resources in the statement of resources, uah – 7,303,189 economic effect of the analysis, calculated from the total cost of average prices on the statement of resources (ee),% 5.0 references: akimov, o. (2005). diskretnaia matematika: logika, grupi, grafy, fraktaly. moskva: izdatel akimova. berkuta, a. h. (2000). reformuvannia tsinoutvorennia – shliakh do tsyvilizovanoho rynku. tsinoutvorennia u budivnytstvi. zbirnyk ofitsiinykh dokumentiv ta roziasnen, vol. 3. kotler, p. (2020). marketing: an introduction, 5th edition (ukrainian). kyiv: dialektyka-viliams. three seas economic journal 138 vol. 1, no. 4, 2020 matveychuk, v. (2009). effektivnost evropeiskoi sistemy tcenoobrazovaniia pri realizatcii investitcionnykh proektov. derzhava ta rehiony. seriia: ekonomika ta pidpryiemnytstvo, vol. 1. minrehion, u. (2013). dstu b d.1.1-1:2013. «pravyla vyznachennia vartosti budivnytstva». kyiv. minrehion, u. (2013). dstu-n b d.1.1-2:2013. «nastanova schodo vyznachennia priamykh vytrat u vartosti budivnytstva». kyiv. minrehion, u. (2013). dstu-n b d.1.1-6:2013. «nastanova schodo rozroblennia resursnykh elementnykh koshtorysnykh norm na budivelni roboty». kyiv. mizhuriadova rada zi spivrobitnytstva v budivelnii diialnosti, m. r .-u. (2012). kontseptsiia intehruvannia system tsinoutvorennia derzhav – uchasnyts snd i vprovadzhennia innovatsijnykh metodiv vyznachennia vartosti budivnytstva na vsikh stadiiakh investytsijno-budivelnoho protsesu. astana. nikolayev, v. p. (2011). informatsionnoye i normativnometodicheskoye obespecheniye analiza zhiznennogo tsikla kapitalnykh investitsiy. formuvannya rinkovikh vidnosin v ukraini, vol. 9, pp. 88–93. reznichenko, v., lenintsev, ya., & mizyun, v. (2006). organizatsionno-ekonomicheskiye problemy i mekhanizmy snizheniya stoimosti stroitelnoy produktsii. ekonomika stroitelstva, vol. 1. sichnyi, s. (2013). do problem obgruntuvannya vartosti materialiv u budivnytstvi. budivelne vyrobnytstvo. mizhvidomchyi naukovo-tekhnichnyi zbirnyk, vol. 55, pp. 79–87. sichnyi, s. (2017). zmenshennia vytrat pry provedenni analizu tsin na rynku budivelnykh materialiv. budivelne vyrobnytstvo. mizhvidomchyi naukovo-tekhnichnyi zbirnyk, vol. 63/2, pp. 85–91. three seas economic journal 1 vol. 1, no. 2, 2020 corresponding author: 1 lviv regional institute of state administration of the national academy of state administration under the president of ukraine, ukraine. 2 lviv regional institute of state administration of the national academy of state administration under the president of ukraine, ukraine. e-mail: 88dym88@gmail.com orcid: http://orcid.org/0000-0003-1901-9177 doi: https://doi.org/10.30525/2661-5150/2020-2-1 reformation of customs service of ukraine to achieve the goals of sustainable development yevhen borshchuk1, yurii dumiak2 abstract. the objective of the article is a systemic analysis of the approaches to reformation of the customs sphere, determination of the role of customs service in the process of ensuring a sustainable development under the present-day conditions. eurointegration strategy of ukraine necessitates the need for reformation of the national customs system in order to conform to the standards of the world customs organization and the perspective adaptation to the european requirements, elaboration of the development strategy with the purpose of integration with the developed countries of the world, harmonization of economic trade and ecological processes. methodology. in the course of this analysis the customs service was considered as a complex open system with application in the research of the methodology of systemic analysis, which allowed to put emphasis on separate aspects of the specific character of its functioning. results. in any country, customs service is an integral part of the system of state administration of the foreign economic activity, one of the important state institutes of social and economic processes administration. it ensures the balance of interests of all participants of international trade enshrined in the current conventions and agreements on the level of the international law. modernization of the national customs system under the conditions of the european integration processes has to become an important mechanism of social and economic development and international collaboration of ukraine. under the present-day conditions customs service plays an important role in the achievement of goals established by the un in the sphere of sustainable development till 2030. some of these goals are directly connected with the strategic mission of the customs service and that is why it is important to ensure appropriate conditions for functioning of the customs service for the successful accomplishment of the tasks of sustainable development in the social, economic and ecological spheres. the key priorities of activities of the national customs system must ensure accomplishment of the main tasks of the customs authorities in the context of achieving the goals of sustainable development formulated by the world customs organization: formation of the favorable, safe, just and sustainable business environment for economic growth, ensuring social justice, facilitation of improving stability of the global, national and regional ecological systems and combating the climate changes. practical implications. the performed analysis of particularities of the customs system functioning and its objectives allows to determine the role of the customs service in the achievement of the goals of sustainable development till 2030, to highlight the key priorities in resolving the environmental problems, to form the potential of sustainable development. for ukraine these are modernization of national society and minimization of consequences of existence of the corruption schemes. value/originality. the use of the systemic analysis allows to detect the main problems in functioning of the customs service taking into consideration the specific character of its functioning under the present-day conditions. key words: customs service, sustainable development, goals of sustainable development, system analysis, world customs organization. jel classification: e42, q01 three seas economic journal 2 vol. 1, no. 2, 2020 1. introduction social and economic transformations taking place in the ukrainian society in the beginning of the 21st century are accompanied by complicated and controversial processes: transformation of policy making organs, reformation of economic foundations of functioning of the national economic system, profound changes in the role of the state institutions in regulation of social relations, growing social inequality. all this is taking place against the background of the global processes of economic integration of the states, which predetermines the need for the formation of effective tools for regulation of the social and economic development and optimization of functioning of the state regulation in various spheres, particularly, in the customs sphere. as the researchers point out, substantial rise in the scale of turnover of commodities between ukraine and other countries against the background of economic slowdown under the conditions of pandemics fuels up withdrawal into the shadows in the sphere of customs-legal regulation of foreign economic relations, which causes tremendous nonreceipt of payments to the budget. eurointegration strategy of ukraine necessitates improvement of the customs system in accordance with the standards of the world customs organization and the perspective adaptation to the european requirements. modern challenges for ukraine explained by the growing scale of globalization necessitate elaboration of the strategy of social and economic development aiming at integration with the developed and economically successful nations of the world and harmonization of the diverse processes in foreign sphere – economy, trade, legal arrangements, etc. integration of ukraine into the global economic system necessitates selection of the effective foreign economic policy that in many respects depends on the structure and character of functioning of the customs sphere (melnyk, todoshchuk, adamiv, 2018). the problems of functioning of the customs system and principles of formation and implementation of the customs policy and customs activities draw more and more attention of scientists and experts, analysis of the various aspects of development of the customs affairs is an inexhaustible subject of research for the leading scientists. the majority of the ukrainian researchers are of the opinion that the pressing problem of modernization of the national customs service is absence of a quality state strategy of the customs service development that would clearly identify the top-priority goals of its functioning in the long-term perspective and then transform into specific tactical measures for implementation of such strategy (martynyuk, 2010). the internal and external constraining factors of development of the state customs service are also insufficiently studied. in general, scientific research of these problems is rather multifaceted but the direction of strategic development of the customs sphere in the context of transition of the national economy to the principles of sustainable development has not been studied sufficiently. the objective of this article is to conduct analysis of modern trends in the improvement of administration of the customs component in ukraine, to assess the impact of the customs service on sustainable development taking into consideration the determinant of the global environment. 2. sustainable development concept strategic tasks of civilizational development have been formulated in the sustainable development concept approved at the united nations conference on environment and development (rio de janeiro, 1992) the main trends of which were outlined by the millennium goals and the sustainable development goals for the period after 2015. the un, proceeding from the analysis of execution of the tasks to achieve the millennium goals by its resolution 70/1 dated september 25, 2015 adopted by the un general assembly “transforming our world: the 2030 agenda for sustainable development” approved the agenda in the sphere of sustainable development in the period after 2015. the feature of the sustainable development goals till 2030 is a considerable attention to the growth of creative and innovation potential of international business in the context of meeting challenges of sustainable development. the world customs organization has formulated the main tasks of the customs authorities in the context of achievement of sustainable development aiming at the formation of favorable, safe, just and sustainable business environment for economic development. this will permit enterprises, especially micro-, small and medium enterprises, to expand their spheres of activities and create prerequisites for a more active participation in the global trade. that is why the pressing problem becomes the problem of identifying the meaning, place and role of the customs control, improvement of functioning of the customs system in the formation of financial three seas economic journal 3 vol. 1, no. 2, 2020 resources of sustainable development (world customs organization, 2018). 3. customs as the state administration institute throughout the entire period of the formation of modern civilization, the customs has been and remains one of the most essential factors of statehood and independence of any country, its financial sovereignty. the customs system is a component of the primary principal features of an independent country that necessitates the construction of the effective national customs system. it has always been one of the key factors of functioning of the state ensuring its national security and economic interests of the country. to assess activity of the customs, first of all, it is necessary to determine its place in the system of the state institutes that control social and economic processes. as a part of the economic system of the country the customs, aside from the performance of its traditional functions of administration in the sphere of taxation and regulation of foreign trade, also acts as a social and economic institute where the customs service is demonstrated in the form of a special state service. the peculiarity of provision and consumption of the customs services is their rigid legislative regulation – the list of the rendered customs services is limited by the tasks and functions of the customs authorities, while the number and quality of the services is regulated by the law (berezhnyuk, 2002; lypovska, 2005). customs administration must observe the balance of interests of all participants of foreign trade in its activity (first of all, social and economic, legal and other interests of its country, society), enshrined in the current conventions and agreements – on the level of the international law taking into account the national interests by way of (pashko, 2004): – creation of the conditions (legislative, norma-tive legal, technological, communication, infrastructural) that do not prevent lawful trade and crossing customs borders by transport, cargoes, passengers; – reconcilement of the national and international trade and customs legislation and the tax policy regulating foreign economic activity; – collaboration with the world community, relevant bodies inside the country in the joint struggle with arms trafficking, smuggling of drugs and other prohibited, dangerous for human health goods and cargoes, that inflict environmental harm as well as with commercial fraud; – recognition of justifiability and eligibility of the measures taken to protect the internal market and domestic commodity producers from foreign economic expansion by the world trade community and individual foreign trade partners, and from the policy of discrimination of commodities manufactured by the national producer. the main tasks of the customs service include (state customs service, 2019): – correct application, steadfast observance and inadmissibility of non– implementation of the requirements of the laws of ukraine pertaining to the state customs service; – performance of obligations envisaged by the international agreements of ukraine on the state customs service in accordance with the requirements of laws; – ensuring customs control and execution of customs formalities pertaining to the goods, commercial transport vehicles crossing the customs border including those that do it on the basis of electronic documents (online customs filing) with the aid of technical control means, etc.; – collection of customs payments, control of correct calculation, timeliness and completeness of their payment, taking measures for their recovery by enforcement if needed, organization of applying guarantees to ensure collection of customs payments; – control of the observance of rules for transfer of currency valuables; – protection of the intellectual property rights, taking measures to prevent transfer of commodities across the border if this is done with violation of the intellectual property rights; – prevention and struggle with smuggling, combating violation of the customs rules on the entire customs territory of ukraine; – control of the activity of enterprises rendering services for declaration of goods, movement and warehousing of goods transferred across the border or that are under customs supervision, and carrying on operations with such goods; issuance of permits to carry on the mentioned types of activities; issuance of the certificates of the authorized economic operator; – verification (authentication of reliability) of the certificates of origin of the goods from ukraine and issuance of the certificates of origin in the established cases; – application of measures envisaged by the law for the customs tariff and non-tariff regulation of foreign economic activity and exercising other powers established by the laws of ukraine. three seas economic journal 4 vol. 1, no. 2, 2020 the environment, in which the customs system of ukraine functions, is determined by two important factors: the european integration processes and the processes of transition to the principles of sustainable development. the important task of social and economic development of ukraine in the context of the european integration processes is reorientation of the national economy towards the foreign economic segment taking into account not only the european standards, but also the national interests of ukraine and introduction of modern methods and levers of state regulation of foreign economic activity. modernization of the national customs system under the conditions of the european integration processes becomes an important mechanism for social and economic development and international collaboration of ukraine for the upgrading economic level of social development creating new opportunities for carrying on business and for interhuman contacts, improvement of environmental situation, expanding the limits of independence of local power bodies and strengthening local democracy. the world customs organization recognized promotion of ensuring a sustainable future, solution of the tasks in social, economic and ecological spheres and in the sphere of health care as the main trends of its activity for the achievement of the sustainable development goals till 2030. to this end it is important that customs, successfully resolving the assigned tasks, would continuously increase its efforts for the effective and more active actions (world customs organization, 2020). 4. customs system and sustainable development goals in contrast to the goals of development, the features of sustainable development goals till 2030 are the growing attention to the problems of formation of innovation potential of international business in the context of meeting the challenges of sustainable development. as noted in the un documents, the goals of sustainable development outline the global priorities of sustainable development and aspirations for the period till 2030. they aim at mobilizing efforts of the world community on a number of common goals and tasks. the sdg calls on the governments, business and general public of all countries to act together on the world scale to overcome poverty and create decent conditions for life and opportunities for all on the planetary scale. the goals of sustainable development is a universal plan of actions for the flourishing of all peoples and countries of the planet that requires participation of all interested parties on the basis of partnership relations (compass guide ukrainian, 2016). the goals of sustainable development can be achieved and provided only when transition is made to the principles of global partnership and collaboration in support of business. as ban ki-moon, secretary-general of the united nations, has noted in his time, “business is a vitally important partner for the achievement of the sustainable development goals. companies can get involved in it through their principal types of activity, and we apply to the companies of the entire world with request to assess their influence, set the ambitious goals and report on the results openly and transparently” (world customs organization, 2020). the national customs authorities in their activities must ensure: – promotion of innovations, protection of intellectual property rights, prevention of penetration of poor quality, counterfeit and other goods that do not meet requirements of relevant standards into the national markets, enhancement of combating international organized crime and terrorism, elaboration of measures against money laundering, human, drugs and weapons trafficking and other serious crimes. – domination of social justice and openness through lowering trade barriers, harmonization of customs activities regarding reduction of the time and financial costs of transporting goods across borders, boosting of trade, increase in earnings and employment, promotion of national and international investments. – promotion of stability of the global, national and regional social and economic systems and struggle with the climate change by way of efficient performance of multilateral agreements aiming at combating illegal trade in hazardous waste and ozone-destroying substances, combating trade in endangered species and prevention of the spreading of alien species, plant and animal diseases, collection of carbon dioxide taxes. in the foreword to “green customs guide to multilateral environmental agreements” executive director of the un environmental programme achim steiner and former secretary general of the world customs organization michel danet note: “today customs officers are aware that their traditional role as guardians of the trading system is evolving into a more nuanced one encompassing different three seas economic journal 5 vol. 1, no. 2, 2020 dimensions of sustainable development related to the well-being and protection of society. now we are asking customs officers to be at the frontline not only for trade, but also for environmental protection purposes, and to contribute to the greening trade.” (un environmental programme, 2008). from the standpoint of transition to the principles of sustainable development, it is necessary to single out two important trends in activity of the customs. environmental: ensuring execution of generally adopted international agreements: the basel convention on the control of transboundary movements of hazardous wastes and their disposal, the cartagena protocol on biosafety, the convention on the prohibition of the development, production, stockpiling and use of chemical weapons and on their destruction, the convention on international trade in endangered species of wild fauna and flora, the montreal protocol on substances that deplete the ozone layer, the rotterdam convention on the prior informed consent procedure for certain hazardous chemicals and pesticides in international trade and the stockholm convention on persistent organic pollutants. for ukraine, the role of the customs in this context is very important in resolving the problem of destructive logging. according to various data, forests in ukraine occupy the area of approximately 16-17% of total territory (about 10.6 million hectares), which is considerably less than the average index in europe (35.4%). it is natural that the state policy must aim at the increase of forested territory. at the same time, illegal logging and sale of timber, plundering and smuggling of timber became a serious problem for ukraine. according to the world wildlife fund, ukraine is the world major supplier of charcoal exporting it to the european union countries. in 2018, import of charcoal from ukraine attained 22% of total volume of logging. to this end, according to johannes zahnen, senior forest policy officer of wwf germany, starting from the date of prohibition of export of round wood from ukraine the state has almost doubled export of charcoal in two years. according to the survey of the british non-governmental organization earthsight studying the problems of illegal logging in the world, in 2018 ukraine became the major exporter of illegal wood to the european union. ukrainian commercial timber under the guise of firewood is sold to the european wood processors who produce furniture, flooring, panels and other products out of it. it is profitable for the european entrepreneurs – they save their forests, buy cheap ukrainian timber, process it and receive added value, jobs and taxes (ukrainian universal exchange, 2020; state forest agency, 2020). without any special calculations it is fair to say that modernization of customs service, elimination of the corruption element in the customs processes will essentially diffuse the problem of logging in the ukrainian forests. financial sphere of activities of the customs, under which we understand formation of the financial potential of sustainable development, is important for the achievement of the goals of sustainable development on the basis of the considerable financial flows that pass through the customs by way of legalization of their movement. generally speaking, financial potential is one of the key elements of sustainable development. in the most general case, financial potential of sustainable development is interpreted as a totality of financial opportunities for the development in the interests of socio-ecological and economic progress (herasymchuk, vakhovych, kaminska, 2006). financial opportunities for the growth of receipts to the budget from the customs are tremendous. in 2018, the volume of smuggled commodities attained 11.9 billion usd, which is nearly one fifth of total volume of imports to ukraine in 2018. according to some calculations, only under the scheme of “suit jackets” (shuttle passage of the residents of near-border regions), ukraine loses about 700 million eur per year. direct losses of the budget from smuggling through the short-received mandatory payments are estimated at 3.2 billion usd, losses in the domestic market are twice the size of that (kravchenko, 2019). like in the case of the environmental trend in its activity, the main task of the customs towards the increase of its contribution to the formation of the financial potential of sustainable development is putting things in functioning of the customs system in good order. the customs must not be an instrument for serving interests of certain oligarchic clans, but an effective mechanism ensuring accomplishment of social and economic development of the state. 5. conclusions thus, following the analysis of the goals and the specific nature of functioning of the customs system it will be fair to say that customs is capable of making a sizable contribution to the achievement of goals of sustainable development both on the global and on the national levels. under the present-day condition three seas economic journal 6 vol. 1, no. 2, 2020 the traditional role of the customs in supporting foreign economic activity is supplemented with the role of an essential factor in resolving environmental problems that have no borders, and its growing role in the processes of formation of the financial potential of sustainable development. the establishment and development of the customs system of ukraine is taking place under the conditions of complicated transformation processes that involve all spheres of vital activities of the state. the customs service serves to a certain extent as an important mechanism of social and economic development and international collaboration of ukraine, it creates certain opportunities for the conduct of business. at the same time the customs sphere almost more than all other state institutions encounters the effects of the corruption schemes that in no small degree distort functioning of the customs system. it is common knowledge that ukraine possesses a great amount of various natural and human resources on which foundation it is possible to form a tremendous potential of sustainable development. to resolve the problem of potential sustainable development formation, for ukraine the need to create the appropriate institutional conditions becomes prior. very often the functioning state institutions by their activities protect interests of separate industrial-oligarchic groups but not the public interests, which can be seen from the work of the customs authorities of ukraine. transition of the national economic system of ukraine to the principles of sustainable development necessitates a radical upgrading of the national social and economic system within the framework of general civilizational processes of social development. the basis of such upgrading must become consolidation of the role of the civil society in the processes of sustainable development, ensuring transparency in activities of the state institutions, elaborating strategy and goals of sustainable development till 2030. references: melnyk, o. h., todoshchuk, a. v., & adamiv, m. ye. (2018). experience of france in the construction and functioning of the customs system: projection on ukraine under the conditions of eurointegration. business inform, no. 7, pp. 38–43. (in ukrainian) martynyuk, v. p. (2010). customs system and economic security of the state: theory and methodology. ternopil: aston. (in ukrainian) berezhnyuk, i. h. (2002). structure of institutional mechanisms in the system of customs affairs administration. herald of the academy of customs service of ukraine, no. 3, pp. 65–69. (in ukrainian) lypovska, n. a. (2005). customs service in the system of public service ukraine. current problems of state administration: collection of scientific works. ed. 1 (19), pp. 208–217. (in ukrainian) pashko, p. v. (2004). fundamentals of customs service in ukraine. kyiv: znannya publishers. (in ukrainian) world customs organization (2018). reports from the world customs organization. international customs officer day. available at: http://sfs.gov.ua/media-tsentr/novini/print-324445.html (accessed 10 january 2020). state customs service (2019). statutes of the state customs service of ukraine. available at: http://customs.gov.ua/polozhennia (accessed 10 january 2020). united nations environment programme (2008). green customs: guide to multilateral environmental agreements. available at: http://www.unep.fr/ozonaction/information/mmcfiles/7466-r-greencustoms guide.pdf (accessed 10 january 2020). ukrainian universal exchange (2020). illegal logging in ukraine: prohibit impossible to permit. available at: http://www.openforest.org.ua/130991) (accessed 10 january 2020). state forest agency (2020). volumes of illegal logging in ukraine increased sevenfold. available at: http://www.unian.ua/ecology/10903121-v-ukrajini-obsyagi-nezakonnih-rubok-zrosli-v-sim-razivderzhlisagentstvo.html (accessed 10 january 2020). compass guide ukranian (2016). manual for the achievement of goals of sustainable development in the sphere of business. available at: http://sdgcompass.org/wp-content/uploads/2016/09/sdg_ compass_guide_ukrainian.pdf (accessed 10 january 2020). herasymchuk, z. v., vakhovych, i. m., & kaminska, i. m. (2006). financial policy of sustainable development of the region. lutsk: nastyrya. kravchenko, v. (2019). green customs. will zelenskyy become the first president who defeats smuggling. available at: http://focus.ua/economics/435093-zeljonaia_tamozhnia (accessed 10 january 2020). three seas economic journal 42 vol. 1, no. 2, 2020 corresponding author: 1 national aviation university, ukraine. e-mail: 0660105265@ukr.net orcid: https://orcid.org/0000-0003-3479-5019 researcherid: https://publons.com/researcher/аас-3889-2019 2 national aviation university, ukraine. e-mail: tan3000@ua.fm orcid: https://orcid.org/0000-0002-2010-307x researcherid: https://publons.com/researcher/s-3805-2018/ doi: https://doi.org/10.30525/2661-5150/2020-2-7 diagnostics of crisis conditions of the aviation enterprise larysa turova1, tetiana gavrilko2 abstract. the purpose of the article is to study the systems and methods of diagnostics of the crisis conditions of the aviation enterprise, to justify the role of controlling as a management accounting system in the detection and prevention of crisis phenomena, to clarify the mechanism and iterations of diagnostics of the crisis conditions taking into account the use of appropriate management systems. methodology. the key provisions of economic and financial theory, methodological and methodological principles of crisis diagnosis of enterprises, presented in the works of ukrainian and foreign scientists, were used as the theoretical basis of the study. the application of a systemic approach allowed to analyze the essence of diagnostics of crisis conditions, its purpose and objectives. the methods of logical generalization used in the research process allowed to formulate the conclusions on the conditions for the effective implementation of diagnostics of crisis conditions based on improving of the functioning of management accounting systems and management systems. results. the study allowed us to analyze the factors that causing crisis conditions in the aviation industry. the main methods for diagnosing crisis conditions are analyzed placing emphasis on the special place that belongs to management accounting and the use of management systems when diagnosing crisis conditions. the basic provisions of effective organization of management accounting at aviation enterprises to form the information base at development of the strategy for crisis prevention or recovering from crisis conditions are defined. the peculiarities of diagnostic analysis of the financial condition of the enterprise as a system of diagnostic methods are identified; on the basis of a systemic approach, they allow to establish causal changes in the economic system through quantitative and qualitative measurement of the influence of factors on adjustments and development. features of different types of diagnostic analysis depending on the hierarchy in the management system, goals and directions of analysis, as well as the availability of information about the problem areas of the enterprise, are discussed. tasks that need to be implemented to achieve the goal of diagnostic analysis are specified. the necessity of diagnostics of possible crisis conditions of the aviation enterprise with simultaneous risk research and its influence on financial stability of the investigated object is justified. the system of indicator values for diagnostics of a financial condition of the aviation enterprise is offered. the sequence of calculations for the implementation of monitoring and controlling process of the financial condition of aviation enterprises is presented. practical implications. the approach for diagnosing financial condition of the enterprise, which allows to identify the symptoms and threats of the financial crisis and to develop the policy for prevention (anticipation) of weak signals of a crisis situation based on the analysis, is justified. the conditions of effective application of management accounting systems on the basis of monitoring and controlling and modern methods of diagnostics of the financial condition of aviation enterprises are determined. the directions for improvement of analytical activity on the basis of information systems and technologies for the aviation industry are justified. value/originality. results given in the article can be used for further research on the problem of diagnosing the crisis conditions of aviation enterprises. key words: crisis conditions, diagnostics, management accounting, controlling, monitoring, financial analysis, aviation industry. jel classification: g33, l26, l64 three seas economic journal 43 vol. 1, no. 2, 2020 1. introduction the crisis conditions and bankruptcy are integral elements of the development of any industry in the market. the crisis resulting from the pandemic has caused record losses of the aviation industry, amounting to 84 billion usd. the international air transport association (iata) has named 2020 the worst year in the history of aviation. according to experts, next year will not make a full recovery and although the projected growth may be 55%, the performance of aviation companies will be 29% lower than in 2019. according to experts, the ukrainian aviation industry will need at least one and a half to two years to reach the pre-quarantine period. the problematic situation has also developed with the aviation enterprises. the crisis in the pandemic has worsened even more due to untimely government orders, which are the main share in the production program for many companies. the slowdown in ukraine's economic development as a whole is caused by other reasons of domestic and external origin, namely: declining demand for ukrainian exports, the geopolitical situation in southeastern ukraine. the recent global financial crisis has affected all spheres of social production; the aviation industry and the service sector (air transportation) are no exception. the reasons for these problems to occur were mainly objective in nature. at the same time, an important place belongs to subjective reasons: inefficient use of crisis management tools both at the state level and at the enterprises themselves. there is an obvious need to find and implement measures to increase the effectiveness of the aviation industry and the aviation enterprises, which requires both systematic research and practical action on successful ways to prevent crises and overcome them. thus, at present, the formation of diagnostic systems for the aviation enterprises, which will promote their crisis management, makes special sense. the tasks of management accounting in the creation of such diagnostic systems should be to form an information base on controlled indicators and provide them to stakeholders for analysis and further management decision-making. 2. tasks and methods of diagnostics of the crisis conditions in the work of the aviation industry (ai) in recent years, there has been a deterioration in the financial and economic condition of enterprises, most of which are still operating at a loss. thus, the current state of the ai of ukraine cannot be considered anything other than a crisis. the government should currently contribute to the further development of ai. ukraine has great prospects for the development of the aircraft industry due to the high demand for domestic aircraft in the world, which ai of ukraine is trying to meet. however, the enterprises themselves must, first of all, take measures to overcome the crisis, properly assessing their current positions and, taking into account their strengths and weaknesses, form an adequate development strategy. the process of diagnostics of the crisis conditions of aviation enterprises should be aimed not only at creating an information system that would provide a comprehensive and systematic assessment of all activities of enterprises, including key financial indicators, but also to identify opportunities for improvement. the purpose of diagnostics of the crisis conditions is timely recognition of signs and nature of trends in the functioning of enterprises, identification of factors that cause negative consequences, the formation of an effective program to prevent further development of crisis phenomena by improving the relevance of enterprise management. the initial result of diagnostics is the adoption of optimal decisions, taking into account the features and characteristics of the situation that arose, to adjust the operation of all components of the system and ways to implement them on the basis of assessing the degree of impact of harmful actions on the deviation in criterial values. the task of diagnostics is not only to assess the condition of the object at a particular time, but also to predict its behavior after the application of appropriate measures, as well as in the absence of corrective action to improve the situation. depending on the policy of the top management, the peculiarities of the enterprise, the availability of personnel of the appropriate qualification, the following methods of diagnostics of the crisis conditions can be used: – analytical, based on contactless methods due to statistical information, the use of a comprehensive analysis of financial and economic indicators of the enterprise; – expert, which gives the opportunity to evaluate the information from experts presented using contact methods; three seas economic journal 44 vol. 1, no. 2, 2020 – dynamic programming based on solving management problems using mathematical models; – linear programming allowing you to optimize the achievement of a quantified goal. 3. the role of management accounting in the diagnostics of the crisis conditions in the diagnostics of the crisis conditions of the aviation industry, management accounting and the use of appropriate management systems are of particular importance. management accounting (ma), or internal accounting, means the collection and analysis of information for the management of the organization at all levels. it is a misconception of many managers that ma is a subsystem of accounting and is limited to the field of finance, because it allows you to track unacceptable deviations of the actual parameters of the enterprise from planned (regulatory) elements, identify their causes and make informed management decisions. in order for the ma data to lead to the desired result, the following actions must be performed: – to identify the main objectives of the structural units of the enterprise, which should be consistent with its mission and overall development strategy. – to specify the sub-goals and objectives with the definition of indicators for assessing the effectiveness of their achievement. – to determine the main and secondary indicators of importance for each task. – to distribute benchmarks based on the functions of responsibility centers. – to establish target values of control indicators, which will ensure the possibility of implementing the processes of forming plans and monitoring their implementation (burkovska, 2012). the obtained results of management accounting can serve as an information basis for further analysis and development of a strategy for crisis prevention or crisis management. it is very important to assess the possible preconditions and results of changes that could affect the activities of the aviation enterprise in order to identify threats and prevent the development of crisis phenomena. to implement the tasks of preventive crisis management, it is mandatory to conduct preventive monitoring of the enterprise environment, both internal and external, the formation of the information base on indicators that reflect the level of success of the enterprise determining the vector of possible actions to identify crisis threats. thus, one of the most important tasks of crisis management is to diagnose the state of the aircraft industry, the use of effective tools for diagnostic analysis, which will create a basis for assessing the performance of the enterprise and will be the basis for adequate decisions on further development. 4. features of diagnostic analysis of financial condition diagnostic analysis is a type of analysis that differs in goals, objectives and includes a system of diagnostic methods that, based on a systematic approach, allows to establish causal changes in the economic system through quantitative and qualitative measurement of factors influencing this change and development. taking into account the goals and directions of diagnostic analysis, the possibility of obtaining comprehensive information on the areas of activity of the enterprise, which fall into the "problem" area, the decision is made to choose one (or more) of the existing types: – diagnostic rapid analysis; – comprehensive diagnostic analysis; – diagnostic analysis of functional areas; diagnostic analysis of thematic issues (in particular, diagnostic analysis of financial condition). the purpose of the diagnostic analysis of the financial condition of the enterprise is to identify existing and potential deviations from stable operation on the basis of typical features that are specific only to this violation, prevention (control) of their occurrence and transformation into "bottlenecks", which can delay the achievement of goals and objectives, jeopardizing both current and strategic activities. based on the above, diagnostic analysis of financial condition can identify "symptoms" of economic illness. to achieve this goal, the diagnostic analysis of financial condition should solve the following tasks: 1) systemic comprehensive organically interconnected study of external and internal environmental factors that describe changes in the environment of the enterprise to identify threats and new opportunities (this applies to both global and specific economic environment); 2) timely identification of factors that ensure sustainability or lead to a breach of financial condition in the short and long term; three seas economic journal 45 vol. 1, no. 2, 2020 3) determination of the target parameters of the enterprise and the criteria for assessing their impact on its financial condition at each stage of the life cycle; 4) determination of the causal links between changes in factors and the system (because a change in any factor can change the whole system) and measuring changes in financial condition (economic system) in quantitative and qualitative terms from the negative impact now and in the future; 5) building of a model for assessing and diagnosing the financial condition for different uses of resources; 6) determination of the degree of risk of a crisis situation at any stage of the life cycle; substantiation of the limit of the enterprise's entry into crisis; 7) development of a system of measures aimed at finding ways to prevent bankruptcy, the development of managerial influences in order to bring the system in the right direction and further strengthen the financial condition. since there is a problem in obtaining a unified idea of the object of study as a system as a whole in the process of diagnostic analysis, diagnostic and systemic analysis are closely intertwined. at present, such problems are related to the lack of a single methodological basis for reliable determination of the financial condition of the airline or operating company (air carrier, airport, etc.). therefore, the diagnostics of the possible crisis conditions of the aviation enterprise should include a study of risk and its impact on the financial stability of the object under study. risk assessment is based on a comprehensive (scientific, technical, technological, marketing, sociological, etc.) research of the object of study, taking into account external influences, construction and analysis of the chain of events under the conditions of various risk factors. studies show that to date there is no complete system of risk assessment indicators. in our opinion, the basic methodological principles of forming a system of controlling and diagnostics of the financial condition of the aviation enterprise and the development of a set of initial risk indicators include: – compliance of the system of indicators with the objectives of the study, which means their ability to identify and assess the degree of influence of a certain group of risk factors on the object of diagnosis (industry or region for the meso level); – availability and accessibility of information support for empirical research; – the presence of a sufficient number of research periods to form a certain trend of changes in the values of the indicator (all periods must be the same); – providing the possibility of forming a statistical base, which would contain information on the level and dynamics of change of indicators, which would be a prerequisite for the development of risk assessment models; – quantitative measurability; – the availability of conditions for the construction of adequate algorithms for calculating indicators; – a high degree of variability and relative awareness, a clear and unambiguous definition of the nature of the impact on the level of risk of the object of study; – the optimal number of indicators from each area of research, the exclusion of indicators that duplicate each other. to implement the process of monitoring and controlling the financial condition of airlines, we offer the following algorithm of calculations: – determining the availability and size of possible financial resources on the basis of calculating the value of the current business of the enterprise; – determining the level of security and efficiency of attracting financial resources based on the calculation of a system of analytical indicators and indicators of financial condition; – analysing the level of organization of financial management; – the formation of an integrated indicator as the main indicator of the availability and use of financial potential, which allows to predict the future state of the enterprise, to identify financial reserves and opportunities, to increase the efficiency of management in general. at the same time, their successful functioning in the modern business environment is impossible without a defined strategy for the development of aviation enterprises (voronkova, 2017). ensuring a stable position in a competitive business space and increasing entrepreneurial capital is possible only if the management of aviation enterprises forms an effective development strategy. 5. approaches to the diagnostics of the crisis conditions the generalization of literature sources and practices of aviation enterprises allows to single out the list of indicators that will diagnose the financial three seas economic journal 46 vol. 1, no. 2, 2020 condition of the enterprise, identify symptoms and threats of the financial crisis and based on the analysis to develop a policy to prevent (anticipate) weak signals of crisis situation. in our opinion, the main independent indicators for assessing the financial condition of the enterprise should include: – asset mobility (current / non-current assets). – accounts payable turnover (net sales income / current liabilities). – return on equity (net sales income / equity). – return on assets (balance / net sales income). – provision with own current assets ((current assets – current liabilities) / current assets). – concentration of loan capital (long-term liabilities + current liabilities) / balance sheet). – debt coverage with equity ((equity / (ensuring subsequent expenses and payments + long-term liabilities + current liabilities)). modern scientific literature sufficiently covers the issue of assessing the financial condition of the enterprise, taking into account the industry characteristics of its operation. from the available variety of financial indicators, the manager, owner or other person who makes financial decisions can choose the most adapted ones to the specifics of a particular enterprise. a financial ratio can be a criterion for making a management decision, if it has a constant calculation algorithm for the enterprise and it is set by the owner, manager or state regulatory or target value. according to m. bartoli, these requirements are met by such financial indicators as: – liquidity ratios (the literature shows the standard values, at the same time it is possible to set own standards, guided by the chosen policy of calculations); – coefficients of financial stability (the literature shows the standard values, at the same time it is possible to set own standards, guided by the chosen policy of calculations); – profitability ratios (usually there is an average industry value, the indicative levels of these indicators in competing companies are set by owners or managers); – turnover ratios (normative or recommended values can be used; when the management sets the lower limit of values, the specifics of the sphere of operation of the enterprise are taken into account); – coefficients underlying the models for determining the probability of bankruptcy (there is a sufficient variety of models of foreign and domestic scientists, adapted to the characteristics of certain economic sectors); – indicators of investment efficiency (characterized by a unified nature); – indicators of the conditions and movement of cash flows (relevant standards have commercial banks that use these indicators in assessing the creditworthiness of the borrower); – integrated ratios, which make it possible to assess the overall financial condition, financial stability, the feasibility of which is determined by the peculiarities of the assessment needs; – indicators of operational analysis (the criterion is the break-even point in kind or value, calculated at a particular enterprise); – indicators (standards) of risk (often determined by complex economic and mathematical models to establish standards require expert methods) (chernysh, 2012). given the sufficient effectiveness of factor analysis and diagnosis, assessing the financial condition, it is advisable to use the analysis of the dynamics and structure of the balance sheet, income and expenses, cash flow dynamics and more. based on the characteristics of these indicators (use to characterize the process), it is problematic to determine their quantitative values (only some structural indicators can be an exception). for diagnosis it is not enough just to calculate the value of these indicators, you should be able to interpret the situation and assess the parameters of the actual financial condition of the enterprise ai. due to the lack of a permanent list of evaluation indicators, according to professor blank i.o., theorists and practitioners in the field of diagnosis have an individual, often subjective, approach to solving this problem, so the use of computer tools to improve the reliability of the obtained results is justified (blank, 2006). the presence of modern information technologies opens up new opportunities for management accounting (monitoring and controlling financial and economic activities), their use is a kind of driver of economic development. the use of traditional tools for the implementation of analytical procedures does not allow for timely and quality decision-making both in relation to the enterprise as a whole and for individual activities. the choice of modern information systems and technologies should be based on such factors as the cost of their acquisition and implementation, the level of their profitability, efficiency in terms of three seas economic journal 47 vol. 1, no. 2, 2020 achieving the desired goals for the company, staff skills, the need for analytical work and its volume (bartoli, 1994). implementation of processes for improving analytical activities based on information systems and technologies for enterprises with large volumes of operations is necessary, according to theo postma, for a number of the following reasons: – large capacity of information arrays used in enterprises and their diversity in terms of unification when used by different departments of the enterprise; – a variety of sources of information concerning both the external and internal environment; – lack of ability to process data online with the involvement of interested users (postma, 1999). the outlined problems for aviation enterprises should be solved through the introduction of a computer information analytical system, which should be characterized by the presence of stages preceding the direct analysis of data using appropriate modern technologies (data warehouse, data mart) and analytical tools (olap, data mining). the use of standard professional software products "1c: accounting", "parus", "galaktika", sap in the case of their adaptation to the peculiarities of the production activities of the enterprise requires additional costs; asset revaluation procedures are also quite time consuming, and although they can be performed on the basis of microsoft excel, it is obvious that this is insufficient for effective accounting in enterprises (burkovska, 2012). obtaining the results of management accounting allows the analysis of financial capacity, reserves and potential resources of the enterprise in order to form an anti-crisis program; it is important to have preventive measures to implement innovations in the aviation enterprise. 6. conclusions the study has made it possible to establish that diagnostics in the aviation enterprises is an important means of achieving the goals of the enterprise, acts as a subfunction of the control function and should be based on the agreed use of all procedures of assessment, analysis and identification. implementation of management accounting systems, based on monitoring and controlling and modern methods of ddiagnostics of crisis conditions of aviation enterprises, requires: – training (retraining, advanced training) of employees; – approbation of accounting procedures on real data of the enterprise for a certain accounting period (on a control example) with the involvement of system developers; – approval (adjustment) of permanent regulations for the operation of such systems based on the results of their experimental (trial) operation; – introduction of new automation systems for enterprise management to solve problems of financial diagnostics or adaptation of existing ones. improvements in management accounting, as well as other further research on diagnostics of crisis conditions, will help to increase the efficiency of aviation companies and prevent the threat of their bankruptcy. references: bartoli, m. 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(1999). organizational diagnosis in practice: a cross-classification analysis using the del-technique. oxford, vol. 17, no. 6, р. 584–597. chernish, s. s. (2012). problemy zastosuvannia metodyk analizu finansovoho stanu na vitchyznianykh pidpryiemstvakh [problems of application of methods of the analysis of a financial condition at the domestic enterprises]. innovative economy, no. 5, pp. 142–146. three seas economic journal 146 vol. 1, no. 4, 2020 corresponding author: 1 donetsk national university of economics and trade named after mykhailo tuhan-baranovskyi, ukraine. e-mail: st.vlad.1995@gmail.com orcid: https://orcid.org/0000-0001-8370-6137 researcherid: aaf-4190-2021 doi: https://doi.org/10.30525/2661-5150/2020-4-21 providing a mechanism for implementing the strategy for improving the competitiveness of ukraine’s maritime transport infrastructure vladyslav stepanenko1 abstract. the purpose of the article is to develop a mechanism for implementing a strategy for increasing the competitiveness of the ukrainian maritime transport infrastructure. methodology. the mechanism for implementing the strategy for increasing the competitiveness of ukraine’s maritime transport infrastructure should have a systemic and comprehensive nature, all its elements should be interconnected and aimed at achieving a common goal that can guarantee the implementation of the strategic goals and priorities of the proposed concept. results. the article is devoted to the formation of a mechanism for the implementation of the strategy of increasing the competitiveness of the ukrainian maritime transport infrastructure, taking into account the european integration orientation. the proposed mechanism consists of key planes and their elements: methodological: (political, administrative, legal, organizational, economic, social methods; principles of consistency and complexity, flexibility, strategic importance, synergy, congruence, integration, innovation, adaptability, consistency, hierarchy; functions: goal setting – planning – organization – motivation – control – coordination); organizational and resource (institutional, organizational, financial, technological, information, socio-economic support); operating room, including a sequence of five stages (i – iii stages. development and adoption of the mti development program of ukraine and measures to implement the strategy at all levels of government (mega, macro, meso, micro. iv stage. implementation of developed measures. v stage. evaluation of the implementation of the strategy to increase the competitiveness of mti of ukraine). practical implications. the directions of increasing the competitiveness of the ukrainian maritime transport infrastructure are determined, namely: financial, personnel, regulatory, organizational, information technology and environmental. an algorithm for the implementation of the strategy to increase the competitiveness of the ukrainian maritime transport infrastructure is presented. value/originality. it is noted that the proposed mechanism for implementing the strategy for increasing the competitiveness of ukraine’s maritime transport infrastructure in the context of european integration will ensure the constant, efficient, competitive, stable development of ukraine’s maritime transport infrastructure. key words: maritime transport infrastructure, strategy, european integration, competitiveness. jel classification: f15, l62, l90, n70, q53 1. introduction current state and development trends of the ukrainian maritime transport infrastructure (reduction of volumes and cargo handling, reducing the attractive image of ukraine as a reliable counterparty in international transport relations, decrease in competitive positions and profitability of seaports due to depreciation of fixed assets (more than 70%), inconsistency of their technical level) testifies to the systemic shortcomings of the internal maritime transport infrastructure management as part of the transport infrastructure of the state. these trends require urgent solutions for effective management and the formation of a mechanism for implementing the strategy to increase the competitiveness of the maritime transport infrastructure, taking into account the european experience of reforms in this industry. 2. the formation of a mechanism for implementing the strategy the mechanism for implementing the strategy for increasing the competitiveness of ukraine’s maritime three seas economic journal 147 vol. 1, no. 4, 2020 transport infrastructure (mti) in the context of european integration is consistent, complex and cyclical and is a system of interrelated elements. the proposed mechanism is adaptive and can change its structure by introducing new elements, the appearance of which is the result of a number of adjusted strategic objectives, measures, management methods or resource and operational support. comprehensive filling of the mechanism for implementing the strategy for increasing the competitiveness of the mti with functional elements and resource support will contribute to the effective management of the competitiveness of the maritime transport infrastructure and operational support for the implementation of the strategy. the implementation of the strategy for increasing the competitiveness of ukraine’s mti provides for the creation of a mechanism (figure 1) able to ensure the adoption of effective management decisions, using a set of principles, tools, functions and methods affecting the process of managing the competitiveness of mti, taking into account the influence of the determinants of managing the competitiveness of mti in the context of european integration. determination of strategic priorities and objectives of the strategy for increasing the competitiveness of the ukrainian maritime transport infrastructure and on the basis of the tools for implementing the strategy, we will determine the directions of increasing the competitiveness of the ukrainian mti, namely: financial, personnel, regulatory, organizational, information technology and environmental direction. 3. financial support 1. state financing or financing at the expense of own funds of the state enterprise “ukrainian sea ports authority” (uspa). 2. financing from extrabudgetary funds, including investor funds. 3. financing by raising debt capital or issuing shares. 4. financing through the creation of a joint venture between the port authorities and port stevedore(s), shipowners, cargo owners and others. 4. staffing the main trend in modern education and training in the field of maritime transport infrastructure should be a shift from supply-side learning to demand-driven learning. the focus should be on individual workers, their productivity and skill level. also it is necessary to maintain high standards of personnel training and professional competence of crews to ensure the safety of navigation and environmental transportation. therefore, an adequate basis should be provided for the training and retraining of crews in the form of activities aimed at: 1. enhancing the image of shipping and a career in the maritime industry. 2. developing professional highly specialized standards for workers in the field of mti in accordance with modern requirements. 3. promoting cooperation between educational organizations and other subjects of maritime transport infrastructure. 4. creating special departments of professional training on the basis of seaports and reinforcement of training with real practice. 5. implementing a work quality control system and periodic re-certification of employees. 6. ensuring presence of clearly formulated general educational principles. 7. ensuring strict compliance with international and european requirements in accordance with the international convention on standards of training, certification and watchkeeping for seafarers (“international convention on standards of training, certification and watchkeeping for seafarers”, 1978). 8. facilitating the work of the international maritime organization (imo) and the international labor organization (ilo) with the ukrainian government regarding the fair treatment of seafarers. 9. promoting cooperation between european maritime education institutions and ukrainian higher education institutions to support the competence of seafarers at the level of prerequisites for the modern development of maritime transport, creating a network of centers of excellence in maritime training. 5. regulatory and legal support in addition to the main legislative decisions, the development and implementation of which will be necessary for the implementation of strategic directions for the development of mti, we propose legislative measures that deserve special attention: 1. bringing the customs code of ukraine (“the customs code of ukraine”, 2012), other regulations and the legal framework of the state border guard service of ukraine in line with the convention on facilitation of international maritime traffic1965 (“convention on facilitation of international maritime traffic”, 1965). 2. continuation of the forward movement in terms of the requirements for ensuring the safety of navigation and the categorization of marine transport infrastructure and vehicles by the competent authorities in the field of ensuring maritime transport security. 3. improvement and harmonization of legislation to european standards in the field of safety in maritime transport. 4. harmonization of national legislation in the field of natural monopolies (law of ukraine “on natural three seas economic journal 148 vol. 1, no. 4, 2020 monopolies” (law of ukraine “on natural monopolies”, 2000)) with the european and international practices for the withdrawal of a part of services in sea terminals, ports, and does not directly affect the speed of commodity and information flows, from under state regulation. 5. legislative strengthening of ensuring the efficiency and effectiveness of public-private partnership mechanisms in the field of investments in mti. 6. improvement and bringing national legislation to the standards of international practice in terms of the distribution of responsibility between the state and entrepreneurship in the field of ensuring safety at the operated objects of maritime transport infrastructure and vehicles. 7. legislative consolidation of compliance with higher environmental standards, legislative and tax incentives for the introduction of energy efficient and environmental technologies in port activities. 8. development and adoption at the regional level of the technical regulations (set of rules, national strategy to increase the competitiveness of the ukrainian mti in terms of european integration monitoring the implementation of the strategy formation of tactical plans control of influencing factors iv stage. implementation of the developed measures v stage. evaluation of the effectiveness of strategy implementation і stage. development and adoption of the mti ukraine development program and measures to implement the strategy mega and macro levels the mechanism of implementation of the strategy of increasing the competitiveness of the ukrainian mti o pe ra tin g pl an e methodological plane principles: consistency / complexity; flexibility; strategic importance; synergy; congruence; integration; innovativeness; adaptability; sequence; hierarchy. functions: goal setting → planning → organization → motivation → control → coordination. methods: political, administrative, legal, organizational, economic, social. institutional: international conventions; national regulations; specialized regulations in the field of mti; subjects of public administration of mti. organizational and resource plane o rganizational: state development strategies; mti development strategies; regional mti development programs. financial : national budget; local budgets; private investment; tranches of international organizations. t echnological: technical equipment of seaports; quality of service provision; scientific and technical potential of the country and regions. inform ation: information resources (safeseanet, «marine single window»); communication resources to improve performance. socioeconom ic: socio-economic situation of the state; economic plans; qualification of labor resources; staff motivation. іі stage. development and adoption of regional mti development programs of ukraine and measures to implement the strategy mesolevel ііі stage. development and adoption of local development programs of individual mti entities of ukraine and measures to implement the strategy micro level figure. 1. the mechanism for implementing the strategy to increase the competitiveness of ukraine’s maritime transport infrastructure in the context of european integration three seas economic journal 149 vol. 1, no. 4, 2020 standards) for the design, construction and operation of hydraulic structures. 9. amendments to the regulatory legal acts “the land code of ukraine” (“the land code of ukraine”, 2001), “the water code of ukraine” (“the water code of ukraine”, 1995) and the law of ukraine “on sea ports of ukraine” (the law of ukraine “on sea ports of ukraine”, 2012) regarding the lands of the water fund occupied by water and water areas of ports in order to simplify the registration procedures property rights of investors to port infrastructure facilities created on the territory of the seaport; facilitation and unification of procedures for the creation of artificial land plots on water bodies in order to enable and simplify the construction of marine infrastructure facilities on the lands of the water fund and the prospective development of infrastructure. 10. development and approval of the law of ukraine “on clusters”. the adoption of this law should outline the following provisions in the legal sphere: definition of the concept of “cluster”; types (territorial, functional, etc.); goals of interaction of cluster members; cluster structures; basic principles of the organization, functioning and termination of the cluster; governing bodies; interaction with state and local government bodies; ownership of property and products or services created by the cluster; rights and obligations of cluster members; state support for the formation of clusters. 11. adoption of the law of ukraine “on multimodal transportation”, which regulates the “legal and organizational foundations of multimodal transportation in ukraine and is aimed at creating conditions for their development and improvement, encouraging the use of more environmentally friendly modes of transport in order to protect the environment, prevent climate change and excessive consumption energy” (draft the law of ukraine “on multimodal transportation”, 2020). this law will promote the development of logistics technology “dry ports”. note that in the process of implementing the strategy, it is necessary to ensure the clarification and revision of the list of necessary legislative measures, which will reflect the current and already made changes in the legislative framework. 6. organizational support the mechanism for implementing the strategy provides for the use of a set of organizational measures consists in performing the following management functions: organizing actions (events) that are consistent with the directions of increasing the competitiveness of mti, laid down in the strategy; motivation of the subjects of mti; organization and implementation of planned activities; subsequent control of target indicators and production resources for the implementation of strategy activities; coordination (if necessary) of measures of the strategy and their further planning, both on the basis of the adjustment carried out, and on the basis of taking into account modern trends. implementation of the mechanism implies coordination of the strategy with the process of making, executing and monitoring decisions in the executive authorities of ukraine, as a result, the following will be achieved: proper implementation of the strategy; ensuring coordination with the main adopted state, departmental and regional strategies for the development of ukraine’s mti; adaptation of the strategy to changes in the global and domestic macroeconomic conditions, as well as the prompt adoption of the necessary decisions on the provision of resources for the implementation of activities. we offer the following algorithm for the implementation of the strategy to improve the management of the competitiveness of the ukraine’s mti (figure 2): 1. uspa in the role of an authorized representative of the ministry of infrastructure of ukraine in the field of port management determines strategic directions for increasing the competitiveness of the maritime transport infrastructure, which must be consistent with the directions of the national transport strategy developed by the ministry of infrastructure of ukraine. 2. strategic directions for the development of mti have been developed and submitted for approval to the ministry of infrastructure of ukraine. after official approval by the ministry of infrastructure, the directions should be implemented by the administrations of development centers (clusters) of mti within the framework of the agreed resource provision. 3. the administrations of the centers for the development of mti are responsible for the implementation of the mechanism for increasing the competitiveness of mti, which must be consistent with the directions of state policy in the field of maritime transport. 4. within the framework of the general management system, the uspa must annually approve the annual and long-term work plans of the seaports, which include goals, objectives, targets, specific activities and projects that will be implemented, including at their own expense. 7. information and technological support the formation of conditions for increasing the competitiveness of ukraine’s mti on an innovative basis requires the activation of state policy to strengthen the innovation and technological component of state development programs, stimulate maritime transport companies to innovate, and introduce state support for innovative and research projects in the mti. so, to improve information technology support, the following tasks should be implemented. three seas economic journal 150 vol. 1, no. 4, 2020 1. formation of a system of intermodal and multimodal transportation through the implementation of the “dry port” logistics technology. we propose the creation of a “dry port” near the city of rozdilna in odesa region at the intersection of road and rail international transport corridor №9 (helsinki – vyborg – saint petersburg – pskov – moscow – kaliningrad – kyiv – lyubashivka/ rozdilna – chișinău – bucharest – dimitrovgrad – alexandroupolis;), as well as the traceca transport corridor (“europe – caucasus – asia”) and the “viking” combined transport train, which passes through the territory of the three states and connects a chain of maritime container and piggyback lines of the baltic region with a similar system of the black, mediterranean and caspian seas (freight train running on the route chornomorsk (ukraine) – minsk (belarus) – klaipeda (lithuania)) (viking, 2003). the movement of cargo from the seaport to the “dry port” can be controlled by implementing electronic cargo tracking systems (gsm-gps navigation system (navstar)), television image recognition system, intelligent radio frequency labeling system) (strelnykova, artemova, 2013). 2. implementation of joint procedures with the eu to ensure the safety of maritime transport, monitoring of vessel movements, assistance at sea, sea communications, response to ship pollution and the creation of a national segment of the safeseanet information exchange system for maritime traffic and emergencies. 3. creation of a national system for the exchange of information (“marine single window”) on the movement of ships and the functioning of business entities in the mti, in particular, through international technical and financial assistance. implementation of information technology logistics systems into the ukrainian’s mti, designed to integrate all participants of port transport and cargo processes into a single information space with the ability to provide and access information that is used in technological processes of cargo transportation. the task of the development of information technology logistics is the integration of the ukrainian mti into the unified transport and logistics network of the european union, increasing the competitiveness of the maritime transport infrastructure, forwarding and logistics activities. 8. environmental support now the maritime administrations of european countries and the european maritime industry are making considerable efforts to improve the ecological state of shipping. the eu regulatory framework aims to cooperate with member states in the prevention of accidents and accidents, air emissions, ballast water treatment and ship recycling. thus, the activities of the european commission are focused on achieving a long-term plan of “zero waste with zero emissions” in the field of maritime transport. due to the fact that ukraine is striving for european integration, the dunaiskyi azovskyi mykolaivskyi administrations of development centers of mti odeskyi im pl em en ta tio n of s tr at eg ic di re ct io ns o f m ar iti m e tr an sp or t in fr as tr uc tu re d ev el op m en t pivdennyi,odesa, chornomorsk, bilhoroddnistrovskyi. mykolaiv, olvia, kherson, skadovsk. mariupol, berdiansk. izmail, reni, ust-dunaisk ministry of infrastructure of ukraine approval of strategic directions for increasing the competitiveness of the maritime transport infrastructure. annual and long-term plans for seaports. uspa development of strategic directions for increasing the competitiveness of maritime transport infrastructure. figure 2. algorithm for implementing the strategy to increase the competitiveness of ukraine’s maritime transport infrastructure three seas economic journal 151 vol. 1, no. 4, 2020 following tasks for environmental protection have been identified: 1. to provide sustainable development in achieving an integrated and coordinated approach to reducing greenhouse gas emissions from shipping, combining market, technical and operational measures. 2. to organize cooperation with the imo to reduce or limit greenhouse gas emissions. 3. to achieve “good” ecological status of sea waters under eu sovereignty or jurisdiction. 4. to improve the legislation of ukraine on port reception facilities for waste, discarded ships and cargo residues, improving the mechanisms for coordinating these operations. 5. to encourage the use of alternative energy sources in seaports through tax exemptions and the development of incentive regulations (e.g., sea wave energy). 6. to increase the effectiveness of ukraine’s participation in the imo and strengthen international cooperation with the eu’s trade and maritime partners, ensuring the safety of navigation. 7. to promote the development of the european marine environmental safety management system (ems-mt), which aims to improve the environmental performance of maritime transport continuously by improving port registration and fees and other payments to promote environmentally sound maritime transport. 8. to promote the eu strategies to improve ship dismantling, the adoption of the imo convention “hong kong international convention for the safe and environmentally sound recycling of ships 2009” and continuous progress towards its further implementation. 9. monitor the amendments adopted by the imo in 2005 to annex vi of marpol (“the hong kong international convention for the safe and environmentally sound recycling of ships”, 2009) to reduce emissions of sulfur and nitrogen oxides from the exhaust gases of ships and the prohibition of deliberate emissions of ozone-depleting substances, as well as mandatory technical and operational measures adopted in 2011 to improve energy efficiency aimed at reducing greenhouse gas emissions from ships. the strategic priorities, tasks and tools for the implementation of the strategy for increasing the competitiveness of ukraine’s mti have been determined, which guarantee the achievement of the main goal of the strategy – ensuring a high level of competitiveness of ukraine’s mti in the context of european integration. 9. conclusions thus, the proposed mechanism for the implementation of the strategy for increasing the competitiveness of ukraine’s maritime transport infrastructure in the context of european integration will ensure constant, efficient, competitive, stable development of ukraine’s maritime transport infrastructure. the improved mechanism for implementing the strategy for increasing the competitiveness of the ukraine’s maritime transport infrastructure consists of key planes and their elements: 1) methodological: (political, administrative, legal, organizational, economic, social methods; principles: consistency and complexity, flexibility, strategic importance, synergy, congruence, integration, innovation, adaptability, consistency, hierarchy; functions: goal setting, planning, organization, motivation, control, coordination); 2) organizational and resource (institutional, organizational, financial, technological, information, socio-economic support); 3) operating room, including a sequence of stages (stage i. development and adoption of a development program for mti of ukraine and measures to implement the strategy; stage ii. development and adoption of regional development programs for mti of ukraine and measures to implement the strategy; stage iii. development and adoption of local development programs for individual subjects of objects mit ukraine and measures to implement the strategy; stage iv. implementation of the developed measures; stage v. assessment of the implementation of the strategy to increase the competitiveness of ukraine’s mti). this mechanism will ensure a permanent, efficient, competitive, stable development of the ukrainian maritime transport. the implementation of a specific strategy is possible through the formation and implementation of strategic directions for increasing the competitiveness of the ukrainian maritime transport infrastructure, which is aimed at consistent integration into the european and world maritime transport market. references: the official site of imo (1978). “international convention on standards of training, certification and watchkeeping for seafarers”. available at: https://zakon.rada.gov.ua/laws/show/995_053 (accessed 03 march 2020). the verkhovna rada of ukraine (2012). “the customs code of ukraine”. available at: https://zakon.rada.gov.ua/ laws/show/4495-17#text (accessed 19 october 2020). the official site of imo (1965). “convention on facilitation of international maritime traffic”. available at: https://zakon.rada.gov.ua/laws/show/995_064 (accessed 03 march 2020). the verkhovna rada of ukraine (2000). the law of ukraine 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october 2020). the official site of viking train (2003). “about the project”. available at: http://www.vikingtrain.com/ (accessed 10 october 2020). strelnykova, i. o., & artemova, yu. o. (2013), suputnykovi systemy navihatsii i monitorynhu transportu. avtomobil i elektronika [satellite transport navigation and monitoring systems]. vehicle and electronics. innovative technologies, no. 4, pp. 56–52. (in ukrainian) the official site of imo (2009). “the hong kong international convention for the safe and environmentally sound recycling of ships”. available at: https://www.imo.org/en/about/conventions/pages/the-hongkong-international-convention-for-the-safe-and-environmentally-sound-recycling-of-ships.aspx (accessed 21 october 2020). three seas economic journal 66 vol. 1, no. 1, 2020 corresponding author: 1 black sea research institute of economics and innovation, odesa, ukraine. e-mail: olena.krylova.o@gmail.com orcid: https://orcid.org/0000-0001-9700-7302 2 black sea research institute of economy and innovation, odesa, ukraine. e-mail: k.s.shaposhnykov@gmail.com orcid: https://orcid.org/0000-0003-0640-9934 doi: https://doi.org/10.30525/2661-5150/2020-1-18 activation of innovative entrepreneurship development оlena krylova1, kostiantyn shaposhnykov2 abstract. the purpose of the article is to develop proposals for intensifying the development of innovative entrepreneurship in ukraine. the importance of intensifying innovative entrepreneurship is recognized by any business entity, because new innovative ideas, solutions embodied in a particular product can provide competitive advantages. the presence of entrepreneurial initiative by business entities, the use of effective tools to stimulate innovation, creativity and effectiveness of innovation can significantly enhance innovation entrepreneurship and overall efficiency of the innovation process. the methodological basis of this work is the synthesis of general scientific methods of theoretical and empirical research (method of cognition, analysis and synthesis, generalization and systematization of information). results. innovative entrepreneurship covers all stages of the innovation cycle: from the initiation of a new idea to obtaining specific results from the market use of the product. the main subjects of innovative entrepreneurship can be any enterprises and organizations that carry out innovative activities or are innovatively active. to develop effective measures to intensify innovative entrepreneurship, first of all, it is advisable to focus on identifying the strengths and weaknesses of innovative entrepreneurship, as well as opportunities and threats for its intensification in ukraine. in this sense, it is important to assess the current level of innovation process, its staffing and financial resources, the level of innovation infrastructure, the establishment of integration relations between the main participants in the innovation process, the effectiveness of innovation, demand for innovative products and more. practical implications. the analysis allowed us to reveal certain results. the strengths of the possible activation of the innovative enterprise include: the presence of a high level of personnel component of scientific potential, which characterizes the ability to generate new ideas; accumulated experience of successful innovation, cooperation between science and business, as evidenced by the main indicators of innovation, the number of innovationactive enterprises and enterprises in industry that implement innovations. weaknesses for the intensification of innovative entrepreneurship should be highlighted: insufficient funding for science and education; declining trends in almost all performance indicators of innovation, which requires rapid implementation of measures to curb their further development in the field of innovation. thus, in order to intensify innovative entrepreneurship in the near future, it is advisable to implement a number of measures, the tasks of which cover the following main areas of change: clear awareness of the national economy’s ability to innovate, create conditions for new products, increase its competitiveness; ensuring diversification of sources of financing of innovative activity of enterprises in order to reduce the costs of acquisition and use of innovative products; establishing close and productive interaction of the main participants of innovative entrepreneurship. value/originality. the use of comprehensive analysis allows to identify the main problems of hidden entrepreneurship, taking into account the specifics of its manifestation in modern conditions. key words: innovative entrepreneurship, innovative ideas, participants in the innovation process, innovative products, cooperation between science and business jel classification: o32, o38, p21 three seas economic journal 67 vol. 1, no. 1, 2020 1. introduction the importance of intensifying innovative entrepreneurship is recognized by any business entity, because new innovative ideas, solutions embodied in a particular product can provide competitive advantages. however, the active development of innovative entrepreneurship in ukraine is hampered by a number of environmental factors, which affects both the total number of businesses that implement innovations and the effectiveness of their innovation activities. among the important factors hindering the development of innovative entrepreneurship, first of all, it is worth noting the low consumer demand for innovative products, insufficient funding for scientific and technological development of the national economy; limited venture financing instruments; imperfection of motivation for active innovation. the presence of entrepreneurial initiative by business entities, the use of effective tools to stimulate innovation, creativity and effectiveness of innovation can significantly enhance innovation entrepreneurship and overall efficiency of the innovation process. world experience proves that an essential aspect of the intensification of innovative entrepreneurship is considered to be the rapprochement between the participants in the innovation process in the direction of increasing motivation in the creation and use of innovations. the implementation of such mutually beneficial cooperation between the participants will accelerate the technological renewal of enterprises, ensure the recovery of industry and the creation of new high-tech industries at the national level. 2. innovative entrepreneurship concept a significant amount of scientific research is devoted to the issues of intensification of innovation processes, effectiveness of innovation activities, development of innovative entrepreneurship. at the same time, the dynamism of the external environment, its complexity and unpredictability cause obstacles, new challenges for the development of innovation processes, which requires constant improvement of existing mechanisms, search and timely use of new opportunities and effective tools to stimulate innovative entrepreneurship. in particular, in ukraine there are conducted thorough works on commercialization of results of innovative activity, directions of stimulation of activity in the field of innovations, systematization of the basic tools of activization of innovative business, financial aspects of support of development of innovative business and introduction of tax incentives in this sphere in modern conditions (melnyk, 2014; pavlenko, 2007; lyakh, lyashenko, kuzmenko, 2018; ivchenkova, 2018, etc.). selection of previously unsolved parts of the overall problem. despite the significant number of publications on the intensification of innovative entrepreneurship, they are more concerned with the development of small and medium-sized businesses in the field of creation and dissemination of innovations. at the same time, any enterprise is characterized by an understanding of innovative entrepreneurship as a permanent flow of innovative solutions, and therefore the issues of intensification of such activities in the economy of ukraine and increase its effectiveness require in-depth attention. such areas of further research are the identification of factors that prevent the activation of the effectiveness of innovative activities of enterprises and the development of a set of measures to find opportunities to eliminate the main obstacles to the development of innovative business. the purpose of the article is to develop proposals for intensifying the development of innovative entrepreneurship in ukraine. 3. parameters of development of innovative entrepreneurship in ukraine in the most general sense, innovative entrepreneurship is an activity that focuses on the application of new approaches, raw materials, ideas, products to meet consumer demand. innovative entrepreneurship covers all stages of the innovation cycle: from the initiation of a new idea to obtaining specific results from the market use of the product. the main subjects of innovative entrepreneurship can be any enterprises and organizations that carry out innovative activities or are innovatively active. innovative activity of enterprises must have certain characteristics: – high level of flexibility, which allows to ensure constant product renewal and withstand competition; – creativity, which allows to provide a constant flow of new ideas for fundamentally new products and processes; – speed of response to the transformation in the needs of consumers; – high motivation for innovation, independence in decision-making. three seas economic journal 68 vol. 1, no. 1, 2020 to develop effective measures to intensify innovative entrepreneurship, first of all, it is advisable to focus on identifying the strengths and weaknesses of innovative entrepreneurship, as well as opportunities and threats for its intensification in ukraine. in this sense, it is important to assess the current level of innovation process, its staffing and financial resources, the level of innovation infrastructure, the establishment of integration relations between the main participants in the innovation process, the effectiveness of innovation, demand for innovative products and more. the state of affairs with the innovation processes of individual countries and regions of the world as a whole is provided by rating assessments comparing the countries of recognized international institutions. ukraine is represented in several international rankings that assess innovation potential, technological and innovative competitiveness. the most common for assessing innovation processes are the following international rankings: global innovation index, bloomberg innovation index, global competitiveness index, innovation index european innovation scoreboard (innovation union), global talent competitiveness index, readiness for the future of production assessment. the global innovation index is generally considered to be one of the indicators of an objective assessment of the success of the world’s innovation policy. the leaders of this index are mainly highly developed countries with high per capita income. according to the ratings by groups of human capital indicators (share of highly qualified specialists in the general structure of employment), research (cooperation of universities with business), protection of intellectual property rights (quantitative indicators on patents, as well as quantitative and qualitative parameters of scientific and technical activity issues) strong positions are held by the eu countries (khaustov, 2018). in particular, the leaders of this index in 2017 were fifteen european countries. china has been in the top 25 of the global innovation index since 2016. these ratings assess not only the current state of affairs, but also partially characterize the possibilities of intensifying innovative entrepreneurship in the country, as well as the effectiveness of innovative activities of major economic entities. according to the global innovation index, human capital, knowledge and research results are still the main competitive advantage of ukraine. however, even these benefits are gradually being lost. thus, in 2018, compared to 2017, according to the subindex “human capital and research”, ukraine moved to 43rd place with a loss of 2 positions. the reason for this situation was the reduction of education expenditures in% of gdp (26th place in 2018 compared to 22nd in 2017) and research and development expenditures in% of gdp (62nd place and 54th place, respectively). the general state of innovation activity, which determines the prospects for the implementation of innovation processes and motivation for innovative entrepreneurship can be tracked by a number of basic indicators, which are presented in table 1. the analysis of the main indicators allows us to make some significant generalizations about the possibilities of intensifying innovative entrepreneurship: the dynamics of the number of innovatively active industrial enterprises over the last 19 years is characterized by insignificant fluctuations (about 1-2%). on average, the share of such enterprises is about 16% of the total number of industrial enterprises. a similar trend is characteristic of the dynamics of the share of enterprises that have implemented innovations. on average, the fluctuations between annual indicators are 2-3%. at the same time, in some periods the enterprises show annual growth (2010–2013, 2014–2016). however, for the share of innovatively active enterprises and for enterprises implementing innovations, 2019 was marked by a decrease of almost 2% compared to 3% in 2018. the growth almost doubled in 2019 compared to 2018, which is characterized by a change in the share of innovative products (goods, services) ) sold in the total sales of c enterprises. but compared to 2010, there is a significant decline (almost 3 times) (see table 1). according to the state statistics service of ukraine, the share of scientific and technical work performed in gdp for 2010–2019 decreased significantly (from 0.91% to 0.43%). the share of scientific, scientific and technical works at the expense of the state budget also decreased by 0.12% percent of gdp in 2019 compared to 0.34% in 2010 (see table 1). in 2010–2019, expenditures on education and science decreased significantly. thus, expenditures on science decreased from 0.8% of gdp to 0.2%, on education – from 6.4% to 4.3% of gdp. despite slight fluctuations, the number of specialists performing scientific and technical work is also reduced to the number of employed population (per 1,000 people). thus, during 2010–2019, this three seas economic journal 69 vol. 1, no. 1, 2020 reduction amounted to 0.7%. relative stability is characteristic of the dynamics of innovation costs in % to the total volume of sold industrial products (goods, services). during the period 2010–2019, a significant reduction was observed only in 2016–2018 from 1.1% to 0.4%. the growth of international registration of industrial property objects should be considered as a positive characteristic. thus, in 2019, this figure increased to 657 units compared to 484 units in 2010. at the same time, the number of received security documents was reduced. if in 2010 their number was 5.3 thousand units, in 2019 it is already 3.85 thousand units. thus, summing up the prospects for intensification of innovative entrepreneurship, we can highlight the following: – the strengths of the possible activation of the innovative enterprise include: the presence of a high level of human resources component in scientific potential, which characterizes the ability to generate new ideas; accumulated experience of successful innovation, cooperation between science and business, as evidenced by the main indicators of innovation, the number of innovationactive enterprises and enterprises in industry that implement innovations; – weaknesses for the intensification of innovative entrepreneurship should be highlighted: insufficient funding for science and education, declining trends in almost all performance indicators of innovation, which requires rapid implementation of measures to curb their further development in the field of innovation; insignificant performance indicators for security documents; – opportunities for activating an innovative enterprise: stimulating the introduction of innovations in industrial enterprises will allow to intensify the creation of new technologies and new innovative products; improving the efficiency of the use of existing research and innovation potential; diversification of sources of financing of innovative activity due to active introduction of startups, distribution of world experience of table 1 indicators that characterize the ability to intensify innovative entrepreneurship indicators 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1 2 3 4 5 6 7 8 9 10 11 the degree of depreciation of fixed assets of industry,% 74.9 75.9 76.7 77.3 83.5 60.1 58.1 55.1 60.6 56.9 the share of the volume of performed scientific and scientific-technical works in gdp, % 0.91 0.80 0.80 0.80 0.69 0.63 0.48 0.45 0.47 0.43 the amount of expenditures for scientific and scientifictechnical work at the expense of the state budget, % of gdp 0.34 0.30 0.34 0.33 0.26 0.20 0.16 0.16 0.17 0.12 the number of specialists who perform scientific and technical work, to the number of employed population (per 1 thousand people) 4.4 4.2 4.0 4.0 3.8 3.9 3.9 3.7 3.5 3.7 the expenditure on science, % of gdp 0.8 0.7 0.8 0.8 0.7 0.6 0.5 0.4 0.4 0.2 the expenditure on education, % of gdp 6.4 6.2 6.7 6.7 5.9 5.3 5.0 5.4 5.1 4.3 the share of enterprises implementing innovations in the total number of industrial enterprises, % 11.5 12.8 13.6 13.6 12.1 15.2 16.6 14.3 15.6 13.8 number of innovatively active industrial enterprises in% to the total number of industrial enterprises 13.8 16.2 17.4 16.8 16.1 17.3 18.9 16.2 16.4 15.8 expenditures on innovations in% to the total volume of sold industrial products (goods, services) 0.8 1.1 0.8 0.7 0.5 0.8 1.1 0.4 0.4 0.5 the number of new technological processes introduced into production, thousand units 2.0 2.5 2.2 1.6 1.7 1.2 3.4 1.8 2.0 2.3 number of introduced types of innovative products (goods, services), thousand units 2.4 3.2 3.4 3.1 3.7 3.1 4.1 2.4 3.8 2.2 the share of the volume of sold innovative products (goods, services) in the total volume of sold products (goods, services) of industrial enterprises, % 3.8 3.8 3.3 3.3 2.5 1.4 0.9 0.7 0.8 1.3 received security documents, thousand units 5.31 5.25 4.96 5.41 4.81 4.5 4.1 4.05 3.93 3.85 international registration of industrial property, units 484 552 498 677 594 622 623 565 506 657 source: compiled according to official statistics three seas economic journal 70 vol. 1, no. 1, 2020 creation of business universities that will promote convergence of education with business; improving the regulatory and legal support of innovative entrepreneurship through measures to stimulate demand for innovation by business; raising the general level of innovative business culture and development of innovative entrepreneurship through access to the eu financial programs; – among the main threats to be addressed should be identified: financial and administrative barriers that hinder the development of innovative business; insufficient sources of funding for innovation due to high interest rates on loans; insufficient development of innovation infrastructure; the difficulty of training and selecting skilled workers to produce innovative ideas; lack of motivation among young people to innovate; imperfection and complexity of procedures for obtaining security documents for intellectual property. thus, systematizing the results, it is advisable to focus on the need to implement the following areas of activation of innovative entrepreneurship in ukraine (figure 1). block 1. ensuring the development of innovation infrastructure. the main objectives of this block of measures are to overcome barriers that hinder the development of infrastructure to support innovative entrepreneurship: – formation of objects of innovation infrastructure at the local level; – creation of a network of business incubators, strategic centers, technology parks, including higher education institutions; – formation of databases of innovative ideas that should be available to entrepreneurs and other stakeholders; – providing consulting support for the protection of intellectual property, creating startups, advising on the process of commercialization, marketing innovations. block 2. increasing the volume of innovative products and ensuring the export of hightech products. the tasks of this group include measures related to increasing the production of innovative products and the share of high-tech exports: grouping of directions of activization of innovative business on blocks block 1. ensuring the development of innovation infrastructure block 2. increasing the volume of innovative products and ensuring the export of high-tech products block 3. stimulating the demand for innovation block 4. differentiation of sources of financing of scientific and technical and innovative activity block 5. formation of a system to support the development of innovative entrepreneurship at the regional and local levels block 6. formation of a favorable institutional environment for innovation block 7. improving the information support of innovative entrepreneurship block 8. ensuring an increase in the level of innovation culture in the field of innovative entrepreneurship figure 1. directions for activating innovative entrepreneurship three seas economic journal 71 vol. 1, no. 1, 2020 – monitoring of technology development and application of forecasting at macro and micro levels; – identification of opportunities for technology production in ukraine; – active introduction of technology transfer; – development of import substitution programs for innovative products; – stimulating the export of high-tech products. block 3. stimulating the demand for innovation. the tasks of this group are to overcome obstacles on the part of governmental and departmental structures in stimulating the demand for innovation: – introduction of benefits for companies that manufacture innovative products; – introduction of incentives for enterprises that buy innovative products; – use of the mechanism of public procurement for innovative products; – establishment of preferential tax conditions and application of preferences for companies that produce innovative products; – use of compensation of expenses to entrepreneurs, starting from the first three years of operation of the business incubator (60%, 40% and 20%, respectively). block 4. differentiation of sources of financing of scientific and technical and innovative activity. within the framework of the tasks of this block, it is envisaged to overcome barriers that cause restrictions on budget expenditures for scientific and technical activities and the use of innovations: – development, improvement and implementation of regulatory and legal support for the functioning of venture funds, mutual investment institutions in the field of innovation; – consulting support for fundraising, access to programs to support the development of innovation, international grant programs in the field of innovation; – application of the mechanism of tax holidays for subjects of innovative entrepreneurship; – expansion of the list of high-tech critical imports of equipment and technologies, without collection of import duties; – state guarantee and subsidization of interest payments on loans issued for export contracts of technologies and innovative products. block 5. formation of a system to support the development of innovative entrepreneurship at the regional and local levels. the tasks of this group are focused on overcoming obstacles to the effectiveness of the system of support for innovative entrepreneurship at the regional and local levels: – provision of financial, informational, educational support at the expense of local budgets on the basis of creation of special funds to support innovative entrepreneurship. block 6. formation of a favorable institutional environment for innovation. this group contains tasks, the implementation of which overcomes obstacles to comprehensive legislative support for the development of innovative entrepreneurship: – development of a national strategy for the development of innovative entrepreneurship until 2030; – digitalization of administrative support of enterprises, in particular the widespread use of a “single window” technology; – advanced training of administrative staff through seminars, trainings, courses, round tables, etc.; – overcoming psychological barriers; – introduction of administrative liability for delays in making decisions on the implementation of innovations; – involvement of professionals at all stages of implementation of innovative projects; – creation of a unified system of training and advanced training in the field of technological innovation, including distance learning; – development of a network of “innovative business activities” to form a database of contacts to establish new contacts between entrepreneurs, experts and solve their problems and establish effective cooperation in the field of innovation. block 7. improving the information support of innovative entrepreneurship. within this group there are tasks to overcome barriers associated with lack of awareness of innovative entrepreneurs: – provision of free consulting services; – providing innovative entrepreneurs with a continuous exchange of information, ensuring its availability and reliability; – formation and development of a system of information and consulting support for innovative entrepreneurship at the national level. block 8. ensuring an increase in the level of innovation culture in the field of innovative entrepreneurship. this group envisages the implementation of tasks to overcome barriers associated with the insufficient level of innovation culture in the field of innovative entrepreneurship: – formation of a positive image of an innovative entrepreneur on the basis of popularization of three seas economic journal 72 vol. 1, no. 1, 2020 innovative ideas, creative thinking among the population; – increasing the social responsibility of business. thus, the results of the study indicate the need to solve a number of problems for the development of innovative entrepreneurship in ukraine in modern business conditions. 4. conclusions innovative entrepreneurship is a dynamic form of innovative activity that provides a continuous flow of innovative ideas and their practical implementation in specific innovative products. to intensify innovative entrepreneurship in the near future, it is advisable to implement a number of measures, the tasks of which cover the following main areas of change: a clear understanding of the national economy’s ability to innovate, create conditions for new products, increase its competitiveness; ensuring diversification of sources of financing of innovative activity of enterprises in order to reduce the costs of acquisition and use of innovative products; establishing close and productive interaction of the main participants of innovative entrepreneurship. references: innovative ukraine 2020: national report (2015) / for general. ed. v.m. heitz and others; nas of ukraine. kyiv, 336 p. (in ukrainian) melnyk, o. s. (2014). state and problems of development of innovative entrepreneurship and scientific and technical activity / the first stage of modernization of the economy of ukraine: experience and problems / for general ed. v.i. liashenko; nas of ukraine, institute of industrial economics; classic private university. zaporizhzhia: classical private university, 798 p. (in ukrainian) pavlenko, i. a. (2007). innovative entrepreneurship in the transformational economy of ukraine: monograph. kyiv: kneu, 248 p. (in ukrainian) lyakh, o. v., lyashenko, v. i., & kuzmenko, n. v. (2018). the concept of institutional support for inclusive entrepreneurship at the regional level. economic bulletin of donbass, no. 2(52), pp. 212–232. (in ukrainian) ivchenkova, o. y., & krykunenko, k. m. (2018). innovative entrepreneurship as a component of the strategy of economic development of ukraine. economic bulletin of donbass, no. 3(53), pp. 141–146. (in ukrainian) khaustov, v. k. (2018). innovative dimension of ukraine’s course towards european integration. economics and forecasting, no. 2, pp. 135–150. (in ukrainian) state statistics service of ukraine (2020). url: http://www.ukrstat.gov.ua/ (accessed: 23.01.2020). statistics, reports, plans. state enterprise “ukrainian institute of intellectual property” (ukrpatent). url: https://ukrpatent.org/en/articles/statistics (accessed: 29.01.2020). education statistics. available indicators. the world bank. url: http://datatopics.worldbank.org/ education/indicators (accessed: 29.01.2020). oecd statistics. url: https://stats.oecd.org/index.aspx (accessed: 28.01.2020). ministry of finance of ukraine. url: https://index.minfin.com.ua/ua/ (accessed: 28.01.2020). denisyuk, v. a. (2006). commercialization of research results: problems and prospects. bulletin of the nas of ukraine, no. 5, pp. 39–53. lukashina, m. v. (2009). strategic directions of development of innovative entrepreneurship. economics of forecasting, no. 8, pp. 86–98. three seas economic journal 89 vol. 1, no. 3, 2020 corresponding author: 1 central ukrainian national technical university, ukraine. e-mail: nataliia.shalimova@gmail.com orcid: https://orcid.org/0000-0001-7564-4343 2 central ukrainian national technical university, ukraine. e-mail: yana_rud@bigmir.net orcid: https://orcid.org/0000-0002-3233-6938 doi: https://doi.org/10.30525/2661-5150/2020-3-15 specific types of related parties and transactions with them in international standard on auditing 550: impact on the assessment of risk of material misstatement and establishing the entity’s accounting policy nataliia shalimova1, yana klymenko2 abstract. the purpose of the study is to identify the impact of specific types of related parties, which are allocated in international standards on auditing 550 “related parties”, not only on the organization of the audit of financial statements in the context of assessing the risk of material misstatement, but also on the organization of accounting in enterprises. to achieve the goal set in the work, a complex of general scientific methods (analysis, synthesis, induction, deduction, abstraction) and methodical techniques (systematization, generalization, review, comparison) based on the provisions of international standards of auditing was used. in the study of the essence of related parties transactions and elaboration their classification method of system analysis, logical method, and method of modeling were used. there are three major tasks within the overall responsibility of the auditor while fulfilling such engagement as audit of the financial statements have been determined. it is substantiated that two different phrases (“has a responsibility to perform audit procedures” and “needs to obtain an understanding”) which are used in international standards on auditing 550 “related parties” requires a separate approach to formation a set of optimal audit procedures. specific types of related parties based on the international standards 550 “related services” that should be considered when performing audit of financial statements has been identified. classification of related parties transactions according to their riskiness and connection with the normal course of business into four different types has been elaborated. two groups of inquiries concerning related parties transactions have been analyzed. it has been proved that making inquiries the auditor should provide as much information as possible in order to avoid misunderstandings, which may lead to difficulties in forming an opinion. it is noted that determining the characteristics of the dominant influence and significant transactions will allow effective communication and cooperation between auditors, management staff and those responsible for governance in formation inquires and answers for them. using proposed classification in the process of audit of financial statements and in developing regulatory documents for accounting at the entity will allow appropriate assessing of risk of material misstatement and increasing the effectiveness of internal control at the entity. it has been substantiated that the objectives of accounting policy not only in terms of meeting the interests of the company as an entity that prepares financial statements and interacts with related parties, but also in terms of meeting the interests of the entity as a responsible party, interacting with the auditor, that seeks to establish an internal control system that will ensure reducing its own risks. key words: audit engagements, audit of financial statements, related parties, related parties transactions, risk of material misstatement, significant transactions, audit evidence, inquiry, accounting policy, internal control. jel classification: m40, m42 three seas economic journal 90 vol. 1, no. 3, 2020 1. introduction the integration of global processes in symbiosis with the globalization of markets has a significant impact on the national economy, which leads to the complication of economic and financial relations. first, the number of corporate associations that have branches, subsidiaries, separate divisions in different countries is increasing, the number of business structures with foreign capital is growing; secondly, contracts of various nature have begun to be concluded, which are connected not only with purchase and sale operations, but also with more complex and specific operations. it should be noted that so-called intergroup operations, operations and relations between related parties are of particular interest, and the terms “affiliated companies”, “related parties”, “controlled transactions”, “final beneficiaries” have now penetrated into almost all sectors of the economy, management, law. these transactions significantly affect the formation of financial statements, and therefore the specifics of this activities allows to distinguish audit services in the sphere of related parties transactions as a separate area, the potential of which is constantly growing. despite the existence of a separate international standard on auditing 550 “related parties” (isa 550 “related parties”), the development of organizational and methodological principles for auditing of related parties in order to meet the information needs of different users remains one of the insufficiently studied spheres of audit theory and practice. 2. literature review and purpose of the study related party transactions are important primarily for the accounting and preparation of financial statements, and they are investigated in this context to a greater extent. issues of audit of related parties transactions are considered superficially and only in some aspects, namely: while studying the scope of audit procedures for small businesses (tsarenko, karmazina, 2016), the process of documenting the audit procedures (antoniuk, 2018), the organization of communication with management staff or those charged with government (riadska, 2015). among the latest dissertation research it is necessary to distinguish the work of v. fesenko (fesenko, 2019), which is devoted to the methodology of audit and analysis of foreign economic activity of related enterprises. specific issues of organizational and methodological aspects of the audit of related parties transactions are considered in a limited number of publications (honcharova, 2020; novichenko, 2020). it should be noted that audit chamber of ukraine has published generalized reports on the analysis of typical errors that were identified during external inspections of the system of quality control (acu, 2019), within which attention is focused on the problems of compliance with the requirements of isa 550 in the process of audit of financial statements. it should be noted that foreign scholars are much more deeply researching the specific issues of audit of related parties transactions. in this context, it is worth noting the review of auditing literature about related-party transactions, presented by m. el-helaly (elhelaly, 2018). deficiencies in auditing relatedparty transactions has been analyzed (louwers, henry, reed, gordon, 2008), role of related party transactions in fraudulent financial reporting has been substantiated (henry, gordon, reed, louwers, 2012). the role of audit quality in the interplay between related party transactions and earnings management has been investigated (elhelaly, georgiou, lowe, 2018). the influence of auditing related party transactions on the audit opinion and judgement has been deeply analyzed (fang, lobo, zhang, zhao, 2017; mustikarini, khansa, 2017; yang, ruan, tang, 2020). the presented analysis shows the importance of research of the outlined problems and their significance for the formation of an effective system of accounting and auditing. the purpose of this study is to identify the impact of specific types of related parties, which are allocated in isa 550 “related parties”, not only on the organization of the audit of financial statements in the context of assessing the risk of material misstatement, but also on the organization of accounting in enterprises. establishing this relationship based on a meaningful and systematic analysis of the provisions of international standards on auditing is necessary in terms of identifying ways to reduce the components of audit risk and increase the effectiveness of communication between the auditor and management. 3. auditor's area of responsibility in accordance with isa 550 isa 550 “related parties” requires that auditors need to examine related parties and their three seas economic journal 91 vol. 1, no. 3, 2020 transactions, whether or not there are specific requirements for the accounting and disclosure of related party relationships, transactions and balances in the financial reporting framework. there are three major tasks within the overall responsibility of the auditor while fulfilling such engagement as audit of the financial statements (isa 550, paragraphs 3-6): 1) the auditor has a responsibility to perform audit procedures to identify, assess and respond to the risks of material misstatement arising from the entity’s failure to appropriately account for or disclose related party relationships, transactions or balances in accordance with the requirements of the framework; 2) the auditor needs to obtain an understanding of the entity’s related party relationships and transactions sufficient to be able to conclude whether the financial statements, insofar as they are affected by those relationships and transactions: achieve fair presentation (for fair presentation frameworks); or are not misleading (for compliance frameworks); 3) the auditor needs to obtain an understanding of the entity ’s related party relationships and transactions sufficient to be able to evaluate whether one or more fraud risk factors are present as required by isa 240 “the auditor 's responsibility to consider fraud in an audit of financial statements” because fraud may be more easily committed through related parties. thus, isa uses two basic phrases (actually guidelines): “has a responsibility to perform audit procedures” and “needs to obtain an understanding”. the first phrase is used in the context of an audit of financial statements, in the preparation of which the disclosure of information about related parties is mandatory and financial reporting frameworks establish specific accounting and disclosure requirements for related party relationships, transactions and balances to enable users of the financial statements to understand their nature and actual or potential effects on the financial statements. the second phrase is used in the context of an audit of financial statements, when such disclosure is not required (requirements are minimal or non-existent in the financial reporting framework). the use of such different phrases creates difficulties in forming a set of optimal audit procedures. 4. specific types of related parties and transactions with them in the context of an audit of financial statements international standards on auditing provide not only a description of tasks and procedures, but also special types of related parties and transactions with them. it is noted that related party transactions (at least many of them) are in the normal course of business (isa 550, paragraph 2). certain provisions of isa 550 “related parties” pay particular attention to the relationship between related party transactions and the normal course of business, in particular in the context of examining the process of authorizing and approving them (paragraph 14). therefore, transactions with related parties may be carried out in the ordinary course of business, or may go beyond the normal course of business of the entity. therefore, the first feature of the classification of related parties and transactions with them is the connection of transactions with the normal course of business. also, isa 550 “related parties” draws attention to the fact that transactions with related parties are not necessarily of high risk and not necessarily give rise to a higher risk of material misstatement of the financial statements than in similar transactions with unrelated parties. therefore, for the purposes of audit of financial statements, the second classification feature of related party transactions can be distinguished: the probability of a higher risk of material misstatement of the financial statements. the combination of the mentioned above classification features allows to distinguish four types of transactions with related parties, namely: type i – transactions that occur in the framework of normal course of business and are characterized by high risk; type ii – transactions that occur in the framework of normal course of business and are not characterized by high risk; type iii – transactions that occur outside the normal course of business and which are characterized by high risk; type iv – transactions that occur outside the normal course of business and which are not characterized by high risk (table 1). the auditor should identif y and assess the risks of material misstatement of the related party relationship and transactions and determine whether any of those risks are significant risks. three seas economic journal 92 vol. 1, no. 3, 2020 significant transactions with related parties relate to conditions and events that may indicate risks of material misstatement (ias 315 (revised) “identif ying and assessing the risk of material misstatement”, appendix 2). but isa 550 interprets this provision more rigidly, as it emphasizes that in any case, significant related party transactions that go beyond the normal course of business of the entity are of high risk and give rise to significant risks (paragraph 18). complementing the previous classification with significant transactions, it should be noted that this category are of part of type iii transactions and not of high but of significant risk. as for significant related party transactions in the ordinary course of business, they may be part of both type i and type ii transactions, depending on other factors. however, it should be noted that there is no clear definition of the category of “significant transactions”, which complicates the work of auditors and requires in each case to establish quantitative and qualitative characteristics of significant transactions. table 1 classification of transactions with related parties according to the connection with the normal course of business and the level of risk of material misstatement transactions that carry higher risk transactions that carry no higher risk tr an sa ct io ns th at o cc ur in th e fr am ew or k of n or m al c ou rs e of b us in es s type i – purchase or sale of products (goods, services), provided under the conditions that the transaction price is set above the level of normal prices; – purchase or sale of other assets, provided under the conditions that the transaction price is set above the level of normal prices; – futures transactions; – lease transactions, provided under the conditions that the price set by the terms of the contract is higher than market prices; – provision and receipt of guarantees and pledges, if the contract price is set above the market price and the terms of the contract are non-typical; – financial transactions in which the value of assets does not correspond to the level of market prices; – transactions with senior management and their close family members of significant characteristics. type iі – purchase or sale of finished products (goods, works, services), provided under the conditions that the transaction price is set not higher than normal prices; – purchase or sale of other assets, provided under the conditions that the transaction price is not higher than normal prices; – operations under agency agreements; – operations under license agreements; – lease transactions, provided under the conditions that the price set by the terms of the contract corresponds to the level of market prices; – provision and receipt of guarantees and pledges, if the price and terms of the contract fully comply with market price indicators and are not non-typical; – financial transactions in which the value of assets corresponds to the level of market prices; – standard operations with senior management and their close family members. tr an sa ct io ns th at o cc ur o ut si de th e no rm al c ou rs e of b us in es s type iіі – sales transactions with unusually large discounts or the possibility of returning goods; – complex equity transactions (corporate restructuring, acquisitions, etc.); – transactions with offshore entities in jurisdictions with weak corporate law; – lease of premises or provision of management services by an economic entity to another party without monetary remuneration; – transactions with repurchase agreements, such as sale with a repurchase obligation; – transactions under contracts, the terms of which changed before the expiration of their validity; – operations performed under conditions of significant changes in the logistics chain; – operations related to the sale of business segments of the entity. type iv – operations related to the sale of new types of finished products (goods, services); – non-significant one-time payments to senior management (payments upon dismissal and at the end of employment, payments on loans, etc.); – changes in the composition of the main management staff; – transactions under contracts, the terms of which changed before the expiration of their validity, the value of which is recognized as insignificant; – minor operations performed in the event of changes in the logistics chain; – realization of a small part of shares and corporate rights that will not lead to a change in the structure of direct or indirect participation in determining legal entities and individuals as related. source: compiled by the authors three seas economic journal 93 vol. 1, no. 3, 2020 traditional factors in the identification of related parties are the presence of "significant influence" or "control", these factors are also used in isas. significant influence is interpreted as the power to participate in the financial and operating policy decisions of an entity, but is not control over those policies. control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. at the same time, isa 550 emphasizes the possibility of existing of exert dominant influence over the entity or its management (paragraph a6). it is recommended to use dominant influence assessment to identify and assess the risks of material misstatement due to fraud. however, the lack of a clear interpretation of the dominant influence makes it difficult to identify and evaluate it to detect fraud. 5. formation of the inquiries about related parties transactions isa 500 “audit evidence” identifies audit procedures such as inquiries, which are defined as the process of seeking information of knowledgeable persons, both financial and nonfinancial, within the entity or outside the entity (paragraph a22), and external confirmations as a special type request, which means the process of obtaining a direct written response from a third party (confirming party) in paper, electronic or other form (paragraph a18). isa 550 focuses on such type of audit evidence as inquiries, which can be presented in the following groups: group i. inquiries at the beginning of the audit of financial statements; inquiries are mandatory. subgroup 1.1. inquiries "nature of related parties" includes the need to obtain information about: – identification of the entity’s related parties, including changes from the prior period; – the nature of the relationships between the entity and these related parties; – entering by the entity into any transactions with these related parties during the period and, if so, the type and purpose of the transactions. subgroup 1.2. inquiries "understanding of control measures (if any) established by management" implies the need to obtain information about the procedure (conditions, mechanisms) that are used in order to: – identify, account for, and disclose related party relationships and transactions in accordance with the applicable financial reporting framework; – authorize and approve significant transactions and arrangements with related parties; – authorize and approve significant transactions and arrangements outside the normal course of business. it should be noted that isa 550 emphasizes that such inquiries are also useful in recurring audit engagements, as inquiries provides a basis for comparing the information supplied by management with the auditor’s record of related parties noted in previous audits. group ii. inquiries in the process of auditing financial statements; the inquiry is made– if the auditor in performing audit procedures reveals significant transactions that go beyond the normal course of business. in this case, the auditor should ask management about: – the nature of these transactions, involving obtaining an understanding of the business rationale of the transactions, and the terms and conditions under which these have been entered into; – the possible involvement of related parties, directly influencing the transaction through being a party to the transaction or indirectly influencing it through an intermediary. assessing the content of the inquiries to be addressed by the auditor, one important problem can be distinguished – the need to clearly identify significant transactions about which the company must provide information. in this context, it should be noted that when conducting transactions with related parties and their audit, information inconsistency or information asymmetry has a significant impact. the reasons of such situation can be various: – firstly, management may not understand the nature of certain transactions with related parties; – secondly, management may not be aware of the existence of all relationships and transactions with related parties; – thirdly, in the interpretation by management and the auditor of such categories as "significant transactions", "normal course of business", "dominant influence" can be presented significant variability. in making inquiries accordingly, the auditor should provide as much information as possible in order to avoid misunderstandings, which may lead to difficulties in forming an opinion. in addition, isa 315 (revised) “identifying and assessing the risk of material misstatement through three seas economic journal 94 vol. 1, no. 3, 2020 understanding the entity and its environment” and isa 260 (revised) "communication with those charged with governance" identify the interaction of those charged with governance and external auditors as an element of the entity’s control environment (isa 315, paragraph a78; isa 260, paragraph a52). therefore, insufficient and inadequate two-way communication of information may indicate an unsatisfactory control environment, affect the auditor's assessment of the risks of material misstatement and, ultimately, his or her opinion. if the audit of the financial statements reveals that the twoway communication of information between the auditor and those charged with governance is insufficient and cannot be resolved, the auditor should modify the auditor's opinion based on the scope limitation or even withdrawing from the engagement (isa 260, paragraph a53). 6. improving the effectiveness of internal control of related parties transactions and communication with auditors isa 550 “related parties” emphasizes that an entity’s information systems should record, process, and aggregate related party relationships and transactions to enable the entity to meet the accounting and disclosure requirements of the framework (paragraph a11). but it is critical that the capabilities of information systems are used not only to generate reports in accordance with the requirements of regulations, but also to reduce the risk in the entities activities. identification and specification of specific types of related parties is important because it allows to understand key aspects of the audit, but on the other hand, it allows to determine the guidelines of the internal control system of entities for which transactions and relationships with related parties are critical and significant. accordingly, when forming the accounting policy of the enterprise, it is advisable to provide for the classification of related parties in accordance with such factors as: riskiness of related parties transactions, connection with the normal course of business, presence of a dominant influence. it is also necessary to specify the definitions of "significant transactions" and “dominant influence” by setting quantitative and qualitative limits, because this is important for internal control, as well as for the formation of responses to inquiries. this approach allows to consider the objectives of accounting policy not only in terms of meeting the interests of the company as an entity that prepares financial statements and interacts with related parties, but also in terms of meeting the interests of the company as a responsible party interacting with the auditor, and an entity that seeks to establish an internal control system that reduces its own risks. 7. conclusions to regulate the procedure for assessing related parties transactions, isa 550 “related parties” identifies specific types of related parties that should be considered not only when performing audit of financial statements, but it is advisable to use by companies in developing regulatory documents for accounting at the enterprise. classification of types of transactions according to the riskiness of transactions with them and connection with the normal course of business, determining the characteristics of the dominant influence and significant transactions will allow to assess audit risk and determining the benchmarks for internal control in the enterprise. however, it should be noted that the understanding of the dominant influence and significant operations of the entity and the auditor may differ, which requires consistent communication in the formation of requests and processing of their results. references: antoniuk, o.r . (2018). vektory rozvytku system kontroliu yakosti nadannia audytorskykh posluh v ukraini [vectors of development of quality control systems for audit services in ukraine]. hlobalni ta natsionalni problemy ekonomiky [global and national economic problems] (electronic journal), no. 21. available at: http://global-national.in.ua/issue-21-2018/29-vipusk-21-lyutij-2018-r/3833-antonyuk-or-vektori-rozvitku-sistemi-kontrolyu-yakosti-nadannya-auditorskikh-poslug-v-ukrajini audytorska palata ukrainy (2019). analiz typovykh pomylok, yaki buly vyiavleni pid chas zovnishnikh perevirok systemy kontroliu yakosti, provedenykh vidpovidno do vymoh polozhennia pro zovnishni perevirky systemy kontroliu yakosti audytorskykh posluh, zatverdzhenoho rishenniam audytorskoi palaty ukrainy vid 30.10.2014 № 302/9 (zi zminamy) do nabrannia chynnosti zakonu ukrainy «pro audyt finansovoi zvitnosti ta audytorsku diialnist» [analysis of typical errors that were identified during external inspections of the quality control system, conducted in accordance with the requirements of the three seas economic journal 95 vol. 1, no. 3, 2020 regulation on external inspections of the quality control system of audit services, approved by the audit chamber of ukraine dated 30.10.2014 № 302/9 (as amended) before the law of ukraine "on audit of financial statements and audit activities"]. available at: https://cutt.ly/mkiw5jb el-helaly, moataz (2018). related-party transactions: a review of the regulation, governance, and auditing literature (august 15, 2018). managerial auditing journal, forthcoming. doi: 10.1108/maj07-2017-1602 el-helaly, moataz, georgiou, ifigenia, & lowe, alan d. (2018). the interplay between related party transactions and earnings management: the role of audit quality. journal of international accounting , auditing and taxation, vol. 32, pp. 47–60. fang, junxiong, lobo, gerald, zhang, yinqi, & zhao, yuping (2017). auditing related party transactions: evidence from audit opinions and restatements. auditing. a journal of practice & theory, april 2017, no. 37(2), pp. 73–106. doi: 10.2308/ajpt-51768 fesenko, v. v. (2019). metodolohiia audytu ta analizu zovnishnoekonomichnoi diialnosti poviazanykh pidpryiemstv [methodology of audit and analysis of foreign economic activity of related companies] (phd thesis), dnipro: ternopil. nats. ekon. un-t. henry, elaine, gordon, elizabeth a., reed, brad j., & louwers, timothy j. (2012). the role of related party transactions in fraudulent financial reporting. journal of forensic & investigative accounting , vol. 4, issue 1. honcharova, v. h. (2020). orhanizatsiino-metodychni pidkhody do audytu operatsii z poviazanymy osobamy [organizational and methodological approaches to the audit of transactions with related parties]. ahrosvit [agro-world], no. 13–14, pp. 54–60. international federation of accountants (ifac/iaasb) (2016-2017). supplement to the handbook of international quality control, auditing , review, other assurance, and related services pronouncements, vol. i, 2016-2017 edition. available at: https://www.ifac.org/publications-resources/2016-2017handbook-international-quality-control-auditing-review-other louwers, timothy j., henry, elaine, reed, brad j. & gordon, elizabeth a. (2008). deficiencies in auditing related-party transactions: insights from aaers. current issues in auditing american accounting association, vol. 2, issue 2, pp. a10–a16. mustikarini, arizona, & khansa, nadia destianne (2017). do related party transactions matter to auditors? evidence from audit opinion. proceedings of the 18th asian academic accounting association (foura) annual conference (indonesia, bali, november 22-23, 2017). novichenko, l. s. (2020). audyt operatsii iz poviazanymy storonamy [audit of related party transactions]. proceedings of the stratehiia rozvytku ukrainy: vii mizhnarodna naukovo-praktychna konferentsiia (ukraine, kyiv, 2020). kyiv: informatsiino-analitychne ahentstvo, pp. 184–186. riadska, v. v. (2015). audyt u rozvytku pidpryiemnytskoi diialnosti v ukraini [audit in the development of entrepreneurial activity in ukraine] (phd thesis), kyiv: kyiv. nats. ekon. un-t im. v. hetmana. tsarenko, o. v., & karmazina, n. v. umovy zabezpechennia kerovanoho vplyvu mizhnarodnykh standartiv audytu na efektyvnist diialnosti maloho biznesu v rehionakh ukrainy [conditions for ensuring the managed impact of international auditing standards on the efficiency of small business in the regions of ukraine]. scientific bulletin of polissia, vol. 2, pp. 103–107. yang, l., ruan, l., & tang, f. (2020). "the impact of disclosure level and client incentive on auditors’ judgments of related party transactions". international journal of accounting & information management, vol. 28, no. 4, pp. 717–737. doi: 10.1108/ijaim-02-2020-0016 three seas economic journal 77 vol. 1, no. 3, 2020 corresponding author: 1 central ukrainian national technical university, ukraine. e-mail: olha.roieva@gmail.com orcid: https://orcid.org/0000-0002-6715-9716 doi: https://doi.org/10.30525/2661-5150/2020-3-13 formation of the accounting policy of the enterprise in the context of ensuring effective inventories management in the process of innovative activity olha roieva1 abstract. the article considers the issues of organization and formation of inventory accounting policy, substantiates its role in the system of information support of inventory management processes and highlights the impact on the effectiveness of inventory management in the process of innovation activity. based on the study of trends in the share of inventories of industrial enterprises and indicators of innovation development, it is established that inventories are not currently considered as a resource that has a significant impact on the innovation potential of the enterprise, and in combination with financial performance indicates inefficient investment in inventories and inefficient inventory management. it is proved that it is possible to increase the efficiency of inventory management due to the optimal organization of the inventory accounting system, the foundations of which are laid during the formation of accounting policies. the author's approach to understanding the accounting policy in the sphere of inventory accounting, which is considered as a set of principles, methods and procedures used by the company to generate quality, timely, relevant, clear, complete and reliable information about the availability, movement, storage and use of inventories, sufficient to make management decisions aimed at improving the efficiency of inventory management and disclosure of inventory information in the financial statements. coverage of approaches to the formation of accounting policy is based on a combination of organizational, technological and methodological components of accounting policy. the first (organizational and technological) component includes such elements as: inventory principles, laws and regulations concerning accounting of inventories, forms of primary documents and internal management reporting used for inventory accounting, document management rules and accounting information processing technology, control procedures on the movement of inventories and the responsibility of officials, the procedure and frequency of revaluation of inventories and inventory count, the order of analytical inventory, the unit of natural measurement of inventories for each unit of accounting, the interaction of accounting with other services during the transfer and exchange of inventory. the second component (methodological) reveals the principles and rules of receipt, processing, recording and transmission of inventory information, inventory valuation rules, inventory accounting (development of a working plan of accounts), disclosure of inventory information in the financial statements. it has been considered such main elements of organizational, technological and methodological components: features of the work plan of inventory accounts, the issue of documentation of inventory transactions, the recognition of inventories and their evaluation, document management rules, accounting for transport and procurement costs. variable elements of inventory accounting policy are identified. key words: inventories, accounting, accounting policy, management system, innovative activity, efficiency, information support, stock estimation, document circulation. jel classification: m40, m42 1. introduction the current stage of development of economic processes in ukraine is characterized by evolutionary nature, and in the face of intensifying competitive relations in world and national resource markets, an important factor that determines the development of economic entities is their focus on innovative development. a distinctive feature of modern development is the emergence of highly integrated (vertical and horizontal) structures that distinguish by the ability to share technology, human and financial three seas economic journal 78 vol. 1, no. 3, 2020 resources can develop high-tech industries, and this concentration is especially important when several ideas must be combined into one viable innovation. the formation and effective use of inventories by enterprises that are actively involved in innovation is one of the determining factors in developing strategy of organization, management and regulation of innovation processes. therefore, ensuring effective inventory management in the process of innovation activity, given the significant amount of money invested in the creation and maintenance of the required level of inventories is a very important issue. the results of efficiency or inefficiency of such management will affect overall liquidity, solvency, financial stability enterprises and levels of its innovative activity. achieving effective management of inventories is possible through timely, relevant, clear and reliable information about the availability, movement, storage and use of inventories at the enterprise. the only reliable source of such information is the company 's accounting system, accounting of inventories in which is one of the most timeconsuming processes. in this regard, the formation of accounting policies of the enterprise, aimed at ensuring effective inventory management in the process of innovation, is an important tool for achieving performance indicators. investigating the issues of accounting of inventories, many scientists (burdeina, 2015; boitsova, makhanko, klyzhenko 2014; dombrovska, 2011; holov, 2007; koriahin, kutsyk, 2015; kuzhelnyi, linnyk, 2001; pavlov, 2004; pushkar, 2002, 2010; svitlychna, 2010; tkachenko, 2008; yaremko, 2002) made a significant contribution to the development of theoretical and methodological issues of building a system of inventory accounting and its organization, defining the essence, classification, assessment of inventories, formation of accounting policy. it is worth noting studies of accounting of inventories and accounting policies (pavlov, 2004; kravchenko, pasternak, 2020). however, the current challenges of the globalized world and the need for an innovative economy in ukraine necessitate the study of the formation of inventory accounting policy in a new direction, in line with effective inventory management in the process of innovation activity of business entity. in this context, it is necessary to use actively the developments of foreign scientists in the sphere of inventory accounting and their using in innovation activity. the research of a simple adjustment that restates the lifo inventory to the more current cost based fifo value and analyzes the effects of this adjustment (sander, hughes, 2005) can be singled out. despite the fact that it was published in 2005, the proposed technique transformed can be used nowadays. a comparison of current u.s. gaap and ifrs standards in the field of inventory accounting has been presented (lucchese, carlo, 2020); the state of establishing by the internal accounting regulations of the companies / organizations the inventory taking procedure has been analyzed (nukka, kasearu, 2016); methods of forming optimal models of inventory accounting have been studied (chouhana, soralb, chandrac, 2017; khan, faisal, al-aboud, 2018). 2. objective and methodology of the study the purpose of the study is to highlight the approaches to the technology of accounting policy of the enterprise in the context of ensuring effective inventory management in the process of innovation. the research hypothesis is based on the assumption that the proposed methodological approaches to the formation of inventory accounting policy will provide an opportunity for effective inventory management and will help to build the innovative potential of the enterprise. during the research such scientific methods have been used: the dialectical method of cognition and the method of comparison to study, analysis and generalization of the theoretical foundations of the formation of inventory accounting policy; method of induction, deduction and observation – to study general trends and practical experience in the formation of accounting policies of inventories in industrial enterprises; method of comparison and grouping – for analyzing of analytical information; abstract-logical method, method of causal relations, concretization, formalization – to identify and systematize existing shortcomings and determine the needs of the management system in information about inventories in the context of ensuring effective inventory management in the process of innovation activity. 3. analysis of the efficiency of using inventories by ukrainian enterprises the inventory management system has a significant impact on the overall performance of the enterprise, so it must be able to respond quickly to changes in three seas economic journal 79 vol. 1, no. 3, 2020 the external environment of its operation, while ensuring the maintenance of previously achieved results. effective inventory management is an important factor in intensifying innovation and improving the efficiency of the enterprise as a whole. inventories for most national enterprises are a significant component of current assets, the share of which, depending on the specifics of economic activity, is from 5% to 94% of its current assets, although on average this value ranges from 20-25% (table 1). examining the change in the size of inventories of industrial enterprises and their innovation activity, it should be noted that the value of inventories during 2015-2019 tended to increase gradually, while the indicators of innovation activity remained unchanged, and in some periods it even showed a decline. thus, the highest number of innovatively active industrial enterprises of ukraine was in 2016 (834 units). in the same year, 2016, the highest among all the years of the study period were the indicators of the number of new technological processes introduced into production (3489 units), the indicators of the number of introduced innovative products (4139 units) and the indicators of total innovation costs (23229.5 million uah) (table 2). according to the data shown in table 2, the largest increase in inventories of industrial enterprises occurred in 2018 (uah 417778.5 million), while the total cost of innovation in 2018 was the lowest for the entire period (uah 9117.45 million). this situation is evidence that inventories are not considered as a resource that has a significant impact on the innovation potential of the enterprise. in addition, comparing the growth rates of inventories and indicators of financial performance of industrial enterprises of ukraine during 2015-2019, it should also be noted that there is no direct relationship between changes in these indicators (table 3). the growth of inventories was more or less uniform, while the indicators of profitability (loss) of industrial enterprises of ukraine had both positive and negative values. during 2015-2016, industrial enterprises mostly operated at a loss, receiving a total loss of 188,267.9 million uah (2015) and 24,724.7 million uah (2016) accordingly. therefore, investments in inventories do not justify themselves from the standpoint of the final results of enterprises. given this circumstance, it should be noted that the issue of inventory management in industrial enterprises is not given due attention in the context of ensuring compliance of the management system with the objectives of effective operation and development of the enterprise as a whole and its innovation in particular. table 1 the share of inventories in current assets of ukrainian enterprises by type of economic activity in 2015-2019, % indicators 2015 2016 2017 2018 2019 the value of inventories in current assets of ukrainian enterprises, % 20.7 18.1 22.9 24.6 24.5 the value of inventories in current assets of industrial enterprises of ukraine, % 24.1 23.0 23.5 25.1 25.6 the value of inventories in current assets of agricultural enterprises, % 22.3 12.2 31.8 39.1 42.2 the value of inventories in current assets of enterprises in the construction sector, % 23.1 25.6 27.4 28.6 28.9 the value of inventories in current assets of wholesale and retail trade enterprises, % 23.5 22.1 25.2 85.2 93.7 the value of inventories in current assets of the transport enterprises, % 15.7 13.5 21.1 20.8 17.4 the value of inventories in current assets of information and telecommunications enterprises, % 6.0 5.3 7.1 7.6 10.3 source: compiled by the author based on the data of state statistics service of ukraine (2020) table 2 indicators of innovation activity and the size of inventories of industrial enterprises of ukraine in 2015-2019 indicators 2015 2016 2017 2018 2019 volume of stocks of industrial enterprises, million uah 289901.2 349754.1 417778.5 480254.4 481775.1 net profit (loss) of industrial enterprises, million uah -188267.9 -24724.7 56124.0 109288.8 133701.6 source: compiled by the author based on the data of state statistics service of ukraine (2020) three seas economic journal 80 vol. 1, no. 3, 2020 4. possibilities of the accounting system in the context of inventory management effective inventory management of the enterprise should provide constant monitoring of inventories and market environment, analysis of their interaction and impact on the performance of the enterprise as a subject of market relations and making informed decisions aimed at saving money and increasing the rate of economic return on capital. in turn, the validity of management decisions depends on the optimal organization of the inventory accounting system, which is able to form an array of information, able to identify alternative solutions and ensure the achievement of strategic goals in the future. many problems of inefficient inventory management can be solved by the company 's accounting system, which aims to: formation of complete and reliable information about inventories; providing the management system of the enterprise with the necessary accounting information about inventories; determination and approval of persons responsible for obtaining inventories and for keeping their records at storage sites; establishment of document circulation rules, accounting information processing technology and forms of primary documents; determining the composition of the permanent inventory commission and setting deadlines for inventory; control over full and timely posting of inventories and their storage at places of storage and at all stages of movement; reliable determination of all costs associated with the acquisition or manufacture of inventories, determination of the initial cost of inventories; objective assessment of inventories. the foundations of the company 's inventory accounting system are laid during the formation of accounting policies. the formation of the company 's accounting policy for inventories should be aimed at meeting the information requests of the management system on the available volume and structure of inventories, the possibility of their optimization and cost savings through the rational formation of standards for the need for inventories. on the other hand, the accounting policy must comply with the basic requirements of laws and regulations (zakon ukrainy «pro bukhhalterskij oblik ta finansovu zvitnist v ukraini», 1999; podatkovyi kodeks ukrainy, 2010; natsionalne polozhennia (standart) bukhalterskoho obliku «zahalni vymohy do finansovoi zvitnosti», 2013; polozhennia (standart) bukhhalterskoho obliku «zapasy», 1999; metodychni rekomendatsii z bukhhalterskoho obliku zapasiv, 2007). inventory accounting policy is a set of principles, methods and procedures used by the company to generate quality, timely, relevant, clear, complete and reliable information about the availability, movement, storage and use of inventories in the enterprise, sufficient to make management decisions aimed at to improve the efficiency of inventory management and disclosure of inventory information in the financial statements. the formation of the accounting policy of the enterprise in the context of ensuring effective inventory management should be carried out taking into account such components of accounting policy as: organizational, technological and methodological. 5. organizational and technological components of inventory accounting policy the organizational and technological components of inventory accounting policy contains the following elements: principles of inventory accounting, laws and regulations concerning the accounting of inventories, forms of primary documents and internal management reporting used for inventory accounting, table 3 indicators of financial results of activity and the size of inventories of industrial enterprises of ukraine in 2015-2019 indicators 2015 2016 2017 2018 2019 number of new technological processes and units introduced into production, units 1217 3489 1831 2002 2318 number of introduced innovative types of products, names, units 3136 4139 2387 3843 2148 number of innovatively active industrial enterprises, units 824 834,0 759,0 777,0 782,0 total expenditures on innovation, million uah 13813.7 23229.5 9117.5 12180.1 14220.9 volume of stocks of industrial enterprises, million uah 289901.2 349754.1 417778.5 480254.4 481775.1 source: compiled by the authors based on the data of state statistics service of ukraine (2020) three seas economic journal 81 vol. 1, no. 3, 2020 document management rules and technology of accounting information processing, control procedures on the movement of inventories and the responsibility of management staff, the procedure and frequency of revaluation of inventories and inventory сount, the order of analytical accounting of inventories, the unit of natural measurement of stocks for each unit of accounting, the interaction of accounting with other services during the transfer and exchange of inventories information. certain elements of the organizational and technological component of the accounting policy of the enterprise for inventory accounting have their own characteristics. the ability to accumulate and summarize information on the availability and movement of inventories is provided by the company through the formation and use of a working plan of accounts. the development of the working plan of accounts should be based on the system of indicators of internal and external reporting, the formation of which it is intended to ensure. documenting transactions with inventories involves the use of primary documents, the forms of which are approved by the state statistics service of ukraine and other central executive bodies (the order of the ministry of statistics of ukraine «on approval of standard forms of primary accounting documents for accounting of raw materials and inventories», 1996). it is necessary to take into account the organizational structure of the enterprise, which is an influential factor in the organization of inventory (kutsyk, gerasymenko, koval, 2011). if for registration of separate economic operations with inventories standard forms of primary documents are not approved, the enterprise develops and approves the forms. an obligatory condition for such forms is the availability of details provided by law and other regulations for primary documents and their approval by the relevant regulatory documents at the enterprise. to streamline the movement of documentation related to inventory accounting, as well as the timely receipt of primary documents for their reflection in the account, the company must develop a document flow schedule, which indicates the date of creation or receipt of documents from other enterprises, institutions and organizations, date of accepting for accounting, date of transfer for processing and archiving. it should be noted that the document flow schedule must comply with the job descriptions developed at the enterprise of the accounting service staff and job descriptions of persons, responsible for supplies (which should be reflected in the accounting policy). these internal documents should be complementary and non-contradictory, as they affect the quality of formation, preparation and timing of inventory information for management purposes and the disclosure of such information in the entity 's financial statements. 7. methodological component of inventory accounting policy the methodological component of the accounting policy includes: principles and rules of receipt, processing, recording and transmission of inventory information, inventory valuation rules, inventory accounting (development of a working plan of accounts), disclosure of inventory information in the financial statements. the establishment of accounting policies in terms of inventory accounting is implemented through the consolidation of the list of valuation methods, accounting and procedures (elements of accounting policy), according to which the regulatory framework provides for more than one option. and from all admissible variants the enterprise should choose that variant which most completely reflects specificity of its economic activity. in particular, the accounting policy of the enterprise should determine: provisions on recognition and initial valuation of inventories; provisions for assessing the disposal of inventories; the order of accounting (identified or in general) of transport and procurement costs, the use of a separate sub-account of accounting of transport and procurement costs; the frequency of determining the weighted average unit cost of inventories; forms of primary documents used for registration of the movement of inventories, which are not provided by standard forms of primary accounting; rules of document circulation and technology of accounting information processing; the order of control over the movement of inventories and the responsibility of management staff; the order of analytical inventory accounting; unit of natural measurement of inventories for each unit of accounting. the elements of the inventory accounting policy, according to which the national legislation provides for several alternatives (options) or three seas economic journal 82 vol. 1, no. 3, 2020 does not provide for any regulations, are the following: determination of the unit of analytical inventory accounting; the order of accounting and distribution of transport and procurement costs; methods of estimating the disposal of inventories; frequency of determining the weighted average unit cost of inventories. 8. conclusions 1. the results of the study showed that the inventory management system of industrial enterprises is not effective enough, because inventories are not perceived as a source of innovation, as evidenced by comparing the dynamics of inventories and the results of innovation. 2. it is substantiated that effective inventory management is able to provide the accounting system of the enterprise, the foundations of which are laid during the formation of accounting policies. inventory accounting policy is a set of principles, methods and procedures used by the company to generate quality, timely, relevant, clear, complete and reliable information about the availability, movement, storage and use of stocks in the company, sufficient for management decisions, aimed at improving the efficiency of inventory management and disclosure of inventory information in the financial statements. the formation of the accounting policy of the enterprise in the context of ensuring effective inventory management is based on organizational, technological and methodological components. 3. it is established that the formation of inventory accounting policy should be implemented through the consolidation of the list of valuation methods, accounting and procedures (elements of accounting policy), according to which the regulatory framework provides for variability. the main such elements include: determining the unit of analytical inventory; the order of accounting and distribution of transport and procurement costs; methods for estimating inventory disposal; the frequency of determining the weighted average unit cost of inventories. the stated approaches to formation and disclosure of elements of the accounting policy of stocks are directed on maintenance of effective inventory management in the course of innovative activity of the enterprise. references: boitsova, m., makhanko, o., & klyzhenko, ya. 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(1999, 16 july) zakon.rada.gov.ua. retrieved from: http://zakon5.rada.gov.ua/laws/show/996-14 (in ukrainian) three seas economic journal 53 vol. 1, no. 2, 2020 corresponding author: 1 national taras shevchenko university of kyiv, ukraine. e-mail: svberez2001@gmail.com orcid: https://orcid.org/0000-0002-5206-6971 researcherid: https://publons.com/researcher/3857505/volodymyr-shevchenko/ doi: https://doi.org/10.30525/2661-5150/2020-2-9 economic shocks of the pandemic impact: the european case volodymyr shevchenko1 abstract. the purpose of the paper is to identify a nature and forms of the economic shocks generated during the covid-19 pandemic in 2020 and to assess such shocks implications on the european countries. such economic shocks have caused many of business companies freezing, contraction of industries and services, recession of economies. economic shocks specifics and their influence on the european economy are considered. shocks implications are causing economic recessions and influence on recovery prospects. implications of economic shocks are argued in order to develop practical guidelines for economic policies. methodology. pandemic is a natural event of new coronavirus (covid-19) spread, which influenced on economic and social life. therefore a study of pandemic-generated economic shocks are based on interdisciplinary approach including inputs of methods from public health, psychology, classical economics, behavioral economics, institutional economics, systemic analysis. selected relevant data of pandemic shocks impact of the european countries are assessed. results. pandemic of the covid-19 coronavirus and governmental policies in response have generated a number of economic shocks. such pandemic shocks are different from previously known economic shocks. content and forces of pandemic – related shocks are a mixture of natural event and results of preventive public measures. the study has identified content and major forms of pandemic economic shocks, their implications. the major shocks of pandemic are considered: psychological, medical, economic, financial, social. economic shocks have been defined such as: external shocks, supply and demand shocks, cross-border spillovers of pandemic economic shocks are considered as a major reason of national, regional and world economies slowdown. specific features of shock in europe are depending on country-specific levels of infection, economic structures and public policies. cases of economic recession of shock-ignited countries are differentiated among the european countries and have unpredictable recovery tracks. practical implications. specific shocks and recession may require different policies responses. the european countries have used different combinations of monetary, fiscal and direct support instruments. the balance between national policies and international coordination is contradictory. short-term economic policies should be focused on the economies’ recoveries. medium-term policies should include structural and sustainability instruments, long-term policies should be focused on drivers of innovation, education, research and inclusive development. key words: pandemic, psychological shocks, medical shocks, economic shocks, supply and demand shocks, financial shocks, recession, eu countries. jel classification: f43, f63 1. introduction world history shows that extreme natural and political events – infections, floods, earthquakes, wars, political unrests – have generated stresses for population as well as in some cases economic shocks and crises. they usually have generated a number of economic problems – economies contraction, emergency expenses, financial distress, external debt, recovery problems. in each such case economic shocks have played as an ignition for the different economic and financial distresses. the actual situation with the covid-19 pandemic and economic shocks has some similarities with historical events but also substantial differences. the actual case is a quick virus transmission and global coverage as pandemic. in january 2020, the new coronavirus emerged in one area in china and spread over other countries and continents. in march 2020, it was announced three seas economic journal 54 vol. 1, no. 2, 2020 the global pandemic of covid-19 as highly infectable and dangerous coronavirus. the newly covid-19 pandemic has caused rapid changes in the global economic and social environment. people became threatened by danger of covid-19 with no proven medications or vaccines against it. governments were faced with urgent need to prepare public health to unknown number of infected patients and to identify a proper treatment. the very first task was to prevent a further spread of infection. authorities in various countries have introduced emergency measures in the areas of health care as well as severe restrictions regarding social communication, economic activities and isolation of the population to counteract the spread of coronavirus. lockdown measures have terminated a part of services, domestic and international travel, tourism, retail trade. such measures have dramatically affected the activities of enterprises and households, the economies, employment. as a result, the companies’ finances have been distorted, governments’ tax revenues have been eroded, and budget spending has been seriously increased. in order to cover unforeseen expenses, the governments and corporations have borrowed financial liquidity, which increased external debts. the pandemic shocks in result have caused contractions of national economies and recessions. their complex nature and continuing pandemic are the major reasons of uncertainty of national and global economies. 2. economic shocks: nature and major forms economic development have been affecting from time to time by events or changes, which seriously influencing on the state of production, consumption, and macroeconomic situation. such cases of unexpected influence on economic processes are considering as economic shocks of various content. economic shocks have different causes and forms, which leads to different approaches to their study in the research literature. the impact of economic shocks and their influence on different processes are among research issues. the content of economic shocks and their relation to crises were discussed by m. lettan and s. ludvigson (lettan, ludvigson, 2011); nature of economic shocks and their major forms have been outlined by e. reed (reed, 2020). the role of economic shocks in the economy and macroeconomic policy has been overseen by o. blanchard (blanchard, 2010). the economic and financial shocks interrelation, asset pricing and cross-border propagation of macroeconomic shocks during global financial crisis of 2008 was studied by i. jakard ( jakard, 2011). the role of economic shocks in macroeconomic dynamics has been studied by i. kalinkova (kalinkova, 2012). external shocks and modeling of their impact on the economy of ukraine were analyzed by o. bazhenova, y. bazhenova (bazhenova, 2016). economic shocks are caused by unplanned or uncontrolled events or parameters, which have enforcing impact on the economic processes. such events would be natural disasters, fundamental changes in macroeconomic indicators, high volatility of commodity and financial markets, economic policy decisions, and significant technological innovations. the main consequences of shocks are changes in economic processes and results, imbalances, recession, asset prices and market excessive volatility, negative expectations of market participants. the shocks could be structured in two functional groups: 1) endogenous (internal shocks of the economic systems or sectors) and 2) exogenous (shocks caused by external to the economies forces or events – natural, political, social and technological). respectively, factors of shocks considered: supply, demand, financial and economic policy, technology. shocks are characterized with interactions; they would have general economic, sectoral, cross-sectoral and regional implications. endogenous shocks can be primarily defined of macroeconomic origin, forms and results. for example, common changes in basic macroeconomic parameters like inflation rapid increase or business restrictions would cause endogenous economic shocks to supply, demand, output and productivity. endogenous shocks would be identified in economic activities and cause a deviation from normal business processes in case of events of bankruptcy, mergers and acquisitions, restructuring, strikes or systemic changes in business models such as outsourcing, offshoring, robotics, and digitalization. such shocks are regular component of the process of economic development and growth. external (exogenous) shocks have three main origins: 1) significant unexpected fluctuations of international markets – commodities (prices and demand changes, trade wars etc.) and financial (interest rates and stock indicators, exchange three seas economic journal 55 vol. 1, no. 2, 2020 rates, gold prices, capital inflows and outflows); 2) extreme natural events – floods, hurricanes, earthquakes, epidemics, droughts, famines; 3) domestic and external conflicts – military, territorial, political, international, religious. the sudden and rapid spread of the covid-19 coronavirus has caused external shocks to national and global economies and societies. in the time of pandemic, the scientific literature is covering the macroeconomic approaches to pandemics in the study of m. eichknbaumo, s. redebo and n. trabandt (eichknbaumo, redebo and trabandt, 2020), features of pandemic economic shocks have been presented and analyzed by a. kose and n. sugavara (kose, sugavara, 2020), their impact on the economic recession and uncertainty in the studies of o. george, s. singh and a. taylor (george, singh and taylor, 2020). the nature of pandemic shocks should be identified in order to assess their impact on the economy and financial system. 3. economic shocks of pandemic: origin, forms and implications the covid-19 pandemic inspired large-scale quarantines in many countries, restrictions on businesses and travel, which led to contraction of economies and international trade, significant changes in economic and social activities. this requires focusing the study on the origins, distinctive features and forms of the economic shocks generated during covid-19 pandemic in 2020. the paper also looks at the implications of pandemic economic shocks for the european countries. pandemic is a natural event of new coronavirus covid-19 spread all over the world, which influenced on economic and social life. the nature of pandemic and its influence on the public life requires the interdisciplinary approach to study of pandemic-generated economic shocks. pandemic economic shocks need an application of respective research methods of public health, psychology, classical economics, behavioral economics, institutional economics, systemic analysis. in economic research, there are different approaches and interpretations of the nature and types of economic shocks, their consequences. shocks are seen as mainly due to economic factors and relationships, such as unexpected macroeconomic changes, cyclical and countercyclical waves, significant fluctuations in prices and demand, internal and external imbalances, economic policies. the modern pandemic is associated with new and multifactor situation in the societies, countries and international relations. economic shocks have emerged as a result of the natural factor – newly discovered coronavirus covid-19, but also due to the anti-virus reactions of the population, governments, and international markets. the rapid spread of the dangerous covid-19 coronavirus has caused a shock to health systems, an extraordinary demand for antiepidemic medical services, and a lack of necessary hospitals capacities and medical supplies. such extreme needs have quickly raised a large international demand for critical medical supplies – face masks, protection for medical personnel, special equipment, such as lung ventilation systems. urgent demand for hospital facilities of specialized infection treatment pursued a quick construction of new hospitals, reconstruction of large public and private spaces such as sports and exhibition halls to be converted for medical services. the shocks to the public health system have caused an extraordinary demand for additional funding that could not be met within budget allocations. countries have attracted funding from domestic and international sources, including emergency funding from the imf and other international organizations. extent of pandemic economic shocks and their implications have been considered as extreme in the modern history. professor n. roubini, a worldknown futurist, who predicted the 2008 global financial crisis, said: “the shock to the global economy from covid-19 has been faster and more severe than the 2008 global financial crisis and even the great depression. in the current crisis, similarly dire macroeconomic and financial outcomes have materialised in three weeks” (roubini, 2020). the specificity of current pandemic is that it has generated initial response on virus information as psychological shock, i.e. individual and group reaction on unexpected and stressful event of infection. this causes inadequate emotional reactions: feeling of threat, emotions of danger, fear, public speculation, decisions under stress and uncertainty. pandemic-generated economic shocks have differences with known shocks due to their specific origin. many countries have implemented different measures aimed to prevent spreading of the covid-19 coronavirus spread. among such three seas economic journal 56 vol. 1, no. 2, 2020 measures affected economic activities were the following: – people on lockdown at homes and restricted walking to the near food shop; – social distancing, face masks in public places, limits for people gathering; – many businesses shout down – shops and shopping malls, restaurants, hotels, beauty salons, fitness clubs and other services; – shift to distance work where possible; – shift to electronic trade of food and goods, cashless payments; – shift to distance education in schools and universities, kindergartens closure; – termination or strong restrictions for transport communication in inner cities, within and between countries; – countries borders shutdown or restrictions. such measures have created or generated in fact “man-made” or “government-imposed” irregularities, which would be considered such as external economic shocks. therefore pandemic has generated cluster of shocks with interrelations and contradictory influence on the economic and social life. – psychological shock as reaction to unexpected threat of infection by deadly coronavirus covid-19 caused serious and widespread stress and fears; – medical shock in public health during coronavirus covid-19 due to the danger of large-scale wave of infection, limited hospitals capacities, absence of treatment protocols and vaccine, shortage of medications and equipment; – economic shocks caused by lockdowns, restrictions and limitations of businesses resulting in contraction of production of goods and services; – financial shocks due to a need to cover extraordinary expenses for fighting against coronavirus, mitigating economic and social consequences of pandemic; – social shocks are associated with full and hidden unemployment, closure of companies, shift to distance work employment, transfer schools and universities to distance learning. the main pandemic shocks have specifics as to known economic shocks. pandemic demand shocks are considering as result of governments directed limits or closure of businesses, contraction of production of goods and services, restrictions for transport communications. such situation generated pandemic demand shock for energy, materials, and business services. reduced demand has caused prices decline, especially for oil and natural gas, influence on the company losses in that sector. after demand shock, the major oil producers have agreed to reduce supply in order to keep market prices balanced. the situation in turn affected production prospects, depressed investments and had spillover effect of related industries such as equipment and materials producers, oil transportation. reduction of electricity consumption is systemic form of demand shock caused by lockdowns, closing of businesses and schools, restrictions for railway transport, etc. in the eu, electricity consumption in april 2020, for example, was -11.2 % lower than the lowest level in the same month during preceding 5 years. there were some regional differentiations: lowest levels were observed in the most hit by pandemic countries such as: france – 15.0 %, spain – 14.6%, luxemburg -13.7%. seven countries showed more than 10% decrease, four countries – between 5% and 10% less (eurostat, 2020). electricity sector is technologically dependable on balance of production and consumption of electricity, therefore demand shock has created some challenges for countries’ power generating systems. pandemic demand shocks have led to downturn in production of different goods and services, disruptions in international supply chains, crisis in tourism industry and international air transportation. demand for international air transport fell by 54% in the second quarter of 2020, totally 7.5 million flights have been cancelled during half a year; airlines have got 84.8 billion usd losses and have lost 419 billion usd revenues, which accounted 50% downturn (iata, 2020). pandemic demand shock seriously affected services, which were traditionally accumulated small and medium sized enterprise. small businesses downturn in many cases has led to shutdowns due to lack of financial reserves and limited opportunities for borrowing on the markets. therefore sme’s future in post-pandemic times looks problematic. pandemic supply shock has become evident as change of supply channels and chains. lockdowns have led to downturn of wholesale trade due to depressed demand for energy, commodities and non-essential imports. international and domestic supply chains have been disrupted and in many cases simplified in order to avoid complexities and delivery risks. supply stability have supersede cost three seas economic journal 57 vol. 1, no. 2, 2020 saving as a criteria for supply chains performance. this is also supporting with a trend of reshoring of corporate production facilities back to home countries. supply shock has led to structural changes in retail trade such as rapid development of e-commerce and trade especially in food supply. various networks of food delivery have boomed during lockdowns and such trend would look competitive in the future. pandemic financial shocks are appearing as an urgent need to meet additional expenses for health care systems operations and supplies, relief for businesses and households, lost revenues of most affected companies and sectors. tax concessions and debt are major financial implications of shock. in order to manage response to financial shocks, countries use monetary and fiscal measures. typical monetary instruments are the downgrading of the central bank’s rates to support commercial banks lending, quantitative easing of the money supply, emergency guarantees and loans to support bank’s stability. urgent financial support is provided by international institutions such as the international monetary fund, the world bank group, the european central bank. one of the consequences of pandemic financial shocks would be further accumulation of domestic and international debt, increase of debt servicing cost. pandemic social shock have emerged along with economic shocks, businesses freezing, lockdowns, transport restrictions and appeared as full or partial loss of jobs, shift from traditional to distance organization of work. social shocks have progressed in second quarter of 2020 and have regional differentiation. work hours losses (parttime employment, formal employment with no work performed, unemployment) in the second quarter of 2020 have been estimated as: world – 14.0 %, americas – 18.3 %, europe and central asia – 13.5 % (ilo, 2020). within the european region, differentiation is reflecting a status of the specifics of economies, labor markets and governments relief measures. work hours losses have been estimated in: southern europe – 18.0%, northern europe – 15%, western europe – 14.3%, central asia – 13.6%, eastern europe – 11.6% (ilo, 2020). the last data also reflects an existence of shadow and contract work in the region, not considered as formal employment and more flexible. distance work becomes widely used during pandemic lockdowns, but difficult to make reasonable assumptions as for its size and productivity. the nature and scale of the pandemic economic downturn are considered as the most severe since the great depression of 1929-1933 and have caused more losses than the 2008 global financial crisis. globalization and interdependence of countries contribute to transmission of economic shocks through channels of foreign trade, financial flows, and international communications. the economic recession in 2020 becomes a major outcome of pandemic economic shocks. economic recession in the european countries has a high degree of uncertainty, which is causing by pandemic situation and complexity of economic shocks outcomes. dangerous nature of the covid-19 coronavirus, fears of possible second wave of pandemic and absence of vaccines make future post-pandemic recovery uncertain. therefore, the economic and financial prospects of many countries and the world economy look unstable in the short and medium term. the prospects of countries are depending on recession downturn and recovery of different rates in europe and emerging economies. the latest imf estimates are giving a comparison of the world and the european countries. table 1 gdp development in 2019 and the forecast for 2020-2021, % year on year (based on the imf world economic outlook updates in june 2020) 2019 2020 forecast 2021 forecast world 2.4 -4.9 5.4 developed economies 1.7 -8.0 4.0 usa 2.3 -8.0 4.5 eurozone 1.2 -10.2 6,0 emerging and developing economies 3.7 -3.0 5.9 emerging europe 2.1 -5.8 4.3 ukraine 3.2 -7.7 3.6 source: compiled by the author based on data (imf, 2929) greater gdp contraction is expecting in eurozone and developed economies due to intensive pandemic spread and even recovery prospects. relatively moderate contraction is expecting in emerging and developing economies despite a mixed pandemic situation. gdp forecast for 2021 would reflect an effect of a “low base” of 2020 downturn, while the real achievement of three seas economic journal 58 vol. 1, no. 2, 2020 pre-pandemic indicators is expected in 2-3 years. projections for ukraine should consider the depressed domestic demand, instability of exports and the impact of external debt servicing expenses. the economic consequences of pandemic economic shocks are differentiated in the european countries due to domestic and international factors such as intensity of the covid-19 cases, border and transport restrictions, conditions of international trade, instability of international financial markets. country-specific factors are mostly dependable on economic structures, especially shares of most pandemic-affected sectors like trade, services, tourism as well as fiscal and financial stability. table 2 gdp change in the selected eu countries, second quarter of 2020 estimate and 2021 forecast, % country change for the 2 quarter of 2020 2021 forecast eu 27 -8.3 5.8 eurozone -8.7 6.7 belgium -8.8 6.5 germany -6.3 5.3 france -10.6 7.6 italy -11.2 6.1 netherlands -6.8 4.6 spain -10.9 7.1 sweden +5.3 3.1 estonia -2.7 6.2 hungary -7.0 6.0 poland -4.6 4.3 latvia -7.0 6.4 lithuania -7.1 6.7 source: compiled by using data (eu, 2020) industrially developed countries of the eu, which are most seriously affected by the covid-19 pandemic (italy, spain, france, sweden), are having a relatively higher gdp contraction compared to the eu. countries of central and eastern europe (hungary, poland, latvia, and lithuania) have a lower cases and lesser services sector share, their gdp downturn looks moderately. different rates of gdp contraction during a pandemic will affect the chances of recovery. the uncertainty of the recovery would be influenced by the shocks impact on the national and international economies. the uncertainty of the recession and the recovery depends on a number of circumstances: 1) probability and intensity of the next waves of the pandemic and the possible scale in individual countries and regions; 2) time for production and application of the covid-19 vaccine, its effectiveness and scale of vaccination; 3) changes in business expectations and consumer behavior in the time of recession and recovery. as a small open economy, ukraine is experiencing pandemic shocks like other european countries and applies similar policies: face masks, social distancing, restriction of public gathering, freezing of business activities, remote employment, and online trade. the macroeconomic situation looks stable when inflation is still below the planned level of 5%. in the first half of 2020, the economic performance have seriously downturned (yearto-year): industry – 12.2 %, agriculture – 4.0 %, transport – 26%, electricity – 8.2%. (nbu, 2020). the impact of economic shocks will be cleared during recovery of the national economy next year. simultaneously shocks led to falling prices for oil and natural gas. reduced demand for imported goods contributing to balancing foreign trade and balance of payments in ukraine, support relative stability of exchange rate. the outflow of capital is mainly due to the redemption of the government bonds. 4. conclusions global pandemic shocks have appeared in several forms: psychological, medical, economic, financial, and social shocks. they have affected economic and social stress, depression and public reaction. pandemic shocks have caused differentiated contraction in the european countries due to the cases intensity and different structures of economies. this also would influence on the postpandemic recovery specifics. economic shocks have depressed demand on products and services due to lockdowns and crossborder restrictions. service sector has become the most affected, largest airlines, travel agencies and hotel chains have moved close to insolvency and applied for governmental subsidies. downsized demand for energy has affected oil, natural gas and electricity prices. respectively, supply shocks have disorganized the international supply chains and had impact on the world trade. financial shocks have created so-called “pandemic debt” to cover extreme public health needs, economic and social relief spending. the second wave of pandemic at the beginning of autumn has enforced uncertainty regarding future three seas economic journal 59 vol. 1, no. 2, 2020 post-recession recoveries, prospects for returning to normal business and social life. recovery policies should be based on modern targets and instruments. short-term policies should be aimed at restoring business and consumption, stabilizing the fiscal and financial situation. medium-term policy should be focused on macroeconomic stability, external balances and sustainable economic growth. to strengthen preparedness for future shocks and risks, it would be needed to focus on the innovative development, advanced technologies, big data and artificial intelligence, communication networks and an inclusive social development. references: bazhenova, o., & bazhenova, y. 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(2020). coronavirus pandemic has delivered the fastest deepest economic shock in history. the guardian. 25 march 2020. available at: https: //www.theguardian.com/business/2020/mar/25/ coronavirus-pandemic-has-delivered-the-fastest-deepest-economic-shock-in-history (accessed 21 may 2020). imf (2020). imf. june 2020 world economic outlook update. available at: https://www.imf.org/en/ publications/weo/issues/2020/06/24/weoupdatejune2020 (accessed 21 july 2020). three seas economic journal 25 vol. 1, no. 2, 2020 corresponding author: 1 «highline media» ltd., ukraine. e-mail: katya.malinoshevska@inter.ua 2 kyiv national university of trade and economics, ukraine. e-mail: marinavladimirovnakorzh@gmail.com doi: https://doi.org/10.30525/2661-5150/2020-2-5 marketing strategies of development on the example of green tourism kateryna malinoshevska1, maryna korzh2 abstract. current economic conditions for the development of business entities are characterized by oversaturation with goods and services, as well as high levels of industrial progress. tourist services are not an exception and their effectiveness depends primarily on the degree of satisfaction of target customers and the coverage of both individual clients as well as corporate ones by the market. at the same time, advertising has become one of the main elements of a marketing strategy in the tourist services system. but the introduction of innovative advertising measures is now unreasonably ignored by tour operators. therefore, the most promising latest advertising technologies in the implementation of the international marketing strategy of the tour operators are identified in the research paper. today, in both global and domestic practices, demand for natural rest and recreation is increasing. it is precisely in line with such demand and peasant traditions of ukraine, so it is necessary to use this opportunity and develop rural green tourism. green tourism has many different definitions and interpretations. a significant cohort of domestic and foreign scientists distinguishes it as a separate tourist destination; no less opponents consider it an integral part of the ecological tourism structure. however, even extensive research does not allow one to interpret this phenomenon uniquely and individually. balancing the rural green tourism market is possible when effective state regulation is in place, the condition and feasibility should be investigated. the subject of research is the theoretical and methodological foundation of competitive advantages of rural green tourism. the purpose of this study is to develop and form factors taking into account the competitive advantages of rural green tourism, identify the main stages and possible marketing strategies of rural tourism entities to enter the international market and explore promising methods of lead generation through innovative advertising technologies. to achieve this purpose, the author uses a dialectical method of scientific knowledge and a number of general and special research methods, interconnected and consistently applied according to the general logic of analysis: theoretical generalization, analysis and synthesis, systemic analysis, statistical analysis, comparison, classification and modeling. logical methods of analysis that summarize the functioning of rural green tourism; methods of statistical processing taking into account statistical data; method of comparative analysis. conclusion. as a result of research on the basis of the offered factors influencing development of rural green tourism, the theoretical analysis of competitive advantages was checked. rural green tourism can provide demographic stability and solve socio-economic problems in rural areas. the development of rural green tourism needs support from the state, the establishment of regulatory measures for employment opportunities for the rural population. rural green tourism can become an organizational and economic component to solve the problems of rural residents. key words: international marketing strategy, governance, tourism, rural tourism, green tourism, tourism cluster. jel сlassification: l12, m11, q13 1. introduction nowadays, the world economic system is experiencing a difficult stage in its development, which is accompanied by the expansion of globalization processes, the intensification of information technologies, on the one hand, and the systemic economic crisis, on the other. these processes are accompanied by the increased interest of developed countries in the high-tech industries, thus primarily enhancing competition between individual national economies, which in turn directly affects the competitiveness of international business entities in this area (kotler et al., 2008; mazaraki, melnyk & chaiun, 2000). all this leads three seas economic journal 26 vol. 1, no. 2, 2020 to the increase of risk of international business processes; their participants use different actions and approaches aimed at increasing their own benefit from joining therein (kelliher et al., 2018). therefore, there is a particularly high interest in the development of the system of international marketing (young entrepreneur council, 2011), its tools and the formation of an effective marketing communications strategy (de pelsmacker, van tilburg & holthof, 2018; lazarus, 2017), the main focus of which is not only successful organization of sales of products on international markets and the implementation of a one-time profitable business operation, but also ensuring reliable positions in the world economic space and maintenance of these positions (borys, 2017). most of the existing approaches to solving this problem are one-sided and are aimed at activating certain marketing functions, the implementation of which is not always consistent with each other, thus leading to a deviation from the expected results in the organization of business processes at the international level. there are many reasons for this result (it depends on both the participants of the business activity and on the level of economic development and competitiveness of their countries, as well as on the specifics of the industry and the market), but the most significant of them are: unprofessionalism in the field of international marketing (which is associated with the spontaneity of running business processes), shortage of resources and funds, lack of experience in international business (especially for the countries in transition), lack of information. the problem of developing an international marketing strategy for green tourism services through the introduction of innovative advertising technologies is of particular interest (hernández, kirilenko, & stepchenkova, 2018; jang et al., 2013; pan, 2019; tolmacheva, 2016; wu, 2018). the urgency of the chosen topic is that competition in the ukrainian green tourism market is quite high nowadays, while the potential of standard advertising tools is much lower due to the specifics of the market itself, as well as the so-called “information blindness” of the audience, which is caused by excessive consumption of various advertising appeals by modern consumers. this is a well-known fact, that advertising is an industry that is undergoing a constant transformation, as the evolving scientific and technical progress has a direct impact on marketing, offering more innovative means of promoting goods and services (babich, 2016; klevoshin, 2016; kononov, 2014; sakhno, 2016). it is important to understand, that the very concept of “innovation” includes the high dynamics of changes, updates and additions. thus, any advertising tool can be considered innovative only as long as it does not lose its relevance and until it is replaced by the newer technology (koseoglu, mehraliyev & xiao, 2019). therefore, the choice of advertising media, the main criterion is their compliance with the requirements and opportunities of today will be discussed in this research paper. thus, there is an urgent need nowadays not only for the formation of the international marketing system in the system of green tourism, but also for the mechanism that allows to coordinate efforts in the field of international marketing in order to increase the effectiveness of marketing activities in the system of green tourism in general and each entity of this market separately. 2. formation of marketing strategy in the international space in order to improve the efficiency of the international marketing system and reduce the risk when entering the international market (in particular, in the field of green tourism services), the short-term forecasts should be as close to the reality as possible, which largely depends on the marketing methodology and forecasting (bozhuk, 2001; he, he & xu, 2018). therefore, the formulation of the goals of international marketing at the international level should be as clear and concise as possible; the quantitative expression of marketing objectives will make it easier to control their implementation. however, not all goals can be formulated quantitatively. supporting goals can be formulated qualitatively: ensuring survival in the conditions of the severe competition in the international market; support and growth of the company’s prestige in the world economic space; support and strengthening the image of the company, etc. there are specific marketing planning models such as sostac, a planning model that aims at simplifying marketing activities and planning, and contains the following elements (table 1): – situation analysis – company position at the moment; – objectives – vector of company development; – strategy – strategic means of achieving goal; three seas economic journal 27 vol. 1, no. 2, 2020 table 1 components of the sostac model # stage actions 1 situation analysis – evaluation of 5s factors and other kpis, as well as assessment of trends and forecasts; – consumer analysis; – analysis of the market situation; – analysis of competitors; – analysis of internal capabilities and resources. 2 objectives formation of goals by 5s criteria: – sell – goals for attracting customers and retaining customers; – serve – goals for customer satisfaction – sizzle – wow factors; – speak – attraction of new clients; – save – quantitative efficiency improvement. 3 strategy formulate a strategy according to the next steps (stop & sit): – segments; – targets; – objectives; – positioning ovp; – sequence: drew attention, tried, bought; – integration: crm, erp, database; – targeting. 4 tactics according to the marketing mix 8p: – product; – place; – price; – promotion; – process; – physical environment; – people; – productivity; – including content plan and contract plan. 5 action definition: – responsibilities and structural subdivisions; – processes and systems; – internal resources, skills and abilities; – external contractors. 6 control according to the assessment of compliance with the goals and achieved indicators, we are optimizing: – 5s and other kpis, involving web analytics; – user experience and feedback; – conversion optimization; – the frequency of data collection; – reports on the effectiveness of mechanisms, processes and actions. – tactics – tactical means for implementing the action plan; – action – operational management; – control – comparing results and planned actions. so, sostac is a well-structured, relevant action model which is used when it comes to external markets, this model describes all the necessary steps in developing a marketing strategy. it can easily adapt to the respective type of the company’s activity and a specific target market, as well as to control the implementation of the goals and coordinate them under the influence of factors of the international marketing environment. in the process of marketing control not only the deviation of the actual indicators from the plans are revealed, but also the reasons behind this deviation and the ways of their elimination are determined. the indicators characterizing both the results of marketing activities and the level of costs associated with their conduct are controlled, and based on their comparison the effectiveness of the marketing program is determined, which may be scheduled, three seas economic journal 28 vol. 1, no. 2, 2020 intermediate (calculated on the basis of current indicators), final or actual (on the basis of actual results achieved after the event) (zhang, chen & li, 2019). 3. building an international marketing management system in green tourism institutions the foundation for marketing activity is the detailed marketing research, on the basis of which it is necessary to analyse and compare the requirements and conditions of the external environment with their own capabilities of each international business actor, resulting in attractive market prospects for them (heidari et al., 2014). and only at this stage marketing goals and marketing strategy are being formed, and then a marketing planning system and a comprehensive program of actions is being developed in all directions. the marketing planning process is the starting point for all of the company’s activities; therefore, this plan must be consistent with other functions of business activity and is part of the green tourism establishment planning system (figure 1). the proposed overall system for managing international marketing of green tourism institution allows to systematize all marketing actions and implementing them in a complex, given their interdependence and mutual influence. thus, international marketing in green tourism is a complex mechanism of interaction of internal variables and factors, which must be as flexible and manageable as possible through the comprehensive influence of the constituent parts of the international environment (from the global economic system as a whole and to a specific industry). in order to ensure the cyclicity of the marketing management at the international level, an assessment of each individual marketing event (advertising measures in particular) and an analysis of the effectiveness of the system as a whole is carried out, being the basis for the development of the relevant measures (merinero-rodriquez & pulidofernandez, 2016). determining the effectiveness of marketing activities is important, especially at the stage of decision-making on a specific event. in this case, one of the main issues that are of interest to both theoreticians and practicing marketers is the question (still open) regarding the construction of a model and the development of a methodology for determining the effectiveness of marketing activities both at the planning stage and at the implementation stage. the marketing program should focus on the development of both general set of directions and each specific event separately, with specific methods and tools adapted to certain conditions that were formed at the moment in the world economic system as a whole and in separate segments of the international market. figure 2 shows a diagram of the decision-making and holding marketing event. it is also very important to evaluate communication technologies in terms of their relevance to the industry specifics. since the it market is rather heterogeneous, it is necessary to classify advertising technologies according to the characteristics of its actors. 4. marketing communication strategy as a direction of international business tourism development marketing communication strategy as a whole, and advertising measures in particular, should be considered as a direction of long-term development of an international business actor and the system of relations with the internal and external environment. in addition, it is determined by the key marketing goals and, in turn, identifies a market niche, allows forming an infrastructure, minimize adaptation to new external conditions and provide internal coordination of actions, which in general determines the acute need for the formation of an effective planning and management system in international marketing in order to mitigate the risk of entering the international market and to achieve the existing goals and implementation of the main strategy. that is why it is necessary to pay much attention, first of all, to the process of developing marketing plans and communication programs in the international marketing system. in terms of advertising activities, it is appropriate to classify it companies on service and product companies. the product model of the it-company assumes that the company creates and develops its products, which are then sold to a large number of consumers without change. according to the service model, the it-company implements custom-made projects and does not have its own products, and the resulting software can be used by the same company or any other company. the service model is typical for outsourcing companies (petruk, 2012). three seas economic journal 29 vol. 1, no. 2, 2020 formation of marketing objectives of green tourism institutions for selected target segments identification of the competitive advantages of market players in green tourism and comparing them with the competitiveness of their countries in the world development of the program of international marketing in the system of green tourism analysis of the marketing environment of the international business process in the system of green tourism services analysis of the factors surrounding the market of services of green tourism assessment of the own capabilities of the green tourism institutionsfactors of the micro marketing environment factors of the macro marketing environment selection of target markets, their segmentation and evaluation marketing planning in the system of green tourism services planning international marketing tactics for green tourism formation of competitive strategy in the international market of green tourism formation of the system of marketing control in order to identify bottlenecks in the functioning of the international marketing management system in green tourism product policy development managing competitivenes s of green tourism services pricing policy development pricing management and the establishment of an optimal level of prices for green tourism services development of the product launch policy management of the distribution system of green tourism services development of advertising policy of green tourism institutions management of the system of demand making and sales promotion in the system of green tourism through the introduction of it technologies development of personnel management system in green tourism establishments managing competitiveness of green tourism staff and implementing customer orientation systems formation of the mission of the international business entity in the green tourism system and strategic planning evaluating the international marketing effectiveness in green tourism development of measures to improve the efficiency of the international marketing system in green tourism figure 1. general management system for international marketing in green tourism establishments, taking into account peculiarities of consumers of green tourism services three seas economic journal 30 vol. 1, no. 2, 2020 thus, it companies are mainly engaged in the development of products for the end user – software for personal use, website creation and management services, various mobile applications and games for different platforms. while service outsourcing firms offer services on the b2b marketplace – a variety of software solutions for data management, crm systems, management and automation of production, and others. the level of advertising innovation can be determined by the following criteria: – using professional technical support; – using latest computer technologies; – using non-conventional ways to provide information that manifests itself in the emergence of innovative advertising forms (hlushkova, 2013). the content of investment support for the innovative development of green tourism establishments is the investment support for different innovative assets in different forms, which gives rise to the ever-increasing production of innovative tourism products of green tourism, the greater the increase in the production of innovative products of green tourism per unit of investment in innovative assets, the higher the effective investment development of green tourism establishments (figure 3). it is customary to distinguish external and internal factors that determine the development of various forms of green tourism. external factors include: pricing, the level of tax burden, the conditions for granting loans for the development of green tourism establishments, the level of income of the population (figure 4). internal factors include: natural, logistical, level of development of scientific research, economic, development of criteria and indicators for monitoring and evaluation of the results of the implementation of the measure considering alternatives to solving the problem optimization processes to choose the most effective measure determination and formulation of the goals of green tourism institution regarding a specific problem sources of fundingassigning executives terms of execution ensuring implementation of the measure development of action plan and its implementation assessment the measure implementation effectiveness 2. development of events to improve the measure effectiveness diagra figure 2. diagram of decision-making and holding of marketing event in the general program of international marketing of the green tourism three seas economic journal 31 vol. 1, no. 2, 2020 the subject of innovation innovative products innovative development of green tourism production of innovative green tourism services investing in innovative assets figure 3. scheme of innovative development of green tourism entities the level of income of the population the degree of protection of the domestic green tourism market economic factors integration of green tourism structural units the level of tax burden conditions for granting loans for the development of green tourism material and technical factors the level of development of research in the field of green tourism external factors of development of forms of green tourism internal factors of development of forms of green tourism pricing for green tourism: equestrian tourism,rafting, fishing, hunting and more natural factors figure 4. external and internal factors of development of forms of green tourism three seas economic journal 32 vol. 1, no. 2, 2020 including financial, organizational and managerial, as well as the integration of structural links of green tourism. it is common to organize innovative activities and select appropriate development strategies to ensure favorable conditions for the economic development of green tourism establishments. developing a common approach to innovation prospects is important because in the context of globalization there is a unification of economic development trends (figure 5). green tourism, both for holidaymakers and owners – peasants, rural communities, regions and the state as a whole, contributes to the development of many related industries (biddulph, 2015; ma et al., 2019; randelli, & martellozzo, 2019; razzaq et al., 2013; stylidis et al., 2014). the development of rural green tourism encourages the improvement of rural estates, streets, and villages as a whole, and encourages the development of social infrastructure (dickinson, & robbins, 2008; mcareavey & mcdonagh, 2011). consequently, in order to provide a stable passive flow of potential customers, it is necessary to build marketing processes focused on the target market: this is optimization of the company’s website in line with current trends, the creation of targeted content, cooperation with local opinion leaders, active management of social media, participation in conferences as speakers, marketing campaigns with landing pages and contextual advertising. 5. conclusion based on the analysis of the nature of international marketing, as well as on the basis of modelling of the overall management system of its mechanism, it was concluded that the plan of international marketing is the basis of the activities of green tourism institutions in the field of ensuring the profitability of their operation in the international business, the international marketing system cannot be isolated from planning other functions of economic activity in international business, especially in the field of marketing communications and their advertising component. as for the advertising green tourism institutions through using modern information technologies, the feasibility of introducing innovative means of advertising for this purpose were determined. the result of the study of this issue was the conclusion about the promising use of it technologies such the emergence of the idea of innovation investigation of the possibility of its development formation concept meeting public needs trial marketing batch production applied research refinement design and development experimental studies analysis of potential markets figure 5. stages of the innovation process in green tourism establishments three seas economic journal 33 vol. 1, no. 2, 2020 as smart billboards, the production of souvenir products using sensory and tactile tissue. on the other hand, when selecting the latest advertising tools for a particular company, the need to focus on specific characteristics of the company (budget, target audience, product, etc.) was emphasized. as a result of the research, it can be concluded that in the context of the current concept of holistic marketing, advertising activity is one of the key elements of the marketing international strategy of the green tourism institutions. it is a complex concept characterized by such features 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(2019). discovering the tourists' behaviors and perceptions in a tourism destination by analyzing photos' visual content with a computer deep learning model: the case of beijing. tourism management, 75, 595–608. doi: https://doi.org/10.1016/j.tourman.2019.07.002 three seas economic journal 77 vol. 1, no. 4, 2020 corresponding author: 1 central ukrainian national technical university, ukraine. e-mail: yurmala@gmail.com orcid: https://orcid.org/0000-0003-0540-4429 2 central ukrainian national technical university, ukraine. e-mail: alikanso@ gmail.com orcid: https://orcid.org/0000-0003-4340-8105 doi: https://doi.org/10.30525/2661-5150/2020-4-11 current state and trends of the national economy of social capital development of ukraine yurii malakhovskyi1, ali kanso2 abstract. the purpose of the publication is to summarize the practice of quantitative assessment of the current state and trends in the change of social capital of national economy (scne) of ukraine on the basis of the use of the index system, which comprehensively take into account numerous aspects of its functioning as a basic factor in ensuring stable competitiveness of the national economy (ne), high level of human development, key conditions for prosperity and well-being of all segments of the population. the results of the benchmarking of indices and analysis of the actual level of scne are based on data about the factors of current level of the national economy’s formation for individual countries in the process of ensuring in the strategic perspective the un sustainable development goals – measuring social capital (sc) for sustainable development goals (sdg). for scne of ukraine is inherent in the simultaneous deep commitment of the domestic community to the values of survival (at the level of russia, moldova, romania, albania, bulgaria) in combination with a high level of confession of secular rational values (at the level of lithuania, south korea, the czech republic, germany, denmark). based on the above data, ukraine has a low level of direct interpersonal social trust (the level of distrust/caution in relations practically exceeds it three times) combined with a low level of trust in political institutions. the necessary information for the assessment of the environment and the general level of development of scne of ukraine is contained in the already mentioned international indices, which in their aggregate comprehensively characterize the subject of our research. key words: social capital of national economy, structural, relational and cognitive components of social capital, state and tendencies of change. jel classification: a13, c43 1. introduction the scne, as a set of structured socio-economic relations, is based on mutually recognized informal institutions: norms and values, the observance of which ensures the growth of personal productivity of members of formed social networks, effective coordination and cooperation of individual actions for mutual benefit, manifested in the optimization of costs from the specification of property rights, their effective transformation, intensification of the level of interaction by minimizing the value of market transactions. a comprehensive study of the field of interdisciplinary relations of the main categories, the study of the peculiarities of their use in the process of formation of social networks and interpersonal norms and values is the basis for the periodization of the main stages of development of techniques and means of regulatory influence on the phenomenon of sc by the state: the formation of approaches to understanding the essence of the phenomenon; in-depth study of manifestation forms; expanding the list of constituent elements; development of the theory of functioning at the micro, mesoand macroeconomic levels of the economy; development of innovative means of development regulation in order to maximize the contribution to the welfare of the population. the basic model of regulation of micro level’s sc involves the use of means of authoritarian influence on the formation and strengthening of the structural, cognitive and relational component of egocentric social networks. two-component model of functioning of sc of macroand mesoeconomic level as a set of norms, values, relationships, beliefs of the individual that facilitate joint activities, perception of assistance and support from the outside, reciprocity, willingness to share resources, trust between participants involves the use of means of regulatory influence on identified components of institutional actors of the public three seas economic journal 78 vol. 1, no. 4, 2020 sector (representatives of central executive bodies and local self-government), as well as stakeholders of the public sphere of mixed national economy with the separation of the structural and cognitive components in the functioning of social exclusive (bonding) social capital is a microeconomic social network of closely and strongly related individuals of egocentric homogeneous groups, which are formed in order to maximize the relief of the lives of community members in the everyday sense (“getting by life”) (rui, covert, stefanone & mukherjee, 2014). sociable, inclusive (supporting) sc is a mesoeconomic social network of remote individuals, poorly connected through, at the same time, more significant than family, business ties between members of autogenic groups, which is used to advance in life (“getting ahead”), organizing a channel of “social elevator” (villalonga-olives, adams & kawachi, 2016). linking sc is a polystructural sociocentric network of individuals united within the national economy who occupy different positions in hierarchical structures, whose membership promotes access to the benefits of personal/social well-being with the assistance of official institutions (carillo alvarez, riera-romani, 2017). the organizational and economic mechanism of regulation of the development of scne is defined as a structured system of behavioral aspects of the activities of subjects of public relations of the means of managerial and indicative influence on the configuration of regulatory objects subordinated to the purpose of implementation of social capital functions (kanso, 2019). the complex nature of the organizational and economic mechanism is ensured by the inclusion of a number of substantive blocks in its composition. it was established that the potential ability of sc to maximize prolonged welfare reflects the established proportions between the attracted volumes of physical, natural, human, social, residual capital and the actual level of consumption of the population, and kinetic – formed under the influence of impulses of innovative social investment (koval, prymush, popova, 2017). the purpose of the publication is to summarize the practice of quantitative assessment of the current state and trends in the change of scne of ukraine on the basis of the use of the index system, which comprehensively take into account numerous aspects of its functioning as a basic factor in ensuring stable competitiveness of the national economy (ne), high level of human development, key conditions for prosperity and wellbeing of all segments of the population. 2. methodology as an empirical base of the comparative positioning dynamics of the formation of scne of ukraine, the world value survey (wvs-6) (world values survey: round six, 2014) data were adopted. given that the wvs-6 studies contain a significant – 371 – number complexly structured in 13 domains of indices, for sufficient to formulate conclusions, the researchers limited themselves to the family, informal and formal types of social capital, as well as its social and structural dimensions. in the process of choosing the optimal list of indicators, the need for a clear distinction between structural, social (relational) and cognitive dimensions of the nature of social capital is taken into account. structural measurement, as envisaged by the purpose and logic of the research, describes the existence of social connections between different institutional actors of the national economy and their characteristics (density, hierarchy), social (relational) (reflects the settings and sensations within existing connections, cognitive) representation, interpretation, system of values and codes, language shared by participants of social networks (cn) and which are most difficult to operate, because they relate to the general cultural context (nahapiet & ghoshal, 1998; baklanova, petrova, koval, 2020). in the course of generalization of relative indicators of evaluation of scne of ukraine, the peculiarities of approach, known in scientific circles (pichler & wallace, 2007), are taken into account, which is based on the results of calculating the indicators of the euro barometer and the qualityof-life research. to summarize the peculiarities of scne formation in ukraine, a combination of wvs6 research results and approaches to the construction of quadrants of the inglehart-welzel matrix (wvs-6, 2014) was applied. 3. results the results of the benchmarking of indices and analysis of the actual level of scne are based on data about factors of current level of the national economy’s formation for individual countries in the process of ensuring in the strategic perspective the un sustainable development goals – measuring social capital (sc) for sustainable development goals (sdg) (sustainable development goals, 2020). the latest publications include data on the actual value of 9 scne indices – human development, world giving, happy planet, corruption perception, global peace, global competitiveness, legatum prosperity, social progress, enabling environment, as well as gdp per capita according to the imf (according to ppp) and sdgi bertelsmann to determine the current level of sustainable development of 193 countries, including 20 from the list of the most stable (table 1). global sustainable competitiveness index is determined taking into account the direct impact of scne on stabilization of the environment of the ne’s development and saving the nation’s natural capital (table 2). three seas economic journal 79 vol. 1, no. 4, 2020 table 1 top 20 most stable countries in the world in the measuring sc for sdg country index (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) rank denmark 11 16 2 2 5 10 1 2 4 9 1 6 1 norway 1 × 3 7 20 16 2 1 5 2 8 6 2 switzerland 2 13 6 4 11 4 3 3 7 1 17 6 3 iceland 6 × 4 11 1 24 10 6 8 6 14 8 4 new zealand 14 3 8 1 2 18 7 7 1 24 11 9 5 the netherlands 10 8 5 8 17 6 6 11 6 14 9 9 6 finland 12 25 1 3 14 11 5 4 11 17 3 10 7 sweden 8 29 7 4 18 9 4 5 9 12 2 10 8 canada 13 6 9 12 6 12 14 9 2 21 20 11 9 germany 4 18 17 9 22 3 8 8 25 18 6 13 10 australia 6 4 11 12 13 14 17 12 3 13 38 13 11 ireland 3 5 16 18 12 23 12 14 12 10 19 13 12 austria 20 15 10 12 4 22 13 20 14 15 5 14 13 great britain 15 7 15 12 45 8 11 13 15 26 13 16 14 singapore 9 46 34 4 7 2 16 27 × 11 66 20 15 belgium 17 42 18 17 18 21 22 19 16 19 16 20 16 the usa 15 1 19 23 128 1 18 26 10 7 25 25 17 japan 19 107 58 20 9 5 19 10 × 27 15 26 18 spain 25 58 30 30 32 26 25 17 22 33 21 29 19 chile 42 41 26 26 27 33 37 37 21 60 31 35 20 ukraine 88 101 133 126 150 83 96 80 46 131 41 98 21 source: own calculation notes: (1) – human development (human development reports, 2019); (2) – world giving (world giving index, 10th edition, 2019); (3) – happy planet (helliwell, layard, sachs, 2019); (4) – corruption perceptions (corruption perception index, 2019); (5) – global peace (global peace index, 2019); (6) – global competitiveness (global competitiveness index 4.0, 2018); (7) – legatum prosperity (the legatum prosperity index, 2019); (8) – social development (social progress index executive summary v.2.0, 2019); (9) – favorable environment (enabling environment index, 2013); (10) – gdp per capita (ppp) (gross national income per capita, 2019); (11) – sdgi bertelsmann (the sdg index, 2019); (12) – average rank; (13) – position in the overall rating table 2 positioning of scne in the process of determining gsci of ukraine gsci component elements year 2012* 2013* 2014 2016 2017 2018 2019 natural capital ukraine 35.3 126 31.6 149 44.6 103 44.6 95 43.9 92 44.0 85 45.2 80 on average** 40.7 51.0 46.6 45.4 44.1 42,9 43.7 effectiveness of management ukraine × × 47.6 71 46.9 87 47.2 100 47.1 100 on average × × 45.6 46.3 49,3 48.6 intellectual capital ukraine 37.3 86 39.8 76 44.6 56 50.3 35 39.2 80 47.8 35 on average 38.1 38.6 37.5 37.4 37.2 35.5 intensity and efficiency of resources use ukraine 43.5 106 39.5 147 31.7 145 34.4 156 39.5 152 42.2 147 on average 46.9 52.9 41.0 42,6 46.6 49.0 social capital ukraine 48.5 48 53.7 42 42.4 75 46.5 54 45.3 57 41.3 87 on average 41.1 29.2 40.5 39.2 40.2 40.5 stable competitiveness ukraine 40.6 74 (186) 41.0 102 (176) 42.2 83 (176) 44.6 64 (180) 43.0 91 (180) 44.7 74 (180) on average 39.5 41.9 41.8 42.5 43.2 43.3 source: the global sustainable competitiveness index, 2019 notes: numerator – the value of the indicator; denominator – rank of indicator;** is the average for the set of evaluated countries; 2012/2013* – estimated indicators – natural capital; intensity and efficiency of resource use; stable innovation and competitiveness (the data is given in the line “intellectual capital”); social cohesion (the data is given in the line “social capital”). three seas economic journal 80 vol. 1, no. 4, 2020 the list and content of specific indicators used to evaluate scne continues to be constantly transformed. since 2012, a kind of application for measuring the value of skne is found in gross national happiness (gnh) indicators. to measure it, a methodology for layout on 9 domains of 33 indicators of psychological well-being was developed. in list there are: health; time usage, education, cultural diversity and sustainability; good governance; viability of communal formations; environmental diversity and sustainability (arsawan et al., 2020); living standards (helliwell, layard & sachs, 2019). according to the authors of this study, for an effective effect on the level of happiness and misfortune, it should be borne in mind that it is formed on the basis of the genetic characteristics of each individual. in addition, the person he or she becomes depends on the interaction of these genes with the environment he or she encounters. together, genes and the environment define the main features of human life – both those that are very “personal” (mental and physical health, family experience, education, gender, age) and those that are recognized mainly as “external” (income level, work, community living, quality of management, prevailing values, religion). and these features, in turn, determine the well-being of a person (petrova et al., 2020). although work is an important part of social existence, human relationships are much wider and include relationships with family, friends and the community. this is obvious, because in the maslow pyramid, the need for love and belonging arise immediately after the basic physiological needs and safety. that is, the sources of personality happiness include a set of social interactions through which people enter into mutual bonds. accordingly, the quantity and quality of social relations in the community should be treated logically and logically as sc. the legatum prosperity index (lpi) (table 3) enters its features in the calculation of scne. the basis of ukraine’s rating is based on weight-equal drivers, which characterize: social cohesion; communal and family networks as a form of volunteer activity; assistance to those in need; philanthropy; perception of social assistance; trust in others; level of marriages; religious tolerance. global competitiveness index 4.0 is formed according the world economic forum methodology by following list of indicators: favorable environment, human capital; market components; ecosystems. direct assessment of the country’s scne (indicator 1.05) is carried out by the mentioned international institution in the process of calculating the element “institution” of the first direction of calculations “favorable environment”, starting from 2018. the method of quantitative determination of the indicator is linear regression, and the regressors are: the actual number of years of study, the corruption perception index, general trust among the population, as well as the level of gdp. the world giving index allows you to evaluate each country in three indicators – helping needy strangers; charitable donations; time devoted to volunteer activities (world giving index 10th edition, 2019). it uses the opportunity to take into account gender and age aspects of philanthropy (table 4). the calculation of the skne index as part of the world giving index, which shows the importance for different countries of indicators of the quality of economic development, functioning environment, quality of public administration (bukanov et al., 2019), functioning of the education system, health care, protection and safety, personal freedom, the formation of skne and the quality of functioning of table 3 rating of ukraine in the process of calculating lpi indicators metrics year 2009 2011 2013 2015 2017 2018 2019 total number of countries in the ranking 114 110 142 149 167 cumulative rating of the country 69/86* 74 64 70 112 111/99* 96 governance 98 99 121 120 130 129 81 security 58 56 55 54 125 128 145 personal freedom 71 98 107 91 95 90 85 social capital 73 37 36 41 115 119 148 quality of economic development × × × × × 97 99 environment of business development × × × × × 106 71 education × × × × × 43 37 health × × × × × 137 114 natural environment × × × × × 105 127 investment environment × × × × × × 113 development of market infrastructure × × × × × × 87 living condition × × × × × × 69 source: (the legatum prosperity index, 2019) notes: according to lpi data listed according to the 2019 methodology three seas economic journal 81 vol. 1, no. 4, 2020 the environment, is based on the use of 104 indicators: gallup world survey, world development indicators, international telecommunication union, fragile states index, world governance indicators, freedom house, world health organization, world values survey, amnesty international, center for system peace. in the end, bertelsmann stiftung’s transformation index (bti) comprehensively assesses political and economic transformations and the level of political leadership in ukraine using criteria grouped by indicator groups (table 5). additional information on the state of formation of individual elements of scne of ukraine can be obtained in case of settlements on the method of calculating freedom index; economic freedom of the world; compliance summary index esf; s&p (standard & poor’s ratings services, 2019); moody’s (moody’s investors service, 2019); world bank governance indicator – voice and accountability (va), government effectiveness (ge), regulatory quality (rq), rule of law (rl), control of corruption (cc); world factbook (world factbook, 2019); freedom barometer for europe. table 4 quantitative assessment of ukraine’ skne in the process of wgi indicators’ calculating metrics year 2011 2012 2013 2014 2015 2016 2017 2018 2020 index rank 105 111 102 103 89 106 90 81 101 value 26 21 24 23 29 26 29 24 donations % 11 7 8 9 38 26 29 18 volunteer hours 30 20 29 26 13 16 15 19 help strangers 37 36 35 36 42 35 source: (world giving index 10th edition, 2019) table 5 quantitative evaluation of ukraine’ linking social capital in the process of bti’ calculating indicators on 10-point scale year 2010 2012 2014 2016 2018 2019 status index rating of ukraine 37 … … … 36 of 129 41 of 162 the numerical value of the index 6.6 … … … 6.54 72.8 to 70.4 for region in average political transformation (democratic status) sdg trends rating of ukraine … 36 of 129 sdg 1 ↓ the numerical value of the index 6.9 6.1 6.8 6.9 su bi nd ex es statehood 8.8 7.3 7.5 sdg 2 → participation in political life 7.8 6.0 7.8 sdg 3  rule of low 6.3 5.0 6.3 sdg 4 … stability of democratic institution 6.5 5.5 7.0 7.5 sdg 5 → political and social integration 5.8 5.3 5.5 5.8 sdg 6 → economic transformation (market status of the economy) sdg 7 … rating of ukraine … 43 of 129 the numerical value of the index 6.2 5.8 5.7 5.4 6.18 sdg 8 ↑ su bi nd ex es stability 5.5 5.0 5.5 sdg 9  welfare regime 6.0 6.0 6,5 6.5 sdg 10 … private property 5.5 .0 sdg 11 ↓ socioeconomic level of development 5.0 6.0 5,0 sdg 12 … index of government rating of ukraine … 49 of 129 sdg 13 ↑ the numerical value of the index 5.4 4.6 4.3 5.41 sdg 14 … su bi nd ex es subordinates to management procedures 6.0 5.7 4.7 5.7 sdg sdg 15  resource efficiency 5.3 4.0 4.7 5.3 sdg 16 ↓ development of cooperation 5.8 5.0 5.4 5.8 sdg 17 … international cooperation 7.0 6.7 6.0 6.7 7.0 source: (the sdg index, 2019) three seas economic journal 82 vol. 1, no. 4, 2020 4. discussions cross-cultural research, regardless of the fundamental principles on which they are carried out – strategic or rational concepts (hardin’s encapsulated interest; stolle’s past experience, confidence in security (“assurance of security”) yamagishi, rosenberg’s “faith in people”); concepts of group identity (tejfelturner categorization theory, decategorization/ personalization/intergroup differentiation/universal identity of gertner-dovidio-howlett); concepts of moral norms (uslaner) – do not give an unambiguous answer to the question, which in quantitative terms is the level of generalized trust in the country, the contribution of this indicator to the formation of the level of well-being of its citizens. this is due to a wide range of reasons that explain the differences in approaches to understanding the term “majority” in different cultural traditions (ranges from in-group to out-group), differences in public trust indicators (absolute “trust in most people” as opposed to “trust in people, which you meet for the first time”), between the worldview “trust settings”, the norm that is assimilated in the process of socialization and remains unchanged throughout life, real behavior, which is determined by a situational assessment of the level of reliability of others, determination of the degree of risk, the likelihood of positive/negative consequences. 5. conclusions for scne of ukraine is inherent in the simultaneous deep commitment of the domestic community to the values of survival (at the level of russia, moldova, romania, albania, bulgaria) in combination with a high level of confession of secular rational values (at the level of lithuania, south korea, the czech republic, germany, denmark). stronger and more reliable, such that the “moral trust” to the members of outgroups, which is inherent in more developed countries (sweden, norway), in which trust in strangers and the majority at the same time is relatively high, is contrasted with the mobile, more plastic and specific “rational trust” in the members of in groups (tinidad and tobago, burkina faso, ghana, south africa, mali, france). this indicates the lack of cultural universality of this phenomenon. an outgroup that intensifies in a situation of tension or conflict may be interpreted as an indicator of tolerance. ukraine is characterized by a specific development of trust categories both at the level of ingroups and outgroups, and the level of “moral” and “rational” trust in dynamics. based on the above data, ukraine has a low level of direct interpersonal social trust (the level of distrust/caution in relations practically exceeds it three times) combined with a low level of trust in political institutions. the necessary information for the assessment of the environment and the general level of development of the skne of ukraine is contained in the already mentioned international indices, which in their aggregate comprehensively characterize the subject of our research. acknowledgement the paper was supported by erasmus+ project № 609944-epp-1-2019-1-lt-eppka2-cbhe-jp “enhancing capacity of universities to initiate and to participate in clusters development on innovation and sustainability principles”. references: arsawan, i. w. e., koval, v., rajiani, i., rustiarini, n. w., supartha, w. g. & suryantini, n. p. s. 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(2016). the development of a bridging social capital questionnaire for use in population health research. population health, vol. 2. doi: 10.1016/j.ssmph.2016.08.008 world factbook (2018). central intelligence agency. available at: https://www.cia.gov/library/publications/ download/download-2018/index.html world giving index 10th edition (2019). charities aid foundation. available at: https://www.cafonline.org/ about-us/publications three seas economic journal 9 vol. 1, no. 3, 2020 corresponding author: 1 zhytomyr polytechnic state university, ukraine. e-mail: vygng@ukr.net orcid: https://orcid.org/0000-0001-7129-6169 researcherid: b-2434-2018 2 zhytomyr polytechnic state university, ukraine. e-mail: alenavygovska@gmail.com orcid: https://orcid.org/0000-0002-7905-0494 doi: https://doi.org/10.30525/2661-5150/2020-3-2 international financial support for public transport at the regional level nataliia vyhovska1, olena vyhovska2 abstract. the purpose of the article is to assess the practice of attracting international sources of financial support for public transportation at the regional level, to identify problems with insufficient effectiveness of the implementation of international financial support projects and the formation of solutions at various system levels. it is determined that the main sources of financing of transport entities are self-financing, lending, state and international financial support. the preconditions for the use of credit funds of international financial donors for financing public transport and the conditions for lending to transport entities are described. peculiarities of public transport lending by way of implementation of the project "ukraine urban public transport" are analyzed, and it is highlighted that its purpose is to realize the strategic priorities of the transport industry, institutional reforms and informatization. it is clarified that the responsibility for the performance gaps under the project, defined in the assistance agreements, is allocated to the city councils and / or public transport entities. an assessment of international financial support is made and the reasons for short receipt of funds by transport companies from international financial organizations are specified. the amount of losses on incomplete implementation of the plan of expenditures and provision of credits for the realization of projects in the transport sector of ukraine is clarified. inefficiency in finding additional sources of financing of the project "ukraine urban public transport" is justified due to the impossibility to allocate financial responsibility to a certain project group in case of delay in non-implementation of the project plan at all levels. the organizational and financial mechanism of providing international financing for urban public transport by the european investment bank is proposed. it is argued that the mentioned mechanism, in contrast to the existing ones, identifies control points for the flow of financial resources, which provides an opportunity to suggest ways to intensify control activities by observers of the european investment bank and the public. the main disadvantage of receiving financing from the european investment bank in the framework of the project "ukraine urban public transport" is identified: obligations to pay vat to the state budget are allocated to the business entity of the transport sector. the problems of inefficiency of implementation of financing sources of international financial organizations (on the example of the european investment bank) are identified and the directions of their solution are offered. the need for coordination of bodies of state supervision at the regional level with the observers' control activity is identified to promote the efficient and meaningful use of international financial sources by economic entities in the transport sector. it is proposed to supplement the state and supranational control with public control functions through the following options for establishing cooperation: 1) interaction of public councils at local self-government bodies with independent observers of international organizations involving auditors of the accounting chamber; 2) control of the process of implementation of the credit project of important infrastructure projects, including public transportation, by public organizations of the regional level. methodology. in accordance with the purpose, the following research methods were used: a systemic approach (in identifying the components of the organizational and financial mechanism of international financial projects and their relationship), methods of comparative and statistical analysis (in assessing the receipt of financial resources from international financial sources). results. the problems of inefficiency of implementation of financing sources of international financial organizations (on the example of the european investment bank) are identified and the directions of their solution are offered. practical implications. improving efficiency of using the international sources three seas economic journal 10 vol. 1, no. 3, 2020 of financial support at the regional level will contribute to the renewal of the rolling stock of urban public transport, ensure its sustainable operation and development, save jobs at utility enterprises, increase revenues of utility enterprises from the provision of transportation services to the population. value/originality. the organizational and financial mechanism for providing international financial support for urban public transport by the eib has been developed, which, unlike the existing ones, identifies control points for grant flows, providing an opportunity to suggest ways to intensify control activities by the eib observers and the public. key words: organizational and financial mechanism for providing international financial support, international financial sources, financial support, transport sector. jel classification: l90, f30 1. introduction the main challenge for the implementation of state-building changes in the transport sector at the regional level is the low financial capacity of local budgets and the complicated regulatory mechanism for obtaining financial support from international financial institutions. the main sources of financing for transport companies are self-financing, lending, government and international financial support. according to statistics in 2019, 584.45 billion uah of capital investments was attracted to the economy of ukraine, 11% higher than in 2018. accordingly, capital investments in transport, warehousing, postal and courier activities amounted to 41.37 billion uah, 7.9% less than in the previous year. in general, investments in the transport sector from all the above sources of financing have reached only 2% of gdp in ukraine, while in the eu – 3% (average for 27 countries), and budget financing in ukraine is at 0.33% of gdp, in the eu – 1.1% (nikiforuk, chmyryova, & fedyai, 2015). these statistics show a permanent short financing of the transport sector, which requires the involvement of international financial organizations to finance infrastructure transport projects. prerequisites for the use of credit funds of international financial organizations to finance public transport are the following: lack of budget funds and the complexity of the mechanism of state support; imperfect mechanism for financing regional development programs; limited access to state guarantees for the implementation of ppp projects at the regional level; insufficient state funding to improve communal infrastructure. the issues of low level of use of provided credit funds by international financial institutions for the development of various infrastructure projects, including public transportation at the regional level, inertia of participants in investment projects at the state level, remain unresolved. 2. international financial donors it is quite common practice for local authorities to raise loans from international financial institutions to finance the development of the transport sector. debt obligations are assumed by local governments on traditional credit terms (maturity, payment and repayment). the european bank for reconstruction and development (ebrd) and the european investment bank (eib) are international donors of financial support for transport entities in the public and private sectors. the source of financing for the development of the transport sector is grant funds provided to finance the development of enterprises in the transport sector (international technical assistance, grants from international donor organizations). the european bank for reconstruction and development is the largest donor of public and private sector lending in developing countries and the main international investor in ukraine's transport sector. loans are provided for a period of 12-15 years with a commission for liabilities of 0.5% per annum, a one-time fee of 1% of the loan amount, a floating rate tied to the average rate of the interbank market of the eu (euribor) + 1% annual rate (kolosova, 2015). in particular, within the project "ukraine urban public transport: modernization of trolleybus transport in zhytomyr", which is implementing with the grant support of the european bank for reconstruction and development with the involvement of an independent international consultant – french company egis internationale and its regional office egis ukraina, on october 15, 2020, the bids of the bidders were revealed on the ebrd electronic procurement platform (ecepp) to determine the contractor for the construction of a new trolleybus line. the european investment bank is another subject of financing the development of urban public transport in 11 cities of ukraine. in 2016, ukraine and the european investment bank signed a financial agreement to provide a loan of three seas economic journal 11 vol. 1, no. 3, 2020 200 million eur to support the project "ukraine urban public transport", which came into force on may 11, 2017. the loan is aimed at upgrading rolling stock, reconstruction and expansion of transport infrastructure of ukraine. the initiator of the project "ukraine urban public transport" is the ministry of infrastructure of ukraine, the borrowers are the ministry of finance and the ministry of infrastructure, through which credit funds are provided to final recipients under loan transfer agreements. within the project "ukraine urban public transport" financial support planning for subprojects is obliged to guarantee the financial sustainability of investments taking into account existing and future adjusted tariffs, co-financing conditions and other grant support to fill the gap of funds. it is determined that such conditions require the search for additional sources of funding from international financial organizations, institutions and donors. the search for additional sources of financial support for the project is entrusted to the ministry of infrastructure of ukraine, the ministry of finance of ukraine and city councils and / or business entities or passenger transport companies. in our opinion, this method of finding alternative participants in project cofinancing is ineffective because the responsibility is scattered, it is impossible to allocate financial responsibility to one of the project groups in case of delay in finding a donor and failure to implement the project plan at the state and regional levels. lending from the european investment bank can provide up to 100% of the financial security of the total cost of the subproject and up to 50% of the total investment of the project "ukraine urban public transport". according to the project, the supervision functions are entrusted to the ministry of infrastructure of ukraine and the ministry of finance of ukraine. the project financing should be supervised once every six months; the process includes the determination of the relevant share of the european investment bank loans. in connection with the signing of the law of ukraine "on ratification of the financial agreement (project "ukraine urban public transport") between ukraine and the european investment bank" no. 2009-viii dated april 12, 2017, the strategic goals and objectives of the ministry of infrastructure are aimed at developing urban passenger transport in the cities of ukraine. indicators of the total amount of credit funds of the european investment bank in 2018 – 6,152,000.0 thousand uah, in 2019 this amount increased by 76,000.0 thousand uah and reached 6,282,000.0 thousand uah, and in 2020 – 5,200,000.0 thousand uah. the data show that the budget program of the ministry of infrastructure of ukraine in 2017 is aimed at implementing measures to support the implementation of ukraine's transport strategy. the amount of budget expenditures/budget allocations in 2017 amounted to 722,150.0 thousand uah. according to the statistics of the accounting chamber in 2017, the selection of funds for the implementation of projects for the development of urban passenger transport in the cities of ukraine was not carried out in full. the reasons for short receipt of funds from international financial organizations are the conclusion by the group of the implementation of subprojects of sub-loan agreements at the end of the year; improper organization of the competition with the selection of objects; delays in the preparation and approval of estimates and other documentation between the working groups of projects. in the period from 2017 to 2019, due to the low and / or missing tranche disbursement from the eib, ukraine would have to pay 142,252 eur as a commission for reserving funds, which was 0.5% per annum and was accrued on the unselected and reserved part of the loan. it should be noted that the responsibility for the failure to achieve the performance indicators set out in the assistance agreements is allocated to the city councils and / or passenger transport entities. the consequence of the unprofessionalism of the local self-government is the reduction of tranches from international donors. accordingly, in 2018 there was a low tranche disbursement for the implementation of investment projects through loans raised by the state from foreign countries, banks and international financial organizations due to the lack of proper organization, and therefore the plan of expenditures and lending for transport projects is not fulfilled. as of the beginning of 2018, the balance of funds from international organizations for the support and implementation of ukraine's transport strategy amounted to 35.3 million uah, or 4.7% of the plan. at the expense of credit funds in 2018, expenditures and crediting for the development of urban passenger transport in the cities of ukraine in the amount of 125.0 million uah were not started. 3. discussion a retrospective analysis of the subproject implementation mechanism reflects the following reasons for the failure of the implementation of three seas economic journal 12 vol. 1, no. 3, 2020 tranches from the european investment bank and the european bank for reconstruction and development: low level of qualification of specialists who implement projects and subprojects of international financial institutions; non-compliance with the requirements of tender procurement of rolling stock according to official agreements between the state and international financial organizations; delays in drawing up official documentary procedures by the local self-government due to corrupt approaches to work with potential beneficiaries; irresponsible attitude of officials to make timely decisions for the timely implementation of investment projects and subprojects. the organizational and financial mechanism for providing international financial support for urban public transport by the eib is presented in figure 1. it is argued that the mentioned mechanism, in contrast to the existing ones, identifies control points for the flow of financial resources, which provides an opportunity to suggest ways to intensify control activities by observers of the european investment bank and the public. consequences of delays in obtaining international financial support from the european bank for reconstruction and development and the european investment bank are: damage caused to the state budget due to low and / or no disbursement in the form of a commission for reservation of funds, which is 0.5% per annum and is accrued on the unselected and reserved part of the loan; non-receipt by the state budget of 10% of the tranche for state guarantees; underpayment by the state budget of 20% of the tranche for vat; slowing down the implementation of the "transport strategy 2030" at the state and regional levels; postponement of renewal of rolling stock of all types of public transport of ukraine. it is determined that the main disadvantage of receiving financial support from the european investment bank under the project "ukraine urban public transport" is the obligations on the independent payment of vat to the state budget allocated to the transport entity. such companies will not be able to receive a vat refund after the purchase of rolling stock, because they do not pay this tax on the sale of one-time tickets. the consequence of this factor is the benefit from the implementation of investment agreements for the state and the coercive nature of obtaining funds from an international donor of local authorities, as local budgets are unable to implement rapid changes in the transport sector at the regional level. priority tasks of ukraine in cooperation with the european bank for reconstruction and development and the european investment bank: to improve the management system at all stages of project implementation through specialized selection of highly qualified managers to project groups; to reduce terms of project implementation between all its stages – from signing of the agreement to realization; to increase the sample of investments under the project from the ebrd and / or the eib by simplifying tender procedures as soon as possible; to increase the number of projects financed by international financial institutions in the national currency; to conduct an overall assessment of the project implementation in terms of their compliance with current legislation and the "transport strategy 2030"; introduction of monitoring and control over the project implementation at all its stages at the regional level; at the legislative level, to provide for the strengthening of responsibility for the timeliness of decision-making by officials at various stages of management. based on the above, the identification of problems of inefficiency in the implementation of sources of financing of international financial organizations (on the example of the european investment bank) and the proposed areas for their solution are presented in table 1. an important problem in attracting international financial sources is the mismatch between the level of the problem that arises and the level of its solution. in particular, the fact that the subject of guaranteeing the repayment of the loan at the regional level are city councils and / or transport organizations owned by the city community. on the one hand, in the context of decentralization, the concentration of financial obligations at the regional level will allow for ongoing monitoring and control of the subproject, on the other hand, the accounting chamber has control over the use of international funds under art. 7 of the law "on the accounting chamber of ukraine": "use of credits (loans) attracted by the state to the special fund of the state budget from foreign states, banks and international financial organizations, implementation of international agreements of ukraine, which leads to financial consequences for the state budget, within the limits related to such consequences "(law of ukraine "on the accounting chamber", 2015). in addition, the use of funds is monitored by independent observers from the european investment bank in accordance with the terms of the loan agreement. three seas economic journal 13 vol. 1, no. 3, 2020 creditor eib international level state level regional level acquisition of new rolling stock major maintenance of rolling stock infrastructure restoration infrastructure development technical assistance planning, supervision contractor areas of use of funds supervision engineer project implementation group project management group acu control transport organization city council technical assistance financing steering committee miu mfu 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 explanation to figure 1: 1 – reporting on the results of project management (implementation); 2 – control by the eib observers figure 1. organizational and financial mechanism for the provision of international financial support for urban public transport by the eib source: development of authors (infrastructure projects of the ministry of infrastructure of ukraine, 2017) three seas economic journal 14 vol. 1, no. 3, 2020 ta bl e 1 id en ti fic at io n of th e pr ob le m s of in effi ci en cy o f i m pl em en ta ti on o f fi na nc in g so ur ce s of in te rn at io na l fi na nc ia l o rg an iz at io ns (o n th e ex am pl e of th e e ur op ea n in ve st m en t b an k) an d off er in g of th e di re ct io ns o f t he ir s ol ut io n n o. th e es se nc e of th e pr ob le m l ev el o f o cc ur re nc e of th e pr ob le m c on se qu en ce s o f t he pr ob le m d ire ct io ns fo r s ol ut io n of th e pr ob le m th e le ve l o f pr ob le m so lv in g c on se qu en ce s o f pr ob le m so lv in g 1 fa ilu re to c om pl y w ith th e re qu ire m en ts o f te nd er p ro cu re m en t o f r ol lin g st oc k un de r offi ci al a gr ee m en ts b et w ee n th e st at e an d in te rn at io na l fi na nc ia l o rg an iz at io ns in te rn at io na l, st at e 1) d am ag e ca us ed to th e st at e bu dg et d ue to lo w a nd / o r n o di sb ur se m en t i n th e fo rm o f a c om m is si on fo r r es er va tio n of fu nd s, w hi ch is 0 .5 % p er a nn um an d is a cc ru ed o n th e un se le ct ed a nd re se rv ed pa rt o f t he lo an ; 2) u nd er pa ym en t b y th e st at e bu dg et o f 1 0% of th e tr an ch e fo r s ta te gu ar an te es ; 3) u nd er pa ym en t b y th e st at e bu dg et o f 2 0% o f th e tr an ch e fo r v at ; 4) sl ow in g do w n th e im pl em en ta tio n of th e "t ra ns po rt s tr at eg y 20 30 " a t t he st at e an d re gi on al le ve ls ; 5) p os tp on em en t o f re ne w al o f r ol lin g st oc k of a ll ty pe s o f p ub lic tr an sp or t o f u kr ai ne . 1) in cr ea si ng th e sa m pl e of in ve st m en ts fo r t he p ro je ct fr om th e e b r d a nd / o r t he e ib b y si m pl ify in g te nd er p ro ce du re s a s so on a s p os si bl e st at e fa vo ra bl e le nd in g te rm s; no a dd iti on al p ay m en ts in th e fo rm o f p en al tie s; fr ee te ch ni ca l a ss is ta nc e w ith d oc um en ta tio n (e xa m pl es o f c os tbe ne fit a na ly si s, te nd er do cu m en ts , e co no m ic ju st ifi ca tio n) . r en ew al of u rb an p ub lic tr an sp or t ro lli ng st oc k en su re s i ts su st ai na bl e op er at io n an d de ve lo pm en t, sa ve s jo bs a t u til ity e nt er pr is es , in cr ea se s r ev en ue s of u til ity e nt er pr is es fr om th e pr ov is io n of tr an sp or ta tio n se rv ic es . 2 l ow le ve l o f q ua lifi ca tio n of sp ec ia lis ts w ho im pl em en t p ro je ct s a nd su bp ro je ct s o f in te rn at io na l fi na nc ia l i ns tit ut io ns st at e, re gi on al im pr ov in g th e m an ag em en t sy st em a t a ll st ag es o f p ro je ct im pl em en ta tio n th ro ug h sp ec ia liz ed se le ct io n of h ig hl y qu al ifi ed m an ag er s t o pr oj ec t t ea m s; st at e, re gi on al 3 pr oc ra st in at io n in c on du ct in g offi ci al do cu m en ta tio n pr oc ed ur es b y th e lo ca l se lfgo ve rn m en t d ue to c or ru pt a pp ro ac he s to w or k w ith p ot en tia l b en efi ci ar ie s st at e, re gi on al in tr od uc tio n of m on ito ri ng an d co nt ro l o ve r t he p ro je ct im pl em en ta tio n at a ll its st ag es a t th e re gi on al le ve l; r eg io na l 4 ir re sp on si bl e att itu de o f o ffi ci al s t o m ak e tim el y de ci si on s f or th e tim el y im pl em en ta tio n of in ve st m en t p ro je ct s a nd su bp ro je ct s st at e, re gi on al 2) c on du ct in g a ge ne ra l a ss es sm en t of th e pr oj ec t i m pl em en ta tio n in te rm s o f t he ir c om pl ia nc e w ith c ur re nt le gi sl at io n an d th e "t ra ns po rt s tr at eg y 20 30 ", re du ci ng th e tim e of p ro je ct im pl em en ta tio n be tw ee n al l i ts st ag es – fr om si gn in g th e ag re em en t t o im pl em en ta tio n; st at e, re gi on al 5 e st ab lis hm en t o f a n ad di tio na l i nt er es t r at e fo r l oc al b ud ge ts fo r t he p ro vi si on o f a st at e gu ar an te e by th e m in is tr y of f in an ce o f u kr ai ne in te rn at io na l en su ri ng th e po lit ic al a nd e co no m ic st ab ili ty o f t he c ou nt ry in te rn at io na l so ur ce : c om pi le d by th e a ut ho rs three seas economic journal 15 vol. 1, no. 3, 2020 at the same time, it is necessary to coordinate the controlling bodies of the state at the regional level with the control activities of the above-mentioned observers, which will contribute to the effective and meaningful use of international financial sources. given the social component of public transport and the importance of infrastructure projects of this level for society, we propose to supplement state and supranational control with public control functions. options for establishing such cooperation may be as follows: 1) interaction of public councils at local self-governments with independent observers of international organizations with the involvement of auditors of the accounting chamber; 2) control by public organizations of the regional level of the process of implementation of the credit project of important infrastructure projects, which include transportation by public transport. the first option involves the development of a plan for coordination of control actions with the definition of the responsibilities of each member of the control group; the second option provides for the possibility for a public organization to have access to financial documents for the implementation of a loan project by the eib observers, which determines the need to form qualification criteria for selecting such an organization and involving its individual members in the control process. the first option of cooperation seems more realistic to us, as the implementation of the second option is associated with the need for a high level of trust in public organizations operating in modern ukraine. for the full implementation of the second option of public control, it is necessary to form a civil society, the foundations of which are just emerging. 4. conclusions it is determined that the cooperation of international financial organizations with local governments and / or public transport entities of ukraine will contribute to the renewal of the rolling stock of urban public transport; ensure its sustainable operation and development; will save jobs at utilities; increase revenues of utilities from the provision of transportation services to the population. the reasons for non-receipt of funds by transport enterprises from international financial organizations are clarified. an assessment of international financial suport is made and the amount of losses on incomplete implementation of the plan of expenditures and provision of credits for the realization of the projects in the transport sector of ukraine is clarified. the organizational and financial mechanism for providing international financial support for urban public transport by the european investment bank is developed, which identifies control points for grant flows, which allows to suggest ways to intensify control activities by observers of the european investment bank and the public. the identification of problems of inefficiency of introduction of sources of financing of the international financial organizations on an example of the european investment bank is offered as well as the directions of their solutions. the need for coordination of bodies of state supervision at the regional level with the observers' control activity is justified to promote the efficient and meaningful use of international financial sources by economic entities in the transport sector. references: european ppp market: 49 deals (2015). european investment bank. available at: http://www.eib.org/ epec/ (in ukrainian) chamber of accounts (2020). conclusions about the results of the analysis of the annual report on enforcement of the law of ukraine «on the state budget of ukraine for 2020». available at: https://rp.gov.ua (in ukrainian) kolosova, v. p. (2015). state budget expenditures planning for implementation of investment programs credited by international organizations. finance of ukraine, vol. 2, pp. 27–38. (in ukrainian) law of ukraine on the ratification of the financial agreement between ukraine and the european investment bank № 2009-viii (2017, april 12). vidomosti verckhovnoi rady ukrayiny. (in ukrainian) law of ukraine on the accounting chamber № 576-viii (2015, july 2). vidomosti verckhovnoi rady ukrayiny. (in ukrainian) nikiforuk, o. i., chmyryova, l. yu., & fedyai, n. o. (2015). prospects for financing transport projects under international financial assistance. ukraine economy, vol. 4, pp. 45–57. (in ukrainian) povna, s. v., sikach, n. m., & ignetenkov, o. l. (2018). public management of modernization in the city's public transport system. public administration: research and development, vol. 1, pp. 39–52. (in ukrainian) three seas economic journal 159 vol. 1, no. 4, 2020 corresponding author: 1 kyiv national university of construction and architecture, ukraine. e-mail: shumak-ljudmila@ukr.net orcid: https://orcid.org/0000-0002-5738-5744 doi: https://doi.org/10.30525/2661-5150/2020-4-23 engineering labour market in construction in ukraine and abroad ljudmila shumak1 abstract. the purpose of the article is to analyse the engineering labour market on the example of the profession of design engineer in modern conditions of the construction market in ukraine and abroad. it is also necessary to study the formation of the integrated view of the structure, state and dynamics of the labour market in design enterprises; qualification requirements for engineers; compliance of the vocational education system with these requirements. design is a type of labour activity in construction as a branch of professional activity. the article contains statistical indicators of wages that characterize the profession of design engineer, and innovative activities of design enterprises. the indicator of the level of innovative development of design enterprises is the quality of products (projects). one of the main characteristics of design is the price of the product. it includes the customer’s assessment of all other design properties. pricing issues have been and continue to be one of the guiding problems of the country’s construction industry, including design and the salaries of design engineers. methodology. the design market in ukraine has a situation that reflects the overall state of the construction industry. the development of this type of business and its participants is differently influenced by many factors. project market participants in ukraine can be classified: by the form of ownership – state departmental institutions and commercial structures; by the volume of work – design enterprises and design institutes that act as general designers, who mainly perform all stages of the project. architectural workshops, mainly specializing in the stages of “sketch project” and “project”; design departments at the construction and assembly organizations performing stages “working design”, “working documentation”, separate sections of projects or only detailing for production. there were about 70 design enterprises and about 200 architectural workshops in kyiv in 2016, according to the association of design enterprises. the potential of ukraine as a “technical” state, that is able to solve complex problems and generate complex solutions and products with high added value, is due to the potential of the educational field of technical direction. accordingly, in 2016 in ukraine, the relative number of graduates of technical specialties was 2 times more than in the uk or poland, namely, in european countries, thousands of people: ukraine – 130; france – 105; germany – 93; turkey – 75; great britain – 71; poland – 66; spain – 56; italy – 48; romania – 39. in 2015-2016, training in the fields of construction specialties in ukraine was carried out by 49 higher education institutions. today, one of the shortcomings of education is the lack of modern curricula; technical fields are getting excessively humanitarian and detachment from practice, in particular, the application of european standards. some western academic subjects are not taught in ukrainian universities at all, which reduces the competitiveness of graduates. certification of responsible executors of design works in construction in 2012 was a significant step towards the liberalization of the market of design services. the responsibility of engineers was personified and strengthened, but at the same time their object and financial possibilities were increased. as of december 2015, more than 22,000 design engineers have been certified in ukraine. it can be stated that for the period 2016-2019, a fairly developed market of design services has been formed in ukraine. its key features are the attraction to large cities, diversification by specialties and grounds on the existing, including the soviet, experience, as well as concentration and duplication of functions, in particular, design institutes by the commercial sector, etc. significant potential is due to intellectual capacity, diversity of tasks and the accumulated practice of ukrainian designers, which provides certain advantages in the international market of design services. today, the customer is moving away from design technologies, which means that the designer’s work must be built in such a way that the customer understands the need for investment at the design stage of the facility, taking into account further operation. the lack of design and the need to revise salaries affects the value of real estate. the lack of engineers affects the organization of construction and the market as a whole. increasing the salaries of design engineers, creating more favourable working conditions lead three seas economic journal 160 vol. 1, no. 4, 2020 to an increase in the cost of construction work from 9 to 15%. understanding the difficulties faced by the design industry, it is logical to think about the ways to overcome them in the near future. conclusion. nowadays, during the covid-19 pandemic, the analysis of the engineering labour market in construction allows to understand the innovative activity of the project enterprise and to mark the course of further development of the market of design services in ukraine. reducing unhealthy competition among designers is possible due to new approaches to work aimed at optimizing and improving the performance of design companies. stories of design engineers having to leave their favourite profession to make a living are a thing of the past. now it is a prestigious and profitable speciality. to be relevant in the profession, you must, first of all, learn foreign languages, read technical literature in english. self-education, i.e. the ability to independently search and analyse information, to develop oneself as a specialist, is of great importance. high erudition is a quality possessed by the soviet-era engineers and often lacking in many modern design engineers. at the same time, it is of great importance because the building is a single organism, and the design engineer must understand not only construction, but also related fields. the main feature that distinguishes a design engineer is a certain mindset. and the work must be highly paid for this. considering the issue of the engineering labour market in ukraine, it is safe to say that there are temporary professions that are in vogue, and there are those that will always be in demand, and the profession of design engineer is one of them. key words: engineering labour market, design engineer, salary, project services, innovation activity, vacancy. jel сlassification: j20, m5, l74, n60, e20, f65 1. introduction all designers, both in the field of capital engineering, as well as in the sphere of construction are related with a single regulatory base (standards, norms, instructions, etc.) with some specialization and direction. with no exception, all the designers are the creative workers of the various professions. depending on the type and purpose of objects design engineers are divided into architects, engineers, technologists, constructors and artistic constructors or designers. creativity, which determines the creative nature of the work, is an integral part of their professional thinking. the ability to invent, i.e. to accept new, unconventional and original design decisions, is defined by the ability to work creatively. the level of creativity includes in its orbit all the spiritual and mental powers of the master and is the highest level of the development of the mindset. all of that has to be paid well and bring satisfaction from the done work. the article aims to demonstrate the assessment of the financial stand of the design engineer of the design enterprise in the period of the economic crisis in ukraine and in a number of the foreign countries. expansion of the research provides the idea of the dynamics of vacancies and salaries for engineers of design enterprises in a specific economic context. 2. influence of crisis on the profession “design engineer” 2020 is not just the year of the covid-19 pandemic, but also a crisis with all the consequences. coronavirus has sent tremors through the labour market among the design engineers – in ukraine for one vacancy there are already 11 unemployed candidates. according to recent data, there are three times more people looking for work only in kyiv, than in 2020. certain design enterprises are on the verge of survival. investors that are always expecting a possible market collapse have not been ready for such a course of the events, but they even managed to take advantage of that. the covid-19 pandemic has affected the sphere of investment from the point of view of the fall of assessments on the quality projects. the quarantine has transformed the engineering labour market. the speed of making decisions and innovation implementation in the conditions of quarantine has grown steadily. design enterprises have been forced to develop new procedures and launch new solutions in a short term. the leading tendency of the current engineering labour market can be multiplied by the growth of the newest options of remote work. a lot of design engineers have good performance even while working at home. the main quality of a modern design engineer is a sense of responsibility. 3. review of salary statistics of the profession “design engineer” in ukraine today, the average salary of a design engineer per month in ukraine is 12,663 uah. as of february 18, 2021, 84 positions for design engineers have been opened in ukraine. for 32.1% of open positions, employers have indicated a salary of 13,100+ uah, 16.7% positions with a salary of 7,100+ uah, 14.3% positions with a salary of 9,100+ uah. the number of positions in the profession “design engineer” by salary ranges in ukraine is as follows: salary/number of vacancies: 1,100 uah + / 2; 3,100 + uah / 1; 5,100 + uah / 5; 7.100 + uah /14; 9,100 + uah / 12; 11,100 + uah /6; 13,100 + uah / 27; 15,1 + uah / 5; 17,100 + uah / 3; 19,000 + uah / 9. over the last 12 months in ukraine the level of the average salary of the design engineer has been: february 2020 – 11,039 uah; march 2020 – 13,534 uah; april 2020 – three seas economic journal 161 vol. 1, no. 4, 2020 13,840 uah; may 2020 – 13,872 uah; june 2020 – 13,106 uah; july 2020 – 11,516 uah; august 2020 – 11,623 uah; september 2020 – 13,508 uah; october 2020 – 15,970 uah; november 2020 – 11,381 uah; december 2020 – 10,800 uah; january 2021 – 11,772 uah. as of february, 18, 2021, the largest number of positions for design engineers has been opened in kyiv oblast. in the second place there is zaporizhzhia oblast, and ternopil oblast is the third. positions “design engineer” in the regions of ukraine are distributed as follows: kyiv oblast – 123 positions – 6%, zaporizhzhia oblast – 98 positions – 4.8%, ternopil oblast – 98 positions – 4.8%. accordingly, the following indicators are obtained: ivano-frankivsk oblast, kirovohrad oblast, khmelnytskyi oblast, crimea, luhansk oblast, vinnytsia oblast, lviv oblast, chernihiv oblast, volyn oblast, mykolaiv oblast, chernivtsi oblast, odesa oblast, poltava oblast, zhytomyr oblast, rivne oblast, zakarpattia oblast, sumy oblast – 98 positions – 4.8%, kharkiv oblast – 32 positions – 1.6%, dnipropetrovsk oblast – 14 positions – 0.7%, donetsk oblast – 14 positions – 0.2%, kherson and cherkasy oblasts – 3 positions – 0.1%. designers in any field must work with well-equipped information technology, computer systems, and intelligent software. this is a union of designers, both from design bureaus and working in the field of capital construction. recently, the design process is increasingly focused on the changes that must undergo production and society as a whole and less focused on the developed object. the designer must be able to predict some new state on the basis of modern data, which will occur only if predictions are correct. this is the main difficulty in the work of a designer. the final result of the design has to be assumed even before all the means to obtain them are studied from the consequences to the causes, from the expected impact of this development on the world to the beginning of the chain of events, as a result of which this impact will occur. the designer is forced to follow the events in reverse order. during such follow-up, it often happens that unforeseen difficulties arise at one of the intermediate stages or new, more favourable opportunities open up. the nature of the initial problem may completely change, and the design engineer with his or her directions will be rejected to the starting position. it takes a lot of time and money. according to statistics for february 18, 2021, the profession of design engineer is the highest paid in the kyiv oblast: the average salary is 15,196 uah. odesa and dnipropetrovsk oblasts follow it. rating of regions in ukraine by the level of average salary for the profession “design engineer” as of february 18, 2021 distributs as follows: kyiv oblast – 15,196 uah, odesa oblast – 13,961 uah, dnipropetrovsk oblast – 12,928 uah, kharkiv oblast – 12,146 uah, lviv oblast – 11,833 uah, donetsk oblast – 10,500 uah, volyn oblast – 9892 uah, vinnytsia oblast – 9,717 uah, kherson oblast – 9,500 uah, ivanofrankivsk oblast – 9,275 uah. for the current period, private enterprises have appeared in ukraine, which are engaged in the design of individual specialized technical objects. through engineering work carried out by foreign firms, manufacturing plants and other organizations, there are various trends in design. this is due to market relations and business. large-scale work must be carried out using design support systems, also with the adoption of scientifically based decisions and taking into account the use of new technologies. the profession of design engineer is the highest paid in kyiv. the salary level is 14,471 uah. among similar professions in ukraine, the most highly paid is the electrical design engineer. the average salary is 20,245 uah. in second place is an hv design engineer with a salary of 19,000 uah. in the third place there is a fire alarm security system design engineer with a salary of 16,407 uah. next come: hvac design engineer – 16,142 uah, fire protecting design engineer – 15,050 uah, ec&i design engineer – 15,050 uah, highway design engineer – 14,860 uah, leading design engineer – 13,664 uah, gas distribution design engineer – 12,025 uah, industrial/civil construction design engineer – 9,013 uah. a number of inherent difficulties have arisen in the domestic design market today. they are associated with both the economic situation and the quality of the services provided. firstly, competition among design engineers has increased. competition is a healthy market process. during a pandemic, it is due to a decrease in demand for design services. secondly, there is the pricing dumping in the construction industry. this state of affairs does not contribute to the growth of professionalism and quality. thirdly, the trend of consolidation of design enterprises, which has been growing in recent years, speaks of the problems in the design market. legislative requirements for design and survey activities are being tightened, which leads to the liquidation or merger of small survey and design enterprises and clears the way for large enterprises with state participation. the average monthly salary for the profession “industrial/civil construction design engineer” is 16,562 uah. as of february 19, 2021, there are 3 positions open for the industrial/civil construction design engineer in ukraine. for 66.7% of open positions, employers have indicated a salary of 7,400+ uah – 2 positions, 33.3% positions with a salary of 5,600+ uah – 1 position, 0% with a salary of 3,800 + uah – 0 positions. the following change in the level of the average salary for the industrial/civil construction design engineer for the last 12 months is observed in ukraine: july 2020 – 23,955 uah, september 2020 – 10,000 uah, october 2020 – 30,830 uah, november 2020 – 10,025 uah, december 2020 – 18,000 uah, january 2021 – three seas economic journal 162 vol. 1, no. 4, 2020 8,000 uah. the largest number of positions for the profession of the industrial/civil construction design engineer by regions as of february 19, 2021 is opened in kherson oblast. the second place is taken by kirovohrad oblast, and the third is khmelnytskyi oblast. industrial/civil construction design engineer, the dynamics of the number of positions in ukraine for the last 12 months: december 2020 – 1 position, january 2021 – 1 position. in any country, including ukraine, there is specialization in design. for example, the design of objects of the urban civil sphere, metallurgical and machine-building plants etc. the design engineer is a professional craftsman who is guided in the formation of accurate diagrams and plans for various structures. in ukraine, you can successfully find a job in large companies. to do this, you must have experience in design, be familiarized with using special software and applications. high-level specialists are in demand in the country. the remuneration of a design engineer correlates with his or her professional qualities. the key responsibilities of an expert are: formation of projects and accompanying documentation; preparation of data and contracts for work; drawing up detailed plans and schedules; setting clear assignments for contractors; control over the implementation of projects. the devaluation of the hryvnia and the subsequent inflation that occurred during 2014–2015 had a negative impact on the number of orders and the cost of proposals in the construction sector, including design. 4. financing of an engineer in foreign countries in belarus, you must have a wealth of practical experience for successful employment. a skilful design engineer gets good money. professionals earn in various design companies: in minsk – from 1,000 byn per month; in gomel private design organization – up to 1,500 byn / 750 usd, in vitebsk – salary in the range from 1,000 to 2,500 byn / 500 – 1,250 usd. the organization implements orders from private entrepreneurs. in poland, the average salary of a design engineer in 2019 was 8,539 pln per month. the salary of engineers in poland ranges from 4,430 pln (1,135.88 usd) per month (minimum wage) to 10,634 pln (2,726.63 usd) per month (maximum salary). salaries vary between different engineering jobs. average salary of a design engineer in poland in recent years: average salary in 2016 – 7,248 pln. average salaries of engineers in poland 2017 + 4% – 7,516 pln. average salary in 2018 +3% – 7,772 pln. average salary 2019 + 3% – 8,013 pln. the salary of engineers in poland is growing in 2019 based on submitted salaries and reports. salary in 2019 is 3% higher than in 2018. this trend is indicative of slow but steady growth in wages in 2020 and beyond. the average hourly wage in poland for design engineers is 46 pln (11.79 usd). this means that the average person in poland earns approximately 46 pln per hour worked. hourly wage = annual wage ÷ (52 x 5 x 8). hourly wages are wages paid for one working hour. typically, jobs fall into two categories: paid and hourly jobs. for hired work, a fixed amount is paid regardless of the hours worked. hourly wages per hour of work: the above formula is used to convert wages to hourly wages (assuming 5 working days a week and 8 working hours a day, which is the standard for most jobs). the calculation of hourly wages may vary slightly depending on weekly working hours and annual vacation allowance. the numbers above are a good approximation and are considered standard. in poland, engineering salaries are 11% lower than all other workers. for the period of 2019, the average salary of a design engineer in the cities of poland is as follows: gdansk – 7,300 pln; katowice – 6,657 pln; krakow – 8,783 pln; lublin – 6,875 pln; poznan – 7,515 pln; szczecin – 7,084 pln; warsaw – 9,021 pln; wroclaw – 8,545 pln. in the face of tough restrictive measures related to the coronavirus epidemic, the polish government is trying to save the country’s economy, in particular in design enterprises. the country’s council of ministers has prepared the so-called “anti-crisis shield”, i.e. a programme of economic support in the country in the amount of 212 billion pln (approximately 45 billion eur). in italy as of february 24, 2017 the following data id observed. engineering graduates continued to be among the categories most likely to find a job after graduation, with a high level of employment and an average salary of 1,400 eur . they are among the most demanded in the work. research conducted by the national council of examiners for engineering and surveying (ncees), on the inclusion of employing graduates with engineering skills. analysis of post-graduation employment data for one and five years shows an extremely positive picture for graduating engineering classes: one year after graduation, about two-thirds are employed, compared with 55% of all graduates. after a few years, the situation has been improved; the employment rate is exceeded by 88%. the unemployment rate remains one of the lowest among graduates with engineering skills: one year after graduation, it is actually 10.5% (lower than in 2013) versus 20.6% registered among all graduates. unemployment drops to 3.8%. this indicates a situation of full employment and unemployment. average net monthly earnings increased slightly again after a period of gradual decline. engineering graduates in 2010, five years after graduation, earn more than 1,700 eur , which is 300 eur more than the average for all graduates. the average salary of engineering graduates is the highest among all graduates a year after graduation, almost 1,400 eur . after graduation, this leadership remains even after five years, when it reaches more than 1,700 eur . the salary level varies depending on the manufacturing sector in which graduates with three seas economic journal 163 vol. 1, no. 4, 2020 engineering skills do their jobs: in fact, they range from 1,542 eur for those in professional research to almost 1,850 eur for people in the energy sector. in the first quarter of 2019, germany needed 86,300 engineering professionals. the number of open positions has grown by 7-8% annually since 2011. this is a countrywide disaster. the german labour market offers 34,000 job positions in construction for engineers. at the same time, 22 thousand engineers in germany are officially unemployed. the age of workers active in the labour market incentifies the problem. there is no such number of working engineers over the age of 55 in any other country in the eurozone. on average in europe, 15% of workers are people of older age. the situation with young people is even worse. in european countries, about 35% of engineers are under 35 years old, in germany there are only 18%. the german government is taking action. a lot of efforts have been made to replenish the engineering ranks. in 2016, 127,000 new engineers were trained in german universities – three times more than in 2005. but the upward trend in the number of people who are trained in engineering does not cover the ever-growing demand. the german economy is very engineering intensive. in germany, the salary of an engineer in the construction industry is 42,000 eur . an engineer with ten years of experience earns 70,000-80,000 eur per year in germany. design engineers in germany (ingenieurkonstruktion) receive a salary of 3,099-4,743 eur . their main task is to develop and test concepts for new technologies and production processes. in finland, the average salary for design engineers in 2016-2020 has been changed as follows: 2020 – monthly – gross 4,270 eur , monthly – net 3,085 eur , the gap with the previous year is + 1.5%; 2019 – monthly – gross 4.207 eur , monthly – net 3,051 eur , the gap with the previous year is + 3%; 2018 – monthly – gross 4,068 eur , monthly – net 2,976 eur , the gap with the previous year is + 2%; 2017 – monthly – gross 3,980 eur , monthly – net 2,928 eur , the gap with the previous year is + 4%; 2016 – monthly – gross 3,838 eur , monthly – net 2,848 eur . sources of salaries for engineers of different levels and fields of activity in finland are the finnish job portals, as well as the resource kt.fi with statistics from municipal employers. salaries earned by employees in finland usually consist of a base amount determined according to their level in the salary scale and allowances from overtime and other bonuses received on the basis of work performed. below are the earnings of finnish engineers by workplace and specialization, taking into account the proportion of female staff and the final average monthly wage earned net after paying standard taxes. today, in finland, design engineers receive: monthly – gross – 4,483 eur , monthly – net – 3,200 eur . in canada, engineers are one of the most soughtafter professions. the average salary for engineers can be higher than in other industries. for 2020, according to the official canadian portal jobbank, the average salary for an engineer was about $ 80,000 per year ($ 6,667 per month), design engineer – $ 79,357 per year ($ 6,613 per month), project engineer – $ 82,737 per year, ($ 6,895 per month). in the united states, one of the most sought-after professions that provide a good income is an engineer. skilled workers are valuable, so the wages of engineers in the field of engineering are significantly higher than the average wage in the country. engineering professionals in the united states earn $ 48 an hour, nearly 7 times the minimum and 2 times the average wage for a skilled worker. however, the salaries of engineers in the united states can fluctuate significantly. the level of remuneration depends on many factors, including education – the difference in income between a bachelor’s degree and an employee with an academic degree can be quite noticeable. average salary of engineering graduates: bachelor’s graduate – 86, 000 usd; master’s degree graduate – 96,000 usd; doctoral graduate – 115,000 usd. the salary is influenced by the experience, the level of professional training of the specialist and the region of employment. for example, californian engineers can expect higher salaries than their oklahoma or tennessee counterparts. however, the cost of living in these states will be substantially lower than in california. specialization is important, as the average salary for a design engineer in the united states is highly dependent on the industry. average salary by specialization: production engineer – 80,000 usd; mechanical engineer – 85,000 usd; electrical engineer – 90,000 usd. in the united states, gender pay gap still persists. this is evidenced by the numbers that show how much an engineer earns in the united states. on average, men earn 20-25% more than women working in similar positions. however, this difference is narrowing every year. over the past years, the need for engineers in american companies has steadily increased. the number of vacancies increased by 10%. representatives of engineering specialties are in demand in all production areas, including construction. given the ever-increasing demand, the salary of an engineer in the united states will constantly rise. 5. conclusions according to the survey conducted during the coronavirus crisis in may 2020, about half of the surveyed ukrainian design companies cut their salaries by 20-30%, and 35% of employers planned to further reduce salaries. approximately 65% of the respondents have planned to adhere to the current wage level. despite the severe dip in wages and employment, the labour market is recovering rather quickly. the coronavirus crisis was not originally economic. the engineering labour market in ukraine is beginning to recover from three seas economic journal 164 vol. 1, no. 4, 2020 the crisis. the demand for design engineers is gradually recovering. according to statistics from the four largest recruiting companies, the number of new vacancies has ceased to decline. this positive trend is confirmed by the data of the state statistics service. there was no revolution in the engineering labour market due to the covid-19 pandemic. the data used were: job search site work.ua, personnel portals rabota.ua, hr provider smart solutions, headhunter, ey consulting company in ukraine, international freelance exchange proffstore.com. currently, the ukrainian engineering labour market can be considered an “employer market”. over the past decade, freelance work on individual projects has grown from the lot of creative people into an industry with a multi-billion dollar turnover. freelancing can already be considered as a full-fledged and rather significant part of the ukrainian engineering labour market. remote work is the future. the world is changing. it is difficult to realize how fast the speed of change is. the rate of change increases, the complexity of professional tasks increases. humanity has never rushed so fast before. hundreds of new professions are being created by storms of innovation. they send specialities that seemed to guarantee a comfortable existence ten years ago to the dustbin of history. the knowledge acquired by students becomes obsolete even before they are awarded a diploma. today, the establishment of permanent cooperation with ukrainian design enterprises that already have their offices abroad, as well as with existing foreign design/construction companies is effective. the future of design can only be predicted in the short term. it consists of digital information models, advanced outsourcing and augmented reality technologies. global harmonization of norms and standards is inevitable. specialization of design engineers will gradually lead to the emergence of new directions and to the consolidation of the market in relation to the cost and integration of design technologies. design enterprises are the first to feel changes in the economy. this is due to the fact that the development of demand for design services is largely due to the state and trends of the construction market. ukraine has every chance to occupy key positions in the world market of design services in construction. this article is intended to assess the financial situation of design engineers of design enterprises in construction in ukraine. today winston churchill’s expression “to improve is to change. to be perfect is to change often” is more relevant than ever. references: egorshin, a. p. 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(2018, may 23-24). actual directions of improving the pricing system in the construction of ukraine. materials of the v international scientific and practical conference bim-technologies, methodology and principles of pricing in construction. innovative technologies in the construction industry and their implementation. minsk: belarus. three seas economic journal 102 vol. 1, no. 4, 2020 corresponding author: 1 kharkiv state academy of physical culture, ukraine. e-mail: leonov.yaroslav.2017@gmail.com orcid: https://orcid.org/0000-0001-8837-5744 doi: https://doi.org/10.30525/2661-5150/2020-4-15 modern paradigm of sports policy as ideology of healthy society yaroslav leonov1 abstract. the purpose of the article is to deepen general theoretical concepts to ensure a healthy society and to form an actual sports policy. the article examines the role of the state in the formation of the modern stage of society’s development and the need to create a modern paradigm of sports policy, which should be aimed at a person, namely, to strengthen human capital, which is the basis of any social system. results. undoubtedly, the degree of development of human capital determines the competitiveness of the labour force and the development of the country’s economy, that is, it is the high level of the demographic resource that is the determining factor. this resource is formed from quantitative and qualitative characteristics: economic, social, and cultural capabilities of the country’s population. any loss of human resources, regardless of the reason for it, is not only an indicator of internal political instability but also a problem of a geopolitical scale. this is what leads to the destabilization of the situation in society, weakening it, which in turn can pose a great threat to all mankind. the categories “social capital” and “human capital” are analyzed. it is determined that in the process of formation and development of human capital, it is necessary to take into account the role of social capital in it. it is noted that in the totality of the most common components of human capital, the main place should be occupied by the “capital of health”, since it is health, together with education, that determines a person’s ability to fulfill basic social and economic functions, his or her active participation in the process of achieving not only his or her own well-being but the competitiveness of the national economy as well. thus, the problem of maintaining the health of the nation for any state is one of the most important. health is a natural value in life, both individual and social. at the same time, the essence of the value of health lies in the fact that only with its existence a person can fully realize his or her potential and feel the fullness of life. thus, it becomes clear that it is health that is the core of human capital because existence is impossible without it. achieving these goals involves recognizing the inextricable link between health, community development and poverty reduction. health promotion is fundamental in mobilizing society to achieve this goal through the necessary advocacy measures and appropriate strategies. it is necessary to note that the term “physical activity” is defined as any bodily movement produced by skeletal muscles and which requires energy. the problem of insufficient physical activity indicates that an active lifestyle is critical for health but in our modern world this is an increasingly difficult task. moreover, physical inactivity is not only a health problem; it also carries huge financial costs for health care and the costs of declining productivity. note that at the present stage of development of society, insufficient physical activity is one of the main risk factors for death in the world, while its level is growing in many countries, which increases the costs of non-infectious diseases and affects the general health of the population. people who are not physically active enough have a 20% – 30% higher risk of mortality compared to those who lead an active lifestyle. one in four adult men in the world is not physically active enough, and more than 80% of adolescents lack physical activity. the primary responsibility for preventing physical inactivity-related illnesses rests with the national government, which has a central role to play in these activities, but engagement from all sectors of society, international cooperation and joint action are key elements of success. accordingly, if at the global level there is an understanding that a person can be healthy only with regular physical activity, one should accept this as an indisputable fact and bring it to the consciousness of every person as a truth. value/originality. therefore, it is obvious that this task should be solved at the state level through the development and implementation of national sports policy and providing conditions for the development of the sports industry because a healthy person is the basis of a strong, competitive and prosperous country. key words: sports capital, human capital, social capital, physical activity, health, sports industry, strategic development, government policy, national economy. jel classification: p12, j24, i10, i28 three seas economic journal 103 vol. 1, no. 4, 2020 1. introduction it is well known that an irresistible striving for knowledge and, as a result, the search for truth is inherent in every person by nature. the path to truth is not easy, as there are many obstacles to overcome. however, at the same time, the spiritual value is also necessary for every person. at the same time, any truth is initially perceived by people with strong resistance because this is their psychology. however, as soon as the truth manifests itself and becomes an indisputable fact, it attracts the attention of more and more people. therefore, truth should be at the core of any paradigm. in the modern world, a paradigm is a set of scientific views and fundamental ideas in any area of knowledge, which at a certain historical stage in the development of science are accepted by representatives of the “scientific community ” as real and determine the direction of all subsequent research. in other words, it embodies the undoubted, generally accepted idea about phenomena, processes and events in the studied area of knowledge (sukharev, diadichev, 2012). w hen replacing each other, the paradigms testif y to a broader knowledge of the world. the creation of a new paradigm allows not only to gain knowledge but also to influence a change in the worldview. from the point of view of philosophy, the concept of a paradigm is a model of any kind of human activity, taken as a model. in ancient times, the concept of a paradigm was used to characterize ideas – “samples” of the creation of the world (kirilenko, shevtcov, 2010). the scientific philosophers (immanuel kant, auguste comte, martin heidegger, carl gustav jung etc.) created paradigms based on the knowledge of human existence. in turn, all these paradigms corresponded to the level of historical development of their period. the current stage of development of society requires the creation of a new paradigm, which should be aimed at a person, namely, the formation of human capital, which is the basis of any social system. the degree of development of human capital determines the competitiveness of the labour force and the development of the country ’s economy, that is, it is the high level of the demographic resource that is the determining factor. this resource is formed from quantitative and qualitative characteristics: economic, social, and cultural capabilities of the country ’s population. any loss of human resources, regardless of the reason for it, is not only an indicator of internal political instability, but also a problem of a geopolitical scale. this is what leads to the destabilization of the situation in society, weakening it, which in turn can become a great threat to all mankind. 2. evolution of sports policy development the general theory of economic growth and development of society can be observed in the works of economists of the 19th century: w. petty, a. smith, d. ricardo, k . marx, w. thompson, m. tuhanbaranovskyi, m. kondratiev, j. schumpeter etc. the theory of human capital was formed in the second half of the 20th century and consolidated its position in economics thanks to the work of g. becker, t. schultz, and j. mincer. for example, according to the theory of g. becker, human capital is a stock of knowledge, skills, motivation available to everyone. investments in human capital can be education, gaining work experience, health care and information retrieval. in addition, g. becker made a kind of combination of economic and sociological views on human capital and its elements (becker, 1975). however, the question of the impact of physical activity on the quality of human capital remains relevant. considering the main aspects of the formation and functioning of human capital, it is necessary to take into account the importance of social capital in this process. the most significant contribution to the development of the concept of social capital was made by the french sociologist pierre bourdieu and the american sociologist james coleman, who in their works conducted a deep theoretical analysis of the category of “social capital”, examined the relationship between economic and social capital and substantiated the role of society, family and group in the process of accumulation of social capital. their works indicate that when analyzing the factors influencing the process of formation and development of human capital, it is also necessary to take into account the role of social capital in it (mikhaileva, 2016). in the aggregate of the most common components of human capital, the main place is occupied by “health capital”, since it is health, together with education, that determines a person’s ability to fully fulfill basic social and economic functions, his or her active participation in the process of achieving not only his or her own well-being, but also the competitiveness of the national economy. so, the problem of preserving the health of the nation for any state is one of the most important. the studies of famous scientists can confirm this. for example, g. becker drew an analogy between investing in health capital and investing in other forms of human capital (education capital, training capital, etc.): “one way to invest in human capital is to improve emotional and physical health… health, like knowledge, can be improved in different ways. reducing the mortality of people of working age can improve the prospects of earning money by extending the period during which a person is able to engage in paid work” (becker, 1975). in turn, the american economist michael grossman argued that “health capital is different from other forms three seas economic journal 104 vol. 1, no. 4, 2020 of human capital. a person’s knowledge reserves affect his or her productivity and his or her health stock determines the total amount of time he or she can spend on income” (grossman, 1972). he conducted an empirical study, in which he considered “health as a strong capital that gives access to a full life”, pointing out that “health depreciates with age and can be increased through investment” (grossman, 2000). thus, m. grossman’s model was based on the understanding that human behavior should be similar to an investor who makes a rational choice between what he or she is willing to sacrifice at present to improve their health, to increase their life expectancy in the future. the health component is becoming paramount in modern human capital research. for example, forrester s.v. believes: “the basis of the functioning of human capital at the level of the individual, team (group) and at the level of society (state) is the capital of health. investing in health, on the one hand, determines the very possibility of formation and functioning of human capital, on the other hand, increases its duration. they entail the growth of social production and personal incomes of citizens, have a positive impact on the pace of socio-economic development of the country “ (forrester, verevkina, 2016; diogenes laërtius, 1986; ushakova, nalivaiko, vorontcov, 2017). so it is the “capital of health” that is the basis of human capital, since for many centuries health has been one of the most important phenomena of life that characterizes the quality of human life. different stages of development of society give different characteristics to the concept of health. this is due to certain sociocultural conditions in which the formation of specific types of worldviews took place. understanding of the concept of health is still in the center of attention of researchers from various scientific fields of knowledge. it reflects the fundamental aspects of human life, which makes it necessary to apply an interdisciplinary approach to the consideration of this concept. attempts to define the essence of health were made several centuries before the common era by ancient greek thinkers and philosophers. so, for example, hecato and chryssip noted that health “has predominant value” and “care must be taken about health”. in turn, panethius and posidonius believed that “health is necessary for happiness”. according to the teachings of pythagoras, “health is a virtue, the preservation of the image, and disease is its destruction”. aristotle designated health as “ bodily good, and good is happiness” (bagnovskaia, 2017). the modern era was marked by works in the field of philosophy, medicine, economics, sociology, pedagogy, ecology, which consider the essence of the concept of “health”, its various aspects and social significance, as well as approaches to its study. according to the latest research by scientists, the health period is characterized as: – initially (genetically) given, and then consciously controlled: optimal interaction of internal structures and processes (functions) of the organism, its material and energetic nature; resistance to external aggressive influences; optimal interaction with complementary systems and environments of the surrounding world (boiko, 2014); – harmony of all its components: cosmic, biological, mental (spiritual), and social (zahalna teoriia zdorovia ta zdoroviazberezhennia, 2017); – an integrative characteristic of a person, which encompasses both his or her inner world (integral, multidimensional, dynamic state), and all the originality of relationships with the environment and includes physical, mental, social and moral and spiritual aspects that provide the level of social activity necessary for society, the maximum duration of active life; as a state of balance, a balance between the adaptive capabilities of a person and constantly changing environmental conditions (statut vsesvitnoi orhanizatsii okhorony zdorovia); – dynamic state of preservation and development of psychophysiological functions of an individual, optimal performance and social activity with a maximum life expectancy (health promotion and healthy lifestyles). by the concept of “health”, the world health organization (who) means a state of complete physical, mental and social well-being, and not just the absence of disease and physical defects (global action plan for the prevention and control of noncommunicable diseases). so, health is a natural value in life, both individual and social. the essence of the value of health lies in the fact that only with its presence a person can fully realize his or her potential and live big. thus, it becomes clear that it is health that is the core of human capital because without it the existence of other components is impossible, and there is no more important national task than improving the health of the population. 3. modern paradigms of sports policy the current state of human health is at an insufficient level and this fact negatively affects the world community, requiring the adoption of non-standard management decisions. the issue must be addressed through the development, implementation and global practice of human health promotion. organizational support (strategies, models and methods) of health promotion should focus on all age groups of the population, risk factors, diseases and living conditions and not be limited to the problem of health only. in addition, measures to improve education, community development, policies, laws and regulations are just as important for the prevention of infectious diseases as for addressing the main risk factors for noninfectious diseases (malnutrition, tobacco use, three seas economic journal 105 vol. 1, no. 4, 2020 sedentary lifestyle and alcohol abuse), and to prevent injury, violence and mental illness. achieving these goals involves recognizing the inextricable link between health, community development and poverty reduction. health promotion is fundamental in mobilizing society to achieve this goal through the necessary advocacy and appropriate strategies (hippocrates, 1936; kondrashov, 2010). the question arises: what is it necessary to build a modern paradigm on if it is pivoted on a healthy person? to answer this question, first of all, it is necessary to go several centuries back and turn to the teachings of hippocrates, the famous ancient greek physician and philosopher, who is still considered the “father of medicine”. the ideology of hippocrates indicates that a healthy person should not be based on treatment but on the prevention and prophylaxis of diseases, in particular, leading a healthy lifestyle. this opinion is confirmed by a quote from the book “on the nature of man”: “but when diseases of all kinds are born at the same time, then, without a doubt, the cause of each is the way of life for everyone and treatment should be taken which stands against the cause of the disease ... and changes the way of life, because it is obvious that the kind of life that a person is used to live either in full, or in part, or in one thing, does not correspond to him or her at all. and having learned about this, he or she must change it...” (hippocrates, 1936). it is worth focusing on the fact that, speaking about a healthy lifestyle, hippocrates paid attention to proper nutrition, especially the need for regular physical activity. this statement is formulated in the book “on a healthy lifestyle”: “for those who are engaged in gymnastics, it is useful to run and wrestle in winter, and in summer to wrestle a little bit and not to run at all, but to walk a lot in the cool. those who get tired of running should wrestle and those who get tired of wrestling should run because in this way any part of the body that is tired of work can best of all warm up, strengthen and rest” (hippocrates, 1936). here is the well-known aphorism of hippocrates: “gymnastics, physical exercises, walking must be firmly established in the everyday life of everyone who wants to maintain efficiency, healthy, full and joyful life” (hippocrates, 1936). the ancient greek philosopher diogenes, who was concerned about the excessive consumption of food by people who, in his words, “overate to the detriment of health”, was of the same opinion about a healthy lifestyle, and was also confident that exercise helped to achieve success in life: “a habit achieved by frequent exercise made it easier for us to behave with integrity. you who strove for virtue must be healthy and strong in mind and body. no success in life was possible without exercise; it won everything” (kondrashov, 2010; physical activity). so it should be borne in mind that even in antiquity, special attention was paid to the preservation of health, as a value, the basis of which should not be treatment but the prevention and prophylaxis of diseases through a healthy lifestyle, with a focus on regular physical activity. the concept of “physical activity” refers to any bodily movement produced by skeletal muscles and requiring the expenditure of energy. at the present stage of development of society, insufficient physical activity is one of the main risk factors for death in the world, while its level is growing in many countries, which increases the burden of non-infectious diseases and affects the general health of the population. people who are not physically active enough have a 20% – 30% higher risk of mortality compared to those who lead an active lifestyle. every fourth adult man in the world is not physically active enough, and more than 80% of adolescents lack physical activity (global action plan for the prevention and control of noncommunicable diseases). regular physical activity of the appropriate intensity has significant health benefits: – improves the condition of the muscles, as well as the cardiac and respiratory systems; – improves bone health and functional health; – reduces the risk of developing hypertension, coronary heart disease, stroke, diabetes, various types of cancer (including breast and colon cancer), depression; – reduces the risk of falls (fractures of the hip and spine, etc.); – underlies energy metabolism and maintaining proper weight. the problem of insufficient physical activity indicates that an active lifestyle is critical for health, but in our modern world this is an increasingly difficult task. moreover, physical inactivity is not only a health problem, it also carries huge financial costs for health care and the cost of declining productivity. given that increasing in level of physical activity is a problem not only for individuals, but for the whole society, a multisectoral, integrated approach is needed to solve it, which will be focused on certain groups of the population, taking into account the peculiarities of culture. the primary responsibility for preventing physical inactivity-related illnesses rests with the national government, which has a central role to play in these activities but engagement from all sectors of society, international cooperation and joint action are key elements of success. the main goal of public policy should be to reduce the “burden” of morbidity, mortality and disability caused by preventable and controlled diseases through multisectoral collaboration and joint action at the national, regional and global levels. this will allow the population to achieve high standards of health, quality three seas economic journal 106 vol. 1, no. 4, 2020 of life and productivity in every age group and will positively affect the social and economic development of society. for organizational support aimed at preventing diseases by increasing the physical activity of the population, it is necessary to implement an actual sports policy for the development of society. considering the health benefits that the activities of organizations in the sports industry can bring, let us pay attention to the words of the well-known sports and public figure, the initiator of the organization of the modern olympic games, the french baron pierre de coubertin in his “ode of sport”, who believed that it was playing sports that helped people to fight diseases: “oh sport! you are fertility! you are an obstacle in the way of pernicious ailments that initially threaten people. you are a mediator. you recommend to the suffering, the weak, the sick the best of medicines – yourself. you are an example of your strong, healthy, stately, muscular, hardened, and not amenable to disease adherents, heal the desperate. you heat the blood. make the heart beat faster. you cure ailments. you are the red line in the “health code”. you say: “a healthy mind is in a healthy body!” he paid attention that playing sports should be the prevention of diseases and aimed at human health, and not at causing harm to it: “you contribute to the perfection of man as the most beautiful creation of nature. you are direction. you order to act according to the rules and requirements of hygiene. you hold back from excesses. you teach a person voluntarily, consciously, with conviction to act so that no higher achievements, no records are the result of overstrain, have effect on health“ (pierre de coubertin, 1987). also, it is worth paying attention to the works of biologist, anatomist, anthropologist, physician, teacher peter lesgaft, who was the creator of the theoretical functional anatomy and scientific system of physical education. at the heart of his pedagogical system is the doctrine of the inseparability of spiritual and physical development of man. in his understanding, exercise is a means of both physical, and moral, and intellectual development of the individual. at the same time, it is very important that mental and physical activity should be in full accordance with each other: the whole. he believed that exercise should promote human health, not harm it: “the method of physical education, as well as mental, should not in any way reduce the activity of the body and weaken it – on the contrary, its gradualness and consistency in the application of physical exercises, it must promote the proper development of the body and its health“ (lesgaft, 1953). modern sports policy of many developed countries is based on the understanding that sport is a field of human activity that interests citizens and has great potential for their unification, regardless of age or social background (white paper on sport). at the same time, most people are engaged in sports and health activities in amateur structures. the development of professional sports is becoming increasingly important and equally contributes to the social role of sports. in addition to improving the health of citizens, sport has an educational dimension and performs a social, cultural, and recreational function. sport is a dynamic and fast-growing sector with an underestimated macroeconomic impact and can contribute to growth and job creation. it can serve as a tool for local and regional development, urban regeneration or rural development. sport has synergies with tourism and can stimulate the modernization of infrastructure and the emergence of new partnerships to finance sports and entertainment facilities. in addition, the potential of sports movement, which contributes to the strengthening of physical activity, often remains underutilized and needs to be developed. there is also an understanding that sport makes an important contribution to economic and social cohesion and more integrated societies. all people in the country must have access to sports. therefore, it is necessary to take into account the specific needs of all groups and the special role that sport can play for young people, people with disabilities and people from less privileged backgrounds. sport can also promote the integration of migrants and foreigners into society, as well as support intercultural dialogue. however, sport faces new threats and challenges that have emerged in society: commercial pressure, exploitation of young athletes, doping, racism, violence, corruption, and money laundering. thus, doping is a threat to sports all over the world, undermining the principle of open and fair competition. this is a factor that lowers motivation in sports in general and exposes the professional to unnecessary pressure. this seriously affects the image of sports and poses a serious threat to the health of individuals. corruption, money laundering and other forms of financial crime affect sports locally, nationally and internationally. given the high degree of internationalization of the sector, corruption in the sports sector often has crossborder dimensions. the state sports policy and the development of the sports industry should focus on human health, namely, on the prevention of diseases, which is based on the increase in the physical activity of the population. therefore, the formation of sports policy is associated with the acceleration of the implementation of global, national physical activity and health, appropriate measures to promote the positive effect of increasing the level of physical activity of the population. 4. conclusions the state sports policy should include the following provisions: three seas economic journal 107 vol. 1, no. 4, 2020 1. adoption and application of guidelines on physical activity for health promotion. 2. consideration of issue on establishing a multisectoral committee or similar body to provide strategic guidance and coordination. 3. forming appropriate partnerships and engaging all stakeholders, including governments, academia, civil society and economic actors, to actively engage in promoting physical activity among people of all ages. 4. developing, in collaboration with relevant sectors, policy interventions that promote physical activity in daily life, including through ‘active mobility’, outdoor activities, leisure and sports, such as: – urban planning and transport policies at the national and regional levels aimed at increasing the accessibility, acceptability and safety of walking and cycling, creating appropriate infrastructure; – increasing the volume and quality of physical education programs in educational institutions (from educational institutions for young children to higher education institutions), including ensuring the possibility of physical activity before, during and after official hours of classes; – implementation of programs to support and promote the implementation of initiatives under the slogan “physical activity for all”, addressed to all age groups of the population; – creation and preservation of the built and natural environment conducive to physical activity in schools, universities, enterprises, hospitals, in places where people live, with particular emphasis on creating infrastructure for active means of transportation (for example, for walking and cycling), outdoor activities and games and sports. 5. carry out evidence-based publicity campaigns in the media, social media and at the community level and conduct public service announcements to educate the public about the benefits of physical activity, create incentives for physical activity and promote healthy behavior. to achieve maximum effectiveness and coverage, such campaigns should be carried out in conjunction with supportive measures targeting different populations and organized in specific locations and institutions. 6. promoting the evaluation of actions directed at increase in physical activity for collecting actual evidence on the effectiveness and cost-effectiveness of taken actions. 7. increase in budgetary allocations in accordance with national priorities and taking into account national conditions. 8. finding ways and means to secure adequate, predictable and sustainable resources through domestic, bilateral, regional and multilateral channels, including traditional and voluntary innovative financing mechanisms. 9. actively attracting investments at the national and international levels, strengthening the country’s scientific potential and further stimulating the introduction of innovations in the sports industry. at the global level, there is an understanding that a person can be healthy only with regular physical activity; one should accept this as an indisputable fact and bring it to the consciousness of every person as a truth. this task should be solved at the state level through the formation of an effective sports policy and the creation of innovative and investment conditions for the accelerated development of the sports industry. so it becomes clear that there is a need to form a modern paradigm of sports policy, which should be based on the ideology of a healthy person and a prosperous society. undoubtedly, it is a healthy person who is the foundation of a strong, competitive and prosperous country. references: sukharev, v. a., & diadichev, v. v. 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(in russian) white paper on sport. database european union law. available at: http://eur-lex.europa.eu/legal-content/en/ txt/?qid=1389190214279&uri=celex:52007dc0391 (accessed 17 december 2020). three seas economic journal 54 vol. 1, no. 4, 2020 corresponding author: 1 odesa regional institute for public administration, national academy for public administration under the president of ukraine, ukraine. e-mail: director@oridu.odessa.ua orcid: https://orcid.org/0000-0002-7263-6193 2 odesa regional institute for public administration, national academy for public administration under the president of ukraine, ukraine. e-mail: knyazeva.elena.mail@ gmail.com orcid: https://orcid.org/0000-0001-5625-768x 3 odesa regional institute for public administration, national academy for public administration under the president of ukraine, ukraine. e-mail: tipakhomova@ukr.net orcid: https://orcid.org/0000-0001-9940-1418 doi: https://doi.org/10.30525/2661-5150/2020-4-9 the problem of institutional trust in ukraine and europe: a comparative analysis mykola izha1, olena knyazeva2, tetyana pakhomova3 abstract. the article presents the results of studying the formation of institutional trust, which will help to clarify and, at the same time, raise questions regarding the determination of the level of trust in state and political institutions in ukraine and in modern european countries. in the context of the study, the tasks were considered to identify the factors that influence the formation of citizens’ trust in political institutions, namely: the effectiveness of the activities of political institutions; personal experience of interaction of citizens with representatives of authorities; the level of trust in the state as a whole, which can be transferred to individual state institutions. analyzing the data from the rounds (waves) 1-9 of the european social survey (ess) in 2002–2018, the level of confidence in ukraine’s political and public institutions and in the other european countries is compared. the analysis makes it possible to determine the factors that are present at the supra-individual level (at the country level) and which can influence the public policy of the state. the results of the study can be used to suggest possible measures to increase public confidence in major public institutions. key words: trust, institutional public trust, public authorities, political institutions, level of trust. jel classification: h83, p26 1. introduction despite the efforts of scientists around the world, it is still unknown how long a pandemic associated with the spread of the covid-19 virus will last, how to overcome it and reduce the risks of other crises in the economy, politics, social and other spheres. in order to overcome the crisis, governments in many countries have to take unpopular measures of public administration. the effectiveness of these measures depends largely on the level of trust between the institutions of government and society. the results and depth of the many studies that have already been carried out, the high relevance and variety of the findings, indicate that the problem of public trust in political and public institutions has not lost its relevance, especially recently. it is well known that trust is one of the basic factors that determines not only interpersonal, but also social, economic political relations at different levels of existence and development of society. following the well-known polish sociologist piotr sztompka, we will consider trust in political and public institutions as one of the varieties of public (institutional) trust (sztompka, 2012). in the work, trust is the basis of society (2012), in chapter 3, “varieties of trust”, p. sztompka identifies two main types of trust: interpersonal and social. according to p. sztompka, when we consider trust in institutions and organizations, “we are entering the territory of a special kind of trust, which is defined as public”. school, university, army, church, court, police, bank, exchange, government, parliament, enterprise are the typical objects of this category. the degree of trust that people give to different institutions varies depending on the society and also changes over time” (sztompka, 2012, p. 119). in our view another important form of institutional trust is “procedural trust,” which p. sztompka defines as “trust in institutional practices or procedures based on the belief that compliance will have the greatest effect” (sztompka, p. 119). the three seas economic journal 55 vol. 1, no. 4, 2020 author cites examples from the fields of politics and economics: “trust in democratic procedures (elections, conditions of representation, majority voting), which are recognized as the best ways to satisfy the interests of the largest part of the population and achieve the most reasonable compromises in a conflict of interest situation. in section 8, “trust in democracy,” the author defines trust in the state and its institutions as “public trust or vertical trust, as opposed to the horizontal one existing between citizens” (sztompka, p. 366). the term “vertical” implies that trust exists between partners at different levels within a defined hierarchy, namely, at the levels of power (sztompka, p. 366). it should be noted that in the aspect of research of civil society and the state, modern researchers as the most important distinguish between the problem of trust in public authorities (trust in political institutions) and the problem of the relationship of institutional trust (political of institutional trust) with interpersonal trust (lukin, 2005; terin, 2018). within the framework of the study of political trust, two theoretical traditions of interpretation of political trust have emerged: cultural and institutional. the cultural theoretical tradition of the interpretation of trust is represented by the theories of political culture (baker, 1981; inglehart, welzel, 2005). these theories are based on the hypothesis of exogenous nature of political trust in relation to the political sphere. from a cultural point of view, political trust is the continuation of interpersonal trust, which is formed during the early socialization period and influences further individual evaluations of political institutions. political trust is seen here as a component of social capital, and interpersonal trust (based on the exogeneity of the origin of political trust) is seen as the basis for building political trust (keenan, 1986; jowitt, 1992; hedland, 1999; joyce, 1984; fukuyama, 1995). institutional conceptual interpretations of political trust focus on the endogenous nature of trust and the rationality of trust (i.e. its conditionality by internal political factors related to the political and economic course of government, citizens’ assessment of the level of policy effectiveness in the country). the logic behind this approach is that institutional trust is the consequence, not the cause, of effective political institutions. if political institutions operate effectively, they generate trust, other wise skepticism and mistrust. institutional approaches to the definition of trust are presented in the works of such scientists as rose (1995), newton (1999), mutz (1998), dazgupta (2019), s. skowronek (1982), k . shepsl (2017), and others. to summarize, we can conclude that the following aspects of institutional trust exist, namely: – identification with the values or goals of the institutions (our president, our army, our science etc.); identification with political leaders who lead or represent institutions; – possibility of access to the services (resources) of the respective institute, potential access to it; – pragmatic assessment of the functions performed by the institutes; – illusions, hopes for benefits, protection against threats caused by expectations of institutional dysfunctions; – understanding of the cost of compliance and non-compliance with institutional conditions and requirements, the willingness to minimize the repressive pressure of the respective institute by recourse to resources of other groups, etc. the aim of the study. the purpose of our study is to determine the role of institutional trust in the functioning of public institutions in ukraine and the european countries, to analyze the differences of citizens’ trust in state institutions of different countries, to determine how much the level of citizens’ trust in different countries depends on their individual characteristics. we have tried to identify the key factors influencing citizens’ confidence in political institutions by comparing trends in the level of trust in political institutions in ukraine and europe in the context of the laws that operate in high or low confidence countries. materials and methods. over the last 20 years, a large-scale archive of national and international sociological research data has been accumulated, which allows to solve many research problems. 2. statement of the basic material the european social survey (ess)1 is a unique sociological monitoring project. its organizers received the most prestigious descartes science prize in europe in 2005, the first in its history to receive for the research in the field of the social sciences. dozens of the european countries represented in the project leadership participate in this project, in the committees responsible for the preparation and implementation of the monitoring, in the national coordination structures by the best specialists in various aspects of comparative monitoring sociological research. the uniqueness of the project is determined, first and foremost, by rigorous methodological and organizational requirements, the compliance of which gives reason to believe with certainty that the data obtained in 29 european countries in 2002–2018 open up a real possibility to compare numerous indicators of trust in political and public institutions. ess surveys are conducted according to strict international standards. ess–2002–2019 includes a basic thematic module on various aspects of citizen 1 european social survey // data and documentation [online]. accessed: 4.01.2020. three seas economic journal 56 vol. 1, no. 4, 2020 interaction with political and public institutions. in it, institutional trust and attitudes toward power are measured through the following questions: (1) “please tell us how much you personally trust in the parliament… politicians, police, political parties, the european parliament, the un?”. a scale from 0 to 10 is used for the answer, where “0” means that you absolutely do not trust institutions, and “10” – for the institutions you fully trust; (2) “how satisfied are you with the work of the government of the country?”. to answer the second question, a 10 point scale is offered (from 0 – completely dissatisfied, 10 – completely satisfied) . we decided to verify this statement, based on the results of the european social survey. a confidence index (id) was also used to compare and identify prevailing trends in the european countries in the analysis, which was calculated as an average of the scale from 0 to 10. the empirical analysis begins with a simple description of the averages. although the information given in figures 1-6 is the confidence-based data and not all countries have participated in all rounds of the european social survey, they draw a consistent picture. figure 1 shows a pie chart – radii of institutional and generalized trust, built on the basis of average confidence indicators in each round of the european social research from 2002 to 2018. the diagram clearly shows that the highest level of trust among the countries participating in the project is enjoyed by the police. the average indicator of the level of trust in police for the entire study period is 6 points on an 11-point scale, the maximum level was recorded in 2002 – 6.2 points, the minimum in 2008 – 5.5 (see table 2). the lowest level of trust is enjoyed by political parties and politicians (the average indicator of trust in political parties for the entire study period is 3.5 bp, for politicians – 3.6 bp). confidence in these institutions has noticeably decreased during the 2008–2009 crisis. next, we will dwell on each institute in more detail. parliament. the highest level of confidence of the legislative (representative) branch of state power is most often expressed by citizens of the countries of northern and central europe (see annex 1). the average index of confidence in its national parliaments in norway, switzerland, finland, denmark and sweden for the years 2002-2019 is the highest between 5.9 and 6.4 points. ukraine, poland, croatia and bulgaria belong to the group of countries with a negative index of confidence in the national parliament. the lowest level of population support in europe is used by the ukrainian parliament (data of 2008-2012). as for the dynamics of the level of confidence, according to the study, there are three clusters of countries (figure 1): figure 1. political and public confidence radii according to ess round 1-9 source: authors three seas economic journal 57 vol. 1, no. 4, 2020 the first is that the level of trust has a positive dynamic, namely lithuania, norway, the netherlands, estonia, germany; the second is that the level of trust remains almost unchanged: belgium, sweden, the uk; the third is that the level of trust has a negative dynamic: ukraine, greece, spain, cyprus, croatia. analyzing the nature of citizens’ trust in national parliaments, many researchers point out that a lack of trust is more common in countries with “new” democracies (inglehart, 2005). one of the reasons for the backlog is the insufficiently long term effective functioning of democratic political institutions. how stable is this order? has the result been some kind of random aberration? we tested our results using data from other ess waves from 2002 to 2019 (table 1): sets of leaders and outsiders, despite the fact that the list of participating countries differed by year, intersected and yielded similar results for those countries that hit the intersecting part of the sample. to group countries by level of confidence in national parliaments we used another indicator: the integral trust indicator for national parliaments, which was calculated as the average of all confidence indicators across the country for all the rounds in which we participated. as a result, we got the following picture: denmark (6.4), norway (6.2 on a 10-point scale) lead the parliament, followed by switzerland (6.0) and finland (5.9) [see annex 1]. the group closes with bulgaria (2.3), ukraine (2.6), poland, lithuania (3.2). thus, we can formulate two preliminary conclusions. firstly, countries differ greatly in average confidence in тable 1 trust level. average indicators among all countries (ess round 1-9, mean) round 1 (2002) round 2 (2004) round 3 (2006) round 4 (2008) round 5 (2010) round 6 (2012) round 7 (2014) round 8 (2016) round 9 (2018) trust in country’s parliament 4.9 4.7 4.5 4.2 4.4 4.8 4.6 4.7 4.6 trust in the legal system 5.4 5.2 5 4.8 4.7 4.8 5.3 5.4 5.5 trust in the police 6.2 6 5.7 5.5 5.6 5.8 6.2 6.5 6.4 trust in politicians 3.9 3.7 3.6 3.3 3.2 3.3 3.6 3.7 3.8 trust in political parties 3.6 3.7 3.6 3.4 3.2 3.2 3.6 3.7 3.7 trust in the european parliament 4.7 4.6 4.7 4.6 4.3 4.3 4.1 4.3 4.5 trust in the united nations 5.4 5.3 5.3 5 4.9 5.2 5 5.1 5.1 most people can be trusted or you cannot be too careful 5 5 5 4.8 4.8 5 5.8 5.3 5 source: authors figure 2. dynamics of trust in national parliaments among ess round 1-9 project participants (difference in scores (11-point averages) between the first and last survey) source: authors three seas economic journal 58 vol. 1, no. 4, 2020 national parliaments. secondly, this distribution seems to be quite stable and almost independent of the year of the survey. trust in police. in most european countries, people trust in police more than other political and public institutions (see annex 2). the police confidence index demonstrates that the balance of trust and confidence in almost all european countries is positive. and in countries such as finland (8), denmark (7.8), iceland (7.6) have the highest rate, ie the police in these countries fully deserve the mass trust of citizens. the low police confidence index is observed only in three post-soviet countries – ukraine (2.5), bulgaria (3.7) and the russian federation (3.8). according to the confidence index of law enforcement agencies, ukraine is at the top of the european rating. it should be noted that, compared to the confidence of national parliaments, most countries participating in the ess project have a positive trend. only in two only in two of the surveyed countries – ukraine and israel – did the confidence level drop by 1 point, while in the other four countries with negative dynamics the decline was insignificant (see figure 3). political parties. the confidence rating of politicians is also consistent with the confidence rating of political parties as a whole (see figure 4). as in the analysis of trust in political parties, most countries are characterized by a situation where the majority of citizens express varying degrees of distrust in their countries. outsiders in the level of trust in political parties also stand out in eastern and southern europe: latvia (1.6), bulgaria (1.9), croatia (2.1); the leaders are mainly the states of northern and central europe – denmark (5.4), the netherlands (5.1), norway (5.0) (see annex 3). figure 5 shows a higher level of trust of europeans in the un and the european parliament than in national parliaments. so, the average confidence in the european parliament, though small compared to the confidence in other institutions – 4.4 on a 10-point scale – but there are no significant differences in the indicators across countries. this is the first feature. the second feature is that when considering the ep and un confidence index in dynamics, it can be noted that the number of countries with negative dynamics is almost double the number of countries with positive dynamics, and the other trend is the opposite (see figures 5, 6). from an institutional approach, this fact looks like an unforeseen deterioration in the quality of “exemplary” political institutions. 3. conclusions the results of our empirical study prove that trust in political and public institutions is rationally justified; it is closely linked to the citizens’ assessment of the work of the institutes. institutions that work well build trust – the police, the courts, the european parliament and the un; poorly performing institutions produce skepticism and mistrust – political parties, politicians, national parliament. an empirical analysis of the dependence of the confidence level on the individual characteristics of the respondents in the countries of “democratic transit” and in the high-trust societies has made the following conclusions: 1) institutional trust in these countries is significantly influenced by political and economic factors and, at the same time, is almost unaffected by interpersonal figure 3. dynamics of police confidence among ess round 1-9 project participants (difference in scores (10-point averages) between the first and last survey) source: authors three seas economic journal 59 vol. 1, no. 4, 2020 figure 4. dynamics of trust in political parties among ess 2002-2019 project participants (difference in scores (10-point averages) between the first and last survey) source: authors figure 5. dynamics of confidence in the european parliament among ess 2002-2019 countries (difference in scores (10 point average) between the first and last survey) source: authors trust or the particularities of socialization of individuals. 2) the police and the judiciary stand out from other public institutions. high level in modern developed societies with dense networks of social ties and voluntary associations, where political institutions (courts, police) work in a way that compels or encourages individuals to have a reliable, responsible, trusting behavior, a level of all kinds of trust, which in turn has a reverse effect on political institutions. this is the pattern we have found in “high-confidence societies” to which, for example, modern scandinavian societies belong: denmark, norway, switzerland, finland [аnnex 1-5]. 3) all of the above is about the activities of public institutions to build institutional trust, and is mainly about high-trust societies, that is, western europe. ukrainian society is usually referred to as a lowconfidence society. do high and low trust societies share the same patterns? in our opinion, political three seas economic journal 60 vol. 1, no. 4, 2020 trust (or distrust) is formed mainly by the activities of political institutions (respectively, effective and just, or ineffective and unjust), and people’s social characteristics play a lesser role in this. 4) let us dwell on this conclusion in more detail. w hen addressing the topic of the activities of political institutions, it is natural to question the criteria for their effectiveness. in general, public institutions can be regarded as systems of formal rules or systems of roles. a public institute works effectively if, in the opinion of the participants or observers, it is functional: the “performers” cope with their roles, they meet the expectations placed on them by the citizens. in the english-language literature on institutional confidence, the term performance is used to express the performance of the institute, which indicates the visible, observable effect of the activity. the effect (or inconsistency) of expectations is, in our opinion, the most important in the context of trust in public institutions. of course, the “effectiveness” of public institutions can be measured in any other way that is not related to people’s evaluation. in this study, we proceed from an assessment of the effectiveness of political institutes through a generalized, indirect, positive opinion regarding citizens’ satisfaction with the living conditions and activities of political institutions. 5) thus, the issue of scientific consideration of a number of problems related not only to the definition of the essence and content of the concept of “institutional trust”, but also to the mechanisms of its formation, structure, measurement indicators at the interstate, state and regional and local levels in recent decades , growing relevance. after all, along with the dynamic development of globalization and counterglobalization processes in various spheres of society (world economy, social, humanitarian, environmental, scientific and technical components of sustainable development) increases the nonlinearity of these processes and uncertainty in achieving positive outcomes of institutional change. the need for active formation of institutional trust in the system of public administration. after all, the process of development of the public administration system is a process of self-identification taking into account the positive and negative experiences of the past in changing conditions. figure 6. dynamics of united nations confidence among ess 2002-2019 project participants (difference in scores (10-point averages) between the first and last survey) source: authors three seas economic journal 61 vol. 1, no. 4, 2020 annex 1 trust in country's parliament (ess, mean) round 1 (2002) round 2 (2004) round 3 (2006) round 4 (2008) round 5 (2010) round 6 (2012) round 7 (2014) round 8 (2016) round 9 (2018) index country (mean) delta austria 5.1 4.8 4.9 4.7 5.0 5.4 5.0 0.4 belgium 5.0 4.7 5.0 4.6 4.5 4.9 4.8 4.8 4.8 4.8 -0.2 bulgaria 2.2 1.9 2.4 2.3 2.5 2.3 0.3 switzerland 5.8 5.5 5.7 5.8 5.8 6.5 6.2 6.3 6.4 6.0 0.6 cyprus 5.7 5.6 4.6 4.7 3.7 4.9 -0.8 germany 4.5 4.2 4.1 4.7 4.3 6.0 5.1 5.3 5.1 4.8 0.6 denmark 6.2 6.3 6.4 6.5 5.8 7.7 5.9 6.4 -0.3 estonia 4.2 4.6 3.9 4.2 4.9 4.4 4.5 4.9 4.4 0.7 spain 4.8 5.1 5.0 5.0 4.3 3.7 3.7 3.9 4.4 -0.9 finland 5.8 6.0 6.0 6.0 5.4 7.0 5.6 5.7 5.9 5.9 0.1 france 4.5 4.3 4.3 4.5 4.2 3.9 4.1 4.1 4.2 -0.4 united kingdom 4.7 4.3 4.2 4.3 4.1 5.6 4.3 4.7 4.2 4.5 -0.2 hungary 5.0 3.6 3.4 2.6 4.2 4.7 3.9 4.5 4.6 4.1 -0.4 ireland 4.4 4.7 4.8 3.8 3.7 5.2 3.8 4.5 4.6 4.4 0.2 netherlands 5.2 4.7 5.3 5.6 5.4 6.1 5.2 5.6 5.9 5.4 0.7 norway 5.7 5.4 5.7 5.8 6.0 7.2 6.7 6.8 6.8 6.2 1.1 poland 3.5 2.4 2.7 3.0 3.4 3.7 2.8 3.4 3.8 3.2 0.3 portugal 4.4 3.7 3.8 3.5 2.9 3.5 3.1 3.9 3.6 -0.5 rf 3.3 3.9 3.6 3.6 4.4 4.3 3.7 3.9 0.4 sweden 5.9 5.4 5.6 5.7 6.3 6.3 6.2 5.9 5.9 0 slovenia 4.0 4.1 4.2 4.4 3.0 3.3 4.4 3.3 3.6 3.8 -0.4 slovakia 3.1 4.2 4.0 3.2 3.3 3.6 0.2 ukraine 4.8 2.4 1.7 2.0 1.9 2.6 -2.9 israel 4.7 3.8 3.7 5.6 4.1 4.1 4.3 -0.6 czechia 3.6 3.2 3.3 3.3 4.1 4.0 4.3 4.2 3.7 0.6 greece 4.8 4.7 3.6 2.0 3.8 -2.8 crocia 3.0 2.3 2.7 -0.7 lithuania 2.3 3.3 3.9 3.2 1.7 turkey 6.3 5.9 6.1 -0.4 iceland 5.9 5.8 5.1 5.6 -0.7 luxemburg 5.7 5.8 5.8 0.1 italy 4.8 3.2 4.3 4.1 -0.5 mean (round) 4.9 4.5 4.5 4.3 4.2 4.9 4.6 4.7 4.7 4.5 st.def (round) 0.8 1.0 1.2 1.3 1.2 1.6 1.0 0.9 1.1 1.1 upper limit of norm 5.6 5.5 5.6 5.6 5.3 6.4 5.7 5.7 5.8 5.6 lower limit of norm 4.1 3.5 3.3 3.0 3.0 3.3 3.6 3.8 3.6 3.4 three seas economic journal 62 vol. 1, no. 4, 2020 annex 2 trust in the police (ess, mean) round1 (2002) round 2 (2004) round 3 (2006) round 4 (2008) round 5 (2010) round 6 (2012) round 7 (2014) round 8 (2016) round 9 (2018) index country (mean) delta austria 6.4 6.2 6.3 6.5 7.1 7.4 6.7 1 belgium 5.6 5.8 5.9 6.0 6.0 6.1 6.0 6.4 6.5 6.0 0.9 bulgaria 3.8 3.3 3.9 3.6 3.8 3.7 0 switzerland 6.8 6.9 6.9 6.9 7.0 7.2 7.2 7.2 7.4 7.1 0.6 cyprus 5.6 5.9 5.5 4.9 5.3 5.4 -0.3 germany 6.7 6.5 6.5 6.8 6.9 6.9 6.8 7.1 7.1 6.8 0.4 denmark 7.9 7.9 7.8 7.6 7.7 8.0 7.7 7.8 -0.2 estonia 5.7 5.5 6.1 6.2 5.9 6.1 6.8 7.0 6.2 1.3 spain 5.4 5.9 6.0 6.1 6.3 5.9 6.3 6.6 6.1 1.2 finland 8.0 8.0 8.1 8.0 8.0 8.1 7.9 8.2 8.1 8.0 0.1 france 5.9 5.8 5.8 5.8 5.6 6.1 6.4 6.5 6.0 0.6 united kingdom 6.0 6.1 6.0 6.2 6.2 6.5 6.3 6.7 6.6 6.3 0.6 hungary 4.9 5.2 5.2 4.3 5.1 5.3 5.3 6.4 6.4 5.3 1.5 ireland 6.5 6.6 6.2 6.5 6.5 6.6 6.3 6.2 6.3 6.4 -0.2 netherlands 5.8 6.0 6.2 6.3 6.3 6.4 6.4 6.7 7.0 6.3 1.2 norway 7.0 7.1 7.2 7.0 7.2 7.2 7.4 7.4 7.6 7.2 0.6 poland 4.9 4.6 5.0 5.1 5.4 5.3 5.1 5.7 5.8 5.2 1.9 portugal 5.1 5.1 5.2 5.3 5.1 5.3 5.6 6.1 5.3 1 rf 3.4 3.7 3.5 3.5 4.4 4.4 3.7 3.8 0.3 sweden 6.8 6.5 6.5 6.6 7.0 6.7 6.9 6.7 6.7 -0.1 slovenia 4.9 4.7 5.0 5.0 5.0 5.3 5.5 6.0 6.2 5.3 1.3 slovakia 4.4 4.7 4.8 4.5 4.1 4.5 -0.3 ukraine 3.3 2.5 2.3 2.5 2.0 2.5 -1.3 israel 6.3 4.8 4.8 5.1 4.8 5.2 5.2 -0.9 czechia 5.0 4.2 4.8 4.9 5.1 5.7 5.8 5.9 5.2 0.9 greece 6.4 6.0 4.9 4.6 5.5 1.8 crocia 4.4 4.4 4.4 0 lithuania 4.5 5.7 6.1 5.4 1.6 turkey 6.5 6.5 6.5 0 iceland 7.3 7.8 7.8 7.6 0.5 luxemburg 6.4 6.5 6.5 0.1 italy 6.7 6.1 6.7 6.5 0 mean (round) 6.1 5.8 5.7 5.6 5.7 5.7 6.2 6.5 6.5 5.8 st.def (round) 1.0 1.2 1.3 1.4 1.3 1.5 0.9 0.8 1.0 1.3 upper limit of norm 7.1 7.0 7.0 7.0 7.0 7.2 7.1 7.3 7.5 7.1 lower limit of norm 5.1 4.6 4.4 4.3 4.4 4.2 5.3 5.6 5.5 4.5 three seas economic journal 63 vol. 1, no. 4, 2020 annex 3 trust in political parties (ess, mean) round 2 (2004) round 3 (2006) round 4 (2008) round 5 (2010) round 6 (2012) round 7 (2014) round 8 (2016) round 9 (2018) index country (mean) delta austria 3.4 3.4 3.4 3.8 4.1 3.6 0.7 belgium 4.3 4.4 4.0 3.9 4.2 4.1 4.0 4.3 4.1 0 bulgaria 1.8 1.7 2.0 1.8 2.1 1.9 0.3 switzerland 4.6 4.7 4.7 4.8 5.0 5.1 5.2 5.3 4.9 0.7 cyprus 4.2 4.4 3.5 2.4 2.7 3.4 1.5 germany 3.2 3.2 3.5 3.4 3.8 3.9 4.2 4.0 3.6 0.8 denmark 5.6 5.7 5.7 5.2 5.3 5.1 5.4 -0.5 estonia 3.1 3.5 3.2 3.4 3.2 3.4 3.6 3.8 3.4 0.7 spain 3.7 3.5 3.2 2.7 1.9 2.2 2.4 2.8 -1.3 finland 5.0 5.0 5.0 4.5 1.9 4.7 4.8 5.0 4.5 0 france 3.4 3.2 3.4 3.1 2.7 2.8 3.0 3.1 -0.4 united kingdom 3.7 3.5 3.6 3.5 3.7 3.5 3.8 3.5 3.6 -0.2 hungary 2.7 2.6 2.0 3.1 4.2 3.0 3.6 3.8 3.1 1.1 ireland 4.0 3.9 3.3 3.1 3.0 3.3 3.7 3.8 3.5 -0.2 netherlands 4.8 5.1 5.2 5.3 5.1 4.9 5.2 5.4 5.1 0.6 norway 4.3 4.5 4.8 4.9 5.2 5.3 5.5 5.4 5.0 1.1 poland 1.9 2.1 2.3 2.5 2.2 2.0 2.4 3.2 2.3 1.3 portugal 2.1 2.6 2.4 2.0 1.8 2.2 2.6 2.2 0.5 rf 2.8 3.2 3.1 3.0 3.8 3.6 3.3 3.2 0.5 sweden 4,4 4.6 4.8 5.1 4.9 5.1 4.8 4.8 0.4 slovenia 3.2 3.3 3.4 2.2 2.3 2.0 2.5 2.7 2.7 -0.5 slovakia 2.7 3.6 3.6 2.7 2.8 3.1 0.1 ukraine 3.6 2.2 1.7 2.0 1.9 2.3 -1.7 israel 3.0 3.0 3.1 3.2 3.1 3.1 0.1 czechia 2.7 2.9 2.7 2.7 3.4 3.5 3.6 3.1 0.9 greece 3.5 2.5 1.4 3.0 2.6 -0.5 crocia 2.3 1.8 2,1 -0.5 lithuania 2.2 3.2 2.7 turkey 3.1 3.2 3.2 0.1 iceland 4.9 3.5 4.2 4.2 -0.7 luxemburg 5.0 5.0 0 italy 2.3 2.9 2.6 0.6 mean (round) 3.6 3.6 3.5 3.4 3.3 3.6 3.8 3.9 3.5 st.def (round) 1.0 1.0 1.1 1.1 1.2 1.1 1.0 1.0 1.0 upper limit of norm 4.6 4.6 4.6 4.5 4.5 4.7 4.7 4.8 4.5 lower limit of norm 2.7 2.6 2.4 2.4 2.1 2.5 2.8 2.9 2.5 three seas economic journal 64 vol. 1, no. 4, 2020 annex 4 trust in the european parliament (ess, mean) round 1 (2002) round 2 (2004) round 3 (2006) round 4 (2008) round 5 (2010) round 6 (2012) round 7 (2014) round 8 (2016) round 9 (2018) index country (mean) delta austria 4.2 4.0 4.0 3.6 3.8 4.4 4.0 0.2 belgium 4.9 5.0 5.1 5.1 5.0 5.1 4.8 4.6 4.9 5.0 0 bulgaria 4.6 4.6 4.8 4.3 3.2 4.3 -1.4 switzerland 4.8 4.6 4.7 4.8 4.6 4.7 4.5 4.5 4.8 4.7 0 cyprus 5.8 6.0 5.0 4.3 4.7 5.2 -1.1 germany 4.5 4.2 4.0 4.3 4.0 4.4 4.1 4.4 4.6 4.3 0.1 denmark 4.8 4.8 5.0 5.0 5.0 5.2 4.8 5.0 0 estonia 4.9 5.3 5.0 5.2 4.7 4.4 4.6 4.6 4.8 -0.3 spain 4.8 5.1 5.0 5.0 4.5 3.9 3.9 4.2 4.5 -0.6 finland 4.9 5.0 5.0 5.2 5.1 5.0 4.7 5.2 5.4 5.1 0.5 france 4.4 4.3 4.3 4.6 4.3 3.9 3.7 4.0 4.2 -0.4 united kingdom 3.6 3.5 3.4 3.6 3.4 3.4 3.1 3.7 3.4 3.4 -0.2 hungary 5.7 5.2 5.0 4.0 4.7 3.9 4.8 4.4 5.0 4.6 -0.7 ireland 5.1 5.4 5.2 4.7 4.1 4.4 4.6 4.9 5.0 4.8 -0.1 netherlands 4.7 4.6 4.7 5.1 4.9 4.8 4.5 4.7 5.3 4.8 0.6 norway 4.7 4.6 4.7 5.0 5.0 4.9 5.0 5.1 5.5 5.0 0.8 poland 4.8 4.3 4.8 4.5 4.7 4.2 3.6 3.9 4.6 4.3 -0.2 portugal 4.8 4.0 4.6 4.3 3.7 3.2 3.4 4.1 3.9 -0.7 rf 3.9 3.6 2.8 2.8 3.1 3.3 -0.8 sweden 4.0 4.0 4.5 4.7 5.0 4.7 4.7 4.8 4.6 0.8 slovenia 4.6 4.5 5.0 4.8 3.7 3.8 3.4 3.9 3.8 4.1 -0.8 slovakia 4.7 5.1 5.2 4.4 3.7 4.6 -1 ukraine 4.8 3.6 3.6 4.0 4.0 -0.8 israel 4.1 3.9 3.4 4.0 3.2 3.3 3.6 -0.8 czechia 4.7 4.4 3.9 4.1 3.9 4.2 4.2 4.1 4.1 -0.6 greece 5.8 5.3 4.4 2.6 4.1 -3.2 crocia 3.6 3.3 3.5 -0.3 lithuania 4.3 5.2 5.6 5.0 1.3 iceland 4.2 5.2 4.7 1 luxemburg 5 5.2 5.1 0.2 italy 5.5 4.0 4.4 4.2 1 mean (round) 4.6 4.6 4.7 4.6 4.5 4.3 4.1 4.2 4.5 4.4 st.def (round) 0.5 0.5 0.6 0.6 0.6 0.6 0.7 0.6 0.7 0.5 upper limit of norm 5.1 5.0 5.2 5.2 5.0 4.8 4.8 4.8 5.2 4.9 lower limit of norm 4.2 4.1 4.1 4.1 3.9 3.7 3.4 3.6 3.9 3.9 three seas economic journal 65 vol. 1, no. 4, 2020 annex 5 trust in the united nations (ess, mean) round1 (2002) round2 (2004) round3 (2006) round4 (2008) round5 (2010) round 6 (2012) round7 (2014) round8 (2016) round 9 (2018) index country (mean) delta austria 4.5 4.5 4.7 4.4 4.4 4.9 4.6 0.4 belgium 5.1 5.1 5.3 5.3 5.3 5.5 5.2 5.3 5.3 5.3 0.2 bulgaria 4.8 4.8 4.9 4.6 3.3 4.5 -1.5 switzerland 5.4 5.4 5.4 5.6 5.3 5.5 5.4 5.2 5.4 5.4 0 cyprus 4.2 4.8 4.4 3.7 4.7 4.4 0.5 germany 5.2 4.9 4.7 5.0 4.7 5.0 4.7 4.9 4.9 4.9 -0.3 denmark 6.5 6.6 6.5 6.5 6.2 6.6 6.3 6.5 -0.2 estonia 5.6 5.5 5.2 4.7 5.1 4.9 5.2 -0.7 spain 4.7 5.5 5.0 5.0 4.9 4.7 4.8 4.7 4.9 1 finland 6.5 6.6 6.5 6.7 6.6 6.5 6.2 6.4 6.5 6.5 1 france 4.6 4.7 5.1 5.3 5.0 5.1 4.9 5.0 5.0 0.4 united kingdom 5.3 5.2 5.0 5.1 4.9 5.2 4.9 5.3 5.1 5.1 -0.2 hungary 6.0 5.7 5.5 4.5 5.1 4.9 5.4 5.0 5.6 5.2 -0.4 ireland 5.7 5.8 5.7 5.6 5.3 5.5 5.4 5.7 5.6 5.6 -0.1 netherlands 5.4 5.4 5.4 5.6 5.6 5.7 5.5 5.7 5.9 5.6 0.5 norway 6.8 6.9 6.8 6.8 6.7 6.7 6.7 6.8 7.0 6.8 0.2 poland 5.6 5.0 5.3 5.1 5.3 5.0 4.6 4.9 5.5 5.1 -0.1 portugal 5.4 4.7 4.9 4.9 4.3 4.1 4.6 5.3 4.7 -0.1 rf 4.3 4.1 4.4 3.7 2.8 3.0 3.4 3.7 -1.1 sweden 6.0 6.3 6.4 6.4 6.3 6.3 6.4 6.2 6.3 0.2 slovenia 4.9 4.6 5.1 5.0 4.1 4.2 4.2 4.3 4.4 4.5 -0.5 slovakia 5.2 5.3 5.4 4.8 4.3 5.0 -0.9 ukraine 4.7 3.5 3.6 4.0 4.0 -0.7 israel 4.0 3.9 3.4 3.6 3.0 2.8 3.3 -1.2 czechia 5.3 4.9 4.8 4.9 4.8 4.8 5.0 4.8 4.9 -0.5 greece 4.6 4.0 4.0 2.6 3.5 -2 crocia 4.0 3.9 4.0 -0.1 lithuania 4.7 5.6 5.8 5.4 1.1 turkey 4.2 3.2 3.7 -1 iceland 6.7 6.3 6.6 6.5 -0.1 luxemburg 5.1 5.5 5.5 0.4 italy 5.6 4.5 4.9 4.7 -0.7 mean (round) 5.4 5.4 5.3 5.2 5.1 5.1 5.0 5.0 5.2 5.1 st.def (round) 0.7 0.7 0.8 0.8 0.8 0.9 1.0 1.0 0.8 0.8 upper limit of norm 6.1 6.1 6.0 6.0 5.9 6.0 6.0 6.0 6.0 5.9 lower limit of norm 4.7 4.7 4.5 4.4 4.3 4.1 4.0 4.1 4.4 4.2 three seas economic journal 66 vol. 1, no. 4, 2020 references: sztompka, p. 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(2017). rule breaking and political imagination. chicago: university of chicago press. three seas economic journal 117 vol. 1, no. 4, 2020 corresponding author: 1 vinnytsia national agrarian university, ukraine. e-mail: super_oksana30@ukr.net orcid: https://orcid.org/0000-0002-1911-9138 doi: https://doi.org/10.30525/2661-5150/2020-4-17 monitoring of indicators of socio-economic development of ukraine oksana samborska1 abstract. the transition to market relations and the corresponding structural changes in economy influenced the formation of incomes, their use and distribution system. the largest share in the structure of monetary income of the population is wages; it has increased in recent years. at the same time, there occurred the decline in production in the process of market transformation economy and, as a consequence, forced underemployment and unemployment of a large part of the working population, lack legislative levers of influence on the regulation of the property process stratification of the population led to a decline in living standards, deepening its stratification by the level of cash income and distribution of property, the inability of the majority of the population to do savings, spreading the shadow of monetary income of citizens, hiding them from taxation. this led to a reduction in the effective demand of the population, narrowing the volume of domestic market, reducing opportunities for domestic investment resources and restraint of economic growth of the state. the country’s economic growth is observed from year to year, it directly depends on the welfare of the population and their income. socio-economic development of the country is impossible without the participation of the population and accumulation of human capital, investment in it. structural changes in ukraine’s economy – human capital index, average income, migration processes, declining total population – have negative consequences for economic growth in the country as a whole. therefore, there is an urgent need to study this issue, taking into account all possible prospects. the peculiarities of these indicators specify the development of any country, where one of the main macroeconomic goals is due to the need to outpace the growth of national income in comparison with the growth of the index of human capital and income of citizens. the economic development of the country concerns money and the increase of the general welfare of the population. the way to improve the better life and economic development of the country is possible taking into account the transformation processes, but achieving this involves solving a set of goals and objectives facing governments at all levels. economic and social development of the oblasts of ukraine seeks to be better today. the delimitation of oblasts is caused by the level of the average wage, as well as the total per capita income. the study of indicators of socio-economic development requires clear and precise actions on the part of the state and local self-government. the creation of development strategies for a certain period helps to improve the situation in the oblasts of ukraine, but it is a temporary phenomenon that is not a managed system in some cases. currently, there is a problem of economic development, social protection of low-income groups and health care, retirementage people and so on. all human and civil rights are equal and interrelated, and therefore they must be equally protected by the state: human’s life and health, honour and dignity, inviolability and security are the highest social values (article 3); free development of personality (article 23) is determined by the constitution of ukraine. the study outlines the relationship and interdependence of local budget revenues from subsidies and subventions of the state budget, economic activity of the population, as well as the unemployment rate is an important indicator of the general state of the economy. key words: human capital, development, population, economic growth, average income. jel classification: j24, o10, p42 1. literature review as early as the 17th century, petty w., (1940) was the first to suggest that people and their productive abilities were wealth, and included the useful properties and abilities of human in their monetary evaluation of the concept of capital: “it seems reasonable that what we call wealth property or stock of the country and that is the result of past or past three seas economic journal 118 vol. 1, no. 4, 2020 work, would not be considered something different from the living forces, but would be valued the same.” the idea of the dependence of income of workers, enterprises and society on the knowledge, skills and abilities of people expressed a . smith, (1962) “the growth of useful labour depends primarily on improving the skills and abilities of the employee, and then on improving the machines and tools with which he works” (list, 1891); “acquisition of such abilities, as well as the retention of their owner during his upbringing, education or apprenticeship, always requires real costs, which are fixed capital, which seems to be realized in his personality. these abilities ... at the same time become part of the wealth of the whole society…” one of the reasons for the economic backwardness of some countries, d. ricardo (1995) considered “lack of education in all segments of the people”. the theory of human capital acquired a certain development in the works of karl marx, (1960). he defined labour as a form of commodity that belonged to the free person of the employee and is alienated from the employee through its sale on the labour market. not considering labour as capital, k. marx used the concept of variable capital to characterize labour costs: “… labour in the hands of the worker is a commodity, not capital…, how capital functions after sale, in the hands of the capitalist, during the production process itself ”. proponents of the theory of three factors of production (a. marshall et. al., 1993) did not refer human to the category of capital, but they did not deny that human’s social qualities – knowledge and ability to work – can be considered component of capital. the production of wealth is only a means of supporting human life, meeting its needs and developing its forces – physical, mental, but man himself – the main means of producing this wealth, and it is the ultimate goal of this wealth ... (marx et. al., 1960). according to j. mill (1920), “the human person... is not capital. human is the goal for which wealth exists. but its acquired abilities, which act only as a means and are realized only through work, on all grounds can be attributed to the category of capital”. in his scientific work “the national system of political economy”, f. list (1891) attributed to capital in addition to material wealth, the natural and acquired abilities of people. he attached great importance to the results of the social development of the people, the moral spirit of the nation. f. list noted that the nation must produce spiritual knowledge, because they produce productive forces, while other goods only exchange values. hence, the wealth of a nation largely depends on the level of development of “mental capital” because the current state of nations is the result of an accumulated mass of various discoveries, inventions, improvements, efforts of all generations who lived before us constitute the intellectual capital of existing humanity, each individual nation is as productive as the person has been able to assimilate this legacy from previous generations and replenish it with its own possessions…” (petty, 1940). the content of “human capital” includes “natural abilities, general culture, knowledge (general and special), acquired abilities, skills, experience, and ability to apply them at the right time in the right place”, r .m. nureyev says. it is also the stock of health, motivation, skills that contribute to human productivity. thus, the structure of human capital includes: health capital, healthy lifestyle, educational capital (general and special knowledge), capital of training in production (qualification, skills, professionalism, work experience), scientific capital, inventions, innovations, ideas, theories, research), capital of culture (education, morality, self-education, self-development) possession of economically significant information (awareness of prices, losses and profits); capital migration (mobility of workers), motivation and incentives for economic activity (smith, 1962). human capital is a certain stock of health, knowledge, skills, abilities, motivations formed or developed as a result of investments and accumulated by a person, which is purposefully used in one or another sphere of social production, promotes productivity growth and thus affects the growth of its income. it is necessary to pay attention to some fundamental points arising from this definition: – firstly, human capital is not just a set of these characteristics, but it is formed or developed as a result of investment and accumulates a certain amount of health, knowledge, skills, abilities, motivations; – secondly, it is such a stock of health, knowledge, skills, abilities, motivations, which is expediently used to obtain a useful result and increase productivity; – thirdly, the use of human capital naturally leads to an increase in income of its owner; – fourthly, income growth stimulates further investment in human capital, which leads to an increase in personal income. it should be emphasized that not all investments and not all income can be expressed in monetary terms. in addition to spending money, training, health promotion and other activities aimed at increasing human capital require, at least, and the hard work of a person. in addition to monetary rewards (increase in income), a person with more human capital receives moral satisfaction, saving time, social status. it should also be remembered that the accumulation of human capital results in an integrated social effect, which benefits not only the individual, but also the company, in which a person works, and society as a whole. the category of “income” was defined by j. m. keynes in his book “the general theory of employment, interest and money”, he pointed out the difficulties that most hindered its writing. three seas economic journal 119 vol. 1, no. 4, 2020 the macmillan dictionary of modern economic theory defines income as the amount of money or services received by an individual, corporation, or economy over a period of time. the definition given in the “explanatory dictionary of the ukrainian language” is close: “income is money or material values received by the state, commercial and industrial institution from an individual as a result of any activity”. 2. methodological approach in the process of studying the trends of human capital development, a systemic approach, economic and statistical methods (graphical, comparison, averages) were used; correlation and regression analysis – to consider the dependencies on the formation of trends and forecasting the prospects of the world market; cluster analysis and analysis of variance – to structure and identify individual groups of countries that differ in volume and share of economic growth and economic conditions. 3. results human development in the countries of the world is no less important, it characterizes the indicator defined by the united nations development programme (undp) and used within the un. the human development index predicts that people living in high-income countries will live 19 years longer and study 7 years longer than those living in low-income countries. undp’s statistics present the human development index for 2017 (hdi – values and positions) for 189 countries and territories recognized by the un. there are significant differences between ukraine and other countries when it comes to the well-being of the population. a child born now in norway, the country with the highest hdi, is likely to live over 82 years and study for almost 18 years. at the same time, a boy born in ukraine will most likely to live 63 years and spend 12 years studying. although significant inequalities occur in many countries, including some countries with high levels of economic growth, on average, table 1 the essence of the category “income” by representatives of various economic schools economic schools interpretation of the economic essence of the income category classical economic theory (w. petty, a. smith, j.b. say, d. ricardo) the source of benefit was not only at the stage of production in the form of cost reduction, but also in the process of exchanging goods in the form of increasing sales. it followed that any socially useful work could contribute to income growth. adam smith expressed the following views on sources of income: “wages, profits and land rent are the three primary sources of any income, as well as any exchange value. any other income is ultimately obtained from one or another of these sources.” marginalist economic theory (e. böhm-bawerk, l. walrus, w. jevons, v. pareto, i. fischer, j. hicks) this economic theory explored the problem of income generation not from the supply side, through costs, as the classical school did, but from the demand side, through the attitude of man to the thing, which is manifested in the sphere of personal consumption and exchange. the starting point was the provision that income was influenced not only by the personal interests of the producer, but also the interests of consumers of goods and services. neoclassical marginalist theory (m. blaug) economist mark blaug focuses on the theory of income from the standpoint of macroeconomics, the development of productive forces and production relations without recognizing the theory of wages, profits, rents and interest as the basis of this question. keynesian economic theory ( j. keynes) the keynesian concept considered as an additional source of income motives for the behavior of individuals: “the emergence and movement of income may be related to human behavior.” john maynard keynes argued that the economic system needed government regulation. neoclassical economic theory ( j. clark, a. pigou, f. hayek, g. haberler) john bates clark explained the generation of income. the neoclassical scientist formulated the law of natural order: “each factor has a certain share in the product and each has a corresponding reward, this is the natural law of distribution.” john clark’s conclusion about the distribution of value created was that the income of each factor was proportional to the quantity and value of its marginal product. based on the theory of john clark, ukrainian scientist mykhailo tuhan-baranovskyi developed a social theory of distribution, which pointed to two factors on which wages depended: economic and social. the economic factor was the growth of the productivity of social labour, and the social factor was the social performance of the working class. the income based on the exploitation of the worker by the capitalist was profit, and the non-labour income resulting from the use of the useful properties of the land was rent. marxist economic theory (k. marx, e. bernstein, r . hilferding, k. kautsky, v. lenin) the marxist approach to the formation of income is based on the theory of labour added value. according to karl marx’s theory, the source of income is labour. only one factor participates in the creation of new value – the worker, the owner of labour. other types of income are only the result of unpaid labour. source: (popovych et. al., 2016) three seas economic journal 120 vol. 1, no. 4, 2020 countries such as ukraine, which have a lower level of human development, suffer heavy losses. ukraine ranks 88th out of 189 countries for which the human development index is calculated. this indicator still allows the country to fall into the highest category of human development. the human development index (hdi) is the final indicator for assessing the long-term progress of human development: 1) long and healthy life; 2) access to knowledge; 3) a decent standard of living. long and healthy life is measured by average life expectancy. the level of knowledge is measured by the average number of years spent on adult education; the average number of years of lifelong learning in people over 25 years of age; access to learning and knowledge by expected years of schooling for first-graders, is the total number of years of schooling that a school-age child can count on if school enrolment age models remain unchanged throughout the child’s life. the standard of living is measured by gross national income (gni) per capita in dollars of constant purchasing power at the level of 2011, convertible by the coefficients of transition to purchasing power parity (a. smith, 1962). the following results can be drawn: norway is one of countries that maintain their positions in the human development in the range from 0.94 – in 2015 to 0.953 – in 2018. among the countries unstable-development can be observed in the south sudan – 0.467 in 2015, norway switzeland australia germany poland ukraine south sudan niger nigeria 0,949 0,939 0,939 0,926 0,855 0,743 0,49 0,353 0,527 0,953 0,944 0,939 0,936 0,865 0,751 0,388 0,354 0,532 0 0,2 0,4 0,6 0,8 1 1,2 figure 1. human development index (hdi) in the world in 2015–2018 source: own compilation three seas economic journal 121 vol. 1, no. 4, 2020 a slight increase in 2016 – 0, 49, and a sharp decline in 2018 – 0.388. ukraine obtains stable positions in the human development index – 0.747 in 2015 and 0.751 – in 2018. the most approximate to ukraine are armenia (0.743 – 2015) and jordan (0.745 – 2015). the dynamics of growth of the human development index of ukraine from 2014 to 2018 figure 2. on the positive side, ukraine remains among the countries with a high level of human development and has improved the length of study. however, there are also negative aspects: ukraine has lost several positions in the ranking and now its place is one of the lowest among the countries of europe. thus, the human development index in ukraine was 0.743 in 2016. it ranked 84th in 2016 and 89th in 2018, among 189 countries and territories. in 2015, ukraine was in 81st place. an important indicator that characterizes the socio-economic development of the country is income per capita. last year (2019) in vinnytsia oblast, the per capita income was 64,729 uah, while the average salary of a full-time employee was lower than the national average and amounted to 9,299 uah. thus, in ukraine in 2019, the disposable income per capita was 67,528 uah, and the average salary of full-time employees reached 10,497 uah. the first place in the ranking of oblasts by income per capita in 2019 is occupied by kyiv and is 165,054 uah, the last – luhansk oblast, excluding data from the occupied territories – 24,477 uah. in the capital, a full-time employee receives an average of 15,776 uah, which is the highest salary in ukraine. vinnytsia is at the 10th place in the ranking with a disposable income of 64,729 uah. the average salary in our city is 9,299 uah, which is lower than the national average. in terms of population, vinnytsia oblast occupies a position between poltava and zaporizhzhia, although smaller in oblast. the disposable income in the city of kyiv per person is 165,054 uah, with the highest average salary being 15,776 uah. the city as a capital, having a special status, is a separate territorial unit, so the statistics indicate the level with the oblasts. although kyiv is the smallest in terms of territory, compared to the oblasts and even the city of sevastopol, which also has a special status. according to the population, kyiv is the third after donetsk and dnipropetrovsk oblasts, according to the state statistics of ukraine on the average number for 2019. the disposable income in dnipropetrovsk oblast per capita is 87,130 uah. the average salary in dnipropetrovsk oblast is among the top five in ukraine, amounting to 10,751 uah as of 2019. the oblast is the second largest in terms of area after odesa and the second largest in terms of average population in 2019. in zaporizhzhia oblast, the income per capita is 75,407 uah. zaporizhzhia oblast ranks 5th in the amount of 10,480 uah in terms of the average salary of full-time employees. the oblast ranks the 9th in terms of area and population. kyiv oblast has the following level of income per person: 75,146 uah. the average monthly salary in the oblast is among the top three – 11,003 uah. in terms of area and population, kyiv oblast is one step higher than zaporizhzhia oblast. the largest area in the country (33,310 sq. km) belongs to odesa oblast, and the population is ranked 6th in ukraine. the income per person is 72,805 uah; the average monthly salary of full-time employees in odesa oblast in 2019 is 9,246 uah, which is less than in lviv, poltava and mykolaiv oblasts. however, it is close 0,747 0,747 0,743 0,749 0,751 0,742 0,743 0,744 0,745 0,746 0,747 0,748 0,749 0,75 0,751 0,752 2013,5 2014 2014,5 2015 2015,5 2016 2016,5 2017 2017,5 2018 2018,5 ukraine figure 2. human development index of ukraine in 2014–2018 source: formed by the author three seas economic journal 122 vol. 1, no. 4, 2020 to the average salary of zakarpattia oblast in the amount of 9,202 uah. poltava oblast. disposable income per person: 71,627 uah, the average monthly salary for 2019 is 9,846 uah. lviv oblast. disposable income per person: 65,691 uah. the oblast is in the top five according to population (2,498,683 people), although it ranks 17th in terms of the oblast. the average salary in 2019 was 9,271 uah. kharkiv oblast. the disposable income per capita is 65,534 uah; the oblast is among the leaders in terms of population in 2019, one step higher than lviv, and slightly less than the city of kyiv: 2,651,394 people, and the fourth largest oblast in the country. as for the average salary, it is below the average in ukraine and is 9,081 uah. in sumy oblast, the income per capita is 65,310 uah, and the average salary is 8,579 uah, which is close to the lowest figures in the country. the income of citizens of vinnytsia oblast per person is 64,729 uah, compared to the average salary, it is 9,299 uah, which is lower than the national average. in terms of population, vinnytsia oblast occupies a position between poltava and zaporizhzhia oblasts, although it is smaller in area than these oblasts. in mykolaiv oblast, the income per person reaches 63,685 uah. the average salary is 9,976 uah; it is lower than the national average, but slightly higher than in odesa oblast. dn ipr op etr ov sk ob las t za po riz hz hia ob las t ky iv ob las t ky iv od esa ob las t lu ha ns k o bla st do ne tsk ob las t za ka rpa ttia ob las t ch ern ivt si ob las t te rno pil ob las t figure 3. ranking of cities by income per capita in 2019, uah source: formed by the author do ne tsk ob las t ky iv ob las t ky iv dn ipr op etr ov sk ob las t za po riz hz hia ob las t ch ern ivt si ob las t kh ers on ob las t te rno pil ob las t figure 4. average salary of full-time employees in 2019, uah source: self-formed three seas economic journal 123 vol. 1, no. 4, 2020 zhytomyr oblast has an income per person of 61,961 uah, but the average salary in the oblast is close to the lowest and is 8,528 uah. zhytomyr oblast is the fifth largest in ukraine, and the average population (1,214,971 people) is lower than in zakarpattia oblast (1,252,463 people), which is among the smallest in the territory. chernihiv oblast is the third largest oblast in ukraine, after odesa and dnipropetrovsk oblasts, but in terms of population it is in the top three with the lowest rate – 989,978 people (average for 2019). the disposable income per person is 58,904 uah. according to the level of the average salary, it also occupies low indicators in the amount of 8,206 uah, the lower level is only in chernivtsi and kherson oblasts. the average salary of 8,838 uah is in cherkasy oblast, the figure is almost the same as in luhansk and rivne oblasts, but the income per citizen is 58,808 uah. by size, kirovohrad oblast ranks 15th among the oblasts, the autonomous republic of crimea and cities with a special status. in addition, in terms of population, the oblast is among three oblasts with the lowest rate of 932,914 people. it ranks fifth from the end in terms of average salary in the amount of 8,360 uah. however, the income per capita reaches 58,290 uah in 2019. khmelnytskyi oblast has an average salary of 8,672 uah, which is almost the level of volyn oblast, but it is lower than the average in ukraine. the disposable income per person is 58,008 uah. in kherson oblast, the disposable income per capita reaches 57,110 uah, the oblast took second place in terms of the lowest average salary in 2019 in the amount of 8,187 uah. income per capita in the amount of 55,537 uah was recorded in ivano-frankivsk oblast, which is one of the five smallest oblasts in terms of area, but outnumbers zhytomyr, mykolaiv, and kherson oblasts in terms of population. the average salary is 8,817 uah in 2019. in rivne oblast, the average salary is 8,967 uah but the income per capita reaches 54,183 uah. and although rivne oblast is larger than ivanofrankivsk oblast, the number of residents is smaller – 1,154,071 people in 2019. in volyn oblast, income per capita is 52,879 uah. volyn oblast is at the 20th place in terms of size but the average salary reaches 8,663 uah, the population is close to kherson oblast in terms of population. ternopil oblast has an income per capita of 49,843 uah. it is a small oblast, larger than zakarpattia and chernivtsi oblasts only, and has the lowest average salary of 8,275 uah, which puts it in the 4th place after chernivtsi, kherson and chernihiv oblasts. chernivtsi oblast is the smallest in size and population, the income per citizen is 48,255 uah. the average monthly salary of full-time employees is also the lowest among all oblasts in the amount of 8,066 uah. zakarpattia oblast. disposable income per person: 47,495 uah. the oblast is small in area, however, chernivtsi oblast is the smallest, but in population (1,252,463 people in 2019) it dominates many oblasts, such as: zhytomyr oblast, volyn oblast, mykolaiv oblast, rivne oblast, sumy oblast, kherson oblast, and cherkasy oblast. the average salary is 9202 uah in 2019. donetsk oblast has the largest average number of citizens in 2019 (4,135,969 people) and income per person in the amount of 39,141 uah. these data are formed on the basis of available administrative data on state registration of births and deaths and changes in residence registration, according to the state statistics service. data on the revenues of oblasts are received by the state statistics service only from the territories controlled by ukraine, which explains the low indicators of two oblasts: donetsk and luhansk, some of which are temporarily occupied. the average salary in donetsk oblast is one of the highest in ukraine in the amount of 11,716 uah; it takes the second step after the city of kyiv. in luhansk oblast, the average salary is 8,731 uah, which is less than in cherkasy, rivne, ivano-frankivsk, and lviv oblast. luhansk oblast is larger than donetsk oblast, and they are at the 10th-11th place in the list of the oblasts by the territory. disposable income per person is 24,477 uah. as of november 1, 2018, according to the state statistics of ukraine, about 42,000,000 people live on its territory. 2 million 906 thousand people live in the city of kyiv, which is 14.4% of the total number. the population of dnipropetrovsk oblast is 3,208,000 people, which is 13.1% of the population. we can see changes in the population of ukraine since 1990 in figure 5. about one million ukrainians are leaving the country in search of a better life and a better paying job abroad. migrants transfer to ukraine about 10 billion usd, which is 9% of ukraine’s gdp. in 2015, 1,000,000 migrant workers left ukraine forever (such statistics occurred only in 2015, due to hostilities in the east of the country). in the last 2-3 years, about 300,000-350,000 young people have left ukraine for good. the reason is the low cost of human capital (yatsun, 2014). as a rule, the country’s human capital should be 10 times its gdp at purchasing power parity (ppp). in 2019, the gdp per capita for ppp in ukraine is about 8 thousand usd; therefore, the average cost of human capital per ukrainian is 80 thousand usd. for comparison, the average price of one american reaches 700 thousand usd. it should be noted that the average cost of human capital of young ukrainians aged 15-24 years is 160 thousand usd, and the human capital for retirement-age people of 55-59 years old is equal to 40 thousand usd. a ukrainian of working three seas economic journal 124 vol. 1, no. 4, 2020 51,8 51,952 52,2 52,1 51,7 51,2 50,8 50,3 49,9 49,4 48,9 48,448 47,247,2 46,9 46,6 46,3 46,1 45,9 45,7 45,6 45,5 45,4 42,9 42,7 42,5 42,3 42,1 0 10 20 30 40 50 60 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 figure 5. dynamics of change in the population of ukraine 1990–2019, (million people) source: formed by the author age generates about 8,000 usd a year in the country. if he or she immigrates, the loss in ukrainian gdp will be 8 thousand usd respectively. now 300 thousand ukrainians immigrate a year, accordingly, we can estimate the economic losses of ukraine in the amount of 2.4 billion usd, which is more than 2% of gdp. one ukrainian worker creates 26 thousand usd in poland. if migrants are about 1 million people, they annually form 5% of the country’s gdp, which is about 26 billion usd per year. currently, we see economic growth in ukraine, the rate of change reaches 3% – this is actually an indicator of lag, because the economic recovery requires an indicator of 10%. based on the rapid growth of the country’s gdp, the average wage will increase, create highly productive jobs, increase the welfare and income of every citizen, under such conditions, ukrainian migration will decrease significantly and in 2023 the labour market may balance. economic equilibrium can be restored at the level of 1990 due to the development of the processing industry and increased exports of finished products. the study has showed that the largest population arriving in the city is concentrated in kyiv. this is due to greater opportunities to realize people’s potential and use professional qualities. we see a large number of citizens who have left their oblast in vinnytsia, rivne and zhytomyr oblasts. the population is migrating in search of new prospects for professional development and career growth. 4. conclusions and practical recommendations the most important direction of socio-economic policy of the government and the state should be to achieve sustainable positive dynamics of welfare of table 2 migration movement of the population in january – october 2018, (persons) name of the oblast number of arrivals number of people who left migration growth, (-, +) ukraine 525747 515250 10497 vinnytsia 19017 22238 -3221 zhytomyr 18289 19409 -1120 ternopil 19694 19973 -279 city of kyiv 45010 34749 10261 khmelnytskyi 22738 23227 -489 lviv 31704 30413 1291 kyiv 48201 25989 22212 kharkiv 44576 40911 3665 odesa 30850 25606 5244 rivne 18665 20519 -1854 dnepropetrovsk 34449 32237 2212 volyn 14348 14818 -470 source: state statistics of ukraine three seas economic journal 125 vol. 1, no. 4, 2020 the population on the basis of increasing effective demand, in particular, increasing wages for each employee. in the operational programme, which is the part of the “europe 2020 strategy: in the center – the man”, the main goal aims to improve the standard and quality of life of the population, educational infrastructure, promotion of professional mobility of workers, improving the quality of educational services in accordance with the needs of the labour market, the implementation of effective migration policy to improve the level and quality of life, it is necessary to increase wages and index them in accordance with labour efficiency ensuring the support of the purchasing power of the population through the indexation of its monetary income. in the field of social protection, it is necessary to introduce fair principles of accrual of pensions depending on length of service and work, to bring the minimum pension to the level of the real subsistence level for persons with disabilities, providing cash benefits to the unemployed for the period of job loss. references: kurylo, l. i. (2014). instytutsiine zabezpechennia formuvannia intelektualnoho kapitalu [institutional support for the formation of intellectual capital]. zbirnyk naukovykh prats tavriiskoho derzhavnoho ahrotekhnolohichnoho universytetu. ekonomichni nauky, vol. 1, pp. 158–165. retrieved from: http://nbuv.gov.ua/ujrn/ znptdau_2014_1_32 (in ukrainian) list, f. (1891). natcionalnaia sistema poliicheskoi ekonomii [national system of political economy]. kyiv. (in russian) lupenko, yu. o., malik, m. y., shpykuliak, o. h., et al. (2014). innovatsiine zabezpechennia rozvytku silskoho hospodarstva ukrainy: problemy ta perspektyvy: monohrafiia [innovative support for the development of agriculture in ukraine: problems and perspectives: monograph]. kyiv: nnts “iae”. (in ukrainian) marshall, a. (1993). printcipy ekonomicheskoi nauki [principles of economic science]. moscow: progress. (in russian) mill, j. (1920). principles of political economy. london: longmans green and co. 39 paternoster row. marx, k. & engels, f. (1960). sochineniia [compositions. 2nd ed.]. moscow: gosudarstvennoe izdatelstvo politicheskoi literatury. (in russian) petty, w. (1940). ekonomicheskie i statisticheskie raboty [economic and statistical works]. moscow: sotcekizdat. (in russian) popovych, o., & didenko, n. (2016). interpretation of the economic essence of the category “income”. economy and society, vol. 7, pp. 975–978. ricardo, d. (1995). sochineniia [compositions]. moscow: sotcekgiz. (in russian) smith, a. (1962). issledovanie o prirode i prichinakh bogatstva narodov [the study of the nature and causes of wealth of peoples]. moscow: sotcekgiz. (in russian) shpykuliak, o. h. & malik, m. y. (2005). kadrovyi potentsial ahrarnykh pidpryiemstv: upravlinskyi aspekt: monohrafiia [personnel potential of agrarian enterprises: managerial aspect: monograph]. kyiv: nnts “iae”. (in ukrainian) samborska, o. (2020). economic analysis for forecasting and prospective planning of economic processes of local self-government. the scientific heritage, vol. 7(46), pp. 21–28. samborska, o. (2019). human capital as a factor of economic growth of ukraine. economics of agro-industrial complex. international research and production journal, vol. 6, pp. 64–72. samborska, o., kolesnyk, t., talavyria, m., & nikolenko, l. (2018). problems and perspectives in management. ensuring the sustainable development of the ukrainian agrarian sector in conditions of globalization. problems and perspectives in management, vol. 16(3), pp. 245–258. samborska, o. (2018) strategy of government of management state land: foreign experience. web of scholar, multidisciplinary scientific journal, no. 4(22), vol. 3, pp. 15–19. samborska, o. (2020). efficiency of social protection of the rural population in the united territorial community. european journal of sustainable development, vol. 9(3), pр. 343–348. yatsun, o. m. (2014). human capital as a factor of economic growth. visnyk akademii pratsi i sotsialnykh vidnosyn federatsii profspilok ukrainy, vol. 2, pp. 95–100. retrieved from: http://nbuv.gov.ua/ujrn/vapsv_2014_2_18 (in ukrainian) three seas economic journal 37 vol. 1, no. 4, 2020 corresponding author: 1 oles honchar dnipro national university, ukraine. e-mail: debunovleonid@gmail.com orcid: https://orcid.org/0000-0001-9388-5845 2 oles honchar dnipro national university, ukraine. e-mail: yakovenkoa@i.ua orcid: https://orcid.org/0000-0003-1315-6322 researcherid: d-2480-2016 doi: https://doi.org/10.30525/2661-5150/2020-4-7 considering the state of the ukrainian economy in the enterprises financial sustainability modeling leonid debunov1, aleksandr yakovenko2 abstract. construction of a model for predicting the bankruptcy of the enterprise is an urgent and popular task. using this model will provide an opportunity to make quick and accurate assessment of financial sustainability, predict possible bankruptcy advance and take the necessary action to avoid it. obviously, bankruptcy can occur both under the influence of internal factors (in particular, financial management errors) and when the economic environment changes. the inclusion of all possible environmental factors influencing into the model is a difficult task and causes an overload of such a model with a large number of input signals. a more realistic option is to build a model using internal financial indicators only, but under a relatively constant external environment. the subject of the study described in the article is the general homogeneity of the ukrainian economy over time in the context of the possibility of using companies’ reports for these periods to build a neural network model of financial sustainability of enterprises using only internal financial indicators. to separate stable periods from unstable ones, a review of the dynamics of macroeconomic indicators of ukraine for the period 2010–2019 is used. graphical analysis of the dynamics of macroeconomic indicators is used as a methodology. the purpose of this study is to identify periods of ukraine’s economy, the conditions of which are quite stable to take reports of enterprises of these periods for a dataset formation. the article considers the dynamics of the following indicators of ukraine’s economy: gross domestic product, hryvnia exchange rate, employment, consumer price index, total net profit (loss) of enterprises by size of enterprises, levels of profitability of operating activities, foreign trade indicators by geographical areas (imports and exports of goods and services) etc. the study pays special attention to the economic crisis of 2014–2015 and to changes in the economic environment, which distinguish the conditions before and after the crisis. the main conclusions of the article are the recognition of the existence of crisis phenomena in the period 2014–2015 and the recognition of the difference between the post-crisis period and the pre-crisis period. in order to build an up-to-date model of financial sustainability, it is recommended to use report data for periods not earlier than 2016. key words: financial sustainability, bankruptcy, economic crisis, model, mac-roeconomics, analysis. jel classification: e37, e20, g33 1. introduction the financial sustainability of the enterprise may be broken both by the influence of internal factors and by changes in the external economic environment. thus, in modeling financial sustainability should be chosen one of the following approaches: a) include in the model both internal and external factors; b) to include in the model only internal indicators, but under the condition of relative invariability of the external economic environment. creating a model that would include external indicators is an ambitious and promising task. however, first, it requires a separate large-scale study to identify such factors and present them in the form of indicators in an acceptable for modeling form, secondly, leads to an increase of the total number of factors in the model, that is undesirable. a more realistic option is to build a model that will include only internal factors. we must understand that such a model will be able to maintain its adequacy only in economic conditions that will not contain significant changes over time. it cannot be said that a model built for the conditions of one country retains its accuracy when applied to enterprises in another three seas economic journal 38 vol. 1, no. 4, 2020 country. similarly, we cannot be sure that a oncebuilt model will retain its predictive properties for decades. that is, the data of enterprises that use the model to provide an assessment should relate to the same economic conditions as the data used to build and test it. thus, when constructing such models, special attention should be paid to the time period of the data selected for the sample of observations that will be used in creating the model. w hen creating a dataset, it is necessary to avoid reports of those years that belong to periods of economic crisis. obviously, during the economic crisis, the risk of bankruptcy of enterprises increases under the influence of external factors. in this case, the company may have approximately the same values of internal financial indicators both during the crisis and outside it, but the risk of bankruptcy during the crisis will be higher. thus, the inclusion of observations of crisis years in the dataset can lead to erroneous assessment of the impact of the values of certain internal factors, and therefore to obtain an inadequate model. in addition, the formation of a dataset should take into consideration possible structural changes and significant shifts in the national economy. if in a short period the economic situation undergoes significant changes, in the context of financial sustainability modeling, this should be perceived as the appearance of a new economic environment. therefore, the model created for the conditions of the old environment cannot be used for enterprises in the new conditions. there are many reasons for this: changes in the structure of costs, changes in the amount of required reserves, changes in the ability to obtain credit funds, changes in approaches to foreign exchange transactions, etc. thus, before creating a dataset to build a model of financial stability of enter-prises, which includes only internal factors, we must determine what time of data is acceptable to solve this task. the authors of this study reviewed existing interpretations of the concept of “financial sustainability” (debunov & yakovenko, 2019), formed a dataset of reports of ukrainian companies and bankruptcy decisions (debunov & yakovenko, 2019) and built a neural network that classifies ukrainian companies as financially stable and potential bankrupt (debunov, 2019). this publication focuses in more detail on the selection of the period which reports may be included to the dataset for model creation. as mentioned above, over time, the model may lose its accuracy, so the best years to build are the least distant from today. the purpose of this study is to identify periods of ukraine’s economy, the conditions of which are quite stable to take reports of enterprises of these periods for a dataset formation. the following questions should be answered: 1) can we consider that 2014 is the year of economic crisis beginning? 2) what time period is covered by the economic crisis? 3) are there any changes in the economic conjuncture between the precrisis and post-crisis periods? 2. gross domestic product and exchange rate consider the indicators of the ukrainian economy for the period 2010–2019. first of all, in our opinion, special attention should be paid to the period beginning in 2014, as it is known that the national economy in these years has been influenced by political factors and there has been an active phase of hostilities. figure 1 shows the gradual growth of ukraine’s gdp in monetary terms. however, in 2014–2015 we see a rapid growth of the gdp deflator index compared to the previous year, along with a decline in the index of the physical volume of gdp compared to the previous year. thus, the growth of gdp in monetary terms is due to rising prices for manufactured products. at the same time, in physical terms, we see a decline in production. the graph shows a relatively stable ratio of indices until 2013 inclusive. since 2016, we have seen the formation of a new ratio of indices, which differs from the ratio of the pre-crisis period and is quite stable. we should note that the maximum increase in prices and decline in physical production occurred in 2015. already in 2016, we see an increase in the physical volume of gdp and a decrease in the growth rate of prices for the product. figure 2 shows a sharp decline in the average annual hryvnia exchange rate in the foreign exchange market. it should be noted that the devaluation of the ukrainian national currency began in 2014. since 2016, the rate of hryvnia depreciation had been significantly reduced, which gives reason to believe that the next years were stable. 3. distribution of enterprises by size figure 3 shows a significant reduction in the number of large enterprises, which began in 2013 and stopped in 2016 (from 659 units to 383 units, i.e. a reduction of 41.9%). the decline in the number of medium-sized enterprises is most pronounced in 2014, and in 2017 growth begins. the mass closure of enterprises in 2014–2015 can be considered another manifestation of the crisis. from the point of view of modeling the financial stability of enterprises, it should be noted that the closure of enterprises in such large numbers indicates an increase in the complexity of doing business during this period, which is external factor for businesses. thus, the probability of bankruptcy in these years under the influence of external factors was higher than usual (non-crisis periods). three seas economic journal 39 vol. 1, no. 4, 2020 figure 1. dynamics factors of the volume of gross domestic product of ukraine source: (derzhavna sluzhba statystyky ukrainy, 2021)1 figure 2. official exchange rate of hryvnia to usd (average for the period) source: (natsionalnyi bank ukrainy, 2021) 1 according to the methodology of the sna 2008. in accordance with the methodological provisions of the updated version of the system of national accounts in 2008 (order of the state statistics service of ukraine dated 17.12.2013 № 398). excluding the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and since 2014 – also without part of the temporarily occupied territories in donetsk and luhansk regions since 2014, there has been an increase in the share of products (goods and services) sold by small enterprises among all products sold in monetary terms (figure 4). in addition, we see an increase in the share of sales of medium-sized enterprises and a decrease in the share of large ones. the described observations emphasize the tendency to reduce the role of large enterprises in aggregate production. this, in turn, supports the hypothesis of a difference in economic conditions before and after the crisis. 4. use of labor resources in figure 5 and figure 6 we see a sharp deterioration in the labor market, falling parts of the employed population and real wages. undoubtedly, the graphs show the existence of a socio-economic crisis in 2014–2015. such phenomena may be due to a sharp drop in demand for labor, a sharp rise in prices, along with the unwillingness of employers to raise wages at the same pace. we note that in 2015 the part of the employed population stops falling, and in 2016 growth of real wages returns to rates of the pre-crisis period. figure 7 shows the changes in the structure of employment by size of enterprises. in this graph, we draw attention to the fact that by 2013 the share of labor in-volved in large enterprises grew and exceeded the share for small enterprises. starting from 2014, we see a change in the trend – a gradual reduction in the share of employees employed at large enterprises, from 32.2% in 2013 to 26.4% in 2018. in addition, since 2016, the share of labor employed in small enterprises exceeds the share of large ones. note that the share for small enterprises is almost unchanged (fluctuates around 26.7%), and the decrease in the share for large enterprises since 2014 is replaced by an increase in the share of employees working in medium-sized enterprises (from 40.7% in 2013 to 46.1% in 2018). these trends indicate in favor of the assertion of the difference between the economic situation of pre-crisis three seas economic journal 40 vol. 1, no. 4, 2020 58 6 65 9 69 8 65 9 49 7 42 3 38 3 39 9 44 6 0 200 400 600 800 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 large enterprises 20 9 83 20 7 53 20 1 89 18 8 59 15 9 06 15 2 03 14 8 32 14 9 37 16 0 57 0 5000 10000 15000 20000 25000 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 medium enterprises 35 7 24 1 35 4 28 3 34 4 04 8 37 3 80 9 32 4 59 8 32 7 81 4 29 1 15 4 32 2 92 0 33 9 37 4 0 100000 200000 300000 400000 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 small enterprises 41,6 44,5 41,9 42,4 41,8 39,8 38,3 38,0 38,2 41,5 40,3 42,1 41,1 41,3 42,0 42,8 42,8 42,6 16,9 15,2 16,0 16,5 16,9 18,2 18,9 19,2 19,2 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014 2015 2016 2017 2018 small enterprises medium enterprises large enterprises figure 3. number of business entities by size source: (derzhavna sluzhba statystyky ukrainy, 2021)2 2 the data are given without taking into account the results of banks, budgetary institutions, the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the anti-terrorist operation zone. 3 the data are given without taking into account the results of banks and budgetary institutions, for 2014–2018 without the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. 58 6 65 9 69 8 65 9 49 7 42 3 38 3 39 9 44 6 0 200 400 600 800 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 large enterprises 20 9 83 20 7 53 20 1 89 18 8 59 15 9 06 15 2 03 14 8 32 14 9 37 16 0 57 0 5000 10000 15000 20000 25000 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 medium enterprises 35 7 24 1 35 4 28 3 34 4 04 8 37 3 80 9 32 4 59 8 32 7 81 4 29 1 15 4 32 2 92 0 33 9 37 4 0 100000 200000 300000 400000 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 small enterprises 41,6 44,5 41,9 42,4 41,8 39,8 38,3 38,0 38,2 41,5 40,3 42,1 41,1 41,3 42,0 42,8 42,8 42,6 16,9 15,2 16,0 16,5 16,9 18,2 18,9 19,2 19,2 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014 2015 2016 2017 2018 small enterprises medium enterprises large enterprises figure 4. distribution of the total amount of sold products (goods, services) by size of en-terprises source: (derzhavna sluzhba statystyky ukrainy, 2021)3 and post-crisis periods, as for one reason or another large enterprises as a whole show a decrease in demand for labor, which can be considered an indicator of deteriorating position of this group compared to medium and small enterprises. according to figure 8, there was a stable proportion of the distribution of total wages between enterprises segmented by size until 2013. the largest amount of income in the total received employees of large enterprises. in 2014, the share of wages of large enterprises began to decrease and the share of mediumsized enterprises increased. since 2015, the largest amount of total wages was paid by a group of mediumsized enterprises (42.9% of the total wages in the country were paid by medium-sized enterprises against 41.2% paid by large ones). the phenomena described in figure 6 and figure 7 indicate some changes in the economic environment of the country and should be characterized as an increase in labor demand from medium-sized enterprises combined with a weakening from large ones. we note that the time period of the beginning of these changes is 2014. three seas economic journal 41 vol. 1, no. 4, 2020 5. financial results of enterprises figure 9 clearly confirms the existence of the economic crisis in 2014 and 2015. each segment of enterprises by size in monetary terms shows a total loss in these years. however, the indicator of the share of profitable enterprises in the number of objects of the corresponding size shows a less unequivocal situation. we see that from 2013 to 2014 in the segment of large enterprises there is a significant de-cline in the share of profitable enterprises (from 68% to 49%). at the same time, in the segment of small enterprises in the same period we see an increase in the number of profitable entities and in 2015 it reached 73%. in addition, we see that in 2015 the share of mediumsized enterprises that made a profit also increased significantly (up to 71%). thus, given the importance of the indicators shown in the previous graphs, we can conclude that the crisis of 2014–2015 caused the greatest losses to large enterprises. at the same time, the position of small and medium enterprises has strengthened. in 2016, we observe the normalization of the situation, in total, large and medium-sized enterprises show a profit, small enterprises, as in the pre-crisis period – a loss. already in 2018, all 58,4 59,1 59,6 60,2 56,6 56,7 56,3 56,1 57,1 58,2 54 55 56 57 58 59 60 61 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 % 110,2 108,7 114,4 108,2 93,5 79,8 109,0 119,1 112,5 109,8 70 80 90 100 110 120 130 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 % figure 5. employed population aged 15–70 years in % of the population of the corre-sponding age group source: (derzhavna sluzhba statystyky ukrainy, 2021)4 figure 6. dynamics of real average monthly wages in % to the previous year source: (derzhavna sluzhba statystyky ukrainy, 2021)5 30 ,2 31 ,4 32 ,4 32 ,2 30 ,4 29 ,0 27 ,4 26 ,9 26 ,4 42 ,6 41 ,7 40 ,9 40 ,7 42 ,8 44 ,2 45 ,2 44 ,6 46 ,1 27 ,2 26 ,9 26 ,7 27 ,1 26 ,8 26 ,8 27 ,4 28 ,5 27 ,5 0% 20% 40% 60% 80% 100% 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 small enterprises medium enterprises large enterprises 44 ,7 45 ,2 45 46 ,1 43 ,5 41 ,2 39 ,8 37 ,4 38 ,8 41 38 ,8 39 ,3 37 ,9 41 ,1 42 ,9 44 ,2 45 44 ,4 14 ,3 16 15 ,7 16 15 ,4 15 ,9 16 17 ,6 16 ,8 0% 20% 40% 60% 80% 100% 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 small enterprises medium enterprises large enterprises figure 7. the structure of employment by size of enterprises source: (derzhavna sluzhba statystyky ukrainy, 2021)6 figure 8. structure of labor costs by size of enterprises in % of the total source: (derzhavna sluzhba statystyky ukrainy, 2021)7 4 data for 2010–2014 are given without taking into account the temporarily occupied territory of the autonomous republic of crimea and the city of sevastopol, since 2015 – also without part of the temporarily occupied territories in donetsk and luhansk regions. 5 data are given for legal entities and separate divisions of legal entities with the number of employees of 10 or more persons. 6 the data are given without taking into account the results of banks and budgetary institutions, for 2014–2018 without taking into account the temporarily occupied territory of the autonomous republic of crimea, sevastopol and part of the occupied territories in donetsk and luhansk regions. 7 the data are given without taking into account the results of banks and budgetary institutions, for 2014–2018 without taking into account the temporarily occupied territory of the autonomous republic of crimea, sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. three seas economic journal 42 vol. 1, no. 4, 2020 segments of companies by size show a profit in total. comparing the periods before 2013 and after 2016, we should note an increase in the share of profitable enterprises in each segment. before 2013, about 62% of all medium-sized enterprises were profitable, after 2016 – 73%. respectively for medium-sized – 63.5% against 76.4%. regarding large enterprises, we see a steady trend of increasing the share of profitable enterprises, which in 2018 exceeded the average of the pre-crisis period and amounted to 77%. based on this, we must recognize the differences between the state of the economy before and after the crisis. of course, such differences are important in modeling financial sustainability, because a randomly selected pre-crisis enterprise is less likely to be profitable than a post-crisis enterprise selected in the same way. this means that a model that uses only indicators of the company ’s internal state and its training was based on pre-crisis data will lose its accuracy when used in post-crisis observations, as there are changes in the economic environment. figure 10 and figure 11 show the decline in profitability of enterprises operating activities of all sizes. in 2014, we see a total loss of –4.1%, which indicates the existence of the economic crisis. in 2015, the overall operating profitability is already positive and equal to 1.0%, but is still at a level much lower than the pre-crisis period. at the same time, we note that according to the value of this indicator, small enterprises are affected, –17.9% in 2014. also, large enterprises generally maintained a positive level of operating profitability. we see that since 2016 the situation has stabilized, and the new trend in the level of profitability is higher than the pre-crisis period, both for the overall indicator and for each individual segment by size of enterprises. 6. domestic consumption assessing changes in the market for manufactured products, let us look at fig-ure 12. there is a clear change in the trend of the share of goods produced in ukraine. we see that by 2014 the share of ukrainian goods in the ukrainian market fell sharply at about the same rate. since 2014, it continues to decline, but the pace is slowing down significantly. and in 2019 there is already growth. in our opinion, the change in the described trend is a manifestation of changes in the economic environment in 2014–2015. 2, 8 59 ,1 15 ,2 8, 1 -2 04 ,5 -1 52 ,6 46 ,8 11 9, 6 13 6, 8 30 ,7 19 ,2 34 ,6 -1 ,6 -2 06 ,2 -1 02 ,8 15 ,1 70 ,1 1 19 ,7 -1 9, 7 -1 0, 6 -1 4, 7 -2 9, 4 -1 79 ,3 -1 18 ,2 -3 2, 2 -2 1, 0 31 ,9 65% 68% 69% 68% 49% 56% 66% 73% 77% 62% 64% 64% 64% 61% 71% 76% 76% 78% 57% 63% 63% 65% 66% 73% 73% 72% 74% 0% 10% 20% 30% 40% 50% 60% 70% 80% -250 -200 -150 -100 -50 0 50 100 150 200 2010 2011 2012 2013 2014 2015 2016 2017 2018 large enterprises, net profit (loss), uah billion medium-sized enterprises, net profit (loss), uah billion small enterprises, net profit (loss), uah billion large enterprises that made a profit, % medium-sized enterprises that made a profit, % small enterprises that made a profit, % figure 9. net profit (loss) of enterprises and the share of enterprises that received profit by companies size source: (derzhavna sluzhba statystyky ukrainy, 2021)8 8 excluding the results of banks. for 2014–2018 without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. three seas economic journal 43 vol. 1, no. 4, 2020 4,0 5,9 5,0 3,9 -4,1 1,0 7,4 8,8 8,1 -6 -4 -2 0 2 4 6 8 10 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 % 3,9 6,2 5,2 5,0 0,7 4,0 8,8 11,2 9,1 5,0 6,0 5,0 3,2 -3,6 0 6,9 7,3 7,0 1,8 4,2 4,1 2,2 -17,9 -4,2 5,2 6,5 8,3 -20 -15 -10 -5 0 5 10 15 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 % large enterprises medium enterprises small enterprises figure 10. the level of profitability (loss) of enterprises operating activity, % source: (derzhavna sluzhba statystyky ukrainy, 2021)9 figure 11. the level of profitability (loss) of op-erating activity by size of enterprises, % source: (derzhavna sluzhba statystyky ukrainy, 2021)10 9 excluding the results of banks. for 2014–2018 without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. 10 excluding the results of banks. for 2014–2018 without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. another confirmation of the existence of crisis phenomena in the period 2014–2015 is the value of the consumer price index in these years (figure 13). the highest growth rate of prices was observed in 2015, which amounted to 48.7% of the 2014 price level. we note the decline in the value of the index in 2016 and its further stabilization, which can be perceived as the end of the deep phase of the economic crisis. 7. foreign trade in figure 14 and figure 15 concerning the crisis period of 2014–2015, we see a de-cline in the amount of exported goods and services in all geographical areas. exports to the cis (commonwealth of independent states) decreased the most for both goods and services. in this area, exports of goods decreased from 22.1 billion usd in 2013 to 6 billion usd in 2016. exports of services – from 5.8 to 3.7 billion usd, respectively. the graphs show that in the post-crisis period (since 2016) the volume of exports in all other areas begins to grow monotonously, while the volume of exports to the cis countries remains at the level of the crisis period. we also note a rapid increase in sales of ukrainian goods and services to the european countries. we see that in 2018 the value of exports exceeded the level of pre-crisis years and reached 20.6 billion usd. it should be noted that before the events of 2014– 2015, the cis countries occupied a leading position in ukraine’s exports of both goods and services. however, after the crisis in the geographical structure of ukraine’s exports, this area ranks 3rd in terms of trade in goods (after europe and asia) and 2nd in trade in services (after europe). we also see that europe is confidently becoming the main exports destination for ukraine in the post-crisis period. figure 16 and figure 17 show the changes in the volume of imports of goods and services to ukraine by geographical areas. we see that the values of goods import in almost all areas reach the lowest level in 2015 (the direction of the cis countries in 2016). we also see a clear decline in imports from the cis countries. in contrast to the pre-crisis period, in 2016 and 2017 the amount of imports of services from the cis countries is lower than the amount of imports from the americas. we also note the rapid growth of this indicator for goods and services in the direction of europe. thus, changes in the geographical structure of ukraine’s foreign trade are ob-vious. as you can see, until 2013, ukraine’s main trading partner was a group of cis countries. after 2016, the most active trade is with european countries. the change in the course of foreign trade is largely politically motivated. after the russian federation carried out acts of aggression against ukraine (occupation of the crimean peninsula and support for terrorist organizations in donetsk and luhansk regions), starting in march 2014, ukraine began to apply sanctions against a number of individuals and legal entities in russia (ukaz prezydenta ukrainy no.549/2015, 2015; ukaz prezydenta ukrainy no.550/2015, 2015). on the other hand, on june 27, 2014, the economic part of the association agreement between ukraine and the european union was signed, which in particular concerns the establishment of a common free trade area, economic and financial cooperation (verkhovna rada ukrainy, 2014). three seas economic journal 44 vol. 1, no. 4, 2020 66,5% 63,9% 58,9% 54,3% 48,5% 46,9% 44,5% 43,7% 42,0% 44,1% 35% 45% 55% 65% 75% 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 share of sales of goods produced in ukraine, % 109,4% 108,0% 100,6% 99,7% 112,1% 148,7% 113,9% 114,4% 110,9% 107,9% 90% 100% 110% 120% 130% 140% 150% 160% 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 figure 12. share of goods produced in ukraine sales, among the total turnover of wholesale enterprises source: (derzhavna sluzhba statystyky ukrainy, 2021)11 figure 13. consumer price index for goods and services (up to the previous year; percent) source: (derzhavna sluzhba statystyky ukrainy, 2021)12 11 data for the period 2014–2019 are given without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk oblasts. 12 since 2014, the data are given without taking into account the temporarily occupied territory of the autonomous republic of crimea and the city of sevastopol. since 2015, the data are given without taking into account part of the temporarily occupied territories in donetsk and luhansk regions. 13 since 2014, excluding the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. 18,7 26,2 25,3 22,1 14,9 7,8 6,0 6,9 7,0 13,8 18,4 17,4 17,1 17,1 13,2 13,8 17,9 20,6 13,7 17,7 17,7 16,8 15,4 12,4 11,8 13,0 13,8 3,0 3,3 5,6 5,1 5,1 3,8 3,9 4,0 4,1 2,0 2,6 2,6 2,2 1,4 0,8 0,7 1,2 1,6 0 5 10 15 20 25 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america 5,4 6,0 5,8 5,8 4,0 3,5 3,7 3,8 3,7 3,2 4,0 3,9 4,9 4,4 3,5 3,5 4,0 4,7 1,0 1,1 1,3 1,4 1,4 1,1 1,2 1,3 1,5 0,1 0,2 0,2 0,2 0,1 0,1 0,1 0,1 0,2 1,2 1,4 1,4 1,6 1,2 1,1 1,1 1,2 1,3 0 1 2 3 4 5 6 7 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america figure 14. dynamics of the goods exports geographical structure, billion usd source: (derzhavna sluzhba statystyky ukrainy, 2021)13 the process of changing the geographical structure of foreign trade has a sig-nificant impact on the financial sustainability of enterprises. closing the possibility of presence in the old markets and opening new ones requires active action to reconfigure the usual ways of doing business. in particular, enterprises face such tasks as adaptation to new sales conditions, change of pricing policy, registration of documents that will allow to sell products in these markets, changes in activities related to legal differences in markets, bringing product quality to new standards, search and establishment of connections with new contractors, etc. at the same time, the ban on imports of raw materials and services from conventional three seas economic journal 45 vol. 1, no. 4, 2020 14 information for 2010–2013 is given without taking into account the temporarily occupied territory of the autonomous republic of crimea and the city of sevastopol, for 2014–2016 – without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the anti-terrorist operation zone, for 2017–2019 – without taking into account temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and parts of the temporarily occupied territories in donetsk and luhansk regions. 15 since 2014, excluding the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories in donetsk and luhansk regions. 18,7 26,2 25,3 22,1 14,9 7,8 6,0 6,9 7,0 13,8 18,4 17,4 17,1 17,1 13,2 13,8 17,9 20,6 13,7 17,7 17,7 16,8 15,4 12,4 11,8 13,0 13,8 3,0 3,3 5,6 5,1 5,1 3,8 3,9 4,0 4,1 2,0 2,6 2,6 2,2 1,4 0,8 0,7 1,2 1,6 0 5 10 15 20 25 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america 5,4 6,0 5,8 5,8 4,0 3,5 3,7 3,8 3,7 3,2 4,0 3,9 4,9 4,4 3,5 3,5 4,0 4,7 1,0 1,1 1,3 1,4 1,4 1,1 1,2 1,3 1,5 0,1 0,2 0,2 0,2 0,1 0,1 0,1 0,1 0,2 1,2 1,4 1,4 1,6 1,2 1,1 1,1 1,2 1,3 0 1 2 3 4 5 6 7 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america figure 15. dynamics of the services exports geographical structure, billion usd source: (derzhavna sluzhba statystyky ukrainy, 2021)14 26,7 37,2 34,5 27,9 17,3 10,5 8,6 11,5 13,2 20,0 27,1 27,6 28,6 22,4 16,7 18,5 22,9 25,4 10,0 13,3 17,1 15,2 10,8 7,2 8,9 10,7 13,6 0,9 0,9 0,9 0,7 0,7 0,6 0,6 0,7 0,8 2,9 3,9 4,4 4,3 3,0 2,3 2,6 3,6 4,1 0 5 10 15 20 25 30 35 40 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america 0,9 1,2 1,2 1,5 1,2 0,8 0,7 0,7 0,7 2,4 2,8 3,0 3,5 3,0 2,7 2,4 2,6 3,2 1,2 1,4 1,5 1,6 0,9 0,9 0,9 1,1 1,3 0,04 0,04 0,04 0,04 0,04 0,04 0,04 0,08 0,16 0,6 0,6 0,5 0,6 0,7 0,6 0,8 0,7 0,5 0 1 1 2 2 3 3 4 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america figure 16. dynamics of the goods imports geographical structure, billion usd source: (derzhavna sluzhba statystyky ukrainy, 2021)15 sources also affects the company, leads to changes in costs, readjustment of production technologies to the quality of new raw materials, search for new suppliers, change the amount of transportation costs, etc. it is obvious that a sharp change in the geographical direction of cooperation plunges the company into a state of stress, in the period of adaptation to new conditions, the forecasts of the financial future of the company are quite uncertain. in addition, after the reorientation of the company to a new market and adaptation of production to new sources of raw materials, it is logical to assume that the structure of costs and profitability of the company changes compared to previous periods. thus, when such a phenomenon occurs en masse, it should be borne in mind that after the foreign economic reorientation of the country, the actual averages of many financial indicators will change, and therefore their real values, three seas economic journal 46 vol. 1, no. 4, 2020 26,7 37,2 34,5 27,9 17,3 10,5 8,6 11,5 13,2 20,0 27,1 27,6 28,6 22,4 16,7 18,5 22,9 25,4 10,0 13,3 17,1 15,2 10,8 7,2 8,9 10,7 13,6 0,9 0,9 0,9 0,7 0,7 0,6 0,6 0,7 0,8 2,9 3,9 4,4 4,3 3,0 2,3 2,6 3,6 4,1 0 5 10 15 20 25 30 35 40 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america 0,9 1,2 1,2 1,5 1,2 0,8 0,7 0,7 0,7 2,4 2,8 3,0 3,5 3,0 2,7 2,4 2,6 3,2 1,2 1,4 1,5 1,6 0,9 0,9 0,9 1,1 1,3 0,04 0,04 0,04 0,04 0,04 0,04 0,04 0,08 0,16 0,6 0,6 0,5 0,6 0,7 0,6 0,8 0,7 0,5 0 1 1 2 2 3 3 4 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 cis countries europe asia africa america figure 17. dynamics of the services imports geographical structure, billion usd source: (derzhavna sluzhba statystyky ukrainy, 2021)16 which ensure financial sustainability, may also differ from previous periods. in other words, a change in the direction of foreign trade can lead to a change in the levels of normal values of financial indicators, which maintain the financial sustainability of companies. 8. innovations figure 18 shows the lowest number of implementations of new production technologies in 2015, and the highest – in 2016. in our opinion, this 16 information for 2010–2013 is given without taking into account the temporarily occupied territory of the autonomous republic of crimea and sevastopol, for 2014–2016 – without taking into account the temporarily occupied territory of the autonomous republic of crimea, sevastopol and part of the anti-terrorist operation zone, for 2017–2019 – without temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and parts of the temporarily occupied territories in donetsk and luhansk regions. 17 data for 2010–2014 are given for legal entities and their separate divisions that carried out industrial activities. data for 2014–2019 are given without taking into account the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and parts of the temporarily occupied territories in donetsk and luhansk oblasts. data for 2015–2019 are given for legal entities engaged in industrial activities, with an average number of employees of 50 people and more. indicates a readjustment of production due to changes in the economic environment in 2014–2015. the introduction of new technologies requires preparing and investment, which takes some time. we can assume that in 2014, when economic changes began, enterprises in general completed the introduction of technologies prepared in previous years and canceled the introduction of technologies that were associated with the lost relevance of trade and economic conditions, in particular with cooperation with 2043 2510 2188 1576 1743 1217 3489 1831 2002 2318 11,5 12,8 13,6 13,6 12,1 15,2 16,6 14,3 15,6 13,8 0 2 4 6 8 10 12 14 16 18 0 1000 2000 3000 4000 5000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % nu m be r number of new technological processes and units introduced into production share of the number of industrial enterprises that implemented innovations (products and/or technological processes) in the total number of industrial enterprises, % figure 18. introduction into production of new technological processes and products at in-dustrial enterprises source: (derzhavna sluzhba statystyky ukrainy, 2021)17 three seas economic journal 47 vol. 1, no. 4, 2020 cis countries (which explains the low number of implementations in 2015). following this reasoning, we can assume that in 2015 the companies were engaged in the preparatory processes of technological change and began their implementation, and during 2016 we see a large number of completion of these projects. 9. conclusions thus, analyzing the dynamics of a significant number of indicators of ukraine’s economy in the period 2010–2019, we can draw some conclusions. we must acknowledge the existence of the economic crisis that began in 2014. in support of this, the decline in the physical volume of gdp, the fall in the national currency, rising unemployment, high inflation, falling real average monthly wages, reducing the number of large and medium enterprises, recorded total losses for each of the segments by size of enterprises, negative level of profitability of operating activities, falling foreign economic activity (both exports and imports of goods and services). as a result of the analysis, it was found that crisis phenomena are observed during 2014 and 2015. the values of indicators in 2016 remain a fairly stable trend in the coming years, i.e. this period can be considered non-crisis. the levels of indicators of the pre-crisis period differ from the levels of the post-crisis period. we can observe the indicators of the national currency exchange rate, the structure of employment and the structure of labor costs by size of enterprises, the distribution of total sales by size of enterprises, shares of profitable enterprises and levels of operating profitability by size of enterprises, changes in sales goods produced on the territory of ukraine, a radical change in the structure of foreign trade in geographical areas. given the above, we reach the following conclusions. in order to build an adequate and relevant model of financial sustainability, it is unacceptable to use the reports of enterprises from the crisis periods of 2014–2015. the use of pre-crisis reports until 2013 may lead to an outdated model, which may demonstrate the low accuracy of estimates of new observations. data from the period beginning in 2016 are the most suitable for building a model of financial sustainability of enterprises. references: debunov, l. m., & yakovenko, a. g. (2019). analiz sychasnykh pidkhodiv do vyvchennia poniattia finansovoi stiikosti pidpryiemstva [analysis of modern approaches to defining the concept of financial sustainability оf enterprise]. scientific notes of the national university ostroh academy, series economics, no. 12(40), pp. 86–91. doi: 10.25264/2311-5149-2019-12(40)-86-91 debunov, l. m., & yakovenko, a. g. (2019). formuvannia datasetu ta vybir parametriv dlia pobudovy shtuchnoi neironnoi merezhi klasyfikatsii pidpryiemstv za finansovoiu stiikistiu [formation of the dataset and selection of parameters for the building of the artificial neural networks of the enterprises financial sustainability classification]. review of transport economics and management, no. 17, pp. 158–169. doi: 10.15802/rtemt.v0i1(17).176655 debunov, l. (2019). modeling company’s financial sustainability with the use of artificial neural networks. economy and forecasting, no. 3, pp. 76–93. doi: 10.15407/econforecast2019.03.076 derzhavna sluzhba statystyky ukrainy (2021). statystychna informatsiia [statistical information]. kyiv: informatsiino-analitychne ahentstvo. available at: http://www.ukrstat.gov.ua natsionalnyi bank ukrainy (2021). ofitsiinyi kurs hryvni shchodo inozemnykh valiut [official hryvnia exchange rate against foreign currencies]. available at: https://bank.gov.ua/ua/markets/exchangerates?date=31.01.2021& period=daily ukaz prezydenta ukrainy no. 549/2015 (2015). pro rishennia rady natsionalnoi bezpeky i oborony ukrainy vid 2 veresnia 2015 roku ‘‘pro zastosuvannia personalnykh spetsialnykh ekonomichnykh ta inshykh obmezhuvalnykh zakhodiv (sanktsii)” [on the decision of the national security and defense council of ukraine of september 2, 2015 “on the application of personal special economic and other restrictive measures (sanctions)”]. available at: https://www.president.gov.ua/documents/5492015-19437 ukaz prezydenta ukrainy no. 550/2015 (2015). pro rishennia rady natsionalnoi bezpeky i oborony ukrainy vid 17 veresnia 2015 roku “pro vnesennia zmin do dodatka 1 do rishennia rady natsionalnoi bezpeky i oborony ukrainy vid 2 veresnia 2015 roku “pro zastosuvannia personalnykh spetsialnykh ekonomichnykh ta inshykh obmezhuvalnykh zakhodiv (sanktsii)” [on the decision of the national security and defense council of ukraine of september 17, 2015 “on amendments to annex 1 to the decision of the national security and defense council of ukraine of september 2, 2015” on the application of personal special economic and other restrictive measures (sanctions)“]. available at: https://www.president.gov.ua/documents/5502015-19438 verkhovna rada ukrainy (2014). uhoda pro asotsiatsiiu mizh ukrainoiu, z odniiei storony, ta yevropeiskym soiuzom, yevropeiskym spivtovarystvom z atomnoi enerhii i yikhnimy derzhavamy-chlenamy, z inshoji storony [association agreement between the european union and the european atomic energy community and their member states, of the one part, and ukraine, of the other part]. available at: https://zakon.rada.gov.ua/laws/show/984_011#text three seas economic journal 35 vol. 1, no. 3, 2020 corresponding author: 1 poltava state agrarian academy, ukraine. e-mail: zorya31031983@gmail.com orcid: https://orcid.org/0000-0002-5916-4689 researcherid: r-1681-2016 2 poltava state agrarian academy, ukraine. e-mail: serhienko.volodymyr14@gmail.com doi: https://doi.org/10.30525/2661-5150/2020-3-6 theoretical and methodological principles of formation of investment and innovation strategy at the enterprise оleksii zoria1, volodymyr serhienko2 abstract. the purpose of the article is to develop and theoretically substantiate the mechanism of formation of investment and innovation strategy of the enterprise in the conditions of institutional transformations. it has been established that future competitiveness is associated with innovation, and for enterprises it is associated with their innovative activity. at the same time, the innovations themselves become objects of investment. methodology. in the course of the research, scientific methods were used that took into account the laws and regularities of economic theory, agrarian economics, agrarian management, the dialectical and historical approach to scientific knowledge. results. for enterprises operating in modern conditions, it is advisable to form an investment and innovation cross-functional strategy, which allows to coordinate tasks in the field of innovation and investment in achieving the goals of the overall strategy. the essence of innovation and investment strategy is based on limited resource provision of development processes, taking into account that investments act as an independent source of competitiveness and as a means for innovative development, but must be implemented in a better combination of investment directions. in addition, the investment and innovation strategy allows to provide the necessary cyclical processes of enterprise development in combination with the cyclical nature of the economy for a long period. investment and innovation strategy must have a structural integrity in terms of resource use and impact on the enterprise as a whole. this strategy of the enterprise should be consistent with the overall strategy, contribute to the achievement of common goals, strengthen the competitive, financial, technological position of the enterprise, as well as create opportunities for further growth and development. the role of investment and innovation strategy is subordinated to the strategic goals of the enterprise and is transformed depending on the type and objectives of the overall strategy, can range from full focus on creating and implementing innovation to investment in support of current activities and sustainability. practical implications. the practical significance of the study is that its scientific and theoretical results, proposals, conclusions and generalizations form the scientific basis for solving the problem of formation of investment and innovation strategy of the enterprise in modern conditions. value/originality. the implementation of the proposed measures will increase the efficiency of enterprises of all sectors of the national economy and ensure the process of formation of investment and innovation development of the economy. key words: investment and innovation strategy, development, enterprise, efficiency, mechanism, management. jel classification: d25, l26, o32 1. introduction the search for and implementation of various measures to support and improve the efficiency of enterprises is associated with anticipating changes in the future. investments allow you to use the existing opportunities in the markets through the change or expansion of production, to maintain fixed assets at a stable production level, to create and develop the infrastructure of sales systems and much more. at the same time, as practice shows, investment alone to obtain unique competitive advantages is becoming insufficient in our time. future competitiveness is now associated with innovation, and in the case of enterprises, with its innovation or innovation activity. at the same time, the innovations themselves become objects three seas economic journal 36 vol. 1, no. 3, 2020 of investment. accordingly, there is a dilemma in the paradigm: investment or innovation is needed by the company to maintain current and ensure future competitiveness. an additional complication is created by the current production and economic situation at the enterprise, which may require the diversion of investment resources from development goals to solve current problems. all these processes take place in conditions when it is necessary to ensure a certain stability of the economic situation of the enterprise for the entire period of investment in innovation, the risk of which is traditionally significant. management decisions made at the enterprise in these conditions require the use of a serious theoretical basis for choosing from a variety of alternatives and economic justification of current and future effects, taking into account possible risks. traditionally, long-term decisions on setting goals of the enterprise and determining ways to achieve them are considered in the framework of strategic planning, as a result of which form a development strategy. however, the place and role of innovation and investment in the strategy of the enterprise in modern conditions requires rethinking, namely, what place innovation should play in changing technological systems, what share of investment resources should be directed to innovation and how, from the management point of view, to combine strategic decisions; in the field of investment and in the field of innovation. 2. the place and role of investment and innovation strategy in enterprise management as you know, the starting point for developing a strategy is to decide what the company will earn in the short and long term: 1) a well-known product (by investing in increasing production, investing in diversification projects, penetrating new markets and etc.); 2) innovative product (by investing in the implementation of innovations) (marmul, ksonzhyk, 2011). based on the conclusions that innovation cannot be carried out separately from the current activities of the enterprise and requires the cost of financial, labor, material resources, decisions in the field of investment and innovation sphere of strategic decisions the strategy is not formed a strategy is formed asset withdrawal and business reduction strategy strategy for using existing opportunities in existing business the strategy is based on the scaling of existing technologies (without innovation) the strategy is based on innovative solutions (there is a scientific, technical or organizational and economic novelty) reduction strategies in the existing business, in the existing market new markets (with existing product) existing market new market strategies for growth, development, stability sphere of investment and innovation strategies figure 1. the scope of strategic decisions of the enterprise and the place of investment and innovation strategy three seas economic journal 37 vol. 1, no. 3, 2020 strategy are superimposed on several functional strategies (figure 1). the role of investment and innovation strategy for each of the types of strategy (development, growth, stability and reduction) varies depending on the priorities of the owners and management of the enterprise and, accordingly, changes the contribution of this strategy to achieving overall development goals (heiets, semynozhenko, 2006). in the case of choosing a strategy of development, growth or stability, one of the tools to achieve strategic goals can be innovations of varying degrees of radicalism. thus, the role of investment and innovation strategy may be as follows: 1) maintaining or strengthening the innovative (usually technological) position of the enterprise as a result of the introduction of innovations, which will affect the share of revenue received from the sale of products manufactured using innovative solutions; 2) maintaining or increasing market share by improving existing or bringing new products to market; 3) ensuring the necessary for the company the average return on investment; 4) ensuring the growth of the value of the enterprise on the basis of both investments with acceptable profitability for the enterprise, and by increasing operational efficiency provided through the introduction of innovations. the interests of business owners, regardless of the chosen strategy include both receiving dividends and increasing the value of available assets. accordingly, when developing an investment and innovation strategy should take into account its impact on the value of the enterprise; 5) maintaining financial stability or strengthening it. when carrying out investment and innovation activities, significant funds can be diverted, which will increase the debt burden of the enterprise. an investment and innovation strategy is being developed as an integral part of the overall strategy and should not hinder the achievement of its goals, including in the field of finance. 3. the mechanism and elements of development of investment and innovation strategy of the enterprise the development of investment and innovation strategy as a large and complex task can be done in different ways. in the field of strategic planning and management of investment and innovation activities, we can identify general elements of the mechanism for developing investment and innovation strategy: 1) elements aimed at the implementation of processes related to the preparation for the development of investment and innovation strategy, including approaches and methods of assessing the strategic position of the enterprise and approaches to the development of the overall strategy; 2) elements related to project evaluation and risk assessment associated with these projects; 3) elements related to the implementation of the strategy, which include the main stages of the cycle of strategic management of the enterprise, related to the implementation of the approved innovation and investment strategy. in any case, it is important to keep in mind that the investment and innovation strategy is developed not only to achieve the objectives of innovation as such, but also the objectives of the overall strategy, which necessitates their coordination and linkage. on the other hand, the development of investment and innovation strategy should include the definition of the approach and sources of investment, without which the implementation of decisions will be impossible. 4. the main types of investment and innovation strategies of the enterprise the development of investment and innovation strategies should take into account the need to ensure a balance of limited resources between investment, innovation and current activities. under these circumstances, business owners and management of the enterprise in the presence of a number of potential projects and activities face the problem of choosing among them only those that should be implemented in the first place. another important decision is to choose the type of strategy that the company will follow. given that the implementation of any strategy requires investment resources, we can rely on the most well-known classifications of investment strategies (balatskyi, 2004). the following main types of investment and innovation strategies can be identified: 1) offensive investment and innovation strategy or strategy of the technological leader, which is characterized by the highest level of risk, growth of innovative activity of the enterprise and the possible introduction of basic innovations. due to the large amount of research performed and three seas economic journal 38 vol. 1, no. 3, 2020 a significant increase in the technological level on this basis, the problem of reducing the cost of production, increasing market share, as well as ensuring the possibility of making a profit; 2) protective innovation and investment strategy, which involves following the market leaders in the field of innovation. the degree of risk of implementing this protective type of strategy is lower than the offensive, but the profitability of such enterprises, respectively, is lower than the technological leaders. enterprises that have chosen this type of innovation and investment strategy are characterized by a fairly high level of technology and have a significant market share; 3) investment and innovation strategy of imitation provides a slight improvement of innovations previously released by competitors. at the same time, the introduction of innovations is the basis for increasing profitability; 4) traditional investment and innovation strategy, which assumes that investment in innovation is minimal; 5) absorption of investment and innovation strategy, which is based on the acquisition of licenses for the use of innovations of other enterprises. this type of strategy complements others because when implementing, for example, offensive investment and innovation strategy, the company can implement not only the results of its own development in its activities, but technological solutions of competing companies on the basis of a license. at the same time, it should be noted that if the typology of investment and innovation strategies is well developed, the approach to determining the type of strategy for a particular enterprise is a task that requires further research. 5. ways to ensure consistency of investment and innovation strategy with the overall strategy of the enterprise the tools for developing an innovation and investment strategy should ensure its coherence, which affects the following areas: 1) ensuring a balance between projects related to the implementation of innovations and, accordingly, not related. this balance is based on the ratio of planned profitability and the expected degree of risk of investment and innovation activities; 2) the cumulative effect of the implementation of investment and innovation strategy both from a financial standpoint, expressed as income from investments and from a market position, which involves strengthening competitiveness and increasing the value of the enterprise on this basis, should meet the objectives set in the overall enterprise development strategy; 3) consistency in the inclusion in the investment and innovation strategy of projects related to innovations of varying degrees of radicalism. the radicalism of the implemented innovations depends on the characteristics of the industry, in particular, the life cycle of the applied technologies. for those industries that are characterized by technology consistency, improving innovation is a priority over basic ones. thus, when developing an investment and innovation strategy, it is necessary to analyze the industry in terms of life cycle to determine its type; 4) consistency of investment and innovation strategy implies coordination between qualitative and quantitative goals, determining what the competitive advantages of the enterprise in the future are based on, what the planned return on investment in investment and innovation activities is, what the basis for generating free cash flow or improving the quality of products is, which is carried out to expand market presence. achieving a balanced investment and innovation development of the enterprise is associated with solving a number of tasks, namely (marmul, ksonzhyk, 2011): 1) balanced development in time of traditional production and production, which is carried out with the use of innovations (management of investment processes to create innovative products with the prevention of temporary gaps in economic turnover); 2) problems of rational combination of innovations of various degrees of radicalism; 3) balanced investment in the main areas of creation of innovative products of the enterprise (from marketing to the consolidation of copyright); 4) problems of stock of investment opportunities of the enterprise. recognizing the need to develop scenarios and balance in the formation of investment and innovation strategy, it is important to determine how to achieve innovation and investment goals. achieving goals is almost impossible without filling the strategy with essential content, which allows you to consistently implement investments and obtain the necessary effects. in modern management the project approach is used for this purpose, application of which both during strategy three seas economic journal 39 vol. 1, no. 3, 2020 development, and at its realization is the most expedient from the practical point of view. projects included in the strategy should be selected based on the criteria of consistency and bring the greatest effect to the company. 6. conclusions clarification of the essence and role of investment and innovation strategy of enterprises allowed to make the following conclusions and generalizations: 1) for enterprises operating in modern conditions, it is advisable to form an investment and innovation strategy, which is cross-functional and allows to coordinate tasks in the field of innovation and investment in achieving the goals of the overall strategy; 2) the essence of innovation and investment strategy is based on limited resource provision of development processes, taking into account that investments act as an independent source of competitiveness and as a means for innovative development, but must be implemented in a better combination of investment directions. in addition, the investment and innovation strategy allows to provide the necessary cyclical processes of enterprise development in combination with the cyclical nature of the economy for a long period; 3) investment and innovation strategy must have a structural integrity in terms of resource use and impact on the enterprise as a whole. this strategy of the enterprise should be consistent with the overall strategy, contribute to the achievement of common goals, strengthen the competitive, financial, technological position of the enterprise, as well as create opportunities for further growth and development; 4) the role of investment and innovation strategy is subordinated to the strategic goals of the enterprise and is transformed depending on the type and objectives of the overall strategy, can range from full focus on creating and implementing innovation to investment in support of current activities and sustainability. the conclusions and generalizations are consistent with the provisions of economic policy, which provide for effective economic development through the comprehensive implementation of innovations and active investment activities of enterprises. references: aranchii, v. i., zoria, o. p., & holban, t. t. (2019). stratehichni napriamy investytsiino-innovatsiinoho rozvytku ahrarnoho vyrobnytstva na haluzevomu ta hospodarskomu rivniakh [strategic areas of investment-innovation development of agricultural production at the industry and economic level]. prychornomorski ekonomichni studii, vol. 45, pp. 33–38. balatskyi, o. f. (2004). upravlinnia investytsiiamy [investment management]. sumy: universytetska knyha. vinichenko, i. i. (2010). investytsiina diialnist silskohospodarskykh pidpryiemstv [investment activity of agricultural enterprises]. donetsk: yuho-vostok. marmul, l. o., & ksonzhyk, i. v. (2011). investuvannia innovatsiinoho rozvytku kharchovykh i pererobnykh pidpryiemstv [investment innovative development of food and processing enterprises]. mykolaiv. plaksiienko, v. ya. (2011). formuvannia investytsiinoho klimatu v pidpryiemstvakh ahrarnoho sektoru ukrainy [formation of the investment climate in enterprises of the ukrainian agrarian sector]. visnyk poltavskoi derzhavnoi ahrarnoi akademii, vol. 2, pp. 202–206. sokoliuk, k. yu. (2013). investytsiinyi proekt yak zasib realizatsii investytsiinykh resursiv [the investment project as an instrumentality for investment resources implementing]. economic science, vol. 1, no. 77, pp. 82–91. heiets, v. m., & semynozhenko, v. p. (2006). innovatsiini perspektyvy ukrainy [innovative prospects of ukraine]. kharkiv. three seas economic journal 84 vol. 1, no. 3, 2020 corresponding author: 1 prydniprovska state academy of civil engineering and architecture, ukraine. e-mail: fisunenko.pavlo@pgasa.dp.ua orcid: https://orcid.org/0000-0002-1339-5860 doi: https://doi.org/10.30525/2661-5150/2020-3-14 methodical approach to determination of level of innovation competitiveness of construction enterprises pavlo fisunenko1 abstract. the purpose of the paper is to develop and prove the combined methodical approach to estimation of the level of innovation competitiveness of construction enterprises. methodology. theoretical and methodical basis of the research is the system approach to study of fundamental concepts of economic science to providing enterprises’ competitiveness. development of the combined methodical approach is based on the results of comparative analysis of the existing approaches to estimation of companies’ competitiveness, including researches of the methods assessing total competiveness as well as its separate components. dialectical and abstract logical methods as well as induction and deduction were used to generalize theoretical and methodological aspects of competitiveness evaluation and develop the combined approach. the results of the comparative analysis of publications devoted to estimation of enterprises’ competitiveness showed that the approach used by the researchers is based on using one or several methods of evaluation: based on the competitive advantages theory, effective competition, quality of goods, matrix, integral, scoring, analytical hierarchy, vikor and others. all these methods that can be used to estimate innovation competitiveness of construction companies are divided into three groups: quantitative, qualitative, and specialized. a combined approach to estimation of construction enterprises’ competitiveness based on combination of methodical concepts of stakeholder analysis theory (interested parties) using comparative advantage, matrix and integrated methods. practical implications is development of scientific, methodological and practical approach to estimation of construction enterprises’ competitiveness allowing to receive the basis to creating the strategy of innovation competitiveness in order to provide economical safety. value/originality is development of theoretical, methodological and applied aspects of estimation construction enterprises’ competitiveness including combined methodical approach as a complex of separate blocks, each is aimed at solving separate research task and has one purpose. key words: enterprise, competitiveness, level, estimation, method. jel classification: d20, o31, l74 1. introduction determination of the level of the enterprise’s innovative competitiveness is the basic moment for the strategy of innovation competitiveness development in order to prove its economical safety. researches and scientific analysis of the materials studying innovative competitiveness allowed to determine that innovative competitiveness was an aggregated characteristic of fulfilling innovative activity and competitive advantages as its result that are company’s assets and parameters forming its positive differences comparing to competitors due to innovative activity. estimation of the enterprise’s innovation competitiveness is assessing its ability to develop and use innovations in order to gain competitive advantages at the certain market and determine its level which is a complicated task of interpretation and estimation of aspects that characterize enterprise’s innovative activity that forms its innovative competitiveness. determination of the level of the enterprise’s innovation competitiveness should facilitate: motivation for managerial decisions, determination the ways of increasing innovative management and production, modernization of technology, implementation of modern innovative instruments, financing innovations and organizational provision of their using, development the ways three seas economic journal 85 vol. 1, no. 3, 2020 of costs optimization, increasing customer focus of innovations that helps to succeed in the competition for the customer and sales market. multilevel character of competitive interaction of construction companies causes wide range of approaches to estimation of their innovation competitiveness. 2. comparative analysis of the existing approaches to estimation considering the fact that nowadays there are no accepted methodological approaches to estimation of enterprises’ innovation competitiveness, meanwhile characteristics and specific activity of every construction company causes necessity of careful choice of the estimation method of its general competitiveness or its separate elements, we have carried out comparative analysis of existing works in the sphere of estimation of enterprises’ competitiveness. the results of comparative analysis of publications devoted to estimation of enterprises’ competitiveness showed that the approach used by researchers are based on one or several methods of estimation. the variety of methods of enterprises’ competitiveness evaluation used by the researchers caused necessity of their generalization and systematization in order to choose the most appropriate ones to assess construction companies’ competitiveness. based on the analysis of the existing works (sakhno, 2012), the largest groups of methods of companies’ competitiveness evaluation based on the theories of comparative advantages, effective competitiveness, quality of the product, matrix and integral were determined. it is offered to estimate enterprises’ competitiveness on the basis of scoring method of rating model using methods of multicriteria analysis (balan & anisimova, 2011). the work presents estimation of competitiveness using instruments of multicriteria optimization, in particular methods of analytic hierarchy (t. saati) and vikor (balan & prymak, 2014). v. oberemchuk, d. yatskoviy, h. ivaschenko, o. mlotok developed their methodological approaches based on the theory of effective competition. according to this theory, the most competitive enterprise is the one with the best organization of financial, production and sales activity. based on assessing of indices of enterprises’ effective activity, financial state, effective sales organization enterprise competitiveness ratio is determined. according to the theory of effective competitiveness widening the list of standard indices such directions of estimation were proposed: competitiveness of product, financial state of an enterprise, effectiveness of promotion and sales, effectiveness of production, enterprises’ competitive potential, production ecological compatibility, social effectiveness, image of the enterprise (oberemchuk, 1999). the methodological approach to competitiveness estimation based on enlargement of indices developed by v. oberemchuk includes six groups: production effectiveness, business activity, financial state, effectiveness of promotion and sales, effectiveness of investment and innovative activity, position on securities market was proposed (yatskovyi, 2013). it was proposed to estimate the company’s competitiveness in such areas: effectiveness of production activity, effectiveness of financial activity, effectiveness of human resources management, effectiveness of innovation activity, effectiveness of marketing activity (ivashchenko, 2004). methodological approach offered by o. mlotok, is also based on methods of effective competition theory and deals with four areas: effectiveness of production activity, financial state, effectiveness of promotion and sales, competitiveness of the product. it deals with the most important spheres of the company’s activity and excludes doubling separate indices (mlotok, 1998). estimation of the company ’s competitiveness is based on assessing their financial condition, efficiency of their economic activity and products competitiveness (lupak, 2010; yevchuk, 2010). company ’s financial stability is used besides mentioned above estimation (shhiborshh, 2000). estimation of enterprise’s competitiveness is based on methods of marketing and financial analysis and includes calculating ratio of marketing testing of competitiveness characterizing effectiveness of marketing activity as well as current ration and equity to non-current assets ratio (bilousov, 2010). 3. groups of methods estimating enterprise’s competitiveness therefore, all the methods for estimation companies’ competitiveness used for assessing innovative competitiveness of construction three seas economic journal 86 vol. 1, no. 3, 2020 companies can be divided into three groups: quantitative, qualitative and specialized. qualitative methods are basically used in conditions of limited statistic data. they include method of expert survey determining nature of market phenomenon, factors influencing the company’s competitiveness and other qualitative characteristics of its activity. among them there are swot analysis, snw analysis, pest analysis and stakeholders’ analysis. quantitative methods have high level of mathematic formalization, estimation accuracy and objectivity. they are based on quantitative indices. the information basis for these methods is financial, accounting, statistic data of the company. specialized methods allow to estimate the competitiveness of separate aspects of the company’s activity – production, innovation, marketing, financial, etc. methodological aspects of the complex estimation of enterprise’s competitiveness is presented in the work of a. levytska, having formed complex approach when using complex of methods of enterprise’s competitiveness to get deeper evaluation (levytska, 2013). 4. combined approach to estimation of innovation competitiveness despite considerable methodical development choice of the approach considering all aspects of enterprise’s innovation activity and satisfying interests of all interested parties of construction enterprise is still actual nowadays. logics of the proposed methodological approaches is doubtless considering theoretical issue, however it is necessary to provide its flexibility and alternative options of different methods using in specific economic conditions of enterprises’ functioning due to lack of official information concerning innovative activity of construction enterprises. this will allow to get full information about the level of innovation competitiveness of construction enterprises comparing with others. in our opinion, an approach based on combination of methodical aspects of the theory of stakeholders’ analysis (interested parties) using methods of comparative advantages, matrix and integration methods can satisfy all these demands. therefore, while assessing elements of estimation approach the purpose of estimation: to determine level of innovation competitiveness of a construction enterprise researching task to estimate level of innovations implementation and usage into construction companies’ activity estimation and reputation block analytical and modelling block analytical and identification block comparative and diagnosis block block of estimation and statement to estimate level of satisfaction of interested parties with activity of construction enterprises to determine dependence between the level of satisfaction of interested parties and innovative activity of a construction enterprise to determine level of satisfaction of interested parties caused by innovative activity of a construction enterprise to compare construction companies and determine their innovation competitiveness (considering separate elements and in general) figure 1. elements of the combined methodological approach to estimation of innovative competitiveness of construction enterprise considering interested parties three seas economic journal 87 vol. 1, no. 3, 2020 construction enterprises’ innovation competitiveness it is necessary to use a combined methodical approach, based on using different elements combinations of existing methodical approaches adding each other and it demands survey of different interested parties, analysing their opinions and determining regularity. such a methodological approach is offered to present as a complex of separate blocks, each aiming at solving a separate research task and leading to the same purpose (figure 1). the first one is block of estimation and statement providing estimation of the level of implementation and using innovations (technological, organizational and managerial) in the construction company’s activity by means of scoring estimation. when conducting a survey of the construction company’s employees of different categories (managers, specialists, workers) it is offered to estimate the level of implementation of different types of innovations. the second one is estimation and reputation block providing scoring of satisfaction level of the interested parties considering the company’s activity and determining the average level of satisfaction of each interested party and aspect of activity. next is analytical and modelling block determining dependence between estimation of the satisfaction level of the interested parties and assessing its innovation activity. in order to provide this, it is necessary to use methods of correlation and regression analysis and mathematical modelling. next is analytical and identification block determines the satisfaction level of the interested parties caused by innovation activity of construction enterprise. last is comparative and diagnosis block providing determination of the level of construction enterprise’s innovative competitiveness (comparing with other enterprises) based on general indicator. 5. conclusions the researches carried out allowed to make such conclusions: 1. estimation of the company’s innovative competitiveness was the necessary stage of developing the strategy for its economic safety provision. 2. comparative analysis of the existing approaches to estimation of the company’s competitiveness showed that they were based on using one or several methods of estimation. 3. it was determined that all methods of the estimation of the company’s competitiveness could be divided into three groups: quantitative, qualitative, and specialized. 4. the approach based on combining theory of stakeholders analysis using method of competitive advantages, matrix and integral method, was used to estimate innovation competitiveness of construction companies. 5. elements of the combined methodological approach to estimation of the construction company’s innovation competitiveness considering interested parties are analysed. the prospects of the further research in this direction is mathematical formalization of the proposed method and its approbation on the construction companies. the results of estimation of innovative 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(in ukrainian) three seas economic journal 71 vol. 1, no. 2, 2020 corresponding author: 1 black sea research institute of economy and innovation, odesa, ukraine e-mail: o.holovko@gmail.com orcid: https://orcid.org/0000-0002-6813-6735 2 black sea research institute of economics and innovation, odesa, ukraine e-mail: biriukov.ihor.o@gmail.com orcid: https://orcid.org/0000-0001-9609-2592 doi: https://doi.org/10.30525/2661-5150/2020-2-12 reasons and consequences of hidden entrepreneurship in ukraine oleh holovko1, ihor biriukov2 abstract. the purpose of the article is to study the essence, causes and consequences of hidden entrepreneurship in ukraine. the shadowing of economic activity hinders the development of the country’s competitiveness, complicates integration into the european community, negatively affects the growth of social living standards of the population. in ukraine, there is no single approach to the interpretation of the concept of “hidden entrepreneurship”. in most approaches, this phenomenon is associated with illegal business. in some studies, hidden entrepreneurship is associated with the shadow economy. this creates discrepancies in the indicators of the level of the shadow economy in ukraine’s gdp, which distorts the reflection of the real state of threat to the effective development of the economy. the problems of shadowing economic activity have been studied for a long time. at the same time, deepening the understanding of the causal links between hidden entrepreneurship and the prospects of economic development in modern ukraine requires more detail. the methodological basis of this work is the synthesis of general scientific methods of theoretical and empirical research (method of cognition, analysis and synthesis, generalization and systematization of information). results. one of the main parameters of hidden entrepreneurship is the focus on the conscious reflection of performance. thus, informal economic activity, which is mainly related to housekeeping, small services, irregular work, etc., acquires signs of deliberate concealment as a result of legal production and sale of unregistered goods and services. carrying out economic operations prohibited by law turns economic activity into illegal or criminal. thus, each subsequent type of hidden business receives additional characteristics regarding the legality of economic transactions. we identify four main groups of reasons for the emergence of hidden entrepreneurship: economic, socio-political, administrative, moral and ethical, psychological reasons. hidden entrepreneurship provides employment to the part of the country’s population that has no sources of income (pensioners, pregnant women, people with no work experience, youth, minors, etc.). in addition, hidden business goods and services are affordable for socially vulnerable groups, partially reducing the social tensions that exist in society. practical implications. given that the level of the shadow sector in ukraine is quite high (over 30% of gdp) now, its impact on economic development is negative. therefore, identifying the root causes, as well as awareness of the negative consequences of further development of hidden entrepreneurship for the national economy should become the foundation for the transformation of the institutional environment in the country. understanding these implications will identify the most promising ways to reduce the level of the shadow economy and promote the use of the positive effects of hidden entrepreneurship to develop the necessary incentives for entrepreneurs. value/originality. the use of comprehensive analysis allows to identify the main problems of hidden entrepreneurship, taking into account the specifics of its manifestation in modern conditions. key words: hidden entrepreneurship, shadow economy, level of the shadow economy, effects of hidden entrepreneurship, basic characteristics of hidden entrepreneurship jel classification: o17, p21 three seas economic journal 72 vol. 1, no. 2, 2020 1. introduction hidden entrepreneurship in the national economy is closely linked to the shadowing of economic entities’ activity. in turn, the shadowing of economic activity hinders the development of the country’s competitiveness, complicates integration into the european community, negatively affects the growth of social living standards of the population. in ukraine, there is no single approach to the interpretation of the concept of “hidden entrepreneurship”. in most approaches, this phenomenon is associated with illegal business. in some studies, hidden entrepreneurship is associated with the shadow economy. this creates discrepancies in the indicators of the level of the shadow economy in ukraine’s gdp, which distorts the reflection of the real state of threat to the effective development of the economy. 2. hidden entrepreneurship concept the problems of shadowing economic activity have been studied for a long time. the basic principles of the emergence of shadow economic activity are considered in the scientific works by p. gutmann, w. tanzi, w. thyssen, e. feige and other scientists. some aspects of the functioning of the shadow sector in the national economy are studied by z. varnaliy, s. mocherny, i. mazur, a. skoruk, and others. in particular, the works of these scientists have deeply analyzed the essence of the shadow economy, identified its types, summarized the main consequences for the economy, social sphere and national security in general. thanks to the research of these authors, most of the main issues of hidden entrepreneurship are revealed, the causes and patterns of shadow economy development, characteristics of the main types and mechanisms of hidden economic activity, methods of assessing the scale of the shadow economy and ways to unshadow the economy. at the same time, deepening the understanding of the causal links between hidden entrepreneurship and the prospects of economic development in modern ukraine requires more detail. setting objectives. the purpose of the article is to study the essence, causes and consequences of hidden entrepreneurship in ukraine. the methodological basis of this work is the synthesis of general scientific methods of theoretical and empirical research (method of cognition, analysis and synthesis, generalization and systematization of information). 3. basic characteristics of hidden entrepreneurship in research, hidden entrepreneurship is usually seen in the context of the functioning of the shadow economy. understanding the shadow economy makes it possible to identify the basic characteristics of hidden entrepreneurship in relation to the implementation of any economic activity. in particular, such characteristics include the ability to account for, detect and control the results of economic transactions (table 1). one of the main parameters of hidden entrepreneurship is the focus on the conscious reflection of performance. thus, informal economic activity, which is mainly related to housekeeping, small services, irregular work, etc., acquires signs of deliberate concealment as a result of legal production and sale of unregistered goods and services. carrying out economic operations prohibited by law turns economic activity into illegal or criminal. thus, generalizing views on the shadow economy, it is advisable to distinguish between three types of shadow entrepreneurship (figure 1). in this case, each subsequent type of hidden business receives additional characteristics regarding the legality of economic transactions. it should be emphasized that informal and hidden types of economic activity are related to the motives of providing basic living conditions in times of economic crisis. therefore, it is impossible to fight them, their volume and scale should be reduced, creating favorable living conditions, doing business, reducing tax pressure. corruption as part of the shadow economy should be overcome by creating unfavorable conditions for its existence. on the contrary, prohibited economic activities (arms, drug trafficking, terrorist financing, etc.) as the criminal part of the economy should be overcome through constant monitoring and control. the problem of shadowing of the economy became important in the late 20th century, when the shadow sector began to penetrate into all spheres of economic and social relations in almost all countries, regardless of the level of development of the national economy. however, in some countries the shadow economy is at a level that does not have a significant impact on the economy (5-12% of gdp), and in others it has a negative impact on all socio-economic processes (over 30% of gdp) (skoruk, 2017). in general, the level of economic shadowing is considered normal at 10-12% of gdp, critical three seas economic journal 73 vol. 1, no. 2, 2020 for the legal economy – 20%, catastrophic – 40% (tsvihun, nechyporuk, 2018). according to preliminary data of the ministry for development of economy, trade and agriculture of ukraine in january-march 2020 there was a decrease in the level of the shadow economy to 31% of official gdp, which is 1% less than in the same period of 2019. thus, hidden economic transactions in the national economy remain at a fairly significant level, although they do not reach a critical level. in some european countries (the czech republic, poland, slovenia, slovakia, croatia, bulgaria, ukraine, etc.) the level of shadowing of economic activity ranges from 10.1% to 26.9% of gdp (national bank of ukraine, bank.gov.ua/news). given the specifics of the emergence and development of hidden entrepreneurship, the main reasons include bans and restrictions, as well as the inefficiency of the business regulation system (bureaucracy, tax burden, distrust of state institutions, etc (mazur, 2017). table 1 basic characteristics of hidden entrepreneurship signs of hidden entrepreneurship definition of the term “shadow economy” researcher activity not taken into account by official statistics «part of the gross national product, which, due to its lack of reporting and (or) underestimation of its value, is not reflected in official statistics» tanzi, v. 1982 «activities that create new value are not taken into account by official statistics» thiessen, u. 1997 «all economic activity, which for some reason is not taken into account by official statistics». feige, e. 1980 «any economic activity not taken into account by official statistics» gutmann, p. 1977 «economic activity that is not accounted for, not controlled and not taxed by the state and (or) is aimed at generating income by violating applicable law» turchynov, a. 1955 informal and / or illegal income-oriented economic transactions «type of economic activity aimed at obtaining prohibited income, evading state, supranational and public control and paying taxes when carrying out legal types of economic activity» mochernyi, s. 2002 «complex socio-economic phenomenon, which is a combination of uncontrolled and unregulated both illegal and legal, but immoral economic relations between economic entities regarding profit by concealing incomes and tax evasion» varnalii, z. 2009 «a hidden and / or not hidden economic activity, the purpose of which is to intentionally or compelled to obtain super-profits as a result of uncontrolled socioeconomic relations» skoruk, o. 2017 types of shadow entrepreneurial activity «informal» unregulated production of goods and services (household production; non-permanent services; small-time jobs, etc.) «illegal / criminal» prohibited activities (corruption, drug trafficking, etc.) «hidden» legal production and sale of unregistered goods and services (construction, household, medical, etc.) figure 1. types of shadow entrepreneurial activity three seas economic journal 74 vol. 1, no. 2, 2020 4. main groups of reasons for hidden entrepreneurship summarizing scientific views on the reasons for the development of the shadow sector in the economy (mazur, 2017, tsvihun, nechyporuk, 2018, prystupa, tchaikovskyi, 2019), we can identify main groups of reasons for the emergence of hidden entrepreneurship (table 2). a contradictory view of the problems of hidden entrepreneurship in research is the assessment of the consequences of this phenomenon for economic development (podmazko, 2013, prystupa, tchaikovskyi, 2019, gordeychuk, 2019). among the main consequences of the shadowing of entrepreneurship, there are negative and positive (figure 2). it should be noted that the positive consequences are inherent only in “informal” and “hidden” types of economic activity and are to some extent constructive. thus, hidden entrepreneurship provides employment to the part of the country’s population that has no sources of income (pensioners, pregnant women, people with no work experience, youth, minors, etc.). in addition, hidden business goods and services are affordable for socially vulnerable groups, partially reducing the social tensions that exist in society. in fact, hidden entrepreneurship in ukraine coexists with the legal economy (gordeychuk, 2019). however, hidden entrepreneurship does not improve the system of economic regulation, but only exacerbates the struggle for the division of existing markets, is a threat to socio-political stability of society. restraining the development of hidden entrepreneurship is seen in the “detailing” and the fight against the shadow economy. however, in order to effectively counteract the spread of shadow entrepreneurship to critical scales, it is necessary to improve the institutional environment for doing business. it is especially difficult for national entrepreneurs to withstand the tax burden regardless of the results of their work. in conditions of instability, it is difficult for entrepreneurs to work legally, as the growth of expenditures on compliance with the legal conditions of business significantly exceeds the risks of shadow activities. 5. conclusions theoretical generalization of the problem of the emergence and causes of the development of hidden entrepreneurship creates conditions for determining methods to reduce its level in table 2 the reasons for the emergence of hidden entrepreneurship in the national economy group of reasons specification of reasons economic reasons – high taxes; high rates, large numbers and complex tax calculations; – the crisis of the financial system; – deformation of the employment structure; – the desire of entrepreneurs to minimize costs and make a profit; – establishment of preferential conditions for functioning of certain business entities; socio-political reasons – entrepreneurs’ uncertainty about the stability of the economic and political courses; – low institutional support for economic policy; –corruption; – shortcomings of the tax system; – imbalance of state regulatory policy; – imperfection of budget policy; – low level of social benefits received by employed workers in legal economic activity; – political instability administrative reasons – a considerable number of mechanisms of shadow operations; – little responsibility for wrongdoing and tax evasion; – inefficient management of state property and protection of owners’ rights; – shortcomings in the activities of the judiciary; – poor training of law enforcement officials in new economic conditions moral and ethical, and psychological reasons – condemnation of illegal activity; – low level of consciousness due to socio-political instability; – high level of uncertainty in the future; – the relationship of business with criminal structures source: (mazur, 2017; tsvihun, nechyporuk, 2018; prystupa, tchaikovskyi, 2019) three seas economic journal 75 vol. 1, no. 2, 2020 ukraine at the present stage. given that the level of the shadow sector in ukraine is now quite high (over 30% of gdp), its impact on economic development is negative. therefore, identifying the root causes, as well as awareness of the negative consequences of further development of hidden entrepreneurship for the national economy should become the foundation for the transformation of the institutional environment in the country. understanding these implications will identify the most promising ways to reduce the level of the shadow economy and promote the use of the positive effects of hidden entrepreneurship to develop the necessary incentives for entrepreneurs. types of hidden entrepreneurial activity effects the negative effects: – economic (decrease in tax revenues; confusion and unregulated development of the economy; decreased investment attractiveness of the economy; the inability to use shadow funds for emergency purposes (during the war, economic crisis, natural disaster); reducing the competitiveness of the national economy); – political (complexity of state management of the economy; loss of public confidence in state institutions; formation of a negative image of the state in the world); – legal (legal implementation of shadow operations; low liability); – social (the complexity of the state's social functions; high stratification of society; reduction of pensions and social security; lack of social guarantees; inability to provide the population with quality public goods (education, health care, defense, etc.). the positive effects: – economic (accumulation of temporarily available funds; opportunities for the realization of entrepreneurial potential; ensuring the development of competition; creasing the competitiveness of domestic goods by saving money); – social (employment and growth of consumer demand; growth of incomes of enterprises and population; mechanism of social, labor, professional mobility). figure 2. the effects of hidden entrepreneurship references: tanzi, v. (1982). the underground economy in the united states abroad. mass: lexington books lexington. thiessen, u. (1997). the shadow economy: forecasting methods, quantitative assessment problems and conclusions for economic policy. shift to a market economy. reforms in ukraine: an inside look. (in ukrainian) feige, e. (1980). a new perspective on macroeconomic phenomena: the theory and measurement of the unabsorbed sector in the us economy. causes. gutmann, p. m. (1977). the subterranean economy. financial analisis, no. 1, pp. 33–50. turchynov, a. v. (1995). shadow economy: theoretical foundations of research. kyiv: artek. (in ukrainian) mochernyi, s. v. (2002). economic encyclopedia: in three volumes. t. 3. кyiv: vydavnychyi tsentr «akademiia». (in ukrainian) varnalii, z. s. (2009). economic security. kyiv: znannia. (in ukrainian) skoruk, o. v. (2017). shadow economy: the nature, causes of occurrence and ways to overcome it. economy and society (electronic journal), no. 11, pp. 127–131. available at: http://www.economyandsociety.in.ua/ index.php/journal/ (in ukrainian) three seas economic journal 76 vol. 1, no. 2, 2020 tsvihun, t. v., & nechyporuk, o. i. (2018). economic trends: causes and features of influence on economic development. economy and society (electronic journal), no. 19, pp. 251–254. available at: http://economyandsociety.in.ua/journals/19_ukr/37.pdf (accessed 10 january 2020). (in ukrainian) nearly quarter of ukraine’s gdp, or uah 846 billion, is in shadow – study of shadow economy finds. available at: https://bank.gov.ua/news/all/doslidjennya-tinovoyi-ekonomiki-v-ukrayini--mayje-chvertvvp--abo-846-mlrd-griven--perebuvaye-v-tini (accessed 10 january 2020). (in ukrainian) mazur, i., & shyshak a. (2017). socio-economic nature of shadow economy and causes of its development in entrepreneurship. bulletin of taras shevchenko national university of kyiv. economics, no. 1(190), pp. 13–20. available at: https://www.researchgate.net/publication/339617037_socialno-ekonomicna_ priroda_tinovoi_ekonomiki_ta_pricini_ii_rozvitku_v_pidpriemnictvi (accessed 9 january 2020). (in ukrainian) prystupa, t. v., & tchaikovskyi, m. a. (2019). the shadow economy and her influence on the social and economic development of ukraine. azov economic bulletin (electronic journal), no. 1/12, pp. 56–61. available at: http://pev.kpu.zp.ua/journals/2019/1_12_uk/1_12_2019.pdf (accessed 12 january 2020). (in ukrainian) gordeychuk, m. (2019). shadow economy: positive and negative effects traektoriâ nauki = path of science (electronic journal), vol. 5, no. 3, pp. 2001–2007. available at: https://ideas.repec.org/a/pos/ journl/44-3.html (accessed 5 january 2020). (in ukrainian) podmazko, a. (2013). effects of the shadow economy: a comparative analysis of various consequences. ekonomichni innovatsii, no. 53, pp. 187–198. (in ukrainian) three seas economic journal 19 vol. 1, no. 2, 2020 corresponding author: 1 donetsk institute of private joint-stock company “higher education institution “interregional academy of personnel management”, ukraine. doi: https://doi.org/10.30525/2661-5150/2020-2-4 features of enterprise development management by indicators of imbalances oleksandr likhota1 abstract. the paper considers the model of enterprise development management taking into account imbalances, which allows to improve its quality in the short and long term. it is proved that the development and operation of special management functions, the implementation of strategies in the proposed set of measures improves the quality of management in terms of imbalance in the direction of achieving or maintaining the development of the enterprise. it is shown that in order to prevent the risk of losses from imbalances it is necessary to use monitoring, which will identify factors of economic imbalance of enterprise development indicators and identify trends, and the result of its use is to take into account early signals and ensure timely implementation of enterprise development strategy. attention is drawn to the fact that the system of diagnostics of imbalances is characterized by various objects and subjects involved in this process, and its object is a complex highly organized dynamic system and its elements. such work on the diagnosis of imbalances should be carried out by the analytical services of the enterprise, and in the absence of specialists with sufficient knowledge and experience it is possible to purchase analytical services in consulting firms. attention is drawn to the fact that the initial stages of the technology of management decisions are the development of a system of measures, collection of initial information about the situation in the company, morphological analysis of external and internal environment, search for options to avoid imbalances. in order to assess the possibility of implementing strategic directions, it is necessary to distribute them according to the level of priority, adequacy of resource potential, lack of funds, which becomes an incentive to increase the economic stability of the production enterprise. management actions to prevent imbalances in corporate governance should be carried out at the expense of internal resource potential, and depending on the availability of resource and management capabilities, the following types can be used: management: organization; consulting management; crisis management. key words: consensus, compromise, imbalance, vertically integrated corporate structures, enterprise development indicators, special management functions, control algorithm. jel classification: g32, h12 1. introduction relevance of the research topic is connected with the fact that the development of ukraine’s economy in the crisis is characterized by frequent and sharp changes in trends, lack of regularity and sustainable development. in real life, this state of affairs can be characterized as the presence of systemic imbalances, when the characteristics of some elements of the economic system do not meet the needs of others. in parallel, features of management of development of the enterprise by indicators of imbalances allow to justify elements and functions of the corresponding management system, methods of its effective application in practice. in such conditions, it is necessary to determine the degree of compliance of the theory with the needs of the practice of enterprise development management, to form requirements for a set of methods and tools for diagnosing imbalances and to create conceptual provisions for enterprise development management. analysis of publications shows that this problem is given considerable attention in the works of b.m. andrushkiv, yu.p. anisimov, a.v. glazunov, e.l. smolianov, e.m. korotkov, т.v. hrynko, s.v. koverh, n.v. kasianova, v.l. tovazhnianskyi, o.yu. tolkachenko, i.m. dli, o.s. masyutin, s.v. shaposhnikov, m. robson, b. colasse, j.l. gibson, f. ullah. despite the availability of these studies, the issue of enterprise development three seas economic journal 20 vol. 1, no. 2, 2020 management by indicators of imbalances needs to be systematized and further studied. the purpose of the work is a study of the peculiarities of enterprise development management by indicators of imbalances. 2. research materials it is necessary to start the presentation of research materials with the fact that in the current conditions of ukraine there is a significant number of imbalances associated with the needs of enterprises in the workforce, the mismatch of their products to market needs, difficulties in finding investment funds. in such circumstances, enterprises are forced to work in conditions of systemic imbalances, which are superimposed on microimbalances in their internal structure. on this basis, when choosing a technology to manage the company there is a need to take into account the nature of existing problems (standard, typical or non-standard) and determine the features of management. first of all, we consider the features of management depending on the level of balance of the enterprise: consensus; compromise; imbalance. in condition of consensus, management is focused on identifying negative trends. in this case, emphasis should be placed on a preventive management model based on a diagnostic checklist. this model is aimed at anticipating the response to critical factors of imbalances and the formation of a program of preventive action. in the course of such actions, the diagnosis of latent signals of threats to the company 's development is carried out. the imbalance of the system is often preceded by signals, the analysis of which allows to establish the nature of the problems, which makes these actions very important. in conditions of economic disequilibrium (compromise), there are tendencies of increase of tension at the enterprise. in such circumstances, a model is needed to balance the interests of the company and all stakeholders. this model reveals ways to increase the economic balance of the corporate structure. depending on the sufficiency of own potential, the range of measures to regulate imbalance factors is determined. on the basis of regulatory measures the consistent mitigation of acute problems with the subsequent change of a direction of influence of negative factors is provided. in the absence of effective measures, there are uncontrolled trends that lead the company to deepen imbalance. most specifically, the need to manage the development of enterprises in terms of imbalances is manifested in the crisis period (imbalance). during this period, a set of measures is needed to identify the objects of imbalances, assess their consequences, establish points of imbalances and factors of their change, to carry out regulatory measures. the result of regulatory measures is a gradual increase in the balance of economic development of the corporate structure. one of the main elements of enterprise development management is the diagnosis of their economic situation. as indicated by e.m. korotkov, diagnostics provides a definition of the state of an object, subject, phenomenon or process through the implementation of a set of research procedures, identifying weaknesses and bottlenecks. diagnosis is not the one-time act, but a process that is carried out in time and space with the participation of specialists with a high level of qualification (korotkov, 1997). in the process of diagnosing enterprises, various tasks are solved. firstly, one of the important tasks solved by controlling, according to b. colasse, is the observation of processes occurring in real time, comparing the target results with the achieved ones (colasse, 1997). this position emphasizes the importance of monitoring in the rapid detection of imbalances, but does not take into account the strategic manifestation of the imbalance of enterprise development processes. secondly, in order to prevent the risks of losses from imbalances, monitoring is needed to allow to identify the factors of economic imbalance of indicators of enterprise development in time and to establish trends in their changes. the result of monitoring of negative factors and trends is to take into account the early signals and ensure the timely implementation of the strategy of enterprise development management in the context of imbalances. thirdly, in the process of diagnosing imbalances in enterprise development, it is important to ensure the effectiveness of the information retrieval system. when diagnosing imbalances, not only the static condition of the object is investigated, but also its development over time. the information is grouped in two directions: a) the influence of factors that stabilize the system; b) the dynamic properties of the system and the scale of their manifestation. fourthly, in regulating imbalances, it is necessary to use monitoring as a tool to control the impact three seas economic journal 21 vol. 1, no. 2, 2020 of sectoral and territorial environment on the company 's activities. during the monitoring it is necessary to identify and assess the impact on the end result of controlled and uncontrolled factors. fifthly, in conditions of increasing imbalance of sectoral and territorial environment, the monitoring system should be as viable and useful as possible, have an innovative character from the standpoint of implementing the latest management methods and advanced technological processes. the system of diagnostics of imbalances is characterized by various objects and subjects that participate in the diagnostic process. the objects of diagnosis are both a complex highly organized dynamic system and any element of this system, which should be represented from the standpoint of stakeholders. as o.v. glazunov points out, stakeholders in the diagnosis may be the owners of enterprises, their contractors, banks, tax authorities and others (glazunov). practical work on the diagnosis of imbalances should be carried out by the analytical services of the enterprise, but specialists may not have sufficient knowledge and experience to conduct diagnostic procedures. in such cases, it is possible to purchase analytical services in consulting firms. retraining and raising knowledge of the specialists of the production organization provides more accessible opportunities. the initial stages of the technology of management decisions are the development of a system of measures, the collection of initial information about the situation in the company, morphological analysis of the external and internal environment, the search for options to avoid imbalances. in this sense, the technology of management decisions is narrow and should be presented as an active process of movement of the company from the priorities to obtain the planned results in management. on the basis of the chosen priorities, options of their realization, which become a basis of directions of development of the enterprise, are defined. for the formation of such options and the program of their implementation, barriers to sustainable development should be established. to create development programs, it is necessary to identify factors that influence the causes of negative trends. given the influence of such factors, the strategic directions of development of enterprises of vertically integrated corporate structure are determined. assessing the possibility of implementing strategic directions, they are distributed according to the level of priority, the adequacy of resource potential is considered, and if there is a lack of funds, they are reviewed. as n.v. kasyanov points out, the implementation of these areas becomes an incentive to increase the economic stability of the production enterprise and makes it possible to avoid imbalances at the macro and micro levels (kasyanova, 2014). management actions to prevent imbalances in corporate governance should be carried out at the expense of internal resource potential. depending on the availability of resources and management capabilities in solving problems, the following types can be used: organization; consulting management; crisis management. the organization is carried out by the company 's specialists while improving the effectiveness of interaction between its employees. this type involves the use of the resource potential of the corporation in order to carry out independent measures to reduce the risk of losses from imbalances. the application of organization model largely depends on the competence of management. most often, in the management of the corporation there are specialists who have the necessary competencies, but managers may not have such competencies, which reduces the effectiveness of the measures taken. in many cases, as imbalances increase, owners reduce control over the actions of managers, which can also pose an additional risk of making erroneous measures in making appropriate management decisions. thus, in order to form a development strategy that allows to balance the goals of all stakeholders, at the first stage it is necessary to identify development priorities for each of the enterprises that are part of the vertically integrated corporate structure (vics). at the second stage the competitive position of the enterprise in the market is defined, i.e. the degree of performance of the revealed requirements of interested parties at the enterprise and at competitors is compared. when conducting periodic tracking of changes and constructions of “profiles” of your company and competitors, you can get very useful information, the analysis of which will give an interpretation of tactical and strategic actions of competitors. the third stage is related to the definition of the relationship between the requirements of stakeholders and indicators of enterprise development, as well as the establishment of mutual correlation between indicators of enterprise three seas economic journal 22 vol. 1, no. 2, 2020 development, which allows to take into account their impact on each other. it should be noted that when calculating and controlling development indicators, managers forget about such a category as the quality of management, which plays an important role in the successful development of the enterprise. based on the above, it is advisable to divide all indicators into two groups: indicators of management quality, which characterize the level of development tools and methods of management as a whole, and its individual units and indicators of organizational development, which characterize the level of corporate structure and its units. at the fourth stage, the final list of indicators of enterprise development is determined and their planned values are calculated. based on the obtained actual values of development indicators and their planned values, an enterprise development strategy is created, which has the following advantages: the strategy will take into account the requirements of all stakeholders; will take into account the impact of various development indicators on the implementation of these requirements; meeting the requirements of stakeholders will be correlated with the current competitive position of the enterprise; the influence of development indicators on each other will be taken into account, which will allow to avoid mistakes in the planning, when, for example, the necessary increase of one indicator leads to an undesirable decrease of another; strategic decisionmaking will be more reasonable, as it will be based on quantitative data obtained by calculation. in case of a further increase in the imbalances in the development of the enterprises of a vertically integrated company, it becomes necessary to manage taking into account a number of priority measures: – information on the occurrence of imbalances should not be share outside the corporate structure; – the control over the factors provoking imbalances is provided from the moment of their occurrence; – development management taking into account imbalances justifies the need to preserve and restore the economic activity of the main enterprises of the technological chain. for realization of the specified directions, the scheme of management of development of the enterprises of corporate structure taking into account imbalances is presented (figure 1). the developed algorithm for managing the development of the enterprise on the indicators of imbalance contains four main stages, which involve the use of appropriate mathematical methods: regression analysis; сomprehensive operational assessment; risk analysis of losses from imbalances; assessment of the effectiveness of the management mechanism of enterprise development by indicators of imbalance. this stage of the study must be completed by assessing the economic effectiveness of the proposed algorithm for managing the development of the enterprise by the indicators of imbalance of development factors and with the help of special management functions. in order to solve this problem it is necessary to consider the concept of economic effectiveness of the process and the mechanism of development management by the indicators of imbalance. several approaches to defining the nature and essence of the concepts of quality and effectiveness of management are proposed. comparing indicators of quality and effectiveness of the process of functioning of the system as factors of structural analysis, some approaches determine its structure in the magnitude relation “causes – results”, and another determine the algorithm for converting resources into results. quality indicators are evaluated by comparing the homogeneous characteristics of the properties of the object, actual and target indicators. in this case, the effectiveness should take into account various indicators of results (system outputs) and resources (inputs), which characterize the usefulness of the results of their consumption. a well-known specialist j. gibson believes that the concept of effectiveness should be based on a temporal model of organizational effectiveness (gibson, 2000). the scientist emphasizes organizational effectiveness as the ratio of the results of its activities to the costs used for these resources-factors. moreover, short-term results can be the increased sales, reduced losses, costs and more. to the list of internal (individual and group) effectiveness factors in the short term, j. gibson includes quality of work, flexibility of reactions, staff satisfaction, and in the long run – taking into account external opportunities and environmental threats. in the author's opinion, the effectiveness of assessing the quality of management of economic processes should be defined as a measure of the result from the standpoint of efforts spent to achieve it. evaluation of indicators of the level of balance, quality indices and performance of special functions of development management three seas economic journal 23 vol. 1, no. 2, 2020 by indicators of imbalance, characterizes the complexity of this system. the gradual process of increasing economic effectiveness is carried out using the established algorithm and special control functions that reduce the level of imbalance and reduce the economic risks of losses from imbalances. thus, the application of this algorithm and management functions makes it possible to regulate the imbalance in the development of enterprises and, consequently, increase economic effectiveness in the process of reducing risk losses ∑i∑jvdij → min. the criterion for minimizing losses from imbalances is the minimum of integrated mathematical expectation of losses from risks of imbalance. this provides a minimal integrated mathematical expectation of losses. analytical representation of the integrated mathematical expectation of losses from imbalances is a simple arithmetic sum of the mathematical expectation of all types of losses. 3. conclusions as a result of the study, the following conclusions can be done: 1. management of enterprise development taking into account imbalances allows to improve the quality of development management in the short and long term, which is expressed in an integrated indicator of the level of balance in the range of “compromise – consensus”. 2. to reduce economic losses from delayed response to the regulation of imbalances in enterprise development; to assess the economic losses resulting from the occurrence of a risky event due to an imbalance; to take measures to reduce imbalances in the development of the enterprise through appropriate strategies. implementation of methods and strategies for managing the development of enterprises by the indicators of imbalances using basic and special management functions the choice of methods and strategies for managing the development of enterprises by the indicators of imbalances formation of the system and definition of target tasks: norms and planned indicators of quality of management of development of the enterprises of corporate structure by indicators of imbalances assessment of compliance with quality indicators of enterprise development management by indicators of imbalance formation of enterprise development management strategy assessment of the level of imbalance of enterprise development on the basis of development indicators results: compromise of interests of the corporation and its business structures quality control of enterprises of vics development management by indicators of imbalance figure 1. decision-making on the regulation of imbalances three seas economic journal 24 vol. 1, no. 2, 2020 3. development and operation of special management functions, implementation of strategies in the proposed set of measures improves the quality of management in terms of imbalance in the direction of achieving or maintaining the development of the enterprise. these provisions characterize the management system of a vertically integrated corporate structure with the simultaneous provision of values and motives, attitudes and threats, the definition of conditions that may be a motive or barrier to productive work. references: korotkov, e. m. (1997). the concept of management. moskow: deka, 304 p. colasse, b. (1997). management of financial activities of the enterprise: problems, concepts and methods. translated from french. moskow: finance: uniti, 575 p. glazunov, a. v. balance of interests of stakeholders. available at: http://quality.eup.ru/docum6/ balans-interesov-zainteresovannyh-storon.htm kasyanova, n. v. (2014). assessment of the balance of enterprise development potential. management models in a market economy: coll. science. donetsk: donnu, pp. 62–73. gibson, j. l. (2000). organizations: behavior, structure, processes. translated from english. 8th ed. moskow: infra-m, xxvi, 662 p. three seas economic journal 48 vol. 1, no. 2, 2020 corresponding author: 1 admiral makarov national university of shipbuilding, ukraine. e-mail: nikolay.fateev@nuos.edu.ua orcid: https://orcid.org/0000-0002-2663-6440 2 admiral makarov national university of shipbuilding, ukraine. e-mail: iryna.zaporozhets@nuos.edu.ua orcid: https://orcid.org/0000-0003-4015-5958 researcherid: u-4239-2017 doi: https://doi.org/10.30525/2661-5150/2020-2-8 organization of the project management office of ship repair enterprise nikolai fateev1, iryna zaporozhets2 abstract. the aim of the article is to study the features of ship repair production and, accordingly, develop recommendations for the composition of the functions of the project management office, its structure and stages of development. the characteristics of ship repair production, which determine its features and the structure of management of a ship repair enterprise, are systematically presented. the subject of the study is the models and methods of project management, programs and project portfolios of ship repair enterprises. the object of the study is the corporate project management system of a ship repair enterprise. the project-oriented nature of ship repair production, combined with a high degree of uncertainty in the planning and implementation of ship repair projects, identifies the need to use deterministic network models with a probabilistic estimate of the duration of work. to reduce risks in conditions of uncertainty, it is proposed to use agile technologies, which organically complement the matrix organizational structure of a ship repair enterprise and ensure effective cooperation with the customer and the success of the business as a whole. the creation of a project management office is proposed to be implemented as a development system that includes four stages of maturity. the key functions of the project management office at each stage of development have been formulated. the role of the information model of the vessel in the implementation of the 6d design methodology, which provides monitoring during the operation of the vessel, predicting the degree of wear of the vessel's elements over time, is justified. the ms project standard package allows building interfaces with the information model of the vessel to obtain the parameters of the hull structures, characteristics of the mechanisms and equipment of the vessel, as well as recommendations for repair technology. an important function of the project management office is to participate in the strategic management of project portfolios. to implement this function in the enterprise management system, certain prerequisites for the development of portfolio management must be formed: a formalized strategy, metrics for evaluating projects for compliance with the strategy, a certain culture of management decisions. the duration of vessel repair determines the time of decommissioning. this important strategic indicator is the basis for the formulation of bs (balanced scorecard). an important task of the project management office is to implement feedback and provide information on the status of achieving the planned indicators at all levels of enterprise management. the structure of the function and tools of the project management office are determined by the management of the enterprise depending on the number and complexity of the ship repair projects, level of development of the corporate information system of the enterprise, availability of specialists with appropriate qualifications. the project management office will provide effective communication between project management and functional services of the enterprise, which will significantly improve the quality of the enterprise management system as a whole. the organization of the project management office in the management system of the ship repair enterprise will ensure the effective allocation of resources for projects, accounting for available resources of the enterprise, coordination of goals and tasks of individual projects with strategic plans of the enterprise. all this is aimed at reducing costs and increasing the competitiveness of the ship repair enterprise. key words: project, project management, project management office, ship repair production, information systems. jel classification: m11, m15, o22 three seas economic journal 49 vol. 1, no. 2, 2020 1. introduction ship repair production is an important element of the system of operation of maritime and inland water transport. increasing competition in global ship repair markets requires the constant improvement of technology and organization of production, development of modern management mechanisms. the main tasks that need to be addressed on the way to ensure the competitiveness of ship repair enterprises are reducing the duration of repairs, cost of work and improving the quality of repairs. the theory and practice of project management have confidently become the basis of effective management mechanisms for ship repair enterprises. to enter the trajectory of sustainable development, ship repair enterprises use a strategy of diversification of production and economic activities, as well as resort to integration into the cluster economic systems of regional, national and international levels. at the same time, the network of production and corporate relations and dependencies is growing. in addition, there is a variability in the composition of cluster integrations and mobility of borders, which is necessary for effective functioning in a competitive environment. in these circumstances, the concept of project management in ship repair production must be supplemented with flexibility mechanisms that can be adapted to changes in internal and external factors, the structure of the project office must be brought in line with the industry specifics of project activities, which determines the relevance of the topic and content of the article. the aim of this article is to study the features of ship repair production and, accordingly, develop recommendations for the composition, functions, structure of the project management office as a tool for strategic development in a competitive environment. 2. statement of the main research material a project management office is a balanced organizational and technological complex of software, technical and information tools and instruments aimed at implementing, supporting and improving the efficiency of project management processes. the functions of the project management office are performed within a unified information system and based on developed intracorporate standards (bushuiev, zakharov, sharovara, 2009). the pmbok project management standard (american national standard) recommends to define its functions in a wide range when organizing a project management office – from the functions of providing support in the management of individual projects to direct management of the enterprise project portfolio with integration into the mechanisms of strategic, tactical and operational management. the pmbok standard proposes a classification of the project management office into three types, depending on the degree of influence on the project activities of the enterprise: 1. supportive – plays an advisory role, serves as a repository for projects, the degree of control from the project management office is low. 2. supervising – provides support to the team of project managers, provides adaptation of models and methodologies of project management, analyzes successful practices. 3. managing – supervises projects by directly management of the enterprise portfolio.the degree of control from the project management office is high. any type of project management office provides effective communication between projects and enterprise performance appraisal systems. the nomenclature of functions of the project office of a ship repair enterprise and, accordingly, the architecture of software tools, it is advisable to form on the basis of an analysis of the features of ship repair production and strategic goals of the enterprise. the characteristics of ship repair production, which determine its features, can be presented in the following form: – a high degree of uncertainty in the planning and implementation of ship repair projects (a significant part of the work is revealed after the dismantling of mechanisms and defects at later stages). it follows that the problem of relations with the customer, who needs a clear determination of the terms of repair in the contract, as well as the cost of all resources. therefore, a specific form of cooperation with the customer has developed in ship repair, which provides for the readiness of all participants to change projects, their unification around common values. – single and small-scale production. – project-oriented nature of production. as a result, ship repair production has a pronounced matrix structure. at the same time, a strong matrix is inherent in ship repair, where project management three seas economic journal 50 vol. 1, no. 2, 2020 factors prevail, project managers have broad powers. – the irregularity of resource costs during the repair process, which in the context of multi-project management and a complex project portfolio structure requires the development of unique models for the supply of materials and components. – a significant proportion of manual operations, which, moreover, are performed in unfavorable conditions (seasonality, weather conditions), requires highly qualified personnel. – specific methods, tools and organization of production preparation, which significantly affects the duration and quality of repair projects. the ship's crew, representatives of the customer and the project executor take part in the preparation to repair the vessel. at this stage, flaw detection lists for all subsystems of the vessel (hull, mechanical, electrical, radio navigation, etc.) are compiled. flaw detection lists include information on the nature of defects and comprehensive data on the range and scope of repair work, which are the basis for the development of a network model of a repair project. – in work (fateev, zaporozhets, 2009), the authors set out the specifics of constructing the financial structure and budget system of a ship repair enterprise. specific models for aggregating project budgets at the level of individual programs and the enterprise portfolio as a whole are proposed. – in the process of preparation of ship repair production, a transport vessel as a technical system can be represented consisting of elements that have common design characteristics and repair technology. as a result of such a decomposition, a hierarchical structure is formed, where the lower level is made up of structural and technological elements (ste), for which standard technological repair processes are used. the results of work for each ste are completed with submission to the customer and, if necessary, to the classification society. the effectiveness of the ship repair process as a whole depends on the validity and quality of decomposition. – when developing private network models for performing work for each ste in ship repair, it is necessary to use deterministic network models with a probabilistic estimate of the duration of work (razu, 2007). in the process of linking private network models to the calendar and building an integrated network schedule for ship repair, a table of interdependence of work on different ste is used. after bringing the parameters of the network schedule to the specified constraints (optimization of the network schedule), a responsibility matrix is drawn up, which coordinates the structure of the breakdown of work on the project with the organizational structure of project management. – the elements of the agile methodology are increasingly used in ship repair (kom mayk. agile, 2018; appelo yurgen, 2018). through the formation of cross-functional teams, which include specialists from different divisions of the ship repair enterprise, as well as from suppliers, customers, consultants, etc., an efficient solution to conflict situations is provided for the distribution of resources between works on different ste. agile technologies organically complement the matrix organizational structure of the ship repair enterprise, which provides effective cooperation with the customer, business success in a dynamic environment. – modern technologies for the design, construction, repair and operation of vessels are based on a single information space (6d design). thus, models for planning and implementing the ship repair projects should be integrated with ship design systems. it is advisable to implement the creation of a project management office as a developing project (razu, 2007). logically and temporally, the developing project consists of separate initiatives for further improvement and development of previously obtained results. the development of the organizational structure of the project office is individual for each individual enterprise. the set of tasks solved in the office directly correlates with the maturity of general management at the enterprise and project management, in particular. we will present the structure and functions of the project office of a ship repair enterprise in the form of a developing system that includes several stages of maturity. the evolution of the project office is associated, first of all, with “increasing capacity”, that is, the expansion of the set of functions performed by it. the proposed maturity levels are based on the model of classification of corporate project management systems recommended by the pmbok standard (american national standard) and taking into account the specifics of ship repair production. stage 1 – the processes of forming the project office as a structural unit of the enterprise: the development of regulations governing the activities of the project office, analysis of information on the three seas economic journal 51 vol. 1, no. 2, 2020 structure of the project portfolio, formalization of project management processes. an important element of the first stage is the formation of an information system for scheduling projects. in our opinion, the confident leader in the market of information systems for project management is the software product of microsoft ms project standard (microsoft project, 2020). all the main tasks of planning and implementation of ship repair projects are implemented here. the ms project standard package implements data export, i.e. import tools that provide integration with the enterprise accounting system. on the basis of this package, an automated workstation (aws) is being formed for the project manager of a ship repair enterprise. at the first stage, it is necessary to form and subsequently increase a knowledge base and skills in project management, to organize a continuous process of employee training. stage 2 involves expanding the influence of the project office by increasing the range of tasks. in addition to supporting the project management methodology in an active state, the project management office, through close interaction with project managers, ensures timely updating of project schedules in the information system, processes reports on the status of work on projects, which allows it to form an overall picture of projects, maintain a documented archive. the financial structure of the ship repair enterprise is a system of responsibility centers. the budget system corresponds to the financial structure. the consolidated budget provides for the determination of indicators of the operating, investment and financial activities of the enterprise as a whole.the project management office provides analytical information on the costs of projects, programs and portfolios of the enterprise to the finance department and accounting. the key function of the project management office at the second stage is to control the allocation of resources to projects. for this, the project management office forms a corporate pool of necessary materials, components and provides operational information to the material and technical supply service, which will allow to organize a reliable logistics service for the ship repair enterprise. at stage 3, a predictive analytics function is recommended to the project management office, within the framework of which project statistics are maintained, analytical reports and normative estimates for project planning are generated.this also includes a register of typical risks associated with a high degree of uncertainty in ship repair production. an important task of the third stage of project management office development is the development of regulations for information support of the agile methodology. a cooperation of the project management office with cross-functional teams will allow to promptly adjust project plans, reallocate resources within the project portfolio. the use of the information model of the vessel, which is formed at the stages of design and technological preparation of production within the methodology of 6d-design, will reduce the complexity of the development of ship repair projects and improve their quality. in essence, 6d-design allows planning for the next stages of life cycle of the vessel, it is a system of monitoring during operation of the vessel, predicting the degree of wear of ship elements over time. the project management office will provide preparation of documentation for scheduled inspections and tests of key units, repair and replacement of equipment, pipelines, mechanisms. the ms project standard package allows to build effective interfaces for obtaining parameters of hull structures, characteristics of mechanisms and equipment of the vessel, as well as recommendations on repair technology, laid down in the information model of the vessel. the stage 4 involves the active participation of the project management office in the strategic management of the project portfolio. to do this in the enterprise management system, certain prerequisites for the development of portfolio management must be formed: a formalized strategy, metrics for evaluating projects for compliance with the strategy, a certain culture of management decisions. it is recommended to use the bs to assess the effectiveness of ship repair enterprise projects and their compliance with the corporate strategy. the bs evaluates the work of an enterprise on the basis of four balanced parameters: finance, customer relations, internal business processes, as well as training and advanced training of personnel. the duration of the vessel repair determines the terms of decommissioning. this important strategic indicator is the basis for formulating bs for all four groups. the task of the project management office is to implement feedback and provide information three seas economic journal 52 vol. 1, no. 2, 2020 on the status of achieving the planned indicators at all levels of enterprise management. the project management office, the level of development of which corresponds to the fourth stage, is not in demand at all ship repair enterprises. the structure, functions and tools of the project management office are determined by the management of the enterprise, depending on the number and complexity of ship repair projects, level of development of the corporate information system of the enterprise, and availability of trained specialists. 3. conclusions 1. the features of ship repair production determine the structure, functions, composition of tools and stages of development of the project management office. 2. the organization of the project management office in the management system of the ship repair enterprise will ensure the effective allocation of resources for projects, accounting for available resources of the enterprise, coordination of goals and tasks of individual projects with strategic plans of the enterprise. all this is aimed at reducing costs and increasing the competitiveness of the ship repair enterprise. 3. the project management office will ensure effective communication of project management and functional services of the enterprise (marketing, material and technical supply, financial management, personnel management), which will improve the quality of the enterprise management system as a whole. 4. it is necessary to increase the knowledge base and skills in the management of ship repair projects, organize a continuous process of employee training. 5. for the sustainable development of project management methodology in shipbuilding and ship repair, it will be necessary to develop industry standards for project management. references: american national standard. a guide to the project management body of knowledge (pmbok guide). sixth edition. usa, ansi/pmi, 2017. 976 p. fateev, n. v., & zaporozhets, i. m. (2009). byudzhetirovanie v sisteme uprableniya proektami i programami sudoremontnogo predpriyatiya [budgeting in the project management system and programs of the ship repair enterprise]. upravlinnia proektamy ta rozvytok vyrobnytstva, no. 2(30), pp. 118–123. razu, m. l. (2007). upravlenie proektom. osnovy proeknogo upravleniya [project management. fundamentals of project management]. moscow: knorus, 767 p. kom mayk. agile. (2018). otsenka i planirovanie proektov [project evaluation and planning]. moscow: alpina, 245 p. bushuiev, s. d., zakharov, a. m., & sharovara, o. m. (2009). upravlinnia portfeliamy proektiv, prohramamy ta proektnym ofisom [management of project portfolios, programs and project office]. kyiv: knuba, 88 p. appelo yurgen (2018). agile-mededzhment. lidersvo i upravlenie komandami [agile management: leadership and team management]. moscow: alpina, 512 p. microsoft project (2020). ms project standard. avalable at: https://www.microsoft.com/uk-ua/ microsoft-365/project/project-management-software kaplan, r ., & norton, d. (2016). sbalansirovannaya sistema pokazateley. ot strategii k deystviyu [the balanced scorecard: translating strategy into action]. moscow: olimp-bisnes, 320 p. avalable at: http://www.management.com.ua/books/view-books.php?id=72 three seas economic journal 7 vol. 1, no. 2, 2020 corresponding author: 1 zaporizhia national university, ukraine. e-mail: borisova.lilia@gmail.com orcid: https://orcid.org/0000-0002-4432-2226 doi: https://doi.org/10.30525/2661-5150/2020-2-2 use of innovative technologies by insurance market entities. telematics in car insurance liliya ignatovich1 abstract. the purpose of the article is to substantiate the need for the use of innovative technologies by participants in the insurance market, namely, telematics in car insurance. the current state of the financial services market requires insurers to raise standards of work through the introduction of innovative products. it is determined that increasing the competitiveness of an insurance company should focus on providing the best personal services and meet the requirements of modernity and modern social trends, and therefore, make full use of the internet: marketing and innovation. in view of this, the key task of the insurer’s innovation activity is the maximum approximation of insurance services to the existing needs of the insured in insurance protection. it is possible to reach stable demand for this or that insurance service under the conditions of application of the world innovative insurance programs providing balance of qualitative and quantitative parameters of the insurance contract only. the relevance of the topic is that the ukrainian insurance companies are forced to look for new opportunities to meet the needs of their customers in order to maintain competitive advantages and work effectively in the conditions of innovative development of insurance activity in the world. a promising area of further research is to assess the readiness of insurance market participants to use innovative insurance services. methodology. the essence of telematics in car insurance is investigated. the state of the casco insurance market in ukraine is analyzed. the main advantages of telematics use by the subjects of the insurance market of ukraine are determined. practical implications. it is proved that the introduction of innovative technologies opens new opportunities for the growth of additional premiums, improving the quality of service and minimizing insurance risks. theoretical provisions on the need for ways to improve the innovative activities of the insurer have been further developed. key words: internet marketing, innovative technologies, innovation, insurance, it technologies, casco, telematics, insurance telematics. jel сlassification: m30, d40, l10 1. introduction today in the insurance market of ukraine, there are not only tendencies to use modern technologies in the field of business management, as well as new information technologies, but they are the driving force that allows insurance companies to interact with increasingly demanding and impatient customers successfully. consumers, well versed in technological innovations and actively using them in everyday life, expect the appropriate technological level of service from insurers. for the effective development of the insurance services market it is necessary to use the internet marketing tools (liliya іgnatovich, 2020). this expands the possibilities of communication between the subjects of the insurance market and increases the efficiency of business process management. the development of a digital strategy and its implementation is an inevitable step for the sustainable development of the insurance business in ukraine. the rapid growth of the number of the internet users, the expansion of the scope of digital technologies, the transition to electronic document flow and other innovative tools have led to changing the principles of the insurance market of ukraine (denisenko, 2015). the number of communication channels is growing every year, which means that the opportunities for interaction with the audience are increasing. the introduction of innovations helps three seas economic journal 8 vol. 1, no. 2, 2020 not only to sell insurance policies and quickly settle losses, but also to improve communication with the client, creating individual insurance products. unfortunately, most insurance companies in ukraine do not use their marketing potential. this indicates that there are significant opportunities for further development of insurance companies, a prerequisite for this is the use of innovative technologies. the use of classical approaches to pricing is impossible and it is necessary to use only an individual approach. standardized insurance products are being replaced by individual ones. telematics is becoming one of the world’s leading innovations in the insurance market. the phrase “insurance telematics” is not clear to many people today. however, it is actively gaining momentum in the modern world, because it represents significant benefits for both insurance companies and car owners. telematics in insurance is an opportunity to reduce the cost of the policy for a single driver. in other words, it is a special monitoring system, the main function of which is to track the driving characteristics of a particular person. insurance telematics allows you to collect data about each car owner, including driving style, travel frequency and mileage. in this case, the cost of the insurance policy is formed for each individual driver. in an effort to reduce insurance premiums, drivers become more attentive on the road, thereby reducing the risks for all road users. the western world is already actively using telematics in insurance and ukraine is still lagging behind. 2. the main material the introduction and use of innovations for the insurance market of ukraine is one of the most important conditions today. this is necessary for a prompt response to all the challenges of the modern world, the growth of consumer demand and for the opportunity to offer a current line of insurance services to specific customers. one of the modern leading innovations in the insurance market is telematics, which has moved to insurance from the transport and logistics industry. telematics is literally a combination of the words telecommunications and computer science. this is a comprehensive use of telecommunications, information and communication technologies. this is a technology for obtaining information using telecommunications devices. transport telematics allows you to control the location, movement and condition of an individual car or an entire fleet using a gps receiver and electronic gprs or 3g devices installed in each machine that interacts with the user and web-based software. when insurance companies realized the benefits of telematics, they were able to study the “style” of driving their customers, and, taking this into account, to set the cost of a car insurance policy for each individual driver. for example, the most popular type of insurance is casco, a voluntary type of vehicle insurance against damage, destruction, loss due to a road traffic accident, illegal seizure, fire, explosion, natural disaster, illegal actions of third parties, external influences of foreign objects (law of ukraine “on insurance”, 1996). 3. analysis of the auto insurance market in ukraine if we analyze the indicators of the financial market of ukraine, the market of insurance services is the second in terms of capitalization among other non-banking financial markets. the total number of insurance companies as of march 31, 2020 was 225. regarding car insurance, the indicators of collected premiums and insurance payments are presented below. despite the global crisis and quarantine measures, due to covid-19, net car insurance premiums increased (+ 7.4%). thus, according to table 1, the amount of insurance premiums excluding the share of insurance premiums paid to resident reinsurers as of march 31, 2020 amounted to 3,317.4 million uah. as of march 31, 2019, this indicator amounted to 3,087.8 million uah. thus, according to table 2, net insurance payments from car insurance in the first quarter of 2020 increased by 144.3 million uah. table 1 net insurance premiums for the first quarter of 2019-2020 type of insurance 1st quarter 2019 1st quarter 2020 growth rates car insurance (casco, ssli, “green card”) 3 087.8 million uah 3 317.4 million uah 229.6 million uah (7.4 %) source: compiled by the author independently, based on the insurance top journal, 2020 three seas economic journal 9 vol. 1, no. 2, 2020 analyzing the data of figure 1, the volume of gross insurance premiums with casco for the first quarter of 2020 amounted to 1830.9 million uah. the growth rate of insurance premiums on casco was 5.7 %. the volume of gross insurance payments for land transport insurance (casco) for the first quarter of 2020 amounted to 934.7 million uah, which is 2.0% more than for the same period in 2019. the assessment of the state of the car insurance market revealed that the demand for motor insurance services and direct casco insurance from potential policyholders is growing every year, despite the general state of the market and has a positive effect on the introduction of innovations. regarding the tariff policy of insurance companies, each insurance company has its own insurance programs casco, with its own conditions and basic coefficients. analyzing information about insurance cases, companies seek to optimize the ratio of insurance premiums to insurance payments. based on the obtained data, insurance coefficients are set, according to which the cost of a casco policy for a specific car owner is calculated. the most advantageous offers for casco insurance are provided to adult and experienced drivers who have the lowest risk of getting into an accident. it should be noted that the cost of casco for a particular car is influenced by the following factors: theft statistics for this model in the area and the availability of special anti-theft devices, the cost of spare parts, the size of the deductible, the presence of insurance cases for previous periods, additional options. departure of the emergency commissioner, evacuation, collection of documents, etc.). the cost of casco is influenced by the city of registration of the car: for example, casco in kyiv is more expensive than in the regions, as according to statistics, the probability of an insured event in kyiv is higher than in other cities. telematics allows you to track driving technique, and then develop a system of discounts or bonuses for customers for safe driving. this technology is also useful because it will later help to reduce the number of accidents and make traffic safer for all its participants. 4. telematics as an innovative tool for the development of the insurance market the most common type of telematics device is a small device that is inserted into the diagnostic port of the car under the wheel. when the car is moving, it collects data that determines the driving characteristics of the client. communication is table 2 net insurance payments for the first quarter of 2019-2020 type of insurance 1st quarter 2019 1st quarter 2020 growth rates car insurance (casco, ssli, “green card”) 1 580.3 million uah 1 724.6 million uah 6 144 million uah (9.1%) source: compiled by the author independently, based on the insurance top journal, 2020 1st quarter 2019 1st quarter 2020 1732,3 million uah 916,1 million uah gross premiums 1830,9 gross payments 934,7 figure 1. dynamics of the main indicators of casco three seas economic journal 10 vol. 1, no. 2, 2020 provided by a sim-card of one of the mobile operators, which is used to transmit telematic information to the provider’s server. this data is available both to the insurance company on a special web portal and to the client, who can monitor their performance through the mobile application and additionally receive recommendations on the technique and style of driving. the mobile application is installed on the client’s smartphone with android or ios for visualization and data transfer for processing. the insurance company has the opportunity to view the analytics on the web portal (the official website of the benish gps company, 2020). driving style is evaluated on a scale of points, on the basis of which the insurer determines the individual discount. also in the mobile application, the insured driver can read tips on how to increase driving safety. following the recommendations of the system, you can reduce the probability of an accident by 30%. under the terms of the insurance program, the telematics device and the casco smart application are provided free of charge. the application is available for download in the apple store or google play. insurers in the united states began to use telematics in insurance for the first time. since 1998, the united states has introduced products that allow you to pay for hull insurance based on the number of miles traveled by the car. from the fall of 2014 in america, it is recommended to install telematics devices in all new cars. in europe, the law of mario monti (italy) came into force in june 2012: telematics devices are installed in all new cars. their data are taken into account by the courts in great britain and italy. in ukraine, the use of insurance telematics technologies is at an early stage, because it has no technical base and specialized software. we only begin to use such devices in ukraine. the first and only insurance company to launch an insurance product with telematics is axa insurance. casco smart was launched in 2016. in 2018, allied market research published a report entitled “global commercial telematics market by solution type (oem and aftermarket), application (solutions and services), and end user (transportation and logistics, insurance, healthcare, media & entertainment, vehicle manufacturers/dealers, and government agencies): global opportunity analysis and industry forecast, 2018-2030”. according to the report, the global market for commercial telematics was 27.07 billion usd in 2017. it is expected that by 2030 it will amount to 144.44 billion usd. the average annual growth rate with a forecast until 2022 is 14% (annual review and summary financial statements, allied market research, 2020). in insurance telematics, two main approaches are used: 1. “pay as you drive”. mileage monitoring, socalled low mileage. 2. “pay how you drive”. more parameters are taken into account: driving time, speed mode, mileage. the total number of indicators in this case can reach two or three dozen. the data obtained are processed and make it possible to assess the level of risk of each individual driver directly. telematics also allows vehicle owners to control each car. such monitoring nullifies all fraudulent practices of the park staff. it is important to note that the telematics device does not collect personal data: no information about the location of the car, no gps coordinates, no visited places, no tracks. the main advantages of using telematics for insurance market participants are: 1. individual risk accounting. 2. creation of new products and introduction of additional services 3. development of loyalty programs for each client. 4. transparency of pricing. 5. reducing the number of insurance fraud cases. 6. reducing the costs of insurance companies. 7. additional channel of communication with the client via mobile application. 8. improving driving culture and reducing the number of accidents. 9. ability to transmit information about the accident instantly. 5. conclusions globalization requires insurers to use innovative tools. the evolution of wireless connection, big data and the internet is transforming even such conservative areas as insurance. according to foreign experience, the level of innovation of the insurer is one of the determining factors in increasing its competitiveness. focusing on consumer needs requires insurers to raise standards of performance through the introduction of innovative products. three seas economic journal 11 vol. 1, no. 2, 2020 despite the annual decrease in the number of insurance companies in ukraine, the level of motor insurance is growing every year. casco is one of the most common types of voluntary insurance for owners of land vehicles. the use of digital technologies gives insurers new opportunities to improve the quality of customer service, better selection of insurance risks, prevention of losses. the basis of insurance telematics is the registration of driving style, which allows insurance companies to create new offers for customers. but telematics in car insurance is not only a means of managing the insurer’s risks to reduce the cost of the policy, but also a tool for interacting with the client through a mobile application. in ukraine, the use of insurance telematics technologies is at the early stage. insurers need to be prepared to work with huge amounts of information, have specialized software and have a powerful back office. all this requires significant investment in development and operation. the state of the car insurance market and the experience of foreign countries are analyzed. the necessity of using insurance telematics as a new level of cooperation with clients is proved. it has been found that telematics devices allow you to determine the cost of the insurance policy more accurately, reduce the loss of the insurance company by creating personal insurance products, increase the level of service and generally reduce the incidence of insurance fraud. the current state of the insurance market requires insurers to raise standards of work immediately through the use of insurance telematics, which is an important area in the development of the insurance market. references: annual review and summary financial statements allied market research (2018). retrieved june 28, 2020, from: https://www.prnewswire.com/news-releases/commercial-telematics-market-144-44billion-by-2030-at-13-8-cagr-says-amr-838252834/2020-1-3.html denisenko, m. p. (2015). innovations on the insurance market of ukraine. investments: practice and experience, no. 21, pp. 79–82. statistics of insurance top in ukraine (2020). forinsurer. insurance top. retrieved september 10, 2020, from: https://forinsurer.com/stat law of ukraine “on insurance” (1996). vvr ukraine, (18):78. retrieved september 10, 2020, from: http://search.ligazakon.ua/l_doc2.nsf/link1/z960085.html liliya іgnatovich (2020). internet marketing as an instrument for developing insurance services. bulletin of zaporizhzhia national university. economic sciences, no. 2(46), p. 123. the official website of the benish gps company. retrieved september 05, 2020, from: http://www.benishgps.com three seas economic journal 84 vol. 1, no. 1, 2020 doi: https://doi.org/10.30525/2661-5150/2020-1-12 history of formation of e-commerce enterprises as subjects of innovative entrepreneurship vladimir simakov1 in the article the history of the formation of e-commerce enterprises as subjects of innovative entrepreneurship is analyzed. the list of stages of genesis of formation of e-commerce enterprises as subjects of innovative entrepreneurship is determined. the specifics of each of the historical periods are described. in the last decade, the concept of the essence of the benefits and specifics of the functioning of e-commerce as the latest phenomenon of the world economy has become the subject of attention not only of practitioners but also of scientists. this is largely due to the need to solve with the help of new scientific solutions being developed in this area, specific problems of practice, which will assess and improve efficiency, as well as supplement the tools of e-commerce with new approaches. at the same time, such research should be based on the study of the genesis and identification of current trends in the formation of e-commerce enterprises as subjects of innovative entrepreneurship, which determines the relevance of the topic of this article. e-business or e-commerce is traditionally interpreted as the sale of goods over the internet. in a broader sense, e-commerce can be interpreted as the use of electronic means of transmission to participate in exchange, including the purchase and sale of goods and services, which requires transportation, both physically and digitally, from one place to another. key words: history, enterprises, e-commerce, subjects of innovative entrepreneurship, economy. jel classification: l81, l26 corresponding author: 1 pjsc “novokramatorsky engineering factory ", ukraine. 1. introduction digital technologies have changed the global economy significantly in recent decades and continue to change. value creation processes for customers have shifted from the production of physical goods to a service-oriented economy, information and intelligence as the main sources of value creation and profit. at the heart of this economic transformation is e-commerce. in the last decade, the concept of the essence of the benefits and specifics of the functioning of e-commerce as the latest phenomenon of the world economy has become the subject of attention not only practitioners but also scientists (roberts, zahay, 2017; dvoretsky, zharnikova, sobolevatereshchenko, 2019). this is largely due to the need to solve with the help of new scientific solutions being developed in this area, specific problems of practice, which will assess and improve efficiency, as well as supplement the tools of e-commerce with new approaches. at the same time, such research should be based on the study of the genesis and identification of current trends in the formation of e-commerce enterprises as subjects of innovative entrepreneurship, which determines the relevance of the topic of this paragraph. e-business or e-commerce is traditionally interpreted as the sale of goods over the internet (lazneva, dolgopolova, 2019). in a broader sense, e-commerce can be interpreted as the use of electronic means of transmission to participate in the exchange, including the purchase and sale of goods and services, which requires transportation, both physically and digitally, from one place to another (malovichko, 2015). in this context, in our opinion, it is important to understand the importance of e-commerce as an environment that is created and developed in order to facilitate (accelerate, increase convenience for buyers and sellers, etc.) exchange of goods. thus, e-commerce is becoming a driving force in the development of modern trade and through its active development it is largely inferior to traditional organizational forms of trade (department stores, branded stores, etc.). three seas economic journal 85 vol. 1, no. 1, 2020 2. presentation of research material e-commerce is a specific form of innovative entrepreneurship that has gained significant benefits in the trade of goods due to the significant potential of the internet. the main reason for the success of business in the field of e-commerce according to researchers (melnychuk, 2014) has its coverage: the e-commerce business operates on an online platform, and today, using the internet, there is the potential to gain a much larger number of customers than in a real store. there are many forms of commercial transactions that can take place in everyday life from business to business, or b2b, such as electronic data interchange, auction markets, and so on. commercial transactions can also take place in b2c or business with consumers, such as online retail and electronic brokerage services. e-commerce has tried to take advantage of savings by using a single data center to reduce system errors and processing time, a high degree of personalization of the product or service to meet customer needs and customer interaction with databases at very low marginal cost (shaleva, 2011). thus, e-commerce has been and remains an area where innovations are actively implemented and disseminated, so it is not only a form of innovative entrepreneurship, but also an environment for testing and implementing innovations that enhance e-commerce and innovative entrepreneurship in general. e-commerce has a rich history, from primitive electronic data transactions in the 1960s and the first online retail transactions in 1994, to the modern popularity of e-commerce giants such as amazon and ebay. outlining certain stages in the history of e-commerce should be based on scientific approaches to this issue, which makes it possible to reveal the content of each relevant stage in the context of the factors that led to its occurrence and actualization. as early as the 1960s, companies conducted electronic transactions through primitive computer networks. thanks to electronic data interchange (edi), they were able to exchange business documents with machines from other companies. during the same period, the military created the arpanet network, which allowed the dissemination of important information in the event of a nuclear attack. these innovations laid the foundation for e-commerce. in fact, when arpanet switched to transmission control protocol and internet protocol (tcp / ip) in 1982, it used the same technologies that are used today on the internet (moore). originally, the term "e-commerce" meant the process of conducting commercial transactions electronically using leading technologies such as electronic data interchange (edi) and electronic means of transmission (eft), which allowed users to exchange business information and enter into electronic transactions. the ability to use these technologies appeared in the late 1970s and allowed commercial companies and organizations to send commercial documents electronically. in the early 1980s, the main owners of computers were research universities. however, those who had access to computers could send e-mails and exchange documents over networks such as bitnet and usenet. for home pc users, compuserve was the main provider of bulletin boards, chat rooms, and more. compuserve introduced the electronic mall in 1984, which allowed users to make deferred purchases in more than 100 online stores. the service was not very successful, but it was one of the first examples of online retail. subsequently, in 1991, the national science foundation lifted the ban on commercial use of the internet (zharnikova, 2019). in our opinion, this historic step has made e-commerce possible in the form that is currently known, and has significantly contributed to the dynamization of this form of innovative entrepreneurship. the next important issue was security, which is an important element of the effective functioning of the technical and technological base of e-commerce. in 1994, netscape 1.0 released a protocol called secure socket layer (ssl), which secures both the sending and receiving sides of an online transaction. ssl provided the ability to encrypt personal information on the network (moore). ensuring the security of trade through e-commerce, in our opinion, was the factor that made it possible to combine the potential of e-commerce with online payments and created the foundations for e-commerce as a leading trend in world trade. shortly afterwards, to ensure the required level of security, the first third-party credit card processing companies were established, which significantly increased the opportunities for financial transactions in e-commerce transactions and became a significant driver of e-commerce development in the world. that's what made the three seas economic journal 86 vol. 1, no. 1, 2020 first-ever secure online transaction possible: on august 11, 1994, the new york times reported that a man named phil brandenberger of philadelphia had purchased the sting singer's album from his computer. this has opened up opportunities for innovative entrepreneurs to benefit significantly from the new trend. it should also be noted that this opportunity was the impetus for the emergence of the next (1995) amazon and ebay and a significant acceleration of e-commerce after that (hagiu, wright, 2015). largely thanks to these two companies, modern e-commerce retailers enjoy a highly developed and specialized market, and users can buy almost any product online. – e-commerce is also a smart choice for entrepreneurs, especially because launching an online store no longer requires large overhead costs and large technical knowledge. thus, according to bigcommerce, the average cost of creating an online store in 1999 was about 100,000 us dollars, and this did not take into account the purchase of goods, warehouses or delivery logistics. at the moment, the cost of launching an online store can be as little as $ 30 (malyuta, ogol, 2019). therefore, in our opinion, a significant reduction in the cost of entering the market for new market participants should be included in the list of important trends and factors in the development of e-commerce in the global dimension. – in 2000, a large number of commercial companies in the united states and western europe introduced their services on the world wide web. at this time, the meaning of the term "e-commerce" has changed. people began to define it as "the process of buying available goods and services over the internet using secure connections and electronic payment services." although the dotcom crash in 2000 failed, and many e-commerce companies disappeared, retailers realized the benefits of e-commerce and began adding such opportunities to their websites (for example, after the webvan online store went bankrupt, two supermarket chains, albertsons and safeway, began using e-commerce to allow their customers to buy products online). by the end of 2001, the largest form of e-commerce, the businessto-business (b2b) model, had about $ 700 billion in transactions. thus, in our opinion, this period of e-commerce can be considered a stage of dynamic growth and entry into the trajectory of sustainable growth of this form of innovative entrepreneurship in developed countries, which ultimately gave impetus to the growth of e-commerce worldwide. – this view is supported by the fact that, according to available data (worldwide retail and ecommerce sales: emarketer’s estimates for 2016–2021), e-commerce sales continued to grow over the next few years, and by the end of 2007 e-commerce sales accounted for 3.4 percent of total world trade sales. – in the table. 1 consistently presents the main events that influenced the development of e-commerce as a form of innovative entrepre-neurship. – this table clearly shows certain milestones that caused: – the emergence of e-commerce as an effective form of business organization (for example, the invention of e-shopping in 1979, the launch in 1982 of the first e-commerce platform and in 1992 – an online platform for selling books, etc.); – events that significantly intensified the development of e-commerce (especially the emergence and operation of amazon, ebay and other large trading platforms, etc.); – events that contributed to the transformation of e-commerce to the current state (development of online payments, activation of social networks as an environment for the spread of e-commerce, etc.). in general, the analysis of existing research has shown that at the moment there is no structured representation of the stages of formation and development of e-commerce as a form of innovative entrepreneurship. with this in mind, the author of this paper proposes to distinguish certain stages of development of e-commerce in terms of what effect was achieved in a certain historical period under certain events that affected the development of e-commerce. yes, in the works (tardaskina, strelchuk, tereshko, 2011; shaleva, 2011; kaluzhsky, 2014; khovrak, 2013) describes the advantages of e-commerce development, which should be taken into account when building an author's system of phasing. the author of this paper as a criterion for highlighting the stages of development of e-commerce as a form of innovative entrepreneurship proposes to determine a certain effect that was achieved in a certain historical period under certain events that affected the development of e-commerce. this effect can be considered as a separation criterion if it is: – confirmed by historical data and trends in e-commerce; – can be clearly formulated and distinguished from the set of results of e-commerce development as a form of innovative entrepreneurship. three seas economic journal 87 vol. 1, no. 1, 2020 therefore, the author, based on the above criteria, proposes to identify such stages: 1. the stage of formation of e-commerce as a form of innovative entrepreneurship. period – 1969-1995 highlights (shown in table 1): development of internet services that have created opportunities for the spread of e-commerce and the creation of a data security system and online payments. 2. the stage of ensuring the global presence of e-commerce as a form of innovative entrepreneurship. period – 1995-2000 main events (shown in table 1): appearance on the market amazon і ebay, alibaba.com. 3. the stage of ensuring the reduction and optimization of e-commerce costs as a form of innovative entrepreneurship, including – increasing table 1 the main events that contributed to the development of e-commerce year major events in the field of e-commerce 1969 the first large e-commerce company was founded – compuserve. 1979 michael aldrich invents e-shopping. 1982 boston computer exchange is launched as one of the first e-commerce platforms. 1992 book stacks unlimited is launched as one of the first online bookstores. 1994 netscape launches netscape navigator, a web browser, making it easier for users to search the web. 1995 launch amazon and ebay. 1998 paypal is launched as an online payment system. 1999 alibaba.com is launched. 2000 google launches adwords as an online advertising search tool. 2005 amazon launches amazon prime with accelerated fixed delivery for users. 2005 esty, an online platform for launching handmade and vintage goods. 2009 bigcommerce is launched as an online store platform. 2009 founded square, inc. 2011 google wallet is launched as an online payment system. 2011 facebook is launching sponsored stories as a form of early advertising. 2011 the stripe service starts 2014 apple pay is launched as a form of mobile payment. 2014 jet.com is launched. 2017 introduce posts on instagram. 2017 cyber monday sales exceed $ 6.5 billion source: compiled on the basis of the analysis carried out in this paper and (moore) figure 1. dynamics of annual profits of leading companies whose activities are based on e-commerce source: (moore; united states: retail e-commerce sales 2017-2024) three seas economic journal 88 vol. 1, no. 1, 2020 the efficiency of advertising costs through the development of advertising services. period – 2000-2005 main events (shown in table 1): appearance on the market adwords, amazon prime. 4. the stage of increasing competition and the emergence of new innovative solutions in the field of e-commerce as a form of innovative entrepreneurship. period – 2005-2010 main events (shown in table 1): the emergence of new platforms, finding ways to personalize the offer to consumers. 5. the stage of increasing the convenience and speed of interaction between seller and buyer in the field of e-commerce as a form of innovative entrepreneurship, including – the convenience of payment services. figure 2. dynamics of online shopping in ukraine in 2012-2018 source: (top 10 best online stores in ukraine 2018-2019) figure 3. leaders of the e-commerce market of ukraine in the number of visits in millions per year in 2019 source: (top 10 best online stores in ukraine 2018-2019) three seas economic journal 89 vol. 1, no. 1, 2020 the period – 2010 – to the present time. highlights: the emergence of new platforms for online payments and services based on social networks, the widespread use of social networks as e-commerce sites or ways to obtain information about goods and services. using the latest means of electronic interaction, companies also have the opportunity to obtain detailed information about the needs of each consumer and automatically offer goods and services in accordance with their requirements (the list of these events is formed on the basis of table 1). e-commerce markets have been growing around the world, especially since the mid-1990s, when the giants we know today, amazon, alibaba and others, emerged. in fig. 1 shows that the development of amazon is the most important factor in the development of the e-commerce market, at the same time, the activities of many other companies were effective. offering a wide choice and exceptional convenience for customers, these companies have been able to quickly expand their activities through innovation and optimization. referring to the experience of e-commerce in ukraine, in particular, it should be noted the growth of consumer activity in this area (figure 2). the leaders of the e-commerce market in ukraine are the largest ukrainian marketplace in eastern europe "rozetka", as well as the internet platforms "allo" and "citrus" (figure 3 and figure 4). 3. conclusions thus, modern e-commerce shows a significant dynamics of development both in the world as a whole and in ukraine. first of all, this fact is due to the fact that this form of innovative entrepreneurship has many advantages over conventional stores and mail order catalogs. consumers can easily, at any time convenient for them, look for the right product in a large database of these products and services. online sellers, in turn, also receive certain benefits: the internet and its search engines give customers the opportunity to reduce the cost of the advertising campaign. even small online stores can enter global markets. web technology also allows you to track customer preferences and implement personalized internet marketing tools. figure 4. the structure of the e-commerce market of ukraine in 2019 source: (top 10 best online stores in ukraine 2018-2019) three seas economic journal 90 vol. 1, no. 1, 2020 references: roberts, m. l., & zahay, d. (2017). internet marketing: integrating online and offline strategies in a digital environment. publisher: cengage, 512 p. dvoretsky, d. yu., zharnikova, v. v., & soboleva-tereshchenko, e. a. (2019). features of loyalty programs of the b2b segment in the high-tech goods market. science and education a new dimension. humanities and social sciences, рp. 14–18. lazneva, i. o., & dolgopolova, m. v. (2019). development of electronic trade in the structure of the information economy of ukraine. market infrastructure. no. 31, pp. 31–37. malovichko, s. v. (2015). equifinal transformations in time and change of basic contours of electronic commerce of enterprises. economic space. no. 98, pp. 25–34. melnychuk, o. (2014). development of electronic commerce in the structure of the information economy of ukraine. bulletin of the taras shevchenko national university of kyiv. economy. no. 8, pp. 93–97. shaleva, o. i. (2011). e-commerce / textbook. way. kyiv: center for educational literature, 216 p. zharnikova, v. v. (2019). world trends and current realities of retail development in the digital economy. efficient economy. no. 5. url: http://www.economy.nayka.com.ua/?op=1&z=7075 moore k. ecommerce 101 + the history of online shopping: what the past says about tomorrow’s retail challenges. url: https://www.bigcommerce.com/blog/ecommerce/#ecommerce-timeline hagiu, a., & wright, j. (2015). marketplace or reseller? management science. vol. 61. issue 1, pp. 184–203. malyuta, i. a., & ogol, a. e. (2019). analysis of the current state and prospects of internet commerce in ukraine. efficient economy. no. 1. url: http://www.economy.nayka.com.ua/?op=1&z=6845 10 global e-commerce trends of 2019 url: https://evo.business/10-globalnyx-trendov-internettorgovli-2019-goda/ worldwide retail and ecommerce sales: emarketer’s estimates for 2016–2021. url: https://www.emarketer.com/report/worldwide-retail-ecommerce-sales-emarketers-estimates 20162021/2002090 tardaskina, t. m., strelchuk, e. m., & tereshko, y. v. (2011). electronic commerce [text]: textbook. pos. odessa: onaz them., 244 p. kaluzhsky, m. l. (2014). electronic commerce: marketing networks and market infrastructure. moscow: economy, 328 p. khovrak, i. v. (2013). e-commerce in ukraine: advantages and disadvantages. economics. finances. right. no. 4. united states: retail e-commerce sales 2017-2024 / published by  j. clement,  feb 6, 2020. url: https://www.statista.com/statistics/272391/us-retail-e-commerce-sales-forecast/ top 10 best online stores in ukraine 2018-2019. url: https://my-master.net.ua/ua/top-10-krashhihinternet-magaziniv-ukrayini-2018-2019-roku/ three seas economic journal 72 vol. 1, no. 3, 2020 corresponding author: 1 interregional academy of personnel management, ukraine. e-mail: dmytroonashchenko@gmail.com orcid: https://orcid.org/0000-0002-9991-4798 doi: https://doi.org/10.30525/2661-5150/2020-3-12 the basic principles of the process approach in the formation of the organizational architecture of trading enterprises dmytro onashchenko1 abstract. the purpose of the article is to define and substantiate the basic principles of the process approach, as well as the stages of its use in the formation of the organizational architecture of trading enterprises based on the process approach. continuing changes in the world economy associated with its globalization, as well as its crisis nature, growing competition in all spheres of the economy and especially in the field of trade, the owners and managers of each enterprise raise the urgent question: how to survive and what to do in this situation? what actions to take and what management tools to rely on to make life-changing business decisions? methodology. during the analysis, the features of the process approach were considered when using it to form the organizational architecture of an enterprise, the essence, features and classification of business processes of an enterprise. results. shrinking most markets requires businesses to not only offer products that have the greatest value to customers, but also create variations of that product for different consumer segments, and make the necessary internal changes. the process approach to the formation of the organizational architecture of the enterprise and the enterprise management system offers a solution based on a simple mechanism – a business process, the task of which is to create value for the client. in addition, the process approach allows enterprises to maintain the required speed and efficiency of their activities. for in modern conditions of a high level of competition between enterprises, it is very important to focus on key customers, determine their requirements and criteria for evaluating the results of the processes performed by the company), quickly organize processes and ensure their parameters in accordance with consumer expectations. practical implications. analysis of the features of the process approach when using it to form the organizational architecture of an enterprise, the essence and features of business processes made it possible to conclude that they really contribute to the establishment of effective and flexible activities of the enterprise, increase the competitiveness of the enterprise in the market compared with other enterprises. value/originality. the use of system analysis made it possible to formulate the features of the application of the process approach in modeling, improving the organizational architecture of trading enterprises key words: trading enterprise, enterprise architecture, process approach, business processes, principle. jel classification: d23, l22 1. introduction changes in technology, markets and customer needs have become commonplace in today 's economy, and commercial enterprises, seeking to maintain their competitiveness, are forced to use increasingly relevant technologies to improve the fundamentals of their activities. this is due to the fact that traditional methods of doing business for trading enterprises become ineffective due to the following factors: slowing down the growth of consumer demand, increased competition, slowing growth of net revenue, increasing the cost of debt service. in addition, the key ability for long-term success of the enterprise is the ability to create and develop competitive products in a changing environment. the speed of change and efficiency of the enterprise come to the fore. in the long run, companies no longer compete with business models or products, but with organizational systems that can, in turn, effectively transform business models and create innovative products. an additional complication in modern enterprises is that the processes are broken down into small operations and individual tasks and attention is lost three seas economic journal 73 vol. 1, no. 3, 2020 on the overall result that the customer expects to receive. there is an interesting effect, in the same company, at the level of individual operations, the company can work in process logic, but as soon as we begin to collect operations in larger processes, process logic is broken and gradually turns into a functional hierarchy, which loses most of the necessary connections. as a result, end-to-end processes of a larger order do not have owners and are divided between a large number of functional units, losing sight of the client and the overall result that must be created for him or her. the enterprise from a horizontal chain of processes turns into a vertical hierarchy of functions. in this regard, many market players have begun to look for ways to improve the efficiency of their business. one of these tools was the use of a process approach to improve business processes and organizational architecture of the enterprise, which in combination with cost optimization and the introduction of modern information technology can bring the enterprise to a new level. the process approach to organizational modeling is becoming a leading practice in the world, allowing companies to obtain the necessary speed, efficiency and adaptability. according to a. bjorn, "the process approach was much more effective than functional in terms of the struggle for competitiveness in a dynamic consumer market with its unpredictable whims and somersaults" (bjоrn, 2003). 2. theoretical and methodological principles of the process approach in developed countries, process organizational modeling has become common practice. the transition to a process approach to the formation of the organizational architecture of the enterprise means the transition to activity management, in contrast to the management of structures, which is characteristic of functional management. the functional approach to building an organizational architecture has a number of insurmountable limitations, which in conditions of high competition and requirements for flexibility and efficiency does not allow organizations to function successfully. "today 's companies consist of functional mines or chimneys, vertical structures based on small elements of processes" (hammer, 1997). the key limitations of the functional approach are: 1. local optimum. everyone does their job in the best way, and all this can be counterproductive, as there is no guarantee that local optimization is beneficial to the process as a whole; 2. internal client – manager. those who must be real domestic consumers are isolated from each other; 3. purpose in the hierarchy: personal security, self-preservation in the system, meeting the requirements of the leader, career advancement. one of the consequences is distorted information upstairs; 4. time of interaction between divisions: 20% – for performance of work and 80% for transfer of its results to the following executor; 5. focus on the task does not stimulate employee interest in the end result; 6. no one sees the big picture. no one understands how an organization actually works. the process approach overcomes these limitations and creates a real competitive advantage. the view of the enterprise through business processes overcomes the boundaries of the functional division of labor. there are integral blocks of work that must be done to create a product. they require a certain set of competencies, which may not coincide with accepted functional practice. everyone is guided by the added value that must be created in the business process and only under it is selected the necessary qualifications of performers. the advantages of using a process approach are as follows: 1. the company becomes more flexible and adaptable; 2. it is clear who is responsible for what and how each operation affects the end result; 3. the relationship "customer – service provider" set up horizontal links throughout the chain, and create the effect of "pulling"; 4. it simplifies the management system, less hierarchy, more subordinates, increasing the speed of decision-making; 5. it becomes possible to manage key business processes and results of the enterprise, as well as to integrate, often disparate, the actions of departments and direct their efforts to a single result; 6. the organization does not need heroes, ordinary employees become productive in the system; 7. stages of the process are performed in a natural manner; 8. processes have many options for execution, focusing not on tasks, but on the value result for the client; three seas economic journal 74 vol. 1, no. 3, 2020 9. the work is performed where it is possible to do it most effectively, and not where it is determined by the functional structure; 10. the volume of inspections and control is reduced; 11. the need for approvals is minimized. the process approach has been developed and applied in order to create horizontal links in organizations. units and employees involved in one process can independently coordinate the work within the process and solve emerging problems without the involvement of senior management. the process approach to management allows us to solve the arising questions more quickly and to influence the result. due to the international standards of the iso 9001: 2000 series, the process approach is a generally accepted norm in the activity of enterprises. and the basic principles on which the process approach is based include the following: – the principle of interconnection of processes, which is based on the fact that the company is a network of processes that represent any activity of the company, where various works are performed; – the principle of demand for the process, which is based on the fact that each process has a specific purpose, and the results of this process are in demand by the relevant consumer; – the principle of documenting processes, which is based on the fact that the process activities must be documented, due to which there is a further standardization of the process and a basis for change and further improvement of the process. in addition, the description of business processes provides transparency of all business operations, allows you to analyze the possible consequences of failures at a particular stage of work, timely find and correct errors, which, in turn, implements the most important idea of quality management – embedding quality in the process (instead of total quality control of finished products); – the principle of process control, which is based on the fact that each process has a beginning and an end, and within these limits should be defined indicators that characterize the process and its results; – the principle of responsibility for the process, which is based on the fact that to perform a certain process may involve different specialists and employees of the enterprise, while the responsibility for the process and its results rests with a certain person. 3. business process as a key element of the process approach based on the fact that in the process approach, any enterprise is considered as a business system, which is a connected set of business processes, its key element is the business process. according to iso 9001 standards, a business process is "a set of interconnected and interacting activities that will turn inputs into outputs". at the same time, in a broader sense, the business process can be defined as a sequence of actions to carry out production and economic activities within a certain organizational management structure of an industrial enterprise, which converts the "input" of resources to "output" the result, which has value for the consumer. this business process is characterized by two important features: firstly, it has its external suppliers, internal recipients and consumers; secondly, it crosses organizational boundaries, i.e. it usually flows over the barriers that exist between units of the organization, as well as between different organizations, interconnected relations "supplier-consumer " or even penetrates these barriers (tashkinov, 2014). given the importance of this category, even despite generally accepted standards, it does not have a single universal definition, and among the main characteristics that are used in its definition, the following are used: – sequence; – action; – set; – activity; – result; – value; – consumer and others. using these characteristics, as well as taking into account the features and essence of the business process, we concluded that the business process is a set of certain actions within the relevant organizational structure, which forms the overall business system of the enterprise to achieve primary goals. one of the main stages of building a process organization of the enterprise is the selection and classification of business processes. there are a large number of different classifications of business processes, but according to the results of the study and generalization, we will focus on the following basic categories: three seas economic journal 75 vol. 1, no. 3, 2020 – main business processes – focused on the production of products or services that have value for the customer, and that provide income for the company; – ancillary business processes – designed to ensure the implementation of basic business processes. in general, they provide resources to all business processes of the enterprise; – business management processes – cover the full range of management functions at the level of each business process and business system as a whole, i.e. the interconnected set of all business processes of the enterprise. the construction of the technology of management processes is based on the concept of controlling, which allows to form a complete cycle of enterprise management, from strategic planning to analysis of the causes of deviations from the plan and the formation of management influences. from this definition we can conclude that the whole set of interacting business processes of a particular enterprise forms a business system of the enterprise, which covers all activities of the enterprise. in this case, business processes exist in inseparable connection with kpis and for efficient operation require accurate and efficient calculation, which is one of the fundamental differences between the process approach and the functional one. the process approach is based on the maximum expressed by p. drucker: "you can only manage what can be measured." measuring and interpreting the value result of each business process forms an effective relationship between the internal customer and the service provider. 4. features of project management of an enterprise the application of the process approach in different areas of the economy to obtain the greatest efficiency requires consideration of their main features, and this is especially true in such areas as trade. according to the system approach, which is presented in the works of n. novoselova, all business processes of a trading company are divided into three groups: 1) managing business processes that control the functioning of the system. examples of the management process are corporate governance and strategic management; 2) operating business processes that make up the main business of the company and create the main revenue stream. examples of operational business processes are supply, production, marketing and sales; 3) support business processes that serve the core business. for example, accounting, recruitment, technical support (novoselova, 2009). all three groups of processes are interconnected and separately from each other they cannot bring high efficiency. in the traditional approach, among the main business processes of a trading company are listed the main operating processes of a trading company, such as sales of goods, transportation, etc., and there are other groups than in the system approach. based on the functions, business processes of a trading company are divided into: a) commercial (advertising of goods and services, selection and ordering of goods from suppliers, pricing, advising customers, selection of products, sale of goods); b) technological business processes of trading organization, which include such processes (vinogradova, 2012): – transportation of goods from suppliers; – acceptance, storage of goods; – moving goods from the warehouse to the trading floor; – sorting of goods and preparation for sale, packaging, etc .; – organization of sales of goods; – inventory; – merchandising, etc. because a trading company is a complex system, its activities consist of a large number of business processes, each of which is a sequence of actions and decisions aimed at achieving a specific goal. each company has its own set of business processes, and it is not standard for all trading companies, as it depends on the specifics of the trading company (industry, size, location, nature of sales, etc.). for the effective functioning of a trading company in market conditions, it must be constantly evolving and improving. to do this, when applying the process approach, it is first necessary to determine and assess how well the business processes of the enterprise are functioning, which will identify not only shortcomings and weaknesses, but also possible areas for business processes and architecture of the trading company. the efficiency of this process is increased through the use of key performance indicators of business processes of a trading company. three seas economic journal 76 vol. 1, no. 3, 2020 in general, obtaining data to assess the business processes of trade requires three main steps: 1) indicator planning and development of tools, procedures and criteria for data collection; 2) direct data collection; 3) data analysis and reporting based on the results of the analysis (dashkov, pambukhchiyants, 2010). as for the indicators that most fully reflect the efficiency of business processes of commercial enterprises, they should include: – productivity; – cost level; – quality. at the same time, depending on the characteristics of the trading company, this list of indicators can be increased. based on the results of assessing the effectiveness of commercial activities and conducting a quali tative assessment of the implementation of regulations of the trade and technological process of surveyed enterprises identify weaknesses in the business processes and organizational architecture of the enterprise, which serves as a basis for modeling new or improved organizational architecture, etc. 5. conclusions process organizations look for reasons for not achieving goals in business processes, rather than focusing on blaming employees. this allows you to solve problems and not build up internal tension in work teams. the modern development of information and communication technologies gives an additional incentive to use the process approach in the organization. the process organization is based not on individual structural elements, but on the connections between them. the essence of connections lies in the ability of participants to communicate with each other. for communication to be effective, it must be data driven. thus, the ability to establish effective communication between business processes becomes a key factor in the success of a process organization. information technologies make it possible to collect and operate with a large amount of data, business intelligence systems greatly simplify access to them, and modern communication tools neutralize physical remoteness. the process approach completely changes the paradigm of modern enterprise management by offering a holistic, versatile and scalable solution that can create a long-term competitive advantage for companies in today 's world. thus, the introduction and use of a process approach to the formation and improvement of the organizational architecture of the trading company will have the following positive consequences for the trading company: 1. changing the culture of doing business in general. lack of systematization in the organization and management of business processes; the use of software products designed to model business processes, raises issues of organizational structure and architecture of commercial enterprises. 2. the process approach promotes the formation of new economic thinking of the management of trading enterprises, focused on modern management methods that allow to ensure the investment of the range of trade networks in the range of the region, the effectiveness of trade and high service culture. 3. the application of the process approach requires certain investments; optimization of temporary, material, labor, information resources. but the structured goals and objectives of trade, standardization of business processes will contribute to further economic growth of trading enterprises and their efficiency. references: bjоrn, a. (2003). business processes. improvement tools. moscow: ria "standards and quality ". hammer, m. (1997). corporation reengineering. manifesto for a revolution in business. saint petersburg: saint petersburg university. tashkinov, a. g. (2014). theoretical and methodological foundations of the process approach to management at an industrial enterprise. bulletin of the perm university, vol. 2(21), pp. 77–86. novoselova, n. v. (2009). standardization of business processes in retail. store management, vol. 9, pp. 15–23. vinogradova, e. v. (2012). features of business processes of management of trading enterprises. bulletin of donetsk state university of economics and trade, vol. 4, pp. 22–27. dashkov, l. p., & pambukhchiyants, v. k. (2010). commerce and trade technology. moscow: information and implementation center "marketing". three seas economic journal 90 vol. 1, no. 4, 2020 corresponding author: 1 shei “ukrainian state university of chemical technology”, ukraine. e-mail: spkiris@gmail.com orcid: https://orcid.org/0000-0001-6905-9682 doi: https://doi.org/10.30525/2661-5150/2020-4-13 parameters for evaluating the effectiveness of apartment building management stanislav kiris1 abstract. the purpose of this article is to determine the main principles for assessing the efficiency of management of an apartment building. now in ukraine has not yet developed a single methodology for assessing the effectiveness of apartment building management, so there are a large number of scientific approaches to the formation of such an assessment system. the organizational and economic mechanism of management of apartment buildings provides a set of interconnected components. the analysis of economic efficiency and social responsibility should consider that the management system should be aimed at achieving the following goals of apartment building management. methodology. in the evaluation process it is necessary to calculate the value of the complex indicator of all three groups, using the weight. at this work the algorithm for evaluating the effectiveness of management of an apartment building is developed. the value of regulatory (target) indicators must be set taking into consideration the situation in the target market, taking into account the potential and intentions of the management company (manager). in the management activities of apartment buildings, evaluation of its efficiency has recently also begun to be applied by using certain criteria and assigning them points (on a 5-point scale). the main elements that have a certain numerical value in this system are the corresponding indicators. for each of them the calculation period is presented, the corresponding units of calculation and boundary conditions of the level of their values are given. the lists of criteria that must be met by the management of apartment buildings are identified. there are some negative trends of declining interest of co-owners of apartment buildings in management is described. the choice of methods of evaluation the effectiveness of apartment buildings based on form of condominiums management should be made. there are many differences in the forms of management of an apartment building, which should be counted in the new methodology for assessing the effectiveness of management. as a result of work is developed the standard scheme of an estimation of efficiency of management of apartment houses in ukraine is developed. the sources of an initiation of assessment of the effectiveness of apartment building management are identified. the results of a survey of the association of co-owners of an apartment building (acab) of dnipro in 2020 noted the following specifics which should also be taken into account in the process of assessing the effectiveness of apartment building management. key words: apartment building, joint property of co-owners, efficiency of apartment building management, parameters for evaluating the efficiency of apartment building. jel classification: r20, r29, m19, l99 1. introduction a great value and importance for co-owners is management efficiency of existing housing stock, as its market value depends in part on the condition in general of the facilities and the level of housing and communal services provided in it. professional managers are also directly interested in the high efficiency of housing management, as their professional reputation depends on it. (alekseev, 2016; moroz, 2018). the interests of homeowners and managers in terms of management efficiency coincide completely, but the criteria for this efficiency need to be clearly defined. the principles of effective management of apartment buildings consist in achieving the appropriate management goal (a certain quality result or quality of the object at optimal costs) (moroz, bondarenko, chubka, 2018). an effective apartment building management system requires the joint efforts of their co-owners and management bodies (depending on the chosen form of apartment building management). three seas economic journal 91 vol. 1, no. 4, 2020 it should be noted that ukraine has not yet developed a single methodology for assessing the effectiveness of apartment building management, so there are a large number of scientific approaches to the formation of such an assessment system. the vast majority of apartment building authorities aim to: – satisfying needs of co-owners in quality services; – carrying out current and capital repairs; – quick response to the needs of co-owners; – information support of co-owners; – performance of works on improvement of housing stock, etc. 2. the algorithm for evaluating the effectiveness the algorithm for evaluating the effectiveness of management of an apartment building should look like this (figure 1). in the evaluation process it is necessary to calculate the value of the complex indicator of all groups, using their weight. the value of regulatory (target) indicators must be set taking into consideration the situation in the target market, taking into account the potential and intentions of the management company (manager). the next stage assumes that in the process of calculating the ratio of actual and target values of indicators it is necessary to take into consideration that in the analysis of some of them the picture of target dynamics has a regressive character (reduction of indicator value is a positive trend). in this case, it should be used the inverse of the indicator, in the calculation of which the targets are divided by the actual. necessity to determine the weight of each indicator is due to the fact that the indicators, with the importance of assessing each of them, may have different degrees of significance in the overall assessment of the effectiveness of management of urban residential real estate. besides, weights will allow you to set priorities in each specific period of development. the weights are set by experts for each group of indicators, with the contribution of each group of indicators is taken equal. the organizational and economic mechanism of management of apartment buildings provides a set of interconnected components, which provide: – achieving the ultimate management goal; – transition from normative-tariff regulation of cost and quality of communal services provided by co-owners of an apartment house to payment of actually consumed volume of services; – development of the scheme of interaction of local public authorities, various business entities and consumers in the process of providing services; – reforming the financing system with an emphasis on paying consumers for management and other services, taking into account their real value; – rational schemes of combination of available sources of financing; – creating conditions for effective management. for today, the situation regarding the assessment of the effectiveness of apartment building management in ukraine provides the existence of parameters and standards of quality of housing and communal formation of a system of indicators of efficiency of management of an apartment house 1 establishment of target (normative) values of certain efficiency indicators 2 search and obtain data on the actual values of the analyzed indicators 3 determining the deviations of the planned indicators from the actual ones, the reasons for these deviations, their ratios 4 calculation of weight coefficients of indicators within their separate groups 5 calculation of complex indicators of efficiency of management of the apartment house 6 analysis of the obtained results, making a conclusion about the general level of efficiency of apartment building management 7 figure 1. algorithm for evaluating the effectiveness of apartment building management source: author’s development three seas economic journal 92 vol. 1, no. 4, 2020 services, normative documents, which quite clearly regulate the issues of housing and communal services. however, when it comes to the quality and efficiency of management in relation to apartment buildings, when tracking the technical or legal side of the case are left aside the system-forming elements of quality management of apartment buildings, which are not evaluated or evaluated on an intuitive level. these elements include the following: – apartment building management can be considered from a tactical or strategic point of view, as all management plans are implemented in both the short and medium and long term (by indicating that the vast majority of administrators carry out tactical planning – planning the performance of an apartment project for one year ; – in the conditions of development of the market of administrative activity by apartment houses such characteristics of management, as its reputation, openness, orientation on sustainable development, etc. start to acquire special value; – in the context of management development in the housing sector, managers gain significant experience, use foreign experience to assess the effectiveness of management to increase their own competence and, accordingly, increase their own competitiveness in the labor market. for the purpose of developing criteria for quality and efficiency of apartment building management, the following features of this approach to evaluation are taken into account: – the ability to compare the effectiveness of management of apartment buildings for different forms of management, as well as governing bodies and their representatives; – objectivity of management efficiency assessment; – availability of data required for analysis; – ensuring the unity of approaches to assessing the quality of management of different types of housing; – identification of management problems in different forms of management; – involvement of co-owners in the assessment of management quality. consumers of the results of the obtained assessments are state local governments, co-owners of an apartment building, as well as specialists in various fields and experts. the assessment can be used as a basis for developing a more detailed list of indicators that allow us to draw conclusions about the effectiveness of apartment building management. in general, a typical scheme for assessing the effectiveness of management of apartment buildings in ukraine is as follows (figure 2). in the management activities of apartment buildings, evaluation of its efficiency has recently also begun to be applied by using certain criteria and assigning them points (on a 5-point scale): – 5 points – full responsibility with established rules and regulations (excellent quality); – 4 points – responsibility with the rules and regulations for all major parameters (quality is considered good); – 3 points – there is compliance with the rules and regulations only on some basic parameters (this quality is satisfactory); – 2 points – there is a low compliance with rules and regulations (the quality of management is unsatisfactory); – 1 point – complete non-compliance with the established requirements and criteria, these management activities are completely ineffective. also, the effectiveness of the management of apartment buildings can be assessed by the following criteria: – the level of technical condition of the common property of apartment buildings, as well as the current condition of adjacent territories; – the size and dynamics of financial and economic indicators of activity in the management of apartment buildings; – assessment and analysis of indicators that indicate the quality of housing and communal services for co-owners of apartment buildings. there are many questions regarding the management of a residential building, compliance with existing norms, standards, procedures and rules in practice. the main elements that have a certain numerical value in this system are the corresponding indicators. for each of them the calculation period is presented, the corresponding units of calculation and boundary conditions of the level of their values are given. the list of criteria that must be met by the management of apartment buildings is as follows: 1. proper condition of an apartment building (or buildings). 2. the ability of the house to conduct effective organizational and economic activities. 3. effective economic management. 4. established interaction with co-owners. 5. focus on the development of the management function of an apartment building. the first three criteria begin to be used in ukraine, but the last two are used only by innovation managers. 3. the negative trends of apartment building management in general, in ukraine there is a negative trend of declining interest of co-owners of apartment buildings in management: – meetings of co-owners are held very rarely – usually once a year, which does not allow for effective management, taking into account the views of all participants in the process; three seas economic journal 93 vol. 1, no. 4, 2020 – the interest of co-owners is mainly focused on the amount of payment for the services of the management company or the cost of utilities of the association of co-owners of an apartment building (acab); – in case of necessity of current or capital repairs there are conflict situations: if the funds of the reserve fund are used for current repairs, then the financial participation of all co-owners is necessary for capital repairs, which they mostly refuse (motivated by low income); – there are frequent cases of lack of a common point of view on the main priority problems of an apartment building that need to be addressed as a matter of priority (for example, upper floor residents need roof repairs, but lower floor residents do not have roof leaks and believe that this cost item is not as urgent, in turn, residents of the first floor require replacement of the front door for insulation, but residents of the upper floors do not have such problems). it should also be noted that the results of a survey of the association of co-owners of an apartment building (acab) of dnipro in 2020 noted the following specifics, which, in our opinion, should also be taken into account in the process of assessing the effectiveness of apartment building management: – the predominant contingent of co-owners (in houses where people of pre-retirement and retirement age mostly live, the main attention is paid to financial indicators of management – the cost of management, repair costs, etc.; in new buildings more attention is paid to the development of adjacent infrastructure (improving communications, participation in local programs, etc.); – the number of co-owners of an apartment building (the greater the number of co-owners, the smaller the financial burden in the process of current and capital repairs, infrastructure development of the adjacent territory, etc.); typical scheme for evaluation of efficiency of management of apartment buildings in ukraine economic (financial) indicators – sufficient management budget; – level of non-payment of co-owners of management services; – the size of the reserve fund; payment discipline, etc. organizational indicators – organization of maintenance work; – organization of housing and communal services; – availability of the necessary documentation for holding meetings and decisions, etc. technical indicators – ondition of the housing stock; – quality of infrastructure and its maintenance; – housing development (improvement) information indicators – participation of co-owners in the management of an apartment building; – the level of their involvement in management; – providing up-to-date information on current management issues communication indicators – communication between co-owners of the house; – communications between management bodies and co-owners; – communication with local authorities figure 2. a typical scheme for assessing the effectiveness of management of apartment buildings in ukraine source: author’s development three seas economic journal 94 vol. 1, no. 4, 2020 – date of commissioning of the housing stock (old housing stock requires significant financial investments in the repair of plumbing, power lines, etc., while new buildings require playgrounds, recreation areas for co-owners, landfills, etc.). 4. the parameters for evaluating the effectiveness of apartment building management the analysis of economic efficiency and social responsibility should consider that the management system should be aimed at achieving the following goals of apartment building management: 1) economical goal, which on the part of the co-owners of an apartment building should ensure the efficient use of consumer funds aimed at maintaining and improving the housing stock, while on the part of the manager his or her production activities for the provision of management services should be profitable; 2) social goal – maximum satisfaction of consumer needs of co-owners; 3) technological goal – maintenance and improvement of the technical condition of the apartment building, therefore, in parallel with economic efficiency and social responsibility, the technical consequences of management activities should be considered and evaluated. in the development of this approach as target criteria of efficiency of management of the apartment house we can use the following: – safety (level of protection of a person and his property from fire, accident, accident, natural and man-made threats); – level of comfort (compliance of living with the existing set of requirements, which provides the optimal living environment for co-owners); – level of reliability (in the ability of the object to preserve the basic characteristics of the housing stock during its operation); – level of availability (level of possibility of acquisition of housing by individuals in accordance with their values, needs and income level). in our opinion, in the proposed model it is important to define individual indicators of service quality, which are characterized as the ratio of subjective/objective quality indicator of apartment building management to the reference value of the corresponding subjective or objective quality indicators of management. therefore, it can be argued that the effectiveness of apartment building management should include an analysis of the broadest list of indicators, so the main criteria for assessing the effectiveness of management of apartment buildings are as follows (table 1). in order to assess the effectiveness of the management of an apartment building, a 5-point system is used according to the following principle: 5 points indicate the full compliance of management activities with current rules and regulations (excellent quality of work and services, which is assessed using certain indicators); 4 points indicate sufficient compliance of management activities with the established indicators and basic parameters (indicate good quality); 3 points allow us to talk about the average level of compliance with the rules and regulations for the management of an apartment building according to the basic parameters (you can see a satisfactory level of management services); 2-0 points indicate extremely low compliance with current norms and rules or its absence (in this case, management activities deserve an unsatisfactory assessment of the quality of work). after summing the scores separately for each criterion, you can also apply the coefficient of significance of each parameter and determine the final assessment of the effectiveness of apartment building management, and, in our opinion, the level of significance of each criterion should be set by each apartment building in accordance with management base etc. 5. conclusions the evaluation of the effectiveness of the management of an apartment building should be carried out periodically with the obligatory accompaniment of surveys of co-owners. thus, consider that the effectiveness of management from the standpoint of achieving goals and the level of effectiveness of management measures. therefore, we believe that the results of the evaluation of management activities should be an incentive for their activities. management activities must be transparent and efficient. it is worth noting that in light of recent trends, the assessment of the effectiveness of management of apartment buildings should take into account the following criteria and indicators: 1) energy efficiency: – issues of technical operation and maintenance of apartment buildings; – rational energy consumption; – use of energy saving technologies; – reduction of costs for electricity, heat supply; 2) environmental indicators: – reduction of negative impact on the environment; – improving waste management; – ensuring periodic garbage removal by relevant companies; – ensuring the cleanliness of the adjacent territory; 3) social dimension: three seas economic journal 95 vol. 1, no. 4, 2020 table 1 groups of indicators indicators 1 2 availability of technical documentation for an apartment building, as well as its condition and completeness of the list – executive management documentation for the house; – documentation related to the technical accounting of the housing stock, which contains information on the condition of the common property; – cadastral documents maintaining documents for the management of an apartment building on the issues of current maintenance and repair – proper documentation on the inspection of the housing stock and its condition in the relevant seasons; – documentation of readiness of housing for seasonal operation; – documents-plans for maintenance of common property; – documents on the implementation of plans for maintenance; – plan for overhaul of common property; – documentation on the level and performance indicators of the plan of overhaul of common property; – the decision of the co-owners of the apartment building to approve estimates for maintenance and overhaul of the apartment building; – accepted (approved) and executed schedules of regular inspections of the apartment building and adjacent territories, documented inspection results; – indicators of timely implementation of measures to maintain order and insurance of housing with significant depreciation indicators of quality of maintenance, repair and development of infrastructure (adjacent territory) – current condition of garbage containers, schedule of their cleaning, observance of schedules; – current condition of lawns and green areas located in the surrounding area; – approved and implemented plans for landscaping and landscaping of the adjacent territory; – current condition of outdoor lighting (operation, appearance, safety, energy efficiency, performance of assigned functions); – the current condition of the territories set aside for drying clothes, recreation of citizens; – sports, playgrounds: their availability, condition, development; – seasonal grounds (summer, winter); – current condition of sanitary condition of garbage pipes, elevators, common corridors, stairwells; – approved and executed schedules of sanitary cleaning of public premises in accordance with regulatory documents; – sanitary condition of basements; – sanitary condition of the attic of an apartment building, the existence of fire hydrants, their condition and suitability for use; – the presence of fire shields, their condition; indicators of the quality of services provided to co-owners – the existence of a list of agreements with organizations that supply heat, water, gas, electricity, garbage, provide homophone services, etc.; – substantiated claims of co-owners of an apartment building for the absence or low quality of provided utilities (during a certain period – a quarter, six months, a year); – the number of detected emergencies in the life support systems of an apartment building, which were eliminated in violation of certain deadlines (during a certain period – a quarter, six months, a year); – applications of co-owners of an apartment building, which were executed in violation of the established deadlines (during a certain period – a quarter, six months, a year); – organization of the general meeting of co-owners of an apartment building; – the quality of decision-making specified in time of the meeting; – duration of management decisions; – support of management decisions made by co-owners financial and economic indicators of management – condition, level, dynamics of indebtedness of co-owners for payment of utilities and management services; – arrears of management services (salary); – availability, size and dynamics of the reserve fund; – availability and features of investment programs (deposit accounts); – the dependence of the dynamics of the size of management costs of co-owners and their ability to pay utility bills on time (ie the validity of the established prices for apartment building management services, the optimal financial burden on co-owners taking into account the number of state subsidies) quality of the management staff – quality of the management staff quality of the management activity – quality of the management activity three seas economic journal 96 vol. 1, no. 4, 2020 – ensuring the rights of co-owners to receive quality services; – participation of co-owners in the management of the house; – the right chairman of each co-owner; 4) loyalty of co-owners: – periodic meetings; – general participation in management decisions; – possibility to get acquainted with documents on house management; – effective communications with the management of the apartment building; 5) communication with state local authorities, etc.: – participation in local development programs; – receiving state support, etc. it should also be noted that the assessment of the effectiveness of apartment building management can be initiated by the general meeting of building co-owners, the initiative group, the chairman of the association of co-owners of an apartment building (acab) and carried out by creating a commission consisting of both co-owners and representatives of the apartment building management body. based on the results of such an assessment, an appropriate decision is made to overcome existing problems or find new ways and opportunities to improve the management mechanism of the apartment building. thus, according to the results of the study, we note that since a single method of analyzing the effectiveness of apartment building management in ukraine has not yet been developed, co-owners and representatives of building management bodies at their discretion create appropriate algorithms for such assessment. references: alekseev, i. v., & moroz, n. v. (2016). evaluating the effectiveness of housing management. current economic problems. series "demography, labor economics, social economy and politics, vol. 5(179), pp. 246–253. moroz, n. v., bondarenko, l. p., & chubka, o. m. (2018). principles of professional management of multiapartment buildings. scientific bulletin of polissia, vol. 2(14), part 1, pp. 150–156. three seas economic journal 139 vol. 1, no. 4, 2020 corresponding author: 1 kyiv national university of construction and architecture, ukraine. e-mail: bankovskao@ukr.net orcid: https://orcid.org/0000-0001-5322-1075 doi: https://doi.org/10.30525/2661-5150/2020-4-20 conceptual principles of pricing in the aerated concrete market in ukraine in the context of economic cyclicality olha skrypnyk1 abstract. the purpose of the paper is to identify patterns of influence of macroeconomic and sectoral factors on the dynamics of prices of aerated concrete products during 2015–2020. the method of factor analysis was used to identify the degree of influence of a number of macroeconomic indicators and raw material prices on the pricing of aerated concrete products. using the graphical method, the patterns of change in the growth rate of aerated concrete prices at different phases of the economic cycle during this period were identified. methodology. the study is based on the identification of correlation regression relationships between the price of aerated concrete products and raw materials for their production and some macroeconomic factors, as well as on the analysis of changes in the degree of influence of relevant factors on aerated concrete prices at different phases of the economic cycle. research results. the article summarizes the theoretical approaches to the classification of pricing factors, defines the time limits of the phases of economic cycles in the economy of ukraine during 2014–2020, identifies the main factors of price formation in the aerated concrete market of ukraine and analyses the degree of their impact on prices of aerated concrete products in 2015–2020. practical implications consist of identifying a number of correlations, as well as trends in aerated concrete prices at different phases of the economic cycle, which can be used to improve pricing in the construction industry. value/originality. methodological approaches used for factor analysis of pricing of aerated concrete products can be used for timely price adjustment within the chosen pricing strategy, based on forecasts of macroeconomic development of the economy. key words: aerated concrete market, pricing, factor analysis, correlation, re-gression, economic cycle, construction volumes, inflation, consumer price index. jel classification: e32, l16, l74 1. introduction currently, one of the urgent issues in ukraine is renovation and modernization of worn-out and obsolete housing stock. investment in construction has a multiplier effect in terms of accelerating the growth of national gdp, since this industry is the most material-intensive and labour-intensive. the increase in construction is always the driving force behind the development of related industries, primarily the building materials and products industry. in our opinion, one of the important development tendencies of the construction industry is the use of modern wall materials, namely aerated concrete. according to the ukrainian autoclaved aerated concrete producers association (vaag), aerated concrete has occupied the largest share of the domestic market of constructional materials over the past 10 years; it has increased from 8% to 53%. now not only energy-efficient private cottages but also multi-storey residential complexes are built using this light and warm material (vaag, 2020). given the current unstable development of the domestic economy and the intensifying market competition, the choice of effective pricing measures is becoming increasingly important for the successful development of the enterprise, since its profitability directly depends on the price at which the product is sold. that is why the research of the pricing process for aerated concrete products is relevant. some theoretical aspects of this problem also need further study; in particular, the main objectives of our study are to analyse the price-forming factors of macroeconomic and sectoral level and to identify the degree of their indirect influence on the prices of aerated concrete products. conversely, solving the problem of effective pricing is impossible without identifying and analysing the factors influencing the price. three seas economic journal 140 vol. 1, no. 4, 2020 2. theoretical foundations of factor analysis of pricing pricing is a rather complex process that requires a comprehensive analysis of factors in order to predict their impact on the ability to sell goods at a price favorable to the enterprise. in today’s market conditions, the methods of “mechanical” pricing only based on costs and adding profit to them or focusing on the industry leader or competitors do not take into account many important factors, thus increasing the financial risks of the enterprise. that is why the issue of a comprehensive study of the system of pricing factors is extremely important. the analysis of literature shows that at the present stage of development of economics the issue of pricing factors has been thoroughly studied. the most universal is the primary division of pricing factors into internal (those that can be controlled by managers) and external (those that the company cannot directly influence, but can adapt to them) or according to another classification – factors of direct influence (partially controlled by the enterprise) and factors of indirect influence (not controlled by it) (mazur, 2012). this principle of classification, proposed by p. kotler (kotler, 2000) is supported by most scientists (table 1) to create an effective pricing strategy one should create an information base that would contain all the data about the factors influencing the price level. 3. factor analysis of prices for aerated concrete for the factor analysis of prices for aerated concrete, we selected those factors that are subject to quantitative objective measurement (economic indicators). we divided them into 2 groups, namely: 1. macroeconomic factors: economic growth in the country as a whole (nominal gdp growth); consumer price index; the exchange rate of usd against the hryvnia (according to the interbank foreign exchange market); the size of the average salary in ukraine; volume of capital investments. 2. industry factors. they characterize the conditions of management in each industry, are common to all enterprises in this industry. among them we have singled out: the volume of construction; prices for key raw materials for aerated concrete production (lime, cement, quartz sand, aluminium powder, gypsum) – also the cost of production directly depends on these indicators; production capacity of enterprises in the industry. according to the results of stochastic correlation analysis, the values of correlation coefficients are obtained and presented in table 2 (skrypnyk, 2019). as can be seen from the obtained coefficients, changes in average wages and inflation have the most discernible impact on aerated concrete prices, macroeconomic factors that indirectly reflect primarily changes in the cost of production of aerated concrete. the only exception was the exchange rate, table 1 overall classification of pricing factors authors internal external (lytvynenko, 2010) goals of organization and marketing, strategies for individual elements of the marketing complex, unit cost. consumer demand, producer supply, household income, consumer behavior, the influence of the state on pricing policy, price advertising, financial system, money circulation, monetary system, participants in sales channels, competition, inflation (mazur, 2012) actual costs, production capacity, method of production, image of the enterprise, etc. macroeconomic environment, conditions of competition, characteristics of consumers, characteristics of intermediate sellers, characteristics of suppliers (petrunia, 2010) current goals of the company, the level of costs of the enterprise, the pricing strategy of the enterprise. external: state and dynamics of the market, price elasticity of demand, prices of competitors, competitive positions of the enterprise, etc. (beliavtsev, 2005) types of goods, price elasticity, enterprise goals, degree of consumer satisfaction with this product, the possibility of market segmentation, the presence of qualitative differences between the company’s products and competitors’ products, enterprise size, degree of product differentiation, role of advertising goods, features of the production process, etc. market structure, economic independence of the enterprise, political stability of the country-producer and the countries where the products of the enterprise are sold, the economic environment, market share, position of competitors, etc. (balabanova, sardak, 2003) mission of the enterprise, goals of the enterprise, principles of pricing, marketing goals, elements of the marketing complex, costs, personnel, image of the enterprise. market environment, government regulation, consumers, competition, market conditions, level of demand and its elasticity, economic situation, participants (larina, barylovych skrуpnуk, 2016) production and commercial: scale of production, production experience, commercial risks of the enterprise, conditions of sale of goods macroeconomic factors: inflation, exchange rates, interest rates, etc., state price regulation. marketing factors: characteristics of markets, type of market structure, stage of the product life cycle three seas economic journal 141 vol. 1, no. 4, 2020 which, in our opinion, was due to the low share of imported raw materials in the cost of aerated concrete production. as for the dynamics of nominal gdp and the volume of capital investment, which reflect changes in demand in the country, the impact of these factors on the prices of aerated concrete was insufficient. this confirms our previous assumption that with increasing demand for aerated concrete, producers under oligopoly do not risk raising prices, but only increase production within existing production capacity (skrypnyk, 2019). while analysing industry factors, we analysed the impact of the following factors on aerated concrete prices: prices in ukraine at the end of the quarter on key raw materials used in aerated concrete production (cement brand m-400, gypsum construction grade g-4, quicklime and natural sand) and the volume of construction work. the results of correlation analysis are showed in table 3. analysis of the values of the correlation coefficients, given in table 3, allowed us to draw the following conclusions: a factor such as the volume of construction work, which, first of all, characterizes the change in demand for construction materials and products, has an insufficient effect on the prices of aerated concrete, which does not allow the use of this indicator for forecasting. in our opinion, this is due to seasonal changes in the volume of construction work. factors such as changes in prices for all types of raw materials for the production of aerated concrete have a significant impact on the prices of aerated concrete, which is due to their direct impact on the cost of its production (skrypnyk, 2019). 4. assessment of price dynamics in the aerated concrete market of ukraine in 2016–2020 as previously mentioned, these results were obtained for the period from the 1st quarter of 2015 to the 3rd quarter of 2018 and therefore need to be revised in the light of the data of subsequent periods. to assess the price dynamics in the aerated concrete market of ukraine, it is first of all expedient to compare the growth rates of aerated concrete prices and the consumer price index. for that purpose, we expressed the price of aerated concrete for the 4th quarter of 2016 – 3rd quarter of 2020 as a percentage of the base price, which was the price in the 3rd quarter of 2016. based on the consumer price index, we calculated the average consumer price with the base in the same period. the results of these calculations are shown in figure 1. this figure confirmed our previous studies (skrypnyk, 2019), according to which there was a fairly high correlation between aerated concrete prices and the consumer price index in the period up to the 1st quarter of 2018 (correlation coefficient ~ 0.9). however, from the 2nd quarter of 2018, aerated concrete prices began table 2 values of correlation coefficients between aerated concrete prices and macroeconomic indicators for the period from the 1st quarter of 2015 to the 3rd quarter of 2018 factors prices exchange rate usd, uah / usd average salary, uah average prices based on cpi,% cap. investments, million uah nomin. gdp, million uah small cellular b2 concrete wall blocks for laying on mortar, density of 500 kg/m3 0.59 0.88 0.87 0.57 0.70 small cellular b2.5 concrete wall blocks for laying on mortar, density of 500 kg/m3 0.59 0.67 0.93 0.91 0.68 0.79 average value 0.63 0.91 0.89 0.63 0.75 table 3 values of correlation coefficients between aerated concrete prices and some industry indicators for the period from the 1st quarter of 2015 to the 3rd quarter of 2018 factors prices construction quicklime, uah / t construction gypsum g-4, uah / t cement m-400, uah / t natural sand, uah / t volumes of construction works, million uah small cellular b2 concrete wall blocks for laying on mortar, density of 500 kg/m3 0.91 0.89 0.86 0.90 0.59 small cellular b2.5 concrete wall blocks for laying on mortar, density of 500 kg/m3 0.59 0.96 0.91 0.93 0.92 0.70 average value 0.93 0.90 0.90 0.91 0.64 three seas economic journal 142 vol. 1, no. 4, 2020 to grow faster than inflation. this trend has allowed us to speculate that this may be due to the economic cyclicality that aerated concrete companies have taken into account in advance in their pricing policies. therefore, we have analysed the dynamics of ukraine’s gdp as the main indicator for determining the phases of the economic cycles of kitchin and zhuglyar. in determining the phases of the economic cycle, experts usually focus on gdp growth compared to the corresponding quarter of the previous year (because gdp has significant seasonal fluctuations). negative gdp growth characterizes the phases of recession and depression, and positive is characteristic of recovery and upswing (respectively, the transition from negative gdp growth to positive means the beginning of the recovery phase, and from positive to negative – the beginning of the recession). as for distinguishing between positive and negative phases of the cycle (recession from depression, and recovery from the rise), there is no single methodology for this in economics (dubovskii, 2015). at the same time, the distinction between recession and depression is usually not a difficult task, because the transition from recession to depression begins when the rate of decline in gdp begins to decrease. similarly, we believe that any slowdown in gdp growth during economic growth will indicate a transition from recovery to growth. according to this concept and based on the graph of the percentage change in the quarterly gdp of ukraine relative to the corresponding quarter of the previous year (figure 2) in the period from 2014 to 2020 in the economy of ukraine we have identified the following phases of the cycle: recession: to q1 2015 depression: q2 2015 – q4 2015. recovery: q1 2016 – q4 2016. rise: q1 2017 – q4 2019. recession: q1 2020 – 2q 2020. depression: q3 2020 to the present. the selection of the relevant phases of the economic cycle allowed us to identify the following trends in the dynamics of prices for aerated concrete products in ukraine: 1. aerated concrete prices in the analysed period in the phases of recovery and growth initially grew rapidly, outpacing inflation (from q1 2016 to q2 2019), but from the 3rd quarter of 2019, the growth rate of prices slowed down, and this happened at the stage of prosperity. thus, aerated concrete producers predicted the onset of the recession and adapted their pricing policies in advance to the onset of this phase of the cycle. to identify the real dynamics of aerated concrete prices not related to inflation, it is advisable to consider changes in the discounted price of aerated concrete in the analysed period as a percentage of the base price with the same base (we have used the consumer price index to discount aerated concrete). comparing the graphs in figure 1 and figure 3, we can see that the dynamics of the discounted price of aerated concrete corresponds in general to the dynamics of its undiscounted price. this allows us to conclude that the rise in prices for aerated concrete is influenced not only by inflation in the economy, but also the pricing policy of manufacturers who use increasing demand for aerated concrete in the boom phase to increase profitability, thereby reducing financial risks in the next phase of economic cycle during recession. 100 110 120 130 140 150 160 170 consumer price index average price of aerated concrete in ukraine figure 1. comparison of the dynamics of price growth for aerated concrete and inflation in ukraine in 1 quarter 2016 – 3 quarter 2020 as a percentage of the base values of these indicators (base – 3rd quarter of 2016) source: compiled by the author on the basis of (state fiscal service of ukraine, 2020), (іnproject llc, 2020) three seas economic journal 143 vol. 1, no. 4, 2020 another probable factor influencing the prices of aerated concrete, as already mentioned, is the change in construction volumes. to determine the impact of this factor, we compare the discounted price of aerated concrete expressed as a percentage of the previous quarter and the discounted volumes of construction expressed as a percentage with the same base (we use the index of rising prices for construction works to discount it). this figure shows that in general, the decrease in the volume of construction work is usually reflected in the discounted prices of aerated concrete. thus, in the recovery phase and for most of the upswing phase, this led to a decrease in aerated concrete prices, but in the final pre-recession part of the upswing phase, this led to a decrease in discounted prices (i.e. in fact real prices did not decrease, but the profitability of aerated concrete products decreased for manufacturers). at the same time, the growth of construction work usually led to an increase in the growth rate of discounted prices for aerated concrete. it should be noted that sometimes these changes did not occur in the same quarter, but with a delay of one quarter, which confirms the existence of a stable relationship between changes in construction and the price of aerated concrete products. -1,0 -4,3 -5,3 -14,4 -16,0 -14,5 -7,0 -2,4 0,3 1,8 2,6 4,5 2,6 2,7 2,4 2,2 3,5 3,9 2,7 3,7 2,9 4,7 3,9 1,5 -1,3 -11,4 -3,5 -20,0 -15,0 -10,0 -5,0 0,0 5,0 10,0 і q ua rt er 2 01 4 іі qu ar te r 20 14 ііі q ua rt er 2 01 4 іv q ua rt er 2 01 4 і q ua rt er 2 01 5 іі qu ar te r 20 15 ііі q ua rt er 2 01 5 іv q ua rt er 2 01 5 і q ua rt er 2 01 6 іі qu ar te r 20 16 ііі q ua rt er 2 01 6 іv q ua rt er 2 01 6 і q ua rt er 2 01 7 іі qu ar te r 20 17 ііі q ua rt er 2 01 7 іv q ua rt er 2 01 7 і q ua rt er 2 01 8 іі qu ar te r 20 18 ііі q ua rt er 2 01 8 іv q ua rt er 2 01 8 і q ua rt er 2 01 9 іі qu ar te r 20 19 ііі q ua rt er 2 01 9 іv q ua rt er 2 01 9 і q ua rt er 2 02 0 іі qu ar te r 20 20 ііі q ua rt er 2 02 0 figure 2. percentage change in the quarterly gdp of ukraine relative to the corresponding quarter of the previous year. period – 1st quarter of 2014 – 3rd quarter of 2020 source: compiled by the author on the basis of (state fiscal service of ukraine, 2020), (іnproject llc, 2020) 100 110 120 130 140 150 160 170 180 figure 3. dynamics of the discounted price of aerated concrete for the period 3rd quarter of 2016 – 3rd quarter of 2020 as a percentage of the base price (base – 3rd quarter of 2016) source: compiled by the author on the basis of (state fiscal service of ukraine, 2020), (іnproject llc, 2020) three seas economic journal 144 vol. 1, no. 4, 2020 85 90 95 100 105 110 115 index of growth of prices for aerated concrete index of growth of volumes of construction works 5. conclusions analysis of the literature has shown that the price is formed under the influence of many factors, some of them are not quantifiable, which complicates the calculations when setting the price and forecasting its change. therefore, it is important to identify key ones for timely and effective regulation of pricing and choosing the right strategy, tactics and methods of pricing. analysing the dynamics of prices for aerated concrete products in ukraine in 2016–2020, we can conclude that in the positive phases the price of aerated concrete is highly sensitive to changes in the phase of the economic cycle and volume of construction work, and much less sensitive to inflation in the country. at the same time, during economic growth, the profitability of aerated concrete production increases significantly (due to the outstripping growth of aerated concrete figure 4. comparison of the index of price growth for aerated concrete relative to the previous quarter and the index of growth of construction work relative to the previous quarter source: compiled by the author on the basis of (stаtе fiscal service of ukraine, 2020), (іnproject, 2020) price compared to its production costs), while during the economic downturn it decreases slightly (because the price of aerated concrete grows much lower than its cost). according to our research, the most influential macroeconomic factors in pricing aerated concrete products are inflation and construction volumes. the impact of these factors will be different in different phases of the economic cycle. the patterns identified by us can be used to develop strategic and tactical decisions to regulate the price of aerated concrete products in ukraine at the microeconomic, sectoral and macroeconomic levels. the prospect of further research is to analyse the impact of a number of other macroeconomic indicators (such as market structure, tax rates, average wages) on pricing in the construction industry. references: balabanova, l. v., & sardak, o. v. (2003). tsinova polityka torhovelnoho pidpryiemstva v umovakh marketynhovoi oriientatsii [pricing policy of a trading company in terms of marketing orientation]. donetsk: donduet im. m. tuhan-baranovskoho. (in ukrainian) beliavtsev, m. i. (2005). marketynhova tsinova polityka [marketing price policy]. kyiv: tsentr navchalnoi literatury. (in ukrainian) dubovskii, d. l., kofanov, d. a., & sosunov, k. a. (2015). datirovka rossiiskogo biznes-cikla [dating of the russian business cycle]. moscow: rossiiskaia akademiia narodnogo hoziaistva. (in russian) inproekt llc (2020). information about prices for basic building materials, produts and structures in ukraine. available at: https://www.inproekt.kiev.ua kotler, p. (2000). osnovy marketinga [marketing basics]. moscow: williams. (in russian) larina, ya. s., barylovych, o. m., & skrypnyk, a. l. (2016). marketynhova tsinova polityka. kharkiv: disa plius. (in ukrainian) lytvynenko, y. v. (2010). marketynhova tsinova polityka [marketing price policy]. kyiv: znannia. (in ukrainian) three seas economic journal 145 vol. 1, no. 4, 2020 mazur, o. ye. (2012). rynkove tsinoutvorennia [мarket pricing]. ukraine. kyiv: tsentr uchbovoi literatury. available at: https://pidruchniki.ws/1566021236834/marketing/klasifikatsiya_faktoriv_tsinoutvorennya_ metodi_analizu#474 petrunia, y. g. (2010). marketynh [marketing]. kyiv: znannia. (in ukrainian) skrypnyk, o. (2019). otsinka vplyvu makroekonomichnykh ta haluzevykh faktoriv na tsiny vyrobiv z hazobetonu v ukraini [assessment of the impact of macroeconomic and sectoral factors on the prices of aerated concrete products in ukraine]. construction production, vol. 66, pp. 54–60. state fiscal service of ukraine (2020). economic statistic. available at: http://www.ukrstat.gov.ua vaag (ukrainian autoclaved aerated concrete producers association) (2020). ten years of joint work of the association with manufacturers is a fivefold increase in the use of autoclaved aerated concrete in construction. construction magazine, vol. 1–2, pp. 143–144. available at: https://gazobeton.org/uk/node/802 three seas economic journal 7 vol. 1, no. 1, 2020 corresponding author: 1 vinnytsia national agrarian university, ukraine. e-mail: natkov@i.ua orcid: https://orcid.org/0000-0002-2877-4302 researcherid: l-5920-2018 doi: https://doi.org/10.30525/2661-5150/2020-1-2 budget system and accounting in budgetary institutions natalia koval1 abstract. the purpose of this article is to investigate the budget system, accounting in budgetary institutions and changes that have occurred in budgetary legislation. the content and concepts of the budget system and its accounting are disclosed. method. theoretical approaches to determining the mechanisms and discrete components of the state budget system and its transition to the new iban international standards system have been developed. the research is based on the use of a systematic approach to the consideration of phenomena in the treasury system of ukraine and the budget system, on the fundamental principles of economic theory, systems theory, theory of finance, the theory of international calculations according to iban international standards. results. there is an inseparable link between the treasury and the budget system and the new legislation governing their activities. value/originality. it has been determined that the dynamic development of states, regions and communities in the long run cannot be ensured without the creation of an effective budget management system. an innovative tariff policy has been proposed and opportunities for using non-traditional agricultural insurance products have been identified. recommendations have been made to improve the state's budget and treasury activities. it is substantiated that the budget deficit is an almost constant phenomenon in the economy of every state, in ukraine it is a chronic phenomenon, the presence of the deficit is indirect for the population, but it participates in the return of the funds involved to cover the deficit through payment of taxes. key words: global experience, budget system, mechanism, economic, tax, budget code. jel classification: h60, h61, h83 1. introduction global experience shows that the long-term dynamic development of states, regions, and communities cannot be ensured without an effective budget management system in place. it is no secret that at present the ukrainian budget from a purely economic regulator (which by its nature should be) has become an instrument of political manipulation, bidding, on the basis of political discord and a source of corrupt business interests. excessive centralization of power has not only led to miscalculations in the socio-economic development of the state, but also does not allow it to deal with strategic state issues, since the daily work of the government and people's deputies is to solve many peripheral problems. meanwhile, sound orderly budget management is able to provide a coherent system for implementing strategic priorities. decentralization of power, which has become the leading link in today 's domestic reforms, has actually begun in 2014 with budgetary decentralization. the budget system of ukraine, in accordance with article 5 of the budget code of ukraine, consists of the state budget and local budgets. the local budgets are the budget of the autonomous republic of crimea and regional, district, and local government budgets. local government budgets are budgets of territorial communities of villages, their associations, settlements, cities (including districts in cities), budgets of integrated territorial communities. 2. economic crisis effects on consumer behavior consolidated budget indicators are used to forecast the economic and social development of the state. according to the article of the budget code of ukraine, consolidated budgets are divided into consolidated budget of ukraine, consolidated three seas economic journal 8 vol. 1, no. 1, 2020 budget of the autonomous republic of crimea, consolidated budget of the region, consolidated budget of the district, consolidated budget of the city with district division. such a structure of the budget system, in which all local administrations are granted the right to have their own budget, provides the most complete account of the sources of budgeting and their rational use. the unity of the budget system is ensured by a single legal basis, the use of a unified budget classification, the unity of forms of budget documentation, the submission of the necessary statistical and budget information from one level of the budget system to another for drawing up the consolidated budget of the territory (district, city, region) and the state as a whole, in accordance with the principles of a budget process, a single monetary system, the creation and operation of a single treasury account and the state treasury system. the purpose of the article is to review the budget system of ukraine and to keep records of changes in its legislation in its budgetary institutions. 3. differences in consumer spending behaviour among age groups the state budget is the main national centralized fund. with the help of the budget, the state concentrates a certain share of gross domestic product and distributes it centrally to the development of the national economy, for social protection of the population, the maintenance of state authorities and government, and the defense of the country. the state budget for each financial year is considered by the supreme council of ukraine and approved as a law. the budget system of ukraine, in accordance with article 7 of the budget code of ukraine, is based on the following principles: – unity – the unity of the budget system of ukraine is ensured by a single legal framework, a single monetary system, a single regulation of budgetary relations, a single budgetary classification, the unity of the order of budget execution and accounting and reporting; – balance – budget spending authority should be consistent with the amount of budget revenue for the relevant budget period; – independence – the state budget of ukraine and local budgets are independent. the state does not bear responsibility for the budgetary commitments of the authorities of the autonomous republic of crimea and bodies of local self-government through the funds of the state budget; – completeness – all budget receipts and expenditures of budgets, which are carried out in accordance with the normative-legal acts of state authorities, authorities of the autonomous republic of crimea, bodies of local selfgovernment, shall be included in the composition of budgets; – justification – the budget is formed on the basis of realistic macroeconomic indicators of economic and social development of ukraine and estimates of budget revenues and budget expenditures, which are carried out in accordance with approved methods and rules; – efficiency and effectiveness – in budgeting and implementation, all budgetary actors should strive to achieve the goals set on the basis of the national value system and the objectives of innovative table 1 implementation of the state budget of ukraine in 2019 (million uah) 2019 income costs lending balance (budget deficit) scheduled indicators * 1026131.8 1112130.0 3991.1 -89989.3 january 54550.7 65817.4 667.5 -11934.1 february 124770.7 138487.4 -8.6 -13708.1 march 210623.7 237399.5 -609.7 -26166.1 april 322564.1 324801.7 -518.9 -1718.7 may 426720.6 420436.3 -1370.3 7654.6 june 506849.3 508564.9 -844.0 -871.6 july 584137.1 586490.6 503.6 -2857.1 august 671795.9 668895.4 515.2 2385.3 september 739751.0 758748.1 1678.0 -20675.1 october 810914.9 839569.9 1623.1 -30278.2 november 899707.3 933450.6 1116.7 -34860.1 december 998278.9 1072891.5 3437.0 -78049.5 * the values of indicators by months (income, expenses, crediting) are provided with a growing result * scheduled metrics as of january 1, 2019, excluding budget adjustments for the year three seas economic journal 9 vol. 1, no. 1, 2020 development of the economy by providing quality services; – subsidiarity – allocation of types of expenditures between the state budget and local budgets, as well as between local budgets, is based on the need to maximize the approximation of guaranteed services to their direct customers; – purposeful use of budgetary resources – budgetary funds are used only for the purposes defined by budgetary appropriations and budgetary allocations; – justice and impartiality – ukraine's budget system is based on a just and impartial distribution of social wealth between citizens and territorial communities; – publicity and transparency – informing the public on drafting, reviewing, approving, implementing the state budget and local budgets, as well as monitoring the implementation of the state budget and local budgets. in order to ensure full and timely receipt of revenues and the use of appropriations for the intended purpose, the proper organization of accounting of the execution of the budget is necessary. accounting for the execution of the budget and the estimates of budgetary institutions is called budgetary accounting. the objects of budget accounting are: – budget revenues and expenditures; – cash in banks; – funds in calculations between budgets; – funds and reserves created in the process of budget execution; – material values of budgetary institutions, etc. the budgetary account promotes the rational distribution of national income for the purpose of expanded reproduction and the achievement and maintenance of the necessary proportions in the development of certain sectors of the national economy, accurate execution of the approved budget. the tasks of budget accounting are: – control over the exact implementation of the approved budget; – adherence to fiscal discipline and the most stringent economy of spending on budget spending; – ensuring the safety of property, state property; – identifying additional revenue and mobilizing funds into the budget. the budgetary account is kept in accordance with the current budget system in ukraine. the budget execution is assigned directly to the state treasury service established within the ministry of finance of ukraine. the unified treasury management system consists of the general directorate and its subordinate bodies. the regional bodies of the state treasury department are composed of district and inter-district offices. the bodies of the state treasury department are entrusted with the following tasks: – organization, implementation and control of the execution of the state budget of ukraine, management of revenues and expenditures of this budget, based on the principle of a single treasury account; – regulation of financial relations between the state budget and state extrabudgetary funds, financial table 2 execution of the state budget of ukraine from 2008 to 2019 (million uah) income expenses credit lending balance % gross domestic product % gross domestic product % gross domestic product (budget deficit) % gross domestic product 2008 231686.3 24.44 241454.5 25.47 2732.5 0.29 -12500.7 -1.32% 2009 209700.3 22.96 242437.2 26.54 2780.3 0.30 -35517.2 -3.89% 2010 240615.2 22.23 303588.7 28.04 1292.0 0.12 -64265.5 -5.94% 2011 314616.9 23.90 333459.5 25.33 4715.0 0.36 -23557.6 -1.79% 2012 346054.0 24.56 395681.5 28.08 3817.7 0.27 -53445.2 -3.79% 2013 339180.3 23.31 403403.2 27.73 484.7 0.03 -64707.6 -4.45% 2014 357084.2 22.79 430217.8 27.46 4919.3 0.31 -78052.8 -4.98% 2015 534694.8 27.01 576911.4 29.14 2950.9 0.15 -45167.5 -2.28% 2016 616274.8 25.86 684743.4 28.73 1661.6 0.07 -70130.2 -2.94% 2017 793265.0 26.59 839243.7 28.13 1870.9 0.06 -47849.6 -1.60% 2018 928108.3 26.08 985842.0 27.70 1514.3 0.04 -59247.9 -1.66% 2019 998278.9 1072891.5 3437.0 -78049.5 three seas economic journal 10 vol. 1, no. 1, 2020 implementation of these funds, control over the receipt and use of extrabudgetary funds; – implementation of short-term forecasting of public financial resources, as well as operational management of these resources within the limits of the established state expenditures; – collecting, processing and analyzing information on the state of public finances and the budget system of the country; – development of methodological and instructional materials, accounting procedures in budgetary institutions, development of budget classification, etc. the main department of the state treasury department organizes and implements a consolidated, systematic, complete and standardized accounting of operations on the movement of funds from the state budget of ukraine, state extrabudgetary funds and extrabudgetary funds in the treasury accounts; develops and approves methodological and guidance materials; establishes the procedure for accounting and reporting on the implementation of the budgetary institutions' estimates. accounting in budgetary institutions provides a reflection of all operations related to the implementation of the budget expenditures, estimates of special funds and summarization of accounting and reporting necessary for the operational management, analysis, control over the targeted use of funds on the basis of estimates, the detection of unplanned and illegal costs. for this purpose, there are kept the records of: loans (appropriations) and expenditures of budgetary funds; receipt and spending of special funds; preservation and efficiency of the use of cash, tangible assets, equipment, food, medicines and other valuables; settlements with debtors and creditors, including payroll. accounting for the implementation of estimates of revenues and expenditures in budgetary institutions is maintained by a dual system, by memorial-warrant, journal-warrant, journal-head or computerized form of accounting. the accounting of the implementation of the estimates of general and special funds in budgetary institutions is maintained on a single balance sheet under a single plan of accounts. but if the budgetary institutions have large subsidiary production (training) workshops or auxiliary agricultural and research farms, transferred to economic calculation (have an independent balance sheet and bank accounts), then the latter organize and maintain accounting in accordance with the plan of accounts of industrial enterprises (industrial, agricultural, etc.). the head of the institution and the chief accountant are responsible for the observance of the rules of budgetary discipline and the proper organization of accounting in budgetary institutions. the chief accountant shall be guided by the law of ukraine "on accounting and financial reporting in ukraine" dated 16.07.1999 no. 996-xiv, other normative acts of the higher bodies of state power and management, instructions and instructions of the scu. these documents define the responsibilities, rights of the chief accountant for the correct organization of accounting, which apply to employees of accounting services of all enterprises, institutions and organizations, regardless of ownership and forms of management. the tasks of the accounting department of the institutions are: 1. organization of accounting in accordance with the current regulatory documents; 2. introduction of advanced forms and methods of accounting work and processing of accounting documents using modern computer technology and related software; 3. carrying out preliminary control over timely, correct registration of documents and legality, expediency of performed operations; 4. control of correctness, rationality, economy of spending of funds in accordance with open financing and their purpose; 5. strict control over rational and economical use of material, labor and financial resources, fight against mismanagement and waste, prevention of such negative phenomena; 6. timely financing of self-sustaining institutions, control over their activities and accounting in these institutions; 7. ensuring the accounting of revenues and expenditures at special and other extrabudgetary funds; 8. timely identification and prevention of negative phenomena in economic and financial activities, identification and mobilization of intra-economic reserves for improving resource use and financing; 9. formation and timely submission of necessary information for internal management and for external users (suppliers, customers, bank, tax, treasury, etc.); three seas economic journal 11 vol. 1, no. 1, 2020 10. timely accrual and payment of salaries, scholarships, allowances, pensions, etc.; 11. accounting and control of the state of payments for salaries, scholarships, as well as with other debtors and creditors; 12. participation in the inventory and timely and correct registration of its results; 13. periodic instruction of materially responsible persons (mrps) on the issues of accounting and maintenance of inventory, funds that are in their responsible storage; 14. drawing up the report and submitting it to the relevant authorities within the established terms, ensuring the accuracy, completeness and objectivity of the reporting data and balances; 15. adherence to the established procedure for keeping accounting documents, accounting records, estimates and calculations thereto; timely preparation and transfer to the archive, etc. 4. findings the chief accountant of an institution, central accounting, is appointed or dismissed by the head of the institution and reports directly to him/her. he/ she provides control over all business operations and their reflection in accounting, preparation and timely submission of financial statements, signs (together with the manager) documents on financial and settlement operations, on the issuance of inventory, money, etc. if the employees of the institution submit to the chief accountant documents for operations that contradict the law or violate contracts, agreements, financial discipline, the chief accountant is obliged to notify the head of the institution in writing. having received from the manager a written order to execute the said documents, the chief accountant executes it. at the same time, the responsibility for carrying out illegal operations rests with the head of the institution. the chief accountant vis-à-vis applications, orders for the appointment and transfer of mrps (head of warehouses, storekeepers, cashiers, etc.), agreements, contracts, contracts for the execution of works, supply of inventory, etc. the chief accountant of a budgetary institution for alleged misconduct in professional activity may be held liable under the current legislation. at the dismissal of the chief accountant, the state of accounting and truthfulness, reliability of reporting, availability of accounting documents and accounting registers, files in the archive, etc., should be carried out. the transfer of cases to the newly appointed chief accountant is made on the basis of a special act of acceptance-transfer, which is approved by the head of the institution. 5. conclusions thus, if budget revenues exceed expenditures, this is called budget surplus; but if the budget expenditures exceed its revenue, it is called a budget deficit. budget deficits caused by declining budget revenues and rising budget expenditures are one of the main drivers of inflation. the state budget revenues in ukraine are generated mainly through various taxes and fees, as well as some other sources, in particular, from the privatization of state property. budget deficits are a phenomenon almost constant in the economy of every state. in particular, this phenomenon is chronic in ukraine. for the population, the existence of a deficit is indirect, but it participates in the return of the funds involved to cover the deficit by paying taxes. the budget deficit is usually estimated as a percentage of gdp. according to the results of 2019, revenues of the general fund of the state budget increased by 5.5% to 879.8 billion uah. these are the latest data from the state treasury on the preliminary results of fiscal year of 2019. the treasury has prepared an appropriate commentary on the closure of fiscal year of 2019: operational data. as a result of the year, the government has fully funded the necessary protected items of expenditure and a number of other expenditures that contribute to the development of the economy and the well-being of citizens. for the first time in the last 5 years, the government borrowing plan has been fully implemented, which was made possible by an effective public debt management policy. in 2019, the treasury department approved the 2020 budget timetable in advance. it also identified a list of 114 budget programs under which the main spending units should prepare or amend the procedures for the use of funds for the timely and effective financing of budget programs. the chief spending units will have to approve passports of budget programs with quality indicators of efficiency and effectiveness by february 15, which the finance ministry has already emphasized to the top spending units. from the first working day of 2020, the scsu begins to finance budgetary programs, and therefore all authorities continue to work together to ensure the smooth financing of budgetary commitments. three seas economic journal 12 vol. 1, no. 1, 2020 regarding accounting in budgetary institutions, the cabinet of ministers of ukraine made changes. according to the results of 2019, revenues of the general fund of the state budget increased by 5.5% to 879.8 billion uah. these are the latest data from the state treasury on the preliminary results of fiscal year of 2019. as a result of the year, the government has fully funded the necessary protected items of expenditure and a number of other expenditures that contribute to the development of the economy and the well-being of citizens. according to scsu operational data, the total deficit was less than planned and amounted to 81.2 billion uah (which is estimated at about 2.0% of gdp). in particular, the deficit of the general fund of the state budget was within the target of 69 billion uah. for the first time in the last 5 years, the government borrowing plan has been fully implemented, which was made possible by an effective public debt management policy. in 2019, the treasury department approved the 2020 budget timetable in advance. it also identified a list of 114 budget programs under which the main spending units should prepare or amend the procedures for the use of funds for the timely and effective financing of budget programs. the chief spending units will have to approve passports of budget programs with quality indicators of efficiency and effectiveness by february 15, as the ministry of finance has already emphasized to the top spending units. from the first working day of 2020, the scsu begins to finance budgetary programs, and therefore all authorities continue to work together to ensure the smooth financing of budgetary commitments. the state treasury has switched to iban accounts. from january 1, 2020, the state treasury service of ukraine (hereinafter referred to as the treasury) switched to accounting under the public sector accounting account plan, approved by order of the ministry of finance of ukraine dated december 31, 2013 no. 1203, as amended (hereinafter – account plan no. 1203). from january 1, 2020, new bills for taxation, fees, payments to the state and local budgets, accounts for electronic vat administration system, electronic fuel and alcohol sales administration system, bills for crediting the single contribution to the obligatory state social customs authorities' insurance and deposit accounts, own-account opened under the accounts plan no.1203, taking into account the iban international bank account number of 29, as required by the national bank of ukraine dated december 28, 2018 no. 162 «on introduction of international bank account number (iban) in ukraine" (as amended). please, note that the accounts that were opened under the state and local budget execution accounts plan approved by the decree of the state treasury of ukraine no. 119 dated november 28, 2000 (hereinafter – accounts plan no. 119) are closed from january 1, 2020. references: budget code of ukraine dated 30.08.2010. resolution of the board of the national bank of ukraine dated december 28, 2018 no. 162 “on introduction of the international bank account (iban) in ukraine” (as amended). law of ukraine on accounting and financial reporting in ukraine as amended by laws of ukraine of may 11, 2000 no. 1707-iii, of june 8, 2000 no. 1807-iii, dated june 22, 2000 no. 1829-iii. aleskerova, yu., mulyk, t., & fedoryshyna, l. (2018). improving credit protection analysis methods reports of main agricultural enterprises. baltic journal of economic studies, vol. 4, no. 2, pp. 1–7. doi: 10.30525/2256-0742/2018-4-2-1-7 aleskerova, yu., & fedoryshyna, l. (2018). analysis of investment activities of enterprises of ukraine. economic system development trends: the experience of countries of eastern europe and prospects of ukraine. aleskerova, yu., fedoryshyna, l., & koval, n. (2018). features of loan security for the reproduction of fixed assets for agricultural purposes. baltic journal of economic studies, vol. 4, no. 4, pp. 1–5. doi: 10.30525/2256-0742/2018-4-4-1-5 aleskerova, y., kovalenko, l., & havryliuk, v. (2019). innovative financial criteria for methodological approaches to the assessment of agrarian insurance. baltic journal of economic studies, vol. 5, no. 4, pp. 34–41. doi: 10.30525/2256-0742/2019-5-4-34-41 rogach, s., vdovenko, l., & polishchuk, o. (2019). agriculture of ukraine under the joint policy of the european union. baltic journal of economic studies, vol. 5, no. 3, pp. 178–183. doi: 10.30525/22560742/2019-5-3-178-183 three seas economic journal 13 vol. 1, no. 1, 2020 plakhtii, t., fedoryshyna, l., & tomchuk, o. (2019). socio-economic component of preferential taxation of individuals' incomes. baltic journal of economic studies, vol. 5, no. 2, pp. 171–175. doi: 10.30525/22560742/2019-5-2-171-175 koval, n., priamuhina, n., & zhmurko, i. (2020). analyz economic – financial experience of the world countries in the system of pension insurance. baltic journal of economic studies, vol. 6, no. 1, pp. 1–7. doi: 10.30525/2256-0742/2020-6-1-1-8 kritzer, b. e. (1996). privatizing social security: the chilean experience. social security bulletin, no. 3, pp. 45–55. kubicek (2005). contribution rates to funded pension systems in the new member countries. research in international business and finance, vol. 19, issue 2, pp. 266–280. bettendorf, leon j.h. & heijdra, ben j. (2005). population ageing and pension reform in a small open economy with non-traded goods. journal of economic dynamics control, no. 6, pp. 265–290. nicoholas george (2002). sweden’s savers are kept pasted on state of their funds. financial times. 2002. march 25, p. 7. oskar cerrangolo (2003). pension reform in latin america. conference on «privatisation of public pension systems – forces, experience, prospects». vienna, 2003. june 19–21, pp. 256–275. palmer edvard (1998). the swedish pension reform model – framework and issues.the national social insurance board, may. 32 p. three seas economic journal 18 vol. 1, no. 4, 2020 corresponding author: 1 state university of intellectual technologies and communications, ukraine. e-mail: sveta_novickaya@ukr.net orcid: https://orcid.org/0000-0003-2355-4949 doi: https://doi.org/10.30525/2661-5150/2020-4-4 strategic development as a factor in ensuring the economic stability of a modern market enterprise svitlana birbirenko1 abstract. the purpose of the paper is to analyse theoretical and methodological aspects of the formation of strategic development as a factor in ensuring the economic stability of a modern market enterprise. methodology. the study has been carried out based on studying the theoretical and methodological aspects of the formation of strategic planning as a basis for strategic development of the enterprise; types of strategies for the development of a modern market enterprise; analysis of strategic development in the context of economic stability of the enterprise. results of the research. in the course of research, it has been established that strategic development of the enterprise is impossible without premature drawing up of systematic process of strategic planning of the enterprise. each individual component of economic stability of the enterprise has been characterized by its options for the use of development strategies. practical implications. the practical significance lies in obtaining a synergistic effect due to a combination of several development strategies that will help to obtain the desired positive result. conclusions. strategic development should be aimed at ensuring the ability of the enterprise to achieve strategic development goals and economic sustainability in particular. key words: economic stability, strategic development, strategic planning, strategic management, modern market enterprise. jel classification: l25, l26, o12, o21, o40 1. introduction modern conditions of entrepreneurial functioning have been characterized by transformational changes and instability of the external environment due to the processes of globalization and international integration. this contributes to the formation of certain difficulties in the formation and provision of conditions for effective management of business entities and requires business managers to constantly adjust the system of strategic management for further development of enterprises and making scientifically sound, effective management decisions in particular. that is why the need to reorient the activities of economic entities to the vector of a qualitatively new direction of economic growth with the concentration of management’s influence on improving the efficiency of enterprises and ensuring strategic development is rapidly gaining urgency. thus, there is an objective need to create a management system for strategic development of the enterprise as a factor in ensuring its economic stability in modern market conditions. the purpose of the study is to analyze the theoretical and methodological aspects of the formation of strategic development as a factor in ensuring the economic stability of a modern market enterprise. 2. strategic planning as a basis for strategic development the versatility of the external environment of the enterprise and its dynamism necessitate the creation of a comprehensive system of mechanisms for managing the development of the enterprise. this orientation allows you to adequately and timely respond to operating conditions characterized by rapid variability. given this, the introduction and testing of the theory of sustainable development was an important aspect in the management of economic systems at the micro, meso– and macro levels, which allows: “…to systematically approach the solution of diverse and controversial problems of economic development; to justify the effective strategy of development of the enterprise taking into account features of a condition and possibilities of development of its providing systems; ensure consistency of interaction and balance of interests of stakeholders” (afonichkin, zhurova, 2015). three seas economic journal 19 vol. 1, no. 4, 2020 implementation of strategic development of the enterprise becomes possible only in the presence of strategic orientation. strategically oriented enterprise is an economic system, in which the staff has strategic thinking, the company uses a system of strategic planning, which allows you to develop and use an integrated system of strategic plans, and current activities are subject to achieving strategic goals (muliar, 2013; fedko, 2000). currently, the subject of close attention of foreign and domestic scientists is the concept of strategic development of the enterprise in modern crisis conditions. theoretical, and methodological, and practical principles of problems of development, strategic orientation and achievement of successful, competitive positions of the enterprise in the market in the western countries have sufficiently covered in scientific achievements of foreign scientists. however, the specific conditions of operation of the ukrainian enterprises require a more detailed study of theoretical and practical aspects of the concept of strategic development of domestic business (novytska, dincheva, 2011). defining strategic advantages in setting benchmarks for enterprise development provides a good basis for building a reasonable sequence of actions to implement the concept and form a system of strategic management of the enterprise, which will increase the efficiency of its activities, commercial success and sustainable development of the business entity. strategic development of any system is impossible without predetermined stages of strategic planning (novytska, orlov, 2015). modern development of market systems has characterized by different approaches to this task: both classical and modern. an example of a modern concept is the concept proposed by prof. kuzmin o.ye. (kuzmin, melnyk, 2002), in which he and his co-author identify nine stages of strategic planning, which are clearly presented in table 1. after examining the scientific achievements on the topic of strategic planning, we have drawn conclusions that an acceptable sequence, in our opinion, would be as follows. stage i. formulation of the mission of the enterprise. this stage is important and responsible in the process of developing strategic planning and development. the development of the mission in the future will be crucial for the future of the enterprise, as well as its perception as the external environment and directly by employees (dovbnia, naidovska, khytko, 2011; sklabinska, 2009). stage ii. analysis of the external environment. at this stage, an assessment of external factors over which the company has no direct influence is carried out. external analysis is characterized by three areas: the definition of favourable opportunities, i.e. factors that will help to achieve the goals of the enterprise; identification of threats and identification of danger to the enterprise, i.e. a set of external conditions that create certain obstacles to the expansion of the enterprise in the process of achieving the goal, identify key success factors in the selected business segment (kuzmin, melnyk, 2002; kindratska, 2003). stage iii. analysis of the internal environment. at this stage, the assessment of factors that can be managed and controlled by the company, namely the factors that form the company and which are the result of the activities or inaction of its management, is carried out (volder, 2001). stage iv. defining and formulating the goals of the enterprise. the mission, as a rule, determines the general guidelines of development, the target areas of the enterprise, which together represent the meaning of its existence. at the same time, clearly defined, specific endpoints, which the company aims at and to which it aspires, had fixed in the form of its goals. goals are the specific state of the individual characteristics of the enterprise, the achievement of which is desirable for him or her and to achieve table 1 systematic process of strategic planning of a market enterprise stages of strategic planning characteristics of the stages of strategic planning і information support іі establishing the mission and goals of the enterprise ііі choice of methods of analysis of internal and external factors iv assessment and analysis of environmental factors v assessment and analysis of factors of the internal environment, which makes it possible to identify the strengths and weaknesses of the enterprise vi forecasting of operating conditions and results of production and economic activity of the enterprise, i.e. prediction of probable changes in external and internal environment and possible influence on activity of the enterprise vii use of calculations, substantiation of the most important indicators that most fully characterize the expected strategies viii choosing the optimal strategy ix evaluation of the strategy, i.e. establishing compliance with the latter goals and mission of the enterprise source: (kuzmin, melnyk, 2002) three seas economic journal 20 vol. 1, no. 4, 2020 that his or her activities are aimed (lepeiko, khvastovskaia, 2006). stage v. analysis of strategic alternatives and choice of strategy. at this stage, the definition of key strategic economic elements, analysis of the strategic portfolio of the enterprise in order to form an alternative set of strategies for each individual economic element and select the most optimal, are presented (shevchenko, 2009). the key aspect is the purposeful focus on the use of their advantages. at the final stage of strategic planning, the company implements the strategy into day-to-day operation by developing a system of current plans. strategic planning is characterized as a guiding and coordinating vector in determining the strategic development of the enterprise, helps to focus on solving problems that occur during its operation and directs activities to achieve the intended economic goals to achieve the ultimate overall strategic goal, while having a significant impact on the performance of the enterprise and its efficiency (dovbnia, naidovska, khytko, 2011; dolan, lindsey, 1992). 3. strategies of enterprise development in the modern scientific literature, three variants of strategic development are defined. option i. unchanged. such a strategy is typical of enterprises that are not characterized by significant dependence on the external environment. these are usually companies with a long product life cycle (aircraft, cars, etc.), health care, education, judicial systems, self-government, etc. however, this strategy is not recommended for long-term use, as the company may lose the ability to self-preservation and survival in competition (martynenko, ihnatieva, 2006). option ii. internal growth. these strategies are based on market development or product development, either sequentially or simultaneously due to the internal capabilities of the enterprise. all types of internal growth strategies are interconnected and implemented through modification changes in products (innovative transformations/modifications), market system (expansion and development), organizational aspects (restructuring, reconstruction, modernization), changes in technology (innovation, reengineering), personnel policy (advanced training through training, motivation) (korenitsyna, 2012). this set of strategies has been based on the assertion that the company correctly implements its planned activities and this activity should be developed and expanded. scientists martynenko m.m. and ihnatieva i.a. suggest that there are four strategies that every enterprise focused on internal growth has to implement: concentration, market development, product development, renewal (figure 1). option iii. external growth. according to otenko (otenko, 2013), the main types of external growth include: horizontal integration, vertical integration, concentric and conglomerate diversification, which is realized due to organizational changes, which are reflected in various forms of mergers, acquisitions and agreements, i.e. distribution of personnel capacity and investment between different activities, the financial results of which are not directly related (martynenko, ihnatieva, 2006). external growth strategies has been implemented based on attracting external sources of funding and resources (joint ventures, mergers, acquisitions) and may contain contractual aspects with enterprises that are at the initial or final stage of creating the value of this enterprise. a typical means of implementing external growth strategies is reorganization or its forms – transformation and restructuring (otenko, 2013). most often, the results of the analysis of the external environment push it to external growth: the environment creates organizational conditions that lead to a combination of strengths and opportunities to increase activity in managing the components of the external environment until some of them are included in the enterprise. let us define the essence of external growth strategies in more detail (on the basis of elaboration (otenko, 2013; sharko, advokatova, 2013; dziuba, 2010; sheleheda, kasianova, bersutskii, 2006). 1. horizontal integration is an association of enterprises that are producers of homogeneous products. efficiency in this case is achieved due to the scale, which allows to obtain additional competitive advantages, replacement of those products on the market that are a close substitute, an analogue of the products, respectively, as a consequence, to displace competitors. 2. vertical integration takes place when merging enterprises that produce raw materials, process them, and then independently sell products on the market. in other words, vertical integration is characterized as the process of combining enterprises that carry out successive stages of a single, single production cycle of any product, from extraction of raw materials or materials (resources), their processing (production of finished samples) and selling products to the consumer. in this situation, the efficiency and growth of the enterprise increases due to increased control over suppliers (feedback) or distribution channels of products and services (direct integration). 3. concentric diversification occurs when merging companies that produce similar products or provide similar services. concentric diversification companies are actively searching for companies that are largely connected to them through sales channels, markets, resource and technology needs, and so on. thus, the three seas economic journal 21 vol. 1, no. 4, 2020 existing production continues to be in the center of attention, and the new one emerges from the opportunities that arise in the developed market. in the implementation of concentric diversification, the company expects that synergistic effect can be achieved due to the presence of several types of activities. the financial benefits of concentric diversification are formed within 2-5 years (dziuba, 2010). 4. conglomerate diversification occurs when there is an acquisition of an enterprise that produces such products or provides services that are not related to the products or services of the purchasing enterprise. conglomerate diversification provides significant financial synergies. the synergetic effect is manifested in the form of advantages in taxation, greater opportunities for professional development of the enterprise, better use of financial resources, etc. (dereza, zhudenko, 2010). option iv. entering the international market. it is planned to introduce measures to represent the commercial interests of domestic businesses in foreign markets. international business practice identifies three main strategies for entering the international market (dereza, zhudenko, 2010): – export; – creation of a joint venture; – direct investment. option v. abbreviation. the decline in activity or withdrawal of investments is a characteristic sign of the cessation of investment, as a result – the consolidation of capital and its subsequent movement. reduction strategies take place in crisis situations, when the domestic economy is characterized by recessions and drastic changes. these strategies are always accompanied by losses for the company, but they – existing markets are not saturated with a specific product or service offered by the company; – the share of available purchases can be significantly increased; – the market share of the main competitors is getting smaller while sales in the industry as a whole are growing; – there was initially a close relationship between sales and marketing costs in value terms; – the increased scale effect provides the main competitive advantages. – new distribution channels are available – reliable, inexpensive and high quality; – the company is very successful in what it does; – there are new unopened or unsaturated markets; – the company has the necessary capital and manpower to cope with the expansion of production; – the company has excessive production capacity. new distribution channels are available – reliable, inexpensive and high quality; the company is very successful in what it does; there are new unopened or unsaturated markets; the company has the necessary capital and manpower to cope with the expansion of production; the company has excessive production capacity. this strategy involves significant changes in goods or services. includes the replacement of existing goods with new ones, which means new product life cycle. such a strategy should significantly increase business reputation of the enterprise and create it a competitive advantage, but there is enough expensive and therefore requires appropriate funding. concentration market development product development renewal figure 1. internal strategies of the enterprise source: systematized by the author based on (martynenko, ihnatieva, 2006) three seas economic journal 22 vol. 1, no. 4, 2020 are just as necessary as any other strategy. there are four types of reduction strategies (sheleheda, kasianova, bersutskii, 2006): – сost reduction strategy; – “harvesting” strategy; – reduction strategy; – liquidation strategy. the above strategies are not contradictory, companies can use their combinations to achieve the ultimate goal and change the order of sequence. 4. strategic development and economic stability of the enterprise each individual component of economic stability of the enterprise is characterized by its options for the use of development strategies. in addition, you can get a synergistic effect by combining several development strategies, which will help to obtain the desired positive result. according to (frolova, korenitsyna, 2012; dubrova, 2010), there is the following logical sequence of actions to determine and ensure the economic stability of the enterprise or the stability of its individual components: 1) diagnosis of the current state of stability of the enterprise based on the application of a certain set of indicators; 2) factor analysis of the internal and external environment in order to establish strategic factors of economic stability of the enterprise or its individual components; determination of optimal criteria of stability and substantiation of expediency of their application; determining the level of economic stability (or the stability of its components); 3) search, analysis and testing of certain measures and sources necessary to return the company to equilibrium; 4) development of scientifically sound recommendations for maintaining and increasing the level of economic stability, as well as the implementation of these measures in the daily life of the business entity; control over the process of their implementation. in the modern scientific community there is an opinion that a high level of economic stability is easier for large enterprises to achieve, because they have sufficient resources and proper ability to quickly adapt to market transformations, forecast their future development, to reduce business risks through market diversification. we fully agree with this opinion because ensuring long-term economic stability requires a sufficient stock of financial resources, our own innovative developments related to production technology, an effective personnel management system, automation of most management processes and control over them. the key feature of ensuring the economic stability of the enterprise at the present stage of development of society is strategic management, the implementation of which will contribute to the effective functioning of the enterprise in the market environment in the long-term perspective. therefore, strategic management should be a tool to ensure the economic stability of the enterprise, the system of which includes a set of alternatives for strategic decision-making depending on the situation at a given time (tur, 2016). strategic management of economic stability of the enterprise should take into account the specific features of each individual production or service sector, as they have significant differences in the levels of concentration of stability in both domestic and foreign markets. 5. conclusions ensuring strategic development requires a modern market enterprise to change the profile of activity in the direction of a qualitatively new direction of economic growth, increase the efficiency of its activities. thus, a necessary condition for ensuring the economic stability of the enterprise is the effective management of its strategic development. implementation of strategic development of the enterprise takes place only in the presence of strategic orientation. it is extremely necessary for a modern market enterprise to determine strategic advantages in the formation of directions of development, which will help later in compiling a reasonable sequence of actions for the implementation of the concept and the formation of a strategic management system. all this will increase the efficiency of the enterprise, its commercial success and ensure sustainable development in the future. strategic development of any system is impossible without predetermined stages of strategic planning. strategic planning is a guide and coordinator in the formation of strategic development of the enterprise, allows you to focus on solving tasks and directs activities towards achieving goals. as an open economic system, the company is characterized by dynamism and operates in conditions of uncertainty (often with a high level) and instability of the market environment. as a result, enterprises are constantly forced to face the negative impact of external factors, which leads to a decrease in its economic stability. that is why the issues of ensuring economic stability have recently been most often considered through the prism of strategic development. however, without ensuring the economic stability of the enterprise to achieve strategic development is impossible. strategic development should be aimed at ensuring the company’s ability to achieve strategic development goals and economic stability in particular. three seas economic journal 23 vol. 1, no. 4, 2020 references: afonichkin, a. i., & zhurova, l. i. 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(in russian) three seas economic journal 33 vol. 1, no. 1, 2020 corresponding author: 1 so “institute for economics and forecasting of nas of ukraine”, ukraine. e-mail: ludmilacernecka@gmail.com orcid: https://orcid.org/0000-0002-6622-6964 doi: https://doi.org/10.30525/2661-5150/2020-1-6 estimation of losses in ukraine due to unemployment liudmyla chernetska1 abstract. one of the most important criteria, which makes it possible to evaluate the consequences and prospects of the country's development positively, is the dynamic growth of its economy, which is initiated, first of all, by increasing the efficiency of utilization in the national production of human resources. however, their productive implementation is affected by many socio-economic problems, including unemployment. in the economy, unemployment is a reflection of the state of the labor market, which characterizes the balance of supply and demand for jobs, in the social sphere it is one of the main factors for obtaining a stable income. loss of work leads not only to a decrease in the current material standard of living, but also to the appearance of uncertainty in the future, as well as to the emergence of feelings of inferiority. because people who want to work but do not have a job, they are not able to contribute to the increase of production of goods and services. the number of unemployed in the country is another indicator of its economic disadvantage. therefore, unemployment is constantly the focus of government regulation of the economy and the labor market, and the instruments of regulation and its consequences are evolving with the development of socio-economic relations. the aim of the study. this research article is aimed at determining the macroeconomic losses caused by unemployment, taking into account age and gender. this gives a clearer picture of the magnitude of the likely benefit from properly formed and effectively implemented investment in programmatic measures to reduce unemployment as part of the formation of national economic growth strategies. methodology. the analysis uses a multiplicative model of economic growth that describes the dependence of gdp growth on exogenous factors – the growth rate of gross fixed capital formation and the growth rate of those employed in the economy over the same period. the differences in this part are the use of more accurate data on labor costs: the number of employees is adjusted by gender and age coefficients of labor productivity. results. the dynamics of the unemployment rate in ukraine over the last years in terms of gender and age and duration of unemployment are analyzed on the basis of statistics. based on the constructed production function, the estimation of the potential level of gdp output and the magnitude of its non-receipt in ukraine due to excess of actual unemployment above its natural level for the period from 2010 to 2016 was made. the resulting production function model can also be applied to predict future gdp values based on the expected levels of fixed capital and the number of employees by age. key words: age structure of the population, coefficients of productivity, the cobb–douglas production function, potential gdp, gdp gap. jel classification: e23, e24, c51, o11 1. introduction unemployment is one of the most acute socioeconomic problems in the de-velopment of the modern ukrainian economy. it is caused by both objective and subjective circumstances. on the one hand, this is an indispensable phenomenon in the development of a market system when it comes to the minimum unemployment rate in a country that cannot be reduced and corresponds to the concept of full employment. on the other hand, when the unemployment rate exceeds the natural level, there are processes of inefficient use of labor in the national economy. despite the considerable development of the problem of unemployment, it should be acknowledged that the emergence of new factors that determine its manifestation in new forms requires the deepening of theoretical knowledge in the field of study of this major socio-economic phenomenon of the labor market. in particular, the improvement of methodological instruments of quantitative measurement of the economic three seas economic journal 34 vol. 1, no. 1, 2020 consequences of unemployment to form an objective basis for its state and dynamics, in order to select adequate directions of prevention and regulation of its consequences. it is known that the population at different ages (in particular, and in the middle of the working period) differs both in physical strength and skill, as well as in the level of knowledge, experience, etc. this explains the need to find a more comprehensive assessment of the economic losses caused by unemployment taking into account the importance of age and gender for the country’s economy. this determines the relevance and choice of the topic, setting the purpose and objectives of this study: to conduct, using both traditional and new tools, economic and statistical analysis of unemployment in modern ukraine and quantify the economic consequences of unemployment for the state. 2. analysis of the unemployment rate in ukraine the conducted researches of the labor market of ukraine and social and labor relations show that the reforms carried out did not fully contribute to the formation of positive tendencies in the labor market of ukraine. from 2010 to 2013 in ukraine, there was a gradual decrease in unemployment rates (overall from 8.2% in 2010 to 7.3% in 2013; for men from 9.4% to 8.1%; for women from 8.2% to 7.3%). further, by 2017, these figures rose sharply (overall up to 9.5%; for men up to 11.1%; for women up to 7.7%). and then they fell again in 2018, but only compared to 2014–2017, compared to 2010–2013, the figures are higher (table 1). thus, the unemployment rate in ukraine is quite high, especially among men. in addition, despite high unemployment rates, confidence in the mediation services of the state employment center is low: only a third uses its services. unemployment is never evenly distributed among the population and by age group. some people suffer from it more than others. thus, in 2018, the overall unemployment rate in all youth age subgroups is higher than the average level in the economically active age (8.8%): the youth unemployment rate of 30–34 years old was 8.9%; at the age of 25–29 years old was 9.8%, and in the age group of 15–24 years old this indicator was at the level of 17.9%, i.e., more than twice higher than among all economically active population. in addition, for women, the unemployment rate of the youngest age group was 19.3%, which meant that one in five economically active women could not find a job after college. overall, in 2018, among the unemployed, about 30% were in the youth group (15 to 29 years old), another 30.0% were in the 30–39 age group. long-term unemployment is still present in ukraine. during 2010–2018, on average, a quarter of the unemployed have been seeking work for more than one year. among such persons, the majority of young people are aged 15–34 and make up about 40%. in particular, significant amounts of long-term unemployment are recorded in the age group of 30–34 years old, although persons from this age group usually exhibit higher than average employment rates, since most of them already have accumulated work experience, vocational skills, education and more. more than 75% of the unemployed in ukraine are people with good education, who represent the best part of the labor potential of society but cannot realize it due to the complex socio-economic, socio-political and other factors that have developed in the country. table 1 labor market indicators in ukraine in 2010–2016 years economically active population of thousand people busy population of thousand people unemployed population of thousand people unemployment rate, % total men women 2010 20 894.1 19 180.2 1 713.9 8.2 9.4 6.9 2011 20 893.0 19 231.1 1 661.9 8.0 8.9 6.9 2012 20 851.2 19 261.4 1 589.8 7.6 8.7 6.5 2013 20 824.6 19 314.2 1 510.4 7.3 8.1 6.3 2014 19 920.9 18 073.3 1 847.6 9.3 1.9 7.6 2015 18 097.9 16 443.2 1 654.7 9.1 1.2 8.2 2016 17 955.1 16 276.9 1 678.2 9.3 1.9 7.8 2017 17 854.4 16 156.4 1 698.0 9.5 11.2 7.9 2018 17 939.5 16 360.9 1 578.6 8.8 10.1 7.5 note: all data excluding the autonomous republic of crimea and the ato zone three seas economic journal 35 vol. 1, no. 1, 2020 3. age factor in economic growth one of the key methods of analyzing agespecific features of production and consumption, known as the “age-old economic pyramid”, was proposed by e.valkovich, who built age-scales of production intensity in hungary in the 1960s of the 20th century (valkovich, 1970). subsequently, in 1975–1976, a survey was conducted in latvia of the workers of the most important branches of material production, which made it possible to build age-specific production scales for the male and female population (zvidrinysh, 1987). similar results were obtained by m. denysenko and a . sagradov for russia in the second half of the 1990s (sagradov, 2005). in 1999, in the usa , in 2003 in new zealand, new developments also emerged. based on the analysis of data from sample surveys of households for the period from 2001 to 2003, the coefficients of labor contribution were also determined for belarus (ahabekova, 2006). they are all calculated in such a way that their values are the ratio of the productivity of one person of a certain age to the corresponding average level for the whole population. the results of these studies on the scale of productivity by age, we summarized in table 2. comparing the indicators by periods of development, we can conclude that over the past decades, there has been a marked increase in the labor contribution of people aged 30 to 55 years old and a decrease in its indicators in the age group of 15–19 years old, which is due, first of all, to an increase in the period of youth education and, respectively, a later start of work. 4. construction of production function the simplest concept of economic growth is based on a common production function y = f (k, l), according to which output (y) is determined by the contribution of factors of production – capital (k) and labor (l). these models are, for the most part, based on the cobb – douglas production function: y a k la= * * β , (1) where a is the parameter that characterizes the level of technology – the joint productivity of capital and labor; α and β are the factors that characterize the corresponding contribution of production factors to output growth. construction of the cobb–douglas production function for ukraine was carried out as follows: – gross fixed capital formation (gfcf), hereinafter “k”, was used to estimate the contribution of capital to gdp growth; – “effective employment” is used to measure labor – lef , that is, the number of persons of employment of the relevant age and sex ls x,( ) in the economy, taking into account their gender-age labor productivity ( ) : ( * ), , ,q l l qs x ef x x s x s� � �= = ∑ 15 70 , is simply “ �lef ”. due to the lack of developments in ukraine regarding labor productivity coefficients by demographic groups, for our calculations we used the coefficients constructed for the population of belarus in 2001–2003 (table 2, column 7–8). we will look for a production function like this: y y a k k l l t t t t ef t ef t− − −       =             1 1 1 * * , α β � or ∆ ∆ ∆y a k lef= * * α β , (2) table 2 scales of labor productivity according to various studies of the 20th–21st century age group hungary (1960) latvia (1976) usa (1999) new zea-land (2003) belarus (2001-2003) men women men women 1 2 3 4 5 6 7 8 15–19 0.711 0.71 0.84 0.16 0.2 0.4 0.52 20–24 0.916 0.92 0.96 0.46 0.68 0.9 0.85 25–29 1.051 1.06 1.05 0.85 1.13 1.21 1.0 30–34 1.099 1.08 1.05 1.04 1.44 1.25 1.15 35–39 1.11 1.13 1.07 1.22 1.5 1.22 1.22 40–44 1.117 1.08 1.03 1.32 1.56 1.27 1.22 45–49 1.092 1.05 1.05 1.38 1.6 1.25 1.32 50–54 1.07 1.01 0.99 1.39 1.59 1.19 1.29 55–59 1.059 0.96 0.89 1.3 1.2 1.04 1.08 60–64 0.901 0.67 0.7 1.2 0.77 0.9 0.88 65–69 0.872 0.67 0.7 0.92 0.26 0.83 0.8 70–79 0.799 0.67 0.7 0.74 0.07 0.76 0.73 three seas economic journal 36 vol. 1, no. 1, 2020 where ∆y – the rate of gdp growth at constant prices, in % compared to the previous year; ∆k – the rate of growth of the gnpc volume at constant prices, in % com-pared to the previous year; ∆l – growth rate of “effectively employed”, in % compared to the previous year. the output for constructing the production function is presented in table 3. the estimation of the parameters of the production function (2), in particular its linear form (ln y lna ln k ln lef∆ ∆ ∆= + +α β ),� � using the least squares method, showed that the free term is statistically insignificant (t–statistic = –0,754 < ttable ; standard error = 0,877; р–value = 0,4702 > 0,05), so the function parameters were re-evaluated without a free term. the results of correlation-regression analysis are presented in table 4. therefore, a high coefficient of determination r² = 0.939, a slight regression error of 1.85%, a considerable calculated value of the fisher’s test that exceeds the table value ( ftable = 4,1), the student’s t-test of the parameters of the production function (coefficients of elasticity α і β) t òàt ttableα β= = > ( )8 54 35 014 2 262, , ,� � and their p-values (<0.05) indicate the significant adequacy and statistical significance of the whole model. and this confirms the correctness of the chosen relationship between the studied variables. the residuals are distributed by normal law, there is no autocorrelation and heteroscedasticity. also, there is no collinearity between the explanatory variables (r = 0.504), and the relatively high values of the paired correlation coefficients (r > 0.75) between the dependent variable and the explanatory variables confirm the informative nature of the latter. performing an exponential table 3 initial data for the production function years gdp gfcf average number of “effectively employed” million uah, in 2004 prices. tempo growth million uah, in 2004 prices. tempo growth (conditional thousand people) tempo growth 2004 345113 х 77820 х 23101 х 2005 355723 103.1 80804 103.8 23481 101.6 2006 381618 107.3 98033 121.3 23530 100.2 2007 411607 107.9 121342 123.8 23704 100.7 2008 419715 102.0 119935 98.8 23797 100.4 2009 359101 85.6 59847 49.9 22990 96.6 2010 374349 104.2 62117 103.8 without the autonomous republic of crimea, 2014–2016 also without the ato zone 2009 21954 х 2010 373235 х 58294 х 21905 99.8 2011 393637 105.5 63244 108.5 22013 100.5 2012 393827 100.0 66383 105.0 22168 100.7 2013 393861 100.0 60863 91.7 22214 100.2 2014 368059 93.4 46284 76.0 20977 94.4 2015 332045 90.2 42017 90.8 19118 91.1 2016 339830 102.3 50451 120.1 18942 99.1 table 4 indicators of correlation-regression analysis of the impact of the dynamics of gfcf and the number of “effectively employed” on gdp dynamics equation r² reliability standard error f-fisher + ε 0.939 0.95 0.0185 371567.4 rationed r² dw σε2 significance f 0.933 1.884 0.0034 0.00000 odds standard er-ror tstatistics pvalue α 0.201781 0.023627 8.540276 0.00000 β 0.801561 0.023566 34.01399 0.00000 ln y ln k ln l ∆ ∆ ∆ = + + 0 201781 0 801561 , , three seas economic journal 37 vol. 1, no. 1, 2020 operation made it possible to obtain models of the following form: �∆ ∆ ∆y ê lef= 0 20 0 80, , (3) the values of the coefficients of elasticity show that: with a 1% increase in gdp, the gdp growth will be ~ 0.20%; with a 1% increase in the number of “effectively employed” in the economy, the real gdp growth will be ~ 0.80%. when calculating the marginal rates of substitution of factors of production, it can be seen that in order for gdp not to decrease, the decrease in the number of “effectively employed” in ukraine by 1% should be offset by a capital increase of 3.97%. at the same time, in order for capital to grow, growth in aggregate demand, the main component of which is consumption, is required. as stated by j.m. keynes, “...capital is not some intrinsic substance that is independent of consumption” (keynes, 2002). consumption, for its part, depends on the needs and financial capacity of the population, the latter of which is significantly dependent on the availability of a place of work in the able-bodied population. 5. gdp gap due to unemployment due to the fact that people who want to work do not have a job, they are not able to contribute to increasing the production of goods and services. unemployment means that the country produces less gdp than full employment. there are different conceptions of the natural rate of unemployment within which it is assessed: by defining a long-term trend in the unemployment rate; pro-ceeding from the idea of the equilibrium (stationary) state of the labor market, when the share of the dismissed corresponds to the share of the employed; for reasons of unemployment. therefore, the natural level of unemployment can be determined by knowing its causes. following the approach suggested by m. friedman and m. phelps in 1960, natural unemployment is the difference between actual and cyclical unemployment. if cyclical unemployment (uc )) estimates the number of dismissed for economic reasons (in % of economically active population) and use data on actual unemployment (u), then the calculation of natural unemployment (u*) is simple: u* = u uc− . accordingly, the “effective” number of employed in natural unemployment lef p( ) � will be: l l uef p ef ef c= + , де u u qef c x x s c x s= = ∑ 15 70 , ,* ; �ux s c , – the number of economic (x) and gender (s) dismissed for economic reasons. to further calculate the potential gdp for the period 2010–2016, we substitute the found production function (3): 1) the actual capital stock (k) in the relevant year (i). that is, the gfcf, which participates in social production, does not change (k const à ki i= =, %);� �� ∆ 100 2) the potential growth of the “effective” amount of labor, which will be found by the formula: ∆% /l l lef p ef p ef= *100. therefore, the potential gdp growth in the corresponding year ∆%yi, according to the constructed production function (3) will be: ∆ ∆% , % ,*( )y lі p ef p= 1000 2 0 8. the results of calculations of gdp losses in ukraine from unemployment above the natural rate in 2010–2016 are presented in table 5. therefore, during 2010–2016 (taking into account only the quantitative factor of labor), ukraine lost an average of 2% of gdp annually due to unemployment, which exceeds its natural rate. thus, the under-production of gdp in 2016 with the average annual number of unemployed 1678.2 thousand people amounted to 45648.0 million uah or 1.9% to its actual volume. table 5 the calculation of gdp losses in ukraine is above the natural rate indicators period 2010 2011 2012 2013 2014 2015 2016 actual number of “effec-tively employed” (thou-sand persons), lef 21904.4 2201. 1 22168.2 22213.5 20976.7 191177 18942.1 potential amount of “effectively employed” (thousand persons), lpef 22579.6 22558.8 22614.4 22611.7 21541.5 19663.5 19388.7 gdp actual (y), mln. uah. 1079346 1299991 1404669 1465198 1586915 1988544 2383182 ∆%lpef 103.1 102.5 102.0 101.8 102.7 102.9 102.4 ∆%lp, % 102.5 102.0 101.6 101.4 102.2 102,3 101.9 potential gdp (yp), mln. uah. 1106032 1325926 1427099 1486259 1621827 2034281 2428830 gdp growth potential (∆yp), mln. uah. 26686 25935 22430 21061 34912 45737 45648 gdp gap, % -2.5 -2.0 -1.6 -1.4 -2.2 -2.3 -1.9 three seas economic journal 38 vol. 1, no. 1, 2020 not to mention the direct non-repayable social expenditures in the form of unemployment benefits, which for this year were estimated at 6 542.7 million uah, which is another 0.3% of gdp. 6. conclusions the results of the study help to increase the objectivity of managerial decision-making to stimulate employment at the national level. indeed, human contribution to economic growth in gender and age distribution gives a clear picture of the magnitude of the likely benefit of properly formed and effectively harnessed investment in programmatic measures to reduce unemployment and effectively utilize the full potential of the workforce in the national economy. continuation of scientific research on this issue is to improve the organizational and economic tools for overcoming unemployment in ukraine: 1) modernization of state employment assistance programs (active employment programs with the participation of the state employment service and within the state targeted programs and infrastructural projects) and sectoral programs, including: sheltered employment programs for specific categories of population (young people, women with young children, the disabled, pensions) ner, etc.); 2) improvement of structural, financial, credit, investment, innovation, tax, regulatory, migration, etc. policy makers in terms of their impact on the employment sector to effectively utilize the full potential of the workforce. in addition, this requires information support, which is: 1) improvement of the information and statistical base on monitoring (problems and development) of the labor market and forecasting parameters of economic development by industry; 2) continuous development of social partnership – dialogue between representatives of central and local authorities, employers, trade unions, academics and public organizations. on the basis of which, a qualitative forecast of labor market demand and supply will be made. references: agabekova, n. v. (2006). ekonomicheskaya effektivnost zhiznedeyatelnosti naseleniya: metodologiya i praktika otsenki: monografiya [economic efficiency of the population: methodology and evaluation practice]. minsk: bseu. (in russian) bosworth, b., & collins, s. (2003). the empirics of growth: an update. brookings papers on economic activity, vol. 2, pp. 113–206. keyns, j. m. (2002). obschaya teoriya zanyatosti, protsenta i deneg [the general theory of employment, interest and money]. moscow: helios arv. (in russian) rodionova, i. f., & usyk, v. i. (2015). makroekonomichnyi analiz natsionalnoi ekonomiky: pidruchnyk [macroeconomic analysis of national economy]. kyiv: znannia. (in ukrainian) sagradov, a. a. (2005). ekonomicheskaya demografiya. uchebnoe posobie [economic demography]. moscow: infra. (in russian) ofitsiinyi sait derzhavnoi sluzhby statystyky ukrainy [the official website of the state statistics service of ukraine]. retrieved from: http://www.ukrstat.gov.ua/ valkovich, e. (1970). proizvodnyie ekonomicheskie tablitsyi smertnosti naseleniya vengrii. naselenie i ekonomika [age-specific economic mortality tables in hungary. population and economics]. moscow. (in russian) zvidrin’sh, p. p., & zvidrinya, m. a. (1987). naselenie i ekonomika [population and economy]. moscow: myisl. (in russian) three seas economic journal 1 vol. 1, no. 4, 2020 corresponding author: 1 taras shevchenko national university of kyiv, ukraine. e-mail: adami.carlo@gmail.com orcid: https://orcid.org/0000-0002-1603-0947 doi: https://doi.org/10.30525/2661-5150/2020-4-1 economic intelligence analysis within the italian banking system adami carlo1 abstract. the purpose of the present article is to explore and investigate on the nature of the web of relations of the main italian banks, on the basis of the evolution of the career paths of their relative members of the board of directors. the practical implications of the study is associated with the fact that there is a stronger attention by the national and international financial authorities, such as the european central bank (ecb) and the national competent authorities (ncas), about the governance in the banks and the theoretical background and practical abilities of the senior management to assume a specific role in a financial institution. that condition determines a situation in which a member of the board of a european bank tends to have previous job experiences from other financial institutions, which can be used as informal liaisons to gathering information and disseminate knowledge, thus shaping the whole banking infrastructure. for that reason, due to the significant consequences of that bond of relations in shaping the entire financial system, the subject of the research consists in trying to measure the economic intelligence aptitudes of the most significant italian banks, which derives from personal relationships constructed and developed by the senior management of the financial intermediaries in their previous job experiences. the novelty of the present article consists in conducting an economic intelligence analysis within the italian banking system. methodology. by calculating the main centrality indexes (among those offered by the social network analysis discipline) related to each italian bank within the global banking network constructed on the basis of personal relationships among the relative members of the board of directors, it is possible to measure a financial institution’s inclination to have a sort of “influence” in the system, and in the process, to adopt a potential sound and proper economic intelligence strategy. the basic result of the paper highlights that, notwithstanding the dimension of a financial institution in the network, a bank could be characterized by significant centrality indexes in a web of social relations, thus having the potential capability to have a certain influence and impact within the entire banking network. in other words, the size of the bank, expressed for example as number of branches, total assets or number of employees, is not the only element to express the capacity of a bank to play a pivotal role in the financial system. key words: economic intelligence, banking; social network analysis, financial system, strategy, governance. jel classification: f50, g21 1. introduction with the establishment of the single supervisory mechanism and the beginning of the banking supervision, the european central bank (ecb) has introduced some underlying rules and regulations to be fully harmonized across all the countries belonging to the eurosystem organization, in order to ensure the highest standards in fit and proper supervision. in general, the capital requirements directive iv – crd iv (directive 2013/36/eu of the european parliament and of the council) and the guidelines on the suitability of members of the management body provided by the european banking authority – eba ( joint esma and eba guidelines on the assessment of the suitability of members of the management body and key function holders under directive 2013/36/eu and directive 2014/65/eu) aim to promote a level playing field in the assessment of board members, being those rules not directly applicable in each national legal system of the countries belonging to the eurosystem, but needing to be transposed into national law. in particular, one of the most significant criteria for the fit and proper assessment is represented by an adequate level of banking experience, showing that the potential candidate has the theoretical background and practical capabilities to assume a specific role in a bank. if the former can be demonstrated by means three seas economic journal 2 vol. 1, no. 4, 2020 and adequate level of academic knowledge in the banking and economics fields, the latter is generally associated with a recent and significant experience in the banking industry. as a consequence, a relevant component of the members of the board of directors of banks located in a european country belonging to the eurosystem possesses a previous experience in one or more financial institutions. that specific situation generates an interesting web of informal connections among different banks, based on dissimilar social and personal relations between members of their boards of directors following previous working experience. those connections could constitute potential communication channels among distinctive financial institutions for transmitting information, transferring code of conducts or models for conducting banking activities, and unconventional instruments (alternative to the control deriving from strategic and commercial agreements or equity ownerships) to “influence” other banks. the economic intelligence (clerc, 1997) is a new discipline introduced by academicians, which deals with the capacity of an organization to create situations of informative asymmetry and take advantage from them in the more competitive environment following the development of the globalization (csurgai, 1998). the basic idea consists on the fact that by creating new information channels to gather data and knowledge, and exploiting such sources to disseminate information, an organization (a bank, for the purpose of the present article) can be able to occupy a best position to influence the whole network (starostina, adami, 2016). such prominent position can determinate, for example, significant advantages in terms of conducting banking alliances, finalizing valuable mergers, succeeding in the funding competitions. the aim of the research is to explore and investigate on the nature of the web of relations of the main italian banks implemented on the basis of the evolution of the careers’ paths of the members of the relative board of directors. the purpose of this article consists precisely in measuring the predisposition of a bank to potentially “influence” the rest of the financial system, by quantifying the significance of the position of each banking entity in the web of social relations constructed on the basis of the previous working experience of its board of directors’ members, by computing some of the main centrality indexes of the network. a significant central position of a bank in the network constitutes a situation of potential advantages versus other financial institutions, in terms of capability to have further communication channels to collect information, transfer knowledge and provide influence. 2. literature review numerous academic and professional studies have been conducted in the financial field focusing on the interconnections among banks, with the main purpose of preventing money laundering (colladon, remondi, 2017), or managing systemic risks under macroeconomic distress (hyun jo, 2012). the attention, in fact, is generally focused in exploring the bank’s social relations in order to estimate the global resilience of the financial market to support and sustain a financial crisis (morales, brizan, ghaly, hauner, ma, reza, rosenberg, 2014). the better part of the investigations tends to use financial relationships as a driver for representing the linkage among banks in the network, such as cross-border banking flows (minoiu, reyes, 2013) or bilateral interbank positions (affinito, pozzolo, 2017). different researches, however, adopted a different factor for quantifying bank interrelations (rönnqvist, sarlin, 2016). more interesting, according to the purpose of this paper, some papers have analysed the interlocking directorships in the banking director network, thus demonstrating the existence of a highly connected social system, based on personal relationships among the apical positions in the banking sector, able to influence many other industries, including healthcare, mining and education (senekal, stemmet, 2014). instead, the present study is focused on the analysis of the network of social relation among members of the board of directors of the italian bank, deriving by contacts developed in their previous personal professional experience in other financial institution, thus representing a novelty in the academic literature. 3. methodology the methodology used to conduct the economic intelligence analysis within the italian banking system and, in the process, to identif y and measure the financial institution’s inclination to have a sort of “influence” in the system, and to adopt a potential sound and proper economic intelligence strategy is based on the social network analysis (sna) (wasserman, faust, 1994). the sna is a modern discipline used for the study of social relationships, applied in different areas of the social sciences: economics, public relations, sociology, maths, politics, anthropology. that specialty has its roots in the graph theory (gross, yellen, zhong, 2014), a method for developing and modelling some specific problems, introduced by the mathematician leonhard euler with the aim to find a solution for the problem of the seven bridges of königsberg. the fundamental element of the graph theory is the graph, a discrete object able to describe in a simplistic way, by means of quantitative or algorithmic approaches, more complex three seas economic journal 3 vol. 1, no. 4, 2020 situations (adami, 2019). the use of the graph theory within the social networks (harary, 1964) consists in conceptualisation of a group of actors (for the purpose of this paper: banks) as an ideal structure composed by a set of entities (represented by nodes) connected with relations (epitomized by arches or links connecting pairs of units). as a consequence, a social structure as the one made by the interrelations of social nature (professional liaisons due to previous career’s paths) among organizations or individuals (banks and their relative members of the board of directors), can be depicted as a social network, that is a graphical representation of the articulated web of interactions. that more schematic representation can be observed and analysed in its dynamics by using specific indexes which are able to evaluate and measure the importance of each entity and its contacts within the whole network. in the present article, the potential social relations among members of the board of directors of the main italian banks, constructed during their previous personal careers’ paths, is used as basic network for quantifying the significance of the position of the banks within the whole financial system. in particular, by analysing all the curricula of all the directors of the main italian banks officially published and freely available on the web, some information about previous banking experiences in other financial institution have been extrapolated and used to build an adjacency matrix to be used for the creation of the banking network. due to the fact that a bank characterized by a central place in the network of the social relations of the respective members of the board of directors would be in a better position for adopting a sound and proper economic intelligence strategy (that is implement a methodological approach of gathering and disseminate information), the centrality indexes will be taken into consideration as indicators of the stance of each financial intermediary. in the specific, the following four centrality indexes are computed for the purpose of the analysis: the degree centrality, the closeness centrality, the betweenness centrality and the eigenvector centrality. the degree centrality is defined as the number of ties owned by a node, that is, in the italian banking network, the number of direct social relations of the members of the board of directors of a bank, with the other banks, deriving from a previous work experience in such institutions. as a consequence, the bank that is characterized by the higher degree of centrality is also the one in which the senior directors have the greater number of reciprocal relationships with the rest of the banking system and, in the process, a greater ability to collect valuable data and information concerning their competitors, and influence the credit industry. instead, the closeness centrality is another index of centrality that measures the average of the distance of a node from all the others. it means that whereas the degree centrality focuses only in the direct links, the closeness centrality also takes into consideration the indirect ones. according to the meaning generally attributed to the latter index, it provides a measure of the ability of a bank to enter in contact with the whole financial system, through the fewest possible intermediaries. the betweenness centrality refers to the extent to which a node is positioned on paths among other vertices. a high value of that centrality index, in fact, express a valuable influence within a network by virtue of their control over information passing between others. the importance of the indicator is associated to the fact that a bank characterized by a significant betweenness centrality index constitutes a bridge among two or more subnetwork in the banking web of relations, and its removal will cause a destructive effect on the whole financial system (loss of communication channels between other banks). the last index analysed in the present article is the eigenvector centrality, a ranking measure originally developed by wassily w. leontief (kuznets, 1941), which identifies the nodes with a strong and direct bond with vertices characterised by a high degree centrality. in fact, not all links have the same weight, and the eigenvector centrality appraises the value of each of them. thus, a bank with a strong liaison with one or more financial institution having a high degree centrality, would be able to have indirectly a significant influence in the network. the computation of the four different centrality indexes above illustrated has been conducted using an open-source cross-platform software application for social network analysis and visualization called “social network visualizer (socnetv)”. such software is developed in c++ and runs on different operating systems (linux, os x, windows). thanks to its graphical user interface it is possible to construct and display the social networks in different layouts, which allow to better understand the main features of the web of relations. in particular, the board of directors career’ paths have been converted in a social network by means of the creation of an adjacency matrix. in the specific, each relation among two actors(x;y) (in our case, banks) is equal to 1 in case of the existence of an edge from actor x to actor y (that is the bank x has a director with a previous experience in the bank y), or equal to 0 if there is no connection between the actors (no director belonging to bank x has a previous experience in the bank y). the adjacency matrix is then imported in the socnetv and drawn as graph, where vertices depict the banks and edges represent the personal and social relations related to previous experiences of the members of the board of directors. three seas economic journal 4 vol. 1, no. 4, 2020 4. empirical results as stated above, the research conducted in this paper is focused on the network of the social relations among the main italian banks, constructed taking into consideration the previous experiences of the current members of the board of directors (the year considered is 2020) in other financial institutions represented in the network. in table 1, a list of the banks contemplated in the analysis is depicted. in particular, it is worth to highlight that the investigation is focused only on the italian banks network, and for that reason the foreign financial institutions play a passive role in the web of relations. in other words, the social connections below illustrated are the result of the links among banks resulting from an assessment of only the curricula and previous experiences related to the directors belonging to italian banks encompassed in table 2. in figure 1, the basic layout of the network of social interconnections among the banks is constructed. the nodes characterize the different financial institutions, and each number associated to each node identifies a specific bank, following the order presented in the list of table 1. thus, for example, the nodes number 1, 2 and 3 represent respectively unicredit group (ucg), monte paschi di siena (mps) and intesa, whereas the nodes number 38, 39, and 40 epitomise correspondingly commerzbank, credit agricole and ing bank. the direction of the arrow epitomizes the relations deriving from previous experiences of a director belonging to the bank from the which the arrow starts, in a bank where the arrow indicates. thus, for example, the arrow on the top moving from the node 4 to the node 20 implies that there is at least a director in fineco bank (4) with a previous experience in bnl -bnp paribas (20). in order to have a better graphical representation of the values of the four centrality indexes illustrated in the previous paragraph, in figures 2, 3 and 4, four different depictions of the network are showed. in particular, in each representations the layout of the network is proposed to highlight each specific centrality index taken into consideration for the analysis: the bank with a higher value of such specific index is symbolized by a larger size of the ball, and positioned in the center of the ideal radial scheme. by looking at figure 2, it appears clear that bper (8) turns out to result the bank with the higher degree centrality index, followed by fineco (4), mediobanca (5), and banco bpm (7), which complete the more central cluster. on the other hand, unicredit (1), mps (2) and intesa (3) seem to be characterized by a low value for such index. all the foreign banks are depicted with the smaller size of the balls and on the border (due table 1 example of adjacency matrix actor/ actor 1 2 3 4 5 6 7 8 9 10 1 0 0 0 0 0 0 0 0 0 0 2 1 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 4 1 0 1 0 0 1 0 0 0 0 5 1 0 0 0 0 1 0 0 0 0 6 0 0 0 0 1 0 0 0 0 0 7 1 1 1 0 1 0 0 0 0 0 8 1 0 1 0 1 1 1 0 0 0 9 0 0 0 0 0 0 0 0 0 0 10 0 0 1 0 0 0 0 0 0 0 source: author’s own research table 2 legend of the bank/node 1 ucg 11 banca generali 21 chase manhattan bank 31 group bpce 2 mps 12 banca pop sondrio 22 barclays 32 ubc 3 intesa 13 banca profilo 23 morgan stanley 33 merril lynch 4 fineco bank 14 banca sisstema 24 citigroup 34 goldman sach 5 mediobanca 15 credito valtellinese 25 dresdner bank 35 banco desio 6 banca mediolanum 16 illimity bank 26 banca intermobilliare 36 jp morgan 7 banco bpm 17 banca carige 27 nomura 37 rbs 8 bper 18 societe generale 28 natexis 38 commerzbank 9 credito emiliano 19 credit suisse 29 deutsche bank 39 credit agricole 10 banco finnat 20 bnl-bnp paribas 30 hsbc 40 ing bank source: author’s own research three seas economic journal 5 vol. 1, no. 4, 2020 to a value of the degree centrality index equal to zero) in consideration of the fact, as above described, nonitalian banks are considered only as passive actors (the curricula of their respective directors are not considered for developing the web of relations). the specific result illustrated in figure 2 could be justified by taking into consideration that the members of the board of directors of the middle-sized banks tend to have previous working experience in other financial institutions. instead, members of the board figure 1. social relation network of the main italian banks source: author’s analysis figure 2. degree centrality indexes of the main italian banks source: author’s analysis three seas economic journal 6 vol. 1, no. 4, 2020 of directors of the most significant bank (intesa, unicredit and mps) have mainly an academic or institutional background, or tend to possess banking experience developed internally. according to such interpretation, banco bpm appears to be as an outlier, probably due to the fact it became the third italian bank only recently (in 2017) following the merger between to middle-sized banks, thus maintaining some typical features in terms of organization and governance typical of medium sized banks. instead, in figure 3, the design of the network is aimed to provide information on another centrality indexes: the closeness centrality (again highlighted by the size and the radial explosion of the nodes). in this case, differently from the previous picture, a unique bank located in a central position emerges: unicredit (1). the second place on the podium, with respect this specific centrality index, and with a significant gap in terms of distance from the first position, is occupied by intesa (3). taking into consideration that the closeness centrality index measures the ability of a bank to enter in contact with the whole financial system, a possible clarification of such result is represented by the ability of unicredit (and of intesa in minor extent) to “influence” the italian banking network, for example, by setting some standards or introducing new models for conducting the bank activity. that ability is associate to the fact that unicredit and intesa constitutes the most common previous professional experience of the members of the board of directors of the italian banks examined. by looking at figure 4, it is possible to affirm that there is not a clear limited cluster: there are, in fact, six banks that cover a more central position: mediobanca (5), bper (8), intesa (3), carige (17), creval (15), and banco bpm (7). being the centrality indexes relative measures of the stance of a node in the network, the result in this case does not provide interesting information to express considerations on the potential capacity of the banks to “influence” the system. the reason of the specific pattern of the network (according to the beetweenness index, which should identify the potential bridges among subnetworks) is probably linked to the fact that there are not significant and well delineated subnetworks (due in part to a limited absolute number of banks taken into consideration for the investigation). in particular, only two cliques (largest subgroup of banks in the social network, which are all directly connected to each other) result from the network: the first one is constituted by mediobanca (5) and banca mediolanum (6); the second one is composed by mps (2) and carige (17). it is remarkable that the last cluster (maximal complete subgraph) encompasses the two italian defaulted banks. finally, a different layout of the network is proposed, with the aim to highlight the eigenvector centrality indexes for each bank of the network, that is the measure of the closeness to the banks characterized by a high degree centrality (bper , followed by fineco, mediobanca, and banco bpm). the banks with the highest eigenvector centrality indexes are: carige (17) and mps (2), the two defaulted italian banks. figure 3. closeness centrality indexes of the main italian banks source: author’s analysis three seas economic journal 7 vol. 1, no. 4, 2020 figure 4. betweenness centrality indexes of the main italian banks source: author’s analysis 5. conclusions the analysis conducted in this paper by means of the social network analysis methodology has showed how it is possible to explore and investigate on the nature of the web relations of the main italian banks on the basis of the evolution of the career paths of their relative members of the board of directors. the findings are remarkably interesting. in fact, the basic conclusion of the article highlights that, notwithstanding the fact that a prominent role in the banking sector is naturally occupied by the most larger banks in terms of financial assets, or branches, less significant banking institution could be still in a preferred position for developing informal communication channels to collect or disseminate information, transfer knowledge, and providing influence. in particular, in the italian banking system, other than the two largest banks: unicredit and intesa (characterized by the highest closeness centrality indexes), also bper turns out to result the bank with the higher degree centrality index, followed by fineco, mediobanca, and banco bpm. furthermore, due their respective high values of eigenvector centrality indexes, also mps and carige could have a potential influence, in terms of social relationship, on the italian banking system. that means that indirectly, those banks could have a significant influence, in terms of social relationship, on the italian banking system. however, further research should be conducted in order to quantif y the importance of the position of each italian bank in the web of the social relations and its predisposition to influences the network, by identif ying other different types of networks. thus, for example, the social network analysis could be applied to the italian banking system, by focusing on the careers’ paths of the board of the statutory auditors. furthermore, the same analysis could be also conducted for other countries, in order to carry out qualitative and quantitative comparison of the different financial systems and the dissimilar economic intelligence aptitudes of the main banking institution. references: adami, c. (2019). the use of the graph theory to investigate the role of the economic intelligence for the national security. economic bulletin, vol. 2(10), pp. 6–14. affinito, m., & pozzolo, a. f. (2017). the interbank network across the global financial crisis: evidence from italy, banca d’italia, temi di discussione, number 1118. available at: https://www.bancaditalia.it/pubblicazioni/ temi-discussione/2017/2017-1118/en_tema_1118.pdf three seas economic journal 8 vol. 1, no. 4, 2020 clerc, p. (1997). economic intelligence, world information report 1997–1998, unesco publishing, paris, 1997, chapter 22, pp. 304–317. colladon, a. f., & remondi, e. (2017). using social network analysis to prevent money laundering, expert systems with applications, no. 67, pp. 49–58. csurgai, g. (1998). geopolitics. geoeconomics and economic intelligence, the canadian institute of strategic studies, strategic datalink no. 69. gross, j. l., yellen, j., & zhong, p. (2014). handbook of graph theory. second edition. crc press, taylor & francis group. harary, f. (1964). applications of graph theory to group structure (claude flament), siam review, vol. 6, no. 2, pp. 185–186. hyun, jo j. (2012). managing systemic risk from the perspective of the financial network under macroeconomic distress, bank for international settlement, fsi award 2012 winning paper, september 2012, issn 1684-7180. available at: https://www.bis.org/fsi/awp2012.pdf kuznets, s. (1941). the structure of the american economy, 1919–1929. by wassily w. leontief. cambridge: harvard university press, 1941. pp. xi, 181, the journal of economic history, 1(2), pp. 246–246. doi: 10.1017/ s0022050700053158. minoiu, c., & reyes, j. a. (2013). a network analysis of global banking: 1978–2010. journal of financial stability, vol. 9, issue 2, pp. 168–184. michelle renee morales, david guy brizan, hussein ghaly, & thomas hauner (2014). application of social network analysis in the estimation of bank financial strength during the financial crisis. available at: https://www.researchgate.net/publication/289538675_application_of_social_network_analysis_in_the_ estimation_of_bank_financial_strength_during_the_financial_crisis rönnqvist, s., & sarlin, p. (2016). bank networks from text: interrelations, centrality and determinants, ecb working paper n. 1876, january 2016. available at: https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1876. en.pdf senekal, b. a., & stemmet, k. (2014). the south african banking director network: an investigation into interlocking directorships using social network analysis (sna).  international business & economics research journal (iber), 13(5), pp. 963–980. doi: 10.19030/iber.v13i5.8765 starostina, a. o., & adami, c. (2016). the role of the economic intelligence in the modern international economic relations, in innovations in the development of socio-economic system: microeconomic, macroeconomic and mesoeconomic levels, collective monograph, vol. 1, izdevnieciba "baltija publishing”, latvia, pp. 1–15. wasserman, s., & faust, k. (1994). social network analysis. methods and applications, cambridge university press, cambridge. three seas economic journal 20 vol. 1, no. 1, 2020 corresponding author: 1 national university of pharmacy, ukraine. e-mail: ira_popova_dik@ukr.net orcid: https://orcid.org/0000-0003-2962-9040 2 national university of pharmacy, ukraine. e-mail: demchenata@ukr.net orcid: https://orcid.org/0000-0001-5915-0087 researcherid: d-2228-2015 doi: https://doi.org/10.30525/2661-5150/2020-1-4 territorial societies features: european experience irina popova1, nataliya demchenko2 abstract. the purpose of the article is to summarize the experience of developing tools for the implementation of amalgamated territorial communities. the european countries’ experience helps to improve the system of public administration in such a way that it acts in the interests of the individual-citizen and is under the control of civil society. the important factors in the dynamic development of the state is effective public administration at all levels of the administrative and territorial structure of the country are investigated. the main links in this section are the district and regional levels, within which the main socio-economic, political and cultural links are realized and estableshed. the main task of effective regional public administration is to ensure the socio-economic development of the region and to meet the needs of citizens. methodology. the survey is based on a comparison of data from the eu countries. the competences of local governments in the eu countries are examined. results. implementation tools for amalgamated territorial communities have been identified to assess the socio-economic development of the community for investment attractiveness. it has been proved that the amalgamation of territorial communities should be based on the principle of multicriteria, since the main participants in the formation, functioning and further development of the community are people who are united in a team to achieve a common goal, which is to develop the territorial community in order to improve the quality of life. practical implications. society will be able only if each of its members clearly understands the possibility of improving the standard of living within the community than existence outside of it. the study has shown that there are the number of criteria, including spatial, temporal, demographic, labor, cultural, historical, financial, that should be considered when amalgamating territorial communities. it is proved that the main instruments of implementation of amalgamated territorial communities are area, population (including demographic structure), income level, level of spending, financing structure, structure of economic entities by types of activity and level of income, number of objects of social infrastructure, employment and community unemployment, etc. key words: amalgamated territorial community, implementation, tools, criteria, communes, municipalities. jel classification: r13, r50 1. introduction one of the most important factors of modern state-building in ukraine is the improvement of the system of public administration at all levels of the administrative and territorial structure of the country. the main task of effective regional public administration is to ensure the socioeconomic development of the region and to meet the needs of citizens. thus, in exploring the world experience and taking into account the domestic practice of public administration, it is necessary to improve the system of public administration in such a way that it acts in the interests of the individual-citizen and is under the control of civil society. the study of decentralization of public power has received considerable attention from both domestic and foreign scientists. thus, in the works of zablodskaya i.v., boychenko e.b., grechana  s.i. much attention was paid to monitoring the implementation of the strategy of the amalgamated territorial communities; ustimenko v.a., dzhabrailov r .a. deal with issues of legal support for the development of territorial communities; primush r .b., gochachilov k.m., lotsyuk and others considered tools for the development of three seas economic journal 21 vol. 1, no. 1, 2020 territorial communities; seryugin s.m., sharov  yu.p., goncharuk n.t. explored innovative approaches and tools for managing the development of integrated territorial communities (ghrechana, 2017). however, despite the regulatory framework for the ukrainian and foreign scientists, the processes of decentralization and organizational support remain poorly understood. the european experience needs special study, especially in the development of the amalgamated territorial communities (atc) implementation tools. the system of sovereign governance is the basis for the development of democracy. consciousness of ukraine is an important factor in the current stage of state creation in ukraine. the complication of the current process of establishing an effective system of sovereign governing is that of feeling guilty of the interest in the environment of the huge individual, who has been controlled by the control of enormous suspension. an important factor in the dynamic development of the state is effective public administration at all levels of the administrative and territorial structure of the country. the main links in this section are the district and regional levels, within which the main socio-economic, political and cultural links are realized. the main task of effective regional public administration is to ensure the socio-economic development of the region and to meet the needs of citizens. the degree of effective local selfgovernment is one of the defining criteria for the democracy of the political system. the imperfection of local government in ukraine, its inconsistency with the european standards and principles, necessitates the search for ways to reform. ukraine, like most countries of the former soviet union, is in the process of further improving its governance system, including territorially. that is why studying the problems and ways of solving them in forming the system of territorial governance in the countries of western europe is considered as an important component of the transformation processes, especially in view of our country 's desire for european integration. any reform in the country of learning and using the experience of other countries is a prerequisite for successful reform. in particular, clarifying the objective patterns and basic principles of centralized and decentralized governance should help ukraine avoid many mistakes and difficulties in developing a modern governance model based on a combination of different degrees of centralization and decentralization. 2. the european standards and principles in communes’ management one of the defining criteria for the democratic system of the political system is the effective activity of local self-government. the imperfection of local government in ukraine, its inconsistency with the european standards and principles, necessitates the search for ways to reform. in carrying out any reforms in the country, the study and use of the experience of other countries is a prerequisite for successful reform. in particular, elucidation of the objective laws and basic principles of centralized and decentralized management should help ukraine avoid many mistakes and difficulties in the development and formation of a modern management model based on a combination of different degrees of centralization and decentralization. one of the main and urgent tasks of democratization of social and political life in ukraine is reforming the system of local selfgovernment, as it is one of the most important elements and indicators of democratization of society. in the current context of intensifying the processes of decentralization, the national economy has been challenged to form territorial associations that would function effectively and develop comprehensively. studying the experience of european countries, it has been determined that territorial entities have different names. so, these are gminas in poland; communes in france, belgium, italy, sweden; municipalities in spain, great britain; communities in germany. the main task of the commune is to meet the most important human needs. gmina is endowed with: the status of a legal and independent entity in the performance of its own tasks; carrying out its functions has own and additional income (in the form of subventions); it is empowered with ownership of communal property; judicial protection is provided for the protection of its independence (dolecjkyj, 2001). communities include: public education (elementary schools and high schools); street lighting; water supply, sewerage, etc.; communal housing construction; landscaping; culture, including community libraries and other cultural institutions, and the protection of historical and cultural monuments; public order and citizens' safety, as well as fire and flood protection of the commune road, streets, bridges, squares and traffic management; management of real estate, three seas economic journal 22 vol. 1, no. 1, 2020 environmental protection and water management; local public transport; healthcare social assistance and its infrastructure; markets and market premises; commune cemetery. the functioning of both legislative and executive structures is envisaged in the commune's territory. the main representative political and legal body of the commune is the commune council. the main powers of the councils are focused on budget approval, development strategies (programs), property management, and more. for the more efficient performance of their functions, communes can form auxiliary units of management – saleseries (at the level of rural communes), settlements (in communes of urban and rural origin) and districts (in cities) (lendjjel, 2011). communes operating in france, belgium, italy, sweden significantly differ in size and population. thus, in 90% of the communes the population is less than 2 000 citizens. the number of communes in france is about 36,700, and the average population is 380 people. the commune is the only administrative and territorial unit where there is no separate independent state authority, that is, in theory, the mayor in his/her own person combines municipal functions and functions of state power. however, many functions of the state executive power belong to the functions of local self-government. that is, the commune is an autonomous collective on the territory. legal indicators characterizing a commune are its name, territory and population. in italy, there are 110 provinces and 8048 communes, however, the number of communes is not constant, because communes can unite and separate based on the interests of their inhabitants (and this practice is quite common). in italy, a commune is characterized by: population and territory. the italian commune has the right to issue binding administrative acts. the italian law states that a commune is an organization that is endowed with independence and autonomy and has its own charter. the italian commune is also endowed with legal personality. the competence of the communes includes: the right to impose and accumulate local taxes, regulate local police activity, health and social services at local level, primary and secondary education, public transport, garbage collection and recycling, street lighting, trade permits (nadu, 2012). local government in spain is the third level of a multi-level government system. the main criterion for the formation of the municipality is the territory (taking into account the population). all municipalities carry out the following functions: lighting, disposal, waste removal, cleaning of forks, water supply, food quality control. if the number of a municipality is from 5 000 to 20 000, it also provides services for the maintenance of parks, libraries, waste removal and market space management. in the number from 20 000 to 50 000 people civil and fire protection services and sports services are additionally provided. with the number is more than 50 000, in addition to the above powers, it provides services in the operation of public transport and environmental protection (fedorenko, 2017). in germany, as in ukraine, the territorial community is the primary subject of local selfgovernment. the community has the exclusive right to solve local problems within the framework of the national legislation, the community is recognized as "territorial corporations", and the issue of their income is regulated. criteria in the process of determining a territorial community are the population, settlement structure, traditions, features of historical, social development of cities, etc. the number of communities in germany is 12 312, 16% of which are independent communities and 77% belong to a two-tier union of communities (shymanke, 2008). it should be noted that the administrative and territorial units, despite their different names, have the same functional purpose: the level and quality of life of people in the community should be higher than separately from it. for the successful accomplishment of its mission, each atc must have certain criteria that contributed to its formation. in the national economy, the basis of community formation is the territorial-spatial principle according to which, the distance from the administrative center of the community to the outermost settlement should not exceed 20 kilometers (although in the realities of the region it may be more); emergency medical and firefighter arrivals within the community should not be more than thirty minutes; school (minimum 250 pupils), kindergarten (number of preschool children in the administrative center should not be less than 100). it should be noted that, for ease of analysis of statistics, the eu carries out grouping using the single-criterion principle. the main criterion is the population. this system is called nuts three seas economic journal 23 vol. 1, no. 1, 2020 (nomenclature of territorial units for statistics), a nomenclature of territorial units for statistics. the purpose of this grouping is to solve the following tasks: collection, harmonization, development of regional statistical information in the eu countries; socio-economic analysis of regions at different levels; shaping the eu regional policy (ustawa, 1990). 3. community integration criteria in the national economy if we consider the eu countries separately, it should be noted that the amalgamation of territorial communities is based on the principle of multicriteria. criteria for determining the feasibility of community formation in germany are population, settlement patterns, traditions, features of historical, social development of cities, and so on. however, there are significant differences between communities, that is, each is unique, which necessitates a proper management organization depending on the characteristics of the community. exploring the commune as an organization, b. metcalfe (metcalf, 1996) distinguishes its following features: the great importance of the group, not of the nuclear family; "joint money and expenses"; collective home ownership; group decision making both in general and in personal matters. the need to use the principle of multicriteria defines the approach based on several criteria (pautova, 2011): – determination of the optimal number of the population, taking into account the number of ablebodied, its growth, employment rates, migration, etc.; – ensuring economic proportionality in the union between economically developed and depressed settlements; – identification of socio-economic and cultural centers; – defining the boundaries of amalgamation on the principle of continuity of boundaries of existing regions, territories of settlements, objects of industry. on the basis of the above, we can form a system of criteria for atc as a synthesis of national characteristics and foreign experience (table 1). table 1 shows that there are a number of criteria, in particular spatio-temporal, demographic, labor, cultural and historical, financial. of course, taking the entire system of criteria into account when amalgamating territorial communities is an extremely difficult task. however, it should be noted that only with as many criteria as possible a synergistic effect can be achieved. it allows the energy of the communities that have defined their position to be fully supported. after all, the main goal of local government reform is to organize people around their places of residence in such a way as to facilitate their joint activity, while improving the standard of living and quality of life for all members of the community. 4. assessment criteria of territorial communities the assessment of the capacity level of territorial communities is made on the basis of assessment criteria, taking into account the limit values, which table 1 the system of community integration criteria in the national economy criteria content available spatial the distance from the administrative center of the community to the outermost settlement should not exceed 20 kilometers temporal emergency medical and firefighters should arrive within the community for no more than 30 minutes. social objects presence of school (not less than 250 pupils), kindergarten (number of preschool children in the administrative center should not be less than 100) additional demographic the population, for example, in the eu, cannot be less than 2 500; for rural community – 8 500; settlement – 15 600, urban – 33 700 and more; density, settlement pattern, growth, migration. labor number of able-bodied population, employment rate, unemployment rate, wage rate. cultural and historical traditions, features of historical development, historical connections between particular territories. financial the ratio of own revenues (for example, in the eu, the amount of own revenues is at least 50% of the estimated need) and costs, level of subsidy, income and expenses per person. proportional the ratio of economically developed areas to depressed ones. three seas economic journal 24 vol. 1, no. 1, 2020 are: population is 3000 people; area is 200 km2; taxability index is 0,3; the share of local taxes and fees is 10%. the ability level depends on the value of the indicator, which reflects a certain criterion of evaluation (table 2). generalization of the european experience in the functioning of atc has led to the following conclusions regarding the tools for their implementation: 1. the size of the commune/population directly affect the number of staff of the management apparatus: with the increase in population increases the staff of management (more than 10,000 inhabitants of rural communes are more than twice as large as rural communes with a population of up to 6 000, similarly, more than 20 000 inhabitants of rural communes have twice the number of rural communes with a population of up to 10 000 of inhabitants) (figure 1). 2. social assistance centers, houses of culture and libraries typical of all types of communes; in the vast majority of communes there is an economic and administrative department of education which is not part of the administrative apparatus. in smaller gminas (with a population of up to 6,000), educational functions fall within the authority of the management apparatus; in most rural communes with a population of more than 6 000 inhabitants and rural-urban communities with a population of more than 10 000 residents, communal facilities operate, in smaller communes the powers in the communal sector are vested in the table 2 the level of ability of atc the criterion of evaluation indicator the numerical value level of ability population p to 3 000 inhabitants 0,3 low from 3 000 to 5 000 inhabitants 0,6 average more than 5 000 inhabitants 1 high square up to 200 km2 0,3 low from 200 to 400 km2 0,6 average more than 400 km2 1 high taxability index to 0,3 0,3 low from 0,3 to 0,9 0,6 average more than 0,9 1 high share of local taxes and fees up to 10% 0,3 low from 10% to 20% 0,6 average more than 20% 1 high figure 1. indicators of gmina management apparatus three seas economic journal 25 vol. 1, no. 1, 2020 administration apparatus; most rural communities with a population of more than 6 000 residents operate independent public health facilities; and in rural-urban communes with a population of more than 20 000 inhabitants there are stationary selfhelp homes and centers of sports and recreation (figure 2). 3. analysis of the structure of own current expenditures of the commune's budgets revealed that the major part of these financial resources is directed to the financing of administrative units, educational establishments, social assistance centers, cultural centers and libraries. at the same time, as the population grows, the share of expenditures on the administrative unit of the commune decreases, and, as a rule, expenditures in the sphere of education increase (figure 3). 5. findings based on the conducted research, we can conclude that atc should be based on the principle of multicriteria, which promotes the development of the territorial community in order to improve the figure 2. indicators of educational institutions of communes figure 3. the structure of expenditures communes three seas economic journal 26 vol. 1, no. 1, 2020 quality of life. the community will only be able to do so if each member of the community understands more clearly the possibilities of improving the standard of living within the community than living outside it. only by using as many criteria as possible a synergistic effect can be achieved, which allows the energy of the communities that have defined their position to be fully supported. after all, the main goal of local government reform is to organize people around their places of residence in such a way as to facilitate their joint activity, while improving the standard of living and quality of life for all members of the community. the community will only be able to do so if each member of the community understands more clearly the possibilities of improving the standard of living within the community than living outside it. 5. conclusions an important feature of the territorial community as an economic category is the existence of relations of distribution, redistribution, exchange of value of the created regional product; availability of financial relations for the formation and use of local budget indicators; participation in certain economic relations arising from the relations of ownership of joint communal property; a common economic interest in the conduct of an economic activity and the profit or loss suffered as a result of its joint and several liability; corporate rights management; participation in the formation of regional monetary funds. also, the union of territorial communities should be based on the principle of multicriteria, since the main actors in the formation, functioning and further development of the community are people who are characterized by personal qualities that lead to interaction between members of the community, creating a cohesive team that has a common purpose and not only on the distribution of roles and places, but also on mutual support and assistance in the pursuit of a common goal, which is to develop the territorial community in order to improve the quality of life. the community will only be able to do so if each member of the community understands more clearly the possibilities of improving the standard of living within the community than living outside it. the territorial community becomes the primary subject of local self-government, the main carrier of its functions and powers. the characterization of territorial communities as the primary social actors of local authority in the field, the diversity of forms of direct and indirect democracy in local government, and the recognition of the leading role of territorial communities in shaping the whole system of public authorities (from the highest to the local), allows to determine as a special form of public authority. local selfgovernment is a system of organizing the activities of local residents in the respective territory, which is a complex of various institutions, functioning as a single integrated mechanism, and its leading link is the territorial community. the study has shown that there are a number of criteria, including spatial, temporal, demographic, labor, cultural, historical, financial, that should be considered when amalgamating territorial communities. of course, taking into account the whole system of criteria is extremely difficult. however, it should be noted that only with as many criteria as possible a synergistic effect can be achieved, which allows the energy of the communities that have defined their position to be fully supported. it is proved that as the main tools for the implementation of atc are area, population (including demographic structure), income level, cost level, financing structure, structure of economic entities by type of activity and income level, number of social infrastructure objects, employment and unemployment rates in the community, etc. the definition of these instruments is the basis for evaluating the socioeconomic development of the community for the sake of investment attractiveness. references: voevodstvo, povjat, ghmyna: decentralyzacyja kak element evropejskogho stylja [voivodeship, county, gmina: decentralization as an element of the european style]. available at: http://forbes.net.ua/ opinions/1421483-voevodstvo-povyat-gmina-decentralizaciyakak-element-evropejskogo-stilya (accessed march 19, 2020). ghrechana, s. i. 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(2017). konstytucijni modeli miscevogho samovrjaduvannja u derzhavakh-uchasnycjakh jes, shvejcariji ta ukrajini: monoghrafija [constitutional models of local selfgovernment in eu member states, switzerland and ukraine]. kyiv: vydavnyctvo lira-k. (in ukrainian) shymanke, d. (2008). proektnyj dokument systema miscevogho samovrjaduvannja ta jiji reformy. dosvid dejakykh jevropejsjkykh krajin (danija, nimechchyna, anghlija, francija ta shvecija) [project document no. 12. local self-government system and its reforms. experience from some european countries (denmark, germany, england, france and sweden)]. kyiv, p. 28. (in ukrainian) metcalf, b. (1996). shared visions shared lives: communal living around the globe. uk: findhorn press, 192 p. nuts – nomenclature of territorial units for statistics. available at: http://ec.europa.eu/eurostat/web/ nuts/overview (accessed march 19, 2020). ustawa z dnia 8 marca 1990 «o samorz dzie terytorialnym». available at: http://isap.sejm.gov.pl/ detailsservlet?id=wdu19900160095 (accessed march 19, 2020). three seas economic journal 153 vol. 1, no. 4, 2020 corresponding author: 1 chernihiv national university of technology, ukraine. e-mail: maxchut@gmail.com orcid: https://orcid.org/0000-0002-7316-7579 researcherid: x-9940-2018 doi: https://doi.org/10.30525/2661-5150/2020-4-22 modern tools for management accounting and their role in ensuring the total value of the enterprise maksym chut1 abstract. the purpose of the paper is to determine the role of modern effective tools for management accounting in the context of increasing the total value of the enterprise. the article deals with the basic tools of management accounting and details the essence of their transformation in modern conditions. current market conditions require modification of individual management accounting tools and methods, which are described in detail and substantiated in the article. in ukraine, the value of management accounting remains undervalued, because, unlike the major international accounting systems, the use of management accounts in correspondence with financial accounts is in no way intended. management accounting as such is at the discretion of the enterprise. therefore, this function – meeting the specific management information needs – is often entrusted with analytical accounting data which, by its very nature, cannot fully accomplish such tasks. the author specifies some atypical modern tools not only the management accounting process, but also its support. business value estimation is presented as a kind of management accounting tool that allows, at the same time, to create reputation capital, and to become an element of it. as a result, the system of the newest management accounting tools in the system of value-based management was improved by determining the essence of transformation of its components, which allowed to establish their role in identifying and counteracting factors of negative influence in terms of growth of enterprise value. the research substantiates the role of each single up-to-date management accounting tool (application of modern e-document flow in management accounting, cost-oriented controlling, actuarial calculations, international accounts, electronic forms of analysis, forecasting and mathematical modelling, reporting forms and their dissemination by modern means of communication) in identifying and eliminating problematic factors to the implementation of valuebased management. key words: value-based, management, accounting, capital, reputation, business image. jel classification: g12, d24 1. introduction the globalization of the world economic space is posing more new challenges to management. market conditions change in both form and content, and the role of information in business processes is constantly increasing. management's information needs often go beyond the basic indicators of financial reporting or macroeconomic statistics and contain a significant component of management accounting data. in ukraine, the importance of management accounting remains underestimated because, unlike the main international systems of accounts, the use of management accounts in correspondence with financial accounts is not provided in any way. management accounting by itself is left to the discretion of the enterprise. therefore, this function – meeting the specific information needs of management – is often entrusted to the data of analytical accounting, which in essence cannot implement such tasks in full. accordingly, the task is to formulate the up-to-date or modified management accounting tools that will be able to fit the times. one of the features of the modern market is its financial and investment orientation: the performance of conducting business is assessed not only by indicators of profitability or cost-efficiency but also from the standpoint of the state of the enterprise in a competitive environment, the level of its capitalization. the enterprise management and, consequently, information requests for management accounting should be aimed at increasing the total business value, i.e. to become value-based. three seas economic journal 154 vol. 1, no. 4, 2020 2. transformation of management accounting tools the main tools of management accounting are typical: documentation, control, evaluation, calculation, accounts, analysis, forecasting, budget planning, reporting, information sharing. the up-to-date forms of management accounting tools in the mechanism of value-based financial management of industrial enterprises are essentially modified and modernized familiar forms (figure 1). 3. characteristics of the up-to-date management accounting tools consider these tools in more detail. creating an e-document flow system at an industrial enterprise ensures the efficiency of management and decisionmaking, optimizes information flows at the enterprise and promotes the rational redistribution of responsibilities in the field of documenting. the implementation of the document flow schemes in digital technologies will contribute to its digitalization typical management accounting tools → up-to-date forms of management accounting tools → essence of modification → documentation → e-document flow → reducing the use of paper media, creating registration gateways for e-document flow, ensuring the security of documents, creating the image of modern digital business. → control → controlling, internal audit, forensics → modification of control in accordance with market conditions, use of electronic methods, public registers, analysis and incentive system, etc. → evaluation → estimation with elements of actuarial calculations → application of actuarial calculations and financial modelling to estimate current and future business value added → calculation → calculation (including modern cost structure) → the international federation of accountants and the board of independent accountants and auditors are constantly reviewing the cost structure by the cost items and the procedure for recognition → accounts → accounts (including international ones) → in management accounting, it is appropriate to use your own internal system of accounts → analysis → analysis (including electronic forms) → transformation of reporting indicators according to international standards provokes a change in the essence of the coefficients of its analysis → forecasting → forecasting (including electronic and mathematical modelling) → development of cybernetics and modelling systems should be implemented in systems of analysis, application of cross-correlation analysis → budget planning → planning and budgeting → instability of the external environment and the impact of globalization processes require flexible action plans → reporting → reporting (including non-financial reporting, annual reporting) → modern financial statements should focus on the prospects and risks of activities, rather than on the disclosure of current financial and property status → information sharing → information and communication → application of modern fast forms of communication inside and outside the business figure 1. transformation of management accounting tools in the mechanism of value-based financial management of industrial enterprises source: compiled by the author three seas economic journal 155 vol. 1, no. 4, 2020 and the formation of a positive image of a digital and technological enterprise (pylypenko, 2007). it is next to impossible to ensure the growth of business capitalization without creating the image of a technology company in today 's reality is almost impossible. this is confirmed by the list of one hundred largest companies in the world by market capitalization according to the forbes rating. therefore, manufacturability and digitalization of the processes should be the basis at all levels of management accounting as well, including in the e-document flow system. the creation of subsystems (structural units or relevant positions) of controlling or internal audit is a set of preventive measures that ensure the completeness and reliability of accounting and management data and prompt response to shortcomings in the organization of current operation. the results of the operation of such subsystems are also aimed at the tactical level of management decision-making, as they allow to identify those shortcomings in the organization of the enterprise, which may interfere with the mechanism of value-based financial management. the forensic process is the most effective tool for conducting internal investigations – the very possibility of its implementation is a demotivating factor in the process of planning speculation or fraud, which has a direct impact on the business value. the modern information environment makes public information available. companies regularly disclose financial reporting data on the internet, a lot of information and analytical resources, which allows to model and forecast market development at least in the medium term. the rapid development of technology makes long-term forecasts unreliable because every know-how can provoke another round of scientific and technological revolution. even if forecasts for a period of three to five years can be quite realistic, the main thing is that they are based on a properly conducted long-term assessment of their own financial statements, which can be based on methods used by actuaries. it is the tools of financial modelling and data analysis that make it possible to accurately assess the results of economic activity of industrial enterprises, which is the basis for calculating the business value. in essence, costs calculation is a list of cost items that can be attributed or allocated to individual products. the basis of the calculation process is the correct organization of costs accounting, i.e. collection and registration of relevant information, its grouping and processing, generalization of information on the synthetic and analytical accounts (trunina, onyshchenko, 2018). accordingly, there is a need to develop an internal calculation system, which will be based on those cost items that will be allocated by the management of the enterprise and the rules of np(s)a. management personnel have significantly more resources and opportunities to account for costs by all available methods than it is provided by the regulations. in addition, the cost of modern goods contains an information component, such as the cost of development, innovation, distribution and implementation in production; the cost of promoting the product on the internet and its sale in modern ways, etc. the use of specialized management accounts is provided in many countries around the world by a system of accounts. such accounts correspond directly with financial accounts and create an information array for management decisions. these accounts are mainly transit and perform an information function. in ukraine, it is ensured to create a management accounting system by each enterprise independently according to its own needs (kundria-vysotska, vahner, 2011). keeping management accounts separately from the financial ones creates duplication of accounting functions and the emergence of relevant differences in the data, so it would be more appropriate to integrate the system of management accounts with the financial accounts, which will provide quality and accurate calculation of value-based financial performance. in parallel with the development of accounting information systems, the development of new forms and methods of its processing is occurred. means of electronic cybernetics, economic and mathematical modelling in modern conditions allow to process large data arrays quickly and efficiently, and most importantly, to carry out fairly reliable forecasting (shevchuk, 2012). the implementation of such tools in the management accounting system will allow to transfer it from retrospective to prospective plane and provide management personnel not only with initial information but also with a relevant assessment of prospects in order to maximize the business value. an important tool of management accounting is business planning. comparison of actual indicators with the planned ones allows to identify the reasons for the loss of the enterprise's performance and for reducing the business value to take appropriate management measures. at the same time, it should be borne in mind that the causes of deviations are often due to the influence of the external environment of the enterprise, which is very dynamic in modern conditions. accordingly, the promising indicators need to be adjusted even in one reporting period, i.e. the plans and budgets of the company should be flexible, and the reaction of management personnel should be as mobile as possible. with the application of international financial reporting standards, its non-financial components, textual and descriptive parts become a tool for managing the company because they present the financial and property status of the company most beneficially for the owners of the company. compilation of textual parts of the financial three seas economic journal 156 vol. 1, no. 4, 2020 statements of the enterprise should be a function of management accounting because the content of the parts meets the needs of management and is based not only on accounting data but covers components of assessing possible business risks, financial and property status, potential costs, revenues and prospects of the enterprises. nowadays, the use of information technology for the needs of management accounting is a requirement of time and a necessary condition for the implementation of the mechanism of valuebased financial management. neural networks for accounting, analysis and even management are increasingly developed. they can operate with systems and data sets with fuzzy boundaries or components, which allows you to quickly respond to changes in external conditions. in addition, the neural network is able to capture information data from the external environment, identif ying those components of the management process that the manager may not notice. modern information technologies allow to automate the processes of financial and management accounting and internal control, which ensures maximum completeness and objectivity of the received accounting information (onyshchenko, 2016). carrying out a reliable and forward-looking assessment of the company 's assets, capital and liabilities is also an integral tool of modern management accounting. this allows you to establish the fair business value compared to the book value, and as a consequence – to assess goodwill. at the same time, it is the management accounting system aimed at establishing the value of the business image – its reputation capital. thus, the assessment of the business value is, on the one hand, a tool of management accounting, and on the other hand, it is a way to establish its effectiveness. the purpose of a modern enterprise, against the background of the development of the investment market, is not only to make a profit but also to maximize the business value. thus, management accounting should be considered a component of value-based management. 4. business value methodology business valuation is the basis of value-based management and the main tool of management accounting. however, management accounting is focused on measuring impact and valuation, including the dynamics of the main aspects and factors that affect the value of the company. today, value-based management uses several basic methods of assessing the business value: – income approach involves the calculation based on the most efficient and profitable way to use assets, even if it is just disposition of property, i.e. this approach is implemented by discounting cash flow and direct capitalization of income; – property (cost) approach assumes that the business value is equal to the rate of the cost that must be incurred to create the same business but in modern conditions (taking into account the physical and moral depreciation of assets and technologies); – market (comparative) approach is based on the use of market valuations of the property of the enterprise and its shares. each of these approaches can be used in management accounting and has its advantages and disadvantages. the income approach is simple, logical, clear, easy to apply and does not contain complex mathematical calculations. however, this approach does not take into account the components of the influence of external factors, the prospects of the enterprise, its competitive position (kasych, 2014). the property (cost) approach allows you to form a modern view of your own business, to assess it from the standpoint of the state of assets, feasibility, and efficiency of their use. however, with this approach, it is almost impossible to reliably establish the value of intangible assets and the effectiveness of their use with this approach. software and the rights to trademarks, signs, goodwill etc. are assets the value of which is almost impossible to determine by this method. their value is determined by an expert method and forms the basis of the reputational capital of an industrial enterprise. the market approach embodies the business capitalization and looks the most reliable. however, the application of this method requires a basis for comparison and a relevant market. on the one hand, the approach is based on the most realistic data – market valuations, but on the other hand, only retrospective and current data are used regardless of the prospects of business development. in the system of management accounting, much attention is paid to cost accounting, especially production, and the formation of financial results of the enterprise. in this way, companies face the imperfection of existing management accounting tools: costing methods and revenue estimation. management accounting is designed to ensure the quality and efficiency of accounting information that will help maximize the business value. however, the lack of standard algorithms, guidelines and reference materials hinders the effective implementation of management accounting and the formation of a mechanism for valuebased financial management. at the present stage of development of industrial enterprises, not all of them are ready for the introduction of management accounting. despite the vast majority of owners have their own conditional "accounting notebook", not all of them are ready to bear the additional costs of providing management accounting in a civilized way. that is why the process three seas economic journal 157 vol. 1, no. 4, 2020 of disseminating management accounting should be painless and simple. in our opinion, one of the ways of such implementation may be the formation of guidelines and instructions for the application of integration between ifrs targets for value-based management. the process of transition of accounting systems to the requirements of international standards for many companies is complex, it has certain obstacles. among them, it is worth noting the lack of information support, insufficient awareness of accounting personnel, insufficient adaptability of the national accounting system. accordingly, it is quite appropriate to integrate new components into the enterprise at the time of transformation accounting processes (veretnov, 2019). currently, management accounting is kept separate from financial accounting but international practice often involves their mutual integration. in addition, it should be borne in mind that ifrs is constantly evolving and, accordingly, will stimulate the development of management accounting. however, the introduction of ifrs alone is not enough to form a mechanism for value-based financial management in an industrial enterprise. it is necessary to integrate ifrs with the use of a valuebased management concept, which provides for the creation of links between basic accounts and the resulting financial indicators of business value. based on these links, strategic and tactical goals of a whole enterprise and its specific units are formed. 5. conclusions it is necessary to perform the following tasks for the effective organization of management accounting as part of the mechanism of value-based financial management: – to specify the functions of accounting and other personnel in the system of management accounting; – to introduce integration between ifrs and the resulting financial indicators of value-based management; – to establish the boundaries and content of information needs of management personnel; – to identify sources of information and methods of obtaining it by the subsystem of management accounting; – to justify methods and ways of accounting for individual objects and the formation of financial results; – to rationalize the organization, accounting technologies, accounting processes, nomenclatures, documentation, etc. for the purposes of value-based management. the process of dissemination of management accounting in ukraine is also faced with a lack of understanding of the basic methods and tools of individual managers of the enterprise. management accounts are often perceived as a kind of detailing of accounts; the processes of implementing the internal audit system are often reduced to obtaining iso certificates; writing textual parts of financial statements is perceived as another form of a mandatory document; methods of cost accounting and analysis of their effectiveness are perceived as additional analytical work. accordingly, educational work aimed at promoting management accounting as such is required in addition to methodical work. on the one hand, the problems of accounting and management in the enterprise are the problems of its owners. on the other hand, the wellbeing and development of each individual business entity is an element of the overall socio-economic development of the country, economic system and society (barczi, szentirmai, zeman, 2019). modern management accounting, focusing on the formation of the value of the enterprise, must go beyond the internal information of the enterprise. such a management accounting will be strategic in nature, cover a longer period of time and will be based on a comparison of the state of the enterprise with the external environment. it is strategic management accounting that will make the most of forecasting and modelling tools (drury, 2005). management accounting for the purposes of value-based management takes over a significant part of the functions of planning, analytical, financial departments. the main thing in the organization of management accounting is to avoid duplication of functions. as a result, the basic principles of management accounting as part of the mechanism of value-based financial management in the enterprise should include: 1. methodological principles are harmonized independence (each company independently organizes management accounting based on elementary scientifically sound methodological recommendations), pluralism and scientificity (management accounting is organized taking into account the peculiarities of the production activities of the enterprise; it is unique and special, based on the achievements of not only accounting science but also all industries). 2. organizational principles are cost-effectiveness (the usefulness of introducing management accounting should be higher than the cost of its maintenance, it should not overload the personnel), informativeness (information of the management accounting subsystem must meet the requirements of management and not repeat the indicators generated by other subsystems of the enterprise), completeness and operational efficiency (information should be sufficient and timely, periodic and structured). 3. economic principles are rationality (a management accounting subsystem should seek maximum growth in business value), effectiveness (the efficiency of the management accounting subsystem should be either reasonable or obvious). three seas economic journal 158 vol. 1, no. 4, 2020 4. strategic principle means that management accounting is not limited to retrospective data registration, but it is forward-looking. as a result of the research, the role of each single up to-date tool of management accounting (application of modern e-document flow in management accounting, cost-oriented controlling, actuarial calculations, international accounts, electronic forms of analysis, forecasting and mathematical modelling, reporting forms and their dissemination by modern means of communication) in identifying and eliminating problematic factors through the implementation of the mechanism of value-based financial management of industrial enterprises is justified. the combination of these tools can ensure the completeness and reliability of the information array of valuebased management, planning the future activities of the enterprise and become an effective stimulus and element of the growth of not only reputational capital but also the total business value. references: trunina, i. m., & onyshhenko, o. v. (2018). “methodological approaches to managing the costs of industrial enterprises”. modern economics, vol. 7, pp. 182–191. kundria-vysotska, o., & wagner, i. (2011). “conceptual approaches to the recognition and organization of strategic accounting”. ekonomika i banki, no. 1, pp. 3–8. muhina, e. (2014). “theoretical aspects of strategic management accounting as an element of effective organization management”. voprosy ekonomiki i prava, vol. 8, pp. 104–109. pylypenko, a. (2007). orhanizatsiia oblikovo-analitychnoho zabezpechennia stratehichnoho rozvytku pidpryiemstva [organization of regional and analitical care of strategic development of business]. kharkiv: khneu. ward, k. (2002). strategicheskii upravlencheskii uchet [strategic management accounts]. moscow: olimpbusiness cjsc. ushanov, i. (2011). “strategic management accounting of client profitability based on cap analysis”. proceedings of the moscow institute of physics and technology (trudy mftu). computer science, management, economics, vol. 3, no. 2, pp. 134–137. shevchuk, v. (2012). “strategic management region yak information system competitive competition strategy of strategic enterprise”. visnyk natsionalnoho universytetu "lvivska politekhnika", no. 722: menedzhment ta pidpryiemnytstvo v ukraini: etapy stanovlennia i problemy rozvytku, pp. 281–285. chandler, a. d. (1990). integration and diversification as business strategies – an historical analysis.  business and economic history, vol. 19, pp. 65–73. ansoff, h. i. (1965).  corporate strategy: an analytic approach to business policy for growth and expansion. penguin books. kasych, a. o., & kharkova, zh. v. (2016). “managing the competitive advantage of the enterprise”. economic analysis: collection of scientific papers: publishing and printing center of ternopil national economic university “ekonomichna dumka”. ternopil, vol. 25, no. 2, pp. 79–85. kasych, a. o. (2014). “the introduction of the concept of strategic management into the practice of industrial enterprises”. business inform, no. 11, pp. 290–294. veretnov, v. (2012). “outsourcing. strategic management accounts in the field of software outsourcing”. аvailable at: http://www.klubok.net/article1198.html//07/20/2007//20.25.10 onyshchenko, o. (2016). “modern engineering instruments for accounting theory and practice”. visnyk kremenchutskoho natsionalnoho universytetu imeni mykhaila ostrohradskoho, vol. 3(2), pp. 78–86. ramljak, b., & rogošić, a. (2012). strategic management accounting practices in croatia. journal of international management studies, vol. 7(2), pp. 93–100. barczi, j., szentirmai, m. g., & zeman, z. (2011). “the information-connection between the strategic managementaccounting and the company valuation”. аvailable at: http://ssrn.com/abstract=1928034 drury, c. (2005). upravlencheskij i proizvodstvennyj uchet [management accounts and production accounting]. moscow: unity-dana. bromwich, m. (1990). “the case for strategic management accounting: the role of accounting information for strategy in competitive markets”. accounting , organization and society, vol. 15, pp. 27–46. three seas economic journal 59 vol. 1, no. 3, 2020 corresponding author: 1 pe «galaexpert», ukraine. doi: https://doi.org/10.30525/2661-5150/2020-3-10 innovative and technological potential as a necessary condition for the sustainable development of the region daria londarenko1 abstract. the object of the study is regional economic systems that implement innovative technological processes. the subject of the study is the economic, organizational, and managerial relations that develop in the process of formation and use of innovative and technological potential at the regional level. the purpose of the article is to study the innovative potential of the regions, substantiate the theoretical provisions and develop methodological recommendations for the development of effective ways and forms of its mobilization. methods. the theoretical and methodological basis of the study is the conceptual provisions and scientific developments of domestic and foreign scientists on the formation and use of elements of innovative and technological potential at various levels of management, published in monographs, periodicals and materials of scientific and practical conferences on the topic of research. the study is based on a general scientific methodology that provides for the use of a systematic approach. methods of observation, comparison, categorical, structural-functional, situational, economic mathematical methods, and the method of hierarchy analysis are used to solve the tasks. results. the article describes the innovative and technological potential of the region as an economic and managerial category. the typology of innovation as a complex and diversified concept containing many interacting components is studied. the following essential characteristics of the innovation and technological potential of the region are highlighted. firstly, the innovative and technological potential of the region is determined by the opportunities available to it for change. the innovation potential creates conditions sufficient to ensure the progressive development of the regional socio-economic system through the creation of innovations and their purposeful transformation into innovations. secondly, the innovative and technological potential of the region is characterized by the presence of specific ones, both involved and not involved in production, but prepared for use in it. third, the innovative and technological potential of the region is determined by the willingness to use the existing innovative opportunities in order to translate innovations into innovations. the structure of the innovation and technological potential of the region is studied. it is determined that of all the components of the innovation potential of the region, the most important is the labor (human) potential. it is characterized, firstly, by the level of qualification, intelligence, and creativity of the population living and functioning in the territory. it is the population, on the one hand, that is able to produce innovations, and on the other hand, to introduce and distribute them, thereby determining the opportunities and directions of innovative development. it is highlighting innovative and technological potential of the region following components, including the capacity of: organization and management technology; research and development; marketing; technology and production; personnel; potential financial base; knowledge base; natural resource. practical value. this classification of the components of innovation and technological potential is of great practical importance. it focuses the attention of researchers and users on the simple fact that the key element of the innovation potential of the region is the subjects of innovation activity operating on its territory. in particular, among all subjects of management, both employed and not employed population in the market sector of the economy should be singled out. key words: technopolis, regional economy, innovative infrastructure, economic regulation, clustering, high-tech company, innovation and technological modernization, scientific and technical development. jel classification: r11, f63 three seas economic journal 60 vol. 1, no. 3, 2020 1. introduction the process of adaptation of socio-economic systems to a dynamically changing external environment in modern conditions is largely determined by the ability to timely find and use competitive success factors as productively as possible. this process is directly dependent on the ability to continuously develop and improve. innovative and technological potential are becoming the main engine of progress and a condition for the sustainable functioning of regional socioeconomic systems. this conclusion is confirmed by the assessment of the development results of countries that have created an innovative economy, in other words, an economy based on knowledge and information technologies. the truth of these provisions is determined by the main properties of the category "innovative economy ": the innovative economy is a continuous process of improvement and the emergence of fundamentally new ideas, inventions, which, as they accumulate, develop into new breakthrough innovations; in an innovative economy, knowledge plays a crucial role, and the production of knowledge is a source of growth; the innovation economy is based on information, as well as information and communication systems, space and the use of the internet in all spheres of human activity. the concept of innovation, which underlies the innovation economy, covers all aspects of human life and means innovation that improves human life. innovation is a renewal, transformation of activity, which leads to the replacement of some of its elements with other, more advanced ones. initially, they are formed in consciousness as a problem associated with the presence of a contradiction between reality and a possible state. ultimately, innovations are manifested because of differentiation of interests of market participants and involve the resolution of existing contradictions through targeted activities. 2. typology of innovations innovation is a complex and diversified concept that contains many interacting components. innovation defines changes in the properties and performance characteristics of the product as a whole and changes in the components of the product that increase its effectiveness, including the nature of the services that provide them. in this regard, the validity of the methodological approach adopted by us is confirmed by the generally accepted list of types of innovations: – introduction of a new product or qualitative change in an existing product; – a process innovation that is new to the industry; – opening of a new market; – development of new sources of supply of raw materials or other investments; – changes in the business organization. from the point of view of managing the innovation process, it is important to take into account the existing typology of innovations. traditionally, there are innovations that allow you to create new products or those for creating new technologies. depending on the level of novelty, they are divided into basic and secondary. in the modern sense, basic innovations imply a radical change in the technological base and methods of organizing production, the sociocultural sphere. secondary innovations are aimed at the development and modification of basic innovations, their dissemination in various fields. among the technological innovations, experts also distinguish imitations that repeat already developed innovations, and innovations that are implemented for the first time. in the spatial sphere, global, civilizational, national, regional, local and point innovations are distinguished. complementing the typology, it is proposed to subdivide innovations into ascending ones related to scientific research, and descending ones related to the process of commercialization of scientific achievements. this list could be continued, but within the framework of the task, the above definitions are sufficient to draw the following important conclusion: the typology of innovation potential, which characterizes the conditions and opportunities for innovation activity, is adequate to the typology of innovation. the multidimensional nature of the category "innovation" is the basis for resolving constantly emerging contradictions both within socioeconomic systems and in their relationship with the environment, in other words, the basis for the sustainable development of socio-economic systems. in our opinion, to ensure a high level of competitiveness of socio-economic systems, it is necessary, on the one hand, to have a powerful innovation potential, on the other hand, to use it productively. both sources should be considered as the root causes of innovation activity at the level three seas economic journal 61 vol. 1, no. 3, 2020 of the socio-economic system for the following reasons. firstly, the development of innovation activity in the region occurs as a reaction not to everyone, but only to the "technological push" that is adequate to the accumulated innovation potential. in other words, if the region does not have the necessary conditions and opportunities to create innovations in a particular area where there is a "technological push", then it is impossible to expect adequate innovation activity. secondly, information about the needs of society is a kind of push to find technical opportunities to meet them. this means that public choice, public preferences expressed through the ratio of supply and demand form the priorities of innovation in socio-economic systems. however, the statement about the linear dependence of the process of innovation and demand means a serious simplification of this problem. simultaneously with the formation of innovative priorities, there is an improvement and development of mechanisms that allow flexibly to combine the directions of scientific research ith the needs of society. the potential of the whole set of these factors is contained in the innovative potential of the subjects of innovative activity, whether it is an individual, an enterprise, a region, or a country as a whole. 3. characteristics of the innovative and technological potential of the region within the framework of our research, the problem of the development and use of the innovative potential of the region is of exceptional interest. the innovative potential of the region is an independent system category, along with the production, economic, human, organizational and information potential, it is part of the potential of the region. the interaction of these independent system categories forms a synergistic effect of the region's activities and sustainable development. the innovative and technological potential of the region as an economic and managerial category is currently poorly studied, in our opinion; it is the main one in the system of the total potential of the region. in this regard, it should be noted that in the above-mentioned review of the main terms and definitions, the category of "innovation potential" is not considered at all. meanwhile, the development of theoretical provisions, assessment methods and recommendations for the management and use of the innovative potential of the region will help the authorities to navigate in a changing and contradictory environment, developing a set of adequate measures to ensure the sustainable development of the region. thus, the study of the above definitions of innovation potential, as well as the innovation potential of the region, allows us to draw the following conclusion. in their definitions, the authors focus on such characteristics of potential as "capabilities", "resources", "readiness" and "ability ". note that "opportunity " is a general concept that includes both private concepts such as" resources" and "ability ". therefore, in our opinion, the innovative potential of the region is the opportunities available to it and the readiness to produce and / or use innovations in this territory or beyond its borders that ensure its sustainable social, economic and environmental development. the innovative opportunity includes available prerequisites for the implementation of the changes. various reasons can serve as an incentive that encourages a business entity to change. there are two types of changes: change because of innovation and change as a source of innovative opportunities. it should be noted here that changes as a source of innovative opportunities are determined by the totality of all changes in the internal and external environment of the region. thus, the following essential characteristics of the innovation potential of the region can be distinguished: firstly, the innovation potential of the region is determined by the opportunities for change at its disposal. the innovation potential creates conditions sufficient to ensure the progressive development of the regional socio-economic system through the creation of innovations and their purposeful transformation into innovations. secondly, the innovative potential of the region is characterized by the presence of specific ones both involved and not involved in production but prepared for use in it. thirdly, the innovative potential of the region is determined by the willingness to use the existing innovative opportunities in order to translate them into innovations. the innovative potential of the region can be characterized, on the one hand, by the achieved level of its socio-economic development, on the other hand, by the possibilities of ensuring its further three seas economic journal 62 vol. 1, no. 3, 2020 growth. three groups of dependencies determine the magnitude and dynamics of changes in the innovation potential of the region: quantitative and qualitative characteristics of the components of the potential; relationships between subsystems (system quality); interaction of external factors. innovation potential can be large from a quantitative point of view, that is, include significant material, technical, information, labor and other resources, but not used, and therefore do not have a significant positive impact on economic development. the potential may be high in terms of quality, but it may not correspond structurally to the needs of regional development. it is important to keep in mind that potential is only an opportunity that may not be used. 4. the composition and structure of the innovation and technological potential of the region the composition of the innovative potential of the region in the economic literature is presented in different ways. the most common description of the innovation potential is the following, which includes: – natural resources; – state of the environment; – population, its gender and age composition and general education level, labor resources, level and dynamics of employment; – production potential (fixed capital, the level of its depreciation, the technological and reproductive structure of fixed capital, the level of specialization and technological equipment, the competitiveness of products); – scientific and labor potential (the assessment of the resource, technological and human resource base, r & d results of scientific and innovation activities, the scope of progressive, traditional and high-technology-oriented activities); – regional and geopolitical aspects of innovation potential (differentiation of levels of economic development, natural and climatic differences, the level of anthropogenic load by region); – regional infrastructure (transport, communications, services, etc.). natural resource potential of the region, the achieved level of economic and technological development of society and the study areas used in economic and other human activities, on the one hand, create conditions for implementation of innovative activities and, on the other hand, are the permanent object of innovation. the availability of natural resources, firstly, affects the formation of the territorial structure of the economy; secondly, it affects the industry specialization of the region; thirdly, it affects the pace of district (regional) socio-economic development; fourthly, it helps to increase the role of the region in the commodity market. of all the components of the innovation potential of the region, the most important is the labor (human) potential. it is characterized, first of all, by the level of qualification, intelligence, and creativity of the population living and functioning in the territory. it is the population that is able, on the one hand, to produce innovations, and on the other hand, to introduce and distribute them, thereby determining the opportunities and directions of innovative development. it is distinguished by the allocation of the following components in the innovation potential of the region, including the potential of: – organizations and management technologies; – research and development; – marketing; – technology and production; – personnel; – potential of the financial base; – information base; – natural resource. the significance of this approach lies in the fact that it creates a basis for the practical use of each of the elements of innovation potential by management stakeholders. thus, the use of the potential of marketing acts as an objective need to focus the scientific and technical, production and sales activities of the company on taking into account market demand, needs and requirements of consumers. the potential of the organization and management technology represents the ability and readiness of the region to use innovative opportunities in the field of values, standards of behavior and traditions, worldview features of the region, centralization and decentralization, methods and procedures for monitoring the implementation of decisions, management information systems, organization of the communication system, management style, qualifications and abilities of senior management, strategic planning systems in the region. this element of innovation potential is currently being emphasized, since it is the introduction of innovations that is the most vulnerable stage in three seas economic journal 63 vol. 1, no. 3, 2020 the organization of the innovation process in our country. the potential of research and development in the region characterizes the ability and willingness of the region to use innovative opportunities composition of personnel engaged in research and development, their qualifications and experience, motivation, condition of laboratory facilities and test equipment, cooperation with other regions, licensing agreements, and organization of the design process. marketing potential of the region – the ability and readiness of the region to use innovative opportunities regarding the applied concepts and strategies, sales markets, consumers, products, pricing policy, distribution channels, sales organization, sales agents, inventory of goods, trade costs, after-sales service, advertising activities in the region. the potential of technology and production of the region is the ability and readiness of the region to use for innovative purposes production units, technologies, fixed assets, organization of maintenance, production, scheduling system, organization of quality control. personnel potential of the region is the ability and willingness of the region to the use of staff competencies and skills, hr policy, training, and professional development, rating system, payment and work motivation. the potential of personnel in the regions of ukraine in the current conditions remains very high, and often exceeds the same indicator of developed countries. this is especially true for the engineering staff of employees who have a high degree of sensitivity to innovation and qualifications, as well as a wide range of tasks that can potentially be effectively solved by these specialists. the potential of the financial base of the region is the ability and readiness of the region to use for innovative purposes the sources and size of financial resources, profit, cash flow, financial planning, reporting status. the financial resources required in the process of creation and, in particular, the diffusion of innovations, certainly deserve special attention in this classification. in this regard, most regions of ukraine are not only deprived of the possibility of using loans for innovative purposes, but often do not have their own funds even to carry out basic work to maintain the achieved level of production. the potential of the region's information base is the ability and readiness of the region to use a communication system for innovative purposes, timely, reliable, sufficient, targeted information systems for collecting, processing and transmitting information, the possibility of encoding, and the relevance of information. an effective innovation process is unthinkable without access to information about the state of the venture capital markets, technologies, inventions, licenses, "knowhow", that is, without appropriate information resources. natural resource potential is the ability and readiness of the region to use resource and raw material for innovative purposes, the state of forestry, the number of pastures, roads, disturbed land, resource reserves, costs, and protection of natural resources. the static component of innovative capabilities is a currently existing time innovative ability and the willingness of the region, dynamic component means capabilities and readiness to innovation. a feature of the dynamic component is its relationship with the strategy and tactics of developing static elements of potential, including material, financial and other types of resources. in our opinion, this composition can represent the innovation potential of any subject of innovation activity, including the regional socio-economic system. along with such generally accepted structural elements of innovation potential as material, personnel, financial, investment and management system potential, we distinguish such elements as institutional, image, and external environment. it should be noted that such a resource as the external environment does not belong to the region, and the full subjects of management of this resource are forces located outside the region. however, we believe that these circumstances cannot be the reason for ignoring this resource, excluding it from the process of forming and using the innovative potential of the socio-economic system. our view of this problem touches on the issues of strategic management, which is particularly emphasized by the inclusion of the external environment in the dynamic component. in the economic literature and in practice, the external environment is considered as a factor affecting the market potential of the region, and its impact is recommended to be taken into account when managing market potential. in our opinion, the fundamental differences dictate the need to three seas economic journal 64 vol. 1, no. 3, 2020 consider the external environment of the region as an element of its innovation potential. the external environment as a factor affecting the innovation potential of the region may or may not be taken into account, but the potential, considered as an integral system, does not change from this: only its output parameters change for better or worse. on the other hand, if the external environment is considered as an equal component of the innovation potential of the region, then ignoring it deprives the system of integrity. therefore, this provision qualitatively changes the structure of the innovation potential of the region, creating new methodological opportunities for determining the ways of its development and use. the reason for this conclusion is also the fact that any of the regions is included in the system of interregional, and, at the present stage of development, international relations. therefore, at present, each region uses the opportunities provided by the external environment to a greater or lesser extent, and counts on their use, forms appropriate programs for this purpose. thus, the above proposal reflects the need to legitimize the status quo, and the consideration of the external environment as an element of the structure of the innovation potential of the region allows us to purposefully use the relationships existing between the elements of the innovation potential of the region, thereby increasing its effectiveness. institutional component of the innovation potential is unique because experience shows that in a market economy, effective use of achievements of science and technology, the use of intellectual capital is possible only under condition of presence in a particular state of a balanced, clear and effective legal basis and creating the necessary institutional organizations, providing innovation related services. another component that we have introduced into the innovative potential of the region is the image potential. the role of this potential component is difficult to overestimate, since a positive image of a particular region among potential users is the key to success in promoting its product. in our example, this means that the formation in the minds of business entities of a favorable image of a particular region as a territory where all the necessary conditions for fruitful creativity are created, contributes to the rapid increase in the region of the main component of the innovative potential – the potential of personnel. each of the subjects of innovation activity operating in the region has at its disposal the following elements of innovation potential: resources; management system; personnel activities; industry structure; environmental factors. 5. conclusions the determinant of the sustainable development of the regional socio-economic system in modern conditions is not so much the creation and increase of innovative and technological potential as such, but, firstly, the use of existing potential, and secondly, its increase in those areas that can provide real socio-economic returns. however, in order to ensure the effective use of the innovative potential of the region, it is necessary to determine its content. the interaction of independent system elements of innovation and technological potential forms a synergistic effect of the region's activities and sustainable development. at the same time, the proposed classification of the components of the innovation potential allows us to focus on its priority elements in specific periods. this classification of the components of innovation and technological potential is of great practical importance. it focuses the attention of researchers and users on the simple fact that the key element of the innovation potential of the region is the subjects of innovation activity operating on its territory. in particular, among all subjects of management, both employed and not employed population in the market sector of the economy should be singled out. references: heiets, v. (2014). modernization in the system "society – state – economy. journal of european economy, t. 13, no. 2, рp. 111–124. kachala, t. m. (2011). modernization as a necessary condition for economic reconstruction. volyn institute of economics and management, vol. 2, pp. 163–171. filipenko, a. (2000). modernization of ukraine's economy in the context of globalization. bulletin of the nas of ukraine, vol. 1, pp. 34–43. three seas economic journal 65 vol. 1, no. 3, 2020 tulchynska, s. o. (2009). intellectual and innovative modernization of the economy of ukraine: theoretical and methodological aspects: monograph. kyiv: ntuu "kpi", 488 p. polyakova, a. g. (2009). conceptual bases of modernization of economy of regions. bulletin of tomsk state university, vol. 323, pp. 273–279. dunaiev, i. v. (2015). modernization of regional economic policy: identification and semantic analysis of the conceptual apparatus. actual problems of public administration. odesa: ori napa publishing house, vol. 4(64), pp. 16–20. mikhalchenko, m. (2005). political reality in ukraine: transformation, modernization, revolution? modern ukrainian politics. politicians and political scientists about her. kyiv, vol. 7, pp. 18–27. petryna, m. (2016). basic conditions for creating an innovative model of economic development of ukraine. ukraine economy, vol. 48, pp. 35–47. lambooy, jan g. (2001). evolutionary economics and regional policy. the annals of regional science, vol. 35, pp. 113–131. human development report (2010). the reak wealth of nations: pathways to human development. three seas economic journal 60 vol. 1, no. 2, 2020 corresponding author: 1 national university of life and environmental sciences of ukraine, ukraine. e-mail: oleksandr.v.shelest@gmail.com orcid: https://orcid.org/0000-0001-7240-4993 2 national university of life and environmental sciences of ukraine, ukraine. e-mail: bella.golub55@gmail.com orcid: https://orcid.org/0000-0002-1256-6138 doi: https://doi.org/10.30525/2661-5150/2020-2-10 olap systems as the modern data preparation tools for outdoor advertising data mining oleksandr shelest1, bella holub2 abstract. today, most organizations use databases and at worst text documents and spreadsheet files as sources for data analysis, which prevent correct and error-free analysis. at best, the data can be constantly adjusted due to ambiguities and inaccuracies. the subject of the study is the intellectual analysis of outdoor advertising data. the methodology of successful data analysis is the correct storage of data, which is the basis for clear data analysis. modern computer systems and computer networks allow the accumulation of large arrays of data to solve problems of processing and analyzing. unfortunately, the machine form of data presentation itself contains the information that a person needs in a hidden form, and you need to use special methods of data analysis to obtain it. in order to get what you want, you need to create not just a database, but a data warehouse with a special storage structure. thus, the data warehouse allows you to collect data from various sources, databases, table files and other things, store them throughout history and, unlike conventional databases, allows you to create systems for fast and accurate data analysis. data warehouse is the basis for building decision support systems. operational data is checked, cleared and aggregated before entering the data warehouse. such integrated data is much easier to analyze. different sources of operational data may contain data describing the same subject area from different points of view (for example, from the point of view of accounting, inventory control, planning department, etc.). a decision made on the basis of only one point of view can be ineffective or even erroneous. the goal is to use a data warehouse to integrate information that reflects different perspectives on the same subject area. focus on the object, which will also allow the data warehouse to store only the data you need to analyze it. it will also significantly increase the speed of data access both due to the possible redundancy of the stored information and due to the exclusion of modification operations. conclusion: the decision support system will ensure reliable storage of large amounts of data. tasks will also be assigned to prevent unauthorized access, data backup, archiving, etc. key words: database, data warehouse, olap, data mining, decision support system. jel classification: c80, y40, m37 nomenclature db database ods operational data store dw data warehouse olap online analytical processing oltp online transaction processing dss decision support system rolap relational olap 1. introduction the practice of using oltp systems has shown the inefficiency of their use for full analysis of information. such systems quite successfully solve the problem of collecting, storing and retrieving information, but they do not meet the requirements necessary for modern dss (barsehyan, kupryyanov, et al., 2009). therefore, to enable the analysis of accumulated data, it is necessary for organizations to create data warehouses, which are integrated data collections accumulated from different systems of operative access to data. in the process of data accumulation, the need to use data mining methods as an effective aid increases; this allows the researcher to gain additional knowledge on the subject area, in which three seas economic journal 61 vol. 1, no. 2, 2020 he or she works, and must make informed decisions (serheiev-horchynskyi, ishchenko, 2018). most organizations take the wrong approach to analyzing data, resulting in errors and slower execution. the data is constantly being revised due to inaccuracies. analyst is a specialist who analyzes data, conducts research and generalizations in a particular field of activity. for the analysis to be successful, the data must be properly processed and structured. data analysis is a part of an interactive automated system designed to help and support various human activities in making decisions about solving structured or unstructured problems. 2. formulation of the problem the first step is to determine what data can be attributed to the detailed data. these are data that are transferred directly from ods. they correspond to elementary events and are fixed by oltp systems (for example, sales, prices, etc.). the second step is to divide all the data into measurements and facts. measurements are data sets needed to describe events (for example, cities, goods, people, etc.). facts are data that reflect the nature of the event (for example, the number of goods sold, the efficiency of placement, etc.). actual data can be presented as numerical or categorical values. the third step for convenient operation you need to get information about the dw data. such information is called metadata. according to the concept of j. zahman, metadata should answer the following questions: what, who, where, how, when and why. the fourth step is to organize the data transfer process, which includes the stages of extraction, conversion and download – etl process. the fifth step is to transform the data; at this stage, the following procedures are performed: data aggregation, translation of values, creating fields and data cleaning. – data aggregation will provide a smaller number of short records that will be transferred to dw. – translation of values replaces encoded data with clearer descriptions. – creating fields allows you to create not just ordinary fields, but also special fields that will exclude additional calculation operations. – data cleaning is aimed at detecting and removing errors and inconsistencies in the data in order to improve their quality. 3. literature review what is oltp? transactional system is a real-time transaction processing, known as oltp, which supports transaction-oriented programs in a three-tier architecture. oltp administers the organization’s daily transactions. any data warehouse is an olap system. the use of olap is as follows, for example: a company can compare its mobile phone sales in june with sales in july, and then compare these results with another location that can be stored in a special database. an example of an oltp system is an online store. let us say that several people want to buy the same product at the same time, although the number of products is limited. the key difference is that olap is a category of software that analyzes data stored in a database, while oltp supports transaction-oriented programs in a three-tier architecture (figure 1). olap creates a single platform for all types of business analysis needs, which includes planning, budgeting, forecasting, and analysis, while oltp is useful for managing an organization’s day-to-day transactions. olap is characterized by a large amount of data, while oltp is characterized by a large number of short online transactions. the data warehouse in olap is created uniquely so that it can integrate different data sources to build a consolidated database, while oltp uses traditional databases. advantages of using olap services: – olap creates a single platform for all types of business intelligence needs, which includes planning, budgeting, forecasting and analysis. – the main advantage of olap is the consistency of information and calculations. – simply build security restrictions on users and objects to enforce rules and protect sensitive data. – the use of olap system gives the organization the ability to predict and analyze various situations related to current activities and prospects. these systems can be considered as an addition to enterprise level automation systems. all the advantages of olap systems directly depend on the accuracy, reliability and amount of source data. – based on detailed data, aggregated data can be obtained. aggregation occurs by summing numerical actual data for certain dimensions. most dss users do not work with detailed, but with aggregated data. dw architecture should provide a fast and convenient way to obtain three seas economic journal 62 vol. 1, no. 2, 2020 information of interest to the user. for this purpose, it is necessary to store a part of the aggregated data in dw, instead of to calculate them at performance of analytical inquiries. obviously, this leads to redundancy of information and an increase in the size of dw. therefore, when designing such systems, it is important to achieve the optimal ratio between the calculated and stored aggregate data. data that is rarely accessed by users can be calculated during the execution of analytical queries. data that is needed more often should be stored in dw. 4. research after researching organizations engaged in outdoor advertising in ukraine, their decision support system, if it can be called that, was analyzed (figure 2). also, the disadvantages of this system are presented in the publication (shelest, holub, 2019). the most important criterion for the use of advertising is the number of its consumers. outdoor advertising is one of the most effective advertising media. where to place an ad, what size it should be, its design – all these are parameters that affect the effectiveness of its use. there is currently no full-scale system for monitoring and analyzing the process of using outdoor advertising. as shown in figure 2, there are two operational data stores that generate certain files for analytics on the server. each client has local software installed, which periodically downloads files from the server and performs certain manipulations with them to obtain reports and perform data analysis. such a system is difficult to call a decision support system. at each client, the data for the analysis contain locally, they are not protected in any way. if you continue to use this structure, it may lead to the loss of correct data. in order to ensure security, clarity and accuracy in the data and analysis, the structure of the data warehouse is presented (figure 3). data come from ods (operational data store). dw has a denormalized data structure for quick access to data. in the course of work the structure of dw can change. separate fact tables are created for possible combinations of generalization levels of different dimensions. this allows for better performance, despite the complexity of the database structure, and the large number of fact tables. the relational system – rolap (figure 4) is perfectly suitable for this olap system. rolap servers use relational databases. according to e. codd, “relational databases have been, are and will be the most suitable technology for data storage. there is no need in new database technology, but rather in analysis tools that complement the functions of existing databases and are flexible enough to anticipate and automate different types of intelligent databases analysis inherent in olap” (barsehyan, kupryyanov, et al., 2009). in case of change of structure of measurements, the rolap system with dynamic representation of dimension is the optimum decision as such modifications will not lead to physical reorganization of a db. relational databases provide a much higher level of data protection and good opportunities for delimitation of access rights. etl processes are presented for data transfer from different databases to dw (figure 5). olap oltp business processes (database) data warehouse analytics strategy processing operations figure 1. olap and oltp three seas economic journal 63 vol. 1, no. 2, 2020 traditionally, etl systems have been used to transfer information from outdated versions of information systems to new ones. currently, etl process is increasingly used to transfer data from ods to dw. to start etl process, you need to extract data from our databases and prepare them for the conversion phase. the method of obtaining information by auxiliary software directly from the database is used. there are the following advantages of this method of obtaining information: – no need to expand the oltp system; – data can be deleted based on the needs of the transfer process. work stations laptopsserver db other doc db other doc other docother doc other doc other doc figure 2. system of analysis of outdoor advertising times idpk date types idpk name factors time_keyfk type_idfk owner_idfk month inspection owners idpk name main_owners main_owner_idpk name main_owner_idfk constructions idpk city_idfk x cities idpk name panel_idfk panels idpk construction_idfk y ots grp cost products idpk name product_idfk classes idpk name categories idpk name sectors idpk name class_idfk category_idfk sector_id advertisers idpk name advertiser_idfk size_idfk sizes idpk width regions idpk name region_idfk streets idpk name street_idfk height figure 3. data warehouse structure three seas economic journal 64 vol. 1, no. 2, 2020 data warehouse work stations laptopsserver db db figure 4. rolap dss outdoor advertising system dss data storage subsystem operator input subsystem (oltp) input subsystem (oltp) db db dw analysis subsystem (olap) analytic operator figure 5. etl processes in the publication (shelest, 2020), the intellectual analysis of the data of outdoor advertising by means of power bi is presented. with the help of excel, it is possible to analyze the data (figure 6). based on the data extracted from dw for certain filters, we can observe the rate of ots panels of outdoor advertising on the graph (figure 7). we see that in may 2020, the ots rate in kyiv is much higher than in other cities. each type of panel has its own mathematical model for calculating ots. ots – opportunity to see. 5. conclusion dss solves three main tasks: collection, storage and analysis of stored information. at the same time there are: information retrieval analysis, operational analytical analysis and intellectual analysis. the concept of data warehouses is used to unite oltp subsystems and analysis subsystems within one system. there is a database for oltp subsystems and a database for analysis. dw allows you to integrate information that reflects different points of view on one subject area. data in dw after download is read-only. this allows you to significantly increase the speed of access to data, both due to the possible redundancy of stored information, and by eliminating modification operations. when loading information from ods to dw, the data is filtered. many of them do not fall into dw because they are meaningless in terms of use in the analysis procedures. the concept of dw provides for the separation of data storage structures for operational processing and execution of analytical queries. this allows one dss to combine two subsystems that meet conflicting requirements. the advantages of rolap are the ability to work with existing relational databases, more economical use of resources and greater flexibility in adding new dimensions. three seas economic journal 65 vol. 1, no. 2, 2020 figure 6. data obtained from dw in excel figure 7. chart of indicators of ots panels for may 2020 three seas economic journal 66 vol. 1, no. 2, 2020 references: barsehyan, a. a., kupryyanov, m. s., kholod, y. y., tess, m. d., & elyzarov, s. y. (2009). analiz dannykh protcessov: ucheb. posobie [analysis of data and processes: textbook]. st. petersburg: bkhv-рeterburh. (in russian) shelest, o. v., & holub, b. l. (2019). rozrobka informatsiynoi tekhnolohii intelektualnoho analizu danykh zovnishnoi reklamy [development of information technology for data mining of outdoor advertising]. (phd thesis). kyiv: national university of life and environmental sciences of ukraine. (in ukrainian) shelest, o. v. (2019). dodatkovi moduli u systemi analizu danykh zovnishnoi reklamy “analityk” ta “infopanel” dlia analizu tsyfrovykh panelei [additional modules in the system of analysis of outdoor advertising data “analityk” and “infopanel” for analysis of digital panels]. (phd thesis). kyiv: national university of life and environmental sciences of ukraine. (in ukrainian) serheiev-horchynskyi, o. o., & ishchenko, h. v. (2018). intelektualnyi analiz danykh, kompiuternyi praktykum [intellectual data analysis computer practicum]. kyiv: national technical university of ukraine “igor sikorsky kyiv polytechnic institute”. (in ukrainian) shelest, o. v. (2020). intelektualnyi analiz danykh zovnishnioi reklamy zasobamy power bi [intellectual analysis of outdoor advertising data by power bi]. (phd thesis). kyiv: national university of life and environmental sciences of ukraine. (in ukrainian) overview of online analytical processing (olap). available at: https://support.office.com/en-us/ article/over view-of-online-analy tical-processing-ol ap-15d2cdde-f70b-4277-b009-ed732b75 fdd6?ui=en-us&rs=en-us&ad=us upravlinskyi analiz: website. available at: https://studme.com.ua/1228112810027/ekonomika/ metody_intellektualnogo_analiza_dannyh.htm online analytical processing (olap). available at: https://docs.microsoft.com/en-us/azure/ architecture/data-guide/relational-data/online-analytical-processing doors consulting: website. available at:http://www.doors-c.com.ua/ power bi. available at: https://powerbi.microsoft.com/ru-ru/ three seas economic journal 46 vol. 1, no. 1, 2020 corresponding author: 1 national academy for public administration under the president of ukraine, ukraine e-mail: v_koltun@yahoo.com orcid: https://orcid.org/0000-0003-3417-8213 doi: https://doi.org/10.30525/2661-5150/2020-1-8 strategic measures for improving the quality of public transport services: approaches to formation maksym borozenets1 abstract. the subject of the study is the formulation of strategic measures to improve the quality of public transport services. the goal is to justify a set of strategic measures aimed at improving the quality of public transport services. to achieve this goal, the following research objectives have been identified and solved: to establish the specifics and principles of effective strategic planning for urban transport services provision; to identify the features of urban transport services system; to identify the main measures for urban public transport services development, in particular, for the city of kyiv. to achieve the goal of the study, a set of system theory methodologies has been selected. in modern science, this approach is considered to be the most productive and capable of providing a high degree of verification of the results obtained. as a result of the study: 1) a complex of strategic measures is substantiated, aimed at improving the quality of public transport services, namely: optimization of modal transportation; integration of modal transportation; optimization of road space; increasing the bus fleet; improving bus design and increasing the comfort in passenger compartments; selection of fare forms; development of information systems of interaction; compliance with the traffic laws and passenger transportation rules; increase of internal efficiency of transport operators’ activities; use of information technologies; increase of transport operators’ incomes; 2) the specifics and principles of effective strategic planning for urban transport services provision are established. they consist in applying an iterative approach to strategic planning. its advantages are due to simultaneous execution of any strategic planning work (from writing the following elements of the strategic plan to the fulfilment of its objectives) with continuous analysis of results obtained, which makes it possible to adjust the works according to the changing environment conditions; 3) the features of the urban transport service systems are revealed, namely: urban public transport systems are complex open dynamic socio-economic systems. we consider multimodality of external environments, multifactoriality of external influences, presence of internal imbalances in systems as one of the main reasons for their unsatisfactory state. therefore, a multifaceted approach is needed, which takes into account the maximum number of factors and combines a range of measures to improve the quality of urban passenger transportation; 4) the main measures for the development of urban public transport services, in particular, for the city of kyiv, are identified, namely: ensuring multimodal public access to public transport stations and public places; organization of information and communication interaction between all elements of the passenger transportation system; use of various forms of urban public transport fare; mathematical modelling of integration interaction of different types of public transport. key words: public transport, quality of service, strategic activities, public administration, urban management. jel classification: m38, r49, r58, l9, l38 1. introduction the relevance of research is determined by a set of objective factors. one of the problems of modern towns in ukraine is the insufficient quality of transport services provided. we have identified the implementation of a holistic “total quality management” approach (tqm) as a main vector for improving the transport services provision. it plays a major role in tqm implementation. it is about both organizational management and management of higher-level systems, in particular, the system of services provided within the territorial community. it allows you to identify and implement priorities, systematize all factors of three seas economic journal 47 vol. 1, no. 1, 2020 quality formation, motivate its provision, organize step-by-step effective control. strategic quality management is of particular importance. the problem of quality of passenger transportation services is explored by modern scientists, both domestic and foreign. we should point out the fundamental achievements of the ukrainian scientists: adler yu.p., ihnatenko  d.o., ihnatenko o.s., markova v.d., nesterenko p.a., polhovskaya t.m., shper v.l., fedyukin v.k., yanovskyi p.o. the scientific achievements of the following foreign scientists is significant: akao  y., anderson e.w., battellino, h., bryant b.e., buliung, r ., cha j., fornell c., mitra g., johnson m.d. at the same time, as the analysis shows, the issues of improving the quality of public transport services in the strategic planning aspect have not yet been the subject of a special study, which led to the choice of the topic of this research. the article goal is to substantiate a set of strategic measures aimed at improving the quality of public transport services. to achieve the goal, the following research objectives have been identified: to establish the specifics and principles of effective strategic planning for the urban transport services provision; to identify the features of urban transport services system; to identify the main measures for the development of urban public transport services, in particular, for the city of kyiv. in order to achieve the set objectives and the research goal formulated, we have chosen a set of system theory methodologies, because this approach is considered the most productive in modern science and capable of providing a high degree of verification of the results obtained. in accordance with the goal, the presentation logic is defined, based on the principle of ascent from abstract to concrete. the analysis starts with defining the principles and approaches of effective strategic planning, establishing the typology of urban public transport systems. based on the above elements of the study, the result was obtained, which allow formulating adequate measures of strategic planning of quality assurance of urban public transport services. 2. strategic planning for the development of urban public transport services an insufficiently high level of satisfaction of passengers of the urban public transport (first of all of bus routes) requires strategic planning of its development. strategic planning and development of program of urban public transport services development on the basis of improving the quality of passenger service includes several stages of successive transformation (reforming) of the existing transport system of the urban territorial community (taguti, fadke, 2013; fomin, 2010). separate stages of strategic plan development can be used iteratively. thus, if the prospective goals of public transport services development cannot be fully achieved, at least in the medium term, the parameters of such limiting factors as available financial resources, current organizational and regulatory frameworks or technical capabilities of transport operators should be revised. in these cases, the earlier stages of the strategic plan can be revised and updated in the light of the expected results or problems that arise in the process of accomplishing the previous tasks. it may sometimes be appropriate to even change the stated goals of public transport services development or to add some incentive measures to an already developed strategic plan. in the long run, it is sometimes possible and appropriate to change the previously considered external conditions for the operation of urban public transport. we proceed from the fact that there are the following major advantages of an iterative approach to strategic planning: all aspects of the developed strategic plan for the public transport services development are subject to critical analysis; consideration is given both to the overall coherence of the strategic plan as well as the coherence of its individual steps and elements; even an acceptable version of the strategic plan can be improved and optimized; potential strategic plan weaknesses can be identified and corrected already at the planning stage, rather than at the implementation stage, which is an obvious problem of reviewing programs and activities; the contradictions between the actors of the urban public transport system can be mitigated on the basis of a more active involvement of all stakeholders, including consumer ngos as the most important participants in the strategic plan development process. 3. urban transport services system urban public transport is a complex transport system. in order to create an efficient and quality service, it is necessary to find out the relationship between its separate components. complexity exists both within service provider organizations (transport operators) as well as the environment three seas economic journal 48 vol. 1, no. 1, 2020 of service provision. as a macroeconomic external environment affecting the transport system, the following set of socio-economic features is considered: socio-economic profile of the community, demographic profile, forecasts, regulatory framework, institutional framework, prospect of town development. in turn, the microeconomic external environment for urban public transport services, including bus services, should be assessed on the following criteria: capacity and accessibility of urban bus transportation infrastructure; competing modes of transport, including motorless vehicles; capacity of the bus fleet and a description of the services providing, their strengths and weaknesses; description of other public transport service providers, their strengths and weaknesses, modes of use; assessment of public transport services consumer satisfaction, market segmentation; assessment of existing scenarios for the public transport development, in particular bus transportation; assessment and diagnosis of major problems. a strategic analysis of the current situation of urban public transport service provision is a major step in the service development process. the objectives of this phase are to identify factors affecting the bus transport services provision, to describe the current situation of service provision, to evaluate the transport system and to diagnose identified problems. a thorough understanding of the existing bus service transport environment greatly influences strategic aims and plans development. much of the necessary information and useful data can be obtained as early as at the development of the strategic mobility plan. the stage of setting goals for improving the quality of urban bus transportation services is an important element in the strategic planning process. to what extent this stage will be significant depends on the structure and potential of a town, as well as the assessment of the current state of service provision. as a rule, this phase is conducted with the participation of key stakeholders and reflects the diversity of their views and interests, which, however, involves reaching consensus on the goals and objectives pursued, as well as measures to achieve them. the objectives of this phase are to identify key stakeholders and consult with them, to develop a set of goals and objectives relevant to urban passenger bus transportation, to identify potential constraints and social, economic, environmental, technological and managerial factors affecting the process (hazanova, 2008). the purpose of the next stage is to develop strategic options for improving urban bus service, depending on the urban environment particularities. modern towns are a heterogeneous community of different groups of urban population, types of land use, road transport infrastructure, types of public transport, forms of traffic management. so, urban road space is used by buses, cars, electric vehicles, bicycles and pedestrians, therefore generating strategies for developing and improving quality of services is a difficult task. strategic decisions will vary depending on these urban conditions and will be determined by the prevailing factors and formulated goals. urban public transport systems are complex socio-economic systems. multifactorial external influences, internal imbalances in systems are considered one of the main reasons for their unsatisfactory condition. adopting a single, albeit scientifically sound, decision to improve the quality of bus services will not have the desired effect, since its benefits will not extend to the entire transport system. therefore, a multifaceted approach is needed, combining a set of measures to improve the quality of urban bus transportation. 4. development of urban public transport services the main measures for the development of urban public transport services include: 1. optimizing and integrating of transportation by different types of urban public transport. 2. optimizing the use of road space to ensure priority for public transport. 3. choosing options for increasing the bus fleet capacity, improving the bus design, streamlining the fare system. 4. increasing accessibility of town buses to socially vulnerable citizens and people with disabilities. 5. ensuring proper enforcement of passenger rules and improving the internal efficiency of the modal system. 6. use of information and communication technologies, including means of communication with the driver and feedback from the transport operator. 7. application of modern economic-mathematical methods and models of management decision-making by transport operators and local self-government bodies. optimizing and integrating transportation by different types of urban public transport is about choosing the best options for using public transport and modes of transportation. each mode of population displacement has its advantages and disadvantages. this also applies to pedestrians, three seas economic journal 49 vol. 1, no. 1, 2020 cyclists and riding an individual electric vehicle, which should be taken into account in optimal planning. as a result, road space and passenger traffic should be divided among different users, including personal transport, pedestrians and cyclists. bus transportation is used for trips longer than 4-5 km. in addition, almost every bus trip is associated with one or more passenger transfers and therefore a pedestrian traffic. therefore, the importance of motorless modes must be taken into account and provided with infrastructure. in this case, the motorless modes will not compete for the road space with the buses, but will complement the bus service. optimizing the use of different modes of transport involves managing demand for transportation services. demand management can take many forms, such as some restrictions on the use of personal vehicles (paid and intercepted parking, restrictions on the use of official vehicles, organized transportation of pupils and students during rush hours, differentiated rates of taxation on vehicles, toll zones). some of these measures will require legislative support, but many may be implemented by the local government within their authority. integration of all modes of passengers’ transportation (movement) is carried out by the centralized management of the process of use of all modes of transport and general road-transport infrastructure. at present, there is no proper integration of service provision by all modes of transport and within each of them. as a result, there are, for example, overlapping bus, tram and trolley bus routes, and demand for transportation services in some large and remote urban areas is not being met. each mode of transportation must be aimed at fully meeting the demand of the population within the integrated public transport system. the lack of centralized management of all transport modes is the main reason for the low degree of integration. one form of complex planning of urban public transport use may be organizing a transportation management committee with the participation of all stakeholders’ representatives, including non-governmental organizations operating in the respective territorial community. there are opportunities to integrate bus services with other modes of transport. for example, the central bus station and the railway station have the ability to make a smooth and easy transition from one transportation mode to another, which can be used in planning and optimizing transportation services. optimizing the use of road space to ensure priority for public transport. according to experts, buses as a means of public transport less pollute the environment and require less roadway and fuel than a car per 1 passenger-kilometre. despite this, there is considerable competition of buses and other public and private transport for roadway and bus stops. one of the measures aimed at increasing the use of buses as a means of urban public transport is to ensure their priority over private cars by restricting car access to certain places, prohibiting parking on some roads and near stops, and giving priority to buses over other types of public transport on already dedicated special lanes. the choice of options for increasing the capacity of the bus fleet, improving bus design, streamlining the fare system are important factors for developing bus transport services and improving their quality. much of public transport is communal property, but a significant amount of services is provided by private transport operators (minibuses and microbuses), which do not properly plan their transportation service activities and do not coordinate it with other modes of public transport. such operations are carried out on a purely commercial basis and cannot be regarded as the provision of organized public transport services. there is a widespread belief that the city of kyiv does not have enough buses to meet the demand for passenger transportation. however, this position is not scientifically justified, as there are always reserves to improve the quality of urban bus services. thus, the conducted researches of existing reserves of improvement of quality of services are estimated in the amount of 25.8%. increasing the number of buses and the quality of service can take several forms, and the available options for improving the quality of service depend on the service scenarios developed. the existing town bus fleet is characterized by bus standard types. these buses are usually not quite modern with wide pneumatic doors, low floor and rear engine layout etc. high bus floor and narrow doors make boarding and landing difficult for many categories of people and take a long time. in addition, high floor and narrow doors often lead to accidents and are a major problem for disabled passengers, the elderly and children. currently, there are 546 lowfloor buses in the utility company. they have all the desirable characteristics of city buses; however, they are more expensive. transport operators have a wide choice of bus transport, from mini-buses to modern low-floor and even articulated buses. the three seas economic journal 50 vol. 1, no. 1, 2020 high starting cost of modern buses is offset in the long run by the benefits of improved ride, higher safety standards, optimized commercial speed and ease of access for all categories of population. passenger fare and revenue management are considered to be the backbone of transport operators’ business for several reasons: fares are the main source of income. if pricing is optimal, then the transport operator is able to maximize the potential revenue and therefore increase the profitability of the transportation; fares affect the demand of the population for travel, and a travel restriction is possible for vulnerable low-income groups; inefficient or poorly designed travel billing system can lead to increased costs and reduced vehicle performance; suboptimal system of fares and forms of payment create possibilities of evasion from payment and fraud of route crews. the structure of the fare is currently determined by the local government. however, it is recommended that all stakeholders consider alternative tariff systems. according to a city bus passengers’ survey, many of them are in favour of increasing bus fares while significantly improving the quality of service. although the main source of revenue for bus and utility companies is fare, there is some potential for revenue growth from other sources of revenue, including advertising. organizations usually own land parcels of bus depot and parks within the city. the enclosures of these land parcels can be used for advertising purposes, in addition, some of them may be leased. promotional messages can also be placed on buses and ticket outlets (for towns where electronic tickets have not yet been introduced), on scrolling text lines at passenger compartments. ensuring proper implementation of the passenger rules and improving the system internal efficiency requires a high level of organization for all road users. failure to adhere to the rules of passenger rules will, in the end, reduce the quality of public transport services. on the contrary, proper enforcement of the rules leads to more orderly behaviour on the roads, efficient use of road space and provides a level playing field for all road users. strict adherence to the road regulations and passenger rules should be preceded by a campaign to better inform the population of their contents, as well as the provision of quality objects of road transport infrastructure. improving the efficiency of urban bus transport, both in the public and private sectors, requires appropriate action. for example, some transport organizations may be effective in terms of higher revenue or lower costs, but have problems in terms of low staffing, outdated service practices, high levels of theft, lack of route planning and control mechanisms, low motivation, etc. if these negative factors are present in the activity of transport operators, they must be identified and measures must be taken to eliminate them. the efficiency of transport operators is closely linked to the quality of passenger service, so the developed service quality targets are an important guideline in managerial decisions. use of information and communication technologies, including means of communication with the driver and feedback from the transport operator are necessary for monitoring the bus movement on routes, maintaining documentation, drawing up and tracking of bus maintenance schedules, solving problems of passengers during transportation, boarding and landings, etc. all of this data is easy to computerize as it can be processed and presented for decision making. modern communications (gps) are used to monitor bus traffic on routes and to inform passengers online. the list of individual measures considered above of strategic plan for the development of urban bus transport services and for improvement the quality of service is presented in the table 1. an important management decision of communal bus transportation operators is the optimal distribution of limited financial resources and budget subsidies in certain lines of activity to improve the passenger service quality and implement their measures. since the possible number of measures to improve the quality of passenger bus service is significant, the optimal fund distribution concerns not specific measures of the strategic plan, but integrated directions for service quality improving. 5. conclusions as a result of the study: 1) the complex of strategic measures is substantiated, aimed at improving the quality of public transport services, namely: optimization of modal transportation; integration of modal transportation; optimization of road space; increasing the bus fleet; improving bus design and increasing the comfort in passenger compartments; selection of fare forms; development of information systems of interaction; compliance with the traffic laws and passenger transportation rules; increase of internal efficiency of transport operators’ three seas economic journal 51 vol. 1, no. 1, 2020 table 1 measures of strategic plan for the development of urban bus transport services and improvement of quality of service activities necessary solutions advantages effects modal transportation optimization defining the role of all modes of transport. establishment of the territory of bus service. elimination of duplicates. restoration of the missing elements. approximation of the modes to the optimum combination. all modes of transportation play roles according to the overall mobility and accessibility plan. integration of modal transportation rationalizing and restructuring of existing transportation routes more efficient use of vehicles, personnel and resources. improving transportation efficiency and quality of service road space optimization prohibition of parking of vehicles on the roads. dedicated lanes for public transport (based on the experience of the city of kyiv). permission for access to densely populated areas by public transport only. improving access to public transport. optimization of commercial speed. reducing the number of accidents. increasing population mobility and accessibility. increasing the quality of passenger service. increase in bus fleet consideration of the possibility of expanding the territory of the bus fleet, increasing the staff. determining the increase in the quality of transportation and service. increasing transportation frequency, accessibility and mobility. reducing bus overload at peak hours. increase in capital expenditures/ improving the quality of transportation and service. improvement of bus design and increase of comfort in passenger compartments. purchase of modern buses with increased accessibility and ergonomic functions. improving comfort. reducing the number of accidents. increase in capital expenditures. improving comfort. increased population accessibility and mobility. selection of fare forms consideration of alternative fare forms. choosing the best fare form. reducing free travel. providing benefits for social groups. maximize income and profit. optimization of some operations and management functions. development of information systems of interaction institutionalization of public consultation mechanisms. establishing effective passenger complaint and suggestion handling procedures reinforcement of feedback with the transport operator. greater public involvement in problem solving. improving the service quality and passenger satisfaction. increased awareness of transport operators. compliance with traffic laws and passenger transportation rules. strengthening requirements for compliance with laws and rules. monitoring the implementation of the passenger transportation rules. promoting traffic laws. more efficient use of road space. ensuring a level playing field for all service providers. reducing accidents and road accidents improvement of internal efficiency of transport operators’ activity. development of repair base. investing in vehicle purchase. training of personnel. improvement of activity of transport organizations personnel. improvement of service delivery processes. cost reduction for transport operators. improving the service quality on traffic routes. use of information technologies. detection of processes, subject to informatization. reorganization of processes using information technologies. reduced operating costs. improved route planning and more effective controls. improving management in transport organizations. increasing the quality of passenger service. the need for staff training. increasing revenues of transport operators. the most complete use of transport operators’ potential. generation of advertising revenue. introducing of means of fare control. making extra income increased cost-effectiveness of transport operators. formation of positive cash flows from operating activities. three seas economic journal 52 vol. 1, no. 1, 2020 activities; use of information technologies; increase of transport operators’ incomes; 2) the specifics and principles of effective strategic planning of urban transport services provision are established. they consist in applying an iterative approach to strategic planning. its advantages are due to simultaneous execution of any strategic planning work (from writing the following elements of the strategic plan to the fulfilment of its objectives) with continuous analysis of results obtained, which makes it possible to adjust the works according to the changing environment conditions; 3) the features of the urban transport services system are revealed, namely: urban public transport systems are complex open dynamic socioeconomic systems. we consider multimodality of external environments, multifactoriality of external influences, presence of internal imbalances in systems as one of the main reasons for their unsatisfactory state. therefore, a multifaceted approach is needed, which takes into account the maximum number of factors and integrates a set of measures in the field of improving the quality of urban passenger traffic; 4) the main measures for the development of urban public transport services, in particular, for the city of kyiv, are identified, namely: ensuring multimodal public access to public transport stations and public places; organization of information and communication interaction between all elements of the passenger transportation system; use of various forms of urban public transport fare; mathematical modelling of integration interaction of different types of public transport. references: adler, yu. p., polhovskaya, t. m., shper, v. l., & nesterenko, p. a. (2001). upravlenie kachestvom. chast 1: sem prostyh metodov [quality control. part 1: seven simple methods]. moscow: misis. (in russian) akao, y. (2011). quality function deployment: integrating customer requirements into product design. chicago: american marketing association. battellino, h. (2009). transport for the transport disadvantaged: a review of service delivery models in new south wales. transport policy special issue international perspectives on transport and social exclusion, vol. 16:3, pp. 90–96. buliung, r., & mitra, g. faulker (2009). active school transportation in the greater toronto area, canada: an exploration of trends in space and time (1986–2006). preventive medicine, vol. 48, pp. 507–512. fedyukin, v. k. (2014). upravlenie kachestvom processov [process quality management]. moscow: filin. (in russian) fomin, v. n. (2010). kvalimetriya. upravlenie kachestvom. sertifikaciya [qualimetry. quality control. certification]. moscow: ekmos. (in russian) fornell, c., johnson, m. d., anderson, e. w., cha, j., & bryant, b. e. (2006). the american customer satiafaction index: nature, purpose, and findings. journal of marketing, vol. 60 (october 2006), pp. 7–18. harshani dzhon, & zelten rejnhard (2011). obshaya teoriya vybora ravnovesiya v igrah [general theory of choice of equilibrium in games]. sankt-peterburg: ekonomicheskaya shkola. (in russian) hazanova, l. e. (2008). matematicheskoe modelirovanie v ekonomike [mathematical modeling in economics]. moscow: vek. (in russian) ihnatenko, o. s., & ihnatenko, d. o. (2015). do yakosti transportnykh posluh cherez adaptatsiiu zakonodavstva [to the quality of transport services through the adaptation of legislation]. avtodorozhnyk ukrainy [ukrainian road builder], vol. 12, p. 17. markova, v. d. (2006). marketing uslug [service marketing]. moscow: finansy i statistika. (in russian) taguti, g., & fadke, m. (2013). optimalnoe proektirovanie kak tehnika kachestva [optimal design as a quality technique]. metody upravleniya kachestvom [quality management methods], vol. 9, pp. 27–35. yanovskyi, p. o. (2018). pasazhyrski perevezennia [passenger transportation]. kyiv: nau. (in ukrainian) three seas economic journal 1 vol. 1, no. 3, 2020 corresponding author: 1 yuriy fedkovych chernivtsi national university, ukraine. e-mail: i.budnikevich@chnu.edu.ua orcid: https://orcid.org/0000-0002-5466-6532 researcherid: http://www.researcherid.com/d-2876-2017 2 yuriy fedkovych chernivtsi national university, ukraine. e-mail: vadhonchar@gmail.com orcid: https://orcid.org/0000-0002-8252-0573 doi: https://doi.org/10.30525/2661-5150/2020-3-1 regulatory mechanisms of ukrainian pharmaceutical market competitiveness in the context of european integration iryna budnikevych1, vadym honchar2 abstract. the purpose of the paper is to summarize and present the differences in the competitive environment of the european union (eu) and ukrainian pharmaceutical markets. the method of longitudinal study allowed to detect the patterns of changes and correlations for pharmaceutical products exports and imports volumes over twenty years (2001-2020). methodology. the research is based on the definition of the pharmaceutical market as a complex socio-economic institution that fulfills the function of pricing medical products and utilizes them to ensure health care functioning. it indicates the population’s wellbeing and requires ongoing maintenance based on needs agreement of households, economic entities, and the state. the quantitative research is based on export-to-import coverage ratio calculations with the identification of pharmaceutical products fraction in the total volume of foreign trade, including the one with the eu. the results of the paper consist in the evaluation of the competitive environment of the european union’s pharmaceutical market and statistical assessment of ukrainian foreign trade of pharmaceutical products. they also include the definition of the european integration influence over the ukrainian pharmaceutical market and well-reasoned recommendations about the application of the state and trade regulation mechanisms. in the paper, we defined the distinctive features of the european countries’ pharmaceutical markets and outlined their main characteristics that have connections to the transnational corporation’s activities, common market, and high concentration. statistical data collected over 20 years indicated the dynamic development of the ukrainian pharmaceutical market, despite its small-scale contribution to the foreign trade turnover. the dependence of ukraine on the foreign supplies of drugs and medications is illustrated by the multiple excesses of imports over exports, especially in the trade relationships with the eu. the eu countries are the leading importers of pharmaceutical products to the ukrainian market. however, the share of medical supplies exports from ukraine to the eu countries is negligible. their key exporters are post-soviet and developing countries. the growth in ukraine’s export potential is inextricably linked to the expansion of the competitiveness of domestic medical supplies. practical implications consist in the development of recommendations concerning the gmp and gdp demands realization, domestic manufacturers cooperation with the leading foreign pharmaceutical companies, the penetration of transnational companies into the ukrainian domestic pharmaceutical market based on imports of innovative technologies, the improvement of the marketing management of the pharmaceutical products exporting. the priority factor in the growth of the competitiveness of the ukrainian pharmaceutical market is a successful combination of state and trade regulation mechanisms. the objects of these factors are the pricing policy for material resources and finished products, the introduction of innovations, tax exemptions, and export-import quotas implementation. they also include the establishment of traffic rates that depend on the market saturation with socially significant medical supplies, budget support of the prioritized subsectors of the pharmaceutical industry, and patent protection. the expected results concern the decrease in the dependence of the ukrainian pharmaceutical market on the foreign distribution of the raw materials and finished products and strengthening the positions of the ukrainian manufacturers in foreign markets. value/originality. we evaluated the competitiveness of the national pharmaceutical market based on three seas economic journal 2 vol. 1, no. 3, 2020 the criteria of foreign trade performance and detected the priorities of its growth, taking into consideration the synthesis of the state and trade regulation mechanisms. key words: competitiveness, pharmaceutical market, national economy, european integration, market, state regulation. jel classification: d41, f02, f12, f15, l51, l65, o33 1. introduction in the national economies of world’s countries, the pharmaceutical market is a complex structural element that plays a vital role in the fulfillment of a dominant social function related to public health care. as an economic indicator, it represents the level of the populations’ wellbeing. specifically, the increase in the capacity of the pharmaceutical market shows the growing capabilities of residents to satisfy the need to maintain high standards of living. an agreement of the needs of households, economic entities, and states emphasizes the operation of market and state mechanisms that regulate the pharmaceutical segment of the national economy. the main feature of the highly developed markets is the use of innovations since their competitiveness is linked to the establishment and promotion of new pharmaceutical products. the members of the pharmaceutical market fall into four main categories. they include innovative branded companies that conduct research and development of new products, generic companies that enable the output of the products that are no longer under patent protection, biotechnological (biotech) companies that can produce both patented and generic medical supplies, companies utilizing the raw materials of either homeopathic or chemical nature (bekarev, bekareva, 2014). the features of the modern pharmaceutical market development are the acceleration of its output consumption in the developing countries, the expiry of the patent protection for the significant number of branded medical supplies, the reduction of incomes and market share of the branded pharmaceutical businesses. certain segments of the pharmaceutical market have their distinctive competitive advantages. patented companies produce products of higher quality, while generic ones set lower prices and are more accessible for the average consumer. the introductory prices depend on the degree of therapeutic innovation and price regulation discourages price competition between brand-name drugs (ekelund, persson, 2003). the results indicate that physicians often fail to internalize patient costs, explaining why cheaper generics are infrequently adopted. however, generics' markup advantages are short-lived, which limits their impact on increasing generic adoption (iizuka, 2012). legal regulation has a significant influence on the competitive environment of the pharmaceutical market. such detrimental factors as the lack of legislative protection of branded companies, weaknesses in the patent law, and ineffective prevention of falsified medical supplies turnover worsen conditions of the competitive environment. patent enforcement in developing countries generates considerable controversy, especially when patents involve potentially life-saving drugs. because prices in developing countries are much lower than in the developed world, multinationals may choose to enter such markets with a delay, or not at all, implying a complete loss of access to patented drugs in developing countries. such considerations may provide a justification for policies targeting access in the short and medium run, such as compulsory licensing (goldberg, 2010). the turnover of the pharmaceutical products must comply with the regulations of trade-related aspects of intellectual property rights (trips) of the world trade organization (duggan, garthwaite, goyal, 2016). the integration of ukraine into the world economic area requires the protection of its national market competition, in particular of the pharmaceutical one. its role is objectively growing as humanity faces new challenges. one of the issues is especially urgent in the health care field, as there is a pressing need to combat coronavirus infection. 2. competitive environment of the eu pharmaceutical market the world pharmaceutical market is divided into clusters represented by the following groups of consolidated countries: north america, western europe, central and eastern europe, japan, middle east, asia and latin america, other asian and african countries. socially-oriented economies of western and northern european countries determine their substantial and highly developed three seas economic journal 3 vol. 1, no. 3, 2020 pharmaceutical markets. they feature in the population’s high standards of living that result in residents aging, notable budget spending on health care, and excellent competitive environment. central and eastern european pharmaceutical markets are defined by lower economic efficiency due to deteriorated living conditions, modest healthcare expenditures, the dominance of generic medications, and the significant dependence of the national markets on the imported pharmaceutical supplies. the last-mentioned issue occurred due to the transformational processes that came into action in post-soviet countries in the 1990s. there was a crisis in the state-run pharmaceutical industry and the introduction of the private economic segment. in the european union (eu), traditional price differentials for pharmaceutical products between countries are being undermined by parallel trade and regulation based on foreign prices. this break down of market segmentation leads manufacturers to adopt uniform prices eu-wide. efficiency and distributive effects of such policies are probably negative. monopsony is a more serious problem in the eu, hence actual price differentials may exceed ramsey optimal differences. confidential contracts between manufacturers and governments, including rebates off a common list price, would preserve ex post price differentials and should be consistent with the eu law (danzon, 1997). the main market players in the eu pharmaceutical industry are the largest transnational companies that were created by means of mergers and takeovers, and they continue such integration (tronenko, 2014). the central and eastern european pharmaceutical market consists in the significant concentration and consolidation. for example, 10 participants of the market hold almost 90% of sales. legal mechanisms of economic principles maintenance in the pharmaceutical market of the eu target the combination of goals of the eu single domestic market of medical supplies and social aims oriented on the protection of consumers and patients’ interests. in the wide perspective they include the protection of individuals’ rights and interests (pasechnyk, 2014). 3. ukrainian foreign trade of pharmaceutical products imports and exports are the indicators of ukraine’s international trade of pharmaceutical products. they have the recurrent dynamics from 2001 to 2020 and are tightly related. it is illustrated by the high value of the correlation coefficient, which is equal to 0.8739 (table 1). the average share of pharmaceutical products exports equals only 0.35% of the total exports. the average mean of medical supplies imports is 3.41% of total imports. therefore, the foreign trade of pharmaceutical products does not play a significant role in the balance of payments formation. in the structure of foreign trade, the share of pharmaceutical products imports significantly surpasses the share of exports (11.53 times on average). from 2001 to 2008, the value of the export-to-import coverage ratio grew from 6.88 to 16.22. over the next years, there was a downward trend of the stated index, which decreased to 8.65 in 9 months of 2020. the dynamics of the coefficient is illustrated by the parabola that opens downward with the significant level of multiple determination coefficient (r² = 0.7101). the formalization by the equation is as follows: y = –0,079х2 + 1,4514х + 7,2854 (1) from 2001 to 2012, the scope of pharmaceutical products exports surged 9.64 times from 342593.66 thousand usd to 3303002.4 thousand usd (historical peak point). the dynamics of pharmaceutical products' imports is similar. there was a 5.13 times increase from 49831.68 thousand usd to 255591.6 thousand usd. therefore, we observe a surpassing growth in the value of export transactions as compared to imports. the most rapid growth rates of a pharmaceutical products foreign trade volume occurred between 2003 and 2007. by 2015, foreign trade performance saw downward dynamics as the exports went down to 1367034.5 thousand usd (by 58.5% relatively to the historical maximum). imports decreased to 155441.6 thousand usd (by 39.2%). relative estimates show that exports decreased by 39.2% in 2015, and imports – by 44.5 % compared to the previous period. by the end of the analyzed period (2019), foreign trade turnover indicates an upward trend. thus, exports rose to 2143147.0 thousand usd, and imports increased up to 250792.2 thousand usd, which corresponded to the tendencies of 2014. the imbalance between imports and exports of pharmaceutical products in international trade with the eu is even more dramatic (table 2). the average mean of the export-to-import coefficient during 2018 and 9 months of 2020 is 73.35 times. three seas economic journal 4 vol. 1, no. 3, 2020 table 1 the dynamics of indicators of the ukrainian foreign trade of the pharmaceutical products years exports imports exportto-import coverage ratio thsd. usd in %, to the corresponding period of the previous year % of the total volume thsd. usd in %, to the corresponding period of the previous year % of the total volume 2001 49831.68 118.48 0.31 342593.66 131.18 2.17 6.88 2002 42920.18 86.13 0.24 427893.01 124.90 2.52 9.97 2003 54135.53 126.13 0.23 596826.62 139.48 2.59 11.02 2004 66272.51 122.40 0.20 745494.59 124.97 2.5 11.25 2005 82221.21 124.07 0.24 1043904.7 140.03 2.89 12.70 2006 92487.6 112.7 0.2 1384877.2 132.7 3.1 14.97 2007 129446.6 140.0 0.3 1931315.9 139.5 3.2 14.92 2008 151071.8 116.7 0.2 2433303.7 126.0 2.8 16.11 2009 150046.4 99.3 0.4 2130331.5 87.5 4.7 14.20 2010 198731.4 132.5 0.4 2459867.5 115.6 4.1 12.38 2011 194866.4 98.1 0.3 2873504.7 116.8 3.5 14.75 2012 243106.9 124.8 0.4 3303002.4 114.9 4.0 13.59 2013 250849.6 103.2 0.4 3094782.7 93.7 4.1 12.34 2014 255591.6 101.9 0.5 2473307.8 79.9 4.5 9.68 2015 155441.6 60.8 0.4 1367034.5 55.3 3.6 8.79 2016 184182.8 118.5 0.5 1606956.3 117.6 4.1 8.72 2017 192111.3 104.3 0.4 1767455.8 110.0 3.6 9.20 2018 216178.0 112.5 0.5 1947012.5 110.2 3.4 9.01 2019 250792.2 116.0 0.5 2143147.0 110.1 3.5 8.55 9 months 2020 191796.6 107.9 0.5 1659235.8 110.8 4.4 8.65 average index х х 0.35 х х 3.41 11.53 source: state statistics service of ukraine (2020) table 2 the dynamics of indicators of the ukrainian foreign trade of the pharmaceutical products with the eu years exports imports exportto-import coverage ratio thsd. usd in %, to the corresponding period of the previous year % of the total volume thsd. usd in %, to the corresponding period of the previous year % of the total volume 2018 21736.2 149.0 0.1 1418666.0 109.8 6.1 65.27 2019 23420.4 107.7 0.1 1562688.2 110.2 6.2 66.72 9 months 2020 13801.5 81.5 0.1 1215409.0 110.5 7.4 88.06 average index х х 0.1 х х 6.57 73.35 the proportion in the total foreign trade, % 2018 10.05 х х 72.86 х х х 2019 9.34 х х 72.92 х х х 9 months 2020 7.20 х х 73.25 х х х average index 8.86 х х 73.01 х х х source: state statistics service of ukraine (2020) the average share of pharmaceutical products exports in total exports to the eu countries amounts to only 0.1%. pharmaceutical products imports constitute 6.57% of total imports. therefore, the import indicators are noticeable in the foreign trade structure because pharmaceutical products exports do not play a significant role in forming the balance of payments. the eu is the leading supplier of the imported medical products to ukraine. the share of the three seas economic journal 5 vol. 1, no. 3, 2020 product delivered is 73% on average out of total imports of pharmaceutical products. on the contrary, ukraine exports to the eu only 8.86% of the total volume of the exported pharmaceutical products. following the results of 2019, the dominant share of medical supplies produced in ukraine is exported to the following countries: uzbekistan (21.36%), brazil (11.97%), belarus (9.58%), kazakhstan (8.59%), the republic of moldova (6.06%), the russian federation (5.91%), azerbaijan (4.97%), georgia (4.84%), iraq (3.89%), lithuania (3.46%), india (3.02%), kyrgyzstan (2.47%), turkmenistan (1.76%), latvia (1.55%), vietnam (1.17%), germany (1.01%). the proportion of delivery to other countries is less than 1%. the harmonization of the main technical requirements for pharmaceutical products based on the european union obligations is a pre-requisite for the realization of the export motivation of the domestic manufacturers and the protection from the competitiveness with lowquality imports. 4. the influence of european integration over the pharmaceutical market of ukraine the implementation of european regulations concerning public health care, medical supplies turnover, and quality control is a vital direction of ukrainian pharmaceutical integration into the global market (kovalenko, 2014). some of the positive actions our country takes in this direction are the formation of the state drugs and medications control service in september 2014 and its membership in the pharmaceutical inspection convention (pic) and pharmaceutical inspection co-operation scheme (pic/s). ukraine fulfilled the gmp and good distribution practice (gdp) requirements for medical supplies and joined the world health organization system of medical products quality certification. cooperation between domestic and foreign medical product manufacturers strengthens the external and internal competitiveness of the ukrainian pharmaceutical market. it occurs in the form of joint ventures, alliances, group marketing strategies, the promotion of products, and the transfer of the over-the-counter (otc) drugs production to ukraine (kostiuk, kovalenko, 2013). spreading the transnational corporation’s influence over the operating and investment spheres of domestic pharmaceutical business activities facilitates the improvement of technical and technological production levels. it ensures innovation and high quality of industry’s production, extends the export potential, and reorients it to the developed markets, including the european ones. the factors that foster competitiveness in the pharmaceutical market are a significant scope of wholesale and retail commodity turnover, as well as considerable personnelrelated, educational, research, and production potentials in the pharmaceutical sector. some aspects restrict competitiveness. they include an insignificant share of pharmaceutical businesses in ukraine that are also certified for compliance with european standards of good manufacturing practice (gmp) and a low proportion of ukraine’s original and biotechnological medical supplies. raw materials needed to produce drugs and medicals are limited and depend on the imports of pharmaceutical substances. domestic goods do not meet the demands of the european quality standards and certification requirements. the worn-out physical infrastructure fails to keep up with the time, and there are no investments to upgrade it. the innovation activity of domestic producers is low, and there is a lack of government contracts for purchasing products of the ukrainian pharmaceutical industry. other restrictions are the faulty mechanisms of providing budget support, pricing, and managing the pharmaceutical market (dorovskyi, 2015; derbenova, 2017). 5. the mechanisms of state and market regulation the mechanisms of state regulation are oriented toward improving the competitiveness of the ukrainian pharmaceutical market. they include the regulation of prices and tariffs for material resources dedicated to the production of medical supplies, mostly – sources of energy. they feature tax benefits, customs controls of the innovative activities, and the implementation of special quotas for exports and imports of cutting-edge equipment, technologies, and pharmaceutical products. regulative institutions must assist the local pharma manufacturers in foreign markets entering, encourage the exports by the state’s monetary policy, obtain exporting preferences, and promote the development of international and industrial custom logistics. they perform deregulation to decrease the transactional expenditure on licensing procedures for business three seas economic journal 6 vol. 1, no. 3, 2020 activities in the pharmaceutical market and the admission of medical products to it (korolenko, holovatiuk, 2017). external and internal markets are the areas of competitiveness for domestic pharmaceutical producers. compared to foreign companies, they have a competitive weakness in terms of products’ quality since they release generics mostly (non-original products). their competitive advantage, however, is associated with low prices. nevertheless, the distinctive feature of the ukrainian pharmaceutical market is the expansion of the branded production of medical supplies that enlarges the final consumer costs. mechanisms regulating the pharmaceutical market must consider the characterization of medications as goods or non-consumer products (due to the maturity stage of the life cycle, episodic nature of purchases). they are associated with the establishment of a selective type of distribution, maximum supplierbuyer proximity, the placement in the housing estates and health care facilities, e-commerce, and postal delivery (ustymenkо, 2011). strengthening the competitiveness of ukraine on external pharmaceutical market also allows for the formation of distribution and establishment channels, as well as the development of long-term relationships with the european mediators (dealers, distributors). other market mechanisms consist of the intensification of international cooperation of domestic and foreign medicine manufacturers in the technical and technological domains. they include foreign investments that enable the conduction of research works and the creation of innovative products in the pharmaceutical industry. market mechanisms optimize external and internal logistics chain of supply, production, and distribution of pharmaceutical products, improve the risk management system, and implement european standards of health care and pharmaceutics reformation (lytvynenko, sobkova, 2015). local manufactures of pharmaceutical products and medical equipment are forced to copy medications, cutting-edge equipment and imitate the process of creative development of advanced technologies. there is a suggestion to apply the following principles to improve the patent protection of the pharmaceutical market. the dominant condition of acknowledging drugs and medications as the new product is if there is a significant difference in the qualities that affect the efficiency of therapy. if it is lacking a new therapeutic effect to its famous alternatives, there is a reason to consider such medical treatments as non-patentable. it is necessary to provide legal protection strictly to the products that fall into the category of medical products (olefir, 2016). 6. conclusions the pharmaceutical market is a complex socioeconomic institution that fulfills the function of pricing medical products and applies them to ensure health care functioning. it indicates the population’s wellbeing and requires ongoing maintenance aligned to the needs of households, economic entities, and the state, using the coordinated market and state regulation mechanisms. in the paper, we performed the division of pharmaceutical companies into categories depending on their level of innovation and the nature of products released. we determined the competitive advantages and disadvantages of certain groups of medical products (patented and generics) and defined the consuming tendencies in countries depending on their development. the research paper illustrates the significant influence of patent law and commercial aspect of intellectual property rights over the development of a competitive environment in the pharmaceutical market. we determined the distinctive features of the pharmaceutical markets of western and northern european countries in comparison to the countries of central and eastern europe, as well as outlined the main characteristics that have connections to the transnational corporations' activity, common market, and high concentration. statistical data collected over 20 years indicated the dynamic development of the ukrainian pharmaceutical market, despite its small-scale contribution to the foreign trade turnover. the dependence of ukraine on the foreign supplies of drugs and medications is illustrated by the multiple excesses of imports over exports, especially in the trade relationships with the eu. the eu countries are the leading importers of pharmaceutical products to the ukrainian market. to the contrary, the share of medical supplies exports from ukraine to the eu countries is negligible. their leading exporters are post-soviet and developing countries. the growth of ukraine's export potential is inextricably linked to the expansion of the competitiveness of domestic medical supplies. the main results of the european integration processes influence over the ukrainian three seas economic journal 7 vol. 1, no. 3, 2020 pharmaceutical market are the implementation of the european regulations concerning public health care, medical supplies turnover, and quality control. they include the creation of the corresponding supervisory institutions, the membership in pic/s, the fulfillment of gmp and gdp requirements, and joining the world health organization system of medical products quality certification. the competitiveness of the domestic manufacturers of pharmaceutical products will be improved by the cooperation with the leading foreign pharmaceutical firms, the penetration of transnational companies into the ukrainian domestic pharmaceutical market based on imports of innovative technologies, the improvement of the marketing management of the pharmaceutical products exporting. the priority factor in the growth of the ukrainian pharmaceutical market competitiveness is a successful combination of state and trade regulation mechanisms. the objects of these factors are the pricing policy for material resources and finished products, the introduction of innovations, tax exemptions, and export-import quotas implementation. they include the establishment of traffic rates that depend on the market saturation with socially significant medical supplies, budget support of the prioritized subsectors of the pharmaceutical industry, and patent protection. decent synthesis of the mentioned mechanisms will facilitate the elimination of disproportions between exports and imports of medical supplies. the expected results concern the decrease in the dependence of the ukrainian pharmaceutical market on the foreign distribution of the raw materials and finished products and strengthening the positions of the ukrainian manufacturers in foreign markets. references: bekarev, a. a., & bekareva, s. v. (2014). podkhod k otcenke konkurentosposobnosti natcionalnoi farmatcevticheskoi otrasli [an approach to assessing the competitiveness of the national pharmaceutical industry]. novosibirsk state university bulletin. series: socio-economic sciences, vol. 14(4), pp. 78–91. danzon, p. m. (1997). price discrimination for pharmaceuticals: welfare effects in the us and the eu. international journal of the economics of business, vol. 4(3), pp. 301–322. doi: 10.1080/758523212 derbenova, ya. v. (2017). potentsial pidvyshchennia konkurentospromozhnosti farmatsevtychnoi haluzi ukrainy na natsionalnomu ta mizhnarodnomy rynkakh [potential to increase the competitiveness of the pharmaceutical industry of ukraine in the national and international markets]. problems of innovation and investment development, vol. 10, pp. 3–7. dorovskyi, o. v. (2015). metodychnyi pidkhid do otsinky konkurentospromozhnosti farmatsevtychnoi haluzi ukrainy [methodical approach to assessing the competitiveness of the pharmaceutical industry of ukraine]. financial space, vol. 2, pp. 358–368. duggan, m., garthwaite, c. & goyal, a. (2016). the market impacts of pharmaceutical product patents in developing countries: evidence from india. american economic review,  vol. 106(1), pp. 99–135. doi: 10.1257/aer.20141301 ekelund, м., & persson, в. (2003). pharmaceutical pricing in a regulated market. review of economics and statistics, vol. 85(2), pp. 298–306. doi: 10.1162/003465303765299828 goldberg, p. k. (2010). intellectual property rights protection in developing countries: the case of pharmaceuticals. journal of the european economic association, vol. 8(2-3), pp. 326–353. doi: 10.1111/j.1542-4774.2010.tb00506.x iizuka, t. (2012). physician agency and adoption of generic pharmaceuticals. american economic review, vol. 102(6), pp. 2826–58. doi: 10.1257/aer.102.6.2826 korolenko, n. v., & holovatiuk, o. s. (2017). lohistychne upravlinnia yak faktor pidvyshchennia mizhnarodnoi konkurentospromozhnosti ukrainskykh farmatsevtychnykh pidpryiemstv [logistics management as a factor in increasing the international competitiveness of ukrainian pharmaceutical companies]. efficient economy, 1. available at: http://nbuv.gov.ua/ujrn/efek_2017_1_20 (accessed 10 november 2020). kostiuk, h. v., & kovalenko, a. v. (2013). konkurentospromozhnist farmatsevtychnoi promyslovosti ukrainy [competitiveness of the pharmaceutical industry of ukraine]. efficient economy, vol. 11. available at: http://nbuv.gov.ua/ujrn/efek_2013_11_94 (accessed 10 november 2020). kovalenko, i. (2014). kryminalna vidpovidalnist za falsyfikatsiiu likarskykh zasobiv – vazhlyvyi krok adaptatsii farmatsevtychnoi haluzi do notm yevropeiskoho soiuzu [criminal liability for falsification of medicines is an important step in the adaptation of the pharmaceutical industry to the norms of the european union]. legal bulletin, vol. 1, pp. 262–266. three seas economic journal 8 vol. 1, no. 3, 2020 lytvynenko, l. l., & sobkova, a. o. (2015). perspektyvy rozvytku farmatsevtychnoho rynku ukrainy v umovakh pohlyblennia protsesiv yevrointehratsii [prospects for the development of the pharmaceutical market of ukraine in the conditions of deepening of european integration processes]. problems of improving the efficiency of infrastructure, vol. 40, pp. 51–57. olefir, a. o. (2016). obmezhennia sfery patentnoi okhorony yak zasib vidnovlennia konkurentospromozhnosti farmatsevtychnoi promyslovosti [limiting the scope of patent protection as a means of restoring the competitiveness of the pharmaceutical industry]. theory and practice of intellectual property, vol. 2, pp. 28–40. pasechnyk, o. v. (2014). pravove zabezpechennia farmatsevtychnoi polityky yevropeiskoho soiuzu [legal support of the pharmaceutical policy of the european union]. scientific bulletin of the international humanities university. series: jurisprudence, vol. 12(2), pp. 183–186. state statistics service of ukraine (2020). commodity structure of ukraine's foreign trade. available at: http://www.ukrstat.gov.ua/ (accessed 10 november 2020). tronenko, n. (2014). rol yevropeiskykh farmatsevtychnykh tnk u formuvanni spilnoho rynku yes [the role of european pharmaceutical tncs in the formation of the eu common market]. ukrainian securities market, vol. 7, pp. 55–62. ustymenko, m. v. (2011). formuvannia mizhnarodnykh kanaliv rospodilu na farmatsevtychnomu rynku tsentralnoi i skhidnoi yevropy [formation of international distribution channels in the pharmaceutical market of central and eastern europe]. marketing in ukraine, vol. 2, pp. 22–25. three seas economic journal 16 vol. 1, no. 3, 2020 corresponding author: 1 lviv university of trade and economics, ukraine. e-mail: gerega2000lute@ukr.net orcid: https://orcid.org/0000-0001-5329-6915 doi: https://doi.org/10.30525/2661-5150/2020-3-3 macroeconomic characteristics of financial and economic sustainability of trade enterprises in ukraine oleksandr gerega1 abstract. the relevance of the researching and ensuring financial and economic sustainability of trade is proved. the essential structural characteristics of financial and economic sustainability are generalized. the specifics of managing the financial and economic sustainability of trade business are indicated. the macroeconomic characteristics of financial and economic sustainability of trade in ukraine as the volume of equity, balance currency, sales of goods of the trade enterprises, current assets, current liabilities and provision, own current assets of trade enterprises are analysed. the financial and economic sustainability of trade enterprises in ukraine was assessed using the ratios of provision of current assets to own funds, provision of stocks with own funds, maneuverability of equity, mobility, permanent assets, financial stability and financial dependence. purpose. the purpose of the research is to analyse the condition and development trends of macroeconomic characteristics of financial and economic sustainability of trade in ukraine and justification proposals for public policy to stimulate its strengthening. methodology. the following scientific methods were used during the research: analysis, synthesis and comparison – to research the prerequisites for ensuring the financial and economic sustainability of trade enterprises; statistical analysis – to calculate the key macroeconomic characteristics of financial sustainability and liquidity of trade enterprises; groupings, logical analysis, strategic management – to form priorities and means of state policy to stimulate the strengthening of financial and economic sustainability of trade business. results. the low level of financial sustainability and liquidity of the trade sector in ukraine has been empirically proven. it is established that a critical decrease in the financial and economic sustainability of the trade business occurred in 2014-2015. in 2012, the level of financial sustainability and liquidity of trade enterprises was the highest. since 2016, the gradual restoration of financial and economic sustainability of trade business in ukraine has begun. however, its level is still insufficient, which requires justification and implementation of effective measures of state regulation in this area. it is proved that strengthening the financial and economic sustainability of trade enterprises in ukraine requires the formation and implementation of a common (state and business entities) policy aimed at strengthening the financial and economic sustainability of trade enterprises in ukraine. the policy should be implemented in the following areas: alternative forms of the financial result formation, improvement of financial and economic attractiveness of enterprises, distribution of financial and economic risks with the manufacturing sector, realization of financial potential of domestic market by enterprises. practical implications. the means of the state policy of stimulation and strengthening of financial and economic sustainability of the trade enterprises in ukraine are defined. value/originality. the methodical approach to the formation of tools and means of policy to strengthen the financial and economic sustainability of the country’s trade business has been further developed. key words: financial and economic condition, sustainability, trade enterprises, macroeconomic parameters, policy of financial and economic development. jel classification: g32, l81, m21 1. introduction during the period of ukraine’s independence, most macroeconomic indicators of financial and economic development of retail enterprises are improving. in some periods, the growth rate slowed down, the structural characteristics of the dynamics changed and opposite trends were observed. accordingly, it is necessary to identify three seas economic journal 17 vol. 1, no. 3, 2020 and implement measures aimed at strengthening the positive and levelling of negative impacts on the activities of individual economic agents and rational socio-economic development of trade in general. this involves the analysis of the hypothetical state of the business environment due to the implementation of measures of the public policy, implementation of previously adopted strategic economic, scientific and technical decisions, general trends and processes related to the formation of financial and economic potential of trade enterprises in ukraine for proper adaptation to modern world transformations. awareness of the shortcomings in relation to the financial and economic conditions of commercial activity of the enterprises allows us to eliminate the most significant objective obstacles, as well as to stimulate the implementation of favorable development factors and improve its system and structural characteristics. therefore, it is important when researching the conditions and factors of development the trade enterprises in ukraine to take into account not only the areas of its influence (positive or negative), but also its full value in relation to all functions of the managing process of the potential the financial and economic sustainability. it is also necessary to take into account the role of state regulatory bodies in ensuring the financial and economic stability of commercial enterprises, in particular in the context of the results of the relevant assessment. any conclusion of analytical calculations will directly determine the quality of government regulation and the areas in which it will be necessary to ensure its effectiveness and progress in forecast periods. at the same time, government regulation should primarily provide for the use of tools and instruments that have a stimulating effect on the financial and economic stability of commercial enterprises. along with the formation of the system of state regulation at the enterprise level, there should also be institutional and structural changes related to the optimization of financial and economic potential, improvement of internal organizational work, expansion of investment and innovation partnerships and more. 2. brief literature review the analysis of recent research and publications shows that the proper financial and economic sustainability, efficiency, and availability of prerequisites for the development of trade enterprises depend primarily on the favorable resource functional and market factors (vasyltsiv et al., 2020; kutsyk et al., 2018; kachmaryk et al., 2012). the scientific approaches combine ideas about importance of resource functional factors. it has been taken into account when determining the availability, cost of involvement, levels of maintenance and use, as well as the characteristics of the current supply of trade enterprises in quality cash, inventories, equity, staff, retail and warehouse space, information, intangible assets (staverska, 2019; savchenko et al., 2018; kutsyk et al., 2016; gerega, 2016; koknayeva, 2012). the proponents of the market approach characterize the availability for business entities of target market niches, property and rights of activity, as well as the volume and level of transaction costs in obtaining it (delas et al., 2019; vozniuk, 2012). relevant aspects of the functioning of trade enterprises are the subject of research by a number of scientists who both combine and share the preconditions and consequences of providing resources, reaching market agreements, etc. (koptieva, 2020; vasyltsiv et al., 2019; kashchena, 2018; lupak et al., 2017). however, the peculiarities of the modern period of economic development, trade and domestic market, changes in approaches and means of financial and resource support of development determine the justification of effective macroeconomic preconditions that form the financial and economic sustainability of trade enterprises in ukraine. 3. macroeconomic preconditions for ensuring the financial and economic stability of trade enterprises of ukraine it is known that an effective and rational state policy should be based on a reliable and complete information base that substantiates and realizes informed and effective management decisions (kutsyk et al., 2020). in turn, the necessary information concerns both the quantitative characteristics of the current state and development trends in the analysed area, and the parameters of the institutional environment of its subjects, the development of its infrastructure, external and internal factors that determine it. all this confirms the importance of choosing trends that directly determine the level of financial and economic sustainability of trade enterprises. three seas economic journal 18 vol. 1, no. 3, 2020 the financial and economic sustainability of entities largely depends on the amount and level of equity in the structure of its balance sheet. therefore, it is negative that in 2010-2019 the amount of equity of trade enterprises in ukraine decreased from 8.5 billion eur to 6.5 billion eur or decreased of 23.5 % (figure 1). at the same time, the balance currency of enterprises, on the contrary, increased by 4.9 billion eur (or increase of 2.7 %). thus, the level of equity in the total balance currency of trade enterprises decreased – from 10.4 % in 2010 to 7.5% in 2019. the gap between the amount of equity of trade enterprises and the volume of its balance currency has also increased. if the corresponding figure was 72.9 billion eur as of 2010, in 2019 it is 86.2 billion eur . the decrease in the amount of equity in the structure of the balance sheet of trade enterprises is evidence of the deterioration of its financial condition, in particular the ability to form its own non-current assets at its own funds. the operating of own non-current assets is more mobile, flexible and significantly cheaper to maintain. it can be seen that in general, by 2013, the situation with the financial stability of domestic trade enterprises was improving: the amount of equity grew, as well as the balance currency of enterprises. for example, the highest values of its indicators were in 2012, when in the country in general and in trade in particular there was a revival of business activity largely against the background of the uefa european championship in ukraine and poland in 2012. it is about 108.4 billion eur in balance currency and 10.4 billion eur in equity. it was a crisis in 2014, in particular the factors of the political crisis and external military aggression in eastern ukraine. thus, in 2014, the balance currency of trade enterprises decreased by 31.1 %. in absolute terms, the figure was 33.6 billion eur . it is obvious that such reduction has led to a significant deterioration in the financial and economic sustainability (increasing losses) of the trading business due to its decapitalization. as a result, negative values of the amount of equity were obtained for enterprises in the industry. it was possible to restore the positive value of the amount equity of trade enterprises only in 2017, when the figure was only 0.9 billion eur . the coefficient of financial stability was 0.014, which was perhaps the worst value for the entire period of independence. 8, 5 9, 5 10 ,4 9, 2 -1 ,5 -2 ,8 -1 ,0 0, 9 3, 2 6, 5 81,4 95,7 108,4 108,1 74,5 57,7 66,4 86,3 63,3 72,0 150,1 127,9 111,7 92,989,1 114,3 167,8 173,7 155,1 147,7 -20,0 0,0 20,0 40,0 60,0 80,0 100,0 120,0 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 in e u r b ill io ns 50 100 150 200 in e u r b ill io ns equity in eur billions balance currency in eur billions sales of goods in eur billions 72,9 86,2 98,0 98,9 76,0 60,5 64,3 65,5 68,8 86,2 figure 1. equity, balance currency and sales of goods the trade enterprises of ukraine in 2010-2019 source: state statistics service of ukraine three seas economic journal 19 vol. 1, no. 3, 2020 on the positive side, there is a tendency to gradually improve the financial and economic condition of domestic trade from 2016 to 2019. it was achieved through a steady increase in sales of goods. for example, if in 2015, the trade turnover amounted to 89.1 billion eur; in 2019, it increased to 150.1 billion eur . the average annual growth rate of trade turnover of enterprises in 2015-2019 was about 17 %, which is quite high. an important characteristic of the financial and economic sustainability of enterprises is its liquidity and solvency. as we can see from the information presented in figure 2, during 2010-2019, in ukraine trade enterprises were characterized by relatively acceptable liquidity, as the amount of current assets of enterprises exceeded the volume of its current liabilities. the only exceptions were the crisis of 2014-2015, when current liabilities exceeded the current assets of trade enterprises in ukraine. this was confirmed by the negative values of own current assets of trade entities (“minus” 1.7 billion eur and “minus” 1.1 billion eur in 2014 and 2015). the improvement of the situation and the growth of the analyzed indicator in 2016-2019 were positive phenomena, but so far, their level has not been restored for 2012, when the figure was 7.4 billion eur. 4. the results of assessing the financial and economic stability of trade enterprises of ukraine the level of liquidity of the trade business in 2010-2019 remained insufficient in ukraine. thus, the total liquidity ratio in 2019 was only 1.04, which is a low value, as in trade the relevant regulatory indicator should be 1.5-2.0. the total liquidity ratio for 2019 was even lower than for 2010 (1.05). the highest value of the indicator was typical for 2012 – 1.09. the general trends in terms of financial stability and liquidity of trade enterprises have affected the key parameters of financial and economic sustainability (table 1). the most of the main indicators are unsatisfactory. these are, in particular, the ratios: provision of current assets with own funds, provision of stocks with own funds, permanent assets, financial stability and financial dependence. moreover, according to almost all these characteristics of the financial and economic 64 ,9 77 ,4 90 ,2 87 ,6 61 ,6 49 54 ,7 57 ,2 6 2, 7 74 ,2 61 ,8 72 ,6 82 ,7 83 ,1 63 ,4 50 55 ,7 71 ,4 54 ,5 6 1 2,8 1,61,5 0,1 -1,1-1,7 4,5 7,4 4,8 3,1 0 10 20 30 40 50 60 70 80 90 100 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 in e u r b ill io ns -5 0 5 10 15 20 in e u r b ill io ns current assets in eur billions current liabilities and provision in eur billions own current assets in eur billions figure 2. current assets, current liabilities and provision, own current assets the trade enterprises of ukraine in 2010-2019 source: state statistics service of ukraine three seas economic journal 20 vol. 1, no. 3, 2020 sustainability of the domestic trade business, the situation in 2010-2019 only worsened. only indicators of maneuverability and mobility of enterprise capital were within more or less satisfactory limits. the period of 2014-2015 was a crisis. since 2016, the financial and economic sustainability of trade enterprises in ukraine has been gradually improving, but as of 2019, its acceptable level has not been reached yet. 5. directions and tools of the policy of strengthening the financial and economic stability of trade enterprises in ukraine thus, the state of financial and economic sustainability of trade enterprises in ukraine is insufficient, which leads to a slowdown in business activity in the industry, limiting opportunities, internal and external investment in enterprise development projects, deteriorating financial and economic efficiency and security. this situation needs to be corrected by implementing a policy aimed at strengthening the financial and economic sustainability of the industry (figure 3). 6. conclusions the state of financial and economic sustainability of trade enterprises in ukraine has significantly deteriorated starting from 2014-2015. during 2016-2019 it was characterized by a gradual improvement of financial and economic sustainability of trade enterprises. however, so far it has not been possible to ensure an acceptable level of financial and economic sustainability. in particular, evidence of this is below the acceptable values of such macroeconomic characteristics as financial stability and liquidity ratios: provision of current assets to own funds, provision of stocks with own funds, maneuverability of equity, mobility, permanent assets, financial stability and financial dependence. correction of this situation requires the formation and implementation of a common (state and business entities) policy aimed at strengthening the financial and economic stability of trade enterprises in ukraine. it is appropriate that the policy is implemented in such areas and appropriate tools as (1) alternative forms of financial result formation (acceleration of trade turnover and reduction of turnover costs, increase of financial and economic efficiency of trade enterprises, diversification of trade activity), (2) improving the financial and economic attractiveness of enterprises (improving the impact of trade on spatial development, leveling regional and subregional disparities, increasing investment and innovation security of trade enterprises and its modernization, strengthening intersectoral cooperation and trade integration, creating food security conditions, creating conditions for development of trade table 1 indicators for assessing the financial and economic stability of the trade enterprises of ukraine in 2010-2019 years indicators ratios of provision of current assets with own funds ratios of provision of stocks with own funds ratios of maneuverability of equity ratios of mobility ratios of permanent assets ratios of financial stability ratios of financial dependence recommended values > 0.1 0.5-0.8 0.3-0.5 > 0.5 reduction > 0.8 < 0.5 2010 0.048 0.250 0.367 4.114 1.863 0.117 0.891 2011 0.062 0.309 0.503 4.457 1.822 0.111 0.895 2012 0.082 0.410 0.716 4.959 1.753 0.106 0.904 2013 0.051 0.250 0.489 4.277 2.230 0.093 0.915 2014 -0.028 -0.133 1.137 4.790 -8.423 -0.020 1.020 2015 -0.022 -0.092 0.382 5.625 -3.133 -0.046 1.048 2016 0.002 0.010 -0.124 6.358 -8.951 -0.015 1.015 2017 0.026 0.102 1.676 6.197 10.555 0.013 0.987 2018 0.026 0.100 0.507 6.729 2.937 0.046 0.956 2019 0.038 0.149 0.430 6.184 1.843 0.082 0.924 source: state statistics service of ukraine three seas economic journal 21 vol. 1, no. 3, 2020 entrepreneurship), (3) distribution of financial and economic risks with the manufacturing sector (increasing the impact of trade enterprises on the domestic real sector of the economy, the formation of investment resources for development), (4) realization of the financial potential of the domestic market structural characteristics, ensuring the balanced development of trade infrastructure, the impact on the formation of effective demand). at toolsdirections (guidelines) of policy alternative forms of formation the financial result distribution of financial and economic risks with the manufacturing sector realization of the financial potential of the internal market by enterprises  accelerating turnover and reducing the cost of circulation;  increasing the financial and economic efficiency of trade enterprises;  diversification of trade activities  growing the influence of trade enterprises on the domestic real sector of the economy;  formation of investment resources for development  increasing the level of influence of trade enterprises on the domestic market and improving its structural characteristics;  ensuring the balanced development of trade infrastructure;  influence on the formation of effective demand improving the financial and investment attractiveness of trade enterprises  improving the level of trade impact on spatial development, levelling regional and subregional disparities;  growth of investment and innovation provision of trade enterprises and its modernization;  strengthening intersectional cooperation and trade integration, creating preconditions for food security;  creating conditions for the development of trade entrerp. figure 3. the directions and tools of the policy of strengthening the financial and economic sustainability of trade enterprises in ukraine the same time, this is not the final list of directions and instruments 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(2012). otsinka finansovoho stanu pidpryiemstva yak neobkhidna skladova yoho ekonomichnoho rozvytku [assessment of the financial condition of the enterprise as a necessary component of its economic development]. innovative economy, no. 11(37), pp. 101–105. three seas economic journal 35 vol. 1, no. 2, 2020 corresponding author: 1 national technical university «kharkiv polytechnic institute», ukraine. e-mail: oms.ukr.kpi@gmail.com оrсid: https://orcid.org/0000-0003-1623-5798 doi: https://doi.org/10.30525/2661-5150/2020-2-6 the influence of ownership structure on the development of international activities of international business entities olga sunigovets1 abstract. the purpose of the article is to generalize the existing views on ensuring the effectiveness of international business entities in the context of globalization trends and the implementation of the tasks of domestic companies to enter international markets. systematization of problems of international business development on the basis of the research of the impact of structural aspects in ensuring economic development, with special emphasis on studying the development of the ownership structure of international business in the formation of the foundations of sustainable economic growth. methodology. the study is based on comparing trends in the development of international business of countries, processing the results of studying the issues of the topic by domestic and foreign economists, domestic and foreign literature, statistical data, the results of analytical studies of rating agencies, international organizations. in the process of research, the method of theoretical generalization and comparison, and general scientific research methods were used, mainly, analysis, synthesis, abstraction. the information basis of the research consisted of the works of domestic and foreign scientists on the problems of the theory of international business, international economic relations, international management, and international corporate governance of international business. the results of the research showed that the modern conditions for conducting international business were changing dynamically, which required the development of international business entities special improvement of existing approaches to management in accordance with the conditions of globalization, manifestation of innovative development and striving for openness as the best way of modern coexistence. the country’s position in the world economic system is determined by the structure of the economy. practical implications. thus, the structure of the economy determines the possibilities of economic development, the ownership structure is an important aspect in ensuring the efficiency of international business. in the context of globalization, corporate governance is seen as a tool for development and needs improvement for the enterprises to enter into international markets. the ownership structure is able to determine the innovative potential of enterprises in world markets. value/originality. the identified current trends in the development of structural relationships of the economy based on the generalization of research on structural interdependencies in creating the preconditions for sustainable economic development allows to determine the basis for the actions of international business in the globalization and manifestations of innovative economy more objectively. the special value of the work lies in a more detailed study of the ownership structure in ensuring the efficiency of international business and the effects of globalization, which determines the main directions of improving ukrainian enterprises, their organizational and legal forms of doing business to ensure compliance with international business principles and access to international markets. key words: globalization and innovation development, economic structure, ownership structure, international business, business efficiency, corporate governance. jel classification: o30, f43, g32, g34, f23 1. introduction globalization exacerbates international competition. it determines the increase in labor productivity as a result of rationalization of production at the global level and the spread of advanced technologies, continuous introduction of innovations worldwide. such trends have determined the need for the formation of a new three seas economic journal 36 vol. 1, no. 2, 2020 system of world economic structures, the principles of development of the regulatory system, the global business philosophy. the effectiveness of modern companies, based on the peculiarities of their organization and operation, is determined by the coordination of actions in both domestic and global markets. state regulation of concentration and development of property can smooth out contradictions. the modern economy is called the corporate economy. the income of large corporations is many times higher than the income of many countries. corporate governance in the context of globalization is seen as a powerful source of economic growth. in the context of economic globalization, the problems of corporate governance are exacerbated. the development of the corporate sector of the economy is determined by transnationalization, the access to the world level of large corporations, small and medium-sized companies, the interpenetration of corporate governance models, improving corporate relations as a result of employee participation in the ownership, profits and management of the corporation, institutionalization in accordance with the basic principles of corporate governance, the implementation of corporate social responsibility. thus, development determines the improvement of the institutional environment of doing business, which requires detailed research. the purpose of the article is to study the main aspects of ensuring the effectiveness of international business in the face of globalization, which will ensure the development of international business to globalization, improving corporate governance practices in accordance with global norms and rules. 2. the structure of economic systems in the context of globalization the structure of the economy makes it possible to establish its proportions, which determine its state, impact on social aspects in society, the country’s position in the world economic system. the structural model of the economy is formed by a set of different economic proportions. the imbalance of these proportions leads to macroeconomic disproportion and the crisis in the structure of the country’s economy. the constituent elements of the structure of the economy are different structures, reproductive, industrial, institutional, territorial, foreign economic, sectoral, technological, social. the institutional structure determines the conditions for the functioning and development of economic entities, on the basis of which there are property rights, the legal regime of resource use, taxation, methods of income generation, etc. the main proportions of the institutional structure are studied by the structure of ownership, competition, management, legal structure. the ratio of exports and imports of goods, services, technologies, capital, etc., the structure of exports and imports determine the proportions of the foreign economic structure. correspondence of the national economy to the tendencies of scientific and technical development of the countries of the world, a share of the made production or the services corresponding to this or that techno-economic paradigm characterize technological structure. the generalizations as to the efficiency of the structure of the national economy and those that characterize the state of economic and social development of the country are the proportions of the social structure. 3. ownership structure and international activities of international business entities interstate proportions form quantitative relations between the national industries of different countries. various options for achieving proportionality in economic development are proposed. the structure of ownership is of great importance for the economy, determining the nature and essence of the processes of production, consumption and distribution. state, natural and legal persons’ property is recognized. the organic combination of all of them in the economy creates opportunities to achieve high rates of economic growth. the ownership structure reflects the nature of the existing relationship between the objects and the subjects of ownership and is specific to each country. most likely, all countries are a society with a mixed economy. the types of ownership of a mixed economy are private, joint equity, joint compatible. now it is not an individual but a joint share form (of share capital, financial capital) that prevails. the state seeks to regulate at the legislative level the relationship of ownership, disposal and use of property (samuelson, 1989). the modern structure of the economy is characterized by shadow property relations, this is a set of unregulated and unaccounted for at three seas economic journal 37 vol. 1, no. 2, 2020 the legislative level of economic relations that take proceed outside the legal field. in developed countries, the basis of the economy is small enterprises with private ownership of the means of production. in ukraine, business entities include legal entities and sole proprietors. the change in the number of subjects by organizational and legal forms of management is shown in figure 1 and figure 2. creating conditions for the realization of property rights, which combines the interests of social stability, justice and active economic development, is the main task of forming a modern property structure in ukraine. due to the need to preserve natural resources, improve the living environment, solve social problems and take into account the scarcity and impact on the environment, the need for minimum consumption of natural resources is determined. in solving such problems, preference is given to planning mechanisms and the predominant form of ownership is recognized as state property. in the field of meeting personal and group needs, the private form of ownership will prevail, as it provides higher productivity and this determines its predominant use. the economic factor is significantly reduced under the influence of the achievements of stp. the formation of the world market and services intensifies competition, promotes the formation of transnational corporations, which determines the transition of private property to a new level. globalization takes place within private property, strengthening its position. state property has significant potential in the context of globalization to address the challenges of cooperation. the optimal value of the share of state property according to the results of research under the conditions that have been most favorable for state property is called at the level of 22%, this figure is close to that of sweden – 20.5%. the ratio is not a constant value. this ratio changes under the influence of various factors. the greater proportion of private property determines its higher efficiency. the factors influencing the studied relationships are characterized as difficult to define and measure, these factors have an indirect manifestation of influence, while changing the gap in the effectiveness of these forms of property management. the main factors are: – rate of return on capital; – degree of automation of production processes; – educational, moral and ethical level of the population; private enterprises; 259772; 19,51% state enterprises; 5559; 0,42% foreign enterprises; 1988; 0,15% limited liability company; 519607; 39,03% joint stock companies; 23110; 1,74% other types of business associations (companies with additional liability, full society, limited partnership); 4125; 0,31% others (farm, collective enterprises, state enterprises, state-owned enterprises, utilities, subsidiaries, consumer cooperation of the enterprise, rental companies, joint ventures, cooperatives, credit unions); 517069; 38,84% figure 1. number of legal entities by organizational and legal forms of management as of the beginning of 2015 source: developed by the author on the basis of (derzhavna sluzhba statystyky ukrajiny) three seas economic journal 38 vol. 1, no. 2, 2020 – importance of non-economic needs of society (ecology, space, etc.). the ratio under consideration affects socioeconomic efficiency; there is a ratio at which the maximum effect is ensured. the private initiative responds more quickly to the request, satisfies them better and more economically. private property ensures the development and implementation of scientific and technical progress more successfully and this provides its efficiency advantage. any factors that reduce the return on capital, respectively, reduce the interest in doing business. thus, the high level of production efficiency is associated with a relatively small share of state ownership and a significant share of highly profitable private households. highly efficient production is also due to the large share of small and mediumsized firms, which provides flexibility, stability and maneuverability to socio-economic processes. the growth of joint ventures and the share of state participation in them should be recognized as an attempt to combine the advantages of centralized and private enterprise approaches. 4. international regulation of corporate governance modern manifestations of globalization have been identified in: – increase of the scale of international trade; – information development; – growth of international mergers and acquisitions; – growth of scales of activity and companies with the participation of foreign capital; – strengthening the role of large multinational corporations in the world economy; – formed world market. in modern conditions, attempts have been made to regulate the activities of large corporations and approaches to their management. bringing uniformity to the understanding of corporate governance in the international market can have some success. such a well-defined system of relationships is created and operates to ensure maximum efficiency, attract investment, fulfill legal and social obligations ( jensen & fama, 1983). regulation of corporate governance is implemented through the development of standards, namely: – corporate governance quality criteria developed by various rating agencies; – financial reporting standards; – requirements of stock exchanges; – codes and principles of corporate governance. many international organizations are developing corporate governance standards, namely the organization for economic co-operation and development, the world bank, the international private enterprises; 200285; 14,83% state enterprises; 3750; 0,28% foreign enterprises; 631; 0,05% limited liability company; 674437; 49,94% joint stock companies; 13902; 1,03% other types of business associations (companies with additional liability, full society, limited partnership); 3200; 0,24% others (farm, collective enterprises, state enterprises, stateowned enterprises, utilities, subsidiaries, consumer cooperation of the enterprise, rental companies, joint ventures, cooperatives, credit unions); 454422 33,65% figure 2. number of legal entities by organizational and legal forms of management as of the beginning of 2020 source: developed by the author on the basis of (derzhavna sluzhba statystyky ukrajiny) three seas economic journal 39 vol. 1, no. 2, 2020 monetary fund and a number of european organizations. normative models are based on oecd recommendations on corporate governance principles. the demand for information and e-services in management is not clearly defined, according to normative models for stakeholders it is better to be more aware of management (mckinsey & company, 2002). thus, it requires the development of tools that use information and communication technologies, the companies’ costs required to provide feedback to its stakeholders. there are the following types of assessments of the effectiveness of corporate governance: – corporate governance rating; – investment rating; – credit rating. the most famous rating agencies in the world are standard & pools, moody’s, fitch ratings morningstar. it is believed that national rating agencies can better take into account local specifics. the final corporate governance rating of the well-known international rating agency standard & pools is determined on the basis of a weighted assessment of the performance of companies in the following four main groups: – shareholder rights; – activities of management and control bodies; – disclosure of information; – compliance with the interests of other stakeholders, corporate social responsibility. the achieved level of corporate governance of the company sets one of the four rating classes a, b, c, d. the first three classes of the rating with the help of gradation allow you to compare companies of one rating. the gamma rating reflects the relative pros and cons of a particular company’s corporate governance practices in terms of protecting investors from possible loss of value or lost opportunities to create value due to shortcomings in the corporate governance system. the main components of corporate governance rating are shareholder influence, shareholder rights, transparency, audit and risk management system, the effectiveness of the board of directors, the strategic process and the reward system. the rating criteria are based on a number of international codes of corporate governance, research, individual company practice and s&p experience. given the growing interest and importance of adhering to the advanced principles of corporate governance, regular monitoring of enterprises and attracting more participants to the ranking are important. this will improve the practice of corporate governance of the ukrainian enterprises, and the increase in the number of participants in the rating will also be evidence of the formation of a stable, civilized stock market. the standard of corporate governance is implemented on a voluntary basis. the driving factor in achieving high standards of corporate governance is the concomitant increase in the investment attractiveness of companies the methodology for assigning a rating to enterprises builds an analytical process in accordance with global criteria. credit ratings are more an assessment of a legal entity’s ability and willingness to repay its debt obligations, the existing criteria are aimed at determining the characteristics of its own creditworthiness and the issuer’s credit rating for a particular company. s&p’s credit rating provides assessments of the business risk profile, the company’s financial risk profile, thus determining the base level of the rating, and other factors, additional rating factors may change the base level of the rating and these factors, or as they are called modifiers, reflect business diversification analysis, capital structure, financial policy, liquidity and management, corporate governance. corporate governance ratings carry a burden not only on the counterparties, but also on society as a whole, the main component is a high level of transparency and the development of mechanisms and criteria for reconciling numerical interests. compliance with these criteria and the conditions of globalization is also facilitated by international agreements in various areas of the economy and business. 5. transparency of companies in the context of globalization information transparency of companies, as a characteristic of the quality of corporate governance, is a factor in shaping the value of companies. the issue of transparency calls for even more attention to the development of the concept of e-corporate governance. electronic corporate governance is defined as the provision of internal and external interactions in the company, aimed at maintaining the balance of interests between stakeholders through the introduction of information and communication technologies. the three seas economic journal 40 vol. 1, no. 2, 2020 development of e-corporate governance can change existing approaches to solving corporate governance problems. the study of national models of corporate governance should be conducted based on the tools of the new institutional economy. existing searches are based on the theory of the firm. in addition, it is necessary to identify models that are more consistent with the development of the modern economy in the context of globalization and with the manifestations of convergence of existing models. disclosure issues and transparency are the focus of rating, analytical and consulting agencies such as hallvarsson & halvarsson, standart & poor’s. increasing the transparency of companies will help to increase the efficiency of the capital market. electronic corporate governance in itself can increase the transparency of the enterprise. principles and tasks for improving the quality of management through the effective use of information due to information and communication technologies are being developed (okot-uma, 2001). the main content of the requirements is determined by increasing the availability of information and services, openness and accountability of management, public involvement in the management process. recognizing that any classification based on concentration of ownership is conditional, the ownership structure can be very complex and the division into dispersed and concentrated ownership structures is possible only with great restrictions, we should talk about the prevalence of firms with dispersed and concentrated ownership in countries. usually, countries with a high level of shareholder protection are characterized by firms with dispersed ownership, while countries with a low level of protection are dominated by another model of firms. from the point of view of the ownership concentration factor, two basic models are defined: companies with dispersed ownership and companies with concentrated ownership. this division has another basis, respectively distinguishing between market-oriented and bank-oriented models. in the market model, the capitalization of the company is determined by the stock market, in the banking model, most corporations are managed by the bank and the main form of financing is a bank loan. the market-oriented model makes strict requirements for the provision and disclosure of information. serious shortcomings in the domestic practice of corporate governance have been identified: – the formal nature of the implementation of corporate procedures; – weakness of the risk management system; – insufficient role of the board of directors in the implementation of corporate governance; – violation of the of minority shareholder rights. the factors that determine the effectiveness of corporate governance include: – level of ownership concentration; – personnel policy; – concentration on key competencies; – information support; – features of cultural traditions; – development of legislative and institutional environment. in international economic relations, the protection of property rights is less perfect than in the leading industrialized countries. common hierarchical structures are created. the formation of corporate ownership depends on the involvement of state-owned enterprises, the development of holding companies and the formation of a mixed ownership. each model of corporate governance has its own control mechanisms, they are determined by the structure of the corporation’s ownership, the number of shareholders. 5. conclusions the main goal of property reforms is to change the behavior and increase the efficiency of enterprises. the process of redistribution of shares took place from employees to managers, from insiders to external shareholders and from the state to nonstate shareholders. managers of enterprises are the dominant group of owners, the participation of external shareholders is less significant. the formation of a coalition of large owners is more effective due to the possibility of limiting expropriated behavior and mutual complementarity. such a more balanced and less asymmetric configuration of ownership helps to maximize the market value of companies. the growing integration of financial markets, the globalization of commodity markets, the convergence of legal and institutional norms, and the open exchange of information have determined the processes of convergence of national models of corporate governance. this tendency occurs in the direction of marketoriented model, companies with dispersed three seas economic journal 41 vol. 1, no. 2, 2020 property, reduction of concentration of property, introduction on the open market of a part of large blocks of shares by the entrepreneurs who inherited business of big holders. necessary changes in the ownership structure, information disclosure system, legal and economic factors are now due to the development of corporate governance. enterprises that can adapt corporate governance to their own business models will gain a significant competitive advantage. the introduction of corporate governance standards by small and medium-sized companies can ensure success in competition in the global market. the promotion of civilized principles of corporate governance should be recognized as a long-term strategic goal of international business entities. one cannot ignore the development of the need for longterm goal-setting, expanding the space of corporate relations, taking into account the interests of all key, not only traditional, stakeholders. increasing business transparency, introducing a corporate social responsibility system with a predominance of companies of entrepreneurial composition, ensuring a real delineation of ownership and management, improving the indicators of investment in fixed assets and activity in the ipo market, which is a significant problem for ukraine, can improve and ensure compliance with international business development trends in the context of globalization. the practice of corporate governance requires the application of adequate to the requirements of global norms and rules. references: derzhavna sluzhba statystyky ukrajiny (2020). statystychna informatsiia. available at: http://www.ukrstat.gov.ua jensen, m., & fama, e. (1983). separation of ownership and control. journal of law and economics, vol. 26, issue 2, pp. 301–325. doi: https://dx.doi.org/10.1086/467037z mckinsey & company (2002). governance is unceasingly at the heart of investment decisions, new mckinsey survey shows. investors eager for greater accounting disclosure, other broad reforms. available at: http://www.mckinsey.com/governance okot-uma, r . (2001). electronic governance: re-inventing good governance. london: common-wealth secretariat. available at: https://citeseerx.ist.psu.edu/viewdoc/download? doi=10.1.1.197.6576&rep=rep1&type=pdf samuelson, p. (1989). economics (13th ed.). new york: mcgraw-hill, 837 p. available at: https://archive.org/details/economicsintrodu00paul/page/n10/mode/1up three seas economic journal 29 vol. 1, no. 4, 2020 corresponding author: 1 khmelnytskyi national university, ukraine. e-mail: svosn@ukr.net orcid: https://orcid.org/0000-0002-1301-1492 2 khmelnytskіy national university, ukraine. e-mail: svosn@ukr.net orcid: https://orcid.org/0000-0002-8474-1978 doi: https://doi.org/10.30525/2661-5150/2020-4-6 imperatives of the socio-economic development of ukraine in the context of the post-industrial society formation mykhaylo voynarenko1 , alexey svistunov2 abstract. the peculiarities of ukraine’s socio-economic development are investigated and their problematic aspects are highlighted in the article, along with their systemic analysis. the need for state regulation to increase the transformation processes in the economy under crisis conditions is justified. the objective of the study is the further development of theoretical approaches, systematisation of the analysis results and definition of the main measures to improve the efficiency of the socio-economic processes management in ukraine to ensure implementation of the economic growth model in the short term. the subject of the study is the state of socio-economic development of ukraine. the object of study are the transformation processes taking place in the country’s economy. the study uses methods of logical generalisation, graphical, analysis, evaluation. the originality of the article lies in the approach of the authors to the definition and justification of ways to solve complex socio-economic problems of ukraine. the new trends in management efficiency improvement of socio-economic processes in ukraine, which are to ensure implementation of the economic growth model in the short term, are developed. the role of economic development in the investment attractiveness of the economy is justified. it has been identified as an important activity for increasing the country’s income. it has been shown that structural restructuring of an enterprise, its transformation on the basis of technological renewal in connection with realisation of the potential of informatisation and technological innovations, implies a number of structural changes in the direction of innovative development. it is confirmed that intensification of processes of informatisation, digitisation will allow to unite business, capital, industrial, scientific and trading infrastructure in the direction of achievement of world standards of development. ways to solve the outlined problems will accelerate the socio-economic development of ukraine, ensure sustainable development of the country’s industry in the globalised economic space. at the same time, the development of cluster systems, which allow to combine science, business and government to solve the problems of sustainable development of regions, countries and their associations, is of great importance. the study also emphasises the high potential of ukraine in the development of information systems, their active introduction in various industries of the country. key words: socio-economic system, crisis, government regulation, investment climate, clustering, development institutions, post-industrial society. jel classification: e60, l50, o10 1. introduction ukraine is at the stage of modern socio-economic system building. the stage is characterised by long transition period and is complicated by the deep economic crisis of recent years. in that regard, it becomes problematic to provide the further economic growth by current methods and governance mechanisms which have a number of significant shortcomings revealed in the process of their practical implementation. as a result, there is a downward trend of gdp in recent years, the national currency is falling, and investor confidence is decreasing. these factors have caused a number of negative phenomena in the domestic economy. most sectors of industry are under difficult circumstances, primarily those playing an important role in the state’s economic growth, determining the investment activity and employment levels, generating the vast three seas economic journal 30 vol. 1, no. 4, 2020 majority of budget revenues. the reasons for the decline of the domestic economy have already been identified but the situation in political, economic and financial spheres continues to worsen because of the lack of effective anti-crisis measures. that is why it is necessary to introduce scientifically grounded methods and advanced technology of the socioeconomic processes management into the domestic economy. it must be taken into account that the regulatory role of government is the main condition of the successful completion of the socio-economic system development transition process. the issues of the socio-economic development modelling process and their management have a strong scientific basis and practical corroboration. but the difficult economic situation in the country and the obtained system analysis results require corresponding theoretical justification of the identified economic and social problems and the development of measures to remove ukraine from the crisis. the objective of the study is the further development of theoretical approaches, systematisation of the analysis results and definition of the main measures to improve the efficiency of the socio-economic processes management in ukraine to ensure implementation of the economic growth model in the short term. 2. features of socio-economic development of ukraine the problem of the certain type of management of socio-economic systems development existed at different stages of socio-economic formations at all. economics substantiates the position that the achieved degree of social development is determined by the method of production and redistribution of national wealth. this statement is based on the longterm researchers. herewith, the general pattern is that transition to the next stage of socio-economic relations is accompanied by qualitative changes in the productive forces and production relations interaction process. globally generalised socio-economic development experience of many different countries, reveals the general and the most characteristic features both to determine the specific type of socio-economic structure and to give its detailed specification and evaluation. thus it provides an in-depth study of each country’s development, taking into account its national peculiarities. the theoretical study of socio-economic formations allows us to consider society as a whole socio-economic system operating and developing according to its economic laws based on the historical and dialectical unity of productive forces and production relations. the system also includes historical transformation processes and interaction of productive forces and production relations: unfinished production relations of the previous formation, current production relations and launched production relations for the transition to the next development stage or a new socioeconomic structure. historically, this transition occurs spontaneously in some countries. other countries manage to direct their economic development in accordance with economic laws, morality and culture. in the first case, one could assert the mixed model of socio-economic development. the second case is a definite country’s development model. many scientists study ukraine’s modern social and economic state analysing economic environment and evaluating key factors of prospective economic growth along with the state’s own development model formation. a protracted economic crisis testifies both the predominance of economic problems over multiple political problems and their interdependence and destructive influence on renewing production and consumption ratio. o. m. polinkevych considers that even under such complicated circumstances the scientific and technical progress speedingup problems are still actual, as well as the 6th and 7th technological paradigms prevalence in the society (polinkevych, 2016). significant scientific developments of e. m. libanova are the fundamentals of the social economy in ukraine revealing the negative impact of economic and political situation on social justice, welfare of the population, its social protection and formation of the ideology that leads to macroeconomic instability. according to the author, there is an urgent need for social innovation and modernisation of its own society “to gain a worthy place in the world community” to solve socio-economic problems (libanova, 2010). the necessity for the economy structural transformation for crisis overcoming is justtified in the works by s. a. erokhin (erokhin, 2014). v. m. tarasevych considers investment processes to be activation means for market operational principles and domestic economy system transformation efficiency increase as, “the main competitive advantage of national capital is a prospective powerful innovation and economic potential of a national type” (tarasevych, 2013). research works by v. m. heiets and a. a. hrytsenko are the significant contribution to the development of national economic theory and the choice of the perfect socio-economic development model. according to the results of the system studies, the researchers concluded that it is necessary to transform the modern model of socio-economic development of ukraine into an endogenously oriented model, which will be able to ensure recovery and further development of socioeconomic processes basing on discovering its own internal mechanisms of economic growth. it will allow the country to define its own way of the post-industrial society formation (heiets, 2015; heiets, hrytsenko 2013; hrytsenko, 2014). m. i. zveriakov reasonably three seas economic journal 31 vol. 1, no. 4, 2020 proves that the ukrainian political and economic model formation eventually leads to the high level of the economy monopolisation and significantly limits its growth. that is why there is the need to eliminate one of its basic structures – coalescence of business and government and “the main problem of overtaking modernisation economy creation is still there, complicated by deepening the previously unsolved socio-economic issues” (zveriakov, 2015). thus, the conducted theoretical study of the theory and practice systematisation on issues relating to building a modern national socio-economic system allows to make reasoned opinion that modern ukraine has faced the problem of choosing a new model of economic development, which would allow the national economy to enter the world economy with a high level of civilisation, progress and prosperity in a short time. however, the important stage must be accomplished for its formation that of acute political and economic crisis overcoming within the shortest possible period of time (heiets, 2015). it should rely on scientifically grounded economic policy and state programs of socio-economic development to ensure national economy strategic development integrity along with corresponding national measures growth in political, cultural, social, and environmental spheres (figure 1). to fulfil the tasks of transition period stated earlier the domestic economy should count on its own potential and development of efficient socio-economic processes management. the state regulation should primarily concern state socioeconomic development programs in key spheres implying the following measures: selective support of certain branches through budgetary funding; financing of education and research; stimulation for national companies development and their use of new technology; domestic production standardisation and quality control; commodity export growth and commodity import regulation; recommendatory the model of social and economic development of ukraine transitional stage state’s regulation trends economic, political, social, natural and economic, scientific and technical, cultural and ideological (formation of state programs of socio-economic development in the context of each direction, determination of critical threshold predictive values for most important indicators, the establishment of institutions, departments, organisations etc.) monitoring and evaluation of the transitional stage introduction tasks evaluation and analysis of the economy and its development potential evaluation of the competitiveness of products and services in foreign markets analysis of the population welfare growth, formation of the ideology and culture of a new type the evaluation of investment and innovative activity of regions and sectors analysis of scientific-technical and technological spheres development indicators the tasks definition for the successful completion of transition stage long-term forecasting of socio-economic, scientific and technical, and environmental development strategic objectives setting for the technological breakthrough definition of the principles for further implementation of the policy of socioeconomic development based on the analysis of the accomplished achievements figure 1. the sequence of the main tasks introduction of transition stage for a national model of economic development source: developed by the author three seas economic journal 32 vol. 1, no. 4, 2020 planning introduction ensuring socio-economic policy development in connection with economy forecasts, state progams and characteristic indicators system of key factors of state influence on social and economic processes. besides, with such state regulation the economy stuctural transformation process is to become systematic, that is why simultaneous structural reforms in social, political and cultural spheres are reasonable. changes in social sphere will stipulate state policy transformation as to real income of population growth, public health service and pension system improvement, and combining social programs with employment policy. in politics, all sections of population need to follow the constitutional regulations along with quick growth of new authority intellectual potential and corresponding legislation and institutional environment. in cultural sphere there should be changes in values of social awareness, formation of a new humanitarian development paradigm, which means consumerism rejection and new values of personal and public harmony values strengthening. 3. problematic aspects and ways out of the crisis the comprehensive approach to solving the stated here problems is to guarantee ukraine’s successful economic modernisation and creating its own economic growth model. that is why structural changes are the main factor for development of the national economy strategic trends including the following: state, science and business cooperation priority raise; efficient investment sources diversification for innovation and clusterisation directed at high-tech, intellectual and informational, science intensive industries with quality production highly demand in international markets. thus the investment stimulation is an important prerequisite for the whole range of socio-economic problems solution at a modern stage of national economy development. the investment attraction is possible under conditions of positive real investment dynamics as a part of social resources, providing the continuity of both simple and extended reproduction process forms. the investment climate in ukraine continues to be not attractive enough, as a result, capital moves abroad, the banking system weakens, the foreign debt of the domestic economy grows, the trade balance and the state budget unbalance, and financial and economic dependence on imf rises. however, financial resources moved abroad exceed annual ukraine’s gdp according to today’s exchange rate. this indicates that the country has lost real investments generated by more favorable country’s internal sources abstract (heiets, 2015). the quarterly survey conducted by the european business association indicates that companies which are operating in ukraine worsened its assessment of the country’s investment climate. special attractiveness index of ukraine for the third quarter totaled 2.56 points out of 5 possible points against 2.66 earlier (figure 2). 89% of the association member companies among 98 respondents expressed dissatisfaction with the investment climate in the country: the level of corruption combating did not correspond its scope, reforms occurred slowly, there was no effective legislative and regulatory framework. all these factors stop new investors from investing in ukraine as a perspective market abstract. the following types of modernisation industry investments would be the best to attract to ukraine: investments in physical capital (equipment, facilities, development of industrial infrastructure); investments in technological capital (research, innovation, design development); investments in human capital 0 1 2 3 4 5 2009 2010 2011 2013 2014 2015 2016 2017 2018 1 q 2 q 3 q 4 q figure 2. scoring of the investment climate in ukraine according to the european business association data source: (european business association study, 2015; institute of economics and forecasting of nasu. information resources) three seas economic journal 33 vol. 1, no. 4, 2020 (education and government) as human and social capital in developed countries provide by far the highest rate of economic growth. according to many countries experience, foreign investments contribute to a more rational use of tangible and intangible national resources. thus, the operation of foreign companies in the domestic market replaces loss making national enterprises that make it possible to redirect resources among profitable companies with modern production technologies; foreign investments increase competition in the domestic market, stimulating the introduction of advanced equipment, technologies, innovations and increasing the efficiency of their activities. a positive result of foreign investment is involvement of many manufacturers, suppliers, service companies, research and other organisations into different projects. in this case, the attraction of foreign investment becomes a catalyst of economic activity, which increases the reserves of local business further development and contributes to the attraction of prospective local investments in the economic activity. international experience also shows that the national economy efficiency stimulation occurs when foreign investments contribute to the abandoned productions revival, new industries, industrial structures and industries emergence. economic growth in its turn leads to investment risk reduction and shortening the payback period of investments. however, it is necessary to take into account that potential negative consequences of foreign investment may occur along with positive influential factors in national economic growth. the negative factors include the replacement of national investment and companies, as well as facilitating the movement of capital abroad on the basis of various pricing schemes and internal redistribution of financial resources. for example, 58 billion usd in foreign currency were transferred from ukraine in the form of dividends and interest payments to non-residents during 2008-2014. though, payments to non-residents could belong to a significant amount of cheaper domestic investments under conditions of favorable investment policy and proper control (heiets, 2015). only the state can resist such negative phenomena as the domestic economy and business are still weak, therefore demanding well-grounded efficient investment policy (heiets & hrytsenko, 2013). the institutional factors occupy an important place among the many influential factors in building modern socio-economic system. even minor violations in the institutional structure lead to significant, and in many cases irreparable complications in the economic environment hindering the state’s economy growth rate. therefore, the problem of institutional reforms is of particular importance under conditions of socioeconomic systems transformation. accordingly, the state should create the policy of establishing the institutions, necessary for the successful formation of modern economic relations. a key process in the initial conditions of economic reforms should be the development of information systems, as complex multisystem socio-economic structures that become the driving force for positive change in all sectors of the economy and in all areas of human activity. information technology and systems enable to ensure economic growth through stimulating competition, promoting the expansion of production, increasing productivity provided their use is organised properly. the following facts testify to the realisation of many directions in practical life and the advantages of our country compared with developed countries in the sphere of information computer technologies. according to aventures capital fund assessment, multi-billion it-industry has been formed in ukraine by 2012. about 100 thousand of high-class programmers work in local it-companies. in 2012, ukraine was ranked first in the number of developers among the countries of central and eastern europe. during the recent years, ukraine is among the five world leaders in the software products export. only india, china, russia and brazil are ahead of ukraine. it industry of ukraine includes more than two hundred thousand of enterprises and their total gross income is 12 billion uah per year. export of informationcomputer technologies services is 9.5 billion, or 80% of the total state income (eremin, 2015; instytut ekonomiky ta prohnozuvannia nan ukrainy). thus, ukraine has a powerful intellectual potential and could become one of the largest software producers in the world, primarily bringing significant income to the state. revenue growth of the it industry in the world over the last ten years demonstrates the great value of it-technologies for the economic development (figure 3). thus, the it-market revenue in 2016 is expected to be almost 3.7 trillion eur . according to the forecast data, the world gdp will be 60.7 trillion eur . thus, the share of the it-market in the world gdp will be about 6.2%, while in 2013 this percentage was 5% (eremin, 2015; instytut ekonomiky ta prohnozuvannia nan ukrainy). stimulating the domestic market of it-technologies at the state level, primarily as a liberal fiscal policy, may be crucial for the formation of a powerful source of the gdp growth. the cluster groups forming is another essential direction in the economic policy key components formation aimed at the further socio-economic growth in the regions (voinarenko, & bereza, 2013; voinarenko, 2014). cluster structure can be considered a new type of production and economic model built on collaboration and co-operation of industrial and trade companies, financial and credit organisations, educational and scientific institutions (voinarenko, & bereza, 2013). three seas economic journal 34 vol. 1, no. 4, 2020 the experience of many developed countries confirms the national competitiveness increase as a result of industry clustering mechanisms. in this connection, there is a need for cluster system formation able to provide innovation factors transformation into the min economic growth source. besides, clusters mean such a combination of competition and cooperation when uniting participants in certain spheres makes successful competitiveness in other spheres possible. there is an efficient trend for ukraine’s economy development and its high position in the system of international economic relations. cluster policy intensifies innovation in the regions through the search for innovative products in specific areas, identification of reserves to increase their manufacturing using the latest technologies. in addition, the policy enables to improve the regional socio-economic situation through more efficient resources use and redistribution, a decrease in prices for essential services and wealth for the people of the region, creating new jobs, etc. but clusters did not prove to be powerful economic systems in ukraine significantly raising the competitiveness of national economy on domestic and foreign markets. this can be explained by the need of state support demanding primarily well-grounded cluster policy as a component of the state economic policy regulation able to provide an innovative approach to the new economic development direction (voinarenko, 2014; hrytsenko, 2014; voinarenko, 2014). during several decades many countries have been developing cluster strategies aimed at financial and intellectual capital integration and realisation of national economy competitive advantages. on the one hand, the cluster strategy should stimulate all-level cluster initiatives (regional, national, and international). on the other hand, they should promote existing clusters development. in our opinion, the main factors of cluster strategy realisation are: determining the most competitive companies and firms inside the cluster, which have their own development strategy; creating conditions for stable financial sources search; attracting small businesses, scientific and educational institutions to cluster structures; founding the scientific research centers. scientific results systematisation concerning clusters is very important for creating well-grounded cluster strategy as a part of state economic policy. it is aimed at defining state support trends for clusters in the long term. the instruments of the state policy should eliminate barriers for cluster formation, infrastructure improvement, simplification of financial sources and foreign investments attraction mechanism, remove restrictions in innovation implementation. it should be also noted that the high level of competition on the world market, its impact on regional development and the development of the national economy, require the creation of structures in ukraine which would ensure and coordinate the functioning of the industrial complex and its external economic relations (primarily cluster associations, their insurance and information, financial and legislative services). 4. conclusions thus, the processes of production, exchange, distribution and consumption of goods are the basis of socio-economic system of each country. they are 2,307 2,455 2,614 2,723 3,663* 0 1 2 3 4 t rl n e u r years 4,775 2,813 2,969 3,083 3,169 3,274 figure 3. dynamics revenue of the it-technologies market in the world for the 2005–2017, trillion eur source: (eremin, 2015; instytut ekonomiky ta prohnozuvannia nan ukrainy) three seas economic journal 35 vol. 1, no. 4, 2020 dynamic in their nature and require clear coordination and direction to achieve certain goals. it is impossible to develop universally recognised standards and ways of progress for each country despite the high level of world science and technology. however, using of the world practical experience is a necessary condition for building a new economic system. modern highly-developed socio-economic systems are characterised by private ownership of material resources, evolutionary development of ownership and its progressive interaction and the qualitative competitive mechanism. the transformation processes in ukraine aimed at the building of a new economy are mostly accompanied by problematic socio-economic and crisis phenomena which have protracted nature. this suggests that there is no clearly defined model of socio-economic development in ukraine. besides, the mechanisms of transformation processes state regulation to build strategies and tactics, which can help to achieve the economic growth, are absent as well. thus further theoretical research, analysis and definition of theoretical concepts of building a civilised society are required. so, according to the results of our research of the socio-economic development of ukraine peculiarities, we can conclude, that to create a modern socio-economic system for the country it is advisable to develop an effective public economy policy of a transition stage to the real models identified by scientists. the policy should be based on the results of scientific studies of economic development and economy growth, targeting at high technology and competitive products. available intellectual and scientific potential create the basis for the goal achievement. the priority tasks of the country as to european integration prove such an aim to be not only the basis for state economic strategy but also the political consolidation of society. to ensure the further development of ukraine in the short term we offer the following measures to be taken: the model economy with expensive labour and social standards of the population must be introduced in ukraine; the determination of requirements for the owners of the privatised enterprises with the investment prospects of the dependent nature as to their future operations and increase in the number of jobs; facilitating the formation of cluster structures as a competitive organisational form of territorial and sectoral production model and a new element of the state economic policy aimed at ensuring socio-economic development of regions; creating structures in ukraine which have contributed to the emergence of the new cluster and would coordinate operation of cluster organisations and their external economic relations to find points of regional growth and ensuring resist on negative influences of the high level of competition in the global market; developing the financial sector of ukraine in the new economy growth models which would be depended from investment and should be formed in short term exclusively on market principles; returning the funds taken abroad which belong to ukraine; developing a mechanism for increasing investment in development and research to develop it-technology, infrastructure projects, environmental and other innovations; formation of state social support towards increasing influence for reducing inequality and overcoming the poverty, enhancing the prosperity of population; formation of efficient state policy in moral and cultural spheres which is vital for successful ukraine’s economy transformation. references: european business association study (2015). business has worsened ukraine’s investment climate due to corruption. available at: http://news.finance.ua/ua/news/-/361677/biznes-pogirshyv-otsinku-investklimatuukrayiny-cherez-koruptsiyu-doslidzhennya eremin, d. 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(2014). clusters in the institutional economics: monograph. wloclawek: esfii, poland. zveriakov, m. i. (2013). u poshuku vykhodu iz kryzy [in search of a way out of the crisis]. economy of ukraine, vol. 8, pp. 4–21. zveriakov, m. i. (2015). pro zminu modeli economichnoho rozvytku [about change of model of economic development]. economy of ukraine, vol. 635, pp. 41–49. three seas economic journal 46 vol. 1, no. 3, 2020 corresponding author: 1 computer and automated systems software engineering, russian federation. e-mail: koldyshev@gmail.com orcid: http://orcid.org/0000-0001-9283-558x researcherid: aaw-7296-2020 doi: https://doi.org/10.30525/2661-5150/2020-3-8 industrial (b2b) marketing of glass companies: mobile applications as a sales promotion tool maxim koldyshev1 abstract. the purpose of the paper is a qualitative analysis of mobile applications as a sales promotion tool in industrial (b2b) marketing of glass companies. industrial marketing of the glass industry is poorly studied in terms of digital technology development and integration as well as mobile applications as tools for digital marketing communications. b2b companies’ digitalization is at the initial stage. methodology. this research builds on the concepts of digital b2b marketing, the digitization capability of b2b companies, customer relationship building, and customer focus. the research methodology is based on the case study of abc company and the content analysis of information available on the abc’s website in the public domain. a content analysis was conducted of the patent for a method for determining the coated glass coating type using an application and a light source. results demonstrate problems related to digital marketing concepts integration, customer focus, and customer relations formation. the results show an active digital strategy use for the company’s business growth through software development and integration of end product interactive visualization tools. as a result, additional business value is formed: 1) end customer company focus; 2) product knowledge development and b2b services personalization; 3) manufacturers transfer some sales and communication functions to their customers, which solves the problem of staff rotation in the sales subsystem; 4) the application becomes a tool for customer behaviour analysis. mobile applications complement any traditional product promotion channels. the main domestic industrial market challenge is the poor rate of readiness for digital changes: applications become an effective marketing communication tool only when customers use them. practical implications. companies in different industries can use the results to understand real issues of applications integration in marketing strategy and communication. these problems include the digital unpreparedness of the russian domestic market to accept new technological solutions. value/originality. this research proves that mobile applications increase sales and is effective if company personnel, end users and b2b customers actively use them. applications complement traditional b2b marketing channels. key words: industrial (b2b) marketing, mobile applications, sales promotion tools, digital marketing communications. jel classification: m31, m21, l63 1. introduction the russian glass industry is characterized by the manufacturers producing the same type of product and promoting it with added value due to additional features. for example, companies produce architectural glass with solar control, energy-efficient coatings that, besides other things, add colour to the glass. the upward trend in manufacturing energy-efficient products provides a competitive advantage for manufacturers. another important upward trend is business digitization, including the development of mobile and web applications for visualizing product appearance (wali, uduma & wright, 2016), the use of configurators that calculate lighting and thermal characteristics, assistant applications for step-by-step selection of the glass type, etc. such technological solutions solve the problem of informing consumers about the product properties, the problem of maintaining market share and ensuring income stability. despite the digitization of b2b marketing in the glass industry, these trends are upward as end-users know little about the characteristics of glass products. three seas economic journal 47 vol. 1, no. 3, 2020 according to the 2017 windows end users survey conducted by the marketing center o.k.n.a. marketing (november 2017) in russia, end users do not know anything about the types and properties of glass coatings. the internet or mobile office are increasingly important buying channels, the popularity of the window manufacturers’ websites is growing, while the search engines like yandex and google become major information sources for customers. the main criteria for end users in choosing windows are price and quality (29.5% and 28.3%, respectively); potential impact on heating savings (3.3% of customers in 2017) and environmental friendliness (2.1% of customers) are the least important buying reasons (o.k.n.a. marketing, 2017). this indicates a low culture of consumption and informing customers about the characteristics of glass, which can provide additional value to companies in the glass industry and increase the loyalty level. window consumers generally do not turn to sellers to get information about the properties of the specific glass coating, only the sellers of the product can provide this relevant information. in this case, various applications for visualizing innovative products and for explaining the properties of glass coatings to end users become additional and more effective communication channels. as a result, the customer loyalty level will increase, the company will be able to ensure its income stability. in the context of integrating the concepts of “digitization capability” of b2b companies (ritter & pedersen, 2020) as a way to increase product value and form relationships with customers (harker & egan, 2006), orientation of b2b companies towards the end users of their customers, the study of applications as a tool to increase sales is especially relevant. given the fact that b2b companies are more focused on the product rather than the customer, the buyer (wali, uduma & wright, 2016), it is important to study the use of applications for providing product specific information, building relationships with end customers, and promoting sales. the research objective is a qualitative analysis of mobile applications as a sales promotion tool in industrial (b2b) marketing of glass companies. 2. literature review the scientific literature has little studied the impact of mobile applications on the sales of b2b companies. despite the use of digital marketing by b2b companies and the digital revolution in business over the past twenty years (herhausen et al., 2020), scientific literature lacks comprehensive research on the underlying issues (pandey, nayal & rathore, 2020). herhausen et al. (2020) identify two major gaps in this regard: “the practice gap, which identifies the deficit between managers’ ‘current’ practices and their ‘ideal’ digital marketing capabilities; and, the knowledge gap, which demonstrates a significant divide between the digital marketing transformations in industrial firms and the extant scholarly knowledge that underpins this”. at the same time, digital marketing communications and sales volume management ensure the competitive sustainable development of organizations (pandey, nayal & rathore, 2020). digital business models (technological innovations that affect financial performance) challenge traditional thinking and concepts in a b2b environment (lin et al., 2020). this suggests the need to study digital marketing tools for b2b companies to increase and maintain sales, conceptualize new ideas for business development. ayman, kaya & halim (2019) consider mobile applications as a way of interaction between buyers and sellers, as a tool of marketing communication strategy. parkkinen & hoțoleanu (2017) conclude that technology as a communication tool increases consumer knowledge of the company’s products, increasing their awareness. however, some technological solutions are part of digital marketing. in b2b, the sales cycle is long, multi-stakeholder driven, while digital tools and sales channels complement traditional ones (veronica, silvia & lavinia, 2018). technological solutions provide the development of product knowledge and b2b sector services personalization (wali, uduma & wright, 2016), while they may not be sufficiently focused on end users. this results in a risk of growing costs for the development of applications that inform b2b customers about the product, but do not provide information to end users about the characteristics and properties of the product. that underlines that the true major goal of b2b companies could be solely profit driven mentality, and much less of the end customer satisfaction. feng et al. (2020) argue that mobile habits influence buying behaviour, intent: buyers who use communication apps are more likely to purchase a product. as the number of the internet and mobile device users grows, companies are actively promoting their products online. three seas economic journal 48 vol. 1, no. 3, 2020 mobile targeting is being integrated into b2b marketing strategies. mobile apps are an example of customer interaction (wang, 2020). mobile devices provide instant customer interaction and customer service, complementing traditional product promotion channels. improvements in the targeted capabilities of mobile devices have driven progress in the use and development of mobile applications, and subsequently – in mobile commerce (feng et al., 2020). “mobile targeting in b2b markets involves connecting with the right business partners and, eventually, profitable consumers” (feng et al., 2020). applications complement other digital sales tools (wang, 2020). the use of mobile devices provides contextual information about customers, as well as opportunities to improve marketing strategies and targeted product promotion campaigns (tong, luo & xu, 2020). as product personalization becomes more and more important in the context of profitability, scientific literature covers personalized mobile marketing strategies (tong, luo & xu, 2020). mobile applications are product personalization tools and thus open up new challenges for b2b digital marketing research. 3. materials and methods 3.1. concept and design this research builds on the concepts of digital b2b marketing, the digitization capability of b2b companies (ritter & pedersen, 2020), customer relationship building (harker & egan, 2006), and customer focus (hall, 2017), which implies the orientation of b2b companies towards the end users of their customers. integrating these ideas into business is a way to increase sales and customer loyalty, create product value and develop a consumption culture. the integration concept tools are technological mobile applications that have been actively used by companies since 2000 (hall, 2017). the research design is qualitative, since the methods of content analysis of the website of abc company (the company name was changed for confidentiality reasons) operating in the glass industry and the case study method were used. as the internet is one of the main product promotion channels in the glass industry, website analysis can determine the effects of application use. 3.2. methods and data the research methodology is based on the case study of abc company and the content analysis of information available on the abc’s website in the public domain. besides, a content analysis was conducted of the patent for a method for determining the coated glass coating type using an application and a light source. the analysis of the patent allowed determining the stages of the application methodology. 3.3. research limitations the main research limitations were personal data protection and data privacy of abc company, russian float glass manufacturer. the patent and information posted on the company’s website did not allow to fully quantify the effect of using a mobile application as a way to increase sales. in addition, there was no quantitative data for the glass industry to analyse dynamics, and publicly available company data to assess application effectiveness by studying sales dynamics. 4. results 4.1. information about the company and technologies used to promote sales abc is a manufacturer of float glass and sputtered glass for exterior use in residential and commercial buildings. the main feature of the glass companies is continuous glass production. the glass furnace cycle is approximately 15-20 years. regardless of the level of demand for glass, glass furnaces produce in average 500 – 1000 tons of glass per day depending on its design. long-term planning allows managing production and seasonality. most of the products have a fairly stable demand: 80% of production volumes are consumed by 20% of customers and ensures the accuracy of demand forecasts. the industry uses statistical forecasting systems. during the crisis periods, when the construction and automotive industries are suspended, glass manufacturers increase their stocks in warehouses, crush the glass into cullet and melt it again (the socalled cycling). cycling is expensive, but compared to furnace cooldown, it is a more cost effective way to maintain operation. the main product of abc is float glass. this transparent sheet glass is produced by a large number of manufacturers, both large international (agc, guardian, saint-gobain, pilkington, etc.) three seas economic journal 49 vol. 1, no. 3, 2020 and regional (salavatsteklo, gomel glass, etc.). float glass has little difference from manufacturer to manufacturer and thus considered to be a commodity product. that is why, manufacturers promote float glass with added value (architectural glass with solar-protection coatings, energy-saving coatings that give colour to glass), including through mobile and web applications (appearance visualizers, configurators calculating lighting and thermal characteristics, assistant applications for step-by-step selection of the type of glass, etc.). since competition landscape on uncoated float glass is tight manufacturers are investing into fabrication lines in order to add additional properties to base glass: – magnetron sputter coatings – for energy-saving (lowe) and solar control coatings application (for use in residential windows and commercial facades); – wet coaters lines for mirror and painted glass production; – laminated lines for safety and acoustic glass production; – acid etching lines for use in interiors; – ultra-thin (less than 2 mm) glass, or thick (over 12 mm), xxl jumbo glass sizes (over 7-20 m long); – and others. the main problems of companies in the glass industry are the following: – low profitability of commodity products. phonecia glass, yugsteklo are examples of manufacturers’ bankruptcies that have not provided competitive advantages, brand identification and have not expanded the range with more marginal products. an example of a competitive company is guardian glass, ryazan (businessstat, 2019), which is driving growth by increasing production of energy-efficient glass. in the context of a fall in the domestic market, stagnation of the economy in 2014-2016, the introduction of new building codes and regulations, the sales growth of glass manufacturers will grow. – seasonality, which is an acute shortage of glass in the summer-autumn period, redundancy in the winter-spring period. – poor awareness of the end user about the glass properties and its role in overall window or facade performance. glass takes around 80% of the window area, and it is hard to underestimate its impact on solar control and energy saving features of the window. a customer faces the need to install and replace windows only 1-2 times in his or her life. consequently, the customer is not aware of innovations and new features in glazing area. therefore, the main task of manufacturers and distributors is to inform customers. the main promotion channels are word of mouth, opinion leaders, the internet, bloggers, tv re-modelling shows. – complicated supply chain to the end consumer. as a producer of raw materials, glass producers should work with window manufacturers and distributors of the final product to the end users, considering the peculiarities of b2b and b2c sales. high employee turnover at points of sale leads to difficulties in maintaining the level of competence of the window sellers (constant trainings, conferences, training videos for salesmen are very costly ways of developing competencies). this leads to the fact that salesmen at b2c points of sale do not always inform end buyers about the glass properties. – abc’s indirect competitors are manufacturers of bricks and other no transparent wall. the efforts of architects, designers, developers to popularize large window openings, glass walls provide the company with a demand, instil a culture of glass consumption. the lack of regulations requiring the use of energysaving glass in windows in several countries is an advantage for manufacturers of bricks, foam blocks and other products. 4.2. digital online resources for sales promotion the before mentioned operational problems, mainly related to marketing and sales, led abc to the need to develop digital tools for promoting sales. these tools include: 1. software for system analysis of product (float glass) and glazing systems. the online resource – glass analytics – is available on the abc website and offers users a choice of programs for obtaining engineering calculations of technical characteristics. this allows visualizing the advantages of using sputtered glass for glazing facades. 2. performance calculator or online configurator software (bim generator software), which simplifies the selection of the optimal glass and is easy to use thanks to a simple user interface. the configurator allows calculating the thermal and lighting properties of glazing (for example, single glass without coating or complex combinations of base glass, various coatings and intermediate layers). the configurator allows to analyse the thermal and lighting properties of different options, three seas economic journal 50 vol. 1, no. 3, 2020 create a visual report that compares the properties of glazing of different categories in the most convenient form for the buyer. the tool contains highly detailed content and filters by parameters based on the client preferences. the set criteria or parameters provide control over the size of the spacer, the type of glass fixing in the glass unit. 3. the abc glass visualizer software or realtime visualizer allows to generate photorealistic images of glazing from the inside and outside of the building selected by the customer. the resource allows the user to evaluate the aesthetic component of different glass types. 4. mobile stands for demonstrating the energy saving features of insulating glass units, which allows the buyer to experience interaction with the product. thus, the abc’s website contains online resources for product analysis, glazing systems, a software for calculating the thermal and lighting properties of glazing, generating photorealistic images of glazing, and calculating the optical and thermal characteristics of glass units. 4.3. mobile applications as a way of promoting sales a separate tool in the communication marketing strategy is an interactive tool for selecting the optimal glass unit formula for a customer in the form of the abc glass expert mobile application for ios and android. the application has a number of features: user analytics, loyal user identification, video tutorials, and business process reports. the mobile application shows the user the stages of selecting the optimal solution by determining the cardinal position of the window, the colour shade and the noise insulation level. the application is aimed at window sales managers and measurers. in the administrative panel, administrators of regional levels of abc have the ability to manage content in the client application. the main implementation problems of the application development project were to ensure the offline operation of the application in the absence of an internet connection, localization of the application around the world and the availability of the application to any user, understanding their specific user journeys. an important stage in the integration of the abc coating recognition application was the patenting of the method for determining the coated glass type using the application and the light source. the patent was registered in russia and the usa. the method for determining a glass unit is as follows: 1. the user takes a light source and brings it to the glass unit. 2. takes a photograph with an app of the original flame with its reflections from each glass surfaces in the glass unit. 3. the system analyses the deviation in colour of the body of flame from each of the surfaces and compares it with the application’s spectral data library. 4. based on the comparison, an assumption is made as to the type of coating probability, and the surface it is located at within a glass unit. analysis of the application’s functionality allowed identifying potential scope of the application: 1. the end user can determine the type of glass coating (energy-saving or solar control). 2. installation teams can confirm the correct glass unit orientation within the window. 3. architects, inspection and supervisory authorities can determine the type of glass installed on the facade of the building in case of documentation loss. 5. discussion the results demonstrate the use of abc’s proactive digital business growth strategy through software development and the integration of interactive technology tools into the work of their staff. this confirms the findings of other studies in this area: “the use of electronic means of cooperation between the companies continues to grow in strength and dynamics” (pawłowski & pastuszak, 2017). software and applications allow to create added value in the form of the final product visualization. b2b marketing is becoming more consumer-oriented through mobile applications. in comparison with the results of wali, uduma & wright (2016), this study allows to conclude that technological solutions in the form of applications not only provide product knowledge, personalization of services in the b2b sector, but are targeted at end users. at the same time, abc develops software both for internal and external use (end users and customers). thus, abc as a supplier of float glass partially transfers a number of sales and customer information functions to its customers, and solves the problem of employee turnover in the sales subsystem. according to the findings, pawłowski & pastuszak (2017) “we observe growing “self-service with everything”; three seas economic journal 51 vol. 1, no. 3, 2020 providers will pass on to buyers and systems, most actions which they can perform by themselves.” as the number of mobile device users will increase in the future, the trend towards self-service in the glass industry will gradually increase. companies, which are technologically ready for such digital transformations, will have a competitive advantage in the marketplace. the abc mobile application is also a tool for analysing end user data, forming knowledge about customers and their behaviour. this leads to knowledge of the market as a whole and allows for more detailed segmenting of customers. similar conclusions were made by paschen, kietzmann & kietzmann (2019): technologies based on artificial intelligence and big data are influencing the transformation of marketing in the b2b segment in terms of knowledge management about customer behaviour. the findings of this study correlate with the results of feng et al., (2019) on digital augmentation of traditional marketing channels based on content marketing and technology solutions. this allows to instantly interact with customers and end users, identify purchase problems, and solve the problem of a long sales chain. “branded app adoption and uses increase customers’ website interactions… increase customers’ spending and promotional responses” (wang, 2020). as a result of the portability, accessibility to owners and multifunctionality of mobile devices, multidimensional data is collected on the activities of consumers who use applications on their mobile phones that can effectively describe their habits (feng et al., 2019). thus, abc should pay more attention to mobile customer data to gain insight into customer behaviour and develop new products. mobile phone big data will enable b2b glass manufacturers to better understand not only their customers, but also their business partners, competitors and players in the b2b markets in general. ultimately, this will lead to better customer interaction strategies and increased sales. digitization through the integration of mobile applications also carries the risk of resource scarcity and accelerated sales decline. this is due to the peculiarities of the russian glass industry market and consumer behaviour in this market. the domestic market is not entirely ready for such changes, the mobile application is available for use only by the company’s employees, and the end customer data is limited by the 2017 survey data. a mobile application can be an effective tool for transferring the functions of marketers and sales managers if such a tool is actively used by buyers. consumer survey data from the 2017 windows end user opinion survey show low mobile application usage and an emphasis on price as a key purchase criterion. this suggests that in the next five to ten years the mobile application may almost not be used by buyers of the russian market. this leads to both costs and lack of effect from digitization. as deryabina & trubnikova (2019) state, “decreasing the human field resources in parallel before reaching the desired economic effects, can bring the companies to resources gap and as a consequence to acceleration of decrease of sales”. at the same time, abc company has problems with a long sales chain and high turnover of personnel at the end points of sales. a mobile application is a way to solve these problems and, at the same time, by informing consumers about the properties of the product, and building loyalty. 6. conclusion this research leads to three main findings. firstly, mobile applications as a tool to increase sales are effective if they are actively used by company personnel, end users and b2b customers. the penetration rate of the number of users depends on digital skills and technological readiness of both companies in the b2b segment and customers. secondly, the active use of the company’s digital business growth strategy and digital marketing communications leads to the formation of additional values: 1) development of customer-oriented business; 2) development of knowledge about the company’s products among external and internal stakeholders; 3) personalization of products in the b2b segment; 4) solving the employee turnover problem and employee incompetence, primarily sales managers, by informing buyers about the properties of the product through interactive technologies; 5) the possibility of accurate detailed analysis of data about customers (b2b) and end users, their behaviour and the mechanism of making a purchase decision. third, applications complement traditional b2b marketing channels. this is due to a number of problems, including the digital unpreparedness of the russian domestic market to accept new technological solutions. as a consequence, the integration of applications into the sales system leads to additional costs for three seas economic journal 52 vol. 1, no. 3, 2020 the company while providing effects in the long run. at the same time, the company has a problem of insufficient competence of sales managers due to employee turnover. this does not allow to instantly solve the problem of a long sales chain and, with the help of applications, reduce the period of informing the end users about the main advantages of the products. since the active use of applications by stakeholders can be expected in five to seven years, the above problems can be solved by continuing active digital marketing communication. references: ayman, u., kaya, a. k., & halim, i. (2019). mobile app marketing communication for b2b and b2c: ingoes as a case study. in consumer behavior and marketing. intechopen. doi: 10.5772/intechopen.85008 businessstat (2019). analiz ryinka listovogo stekla v rossii v 2014-2018 gg, prognoz na 2019-2023 gg. available: https://marketing.rbc.ru/research/42399/ boyd, d. e., & koles, b. (2019). virtual reality and its impact on b2b marketing: a value-in-use perspective. journal of business research, vol. 100, pp. 590–598. deryabina, g., & trubnikova, n. (2019). digital b2b communications: economic and marketing effects. institute of scientific communications conference: 866–875. springer, cham. feng, x., li, y., lin, x., & ning, y. (2020). mobile targeting in industrial marketing: connecting with the right businesses. industrial marketing management, vol. 86, pp. 65–76. doi: 10.1016/ j.indmarman.2019.06.007 hall, s. (2017). innovative b2b marketing : new models, processes and theory. kogan page publishers. harker, m. j., & egan, j. (2006). the past, present and future of relationship marketing. journal of marketing management, vol. 22(1-2), pp. 215–242. herhausen, d., miočević, d., morgan, r . e., & kleijnen, m. h. (2020). the digital marketing capabilities gap. industrial marketing management, vol. 90, pp. 276–290. doi: 10.1016/j.indmarman.2020.07.022 lin, w. l., yip, n., ho, j. a., & sambasivan, m. (2020). the adoption of technological innovations in a b2b context and its impact on firm performance: an ethical leadership perspective. industrial marketing management, vol. 89, pp. 61–71. doi: 10.1016/j.indmarman.2019.12.009 pandey, n., nayal, p., & rathore, a. s. (2020). digital marketing for b2b organizations: structured literature review and future research directions. journal of business & industrial marketing, vol. 35(7), pp. 1191–1204. doi: 10.1108/jbim-06-2019-0283 parkkinen, t., & hoțoleanu, m. (2017). inbound marketing strategy: content marketing and blogging : case: cloud-based mobile application. available at: http://urn.fi/urn:nbn:fi:amk-2018092015277 paschen, j., kietzmann, j., & kietzmann, t. c. (2019). artificial intelligence (ai) and its implications for market knowledge in b2b marketing. journal of business & industrial marketing, vol. 34(7), pp. 1410–1419. doi: 10.1108/jbim-10-2018-0295 pawłowski, m., & pastuszak, z. (2017). b2b customers buying behavior. international journal of synergy and research, vol. 5, p. 19. ritter, t., & pedersen, c. l. (2020). digitization capability and the digitalization of business models in business-to-business firms: past, present, and future. industrial marketing management, vol. 86, pp. 180–190. rizomyliotis, i., konstantoulaki, k., & kostopoulos, i. (2017). what is next for business-to-business marketing communication? business-to-business marketing communications: 79–90. palgrave macmillan, cham. the american institute of architects (2019). the architect’s journey to specification 2019. available at: https://www.aia.org/resources/85766-the-architects-journey-to-specification:46 tong, s., luo, x., & xu, b. (2020). personalized mobile marketing strategies. journal of the academy of marketing science, vol. 48(1), pp. 64–78. veronica, p., silvia, m., & lavinia, p. a. (2018). traditional versus online marketing for b2b organizations: where the line blurs. ovidius university annals, economic sciences series, vol. 18(1), pp. 382–387. wali, a. f., uduma, i. a., & wright, l. t. (2016). customer relationship management (crm) experiences of business-to-business (b2b) marketing firms: a qualitative study. cogent business & management, 3(1): 1183555. doi: 10.1080/23311975.2016.1183555 wang, r . j. h. (2020). branded mobile application adoption and customer engagement behavior. computers in human behavior, 106: 106245. doi: 10.1016/j.chb.2020.106245 o.k.n.a. marketing (2017). issledovanie mnenii konechnykh potrebitelei pvkh-okon. three seas economic journal 23 vol. 1, no. 3, 2020 corresponding author: 1 uzhhorod national university, ukraine. e-mail: rvps@ukr.net orcid: https://orcid.org/0000-0002-3869-3274 researcherid: aaj-1630-2020 doi: https://doi.org/10.30525/2661-5150/2020-3-4 formation and substantiation of anti-crisis strategy of financial security of countries with economies in transition oleksiy getmanenko1 abstract. the purpose of the article is to form and substantiate the anti-crisis strategy of financial security of countries with economies in transition. this need is due to the fact that the development of the world economy and international financial relations, strengthening integration processes in the world in times of the ongoing global financial instability, internal and external contradictions and imbalances in financial markets require the development of new ways to improve financial security. methodology. in the course of the analysis, various concepts and directions of improving the financial security of the state were considered, using the methodology of system analysis in the study, which allowed to form the principles of anti-crisis strategy of financial security of countries with economies in transition. results. the most important tasks of strategic anti-crisis management of financial security of the state on the way to its integration into the world economy are to ensure an effective integration of the financial component of the economy within the regional and global financial relations, to improve the efficiency of public administration and optimize the system of overcoming external and internal threats to financial security, conduct a policy of reasonable protectionism within the framework of generally accepted and effective procedures, as well as to maintain stability of the national currency and its moderate volatility, etc. practical implications. the analysis of concepts and areas of improvement of financial security of the state allowed to formulate the principles of anti-crisis strategy of the financial security of countries with economies in transition and to develop practical recommendations for improving the process of financial security management in ukraine. value/originality. the use of systematic analysis allowed to formulate the principles of anti-crisis strategy of the financial security of countries with economies in transition in modern conditions. key words: anti-crisis strategy, financial security of a country, countries with economies in transition, international financial relations. jel classification: f36, h12 1. introduction the development of the world economy and international financial relations, the strengthening of integration processes in the world in times of ongoing global financial instability, internal and external contradictions and imbalances in financial markets have led to the strengthening and spread of the following interrelated trends, risks and threats to global financial security. firstly, the openness of the world's economies and their financial markets, liberalization of international financial relations, integration of financial and foreign exchange markets, intensification of global capital movements have significantly strengthened the level of interconnectedness and interdependence of the world economy, global financial and economic system, economies and financial systems of the world, which have become whole. secondly, the interconnectedness and interdependence of the world economy and the global financial and economic system, which are dynamic and multi-coordinate, have made it a complex, vulnerable and prone to various risks and threats system for all member countries, due to the uneven development of the world; thirdly, the strengthening of the integration of the world economy, the turbulence of the global three seas economic journal 24 vol. 1, no. 3, 2020 financial and economic system as well as the open economy is accompanied by various manifestations of instability of economic and financial markets, ineffective tools for regulating and controlling states and their lack of possibility to impact the turbulent environment. fourthly, the virtualization of economic relations, the development of the e-economy, the emergence of new agreements, products and transactions, turbulence and changes in the environment have led to a systematic transformation of the role of financial institutions and economic entities on the basis of common tasks and functions, new laws and paradigms, subject to the laws of synergy, and, consequently, the need to form fundamentally new approaches to their regulation at both global and national levels. it should also be noted that both globally and at the level of an individual country, there is a constant emergence of various structural disparities, which are constantly increasing and are critical for both local and global financial security, as well as for the development of financial and economic systems. in view of this, in any country, the issue of developing ways to neutralize the risks and threats to financial security in the process of integration into the world economic relations at the national level comes to the fore. this is especially true in the countries with economies in transition. to reaffirm the importance of this step, it should be noted that following the united nations summit on sustainable development on 25 september 2015, 193 participating countries have committed themselves to a wide range of measures and structural changes to ensure macroeconomic stability and financial security of states, competitive development, ecological balance and social cohesion of national economies, etc. after all, even the market systems of developed countries were incapable of self-regulation: "the root causes of cataclysms are a utopian attempt by economic liberalism to create a self-regulatory market system" (polanyi, 2001). 2. ways to neutralize the risks and threats to financial security of countries with economies in transition according to professor r . voitovych, the problem of the lack of formation of national identity prevents the state from fully resisting the globalization challenges of other states, to ensure a sufficient level of its own financial security. according to the author, it is essential to develop a state globalization policy that would preserve the country 's financial stability by taking into account the ratio of geostrategic forces in the global space and a clear definition of ukraine's place and role in it. at the same time, globalization policy should be aimed primarily at the realization of national interests not by adapting to the needs of the global development system, but by being able to declare and defend their own nationally regulated position in the global world (voitovych, 2013). a. kulinska in the monograph "management of the components of financial security of the national economy of ukraine: concept and methodology " offers methodological tools for managing the financial security of the national economy of ukraine, which is to strengthen the interconnections between the components of financial security (kulinska, 2016). somewhat similar proposals were put forward by o. sidorov, who proposed a fairly general approach to economic security on the basis of the intellectual potential, which involved a certain sequence of stages of support, which included the formation of methodological and information bases, analytical assessment, threat detection and assessment, development provisioning mechanism. according to the scientist, this approach allowed to diagnose the state of the national economy based on the results of economic security assessment, to identify threats to economic security in the field of intellectual potential and to develop measures to eliminate them or overcome their consequences (sidorov, 2018). it is also necessary to highlight the proposals of some scholars on the possible ways to neutralize the risks and threats to financial security in the process of integration into the world economic relations, which are to manage certain components of financial security. unfortunately, such a narrow specialization of the ways to neutralize risks and threats to financial security is not able to fulfill this task, because the country 's financial security is a systemic category, and it is impossible to achieve its quality level only through the management of its individual components. public financial policy and tools aimed at overcoming threats, risks and negative factors for the financial system and financial security of the country must combine a set of budget, tax, credit, monetary and other instruments. the need to use the instruments of all components of the country 's financial security three seas economic journal 25 vol. 1, no. 3, 2020 is due to the fact that the shortcomings and limited effects of some instruments must be offset by the advantages of others, it is necessary to create a comprehensive system of measures to strengthen and effectively develop both the country 's financial system and financial security. let us now consider the proposals that have been developed by international structures. thus, within the framework of the g20 in london on april 2, 2009, a number of priority tasks were identified in reforming the system of the anti-crisis regulation of financial security at the national level: – expanding the scope of financial regulation and its extension to most transactions in the financial market. regulation must keep pace with innovation and focus more on operations rather than institutions; – strengthening market discipline, eliminating the risk of an incorrect assignment of ratings. the identification of triggers that indicate the need for government intervention, as well as the development of a more transparent system of distribution of losses, are of particular importance for system-forming banks; – minimization of pro-cyclicality in regulation, creation of reserves and airbags in a "peacetime". regulators should continuously monitor market conditions so as not to encourage the financial institutions to take excessive risks; – ensuring greater information openness, reliability of statistical data, their accurate reflection in the reports on financial stability, the creation of more transparent conditions for the assessment of complex financial instruments. various market indicators (stock indices, option prices, cds spreads) can contain important information about systemic risk. obtaining information on the overthe-counter transactions and off-balance sheet transactions will expand regulators' understanding of the level of accumulated risk in the system; – improving the efficiency of liquidity regulation in the financial system (g20 london, 2009). according to experts of the international financial organizations, the priority for the country 's financial security in the process of integration into world economic relations should be the integration of the national macroeconomic policy and tax system, as well as the financial regulation of capital flows. the imf has already reconsidered its strong position on capital controls, but governments and international institutions need to do more to legitimize such measures. for example, governments can strengthen the stability of the national economy through "countercyclical regulation of capital", i.e. by limiting the inflow of capital if the economy is overheated, and by taxing the outflow of capital in the event of a recession. governments must also combat tax evasion by creating a global financial register that records the place of residence and citizenship of shareholders and beneficial owners of financial assets. agreeing with the above positions and activities of scientists, organizations and states, it should be noted that they are either one-time, even when obtaining certain positive results, or aimed at solving operational problems, and so on. however, they are not a specific system and must be constantly reviewed and changed depending on the situation and the state of financial security of the country, which may lead to a waste of time in case of other, previously irrelevant risks or threats. 3. the concept of strategic anti-crisis management of financial security of the state given the above, we propose the concept of strategic anti-crisis management of financial security of the state, which should be implemented on the basis of strategic and preventive nature, should be aimed at continuously ensuring a level of financial security of the state at which it can protect its national interests, support socio-economic and financial stability of development, to be a participant in the world integration processes and international economic relations, which provides compliance of financial policy of the state (international, regional, national, local) long-term goals of sustainable development; constant complex interaction of all subjects of financial security management on all aspects of the financial security; constant control, monitoring and prevention of the existing and potential internal and external risks, threats, dangers and imbalances by building a vertically integrated risk management system at all levels of the economy; continuous development and improvement of tools for control, monitoring and avoidance of risks, threats, dangers and imbalances, overcoming their negative consequences and ensuring the financial security of the state. at the same time, the model of strategic anticrisis management of financial security of the state should provide a list of various, consistent actions carried out in stages according to the algorithm: 1. strategic diagnostics involves the implementation of system analysis: external and three seas economic journal 26 vol. 1, no. 3, 2020 internal factors, challenges, dangers and threats; various geopolitical, economic and financial influences; trends and patterns of development of the world economy and the world financial system; state and trends of the financial system and security of the country, etc. 2. strategic planning involves forecasting and planning the development of the financial system and financial security of the country within the economic security, as well as the establishment of the medium and long-term priorities of its operation. the result is the development of a strategy of financial security of the state as a political and economic course of the financial security management system of the state, the activities of state bodies, economic and financial structures, which aims to create conditions and resources for financial stabilization and economic growth. 3. strategic implementation involves ensuring the required level of financial security of the country by coordinating and ensuring the effective interaction and functioning of all components and elements of systems; introduction of preventive, anticipatory and / or anti-crisis solutions, measures and tools. 4. strategic monitoring involves the implementation of current and future monitoring and control, assessment of the state of financial security based on the relevant indicators; adjustment of the medium– and long-term priorities of the strategy, adaptation and transformation of the operational decisions and actions, based on the results of strategic monitoring of the financial security system of the state. ensuring the quality implementation of this concept and achieving the greatest effect is possible only if the financial security management system of the state will be a set of the interconnected elements, which are characterized by the following system characteristics: – mandatory presence of an ordered set of components, the functioning of which is determined by the established laws, norms and rules; – the permanent nature of the relationships between the constituent elements that arise in the process of the system; – flows of resources, information and energy both within the system itself and in the process of its interaction with the external environment; – the presence of a clear hierarchical structure with the distribution of powers, duties, responsibilities and control centers in the implementation of the main functions of the system; – ability to self-development and self-regulation of the system, forming its self-sufficiency and independence in the course of social exchange; – the presence of a holistic system of properties and characteristics that are not inherent in its individual elements (boiko, 2017). the system of financial security management of the state should have such a structure that would be able to ensure clear functional and institutional interaction and coordination of all elements of the financial system. the main tasks of the financial security management system of the state include: – ensuring coordination of various levels and components of the financial security, including the international security systems; – identification of the internal and external threats to financial security; – choice of ways and means to achieve goals and address financial security issues; – formation of a set of measures capable of ensuring the achievement of goals and solving problems; – coordination of actions of all participants of strategic anti-crisis management of the national financial security; – ensuring monitoring, evaluation and control of the strategy implementation; – financial, informational, personnel and other support of the strategy implementation process. to confirm the correctness of the direction of improving financial security management, consider two opposite cases on the example of poland, which partially implemented our principles and the principles of financial security management system, and an example of argentina, where our principles and principles did not find a place. today, in poland, there is a system of financial security management, which includes the financial stability committee, the ministry of finance, the financial supervision commission, the national bank of poland, the bank guarantee fund, guarantee and compensation entities in the insurance and capital market, and the national association credit unions. each of the structures has specific tasks defined by the law both in case of crisis situations in the activities of individual institutions, and in case of crisis of the system as a whole (masiukiewicz, 2014; masiukiewicz, 2012). the financial security management system of the argentine republic is no less presentable from an three seas economic journal 27 vol. 1, no. 3, 2020 institutional point of view and includes a number of relevant regulations. the key institution of the financial security management system of the republic of argentina is the high level systemic risk monitoring committee, which includes the central bank of the republic of argentina (bcra – banco central de la republica de argentina), the ministry of economy and public finances (mecon), the national securities commission (cnv), the national insurance supervisor (ssn), and the deposit insurance fund (fgd). at the same time, the main problem of the systems and process of financial security management of these countries, as well as of ukraine, is the lack of a financial security management system in the presence of conditions and appropriate regulatory and supervisory institutions. 4. risk management system as a subsystem of the financial security management system of the state given the above, as well as returning to the functioning and efficiency of the financial security management system of the state and based on the requirements and features of systems theory and systems analysis, the criteria for monitoring and analyzing the functioning of the financial security management system should include: – time order, which implies the need to take into account the state of functioning of the elements and the system as a whole and the dynamics of processes, taking into account the continuity of the management process; – structural-spatial ordering as the spatial arrangement of system elements, and the establishment of different types of connections between them; – information ordering as a subsystem of knowledge management, taking into account internal and external connections, fulfillment of functional responsibilities for functioning, security and selfdevelopment (moiseenko, 2007). this can be ensured through the risk management system as a separate subsystem of the financial security management system of the state. the main task of this risk management system should be: – identification and prevention of existing and potential systemic risks, dangers and threats of the external and internal origin, because they have caused and continue to cause the greatest negative and destructive impact on the financial security of a single state; – assessment and determination of the necessary resources to neutralize risks, dangers and threats; – planning and adjusting measures for the implementation of state policy in the field of financial security, etc. to implement the above-mentioned risk management subsystem in ukraine, it is possible to establish a permanent working group under the national security and defense council of ukraine or the cabinet of ministers of ukraine. this council should be instructed to lead not only the organizational and methodological work on the development of the financial security strategy and policy, but also the current regulation, monitoring of global risks and assessment of their impact on the financial security and the economy, as well as a timely identification of potential challenges, dangers and threats to financial security of ukraine. as for the structure of the risk management subsystem, as well as the control, collection and analysis of information on systemic risks to financial security of ukraine, we can offer the following distribution and responsibility of the state bodies and components of the financial security of the state, in order to identify and prevent the risks, implement the necessary measures and tools, given the systematic category of "financial security ": – ministry of economic development, trade and agriculture of ukraine: financial security of the state; – ministry of finance of ukraine: budget and debt security; – national bank of ukraine: monetary banking, currency security and security of the non-banking financial sector; – national commission on securities and stock markets of ukraine: stock market security. at the same time, a prerequisite for the effectiveness of this risk management system should be interconnected activities and comprehensive interaction of all its institutions, their quality regulation and administration within the entire financial security management system, as well as ensuring the implementation of a unified state policy on financial security, rather than a simple statistical performance of their own functional tasks, as it is happening today in the system of public administration of the financial system and security of the state. three seas economic journal 28 vol. 1, no. 3, 2020 5. conclusions thus, it can be noted that strategic anti-crisis management of the national financial security will address a number of important issues for the state, the main of which are the following: – ensuring the financial stability of the state for a long period in all conditions, including by preventing and minimizing the effects of various crises (for example, crises of monetary, financial systems, etc.); – neutralization of the negative impact of the world finances and economic expansion of the foreign and transnational companies on the national financial security; – meeting all the necessary needs of society in financial resources and ensuring economic growth of the country; – counteracting existing and potential dangers, risks and threats to ensure a stable functioning of the financial system, financial independence and identity of the state; – ensuring the competitiveness of the state and the competitiveness of domestic producers in the world economy and the regional markets; – ensuring the flexibility of legislation and compliance of national legislation with international standards; – ensuring the protection of national and financial interests of the state and society in the context of growing globalization and integration of the country into international economic relations; – ensuring effective control over the distribution and use of public funds; – creating a favorable investment climate for foreign investment. references: polanyi, k. 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(in ukrainian) three seas economic journal 35 vol. 3 no. 2, 2022 corresponding author: 1 batumi state university & batumi state maritime academy, georgia e-mail: giazoidze@yahoo.com orcid: https://orcid.org/0000-0002-0155-5775 researcerid: https://publons.com/researcher/4610363/gia-zoidze/ 2 tbilisi state university, georgia e-mail: shota46@yahoo.com orcid: https://orcid.org/0000-0003-0933-3648 doi: https://doi.org/10.30525/2661-5150/2022-2-5 transformation of economic policy priorities under covid-19 gia zoidze1, shota veshapidze2 abstract. the aim of this paper is to analyze the main challenges of the new paradigm of economics in the context of covid 19, the economic role of the state and the scale of state intervention in the economy. economics teaches us that there is a time for budget expansion and a time for budget constraints. there are times when the government has to intervene in the value chain and there are times when it has to leave the markets alone. sometimes the tax has to be high and sometimes low. trade in some areas should be more independent and regulated elsewhere. globalization is one of the primary variables impacting the state's economic condition in the modern world. the most important function of the state in the context of globalization is not only to protect the national economy from external influences (so-called "external shocks"), which is virtually impossible today, but also to effectively participate in international economic ties and increase the country's global competitiveness. in this aspect, the contemporary state plays a critical role. in turn, georgia must construct a "georgian model" of economy that will serve as the "core" of an economic model that would attract investment (in the real economy), generate employment, expand exports, and deliver true prosperity to all georgians. today is the day when, at the state's initiative, the country's economic priorities are defined and the country's distinctive economic potential is fulfilled. the modern economic crisis, which was triggered by the covid-pandemic, has demonstrated that a route out of the current predicament is conceivable when the anti-crisis strategy is based on increased government participation in the economy. to accomplish so, the government and the public sector must play a larger role in crisis management. despite these examples, the economic regulation of the state has always had strategic and tactical significance. for any country, there are and will always be state problems that are either not addressed through the supply-demand mechanism or are associated with negative side effects. based on the existence of such cases, a set of free market economic measures is being developed through state programming of the economy and the use of regulatory tools. in view of the above, it is necessary to reconsider and reform the role and rights of the state in modern economic relations. the need to establish the state as a factor of progressive development in the economy should be emphasized during the reform. in addition, it should include legislative activities such as – compliance with labor safety conditions, regulation of the minimum wage, resolution of social conflicts, etc. key words: covid-pandemic, the state's economic role, governmental interference in the economy, the new paradigm of economics. jel classification: b10, f62, h10, h72 1. introduction the pandemic crisis has posed many challenges to countries around the world. georgia (as well as almost all countries in the world) were painfully affected by these challenges, which faced an economic crisis in 2020–2021. in such conditions, both excessive regulation of the economy and its self-flow will not be effective. in the first case, there is a "slowdown" in the development of the economy and an increase in corruption in the regulatory bodies, and in the second case, we can get a complete disorder and a severe violation of the rights of consumers and investors. the world experience of economic reforms has shown that it is most effective this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 36 vol. 3 no. 2, 2022 to use the "golden interval" between these two approaches. the need for government intervention is also determined by the fact that absolute freedom is impossible. anarchy, as a philosophical model of social order, is practically impossible. one person's freedom ends where it threatens another's freedom. it is also very difficult and important, in the above sense, to define property rights, which is impossible without the participation of the state. another economic area in which a particularly difficult problem arises is the monetary system, for which the responsibility of the government has long been known. the need for government intervention in this area is not disputed in any country. at the present stage, the economic role of the state is influenced by two very important processes: globalization and the formation of a post-industrial society. as a result of globalization, the interdepen dence of the governments of a country in the development and implementation of national economic policy, as well as their dependence on international (supranational) institutions, is significantly increasing. of course, all this limits the degree of independence of national governments and raises the need for uniform, unified regulation mechanisms and agreements in one country or another (zoidze, 2021). therefore, the question may arise: in the global world, is the role of the state weakened in the development of economic policy or is it the death of the state?! this view has not a little support in the scientific community. the question is to what extent these theses reflect reality. economic thought, mass-conscious notions and religious assessments, references to economic relations and governance, and later to the programs of political parties, emerged from the origins of the ancient states (veshapidze, 2015). from them we can conditionally distinguish economic doctrine – a theoretical concept that reflects the basic laws of economic life, describes the relationship between its subjects, which reveals the driving forces and important factors in the creation, distribution and exchange of wealth. economic doctrine dates back to the 16th century and is associated with the formation of the capitalist commodity economy. old theories are important for a better understanding of the new. modern theories cannot be properly understood if we do not regard them as a legacy of the past. however, new economic theories cannot be mere improvements to the old. good new theories use only part of the old theories, some fragments of which remain temporarily unread. 2. realistic and useful alternative vectors of economic thought the universally accepted division of economic thought into ancient greece, mercantilists, physio crats, classical, marxist, neoclassical, institutional, keynesian, monetary economic thought, and neoclassical synthesis is conditional on the methodological nature of a number of schools. there are a number of well-known scientists whose work has a synthesized character and can not be attributed to any of the above scientific directions. therefore, economists today are trying to achieve in their approach a healthy combination of everything, their synthesis, which has withstood the test of time and is still true and relevant today. it is a combination of modern, neo-keynesian and neoliberal provisions with their earlier neoclassicists, as well as some postulates of classical political economy (veshapidze, 2015). it is on these postulates that the new paradigm of economics and its teachings is based. this is a core program whose main advantage of the approach is that the standard orientations of the economy are being replaced by more realistic and useful alternative orientations. unlike all previous political paradigms – mercantilist, classical liberal, keynesian, social democratic, ordo-liberal (west german) or neoliberal – they are no longer seen as universal programs that can be used anywhere, anytime. according to this program, any question related to this or that economic policy will be answered correctly: "depending on the circumstances". we need economic facts and analysis to get the details on which the desired result depends. truly useful keywords in economic science are – not preconceived notions, contextuality, not universality. economics teaches us that there is a time for budget expansion and a time for budget constraints. there are times when the government has to intervene in the value chain and there are times when it has to leave the markets alone. sometimes the tax has to be high and sometimes low. trade in some areas should be freer and regulated elsewhere. relationships need to be established between real-world circumstances and the appropriateness of certain types of govern ment intervention (zoidze & abuselidze, 2021). recently, most economists in the west have been trying to combine the classic smith and marshall microeconomics with modern income-level macroeconomics to achieve a "neoclassical synthesis" through effective credit and monetary policies, so that both approaches achieve a healthy fit and is still relevant today. according to nobel laureate in economics paul samuelson, a. smith's " wealth of peoples" is the three seas economic journal 37 vol. 3 no. 2, 2022 "birthday of political economy ", and what was before it is the "prehistory of economics", a memory from time immemorial when borrowing and lending were banned from state policy, with mercantilists advocating protectionist tariffs as "prince's advisers". for the prosperity of the nations "and when the physiocrats, who" believed in the cycle of economic life", hoped for" the reform of the old regime of prerevolutionary france". by this author, adam smith has been proclaimed a "forerunner of free competition" and a preacher of the "emerging bourgeois class", and his book is an unusually authoritative "masterpiece" that "had a tremendous impact on the next century ". then there are the teachings of t. r . malthus and the "key figure of this century " d. ricardo. that is t. malthus, by proposing the theory of a reduction in workers' wages, also influenced d. ricardo as the population grew. one of the directions of neoclassical economics is modern post-keynesian economics. the latter, in turn, was also based on karl marx's "capital", which came from earlier works. they are duly assessed by the so-called neoclassical revolution, which discovered mathematical means of analyzing demand, utility, and universal economic equilibrium, and made political economy more "scientific". important is the circumstance that the englishman a. marshall and the american j. b. clark, who made the greatest contribution to the neoclassical revolution, became more and more concerned with the glory they achieved and the high position they had in society. l. walras and w. pareto introduced elements of mathematics into economics and thus developed important methods of economic analysis (veshapidze, 2015). as a result of the keynesian revolution, in the years following world war ii, political economy, on the one hand, went too far in explaining the economic situation and the cycles of business activity. however, the neoclassical economy of the time "failed to develop developed macroeconomic models that would be appropriate for its highly developed microeconomics". only the epoch-making j. m. keynes' general theory of employment, benefit, and money, published in 1936, did not allow economic science to "remain old-fashioned", and sey 's law belief in a crisis-free society disappeared. in the period of post-keynesian political economy, the ideas of the post-keynesians yielded results, which manifested themselves in the better functioning of a mixed economy. an unprecedented increase in production and living standards in history has been achieved since world war ii. however, this still did not solve the problem of finding the only perfect model of economic policy. society could not be freed from the need to choose between full employment and price stability. institutionalists, serious economic currents, and other schools of economics have tried to do this: the chicago school, proponents of free competition, including m. friedman, and other truly "market priced" activists. then, j.k. galbraith criticized the orthodoxy that prevailed in the economy. this was followed by the establishment of a school such as new left, a critic of the mainstream direction of economic science. it includes american economists who call themselves "radical economists". over the last century, the fight against disasters such as mass unemployment and inflation has been and remains the most pressing problem of socioeconomic development of states with market organization and, of course, of economic science. how to achieve stable and full employment and steady growth of real incomes of the population? what are the "secrets" of the crisis-free economic cycle? this led economists to neoclassical synthesis. according to paul samuelson, the "neoclassical synthesis" is a combination of modern, neo-keynesian and neoliberal propositions and "truths" with their earlier neoclassicists, as well as some postulates of classical political economy, primarily the modern theory of income formation. 3. a new paradigm in the teaching of economics and in economics itself given the recent developments, it can be said with certainty that something new has emerged in the world of economic policy. president of the united states of america, joe biden, has called for a massive increase in government spending on social programs, infrastructure, and the transition to a green economy. he intends to use public procurement to re-establish domestic production chains and bring back manufacturing employment to the us. janet yellen, the country 's minister of finance, is asking for a global coordinated hike in corporation taxation. jerome powell, chairman of the federal reserve, who has traditionally been the government's main "hawkish" on price stability, is trying to allay inflation fears and has voiced support for expanding budget expansion (rodrik, 2021). all these political changes represent a sharp breach of the view previously held in washington. does all this mean the emergence of a new paradigm of economic policy? economic policy in the united states and the west in general has long needed change. the ideas that have dominated since the 1980s (otherwise known as the washington consensus, market fundamentalism, neoliberalism) initially became popular because keynesianism was perceived as both erroneous and three seas economic journal 38 vol. 3 no. 2, 2022 excessive state regulation. however, these ideas took their own lives and gave rise to a highly financialized, unequal and unstable economy that is poorly prepared to meet the most important challenges of our time: climate change, social inclusion, revolutionary new technologies (rodrik, 2021). it would be helpful to start the necessary paradigm shift depending on how we teach economics. economists value market power for overall economic growth. adam smith's "invisible hand" (the idea that selfish people who seek nothing but personal wealth can create collective prosperity rather than social chaos) is one of the crown jewels of economists. however, at the same time, it remains deeply illogical, and perhaps that is why economists spend so much time preaching about the magical power of markets. however, the economy is not a praiseworthy song of free markets. moreover, most economic education focuses (concentrates) on how markets can lead to excessive inequality and their inability to allocate resources effectively. ideal competitive markets that harmoniously create a stable equilibrium are just one of many different opportunities. smith's model is not the only one. nevertheless, many economists have an article-posing reflex: they always see well-functioning, competitive markets as the main focus when considering any proposal for a possible rejection of laissez-faire policies (non-interference in the state economy). the new paradigm in the teaching of economics and in economics itself contributes to a better understanding of its social consequences. however, we should be aware that this does not create a new paradigm of economic policy. and so it should be. all of our past political paradigms – mercantilist, classical liberal, keynesian, social democratic, ordo-liberal (west german), or neoliberal – had major flaws since they were viewed as universal plans that could be implemented everywhere, at any time. however, the flaws in each of these paradigms have ultimately eclipsed their groundbreaking contri butions to our knowledge of economic governance. as a result, there were erratic swings between extreme optimism and pessimism regarding the government's role in the economy (rodrik, 2021). making connections between real-world circumstances and the appropriateness of a certain type of government intervention – this is why the economy is really good. existential concerns confront our civilizations, necessitating new economic approaches and major political innovation. the biden administration launched a massive, long-overdue economic change. those looking for a new economic paradigm, on the other hand, should be cautious about their desires. our goal should not be to create a new petrified orthodoxy, we should learn to adapt our policies and institutions to changing needs. 4. impact of covid-19 on georgia's economic orientations it is true that the role of the market in the development of civilization is universally recognized, but it is not an omnipotent phenomenon and an effective mechanism for solving all problems. in real life, there are often situations when the market makes certain mistakes. zones of such market failure often include areas important for the sustainable and stable development of society: science, education, culture, social security (figure 1). in the post-industrial period, the economic role of the state is realized in the following functions: – regulation of natural monopoly conditions (production and distribution of electricity, telecommunications, transport, communications, water supply, etc.); – correcting unfavorable social consequences in the state, which should reduce social inequality, unemployment and poverty; – sustainable development of the economy using macroeconomic policy instruments, which should be focused on protecting the economy from the crisis and rising prices. the current reality around the eu confirms that some functions of the nation-state are being transferred to this largest regional organization (for example, positive side negative side – supply public commodities (such as law and order) that are not available on the open market – supply essential items (education, health) that are underserved in the free market – using the tax and welfare system, minimize inequity and poverty. – regulations by the government can protect the environment, employees, and consumers. – maintain the environment's long-term interests – monopolistic power should be limited – insufficient information and timing gaps are examples of government failure. – in the public sector, there are little incentives to be efficient. – government affected by powerful lobbying groups – higher taxes have a disincentive effect. – welfare programs have disincentive consequences. – there may be fewer options if the government owns the company. figure 1. intervention by government source: t. pettinger. pros and cons of government intervention. economics help, 2019 three seas economic journal 39 vol. 3 no. 2, 2022 the development of a common monetary policy for eu countries is carried out by the european central bank). however, it should be noted that globalization itself creates many problems, the solution of which is practically unthinkable without state intervention (for example, regulating migration, combating the spread of drug trafficking and terrorism, controlling transnational corporations, etc.). at the state level, striving for a high degree of equality in income distribution is very important, as it helps maintain social stability in society, protects it from strong fluctuations and civil strife. achieving a certain level of equality in income distribution is considered by many researchers as an increase in access to education by the general population, hence the accumulation of human capital, the development of small business, which, as we have already seen, plays a leading role in modern society. this issue has other no less important aspects. in particular: expenditures on education and health care are important not only in terms of the development of the individual as an independent value and the most important productive factor. emission also means that it contributes to equalizing the individual incomes of the population. today, the government of any country can not independently develop and implement economic policies without regard to the norms of conduct of other states and, especially, international organizations. in the modern world, one of the major factors influencing the economic role of the state is globalization. in the context of globalization, the most important function of the state is not only to protect the national economy from external influences (so-called "external shocks"), which is virtually impossible today, but also its effective involvement in international economic ties and increasing the country 's competitiveness globally. in this regard, the role of the modern state is very important. it is noteworthy that the world economic science has not yet created a model of budget system acceptable to all countries and functioning with equal efficiency, so it is not surprising that the budget system of georgia, at the present stage, requires significant improvement and transformation. in the process of finding a way out of the current situation, the state began to "copy " the "ready-made" economic models of foreign countries, which is another conceptual error. georgia needs to create a "georgian model" of the economy, which will be the "core" of the new economic system, which will attract investment (in the real sector of the economy), create jobs, develop exports and bring real prosperity to all residents of georgia. today is exactly the moment when, at the initiative of the state, the priorities of the country 's economy are developed and the unique economic potential is realized (zoidze, 2020). for example, the president of the ebrd and the government of georgia have a common vision on the issue of establishing and presenting georgia as a regional transport and freight "hub" (due to the unique location of georgia – in terms of trade and transport routes). in order for georgia to make this perspective a reality, it is necessary to create a non-commercial socalled "hub" with the participation of the state – in the form of a commodity exchange, which will promote: – the process of demonopolization of the economy; – increase and activation of commodity and foreign exchange flows; – development of logistics network; optimal loading of seaports; – establishing the uniqueness of georgia's economic model. in short, the constructive "intervention" of the state in economic processes is necessary, but only on one condition – if this intervention will be effective. it should be noted that if years ago the role and functions of the state were reduced to its fiscal policy, today this role is mainly considered as one of the technical tools for influencing the economy. however, no government, regardless of its political goals and objectives, can in any way not participate in the functioning of the economy and not be interested in the high efficiency of business in the country. therefore, the economic function of the state is to promote and protect the normal functioning of the market economy, which it cannot provide without interfering in the economy (zoidze, 2021). in the conditions of intensified competition in the modern international markets, the implementation of an effective budgetary policy is gaining great urgency for the development of the country. today, the most important priority of the state budget of georgia is to take care of the population's health and social guarantees. of course, it is necessary to improve the state policy in this direction, but it is also necessary to focus on reducing the number of socially vulnerable people, which means reducing poverty. this is one of the components of an effective budget policy. the optimistic expectations of the future created by the state can be considered as a stimulus for the reproductive process of the economy. these are the main public goods that play a crucial role for economic growth for developed countries, while for developing countries this is not enough and requires an active state investment policy (e.g., investments in infrastructure, education, etc.) (veshapidze et al., 2021). various studies have shown that the main urgent challenges in georgia are the reduction of inequality, poverty and unemployment, as well as the creation of new jobs in the private sector, without which social ties and economic development cannot be achieved. three seas economic journal 40 vol. 3 no. 2, 2022 in order to overcome these problems, it is necessary to achieve a high level of productivity. it can be achieved through effective restructuring and the development of strategies focused on the development of human capital through the provision of high employment. the effectiveness of state intervention in the economy depends significantly on fiscal policy. prioritization of public finances directly affects the economic growth of developing countries. so for example, if the development of business in the country is hindered by disorganized infrastructure, non-competitive environment, insecurity of private property and so on, the state should apply the appropriate funding in this direction. if the state does not respond adequately to the current challenges, even though it has adequate financial resources, then the budget policy is wrong. the modern, crisis-induced economic crisis has shown that a way out of the current situation is possible when the anti-crisis plan is based on strengthening state intervention in the economy. to do this, it is necessary to increase the role of government and the public sector in crisis management. inside the country, covid-19, along with many tragedies, has created new data and shown us the need for a development strategy that is reflected in clear priorities. the pandemic has shown us that an economy built on market principles alone cannot meet worldclass challenges. the main responsibility for providing health, education and social spheres still rests with the state. and should be indebted even. but it is necessary to find a new balance in which the area of free action of the private sector will not be limited – on the contrary, it will become more protected – and the role of the public sector will remain essential. as we have seen, the plan to make the public sector disappear turned out to be absurd. however, the efficiency, flexibility and accountability inherent in the private sector must be established in this area for every unit of money spent. based on the analysis of the macroeconomic indicators given in table 1 below, it can be said that a significant challenge for the georgian economy is the low economic growth rates, which are undesirable for the country. gdp growth per capita is still very insignificant in the country. according to preliminary data, the country 's gdp has shrunk by about 7%. under such conditions, approaches to state intervention in the economy naturally change. derived from the analysis of the discussed macroeconomic indicators, we can assume that there is a danger of a deep economic crisis in georgia. in order to avoid this crisis and to increase economic sovereignty, it is essential to fundamentally review the existing political course of the state and establish a new political platform. based on the georgian economic reality presented above, the following effective steps will be extremely effective for the sustainable and stable economic development of georgia: – improving administrative control based on legislative and normative acts. in addition, it is important to fundamentally revise the labor code in order to protect the rights of employees as much as possible; – modernizing the tax system (e.g., introducing a progressive income tax). progressive income tax operates in quite a few countries around the world and contributes significantly to the equalization of public incomes. in this case, the taxable interest rate may range from 15% to 50%; – must be defined the specific priority sectors of the economy that will be covered by state property and governance. active involvement of the state in economic activities will contribute to increasing the economic independence of the country. all this, in turn, will lead to the creation of additional jobs; – it is important to enact various economic regulators (e.g. subsidies). targeted direct and indirect export subsidy policies can have a major impact table 1 gross domestic product indicators of georgia and the ratio of state budget payments to gdp, annual data, 2015–2021* 2015 2016 2017 2018 2019 2020 i 21* ii 21* gdp at current prices, billion gel 33.9 35.8 40.8 44.6 49.3 49.3 11.5 15.5 gdp at constant 2015 prices, billion gel 33.9 34.9 36.6 38.4 40.3 37.6 8.8 11.2 real gdp growth, % 3.0 2.9 4.8 4.8 5.0 -6.8 -4.1 28.9 gdp deflator change, % 5.8 2.6 8.5 4.4 5.2 7.3 7.9 11.6 gdp per capita (at current prices), gel 9 109.4 9 613.9 10 933.9 11 968.0 13 239.4 13 234.1 3 081.3 4 161.4 gdp per capita (at current prices), usd 4 012.6 4 062.1 4 358.5 4 722.0 4 696.2 4 255.7 929.7 1 250.7 gdp at current prices, billion usd 14.9 15.1 16.2 17.6 17.5 15.8 3.5 4.7 state budget payments, billion gel 9.70 10.29 11.76 12.59 13.09 14.85 ratio of state budget payments to gdp, % 28.61 28.74 28.82 28.22 26,55 30.12 source: compiled by the authors based on official data from the ministry of finance of georgia and the national statistics office of georgia note: 2021 data are taken for i and ii quarters three seas economic journal 41 vol. 3 no. 2, 2022 on a country 's strategic, long-term development. however, the proper development and implemen tation of subsidy policies can solve the main social problems of the state; – it is important for the economic development of georgia to use the tool of offshore zones. as it is known, this mechanism envisages a zero or symbolic tax system, which is one of the main incentives for foreign investors. for this, we must arrange such regions in georgia as offshore zones, which require multifaceted infrastructural development as much as possible. successful implementation of this project in these offshore zones will contribute to the improvement of the region's infrastructure, rapid inflow of foreign direct investment in the country and increase the number of jobs. 5. conclusions the main goal of state intervention in the economy is to present the best features of the market economy as effectively as possible. however, in addition to successful attempts to intervene in the state economy, there are often examples of tragic mistakes when the market itself could have better addressed the problems that arose. despite these examples, the economic regulation of the state has always had strategic and tactical significance. for any country, there are and will always be state problems that are either not addressed through the supply-demand mechanism or are associated with negative side effects. based on the existence of such cases, a set of free market economic measures is being developed through state programming of the economy and the use of regulatory tools. economics is a relatively inaccurate science. consequently, the reproductive process largely depends on product sales expectations rather than accurate forecasting or accurate information. in practice, this can explain the abundance of crisis periods. that is why the state stimulates economic growth by creating the main public goods (optimistic expectations for the future), which is why the economic capacity of the state can be attributed to the factors of production. in addition, it is necessary to make the following basic social rights actually available to the population – social protection, employment, housing, health care and education. the exercise of these rights is most often inaccessible to those who need them most. employment is an important component of fundamental human rights and involvement in public life. at the same time, access to employment for all and the provision of normal working conditions for the society are the most important factors in the fight against poverty. therefore, through social protection systems and the deepening of economic relations, each state seeks to help as many people as possible to move from a passive role in the economic process to an active one. this is where the need to invest in the education of every member of society comes into play, as a knowledge-based economy is the most important factor in future economic growth. in view of the above, it is necessary to reconsider and reform the role and rights of the state in modern economic relations. the need to establish the state as a factor of progressive development in the economy should be emphasized during the reform. in addition, it should include legislative activities such as – compliance with labor safety conditions, regulation of the minimum wage, resolution of social 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(2019). labour emigration and employment in georgia. humanities and social sciences review, 9(01), 127–136. official website of the national bank of georgia. available at: www.nbg.gov.ge official website of the ministry of finance of georgia. available at: www.mof.ge official website of the national statistics office of georgia. available at: www.geostat.ge three seas economic journal 109 vol. 1, no. 4, 2020 corresponding author: 1 zaporizhzhia city council, ukraine. e-mail: ap.zp.gov@gmail.com orcid: https://orcid.org/0000-0002-7720-7689 doi: https://doi.org/10.30525/2661-5150/2020-4-16 dynamics of digital transformations in the national economy of ukraine anatolii pustovarov1 abstract. the purpose of the paper is to analyse the quantitative changes dynamics in the development and application of information and communication technologies in production and sale of information, traditional goods and services, provision of public services, as well as in everyday life of citizens. methodology. the main method of research is the trend analysis of statistical data provided on the official website of the state statistics service of ukraine. results of the survey showed dynamics of digital transformations in the information sector of national economy of ukraine, the level of use of information and communication technologies by enterprises outside the information sector, as well as the population and government agencies (2016–2019). practical implications. positive and negative changes in the information sector because of digital transformations in national economy of ukraine are found. there are positive changes: annual growth of the information sector; growth of production volumes with the use of medium-high technologies; increase in sales of services with computer equipment; level of use of fixed broadband internet access by enterprises higher than the average; positive dynamics of internet use by the population; availability of internet access in 94% of surveyed government agencies. there are negative changes: reduction of indicators of the use of information and communication technologies at the enterprises outside information sector; insufficient provision of enterprises with specialists in information and communication technologies; a small number of companies with official website and cloud technology; low indicators of e-business development according to the b2b interaction model; lack of generally accepted methodology and list of evaluation indicators; unsatisfactory level of collection, grouping and provision of statistical data about dynamics of digital transformations of the national economy by the state statistics service of ukraine; unsatisfactory level of use of e-democracy instruments. value/originality. the findings can be used to improve the mechanisms and measures of state regulation of digitalization of the national economy. key words: digital transformations, information sector, information and communication services, website, cloud technologies, e-business, e-democracy instruments. jel classification: e26, o33, o38 1. introduction the rapid development of current technologies has a positive impact on the development of national economies to achieve their sustainable development goals. nowadays, one of the main problems is to ensure the effective integration of the introduction of information and communication technologies (ict) with the interests of key stakeholders in development processes: enterprises, individuals and government organizations. timely identification of the shortcomings of such integration should be a priority for relevant government agencies and ngos. the use of digital technologies provides significant benefits: for companies – to increase productivity and competitiveness, for people – to acquire new knowledge and skills, job choices and opportunities, for governments – to improve the quality of public services to citizens and organizations. countries are able to reap the full benefits of ict transformation if they continually improve the business climate, invest in education and public health, and promote good governance. countries that complement investment in new technologies with large-scale economic reforms receive digital dividends by accelerating economic growth, increasing jobs and improving the quality of services. such reforms include improving the regulatory framework that allows organizations to use the internet for competition and innovation, bringing employees up to the demands of new economy, enabling people to take full advantage of digital technologies, and ensuring accountability of institutions to ensure rapid needs and requirements of citizens. three seas economic journal 110 vol. 1, no. 4, 2020 as digital transformation extends to all sectors and affects all aspects of society, measuring its individual characteristics and dynamics will become an increasingly difficult task to answer a wide range of questions, including how to measure and track digital transformations in all sectors of national economy, including the public sector; how to measure the destruction of existing business models and the emergence of new ones, the reorganization of the work or the size of the structural components of national economy; how to assess the value of data, both private and public, in standard statistics; how to track international transactions of digitized goods and services; how policies affect the digital economy and how to monitor and evaluate such impacts; what economic activities and jobs should appear in the future; what is the impact of digital transformations on the well-being of citizens and society as a whole. nowadays, information and communication technologies and digital transformation are the driver of technological change and a condition for national economy competitiveness and sustainable development. to increase the competitiveness of national economy, it is necessary to accelerate the start of digital transformation. 2. survey recent research the results, risks and benefits of ict introduction in production and sale of traditional goods and services are surveyed by many ukrainian and foreign researchers and scientists. the areas of such research are: analysis of the level of digitalization of ukraine and the european union (karchev, ohorodnia, openko, 2017), analysis of the most famous indices to reflect level of digital transformation of national economies (pizhuk, 2019; yanenkova, 2017), selection of a group of indicators to analyse level of formation and development of digital economy (semenog, 2020), development of methods to determine integrated indicators of condition and potential of digital development of the national economy (kuzovkova, salutina, kukharenko, 2019), methods of calculating the international digital economy and society index (i-desi, 2020), the digital economy and society index (desi), the network readiness index (2019). however, currently there is no universal method of analysing these processes. the study of the dynamics of change on international indices does not always reflect the real transformations in a national economy. therefore, we consider carrying out a trend analysis of the dynamics of digital transformations of the national economy. on the basis of statistical reporting, we should identify “ bottlenecks” and positive changes in these processes. 3. methodology of digital transformations the study of the dynamics of digital transformations of the national economy requires defining the main components (parameters) and indices (indicators) of evaluation. there is currently no generally methodology and list of indicators. thus, r . kling and r . lamb in their work (kling, lamb, 2000), based on the publication of l. margherio et al. (margherio, 1999), identified four main components of the digital economy: (1) digital products and services (access to information services, software sales, e-education, etc.); (2) mixed digital products and services (retail sale of real goods, hotel rooms, as well as related sales and marketing); (3) services and production of goods depended on information technology (accounting services, production of real goods, which require highprecision machining using software control, etc.); (4) products and services of the information sector (production of network equipment and personal computers, information consulting, etc.). in “measuring the u.s. digital economy: theory and practice”, thomas l. mesenbourg and b. k . atrostic (mesenbourg, atrostic, 2001) identified the following main components of digital economy: supporting infrastructure (hardware, software, telecommunications, networks), electronic business processes (characteristics of doing business), and e-commerce operations (sale of goods and services via the internet). recently, the following international indices have become widespread and popular: the level of ict development and use is determined by the digital economy and society index (desi), the international digital economy and society index (i-desi) (2020), and the network readiness index (nri) (2019), etc. the methodology for calculating the final indicator for each of these indices involves the selection of certain parameters and indicators of evaluation. the list of these parameters and indicators differs. the general evaluation parameters are: quality of fixed and mobile broadband communication, digital skills of the population, directions of the internet use, development of sales channels via the internet, digital government services. to analyse the dynamics of digital transformations in the national economy of ukraine, we use official statistical reporting and observations data of the state statistics service of ukraine official website. it should be noted that most of the digital information on the level of ict use is in “information society” section. however, data on the development of information sector of ukrainian economy, the use and growth of the technologies market of varying complexity, the sale of goods and services using ict are in “activities of enterprises” section; data on exports and imports of services in telecommunications, computer and three seas economic journal 111 vol. 1, no. 4, 2020 information services are in “foreign economic activity” section; data on the use of the internet by the population are on the website of the internet association of ukraine in the section “projects. internet audience research.” the concept of “digital transformation” includes quantitative changes in the development and application of ict in production of information and traditional goods and services, public services, as well as in the citizens’ everyday life. thus, the analysis of the dynamics of digital transformations involves identifying both positive and negative changes in functioning of information sector of the national economy, level of ict use by enterprises, individuals and government agencies. the analysis uses 2016–2019 period according to the periodicity of updating statistical data on the official website of the state statistics service of ukraine. 4. information sector in ukraine the information sector of national economy consists of manufacturers of network equipment and personal computers, as well as firms that provide consulting services it consulting. in 2016–2019, the number of enterprises operating in this sector (by 20% during the period), the number of employees of these enterprises table 1 quantitative characteristics of the development of information sector of ukraine in 2016–2019 indicators years growth rate 2019 / 2016, %2016 2017 2018 2019 information sector number of enterprises, units 4 866 5 272 5 495 5 848 +20.2 number of employees, persons 50 289 56 838 57 416 59 102 +17.5 volume of sales, thousand uah 17 980 705 23 187 133 29 024 539 36 118 468 +100.9 source: performance indicators of enterprises, state statistics service of ukraine (2010–2019) table 2 the dynamics of using technologies of different levels of complexity in 2016–2019 indicators years growth rate 2019/2016, %2016 2017 2018 2019 production on high technologies using number of enterprises, units 916 961 1 001 1 040 +13.5 number of employees, persons 103 351 103 115 95 706 95 793 -7.3 volume of sales, thousand uah 57 556 690 68 846 165 75 731 614 74 890 274 +30.1 production on medium-high technologies using number of enterprises, units 4 895 5 337 5 647 5 931 +21.2 number of employees, persons 356 219 358 760 360 601 346 833 -2.6 volume of sales, thousand uah 183 971 302 214 800 925 265 644 383 285 409 769 +55.1 production on medium-low technologies using number of enterprises, units 12 468 13 485 14 036 14 799 +18.7 number of employees, persons 441 371 432 909 434 703 422 536 -4.3 volume of sales, thousand uah 549 233 106 726 062 021 880 188 463 804 372 660 +46.5 production on low-level technologies using number of enterprises, units 14 156 15 414 16 178 17 005 +20.1 number of employees, persons 528 683 550 213 558 281 547 976 +3.6 volume of sales, thousand uah 638 848 863 771 463 009 839 602 340 860 556 954 +34.7 source: performance indicators of enterprises, state statistics service of ukraine (2010–2019) (by 17.5%) and the volume of products sold by them (twice) steady increased (table 1). the highest growth rate is for production using medium-high technologies (+55%); the lowest one is for production using high technologies (+30%). the latter includes: computer linguistics and computer science (formalization of problems and tasks that are similar to human actions (artificial intelligence)); data exchange between the physical world and computer systems using standard communication protocols (internet of things); merger of automated production, data exchange and production technologies into a single self-regulatory system with minimal or no human intervention (industry 4.0); standalone devices; quantum computers; virtual reality, communication and 5g networks; blockchain, etc. the reduction in the number of employees in enterprises that use high (-7%), medium-high (-2.6%) and medium-low production technologies (-4.3%) is concerned (table 2). there are different reasons of reduction by various factors. the positive factors are increasing the share of automated work, optimization of business management processes, expanding the content of individual employees. the negative factors are unsatisfactory level three seas economic journal 112 vol. 1, no. 4, 2020 of wages, late payment of wages, unsatisfactory working conditions, and the use of imperfect management instruments. however, under the growth in sales staff reductions lead to an increase in productivity indicator, which is certainly a positive phenomenon. 5. dynamics of ict the vast majority of ict is used in services (97% in 2019). the total growth of sales of services provided using ict during the period is 76% (table 3). simultaneously, the level of ict use in goods production also has a positive trend under the growth of number of enterprises and sales. in 2016–2019, there are the most significant quantitative changes in sales occurred in services related to the use of computer equipment (93.5%), which include: computer programming services, development of the structure and content of the web-sites, development of the structure and content of databases, table 3 the dynamics of using information and communication technologies in 2016–2019 indicators years growth rate 2019/2016, %2016 2017 2018 2019 information and communication technologies number of enterprises, units 9 979 11 271 12 291 13 521 +35.5 number of employees, persons 132 158 128 973 127 941 136 485 +3.3 volume of sales, thousand uah 150 681 907 188 042 533 230 821 579 261 481 025 +73.5 in particular: information and communication technologies in production number of enterprises, units 286 285 293 320 +11.9 number of employees, persons 11 004 10 670 10 341 10 406 -5.4 volume of sales, thousand uah 6 349 731 6 637 844 8 588 477 7 497 364 +18.1 information and communication technologies in services number of enterprises, units 9 693 10 986 11 998 13 201 +36.2 number of employees, persons 121 154 118 303 117 600 126 079 +4.1 volume of sales, thousand uah 144 332 172 181 404 689 222 233 103 253 983 661 +76.0 source: performance indicators of enterprises, state statistics service of ukraine (2010–2019) table 4 the growth rate of the market for services using high technologies in 2016–2019 indicators years growth rate 2019/2016, %2016 2017 2018 2019 services using high technologies number of enterprises, units 13244 14806 15859 17173 +29.7 number of employees, persons 260318 259184 255681 256276 -1.6 volume of sales, thousand uah 127359909 150459570 185176262 218065820 +71.2 intellectually rich market services number of enterprises, units 64969 72331 77135 83254 +28.1 number of employees, persons 577084 563537 551099 604961 +4.8 volume of sales, thousand uah 398904519 476283697 544879427 588633439 +47.6 services using computer equipment number of enterprises, units 5350 6264 7003 8063 +50.7 number of employees, persons 44939 47177 49533 58099 +29.3 volume of sales, thousand uah 48660282 60826902 76545025 94175579 +93.5 source: performance indicators of enterprises, state statistics service of ukraine (2010–2019) design and development of applications, configuration and implementation of the software application so that it operates within the information system of the client. also, a significant increase (71.2%) is in the volume of services using high technologies (table 4). the dynamics of indicators of ict use at ukrainian enterprises outside information sector is mostly negative in study period. thus, number of enterprises used computers decreases in 7.2 p.p.; number of enterprises with internet access decreases in 11.8 p.p.; the average number of employees who used computers with internet access decreases in 50.7 p.p.; the number of enterprises using local computer networks, intranet and extranet decreases in 7.6, 4.4 and 0.7 p.p. respectively (table 5). the share of enterprises using fixed broadband internet access in 2016–2019 is over 60%. simultaneously, there is an annual reduction of the indicator (table 6). the share of enterprises that has an official website ranges from 35.2 to 38.4% in 2016–2019. in 2019, three seas economic journal 113 vol. 1, no. 4, 2020 table 5 the indicators of the use of information and communication technologies at the enterprises of ukraine in 2016–2019 indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 number of enterprises using computers, in % of total number of enterprises 95.1 95.4 89.7 87.9 -7.2 average number of employees who used computers, in % of total number of employees 30.9 34.9 32.8 34.3 +3.4 number of enterprises with internet access, in % of total number of enterprises 98.2 98.2 88.0 86.4 -11.8 average number of employees who used computers with internet access, in % of total number of employees 79.1 72.2 27.1 28.4 -50.7 number of enterprises that: uses a local area network (lan),% has an intranet,% has an extranet,% 59.5 62.4 8.8 62.0 67.0 8.0 53.5 59.2 8.3 51.9 58.0 8.1 -7.6 -4.4 -0.7 source: the use of information and communication technologies at enterprises, state statistics service of ukraine (2016, 2017, 2018–2019) table 6 the number of enterprises using high-speed internet access in 2016–2019 indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 number of enterprises using narrowband access, % 31.3 32.9 31.4 30.6 -0.7 number of enterprises using fixed broadband access, % 67.1 66.3 62.1 60.9 -6.2 number of businesses using mobile broadband with portable devices, % 23.4 24.1 23.5 23.6 +0.2 source: the use of information and communication technologies at enterprises, state statistics service of ukraine (2016, 2017, 2018–2019) table 7 the main areas of use of websites by ukrainian enterprises in 2016–2019 indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 number of enterprises with website, in % of total number of enterprises, in particular the website provided an opportunity: 37.5 38.4 35.6 35.2 -2.3 customer service 17.3 17.6 16.9 16.7 -0.6 product supply 6.2 6.6 6.3 6.1 -0.1 order goods and services online 10.2 10.5 10.3 10.2 0 links to company profiles on social media 14.8 16.2 16.2 16.5 +1.7 providing information on open vacancies 10.0 10.8 10.5 10.4 +0.4 personnel training 3.6 3.8 3.9 3.9 +0.3 source: the use of information and communication technologies at enterprises, state statistics service of ukraine (2016, 2017, 2018–2019) the indicator decreases in 2.3 p.p. compared to one in 2016. the most common website options are customer service and links to company profiles on social networks, the least common – staff training (table 7). fluctuations in the relative use of websites can be considered insignificant. the use of cloud technologies can be considered insufficient: only 8.8-10.3% of enterprises purchase the relevant services. there are reasons for the slow spread of cloud technologies: problems with secure transmission and storage of data, the need for a constant connection to the internet, the risk of information loss. however, the indicator has a positive trend (table 8). indicators of e-business development by the “b2b” interaction model are insignificant. thus, the share of enterprises purchasing goods or services via the internet ranges from 17.2 to 20.3% (table 9). the overall dynamics of the indicator is positive but insignificant one (an increase of 2.9 p.p.). the share of enterprises receiving orders via the internet for the sale of goods or services ranges from 4.8 to 6.4% and decreases over the period by 1.2 p.p. the largest share of products sold through websites or applications is 4.5% of total sales of enterprises. it is considered a very low figure. the dynamics of indicators of the internet use by the population in 2016–2019 is insignificant, but three seas economic journal 114 vol. 1, no. 4, 2020 positive one (table 10). the highest growth rate in 2019 is the number of regular internet users (7 p.p.). simultaneously, mobile phones or smartphones and home laptops are mostly used as technical devices by regular users to access the network. residents of cities with a population of less than 100,000 in 2019 account for 29% of total number of internet users. the same share falls on rural residents. the distribution of network users by regions of the country in 2019 is: the central-northern regions of ukraine – 33%, the eastern regions – 29%, the western regions – 27%, the southern regions – 11%. the most numerous age groups among internet users are people aged 25-34 years (25%) and aged 35-44 years (21%). 6. e-democracy instruments the analysis of the dynamics of indicators of the use of e-democracy instruments by public authorities and local governments due to the lack of data for the study period is impossible. the website of the state statistics service of ukraine shows the results of the survey for 2019 only. they show that more than 94% of surveyed government agencies have internet access and only about 22% of them provides citizens with e-democracy instruments such as “e-appeal”, “e-petition”, “e-consultation”, “participation budget (public budget)” (table 11). since 2018, the center for innovation development conducts a study of the local e-democracy index on the following indicators: democratic regulations, table 8 the dynamics of use of cloud technologies by ukrainian enterprises in 2016-2019 indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 number of enterprises that purchases cloud computing services, in % of total number of enterprises 8.8 9.8 9.8 10.3 +1.5 number of enterprises that analyses the “big data” from smart devices or sensors, % 8.6 7.6 5.9 5.7 -2.9 the number of companies that analyses the “big data” from portable geolocation devices, % 3.5 3.7 3.4 3.7 +0.2 number of enterprises that analyses the “big data” from social media, % 4.1 3.9 3.3 3.3 -0.8 source: the use of information and communication technologies at enterprises, state statistics service of ukraine (2016, 2017, 2018–2019) table 9 the dynamics of e-business development in ukraine in 2016–2019 indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 number of enterprises purchasing goods or services via the internet, in % of total number of enterprises 17.2 20.3 19.5 20.1 +2.9 number of enterprises receiving orders via the internet for the sale of goods or services, in % of total number of enterprises 6.0 6.4 50 4.8 -1.2 volume of sold products (goods, services) receiving from trade through websites or applications (applications), in % to total volume of sold products (goods, services) of enterprises … … 3.5 4.5 source: the use of information and communication technologies at enterprises, state statistics service of ukraine (2016, 2017, 2018–2019) table 10 the dynamics of indicators of the internet use by population in 2016–2019 in % indicators years deviation 2019/2016, p.p.2016 2017 2018 2019 availability of internet at home 61.3 63.4 65.0 65.0 +4.7 share of regular users 64.0 64.1 63.0 71.0 +7.0 internet penetration by types of settlements: cities with a population of 100 thous.+ 71.0 77.0 71.0 74.0 +3.0 cities with a population of 100 thous. – 66.0 67.0 63.0 70.0 +4.0 villages 54.0 53.0 53.0 58.0 +4.0 source: internet audience research three seas economic journal 115 vol. 1, no. 4, 2020 availability of it instruments, number and percentage of unique active users, number of created cases, number of considered cases, number of supported cases, number of completed cases, percentage of completed cases, duration of execution. in 2017, the top three cities includes kyiv, khmelnytsky and vinnytsia (prykhodko, yemelianova, loboiko, khutkyi, kushnirenko, 2018), in 2018 the leaders are kyiv, ivano-frankivsk and lviv (yemelianova, loboiko, maievska, 2019). on the surveys and measurements, the authors of the reports identify the following shortcomings in the use of e-democracy instruments: inaccessibility to platform administrators from the local government of statistical indicators on attendance, number of registered users, etc.; lack of information from local governments on the effectiveness of e-petitions and e-consultations made it impossible to consider them in local policies; closeness of e-democracy instruments for cooperation with it volunteers and further improvement. 6. conclusions the analysis of the dynamics of digital transformations of national economy of ukraine in 2016–2019 reveals the positive changes as: annual growth of the information sector, growth of production using medium-high technologies, significant quantitative changes in sales of services related to computer equipment; the share of enterprises using fixed broadband internet access is over 60%; positive dynamics of internet use by the population, availability of the internet in 65% of households, growth in the share of regular network users; availability of internet access in 94% of surveyed government agencies. there are some negative changes: reduction of information and communication technologies in enterprises outside information sector; low level of enterprises with an official website and cloud technologies; insignificant indicators of e-business development according to the “b2b” interaction model; a low share of public institutions providing citizens with the opportunity to use the e-democracy instruments. also, the negative aspects of the analysis of the dynamics of digital transformations are: the lack of a common methodology and list of evaluation indicators; unsatisfactory level of collection, grouping and provision by the state statistics service of ukraine of statistical data characterizing the dynamics of digital transformations of the national economy. the further researches include techniques and means to improve the state regulation of digitalization of national economy. table 11 the indicators of the use of e-democracy instruments in 2019 indicators total of them public authorities bodies of judicial system local governments state organizations (institutions, establishments) number of institutions with the internet access, units 17678 5102 695 10584 1297 share of institutions with internet access in total number of institutions of survey, % 94.7 92.5 87.9 96.6 92.8 number of institutions providing the opportunity to use of e-democracy instruments, units 3853 1326 568 1818 141 in% to total number of institutions with internet access 21.8 26.0 81.7 17.2 10.9 source: use of e-democracy instruments by public authorities and local governments (2019) references: desi 2020: how digital is europe compared to other major world economies? 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(in ukrainian) three seas economic journal 48 vol. 1, no. 4, 2020 corresponding author: 1 educational and scientific institute of culture and arts, sumy state pedagogical university named after a.s. makarenko, ukraine. e-mail: tokarenkonat@gmail.com orcid: https://orcid.org/0000-0003-2598-4336 doi: https://doi.org/10.30525/2661-5150/2020-4-8 socio-cultural development and cultural policy of ukraine: experience of formation and implementation nataliia zlenko1 abstract. the paper is devoted to the analysis of the state cultural policy in the context of development of sociocultural space. scientific research is based on understanding of the basic values, the place and role of culture in the modern world, its true significance for the state, which claims the title of civilized, and therefore understanding of culture as a priority of the state policy. therefore, the aim of the paper is the generalization of the ukrainian experience of state cultural policy and identification of the significant achievements in this area. methodology. the methodology of science of interdisciplinary level is applied in the research. the integration of interdisciplinary knowledge and the unification of disparate characteristics into the system allowed to obtain the new scientific knowledge in part of cultural policy characteristics on different sides and of view of the ukrainian cultural policy in its entirety. the paper analyzes the main milestones of the ukrainian cultural policy formation from independence to the present. the main achievements and imperfection of the state cultural policy in the political, cultural, institutional and financial aspects are summarized. results. it is concluded that despite the failure of systemic cultural reforms in the past, a number of important changes have taken place in the cultural policy of ukraine. the state cultural policy acquires signs of integrity and system. an organic entry into the context of the european system of values with the preservation and development of the own cultural heritage takes place. value/originality. analysis and systematization of the reformist projects and institutional decisions of the cultural policy of ukraine in 1990–2020 can be used as the theoretical addition to research of the field of state cultural policy of ukraine. practical implications. from our point of view, the practical implications of the cultural policy research will help to get closer to understanding the reasons of the many reforms failures, to find the new effective practical solutions and to develop optimal approaches for the future state cultural policy of ukraine. key words: culture, cultural policy, state cultural policy. jel classification: f15, l62, l90, n70, q53 1. introduction “the authority of a strong state is determined not only by its military and political influence on the world arena, but also by the possessed cultural potential” (zhyvohliadova, 2019). today, culture should be considered as one of the powerful drivers of the state social and economic development. “cultural policy cannot and should not be a “residual sphere” of the state policy, as its potential can contribute to many tasks” (shevchenko, 2019). we cannot disagree with the view of s. zdioruk, published in the analytical study “cultural policy of ukraine: the national model in the european context”, that “modern, inherent in european society understanding of cultural functions, its role in public life goes far beyond vision as a sphere of pure art, aesthetic and spiritual pursuits, preservation and nurturing of folk traditions”, although these branches, of course, do not lose their significance” (zdioruk, 2012). the need of cultural policy research as an independent branch of theoretical knowledge has become relevant in the recent years due to the necessity of the search of new effective practical solutions in this area. the research degree. the state cultural policy is defined as a set of principles and norms that are guided by the state for the preservation, development and dissemination of the culture. cultural policy is understood as a purposeful activity in the field of culture and a sphere of social activity related to the state, its administration, power, i.e. that part of political activity (politics) which concerns the cultural sphere. three seas economic journal 49 vol. 1, no. 4, 2020 various aspects of the cultural policy’s formative factors have been studied by both foreign researchers (c. landry, s. mandy, e. toffler, etc.) and ukrainian scholars (v. andrushchenko, y. bohutskyi, t. wozniak, o. hrytsenko, l. huberskyi, s. zdioruk, i. kostyria, m. mykhalchenko, m. khudolii, etc.). however, the cultural policy of ukraine has not been the subject of a special study of ukrainian philosophers, culturologists, political scientists, economists, and legislators. therefore, the purpose of scientific research is to generalize the ukrainian experience of cultural policy and identify significant achievements in this sphere, which, from our point of view, will be addition for the theoretical basis in this area and will help to understand the causes of many reforms failures and will contribute to optimal approaches to future state cultural policy. the methods of interdisciplinary methodology have been applied in order to achieve the goal. as interdisciplinarity shows what is inaccessible within a single science with its specific, narrowly oriented object, subject and research methods. additionally, the modern science is in transformational processes. interdisciplinarity is not only a simple borrowing of methods, tools from other sciences (disciplines), but also the integration of the last at the level of construction of interdisciplinary objects, subjects, processing of which allows to obtain new scientific knowledge. it also allows to get an explanation, a new reading, if not all, then most of economic, political and cultural processes and phenomena, to reveal previously unnoticed patterns. to analyze and summarize the state cultural policy experience we have applied the methods of the empirical level, namely inductive generalization. the formation of the empirical basis of the theory requires the theoretical interpretation of the basic empirical dependencies and facts, the further development of the original scientific abstractions. theoretical activity organizes the empirical one, predicts and draws new facts into the circle of research. the theoretical knowledge reflects the object at the level of its internal connections, patterns of formation, development and existence. at the theoretical level, cognition generalizes empirical data, establishes the significance and practical value of certain research methods, reveals the true relationship between empirical data and existing theories, formulates new generalizations and conclusions within theories that previously existed. it reproduces the phenomena or processes mechanism, which provides an opportunity to explain the established facts, as was done in this research. the basis on the interaction and unity of the empirical and theoretical, the availability of forward and backward linkages between them allowed to explore the cultural policy as an integrated system. 2. the review of the reform projects and practical measures in the field of cultural policy of the first decades of independent ukraine at the time of gaining state independence, the ukrainian culture was, in fact, postcolonial in nature: “the cultural space was still dominated by the public spheres of the former metropolis with their nonukrainian content and identities, and many citizens of the newly formed state had a nominal ukrainian identity, preserving soviet or russian identity” (hrytsenko, 2019). such situation was considered by the political and cultural elite as a serious problem that had to be solved by means of state policy. there were also other problems in the transition period in the ukrainian culture due to the fact that “most of then existing cultural and media centers were formed in a state-planned economy and could not cope with a market economy, especially during an economic crisis and hyperinflation” (hrytsenko, 2019). so, the matter of the sphere of culture and state humanitarian policy reforming became obvious. however, for almost twenty-five years, there has been only a declaration of the state cultural policy course change. the guidelines and goals that were set by the “reformers” for themselves and for culture were not entirely effective for a number of reasons. the researcher o. hrytsenko in his monographic study “cultural space and national culture: theoretical understanding and practical formation” highlights among such reasons “the focus on ready-made recipes for solving the problems that were often uncritically borrowed from the soviet past or from the experience of “real” european countries, <…> worldview contradictions between the bearers of different ideas about the nation, national culture and identity, different value systems and ideological guidelines <…> (hrytsenko, 2019). it is needless to mention that there are different interpretations of the concepts of “national cultural space” and “national cultural product”. moreover, there were also a number of economic and administrative problems. utilities, numerous state institutions and cultural enterprises, as well as hundreds of thousands of their employees, could no longer be maintained in a planned economy as before. the format of their activities has lost its ideological justification and economic basis. it is also worth to mention the unequal competition of the national cultural product with the globalized world market, which after the declaration of independence of ukraine gained free access to our mass consumer. however, despite the difficulties and contradictions, the process of ukrainian cultural space formation has been taken place. it was a complex and painful process of implementing state policy in the field of culture, which marked several conditional stages. the first stage of the cultural policy of independent ukraine took place in the conditions of the planned three seas economic journal 50 vol. 1, no. 4, 2020 economy dismantling, privatization process in the various cultural branches (film production, book publishing, etc.) in combination with hyperinflation and a sharp decline in the purchasing power of the population. in addition, there was a real prospect” (for many, it was the threat) of its returning to the periphery of western or russian cultural space” (hrytsenko, 2019). on the other hand, the introduction of “ukrainian-oriented” state policy was hindered by the now (mostly) privatized cultural industries of russia, which took on the role of the cultural mediator between the world and the former soviet republics. music, movies, literature, etc. existed mainly in the russian translation or duplication. russified influence acquired a market (and political!) format. “accordingly, at the beginning of the 21st century, the ukrainian culture has not gained the ability to effectively fulfill its role in social development, has not become a decisive force in the national identity formation of the majority of citizens, nor in building of the creative potential of society. it has not even become a leader in meeting the cultural needs of the population of ukraine” (hrytsenko, 2019). the first legislative act of independent ukraine in the sphere of culture was the “fundamentals of ukrainian legislation on culture”, adopted in february 1992. however, most of the principles proclaimed in the law were declarative and post-soviet in nature. the problem or task of the cultural space reforming was not proclaimed in this legislative act. the main attention was paid to the development of cultural ties with the ukrainian diaspora. unfortunately, almost none of the promised, except of the establishment of several cultural centers at the embassies of ukraine, with minimum funding and opportunities, were implemented. the declared provisions were not supported by legal actions during the next few years. the state policy on the ukrainian culture development was mostly inertial. in 1997, a resolution was issued approving the “conceptual directions of the executive bodies’ activity on the development of culture”. it was important to state the need of the cultural sphere comprehensive reforming. patriotic rhetoric is rising; however, the document shows a tendency of reducing of the government specific commitments. “strictly speaking, at least some of these regulations can be considered as reformist, as they were aimed to regulate the various cultural institutions activities in the new market economy and to ensure the continued existence of numerous mini-public spheres formed around theaters, houses of culture and libraries in soviet times. “revenues from paid services have not become a significant source of income for cultural institutions – they continue to depend on state or local budgets “(hrytsenko, 2019). the next stage of cultural policy is linked with the cultural reform project. in march 2005, the verkhovna rada of ukraine adopted the law of ukraine “on the concept of state policy in the field of culture for 2005–2007” (on the concept…, 2005). it was adopted in a second attempt (the first was stopped by veto of the president leonid kuchma). the project was declared to be serious, however, the principles of state policy declared in the law contained only general principles of “transparency and publicity”, “democracy”, “deideologization and tolerance”, “system and efficiency”, “innovation”, in which, in fact, there is no cultural specificity. attempts to update the state cultural policy and to provide more favorable conditions for the national culture development were intensified after the “orange revolution”. the first strategic document of the new government in the field of cultural policy is the decree of president yushchenko no. 1647 dated november 24, 2005 “on the priority tasks of enrichment and development of culture and spirituality of ukrainian society”. it was established the national council of culture and spirituality under the president of ukraine with the aim of developing a “national action program for the enrichment and development of culture and spirituality of ukrainian society”. the aim of the document was to change the priorities in the state cultural policy. in fact, “roadmap for the program of enrichment and development of culture and spirituality of ukrainian society” was proposed. but the document was never approved, as viktor yanukovych had different vision of public policy in the field of culture after the 2006 re-election. general approaches to state support of culture have not changed significantly. however, this does not mean that during those years there was no development of national culture. during 2010-2013 years the cultural multi-vector was returned. the law of ukraine “on culture” (on culture…, 2010) was finally adopted in 2010 and entered into force on january 1, 2011. the main legal acts of the law demonstrated both positive changes and a number of threats to the ukrainian culture. the law has contributed to the legal interpretation of concepts such as the national cultural space and its integrity. the law recognized the lack of unity of the cultural space of ukraine. the matter of ensuring the protection of cultural values and cultural heritage objects that are the property of ukraine and are located in other countries was also raised. this period of time was marked by several essential features. on the one hand, this is the last peak before the rapid fall of yanukovych. on the other hand, the team had certain ambitions, including the desire to reform cultural policy in ukraine. the art arsenal (kyiv), “isolation” (donetsk) was opened, the rinat akhmetov foundation launched the country’s first and only grant program of cultural support – “culture for the eastern partnership”, pinchukartcentre and a network of three seas economic journal 51 vol. 1, no. 4, 2020 small cultural organizations were created. the cultural critic k. botanova accurately noted in her paper “not crossing this line was a matter of honor and the players on both sides despised and did not notice each other” (botanova, 2019). in addition to these positive decisions, the autho rities were “systematically” solving the language problems in ukraine by adopting the law “on the principles of state language policy”, which strengthened the position of the russian language in ukraine’s cultural space. in this sense, the maidan, which undoubtedly divides not only the last decade but also the entire history of ukraine since 1991 into two unequal parts, was a great revolution in people’s attitudes toward their state and, accordingly, a revolution in cultural policy. the maidan as an action and as a symbolic gesture of citizens regaining control over their own state lifted the taboo on the concept of state power, governance, politics (botanova, 2019). in 2014, the new people were involved to the public administration, making it more open, negotiable and simply human. also the opportunities were opened for the whole layer of activists and ngos for more directly and transparently influence and advocate for cultural policy changing. it turned out that the experience of the non-governmental sector in previous years, networking, self-organization, international cooperation – this was also the creation of cultural policies, effective steps to support, protect, develop various forms of cultural activities. since 2014, this experience has been implemented in various attempts to create longterm cultural strategies, the most important of which were the assembly of cultural figures and the culture 2025 initiative. there are at least three important points in unsuccessful history of cultural strategizing. first, it is the experience of consensus-seeking and advocacy in the public cultural sector. a standard democratic practice to negotiate and put pressure on the government was not easy for the ukrainian cultural sector. however, the constant public activity since 2014 has made it possible to introduce transparent tender procedures, expert councils to make key decisions and allocate budget funds, and to create new institutions (the list can and should be continued). secondly, the concepts of “strategy”, “cultural policies”, “long-term planning”, “public-private partnership”, “open access” and many others have not only become an integral part of the vocabulary of all state institutions (we still remember that even five years before it was beyond imaginary), but also began to be applied. at the same time, after euromaidan, the criticism of the state’s cultural policy was intensified. in the spring of 2014, with the efforts of public “agents of change” and the new “revolutionary” leadership of the ministry of culture, with the support of the eu eastern partnership, the development of a “new cultural strategy” of ukraine was began. the significant result of the two years of “negotiations, discussions, quarrels and accusations of incompetence, unwillingness to dialogue, and even nationalism” (hrytsenko, 2019) was the strategy of cultural development formation, which was finally adopted on february 1, 2016. № 119-r “on approval of the long-term strategy of the development of ukrainian culture – reform strategy” (on approval…, 2016) – (these and other normative documents in the sphere of culture in ukraine until 2017 are provided in table 1). despite the mostly declarative and internally contradictory nature and weak connection with the real situation of the cultural sphere in ukraine, it cannot be denied that some of the priorities identified in this document have brought real changes in the cultural space of ukraine. 3. the main achievements of the cultural policy formation at the present stage the next important stage of cultural policy in our country was the period of 2015-2019. priority for the authorities was “the state support providing for the national cultural product” and “the integrated information and cultural space formation”. the decision to reform the budget system and finance cultural expenditures was also important. the formation of the state institution – ukrainian cultural fund – with considerable funding affected the interests of some figures in the field of culture. the most noticeable was the conflict between supporters of different approaches to the status, functions and sources of funding of the new institution. the main tasks of the “ukrainian cultural fund” were “to promote the implementation of state policy in the fields of culture and arts, the development of modern cultural, artistic activities and competitive on the world market domestic (national) cultural product; expert selection, financing and monitoring of projects, implementation of which is provided with the support of the ukrainian cultural fund (about the ukrainian cultural foundation, 2017). the support of the national cultural industries as a key direction of the public cultural policy reforming has been actively strengthened. among the important innovations were the creation of the institute of ukrainian book, the ukrainian institute and so on. significant changes have also taken place in the system of the ukrainian cinema state support. today, not only all key state institutions have strategies. to the important changes and achievements during last four years belong: decentralization, the law on the competitive appointment of the cultural institutions heads; the creation of the new cultural institutions mentioned above, the grants introduction for the non-governmental sector from the state budget; three seas economic journal 52 vol. 1, no. 4, 2020 the attempts to create transparent procedures and decision-making mechanisms (for example, for the ukrainian pavilion at the venice biennale), the numerous expert councils organization, this is, in fact, a participatory model. “the choice of the national cultural policy model should be based not only on the attractiveness of a foreign experience, but primarily on the own social, political and cultural traditions, the state of the economy, culture in general and its individual spheres, international challenges facing the country ” (zdioruk, 2019). significant changes in cultural policy are also evidenced by changes in the financing of culture. if five or ten years ago there was a problem of inadequate financial support of the cultural sector and there was a gap between the so-called official culture, which is financed from the budget, and one that is focused on the current needs of cultural activities. thus, culture was on the periphery of the state interests, and although there were a number of laws and regulations that were designed to regulate the issues of cultural development, most of them “did not work”, remaining in fact the “declarations of intent”. the positive changes in the field of cultural financing are also evidenced by the fact that the 2021 state budget has increased the funding for the ministry of culture and information policy by 52% compared to 2020. according to the minister of culture o. tkachenko, this is the fact of “the clear demonstration of a gradual change in the perception of the culture role for the state” (mori, 2020). according to the approved budget, it is possible to start the implementation of the planned programs in 2021, in particular, the great restoration project, creation of cultural services centers, programs for the folk arts and crafts and reading promotion, systematic development and promotion of domestic tourism, construction of the national memorial complex of heroes of the celestial hundred – museum of the revolution of dignity, the museum of the holodomor, the museum of babyn yar and the branch state archive, information security and media literacy programs, etc. this year it is important to increase the state’s financial support of the cultural projects, mainly through the ukrainian cultural fund. it is proposed to increase its funding to 695 million uah in 2021 – on 73% more than in the 2020 budget. the cinematography support will be also increased by 36.5%. in total, the state will spend 621 million uah to create ukrainian cinema in 2021. from our point of view, finally there are achievement of certain results. ukraine confidently follows the path of professional and motivated advocacy in the field of cultural and creative industries. innovative business and creative management models are used. a positive development is the approval by the government of the list of economic activities that belong to the creative industries. also, the ukrainian fund of startups with table 1 legislative regulation of cultural policy in 1990-2017: basic laws and reform projects “fundamentals of ukrainian legislation on culture” 1992 “basic provisions of the concept of the state cultural policy of ukraine” 1994 “on measures to mark the 100th anniversary of the birth of o. dovzhenko” 1994 “state program of the national book publishing and the press development for the period up to 2000” 1995 resolution “on restructuring in the field of cinema” 1997 law of ukraine “on cinematography” 1998 resolution “conceptual directions of the executive bodies activity concerning the culture development” 1997 “on measures to reform the cultural sector” (“on cinematography” and “on the cultural heritage protection”, “on minimum social standards for public libraries”, “on the contractual form of employment contract with managers and creative staff of state theaters and concert and entertainment institutions”, “on approval of the list of paid services that may be provided by cultural and artistic institutions based on state and communal property” and “on structural adjustment in the field of cinematography” 1997 “on approval of the regulations on state support of national films in the production system” 1998 “on the main directions of the national cinematography development for the period up to 2005” 2000 “on approval of the national program of the national film industry development for 2003–2007” 2002 “on the state support of book publishing in ukraine” 2003 law of ukraine “on the concept of state policy in the field of culture for 2005-2007” 2005 “on the priority tasks of enrichment and development of culture and spirituality of ukrainian society” 2005 program of the enrichment and development of culture and spirituality of ukrainian society “(road map draft) 2007 “on amendments to the law of ukraine “on cinematography”” 2010 law of ukraine “on culture” 2011 “on approval of the long-term strategy of the ukrainian culture development reform strategy” 2016 law of ukraine “on amendments to certain laws of ukraine on improving of the public administration system in the publishing sphere” 2016 “on the establishment of the ukrainian book institute” 2017 law of ukraine “on the ukrainian cultural foundation” 2017 “order on the establishment of the state institution “ukrainian institute” 2017 three seas economic journal 53 vol. 1, no. 4, 2020 a budget of 390 million uah was recently announced which should increase the investment attractiveness of ukraine and stimulate the growth of domestic creative capital. the scheme “producer of national cultural product” – the world community – is being developed. a system of powerful institutions with the ability to develop policy in the field of culture is being built. the documentary base is being formed, which will allow to define the main priorities of activity clearly. significant changes are taking place in the field of financing. it is important to ensure the coordinated plan realization in accordance with the state strategy of cultural policy. it may sound paradoxically, just now the current ukrainian situation in the field of culture is reminiscent of that in italy after its unification more than a hundred years ago. then one of the political leaders declared: “ we have created italy, now we need to create italians”. accordingly, ukrainian politicians have created ukraine, and now they have to create ukrainians. and in this sense, today’s state policy in the field of culture, in our opinion, has chances to achieve this aim. 4. conclusions the process of formation and implementation of the cultural policy of independent ukraine is long and contradictory. the cultural reforms and events in different years are determined by the political context. their aim was to solve the specific problems (legislative, financial, institutional means) and to attempt to reform the entire cultural policy, and even the entire ukrainian culture as well. such long-term cultural and political activities had different consequences: while most attempts to carry out serious systemic reforms failed, the measures to solve certain problems finally yielded results, which together with the development of cultural goods markets and self-organization processes in the cultural and artistic environment changed the national culture as a system. the reform projects failures can be explained by the focus of most reformers on the idealized vision of the culture future, neither on solving of its real problems, that usually makes public policy inefficient. to the failure causes we can also include the weak interest of governments and political elites in the real state cultural policy reforming, mutual misunderstanding, interest and values conflicts, weak funding, and insufficient legislative regulation in this area. most of the declared provisions were not supported by legal actions. the state policy of the ukrainian culture development was mostly inertial. despite the low efficiency of systemic cultural reforms, a number of important changes have been taken place in ukraine’s cultural policy. today, the positive reforms and development strategies have already begun to be implemented. there are real opportunities for the free development of national culture, artist’s creativity freedom, achievement and preservation of the integrity of the ukrainian national culture, its integration into the european and world cultural space. we are witnessing how the state systemic cultural policy began to be built, resulting in the culture formation that is capable to function as a part of the world cultural process in the modern conditions. references: botanova, k. (2019). cultural policy of the last decade: how to live with a constantly open window of opportunity. available at: https://lb.ua/culture/2019/12/23/445542_kulturna_politika_ostannoi.html zhyvohliadova, d. (2020). actual: about cultural policy. available at: https://uaculture.org/texts/aktualno-prokulturnu-polityku/ zdioruk, s. i., litvinenko o. m., & rozumna, o. p. (2012). cultural policy of ukraine: national model in the european context: analyst. ext. kyiv: niss. hrytsenko, o. (2019). cultural space and national culture: theoretical understanding and practical formation. kyiv: institute of cultural studies of the national academy of sciences of ukraine. mori, ye. (2020). social media. available at: https://suspilne.media/88875-u-budzeti-2021-na-kulturu-vidilili-na52-bilse-niz-minulogo-roku-tkacenko/ law of ukraine dated 03.03.2005. on the concept of the state policy in the field of culture for 2005–2007. no. 2460-iv. information of the verkhovna rada of ukraine, 2005. no. 16. art. 264. 1. available at: https://zakon.rada.gov.ua/laws/show/2460-15#text law of ukraine on culture no. 2778-vi dated 14.12.2010. information of the verkhovna rada of ukraine, 2011. no. 24. art. 168. available at: https://zakon.rada.gov.ua/laws/show/2778-17#text on approval of the long-term strategy for the development of ukrainian culture – the strategy of reforms. order of the cabinet of ministers dated 01.02.2016 no. 119-p. available at: https://zakon.rada.gov.ua/laws/ show/119-2016-%d1%80#text about the ukrainian cultural foundation. law of ukraine dated 23.03.2017 no. 1976-viii. information of the verkhovna rada of ukraine, 2017. no. 19. art. 238. available at: https://zakon.rada.gov.ua/laws/show/ 1976-19#text shevchenko, m. i. (2019). cultural policy of ukraine in the context of european integration: dilemmas and challenges. international relations: theoretical and practical aspects, vol. 3, pp. 215–224. three seas economic journal 73 vol. 1, no. 1, 2020 corresponding author: 1 yuriy fedkovych chernivtsi national university, ukraine. e-mail: v.kharabara@chnu.edu.ua orcid: https://orcid.org/0000-0002-8555-6440 2 yuriy fedkovych chernivtsi national university, ukraine. e-mail: r.greshko@chnu.edu.ua orcid: https://orcid.org/0000-0003-3054-356x doi: https://doi.org/10.30525/2661-5150/2020-1-11 theoretical foundations of the credit mechanism of meeting consumer needs of the population violetta kharabara1, roman greshko2 abstract. purpose. a significant role in ensuring the socio-economic development of the state, increasing the economic activity and purchasing power of the population is played by the credit mechanism of meeting the consumer needs of the population. however, the effects of crisis phenomena in the state economy have created high credit risks, which negatively affected the dynamics of consumer lending in ukraine. method. thus, the purpose of this article is to study the financing of the real sector of the economy and increase its capital due to the effective functioning of the credit mechanism of meeting the consumer needs of the population. research results. the theoretical approaches of scientists to the essence, elements and components of the credit mechanism of meeting the consumer needs of the population, external and internal factors influencing its efficiency, such as the ability of the borrower to return the credit, availability of credit, interest rate, as well as maturity and repayment terms are investigated in the paper. also, the study analyzed legislative and regulatory acts on the development of credit relations and the banking system in ukraine. the problems of organization of credit activity of banks, formation of effective credit policy, choice of effective methods, types of lending are considered. particular attention is paid to the most common type of crediting of consumer needs with credit cards in the modern way. value/originality. as a result, the paper proposes to consider the essence of the credit mechanism of meeting the consumer needs of the population as a set of forms and tools for influencing the system of credit relations between the subjects of lending to the consumer needs in order to provide the necessary volumes of consumer credit. in turn, as a result of using the method of comparative analysis, the list of consumer lending facilities is systematized in the work, the classification of credits for consumer needs of the population is improved, and the author’s vision of the main components of the credit mechanism of meeting the consumer needs of the population is characterized. key words: credit relations, consumer needs, credit policy, banks, ukraine. jel classification: е51, g21 1. introduction at the current stage of ukraine’s economic development, an important place in the search for ways of economic growth is occupied by the task of forming effective credit relations in the process of development of the consumer market of the state. a significant role in ensuring the socio-economic development of the country, raising the living standard of the population is played by consumer lending. in the context of the effects of crisis phenomena in the state’s economy, the problem of pulling people’s savings to finance the development of the real sector of the ukrainian economy has become significantly aggravated. the provision for consumer needs of the population is characterized by an increase in interest rates, initial payments and commissions on credit proposals, a decrease in the value of mortgaged property, and an increase in requirements for borrowers in the near-term stop of the lending market. in addition, the decline in economic activity and further deterioration in purchasing power of the population have a negative impact on the dynamics of consumer lending. taking into account high credit risks, the recovery in the growth of lending to the consumer needs of the population is slow and mainly short-term. in turn, the acceleration of international capital flows leads to increased competition in the three seas economic journal 74 vol. 1, no. 1, 2020 consumer lending market due to the strengthening of market positions of non-bank organizations, brokerage, mortgage companies, which requires new approaches to meet the consumer needs of the population. the sphere of consumer lending is directly related to the needs for the development of national production, serving the interests of households and mediating the connections between the state, financial and credit institutions, commodity producers and the population. under these conditions, methods and instruments for lending for the consumer needs, sources of credit repayment, the peculiarities of the formation of the cost of credits for consumer needs of the population and the socioeconomic efficiency of the credit mechanism of meeting the consumer needs of the population require in-depth scientific study. 2. research results the problem of crediting the consumer needs of the population is constantly enriched with new scientific developments, but the theoretical integrity and practical effectiveness of its development is insufficient, as there is a continuing controversy among scientists and practitioners about understanding the essence of the credit mechanism of meeting the consumer needs, the economic nature of this category and its main components. in this regard, it is important to develop a holistic paradigm of understanding the essence and basic components of meeting the consumer needs of the population, which would integrate all their features. credit is a form of cash flow that is provided in the form of a credit. credit provides a transformation of monetary capital into a credit and expresses the relationship between commercial banks and borrowers. solving the problems of the formation of a market environment and economic growth depends on the efficiency of the credit mechanism of banks and the banking system as a whole, which is explained not only by the increase in their role in the development of the economy, but also the opportunity to react quickly and effectively to newly introduced management mechanisms. in their studies, such scholars as kirichenko o.; moroz a., savluk m., pukhovkina m.; savluk m., moroz a., lazepko i.; vitlins v. pernarovsky o., nakonechny ya., velikoivanenko g. consider only certain elements of the credit mechanism. thus, credit policy is defined as a strategy and tactics of raising funds and directing them to lending to customer needs based on the principles of return, urgency, differentiation, security, and payment. important is the opinion of these scholars that the credit policy allows them to plan, regulate, control, rationally organize the relationship between the commercial bank and its clients in relation to the reverse flow of funds. in turn, the authors of the article include to the components of the credit mechanism such elements, as: the classification of bank credits, the principles of bank lending, methods of lending and the form of credit accounts, the creditworthiness of borrowers and methods for its determination, the forms and types of security for the repayment of bank credits, principles and requirements for the conclusion of bank credit agreements with borrowers, the basic principles and legal aspects of lending to the market economy and the population. among the principles, the return, urgency, differentiation, security and pay are distinguished. consequently, the principles of bank lending are the basis of the credit mechanism, since they reflect the essence and content of the credit and the requirements of objective economic laws in the field of lending. the issue of lending methods is considered in a number of works by the authors such as liutyi  i., kryklii a., mischenko v., naumenkova s., versal n.; moroz a., savluk m., pukhovkina m.; savluk m., moroz a., lazepko i., where the method of lending is defined as a method of granting and repaying a credit in accordance with the principles of lending. thus, lending methods determine the type of credit, ways of regulating possible credit debt, the form and procedure for monitoring the purposeful use of borrowed funds and their timely return. for comparison, in the practice of the ukrainian banks (pjsc jscb “arcada”, pjsc “vtb bank”, pjsccb “pravex-bank”, pjsc “ukrsotsbank”, jsc “raiffeisen bank aval”, jsc “ukreximbank”) two methods of lending are used. the essence of the first method is an individualized approach to granting a credit, that is, a credit is provided to meet a certain target need for funds. this method is used to provide credits on specific terms, which are determined in advance. according to the second method of lending, credits are provided within the limits set by the bank in advance of a certain borrower, which is used by him or her as necessary, by payment of payment documents received during a certain period, that is, three seas economic journal 75 vol. 1, no. 1, 2020 in this case, the bank opens the borrower’s credit line. this form of provision is used for clients with a stable financial standing. the effectiveness of the credit mechanism of commercial banks depends on two groups of factors – external and internal. authors such as liutyi i., kryklii a., mischenko v., naumenkova s., versal n., liubkina o., rozhko o.; onishchenko v.; pernarovskyi o.; vitsinskyi v., pernarovskyi o., nakonechnyi ya., velikoivanenko g. underline the impossibility of the existence of a single, sustainable credit mechanism for all commercial banks, since each bank defines its own credit policy, taking into account all the set of internal and external risks that affect the effectiveness of its activities, and the attitude of the bank’s management to risk. it is debatable that in this case, the concept of credit mechanism and credit policy of a commercial bank are identified, and, in fact, credit policy is defined as a set of measures aimed at minimizing internal and external credit risks. according to vitlinskyi v., credit policy is the basis of the risk strategy in the bank and can be aggressive and traditional. the basis of the credit policy is the bank’s strategy is aimed at increasing its capital or increasing current income, or a mixed strategy. consequently, credit policy in the narrow sense is a system of bank facilities in the area of lending its clients, which the bank carries out to implement its general strategy for a certain period of time. the results of scientific research by the team of authors moroz a., savluk m., pukhovkina  m. indicate that the credit policy of commercial banks has its own internal structure. summarizing the results of the study, we will present the main elements of the credit policy: a strategy for the directions of the credit process; tactics of lending organization; control and monitoring the implementation of the chosen strategy and tactics. the efficiency of the credit mechanism of meeting the consumer needs of the population is significantly dependent on the intensity of competition in the banking sector, which differs in the development of forms, accompanied by the development of information technology and communications, which leads to the expansion of the territorial scope of banks, the spectrum of banking products and services, increases the diversification of the banking industry. therefore, the credit mechanism of meeting the consumer needs of the population contains, as a component, a credit policy, but, in addition, should be supplemented by: a detailed classification of credits for consumer needs of the population and facilities for lending for the consumer needs of the population; definition of forms, methods, tools and directions of crediting of consumer needs of the population; elements of macroeconomic modeling in relation to the formation of the value of credits for consumer needs of the population; definition of conditions, forms and methods of cooperation of crediting subjects of consumer needs of the population with market institutions that influence the efficiency of credit relations. the authors of the study agree with galchinsky a. that the activities of financial and credit institutions should be subordinated to the main macroeconomic task, namely: to balance economic development, to ensure optimal employment and to curb inflation. the activities of commercial banks should promote the introduction of economic ideology to stimulate solvent demand and supply of goods. issues of organizing credit activities of commercial banks are reflected in the writings of foreign authors: ansoff, barltrop & mcnaughton, frost, edwards, karloff, kaufman, rose & hudgins, sinkey, woelfel. in the definitions given by foreign economists, the effectiveness of the credit mechanism is determined by the focus on increasing consumer demand, using a bank of the most profitable markets for the sale of banking products, taking into account the real needs of borrowers. the effectiveness of a bank’s lending activity depends on the optimally created commodity, price, communication and marketing policies of the bank, as stated in dickson’s work. the bank focuses on specific functions of the bank in providing credit services, namely: studying and forecasting demand for banking products, issuing banking products, pricing, creating an image, expanding market shares. in studies by researcher romanenko l., there is a meaningful description of measures for the formation of consumer demand for credit products, namely: concentration of efforts of the bank to meet the needs of the client, focusing on the longterm result of the focus on achieving the final result. thus, in the above definitions, the focus is on the commercial aspect of an effective lending mechanism, insufficient attention to strategic performance of the bank; the emphasis is on achieving the optimal end result under certain three seas economic journal 76 vol. 1, no. 1, 2020 conditions, however, in our opinion, the effectiveness of the implementation of the credit mechanism is determined, first of all, by the socioeconomic efficiency of lending activities. it should be noted that the effectiveness of the credit mechanism is determined by the priorities of selecting the target segment of clients; the competence of the bank’s management, professional training and experience of the personnel, persons involved in the selection of specific credit applications and forms the terms of credit agreements. thus, the credit mechanism, in a strategic way, includes the priorities, principles and objectives of a separate bank in the lending market, tactically – the toolkit used to implement goals for the implementation of credit agreements, the rules for their implementation, the rules of the organization of the credit process. the credit takes specific forms that enable the existence of the lending process. the credit form reflects the external manifestation and organization of credit relations. in a market economy, there are different forms of credit, which differ by the subject and object of the credit, the source of payment of interest, the specific content of the credit agreement. forms of credit are constantly evolving, accordingly their place in the structure of economic relations changes. the question of the forms and types of credit in economics is debatable. differences in the approaches of economists depend on understanding the criteria, principles and classifications of forms of credit. the authors of the article share the opinion of researcher lagutin v. concerning the following forms of credit: commercial credit; bank credit; state credit; consumer credit; mortgage credit; leasing credit; international credit. credit relations mediate the functioning and development of both production and exchange, and the sphere of final consumption. in this area there is a specific form of credit: a credit for consumer needs, designed to meet the consumer needs of individuals and households. an essential feature of a credit for consumer needs – end-user financing. the peculiarity of a credit for consumer needs is that the main guarantee of its provision and return is the constant cash income of a physical person – the borrower. the population is able to consume goods and services at the time of payment of their full value. thus, the development of lending to consumer needs contributes to raising the standard of living of the population. in macroeconomic terms, lending to consumer needs of the population increases the total solvent demand for consumer goods and services, which, in turn, stimulates the expansion of their production volumes. according to the authors of the study, the factors that determine the effectiveness of lending to consumer needs are: the ability of the borrower to repay the credit; availability of credit; interest rate; maturity and repayment terms. according to pernarivsky o., the subjects of lending, consumer needs of the population are commercial banks, credit unions, mutual funds, credit cooperatives, credit exchanges, trade organizations, pawnshops, rental offices. the specifics of the final consumption sphere require, in the context of considering consumer financing lending, to identify trading organizations that carry out intermediary activities for the purchase of goods and services. consumer credit is a form of cooperation of a trade organization with a financial and credit institution to meet the current demand of the population. in this case, the trade organization must find the optimal combination of direct sales of goods for money and sales in installments. the object of lending to the consumer’s needs of the population is the costs associated with satisfying the needs of the population, namely: the cost of meeting the needs of the current nature (the acquisition of goods in personal property); expenses for meeting capital and investment needs (construction, acquisition and maintenance of real estate). the proposed classification of lending facilities for consumer needs is shown in figure 1. historically, the first form of credit for consumer needs was the so-called “tali trade” – trade in installments, which began to develop in western europe back in the 18th century. traveling traders (“talimen”) from time to time (for example, on a monthly basis) delivered goods in certain areas and sold to certain households, agreeing to a partial regular payment, with the delay of the final payment for a certain period (until their next arrival). credits for consumer needs include an extremely wide range of credit types. in the conceptual plan they distinguish commodity and money credits for consumer needs. commodity credit for consumer needs is associated with the sale of durable goods in credit (with installment payment). cash credit for consumer needs is the provision by financial and credit institutions of credits to individuals to meet consumer needs. unlike the production credit, according to scientists, savchuk v., mazurko p., three seas economic journal 77 vol. 1, no. 1, 2020 panchuk a., used to create a new value, the use of credit for consumer needs stimulates the growth of the value of the labor force proposed on the market. the practice of crediting the consumer needs by domestic financial and credit institutions allowed the authors of this study to identify the following lending objects: the acquisition of real estate (mortgage credits); purchase of motor vehicles; purchase of durable goods; payment for services (training, treatment, tourism); receiving cash for other urgent current needs (see figure 1). the list of domestic and foreign manufactured goods recommended for sale by installments is tele-radio equipment, electrical household goods, sewing machines, musical instruments, cinema equipment, furniture, goods for newborn children, garden houses, standard houses with complete sets of details, building materials , clothing, footwear, carpets, crystal items, porcelain, earthenware, fur products, vehicles, personal computers, etc. the sale of goods by installments is carried out on the basis of an agreement on the sale and purchase of goods in installments, which is concluded in objects of lending for the consumer needs of the population current needs capital and investment needs purchase of durable goods: audio, video, household appliances; computer engineering; communication facilities; photo equipment; portable electronics; furniture; windows; door; plumbing; heating systems; gas equipment; building materials; equipment; clothing; jewelry. acquisition of services: education; tourism services; medical services; services of sports facilities (fitness club, swimming pool, gym, etc.); services for the organization of weddings, holidays, birthdays, anniversaries. construction: individual dwelling houses with outbuildings; houses in rural areas that are not primary housing; cottage-type houses and landscaping of garden plots; outdoor buildings for keeping livestock and storing agricultural products; summer kitchens; greenhouses; workshops; sunshades; fences; garages. purchases of real estate in the primary and secondary markets: apartments; individual dwelling houses with outbuildings; houses in rural areas that are not primary housing; houses of the holiday type; workshops; garages; commercial real estate; land plots. repair and reconstruction: apartments; individual dwelling houses with outbuildings; houses in rural areas that are not primary housing; houses of the holiday type; outbuildings; greenhouses; workshops; garages; joining real estate to engineering and communications networks. purchase of vehicles: cars, trucks, motor vehicles (new or used): foreign production; foreign production put together on the territory of ukraine; production of cis countries; domestic production. figure 1. classification of objects of crediting the consumer needs of the population source: was compiled by the authors on the basis of the results of lending of ukrainian banks three seas economic journal 78 vol. 1, no. 1, 2020 a definite form between a business entity and an individual (buyer), according to which an entity undertakes to transfer the specified goods, and the buyer to make calculations for the good in terms and in the amounts stipulated by the agreement. necessary, important and profitable is the sale of expensive goods in installments, both for business entities, which have many problems with the sale of products, and for consumers, since it makes the majority of goods available. depending on the target nature (appointment), different types of cash credits are used, namely: investment credits; credits for the development of individual farms; credits for the purchase of consumer goods or payment for services; targeted credits to individual social groups (young families, students); credits for non-target consumer needs. according to kravchuk k. and turpak a., investment credits are credits for the construction and renovation of housing, the construction of garden houses, landscaping garden plots. this type of consumer credit is long-term. long-term consumer investment credits are provided by commercial banks on mortgage – apartments, houses, cottages, land plots, garages. provision of building consumer credits is often carried out by the bank by opening a credit line, with the credit being provided to the client by parts that correspond to the cost of completed stages of construction and installation work. credits for the purchase of consumer goods or payment services include the purchase of expensive goods and services for long-term use, namely: cars, household appliances, electrical engineering, furniture, medical services, recreation, etc. such a credit has a social orientation, therefore it should be accessible to the necessary volumes for the majority of citizens. target credits to individual social groups (young families, students, etc.) are used within the framework of national programs of social protection of the most vulnerable sectors of the population. they are provided on preferential terms: at a low interest rate, under simplified terms of execution. credits for non-target consumer needs are credits, the need for which arises due to special circumstances of unforeseen nature in the life of the population. the feature of this type of credit for consumer needs is that it is provided in cash in an amount that depends on the borrower’s income and without specifying the purposes of its use. interest for using this credit is differentiated depending on the maturity of the credit. unsolicited cash credits are also provided by pawnshops on property pledges, mutual assistance pays, and separate economic organizations. according to the subjects of credit relations – in terms of the creditor – credits for consumer needs are divided into bank and non-bank; in terms of the borrower – credits provided to all segments of the population, different social groups, different age groups; by way of provision – direct credits provided directly to borrowers, and indirect, provided through intermediaries (trade organizations, pawnshops, rental offices); by the degree of coverage of the credit of the cost of consumer goods and services – credits for full value and for partial payment of goods (services). one kind of credit for consumer needs is a credit provided by pawnshops. pawnbrokers are credit institutions that borrow money on a pledge of movable property. for the first time, pawnbrokers were founded in the 15th century by moneylenders who came from lombardy. in ukraine, the network of pawnbrokers has been widely developed on municipal (city) and joint-stock basis in the late 19th – early 20th century. the main task of the activity of the pawnshops is to provide credits to the population on the pledge of personal and household goods, as well as the preservation of these items for a small fee. as a rule, property is taken as collateral, which can be realized quickly. in this case, the mortgage provides the repayment of the credit. the insurance of the acquired property takes place at the expense of the mortgagor. pawns give a credit at an amount that is less than the value of collateral. as a rule, precious metals and stones, pearls, gold watches, for which the size of the credit may reach up to 90% of the value estimate, are most “valued” as collateral. the borrower retains the ownership of the property entrusted to the pawnshops. in the case of nonrepayment within the established term of the credit, as well as the evasion of the person who has laid things in the pawnshop, from their receipt, the right of ownership passes to the pawnshop, which transfers the property for sale (realization). from the proceeds, the pawnshop holds the amount of debt, accrued interest, remuneration, insurance costs of the pledged property and its sale. consumer credits are also provided by nonbanking institutions such as credit unions, mutual assistance funds, and credit cooperatives, which are voluntary organizations based on personal savings for mutual lending. these lending institutions three seas economic journal 79 vol. 1, no. 1, 2020 are not intended to receive profits, therefore they provide credits without interest or at minimum interest. credit unions work with those strata of the population who, for economic reasons, cannot get a credit in a bank. such lending institutions meet the needs of their members in small credits for consumer and production needs. the specific component of the credit mechanism of meeting the consumer needs is the rolled items. for registration of a rental agreement, the client submits a passport and a certificate from the place of work or training. the contract stipulates the term rental and the monthly tariff. payment notes are marked and issued in duplicate. for each day of delayed payment, a penalty of 1% of the amount of monthly tariff is charged. repairs of rental facilities are carried out at the expense of a rolling point, if the damage is not the result of improper exploitation of the property by the recipient. the main share of credits for consumer needs of the population falls on banks. in ukraine, one of the types of cash bank credits for consumer needs is the checking credit and bank credit cards. checking credit is a type of credit for consumer needs, which provides a credit through the opening of a checking account. in banking practice, two main types of check credit are used: lending from an overdraft account (with a negative balance on the current account) and lending based on the use of a special checking account and special bank checks. in modern terms, the most widespread is the crediting of consumer needs by means of a credit card. the main advantage of a credit card is the convenience of practical use. a credit card is a registered (with the owner’s identifier) cash payment-settlement bank document that is used to provide a credit for consumer needs. today, in developed world countries, credit cards come in first place as a means of calculating consumption. credit cards in the monetary sphere replaced cash and checks: payments for goods and services are carried out by the borrower at the expense of their credit card. the use of credit cards greatly facilitates the provision of credit for consumer needs, but increases the risk of abuse and fraud. the use of credit cards organizes economic relations, in the process of lending to consumer needs, between the three entities: a commercial bank; cardholder (borrower); trading organization. between a commercial bank and a trade organization, an agreement is concluded on the use of this bank’s credit cards when purchasing goods. the trading organization must give its official consent to accept the cards of this bank when calculating for the goods. for a commercial organization, a credit card is a guarantee of opening for a buyer of a credit in a bank. on a periodic basis (or immediately), trade organizations transfer to the bank bills for goods sold to credit card holders. the bank pays these bills by transferring a certain amount of funds to the current account of the trading organization. gradually the lending limit is exhausted and if the cardholder does not repay his or her obligations to the bank, the card loses its validity. credit card holders are constantly receiving information on the balance of the credit limit on it and, accordingly, on the need to extend the credit. thus, the stages of the process of crediting consumer needs through credit cards are as follows: the issuance of a credit card by a bank to the client-borrower; purchase by the borrower of goods through credit card calculation; transfer of bills for the purchased goods to the bank by a trade organization; transfer of funds from the bank to the current account of a trading organization; return of the borrower’s funds to the bank. the bank receives interest on the credit granted to holders of cards within the credit limit. the bank regulates the size of the credit limit on cards and periodically restores the cards itself, which allows it to overestimate the creditworthiness of cardholders. as a rule, only leading commercial banks are able to issue their own credit cards, because in order to provide profit, the distribution system of cards should be large enough. the main costs associated with the use of credit cards for banks are the costs of their release to the market and the search for a commercial network that would have agreed to accept them as a means of payment. it is clear that the issue of their own credit cards is a rather expensive banking transaction. therefore, in practice, banks use national (even worldwide) credit card systems (visa, mastercard, american express, etc.). it should be noted that credit cards for consumer needs are issued not only by banks but also by airlines, railways, hotels, telephone companies, and trade organizations. according to the authors of the study, a credit for consumer needs of the population should be understood as a credit, aimed at satisfying the personal needs of individuals, that is, serving the sphere of personal consumption. the proposed classification of credits for consumer needs is presented in figure 2. three seas economic journal 80 vol. 1, no. 1, 2020 in turn, the authors of the study propose to determine the credit mechanism of meeting consumer needs of the population as a set of forms, methods and tools for forming credit relations between the subjects of consumer credit financing for the development of the sphere of final consumption and the financial services market of ukraine, with the participation of market institutions that affect the efficiency of credit relations. the main components of the credit mechanism of meeting the consumer needs are presented in figure 3. the basis of the credit mechanism of meeting the needs of existing and potential customers is the credit policy of lending entities, which determines the priorities of the development of credit relations through the offer of a wide range of credit products and services. the credit policy contains the objectives, principles and conditions for granting credits to different categories of borrowers, priority areas of credit activity, allocation of powers, limits on credits to one borrower, requirements for the provision and repayment of a credit, the procedure for granting credits to employees and founders of the bank, a set of quality control measures for the credit portfolio. the essence of credit policy is determined by the peculiarities of lending to consumer needs, namely: – consumer credit refers to the relationship between the creditor and the borrower, whose purpose is to finance end-use consumption, in contrast to credits provided to business entities for production purposes or for the acquisition of assets generating the movement of value; – users of consumer credit are mainly individuals; – consumer credit is a means of meeting the consumer needs of the population, that is, personal, individual needs. lending to the population, on the one hand, increases their solvent demand, living standards in general, and, on the other hand, classification of credits for consumer needs of the population − short-term; − mid-term; − long-term. − with down payment; − without down payment; − one-time payment; − under the annuity scheme; − according to the usual scheme. − with the participation of intermediaries; − without the participation of intermediaries; − with the participation of trade organizations; − without the participation of trade organizations; − mortgages; unsecured. − with full cost coverage; − with partial coverage of the cost. − bank; − non-bank. − investment; − card; − check − for the development of an individual household; − for the purchase of goods and payment of services; − target groups of consumers. by purpose by repayment method by way of organization by terms of delivery by the degree of coverage of the cost of goods (services) by subjects of credit relations figure 2. classification of credits for consumer needs of the population source: compiled by authors three seas economic journal 81 vol. 1, no. 1, 2020 accelerates the sale of inventories and services, contributes to the creation of fixed assets of production enterprises; – all types of credit for consumer needs are social in nature, as they contribute to solving social problems: raising the standard of living of the population (especially low and middle income), the adoption of the principles of social justice. the above has a manifestation in preferential terms of lending and development of loyalty programs. credit relations between the subjects of consumer lending mediates the development of the final consumption, which necessitates the cooperation of trade organizations and financial and credit credit mechanism of meeting the consumer needs of the population credit policy − commercial banks; − credit unions; − mutual assistance funds; − credit cooperatives; − credit exchanges; − trade organizations; − pawn shops; − rental points. − expenses for meeting the needs of the current nature; − expenses for meeting capital and investment needs. forms, methods and tools for lending for the consumer needs of the population − acquisition of durable goods; − purchase of vehicles; − purchase of services; − construction; − purchase in the primary and secondary real estate market; − repair and reconstruction. macroeconomic factors activities of the national bank of ukraine market institutions that affect the efficiency of credit relations: trade organizations; insurance companies; collection companies (protection of interests of financial and credit institutions); anti-collector companies (protecting the interests of borrowers); credit brokers; bureau of credit histories. subjects of lending for consumer needs of the population directions of lending for consumer needs of the population objects of lending for the consumer needs of the population conditions, forms, methods of cooperation credit products and services figure 3. components of the credit mechanism of meeting the consumer needs of the population. source: compiled by authors three seas economic journal 82 vol. 1, no. 1, 2020 institutions. an additional condition for consumer lending is the life insurance of a borrower, which requires the involvement of insurance companies in cooperation. the efficiency of the functioning of the credit mechanism for providing consumer needs is significantly influenced by macroeconomic factors that shape the solvent demand of the population, as well as trends in the banking system in terms of volume dynamics, transformation of credit portfolios of banks, and dynamics of problem debt volume. at low level of solvent demand of the population at considerable volumes of the given credits the volume of problem debts of creditors, which requires attraction of collecting companies in the sphere of credit relations, significantly increases. in addition, according to the authors, the reduction of the volume of problem debts in the credit portfolios of financial institutions is facilitated by cooperation with credit brokers and a bureau of credit histories. 3. conclusions it can be argued that solving the problems of the formation of a market environment and economic growth depends on the efficiency of the credit mechanism of commercial banks and the banking system as a whole, which is explained not only by the increase in their role in economic development, but also by the opportunity to respond quickly and effectively to newly introduced management mechanisms. the basis of an efficiently functioning credit facility is the planning of credit activities, justification of their expediency taking into account the trends of economic development of the country and the banking system, in particular. in this paper, the authors investigated the credit mechanism of meeting consumer needs by structuring the relationships between subjects and objects of lending to consumer needs, forms, methods and tools for the formation of credit relations in the conditions of the development of the consumer market, which allowed to obtain the following results of the study: – with the help of comparative analysis, the authors improved the classification of credits for consumer needs of the population, which provides for their division by purpose, terms of provision, repayment method, the degree of coverage of the cost of goods (services), the way of organizing credit relations, subjects of credit relations, while a credit for consumer needs of the population means a credit, which is aimed at satisfying the personal needs of individuals and serving the sphere of personal consumption; – the work proposes its own definition of the credit mechanism of meeting consumer needs of the population as a set of forms and tools for influencing the system of credit relations between the subjects of lending to the consumer needs of the population in order to provide the necessary volumes of consumer credit; – the authors identify the main components of the credit mechanism for the provision of consumer needs, such as: the credit policy of consumer crediting entities, which is formed under the influence of macroeconomic factors and regulatory measures of the central bank of ukraine; subjects and objects of lending; forms, methods, tools and directions of consumer lending; market institutions that affect the efficiency of credit relations. resolving the problems of effective functioning of the credit mechanism of meeting the consumer needs of the population remains relevant, concerning the coverage of new methods, conceptual approaches to the valuation of mortgaged property, risk insurance for nonrepayment of credit and determination of the value of credits for consumer needs of the population. these problems require additional study and will be the subject of further scientific research by the authors. references: ansoff, h. 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(2001). encyclopedia of banking & finance. chicago: probus pub. co. three seas economic journal 166 vol. 1, no. 4, 2020 corresponding author: 1 simon kuznets kharkiv national university of economics, ukraine. e-mail: iastremska.o@gmail.com orcid: https://orcid.org/0000-0003-1865-0282 2 kryvyi rih national university, ukraine. e-mail: korolenko.ob@knu.edu.uа orcid: https://orcid.org/0000-0002-0771-4298 doi: https://doi.org/10.30525/2661-5150/2020-4-24 assessment and risk management of socio-economic projects olesia iastremska1, olha korolenko2 abstract. the quality of implementation of social programs and projects is a measure of the effectiveness of social policy. ideally, a social project can be implemented if absolutely everyone is interested: both the participants and those to whom the project affects in one way or another. all stakeholders are members of the value chain and add value to the program to one degree or another. the general purpose of the research work is to substantiate the mechanisms for reconciling the interests of stakeholders and study effective models of social entrepreneurship. practice proves that the most rational among the known methods of risk management is the stakeholder approach. the main risks in the perception of the quality of social project implementation are “gaps”: a) in knowledge – project implementers misunderstanding of the customer expectations; b) in standards – the inability to set quality standards that meet customer expectations; c) in the effect of implementation – the inability to ensure the quality of project implementation in relation to established standards; e) in communications – the inconsistency of the transmitted information about the quality of the project to the actual level. all these risks are closely linked. research shows that the greatest risks in the implementation of social projects occur among the “gaps” in standards. distinctive features of the management process of social programs and projects, which have to be taken into account during the management standards development, are presented in the work of v.m. burkov. the basis of the formation of the interests harmonization mechanism is the “stakeholder interaction standard aa1000” (standard aa1000ses), which sets out the basic methods, tools and standards of stakeholders management. the technology of developing of the social project road map is presented in the work of o.v. ponomarenko. the works of o.i. datsko are devoted to the study of the role of stakeholders in the view of the projects development with the aim to increase the territories competitiveness. the process of urban development strategy is researched by a.i. yermolova. summarizing the above, it should be noted that one of the defining areas of socialization of economic relations in modern ukraine is the development of social entrepreneurship. today’s economic, political and social realities necessitate the development of social entrepreneurship from the level of charity to the level of social enterprises, which will not only become a source of material needs for people unable to compete in the labor market, but also help to solve various pressing social problems. the formation of social enterprises should be ensured by a set of legal, economic and ideological guarantees from the state and society. the evolution of social entrepreneurship should be accompanied by the solution of both global (for example, the formation of public consciousness) and applied (for example, for the sustainable social entrepreneurship development it is required to use effective business models) tasks. the method of cba involves determining the discount rate for social projects, which can be calculated by the model for the assessment of the social border of intertemporal benefits. the following statistical indicators can be used for calculation: the risk to life level, the growth rate of consumption per capita, the elasticity of the marginal social utility of consumption. the calculation uses the arithmetic mean values of these indicators for as long as possible. key words: social entrepreneurship, social project, social project risk, discount rate, cba-analysis, business models, social development. jel classification: a13, o10, g14, l84, o31 three seas economic journal 167 vol. 1, no. 4, 2020 1. introduction today, the modern development of society is impossible without future planning with the strategic possibility of stable socio-economic progress, which is the socially oriented growth that provides the social innovation, including unusual ways of solving and mitigation of existing social problems. a market economy is based on the “three whales”: legal system, market infrastructure, and entrepreneurship. according to international experience, an important component of the national economy competitiveness is entrepreneurship. in the conditions of market transformation of the ukrainian economy, the entrepreneurship development is the basis of economic and social development, social problems solving, poverty overcoming and the high standard of living ensuring. entrepreneurship has been developing since ukraine had got independence. the quality of implementation of social programs and projects is the measure of the social policy effectiveness. ideally, the social project can be implemented if absolutely everyone is interested in its realization: the participants and those whom the project affects in one or another way. all stakeholders are members of the value chain and they add value to the program to some extent. the social value optimization for consumers is complicated by the fact that stakeholders of one value chain are members of many other value chains that together constitute the social capital of the program or territory. in order to increase this capital, it is necessary to use standards and methods of program (project) risk management. the practice proves that among the known methods of risk management the most rational is the stakeholder approach. the general purpose of the research is to substantiate the mechanisms of stakeholders interests harmonization and coordination of management entities actions, to develop the risk assessment methods and to consider them as the methodological basis for the social project management standardization at the regional level. 2. methodology of research the issues related to the state socio-economic development and the social development of the enterprise are given considerable attention by m. volkova, n. holubiak, n. horishna, h. davydovska, v. dykan, o. dovhan, v. kompaniets, m. naumova, e. plakhova. at the same time, despite the significant number of scientific works, which consider theoretical, methodological, practical aspects of socio-economic development of the state, the social entrepreneurship remains unresolved, and some positions are still debatable. despite the significant contribution made by domestic and foreign scholars to the research problem, there is a need for further in-depth study and consideration at both theoretical and practical levels. the main risks in the perception of the quality of social project implementation are “gaps”: a) in knowledge – project implementers misunderstanding of the customer expectations; b) in standards – the inability to set quality standards that meet customer expectations; c) in the effect of implementation – the inability to ensure the quality of project implementation in relation to established standards; e) in communications – the inconsistency of the transmitted information about the quality of the project to the actual level. all these risks are closely linked. research shows that the greatest risks in the implementation of social projects occur among the “gaps” in standards. many works by both national and foreign specialists are devoted to the project management methodology implementation in the field of state regulation of social development, namely s. d. bushuiev, v. n.  burkov, v. voropaiev, v. m. vorotin, clifford, f. gray, n. m.  dragomiretska, i. i. mazura, v. d. shapiro etc. problems of development of the social services market are investigated by m. f. holovatyi, i. d. zvereva, h. m. laktionov, t. v. semihina, e. i. kholostov etc. v. i. hrebennikov, b. a. rosenfeld, n. m. rymashevska etc. pay attention to the social standards development. scientific research by v. b. ahranovych, n. v. kulikova, o. v. ponomarenko are devoted to the issue of standardization of the social programs management. the matter of the social engineering methodologies is studied by a. s. avtonomov, h. a. antoniuk, a. s. karpovtseva, v. a. lukov etc. distinctive features of the management process of social programs and projects, which have to be taken into account during the management standards development, are presented in the work by v. m. burkov. the basis of the formation of the interests’ harmonization mechanism is the “stakeholder interaction standard aa1000” (standard aa1000ses), which sets out the basic methods, tools and standards of stakeholders management. the technology of developing of the social project road map is presented in the work by o. v. ponomarenko. the works by o. i. datsko are devoted to the study of the role of stakeholders in the view of the projects development with the aim to increase the territories competitiveness. the process of urban development strategy is researched by a. i. yermolova. despite the significant scientific interest in solving the problem of the stakeholders management, it is still missing the high quality systematic study of existing methodological approaches to the formation of stakeholder management technology with an emphasis on defining the problem area of coordination of interests and conflict prevention in social projects and programs. consequently, it has determined the subject area of our research. three seas economic journal 168 vol. 1, no. 4, 2020 we also emphasize that today several approaches to social project management have been developed, the structural components of the social project have been identified, the goals of setting problems in social engineering have been carefully considered, optimal schemes of social project implementation and financing have been revealed, the process of project team formation and project participants management have been identified. additionally, in the works devoted to the analysis of the investment projects risks, project risks are classified, numerous methods of their qualitative and quantitative assessment are developed, the scheme of the project risks analysis and management methods are described. however, in the existing works the issue of quantitative risk assessment of social projects is not considered. accordingly, it has led to the main scientific tasks within the research. 3. the formation of approaches to the social entrepreneurship definition as the basis of research social entrepreneurship – the entrepreneurial activity combined with the solution of social problems, it is activities the results of which are evaluated not only (and not so much) by the amount of profit, but by the “social return”. the theoretical platform of the social entrepreneurship scientific research is the concept of “mixed” or “combined value” of j. emerson ( j. emerson), according to which the enterprise is an element of socio-economic reality, which combines economic and social components. at the same time, these components are not considered in isolation, but as complementary. according to j. emerson, the results of economic and social activities cannot be opposed. “the question is not what to choose – the creation of economic wealth or social improvement, but to create values and use resources to increase the benefits of continuous production of both types (economic and social)” (social business in ua, 2020). the concept of combined value is based on the following components: all enterprises create combined value; there is a continuous interaction of social and economic goals of the enterprise; assessing of the investments effectiveness by financial instruments only leads to the efficiency underestimation in general. although j. emerson’s concept indicates the social nature of any economic activity, but it does not allow to explain the features of social enterprises. several concepts of social enterprise are defined at the doctrinal level: broad, combined, innovative and problem oriented. the broad approach (e. shaw, j. viravardena, g. mort, a. fowler, the center for the advancement of social entrepreneurship) is based on the hypothesis that social entrepreneurship is an activity that ultimately implies the achievement of the social goal. according to this approach, social entrepreneurship means the activities of state social organizations; traditional business organizations, which always have a social component; non-governmental non-profit organizations. the broad approach does not allow to single out and define the features of social entrepreneurship, as it can include any activity that has the social effect. in the projection on domestic realities, it is practically impossible to find an enterprise (even if its activities are far from socially oriented, such as production associated with harmful emissions into the atmosphere), which would not declare its positive significance for the economic interests of society in modern ukraine (for example nuclear energy). the combined (commercial-social) approach (a. macmillan, j. robinson, j. rogalin) assumes that social entrepreneurship is an activity focused on achieving not only social but also commercial results. according to this approach, social entrepreneurship is a field of activity that requires the business component. this approach is implemented in ukraine through the system of legal incentives, such as preferential taxation of employers for creating additional jobs for people who find it difficult to compete in the labor market. the innovative approach ( j. meyer, e. noboa, e. austin, j. wei-skillern, h. stevenson, f. perrini, s. vurro) emphasizes on the innovative component of entrepreneurship and the innovative approaches application to solve the social problems. the innovative approach, on the one hand, significantly limits the scope of social entrepreneurship compared to the combined approach because not all business organizations use innovation in the social component of their activities. similarly, the activities of non-profit organizations and state social institutions that do not implement innovations do not fall under social entrepreneurship. on the other hand, this approach expands social entrepreneurship by supplementing its activities with non-profit organizations and public social institutions that develop and implement innovations in their activities. from our point of view, such approach is realistic in ukraine with the support of international organizations and charitable foundations. problem oriented approach (k. lidbiter, schwaba foundation) refers to social entrepreneurship such activity, the social results of which are focused on the particular social group or problem (people with disabilities, socially vulnerable groups, migrants, homeless others). this approach can be considered as a kind of broad approach but with limitations in the field of social entrepreneurship and potential consumers of its products or services. there is still no common vision of social entrepreneurship in the international practice, in particular regarding the criteria for the attitude three seas economic journal 169 vol. 1, no. 4, 2020 of enterprises to social, business mechanisms for solving social problems, community building and mutual assistance. in the united states, for example, it is enough for a product or service to solve a certain social problem, and then the enterprise that produces this product or provides a service can already be called social. in europe, the approach is slightly different: social enterprises have to give part of the profit to the social projects or provide employment to people with special needs. however, there is one criterion with which everyone agrees – it is the social effect, a certain public good. w hatever the differences in the social entrepreneurship definition, the purpose of this activity is to help society. this is a real mechanism of using social opportunities and solving social problems. the more people hear about it, the greater effect this mechanism will create. on the base of the pluralism of social entrepreneurship approaches and practices, it is advisable to clarify its essence as a socio-economic phenomenon. entrepreneurship in its modern sense is the creative initiative process of searching and application of creative or not realized opportunities (innovations) of profit increasing of its economic activity in order to obtain additional entrepreneurial income by a business entity. at the same time, entrepreneurial income is a part of profit generated from the realization of the ability of the business entity to innovation. according to this definition, entrepreneurship is not identified with business. business is any initiative economic activity of its subjects for making profit. so, social entrepreneurship means systematic, including innovative, economic activity, which involves solving social problems. the main result of the social enterprise should be the creation of a certain social value. unlike the traditional business, where the main result is profit, social value is a rather complex category, because it refers to both financial and non-financial results (european commission (2020)). considering the social entrepreneurship, social value is a certain benefit for society that is created by business through entrepreneurial activity. it should be the main purpose of the social enterprise. a tool of social value creation is often a product or service 4. experience of social entrepreneurship development in the european countries the european social enterprises have regional features and the clear social goal, to the realization of which they direct the significant part of their profits. for example, most german social enterprises solve the problems of vulnerable groups: migrants and refugees, unemployed youth and people with disabilities. the kiron international platform enables refugees to get education and qualifications remotely – anywhere and anytime. social impact has also been operating in germany for over 20 years, supporting and advising social enterprises, positioning itself as a “social innovation agency”. in 2011, social impact launched the incubation program social impact labs, which became a platform for social entrepreneurs and freelancers. social entrepreneurs are credited by federal banks, venture funds are invested in them, crowdfunding and group investments are gaining popularity. as a result, there are about 100,000 social enterprises in germany, employing more than 2.5 million workers, that is three times more than the car industry, which employs 750,000 workers (chien-chung h. and blair d., 2018). social enterprises in developed countries are, firstly, representatives of small and medium-sized businesses, which play a key role in job creation and economic development – it should be the priority for ukraine as well. according to the european commission, there are currently two million social enterprises in europe (10% of all european business) with more than 11 million employees (6% of workers in the region). the main organizational and legal forms of social enterprises in european countries are cooperatives (in particular, in portugal – “social solidarity cooperatives”, in france – “social cooperatives of collective ownership”, in italy – “social cooperatives”, in spain – “cooperatives of social initiatives” etc.) or companies (for example, in the uk – “community-based companies”, in belgium – “social purpose companies”) (european commission (2020). three countries (lithuania, slovakia and finland) have adopted laws that define social enterprises as engaged exclusively in the labor integration of vulnerable groups. the european commission identifies four main areas in which social enterprises operate: – work integration – training and integration of people with disabilities and the unemployed; – provision of personal social services – health, welfare and medical care, vocational training, education, medical services, child care services, services for the elderly or assistance to low-income people; – local development of areas located in disadvantaged areas – social enterprises in remote rural areas, schemes of development / rehabilitation of neighborhoods in urban areas, development assistance and cooperation with third countries; – other, including processing of agricultural products, environmental protection, sports, art, culture and historical preservation, science, research and innovation, protection of the rights of consumers and sports fans (richardson, 2016). regarding the sources of the social enterprises financing, the experience of developed countries shows that fees and sales (own revenues) were the most important source of financing in 54.28% of enterprises, followed by grants – 27.11%, donations – three seas economic journal 170 vol. 1, no. 4, 2020 5.96% and investments – 4.61%. at the same time, the distribution of funding sources differs significantly between countries. thus, financing from own revenues ranges from 74.5% in spain to 28.5% in romania. grants range from 36.2% in sweden to 18.9% in china, and donations range from 12.1% in romania to 1.7% in hungary. investments range from 21% in china to 0.6% in spain (european commission, 2020). the study conducted by the european commission in 2018 notes that significant amounts of social services are also funded by the public sector. for example, approximately 45% of social enterprises in italy are supported by state funds and they are their main clients (chien-chung h. and blair d., 2018). 5. risk management of social projects the research on modern technologies of social engineering has made it possible to emphasize the importance of forecasting the consequences of a social project for stakeholders. on this basis, the analysis was conducted. it was determined that social forecasting in the social project was to determine the future results of the social project and assess their positive and negative consequences for the social system as a whole, the target group and / or individual social groups. this is the most time-consuming and long-term activity, which involves extrapolation and interpolation of certain trends in social development, analytical models development (matrix, simulation, game, etc.), often – the experts survey. the social forecasting is needed due to the high cost of possible negative consequences of social innovations, which can provoke an unpredictable reaction of society and minimize the positive social effect obtained because of the project. let us say that the marketing of social projects is a process of identifying the needs of society or individual social groups developing and implementing the strategy for their most effective satisfaction within the project resources. the main purpose of marketing activities in social engineering is to find out the optimal scheme for achieving project goals, i.e. the expected social effect. in the process of the social project developing and implementing, marketing activities consist of: implementation of social diagnostics, i.e. collection and analysis of information in order to identify problem areas of the social sphere; assessment of the capabilities of state and municipal structures or non-profit organizations and the cultural potential of society to meet public needs or solve social problems; determination of the main characteristics of the project product; social forecasting, i.e. determining the future results of the social project and assessing their positive and negative consequences for the social system as a whole; development and implementation of the project product promotion strategy including positioning of public value related to the product. social projects are being developed to meet the needs of citizens or to solve certain social problems by changing the social situation. the reason for the social projects development is mostly such problems that, firstly, have contradictory multi-vector development trends, and, secondly, need an adequate solution. the originality of social projects is expressed in the fact that the main expert in their evaluation is not the state or the customer of the project, but society. therefore, the acceptability of solving social problems options for the target groups of the project and the population of the region for which it is developed, should be one of the indicators of the quality of the social project. so, the criteria for the social project acceptability in relation to the population of its territory include public awareness of the importance of social innovation, which is provided by the project; public assessment of the degree (or probability) of achieving the project objectives; the attitude of the population to the ways of the goals achievement; forecast activity of the population in the project implementation. suppose the introduction of an integrated index of acceptability of the social project can be used in order to compare alternatives to the same project, and to select the most popular project for society. in the process of the stakeholder analysis, the following tasks can be solved: development and approval of the strategy; making adjustments to the project; improving the project development and implementation process; ensuring reporting by project co-executors; increasing the level of knowledge about the advantages and disadvantages of the project, etc. the advisability of such actions during the stakeholder analysis: identification of the project stakeholders; determining the importance of each of the stakeholders for the project; determining the interest of each party and the degree of impact on the project; determining the emotional commitment of project stakeholders; determining the strategy and tactics of interaction with each of the stakeholders; inclusion of measures for interaction with stakeholders in the project schedule. quantitative risk analysis of social projects is defined by modern regulations as a necessary component; the assessment of project effectiveness should also be carried out taking into account all risk factors. the main purpose of this analysis is to establish and provide to investors, potential partners or project participants the data that is necessary for the decision-making on the expediency of participation in the project. when reviewing the methods of quantitative assessment of project risks, their advantages, disadvantages, and analysis of their acceptability allow us to conclude that in theory and practice there are no universal methods that can be used for any social project. potential investors and project developers should be able to choose methods taking into account the specific conditions of the project, time and money, the scale of three seas economic journal 171 vol. 1, no. 4, 2020 the social project, its strategic characteristics. therefore, the risk assessment of large-scale social projects with the aim to solve highly significant social problems associated with long-term results causes serious difficulties. there is the need to find a compromise between possible losses due to inaccurate assessment and forecasting results and costs for their improvement. the determination of the discount rate for social projects can be calculated by the model for the assessment of the social border of intertemporal benefits. according to this method, we have calculated the discount rate for ukrainian social projects. for 2021 it is 4.37%. the forecast discount rate for the period 2018–2021 by the method of scenario analysis was following: in 2018 it ranged from 4.06% to 5.15% with the most probable value of 4.58%; in 2020, the sptr took a value from 3.73% to 5.55% (forecast), and in 2021 the social discount rate is projected to fluctuate from 3.0% to 4.85% (sencha, 2013). the obtained values of the social discount rate can be used as a marginal assessment by the developers of social projects proposed for implementation in the region. 1. the index of acceptability of social projects application is necessary in modern ukraine. as many social problems require the development and implementation of many relevant projects, the index allows to compare projects on such important characteristics as acceptability for the population of their territory and reject or postpone such projects, which definitely will not have significant support from the population. it will reduce the risk of wrong management decisions in the public sector and increase public confidence to government. however, it should be noted that the proposed methodology provides only assessment of the acceptability of the social project by the population, without taking into account the acceptability of the project for the target group and the project team. therefore, further research requires the methodology development that would allow to obtain a comprehensive assessment of the acceptability of the social project in quantitative terms. 2. in the process of the stakeholder analysis, the following tasks can be solved: development and approval of the strategy; making adjustments to the project; improving the project development and implementation process; ensuring reporting by project co-executors; increasing the level of knowledge about the advantages and disadvantages of the project, etc. further research requires the issue of methodological approaches to stakeholder management in the technology of developing social projects, especially at the level of local communities. 3. the risk assessment of large-scale social projects with the aim to solve highly significant social problems associated with long-term results causes serious difficulties. there is the need to find a compromise between possible losses due to inaccurate assessment and forecasting results and costs for their improvement. taking into account the importance of the problem, further research is needed to improve methods and techniques of risk accounting in the assessment of the social project’s effectiveness (martunyuk, 2019). 4. the cba (cost-benefit analysis) application, i.e. estimating the ratio of costs for social projects and benefits from it during the examination of social projects is necessary in modern ukraine, as the application of this analysis allows to compare the monetary equivalent of social effects from their implementation and reject clearly ineffective projects at the stage of their preliminary evaluation, which will reduce the risk of wrong management decisions in the public sector and optimize budget expenditures (kriuchkov, 1998). 6. conclusions summarizing the above, it should be noted that one of the defining areas of socialization of economic relations in modern ukraine is the development of social entrepreneurship. current economic, political and social realities necessitate the development of social entrepreneurship from the level of charity to the level of social enterprises, which will not only become a source of material needs for people unable to compete in the labor market, but also help to solve various pressing social problems. the formation of social enterprises should be ensured by a set of legal, economic and ideological guarantees from the state and society. the evolution of social entrepreneurship should be accompanied by the solution of both global (for example, the formation of public consciousness) and applied (for example, for the sustainable social entrepreneurship development it is required to use effective business models) tasks. it should be noted that social entrepreneurship is a sustainable and positive form of social change that ensures the development of society, the ability of the community to ensure their own economic independence, stability and prosperity. despite political and economic instability, low level of financial support from the state, ukraine has great domestic potential and strong intellectual resources for the social entrepreneurship development. we believe that social entrepreneurship in modern realities is aimed to accelerate positive social changes, ensuring the satisfaction of basic human needs in an optimal way. it should be the key factor in the sustainable development not only of the individual area, but also of the state as a whole. the method of cba involves determining the discount rate for social projects, which can be calculated by the model for the assessment of the social border of intertemporal benefits. the following statistical indicators can be used for calculation: the risk to life level, the growth rate of consumption per capita, and the elasticity of the marginal social utility of consumption. three seas economic journal 172 vol. 1, no. 4, 2020 the calculation uses the arithmetic mean values of these indicators for as long as possible. however, it is important to note that the proposed method of calculating the social discount rate is suitable only for short-term and medium-term planning, as the time series of available statistics are very short. in addition, the approach of the social border of intertemporal benefits does not take into account the specific risks of projects, so the further research requires the calculation of the social discount rate for long-term planning taking into account industry specifics. references: aa 1000 ses (2017). standart vzaimodeistviia storonami [stakeholder engagement standard]. available at: www.accountability.org.uk (accessed 17 november 2020). burkov, v. n., burkova, i. v., & gorgidze, i. a. (2005). zadachi upravleniia v sotcialnykh i ekonoichskikh sistemakh [tasks of management in social and economic systems]. moscow: sintez. datsko, o. i. (2011). zastosuvannia tsinnisnoho pidkhodu dlia zabezpechennia konkurentospromozhnosti rehionu v umovakh hlobalizatsii [implementation of value-based approach to provide competitiveness of the region in the context of globalization]. visn. donets.nats. un-tu, vol. 1, pр. 67–90. yermolova, a. i. (2012). model seredovyshcha zatsikavlenykh storing rozrobky stratehii rozvytku mista [model of the environment of stakeholders in creating urban development strategy]. available at: http://archive.nbuv.gov.ua/ portal/soc_gum/vsunu/2012_14_1/ermolova.pdf (accessed 17 november 2020). kriuchkov, iu.a. (1998). teoriia i metody sotcialnogo proektirovaniia [theory and methodology of social project planning]. moscow: mgp “informreklamizdat”. martunyuk, о., vitvitskaya, о., lagodiienko, v., & krupitsa, i. (2019). formation of an innovative concept of management on the basis of reconstruction of genetic algorithm of management technology. periodicals of engineering and natural sciences. periodicals of engineering and natural sciences, vol. 7, no. 2, pр. 487–499. available at: http://pen.ius.edu.ba/index.php/pen/article/view/560 sencha, i. a. (2013). metodyka kilkisnoi otsinky pryiniatnosti sotsialnykh proektiv dlia suspilstva [methodology for quantitative assessment of acceptability of social projects for society]. publichne upravlinnia: teoriia ta praktyka, vol. 1(13), pp. 97–102. sencha, i. a. (2013). the method of quantitative evaluation is social projects for society. public administration: theory and practice: coll. science. etc. association of doctors of science in publ. admin. kharkiv: dok-naukderzhupr publishing house. toshchenko, zh. t., antov, n. a., & lapin, n. i. (1982). social design. moscow: mysl. social business іn ua (2020). “about social entrepreneurship”. аvailable at: www.socialbusiness.in.ua (accessed 08 january 2020). chien-chung, h. and blair, d. (2018). “the development of social enterprise: evidence from europe, north america, and asia”, research report march. аvailable at: https: socialwork.rutgers.edu/sites/default/files/report (accessed 08 january 2020). dees, g. (1998). “the meaning of social entrepreneurship”, article_dees_meaningof social entrepreneurship. аvailable at: https:centers.fuqua.duke.edu/case (accessed 08 january 2020). richardson, m. (2016). “social enterprise: lessons learned in the uk”, dopovid na ii vseukrainskomu forumi sotsialnykh pidpryiemtsiv [report at the ii all-ukrainian forum of social entrepreneurs]. kyiv, ukraine, november 16. european commission (2020). “sectors of the social economy in the eu: social enterprises”. аvailable at: https://ec.europa.eu/growth/sectors/social-economy/enterprises_en (accessed 08 january 2020). three seas economic journal 126 vol. 1, no. 4, 2020 corresponding author: 1 national university of life and environmental sciences of ukraine, ukraine. e-mail: sverdanof@ukr.net orcid: https://orcid.org/0000-0002-1773-3919 doi: https://doi.org/10.30525/2661-5150/2020-4-18 economics and taxation of wealth mykhailo sverdan1 abstract. the purpose of the paper is to study current issues of wealth, which is due to current sustainable trends in wealth growth and increasing the number of wealthy individuals. the aim is to determine the essence, prerequisites for the emergence and development of wealth, as well as to reflect the historical aspects of the evolution of wealth and its current state. the topic of the article is caused by the need to reveal the modern social stratification of population by the level of wealth, the formation of a wealthy class of society and its growth, the processes of creating and increasing wealth. at the same time, the purpose of the article is to study wealth as an object of taxation. in this regard, an economical essence of the wealth tax and its introduction preconditions are considered, the specificity of functioning of wealth tax in a market economy, the most important features of wealth tax functioning are determined. methodology. proper analysis of the social structure of society in terms of material wealth allows to evaluate the efficiency of the economy and the quality of public policy in the system of creating and distributing public revenues, public goods and wealth. fatal mistakes in choosing the state priorities of socio-economic policies and making the best decisions in the financial sphere appear without the results of these calculations. the survey is based on a comparison of data of wealth tax in different countries. results. the question and the modern specifics of wealth are investigated. the value of wealth for society and the state is determined. the wealth tax is an effective fiscal tool of the state in the distribution of public revenues. the wealth tax exists in many countries in various forms. practical implications. the possibilities of improving well-being and increasing wealth are explored. adequate assessment of the level of well-being and wealth would enable the state to carry out a balanced and effective socio-economic and financial policy to stabilize society and adopt a stable public order. the financial essence of the wealth tax and its introduction preconditions are investigated. the specificity of functioning of wealth tax in a social market economy is considered. value/originality. it has been found that wealth is a comprehensive, multifaceted category, which can be characterized as a specific feature of the socio-economic structure of society, which determines its condition, results, dynamics and development tendencies. wealth characterizes the ability to achieve a positive result (effect) in market conditions of managing and using the existing social and economic potential in the community, as evidenced by its level of civilization development. the peculiarities of the functioning of the wealth tax in different countries of the world are considered. the using of the wealth tax as a fiscal instrument in the state tax system is suggested. key words: wealth, taxation, economy, property, enrichment, well-being, consumption, wealth tax. jel classification: e62, h22 1. introduction “society of wealth” can be the most appropriate definition for the current economic state of individuals in the social hierarchy. the socio-economic structure of society is always divided into stratum. the upper ranks are occupied by individuals with a high level of well-being. wealthy individuals are at the highest level of the public economic pyramid. economy is the foundation of every society. this refers to a productive purposeful economic activity focused on creating a variety of goods to satisfy the specific needs of individuals. the main aim of the economy is to constantly create such benefits that are necessary for human life and the gradual increase in his or her well-being. the main reason for the extraordinary complexity of economics is that it must serve the interests of individuals. the economy cannot be constructed in spite of a human. society and economy are inextricably linked institutions. the existence of a modern society is impossible without a certain economic system of market relations. the modern market economy allows individuals to provide and increase the level of wellbeing, accumulate property and enrich themselves. three seas economic journal 127 vol. 1, no. 4, 2020 the role of the economy in society is to meet the needs of people. some individuals have higher economic needs and economic interests than others. we can also include the desire and ability to obtain additional economic benefits, which subsequently leads to enrichment. a person is interested in receiving economic benefits in greater quantity and of a higher quality. there is no other option for behaviour in market conditions. otherwise, it will indicate a primitive lifestyle. wanting to provide himself or herself with everything necessary for a comfortable life, a person seeks to obtain certain economic benefits. the economy and development of society have led to the modernization and improvement of economic benefits, almost to infinity. compared to the old days, now there are cars, luxury mansions, jewellery made of precious stones and materials, and so on. the nature of the phenomenon has remained essentially the same: a person seeks to visualize his or her status in society and thereby show his or her superiority. only the attributes have changed. wealth is a phenomenon of socio-economic nature, which is inherent in every society during the existence and development of civilization. wealth testifies to the existence of a wealthy strata of the population, which is a direct consequence of the radical stratification in terms of wealth. the economic condition of individuals has always differed in society throughout the historical development of mankind. wealth is a direct logical result in differences in the material position of individuals, and therefore has always existed and exists in all societies. at the same time, the more economically developed and progressive society is, the more obvious is the presence of the affluent population, there are more rich individuals, the more significant is the material stratification and economic inequality of society. the question of the presence of wealthy individuals and the formation of appropriate elite groups is one of the most relevant in the modern socio-economic structure of society. wealth is characterized by a significant accumulation of property, greater consumption of public goods, easy access to resources and services, a high standard of living, etc. welfare has always been a measure of an individual’s place in society and has served to confirm social status. the issue of wealth is a rather complex multifaceted social issue; the reasons for its origin are complex and comprehensive, based on economic, social, and other circumstances. private property has played a significant role since ancient times. at the same time, from the fiscal point of view, private property ensures the creation of objects of taxation and increase the amount of tax revenues in the state budget. accumulated property eventually appears in the form of wealth. to this end, there is a special form of taxation of private property in total – the wealth tax. in the process of tax evolution, separate property taxation at the level of individual property items has become increasingly common, which is widely used today. from a fiscal point of view, private property is a necessary and profitable element of a market economy for the state. the very fact of owning a certain property has long been considered a sign of wealth. the presence of certain real estate in the personal possession and disposal of the ancients was an important sign of well-being, luxury and wealth of individuals. for such persons, the application of a stronger tax burden has always been initiated. in every society there is always a category of wealthy people with a significant amount of wealth, able to pay wealth tax. the concept of introduction of the uniform complex tax has found the practical embodiment from the very beginning of emergence of tax business and is successfully realized in modern conditions. the wealth tax fully proves its worth. 2. economic prerequisites for wealth wealth is always of interest in society. individuals seek to enrich and increase their well-being. this manifests the essence of economic activity of individuals which results in the achieved wealth. the economy is the largest part of public life (beinhocker, 2006). a part of the individuals’ life is in the economic sphere, regardless of any conditions and circumstances, whether it happens consciously or subconsciously, whether there is employment in the real economic sphere of entrepreneurship or not. individuals constantly receive certain income and expenditure, which is always focused on one thing – improving their own well-being. individuals are interested in obtaining the highest possible income or acquiring a certain property, in the costs of various acquisitions, which can improve their well-being. the purpose of such psychological attitudes and actions of individuals is to acquire personal property, create their own wealth, achieve a more affluent level of material prosperity and ensure a higher standard of living. welfare and wealth act as a specific target of the working life of individuals, constituting its main content and financial and economic interest. since its inception, economics as a specific form of social consciousness as a whole has emerged as the science of wealth (mackay, 1931). this hypothesis was started by ancient greek philosophers. gradually, in the process of real economic activity, it became a reality. economic activity in the context of social progress is aimed not only at the formal reflection of the reproduction process; creation of an additional product and production of various public goods are focused on increasing the welfare of individuals, increasing their wealth. this applies to all individuals and social groups. wealthy individuals with available wealth try to make it three seas economic journal 128 vol. 1, no. 4, 2020 even bigger, rich individuals try to become even richer (hay, beaverstock, 2016). this is quite logical and natural. against the general background, the social structure of society is reflected by social strata that are in different economic situations, have different levels of material security, income and wealth. the category of wealthy people is one of the social strata, whose wellbeing is defined as wealth, characterized by an inflated level of acquired wealth and accumulated property, obtaining a significant amount of income. in view of this, the phenomenon of wealth of wealthy individuals, its content, as well as social value and purpose is of relevant interest (carter, 1968). some economic considerations in favour of wealth. history shows that there is only one civilized path to enrichment: the embodiment of economic interests. the pursuit of greater prosperity drives people to economic action. humanity was forced to build an economy so that it encourages people to economic activity. that is, a person can achieve an increase in his or her well-being through taking efforts only. features of human nature had an extremely strong impact on the economic mechanisms of civilization. and without realizing this circumstance, it is extremely difficult to understand why the economy is arranged this way and not otherwise. without pretending to be the ultimate truth, we can nevertheless say that in the structure of economic life, some human traits are especially clearly traced. it was not the economy that created the person, but the person creates the economy, welfare, wealth. first of all, this is the desire for the growth of wellbeing as the main factor in the economic development of mankind. after all, a person (in any case, most people) is designed in such a way that he or she always wants to live even better, even more comfortable, even more interesting. climbing the steps of economic, cultural and moral development, people have acquired many diverse needs and have come up with a lot of ways to satisfy them. natural egoism is the cause of many difficulties of mankind, including in the sphere of economics. passive selfishness is the cause of many difficulties of humanity. conversely, active egoism is a motivational force for a person, a prerequisite for economic activity in the implementation of intentions to increase the degree of well-being. it is the mechanism of the market economy that has become the main means of fighting against passive human egoism. economically, the market does not allow human nature to atrophy. self-care forces the individual to satisfy his or her needs, compels him or her to take economic action, thereby increasing the level of well-being and thus creating wealth. the spirit of competition serves as an auxiliary engine for development in the economy. confrontation with other market entities provokes economic activity. and only the final result will show who was able to achieve great success, surpass competitors, create and grow wealth. striving for excellence is one of the best traits of human nature. this is noticeably manifested in the economic sphere as well. people strive to become the owners of more and more convenient, comfortable, useful and simply beautiful things. this pushes them to continuous development and improvement of their economic needs, as well as to search for effective ways to satisfy them as a way to achieve victory in the competitive struggle and gain economic benefits, raise welfare, and enlarge wealth. the sense of ownership is one of the main foundations of the economy. throughout history, mankind has tried many different forms of property but individual property turned out to be the most rational. private property has the most powerful effect on the economic behavior of an individual. it is private property that reveals and enhances the economic interest of the individual in creating his or her own wealth. the possibility of creating and building up property stimulates human economic activity. the acquisition and accumulation of property becomes the meaning and purpose of the economic activity of people. the thirst for justice is a purely human desire, which has left a powerful imprint on the entire history of mankind. the desire to achieve justice gave rise to various events. at the same time, the thirst for justice sometimes dictated to people too distorted ideas about what this justice consists of. such an ugly brainchild of the human mind became, for example, the idea that justice was the same level and way of life for all citizens. however, this is essentially impossible. thus, the essence of justice does not consist in the need to ensure the same degree of well-being for all people, but in providing the market with equal economic opportunities for each individual. the market provides the same conditions and opportunities for all individuals. therefore, the concept of justice is subjective. its essence lies in the extent to which a person realizes his or her economic potential in the market in order to achieve wealth. consequently, justice is ambiguous and even deceiving. in his reflections, adam smith (smith, 1836) eventually came to the conclusion that social justice is the right of everyone to freely compete their skills and capital with the skills and capital of another person or group of persons. as a result, everyone reaches their own level of well-being and gets their level of wealth. in particular, the desire for justice is one of the foundations for the construction of such important economic mechanisms as wages, revenues and taxation. taxation applies to all individuals without exception. all elements owned by an individual, income and estate, fall into the area of taxation. three seas economic journal 129 vol. 1, no. 4, 2020 property can be subject to both different taxes on various elements of the estate, and one tax on its entire composition as a whole. this is the wealth tax. the distribution of wealth is uneven in society (bulmer, 1990). therefore, against the general economic background of society, only a certain part of individuals becomes rich. this is explained by the fact that in the process of distribution of additional product and public goods, individuals receive their unequal share (davies, 2013). the distribution does not have uniform and equivalent proportions of their appropriation, direction and placement (schneider, 2004). modern science defines wealth as a certain level of provision and support of a way of life that is much higher than the social average in society and is characterized by the importance of money and property (gonzalez, 2011). due to the excess of material wealth, the affluent sections of the population are able to provide themselves with a way of life that far exceeds the level of minimum necessity or average socially established standards. consumption of economic goods ultimately forms private wealth. w. rostow noted the last stage of social civilization as mass consumption (rostow, 1960). wealth as an economic phenomenon has existed for a long time, having undergone a significant evolutionary path, conceptual and structural changes. at each stage of transformational development, wealth is characterized by appropriate specific properties that reflect its formal and meaningful essence. modern forms of wealth are very diverse. wealth is a multifaceted concept. the scope of its functional use is quite wide, including at the level of citizens. the personal wealth of an individual consists of property in total. in this situation, wealth loses its abstract character and acquires a clear personalized form, which makes it possible to define it as an object of taxation. this allows us to state the wealth tax as an independent fiscal category. 3. taxation of wealth an effective property tax system has long been formed and operates in the world. in each country it has its own specifics. usually, the basis of property taxation is the real estate taxes as the basis of private property of citizens. among the total set of private property – movables and immovable – there may be luxury articles, i.e. individual objects for which special fiscal requirements and special taxes are imposed. however, the system of property taxation in terms of collecting certain types of taxes is wrongly identified with the wealth tax. because there may be a housing tax, a system of property taxes on various real estate, land tax etc., as well as luxury taxes, and, especially, a wealth tax. that is, depending on their qualifications, there are appropriate types of taxes for all objects of taxation. in general, the wealth tax is a part of the general system of personal taxation and takes the form of a logical continuation of income and property taxation ( johnston, 1976). therefore, in no way can the wealth tax be equated to both personal income tax and property tax; property (movable and immovable) is only part of the formation of the tax base for wealth tax. thus, the wealth tax is a separate element of the tax system. its introduction has its own specific preconditions, justifications and goals. the mechanism of functioning of the wealth tax has its own characteristics, which distinguishes it from other similar taxes in the group of property taxes. the category of property taxes is quite significant. wealth tax is levied on property of citizens. the economic content of the wealth tax implies not so much a high level of income of the individual, as based on the possession of a significant amount of various property (property – movable or immovable, investment – real, intangible, etc.); comprehensively it acquires a monetary value and becomes an integral object of taxation. the essence of the wealth tax is revealed by the important fact that an individual reaches a fairly high level of financial and property status, which gives the state the potential to introduce it and mobilize additional funds in the budget. it is obvious that the wealth tax is an additional burden for wealthy citizens in the context of personal income and property taxation. at the same time, citizens’ incomes are indirectly related to wealth tax, as they are not actually part of the object of taxation for the reason that they are not included as a separate element in the tax base of tax assessment, but only as a source of wealth tax financing. the primary element for initiating the wealth tax is the object of taxation, which is defined as the “net asset value” (total assets less liabilities). that is, to calculate the object of taxation in the tax base is not taken into account individual types of private property, and their total amount (sandford, willis, ironside, 1975). the tax base for the assessment of wealth tax can be provided only by property (movable and immovable). however, as foreign experience and practice show, financial and monetary investments can also be a significant amount of an individual’s wealth and are a mandatory component of the tax base for calculating the wealth tax. the wealth tax belongs to the group of property taxes, which are also involved in the mechanism of redistribution of the country’s gross domestic product. the wealth tax is not a large-scale redistributive proportion. only in some countries its value is more or less significant – luxembourg, switzerland (table 1). the wealth tax in modern economic conditions is a common form of fiscal influence of the state on society. wealth tax can be paid by both individuals and legal entities (with a clear predominance of the fiscal burden three seas economic journal 130 vol. 1, no. 4, 2020 towards individuals). the tax burden for the economy as a whole is insignificant from the wealth tax, which does not create significant obstacles to its functioning and development, especially since there is a dynamic economic growth in today’s world. the wealth tax is now used in many western european countries. the trend of 1990–2000 showed the fact of mass liquidation of the wealth tax. however, since 2010, the processes of recovery or introduction of the wealth tax have intensified in western european countries: in 2010 – in iceland (abolished in 2005), in 2011 – in spain (abolished in 2008) and in germany (abolished in 1997). the fiscal efficiency of the wealth tax is realized in its own way. first of all, it should be noted that there are far fewer taxpayers than when paying any other tax. wealthy taxpayers are only wealthy citizens with a high level of welfare, who own a significant amount of private property. a person becomes a taxpayer of wealth when his or her financial and property status reaches a fairly high division. an important element in this situation is not the high tax rate, but the size of the object of taxation. there may be many components of the wealth tax base, but their value is the main thing. objectively, there are many people in a wealthy category. therefore, the effectiveness of the wealth tax from a fiscal standpoint is successfully offset by the large size of the object of taxation instead of a wide range of taxpayers. also, you can compare the level of efficiency of the wealth tax with property taxes and luxury taxes. property taxes are the primary form of fiscal levies on the population in favour of the state. their benefits are significant: a significant number of taxpayers and taxable persons. appropriate taxes are used for each type of property. the fiscal efficiency of luxury taxes is realized through high rates for some limited type of property (movable and immovable property). wealth tax rates are low. the wealth tax is the most volatile in modern tax systems, as it is often subject to various modifications. the changes are mostly not a nominal adjustment of some elements, but the transformation of the tax model itself and the introduction of its new or updated fiscal structure depending on the essence of the concept, which is embedded in the economic meaning of wealth. this explains why in current market conditions there are various models of wealth tax, which are also optimized, modified and maximally adapted to the specific socio-economic situation over time; the wealth tax has a fairly large scale, scope and methods of application (smith, 1993). for all its apparent power, the wealth tax is fairly loyal, especially compared to other taxes, and does not place a significant fiscal burden on both the business environment and the well-being of individuals; it does not interfere with the development of economic activity or personal enrichment of wealthy people. some practice of collecting wealth tax. in spain, the wealth tax was introduced in 1978. first of all, it was called impuesto extraordinario sobre el patrimonio de las personas físicas, and since 1991 – impuesto sobre el patrimonio. the property tax threshold before the suspension of the wealth tax in 2007 was not significant and amounted to only 106,000 eur . the wealth tax in spain did not function for only three years: in 2008–2010. since 2011 the wealth tax has become active again with significant modifications. the total amount of tax-free property is 1,000,000 eur (individual deduction and discount on basic housing). the maximum rate of wealth tax is 2.5%. in france, the wealth tax – impôt de solidarité sur la fortune – has existed since 1982. unlike other countries, table 1 wealth tax, % of gdp* country 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 argentina 0.30 0.33 0.31 0.28 0.28 0.31 0.32 0.31 0.24 0.21 0.10 – belgium 0.07 0.06 0.06 0.07 0.08 0.11 0.15 0.16 0.22 0.21 0.21 0.19 canada 0.13 0.12 0.09 0.05 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 colombia 0.67 0.40 0.36 0.69 0.63 0.60 0.54 0.67 0.51 0.42 – – france 0.21 0.18 0.22 0.21 0.24 0.21 0.25 0.24 0.22 0.22 0.01 0.08 germany 0.00 0.00 0.00 0.03 0.03 0.03 0.02 0.01 0.01 0.01 0.01 0.01 greece 0.52 0.54 0.56 0.61 0.64 0.60 0.56 0.61 0.65 0.65 – – hungary – – 0.50 0.49 0.48 0.42 0.42 0.39 0.17 0.14 0.10 0.09 iceland – 0.00 0.23 0.36 0.51 0.45 0.52 0.01 0.01 0.01 – – ireland – – – 0.23 0.28 0.30 0.38 0.06 – – – – italy 0.00 0.42 0.13 0.31 0.05 0.16 0.05 0.01 0.02 0.02 0.01 0.01 luxembourg 1.90 1.93 2.07 1.99 2.04 2.11 2.16 2.53 2.59 2.66 2.81 2.91 norway 0.56 0.56 0.55 0.55 0.55 0.56 0.57 0.45 0.54 0.57 0.57 0.58 spain 0.26 0.06 0.06 0.06 0.14 0.20 0.19 0.18 0.18 0.19 0.19 0.18 switzerland 1.18 1.20 1.17 1.13 1.12 1.16 1.20 1.23 1.31 1.34 1.34 1.30 united kingdom – – – 0.11 0.10 0.13 0.15 0.17 0.16 0.12 0.12 0.11 * oecd statistics three seas economic journal 131 vol. 1, no. 4, 2020 the wealth tax in france is reviewed annually – to adjust rates and objects of taxation. the maximum rate of wealth tax is 1.5%. from 2018 onwards, it has been replaced by a wealth tax on real estate, exonerating all financial assets. in norway, the wealth tax has a significant fiscal value – 50% of total property taxes. the tax is levied at a flat rate of 1.1%, but the relatively low level of the non-taxable minimum automatically determines a fairly large number of its payers. the amount of financial and property wealth in norway is 103,000 eur . a specific wealth tax model was introduced in italy in 2011: one tax, but levied on real estate and financial assets separately. real estate tax is 0.76% of the market value of the acquisition of property. the tax does not apply to financial assets located in italy: it applies to italian residents and is imposed on their financial assets abroad; in 2011–2012, the amount of tax was 0.1%, from 2013 – 0.15%. as an alternative to the wealth tax, there are also some other forms of taxation on the income and property of wealthy individuals. one of them is a lump sum tax. in modern conditions, this is not a very common but quite effective form of taxation. one-time tax has its own specific features. first of all, its value does not depend on the activities of individuals. also, its general premise and property is the practical impossibility of tax avoidance. some countries still use the one-time tax mechanism, quite successfully and effectively. taxes in modern social market economies are not paid in vain: the state does a lot of good for the population – in economic and social terms. this is the progress of civilization, which has a price and for which a proper payment should be made. if society experiences a fiscal return from taxation, it will inevitably pay taxes no matter how high they. for example, among the latest innovations there are the following: luxembourg – introduced free travel on public transport; switzerland – initiated the payment of money to citizens from the budget (refund as a certain fiscal compensation of previously paid and unused taxes: full provision of the state with financial resources). 4. conclusions wealth cannot be considered evil, enrichment – antisocial, and the growth of prosperity – the robbery of others. wealth is a normal phenomenon for the economy. wealth cannot be considered an unfair economic phenomenon in a society. individuals cannot be independent of the economy. people are always dependent on their needs. as needs grow and are met through the consumption of economic goods, the wellbeing of individuals increase. the accumulated amount of economic goods creates wealth. the well-being and wealth of an individual depend on his or her ability to manage wisely. the distribution of income and wealth in society is permissible and even more necessary, although in this way the rich will not become poorer and the poor will not become richer. it is quite conditional and superficial to achieve economic equality. it is impossible to change, replace or impose anything on the market (at least, it is very difficult). the distribution of wealth is a parameter of the market, so it would be wrong to assume that by changing it, you can get the result without interfering with the market mechanism. this does not mean that the market is created only from shortcomings; it is formed so and the laws laid down in it work correctly. it is only necessary to adapt to market laws to obtain the desired “effect” and achieve “equality” and “justice”, in addition to using different levers of redistribution of wealth (wallace, wakeham, 1968). taxes on wealth and income to a small extent create a situation of a certain social justice. the fiscal mechanism of redistribution of income and wealth involves the provision of public goods, rather than specific material support for individuals; thus the state seeks to establish the general welfare of society. wealth embodies a very original object of taxation. since ancient times the state has been effectively practicing the taxation of wealth in various forms for certain reasons. the wealth tax has a positive fiscal and socio-economic effect when properly applied. in the general structure of personal income and property taxation, the wealth tax occupies a proper location. depending on the specifics and trends of socioeconomic development of society and taking into account the dynamics of market transformations, it is necessary to adequately make modifications to the wealth tax, which would stimulate further progress of civilization. the wealth tax is the time-tested tax with the longest history and practical application. the wealth tax convincingly proves its expediency and confirms market adequacy, social acceptability and fiscal efficiency. the effectiveness of the wealth tax has been tested over time and confirmed in many countries around the world, especially in western europe, where it has established itself as a full-fledged fiscal institution of the state. references: beinhocker, e. d. (2006). the origin of wealth: evolution, complexity, and the radical remaking of economics. boston: harvard business school press, xvi, 527 p. bulmer, j. (1990). economics of distribution and wealth. westmead, n.s.w.: j. bulmer and j. r . chapman, 131 p. three seas economic journal 132 vol. 1, no. 4, 2020 carter, c. f. (1968). wealth: an essay on the purposes of economics. london: watts, vii, 175 p. davies, j. b. (2013). the economics of wealth distribution. northampton; cheltenham: edward elgar publishing, 2 vol. gonzalez, j. m. (2011). economics of wealth in the 21st century. new york: nova science publishers, x, 150 p. johnston, r . w. r . (1976). wealth tax. dublin: inc. law society of ireland, xiv, 136 p. hay, i., & beaverstock, j. v. (2016). handbook on wealth and the super-rich. cheltenham; northampton: edward elgar publishing, xi, 482 p. mackay, a. l. g. (1931). economics: the study of wealth. london: i. pitman, xxxiii, 216 p. rostow, w. w. (1960). the stages of economic growth: a non-communist manifest. cambridge: university press, x, 178 p. sandford, c. t., willis, j. r . m., & ironside, d. j. (1975). an annual wealth tax. london: heinemann educational for the institute for fiscal studies, xi, 353 p. schneider, m. (2004). the distribution of wealth. northampton; cheltenham: edward elgar publishing, xiii, 148 p. smith, a. (1836). an inquiry into the nature and causes of the wealth of nations. edinburgh: printed for t. nelson and p. brown. iv, xxx, 404, 25 p. smith, r . s. (1993). personal wealth taxation: canadian tax policy in a historical and an international setting. toronto: canadian tax foundation, xii, 190 p. wallace, t., & wakeham, j. (1968). the case against the wealth tax; a bow group memorandum. conservative political centre, 23 p. three seas economic journal 59 vol. 3 no. 2, 2022 corresponding author: 1 kyiv national university of technology and design, ukraine e-mail: darina0555@gmail.com doi: https://doi.org/10.30525/2661-5150/2022-2-8 digital technologies as a condition for the development of the tourism sector of the economy of ukraine daryna hryhorchuk1 abstract. the article is devoted to highlighting the use of digital technologies as a condition for the development of the tourism sector of ukraine's economy. accordingly, the purpose of the research is to analyze the specifics of the use of digital technologies as a condition for the development of the tourism sector of ukraine's economy. methodology. the methodological basis of the study was a systematic analysis and specifically scientific methods: systematization, generalization, testing of theoretical knowledge during the study. in the course of the research the author established the main conditions and factors of development of the tourism sector of the economy of ukraine. at the same time, the author notes that tourism was one of the sectors most affected by the covid-19 pandemic, which seriously affects the economy, people's livelihoods, public services and limits the range of opportunities throughout ukraine. it was proved that in the conditions of the covid-19 coronavirus pandemic and periodic introduction of quarantine measures in all regions of ukraine, it is expedient to use interactive information technologies to promote the improvement of the tourist image. to this end, the results of a study on the distribution of online sales by segments of the tourism market. it is also established that today the tourism industry is actively implementing technologies to further improve the service, including hotels and transport companies successfully using online booking systems and various mobile applications. the author emphasizes that interactive information technologies presented in the field of tourism can be systematized on the basis of two key factors: the physical presence or absence of the tourist who uses them in the tourist destination, and the system of motivation to achieve intermediate or final goal. the results and proposals of the author in this article are primarily related to the fact that the use of interactive technologies can serve as a new driver of the tourism industry of ukraine, allowing to create new competitive advantages in the region and differentiate based on personalized approach and customer orientation. also, the development of tourism in ukraine should be accompanied by consistent actions to overcome the conditions and factors that cause dissatisfaction of the population, and create new opportunities to improve the quality and quality of life, preservation and development of human capital. key words: digital technologies, tourist, tourism sector, infrastructure system, mobile applications jel classification: o14, l83, o18 1. introduction one of the directions of the tourism economy development for most of the leading countries today is the innovative technologies formation to promote tourism services at different levels that allows not only to attract additional investments in the destination development, provide additional jobs for locals, modernize or create the necessary infrastructure for tourism sector, but it also ensures the formation of a favorable and friendly social climate. the issue of the successful development of tourist regions becomes increasingly important because they are directly related to their socio-economic development, modernization and environmental safety of modern infrastructure, quality of tourism services and public involvement in the tourism industry. the foundations of the tourism development in the context of digitalization were considered and developed by such scientists as (aleksandrova, krutikova, 2017); (book, 2003); (buhalis, deimezi, 2004); (chkan, 2012); (gooroochurn, sinclair, 2003); (kostynets, baranov, 2020); (wagler, hanus, 2018) and others. these scientists have made a significant contribution to the theoretical study of tourism in modern environment: research of theoretical foundations, definition of laws and patterns of tourism this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 60 vol. 3 no. 2, 2022 development, formation of effective mechanisms for tourism, research and development of the resource potential of ukraine, coverage of the information component of the tourism sector development, etc. at the same time, it should be noted that the tourism development does not stand still, so the research of digital technologies as a condition for the development of the tourism sector of the economy of ukraine is considered appropriate. the purpose of this scientific paper is to analyze the specifics of the digital technologies application as a condition for the development of the tourism sector of the economy of ukraine. the methodological basis of research is a systematic analysis and specifically scientific methods: systematization, generalization, testing of theoretical knowledge during the study. 2. general characteristics of the development of the tourism sector of the economy of ukraine from the standpoint of the state of development of the ukrainian tourist services market for today, the realization of the existing tourist potential can be described as unstable and limited. this situation is due to the concentration in the market of tourist services of several attractive regions, the prerequisites for tourism development of which "lie on the surface", and the city itself is an infrastructure center and its bypass is often impossible or illogical due to geographical and administrative location marketing actions and their results. the situation is different in the small and mediumsized cities, some areas, the tourist potential of which in many cases is certainly strong, but due to historical and other conditions (geographical remoteness, low level of infrastructure, etc.) and further ways of city development (according to the relevant profile – industrial, scientific, etc.), the tourism sector has receded into the background and has not been chosen as a source of economic development in the region nor part of it. the rapid growth of the tourism role in the national economy indicates the active development of this area and the urgency of its intensification in ukraine. among the conditions and factors of the tourism sector development of economy of ukraine today it is appropriate to highlight the following: – an availability of natural healing resources, rich cultural and historical heritage; – the presence of a developed transport system; – an availability of an international airport; – the well-developed network of roads and their satisfactory condition provide access to objects of tourist interest; – system of communication services and telecommunication services (it-industry) provides access between territories; – poorly developed financial infrastructure. in addition, it should be noted that tourism is one of the sectors most affected by the covid-19 pandemic, as it seriously influences the economy, people's livelihoods, public services and limits the range of opportunities throughout ukraine (kostynets, kostynets, baranov, 2020). the current crisis is also an unprecedented possibilitity to transform tourism's relationship with nature, climate and the economy. innovative digital technologies could play a central role in the resumption of tourism. 3. the main trends in the development of the tourism sector of the economy as factors in the formation of the tourist image of ukraine one of the main trends in the economy of ukraine during 2019–2021 is the rapid growth rates of online payments. one of the most dynamic sectors of the economy is tourism. according to the research (criteo, 2022), today the share of online services in the tourism sector of ukraine does not exceed 1% of total tour sales, but the segment is actively developing. the structure of online sales by segments of the tourism market is presented in figure 1. every year more and more ukrainians want to buy tours without visiting the offices of travel companies. according to the author's own research in 2019 compared to 2018, online sales of ukrainian travel services have been increased by about 40%. in turn, the trend of 2020 was a boom in the field of purchases made by mobile phones. previously, it could be argued that mobile devices play only a supporting role in planning a purchase – as a means of researching the market and obtaining product information, now such statements are more illegal. according to a study conducted by the marketing agency criteo, in 2019–2020 up to 26% of all online payments were made using mobile devices (criteo, 2022). the preconditions for such a change were the rapid increase in the coverage area of 4g+ networks, increasing access to smartphones, the development of payment services and increasing the security of payments made through mobile transactions, coming to the market of large payment services (google pay, apple pay). a significant role in such rapid development of mobile tourism is played by the benefits offered to travel agents who are increasing their online presence. mobile online technologies are forcing travel agencies and airlines to rethink the usual "life cycle" of a tourist trip and the strategy of communication with the traveler. now the content seller gets the opportunity to stay in touch with the traveler from the moment of booking, during the trip and after it. this opens up completely new opportunities for cross-sell and upthree seas economic journal 61 vol. 3 no. 2, 2022 sell by sending the tourist relevant push messages at certain points in the trip (for example, with recommendations on where to go and what to see). in addition to the possibility of push messages, it should not be forgotten that mobile technology – it's also bluetooth, electronics (smart watches, bracelets), access to user geolocation, nfc and a number of sensors built into the device. all this allows to build communication with the client on a completely new, previously inaccessible level of involvement and personalization. it is worth noting that users of applications are more loyal. using a browser, it is quite easy to close the tab or switch to a competing service, but switching between different applications takes much more time. perhaps this is one of the reasons why mobile applications, according to statistics, have a higher conversion than browser versions of the service (both for pc and adapted for mobile devices). thus, according to the marketing agency criteo, if on average the full-size version of the site and the version for the mobile browser show approximately equal conversion in sales, then in the case of the application conversion is higher by an average of 20% (criteo, 2022). all major players in the tourism market of ukraine have already developed mobile applications to work with their services, assessing the benefits of this method. however, the possibilities of modern mobile advertising technologies open up many unoccupied or undeveloped niches, the development of which is only a matter of time. according to google ukraine, tourists during the trip use the following services (figure 2). the user, especially one who is on trip, due to an often limited ability to use an internet connection, seeks to find the necessary services in the shortest possible time, and preferably from an already known supplier. given the general trend of service integration, it should be assumed that online travel agencies in general, and their mobile services in particular, will follow the same path. this is already happening, as evidenced by the development of dynamic packaging services and meta-search engines. digitalization and innovative solutions provide a unique opportunity to expand the implementation of operational procedures that make travel safe and convenient in the context of the covid-19 pandemic on the development of domestic tourism and the formation of a favorable tourism image of ukraine as a whole. the most effective formation of a favorable tourist image can take place only in the case of close cooperation between the local population and producers of tourist services. currently in ukraine, on the contrary, there is no relationship between the local population and representatives of this business, whether it is a resort area or a nature park. 55% 20% 16% 3% 6% air tickets train tickets hotels tours other figure 1. distribution of online sales by tourism market segments (criteo, 2022) 1% 12% 8% 11% 15% 17% 20% 23% 23% 36% 36% 40% 54% 0% 20% 40% 60% other not used electronic / audio city guides electronic / audio guides to attractions booking / buying tickets for cultural events electronic directories booking / buying tickets hotels / apartments for rent recommend services online translators scheme of public transport offline maps (smartphone, tablet, navigator) online maps figure 2. services used by tourists during the trip (google ukraine, 2022) three seas economic journal 62 vol. 3 no. 2, 2022 4. the main prospects for the use of interactive information technologies for the development of the tourism sector of the economy of ukraine in the context of the covid-19 pandemic and the periodic introduction of quarantine measures in all regions of ukraine, from the author's point of view, it is advisable to use interactive information technology to promote the development of the tourism sector of the economy of ukraine. one of the areas of the game technologies application is gamification. in the world travel market in 2011 euromonitor international (chkan, 2012) gamification was identified as a new trend in the tourism development, and since then research, seminars, studies of industries in the field of gamification have begun to be conducted all over the world in order to adapt it to the tourism sphere. gamified products, in addition to being a tourist product, can also be an independent marketing tool which pushes the tourist to make a decision to travel to the destination. unlike gamified travel products, products that partially use gaming and interactive technologies can be conducted both entirely in virtual reality (vrtours) and in real life, but using additions in so-called "augment reality " (ar-tours). interactive information technologies presented in the field of tourism can be systematized on the basis of two key factors: the physical presence or absence of the tourist who uses them in the tourist destination, and the presence of a system of motivation to achieve an intermediate or final goal. the proposed classification is presented in table 1. application of interactive technologies can serve as a new driver of the tourism sector development. it allows to create new competitive advantages of each region of ukraine and to differentiate on the base of personalized approach and the principles of customer orientation. the tourism development in ukraine should be accompanied by consistent actions to overcome the conditions and factors that cause dissatisfaction of the population and create new opportunities to improve the standard and quality of life, preservation and development of human capital. this motivate the residents to support actively the tourism prospects and participate in projects, that is, it allows to achieve constructive social activity of the population. in the involvement practice special tools can be used (figure 3), that ensures the creation of certain external incentives and circumstances aimed at providing new opportunities to the population through its development and training. support and participation of the population of ukraine in the tourism sector is possible only in the conditions of the industry development on the principles of sustainability, reproduction of cultural and natural resources of the territory and preservation of a unique look and local way of life. manifestation of socio-economic activity of the population is an entrepreneurial initiative. the prerequisite for the overall development of the tourism sector of the economy is the creating of the favorable conditions for the development of small business in the field of tourism and social entrepreneurship. 4. conclusions to sum up, we should note that tourism is a major socio-economic phenomenon, and its impact extends to the entire national infrastructure system. the growing market of information technologies, including mobile applications, does not bypass the tourism sector in ukraine. at this stage, applications are being developed that promote the development of independent tourism, the introduction of services to order taxis, restaurants and more. entities in the tourism industry themselves are actively implementing technologies to improve the service in the future, including hotels and transportation companies that successfully use online booking systems and various mobile applications. in general, it should be noted that active development of the tourism sector of the economy of ukraine will be promoted by the development of proposal for optimizing regulation in the field of tourism and competition in the market of tourism services, removing all barriers to the tourism development, comprehensive assistance in intensifying business activities in tourism, active introduction of information and communication technologies. table 1 brief classification of interactive products for the tourism development motivational factors the tourist is physically present in the destination the tourist is physically absent from the destination the tourist motivation system is present – ticket booking systems that use dynamic pricing; – games in the field of "augmented reality " with a certain end result. – virtual games that allow you to gain travel experience. the tourist motivation system is absent – tours (excursions) in augmented reality; – travel reviews forums. – fully virtual tours (excursions) to museums, etc.; – travel reviews forums; – online booking platforms (booking.com, airbnb, etc.). three seas economic journal 63 vol. 3 no. 2, 2022 tools for involving the population of the region in the tourism development social special preferential programs for the local population professional orientation of young people in the field of tourism dissemination of local lore information among the population promotion branding information support and promotion of public projects in the field of tourism creative information and creative competitions city holidays and festivals educating the population in crafts and arts revival of folklore organizational and economic volunteering charity investment in the urban environment project technology figure 3. tools for involving the population of ukraine in the tourism development references: aleksandrova, a. yu., & krutikova, m. v. (2017). geopolitical factor in tourism development. tourism and recreation: fundamental and applied research, 146–159. book b. (2003). traveling through cyberspace: tourism and photography invirtual worlds. tourism & photography: still visions – changing lives conference, 1, 1–24. buhalis, d., & deimezi, o. (2004). etourism developments in greece: informationcommunication technologies adoption for the strategic management of the greek tourism industry. tourism and hospitality research, 5, 103–130. chkan, a. s. (2012). state regulation of tourism in ukraine. collection of scientific works of tavriya state agrotechnological university. economic sciences, 2(18), 276–290. criteo (2022). available at: https://www.criteo.com/ru/# google ukraine (2022). available at: https://ukraine.googleblog.com/ gooroochurn, n., & sinclair, t. (2003). the welfare effects of tourism taxation. christel dehaan tourism and travel research institute, 1–37. kostynets, iu., kostynets, v., & baranov, v. (2020). pent-up demand effect at the tourist market. journal of scientific papers economics & sociology, 13(2), 274–283. wagler, a., & hanus, m. d. (2018). comparing virtual reality tourism to real-life experience: effects of presence and engagement on attitude and enjoyment. communication research reports, 35, 456–464. three seas economic journal 71 vol. 2 no. 4, 2021 corresponding author: 1 state higher educational institution kyiv national economic university named after vadym hetman, ukraine e-mail: fedorenko.tetiana@gmail.com orcid: https://orcid.org/0000-0002-2044-7219 2 state higher educational institution kyiv national economic university named after vadym hetman, ukraine e-mail: kyrylenko.v.i@gmail.com orcid: https://orcid.org/0000-0002-4950-0378 doi: https://doi.org/10.30525/2661-5150/2021-4-12 the influence of values on social and economic development tetiana fedorenko1, volodymyr kyrylenko2 abstract. the study is devoted to providing new facts to support the influence of culture on the development of the country. we tried to interpret the phenomenon of economic growth through non-economic factors such as institutions, technology (innovation), trust, culture, values. there is no single decisive factor of economic growth, it is always a set of unities. it is assumed that cultural values and economic performance in a country have a two-way relationship. cultural values determine the social direction and complement the traditional factors of economic growth. moreover, at the same time, they change under the influence of socio-economic development. a comparative analysis of different cultures requires identifying universal characteristics and grouping countries according to these characteristics. categories of universal culture are the informal rules that underlie any social organization and form the basis of social relations. the categories of property rights, income distribution, competition, and environmental protection are among the main issues of society's existence and development. these categories relate to economic values, the economic interests of the country. values and attitudes largely determine the direction and rate of economic growth and, at the same time, are influenced by ideology, religion, and political regime. the purpose of this article is to determine the interdependence of society's values and its economic development. the main economic values are private property, competition, and profit. it is possible to explore these categories of economic values through an analysis of data from the world values survey (wvs). research methods. regression is useful to test the relationship between economic values and well-being on the example of 36 countries. the initial data are economic values statistics wvs (greif, mokyr, 2016) and gdp per capita, world bank (gdp per capita (current us$)). the regression model includes independent (values) and dependent (gdp per capita) variables. result. the study examined attitudes to private property, competition and environmental protection in european countries. a positive correlation was found between attitudes towards private property and wellbeing, between economic growth and environmental goals. the findings confirm the correlation between culture, values and economic growth. at the same time, there is no noticeable correlation between attitudes toward competition and income levels. institutional factors are assumed to have a particular influence on competition values. key words: values, economic behavior, culture, economic growth, cross-cultural analysis. jel classification: c21, e71, z13 1. introduction behavioral economics increasingly suggests that context and culture influence people's actions, shape thinking, motivate and create incentives. previously, religion served as a moral guide for people. modern societies are more secularized, but differences in culture and values remain. moreover, they influence people's attitudes toward private property, competition, work, and environmental protection. nations differ in purpose, social functions, level of rights and freedoms of individuals, degree of control over resources. the social order determines the corresponding political regime, social organization (the ratio of public and private property), power distance and hierarchy, and the process of solving common problems (the ecological factor). culture and the economy are interconnected. on the one hand, a society 's cultural values largely determine economic growth. on the other hand, countries with a low level of economic development and a lack of goods this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 72 vol. 2 no. 4, 2021 demonstrate only the needs of survival. the satisfaction of primary existential needs shapes the emergence of new, higher-order values, including the rule of law, democracy, individual freedoms, and concern for the environment. these values begin to emerge in middleincome countries. 2. analysis of research and publications culture and values are informal social institutions. according to north, individuals create institutions – formal (property rights) and informal (codes of conduct) rules designed to organize economic, political and social interaction (north, douglass, 1991). institutions impose some restrictions, but they create order, reduce uncertainty, and this, in turn, provides the potential for economic activity. cultural differences can be a crucial source of differences in growth from country to country. hofstede (1980) found a significant positive correlation between gnp per capita and individualism, and a negative correlation with the power distance index. achievement motivation and frugality have a positive effect on economic growth. at the same time, post-materialistic values have a negative impact (granato, inglehart, and leblang, 1996) (granato, inglehart, leblang, 1996). religious influence on economic growth (barro and mccleary, 2003), the intensity and strength of religious beliefs, including belief in heaven and hell, has a positive relationship with economic growth, while church attendance has a negative correlation. an essential merit of this paper is the study of wvs economic values in a cross-cultural analysis. understanding this will help to suggest the economic atti-tudes and behavior of individuals in countries with different income levels. 3. economic values formal and informal rules determine the process of decision-making and human interaction. these political, social, and legal norms become the basis for production and consumption in the economic system. social institutions have different characteristics: laws and instructions have a regulatory function, values and norms of behavior have a normative and cognitive function. the basis of value rules is action by default because it is accepted. they have moral and cultural legitimacy, and are transmitted through learning or following (geels, 2004). social rules and norms originate in common cognitive rules that summarize a community 's beliefs and experiences. this is how culture is transformed from tradition to the social cognitive construct of a nation (greif, mokyr, 2016). we are interested in the formation of individuals' economic behavior and beliefs: attitudes toward private property or environmental protection. the world values survey measures the social, economic, political, and religious values of people in different countries. the data is a nationally representative social survey based on a common questionnaire conducted every five years since 1981. the 7-wave data set 2017-2021 was used for economic values statistics (haerpfer, inglehart, moreno, and other, 2020). the formula for calculating the economic value index is as follows: i k q i i i= = ∑ 1 10 * , where i – the index of economic values; ki – weighting factor that determines the degree of contribution of the i-th indicator; qi – normalized score of the i-th indicator. private vs. state ownership. wvs polled respondents about the desirability of increasing private or public ownership of businesses on a scale of 1 (private ownership of business and industry should be increased) to 10 (public ownership of business and industry should be increased). regression analysis shows the dependence of economic development on private property values. countries with a higher priority of private property have a higher level of income per capita. the results of cross-cultural analysis using inglehart's typology of clusters by dominant religion show that protestant and catholic cultures have similar values regarding the importance of private enterprise in the economy and business (figure 1). post-communist countries have lower values of private property in business. this is a consequence of the long influence of the collectivist system of the communist regime. here is another example of how socio-economic background shapes public culture. multiple regression was used to analyze the influence of values in combination with the factor of religion and post-communist background. the 86% result is due to differences in values, religion, and affiliation with the communist regime (adjusted r square 0.8610). the test results confirm the statistical significance of the results: f stat 73.25 > f critical 8.6, p-value < 0.05 (tables 1, 2). private ownership is more efficient than state ownership and additionally stimulates economic growth. entrepreneurs respond more flexibly to technological change and are an incentive for innovation. of course, the question is not about critical infrastructure enterprises, which should be stateowned according to the importance of their functions. it is debatable whether private companies can work for social purposes and protect the environment. competition: advantages and disadvantages. competition is the key to entrepreneurial success; the need to compete for wealth and supremacy contributes not only to economic development, but also to other three seas economic journal 73 vol. 2 no. 4, 2021 areas of a nation's life. at the same time, some views condemn competition, considering it a form of aggression. in contrast to competition, they advocate solidarity and cooperation. in this context, attitudes toward competition in different types of societies are of interest. no significant relationship between attitudes toward competition and economic indicators has been found. there is probably an influence of institutional and social factors, which requires additional research. 4. economic development vs. environmental protection economic growth is often associated with excessive resource consumption, rising emissions and pollution. at the same time, the concept of sustainable defigure 1. distribution of values for private and public property and gdp per capita source: compiled by the authors according to the wvs ((haerpfer, inglehart, moreno, and other, 2020) and the world bank (gdp per capita (current us$)) data denmark germany finland netherlands switzerland iceland norway sweden estonia lithuaniahungary czech rep. italy slovakia slovenia spain poland portugal croatia france austria andorra belarus bosnia and herzegovina bulgaria armenia greece georgia macedonia romania russia ukraine cyprus azerbaijan kazakhstan albania 7 8 9 10 11 12 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 ln   g d p  pe r c ap ita  (a ve ra ge  2 01 6‐ 20 20 ) private    ‐ ownership of business should be increased    ‐ state  protestant catholic  orthodox  islamic former  communist  countries table 1 regression statistics & anova regression statistics anova r square 0.8729 df ss ms f significance f adjusted r square 0.861 regression 3 26.84 8.95 73.25 0.000 standard error 0.3495 residual 32 3.91 0.12 observations 36 total 35 30.75 table 2 regression summary output coefficients standard error t stat p-value lower 95% upper 95% lower 95,0% upper 95,0% intercept 13.06 0.61 21.50 0.000 11.82 14.29 11.82 14.29 ownership val-ues -0.31 0.12 -2.53 0.016 -0.56 -0.06 -0.56 -0.06 religion -0.50 0.09 -5.83 0.000 -0.68 -0.33 -0.68 -0.33 dealing with the communist past -0.78 0.16 -5.00 0.000 -1.10 -0.46 -1.10 -0.46 three seas economic journal 74 vol. 2 no. 4, 2021 velopment obliges countries to choose the path of growth without harming the environment. thus, economic and environmental goals are not necessarily opposed, they can be interrelated. wvs suggests choosing the priority of economic growth or environmental protection. it is assumed that environmental attitudes are derived from economic attitudes and appear at a certain level of economic wellbeing. to test the hypothesis, a granger causality test will be conducted for variables x (gdp per capita), y (environmental values). the hypothesis y = f (x) about the dependence of environmental values on well-being was confirmed. f-stat and p-value are statistically significant. the test results confirm maslow and inglehart's theory of needs, that social values emerge after existential needs are satisfied. consequently, countries need to achieve a certain level of economic well-being in order to develop ecological attitudes. the analysis of environmental attitudes shows differences in development goals depending on ideology (post-communist past) and religion. the group of protestant countries has similar indicators of economic development and preferences for growth with due regard for the environment. the group of islamic countries in our analysis also has corresponding indicators of economic development and environmental priorities (figure 2). the cluster of catholic countries is heterogeneous. countries with comparable gdp per capita (e.g., lithuania, poland, croatia, hungary) show significant differences in environmental protection priorities. it is assumed that institutional factors also influence environmental attitudes. the contradictions between economic growth and environmental protection can be reconciled through effective public policies and transparent rules to control emissions or waste. compliance with these rules by private and public organizations and industrial enterprises lies in the culture of the country, and this can contribute to environmentally sustainable development. sometimes environmental projects can ensure economic growth through innovation: non-polluting technology, green energy. thus, it is possible not to choose a compromise between economic growth and environmental protection, but to achieve both goals. 5. conclusions regression analysis reveals a high (0.86) rate of dependence on economic values of ideology and religion. this confirms the idea of the interaction of values, culture and economic achievements, each of these elements complements the others, creates an interdependent system of social organization. communities create a formal organization in the form of the state to regulate economic and social processes. governments regulate economic and social relations, exercise the rule of law, create conditions for the resolution of conflicts of interest and the distribution of public goods. the analysis of values proves the dependence of economic and ecological attitudes on religion. protestant and catholic cultures have a higher perception of private property. while orthodox countries, especially post-communist ones, still have a higher priority for state-owned enterprises. it is confirmed that environmental values develop in middle-income countries after basic economic needs are met. post-communist countries have a lower priority of environmental values than other countries. table 3 bivariate granger causality [7] source: calculated by the authors according to the wvs ((haerpfer, inglehart, moreno, and other, 2020) and the world bank (gdp per capita (current us$)) data three seas economic journal 75 vol. 2 no. 4, 2021 figure 2. distribution of values for private and public property and gdp per capita source: compiled by the authors according to the wvs (haerpfer, inglehart, moreno, and other, 2020) and the world bank (gdp per capita (current us$)) data denmark germany finland netherlands switzerlandiceland norway sweden estonia lithuania hungary czech rep. italyslovak rep slovenia spain poland portugal croatia france austria andorra belarus bosnia and  herzegovina bulgaria armenia greece georgia macedonia romania russia ukraine cyprus azerbaijan albania kazakhstan 1,3 1,5 1,7 1,9 7,0 7,5 8,0 8,5 9,0 9,5 10,0 10,5 11,0 11,5 12,0 ec on om ic  g ro w th     ‐ pr io rit y    ‐ pr ot ec tin g  th e  en vi ro nm en t  ln  gdp per capita (average 2016‐2020) protestant  catholic  orthodox  islamic former communist  countries therefore, it was concluded that economic values are a significant factor in economic growth. they influence political and ideological attitudes regarding economic policy: private or public ownership, competition, environmental protection. values shape the standards of individual behavior and become the basis of economic transactions between agents. references: gdp per capita (current us$) | data. world bank open data | data. available at: https://data.worldbank.org/ indicator/ny.gdp.pcap.cd. geels, f. w. (2004). from sectoral systems of innovation to socio-technical systems. research policy, 33(6–7), 897– 920. doi: https://doi.org/10.1016/j.respol.2004.01.015 granato, j., inglehart, r . & leblang, d. (1996) the effect of cultural values on economic development: theory, hypothesis, and some empirical tests. american journal of political science, 40, 607–631. doi: http://dx.doi.org/10.2307/2111786. greif, a., & mokyr, j. (2016). cognitive rules, institutions, and economic growth: douglass north and beyond. journal of institutional economics, 13(01), 25–52. doi: https://doi.org/10.1017/s1744137416000370. haerpfer, c., inglehart, r ., moreno, a., welzel, c., kizilova, k., diez-medrano j., m. lagos, p. norris, e. ponarin & b. puranen et al. (eds.) (2020). world values survey: round seven – country-pooled datafile. madrid, spain & vienna, austria: jd systems institute & wvsa secretariat. doi: https://doi.org/10.14281/18241.13. north, douglass c. (1991). institutions. journal of economic perspectives, 5 (1): 97–112. doi: https://doi.org/ 10.1257/jep.5.1.97. wessa, p. (2016). bivariate granger causality (v1.0.4) in free statistics software (v1.2.1), office for research development and education. available at: http://www.wessa.net/rwasp_grangercausality.wasp. three seas economic journal 69 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: zakharovatet@ukr.net orcid: https://orcid.org/0000-0002-5736-8346 doi: https://doi.org/10.30525/2661-5150/2022-2-10 anti-crisis marketing at the enterprises of the tourist business in the conditions of european integration tetiana zakharova1 abstract. the purpose of the paper is to set of organizational and economic relations that arise during the development and implementation of the mechanism of anti-crisis marketing, under the influence of external factors such as pandemic and war. methodology. the survey is based on the use of methods and principles of system, logical management, statistical, program and target methods. the statement and proof of working hypotheses were carried out on the basis of methods of classification, balloon-index estimations, expert methods. results. analytical work on the analysis of trends in the development of tourism business in the context of european integration is completed. the most probable changes in the trends of 2022, awaiting the tourism industry, are given. emphasis is placed on the development of domestic tourism for countries with favorable natural conditions and appropriate infrastructure. to assess the situation of the tourism business, a survey was conducted using the developed questionnaire in google forms. it has been revealed that the system of anticrisis marketing has properties that determine the features of the management mechanism: flexibility and adaptability, ability to diversification and timely situation response, the ability to effectively use the innovative potential of the enterprise; its identification and development of appropriate anti-crisis measures. it is proved that the tourism sector should change its priority, be flexible and adaptable. today, the emphasis of tour operators in 2022 should be on domestic tourism: recreational tourism; relaxation tours that help restore health; tourist trips with the direction of art, pottery, etc. the analysis of the market and the influence of factors on the activity of the enterprises of tourism business have been conducted. tourism companies can apply different directions in the anti-crisis programs that will help the enterprise to overcome the crisis: borrowing from the experience of countries of the world; diversity and quality of services; staff motivation: to create a common system of remuneration of personnel depending on the result of activity of the hospitality industry; support of the country. practical implications. a program of anti-crisis actions has been proposed, which will become an important component of future development and not a decline. value/originality. introduction of the mechanism of crisis management at the enterprise of tourism business, using marketing tools. key words: tourism business, crisis, pandemic, european integration, anti-crisis marketing, development prospects. jel classification: а11, м21, м38 1. introduction tourism is characterized as one of the most profitable sectors of the world economy, which is developing dynamically. the trend of change in tourism was influenced by the pandemic. and only at the end of 2021 and in january 2022 many tourism enterprises started to renew work and improve their performance. however, the war in ukraine and economic problems have become another obstacle to the resumption of world tourism, and ukraine is a new and important space for the european community, which is a geopolitical stronghold with huge tourist resources and access to the black sea. ukraine has proved its national consciousness, courage and strength and after the war, it must strengthen its position in the european market. at the same time, the pandemic is far from the end. only taking into account anti-crisis actions and european integration processes, which will let enter new markets, create special institutions that will allow to function at the appropriate level. this fact highlights the issue of crisis management of tourism enterprises, because in such conditions, the company cannot be limited to the current planning and operational management of its activities. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 70 vol. 3 no. 2, 2022 the issue of development of the tourism industry is not new and has been studied by many scientists, scholars and researchers. but the changes in the world economy, european integration processes, caused by the pandemic and the war create the need for a qualitatively new research in the tourism industry. these issues have been carefully studied by leading foreign and domestic scholars: l. ann blanchard, a. m. leong, s. lytvyn, o. mufakkir, n. salazar, m. hani, j. hessley, j. jafari, r . butler, a. yu. parfienko, a.a. romanova, i.a. savchenko and others. at the same time, observing the urgency of the consequences of the economic crisis, the importance and demand for research related to anti-crisis marketing, especially anti-crisis plans, is constantly growing. the aim of the study is to substantiate marketing anti-crisis programs in tourism enterprises in the context of european integration. 2. economic crisis effects on tourism business the market of tourist services is a component of the worldwide market, which affects the socioeconomic development of each state. during the last two years, with the spread of covid-19, the tourism services industry has suffered the most, as citizens’ movement and air travels have been partially restricted; creating a large crowd of people, etc. gloria guevara, president of the world tourism and travel council (wttc), believes that the tourism industry could experience great losses (electronic resources: wttc, 2022). the middle east is predicted to lose the most revenue. world tourism will lose almost $ 7 billion in 2022 due to the effects of the war in ukraine. losses of the tourism industry in ukraine in 2021 are estimated at about 2.5 billion dollars. in addition to the tourism business, the hotel and restaurant business, transport (passenger traffic), retail trade, the entertainment industry and the activities of cultural institutions have also had a negative impact (world economic forum, 2022). russian invasion in ukraine has already affected the countries of the middle east – the negative consequences have begun to go beyond food shortages and the flow of tourists. this region, historically associated with some of the world’s oldest civilizations, is one of the main tourist destinations. the cities of dubai, cairo and istanbul are regularly ranked in the top ten tourist destinations in the world. three the most popular destinations for ukrainians and tourists from russia – egypt, turkey and recently – the uae suffer uttermost. as for the coronavirus, it is off the agenda, with more and more countries lifting restrictions or planning to do so in the near future. sweden, norway, iceland and slovenia no longer have entry restrictions. what is happening in ukraine and in the world is an economic crisis. the crisis is not an easy, but turning point in the activities of the enterprise not only in the hotel industry, but also in any other field. at this point, companies are exposed to internal and external environment, which require from them new and qualitative response. the result of the russian invasion in ukraine was: rising fuel prices, rising tour prices, danger to life and health. geopolitical upheavals also do not benefit tourism. there have been significant changes in the outgoing tourist flows of ukraine to the countries where trips are made since the beginning of the russianukrainian war (electronic resources: wttc, 2022). 3. survey methodology the current optimism of european and american tourists is not yet affected by the geopolitical crisis in ukraine, but forecasts for the future have become gloomy. to assess the situation of the tourism business, a survey was conducted in the form of a questionnaire developed in google forms. 219 people took part in the survey. travel companies, experts in the field of tourism, potential tourists and higher education students in the specialty of tourism were selected for the survey. after processing the data, we obtained the following results (figure 1). according to their figures, 15.8% of travel agents assess the current situation with the sale of tourist services at a sufficient level. the share of agencies that claim that sales are at a satisfactory level in february was 25%. and the share of agencies that said sales were bad was 59.2%. demand for tours has also decreased from 100%, those wishing to go on vacation are 35%. among those who plan a vacation, most people choose domestic and short-term tourism. as a result, holidays in the summer of 2022 will be more expensive; tourists will prefer "short" bookings; cheaper tours; travel cancellation insurance; demand for green and domestic tourism will increase. trips after the war. the rate of tour operators should be on domestic tourism (world economic forum, 2022): – the need of recreational tourism will increase. two years of the covid pandemic, which quickly turned into military chaos, followed by a wave of migration, going beyond the ordinary, stress, grief, loss. after these horrors, people will want something simple and relaxing. holidays by the sea, in the mountains or in the woods are something that will bring you back to life and help you regain your strength. – relax tours will become popular, which will help to restore the psyche. – trips to native familiar lands, growing interest in traditions. people already want to feel something familiar. spend a simple weekend with a fishing rod near three seas economic journal 71 vol. 3 no. 2, 2022 the pond. pottery and easter painting will help cure stress. people will be interested in very simple, almost routine things that restore confidence that life goes on and that will help them feel the joy of the moment. – ukrainians will strive to see for themselves the cities of our military successes and the places we read about in the news. the fate of tourism depends on how quickly the war will end – and whether it will go beyond ukraine. based on the current crisis situations in the development of the tourism industry in ukraine, it is proposed to use marketing anti-crisis management plans (world economic forum, 2022). today, among researchers studying the role of marketing in crisis management, there is no consensus on the definition of "crisis marketing". the concept of "crisis marketing" is applied to a specific program of action to achieve the company 's goals. this means that the marketing strategy is not revised during the crisis. it remains the same, and due to this the company does not lose interest in the prospects of its development, including the post-crisis period. the crisis is not only about losses, it is also about opportunities. the main thing is the ability to find ways for transformation and development. it requires a full focus and analysis of current circumstances, as well as the need for creative solutions and non-standard approaches (aaker d., 2022). 4. findings after analyzing the primary and secondary data, we can propose a mechanism for developing an anti-crisis program (figure 2). the following principles should be taken into account while developing an anti-crisis program: crisis management and mitigation; speeding up recovery; preparation for the future. it should be borne in mind that different countries will have different actions in the anti-crisis program. this is due to many factors: economic potential, human resources, infrastructure. these recommendations are aimed at reducing the effects of the crisis and ensuring the resumption of tourism (matviichuk, 2021). tourist companies can apply various anti-crisis programs, but there are several areas that will help the company overcome the crisis. 1. borrowing the experience of the world (table 1). 2. variety and quality of services. international standards have recognized the only conditions in at a suffisient level of 16 % at a satisfactory level 25% unsatisfactory level critical 59% sale of tourist services janury-march 2022 present missing demand for tourist services domestic tourism foreign tourism figure 1. survey results three seas economic journal 72 vol. 3 no. 2, 2022 the world for assessing the quality system and at the same time established the relationship between the manufacturer and consumer of hotel services. in all western countries, many hotels use quality management concepts, including: quality management system, total quality management, quality assurance system, quality control, total quality and productivity management, quality management system. in this business, first of all, the impression is sold, so it is important that visitors are not transmitted negative emotions, the first impression is always in the first place. the client should feel psychologically comfortable. it is the quality management system of hotel services that guarantees the customer "pricequality " and the comfort that the consumer wants during the service in the hotel, in all cases. 3. motivation of staff: to create a general system of staff remuneration depending on the results of the hospitality industry – ktu (labor participation rate); to create a system of motivation with the help of key performance indicators for each employee – key performance indicators (kpi). 4. state support. development of laws and legislation. tax support for tourism business. development of ways of rapprochement with eu countries. state authorities interested in intensifying ukraine's relations with the eu in the field of tourism, as this process may lead to an influx of foreign investment; improving the quality of tourist services based on their experience; development of domestic infrastructure; replenishment of state and local budgets, etc. in times of crisis, the main directions of the anticrisis program of tourism business in ukraine can be: implementation of brand protectionism for ukrainian goods and services; formation in the minds of potential tourists of ideas about cultural diversity and uniqueness of the territory; intensification of domestic demand for recreational and tourist services; development and implementation of recreational, tourist, sports, ecological projects with foreign partners; implementation of recreational and tourist startups and implementation of innovations. 5. conclusions thus, in the long-term perspective we can expect changes in both the portrait of the tourist and the purpose of travel. in addition, structural changes in the markets of offices and residential real estate will affect hotel real estate. but at present, it is almost impossible to talk about long-term trends with t he in fl ue nc e of e nv ir on m en ta l f ac to rs the purpose of developing an anti-crisis marketing program economy systemati flexibility universalitprotectiocontrol compatibilit t he in fl ue nc e of in te rn al fa ct or s program evaluation methods methods of investment analysis methods of quantitative analysis methods of qualitative analysis m on ito ri ng development of tools for control planning and management decisions stimulating the implementation of the plan by departments of the enterprise evaluation of effectiveness and efficiency increase productivity and management reducing the risk of the enterprise principles for the development and implementation of anti-crisis marketing program coordination of plans and development of a consolidated plan actual results from the application of anti-crisis measures figure 2. the mechanism of development and implementation of anti-crisis program three seas economic journal 73 vol. 3 no. 2, 2022 a large number of difficult-to-predict variables. with the help of anti-crisis marketing, the tourism business will be able to find hidden market opportunities that can be realized very quickly. these opportunities are available in any market, but in normal conditions, when all is well, they are ignored, and ignored specifically, leaving for a rainy day. the existence of such a nuance as hidden market opportunities and with a competent approach, we can overcome the crisis and ensure market growth. today, the focus of tour operators in 2022 should be on domestic tourism: recreational tourism; relaxation tours that will help restore the psyche; tourist trips in the field of art, pottery, easter painting, etc. presence of the crisis program it will allow to determine the sequence of actions of the enterprise in conditions of overcoming crisis, lay the basis for organizational and practical work on the recovery of the table 1 practical aspects used to support the tourism sector in ukraine with the experience of the world the essence of the tool countries where the tool is used subventions (state and regional) during the investment and modernization of tourist infrastructure austria, france, spain, germany, slovakia, slovenia, switzerland, italy increase of funding for tourism research austria, spain stimulating the demand for recreational and tourist services through targeted funding of less protected groups. intensification of social tourism and introduction of holiday checks bulgaria, cyprus, france, greece, spain, slovakia, slovenia, hungary, italy intensification of advertising activities to promote domestic tourism austria, france, spain, ireland, slovakia, slovenia, hungary increase funding for promotional activities abroad austria, france, greece, spain, netherlands, lithuania, malta, germany, slovakia, slovenia, switzerland, hungary, italy carrying out of advertising actions by associations of tourist organizations denmark, netherlands, slovenia, hungary the service is based on a preliminary correspondence acquaintance with taxi drivers and designed for passenger safety kenya, nairobi hotel booking platform vietnam, hanoi a search engine that builds combinations of flights and accommodation through the airbnb service chile, santiago source: (aaker d., 2022; world economic forum, 2022) enterprise. for creation of a high-quality, scientifically grounded program should develop the appropriate package materials, which should reflect both theoretical and methodological principles of program-target planning, and branch, organizational and legal specifics of the enterprise, for which the marketing anti-crisis program is developed. the algorithm of development and implementation of such program is developed by the author in the form of a mechanism. impact of destructive factors on the tourism sector development, the government should implement effective and well-thought-out policies to stimulate the recovery of the tourism sector in the regions. the introduction of anti-crisis key factors, systematization and consistency in the implementation of the above-mentioned measures will help to stabilize the development of tourism entities in the shortest possible time and achieve a level. references: aaker, d. (2022). three priorities of marketing in times of crisis. available at: http://www.management.com.ua/ notes/marketing-priorities.html kostetska, k., khumarova, n., umanska, y., shmygol, n., & koval, v. (2020). institutional qualities of inclusive environmental management in sustainable economic development. management systems in production engineering , 28(2), 15–22. matviichuk, l., barsky, yu., & podolak, v. (2021). financial assurance aspects of the tourism sector development in ukraine in the conditions of covid-19. financial and credit activity problems of theory and practice, 4(39), 570–577. state institute of strategic research. as for the development of tourism in ukraine in the conditions of increased epidemic risks (2020). available at: https://niss.gov.ua/sites/default/files/2020-06/turyzm-v-ukraini.pdf the covid-19 pandemic and its consequences in the sphere of tourism in ukraine (2021). available at: https://ntoukraine.org. travel & tourism continues strong growth above global gdp (press release wttc). available at: https://www.wttc.org/ wang, y., hong, a., li, x., & gao, j. (2020). marketing innovations during a global crisis: a study of china firms’ response to covid-19. journal of business research, 116, 214–220. world economic forum (2022). available at: http://edclub.com.ua/tegy/vsesvitniy-ekonomic-forum three seas economic journal 120 vol. 3 no. 2, 2022 corresponding author: 1 vasyl’ stus donetsk national university, ukraine e-mail: tani2006@ukr.net orcid: https://orcid.org/0000-0003-3901-7670 researcherid: https://www.researchgate.net/profile/tanya_yanchuk 2 vasyl’ stus donetsk national university, ukraine e-mail: fedchenko_o@donnu.edu.ua doi: https://doi.org/10.30525/2661-5150/2022-2-16 use of neuromarketing tools during the pandemic tetiana yanchuk1, olga fedchenko2 abstract. this work determines the current state of research and its results in the field of neuromarketing and artificial intelligence, the attitude and awareness of society to the concepts, results, advantages and disadvantages. it also proposes to form a system of principles for the security of society and opportunities to anticipate and prevent various catastrophic situations. the subject of research is the theoretical, methodological, and practical features of the use of neuromarketing tools during a pandemic. methodology. methods such as observation (to collect primary data), questionnaires (to determine the impact of various neuromarketing tools during a pandemic), analysis and synthesis (to substantiate practical recommendations), and graphics (for visual display) were used to solve the tasks set in the paper. results. the article describes the basic concepts that formed the basis of neuromarketing research. in the paper the main stages of neuromarketing time-tracking are highlighted and described. the article is about the issues related to the special neuromarketing tools that marketers use to obtain relevant results in the course of research. also, the main reasons for the use of specialized tools were revealed and the indicators, which the researchers will analyze in the formation of conclusions and recommendations for the customers, were determined. an example of the practical application of neuromarketing for the business is proposed. it is established that a well-developed brand, which is effectively used in the activities of a enterprise, can become its special intangible asset. moreover, it can be the basis for expanding a loyal target audience and a tool to help the company survive the crisis. people want to experience emotions together with the company, to feel unity with its idea. practical implications. neuromarketing technologies in the pandemic are gaining popularity and are increasingly being used as a powerful tool to influence the behavior of the target audience. the result neuromarketing reflects the highest stage of development of research and development, the right choice, which makes invisible and gives a sense of interrelation of all parts of the investigated system. value/originality. it has been proved that neuromarketing is an effective tool for carrying out activities during the pandemic. practical aspects of the introduction of neuromarketing techniques into the work of enterprises during the pandemic have been proposed. key words: neuromarketing, artificial intelligence, subconscious, biometric systems, algorithms, itracking. jel classification: а11, м21, м31, м37 1. introduction various foreign and ukrainian information sources show the interest and popularity of methods and applications of artificial intelligence (ai). modern research in the field of neuromarketing shows a lot of results that people more often cannot control their subconscious reactions. during the pandemic, neuromarketing tools that can evoke feelings of altruism or reasonable selfishness in the consumer's mind by influencing his subconscious are the best for businesses. even the strongest tools of neuromarketing are unable to evoke in the minds of consumers a thoughtless desire to spend their money without prerequisites, instead, they can significantly strengthen the existing desire to use certain services, due to stimulating subconscious motives of the consumer, which they cannot even imagine. this topic is relevant and needs further research, as modernity during the pandemic changes the vision of the classical business. scientific research of the practical neuromarketing aspects with the help of mechanical network connections and ai systems is carried out by such scientists as o. zhnevsky, k. yun, b. knutson, k. herbs, l.a. casado-aranda, d. angel, r . blackwell, p. miniard, f. kotler, and others. well-known scientists this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 121 vol. 3 no. 2, 2022 such as paul glimcher, martin lindstrom, arndt trindle, and others have studied the problems of neuromarketing in more detail. at the present stage, this area of research has been developed by such scientists as o.d. boyko, a. a kopeiko, м. а. aucklander, e. kahn, and others. the research aims to study and analyze the basic principles and concepts of the phenomenon of neuromarketing as an effective tool for conducting activities during a pandemic; consider the practical aspects of implementing neuromarketing techniques in the work of enterprises during a pandemic. 2. application of neuromarketing tools in the activities of enterprises neuromarketing is the use of brain activity visualization technologies to objectively assess the true reactions of a potential consumer to various marketing materials, whether visual advertising, brand, or style. neuromarketing is sometimes equated with artificial intelligence. it is not advisable to deny the presence of artificial intelligence as such in the life of each of us, as there are many examples of its use: smart sensors; face recognition (machine vision); deep learning; expert systems; recognition of language, texts, images; smart home systems; business analyst (adams, 2020). the global market for software using artificial intelligence algorithms reached $ 51.5 billion in 2021, an increase of 21.3% compared to 2020. such data was published in november 2021 in the research company gartner. the market contained in gartner includes applications with built-in ai capabilities, such as machine vision software and ai software. virtual assistants are called the largest segment of the market by analysts, as the cost of them globally in 2021 will be $ 6.21 billion, which is 12% more than a year ago (oleksii, 2021). one of the leading areas is machine vision programs, which use human biometric systems for recognition and authorization. biometric systems include fingerprints, facial scans, voice or iris recognition. we sometimes don't realize that neuromarketing surrounds us everywhere. let us take our devices: these are selections of movies/series/ music/goods – all this is the result of careful analysis by artificial intelligence of behavior, interests, and time spent on particular content. youtube analyzes what a user watches multiple times, what they like or dislike, what videos they watch, and more. the well-known company netflix, based on the user's behavioral experience, offers a movie or series that is interesting to him/her. we can take their latest achievements in the film industry. for example, the series "squid game". an important component of successful product placement is the organic use of the product in the frame. vans’ slip-on shoes were integrated without a bright logo, but they were the daily helpers of the characters in their tasks, perfectly solving the problems of the characters, their pain. the main message that remains in your head is "running, jumping, sitting, and doing everything else in vans is convenient". unique marketing information can be provided by a neuromarketing tool such as video or itracking. with its help, experts understand what the consumer pays attention to and where he looks for the longest time. this method is now widely used in studies of the effectiveness of advertising, perception of the text, used by programs and sites. it is an indispensable tool for analyzing advertising images, directing attention while watching video clips, various design elements, including packaging. with the help of an itracker, you can make a "heat map" that uses color to show where and for how long a person has been looking. some companies use itrackers or monitor involuntary facial expressions (coleman, 2016). figure 1. modern ai software market and forecast based on usage (oleksii, 2021) three seas economic journal 122 vol. 3 no. 2, 2022 unilever company conducted research combining itracking with a demonstration of a virtual 3d environment. as a result, they changed the packaging design of axe shower gel and deodorant, high lighting the product name, and recommended that sellers place products on sloping shelves so that the bottles always slide forward and face the buyer. at one of the sellers, sales in the deodorant category increased by 3.5% (coleman, 2016). tracking also confirmed that the human face is always the focus of attention. people subconsciously perceive even a schematic image of a person. in a study of print advertising depicting a shampoo product (sunsilk) and the face of a girl looking at the camera, people focused on the slogan above and the girl's face. only 6% of 200 people looked at the packaging of the shampoo. if the girl did not look straight, but on the left, at the package, people looked after her, and in this case, 84% of the participants looked at the package. thus, a minimal change that takes into account typical human behavior has improved perception and further drawn attention to the logo at the bottom of the page (coleman, 2016). there are lots of studies in this area, such as the possibility of predicting the behavior of a large audience. for instance, alexander genevsky, carolyn yoon, and brian knutson used the crowdfunding site kickstarter for their experiments. the study looked at whether brain activity could predict the outcome of crowdfunding in a week. during the experiment, they showed 30 subjects 36 different fees to finance startups. subjects had to say whether they would give money from their scholarship to help a particular project or not. while the participants were making their choice, special devices were recording the activity of their brains (genevsky, 2017). a few weeks after the end of the fundraiser, the researchers began comparing the results of the questionnaire and a – experimental task: view the image of the project (2 seconds), read the description (6 seconds), make a choice (yes / no), fixation (2-6 seconds) b – whole-brain analysis c – time course analysis d – classification analysis figure 2. the essence of the experiment of predicting behavior (genevsky, 2017) three seas economic journal 123 vol. 3 no. 2, 2022 the analysis of brain activity. it turned out that brain activity was the main indicator of how successful the crowdfunding campaign would be. this conclusion was confirmed during the repeated experiment (figure 2). during the pandemic, people began to save and choose goods more carefully. businesses that have used neuromarketing tools at the point of sale have begun to think about which tools to use online. a modern consumer reacts to the price and form of payment, so their reaction can also be explored using knowledge of neuromarketing. l. a. casado-aranda, f. liebana-cabanillas, and h. sanchez-fernandez are engaged in this topic and have conducted their research in this area. (casado-aranda, 2018) they focused on two main methods of payment: debit cards and paypal – biometric payment system (apple pay, samsung pay, and android pay) (figure 3). during the experiment, the researchers analyzed the activity of neurons in the subjects. the participants had to make simple purchases online. it turned out that making risky payments activated areas of the brain associated with negative emotions. and when the subjects performed safe financial transactions, they activated the area of the brain that is responsible for receiving rewards (casado aranda, 2018). most business companies are attracting artificial intelligence technologies and improving economic performances. for example, in banks, the decision to approve or disapprove a loan is decided by the ai – analyzing the entire credit record the ai predicts how responsible the payer will be. in medicine, ai calculates the likelihood of stroke in humans, detects and classifies cardiac arrhythmias based on electrocardiograms, synthesizes human speech, "reads" the neural activity of the auditory cortex, and helps to restore control of paralyzed limbs. with the right tools for neuromarketing, you can recoup your investment quickly, make a profit by optimizing costs and increasing sales. 3. the impact of neuromarketing on the human subconsciousness to understand the situation among young people, respondents aged 16-21, a study was conducted on awareness of the areas of application of ai systems through biometric systems. the survey was carried out through a questionnaire. the questionnaire was figure 3. different payment methods are trusted by users to the greater or lesser extent (casado-aranda, 2018) figure 4. reaction of neuronal activity in participants' brains (casado-aranda, 2018) three seas economic journal 124 vol. 3 no. 2, 2022 attended by 87 people and was conducted during december 2021. the results of the survey are shown in figure 5. the analysis of the given data of the distribution of respondents’ answers allows drawing conclusions that: 44% 43% 13% enter your attitude to the system of artificial intelligence and their modern application positive neutral negative hard to say 90% 10% do you know what biometric data is? yes no yes 83% no 17% do you know about the system of artificial intelligence? yes no 0 5 10 15 20 25 medicine education production banks and finance transport agriculture other 23 (76,7%) 13 (43,3%) 23 (76,7%) 16 (53,3%) 20 (66,7%) 8 (26,7%) 1 (3,3%) what fields of application of artificial intelligence do you consider appropriate? 0 5 10 15 20 25 30 pleasure fear indignation sadness surprising interest 9 (30%) 8 (26,7%) 1 (3,3%) 2 (6,7%) 8 (26,7%) 27 (90%) what emotions do you have with the term "artificial intelligence"? 47% 53% did you know that biometric systems are created and linked to mechanically constructed communication systems? yes no 90% how often do you use biometric identification? every day every week 56% 1% 43% your attitude towards biometric identification systems? positive negative neutral – the majority of respondents are aware of the areas of biometric systems (90%) and ai (83.3%); – more than half of the respondents are positive about biometric systems and their performance (56.7), but the attitude towards ai systems is different. 43.3% of respondents are neutral, 43.3% three seas economic journal 125 vol. 3 no. 2, 2022 0 5 10 15 20 25 30 pleasure fear indignation sadness surprising interest 9 (30%) 8 (26,7%) 1 (3,3%) 2 (6,7%) 8 (26,7%) 27 (90%) what emotions do you have with the term "artificial intelligence"? 47% 53% did you know that biometric systems are created and linked to mechanically constructed communication systems? yes no 90% how often do you use biometric identification? every day every week 56% 1% 43% your attitude towards biometric identification systems? positive negative neutral 0 5 10 15 20 25 face id touch id voice id siri/alisa all systems 25 (83.3%) 22 (73,3%) 8 (26.7%) 15 (50%) 1 (3.3%) what identification system is equipped with your smartphone? figure 5. the results of the answer distribution to the questionnaire are positive and 13.3% of respondents find it difficult to answer; – 83.3% of respondents use the face id recognition system, while 73.3% use the touch id4 fingerprint recognition system; – 90% of respondents use biometric authentication systems (bsa) every day, but only 53.3% of respondents know that the bsa is created and connected to the ai system; – the ai system in respondents often evokes related emotions of curiosity (90%), fear (26.7%), and joy (30%). respondents believe that the use of ai will be appropriate in such areas as medicine (76.7%), manufacturing (76.7%), and transport (66.7%). the answers to the questionnaire provided an interesting cross-section, showing a rather contradictory picture. the respondents know, use, and have a positive attitude towards the achievements of ai – biometric authentication systems, but almost half of the respondents did not know that the bsa was created due to ai and ai evokes the emotion of fear in a quarter of respondents. the reasons may be ignorance, neutral attitude, lack and inaccessibility of sufficient information, minimal coverage of the situation by the media, lack of much transparency in the already published results. all this contributes to the fact that consumers are users of ai results, but do not even guess that it is possible thanks to it. most respondents have a positive attitude towards ai systems, so it is possible to make assumptions that they know about its main three seas economic journal 126 vol. 3 no. 2, 2022 advantages. however, it is not known whether they are aware of the shortcomings and threats that may be real shortly for the world. 4. conclusions the results of the study conclude that people know what ai is, its benefits and opportunities, but are not aware of the specific areas of its application and that it is always with us. manipulation of the consumer's subconscious leads to increased sales and profits. algorithms help us better understand not only the world around us, – but also the inner world, that is our neural connections and subconscious reactions, which we are often unable to control or explain, as neuromarketing research shows. artificial intelligence is a tool that is able to communicate between virtual agents and bots and an operational group that monitors and records products in stock, and provides maximum return on investment for commercial organizers, as they seek to uncover the full potential of data, process, and change the mechanisms of business processes. to understand the situation among young people, respondents aged 16-21, a study was conducted on awareness of the areas of application of ai systems through biometric systems. the answers to the questionnaire provided an interesting crosssection, showing a rather contradictory picture. the respondents know, use, and have a positive attitude towards the achievements of ai – biometric authentication systems, but almost half of the respondents did not know that the bsa was created due to ai and ai evokes the emotion of fear in a quarter of respondents. the reasons may be ignorance, neutral attitude, lack and inaccessibility of sufficient information, minimal coverage of the situation by the media, lack of much transparency in the already published results. neuromarketing technologies in the pandemic are rapidly gaining popularity and are increasingly used as a powerful tool to influence the behavior of the target audience. improving the productivity of the work (based on artificial intelligence) is the reason for differences between developed and developing countries when workers are easily replaced by jobs. in addition, this improvement will generally contribute to income growth, but will also increase income inequality, at least in the transition period and possibly in the long run for some groups of workers, both in developed and developing countries. neuromarketing today is one of the marketing technologies of the future, and therefore needs further study. references: adams, n.-s. (2020). neurolaw, privacy and neurotechnology. available at: https://www.michalsons.com/ blog/neurolaw-privacyand-neurotechnology/45137 casado-aranda, l. a., liébana-cabanillas, fr., & sánchez-fernández, j. a (2018). neuropsychological study on how consumers process risky and secure e-payments. journal of interactive marketing , 43, 151–164. coleman, k. (2016). why these 4 fortunate companies are using neuromarketing. available at: https://edgylabs.com/four-companies-using-neuromarketing. genevsky, а., yoon, с., & knutson, в. (2017). when brain beats behavior: neuroforecasting crowdfunding outcomes. journal of neuroscience, 37(36), 8625–8634. harari, y. n. (2018). 21 lesson for the 21 сentury. israel: spiegel & grau, jonathan cape, 372 р. herbes, carsten & friege, christian & baldo, davide & mueller, kai-markus, (2015). willingness to pay lip service? applying a neuroscience-based method to wtp for green electricity. energy policy, elsevier, 87(c), 562–572. skriabin, o. m., sanakoiev, d. b., sanakoieva, n. d., berezenko, v. v., & liubchenko, yu. v. (2021). neurotechnologies in the advertising industry: legal and ethical aspects. innovative marketing, 17(2), 189–201. richardson, d. c., griffin, n. k., & yan, j. (2018). measuring narrative engagement: the heart tells the story, 243 р. three seas economic journal 48 vol. 2 no. 1, 2021 corresponding author: 1 university of the state fiscal service of ukraine, ukraine. e-mail: olya.lisovskaya94@gmail.com orcid: https://orcid.org/0000-0002-2842-3158 researcherid: abe-7161-2020 doi: https://doi.org/10.30525/2661-5150/2021-1-8 system of financing health care in the european union countries as an experience for ukraine olha lisovska1 abstract. purpose. the purpose of the article is to analyse the state of the system of financing health care in the european union countries and ukraine, to identify and compare their efficiency. to achieve this purpose, the following tasks were set: to analyse the current state of the system of financing health care in the european union using up-to-date statistics on health care expenditures; to analyse the state of the system of financing health care in ukraine for the last five years based on statistical data on expenditures of the consolidated budget of ukraine; to consider what needs the health care sector directs expenditures to; to identify the problems that were prompted medical reform in ukraine; to identify and compare the efficiency of financing the health care system of the european union countries and ukraine. methodology. during the preparation of the article, the author used the method of analysis and synthesis to review statistical data that provided an opportunity to analyse the current state of the system of financing health care in the european union countries and ukraine; the method of comparison was used to determine the efficiency of the models of the system of financing health care in the countries of the european union, in order to further form useful advice for use in ukraine during the period of medical reform; generalization method was used to summarize the results of the study. results. analysing the state of the system of financing health care among the european union countries in 2019, it was found that the largest amount of health care expenditures was in germany (the system of financing was based on the bismarck model), and the smallest was in latvia (the system of financing was based on the beveridge model). analysis of the dynamics of health care expenditures in ukraine showed that over the past five years, the volume of expenditures has increased 2.33 times. in terms of the funds of the consolidated budget of ukraine, the largest percentage (85-91%) falls on the expenditures of the general fund. in relation to the total expenditures of the consolidated budget of ukraine, the share of health care expenditures in 2020 has amounted to 11.02%, which is 1.99% higher than in 2016. despite the growing trend, the amount of budget expenditures is not enough for all the needs of the health sector. to identify the efficiency of the models of the systems of financing health care operating in the european union countries and ukraine, a comparison of the average life expectancy among the people of these countries was made. in the countries of northern and western europe, there was the highest rate in the range of 81.1-83.1 years for both men and women; the lowest rate was observed in ukraine (73 years). ukraine is currently undergoing health care reform, which should change the soviet model to one that will be closer to the english, which shows its efficiency on the example of european countries in the post-soviet space. practical implications. the results of the study can be used to form practical suggestions in preparation for the next stage of health care reform in ukraine. key words: health insurance, health care system, health care models, health care expenditure, european union, ukraine. jel classification: g22, g28, g32, i13 1. introduction the health of citizens has a significant impact on the economic development of the country, which directly depends on the state of financing health care. the system of financing health care, which has continued to operate in ukraine after the collapse of the soviet union, has proven efficiency over the years. after all, due to insufficient funds to finance the industry, the right of citizens to free health care, medical assistance and health insurance, guaranteed by the constitution three seas economic journal 49 vol. 2 no. 1, 2021 of ukraine, was not realized. it should be noted that during the period from the declaration of independence in 1991 until the adoption of the concept of health care financing reform in 2016, there was no significant reform in the field of health care in ukraine. in accordance with the concept and a number of adopted regulations, since 2018 ukraine has started health care reform, which aims to introduce compulsory health insurance, in which the state acts as an insurer, and funding is based on the principle of “money follows the patient”. the implementation of the reform is provided in three stages and, according to the concept, it should be completed in 2020, but the covid-19 pandemic has changed the plans, thus extending the implementation of health care reform in the coming years. in the period of transformation of the domestic healthcare sector and the formation of an efficient system of financing it, it will be useful to use the experience of developed countries. 2. analysis of the current state of financing health care in the european union countries in the countries of the european union, health care systems are based on the bismarck model and the beveridge model. the bismarck model, also known as german model, is compulsory social health insurance for working peoples and their families. contributions are paid to private insurance funds in the way that one part is paid by employers as targeted contributions and the other part is paid independently by employees. this model is used in austria, belgium, italy, estonia, lithuania, luxembourg, the netherlands, germany, poland, slovakia, slovenia, hungary, france, sweden, the czech republic etc. the beveridge model, also known as english model, means the universal coverage of medical services for all citizens at the expense of taxes paid to the budget. the state acts as a monopolist insurer with the authority to plan expenditures in the formation of the state budget and control their use. this model is used in denmark, ireland, spain, latvia, portugal, finland etc. (kulesher, forrestal, 2014; wielechowski, grzęda, 2020). let us analyse the amount of health care expenditures per capita in some countries of the european union for 2019, the structure of which consists of: – government / compulsory schemes; – voluntary health care payment schemes; – household out-of-pocket payments. figure 1 shows that the largest amount of health care expenditures is in germany (6645.8 usd per capita), austria (5851.1 usd per capita) and sweden (5782.3 usd per capita), and the lowest is in hungary (2222.4 usd per capita), poland (2229.6 usd per capita) and latvia (1972.6 usd per capita). 58 51 ,1 54 28 34 27 ,9 55 67 ,9 25 78 ,8 45 78 ,4 53 75 ,7 66 45 ,8 23 83 ,6 22 22 ,4 52 75 ,5 36 49 ,2 19 72 ,6 2 63 8, 1 55 58 ,3 57 65 ,1 22 29 ,6 33 78 ,6 23 53 ,6 32 24 3 61 6, 5 57 82 ,3 0 1000 2000 3000 4000 5000 6000 7000 a us tr ia b el gi um c ze ch r ep ub lic d en m ar k e st on ia fi nl an d fr an ce g er m an y g re ec e h un ga ry ir el an d it al y l at vi a l ith ua ni a l ux em bo ur g n et he rl an ds po la nd po rt ug al sl ov ak r ep ub lic sl ov en ia sp ai n sw ed en figure 1. health care expenditure per capita in the european union countries in 2019, usd source: compiled by the author based on oecd statistics three seas economic journal 50 vol. 2 no. 1, 2021 this is due to economic differences between the countries of northern and western europe, and the countries of central and eastern europe, in terms of gdp, gnp, level of social security, wages, life expectancy etc. the average annual growth rate of health care expenditures per capita in 2019, compared to 2018, had a growing trend in all countries of the european union (oecd/eu, 2020). 3. analysis of the condition of financing health system care in ukraine after the collapse of the ussr , ukraine inherited a health care system based on the semashko model, i.e. financing health care from the state budget, at the expense of which citizens were provided with free medical care (onyshko, shevchuk, 2019). according to the budget classification, the expenditures of the consolidated budget of ukraine for health care are directed to: a) polyclinics and outpatient clinics, emergency medical services: – general polyclinics and outpatient clinics; – specialized clinics and dental care clinics; – emergency medical care centres and medical centres for disasters, ambulance stations; – medical and obstetrical stations; – primary medical centres; b) hospitals and sanatoriums: – general hospitals; – specialized hospitals and other specialized facilities; – perinatal centres, maternity hospitals; – sanatoriums; c) sanitation and anti-epidemic measures and facilities; d) basic and applied health care research and development; e) other health care activities: – orphanages; – blood transfusion centres; – other facilities and activities in the field of health care (the official website of the state treasury service of ukraine, 2021). let us analyse the dynamics of health care expenditures of the consolidated budget of ukraine over the past five years. figure 2 shows that the largest share falls on the general fund, which in percentage terms is 85%, 85%, 86%, 89%, and 91% for 2016, 2017, 2018, 2019, and 2020, respectively, and the expenditures of the special fund are 15%, 15 %, 14%, 11%, and 9% for 2016, 2017, 2018, 2019, and 2020, respectively. in comparison to 2016, in 2020 the volume of health care expenditures increased by 100.2 billion uah (2.33 times). the share of health care expenditures in relation to the total amount of expenditures of the consolidated budget of ukraine amounted to 9.03% (2016), 9.69% (2017), 9.27% (2018), 9.36% (2019), 11.02% (2020) (zvitnist, 2021). although in 2020 the volume of health care expenditures has increased, but still this amount of expenditure is not enough to meet all the needs of the health care sector, so there is a need to find additional sources of income. 4. efficiency of the systems of financing health care in the european union countries and ukraine inefficient allocation of budget funds for health care leads to a number of problems, namely: 64.40 87,80 100,00 114,30 161,50 11 14,5 15,7 13,9 14,2 0 20 40 60 80 100 120 140 160 180 2016 2017 2018 2019 2020 general fund expenditures special fund expenditures figure 2. dynamics of health care expenditures of the consolidated budget of ukraine for 2016–2020, billion uah source: compiled by the author based on the statistics of the state treasury service of ukraine three seas economic journal 51 vol. 2 no. 1, 2021 – low coverage of the population with free medical services and, as a consequence, an increase in out-ofpocket payments; – inequality in access to health care; – low quality of medical services; – reduction in qualification and number of medical personnel working in state medical facilities; – increase in mortality due to preventive medicine is not available for the population, etc. (apetroi et al., 2020). the experience of the european union countries confirms the efficiency of their systems of financing health care, although there is no universal system of financing health care in the world that would suit absolutely all countries. for example, in the period after the collapse of the soviet union and until 2015, the mortality rate in ukraine increased by 8%, while in the post-soviet european countries this figure decreased by 42%. these problems prompted the ukrainian authorities in 2016 to approve the concept of health care financing reform and to begin health care reform in 2018, which aimed to change the soviet model of financing health care to a more efficient one, which would be as similar as possible to the beveridge model, and to introduce compulsory health insurance (romaniuk, semigina, 2018). the efficiency of the system of financing health care in the country can be seen from the indicator of life expectancy. figure 3 shows that the highest life expectancy is in the countries of northern and western europe, where the system of financing health care is based on the bismarck model. in the post-soviet countries, which are currently members of the european union, the average life expectancy is only 3-5 years higher than in ukraine, although these countries have implemented their health care reforms much earlier. in comparison to all countries of the european union, the lowest life expectancy in ukraine was 73 years in 2019 (for both sexes). in 2015, this figure was 72.2 years (who, 2020). this may indicate that the first stage of health reform has shown a small but positive trend. 5. conclusion in accordance with the purpose and objectives of the study, we can conclude that the analysis of health expenditures and life expectancy has confirmed that the most efficient systems of financing health care are those of northern and western european countries. the inefficient allocation of funds from the state budget, which was based on the soviet model, led to a number of problems in the field of health care in ukraine, which confirmed the inefficiency of this model. the 81 ,6 81 ,4 75 ,1 78 ,6 83 ,1 79 ,1 81 ,3 78 ,9 81 ,6 8 2, 5 81 ,7 81 ,1 76 ,4 81 ,4 83 75 ,4 76 82 ,4 81 ,9 81 ,8 78 ,3 81 ,6 75 ,6 78 ,2 81 ,3 83 ,2 82 ,4 73 66 68 70 72 74 76 78 80 82 84 a us tr ia b el gi um b ul ga ri a c ro at ia c yp ru s c ze ch r ep ub lic d en m ar k e st on ia fi nl an d fr an ce g er m an y g re ec e h un ga ry ir el an d it al y l at vi a l ith ua ni a l ux em bo ur g m al ta n et he rl an ds po la nd po rt ug al r om an ia sl ov ak r ep ub lic sl ov en ia sp ai n sw ed en u kr ai ne figure 3. the average life expectancy in 2019 in the european union countries and ukraine, years source: compiled by the author based on who data three seas economic journal 52 vol. 2 no. 1, 2021 health care reform launched in 2018 aims to change the model of financing health care to one based on the beveridge model and to introduce compulsory health insurance, which is theoretically prescribed in the law of ukraine “on insurance” from 1996; however, it does not exist to this day. the experience of the european union, especially the post-soviet countries, is useful and convincing for ukraine during the period of transformation of its health care sector. as the process of medical reform is underway in ukraine, this topic remains relevant for further research. references: apetroi (răcoare), f.-c., michalanche, i.-c., tomaziu-todosia, m., & plotnic, o. (2020). an economic approach to health insurance. logos universality mentality education novelty: social sciences, vol. 9, issue 1, pp. 1–13. doi: https://doi.org/10.18662/lumenss/9.1/31 kulesher, r ., & forrestal, e. (2014). international models of health systems financing. journal of hospital administration, vol. 3, no. 4, pp. 127–139. doi: 10.5430/jha.v3n4p127 oecd.stat (2021). official website of the organisation for economic co-operation and development. retrieved from: https://stats.oecd.org/index.aspx?themetreeid=9 (accessed april 16, 2021). onyshko, s., & shevchuk, y. (2019). functioning specifics of medical insurance financial support models. economic herald. series: finance, accounting , taxation, no. 3, pp. 171–179. doi: https://doi.org/10.33244/26175932.3.2019.171-179 organisation for economic co-operation and development, & european union (oecd/eu) (2020). health at a glance: europe 2020. state of health in the eu cycle, 230 p. official website of the oecd ilibrary. retrieved from: https://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-europe-2020_82129230-en (accessed april 15, 2021). doi: https://doi.org/10.1787/82129230-en romaniuk, p., & semigina, t. (2018). ukrainian health care system and its chances for successful transition from soviet legacies. globalization and health, no. 14:116, pp. 1–11. doi: https://doi.org/10.1186/s12992-018-0439-5 wielechowski, m., & grzęda, ł. (2020). health care financing in the european union countries – structure and changes. acta scientiarum polonorum oeconomia, no. 19(1), pp. 71–80. doi: 10.22630/aspe.2020.19.1.8 world health organization (2020). life expectancy and healthy life expectancy. data by country. official website of the who. retrieved from: https://apps.who.int/gho/data/node.main.688 (accessed april 16, 2021). zvitnist [accounting] (2021). ofitsiinyi sait derzhavnoi kaznacheiskoi sluzhby ukrainy [official website of the state treasury service of ukraine]. retrieved from: https://www.treasury.gov.ua/ua/file-storage/vikonannyaderzhavnogo-byudzhetu (accessed april 15, 2021). three seas economic journal 123 vol. 3 no. 1, 2022 corresponding author: 1 lutsk national technical university, ukraine e-mail: kalishl.y@gmail.com orcid: https://orcid.org/0000-0003-1694-6178 researcherid: x-8522-2019 2 lutsk national technical university, ukraine e-mail: smalborys@gmail.com orcid: https://orcid.org/0000-0001-8586-8404 doi: https://doi.org/10.30525/2661-5150/2022-1-17 integration directions to improve the competitiveness of the hospitality industry liudmyla matviichuk1, borys smal2 abstract. the article is devoted to the study of trends in the hospitality industry in ukraine and the world and the search for ways to improve the competitiveness of the study area. the aim of the publication is to substantiate the directions of increasing the competitiveness of the hospitality industry in the regions of ukraine in modern conditions on the basis of the analysis of trends in the studied sphere. methodology. the study is based on the analysis of scientific literature and points of view of foreign and domestic experts in the field of hospitality. the study also used analytical data of the world travel and tourism council and the national tourism organization of ukraine. during the organization and conduct of the study were used general scientific and special methods, such as analysis, synthesis, comparison, identification of destructive factors affecting the state and development of the hospitality industry. using a structural-logical method, presented a vision of the implementation of modern ways to improve the competitiveness of the hospitality industry in the regions of ukraine in the conditions of the spread of pandemic. results. the content and importance of the hospitality industry in the development of the regions of ukraine and the world. defined the content of the definitions under study, summarized and formulated approaches to defining the relationship between the concepts of "hospitality industry" and "tourism industry". the analysis of the main indicators of the hospitality industry. in order to find ways to improve the competitive advantages of the hospitality industry and determine the target audience the analysis of indicators of inbound and outbound tourism in ukraine. described trends in the development of the hospitality industry in modern conditions. the decrease in almost all indicators of development of the hospitality industry is revealed. the data of the world council of travel and tourism about the state of the hospitality industry in ukraine are analyzed. the reduction of the total contribution of travel to employment in ukraine in 2020 to 6.3% was revealed. identified directions and measures to strengthen the competitive advantages of the hospitality industry in the regions of ukraine. it is proved that promising directions to improve the competitiveness of the hospitality industry in modern conditions are the association of business entities of the industry, as well as the use of modern digital and information tools. such associations can be alliances, clusters, unions, brotherhoods, and so on. joint cooperation of economic entities of the region will allow to create a comprehensive regional product that meets international standards, the needs of modern consumers, safe and of high quality, as well as able to integrate into the world tourism market. practical implications. the study, based on analysis of major trends in the hospitality industry in ukraine and the world has allowed to define integrated directions for improving the competitiveness of the hospitality industry, the implementation of which in the regions allows you to create a comprehensive regional product that meets international standards and the needs of the modern consumer, is of high quality and safe. value/originality. the proposed directions for improving the competitiveness of the hospitality industry are the leading tools of regional development, which will quickly overcome the consequences of the spread of the pandemic, promote socio-economic growth of regions and the integration of regional products and services in the global tourism market. key words: hospitality industry, competitiveness, regional development. jel classification: l83, p25, r11 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 124 vol. 3 no. 1, 2022 1. introduction in the current economic uncertainty, the hospitality industry is one of the few areas of the world economy that is developing dynamically, driving economic progress and creating new jobs. today, the hospitality industry is a priority area for the development of the global economy. in addition, the hospitality industry is a multiplicative sphere of the economy, the development of which contributes to the development of related areas and the socio-economic development of entire countries and regions. the global pandemic covid-19 has slowed down economic growth in all countries and regions. under such conditions, the development of the hospitality industry decreased several times. in general, losses of the tourism industry in ukraine amount to more than 1.5 billion u.s. dollars. however, the consequences of the pandemic have affected the development of domestic tourism. therefore, it is advisable to assess the place of the ukrainian tourism industry in international economic relations. 2. literature review the analysis of indicators of the development of the hospitality industry in ukraine and the world is presented in the works of a. dyshkantiuk, l. potemkina, k. vlasiuk, where the directions of overcoming the modern crisis of the development of the hospitality industry are defined. the impact of the covid-19 pandemic on the state and development of the hospitality industry is highlighted by many works of scientists, including n. korzh, n. onishchuk, who study the impact of destructive factors on the state of hotel farms in the regions and suggest ways to transform them. issues of competitiveness of the hospitality industry based on the use of global trends in the development of the hospitality industry and the implementation of best business practices are considered in their works by o. baula, o. liutak, l. chepurda, h. chepurda, o. zelinska, offering a number of financial instruments for the development of the industry. the role of professional associations in increasing the competitiveness of the hospitality industry is considered in the work of a. holod, o. izhevska, o. korkun, where the analysis of the cluster model of development of the hospitality industry in the region is presented. however, some issues related to the search for integration directions to improve the competitiveness of the hospitality industry in the regions remain unresolved and require detailed study. 3. research results the hospitality industry is an industry characterized by multidimensional, versatileand complex products and services, combining various interrelated activities to meet the needs of consumers. hospitality industry is an economic category, because it contributes to the production and provision of a significant range of services, creating jobs, generating significant revenues, developing the infrastructure of the region and increasing the level of socio-economic development of the whole country (martienko, dyshkantiuk, 2017). the main features of the hospitality industry are the properties of the services offered. the analysis of scientists' approaches to the interpretation of the concept under study shows a multi-vector orientation in the content of this definition. in general, it is possible to distinguish four main types of scientists' approaches to the content of the concept under study: – the hospitality industry includes the tourism industry in a meaningful way; – the tourism industry includes the hospitality industry in a meaningful way; – unified category "hospitality and tourism industry "; – the concepts of "hospitality industry " and "tourism industry " are synonymous. analysis of the literature shows that most researchers consider the hospitality industry in terms of customer satisfaction (yehupova, 2021). the consumers are tourists, sightseers and guests of the region, as well as the local population. according to the law of ukraine "on tourism", a tourist is a person "who travels to ukraine or another country for a purpose not prohibited by the laws of the host country for a period of 24 hours to one year without performing any paid activities and with the obligation to leave the country or place of stay within the specified period". excursionists are visitors who "receive tourist (excursion) services and stay in the place visited for a total duration of not more than 24 hours (without overnight stay)." both tourists and excursionists can be considered guests of a region. in addition, the category of guests of the region can include transit passengers and persons who are on a business trip in this territory. it is worth noting that a person who is on a business trip is exempt from paying the tourist fee upon arrival, which a priori does not classify him as a tourist. consumers of hospitality industry services can be not only guests, but also local residents, who also use the infrastructure of hospitality (food establishments, settlements, entertainment, etc.). the key element in this case is the specificity of the services themselves, which is formed based on the nature of consumer needs, which can be divided into primary needs (accommodation, food, security) and additional (entertainment, travel, communication, etc.). thus, from the above it is possible to conclude that the content of the concept "hospitality industry " is broader than the concept "tourism industry ", because the activities in this sphere are aimed at meeting the needs of customers – consumers of services in general, three seas economic journal 125 vol. 3 no. 1, 2022 not just tourists. therefore, the hospitality industry is an independent category of the sphere of services, although it is interconnected with the tourism industry. the spread of modern factors of influence, which are mostly destructive in nature, on the development of the hospitality industry in the regions of ukraine, has changed the activities of most business entities (baula, liutak, chepurda, zelinska, 2021). to consider the main trends in the state and development of the hospitality industry in ukraine and find ways to improve its competitive advantages, let's analyze the main indicators of development of the studied sphere. hospitality industry accumulates significant revenues from the sale of tourist products and services, is a multiplicative sphere and contributes to the development of related industries. analysis of the results of the world travel and tourism council studies shows that the total contribution of the hospitality industry in almost all countries is insufficient and demonstrates negative trends in recent years. these studies show that in 2020 the total contribution of the industry to ukraine's gdp will be 5.43% (184.2 billion uah). in addition, direct travel spending in 2020 was 1.44% of the country 's gdp. in 2019, this figure was 6.3%, and in 2020 it dropped to 3.4%. this decline in the hospitality industry is explained by the cessation of activities of a large number of business entities. global indicators of the hospitality industry show a similar situation. an analysis of the world travel and tourism council report showed that the hospitality industry 's contribution to global gdp was 10.4 percent ($9.2 trillion) in 2019, declining to 5.5 percent in 2020. during 2020, the hospitality industry lost about 4.5 trillion. at the same time, its contribution to global gdp decreased by 49% (korzh, onyshchuk, 2020). in addition, by 2019, the hospitality industry accounted for one in four new jobs created worldwide, or 10.6% of all jobs (334 million). it is worth noting that the global hospitality industry lost 18.5% of jobs (about 62 million) in 2020. an analysis of this problem showed that the global hospitality industry has 272 million jobs. in addition, during 2020, spending on domestic travel fell by 45% and spending on out-of-country travel by 70%. the analysis of employment indicators in the hospitality industry also demonstrates negative trends. thus, the total contribution of the studied sphere to employment in ukraine during 2020 decreased to 6.3%, during 2019 this indicator was 6.9%. the threat of further loss of the number of jobs remains. in general, in 2020 the losses of the hospitality industry in ukraine are estimated at more than 1.5 billion u.s. dollars. analysis of the problem under study shows that the share of the hospitality industry in the country 's total economy is 3-4% of gdp, which is significantly different from the international indicator (10%). analytical reports of the world tourism organization recognize this indicator at the level of about 9% of gdp. analysis of data from the national tourism organization of ukraine showed that the contribution of the hospitality industry in the total supply of goods and services of the national economy amounted to 11.6% of gdp. ukraine in 2020 demonstrates a fairly high performance in some world rankings (nikolaichuk, 2021). for example, in the ranking of the world economic forum (of 140 countries) ukraine took 78th place in the index of competitiveness of tourism and tourism services. this rating made it possible to analyze such indicators of economic stabilization: – "price competitiveness" (19th place); – "openness to the world" (55th place); – "improving overall infrastructure" (73rd place); – "improving the business environment" (103rd place); – "improving the level of security " (107th place). from the above, it can be concluded that the hospitality industry makes a significant contribution to the country 's economy. to determine directions for improving the competitiveness of the hospitality industry in the region consider it appropriate to analyze inbound and outbound tourism in ukraine, which will identify target consumers of products and services of the industry and accelerate the integration of regional tourism products in the world market. the volume of tourist flows of inbound tourism in ukraine during 2020 is shown in figure 1. most tourists came to ukraine from neighboring countries. during 2020 the leader in the number of tourist arrivals was moldova – 933 thousand people. a significant number of foreigners came to ukraine from belarus (463,5 thousand people), russia (390 thousand people), poland (272 thousand people), romania (229 thousand people) and hungary (217 thousand people). significantly lower figures were shown by turkey (149 thousand people), germany (74 thousand people), israel (57 thousand people) and the united states (42 thousand people). also, according to the state border guard service of ukraine, in 2020 the citizens of great britain (34.5 thousand people), lithuania (almost 30 thousand people), latvia (26 thousand people) were tourists in the country. also there were citizens of azerbaijan, italy, india, georgia, bulgaria, serbia and others. from the czech republic, latvia, china, egypt, uzbekistan and armenia 10 to 20 thousand tourists visited ukraine. most foreigners crossed the ukrainian border for private or tourist purposes. the state border guard service of ukraine recorded 70,000 people crossing the border in transit. it is also advisable to analyze the volume of outbound tourist flows in ukraine during 2020, which is shown in figure 2. three seas economic journal 126 vol. 3 no. 1, 2022 during 2020 ukrainians visited 123 countries of the world. according to the state border service of ukraine, more than 11 million 250 thousand ukrainians will go abroad. the leaders among the visits were the countries bordering ukraine: – the republic of poland – about 4 million citizens of ukraine; – hungary – 1 million 635 thousand ukrainians; – russian federation – 1 million people. high rates of visits by ukrainians are typical for turkey (965 thousand people) and egypt (730 thousand people). a lot of ukrainians traveled to romania (626 thousand people), belarus (496 thousand people), slovakia (336 thousand people), moldova (328 thousand people), germany (222 thousand people) and the united arab emirates (100 thousand people). popular among ukrainians were also: austria (68 thousand people), italy (60 thousand), spain (53.5 thousand), britain (44.5 thousand), bulgaria (42 thousand), israel (41 thousand), georgia (33.6 thousand), greece (26.5 thousand), denmark (24 thousand) and qatar (20 thousand). 933000 435000 390000 272000 229000 217000 149000 74000 57000 42000 moldova belarus rf poland romania hungary turkey germany israel usa figure 1. the volume of tourist flows of inbound tourism in ukraine (2020) 4000000 1635000 1000000 965000 730000 626000 496000 336000 328000 222000 poland hungary rf turkey egypt romania belarus slovakia moldova germany figure 2. the volume of tourist flows of outbound tourism in ukraine (2020) three seas economic journal 127 vol. 3 no. 1, 2022 to the balkan countries (montenegro, croatia and albania) travelled 23 thousand, 16.2 thousand and 12 thousand ukrainian citizens, respectively. thus, the conducted analytical studies have shown that the hospitality industry can accumulate significant revenues from the sale of regional products and services, is a multiplicative sphere and contributes to the development of related industries. in this regard, it is advisable to constantly improve the competitive advantages of the studied sphere and to form products and services that would meet modern safety and quality requirements, meet the needs of consumers and be in the key of global trends in the hospitality industry. according to the authors, today it is advisable to improve the competitiveness of the hospitality industry in the regions of ukraine in two ways. firstly, business entities of the hospitality industry should unite (matviichuk, barskyi, lepkyi, karpiuk, podoliak, 2021). such associations can be alliances, clusters, unions, fraternities and so on. the implementation of such a policy in the region will create a comprehensive regional product that meets international standards, the needs of modern tourists, safe and of high quality, as well as able to integrate into the global tourism market. cluster policy as a tool to improve the competitiveness of the hospitality industry of the region has become widespread in almost all countries of the world (holod, izhevska, korkuna, 2019). in general, a hospitality industry cluster is understood as a voluntary association of stakeholders to form high-quality products and services through the cooperation of small and mediumsized businesses in the region, as well as the creation of complex regional products that meet modern requirements and quality standards. today there are more than 2,500 clusters in europe. studies have shown that the cluster economy is at least 40% more efficient than the traditional branch economy. secondly, it is advisable to use modern digital and information tools to promote the products and services offered. the authors believe that it is advisable to ensure the competitiveness of the hospitality industry in the region by creating its own information systems to promote regional products and services, as well as taking into account the potential of the region, consumer interests and existing trends in the industry. classically, regional goods and services can be promoted by participating in exhibitions, holding events, forming and publishing promotional printed and media materials, advertising in social networks, creating websites, selling souvenirs, opening information offices and conducting joint activities with the hospitality industry entities of other regions. current trends in the competitiveness of the regional hospitality industry confirm the effective directions of promoting products and services. these areas include: – create promotional channels on youtube; – creation of information portals in 3-5 languages; – creating augmented reality tourist viewing sites; – create promotional pages in social networks; – create special apps for mobile devices; – creating 3d routes; – posting and updating information about the region's services in geosocial networks; – formation of an electronic calendar of events in the hospitality industry; – holding an online fair, etc. thus, the current trend of increasing competitiveness of the hospitality industry in the region is the increasing role of information technology. advertising and information systems can be used to form a positive image of the modern consumer about the offer of the hospitality industry in the region. in addition, it is advisable to form a comprehensive service, which is possible with the cooperation of business entities. clusters are defined as the most effective and popular form of unification of hospitality industry subjects. the main advantages of clustering for business entities in the region are: – ability to share the region's infrastructure; – possibility of joint marketing; – organization of sales of tourist products of cluster participants; – development and promotion of regional brands; – participation in joint scientific developments, etc. implementation of cluster policy in the regions will allow to create complex regional products of high quality in accordance with international requirements, rules and standards. this will strengthen the competitive advantages of the ukrainian hospitality industry. 4. conclusions today, in difficult conditions of development of ukrainian hospitality industry, there is a significant decline in its development indicators. the hospitality industry contributes to the production and provision of a significant range of services, creating jobs, generating significant income, developing the region's infrastructure and increasing the level of socio economic development of the whole country. the multi-vector orientation in the content of the definition of "tourism industry " is defined. there are four main approaches of scientists to the content of the concept under study: the hospitality industry meaningfully includes the tourism industry; the tourism industry meaningfully includes the hospitality industry; a single category – "hospitality and tourism industry "; the concepts of "hospitality industry " and "tourism industry " are synonymous. it is proved that the hospitality industry is an independent category of services, although it is interconnected with the tourism industry. three seas economic journal 128 vol. 3 no. 1, 2022 the analysis of the main indicators of development of the studied area was carried out. it was determined that the hospitality industry accumulates significant revenues from the implementation of tourist products and services, is a multiplicative sphere and contributes to the development of related industries. the analysis of the volume of inbound and outbound tourist flows in ukraine during 2020 was conducted. it is proved that the majority of tourists came to ukraine from neighbouring countries. the prospective directions for increasing the competitive advantages of the regional hospitality industry in modern conditions were determined. these areas include associations of hospitality industry entities in the form of clusters, alliances, unions, etc., as well as the introduction of information technology to popularize regional tourism products. references: martiienko, а., & dyshkantiuk, о. (2017). the essence of hospitality as an economic category. economics: the realities of time, 2(30), 72–78. yehupova, і. (2021). hospitality industry: concept, composition and place in the service sector. economy and society, іssue. 29. available at: http://www.investplan.com.ua/?op=1&z=7741&i=7 baula, о., liutak, о., chepurda, l., chepurda, h., & zelinska, о. (2021). financial levers and consequences of implementing global business experience in the domestic tourism market. financial and credit activities: problems of theory and practice, 4(35), 476–485. report of the world tourism and travel council. available at: https://wttc.org/research/economic-impact korzh, n., & onyshchuk, n. (2020). the impact of the covid-19 pandemic on the hotel industry. economic space, 156, 140–143. national tourism organization. available at: http://ntoukraine.org nikolaichuk, о. (2021). trends in the development of the domestic hospitality industry in the context of covid-19. bulletin khnu named after karazin. series “international relations. economy. country studies. tourism”, issue 13. official website of the state statistics service of ukraine. available at: http://ukrstat.gov.ua matviichuk, l., barskyi, yu., lepkyi, m., karpiuk, i., & podoliak, v. (2021). directions of financial support for the development of the tourism industry of ukraine in modern conditions.  financial and credit activities: problems of theory and practice, 4(39), 570–577. holod, a., izhevska, o., & korkuna, o. (2019). cluster model for the development of the regional hospitality industry. eastern europe: economy, business and management, 4(21), 375–380. three seas economic journal 44 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: k.burko@i.ua orcid: https://orcid.org/0000-0002-4321-1292 researcherid: l-5956-2018 doi: https://doi.org/10.30525/2661-5150/2022-2-6 advantages and risks of accounting outsourcing kateryna burko1 abstract. the purpose of the article is to study the advantages and risks of accounting outsourcing and justify the feasibility of its use as a method of modern accounting at enterprises of ukraine. methodology. the theoretical and methodological basis of the study is a systematic approach to the study of practical tools for the implementation and institutional support of the development of accounting outsourcing. in the process of research and systematization of the obtained results, general scientific and special methods wereused: abstract-theoretical; historical; dialectical; induction and deduction, analysis and synthesis; formalization and comparison. results. one of the ways to solve this complex problem is the transfer of accounting of the enterprise to specialized firms on the terms of application of accounting outsourcing. this form of accounting allows enterprises to focus on the most profitable activities and reduce the cost of maintaining their own accounting structure. according to the results of the study of the legislative framework of ukraine, literary sources and practical application, a generalized characteristic of the essence of outsourcing has been formed. the analysis of advantages and risks of alternative accounting options is carried out and factors that encourage enterprises to switch to accounting outsourcing are identified. it is established that accounting services on the terms of outsourcing in ukraine are provided both directly for accounting and financial reporting, and for the performance of works that are not related to the current accounting. the main factors that prompt enterprises to the need to switch to accounting outsourcing are: a high level of loading from the processing of accounting information, a significant amount of overhead costs; frequent changes in legislation; lack of highly qualified accounting staff. customers of protein outsourcing services are: large companies and banks that are able to ensure transparency of information; foreign companies, banks and their branches accustomed to transparency of information; state organizations with legal information; young enterprises for which outsourcing is necessary at the stage of outsourcing; private entrepreneurs and small businesses. it is confirmed that outsourcing, as a form in the organization of accounting at the enterprise, is an object of increased risk. to minimize their risks, the customer may fix in the contract the level of liability of the parties and the conditions for compensation of possible losses. practical implications. the development of the outsourcing services market in ukraine requires a modern accountant not only to know accounting and tax legislation, but also the ability to navigate business processes and own software. modern achievements of automation of accounting processes and information processing affect the form of record keeping and the organization of accounting, allowing you to choose external accounting entities in order to reduce costs. according to the results of the study, the stages of the sequence of the process of outsourcing the accounting process of the customer enterprise are proposed. value/originality. accounting outsourcing, with proper regulatory and high-quality methodological support, has every opportunity to become a promising direction in the organization of accounting work at the enterprise. well-built and implemented outsourcing services should ensure an increase in labor productivity and efficiency of customer information systems, reduce risks during the modernization of existing systems and the introduction of new ones. key words: accounting organization, outsourcing, accounting outsourcing, accounting services, outsourcer, enterprise. jel classification: m40, m41, m49 1. introduction a significant role for making effective management decisions has high-quality information. modern organization of accounting provides the possibility of conducting a comprehensive assessment of the state of affairs of the business entity. a mandatory function of each enterprise is to maintain current accounting and timely and full presentation of reports on the results this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 45 vol. 3 no. 2, 2022 of activities. therefore, the involvement of highly professional specialists for accounting and reporting for the entire life cycle of the enterprise becomes the primary and most responsible task for each manager. due to the high cost of maintenance and retraining of accounting personnel, not all enterprises have the opportunity to constantly provide a staff of qualified accounts. at the same time, excessive savings on salary costs lead to staff turnover and an increase in losses associated with penalties sanctions. one of the ways to solve this complex problem is the transfer of accounting of the enterprise to specialized firms and organizations without enrolling accountants in the state of the enterprise. keeping records on the terms of outsourcing allows enterprises to focus on the most profitable activities and reduce the cost of maintaining their own accounting structure. at the same time, when organizing accounting for this form and withdrawing non-core tasks outside the enterprise, problems arise that require detailed study and reasonable solution. 2. literature review the research of the organization of accounting at enterprises of ukraine, in various spheres of activity, is devoted to a significant number of scientific works. such scientists as disclosed the issues of organization of accounting in the context of the use of accounting outsourcing in their works: s.l. bezruchuk, i.m. burdenko, s.a. garkusha, a.g. zagorodniy, t.i. lysenko, g.i. lyakhovych, g.s. kesarchuk, o.i. mykalo, v.m. momot, a.y. peretyatko, a.m. poplyuk, v.m. rozhelyuk, l.s. skakun, o.o. smolyak, a.j. sultanguzhieva and others. the authors of the publications focus on theoretical aspects and emphasize the importance of practical implementation of accounting outsourcing, offer methods for assessing its effectiveness. however, in ukraine, taking into account the situation related to both the covid-19 pandemic and active hostilities in a large area, a number of problems of accounting outsourcing of both theoretical, organizational and legal nature remain unresolved. therefore, now, the question of studying the advantages and risks of accounting outsourcing, as well as substantiation of the feasibility of its use as a method of modern accounting, remains relevant. 3. forms of accounting organization in ukraine at a modern enterprise of ukraine, in accordance with paragraph 4 of article 8 of the law of ukraine "on accounting and financial reporting in ukraine" the head can organize accounting according to various options: 1. the introduction of the position of an accountant to the state of the enterprise or the creation of an accounting service headed by the chief accountant. 2. use of the services of an accounting specialist registered as an entrepreneur who carries out business activities without creating a legal entity. 3. maintaining on a contractual basis accounting centralized accounting or enterprise, business entity, self-employed person engaged in activities in the field of accounting and/or auditing. 4. independent accounting and reporting directly by the owner or manager of the enterprise (law of ukraine, 1999). enterprises at the legislative level have the right to entrust accounting not only to audit firms, but also to all legal entities and individuals operating in the field of accounting. this makes it possible to talk about the free market of accounting services in ukraine. in our country, mainly, use the services of full-time accountants. however, there is a need for professional performance of certain work and growing demand for the services of specialized accountants to increase the productivity and competitiveness of enterprises. therefore, in the process of managing modern business in ukraine, outsourcing as a form of organization of accounting work is legally allowed and used. 4. the essence and importance of accounting outsourcing high rates of technology development, the process of globalization, economic instability and the need to optimize resources lead to an increase in the popularity of outsourcing services in the world (inspection of the outsourcing services market, 2019). in international practice, outsourcing of such service areas of business as accounting, it and lawyers has long been commonplace. now the question arises about the choice of those who can offer high quality services (the accountancy is safe, 2018). with the help of modern technologies and the internet in ukraine, it is possible to receive outsourcing services while in any locality or abroad. contactless data transmission has an undeniable advantage, especially in the face of the threat of the spread of the epidemic, pandemic, and the need for self-isolation of the employee and in the event of a threat of armed aggression, a technogenic or natural emergency. according to the results of the study of the legislative framework of ukraine and literary sources, we have formed a generalized characteristic of the essence of outsourcing (figure 1). accounting outsourcing is a way to ensure the activities of an enterprise with the transfer of the accounting function to a specialized company on a contractual basis. it includes services for maintaining and restoring accounting by specialists of a specialized third-party organization. three seas economic journal 46 vol. 3 no. 2, 2022 l.s. skakun (2009) interprets the term "accounting outsourcing" taking into account the economic and legal and accounting (a form of accounting organization, which consists in the transfer of individual accounting functions or the entire accounting process to external entities in order to improve the quality and efficiency of their implementation) approaches. according to the author, this approach contributes to the development of practical recommendations for improving regulatory regulation, as well as organizational and methodological principles of accounting in the conditions of outsourcing. 5. factors of development of accounting outsourcing accounting outsourcing, in ukraine, is developing at an accelerated pace. the list of services provided to customer enterprises has significantly expanded. leading specialists-accountants with a high level of professionalism and business responsibility help: to open an enterprise; organize accounting in accordance with the current legislation; restore accounting and tax accounting; prepare financial and internal statements; resolve legal issues; timely provide information to management about the cost, structure of income and expenses, the size of receivables and payables, etc. (figure 2). the main factors prompting enterprises to the need to switch to accounting outsourcing are: a high level of loading from the processing of accounting information, a significant amount of overhead costs; frequent changes in legislation; lack of highly qualified accounting staff. enterprises are forced to make changes in the process of accounting organization in connection with the transition from manual to automated and "cloud" accounting. in conditions when economic activity requires the constant presence of full-time accountants, enterprises cannot use remote accounting services. however, for a number of enterprises, the use of accounting outsourcing becomes a necessity. this is a large number of small and medium-sized enterprises, private entrepreneurs, branches of representative offices and large enterprises that are able to ensure transparency of doing business (figure 3). transfer by one company based on a contract of certain business processes or non-core functions for servicing other companies specializing in the relevant industry terms of application allow the company to focus its efforts on solving the main problems, and delegate related problems to firms for which obtaining such powers is a key activity species economic essence motives of use production (main and auxiliary); business processes (accounting and financial, intellectual resource management, personnel management, leasing and logistics operations); it services; legal services, etc. purpose building a system of relations between business entities that transfer and assume the implementation of certain activities based on concluded agreements the basic principle of outsourcing: i leave behind my company only what i can do better than others can. i give external companies what they can do better than me. o u t so u r c in g business expansion; concentration on the main business; improving business profitability; improved management; improving quality; introduction of advanced technologies; the use of other people's experience; improving the quality of work; cost reduction figure 1. generalized characteristic of outsourcing source: formed by the author on the basis (outsourcing and outstaffing , 2005, kesarchuk, 2014) three seas economic journal 47 vol. 3 no. 2, 2022 accounting and preparation of accounting statements in accordance with the legislation of ukraine additional services that are not re lated to current accounting • assistance in the preparation of the accounting policy of the enterprise; • accounting of banking and cash transactions; • accounting of commodity and material values; accounting for non-current assets; accounting of settlement operations; • calculation and accounting of wages; • calculation and accounting of the necessary taxes and fees when paying wages; • accounting of income and expenses of the enterprise for the reporting period; • preparation of quarterly and annual reports on the basis of the general ledger and accounting registers. full or partial restoration of accounting restoration of synthetic, analytical and tax registers, financial and tax reporting of the enterprise on the basis of fully or partially provided primary documents, the loss of which is associated with the relocation or change of accountants, etc. • consulting services for conducting business activities of the enterprise; printing of payment orders; • registration in funds; • drafting or examination of contracts; • drawing up an order on the accounting policy of the enterprise; • protection of client's interests during tax audits and inspections of other regulatory bodies related to accounting outsourcing of accounting services figure 2. accounting outsourcing services market source: formed by the author on the basis (voskresenska, 2018; poplyujko, 2011) large companies and banks that are able to ensure transparency of information foreign companies, banks and their branches accustomed to transparency of information state organizations with legal information young enterprises for which outsourcing is necessary at the stage of outsourcing young enterprises for which outsourcing is necessary at the stage of outsourcing customers of accounting outsourcing services figure 3. customers of accounting outsourcing services source: formed according to the results of the study three seas economic journal 48 vol. 3 no. 2, 2022 6. risks of accounting outsourcing outsourcing, as a new form in the organization of accounting in the enterprise, is an object of increased risk. when deciding in favor of his own full-time accountant (accounting) or external accounting service (accounting outsourcing), the head of the enterprise must carefully analyze the advantages and risks of alternative accounting options in his enterprise (table 1). having assessed all the advantages and risks, the company faces the problem of choosing an outsourcing company. there are two options for accounting outsourcing. standard – accounting and reporting based on the primary documents provided by the client. extended – full support of the client: registration of primary documents, preparation and submission of reports, accounting and tax accounting, execution of internal documents (momot & smoliak, 2014). preferring to conduct accounting external service on one of the options, the company 's management in the modern outsourcing market chooses outsourcers who are the most experienced and meet the requirements of the customer (table 2). however, it is fair to assess the quality of the accounting work of the customer company will be able only after a certain period of time. experts of the leading countries of the world note that the use of outsourcing operations makes it possible to significantly reduce costs in the process of economic activity and thereby increase profitability. however, in the domestic market, outsourcing activities are hampered by the ignorance of managers in the transition to a new way of doing business (using outsourcing) and assessing its effectiveness (didukh, 2012). one of the obstacles to the development of outsourcing is the lack of financial models for calculating the effectiveness of its implementation. to minimize their risks, the customer may fix in the contract the level of liability of the parties and the conditions for compensation of possible losses. subject to the conclusion of an outsourcing contract, the entities are the customer (an enterprise that delegates certain business processes) and the executor (outsourcer). in the presence of a properly executed outsourcing contract, the customer company can receive significant benefits from cooperation with an outsourcer accounting service provider. therefore, when concluding a contract, it must be clearly stated: the subject of the contract; cost of services; payment procedure; rights and obligations of the parties; responsibility of the parties; the term of the contract; dispute settlement procedure. it is also necessary to indicate the list of services and other actions table 1 advantages and risks of accounting outsourcing own accounting service accounting outsourcing possible benefits risks of application possible benefits risks of application a clear definition of the responsibilities of each of the accounting staff lack of control over the work of an accountant saving time and money of the enterprise on the established staff of accountants limitations of management function the number of employees is determined by the head of the enterprise a waste of time and money to find an accountant cooperation with professionals and adopting their experience the possibility of increasing costs when transferring a significant number of functions and processes disposal of working hours of subordinates payment of holidays and social security of the accountant record keeping by highly qualified specialists the danger of excessive concentration of such technological processes in one hand restriction of the movement of financial, personnel and other information within the enterprise the need to purchase an accounting program and independently update it continuous analysis of legislative changes and their timely application possible non-compliance with contractual relations if you have the appropriate knowledge from full-time accounting staff, it is possible to reduce the cost of remuneration to a lawyer and a cfo providing the accountant with special literature and stationery non-disclosure of information in accordance with the agreement on the provision of accounting outsourcing services the threat of bankruptcy of an outsourcing company payment for professional improvement the danger of information leakage and loss of control over their own resources the need to maintain the interest of the accountant in the work lack of necessary legislative framework for outsourcing regulation source: formed by the author on the basis of (kesarchuk, 2014; voskresenska, 2018; poplyujko, 2011) three seas economic journal 49 vol. 3 no. 2, 2022 of the executor (for example, providing advice on accounting and taxation); list of reporting forms and the procedure for their preparation and submission. unlike a full-time accountant who does not bear full financial responsibility to the employer for losses that will cause improper performance of his duties, the outsourcer is fully responsible for the quality of his work, and the size and procedure for applying such liability in the form of a penalty, the fine is indicated in the outsourcing contract. 7. evaluation of outsourcing efficiency in the conditions of accounting based on outsourcing, a significant number of problems are solved using modern information systems and technologies in the economic activities of enterprises. for their effective use, technical and technological infrastructure, as well as the skills of employees at both the customer and the outsourcer, must be taken into account. modern information and computer systems and technologies allow you to effectively cooperate with the outsourcer and the customer company on different models. it is important to choose the appropriate software and develop measures to protect accounting information. according to the results of the study, the process of outsourcing the accounting of the customer enterprise can be divided into a number of main stages. (figure 4). in the economic literature, a proposal is made on the need to evaluate the effectiveness of outsourcing by determining the generalized indicators of the effectiveness of the production and economic activity of the enterprise before and after its implementation (didukh, 2012). according to the research of scientists, in general, outsourcing for the enterprise is economically beneficial if the conditions are met: (zfp1 + za) < of the ffp0; (1) eup1 >eup0, (2) table 2 criteria for evaluating the outsourcer selection criteria outsourcer rating opportunity level experience in the market, number of customers, feedback from business partners reliability are the needs of all his clients satisfied? flexibility how quickly and easily changes the methods of work in accordance with the requirements and needs of the customer professional potential the presence and level of skills, the need for which may arise in the future potential savings has the ability to offer better terms compared to other offers guarantee of quality of services availability and level of service compared to other offers confidentiality compliance does it guarantee the confidentiality of the information received from the customer guarantee of liability does it guarantee financial liability for possible damage caused by poor-quality provision of accounting services source: formed by the author on the basis of (momot & smoliak, 2014) where eup0 and eup1 – efficiency of enterprise management in accordance with and after outsourcing; zfp0 and zfp1 – the total costs of the enterprise to perform functions in accordance with the implementation of outsourcing; performed on its own, greater than the total current costs and losses in the purchase of such a service from an outsourcer, the transition to outsourcing is justified from an economic point of view (ligonenko & frolova, 2005). the effectiveness of accounting outsourcing should be considered in two aspects. the first is related to economic efficiency (saving the internal resources of the enterprise by outsourcing business processes). the second is related to the efficiency of the outsourcer and the uninterrupted operation of the enterprise, which used outsourcing services. to assess the effectiveness of servicing the enterprise, the outsourcer is proposed to use a methodology that takes into account such indicators as: timeliness of work and provision of services, in accordance with the terms of the outsourcing agreement; completeness of work and provision of services in accordance with the terms of the outsourcing agreement (lyahovich, 2018). at the stage of making a decision on the transition to outsourcing in accounting, management personnel are available only the data available at the time of such a decision. over time, the effect of outsourcing may change along with changes in inflation, wage level, etc. (lyahovich, 2018). an important role in the effective implementation of outsourcing as a form of accounting organization is the timely and prompt provision of information on the costs incurred and revenues received from outsourcing services. to assess the feasibility of choosing outsourcing as a form of accounting organization, it is necessary to analyze the effectiveness of outsourcing services, using various methods that require taking into account the costs incurred during the execution of the contract for accounting outsourcing. the practice of reflecting such costs in accounting is not compli cated, but requires more attention for proper three seas economic journal 50 vol. 3 no. 2, 2022 information support of the process of managing the economic activities of the enterprise. 7. conclusions in modern conditions, in order to benefit business and increase its value, the profession of an accountant needs to change. the development of the outsourcing services market in ukraine requires a modern accountant to know accounting, tax legislation and be able to navigate business processes and own software. automation of accounting processes and information processing allow you to choose external accounting entities in order to reduce costs. the division of labor under conditions of outsourcing and professionalization of accounting work generate competition, which contributes to improving the quality of accounting work. an outsourcer accountant is consciously and voluntarily ready to learn and improve his professional skills. his income depends on his reputation, experience, recommendations, relationship with the client. such a specialist will be able to do more for business and much cheaper than maintaining a staff of accountants. accounting outsourcing, with proper regulatory and high-quality methodological support, has every opportunity to become a promising direction in the organization of accounting work at the enterprise. well-built and implemented outsourcing services should ensure an increase in labor productivity and efficiency of customer information systems; reduce risks during the modernization of existing systems and the introduction of new ones. and also to help minimize operating costs, get professional information support for solving business problems, ensure the protection and management of the enterprise. however, despite the significant advantages of using outsourcing services, the choice of the method of organization of accounting at the enterprise remains the prerogative of managers and owners of the entity. the decision to outsource accounting should be made on the basis of a clear and in-depth analysis of risks and an assessment of the results of its application for the long term. planning by the customer company to outsource accounting selection of an outsourcer (collection and analysis of information about activities: what services provide; reputation in the market; the level of professional training of employees; the cost of work; the availability of a sufficient number of specialists to outsource accounting functions; openness for cooperation with the customer company, etc.) definition of the purpose of outsourcing accounting functions analysis of the advantages and risks of alternative accounting options at your enterprise step-by-step control by the customer company of the performance of accounting functions by the outsourcer determination of risks of outsourcing of accounting functions, level of liability of parties and conditions for compensation of possible losses transfer of accounting functions by the customer company to outsourcing evaluation of the effectiveness of the transfer of accounting functions to outsourcing, in order to make a decision on the prospect of further application of this form of organization of the accounting process at the enterprise figure 4. stages of outsourcing accounting source: formed according to the results of the study references: autsorsing i autstaffing – kak pravilno primenyat (2005) [outsourcing and outstaffing – how to apply it correctly] (n.d.). available at: https://sovetnik.zp.ua/ru/autsorsing-i-autstaffing-kak-pravilno-primenyat/ three seas economic journal 51 vol. 3 no. 2, 2022 didukh, o. v. (2012). analiz efektyvnosti vykorystannja autsorsynghu u ghospodarsjkij dijaljnosti pidpryjemstv [analysis of efficiency of using outsourcing in the economic activity of enterprises]. visnyk nacionaljnogho universytetu "ljvivsjka politekhnika" – bulletin of the national university "lviv polytechnic", 739, 82–87. kesarchuk, h. s. (2014). bukhhalterskyi autsorsynh: poniattia, vydy, perevahy ta nedoliky [accounting outsourcing: concepts, types, benefits and disadvantages]. naukovyi visnyk uzhhorodskoho universytetu. ser.: ekonomika, 1, 201–204. ligonenko, l. o., & frolova, y. y. (2005). autsorsynh yak instrument optimizing and improving business performance]. aktualni problemi ekonomiki – actual problems of the economy, 6(48), 115–125. lyahovich, g. i. (2018). rozrahunok efektivnosti buhgalterskogo autsorsingu [rozrahunok of accounting and accounting outsourcing]. problemi teoriyi ta metodologiyi buhgalterskogo obliku, kontrolyu i analizu: mizhnarodnij zbirnik nauk. prac – problems of theory and methodology of accounting , control and analysis, 1(39), 83–87. momot, v. m., & smoliak, o. o. (2014). bukhhalterskyi autsorsynh yak metod antykryzovoho upravlinnia [accounting outsourcing as a method of crisis management]. naukovyi visnyk khersonskoho derzhavnoho universytetu. seriia: ekonomichni nauky, 2(9-1), 196–199. oglyad rinku autsorsingovih poslug. tempi rozvitku i prognoz na 2019. [inspection of the outsourcing services market. tempi development & forecast for 2019]. available at: https://eba.com.ua/oglyad-rynku-autsorsyngovyh-poslug-tempyrozvytku-i-prognoz-na-2019/ poplyujko, a. m. (2011). buhgalterskij autsorsing: suchasnij stan ta perspektivi rozvitku v ukrayini [accounting outsourcing: an up-to-date standard and perspective development in ukraine]. finansi, oblik i audit – finance, accounting and audit, 18, 335–340. available at: http://nbuv.gov.ua/ujrn/foa_2011_18_43 pro bukhhaltersky ioblik i finansovu zvitnist: zakon ukrainy [a law of ukraine is on a record-keeping and financial reporting in ukraine] № 966-xiv vid 16.07.1999. available at: http://zakon 5.rada.gov.ua/laws/ show/996-14 skakun, l. s. (2009). ocinka efektivnosti buhgalterskogo autsorsingu: sistematizaciya ta analiz pidhodiv [evaluation of the effectiveness of accounting outsourcing: systematization and analysis pidhodіv]. problemi teoriyi ta metodologiyi buhgalterskogo obliku, kontrolyu i analizu: mizhnarodnij zbirnik naukovih prac– problems of theory and methodology of accounting , control and analysis: the international zbirnik of science, 3(15), 267–277. viddam buhgalteriyu v horoshi ruki abo pravda pro buhgalterskij autsorsing [the accountancy is in good hands, but the truth is about accounting outsourcing]. available at: https://www.volyn24.com/news/103323-viddambuhgalteriyu-v-horoshi-ruky-abo-pravda-pro-buhgalterskyj-autsorsyng voskresenska, t. i. (2018). autsorsing buhgalterskogo obliku: sutnist ta osoblivosti poshirennya v ukrayini. [outsourcing of the accounting region: daily and special features in ukraine]. biznes inform – business inform, 1, 254–259. available at: http://nbuv.gov.ua/ujrn/binf_2018_1_38 three seas economic journal 98 vol. 3 no. 1, 2022 corresponding author: 1 lutsk national technical university, ukraine e-mail: olenalutak@gmail.com orcid: https://orcid.org/0000-0002-4293-0586 researcherid: y-2638-2018 2 lutsk national technical university, ukraine e-mail: o.baula@lntu.edu.ua orcid: https://orcid.org/0000-0003-2609-0211 researcherid: u-6191-2017 doi: https://doi.org/10.30525/2661-5150/2022-1-13 conceptual imperatives for optimizing labor migration flows from ukraine оlena liutak1, оlena baula2 abstract. the purpose of the article is to substantiate the impact of labor migration of citizens abroad on the international competitiveness of the country, as well as to outline the conceptual imperatives of optimizing the flows of labor migration from ukraine to preserve the human capital of the country. methodology. during the study, the dialectical method of scientific knowledge was used, as well as methods of scientific abstraction, generalization of analysis and synthesis, deduction and induction, the method of statistical and comparative analysis, the graphical method. results. to identify the reasons for the threatening scale of ukrainian labor emigration, the country's ranking positions in international rankings of economic freedom, ease of doing business, safest countries to live in, global competitiveness, investment attractiveness index and the global innovation index were studied. competitive advantages and threats to the ukrainian labor market are described. practical implications. it is proposed to reduce the excessive volume of labor migration from the country through the use of innovation potential (given the obvious competitive advantages of ukraine in the innovation sphere, according to the authors, they have the potential for optimal adjustment of labor migration from ukraine). a conceptual scheme for the optimization of labor migration flows from ukraine has been developed. it is based on the assertion that human capacity building in the field of innovation is possible through international innovative cooperation in the system of higher education; one of the main opportunities for rapid innovative development of ukraine is the participation in international innovation clusters (the application of cluster policy will contribute to the competitiveness of economic entities due to the potential of effective interaction between its participants due to their close geographical location, provides increased access to innovation, technology and highly skilled personnel, as well as reduced transaction costs; clustering is an effective mechanism for attracting foreign direct investment; the integration of national clusters into global value chains can significantly increase the level of the national technological base, increase the speed and quality of economic growth by increasing the international competitiveness of enterprises in the cluster. value/originality. the scientific novelty of the results obtained consists in deepening the theoretical and methodological foundations and developing practical approaches to the optimization of labor migration flows from ukraine to ensure an adequate level of international competitiveness of the country. in particular, a conceptual scheme for the optimization of ukraine's participation in migration processes has been substantiated and the steps of ukraine's innovation policy for the preservation of the country's human capital have been outlined. key words: labour migration, innovation activity, international innovation clusters, international competitiveness. jel classification: f22, o31, o32, o33 1. introduction the concept of international competitiveness has become even more important in a global economy whose long-term capabilities are determined by a multitude of endogenous and exogenous factors: human and natural resources, infrastructure, governance, capital, government intervention, technological capabilities of companies, etc. the efficient allocation of these resources leads to different levels of productivity as well as the ability to generate, adapt and diffuse innovation. modern global socio-economic transformations contribute to the fact that the quality of a country 's this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 99 vol. 3 no. 1, 2022 participation in international migration processes is an important component of its competitiveness. highly developed countries of the world act as centers of attraction for large numbers of migrants, who thus seek better conditions for self-realization. at the same time, the consumer attitude of migrants toward their host countries is increasing, when migrants, regardless of their level of professional training, claim a significant improvement in their standard of living only because they somehow reside or are in one of the economically developed countries. the most massive and significant migration flow for ukraine is labor migration of citizens abroad, since highly qualified specialists and young people account for the lion's share of labor emigrants. since 2014 there has been an increase in migration processes due to the combined forces operation in eastern ukraine. largescale external labor migration in the country could be clearly observed in early 2020, when as a result of the covid-19 pandemic and the announcement of quarantine, thousands of ukrainians returned en masse from abroad to their homeland, and after the quarantine was loosened, they also went abroad en masse in search of work. the main purpose of the study is to substantiate the impact of labor migration of citizens abroad on the international competitiveness of the country, as well as to determine the conceptual imperatives of optimizing the flows of labor migration from ukraine to preserve the human capital of the country. the scientific novelty of the results obtained consists in deepening the theoretical and methodological foundations and developing practical approaches to the optimization of labor migration flows from ukraine to ensure an adequate level of international competitiveness of the country. in particular, a conceptual scheme for the optimization of ukraine's participation in migration processes has been substantiated and the steps of ukraine's innovation policy for the preservation of the country 's human capital have been outlined. during the study, the dialectical method of scientific knowledge was used, as well as methods of scientific abstraction, generalization of analysis and synthesis, deduction and induction, the method of statistical and comparative analysis, the graphical method. 2. ukraine in international ratings of economic development the study of the conceptual features of labour migration flows from ukraine should begin with an assessment of the rating places of ukraine in the international ratings of economic freedom (index of economic freedom), ease of doing business (doing business/ease of doing business), the safest countries to live in (index the global peace index), global competitiveness (the global competitiveness index), investment attractiveness index, global innovation index (gii) (table 1). the assessment of ukraine's place in international ratings reflecting the quality of life and level of economic development allows us to draw a number of conclusions: – the level of economic freedom is increasing, but it is assessed at a mediocre level; – the ease of doing business has improved significantly over the period under study, but its level is far from that of developed countries; – according to the international index of the safest countries to live in 2020, ukraine is in 148th place out of 163 positions (this is one of the worst indicators on a global scale); table 1 ukraine in international ratings reflecting the quality of life and level of economic development year rating of economic freedom ("ukraine – index of economic freedom", 2021) ease of doing business rating ("the doing business report", 2020) international index of the safest countries to live in (global peace index) ("ukraine – global peace index", 2020) global competitiveness index ("ukraine's position in the ranking", 2017) investment attractiveness index of ukraine, 2020 global innovation index, 2020 2010 46,4 147 97 82 3,28 61 2011 45,8 145 69 89 2,56 60 2012 46,1 152 71 82 2,12 63 2013 46,3 137 111 73 1,81 71 2014 49,3 112 141 84 2,50 63 2015 46,9 96 150 77 2,57 64 2016 46,8 83 156 79 2,85 56 2017 48,1 80 154 85 3,03 50 2018 51,9 76 152 81 3,10 43 2019 52,3 71 149 83 2,90 47 2020 54,9 64 148 85 2,46 45 three seas economic journal 100 vol. 3 no. 1, 2022 – the ranking positions of ukraine on the global competitiveness index for 2010–2020 actually have not changed, and as of 2020 it ranks 85th among 140 countries; – the index of investment attractiveness of ukraine is in the negative plane (as of the end of 2020, 78% of ceos of member companies of the european business association consider the current investment climate unfavorable, and this indicator has increased significantly since the beginning of the year – by 16%. another 16% of respondents consider the current investment climate as neutral. only 6% of respondents consider the investment climate favorable, up from 4% in the first half of 2020); – the values of the global innovation index are encouraging: as of 2020, it ranks 45th out of 131. ukraine ranks higher on a number of individual subindices in 2020 – higher education development 32nd place, knowledge creation and online creativity 39th place, research and development 44th place, trade, competition and market size 45th place. in addition to these indicators, ukraine's positions on the export of information and communication technology services (11th place), higher education coverage (14th place), gross domestic research and development costs financed abroad (15th place), patent applications, intangible assets and new knowledge creation (17th place), computer software costs, mobile application creation (19th place), ease of obtaining a loan (29th place), competition and market scale (42nd place), ease of starting a business (48th place), electricity output (55th place) ("global innovation index", 2020). thus, ukraine's potential for international competitiveness lies in the resource component of innovative development, the system of human capital and science for the development of technology and knowledge economy. 3. migration flows from ukraine global socio-economic transformations themselves, as well as their deepening, have led to the fact that labor migration has become an integral characteristic of the modern world economy. it is predominant and widespread in the overall structure of migrants from ukraine. figure 1 shows the average indicators of the structure of migrants from ukraine by stay abroad in 2017–2019. as can be seen, more than 80% of domestic emigrants are workers seeking earnings abroad. historically, ukraine has been a donor country in global labor migration flows. as for the geographic structure of labor migration, since 2001 there has been an increase in the number of labor migrants from ukraine to eu countries (figure 2). the main sectors of employment for ukrainian workers are construction, restaurant and hotel business, agriculture, and work at home (figure 3). according to iom estimates in 2020 ukrainian migrants in the long-term labor migration prevail in the 30-44 age group, and ukrainian migrants in the 45-65 age category. in the 18-29 age group the number of men / women is more balanced (17% / 22%). overall, the majority of short-term and early labor migrants are aged 18-44 ("labour migration: how many ukrainians", 2021). the status of ukrainian labor migrants abroad is not always legal (figure 4). 3. causes and consequences of labor migration of ukrainians external labor migration is not a new phenomenon for ukraine. since the declaration of independence, ukrainians have been attracted to work abroad. there are logical explanations for these processes. first, the primary reason for ukrainian labor migration is the fact that ukraine is surrounded by countries with a high level of wealth and wages. this can be demonstrated by comparing the minimum wage in ukraine and the main countries of destination for ukrainian labor employment 83,40% study 6,30% forced migration 4,20% other 6,10% figure 1. the structure of migration flows of ukrainians for the purpose of emigration, 2017–2020 source: created by ("migration in ukraine", 2019; "labour migration: how many ukrainians", 2021) 27% 10% 13% 15% 59% 86% 83% 80% 14% 4% 4% 5% till 2000 2001–2009 2010–2014 2015–2020 other countries eu countries cis countries figure 2. geographic structure of long-term labor emigration of ukrainians source: created by ("labour migration: how many ukrainians", 2021) three seas economic journal 101 vol. 3 no. 1, 2022 migrants. table 2 shows the minimum wage and expenditures on basic foodstuffs in ukraine and the main countries of attraction of internal labor migrants at the beginning of 2020. in addition to the low minimum wage, the average salary in ukraine is also one of the lowest in europe (in december 2020 it was uah 14,179, or approximately 480 us dollars) ("the average salary in ukraine", 2021). among the reasons for the high rates of labor migration of ukrainians are the reduction and aging of the population in the eu countries, the presence of hidden unemployment in ukraine, the problems of employment of young people after education, the lack of specific measures aimed at the repatriation of 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 45% 1% 17% 5% 8% 9% 3% 2% 10% 3% 33% 9% 21% 10% 1% 6% 6% 11% men women figure 3. sectoral and gender employment of ukrainian emigrants, 2020 source: created by ("labour migration: how many ukrainians", 2021) uncertain status 4,40% without official status 16,70% tourist visa 3,70% temporary registration 23,70% work permission 12,80% work and residence permits 38,70% figure 4. status of ukrainian labor migrants abroad in 2015–2019 source: created by ("labour migration: how many ukrainians", 2021; "world migration report", 2020) table 2 minimum wages and expenses for basic foodstuffs in ukraine and the countries where most ukrainian labor migrants work, at the beginning of 2020 country (% of labour migrants from ukraine) minimum wage as of the beginning of 2020, usd us (after taxes) % change in the minimum wage compared to 2019 expenses for basic foodstuffs as of the beginning of 2020, % ratio to the minimum wage ukraine 157 +13,2 42,1 poland (38.9) 485 +14,9 15,5 rf (26.3) 166 +6,5 44,8 italy (11.3) 1320* +3,2 14,8 czech republic (9,4) 525 +7,6 18,3 portugal (1,6) 626 +5,8 15,5 hungary (1,3) 357 +8,1 21,8 spain (0.9) 1163 9,2 germany (0.8) 1358 +1,9 9,3 * there is no minimum wage in italy. the average po for low-skilled labour at the beginning of 2020 was at the level of 1,320 us dollars source: created by ("minimum wage in the world and ukraine", 2020) three seas economic journal 102 vol. 3 no. 1, 2022 ukrainians in ukraine and, instead, the existence of such measures in foreign countries, political instability in ukraine, and hybrid war with the russian federation. the signing of the association agreement between ukraine and the european union also contributes to an increase in the number of migrant workers, in particular by simplifying visa regulations and facilitating mobility. labor migration of citizens abroad has a multifaceted impact on the country 's economy: – reduces tensions in the labor market, contributes to the welfare of many families, is a source of foreign exchange earnings and intangible transfer of new knowledge and experience, which can contribute to the development of the state, and the national currency is stabilized; – causes a shortage of workers in some industries and regions, negatively affects family relationships, child rearing, fertility; migrants' earnings, aimed at consumption, provoke higher prices, inflation, increased imports. so, if one focuses only on economic imperatives, then, on the one hand, labor migration provides foreign exchange earnings from abroad, but on the other hand, there is a loss of created value added in the country. the transfers of migrant workers do reduce the level of poverty in the country, increase the current consumption of relatives at home, etc. according to the nbu, workers transferred $12.1 billion to ukraine during 2020. this is $0.2 billion more than in 2019 (and that does not include transfers through unofficial channels) (" workers remit more and more money to ukraine," 2021). these figures significantly exceed the attracted foreign investments in the ukrainian economy. thus, during 2015 ukraine received $4.3 billion of direct investment, in 2016 – $4.4 billion of direct investment. in 2017 – 2.5 billion usd. in 2018 – $2.9 billion. in 2019 – $2.5 billion ("foreign direct investment in ukraine: dynamics of 2015–2019", 2020). at the same time expert estimates show that if the current trend of labor migration of ukrainians abroad continues, and given the demographic situation in ukraine, we can expect a complete collapse of the social security system in 2025. there will be three pensioners per one working ukrainian ("return of labor migrants: what the state is doing wrong", 2019). therefore, if the choice is between currency transfers of workers and creating appropriate conditions for their return home, the second option is obviously the right one. cash receipts provide a short-term effect that cannot ensure sustainable economic development of the country, while creating conditions for the return of migrant workers will help stabilize the labor market, create added value on a much larger scale and, as a result, increase the competitiveness, investment attractiveness and innovativeness of the national economy and achieve indicators of the average european level of well-being of citizens. currently, according to experts, a new wave of labor migration in ukraine is gaining threatening proportions, which involves well-educated young people who see migration not as an economic process, but as a way of life (sadova, 2019). 3. conceptual imperatives for optimizing labor migration flows from ukraine given ukraine's obvious competitive advantages in innovation, in our view they have the potential for optimal adjustment of labor migration from ukraine. summarizing the causes and preconditions of migration processes in ukraine, let us form a conceptual scheme of optimization of labor migration flows from ukraine (table 3). 4. conclusions the vast majority of economically active and competitive population of ukraine determines their motives for going abroad for the purpose of employment, based not only on the state of personal life and well-being, but also taking into account the low level of economic development of the country. this motive is extremely dangerous in connection with the desire to implement an individual strategy in the global labor market, as it threatens the failure to return qualified emigrants to their home country. the loss of such categories of workers will have a negative impact on the age and educational and qualification characteristics of the labor force and will hinder economic growth. therefore, the main task of state migration policy of our state should be the protection of weaknesses and threats with the use of strengths and opportunities to overcome the negative effects of modern migration processes. the negative aspects associated with excessive labor migration from the country can only be leveled out by the use of innovative potential. compared to national economies that do not pay attention to innovation, innovatively developed countries show higher rates of economic growth in the long-term trend and no outflow of human capital. this is especially evident in those countries that are building their own national innovation system based on a combination of stimulation of state innovation policy, science, education, the business community and participation of the country in international innovation clusters to create and implement innovation as a priority of economic development. building human capacity for innovation is possible through international innovative cooperation in higher education, which forms a platform for building relationships between people, social and cultural exchange, and strengthening business ties with other countries. three seas economic journal 103 vol. 3 no. 1, 2022 table 3 conceptual scheme of optimization of labor migration flows from ukraine factors influencing labor migration flows on a global scale globalization and openness of the national economy, increased labor mobility neo-protectionism structural and innovative shifts in the global economy the transition of countries to "industry 4.0" due to the intensification of labor migration and the growing role of international organizations as coordinators of international economic relations: such traditional 20th century professions as car driver, letter carrier, tour guide, courier, construction worker, traditional engineering professions, as well as professions requiring a lot of labor are gradually "dying out" on the world labor market regulatory influence of international organizations that determine the standard "rules of the game" for countries of the world in the national and global labor market strategic priorities for streamlining labor migration from ukraine solving problems related to employment of the most "vulnerable" segments of the labor market – young people and people of pre-retirement and retirement age, who are willing and able to work the spread of dual education; the introduction of special government programs to provide "first jobs," grant support for "freelancers" and the self-employed; training and retraining of workers (based on a system of "lifelong learning" (lll)); training the workforce for the service sector on the basis of skills in it-technology; institutional support for the development of the creative economy (culture, exhibitions, show business, art projects, etc.) with appropriate preferential taxation of "freelancers"; spread of the practice of tax benefits on the profits of entrepreneurs who create new jobs and hire young people. addressing structural unemployment associated with the transition to industry 4.0 reorientation of the system of training specialists to fundamentally new specialties: engineers in robotics, operators of robotic machines and equipment, operators of unmanned vehicles; training specialists in interdisciplinary specialties (for example, specialists serving the "health economy "); development of bioengineering, biotechnology, etc. reforming the social protection system (including the system of pensions, social assistance and social benefits) by introducing a system of "unconditional basic income" payments. g en er al p ri or it ie s of la bo ur m ar ke t r ef or m in u kr ai ne protection of the rights of working people countering all forms of discrimination and the "shadowing" of recruitment and income-generating processes in the labor market preventing the exploitation of child labor implementation of international standards for the protection of workers' rights in ukraine; raising the level of wages to eu standards; prevention of discrimination and "shadowing" of the labor market legalization of income of employers and employees protection of rights and freedoms, observance of social guarantees for all workers working on the ukrainian market, as well as for ukrainian migrant workers provision of assistance, settlement, employment, access to medical care, education and social services for internally displaced persons health care and pension reform modernization of facilities in the real sector of the economy and implementation of technological solutions in the social sphere ukraine's strategic priorities for innovation policy to optimize labor migration flows – building human capacity for innovation by creating an effective system of continuing education and encouraging work in those sectors of the economy that determine the country 's innovative development. – technological modernization of key sectors of the economy and increasing the level of business perception of innovation – the consideration of innovation as an integral element of company development. – implementation of innovations in all spheres of public administration and the formation of a balanced research/development sector by the state, favorable conditions for the use of innovation in all areas of the economy. – increase of openness of the national innovation system, the degree of integration of the country into global innovation processes, development of interstate innovation clusters. one of the main opportunities for rapid innovative development of ukraine is participation in international innovation clusters. the application of cluster policy will contribute to the competitiveness of economic entities through the implementation of the potential of effective interaction between its participants due to their close geographical location, increasing access to innovation, technology and highly skilled personnel, as well as reducing transaction costs. clustering is also an effective mechanism for attracting foreign direct investment. the inclusion of national clusters in global value chains can significantly increase the level of national technological base; increase the speed and quality of economic growth by improving the international competitiveness of enterprises included in the cluster. further research will be aimed at finding the most rational ways to ensure the competitiveness of ukraine in the context of the identified innovative advantages. three seas economic journal 104 vol. 3 no. 1, 2022 references: foreign direct investment in ukraine: the dynamics of 2015–2019 (2020). dnipropetrovsk investment agency. available at: http://dia.dp.gov.ua/pryami-inozemni-investici%d1%97-v-ukra%d1%97ni-dinamika-20152019-rokiv/ global innovation index. who will finance innovation? (2020). wipo. available at: https://www.wipo.int/ publications/en/details.jsp?id=247 investment attractiveness index of ukraine (2020). eba. available at: https://eba.com.ua/wp-content/ uploads/2020/12/eba-investindex_2h-2020.pdf labour migration: how many ukrainians worked abroad in 2019–2021 (2021). available at: https://www.slovoidilo.ua/2021/03/18/infografika/suspilstvo/tr udova-mihracziya-skilky ukray inczivpracyuvaly-kordonom-2019-2021-rokax migration in ukraine. facts and figures (2019). international organization for migration. available at: https://iom.org.ua/sites/default/files/iom-ukraine_facts-ukr_2019.pdf minimum wage in the world and ukraine (2020). finance.ua. available at: https://news.finance.ua/ua/news/-/ 463322/u-yakyh-krayinah-minimalka-zrosla-na-25-i-bilshe-doslidzhennya return of migrant workers: what the state is doing wrong (2019). available at: https://www.slovoidilo.ua/ 2019/10/18/kolonka/aleksandr-radchuk/suspilstvo/povernennya-trudovyx-mihrantiv-ne-tak-robyt-derzhava sadova, u. ya. (ed.) (2019). ukrainian migration in the context of global and national challenges of the xxi century: scientific publication. lviv, 110 p. the average salary in ukraine (2021). ministry of finance of ukraine. available at: https://index.minfin.com.ua/ ua/labour/salary/average/ the doing business report (2020). the world bank. retrieved from http://russian.doingbusiness.org/ru/ rankings ukraine – global peace index (2020). knoema. available at: https://knoema.com/atlas/ukraine/topics/ world-rankings/world-rankings/global-peace-index ukraine – index of economic freedom (2021). knoema. available at: https://knoema.ru/atlas/украина/ индекс-экономической-свободы?_ga=2.155881272.204584354.1551111127-477900222.1517845736 ukraine's position in the ranking of countries in the world according to the global competitiveness index 2017–2018 (2017). economic discussion club. available at: http://edclub.com.ua/analityka/pozyciya-ukrayinyv-reytyngu-krayin-svitu-za-indeksom-globalnoyi -konkurentospromozhnosti-2 workers are transferring more and more money to ukraine: what amount they received last year (2021) television news service. available at: https://tsn.ua/groshi/zarobitchani-use-bilshe-groshey-perekazuyut-do-ukrayini-yakasuma-nadiyshla-torik-1717420.html world migration report (2020). international organization for migration. available at: https://publications.iom.int/ books/world-migration-report-2020 three seas economic journal 81 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: natkov@i.ua orcid: https://orcid.org/0000-0002-2877-4302 researcherid: l-5920-2018 doi: https://doi.org/10.30525/2661-5150/2022-2-12 features of accounting and taxation of income of members of the farm and employees natalia koval1 abstract. the article considers the peculiarities of accounting and taxation of income of farm members and employees. for most agricultural regions of the country, farms are one of the main activities and an important element of the agricultural production system. the main difference between farms and other forms of management is that, given limited capital resources, they try to achieve maximum profits in the long run, which is a prerequisite for continuous operation. the main advantage of farms is the ability to effectively combine the entrepreneurial initiative of peasants, their economic opportunities with the interests of the state, social sphere and lifestyle of peasants. the specific features of agricultural production are studied, attention is paid to the seasonal nature of work in farms. a comparison of regulatory and legal regulation, accounting and taxation of payments for the remuneration of members of farms, employees and individuals providing services under civil law contracts. the specific features of the formation, accounting and taxation of income of members of the farm in accordance with the contribution or labor participation of its founders. systematization of the main normative-legal legislative acts on taxation of incomes of members of a farm and employees is carried out. it is established that the amount of wages of employees does not depend on the final result of the economy and can not be less than the minimum wage established by law. the duration of annual leave of persons working on a farm under an employment contract (contract) must also not be less than that established by the state in accordance with applicable law. it is noted that incorrect reflection in the accounting of payroll of employees and members of the farm causes a significant distortion of accounting, tax, financial and analytical support for the formation of indicators of financial and tax reporting. the publication contains elements of the methodology of accounting and methodological recommendations that can be used in the practice of accounting and taxation of farms. key words: farming, members of the farm, employees, labor relations, income taxation. jel classification: j43, j80, м21, м41, н24 1. introduction current trends call for a solution to the issue of the quality of labor potential, as human activity is of special, crucial importance in the system of innovative economy. labor potential has always been and is the main strategic resource, so economic development can be provided only by those countries that are able to create and effectively use existing labor potential. labor relations in a farm are grouped on the basis of the work of its members. in case of production needs, the farm has the right to involve other citizens in its work. categories of workers in farms the law of ukraine "on farms" № 973-iv of june 19, 2003 is divided as follows: members of farms and employees. features of the legal status, design and taxation of these categories have significant differences (podolyanchuk, koval, gudzenko, 2019; law on farming, 2003). as stated in part 1 of article 3 of the law of ukraine "on farms" № 973-iv, members of the farm can not be persons who work in it under an employment contract (contract) (law on farming, 2003). theoretical and practical ideas about wages evolved with the development of economic theory, which reflected the socio-economic realities and social practice. v. petty, a. smith (1979) interpret the natural price of labor services as the appropriate level of wages necessary for physical existence, ie the minimum wage that workers must receive to ensure their own existence and support families (rumyantsev, 1979). k. brezytska's research (2011) states that wages are wages, and their value is the price of labor, which this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 82 vol. 3 no. 2, 2022 is determined in the labor market as a result of the interaction of demand for specific types of work and labor. wages are remuneration, expressed as a rule, in monetary terms, which, in accordance with the employment contract, the owner or his authorized body of the executive body (brezitskaya, 2011). authors o. podolyanchuk, n. koval and n. gudzenko (2019) clarify that wages are payment for services provided by an employee on the basis of an employment contract or civil contract, which reflects the social and economic situation in the state economy and living standards people (podolyanchuk, koval, gudzenko, 2019). the main aspects of use, assessments in the process of labor activity in agricultural enterprises, the specifics of accounting and taxation highlighted in their works leading scientists: v. andriychuk (2002), i. goncharuk (2015), n. gudzenko (2015), g. kaletnik (2020), e. karpenko (2017), n. koval (2015), o. podolyanchuk (2019), i. sadovska (2019) and others. the analysis of scientific works showed that the specifics of accounting and taxation of income of farm members and employees are insufficiently studied, because scientists in the field of agribusiness, accounting and taxation pay more attention to research of large agricultural enterprises, so the importance of this study. therefore, research and substantiation of the peculiarities of the formation, use, accounting and taxation of labor income of farms is quite relevant. 2. features of determining and taxing the income of members of the farm and wages of employees farmers who work on the farm have a special legal status. such individuals are not employees, they are property owners and owners of their production. at the same time, their work is based on membership in the farm. they establish for themselves the rules of labor participation in the work of the farm, prescribing them in the charter of the farm. this constituent document on the issues of interest to us provides for the whole process of joint work of members of the farm, payment of remuneration for their work and so on. in particular, clearly define, so to speak, the "labor" regime of farmers, ie the distribution between them of relevant functions (podolyanchuk, koval, gudzenko, 2019). wages of employees are taxed on a general basis. the amount of wages of employees does not depend on the final result of the economy and can not be less than the minimum wage established by law. the duration of annual leave of persons working on a farm under an employment contract (contract) must also not be less than that established by the state in accordance with applicable law. one of the specific features of agricultural production is the seasonal nature of work, ie work is performed not all year round, but during the relevant period, which does not exceed six months. in practice, seasonal workers are hired on a farm under an employment contract and a contract of a civil law nature. if the contract specifies the period of work and the time of its implementation, then perform this work is possible only on the basis of the employment contract. according to the labor code, employment contracts concluded with seasonal workers are urgent (podolyanchuk, koval, gudzenko, 2019; tax code of ukraine, 2010; code of labor laws of ukraine, 1971). wages of employees (seasonal workers) are taxed in the general order: pit (personal income tax) – 18%, military duty – 1.5% and the single social contribution, accrued to the wage fund in the amount of – 22%. pit is transferred to the budget as a single payment document at the same time as the payment of income. if the income is accrued but not paid, the withheld pit is transferred to the budget up to and including the 30th day of the month following the accrual. if the income is paid in non-cash form or in cash, the personal income tax is transferred to the budget during the banking day following the day of such payment. when accruing income in kind, the object of taxation is defined as the value of such accrual, calculated at normal prices and multiplied by the increase factor. it should be noted that on march 17, 2022, the law of ukraine "on amendments to the tax code of ukraine and other legislative acts of ukraine on the validity of norms for the period of martial law" 2021-ix of 15.03.2021 entered into force. (hereinafter – the law №2120-ix) (law on amendments to the tax code of ukraine and other legislative acts of ukraine concerning the validity of norms for the period of martial law, 2022). first of all, it will be recalled that martial law was introduced by the law of ukraine "on approval of the decree of the president of ukraine" on martial law in ukraine" № 2102-ix of february 24, 2022, and by the law of ukraine "on extension of martial law in ukraine" № 2119-ix from 15.03.2022, its validity was extended until 25.04.2022 (law on the imposition of martial law in ukraine, 2022; law on extension of martial law in ukraine, 2022). after the introduction of the martial law regime on the territory of ukraine, the verkhovna rada of ukraine repeatedly amended the tax legislation. the draft law "on amendments to the tax code of ukraine on preservation of martial law" № 7262 of april 7, 2022 on amendments to the tcu on preservation of martial law submissions was submitted to the council for consideration (law on amend ments to the tax code of ukraine concerning the preservation of martial law, 2022). three seas economic journal 83 vol. 3 no. 2, 2022 this document proposes to set the personal income tax (pit) rate at: – 9% for income accrued (paid, provided) in the form of salary, other incentive and compensation payments or other payments and remuneration accrued (paid, provided) to the payer in connection with employment relationships and civil contracts; – 5% on income in the form of salaries, other incentive and compensation payments for the newly created job (law on amendments to the tax code of ukraine concerning the preservation of martial law, 2022). preferential taxation should apply for the period from april 1, 2022 to december 31 of the year following the year in which martial law will be terminated or abolished. it should also be noted that in accordance with paragraph 164.5 of the tax code when calculating (providing) income in any non-monetary form, the tax base is the value of such income, calculated at normal prices, the rules of which are set by the pc, multiplied by a factor calculated by the formula: c = 100 / (100 – rt), (1) where c – coefficient; rt – the tax rate set for such income at the time of their accrual (tax code of ukraine, 2010). at a personal income tax rate of 18%, this ratio will be 1.21951. remuneration of members of the farm (ie payment of income) is based on the results of its economic activity of the farm from the profit remaining after covering all expenses, taxes, contributions, fees. farm members are not paid. they receive part of the income (profit) received as a result of the economy, and the requirements for the minimum amount are set only for wages received under the employment contract (article 95 of the labor code). therefore, members of the farm may receive income below the minimum wage (podolyanchuk, koval, gudzenko, 2019; code of labor laws of ukraine, 1971). the income of the members of the farm is paid by distributing the net profit. this is the amount that is reflected in the accounting for sub-account credit 441 "retained earnings". there are two basic options for which the income is paid from the already received profit (profit is available): – depending on the contribution to the capital of the economy; – depending on the labor participation of each member of the farm (podolyanchuk, koval, gudzenko, 2019; sadovska, 2019). according to paragraphs. 14.1.49 item 14.1 of art. 14 of the tax code dividends – payment made by a legal entity, including the issuer of corporate rights, investment certificates or other securities in favor of the owner of such corporate rights, investment certificates and other securities certifying the investor's ownership of shares (shares) in property (assets) of the issuer, in connection with the distribution of part of its profits, calculated according to the rules of accounting (tax code of ukraine, 2010; code of labor laws of ukraine, 1971). for tax purposes, dividends are also equated to a payment in cash made by a legal entity in favor of its founder and participant (participants) in connection with the distribution of net income (part thereof ). therefore, regardless of the nature of the payment (according to the contribution or labor participation) from the point of view of taxation, it is considered a payment of dividends, and therefore taxed in the manner prescribed for dividends. it is necessary to pay attention to the following: if the payment was made not as a result of profit distribution, but on other grounds, it is doubtful to consider it a dividend. in this case, the payment to members of the farm is classified as another payment with appropriate taxation. dividends as passive income (item 14.1.268 item 14.1 article 14 of the tax code) are included in the pit tax base in accordance with item 164.2.8 item 164.2 article 164 tcu, table 1 (tax code of ukraine, 2010). therefore, if the members of the farm are paid dividends of the first kind (depending on the contribution to the capital of the farm), they are taxed at the rate of: 5% – if the farm is a payer of income tax; 9% – if the farm is a single tax payer (third or fourth group). table 1 individual income tax rates for dividends sequence number tax rate, % type of income 1 5 dividends on shares and corporate rights accrued by residents – payers of corporate income tax (except for income in the form of dividends on shares, investment certificates paid by mutual investment institutions). 2 9 dividends on shares and investment certificates, corporate rights accrued to non-residents, collective investment undertakings and non-income taxpayers. 3 18 for other passive income, including dividends, other than those mentioned above. source: (tax code of ukraine, 2010) three seas economic journal 84 vol. 3 no. 2, 2022 if members of the farm are paid dividends of the second type (depending on labor participation), they are taxed at a rate of 18%. if the payment to members of the farm is classified as another payment (other income), it is included in the total monthly (annual) taxable income of individuals (members of the farm) as other income in accordance with paragraphs. 164.2.20 item 164.2 of article 164 of the tax code and is taxed at the rate of 18% according to item 167.1 of art. 167 of this code (tax code of ukraine, 2010). in the form of № 1df dividends are shown with a sign of income "109", and other payment (other income) – with a sign of income "127". in accordance with paragraphs. 1.2 paragraph 16 of subsection 10 of section xx of the tax code, the object of taxation by the military tax is the income specified in article 163 of the code. the same article defines the object of personal income tax. such an object also includes the total monthly (annual) taxable income, the components of which are listed in paragraph 164.2 of the tax code. thus, both dividends (paragraph 164.2.8 of paragraph 164.2 of article 164 of the code) and other income (paragraph 164.2.20 of this paragraph) are included in the object of taxation by the military tax (podolyanchuk, koval, gudzenko, 2019; tax code of ukraine, 2010). members of the farm, an exhaustive list of which is defined in part three of art. 3 law of ukraine "on farms" № 973-iv, from 01.01.2018, were obliged to register with the bodies of revenues and fees as payers of the single contribution (law on farming, 2003). this rule does not apply to members of farms that are insured persons (employees, natural persons – entrepreneurs, heads of farms of both legal entities and natural persons – entrepreneurs with the status of family farms). according to the fourth part of art. 4 of the law on ssc of july 8, 2010 № 2464, this provision also does not apply to members of the farm if they receive an old-age pension or are persons with disabilities, or have reached the age specified in art. 26 of the law on pension insurance, and receive a pension or social assistance in accordance with the law (law on the collection and accounting of a single contribution to the obligatory state social insurance, 2010). if a member of a farm loses the status of an insured person or the status of a person with a disability or ceases to pay social assistance, such a member of the farm is obliged to register with the revenue authorities as a single contributor. registration of members of farms, as they are not covered by the law on state registration, is carried out by the supervisory authority at the location or place of residence on the day of receipt of the application for registration of the single contribution payer. in this case, in case of evasion of registration or late submission of the application for registration by payers of the single contribution, which are not covered by the law on state registration, a fine of ten non-taxable minimum incomes (paragraph 1 of part 11 of article 25 of the law on ssc) (law on the collection and accounting of a single contribution to the obligatory state social insurance, 2010). the basis for calculating the single contribution for members of the farm is the amount of income (profit) received from their activities, which is subject to personal income tax. the amount of the single contribution may not be less than the amount of the minimum insurance premium for the month of january – september 2022, this amount is 1430 uah, and october – december, respectively 1474 uah (law on the collection and accounting of a single contribution to the obligatory state social insurance, 2010). after registration in the bodies of revenues and fees by the payers of the single contribution, the members of farms are subject to the responsibilities specified, in particular, paragraph 1 of the second article. 6 of the law on ssc, on timely and full accrual, calculation and payment of the single contribution (podolyanchuk, koval, gudzenko, 2019). farm members are required to pay a single contribution accrued for the calendar quarter by the 20th day of the month following the quarter for which the single contribution is paid (april 19, july 19, october 19, january 19) (paragraph three of the eighth part). article 9 of the law on ssc) (law on the collection and accounting of a single contribution to the obligatory state social insurance, 2010). such payers may pay a single contribution in the form of an advance payment in an amount determined by them. in this case, the amounts of the single contribution paid in the form of advance payments are taken into account by the payer in the final settlement made by him for the calendar quarter by the 20th day of the month following the quarter for which the single contribution is paid. it should be noted that the single contribution is payable regardless of the financial condition of the payer (part 12 of article 9 of the law on ssc), and for violation of the legislation on the single contribution, in particular, for late payment (late transfer) of the single contribution financial responsibility, namely: – a fine of 20% of unpaid amounts is imposed for late payment (late transfer) of the single contribution (paragraph 2 of part 11 of article 25 of the law on ssc); – in accordance with parts 10 and 13 of this article, a penalty is charged on the amount of arrears at the rate of 0.1% of the amount of arrears for each day of delay in payment. the accrual of the penalty provided by the law on srs starts from the first calendar day following the day of expiration of the term of making three seas economic journal 85 vol. 3 no. 2, 2022 the corresponding payment, up to the day of actual payment (transfer) inclusive (law on the collection and accounting of a single contribution to the obligatory state social insurance, 2010). the law of ukraine "on the state budget for 2022" of 02.12.2021 № 1928-ix established in 2022 the minimum wage in the monthly amount from 01.01. till 01.09. 2022 – uah 6500, and from 01.10. to 31.12. 2022 – uah 6700 (law on the state budget for 2022, 2021). as a result, the maximum amount of the single contribution base, which is defined as the maximum amount of income of the insured person per month, has changed, equal to 15 times the minimum wage established by law, on which the single contribution is accrued. that is, the maximum value of the base for accrual of sdrs from 01.01. till 01.09.2022 – uah 97500, and from 01.10. to 31.12.2022 – uah 100500. 3. features of determining and taxing the income of members of the farm and wages of employees accrual of wages to employees is carried out in the "settlement and payment statement", which determines the total amount of wages for the month and carry out the statutory deductions. the salary is confirmed by the signature of the recipient. if the taxable income is provided in non-monetary form, the tax is paid (transferred) to the budget within three banking days from the day following the day of such accrual (payment, provision) p.168.1.4. tcu. that is, both personal income tax and personal income tax must be paid to the budget within three banking days from the day following the day of accrual of such salary when paying the salary in kind (tax code of ukraine, 2010). accounting for wage payments in kind is presented in table 2. leave is granted in proportion to the time worked. hospital sums are paid no more than 75 calendar days a year. the total amount of accrued wages, withheld, issued and relevant accruals for wages, recorded in the register of business transactions by double entry (podolyanchuk, koval, gudzenko, 2019). regarding the reflection in the accounting of settlements with members of the farm, they are kept on sub-account 672 "settlements on other payments". accrual of income to members of the farm during the year at the expense of profit is debited to sub-account 443 "profit used in the reporting period". the balance on this sub-account is closed at the end of the year by correspondence with sub-accounts 441 "retained earnings" or 442 "uncovered losses". the accounting record of wage payments by members of the farm will be considered in table 3. modern transformation processes in the development of the rural economy require the transition to innovative technologies, which is associated with the formation and reproduction of human potential in rural areas. this, in turn, requires new approaches to assessing the economic efficiency of human resources in rural areas and creating the necessary conditions for its reproduction (kaletnik, goncharuk, 2015). table 2 accounting for wage payments in kind sequence number contents of the business operation debit credit display in f. № 1 df 1 wages are accrued 15, 23, 91, 92, 93, 94 661 column 3a "amount of accrued income" under code 101 2 the single social contribution for wages is accrued 15, 23, 91, 92, 93, 94 651 3 the sale of goods on account of wages is reflected 661 702 column 3 "amount of paid income" under code 101 4 value added tax liability is accrued on the value of goods sold 702 641 5 the cost of goods sold is reflected 902 281, 282 6 the sale of inventories, low-value and perishable items (hereinafter – ibe) at the expense of wages is reflected 661 712 column 3 "amount of paid income" under code 101 7 accrued value added tax liability from the value of sold inventories, ibe 943 20,22 8 personal income tax withheld 661 641 column 4a "amount of withheld tax accrued" under code 101 9 military duty withheld 661 642 10 the personal income tax is listed in the budget 641 311 column 4 "amount of withheld tax listed" under code 101 11 the military fee is listed in the budget 642 311 source: formed by the author three seas economic journal 86 vol. 3 no. 2, 2022 4. conclusions based on the study, it can be concluded that in order to properly reflect in the accounting procedure for accrual, payment and taxation of income of farm members and wages of employees, it is necessary to clearly separate the two categories of farm workers: employees and farm members. because the accounting and taxation of such payments depend on it. it should be noted that in a significant number of farms the accounting and taxation of wages of members of farms and employees is carried out equally. however, the incorrect reflection in the accounting of payments to participants (members) of farms and accrual of wages to them as employees (at the expense of the enterprise) leads to improper overstatement of operating costs, and hence underestimation of pretax financial results. if for those farms that are in the simplified taxation system, this does not affect the amount of tax liability for the single tax, then for farms that are in the general taxation system, such operations have an impact on lower profits. which leads to the application of significant penalties provided by the tax code of ukraine. also, incorrect reflection in the accounting of payroll of employees and members of the farm causes a significant distortion of accounting, tax, financial and analytical support for the formation of indicators of financial and tax reporting. table 3 accounting for wage payments by members of the farm sequence number contents of the business operation debit credit accrual of monthly payment 1 accrued income to a member of the farm 443 672 2 the amount of personal income tax was withheld 672 641/pit 3 military duty withheld 672 642/mt 4 income for a month from the cash desk of the farm was paid 672 301 5 pit paid to the budget 641 311 profit distribution according to the results of the reporting year 1 the farm received a profit for the current year 791 441 2 payments to a member of the farm, accrued in advance during the year from the profit 441 443 3 profits are distributed to replenish reserve capital 441 443 4 part of the farm's profit is directed to the reserve capital 443 43 5 the rest of the profit is used to pay the income of a member of the farm 441 443 6 accrued income to a member of the farm 443 672 7 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(2019). orghanizacija obliku i opodatkuvannja u fermersjkykh ghospodarstvakh v konteksti profesijnogho bukhghaltersjkogho sudzhennja [organization of accounting and taxation in farms in the context of professional accounting judgment]. oblik i finansy, no. 4(86), рр. 45–53. available at: http://nbuv.gov.ua/ ujrn/oif_apk_2019_4_8 (accessed march 20, 2022). three seas economic journal 43 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-8 the impact of digital currency on the transformation of monetary policy volodymyr mishchenko1, svitlana naumenkova2 abstract. the purpose of the paper is to study the specifics of the organization of issue and circulation of digital money by central banks, to summarize existing global experience and assess the potential impact of digital currencies on the conditions of monetary policy, the functioning of the mechanism of money transmission and ensuring financial stability through the implementation of sound decisions of central banks in the digitalization of finance. methodology. the study is based on an analysis of the scientific literature and points of view of foreign and domestic experts in the field of digital technology. it is also based on the experience of the european central bank, the people's bank of china, the bank of england, the bank of israel and the national bank of ukraine on the implementation of pilot projects for the issue and use of digital currencies, quantitative and qualitative assessment of the impact of new forms of money on monetary policy, the functioning of the transmission mechanism, state finance, efficiency of payment systems and payment transactions. in processing the material of the article used a set of general scientific and special methods of research, such as dialectical, historicallogical, system-functional and analytical approaches, generalization, scientific abstraction and others. the results of the study showed that the proposed digital currencies of central banks should be considered as a new high-tech dematerialized form of national fiat money. having summarized the impact of the issue and circulation of digital money by central banks on the main parameters of economic policy, it can be argued that their use will lead to significant changes in the structure and functions of commercial and central banks, as well as existing national and transnational payment systems. the issuance and circulation of digital currency can significantly affect the nature of central banks' monetary policy, the conditions under which the monetary transmission mechanism functions, and the implementation of fiscal policy. practical implications. the study revealed the main advantages and disadvantages of using centralized and decentralized models of issue and circulation of digital money by central banks, identified the directions of institutional changes in the development of the banking system and the implementation of monetary policy in a digitalized economy, which will provide a high level of control over all monetary transactions of market players. value/originality. using the experience of pilot projects on the issue and circulation of digital currencies of central banks will help to improve the effectiveness of monetary policy, to activate the mechanism of monetary transmission, to ensure the stable functioning of the financial system and reduce the level of shadow economy and corruption. key words: digital currency, banking system, central bank, monetary policy, digital transformation. jel classification: e44, e49, g28 corresponding author: 1 state organization “institute of the economy and forecasting of the national academy of sciences of ukraine”, ukraine e-mail: mvi25prof@gmail.com orcid: https://orcid.org/0000-0002-8565-2686 researcherid: n-4143-2018 2 taras shevchenko national university of kyiv, ukraine e-mail: naumenkova@knu.ua orcid: https://orcid.org/0000-0001-8582-6044 researcherid: n-5604-2019 1. introduction the dynamic development of information and communication technologies based on the digitalization of the economy has contributed to a significant reduction in cash circulation and the development and use of digital technologies in money circulation and finance. this has led to the emergence of a digital analogue of money – cryptocurrencies, which are issued not only by anonymous issuers, but also by large transnational companies. in a market environment, such virtual currencies are often seen as private money that can compete with officially recognized currencies this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 44 vol. 2 no. 4, 2021 (cunha, melo, sebastião, 2021). a situation has arisen where a country 's currency can be several currencies simultaneously, the emission and regulation of which are based on different principles, legal status and forms of emission organization. this complicates the work of state regulators of financial market and does not allow the central bank to effectively fulfill its main functions, namely to ensure the stability of monetary market and financial system as a whole (nelson, 2018; balvers, mcdonald, 2021). as a result, central banks have been forced to take appropriate measures to protect national currencies from unreasonable competition from cryptocurrencies, which, among other things, destabilizes the functioning of national monetary systems, the money market and public finances. therefore, in the last few years in the activities of central banks in many countries around the world, issues related to the development, issuance and organization of circulation of their own digital money – central bank digital currency (cbdc) became particularly important. the emergence of digital currencies of central banks has put on the agenda a number of new issues associated with the need to organize an appropriate system of regulation of money circulation, to assess the impact of the new form of money on the conditions of monetary and macroprudential policy, the functioning of money transmission mechanisms, as well as on this basis to ensure the stability of the entire financial system of the country (mishchenko, naumenkova, mishchenko, 2021). 2. mechanisms of functioning of the new form of money in the academic literature, the central bank's digital money refers to its obligations denominated in local currency, which are digital and can perform the usual functions of money (ecb, 2020). the peculiarity of central bank digital currency is that it is a new high-tech dematerialized form of fiat money that exists today, the digital equivalent of national currencies. the main features that distinguish a central bank's digital currency from other forms of money are: 1) the ability to instantly create and distribute to users – market participants (at minimal cost); 2) availability; 3) safety of storage and use; 4) high speed of transactions; 5) low transaction costs; 6) the absence of intermediaries in the process of operations; 7) confidentiality; 8) a high degree of control by the central bank over the status of accounts and all operations of users. the analysis of central bank proposals shows that today we are witnessing the initial stage of the transition to digital money. this is a kind of electronic money issued by a central bank. in this context, it should be seen as a new form of money within the existing monetary system. therefore, today 's proposals for the implementation of cbdc can be seen as an attempt to adapt the existing national monetary and financial systems to the requirements of the digital economy. in this approach, cbdc should be recognized as a new form of national money in addition to its cash and noncash forms. for example, the people's bank of china characterizes cbdcs as electronic payments with digital money and, in terms of monetary statistics, includes them in the monetary aggregate m0, that is, cash ( juks, 2018; davoodalhosseini, rivadeneyra, zhu, 2020). a study of central bank proposals for the use of central bank digital currencies shows that they differ from conventional electronic money in that they are officially recognized currencies and are issued on the basis of blockchain technology. however, it should be noted that cbdcs are not cryptocurrencies in the conventional sense, as there is no "consensus" principle in their issuance by the central bank. the volume of digital currency issued by the central bank does not affect the dynamics of monetary aggregates m1, m2 or m3. only a part of cash (monetary aggregate m0) is replaced by electronic money, which is in circulation in parallel with cash. despite assumptions of some scientists, creation of a security for digital money in the form of reserves of the central bank (or in other form) is not obligatory because the central bank is directly involved in this process, proceeding from the general principle of trust in fiat money, laid in the basis of development of modern monetary systems. according to central banks, the main goal of using digital currency of the central bank is the full transition of the population from cash to non-cash forms of payment, ensuring high speed, reliability, convenience and transparency of transactions, reducing transaction costs and increasing accessibility (fernándezvillaverde, sanches, schilling, uhlig, 2020). however, the main result of the use of digital money, will be the possibility of full control of all transactions of digital currency users of the central bank, which will help to reduce the shadow economy and corruption. under such conditions, it is possible to considerably simplify the process of fulfillment of functions and increase the efficiency of state financial monitoring. an analysis of existing experience and suggestions from scholars and practitioners regarding the implementation of cbdc shows that the use of digital money by central banks has many benefits for both the public and the government ( jiang, qiu, zhou, 2021). it should be noted that the question of fundamentally changing the functioning of national monetary systems is not on the agenda today. digital currency, as well as central banks' electronic money, will function within three seas economic journal 45 vol. 2 no. 4, 2021 the framework of existing monetary systems built on fiat money. to regulate the circulation of digital currency, the ecb, the bank of england, the bank of russia and other central banks propose to use three models: centralized, decentralized and hybrid. in the centralized model, digital money is issued on the central bank's digital platform by opening a separate personal account (electronic digital wallet in cbdc) for each user to carry out digital money transactions. such an electronic wallet is accessed by the central bank's hardware and software by moving a digital code between users' digital wallets. however, it should be noted that the use of such a model greatly increases the responsibility and burden on the central bank, while weakening the role of commercial banks (balvers, mcdonald, 2021). the use of the decentralized model implies a division of responsibility between the central bank and the commercial banks. according to this model, the central bank first opens electronic digital wallets in the central bank's digital currency for intermediary banks, which then open corresponding digital accounts for individual users. cbdc user funds are held in accounts at an intermediary bank, which performs all transactions with them. the hybrid model can be viewed as a transitional model that can combine the requirements of both centralized and decentralized models. most scholars and practitioners, including ecb experts, prefer to use the decentralized model of cbdc issuance and circulation with commercial banks and other financial institutions as financial intermediaries, as they consider it simpler and more efficient. however, regardless of the chosen model, the overall control and responsibility for the issuance and circulation of digital money remains with the central bank. 3. world experience in regulating the circulation of digital currency currently, central banks in many countries, including the ecb, england, israel, canada, india, japan, russia, singapore, switzerland and sweden, are actively exploring the creation and use of national cbdcs. in october 2020, the people's bank of china launched a project to use the digital yuan through a mobile application to store and exchange it. the digital version of the rmb is based on blockchain technology. in the digital yuan experiment, the people's bank of china uses a hybrid model for its circulation, but all digital money transactions are controlled by the central bank: it first exchanges cash from commercial banks for the digital yuan, and then the latter exchanges it from citizens for cash at a 1:1 ratio. there are four levels of digital wallet with different balances and payment limits. in addition to improving domestic payments, the people's bank of china plans to use the digital yuan to make cross-border payments more effective, turn the national currency into an international currency and dedollarize china's foreign trade payments. during the project year (october 2020 – october 2021), about 140 million digital yuan wallets were registered and $10 billion worth of transactions were conducted. in october 2021, the bank of israel issued a digital shekel. the central bank of the russian federation will begin testing the digital ruble in early 2022, based on 12 banks, with further expansion of the project participants and the list of transactions using digital money. the u.s. federal reserve is also ex-ploring the possibility of issuing a digital u.s. dollar ( jiang, qiu, zhou, 2021). in 2018, the national bank of ukraine implemented a pilot project to issue electronic hryvnia. the testing was conducted among employees of the nbu on the basis of the prostir payment system. about 5,000 e-hryvnias were issued. in 2021, a project was implemented to pay salaries in electronic hryvnias to employees of the ministry of digital transformation of ukraine. in october 2020, the ecb published the digital euro report, an important document for organizing the development and use of digital money (ecb, 2020). the main prerequisites for the issuance and use of the digital euro, the ecb considers a significant reduction in the demand for cash, an increase in the demand for electronic payments and the spread of the use of cryptocurrencies. the published report sets out the principles and conditions for the implementation of the project, as well as the general requirements for the use of the digital euro. the basic principles of the issue and circulation of the digital euro were formulated by the ecb as follows (ecb, 2020): 1. convertibility at par. 2. responsibility of the eurosystem for the issue and use of the digital euro, the issue and circulation of which is controlled by the eurosystem. 3. the availability of the digital euro on equal terms in all eurozone countries, based on ecb control of payment service providers. 4. market neutrality that supports the competitive use of private solutions in the payments market. 5. high degree of user confidence in the new form of money. the main conditions for the issuance and circulation of the digital euro, the ecb includes the following: 1. increasing the efficiency of digital technologies. to meet the needs of market participants for ease of use, speed of transactions and efficiency, the development and use of the digital euro must be based on the application of modern information technology. 2. performing the functions of cash. the use of the digital euro should help reduce the amount of cash in circulation, enable offline payments, be free for basic three seas economic journal 46 vol. 2 no. 4, 2021 use, be accessible to vulnerable groups, and protect user privacy. 3. competitive advantages. the digital euro should have the same or even better functionality compared to payment solutions that use foreign currencies. 4. impact on monetary policy. the use of the digital euro as a tool to enhance the efficiency of the transmission mechanism should provide that users of digital euros can be charged interest at a rate determined by the central bank. 5. backup system. to increase the overall resilience of the payment system, the digital euro must be widely available and circulated using stable communication channels that are separate from other payment services and can withstand extreme events. 6. international use. the digital euro should be available and convenient for use not only by residents but also by non-residents of eurozone countries, provided that their transactions are consistent with the objectives of the eurosystem. 7. cost savings. the introduction of the digital euro should help reduce the cost of payment transactions and improve the economic efficiency of market participants who use it. 8. environmental friendliness. the issuance and circulation of the digital euro must be based on technological solutions that will help minimize the environmental impact and improve the existing payment ecosystem (ecb, 2020). the report, in particular, establishes clear requirements for the use of the digital euro: 1. the ability to control the number of digital euros in circulation. the digital euro should be an attractive means of payment, but it should be avoided as a form of investment because of the risk of transferring funds in the form of private money into digital euros. 2. cooperation between market participants. in the process of issuing and circulating the digital euro, it is necessary to use best practices in it project management to ensure equal access to its use in all eurozone countries. 3. compliance with the eurosystem's regulatory framework and standards for digital euro payments. 4. security and efficiency in achieving the goals of the eurosystem. the digital euro must be developed and implemented in a safe and efficient way. the transaction costs of the projected issue of the digital euro must be commensurate with the expected benefits from its use. 5. easy access for users in all euro area countries. thanks to standardized interfaces, the digital euro should be simple and easy to use, compatible with private payment solutions and accessible to citizens who are not currently part of the financial system (for example, those who do not have a formal bank account). 6. use by non-residents of euro area member states. to prevent excessively volatile capital flows or high exchange rate volatility, the mechanisms for issuing and circulating the digital euro should provide for special conditions for its use by non-residents of euro area member states, such as setting limits on certain transactions, limiting transaction amounts, introducing certain remuneration policies for holding digital eurodenominated assets, etc. 7. cyber resilience. digital services provided in the digital euro must be resilient to cyber threats and maintain an adequate level of protection of the financial ecosystem from cyber-attacks (ecb, 2020). in july 2021, the ecb launched a two-year pilot project to test the issuance of the digital euro. to fully meet users' needs, the ecb will study various aspects of the creation, issuance and circulation of the digital euro, as well as the functionality of its design. in addition, the impact of its use on monetary policy and financial stability will be assessed. after the project is completed and the legislation of all eu countries is amended, which will take another three years, the digital euro will be finally put into circulation (ecb, 2021). the world's leading financial companies have expressed interest in cooperating with the ecb on the use of the digital euro. this is due, in particular, to the fact that the eurosystem has repeatedly expressed concern about the dominance of private payment companies, such as visa and mastercard, in the european payment market, the lack of control over their activities, as well as their access to a significant amount of information about the transactions of eu residents, which could threaten the financial stability and monetary sovereignty of the euro area. the widespread use of the digital euro and digital money by other central banks could significantly narrow the scope of international payment companies. to avoid this situation, mastercard has already developed a digital money testing platform to assess the compatibility of its payment ecosystem with block-chain-based cbdc. visa is doing similar work. the implementation of such cooperation is important, because in the digitalization of economies, central banks' digital currencies should become an integral part of the new international monetary and financial system. 4. directions of influence of the use of digital currencies on monetary policy the practical use of digital currency by central banks, like any other form of money, has the potential to affect monetary and macroprudential policy conditions, the functioning of the transmission mechanism, financial stability, support for anti-inflationary measures, and public finances (mishchenko, naumenkova, mishchenko, ivanov, lysenko, 2019). according to the authors, since digital currency in the proposed format is a form of central bank electronic money, this impact will not be significant. this is due to the fact that under the current monetary systems inflation processes are determined not by the form of three seas economic journal 47 vol. 2 no. 4, 2021 money, but by other factors, and the tools and methods of monetary and macroprudential policies remain unchanged. the same can be said about anti-inflationary policy. the impact of the central bank's use of digital money on curbing inflation will be determined by the nature of monetary and fiscal policy, their level of consistency, the balance of payments and the state budget. at the same time, it can be expected that in the future the use of digital money by the central bank will increase the stability of national currencies and the level of financial stability in the country as a whole by ensuring the transparency of all transactions and reliable storage of money compared with keeping it in accounts at commercial banks. this is due to the fact that under certain conditions regulating the circulation of digital money guarantor monetary security will act not commercial banks, which may be insolvent, and the central bank as the guarantor of the monetary system. the most significant use of digital currency by central banks could affect the maintenance of a balanced government budget and sound fiscal policy, as the shadow economy and financial corruption could be greatly reduced and tax evasion would become virtually impossible. the study of the conditions for the issuance and circulation of digital money shows that it can become a new tool for controlling all payment transactions and user transactions in the fight against money laundering, tax evasion and other illegal activities. this is because each central bank digital currency digital unit has its own unique code that allows tracking its sequential movement since release to use during a transaction anytime and anywhere. in addition, an additional factor in maintaining financial stability in the country could be a significant increase in the level of confidence of the population and market participants in the new digital form of the national currency due to the transparency and accessibility of its use. ultimately, the use of the central bank's national digital currency as the sole means of payment in the country could lead to a significant reduction in the role of traditional banks as financial intermediaries. in fact, we are already seeing the beginning of this process. the rapid development of digital payment instruments and technologies has led to the fact that today, in addition to banks, payment transactions are increasingly carried out by non-bank organizations, which account for more than 25% of the payments market. payments on central banks' digital payment platforms will lead to the loss of these functions by existing payment institutions, as central banks will be able to perform them more efficiently. using central bank digital money, commercial banks will be able to raise funds from businesses and households more efficiently, because each market participant will have a single digital wallet. the issue of lending using central bank digital money is more complicated due to the need to formalize collateral and provide guarantees of loan repayment. however, the experience of existing digital banks, in particular the ukrainian monobank, proves that this problem can be solved over time. the study also concludes that depending on the chosen model of digital money issue by central banks and due to the possibility of transferring some of the funds of market participants from conventional bank accounts into digital money, especially if interest is accrued on them, the use of digital currency by a central bank may lead to a reduction in the liquidity of the banking system. if such situations arise, the central bank, as part of its monetary policy implementation, should provide for the possibility of changing the forms and methods of using the mechanism of refinancing and support of commercial banks. 5. findings in economic terms, cbdcs are central bank liabilities denominated in local currency, which are represented in digital form and can fully perform all the functions of money. they represent a new high-tech dematerialized form of fiat money and are issued in addition to their cash and non-cash forms. the difference be-tween central bank digital currency and electronic money is that they are officially recognized currencies, not cryptocurrencies, although they are issued based on blockchain technology. the volume of central bank digital currency issuance does not affect the dynamics of monetary aggregates. digital currency projects of central banks are the first stage of the transformation of existing monetary systems, which is characterized by their adaptation to the requirements of the digital economy. the main goal of using central bank digital currency is the transition to a cashless form of payment that ensures high speed, reliability, convenience and transparency of payments, which will reduce the size of the shadow economy. to ensure effective regulation of the central bank's digital currency circulation, the most promising is the use of a decentralized model of their issuance. today, central banks in many countries around the world are actively studying the issue and use of cbdc. the main reasons for a central bank to issue digital currency are to reduce the need for the use of cash and the need for transparency of payments. the principles, terms of issue and requirements for the use of the digital euro, developed by the european central bank, can be successfully used by central banks in other countries. 6. conclusions the study determined that the use of central bank digital currency (cbdc) will contribute to a significant three seas economic journal 48 vol. 2 no. 4, 2021 transformation of monetary, fiscal and macropru dential policy mechanisms, as well as intensify the channels of monetary transmission mechanism. it is proved that the impact of cbdc on the containment of inflation will be determined mainly by the nature of monetary and fiscal policy, the balance of payments and the state budget. it is justified that by ensuring the transparency of transactions and the reliability of the storage of cbdc money, a much higher level of stability of the national currency can be ensured, as the central bank will be the guarantor of monetary security. in the long term, the use of a central bank's digital currency as the sole means of payment may lead to a significant reduction in the role of traditional banks as financial intermediaries. payments and settlements on central bank payment platforms could cause existing payment institutions to lose these functions. to improve the efficiency of central bank digital currency issuance and circulation mechanisms, it is necessary to develop appropriate regulatory support, strengthen data confidentiality requirements, coordinate the activities of central banks in international payments and settlements, and reliably protect the new payment system from risks and cyberthreats. issues related to the unevenness of the digitalization of banking and financial systems around the world also require further study. references: balvers, r . j. & mcdonald, b. (2021). designing a global digital currency. journal of international money and finance, 111. article 102317. doi: https://doi.org/10.1016/j.jimonfin.2020.102317. cunha, p.r ., melo, p. & sebastião, h. (2021). from bitcoin to central bank digital currencies: making sense of the digital money revolution. future internet, 13(165): 2–19. davoodalhosseini, m., rivadeneyra, f. & zhu, y. (2020). cbdc and monetary policy. s/a note 2020-4. bank of canada. doi: https://doi.org/10.34989/san-2020-4. ecb. (2020). report on a digital euro. available at: https://www.ecb.europa.eu/pub/pdf/other/report_on_a_ digital_euro~4d7268b458.en. ecb. (2021). eurosystem launches digital euro project. available at: https://www.ecb.europa.eu/press/pr/ date/2021/html/ecb.pr210714~d99198ea23.en.html. fernández-villaverde, j., sanches, d., schilling, l. & uhlig, h. (2020). central bank digital currency: central banking for all? review of economic dynamics. doi: https://doi.org/10.1016/j.red.2020.12.004. jiang, s., qiu, s. & zhou, h. (2021). will digital financial development affect the effectiveness of monetary policy in emerging market countries? economic research-ekonomska istraživanja. doi: https://doi.org/10.1080/13316 77x.2021.1997619. juks, r . (2018). when a central bank digital currency meets private money: the effects of an e-krona on banks. sveriges riksbank economic review, 3: 79–99. mishchenko, s., naumenkova, s., mishchenko, v., ivanov, v. & lysenko, r . (2019). growing discoordination between monetary and fiscal policies in ukraine. banks and bank systems, 14(2): 40–49. mishchenko, v., naumenkova, s. & mishchenko, s. (2021). assessing the efficiency of the monetary transmission mechanism channels in ukraine. banks and bank systems, 16(3): 48–62. nelson, b. (2018). financial stability and monetary policy issues associated with digital currencies. journal of economics and business, 100: 76–78. three seas economic journal 20 vol. 2 no. 1, 2021 corresponding author: 1 cherkasy state technological university, ukraine. e-mail: e.vartanova9207@gmail.com orcid: https://orcid.org/0000-0002-8706-6437 2 cherkasy state technological university, ukraine. e-mail: mega.0669667560@ukr.net doi: https://doi.org/10.30525/2661-5150/2021-1-4 peculiarities of the consumer perception of ukrainian and foreign brands olena vartanova1, inna korol2 abstract. ensuring sustainable competitive advantages is the main goal of the company in a chaotic and unpredictable change in the business environment. sustainable and long-term competitive advantages are formed mainly on the basis of the new combinations or new ways of using intangible assets: they give impetus to the company's development and innovation in a rapidly transforming environment. one of such unique assets of the enterprise becomes a brand. the brand is the bearer of the value of the product in the consumer perception, and is often more attractive to the consumer than the actual consumer value of the product. consumer perception of the brand is determined by a large number of factors, including personal and psychological factors that reflect the patterns of human consumer behavior and order its coexistence habits. the study of these aspects of consumer behavior is an extremely important task of marketing. the subject of the research is theoretical-methodical and practical aspects of peculiarities and factors of consumer perception of ukrainian and foreign brands. the purpose of the article is to form a theoretical and methodological basis for determining and comparing the characteristics of the perception of domestic and foreign brands by ukrainian consumers with different socio-demographic characteristics. in line with this goal, the research methodology is based on the use of expert survey methods to determine the characteristics of consumer perception of brands using google forms. the sample size is 169 people. respondents were asked to rate 14 foreign and 11 ukrainian most popular clothing brands according to selected parameters. to confirm the hypotheses formed in the study, the calculation of the fisher's angular transformation criterion φ was used. according to the results of the study of features and factors of consumer perception of ukrainian and foreign brands by ukrainian consumers, the hypotheses about the greater commitment of ukrainian consumers to foreign brands was confirmed (consumer perception of the zara brand exceeds the perception of the h&m brand, consumer confidence in foreign brands exceeds the trust in ukrainian brands). fisher's angular transformation criterion is used to confirm the hypotheses. key words: brand, confidence, consumer perception, consumer behavior, brand quality, fisher's angular transformation criterion, brand perception, consumers, trust to brand. jel classification: d11, d19 1. introduction the modern world is a world of lightning transformations, the characteristics of which are volatility, uncertainty, complexity, and unpredictability of the business environment. current trends in the business environment – globalization, internationalization, transnationalization, digitalization, increasing competition for markets and resources – all determine the need for continuous development, only if modern companies can keep up with changes in the business environment. it is known that sustainable and long-term competitive advantages are formed mainly on the basis of the new combinations or new ways of using intangible assets: they give impetus to the company 's development and innovation in a rapidly transforming environment. one of such unique assets of the enterprise becomes a brand. a brand is an intangible asset whose value lies in its recognition by consumers and the formation of the positive associations associated with it. a brand is often associated with a brand, but in reality, the brand has much more meaning than just a graphic image, logo, or melody inherent in the brand, as it includes the entire set of intangible assets used to create and promote a particular product. if at the dawn of the commodity-money relations a person made a choice in favor of product characteristics three seas economic journal 21 vol. 2 no. 1, 2021 in terms of quality, usefulness, and functionality, then modern motives for purchase are often made unconsciously, under the impulse influence and desire to get positive emotions and pleasure and cover almost all steps of maslow's pyramid. one of the factors that significantly influence consumer behavior and encourages product consumption is the brand and its perception by the consumer. in today 's world, the brand is receiving more and more attention: open brand agencies, research conducted in this area. and this is quite justified because the main function of the brand – to establish an emotional connection between producer and consumer. the brand helps a person choose from hundreds of identical products the one that will best meet his expectations. 2. analysis of the recent publications such scientists as o. guseva, f. kotler, m. makashev, o. melnikova, t. primak, a. demitriev, e. sheregi, i. shutanov, i.m. lindstrom, i. bablenkov, i. vikentyev, o. godin made a significant contribution to the study aspects of brand formation. many studies by consumers and practitioners on consumer perception make it possible to identify factors, motives, and general patterns of consumer behavior, but insufficiently investigated issues of brand association and consumer preferences, which are generally hidden and often beyond their rational perception. research on the irrational nature of the brand allows us to determine the boundaries of irrational consumer behavior, identify irrational factors of brand perception, and form an appropriate marketing communications strategy. this determines the relevance of the study to the peculiarities consumer perception of ukrainian brands and foreign clothing manufacturers. 3. presentation of the main research material according to the known understanding, a brand is a set of ideas, thoughts, associations, emotions, value characteristics about a product or service in the minds of consumers; the mental shell of a product or service. the brand itself is an abstract concept. its physical components (carriers) are the whole set of elements the corporate style: brand name (word, phrase), logo (trademark) with the principles of its construction, a palette of corporate colors that supports corporate identity, original graphics, a set of phrases, sounds, brand and other. thus, the brand is a multi-valued and low component concept, which is difficult to define unambiguously. in the mainstream of modern marketing, the brand is seen in the plane of inseparable relationship with the consumption processes and the psychology of consumer behavior of potential buyers: "marketing is not a battle of products, but a battle of perceptions and the struggle of producers. in the process of interaction with the environment, through the filter of the human perception, we can assume that a person moves from needs to emotions through motives" (kotler, pferch, 2007). the mechanism of the brand's relationship with the consumer is realized through consumer motives, which are derived from needs but have a more detailed and focused nature. such relationships form the content of the brand through a rational combination and emotional relationships with the brand, which, in turn, create and implement behavioral relationships with the brand (koval, romanchuk, 2010). so the brand creates a strong connection between the consumer and the product, which is based on a certain associative series. there are two types of associations in marketing: primary and secondary. primary associations are a set of images and representations that are directly related to the brand (logo, product packaging, price, etc.). all these elements the consumer can see and quickly remembered, and just as quickly erased from memory if the brand did not interest the person. secondary associations form an emotional attachment, they remain in a person's consciousness for a long time. these are abstract concepts related to the basic values laid down in childhood, established principles, and people’s ideas about themselves or the world around them. marketers work hard to firmly link brand attributes to consumer needs, values, and principles, evoke the right emotional responses, and thus create the emotional attachment of the brand's consumer. associations that arise in the consumer about the product and brand are united in a kind of relationship. these connections are maintained through a system of marketing communications – the appearance of packaging, location, music, flavor, color, logo, advertising, etc. each of these elements is designed to emotionally affect the consumer: to cause him positive emotions (fleeting) and stable associations (longterm). accordingly, the consumer can buy the product only because he liked the song from the advertisement, product packaging, or remembered the original name of the manufacturer's site. however, the consumer perception mechanism of the brand is not as simple as it seems at first glance. everyone can have different associations with the same phenomenon, product, subject, and other elements of the brand. for example, people may react differently to a company name. in some, it can cause positive associations, in others – negative. and if the formation of primary associations can be influenced by prices or advertising, the secondary associations are formed purely individually, are very subjective, and can have huge differences for each individual consumer. this makes it extremely important to take a serious approach to the process of brand positioning three seas economic journal 22 vol. 2 no. 1, 2021 and elements of marketing communications, which allows us to predict, based on the structure and characteristics of the target audience, which will be associated with certain elements of marketing communications, and assess consumer perception of the brand. it should be noted that the needs of consumers in a particular period of time do not necessarily coincide with those components that strengthen the brand as a strategic resource at the enterprise. for example, market orientation may conflict with a long-term brand development strategy, and ideally, the company should focus on market needs and the values of its own development, which are reflected in the brand and marketing communications system (rіley, remіzova, kalafatis, sіngh, 2012). the main thing in this process is the delimitation of the brand. an example is the line of suits under colin's brand, which was not accepted by the market. meanwhile, the gillette brand has successfully expanded into the field of aftershave skincare products. it turns out that even if the product category of expansion intuitively corresponds to the category of "parent" brand. marks & spencer, a clothing retailer, began providing financial services under its own brand. despite the fact that the expansion was carried out in a fundamentally new market segment, it was perceived positively by consumers due to the trust in the company 's brand. thus, the basic characteristics of the brand and its emotional "anchors", which have a strong impact on the consumer, are transferred to the new product and form the commitment of consumers. this thesis is confirmed by the opinion of a well-known expert in the field of marketing and branding philip kotler, who believes that in addition to the rational component of the brand to a greater extent provides consumers with emotional benefits (kotler, pferch, 2007). 4. description of research and calculations we will conduct research and compare the peculiarities of perception the domestic and foreign brands by ukrainian consumers with different socio-demographic characteristics, which will help to understand in which areas work is needed to change the image of domestic brands primarily to strengthen the image of domestic brands and increase consumer loyalty. for the purposes were selected of the study ukrainian and foreign brands of a clothing manufacturer. the sample consisted of 169 people different ages and social statuses, living mainly in cherkasy and cherkasy region. the following sample characteristics were taken into account: gender (82 men, 87 women), age (16-60 years; median 24.5 years). the review was conducted by survey (offline and online, using coocle formes). during the research, it was found that the interviewed respondents prefer foreign clothing brands to ukrainian ones. in addition, domestic brands are little known to consumers, so about 12% of respondents did not provide information on their use of ukrainian clothing brands (do not use or do not know any ukrainian brands). data on consumer use of ukrainian and foreign brands are shown in the table 1 (each respondent could name several brands he prefers). the study revealed ukrainian and foreign brands known to consumers, among ukrainian brands dominated by "mass market" brands, and among foreign – brands of the mass market segment and the middle price segment. table 1 distribution of ukrainian and foreign clothing brands known to consumers foreign brands ukrainian brands brand name number of informed consumers brand name number of informed consumers zara 63 kachorovska 11 h&m 38 musthave 9 nike 37 dolcedonna 7 pull&bear 23 folk moda 4 stradivarius 21 factory “lesya ukrainka” 3 bershka 19 andre tan 2 oodji 19 vovk 2 adidas 16 n&м 2 colin's 14 madgie 2 mango 14 b`yurse 2 cropp 12 charodeyki 2 milavitsa 12 mohito 11 reserved 10 data analysis table 1 shows that respondents are much better aware of foreign brands than domestic ones, and use them more often. the number of mentions the foreign brands is 7.5 times higher than the number of mentions of domestic brands. among foreign brands, the most popular are zara, h & m, and nike, among ukrainian – kachorovska, musthave, dolcedonna. often ukrainian brands use english names, "disguising" themselves, thus, under foreign brands. for a more detailed study of ukrainian and foreign clothing brands, several characteristics of brands were selected, which determine their quality and influence the perception of brands by consumers. these include quality, representation, trust, history, uniqueness, personification. the results of consumer surveys on the criteria perception of the brands by consumers are presented in table 2 and in figure 1 and 2. three seas economic journal 23 vol. 2 no. 1, 2021 table 2 evaluation of the quality parameters of clothing brands that affect the perception of the brand by consumers measured parameter foreign brand ukrainian brand number of respondents % number of respondents % quality 126 74,7 43 25,3 representation 122 72,5 65 38,2 trust 140 83,2 56 33,1 history 64 38,2 24 14 uniqueness 74 43,8 35 20,9 personification 105 62,4 29 16,9 number of observations in the sample 631 63,0 252 25,0 to test the hypotheses presented in this study on a more positive perception of the quality of foreign brands compared to ukrainian, the calculation of the fisher angular transformation criterion was used (lozhkin, komarovska, 2014). to do this, we formulate two assumptions. assumptions 1. to test the hypotheses presented in this study on a more positive perception of the quality of foreign brands compared to ukrainian, the calculation of the fisher angular transformation criterion was used (lozhkin, komarovska, 2014). to do this, we formulate two assumptions. consumer perception of the brand mango will always exceed the perception of the brand kachorovska (ukraine). we form two statistically opposite assumptions: but – there is no discrepancy between the consumers' perception of the mango brand and the perception of the kachorovska brand (refutation of the hypothesis); h1 – there is a discrepancy between the consumer perception of the mango brand and the perception of the kachorovska brand (confirmation of the hypothesis). we calculate the empirical value of the fisher angular transformation criterion (lozhkin, komarovska, 2014). φomv = (φ1-φ2) × √(n1×n2) ÷ (n1+n2), (1) where φ1 – an angle that corresponds to a higher percentage; φ2 – an angle that corresponds to a smaller percentage; n1 – number of observations in the sample 1; n2 – number of observations in the sample 2. φomv = (0,584-0,516) × √(309×46) ÷ (309+46) = 0,46 the obtained empirical value of φomv = 0,46 is compared with the critical values of the fisher coefficient φomv= 0.4 ≤ φ * critical = 1.64 (lozhkin, komarovska, 2014). since the φomv less than the critical value of the fisher coefficient, the hypothesis of the predominant consumer perception of the mango brand compared to the kachorovska brand is refuted. assumption 2. consumer confidence in foreign brands will always exceed trust in ukrainian brands. we form two statistically opposite assumptions: but – there is no discrepancy between consumer confidence in foreign and ukrainian brands (refutation of the hypothesis); h1 – there are differences between consumer confidence in foreign and ukrainian brands (confirmation of the hypothesis). φomv = (1,312-0,988) × √ (631x252) ÷ ÷ (631 + 252) = 14,36 the obtained empirical value φomv compare with the critical values of the fisher coefficient φcvc = 2.31; and ≥0.099 (ρ = 0.01) (pachkovsky, maksimenko, 2014); which means confirmation of the assumption of h1 on the difference between the perception of the quality of foreign and ukrainian brands (empirical value of the criterion φomv = 14.36 more than the critical value 0 20 40 60 80 100 representation trust history uniqueness personification total coefficient brand image foreign brand quality 0 20 40 60 80 100 quality representation trust history uniquenesspersonification total coefficient brand image domestic brand figure 1. criteria for consumer perception of foreign clothing brands figure 2. criteria for consumer perception of the foreign clothing brands three seas economic journal 24 vol. 2 no. 1, 2021 φcvc = 2.31), the probability of assumptions is more than 0.999, the probability of error = 0.001, which confirms the hypothesis that consumer confidence in foreign brands will exceed confidence in ukrainian brands. 5. conclusion the results of the study show that the perception of ukrainian consumers of foreign clothing brands in all respects exceeds the perception of ukrainian brands. the difference in the perception of brands in terms of "trust", "quality " and "personalization" is especially noticeable, which demonstrates the main advantages of foreign brands of clothing manufacturers over ukrainian ones. testing the hypothesis of the consumer confidence in foreign brands has shown that consumers trust foreign brands more than ukrainian ones. the profile of the perception the foreign clothing brands manufacturers shows a high level of trust in them, which indicates that consumers tend to automatically choose a foreign brand of clothing based on heuristics ("foreign – means good"), rather than making rational choices. this is partly explained by the concepts of behavioral economics and cognitive distortions of the consumers in the consumer decision-making process. ukrainian consumers rate the quality of foreign brands as higher, and domestic clothing brands perceive them as low-quality, do not trust them, which also contributes to the choice in favor of foreign brands. the last difference is particularly interesting: theoretically, ukrainian brands should evoke a stronger personification, as there are significant opportunities to use the mechanism of brand identification: "own", "the same as me". perhaps the lack of a victorious identification of ukrainian brands by local consumers, with "uniqueness" is associated with the attempt of ukrainian brands to "disguise" themselves under foreign brands in order not to emphasize their ukrainian origin, which violates communication with ukrainian consumers, reduces the strength of ukrainian brands and opportunities to build effective brand communication. the obtained results can be used in the construction of brand communication of the enterprises – clothing manufacturers, as well as a basis for the further socio-psychological study of the brands' perception mechanisms as objects of social cognition. references: rіley, d., remіzova, s., kalafatis, n., & sіngh, j. (2012). the differentіal impact of brand equіty on b2b co-branding. journal of business and industrial marketing , vоl. 27, issue 8, pp. 623–663. kotler, f., & pferch, w. (2007). brand management in the b2b sphere. moscow: vershina. guseva, o. (1998). the concept of branding. advertising ideas – yes! vol. 3, pp. 6–13. koval, l. a., & romanchuk, s. a. (2010). the main aspects of consumer behavior and the factors that determine the choice of a particular type of consumer behavior. scientific works of kirovograd national technical university. economic sciences, vol. 18, part ii, pp. 117–122. available at: http://nbuv.gov.ua/ujrn/npkntu_e_ 2010_18%282%29__22 lozhkin, g. v., & komarovskaya, v. l. (2014). economic psychology: textbook for students: higher textbook lock. kyiv: se "ed. house "personal". pachkovsky, y. f., & maksimenko, а. о. (2014). consumer behavior of ukrainian households: monograph. lviv: ivan franko lviv national university. baltic journal of economic studies 15 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-3 forecasting the development of cultural enterprises in the baltic states and ukraine oleksandr darovanets1, kateryna darovanets2 abstract. the purpose of the paper is to forecast the development of cultural enterprises in the baltic states and ukraine. the article identifies the practical aspect. the enterprises of the cultural sector of lithuania, latvia, estonia, and ukraine are analyzed. the development of cultural enterprises of these countries is presented graphically. the forecast is made. the trend line shows the geometric representation of the average values of the analyzed indicators obtained using any mathematical function. the displayed value of the approximation’s reliability shows the compliance’s degree of the trend model with the original data, as a forecast of cultural enterprises. methodology. the following research methods were used: the method of generalization of theoretical knowledge was used to form the authors’ approach to the definition of terms; tabular method, analysis, which was used to estimate the number and average size of enterprises in the field of culture in the baltic states and ukraine; the graphic method was used for the number of cultural enterprises in lithuania, latvia, estonia, and ukraine; the exponential method was used when constructing a trend line; the approximation method was used for the prediction equation; extrapolation method was used to calculate the projected number and the average size of enterprises in the cultural sectors in lithuania, latvia, estonia, and ukraine. results. the forecast is based on the number of cultural enterprises per capita in the baltic states and ukraine. conclusions are made and proposals for improving the activities of the cultural sector in the leading countries of the world are presented. the study is based on a review of the literature, scientific articles on the development of cultural enterprises in the baltic states and ukraine. practical implications. forecasting the development of cultural enterprises will make it possible to predict activities and avoid miscalculations in the area of the baltic states and ukraine. value/originality. the results of this study provide an opportunity to further make a rating assessment for 2021 and a projected rating assessment of cultural enterprises in the baltic states and ukraine. this will provide an opportunity to learn about the level of development of ukraine in comparison with leading european countries. key words: forecasting, development, cultural enterprises, ukraine, the baltic states, sectors. jel classification: o11, l82, n20 corresponding author: 1 kyiv national university of culture and art, ukraine. orcid: https://orcid.org/0000-0002-7465-5216 researcherid: https://publons.com/researcher/4446883// 2 kyiv national university of culture and art, ukraine. orcid: https://orcid.org/0000-0002-3262-9247 researcherid: https://publons.com/researcher/4452806// 1. introduction the development of cultural enterprises is a system of organization and management of cultural and artistic institutions, improvement of the legal framework. the economic crisis has worsened the activities of cultural enterprises. during the pandemic period, there is an opportunity to rethink possible miscalculations in the cultural sector of the baltic states and ukraine. there are many positive moments during this period that people do not notice. one of them is the development of cultural enterprises in each country. the human resources of cultural enterprises are significantly affected by the lack of timely adaptation to changes in the external environment under the influence of time and the lack of adaptation to changes in the needs of employees, mismatch of conditions and wages there are many talented cultural workers who have traveled to different countries around the world. this contributes to changes in the process of personnel management of cultural enterprises in the leading countries of the world. the crisis has affected the development of cultural enterprises. it has covered almost all public life and has become an important task that needs to be solved soon. baltic journal of economic studies 16 vol. 2, no. 2, 2021 2. literature review antonio vaamonde liste and maria do rosário cabrita say that the risk of the disappearance of lowlevel companies’ profitability in cultural firms is slightly higher than in non-cultural ones. the behavior of cultural and non-cultural firms differ greatly in debt: show firms with high and low debt a significant difference in the risk of their disappearance, although this parameter has no statistical significance in non-cultural companies (antonio vaamonde liste). krupka a.ya, pyrih h.i. believe that it is necessary to promote the material well-being of the population. this will increase the consumption of cultural services. positive effects of strong culture exceed the eventual negative effects of such culture and positively influence the level of enterprises’ dynamics (krupka, pyrih, 2017; the importance of culture for enterprise dynamics…). kyrychuk o. includes among the factors that positively influence the increase of efficiency of investment processes in the sector of culture: the interest of the state and society in the development of culture; diversity of the main activities of cultural institutions, development of creative industries; improving the quality and diversity of cultural services. in european countries, public funding of culture is also carried out based on intergovernmental transfers by transferring local and targeted transfers to local budgets. in norway, municipalities receive from the government a block grant to finance health, education, and culture. some municipalities are allocated a block grant to finance libraries; funds are distributed between local budgets in proportion to the population. another promising form of subsidizing the cultural sphere is partnership participation of the state and corporate sponsors, which contributes to a significant inflow of funds from the private sector. joint projects, for example, in the uk are funded by central budget and sponsorship funds in a ratio of 1:1 for the first project and 1:3 for subsequent projects. in france, a larger share of state participation is envisaged – the budget contribution and the sponsor’s funds are 5:1, money is allocated subject to the prior collection of a certain amount of sponsorship funds (kyrychuk, maksymyak, 2008). 3. analysis number and the average size of enterprises in the cultural sectors in the baltic states and ukraine let us see into the analysis. number and the average size of enterprises in the cultural sectors in western europe (table 1). according to table 1, we can see that in the years 20132018 number and the average size of enterprises in the cultural sectors’ the baltic states and ukraine changed. in latvia, the number of enterprises increased by 1431 or 38.06%. this indicator in lithuania in 2018 compared to 2013 increased by 5688, that is 82.77%. it is seen that in estonia this indicator from 2013 to 2018 was positive, simply increased by 1061 cultural enterprises, that is increased by 38.92%. in ukraine cultural enterprises from 2013 to 2018 was decreased by 87, that is increased by 10.53 %. we can see that lithuania had the largest number of cultural enterprises and ukraine had the smallest number of cultural enterprises from 2013 to 2018. let us see into dynamics. number and the average size of enterprises in the cultural sectors in lithuania (figure 1). according to figure 1, it is seen that number and the average size of enterprises in the cultural sectors in latvia in 2013 as compared with 2018 had an upward trend. let us see the dynamics. the trend line is a geometric representation of the average values of the analyzed indicators, obtained using any mathematical function. r2 is the value of the approximation’s reliability shows the degree of the trend model’s compliance with the original data. its value is 0.949, which is close to 1. the value of r2 shows that the model describes the data with high accuracy. using the trend extrapolation method, we calculated that the predicted number and average size of enterprises in the cultural sectors in lithuania will be: in 2021 increased by 6305 cultural enterprises; in 2022 increased by 17100 cultural enterprises; in 2023 increased by 18160 cultural enterprises. let us see into dynamics. number and the average size of enterprises in the cultural sectors in latvia (figure 2). table 1 number and the average size of enterprises in the cultural sectors in the baltic states and ukraine year latvia lithuania estonia ukraine total size in europe 2013 3759 6872 2726 826 1161698 2014 3913 9019 2885 729 1195166 2015 4609 10195 3138 750 1185689 2016 5074 10957 3261 764 1231553 2017 5007 11653 3605 763 1244269 2018 5190 12560 3787 739 1285203 change in 2018 compared to 2013 1431 5688 1061 -87 123505 % change in 2018 compared to 2013 +38.06 +82.77 +38.92 -10.53 -5.21 source: compiled by the authors based on eurostat (state of eurostat) baltic journal of economic studies 17 vol. 2, no. 2, 2021 according to figure 2, it is seen that number and the average size of enterprises in the cultural sectors in latvia in 2013 as compared with 2018 had an upward trend. only in 2017, we can see a decrease in this indicator. the trend line is a geometric representation of the average values of the analyzed indicators, obtained using any mathematical function. r2 is the value of the approximation’s reliability shows the degree of the trend model’s compliance with the original data. its value is 0.8855, which is close to 1. the value of r2 shows that the model describes the data with high accuracy. using the trend extrapolation method, we calculated that the predicted number and average size of enterprises in the cultural sectors in latvia will be: in 2021 increased by 6305 cultural enterprises; in 2022 increased by 6617 cultural enterprises; in 2023 increased by 6928 cultural enterprises. figure 1. number and the average size of enterprises in the cultural sectors in lithuania source: compiled by the authors based on eurostat (state of eurostat) figure 2. number and the average size of enterprises in the cultural sectors in latvia source: compiled by the authors based on eurostat (state of eurostat)   6872 9019 10195 10957 11653 12560 y = 1060,1x + 6498,9 r² = 0,949 0 5000 10000 15000 20000 25000 2013 2014 2015 2016 2017 2018   3759 3913 4609 5074 5007 5190 y = 311,49x + 3501,8 r² = 0,8855 0 1000 2000 3000 4000 5000 6000 7000 8000 2013 2014 2015 2016 2017 2018 baltic journal of economic studies 18 vol. 2, no. 2, 2021 let us see into dynamics. number and the average size of enterprises in the cultural sectors in estonia (figure 3). according to figure 3, it is seen that number and the average size of enterprises in the cultural sectors in estonia in 2013 as compared with 2018 had an upward trend. the trend line is a geometric representation of the average values of the analyzed indicators, obtained using any mathematical function. its value is 0,9871, which is close to 1. the value of r2 shows that the model describes the data with high accuracy. using the trend extrapolation method, we calculated that the predicted number and average size of enterprises in the cultural sectors in estonia will be: in 2021 increased by 4426 cultural enterprises; in 2022 increased by 4643 cultural enterprises; in 2023 increased by 4860 cultural enterprises. let us see into dynamics. number and the average size of enterprises in the cultural sectors in ukraine (figure 4). according to figure 4, it is seen that number and the average size of enterprises in the cultural sectors figure 3. number and the average size of enterprises in the cultural sectors in estonia source: compiled by the authors based on eurostat (state of eurostat) figure 4. number and the average size of enterprises in the cultural sectors in ukraine source: compiled by the authors based on the state statistics service of ukraine (state statistics service of ukraine)   2726 2885 3138 3261 3605 3787 y = 216,8x + 2474,9 r² = 0,9871 0 1000 2000 3000 4000 5000 6000 2013 2014 2015 2016 2017 2018   826 729 750 764 763 y = -9,1x + 793,7 r² = 0,1581 600 650 700 750 800 850 2013 2014 2015 2016 2017 baltic journal of economic studies 19 vol. 2, no. 2, 2021 in ukraine in 2013 as compared with 2018 tended to down, especially in 2014. the trend line is a geometric representation of the average values of the analyzed indicators, obtained using any mathematical function. r2 is the value of the approximation’s reliability shows the degree of the trend model’s compliance with the original data. its value is 0.1581, which is close to 1. the value of r2 shows that the model describes the data with high accuracy. using the trend extrapolation method, we calculated that the predicted number and average size of enterprises in the cultural sectors in ukraine will be: in 2021 increased by 712 cultural enterprises; in 2022 increased by 703 cultural enterprises; in 2023 increased by 694 cultural enterprises. let us see into dynamics. number and the average size of enterprises in the cultural sectors in the baltic states and ukraine (figure 5). according to figure 5, we can see that lithuania had the largest number of cultural enterprises among the countries of the baltic states and ukraine. the smallest number of cultural enterprises in ukraine from 2013 to 2018. 4. number of cultural enterprises per 1 person in the baltic states and ukraine let us see into the analysis. the number of cultural enterprises per 1 person in the baltic states and ukraine (table 2). according to table 2, it is seen that number of cultural enterprises per 1 person the largest in 2021 in latvia, which is 0.86 %, and the smallest in ukraine, which is 0.01% among the studied countries. this indicator for january 1, 2021: lithuania 0.24 %; estonia 0.34%. let us see into forecast indicators analysis. the number of cultural enterprises per 1 person in the baltic states and ukraine (table 3). according to table 3, it is seen that is forecasting number of cultural enterprises per 1 person the largest in 2025 in latvia, which is 1.12 %, and the smallest in ukraine, which is 0.01% among the studied countries. figure 5. number and the average size of enterprises in the cultural sectors in the baltic states and ukraine, 2013-2018 source: compiled by the authors based on eurostat and the state statistics service of ukraine (state of eurostat; state statistics service of ukraine)   6872 9019 10195 10957 11653 12560 3759 3913 4609 5074 5007 5190 2726 2885 3138 3261 3605 3787 826 729 750 764 763 739 0 2000 4000 6000 8000 10000 12000 14000 2013 2014 2015 2016 2017 2018 ukraine estonia latvia lithunia table 2 number of cultural enterprises per 1 person in the baltic states and ukraine, january 1, 2021 country lithuania latvia estonia ukraine population 2680976 1866316 1320831 41588400 number of cultural enterprises 6305 16040 4426 712 number of cultural enterprises per 1 person, % 0.24 0.86 0.34 0.01 source: compiled by the authors based on the state statistics service of ukraine and eurostat (state of eurostat; state statistics service of ukraine; the population of lithuania; the population of latvia; the population of estonia; state of minfin of ukraine) baltic journal of economic studies 20 vol. 2, no. 2, 2021 5. conclusions summarizing the results of the development of cultural enterprises in the baltic states and ukraine, we can draw the following conclusions: – lithuania had the largest number of cultural enterprises among the countries of the baltic states and ukraine. the smallest number of cultural enterprises in ukraine from 2013 to 2018; – using the trend extrapolation method, we calculated that the predicted number and average size of enterprises in the cultural sectors in lithuania will be: in 2021 increased by 6305 cultural enterprises; in 2022 increased by 17100 cultural enterprises; in 2023 increased by 18160 cultural enterprises; – the predicted number and average size of enterprises in the cultural sectors in latvia will be: in 2021 increased by 6305 cultural enterprises; in 2022 increased by 6617 cultural enterprises; in 2023 increased by 6928 cultural enterprises; – this indicator in estonia will be: in 2021 increased by 4426 cultural enterprises; in 2022 increased by 4643 cultural enterprises; in 2023 increased by 4860 cultural enterprises; – the predicted number and average size of enterprises in the cultural sectors in ukraine will be: in 2021 increased by 712 cultural enterprises; in 2022 increased by 703 cultural enterprises; in 2023 increased by 694 cultural enterprises; – the number of cultural enterprises per 1 person is the largest in 2025 in latvia, which is 0.86 %, and the smallest in ukraine, which is 0.01% among the studied countries. this indicator for january 1, 2021: lithuania 0.24 %; estonia 0.34%; – forecasting number of cultural enterprises per 1 person the largest in 2025 in latvia, which is 1.12%, and the smallest in ukraine, which is 0.01% among the studied countries. we will provide recommendations for the improvement of cultural enterprises in the baltic states and ukraine, that is: – to develop a mechanism for managing the quality of services, the functioning of cultural enterprises; – increase the relationship between cultural enterprises and consumers of cultural services through advertising, incentives; – cultural workers need to cooperate with workers of different countries in the cultural sector; – to establish the relationship between cultural enterprises and universities in terms of cultural literacy; – it is necessary to give creative teams more independence in choosing the direction of their development, the formation of repertoire policy, the organization of both main and commercial activities. table 3 forecasting number of cultural enterprises per 1 person in the baltic states and ukraine, january 1, 2025 country lithuania latvia estonia ukraine population 2788017 1812685 1280130 41466200 number of cultural enterprises 7551 20280 5293 675 number of cultural enterprises per 1 person, % 0.27 1.12 0.41 0.01 source: compiled by the authors based on the state statistics service of ukraine and eurostat (state of eurostat; state statistics service of ukraine; the population of lithuania; the population of latvia; the population of estonia; state of minfin of ukraine) references: antonio vaamonde liste, maria do rosário cabrita. the survival of cultural firms: a study of multiple accounting parameters in spain. doi: https://doi.org/10.3390/su12031159 krupka, a. ia., & pyrih, h. i. (2017). industry and culture as an important component of the country’s economic system. bulletin of odessa national university named after i. mechnikov, 11 (64), 189–192. the importance of culture for enterprise dynamics: the role of type and strength of culture. available at: https://www.tandfonline.com/doi/full/10.1080/1331677x.2016.1168038 (accessed 06 may 2021). kyrychuk, o., & maksymyak, l. (2008). improving the mechanisms of financing cultural and artistic activities in ukraine. efficiency of public administration, 14/15, 277–285. state of eurostat. available at: https://ec.europa.eu/eurostat/databrowser/view/cult_ent_num/default/ table?lang=en (accessed 29 april 2021). state statistics service of ukraine. available at: http://ukrstat.gov.ua/imf/arhiv/nr/nr2016_2020_u.htm accessed 05 april 2021 (accessed 30 april 2021). the population of lithuania. available at: https://countrymeters.info/ru/lithuania (accessed 19 april 2021). the population of latvia. available at: https://countrymeters.info/ru/latvia (accessed 20 april 2021). the population of estonia. available at: https://countrymeters.info/ru/estonia (accessed 19 april 2021). state of minfin of ukraine. available at: https://index.minfin.com.ua/reference/people/ (accessed 19 april 2021). three seas economic journal 31 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-6 the influence of the information economy on the activities of banks svitlana kiporenko1 abstract. the banking system ensures the smooth functioning of the country's economy by servicing cash and non-cash payments, holding funds of legal entities and individuals, providing them with credit resources and many other types of operations. banking activity is characterized by a high degree of risk, as banks operate under the constant threat of losing money and bankruptcy. therefore, the fight against risk is an important task of the entire banking system, and ensuring banking safety becomes the cornerstone of the mechanism of financial security of the state. the existing problems in the banking system in modern conditions are exacerbated by the rapid development of the information economy, which is radically changing the payment landscape of entire countries and threatens the existence of the banking system as such in the usual sense. the aim of the study is a theoretical and analytical coverage of the problems and risks of banking security of the state in the development of the information economy. the subject of the study are the theoretical aspects of banking security of ukraine in the development of information economy. the article used such methods of research as: the method of scientific knowledge (due to the purpose and objectives of the study); analysis and synthesis (to study the impact of the development of the information economy on the banking security of the state); comparative analysis (for the process of analyzing the existing methodological approaches to assessing the level of banking security of the state); statistical analysis, comparison and graphical methods (to assess the state of the main effects of the information economy on the banking system); systematization and statistical analysis (to determine changes in the operational component of banking activity under the influence of the information economy). it was also analyzed e-money transfer services and what e-money was issued by banks in 2020. data on information security and cybersecurity of ukrainian banks were provided. according to the results of the study, conclusions were made about the impact on the development of the information economy of the risks arising in banking operations. the prospects for further research in the field of improving the methods of security in the informatization of banking services are outlined. key words: economic security of the state, banking security of the state, information economy, bank, banking system, non-cash payments, cryptocurrency, electronic credit platform, risk, threat. jel classification: g21, c80, o32 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: kiporis@yahoo.com orcid: https://orcid.org/0000-0001-5045-5052 researcherid: abd-8175-2021 1. introduction the problems of the functioning of the banking system in the context of the rapid development of the information economy are currently studied only fragmentarily. a number of issues related to the emergence of new risks and opportunities to strengthen the banking security of ukraine in the development of the information economy, has been insufficiently studied. the need to study the impact of digitalization on banking activities has been studied by ukrainian and foreign scientists. the works of the following foreign scientists deserve special attention: d. zimmerman, s. carbo-valverde, d. cliff, d. rose, and others. among ukrainian scientists the works of such scientists are of special scientific value: s.a. sheludko, p.p. bratkevich, a.yu. semenog, s.v. tsirulyk, g.b. sokolova, s.m. veretyuk, v.v. pilinsky, s.v. kolyadenko etc. the study aims to cover the concepts associated with the informatization of banking operations, as well as an analysis of the current situation in the banking market. digitalization is an important direction of development of all spheres of ukraine's economy, including the banking sector. digitalization in banking is a complex of modern economic, organizational, management and institutional innovations in any sphere of bank activities (kljoba, 2018). this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 32 vol. 2 no. 4, 2021 the bank's economic information is organized into various is used in banking under the general name "automated banking information systems". there is no generally accepted classification of is, so they can be classified on various grounds. the basic is of banking include (varnaliy, onyschenko, 2016): a) external is: system of legislative and regulatory documents; information system based on new information technologies (swift, reuters, internet, etc.); b) internal is: the system of internal regulatory documents of the bank; accounting and reporting system; automated banking system; system of economic security of the bank; intrabank risk management system, including credit risk management; system of evaluation of the bank's activities; marketing information and other internal is. 2. risks and threats to the functioning and development of the banking system the impact of the information economy on the prospects for the development of the country 's banking system is twofold: on the one hand, it contains favorable opportunities for such development, and on the other hand, it leads to risks and threats to the functioning and development of the banking system. this influence can be characterized as direct and indirect. instead, the introduction of the digital economy and e-commerce, from the point of view of the world bank, carries a number of risks, including: the risk of cyber threats associated with the problem of protecting personal data; digital "slavery," or the use of the personal data of millions of consumers to control and/ or manipulate their behavior; rising unemployment due to the disappearance of certain professions and even industries due to the continued spread of information technology and products, including stores with electronic cash registers, customer service bots, driverless cars, etc. in particular, a number of experts believe that the banking system may disappear in the next ten years; the digital "gap" in education due to different conditions of access to digital services and products and, consequently, the gap in the level of consumption of people in the same country or in different countries (gladkikh, 2018). another classification of risks to the state and society associated with the development of the digital economy identifies the following major groups of risks (gladkikh, 2018): sovereignty risks (penetration of "foreign" it-technologies in all aspects of life and activities of the country, which significantly increases its vulnerability; creating national cybersecurity threats in finance, transportation and energy infrastructure, social engineering, and modeling; risks to society (the robotization of production and services i ncreases unemployment and the disappearance of certain professions, exacerbating social disharmony); impoverishment of human resources; risks to the individual (computerization from an early age leads to the development of "machine" or "clip" thinking in children due to the loss of systemic thinking (so there is a gradual process of losing one's own identity, instead the development of innovative breakthrough ideas, which are usually at the intersection of different fields of knowledge, requires a non-linear logic from the individual). 3. the impact of the development of the information economy on the banking system next, consider the impact of the development of the information economy directly on the banking system through the prism of "benefits-risks”. figure 1. contains information describing the main effects of the information economy on the banking system of ukraine in comparison with similar trends observed in the world. in the face of intensifying competition with decentralized cryptocurrencies, the central banks of a number of countries are preparing to issue their own centralized digital currencies, which will be at the same time a convenient, fast, reliable, secure and cheap tool for payments and savings. instead, the main risks of digital currencies issued by central banks are technological risks, monetary policy implementation risks, financial stability risks, and reputational risks. however, the key risk of issuing digital currencies is considered to be cyber risk, the value of which in 2018 for the global economy as a whole is about $600 billion. in 2018, the global economy as a whole is worth about $600 billion, or 0.8% of global gdp (semenogh, cyrulyk, 2018). influenced by the development of the information economy, central banks in many countries are also paying attention to financial inclusion, because, according to the world bank, at the end of 2017, about 1.7 billion adults (31% of the population) did not have a bank account (in ukraine their share was even higher and amounted to 37%). at the same time, more than 100 countries around the world have already developed a national financial inclusion strategy or have built financial inclusion components into other national strategies (national bank of ukraine, 2020). increased financial inclusion creates new opportunities for central banks and the state as a whole, as it attracts all segments of the population, which stimulates economic growth by mobilizing the savings of individuals, further investing in economic development, and diversifying the financial system; for financial service providers (primarily three seas economic journal 33 vol. 2 no. 4, 2021 banks) – by increasing the number of clients and revenues; for consumers – by more convenient and efficient use of modern financial services, which increases their personal well-being. financial inclusion is directly linked to the financial literacy of the population. therefore, the best practices of improving financial literacy in the leading countries of the world are united under the auspices of international organizations: world bank, oecd, usaid and others. according to the world bank, 44 countries have already approved financial literacy strategies, and 27 countries are in the process of developing such documents. at the same time, the function of improving financial literacy is also mainly performed by central banks (the official site of national bank of ukraine, 2019). changes in the structure of the banking system of ukraine and the nature of the regulator's activities under the influence of the information economy, in line with global trends, manifested, in particular, in (the official site of national bank of ukraine, 2020): – successful completion of testing of own digital currency. as part of testing the experience of other central banks during 2016-2018, the nbu piloted the digital electronic hryvnia, which is seen as an alternative to existing payment instruments (cash, payment cards and electronic money). the advantages of electronic hryvnia are: ease of use, accessibility, security (due to nbu guarantees) and speed of payments. instead, the main risk for ukrainian banks from full implementation of e-hryvnia is the likelihood that the new product will absorb existing e-money services issued by commercial banks, resulting in loss of previous costs of implementing these products by reorienting customers to the more reliable instrument offered by the nbu; – accelerated financial inclusion, which is one of the strategic objectives of the nbu. among the regulator's achievements in this area, as reflected in the nbu's 2018 report, are an increase of one-third per year in transactions using payment cards and an increase in the share of non-cash transactions among all transactions using payment cards to 45%; – intensification of the regulator's efforts aimed at improving financial literacy, which is one of the key areas of financial inclusion. – reduction in the number of operating bank branches due to the automation of banking operations and the spread of online sales of banking products, which allows banks to optimize the network and reduce the "traditional" banking personnel (cashiers, operators, credit inspectors, collectors, security guards, etc.); – the emergence of virtual "banks without branches. these include the entry of a new structure "monobank" to the banking market at the end of 2017. at the same time, this institution does not have a license of the nbu to carry out banking activities, the statements "bank" is not published by the nbu, its assets and liabilities are recorded on the balance sheet of jsc "universal bank". monobank offers its customers figure 1. the main effects of the information economy on the banking system sourse: (sheludjko, bratkevych, 2019) regulators of other countries banking systems of other countries banking system of ukraine preparation for the issuance of centralized digital currencies completion of testing of own digital currency (e-hryvnia) emergence of "uninhabited" branches emergence of virtual "banks without branches" ensuring financial inclusion accelerated provision of financial inclusion distribution of nonbank institutions performing certain functions of banks  distribution of nonbanking institutions that perform certain functions of banks increasing the financial literacy of the population accelerated increase in financial literacy reduction in the number of bank branches  reduction in the number of bank branches  new divisions in the structure of regulatory bodies new divisions in the structure of regulatory bodies staff reduction staff reduction expansion of the banking infrastructure outside the banks  expansion of the banking infrastructure outside the banks  national bank of ukraine three seas economic journal 34 vol. 2 no. 4, 2021 consumer credit services, and the issue, maintenance and reissuance of the card in case of loss is free; – expanding the presence on the ukrainian banking market of new entities that are not banks, but perform the "traditional" functions of banks related to money transfers, currency sales and lending (non-bank payment systems that transfer funds: globalmoney, city24, ukrcard, etc.; microfinance organizations that provide online loans: moneyveo.ua, moneyboom.com.ua, onlinegroshi.com, etc.; p2p-lending services, in particular, "loan", finhub.ua, taplend.com; crypto currency sales services: tyme and ibox terminals, specialized cryptocurrencies, online exchange offices, in particular, bitcoin24, which works with the help of privat24, or other online exchanges kuna.io and btc. trade); – active expansion of the bank payment infrastructure (atms, payment and pos-terminals) outside banks and bank branches, which actualizes the risks associated with physical security and cybersecurity. 4. analysis of changes in the operational component of banking activity under the influence of the information economy changes in the operational component of banking under the influence of the information economy form, in particular, the following trends. during 2020, money transfer services were actually provided by 37 money transfer systems, of which (national bank of ukraine, 2020): – 30 systems created by residents; – 7 systems created by non-residents. using both resident and non-resident fund transfer systems, there were (total) transfers in 2020: – within ukraine – 255.2 billion uah. ($9,489.6 million in u.s. equivalent); – to ukraine – $2,697.4 million. in u.s. equivalent; – outside ukraine – $556.2 million. in u.s. equivalent. as of january 1, 2021, ukrainian banks served 64 million customers, including: – business entities – 2.7 million customers, of which 1.7 million customers are individual entrepreneurs; – individuals – 61.3 million customers. 124.6 million accounts were opened for bank clients. 5.3 million accounts were opened for business entities, including 5.2 million current accounts and 0.1 million deposit accounts. more than 4 million businesses are serviced remotely, which allows the bank's client to promptly track funds in the account and conduct operations on it. for individuals, 119.3 million accounts were opened, including: 102.9 million current accounts and 16.4 million deposit accounts. more than 55 million individuals are serviced remotely. also, as of 01.01.2021, 436 escrow accounts were opened for business entities and 328 accounts for individuals of the following types: banks – 73, clients – 64 million people, accounts – 124.6 million, business entities – 2.7 million (including 1.7 million – individual entrepreneurs), individuals – 61.3 million (national bank of ukraine, 2020). in 2020, there is a tendency for the number of accounts opened by businesses to increase by 12.8%, and accounts of individuals to increase by 4.3%. in 2020, banks are issuing and other operations with the following electronic money (national bank of ukraine, 2020): “maxi” ( jsc “tascombank”); “xpay” ( jsc “bank sich”); “forpost” ( jsc “alfa-bank”); globalmoney ( jsc bank alliance); “electrum” ( jsb “ukrgasbank”); “alfa-money” ( jsc “alfa-bank”); mastercard (pjsc “vostok” bank, pjsc “alfa-bank”, jsc “tascombank”, pjsc cb “privatbank”, jsc “fuib”, jsc “crystalbank”, jsc “oshad bank”); visa ( jsc “oshadbank”, pjsc “fuib”, pjsc cb “privatbank”, jscb “industrialbank”, jsc jscb “concord”, jsc “megabank”, jsc “raiffeisen bank”); “space” ( jsb “ukrgasbank”, jsc “alfa-bank”, jsc “unex bank”, jsc “bank vostok”). in 2020, the following indicators increased at the issuing banks compared to 2019: – the volume of transactions with electronic money increased by 2 590 million uah (by 15%, from 16 714 million uah to 19 004 million uah); – the number of "electronic wallets" increased by 5 million pcs. (by 7%), from 74 million pcs. to 79 million pcs. at the same time, the volume of issued electronic money decreased by 143 million uah (almost 3.4 times, from 203 million uah to 60 million uah). this is due to the fact that several large participants left the market in the second half of 2020 (figure 2, figure 3). in particular, "alpha bank" jsc stopped issuing "forpost" and "space" electronic money. at the same time, the analysis of e-money market for the period from 2014 to 2020 shows that despite the reduction in the volume of e-money issued by banks in 2020, consumer demand for this product to pay for goods and services in ukraine continues to grow. the national bank cybersecurity center continued to build its cybersecurity capabilities in 2020. the nbu has focused on improving the ability of the cyber security incident response team (csirt-nbu) to detect, respond to and neutralize cyber attacks and cyber incidents, as well as expanding the range of sources of information on current cyber threats. improving tools for sharing information about current cyber threats and cyber threat indicators, csirt-nbu deployed and maintained the malware information sharing platform & threat sharing (misp-nbu). this platform allows users to quickly receive information three seas economic journal 35 vol. 2 no. 4, 2021 about current cyber threats and cyber threat indicators. misp-nbu accumulates information received from csirt-nbu, similar platforms (misp) cert-ua, the ssu cyber security situation centre and the national cyber security coordination centre under the national security and defense council of ukraine. during 2020, csirt-nbu studied about 2,500 samples of malicious software, provided ukrainian banks with information about identified cybersecurity incidents and recorded attempts to commit cyberattacks (national bank of ukraine, 2020). the cyber security center of the national bank continued to cooperate with the entities of the national cyber security system of ukraine, other state and commercial institutions working in the field of cyber security and cyber protection. in addition, international cooperation in the field of cybersecurity developed. also, in 2020, in order to fulfill the powers under the law of ukraine "on the national bank of ukraine", the nbu regulated the definition of critical infrastructure facilities and critical information infrastructure facilities in the banking system of ukraine. this is reflected in the regulation on the definition of critical infrastructure in the banking system of ukraine. despite the growing number and variety of cyber threats, thanks to the implementation of new security technologies, effective use of protection systems and complexes, improvement of mechanisms for sharing information about cyber attacks and cyber incidents, the nbu ensured timely detection, assessment and effective response to cyber threats in 2020. assessment of the real state of security of information network resources and its ability to withstand external and internal cyber threats according to the results of an external audit of information security in 2020 showed that the nbu has provided a high level of effective and targeted information protection in the information infrastructure of the national bank. law of ukraine "on the national bank of ukraine" (the official site of national bank of ukraine, 2017). in 2020, the nbu upgraded the cryptographic protection system of the national bank, improved the reliability and fail-safety of the system of data collection and storage of registrars of payment transactions recorders. the nbu worked with payment market participants to improve the efficiency of document reconciliation processes. in particular, in order to harmonize the conditions of their activities in terms of information protection and the use of electronic money, the nbu developed recommendations, defined standard figure 2. total number of "e-wallets", million pcs. sourse: national bank of ukraine, 2020 figure 3. volume of e-money issued, uah million sourse: national bank of ukraine, 2020 33,7 40,4 45,7 52,9 52,7 73,9 79 0 20 40 60 80 100 2014 2015 2016 2017 2018 2019 2020 12,5 30,7 40,4 59,9 83,2 202,9 60 0 50 100 150 200 250 2014 2015 2016 2017 2018 2019 2020 three seas economic journal 36 vol. 2 no. 4, 2021 comments and descriptions and posted them on the official website. in addition, the nbu took care of the spread of electronic trust services in the banking system, helped expand the range of services for remote customer service, provided an opportunity to improve safety, quality, convenience and speed of banking services to its customers. thus, in 2021, four providers of electronic trust services of the banking system received the status of qualified providers based on the decision of the certification center: – national bank of ukraine – qualified electronic trust service provider "accredited key certification center of the national bank of ukraine"; – joint stock company commercial bank "privatbank" – qualified provider of electronic trust services of jsc cb "privatbank"; – joint stock company "state savings bank of ukraine" – qualified provider of electronic trust services – the key certification center of joint stock company "oshadbank"; – joint stock company ukrsibank – qualified provider of electronic trust services of jsc "ukrsibank". the certification authority has generated qualified public key certificates for these providers using (bukhtiarova, ghushha, 2019): – state algorithm of electronic signature national standards of ukraine (dstu -4145), 6 certificates; – international electronic signature algorithm ecdsa, 2 certificates; – international electronic signature algorithm rsa, 2 certificates. nbu took another step to regulate the process of monitoring of cybersecurity, information security and provision of electronic trust services in the banking system of ukraine. to improve the organization of banks in the face of modern cyber threats, the nbu has developed rules to monitor banks' compliance with legislation on information security, cybersecurity and electronic trust services. according to the world economic forum, in 2020, cyberattacks ranked eighth in the risk ranking in terms of impact and were among the top 10 most likely risks. therefore, strengthening control over the implementation of cybersecurity and information security measures by banks, the introduction of a new type of control over banks in the form of on-site inspections and off-site supervision, as well as selfassessment of information security and cybersecurity will help banks to resist cyber threats. in addition, it will allow the nbu as the regulator to evaluate: – the effectiveness of the bank's information security management system; – completeness of the bank's compliance with the requirements of regulations of the national bank on information security and cybersecurity; – the level of information security and cyber risk management by the bank. 5. conclusions new opportunities and risks have been identified that allow banks to embrace changes in the external and internal environment. new opportunities for banks to develop the information economy include increasing the efficiency of their activities (by expanding the customer base and increasing sales of services, conquering new market segments without the need to open new "sales outlets", increasing revenue, reducing operating costs, rental and maintenance of premises, optimization of staff and payroll costs, increasing the level of process automation, speeding up the processing of information). fundamentally new banking risks associated with the rapid development of the information economy include: risks associated with the development of non-cash payments (increased competition with non-bank institutions, loss of commission income, increased vulnerability of digital infrastructure of banks due to the expansion of equipment network, the risk of fraud with payment cards, which in general directly affects the level of banking security of the state); the risks associated with the spread of cryptocurrencies (high volatility of the exchange rate, which can provoke significant losses, potential loss of customers, cash flows, interest income, assets and liabilities, liquidity risk, reduced balances due to loss of customers, risk of cryptocurrency fraud, undermining monetary state monopolies, reduced central bank revenue, reduced demand for the national currency, causing its depreciation and rate change, inability to conduct effective monetary policy, destabilization of the financial market as a whole due to the fall of the cryptocurrency market); risks associated with the spread of electronic credit platforms (increased competition with non-banking institutions, potential loss of customers, cash flows, interest income, assets and liabilities, lack of reporting and regulation by the nbu, lack of state deposit guarantees for depositors, liquidity risk can provoke bankruptcy of banks, which in general negatively affects the level of state banking security). for further disclosure of this issue, the following study will reflect the methods of improving the security of banking services informatization three seas economic journal 37 vol. 2 no. 4, 2021 references: bukhtiarova, a. gh., & ghushha, a. v. (2019). countering cybercrime in the banking sector. pryazovs'kyj ekonomichnyj visnyk, 3, 355–361. gladkikh, d. m. (2018). rozvytok tsyfrovoi ekonomiky u sviti ta ukraini: ryzyky dlia bankiv [development of digital economy in the world and ukraine: risks for banks]. riga: lap lambert academic publishing. gladkikh, d. m. (2019), bankivska bezpeka derzhavy v umovakh rozvytku informatsiinoi ekonomiky (transformatsii bankivskykh operatsii) [banking security of the state in terms of information economy (transformation of banking operations)]. kyiv: nuou. kljoba, l. gh. (2018). digitalization is an innovative direction of banks' development. efektyvna ekonomika, 12. available at: http://www.economy.nayka.com.ua/?op=1&z=6741 (accessed 05 november 2021). national bank of ukraine (2020). zvit pro vykonannia kompleksnoi prohramy rozvytku finansovoho sektoru ukrainy do 2020 roku [report on the implementation of a comprehensive program for the development of the financial sector of ukraine until 2020]. kyiv: nacionaljnyj bank ukrajiny. semenogh, a. ju., & cyrulyk, c. b. (2018). trends in the development of fintech services in the global and domestic financial services markets. ekonomika, 10, 327–334. sheludjko, s. a., & bratkevych, p. p. (2019). the impact of digitalization on the banking business in ukraine. priazovsky economic bulletin, 5, 334–339. the official site of national bank of ukraine (2017). on approval of the regulations on the organization of measures to ensure information security in the banking system of ukraine. available at: https://bank.gov.ua/ua/legislation/ resolution_28092017_95 (accessed 03 november 2021). the official site of national bank of ukraine (2019). innovations and development of the fintech market of ukraine are in the focus of the national bank's attention. available at: https://bank.gov.ua/ua/news/all/innovatsiyi-tarozbudova-finteh-rinku-ukrayini--u-fokusi-uvagi-natsionalnogo-banku (accessed 10 november 2021). the official site of national bank of ukraine (2020). electronic payment system. available at: https://bank.gov.ua/ ua/payments/sep (accessed 07 november 2021). varnaliy, z., & onyschenko, s. (2016). modern tendencies of structural components of financial security of ukraine in the conditions of global transformations. formuvannia rynkovoi ekonomiky v ukraini, 35(1), 75–80. three seas economic journal 111 vol. 3 no. 1, 2022 corresponding author: 1 odessa national medical university, ukraine e-mail: emartynuk2017@gmail.com orcid: https://orcid.org/0000-0002-0377-7881 researcherid: b-8635-2019 2 international humanitarian university, ukraine e-mail: ilya.korolev.odessa@gmail.com orcid: https://orcid.org/0000-0001-8612-0203 doi: https://doi.org/10.30525/2661-5150/2022-1-15 virtual and accessible reality technologies in the trends of modern enterprise competitiveness olena martyniuk1, illia korolov2 abstract. in today's dynamic business environment, any business organization strives to maintain its own competitive advantage in the market. therefore, each company develops and implements methods that allow not only to maintain a stable position, but also to develop and increase the scale of activities in a particular area. such methods include various innovative solutions, attraction of highly qualified personnel, improvement of management system, changes in technological processes in production and many other things. recently, however, so-called virtual reality technologies (vr-technologies) have become increasingly popular among companies. they are becoming increasingly important due to the rapid development of information and communication and digital technologies, which greatly facilitate and diversify the lives of most people and organizations. virtual reality technology is slowly entering the workplace and is used in many fields such as medicine, construction and design, automotive, military, logistics, architecture and design, education, sports, engineering, design, tourism, and more. the main advantage of such technologies is the possibility of complete immersion into the created reality, additionally acquired ability to feel and analyze both positive aspects and negative consequences of planned actions, as well as to simulate options for future events. therefore, the use of modern vr technologies by more and more organizations plays an important role in the development of their competitiveness. according to scientists and practitioners, the benefits of using such technologies are, first, to create added value for consumers through a new set of skills and knowledge; second, to give the organization a virtual competitive advantage; third, the achievement by the company of greater flexibility, dynamism and persuasiveness when using virtual reality to demonstrate its product (for example, to disassemble and assemble its own products in order to explain the internal mechanism or something else); fourth, reducing the duration of the production process, which uses vr technology; fifth, reducing costs and increasing profits for the organization by optimizing processes, which will save resources and time, and others. the aim of this publication is to investigate the main theoretical and practical aspects of virtualization of organizations, in particular, the impact of vr-technologies on their competitiveness, to analyze foreign experience in the use of virtual technologies in business and to summarize proposals for competitive advantage based on virtual reality technologies. key words: virtual reality, augmented reality, digitalization trends, vr-technologies, btl-marketing, 2 gr, usdz. jel classification: м11, g14, l86, о33 introducation in today 's dynamic business environment, any business organization strives to maintain its own competitive advantage in the market. therefore, each company develops and implements methods that allow not only to maintain a stable position, but also to develop and increase the scale of activities in a particular area. such methods include various innovative solutions, attraction of highly qualified personnel, improvement of management system, changes in technological processes in production and many other things. recently, however, so-called virtual reality technologies (vr-technologies) have become increasingly popular among companies. they are becoming increasingly important due to the rapid development of information and communication and digital technologies, which greatly facilitate and diversify the lives of most people and organizations. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 112 vol. 3 no. 1, 2022 virtual reality technology is slowly entering the workplace and is used in many fields such as medicine, construction and design, automotive, military, logistics, architecture and design, education, sports, engineering, design, tourism, and more. the main advantage of such technologies is the possibility of complete immersion into the created reality, additionally acquired ability to feel and analyze both positive aspects and negative consequences of planned actions, as well as to simulate options for future events. therefore, the use of modern vr technologies by more and more organizations plays an important role in the development of their competitiveness. according to scientists and practitioners, the benefits of using such technologies are, first, to create added value for consumers through a new set of skills and knowledge; second, to give the organization a virtual competitive advantage; third, the achievement by the company of greater flexibility, dynamism and persuasiveness when using virtual reality to demonstrate its product (for example, to disassemble and assemble its own products in order to explain the internal mechanism or something else); fourth, reducing the duration of the production process, which uses vr technology; fifth, reducing costs and increasing profits for the organization by optimizing processes, which will save resources and time, and others. 1. methodology of research according to gartner analysts, the widespread use of virtual reality technology can be talked about very soon, because technologically everything is ready for their mass application. to back it up, a report from consulting firm pwc claims that the global virtual and augmented reality industry was worth $46 billion in 2019, and that it will increase 30-fold to $1.5 trillion by 2030. terminologically, virtual reality is a computergenerated three-dimensional environment with which a person can interact. augmented reality refers to all projects aimed at supplementing reality with some virtual elements. their principal difference is that virtual reality constructs a new artificial world, while augmented reality only introduces certain artificial elements into the perception of the real world. in the near future, such technologies will become a common part of everyday life. however, today, the significant spread of vrtechnology is still hampered, first, by the low quality of vr-content; second, by the variety of platforms and lack of uniform standards in its creation; third, by the absence of a clear distribution system, a single platform, where the relevant products would be collected. on the other hand, the dynamics of changes in the external environment of organizations and growing market competition leave them no choice but to quickly master new potentially valuable for consumers and profitable for the organization itself technologies that can improve its competitiveness. using the capabilities of such vr-technologies will allow the organization to act proactively in a dynamic environment, create a significant competitive advantage, increase the current effectiveness of the organization and strengthen the dynamics of its adaptation to changes in the external environment. the beginning of attempts to develop new devices can be considered the events of 2010–2013, when it was announced the development of special glasses google glass by google and virtual reality helmet oculus rift by the same company. later they were joined by global companies such as htc with its htc vive device, as well as samsung, sony, and microsoft with their hololens develop-ments. there were also previously unknown developers who quickly raised funds for startups with startups. given the trends in the development of virtual reality, in the next few years there will be a breakthrough in information technology around the world, including ukraine, which may become a new stage in the development of the information world, because the scope of such technologies is limited and more practical than modern desktops and laptops. according to experts and publications such as greenlight vr , they will need another 10-15 years to make something similar to a revolution in information technology. the results of the application of virtual reality are already tangible today. they encompass a wide variety of economic spheres: services, industry, entertainment, construction, and advertising. with the help of programs for these devices, companies will be able to increase the productivity of their employees, facilitate the learning process through the use of cues, the characteristics of the object with which one is working, and so on. for example, the use of such technology in mechanical engineering and construction, where drawings and sketches will be replaced by augmented reality. this will facilitate work both at the construction site and when communicating with the customer. prototypes of such programs have already appeared. the development of virtual and augmented reality plays an important role in the field of design. the image can be superimposed on the real picture, so the client can be shown the design of any object, and it does not matter whether it will be an apartment after renovation, a dress, a car showroom, or any other object that can be designed. a similar use is possible in travel agencies to show the best places of an upcoming trip and give the client the opportunity to see with their own eyes the scenery they will see on their future trip. three seas economic journal 113 vol. 3 no. 1, 2022 although then the trip may not be necessary. it is somewhat more difficult to consider virtual and augmented reality devices as consumer products. today, due to weak advertising campaigns, high costs, and imperfect devices, people do not buy goods on the scale that the manufacturers hoped for. a preliminary analysis of the scientific literature indicates the relevance of the topic chosen for the study, because in a similar context, the use of vr-technology in ukraine has not been conducted. the first explorations of phenomena close to the modern understanding of virtual reality were carried out about 200 years ago. at that time, such searches were conducted for the sake of curiosity and entertainment. a prototype virtual reality helmet was first created for this purpose in the xix century. since then, research into its benefits and its use in the activities of organizations in various fields has only intensified. researchers and business practitioners began to talk more actively about the use of virtual reality technologies in organizations in the mid1980s, after the invention of the term "virtual reality " by american scientist jaron lanier and his desire to attract the attention of a mass audience to the new phenomenon (virtual reality history from the 19th century to the present). the weight gain and spread of the idea of virtual reality took place after the release of the film "the matrix" in 1999. however, the "industrial" application of vr technology began in 2012 with the creation of a mass production company for virtual reality equipment called oculus vr . two years later, as a promising technological innovation, the company was acquired by facebook for two billion dollars. modern studies of virtual reality in ukraine mainly deal with the problems of virtual education, the use of vr-technology in interior design, bridge construction, construction, engineering and other areas. some authors cite the benefits of using virtual reality technologies in medicine, corporate education, automotive industry, digital marketing, shipbuil ding, etc. given the rapid development of virtual reality technologies, the growth in the number and quality of vr devices appearing in the technological market, we should expect that the number of business models using them will grow. therefore, the paper considers it necessary to find out the impact of vr technologies on the formation of organizational competitiveness and assess their importance in creating a competitive advantage. objectives of the article. the aim of this publication is to investigate the main theoretical and practical aspects of virtualization of organizations, in particular, the impact of vr-technologies on their competitiveness, to analyze foreign experience in the use of virtual technologies in business and to summarize proposals for competitive advantage based on virtual reality technologies. 2. results and discussion 2.1. areas and opportunities for the implementation of vr-technology in business in today 's environment of dynamic development of information systems (is) and innovative technologies to improve the competitiveness of a business organization must develop an action strategy that will fully meet most stakeholder needs. above all, customers, partners, consumers, suppliers, etc. this is possible with the help of modern technology. figure 1. ar in nubers by segment ar/vr market three seas economic journal 114 vol. 3 no. 1, 2022 a diagnosis of global business practices in recent years allows to conclude that the main stakeholders of the organization have a growing interest in its effective and efficient operation. a powerful stimulus for the search for ideas and the use of innovative technologies in the business processes of an organization is its competitors, who facilitate such a search and make its continued success possible. many foreign leading companies, seeking to ensure a better competitive position, attract innovative technologies to their business models. in recent years, vr-technologies have gained considerable popularity. virtual reality simulates both the impact on the user through his or her senses (vision, hearing, touch, etc.) and the reaction to such impact. to create a convincing set of reality experiences, a computer-generated synthesis of virtual reality properties and reactions is performed in real time. for example, vr can be used to put important information directly on the windshield of a car whose driver has a busy delivery order schedule. despite the portability of the car, the driver can see alternate routes, road closures and road complications. the peculiarity of vr is their ability to combine a real environment with an imaginary one or one created with the help of a number of technical means. for example, the famous google corporation has developed a program that allows users to visit free online/offline tours of the palace of versailles. with the help of glasses or a helmet offline, users have the opportunity to visit twenty-one rooms of the palace, to get acquainted with ten sculptures and other works of art. if there is no possibility to use virtual technology, the corporation offers an online exhibition, which will allow to view 390 paintings and artifacts. an interesting fact is that 132,000 photos of the palace were used to create the virtual tour (lutsenko, 2019). this example illustrates the effectiveness of vr and proves the usefulness and competitiveness of the use of vr technology in tourism and, in general, as an innovative solution. researchers who study the experience of using virtual reality technologies emphasize the possibility of using certain devices to fully immerse yourself in a virtual world, while isolating yourself from the real world. today, there are certain tools that help everyone try new vr technologies: – vr glasses and helmets are small screens that are placed in front of your eyes, thanks to their components, allow you to display objects in three-dimensional space. additional features are that such equipment can include headphones, accelerometers, and other accessories; – virtual reality rooms – a specific space in a physical room, on the walls of which photo or video materials are broadcast; – virtual reality gloves are a hand device that can be used to perform certain manipulations through gestures with virtual objects. at the current stage of virtual reality development, scientists argue about the rapid evolution of both vr technologies and vr devices (complete and autonomous devices such as smartphones, laptops, tvs, etc.), which often change the corporate culture and business etiquette of the organizations that use them. as a result, an increasing number of customers, partners and other organizational stakeholders are leveraging virtual innovation and creating a foundation for competitive advantage based on vr ideas. in recent years, more and more areas of business have joined the use of the vr environment, as evidenced by the following list: – learning: teachers can use virtual reality to interact with various objects in three-dimensional space. for example, when learning about the solar system, children can not just look at pictures in a textbook, but really immerse themselves in space thanks to a virtual reality helmet. lenovo and google have developed more than 700 virtual tours that can take students anywhere in the world, from the depths of the ocean to the most famous museums in europe (antoniuk, 2020). – medicine: belgian doctors conducted a study and found that virtual technology can be used in surgery instead of taking various sedatives. the doctors call this technique "virtual hypnosis. the peculiarity is that during surgery the patient is put on headphones and vr glasses and turns on a soothing video about the life of underwater animals with commentary during the broadcast by a pleasant soothing voice (proskuriakov, 2021). – mechanical engineering: ford motor company uses vr projects during the design phase of vehicles. the company 's design center, located in cologne, germany, has an equipped studio where design engineers can comprehensively evaluate a car without having a physical prototype. this equipment allows them to work faster and more efficiently on the layout and appearance of the car, as well as detailing the trim elements. working in a studio like this, the company 's designers were able to choose the optimal layout for the dashboard, seats, and controls for the new ford fiesta (it-enterprise). – sales: ikea used virtual technology to develop its own catalogs. the method is quite simple: a person downloads the app, puts the catalog with the selected page in the place where he wants to place the goods, brings the phone camera up to the catalog and observes how the furniture will look in a certain place – according to their real size and proportions (ochkova, 2016). – military sphere: since 2012, the u.s. has been training personnel using the latest technology. during the training of pilots, infantry, and military medics vr-technologies are actively used, which allow soldiers to be in conditions as close to combat as possible without any danger to life and health (ochkova, 2016). there are other areas of activity where virtual technology is less common, but used. three seas economic journal 115 vol. 3 no. 1, 2022 generalized information about the feasibility of using virtual technologies in other areas of business is shown in table 1. these examples show the positive and growing experience of using vr technologies in business processes of foreign companies, which explains their creation of competitive technological and innovative advantages. business experts also attest to the growing use of vr in internal business communications and corporate training in recent years, as well as the use of vr by companies for trade shows and physical sales offices. thus, vr technology is becoming a competitive standard for modern organizations. 2.2. some examples of implementation consider both the glb and the usdz. these are compact, photorealistic file formats for 3d content created and adapted specifically for augmented reality. certain formats are of paramount importance when it comes to viewing content online and on smartphones. moreover, it is the usdz that plays a crucial role when viewing content on apple devices such as the iphone and ipad. this is because the aforementioned files are a must if one wants to provide a seamless augmented reality experience that works across the board. certain file formats define an object in terms of its appearance, mesh and materials. both triangles and digital ink are part of the exoskeleton. here is an example. a kitchen table will act as a model, depicting a grid describing the shape of the table and the shape of the legs, as well as a material representing the appearance of the wood surface. with industry-standard physical based rendering (pbr) frameworks, materials are based on the perception of the real properties of light. usdz is an impartially brand-new file format for apple devices. it was launched by the company along with pixar in 2018. it is based on the usd format, which appeared much earlier. nevertheless, innovative development is unique due to some distinctiveness. the usdz invention for ar is genuine. after all, it is promptly available to plenty of users. a file from photoshop or dimension can be easily converted to the aforementioned format, and also launched on a smartphone or tablet. just as easy as sending a photo or an audio recording, users can now share 3d objects on the screen of their mobile device. after all, some objects have already become an integral part of the surrounding life. despite this, android-based smartphones do not support usdze – and this is the only problem so far. it is noteworthy that even older operating systems, such as ios 12, support these files. there is no way to open an image in augmented reality if the device cannot be updated. nevertheless, even despite such limitations, the creation of the new file format means that soon we will have the opportunity to place any products from online stores in the space of a room, try them on and view them from different angles. usdz represents a notable leap forward in both marketing and entertainment. usdz files' principal features usdz is an archive, but there is no need to extract files from it. encryption or data compression does not apply to objects created in 3d graphics editors. when transferring information from one device to another, their quality remains unchanged. the pixar animation format is a generic description of a scene. the package of components for a complete 3d augmented reality object combined into a single file is the file of the same name, which exclusively has the ending "z" attached to it. when trying to load an ar model, you can watch as applications bind to it. one click on the link or image is enough, and it launches. the format will become more user-friendly for the average user. another feature that will catch the attention of developers is that the adobe creative cloud suite of applications supports the new format. table 1 the use of vr-technologies in different areas of business (ezhikov, 2017) branch functional areas of activity advertising btl1 and sales business-communications industry demonstration for investors and gr2 demonstration of equipment and the process at exhibitions and negotiations design, digital duplicates of technological chains real estate view apartments online, direct advertising real estate shows at trade shows decision making in design and construction fashion and sports online broadcasts of fashion shows, sports and entertainment events (including paid events) gives you the opportunity to become a real participant in a particular event and experience real emotions training of athletes financial sector demonstration for investors and gr2 design, digital duplicates of technological chains jobs for analysts and traders, data visualization btl is a type of marketing communication that is aimed at a narrow target audience of tv for a specific consumer. 2 gr (government relations) – the activities of specially authorized employees of large commercial organizations that interact with government agencies. three seas economic journal 116 vol. 3 no. 1, 2022 today, both commercial and non-commercial spheres widely use the aforementioned format. if it comes to sales, the purchase is often postponed because it is impossible to touch the item before buying it. this is especially true when selling luxury goods. "trying on" living room furniture or understanding how a branded bag looks against the backdrop of your favorite sofa is made possible by the additional opportunity to interact with the product. as a rule, a customer prefers to shop at a company that has chosen this way of presenting goods, because emotions from digital contact are off the charts. many promising opportunities have opened up for artists with the transition to the usdz format. this fact cannot be ignored. there is one reason that has long prevented 3d graphics from entering effective practice. the viewer cannot get full freedom of interaction using only photos and videos, and 3d graphics are not always available for all devices. in addition, augmented reality is now gaining in popularity. this is a key indicator that 3d artists will be able to develop their creative thinking more actively. both scientific and industrial fields can also make use of usdz files. blueprints, crucial for architects and structural engineers, will finally become more accessible. in the educational field, interactive models help students and schoolchildren to learn knowledge correctly, as well as to expand their horizons. glb is a 3d file format that outlines an object by its surface, both meshes and materials. in other words, it is an exoskeleton consisting of digital paints and triangles. the simulated light reflects off the sample surface, just like real light reflects off a physical object. at the same time, an incredible effect is obtained on the screen, because it is combined with pbr (physically based rendering) materials. sharing? why not, excellent! after all, it is available for viewing in 3d in all prevailing browsers and phones without the necessity to use optional applications. this format stands for the binary transfer format of the web graphics library. this is a linked version of the .gltf format (base format). it often keeps textures joined with an external folder. the format growth is backed up by google, microsoft, facebook, and adobe, being founded by the khronos group. in brief, it is *portable, * ar-ready, * photorealistic conclusions based on the results of the study, the following conclusions are drawn. modern virtual and augmented reality technologies allow users not only to immerse themselves in a new environment for logistics, medical, travel, educational, industrial and other companies. at the same time, vr-technologies are a prerequisite and catalyst for future organizational transformations related to the creation of new competitive advantages. researchers attribute an even more exciting experience to the future implementation of 5g technology, which will reduce latency between requests and responses by a factor of 10 and allow vr and ar applications to reach new levels of use. organizations need to closely monitor the development of modern ict in order to use them in a way that provides a competitive advantage and improves the efficiency and effectiveness of their operations. references: virtual reality history from the 19th century to the present. аvailable at: https://www.imena.ua/blog/the-historyof-virtual-reality/ lutsenko, ye. (2019). google's lutsenko developed a virtua l tour of the palace of versailles. hromadske.ua. аvailable at: https://hromadske.ua/posts/google-rozrobiv-virtualnij-tur-versalskim-palacom antoniuk, m. (2020). virtual and augmented reality: how new technologies inspire to learn. osvitoria.media. аvailable at: https://osvitoria.media/opinions/virtualna-ta-dopovnena-realnist-yakoyu-mozhe-buty-suchasna-osvita/ proskuriakov, s. (2021). virtual reality can replace se datives during surgery – research. hromadske.ua. аvailable at: https://hromadske.ua/posts/virtualn a-realnist-dozvolila-pozbutisya-sedativnih-preparativ-pid-chas-operacij it-enterprise. virtual reality (vr): best practices (2019). аvailable at: https://www.it.ua/ru/articles/virtualnajarealnost-vr-luchshie-praktiki ochkova, l. (2016). 9 spheres of applicati on of virtual reality: market size and prospects. vc.ru. аvailable at: https://vc.ru/flood/13837-vr-use ezhikov, a. (2017). how to use vr technology for business? forbes.ru. аvailable at: https://www.forbes.ru/ tehnologii/343867-kak-ispolzovat-vr-tehnologii-dlya-biznesa martyniuk, о. а. (2020). the impact of digital technologies on the development of business social responsibility. economics: time realities. scientific journal, no. 4(50), рр. 78–86. аvailable at: https://economics.opu.ua/files/ archive/2020/nо4/78.pdf virtual reality & digital twins (2022) [online]. аvailable at: https://www.logistics.dhl/cg-en/home/insightsand-innovation/thought-leadership/trend-reports/virtual-reality-digital-twins.html why apple and pixar’s usdz (2022). why apple and pixar’s usdz format is a big deal for the future of ar. аvailable at: https://in.pcmag.com/wwdc-2018/121659/why-apple-and-pixars-usdz-format-is-a-big-deal-for-the-future-of-ar three seas economic journal 97 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: olena_polova@i.ua orcid: https://orcid.org/0000-0002-7120-7944 researcherid: abf-3980-2021 doi: https://doi.org/10.30525/2661-5150/2022-2-14 peculiarities of functioning of the banking system of ukraine olena polova1 abstract. the state of the banking system indicates the level of prosperity in the country. the financial and economic crisis has provoked a significant outflow of funds from banking system and the growth of nonperforming loans, which led to a deterioration in liquidity and solvency of banks and, accordingly, significantly affected their financial stability. the purpose of the article is to determine the features of the banking system of ukraine and trends in its further development. the banking sector is influenced by a set of factors: the general political and economic situation in the country, the development of the securities market and the interbank market, the organization of the refinancing system, the effectiveness of regulatory functions of the central bank. strikes, natural disasters, military conflicts, revolutionary, political and economic events are also extraordinary factors. the aggravation of the political crisis, inconsistency and inconsistency of public policy make the economic crisis in the country even deeper and longer. it is political stabilization that should be the catalyst for the resumption of economic growth. another important factor that has a strong impact on the economic situation in the economy as a whole and on the functioning of the banking system is the covid-19 pandemic. a key factor in the functioning of the banking system of ukraine in the covid-19 pandemic is the change in the discount rate as an element of monetary policy of the national bank of ukraine. methodology. the main indicators of banking institutions are analyzed, in particular: the dynamics of changes in the number of ukrainian banks, the number of structural units of banks, top-10 banking institutions in 2021, the dynamics of changes in ukraine's discount rate in recent years, financial results of ukrainian banks. it was found that the decrease in the number of banking institutions led to a significant reduction in the number of branches, in particular, most branches were closed by state-owned banks and privatbank, but new branches were opened exclusively by private banks. analyzing the state of the banking services market in terms of raising funds from individuals, dynamics of monetary deposits of the population for the last not a few years show an increase in trust citizens to banks and the interest of bankers to increase in the share of attracted funds of the population in their assets. changes in the financial market affect the competitive position of banks, which requires rapid adaptation to existing conditions and accumulate all efforts to maintain their own solvency and stability of the banking system. results. the results show that the changes that took place in the banking system during the covid-19 pandemic and the full-scale war require the development of possible scenarios for the development of ukraine's banking system in the future. to restore the banks caused by the banking crisis, it is necessary to use such tools as: maintaining liquidity as a "lender of last resort", reducing required reserves, a diversified approach to setting economic standards. based on the optimistic scenario and using adaptive and regulatory approaches, as well as taking into account the influence of endogenous and exogenous factors, the projected indicators of development of the banking system of ukraine have been developed. key words: bank, banking system, national bank of ukraine, covid-19 pandemic, full-scale war, financial and economic crisis. jel classification: g21 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 98 vol. 3 no. 2, 2022 1. introduction a developed banking system is a necessary condition for the normal functioning of the economy, ie the functioning of economic entities and the state budget. the financial condition of the banking system directly affects the economic security of the state and, consequently, its economic sovereignty. the paramount importance of the banking system is aimed not only at the economic activities of individual entities, but also at the financial activities of the state, because it is through the banking system is the direct material support of state functions. on the basis of the adopted legislation, the activity of independent commercial banks is becoming more and more developed, and there is a constant search for ways to increase the efficiency of banks' services to market participants. but in today 's conditions, ukraine's banking system is going through a difficult period of being affected not only by the global crisis and globalization processes, but also by the covid-19 pandemic and russia's full-scale war against our state. therefore, the issue of improving the banking system is extremely important today and requires urgent action to address it. in recent years, there has been an increase in the number of scientific papers and studies on the issues raised, which only confirms its relevance. significant contribution to the study of problems and features of the domestic banking system was made by such domestic scientists as bulindin d.v. (2017), granovskaya i.v. (2011), halperina d.o. (2015), hrubinka i.i. (2017), karcheva g.t. (2017), kholodna y.e. (2013), koriahina t.v. (2016), kvasnitska r . (2018), oliinyk a. (2018), simon a.p. (2016), teliatnyk v.m. (2016), tarasova o.v. (2014), rat o.m. (2013) and others. however, these researchers studied some aspects of the functioning of the banking market, which did not give a complete picture of the problems and prospects for its development today. 2. сharacteristics of the state of the banking services market the banking system plays an important role in shaping economic relations between money market players. this is due to the fact that banks are one of the most important elements of the structure of the economy in the organization of financial flows. they form the basis of the country 's credit system, concentrate the bulk of its resources. the banking system is the branch of activity where all the positive and negative phenomena occurring in the economy are most dynamically and actively reflected (kholodna, rat, 2013). to identify the main shortcomings of the banking system of ukraine, it is necessary to explore the peculiarities of its formation and development. in general, the development of the banking system began with the adoption of the law of ukraine "on banks and banking" (on banks and banking: law of ukraine). its operation is based on generally accepted principles of banking in the world, in particular: two-tier structure, clear functional distinction between first and second tier banks; functioning of second tier banks on a commercial basis and on contractual relations with the clientele; elimination of the state monopoly on banking, the possibility of creating commercial banks of various forms of ownership; organization of state control and supervision over banking activities and assignment of this task to the central bank; independence of the central bank from state executive bodies; formation of system-wide infrastructure for banking (granovskaya, 2011). banking services actively influence the development of ukraine's economy at both the macro and micro levels. first, the banking service is one of the effective factors in intensifying the reproducible process in general and its component such as exchange in particular. second, banking services play a significant role in meeting the needs of the population, improving their living standards by providing consumer credit and influencing the development of small businesses. the banking system is an integral part of the financial system and economy of any country, which summarizes a set of different for organizational and legal form and specialization of banking institutions that exist within a single financial system and a single monetary system mechanism in a certain period of time, is the field of activity in which most positively and actively reflect all the positive and negative phenomena occurring in the economy. it operates through the banking system mechanism for the distribution of financial resources embodied in financial assets, is their mobilization and involvement in economic circulation. (kvasnitska, oliinyk, 2018). the political and economic crisis that began in late 2013 and hostilities in 2022 have worsened the financial condition of domestic banks. some banks and the entire banking system of ukraine today operate in difficult conditions with high risks. due to the crisis in the financial market, commercial banks have to work in a sharp decline in funding, due to significant outflows clients, restricting access to international capital markets, falling stock prices, reducing the amount of financial support provided to ukrainian subsidiaries by foreign parent banks. the low level of resource base and the predominance of short liabilities make the banking sector too vulnerable to the risk of liquidity loss, increased credit and market risks. negative impact on banking have low incomes, and unsatisfactory financial condition three seas economic journal 99 vol. 3 no. 2, 2022 of borrowers requires the creation of significant reserves, which in the absence of relatively stable sources of resources complicates the formation of the resource base of commercial banks (credit ratings of borrowers. ruric national rating agency, 2021). to characterize the state of the banking services market, it is advisable to study the dynamics of existing banks in ukraine (figure 1). as of december 31, 2021, 71 banking institutions were licensed by the national bank of ukraine to conduct banking activities. between 2018 and 2021, the number of solvent banking institutions decreased by 6. at the beginning of the large-scale invasion, of the 71 banks that formed the second tier of the banking system, two were indirectly owned by the russian government (russian sberbank and veb subsidiaries). in the banking sector, these two banks together had 2% of assets, so their closure did not have a significant impact on the banking system of ukraine. the decrease in the number of banking institutions led to a significant reduction in the number of branches (figure 2). most branches were closed by state-owned banks and privatbank. new branches were opened exclusively by private banks, during the fourth quarter – 34. in total, in 2021 the number of separate divisions decreased by 449, most notably in kyiv and dnipropetrovsk region (53 branches each). given the volatile factors in the global market, it is necessary to operate effectively and professionally, 77 75 73 71 69 37 35 33 33 31 23 23 23 23 22 0 10 20 30 40 50 60 70 80 90 31.12.2018 31.12.2019 31.12.2020 31.12.2021 01.03.2022 operating banks of them with foreign capital including 100% foreign capital figure 1. dynamics of change in the number of ukrainian banks source: (official site of the national bank of ukraine, 2022) 2,9 2,6 2,2 2,1 2,1 2 1,9 2 1,9 1,7 1,7 1,6 1,5 1,5 1,8 1,6 1,5 1,5 1,4 1,4 1,4 1,8 1,8 1,8 1,8 1,8 1,8 1,9 8,5 8 7,1 7,1 6,9 6,8 6,7 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 12.18 12.19 12.20 03.21 06.21 09.21 12.21 state banks privatbanks foreign banks private banks total figure 2. number of structural units of banks, thousand units source: (official site of the national bank of ukraine, 2022) three seas economic journal 100 vol. 3 no. 2, 2022 so that a highly competitive position must quickly adapt to existing conditions and accumulate all efforts to maintain their own solvency and stability in the market. mind presented the traditional update of the reliability rating of ukrainian banks in 2021 and the analysis of the banking industry (rating of banks – 2022: in the fog of war, 2022). the domestic banking system is significantly affected by the presence of foreign capital, which should be directed to additional forces of the national bank ukraine, as well as other state bodies in the field of banking regulation and control in order to prevent the formation monopolization in the banking sector of foreign banks, in addition to preventing the possible displacement of the domestic banking sector from the financial market. traditionally, the highest scores are given to large institutions that are members of foreign banking groups or supported by western countries: raiffeisen bank aval, ukrsibbank, city bank, ing ukraine, credit agricole and otp. for the first time since the nationalization, the state-owned privatbank received a high rating of 4.5 stars. two other stateowned ukrainian banks also received high 4 stars: ukreximbank and ukrgasbank. outsiders include rvs bank, russia's prominvestbank, and small ukrainian banks with a translucent ownership structure and weak financial performance: rada bank, mtb, dnipro bank, investment and savings bank, megabank, sich bank, and industrialbank. there have been negative structural changes in the system, which led to a reduction in current capacity, excessive concentration in hands of state assets (55% of banking assets system) in the absence of a clear policy on state banks. it is known that excessive monopolization and concentration of predominant most of the resources are in the hands of a limited circle has a negative impact on the economy and system. on the one hand, this factor market opportunities for pricing based on free competition, which leads to significant problems with full-fledged development under by the action of market forces, and on the other – levels the market labor, determining the extremely low level of income able-bodied population and, as a consequence, the possibility of savings, which are the main source of resource base of banks (karcheva, bulindin, 2017). 3. characteristics of factors influencing the activities of banks the banking sector is strongly influenced by many external and internal factors, including: the nbu discount rate, inflation in the country and the world, the state of the economy, the crisis caused by the sovid-19 pandemic, full-scale war, gross domestic product, state budget deficit, state debt, etc. therefore, it will be expedient to analyze one of the basic indicators as the discount rate of the national bank of ukraine. in order to support ukraine's economy in the pandemic, the nbu board decided to reduce it to 8% (from april 24, 2020) and then to 6% (from june 12, 2020), analyzing the entire history of the economy of an independent state, its level became the lowest in 30 years (discount rate of the national bank, 2022). a high discount rate can provoke reduction of lending activities, which may adversely affect financial security resources of economic entities. therefore, lowering the discount rate to 6% made it possible hope for adequate credit conditions. delivery is a guide for cheaper credit resources, so the gradual reduction of the discount rate relative to projected inflation, which may help reduce devaluation and inflation expectations that largely provoke inflation. during 2021 there is an increase in the discount rate, and by almost the end of the year the board of the national bank of ukraine decided to raise the discount rate to 9% per annum, and on january 21, 2022 – to 10%. this decision is aimed at leveling the impact of additional pro-inflation risks, improving inflation expectations and ensuring a sustainable reduction in inflation to 5%. however, the inflation rate in march table 1 top-10 banking institutions in 2021 bank rating net assets, uah million instant liquidity, % problem loans, % 1 raiffeisen bank aval 4.5 131736.4 15.0 2.3 2 privatbank 4.5 407256.7 10.3 71.2 3 ukrsibbank 4.5 78391.5 13.6 2.5 4 otp bank 4.5 69862.6 11.0 6.2 5 city bank 4.5 33681.3 7.3 0.2 6 ing ukraine 4.5 13644.5 19.9 0.0 7 credit agricole 4.5 54871.0 6.5 1.8 8 ukrgasbank 4.0 123874.6 5.1 11.7 9 ukreximbank 4.0 192053.6 3.5 34.8 10 fuib bank 4.0 104648.8 7.0 7.3 source: (rating of banks – 2022: in the fog of war. mind official site, 2022) three seas economic journal 101 vol. 3 no. 2, 2022 2022 rose to 13.7% against 10% in january. but the nbu, given previous mistakes, left the discount rate at 10%, which can not be ignored. analysis of the financial performance of banking institutions in ukraine over the past four years shows that the income of ukrainian banks increased by uah 69,289 million in 2021 compared to 2018 (table 2), and increased costs, but this did not affect the performance of banks. in 2021, the banking sector received the historically highest profit of uah 77.5 billion (+ 95.4% yoy), primarily due to a rapid increase in operating income and a reduction in provisions. in the fourth quarter, the profit of the banking sector was 12.6 times higher than in the fourth quarter of 2020. profitability indicators are experiencing sharp jumps in the period from 2018 to 2021, and remain positive. in addition to the significant growth rates of income, this was due to the dissolution of provisions for legal risks and, by 71.1% lower than last year, allocations to reserves for expected credit losses. the number of unprofitable banks fell from seven to five in the quarter, with their total loss remaining insignificant. in early 2022, military and political tensions around ukraine led to a moderate outflow of population deposits. as of mid-february, it is clear that banks have calmly met the outflow, having a significant margin of liquidity. as term funds were stable, financial institutions did not raise deposit rates, as they did not need to compete for clients. further tightening of monetary policy is expected to affect the conditions for raising funds and increase funding. therefore, the interest rate risk of banks will increase. stateowned banks were leaders in hryvnia lending in 2021. together with the implementation of the strategy of reducing non-performing loans, this significantly reduced the share of non-performing loans. such actions increase investment attractiveness and bring stateowned banks closer to the strategic goal of privatization. in the near future, the nbu will decide on a schedule for the gradual recovery of capital buffers deactivated during the deployment of the corona crisis. capital buffers increase banks' ability to withstand risks in times of financial and economic instability. the formed capital reserve can be used both to absorb possible losses and for further lending. according to the nbu, 11 10 8 6 6,5 7,5 8 8,5 9 10 10 0 2 4 6 8 10 12 figure 3. dynamics of changes in the discount rate of ukraine in 2020–2021 source: (official site of the national bank of ukraine, 2022) table 2 dynamics of financial results of banks of ukraine for 2018–2021 indicator 31.12.18 31.12.19 31.12.20 31.12.21 2021/2018 (+,-) revenues, uah million 204554 243102 250171 273843 69289 costs, uah million 182215 184746 210445 196313 14098 operating result, uah million 22339 58356 39726 77530 55191 profitability on assets, % 1,69 4,26 2,44 4,09 2,4 profitability on capital, % 14,67 33,45 19,22 35,15 20,48 source: (official site of the national bank of ukraine, 2022) three seas economic journal 102 vol. 3 no. 2, 2022 the current high profitability and available capital reserves allow banks to easily comply with such regulatory requirements (review of the banking sector, 2022). the banking system has managed to adapt to work in wartime and continues to function relatively well. banks have developed effective plans for current activities, as well as recovery plans. this allows them to continue operations in those regions where there is no active hostilities. the practice of remote work is quite effective in these conditions. banks gained this experience during lockdowns in the context of the covid-19 pandemic. assessing the prospects of the financial result, banks will certainly face very serious challenges. due to the decline in business activity and payments, commission income has fallen sharply since the beginning of the war. interest income will also be significantly reduced due to the introduction of credit vacations by banks, which sometimes allow borrowers to pay only symbolic interest. assessing the prospects of the financial result, banks will certainly face very serious challenges. due to the decline in business activity and payments, commission income has fallen sharply since the beginning of the war. interest income will also be significantly reduced due to the introduction of credit vacations by banks, which sometimes allow borrowers to pay only symbolic interest. however, the sharp deterioration in the quality of the loan portfolio and the associated increase in reserves will be the biggest challenge for banks. it is expected that after the end of the credit holidays, banks will receive large volumes of applications for restructuring. also, many customers are likely to report being unable to service loans because of the damage the war has done to their business. therefore, it is safe to say that even if the war ends quickly, banks will be forced to recognize significant losses from the loss of tangible assets and from the depreciation of the loan portfolio. these losses will absorb their capital. icu analysts expect that most banks, including systemically important ones, will have negative capital at the end of this year due to the consequences of the war. national bank of ukraine will be forced to adhere to the policy of easing regulatory requirements in 2023. in the future, military reparations from russia may become one of the sources of bank capitalization. in the further process of restructuring banking systems that have endured or will endure a largescale banking crisis, such tools as: liquidity support "lender of last resort", reduction of mandatory reserve requirements, diversified approach to setting economic standards, transition to troubled credit institution (bank) under the management of a specialized institute for restructuring, recapitalization and nationalization of socially significant banks for the country. most of these tools have been used in the us, eu and cis countries to overcome the effects of crises in banking systems. 4. scenarios for stabilizing the banking system stabilization of the banking system largely depends on the development of effective scenarios for the development of the banking system, which would provide for its transition from extensive to intensive development model, ie how the development of the banking system is characterized by qualitative changes and focus on strategic efficiency. when developing scenarios, it is necessary to take into account that the stable functioning of financial markets and the banking system, ensuring liquidity and stability of banks are extremely important for the stable socio-economic development of the country. unfortunately, commercial banks and non-bank financial institutions in ukraine have low diversi fication compared to european countries, which reduces their efficiency and competitiveness. the structure of the country 's financial system is dominated by non-banking financial institutions. as of january 1, 2021, the number of financial companies in ukraine was 1,031, credit unions 327, pawnshops 304, leasing companies 144, non-life insurance companies 196, life insurance companies 19, insurance brokers 63. therefore, the development of banking systems take into account the presence on the financial market of other entities that belong to non-banking financial institutions. in addition, the share of banking services in the financial market is 82% in assets and 72% in capital. based on the optimistic scenario and using adaptive and regulatory approaches, as well as taking into account the impact of endogenous and exogenous factors, developed indicators of ukraine's banking system until 2025 (table 3), based on the assumption of economic recovery, active implementation of banking innovations and growth digital economy. under the optimistic scenario, there will be a revival of the banking system, which has suffered enormous problems in reducing its resilience during hostilities in ukraine in 2022. however, ukraine's gradual accession to the eu and the rate of gradual economic growth will be moderate, and the level of social security will remain relatively low and will not meet the high standards of quality of life typical of most european countries. the banking sector will go through a difficult path of quality growth and development, aimed at increasing financial stability, capitalization and liquidity, reducing risks. the optimistic scenario is based on the introduction of innovative banking products in the development of the banking system three seas economic journal 103 vol. 3 no. 2, 2022 of ukraine. during crises, hostilities and competition in the banking market, banks need to increase their competitiveness while ensuring financial stability, in particular through the introduction of innovative banking technologies. pessimistic and realistic scenarios for the development of ukraine's banking system are not entirely acceptable, as such scenarios will not ensure systemic stability, efficiency and stable development of the banking system, positive impact on socioeconomic development of regions and the country as a whole. 5. conclusions a strong banking system is a prerequisite for sustainable economic growth in ukraine. banks are one of the main sources of investing financial resources in the country 's economy. in the modern economy, the banking system is of great importance due to the links of this system with all sectors of the economy. domestic banks are forced to operate in high-risk conditions, so they are more likely than their foreign counterparts to be in crisis situations. most crises are due to banks' underestimation of equity and financial stability. analyzing the current state of the banking sector in ukraine, it can be noted that in recent years the pandemic has significantly affected the functioning of banking institutions, it is easy to trace the dynamics and trends of key performance indicators. today, the ukrainian banking system is coping quite well with the unprecedented crisis caused by russia's full-scale war against ukraine. most banking services remain available to the extent that their provision does not endanger the safety of customers and employees of banks. however, risks may increase as the inflow of new funds into accounts is likely to decrease. profitability and capital risks will be key medium-term risks in the banking sector. therefore, the future state of the banking system in ukraine cannot be accurately predicted, and therefore, it is necessary to be able to anticipate changes and quickly develop and implement existing mechanisms and methods of banking institutions. in order to curb inflation and balance the situation in the money market, the national bank of ukraine considers it necessary to take measures to increase the domestic value of the national currency through the use of leverage interest rate policy. stabilization of the banking system largely depends on the development of effective scenarios for the development of the banking system. the optimistic scenario is based on the introduction of innovative banking products in the development of the banking system of ukraine. pessimistic and realistic scenarios for the development of ukraine's banking system are not entirely acceptable, as such scenarios will not ensure systemic stability, efficiency and stable development of the banking system. thus, the directions of improving the efficiency of the banking system are: increasing the capitalization of the banking system; increasing the competitiveness of domestic banks compared to foreign financial institutions; strengthening risk management control in banks; development of effective scenarios for the development of the banking system. table 3 forecast indicators of development of the banking system of ukraine indicator/ year 2025 assets to gross domestic product, % 90-100 capital to gross domestic product, % 13-15 credit to non-financial companies and households 65-75 money of individuals 20-30 the share of non-performing сredit in the сredit portfolio 5-8 the share of the banking sector in the financial services market 65-75 nbu discount rate 5-7 share of state-owned banks in assets 20-25 references: analytics – icu (2021). available at: https://icu.ua/uk/research (accessed 10 april 2022). granovskaya, i. v. (2011). features of the formation and development of the banking system in ukraine. economic bulletin of the university: collection of scientific works, 17/2. available at: www.nbuv.gov.ua/portal/ soc_gum credit ratings of borrowers. ruric national rating agency (2021). available at: http://rurik.com.ua (accessеd 20 march 2022). discount rate of the national bank (2022). available at: https://bank.gov.ua/ua/monetary/stages/archive-rish karcheva, g. t., & bulindin, d. v. (2017). european experience in implementing the bail-in mechanism and prospects for its use growth in ukraine. banking, 4, 53–60. kvasnitska, r ., & oliinyk, a. (2018). problems and prospects development of the banking system of ukraine. eastern european studies: economics, education and law: proceedings of the international scientific conference. (burgas, june 7-8, 2018). burgas: publishing house flat ltd-burgas. review of the banking sector (2022). available at: https://bank.gov.ua/admin_uploads/article/banking_sector_ review_2022-02.pdf ?v=4 https://icu.ua/uk/research (accessed 10 april 2022). three seas economic journal 104 vol. 3 no. 2, 2022 official site of the national bank of ukraine (2022). available at: https://bank.gov.ua/ua/statistic/supervisionstatist (accessed 10 april 2022). on banks and banking: law of ukraine: from 07.12.2000 № 872-xii. available at: http://www.rada.gov.ua (accessed 10 april 2022). rating of banks – 2022: in the fog of war (2022). available at: https://mind.ua/publications/20236095-rejtingbankiv-2022-u-tumani-vijni (accessed 10 april 2022). kholodna, y. e., & rat, o. m. (2013). banking system: textbook. kharkiv, 315 p. three seas economic journal 133 vol. 3 no. 1, 2022 corresponding author: 1 sumy state pedagogical university, ukraine e-mail: elnikkrasnaya@gmail.com orcid: https://orcid.org/0000-0001-8993-806x researcherid: aae-6410-2022 2 national academy of statistics, accounting and auditing, ukraine e-mail: alexdekan@ukr.net orcid: https://orcid.org/0000-0002-8447-6510 doi: https://doi.org/10.30525/2661-5150/2022-1-19 service component of innovation infrastructure impact assessment: a regional example olena omelianenko1, oleksandr yurchenko2 abstract. changes in the world economy and the crisis of 2020 have aggravated the problem of structural stability of the economy and economic security. under these conditions, the demand for services in the creative economy will grow dynamically, as the most valuable goods are ideas, imagination and creativity. the aim of the article is to consider the impact of the service component on innovative development at the regional level. methodology. for the purposes of the study, the main types of services provided by the most common institutional forms of innovation infrastructure are summarized. classification by the criterion of the type of services is useful for monitoring the provision of the innovation system with different elements of innovation infrastructure. services are considered in the applied context of assessing the effectiveness of innovation policy at the regional level. on the basis of analysis of world practice of innovation policy the spheres of financial and economic stimulation of innovation activity within which the corresponding service component can be considered are determined. results. within the framework of alternative approaches to neoclassical economics, based on evolutionary economics and schumpeterian economics, the authors argue for services as an important component of a proactive industrial policy that can address these failures and is based on the institution of mentoring, small business service provision, development of technology parks and much more. the main types of services provided by the most common institutional forms of innovation infrastructure are summarized. classification of services is based on the criterion of the type of services, useful for monitoring the provision of the innovation system with various elements of innovation infrastructure. services were considered in the applied context of assessing the effectiveness of innovation policy at the regional level. practical implications. on the basis of analysis of the world practice of innovation policy the spheres of financial and economic stimulation of innovation activity, within which the corresponding service component was considered, were determined. value/originality. longitudinal data and relevant calculations provide a better understanding of the impact of innovation infrastructure services on the main economic indicators of regional development. key words: innovation development, technology transfer, services, impact, regional economy. jel classification: l84, o32, r11 1. introduction changes in the world economy and the crisis of 2020–2021 have aggravated the problem of structural stability of the economy and economic security. under these conditions, the demand for services in the creative economy will grow dynamically, as the most valuable goods are ideas, imagination and creativity. on the other hand, service development strategies raise the issues of building partnerships, in particular by involving customers in the processes of service design and digital transformation of business processes. at the same time, these trends require the development of new approaches to the management of business models in the service sector. according to experts, one of the main reasons for the lack of success of innovative projects and the small number of such projects is the lack of quality management at all levels of the project development chain, as well as the lack of a systematic view of the project initiators to have a clear idea of the project development strategy. the state and development of business manage ment in the service sector largely determines the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 134 vol. 3 no. 1, 2022 effectiveness of innovative development of the economy, as the functioning of this sphere creates conditions for freeing up time and contributes to high labor productivity. the increasing role and influence of services on the economy necessitates the search and implementation of ways to improve the efficiency of business models. it is important to consider services in the applied context of national innovation policy. developed and developing countries use different methods of state stimulation of innovation in the entrepreneurial sector. the most common are state programs to support innovation within state priorities, legislative, financial and tax tools at the state and regional levels to promote innovation in all areas of business. based on the analysis of world practice of innovation policy and national specifics, it is possible to identify areas of financial and economic stimulation of innovation, within which we can consider the appropriate service component. 2. literature review in alternative approaches to neoclassical economics, based on evolutionary economics and schumpeterian economics, there is a need to consider systemic failures rather than market failures. services are an important component of a proactive industrial policy that can address these failures and is based on the institution of mentoring, small business services, the development of technology parks, and more. based on these theories, services in the innovation sphere can be defined as a component of the innovation infrastructure, including special organizational structures (subjects and objects) designed to ensure more effective use of resources aimed at innovation, to promote the integration of science and production, the formation and development of innovative economic entities, establishing cooperation between them, their implementation of innovative projects by providing logistical, financial, informational, expert and consulting, organizational, and staffing support (mukhamedyarov, divaeva, khabibrakhmanova, 2013). in the knowledge economy, service becomes a critical component (kniazevych, 2014). in this case, service is defined as the process of transferring intangible resources (service distribution) for their practical use in innovative activities. such peculiarities of development of innovation economy, first of all, concern its infrastructural component as the sphere of provision of intangible resources for implementation of innovation projects through service and provision of knowledge-intensive services. service is closely related to complexity, which is manifested in the activities of the subjects of the innovation process through the dissemination of service offerings at all stages of the innovation process. it is important that in the last decade, due to the introduction of new information technologies, the boundaries between the services of different economic agents are noticeably blurred (dvorkina, 2001). this is especially true for information and analytical services, which are characterized by the intersection of services (one of the reasons for mutual interest and integration trends in the information environment) and the ability to provide users with access to documents, information, knowledge, and thereby meet information needs (b2b, g2b, b2c). thus, in the sphere of services it is possible to note existence of double connection: innovations in the sphere of services are effective means of overcoming crises, promotion of competitive products and development of high-tech services, and services are the factor of creation of innovations. a similar approach was used in research (kokurin, nazin, 2011), in which the elements of infrastructure based on the sphere of the external environment, aimed at ensuring innovation, were grouped. in accordance with this logic, the following groups of innovation infrastructure were identified: transport and communication; information and telecommunications; credit and financial sphere; stock market; intermediary institution; enterprises and firms providing special services. in the context of the growing role of the service component of most business processes in the innovation sphere (colman, bing ang, 2016; klimenko, 2020; saxena, 2021), the strategic aspects of developing strategies in the context of regional smart specialization (omelyanenko, prokopenko, omelyanenko, 2021) and digitalization (omelyanenko et al, 2021; omelyanenko v., omelianenko o., 2021; robul et al, 2020) are an urgent problem. the study is devoted to determining the impact of the service component of the innovative development at the regional level. 3. methodology for the purposes of the study, the main types of services provided by the most common institutional forms of innovation infrastructure are summarized. classification by the criterion of the type of services is useful for monitoring the provision of the innovation system with different elements of innovation infrastructure. services are considered in the applied context of assessing the effectiveness of innovation policy at the regional level. on the basis of analysis of world practice of innovation policy the spheres of financial and economic stimulation of innovation activity within which the corresponding service component can be considered are determined. a set three seas economic journal 135 vol. 3 no. 1, 2022 of research methods was used to achieve the goal and solve the set tasks: – theoretical: analysis and systematization of scientific sources in order to identify the state of development of the problem of the impact of services on innovation development; – structural and logical analysis – to determine the components, criteria and performance indicators of service provision; – comparison – to characterize the different options for building business models in the service sector; – generalization – to justify the impact of strategic vectors of transformation of the service sector on innovation development. – statistical: methods of descriptive statistics, correlation methods – for expert assessment of the impact of the service component of innovation policy on key indicators of the development of the region's economy; – system analysis, modern management theory – to study the components of the impact of the service component of innovation policy. 4. results and discussion subjects of innovative development services based on the study (maslova, 2017), the main types of services provided by the most common institutional forms of innovation infrastructure are summarized. technology platform is a communication tool aimed at enhancing efforts to create promising commercial technologies, new products or services, attracting additional resources for research and development based on the participation of all stakeholders (business, science, government, society), improving the regulatory framework in the field of innovative development. engineering center provides engineering consulting services of research, design, calculation and analytical nature; provides feasibility studies of projects, recommendations in the field of production organization and management of industrial, infrastructure and other facilities. innovation and technology centers are created to facilitate the development of small and mediumsized knowledge-intensive businesses, to implement the results of intellectual activities of educational institutions and research organizations. the centers contribute to the realization of their innovation potential by providing a full range of infrastructure services and contributing to the formation of synergies between the participants. the centers provide small innovative enterprises and firms with laboratory and production space, research and development equipment, office, demonstration and conference rooms, as well as legal, financial, engineering, marketing and other services. certification centers act as performers in the field of certification services. they carry out comprehensive certification procedures, from the collection and preparation of the necessary package of documents to product testing and documentation of compliance. cluster development centers are specialized organizations created by regional executive authorities to implement the cluster policy in the region. the purpose of cluster development centers is to create conditions for the development of territorial clusters, to facilitate the coordination of projects of the participants of territorial clusters, and to increase the competitiveness of small and medium-sized enterprises. thus, the centers act as a link between various subjects of innovative activity. innovative territorial cluster is an association of enterprises, equipment suppliers, specialized production and service services, research and educational organizations connected by relations of territorial proximity and functional dependence in the production and sale of goods and services. classification of services focused on innovative development classification by the criterion of the type of services is useful for monitoring the provision of the innovation system with different elements of inno vation infrastructure. the analysis showed that this logic of classification is quite common in research, and it is also the main in the official interpretation of this term. in this case, the following groups are distinguished: – production and technological; – expert consulting; – financial; – informational; – personnel; – sales. an important point when grouping services by type of service is the composition of the elements of each group. there are no generally accepted approaches, especially with regard to financial and industrialtechnological groups. factors in choosing the composition of elements should be the type of services and their specificity, due to the purpose of creating such an element. based on the highlighted essential characteristics of innovation infrastructure, the production and technological group includes centers of collective use of scientific or high-tech equipment and technopark structures (science parks, science and technology parks, technology parks, hightech parks, innovation technology centers, innovation business incubators, etc.). based on certain essential characteristics and expected results of functioning of innovative infrastructure, its formation, necessary for the development of innovative entrepreneurship, should be based on the following principles: 1. balanced construction of the system in the areas of support, as the absence of a certain element to provide three seas economic journal 136 vol. 3 no. 1, 2022 a certain type of service or its presence in the amount not consistent with other elements, will slow down the development of the entire system. for example, the insufficient development of the financial component of the innovation infrastructure can lead to a lack of financing of innovative projects, and thus inhibit the creation of innovative entrepreneurial structures in technology parks, innovative business incubators, or, conversely, the insufficient development of technology parks. there is a situation of lack of innovative projects that require funding. 2. the balance of building a system of services at all stages of innovative entrepreneurship: research, scientific production, production and sale of innovative products within the provided type of services. 3. formation of elements of innovation infrastructure, taking into account the existing innovation and economic potential of the territory and the priorities of socio-economic development. 4. the presence of a project to create an element of innovation infrastructure with clearly defined indicators of development over time (necessary to monitor the development and evaluation of effectiveness). within these principles, there is a clear correspondence with the strategic vectors, in particular sustainability and cooperation. from the perspective of the strategic vector "product as a service", it is advisable to consider more in-depth scientific and methodological approaches to the classification of services in the context of innovation and technological development. the classification of industrial services is based on two criteria – the stage of the life cycle of industrial products and the functional purpose of industrial services, which allows us to systematize the diversity of these services as follows: – services for the development and implementation of industrial products in production (r&d, industrial design, engineering, etc.); – ancillary production services (services for adjustment, maintenance, repair of production equipment, etc.); – supply and marketing services (purchasing, warehousing, transport, sales logistics, etc.); – service services (warranty repair, service of sold products); – administrative services (marketing, management, personnel services, etc.). descriptive statistics development of the service sector of innovation infrastructure occurs in relationship with the real sector of the economy, affecting the increase in the index of industrial production, labor productivity, increasing the level of innovation activity, which ultimately leads to gdp growth, but it can occur asynchronously. in this connection, the impulse (initial) and lagging (resulting) variables based on the action of multiplicative effects were determined by mathematical modeling (table 1). for the first set "index of physical volume of innovation infrastructure services – grp" the greatest cross-correlation dependence is observed at time lag 2 with a tendency of increasing dependence and synchronous changes in both indicators. in the second set "index of physical volume of innovative infrastructure services – index of labor productivity " the highest cross-correlation dependence is also observed at time lag 2. for the third set "index of physical volume of innovative infrastructure services – index of industrial production" the largest cross-correlation dependence is observed at time lag 2. for the fourth set "index of physical volume of innovation infrastructure services – index of innovation activity " and the fifth set "index of physical volume of innovation infrastructure services – index of volume of state grant financing of research and development" the highest cross-correlation dependence is observed at time lag 1. according to the sixth "index of physical volume of innovation infrastructure services – index of human capital in research and development" and the seventh set "index of physical volume of innovation infrastructure services – index of regional competitiveness", the highest cross-correlation dependence is observed at time lag 2. for the eighth set "index of physical volume of innovation infrastructure services – index of production of innovation products" the highest cross-correlation dependence is observed at the time lag of 0. for the ninth set "index of physical volume of innovation infrastructure services – export activity index" the largest cross-correlation dependence is observed at time lag 2. all values of cross-correlation coefficients are statistically significant (p-value less than 0.05). the analysis of the obtained results shows that the influence of the innovation infrastructure factor is most noticeable in the short term in the immediate sphere of innovation activity. at the same time, in the longer term, the importance of innovative services is also evident in the main macro indicators of regional development. thus, the development of the service sector of innovation infrastructure is an effective multiplier for the transition to a new stage of development of the entire regional macroeconomic system, ensuring the balance in the sphere of production, services, innovation infrastructure and innovation. to determine the contribution of industrial services in the development of production, the production function model was used to reveal the relationship between the resulting parameter – value added growth, and the factors affecting it from the perspective of the innovation infrastructure services sector – the increase in the share of services provided by the innovation infrastructure and the labor productivity index. three seas economic journal 137 vol. 3 no. 1, 2022 the model of the production function of the innovative infrastructure services sector, obtained on the basis of regression analysis, has the following form: y = 0,31 ∙ x1–0,27 ∙ x21,22 y – value added growth, %; х1 – increase in the services provided by the innovation infrastructure, %; х2 – labor productivity index in industry, %. based on the model obtained, we can conclude that the greatest influence on the increase in value added in industry has the indicator of labor productivity, which is characterized by a positive elasticity coefficient of 1.22. the indicator of growth of the volume of innovation infrastructure services provided showed a negative impact with the elasticity coefficient (-0.27), which indicates a lack of incentives and mechanisms for development of the innovation infrastructure services sector, capable of providing increased innovation activity and growth of industrial production in the real sector of the economy. policy in the service sector, focused on innovative development consider the main groups of services in the applied context of national innovation policy. the first group is state programs to support innovative business. in particular, state programs of financial and technical support for innovative businesses that carry out research and development on state priorities (usa, japan, great britain, india, china). the second group is financial assistance programs. these include: 1) targeted grants for research and development (in almost all developed countries); 2) direct financing (subsidies, loans), which reach up to 50% of the cost of creating new technologies and products (france, usa); 3) creation of funds for the implementation of innovations (england, germany, france, switzerland, the netherlands); 4) loans, in particular interest-free (sweden); gratuitous loans to cover 50% of the costs of innovation (germany). table 1 sets of pulse and lag variables № of set of variables impulse variable lagging variable time lag (in years) crosscorrelation coefficient time lag (in years) crosscorrelation coefficient time lag (in years) crosscorrelation coefficient 1 index of physical volume of innovative infrastructure services grp 0 0,511 1 0,780 2 0,891 2 index of physical volume of innovative infrastructure services labor productivity index 0 0,311 1 0,557 2 0,689 3 index of physical volume of innovative infrastructure services industrial production index 0 0,278 1 0,444 2 0,486 4 index of physical volume of innovative infrastructure services index of innovation activity 0 0,370 1 0,525 2 0,491 5 index of physical volume of innovative infrastructure services index of the volume of state grant funding for research and development 0 0,401 1 0,587 2 0,498 6 index of physical volume of innovative infrastructure services research and development human capital index 0 0,291 1 0,523 2 0,835 7 index of physical volume of innovative infrastructure services region competitiveness index 0 0,390 1 0,681 2 0,719 8 index of physical volume of innovation infrastructure services index of production of innovative products 0 0,755 1 0,711 2 0,601 9 index of physical volume of innovative infrastructure services export activity index 0 0,397 1 0,486 2 0,731 three seas economic journal 138 vol. 3 no. 1, 2022 the third group is programs for providing various benefits (tax, compensation, customs and others). note such tools as: 1) simplification of taxation for enterprises working in the field of innovation, exclusion from taxation of research and development costs, preferential taxation of universities and research firms (usa, uk, india, china, japan); 2) government programs to reduce risks and compensate for risky losses (usa, japan); 3) free services of patent attorneys on applications from individual inventors, exemption from duties (netherlands, germany, japan, india); 4) deferral of payment of duties (or complete exemption from them), if the invention relates to the field of energy saving (austria); 5) reduction of state duties for individual inventors, insurance and providing them with tax benefits (austria, germany, usa, japan), as well as the creation of special infrastructure to support them ( japan). participation in these programs involves the provision of appropriate advisory services. the fourth group – programs for the formation of innovation infrastructure. in this group we can highlight: 1) creation of state organizations that provide scientific, technical, financial and production support for innovative business (usa, japan, india, china); 2) creation of a wide network of venture capital funds for the implementation of innovative projects (implemented in various ways in almost all developed and developing countries). it is proposed to consider the financial aspects of innovative development in order to determine their hierarchy and relationship in the context: 1) programs of innovative development of state enterprises; programs of innovative development of private enterprises; 2) programs for selection and implementation of innovative projects by private enterprises; 3) programs for selection and implementation of innovative public-private projects, including international ones. according to the authors, the basic principles of financing of these programs of development of the innovation system should be the following: – it is expedient to carry out financing within the limits of the approved strategy (program) of innovative development of the country or region (territory); – it is advisable to finance specific activities or provide a specific amount of services to clients (preferably with joint investment from local budgets, partial payment for services by clients or investors, depending on the stage of innovation processes of the project); – it is necessary to focus on existing organizations of innovation infrastructure that have contacts and practical experience with enterprises and research organizations, and gradually carry out their development. compliance with these principles will make the state support of the innovation system comprehensive, as well as make it possible to evaluate its effectiveness. 5. conclusions in developed countries, funding for innovation comes from both public and private sources, as part of systemic development strategies that take into account, among other things, a number of related development services. research shows that these mechanisms have become more diverse and complex, and adapting to them is one of the most significant challenges for modern states and businesses. thus, the analysis of the regional case proves that the success of innovation is largely determined by the forms of its integrated organization and methods of service support. the analysis of selective approach to service support of innovative activity allowed determining that startups and small innovative business need, first of all, expert (mentor) support. the state can support certain elements of infrastructure (business incubators, technoparks, gas pedals, consulting centers, technology transfer centers, etc.) for some time. at the stage of startups entering international markets, joint cooperation of business and government is necessary to achieve the maximum effect of international competitiveness of developments (products) and the possibility of gaining access to foreign investment, which can be done with the help of export support measures. based on the analysis, the priority measures to solve the problems of innovative development on the basis of the service component include: – expansion of the range of services to support innovation in private technological small and mediumsized enterprises, in particular by creating a system of competitive grants (for research or cost recovery) from innovation funds in priority areas of innovation; – increasing the stimulating role of the tax system and creating demand for new innovative products through maximum attention to public procurement, as well as procurement for the needs of natural monopolies and large enterprises with predominant state participation. acknowledgements the study was conducted with the financial support of the ministry of education and science of ukraine for the grant for the research project "innovative component of the security of sustainable development of old industrial regions of ukraine: strategic directions of institutional support and technology transfer in innovative landscapes" (№ 0121u100567). three seas economic journal 139 vol. 3 no. 1, 2022 references: colman, p., & bing ang, x. (2016). guiding framework for a successful servitization journey. the manufacturer. available at: https://www.themanufacturer.com/articles/a-guiding-framework-for-a-successful-servitizationjourney/ (accessed 10 january 2022). dvorkina, m. ya. (2001). informatsionnoe obsluzhivanie: sotsiokulturnyy podkhod [information service: sociocultural approach]. moscow: ipo profizdat. klimenko, t. i. (2020). upravlenie uslugami innovatsionnoy infrastruktury [innovation infrastructure service management]. kazan: kazan national research technological university. kniazevych, a. o. (2014). softyzatsiia i servizatsiia innovatsiinoi infrastruktury krainy [softization and servicing of the country 's innovation infrastructure]. economy and state, no. 4, рр. 23–27. kokurin, d. i., & nazin, k. n. (2011). formiroanie i realizatsiya infrastrukturnogo potentsiala ekonomiki rossii [formation and implementation of the infrastructure potential of the russian economy]. moscow: traslit publishing house. maslova, n. v. (2017). rol sfery uslug v razvitii innovatsionnoy ekonomik [the role of the service sector in the development of innovative economies]. economy and entrepreneurship, no. 5(1), рр. 220–226. mukhamed'yarov, a. m., divaeva, e. a., & khabibrakhmanova, yu. r . (2013). osnovy formirovaniya i otsenki funktsionirovaniya regionalnykh innovatsionnykh sistem [fundamentals of formation and evaluation of the functioning of regional innovation systems]. ufa: gilem, bashk. encyclical. omelyanenko, v., braslavska, o., biloshkurska, n., biloshkurskyi, m., kliasen, n., & omelyanenko, o. (2021). c-engineering based industry 4.0 innovation networks sustainable development. international journal of computer science and network security, no. 21(9), pp. 267–274. doi: https://doi.org/10.22937/ijcsns.2021.21.9.35 omelyanenko, v., prokopenko, o., & omelyanenko, o. (2021). innovation policy coherence for sustainable development. shs web of conferences, no. 126. doi: https://doi.org/10.1051/shsconf/202112601002 omelyanenko, v. a., & omelianenko, o. m. (2021). digital services as a component of reginal innovation systems. economy digitalization in a pandemic conditions: processes, strategies, technologies:  international scientific conference ( january 22–23, 2021. kielce). riga, latvia: «baltija publishing», pp. 172–176. robul, yu., lytovchenko, i., tchon, li, nagornyi, ye., & omelianenko, o. (2020). digital marketing tools in the value chain of an innovative product. international journal of scientific & technology research, vol.  9, iss. 4, pp. 158–165. saxena, a. (2021). servitization: the next wave of growth for manufacturing. wipro limited. available at: https://www.wipro.com/process-and-industrial-manufacturing/ser vitization-the-next-wave-of-growth-formanufacturing/ (accessed 10 january 2022). three seas economic journal 8 vol. 2 no. 1, 2021 corresponding author: 1 lviv polytechnic national university, ukraine. e-mail: olena.i.balanska@lpnu.ua orcid: https://orcid.org/0000-0003-4849-0080 2 lviv polytechnic national university, ukraine. e-mail: oleksandr.y.yemelianov@lpnu.ua orcid: https://orcid.org/0000-0002-1743-1646 doi: https://doi.org/10.30525/2661-5150/2021-1-2 the risk planning methodological principles for housing investment olena balanska1, olexandr yemelyanov2 abstract. in many countries wordwide there is an urgent need to increase the housing level. however, a significant increase in this level is hindered by a number of factors. among these factors, the significant risk of housing construction investing is essential. reducing the riskiness of housing construction investing requires, among other things, the use of scientifically grounded risk planning methods in such investment. with taking this into account, the purpose of this work is to develop methodological principles for the housing investing risk planning. the study subjects were the patterns of forming the housing construction investing risks. the methodology of this study involved the use of systems analysis, economic and mathematical modeling, tools of decision theory, and technical and economic calculations. among the results of the study, the formed input information array needed for planning the housing investing risks should be noted. this array includes the following main blocks: information on the available regulatory and legal support for housing construction; information on potential developers, intermediaries, and other entities investing in housing construction (particularly on the occurrence of risky events’ frequency and scale in their activities); information on potential investment objects (such as their preliminary estimated costs, consumer characteristics, construction terms); information on the concluding agreements’ conditions and procedure between the housing construction investment subjects. the indicator system for retrospective assessment in housing construction investing risk is proposed. in particular, the following indicators groups are included in this system: actual frequency indicators of risky events’ occurrence in the investment entities’ activity in the previous period(s); specific indicators of the risky events’ occurrence scale in the investment entities’ activities in the previous period(s); relative indicators of the risky events’ occurrence scale in the investment entities’ activities in the previous period(s). also, this indicators system was supplemented by a number of generalizing indicators. the sequence of the risk planning process in housing construction investing for all the main participants of the process is proposed. for the investors particularly, this sequence contains the following sequential actions: a set of situations in which the construction object may appear is formed; the probability for each of these situations is estimated; the expected value of the economic benefit from the housing purchase in each situation is set; the mathematical expectation calculation of the value of economic benefits from the housing purchasing is made; the coefficient of variation is calculated according to the average linear deviation of economic benefits from the housing purchasing; the estimated market value of a residential real estate object is calculated taking into account the risk factor; the profitability index of the particular dwelling purchase operation is calculated. the practical implication of the developed methodological principles of the risk planning in housing construction investing in the practice of the construction subjects will increase the approved management decisions validity. key words: investment project, investor, developer, evaluation, risk, indicator. jel classification: d81, g31, l74 1. introduction one of the leading indicators of living standards is housing availability. achieving a high level of this indicator requires adequate volumes of housing construction. however, certain factors hinder its development. in particular, these factors include the housing construction investing risk. in general, housing purchasing should be considered a specific investment project. in turn, modern management science and practice offer three seas economic journal 9 vol. 2 no. 1, 2021 effective tools for project analysis and management (flyvbjerg, 2006; serra et al., 2014). the use of such tools makes it possible to increase the success of investment projects (chan et al., 2004; shenhar et al., 2001). this is achieved, mainly, by concidering all the main factors of such success and formalizing the projects’ characteristics evaluating process (cho et al., 2005). one of the most critical characteristics of projects is their riskiness, which is the threat of partial or total failure of obtaining the expected results from the project’s implementation. taking into account the project’s risk level requires the use of unique indicators and methods ( jaafari, 2001; lesinskyi et al., 2018; renn et al., 2013; yemelyanov et al., 2018). the projects specific (ho et al., 1992), particularly housing investment projects, should be taken into account. the riskiness of such investment is due to a number of factors, such as its significant duration, the complexity of the relationship between the participants in the investment process (doloi, 2009). the housing investment risk factor has been examined in a several of scientific papers (abu hassan et al., 2012; akintoye et al., 1997; baloi et al., 2003; berk et al., 2012; lian et al., 2017). however, methodological bases developing for such a risk planning are not definitively resolved and require further research. first of all, it is necessary to examine the peculiarities of such planning for all major participants in the housing construction investment process, particularly for investors, developers, intermediaries, and others. 2. the essence and information support of the risks planning process in housing construction investing under the investing risks planning in housing construction, it is advisable to understand the investment process subjects’ actions to establish a reasonable level of their activities’ riskiness in this process. it is necessary to establish planning criteria and determine the parameters, the optimal or normative values of which should be chosen by the planning entity, to carry out such planning. in particular, the norms include most of the construction process indicators (such as duration, the investment distribution during the construction period, the production resources spendings). regarding the risk planning parameters for housing construction investment, which are a subject for optimization, they include those that should a priori be chosen from several alternatives. in particular, we can talk about the choice of a certain developer and intermediary, the best investment scheme, and others. thus, the risk planning methodology of residential construction projects should include a combination of regulatory and optimization methods of such planning. this combination can also be reflected in the fact that the obtained investment process’s optimal parameters may be specific standards for other entities that find themselves in similar conditions. planning the housing investing risks requires the prior forming of a wide array of input information. it is advisable to highlight the following main blocks of this information: 1) information on the available regulatory and legal support for housing construction; 2) information on potential developers, intermediaries, and other entities investing in housing construction (in particular, on the occurrence frequency and scale of risky events in their activities); 3) information on potential investment objects (such as their preliminary estimated cost, consumer characteristics, construction terms); 4) information on the agreements concluding conditions and procedure between the subjects of housing construction investment. 3. the retrospective assessment indicators of housing construction investing risk while assessing the risk events frequency and scale in the housing investing entities activities, it is necessary to identify the following indicators groups for assessing the relevant investment risk characteristics: 1) indicators of the actual risk events frequency in the investment entities’ activities in the previous period(s). it has to be chosen the basis on which such a frequency will be computed, to calculate these indicators. in particular, such a base for the developer may be the total square meters number of housing built, and for investors and intermediaries – the total square meters number of housing purchased by them in the previous period (s); 2) specific indicators of the risky events occurrence scale in the investment entities’ activities in the previous period (s). the average amount of losses incurred by investment entities per unit of the selected base should be computed to calculate these indicators. in particular, specific indicators can be measured in monetary units per square meter of commissioned housing. in this case, the indicators can be computed both in the calculation of the entire database volume and in the calculation of the part of this database in respect of which risky events have occurred; 3) relative indicators of the risky events’ occurrence in the investment entities’ activities in the previous period (s). it is necessary to compare the number of losses incurred by investment entities with certain cost characteristics of the commissioned residential premises, particularly with their estimated cost, to calculate these indicators. as in the case of specific indicators, relative indicators can be calculated both three seas economic journal 10 vol. 2 no. 1, 2021 on the total estimated value basis of the commissioned dwellings and on the part of this value basis that corresponds to the base regarding which the risk events occurred. it is advisable to identify three main risk events: unpredictable increase in construction costs; the consumer properties of residential premises deterioration compared to the predetermined level of these properties; delay in the residential premises commissioning. if we consider the losses from these risky events occurrences from the investors’ point of view (if there are no unique mechanisms to compensate these losses, which were laid down in the text of the agreements between housing investing entities), the amount of these losses is determined as follows: 1) in case of an unforeseen increase in the construction cost, the losses amount is determined by the magnitude of such growth; 2) in case of the consumer properties of residential premises deterioration in comparison with the predetermined level of these properties, the losses amount is determined by the amount of housing market value reduction in comparison with the situation when such deterioration of housing consumer properties did not happen (or by the additional investor expenses to eliminate consequences); 3) in the event of a delay in the residential premises commissioning, the investor’s loss amount may be estimated by the amount of rent that he would have received by giving the premises for rent for the period of this delay. thus, it is possible to offer the indicators system for retrospective risk assessment of housing construction investing. this system contains indicators that allow us to assess the extent and economic consequences of each of the significant risk events for investors, developers, and intermediaries (figure 1). in practice, in the case of a direct relationship between the investor and the developer, the central part of the investment risks (especially the risk of residential facility’s untimely commissioning) is borne by the investor. therefore, the most interesting cases are indicators of the risk events’ actual frequency for developers and indicators of the events occurrence scale for investors who have dealt with specific developers. it also seems appropriate to supplement the above indicators system for retrospective risk assessment in housing construction investing with generalizing indicators. these indicators can be the following: – their actual occurrence frequency in the developer’s activities, the standard for all-risk events. this frequency can be measured by the share of living space meters total number put into operation in the reporting period (s) for which at least one risk event occurred; – the total specific scale of all risk events occurs in investors’ activities who had a relationship with the certain developer. the amount of investor losses received from all possible risk events is first calculated to compute this indicator. then this value is divided by the total number of living space meters put into operation in the reporting period(s), for which there was at least one risky event; the actual frequency indicators of risk events specific indicators of the risk events scale relative indicators of the risk events scale risky events types subject types in housing construction investment price rise the housing consumer properties deterioration input delay investors developers intermediaries other subjects the indicators system of retrospective riskiness assessment in housing construction investing figure 1. the indicators system of retrospective riskiness assessment in housing construction investing source: developed by the authors three seas economic journal 11 vol. 2 no. 1, 2021 – the overall relative scale of all risk events in that investors’ activities who had a relationship with the developer. the investor losses number is first calculated to compute this indicator, as in the previous case. this value is then divided by the initial estimated cost of the living space total meters number put into operation in the reporting period(s) for which at least one risk event occurred. these three summary indicators can be used to process the developers’ attractiveness assessment for potential investors. 4. the sequence of the risks planning process in the housing investing when considering the risk planning process in housing investing, it should be taken into account that this process will differ for all investment subjects. in particular, concerning the investors, when planning their risks, the function of probabilities distributing the expected economic benefit from the residential real estate purchase should be built first of all. in order to implement such a construction and other risk planning process, the following sequence of actions should be performed: 1) the situations set is formed in which the construction object may appear; 2) for each of these situations, its probability is estimated; 3) the expected economic benefit value from the housing purchase in each situation is set. this value can be calculated as the difference between the capitalization of net rent for the relevant premises and the expected investor’s losses number in case of this situation: e p r lі і= − , (1) where: eі is the value of economic benefits from the housing purchase in the i-th situation, monetary units; p is the annual value of net rent, monetary units; r is the annual risk-free capitalization rate in the i-th situation, unit share; lі is the expected investor's losses value due to the occurrence of a risky event(s) in the i-th situation, monetary units; 4) the mathematical expectation calculation of the value of economic benefits from the housing purchase is performed: m e pі rі і п = ⋅( ) = ∑ 1 , (2) where: m is the mathematical expectation of the value of economic benefits from the housing purchasing, monetary units; п is the number of possible situations in which a residential property may find itself; prі is the probability of the i-th situation occurrence; 5) the coefficient of variation calculation on the average linear deviation of economic benefits from the housing purchasing is performed: c e m і m v і і і п = − ⋅( ) = ∑ 1 , (3) where: cv is the coefficient of variation on the average linear deviation of economic benefits from the housing purchasing, unit share; 6) the estimated market value of the residential real estate object is calculated by taking the risk factor into account: v m c c v vm = ⋅ −      1 , (4) where: v is the estimated market value of residential real estate with taking the risk factor into account, monetary units; cvm is the maximum possible value of the coefficient of variation on the average linear deviation (for positive values of the random variable is 2), unit share; 7) the profitability index for the certain housing purchasing transaction is calculated: і v v= / 0 , (5) where: і is the profitability index for the particular housing purchasing transaction, times; v0 is the initial estimated cost of this building, monetary units. if the profitability index calculated according to formula (5) exceeds one, then the housing purchasing should be considered appropriate. if the value of the profitability index is less than one, then buying such housing is impractical. regarding the risk value planning for the intermediary involved in the housing construction investing process, such planning is generally similar to the sequence of this process described above for the investor. however, additionally the following circumstances should be taken into account: 1) the intermediary’s economic benefits are determined by the belonging to him share of housing buyer investment costs; 2) the intermediary’s riskiness depends on what investment risks are transferred to him and whether they are insured; 3) while planning the intermediary’s risks instead of the premises’ initial estimated cost the assets amount involved in the intermediary’s activities should be taken. the proposed approach to the investor’s (the housing buyer) risk planning under certain modifications can be extended to the case of the enterprise – the developer. however, the distributing function probability of a developer's profit from the housing construction and sale can be a function of many variables (for example, each situation may correspond three seas economic journal 12 vol. 2 no. 1, 2021 to a certain amount of developer's expenses not covered by the investor and a certain amount of unsold housing in square meters). also, when planning the risks of the enterprise – the developer, the issue of determining the minimum allowable for such an enterprise initial estimated cost of each dwelling (or square meter of its area) is resolving. it is proposed to perform the following sequence of actions to solve this problem: 1) the probabilities distribution function of the developer’s expected profit from the particular dwelling construction and sale at a certain estimated cost of this room is built; 2) the mathematical expectation and the coefficient of variation of this profit at a certain estimated housing cost is calculated; 3) the capitalized profit amount is determined using the risk-free capitalization rate; 4) the value of the developer's assets involved in the particular dwelling construction and sale is determined taking into account the premises area fraction in the total housing area that is put into operation by the developer and its construction and marketing processes duration; 5) the relationship between the housing construction estimated cost and the capitalized developer’s profit amount, obtained as a result of housing construction and sale is built; 6) such housing estimated value, at which the developer's profit capitalized value from the housing construction and sale becomes equal to the developer's assets value calculated at the fourth stage, is determined. this cost will be the minimum allowable for the developer’s estimated construction cost of a particular dwelling. the authors analyzed the housing construction activities of a number of construction companies in the western region of ukraine. the planned indicators of the housing construction investing risk for these developers on a sample of residential premises, the construction of which was expected to begin in 2019 were calculated (table 1). according to the data in table 1, for most of the dwellings planned to be constructed, the profitability index (5) ranged from 1 to 1.4. simultaneously, for 22.5% of living space, this index was less than one. therefore, it is too risky to invest in such premises construction. this may be due to the high initial cost of such premises, as evidenced by the high average ratio of the initial planned cost to the developer’s minimum allowable cost of housing. thus, for most residential premises, which were examined for the investment feasibility, the investment risk is quite acceptable. moreover for the housing, for which the investment risk is too high, it is necessary to reduce its price. 5. conclusions risk planning in housing investment should be based on a preliminary assessment of the existing risk level. for this purpose, the indicators system of retrospective risk assessment in housing construction investment proposed in this paper can be used. this system contains indicators that allow you to assess the extent and economic consequences of each of the major risk events for investors, developers and intermediaries. it also allows you to establish the relationship between the risks inherent to their activities. it is advisable for the investors, developers, and other participants of the housing construction investment process to use the developed in this work method of planning the housing construction investing risk level in their activities. this method involves constructing the probabilities distribution function of expected economic benefits from the residential real estate purchasing and construction. w hile using the developed method, it is possible to determine the reasonable share of risk premium in the price structure of the relevant construction products and calculate such numbers of the residential real estate value by considering the risk factors that are acceptable to investors and developers. to quantify the riskiness level of housing construction investing, it is advisable to use the developed by the table 1 the planned indicators of the housing construction investing risk in the western region of ukraine on a sample of residential premises, the construction of which was expected to begin in 2019 indexes the indexes value for residential premises, for which the profitability index (5) is < 1 1 – 1.2 1.2 – 1.4 1.4 – 1.6 > 1.6. 1. the total living space fraction of the respective group in the total area of all such premises, % 22.5 40.6 24.9 8.1 3.9 2. the average profitability index for the housing purchase transaction, times 0.91 1.08 1.28 1.41 1.70 3. the average ratio of the forecast value of the coefficient of variation of economic benefits from the housing purchase to the maximum possible value of the coefficient of variation, unit share 0.49 0.32 0.24 0.17 0.13 4. the average ratio of the initial planned cost to the minimum allowable housing construction cost for the developer, times 1.45 1.26 1.09 0.97 0.93 three seas economic journal 13 vol. 2 no. 1, 2021 authors the operation profitability index of the certain housing purchase. it is proposed to define this index as the ratio of a residential real estate object’s estimated market value with taking into account the risk factor, to its initial estimated value. if the profitability index exceeds one, then the housing purchase should be considered appropriate. if the value of the profitability index is less than one, it is impractical to buy such housing. in the latter case, it is necessary to adjust the housing price in its reduction. further researches require, in particular, the development of a risk planning method in housing investing, depending on the chosen model of such investment. references: abu hassan, b. a. b., ali, k., onyeizu, e. n., & yusof, m. n. 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(2018). evaluation of adaptability of ukrainian economy to changes in prices for energy carriers and to energy market risks. energies, vol. 11(12), p. 3529. doi: https://dx.doi.org/10.3390/en11123529 three seas economic journal 67 vol. 1, no. 4, 2020 corresponding author: 1 central ukrainian national technical university, ukraine. e-mail: omlevchenko@ukr.net orcid: https://orcid.org/0000-0001-5452-7420 2 central ukrainian national technical university, ukraine. e-mail: abosultan711@gmail.com orcid: https://orcid.org/0000-0002-4524-7360 doi: https://doi.org/10.30525/2661-5150/2020-4-10 classical philosophical foundations of fundamental scientific research’ institutionalization in cognitive society oleksandr levchenko1, al-ghazali ameen saif ali2 abstract. the subject of publication is the theoretical generalization of the philosophical foundations of fundamental scientific research (fsr). the stages of institutionalization of attitude to the fsr are considered, from the stage of critical discussion of the conditions for obtaining true knowledge of the hellenistic period to the developed system of teaching about the transcendental logic of kant and hegel’s logical teaching about being, essence and concept in the context of fundamental scientific research. the methodology is based on generalization of the most radical points of view and approaches of representatives of different philosophical schools and research programs to clarify the essence and ways of fsr. the causes and gnoseological origins of the fsr scientific method change to the modern form of the method of verification toleration of scientific theories of post-positivism and metapositivism (popper, lakatos, kuhn, feyerabend) are described. as a result of the study, it was concluded that the period of radical rethinking of the classical paradigm of fundamental theoretical research, which is set out in the teachings of researchers of the ancient period, the new time, classical german, marxist philosophy, has started. instead of the deterministic method of scientific thinking, the verification logic of substantiation of the process of generating new knowledge (line descartes&pascal), the method of verification toleration/refutation of popper is adopted by scientists. at the same time, the justification for the truth of the fsr is based on the development of descartes’ teachings about the method. the applied result of the practical application of the popper’s concept in the field of fsr implementation is a deliberately probabilized style of scientific cognition, the principle of verifying the intermediate interpretation of the truth, updating practical approaches to demarcation procedures, justifying the partial and permissible value of scientific theories as “points of invariability” in the continuum of continuous inaccuracy and uncertainty (hume/berkeley vs. bacon/newton line). key words: fundamental science research, cognitive society, philosophical foundation of fsr, verification of science theories and knowledge. jel classification: a11, i20, i23 1. introduction accelerated and emphasized saturation with hightech elements of dominant technological processes, further improvement of the level and quality of collective and personal well-being of stakeholders of clustered innovatively oriented ecosystems is objectively associated with the transformation of the fsr from a kind of peripheral elitist activity into a main focus of development of postmodern cognitive society. the subject of publication is the theoretical generalization of the philosophical foundations of fsr . the stages of institutionalization of attitude to the fsr are considered, from the stage of critical discussion of the conditions for obtaining true knowledge of the hellenistic period to the developed system of teaching about the transcendental logic of kant and hegel’s logical teaching about being, essence and concept in the context of fundamental scientific research. 2. methodology the research is based on generalization the most radical points of view and approaches of representatives of different philosophical schools and research programs to clarify the essence and ways of fundamental scientific research (fsr). the period of generalizations three seas economic journal 68 vol. 1, no. 4, 2020 includes a period of time from ancient times to the middle of the twentieth century and consistently represents the views of the authors of the hellenism era, the new time, the heyday of classical philosophy to the era of empiriocritism and the vienna school of neopositivism. the scientific origins of the emergence of modern theories of critical rationalism as a general theory of the fsr , acceleration and dynamics of growth not subject to inflation of scientific knowledge, critical empirism as a stage of development of logical empirism are investigated. the causes and gnoseological origins of the fsr scientific method change to the modern form of the method of verification toleration of scientific theories of post-positivism and metapositionivism (popper, lakatos, kuhn, feyerabend) are described. 3. results the ancient period of fsr is associated with the introduction of the practice of critical discussion of conditions for obtaining true knowledge with the central problem of passive relation between compulsory, stable, objective knowledge (in compulsory unity with its subject) and problematic knowledge, including correct, as well as illusory, false, unreliable, truth and delusion. the absence of a fundamental logical contrast between the subject and the object of cognitive activity is associated with the fact that the theory of cognition (tc) exists for ancient thinkers only in connection with the task of constructing a picture of space. basic understanding of the essence of knowledge was state by πλάτων (plato) (427/429-347 p. bc) in his conception ἀνάμνησις (anamnesis) – recalling, ascent to knowledge, wisdom, true knowledge of the world of ideas by an intelligent part of the soul when perceiving objects of the sensual world, which differs from υπομνησις (hypommnesis) – a simple mention, reflection, an voice of truth in the soul embodied in the human body, written recording of external impressions (serezhnikov, 1936). the knowledge of the “visible” (εἶδος), as opposed to the idea itself (ιδέα), is a form of spiritual and cognitive reflection of the natural connections-relations of the outside world, which is aimed at its transformation, is interpreted πλάτων as the ἀνάμνησις celestial homeland of souls, where they are perceive any of them directly, face to face, while after resettlement in the rough earthly reality they remained only (πομνησις of the ideal world, difficult with the ὑπόθεσις darkness and gravity of matter. the doctrine of the idea provides the principle ὑπόθεσις (hypothesis) – “position at the heart” – related to the “meaningful prerequisite”, “basis”, “basic principle”, “foundation”, the basis of the meaningful existence of the thing and its structure (plato, 1965). the put forward concept included the need for a certain practice of the soul, its care for itself, the use of “memory without a sign”, the gathering in indivisive unity from the scattered world of sensations, its trains and entertainment, its direct presence in the truth, its improvement and accumulation. such actions allow to solve the paradox of the transition from ignorance to knowledge, and the solution was that in reality there is no absolute ignorance, there is only a deceptive ignorance of oblivion, which is ready to wake up to memory or roll down to even greater ignorance and oblivion. due to the attraction of memory, there is an initial retreat from direct discretion, it becomes the key not to the imaginary, but to the real ignorance of the truth, a retreat from pure and impurity-free knowledge. dialectics for πλάτων consists in the discretion of the very principle of sciences, “giving and demanding content” for sensual things, separating one into disparate, building disparate to a single, structural representation of the whole as a single-separate plurality, overcoming any dualism. pure, true knowledge is the result of a dialogical search for αρχή, the principle of every thing, in which everything possible, is provided, so that αρχή acts as a semantic method of existence, contains the whole plan of this latter structurally and one-separately. in the πλάτων of the book, dialectic – the doctrine of unity of opposites, the search for the principle of each thing, obtaining true knowledge about it – can be presented as follows: − dialectics, entering the sphere of confusing things, dismembers them so that each of them receives its own content – ἰδέα; − ἰδέα things are taken as its principle, ὑπόθεσις, logos (λόγος) subordination to the general subordination of private entities to it, the law (νομός), which leads from scattered sensuality to an orderly idea and vice versa; − dialectics consists in establishing imaginary grounds, a priori categories, forms representing an objective and meaningful reflection of the real reality of the existence of things; − chain “logic – idea – hypothesis – basis” dialectics perceives as the boundary of sensual and material formation of things, which in compressed form contains its “deployment”, acts as a plan, structure, content of existence; − dialectics as the “broom of sciences” is both discourse (consists in logical dismemberment) and intuitive (consists in the merger of the content), cognitive teaching about indivisible integrity, synthesis of the boundaries of discrete (immobile) parts of a particular thing and the unlimitedness of its holistic idea, unlike other sciences that only “dream”, collectively sees the essence of things “in reality”; − dialectics is not just the ability to have a conversation, ask and answer, among the sad disputes to find and practically apply the truth, how much the ability to develop ὑπόθεσις dialectically, think logically, receive a searchable object in a dismembered, unicorn, structural form, is to transform knowledge in the most true way that everything else becomes “secondary and later”. three seas economic journal 69 vol. 1, no. 4, 2020 the method of dialogueal cognition of the of things, which πλάτων associated with σωκράτης (470/469-399 bc) (politis, 2006), implemented in the process of resolving παράδοξος – a paradox, a contradiction that arises in theory, provided that it adheres to the logical correctness of the reasoning. μαιευτική, as the main antinomian technique ἔλεγχος (élenchos, test), σωκράτης provides for the ironic realization of the cathartic (κάθαρσις) ἀπορία by one of the parties to the dialogue in order to implement the zetic (ζήτησισ) ἀπορία, a dichothomy that results in the “birth” of truth by the other party of (scientific) dialogue. in the process of cognition, ἀριστοτέλης (384-322 bc) distinguishes different degrees: practical skills, skill, action according to the pattern (τέχνη); quick and effective situational thinking (φρόνησις) about what contributes to actions about things that are good or bad for humans; science; wisdom (σοφία) – intelligent ability in creativity, a special idea or embodied knowledge about the causes and sources, the degree of knowledge of the world around us in the context of the desire for deepening as a specific property of human intelligence; mind (νοῦς) – productive force of knowledge, generalization of all meaningful, intelligent and mental patterns that prevail in space and man. in the doctrine of fundamental knowledge, he distinguishes “dialectic” and “apodictic” varieties. the first is related to the sphere of isostenic judgments, which may be one or the other. apodictic knowledge is true. at the same time, experience is not the last instance to justify higher links of science. only the mind directly sees the higher references and their truth. at the same time, the general principles of contemplative knowledge are not born to humans, although they are potentially in the form of an opportunity to be acquired as a result of human’s mental activity. in order to truly acquire them, one should gather facts, direct an opinion to them, and thus invoke the process of mental contemplation of higher truths or references for such contemplation, scientific definition of the subject of research. a complete definition of the essence of a thing can only be achieved by combining deduction and induction: first, knowledge of each individual property must be acquired in an experience way; secondly, the belief that this trait is essential must be proved by the condition of a special form – categorical syllogism (lukasiewicz, 1959) of its historically first, logical theory of deduction. the three terms of syllogism – four reasons (material, formal, action, final), consequence and carrier of the cause – ἀριστοτέλης in “ἀναλυτικὰ πρότερα” (aristotle, 2004), “ἀναλυτικὰ ὑστερα” (aristotle, 1853) considers as the central part of the logical doctrine of “organon”, and the basic principle of syllogism considers the relationship between a family, a species and a unitary thing. the systematized unity of the logical theories of its predecessors ἡράκλειτος ὁ ἐφέσιος, δημόκριτος, σωκράτης, πλάτων – was supplemented by the theories of proof (συλλογισμός – reasoning consisting of three simple at attribute expresses – two founders (larger and smaller) and one conclusion, figures and modusas), presentation (τόπος – topiary, technique of spatial organization of thinking and understanding, as well as organized on the basis of thought space), etc. for the first time in the history of thinking, scientists were classified forms of movement – the emergence, destruction, qualitative change, increase, decrease, movement. since there is no single predicate, a holistic concept to which all other concepts can be summarized, very different concepts, the ἀριστοτέλης faces the task of listing all the higher genera – the categories to which other genera of the existing are reduced (αριστοτέλης, 2011). the list of these highest concepts, which use the tools of knowledge of the deep essence of things, includes the essence, quantity, quality, attitude, place, time, position, inherentness, action and subject to it. development of the theory of cognition in the new time (yeshchenko, koval, tsvirko, 2019; baklanova, petrova, koval, 2020), which was associated with the search for absolutely reliable knowledge, updating the paradigm of the fsr during the 17th-18th centuries, was explained by the fact that at that time the first roles were the need to limit the substantiation of the entire set of accumulated knowledge, their assessment according to the degree of truth. francis bacon (1561-1626), who implements a handcrafted plan “great instauration” (“instauratio magna”), divides all its varieties according to the three abilities that are inherent in the human mind. memory contributes to the realization of history, imagination allows you to engage in poetry, mental abilities are the source of philosophy. nature is learned directly, god is learned through nature, man is learned through reflection. in addition to these partial sciences, bacon refers to the field of the desired “first philosophy” (desiderata), which has an attitude to all concepts suitable for use in all fields of knowledge. the most important at the same time is the science of nature, which is also divided into theoretical, which explores the causes (physics and metaphysics), and practical, which brings results (mechanics that on a practical level correspond to physics and natural magic – metaphysics). the logical method of “true guidance”, interpretation of nature, discoveries and inventions based on a systematic experiment, the scientist contrasts with deductions (unprofitable for obtaining new truths), as well as primitive induction (simple list of random signs). scientist considers the true reasons for the “delusion of reason” is “ghosts” of the human race (distorted reflection of things due to the fact that man mixes with their own nature); caves (individual characteristics of man); market (misunderstanding of words); theater (false pupils who lure a person like theatrical performances). three seas economic journal 70 vol. 1, no. 4, 2020 in “new organon” (bacon, 1620) there is a distinction between experiments on “fruiting” and “light-bearing” experiments. the former rush to the nearest results and ignore the realization of causes as the only source of true power of man. “light-bearing” experiments, which do not benefit themselves, contribute to the discovery of causes / axioms, can become a source of new practical discoveries / inventions. developing the line of δημόκριτος, bacon tries to find in the things of others, materialistic, full internal activity of the world its atomic structure in order to solve the main task of science – to “change the “nature” of bodies and “promote the well-being of people”. the scientist is convinced that matter “seems to smile with its ethical-sensual brilliance to all mankind”. at the same time, following ἀριστοτέλης, inductively exploring the fundamental “forms” – entities, bases, laws of formation of this property, bacon carries out their construction to a certain configuration and movement of small material particles that form the body. the researcher distinguishes between 19 qualitatively different varieties of the movement of matter, thereby proving that the specific task of true induction is to find forms that “help” the mind. the above-mentioned purpose should be to serve the tables of presence, absence and degrees proposed by him, which determine the specific ways of taking into account the studied qualities in certain subjects of this class. comparison of tables should contribute to the establishment of just such a feature, which is necessary associated with the quality under study, causes it, makes its form. filling tables, picking up examples, knowing the mass of facts bacon considered the most important task of modern science. conclusion on the basis of the proposed methodology “natural and experimental history” was to serve as a separate part of the grand plan of the “great instauration” of sciences. renatus cartesius, descartes (1596-1650) together with bacon sees the ultimate goal of fsr in human domination over the forces of nature, discovery and invention of technical means, knowledge of causes and actions, improvement of human nature itself. without finding a universal method, the initial thesis, descartes questions the truth of the generally accepted knowledge covering all its species. dual rationalism based on the ambivalence of ideal and material, as well as protracted (le extensa) and thinking (res cogitans) substances, initiated by the scientist, its mechanics as a counterweight to animism and vitalism (thomas hobbes line (1588–1679) – julien offray de la mettrie (1709-1751) – paul-henri thiry, baron d’holbach (1723-1789)), σκεπτικός (philosophical skepticism) (line of πύρρων (360-275 bc) – michel de montaigne (1533-1592) – pierre charron (1541-1603)), formed under the influence of observation of the logical the nature of mathematical knowledge as absolutely reliable, comprehensive and necessary, one that flows from the nature of the intellect itself. the set of these considerations, combined with the search for perfect accuracy in the process of forming an unshakable, unquestionable truth, provided for the possibility and necessity of overcoming certain false qualities and signs of empiricism (gives rise to the truth approximate and relative) and, at the same time, mysticism (boasts super-sense, super-irrational knowledge). the exclusive role in the process of cognition was given to deduction – reasoning, which relies on absolutely reliable initial provisions – axioms and consists of a chain of reliable logical conclusions (koval et al., 2019). directly obvious initial provisions – intuition – have advantages over deduction considerations. therefore, armed with probable means of thinking – intuition and deduction, the mind is able to achieve complete authenticity in all areas of knowledge, provided that it will use the true method. according to descartes, the true or rationalistic method of scientific research must meet four requirements: − firstly, to assume only such provisions as true, which are clear and obvious, that is, do not cause doubts (si clairement et si distinction); − secondly, dismemberment of each complex problem (difficultes) into constituent parts; − thirdly, methodical transition (pensées) from known and proven to unknown and unprodexperied; − fourthly, no omissions in logical research chains, compilation of lists and reviews (revues) (descartes, 2018). descartes resents syllogism as a source of new knowledge, considers it a means of organizing truths already known otherwise. the combination of previously obtained truths in the researcher’s mind is not seen as a mechanistic condition, but is a synthesis, a priori act of creativity. at the same time, in the process of developing a scientific picture of the world, the “temporary dwelling” for the researcher should be morality, for which their rules are displayed (maximes): obey the laws and customs in which he was brought up; be constant (constamment) in your decision and not wander from side to side; change yourself, not the “order of the world” (l’órdre du monde). the translational institutional formation of the fsr in the philosophy of the new time is associated with the overcoming of (benedictus de spinoza) (1632-1677) cartesian dualism of material and spiritual substances (spinoza, 1957). according to this doctrine, the dependence of a person’s thinking on his bodily condition is manifested at the stage of sensory knowledge. in the course of the latter, the first kind of knowledge is formed – discretion (opinio), which can be contrasted with understanding (intellectio), not only as a single source of reliable truths, but as the second kind of cognition consisting of awareness (ratio) and intelligence (intellectus). achieving adequate truths is only possible at this stage. the third kind of cognition three seas economic journal 71 vol. 1, no. 4, 2020 is intuition (intuitio), a real foundation of reliable knowledge. this kind of knowledge associates with the teachings of mystical pantheism about “inner light” and descartes’ teachings about the axioms of the “clear and expressive mind” as the foundation of all knowledge. intuition is intellectual, so it ensures the knowledge of things in terms of eternity, as a necessary moduls of a single substance. representative of english empiricism john locke (1632-1704) argued that the material of knowledge for the soul (tabula rasa) are simple ideas (sensations and reflections), all of which come from a sensational, personal sensual experience (locke, 2002). complex ideas have the following design: a) the concepts/first qualities contained in things consist of simple through their comparison, combination, abstraction, measured quantitatively, exist objectively; b) secondary qualities are not contained in the items attached to the idea of the substance due to subjective perceptions; c) the relationship between different ideas; d) modus, mental designs. the main property of the mind is the ability to test ideas for quality. distinguishing between three elements of cognition – intuitive, demonstrative, sensational – confidence in knowledge is recognized as the highest for the first, the lowest – for the latter. the limitations of knowledge are compensated by the possibility of providence by which god rewarded man. gottfried wilhelm von leibniz (1646-1716) emphasized that rational foundations of the fsr should rely on the methodology, the most important requirements of which were the versatility and severity of philosophical discretions (leibniz, 2017). the innate ability of the mind to know ideas and truths is given not in finished form, but only as a “predisposition”, a deposit. in addition, unlike locke, leibniz acknowledged the essential importance of probabilistic knowledge, introduced division by a special role in knowledge into the necessary “truths of the mind” and random “truths of fact”. a priori, independent of sensory experience, the principles of being, the scientist declared: 1) inconsistency of any possible/imaginable existence (law of contradiction); 2) logical primate of the possible before the actual/ existing one; possibility of infinite set of noncontradicting “worlds”; 3) sufficient justification of the fact that this particular world exists, and not any other of the possible events, that this event takes place, and not another (the law of sufficient justification); 4) optimality (completeness) of this world as a sufficient justification for its existence. the physical world by leibniz considered the unfinished sensual reflection of the true world of monads – indiviolable elements of being, which are among themselves in a relationship of “pre-established harmony”, as a phenomenon of a person who learns the objective world. but, given the fact that physical phenomena are generated by real, the scientist considered the first “well-grounded” means of space, matter, time, mass, movement, causality, interaction, as they were understood by physicists and mechanics of that time. in logic, leibniz developed the doctrine of analysis and synthesis, formulated the law of identity (principum identitatis) – one of the basic laws of thinking as a cognitive activity, which expresses the need to allocate each subject of thought in such a way that it can be operated as identical to itself in the processes of thinking, defined by the permanence of meanings of words. julien offray de la mettrie (1709-1751) denied dualism and proved the existence of only one material substance, primitive and lifelong, which constantly changes the forms of its existence. la mettrie’s materialism was to assert that the ability to feel, remember, and think does not contain signs of a supernatural and mystical, simple property of the human body. if the mind accumulates knowledge, for which nature has created all the conditions, then thanks to their brain is filled with ideas. the aggressive denial of descartes’ dualism and john locke’s idealistic provisions about the inner soul experience, reflection, embodied la mettrie in anti-agnosticism, material sensualism, radically defending the view that feelings are not only images of objects, but also a criterion of truth (la mettrie & hunauld, 2018). for the development of ideas fsr important are the ethical views of the scientist, as well as his utilitarianism. decisive role in the development of society, he attributes enlightenment, conscious activity of individual prominent personalities, denies the existence of unchanging absolute moral values, protects the ideas of hedonism and eudemonism in their balanced, rational understanding. his aesthetic concept is directed against austerity, the instillation of personality rights. the subject of research of peculiarities of functioning of the fsr sphere by the founder of classical german philosophy immanuel kant (1724-1804) during the “precritical” (until 1770) period of its activity was the possibility of contemplative knowledge of things as they exist on their own. it was in the discourse of scientific exploration of this period regarding the development of nature that it substantiated the cosmos hypothesis about the formation of a planetary system from the original “nebula” (kant, 2018), a diffuse substance with a gradual transformation to the current state in accordance with the laws discovered by isaak newton, which, according to friedrich engels (1820-1895), “... shaken by the idea that nature has no history in time..” (marx & engels, 1960). immanuel kant’s most significant scientific achievement was the substantiation of the worldview of the idea of development in inorganic and organic nature, which was later extended to special sections of natural three seas economic journal 72 vol. 1, no. 4, 2020 sciences with the assistance of johann gottfried herder (1744-1803) and friedrich wilhelm joseph schelling (1755-1854). in philosophical writings, the scientist moved away from the previously declared rationalistic views, according to which the real connection between the two facts can be derived from the logical connection of two concepts, which became the basis for the transition from the “precritical” period to the works of the critical. the peculiarity of the critical period in terms of the formation of postulates of fsr development was the development of the author’s line for obtaining true knowledge. the originality of immanuel kant’s gnoseological position was that he finds a compromise between empirics (only experience can be a source of comprehensive and necessary knowledge) and rationalists (only the mind can be the source of comprehensive and necessary knowledge). the scientist claims that the source of true knowledge is independent of experience and preceding it a priori forms of sensuality and intelligence. since, he has criticized the study of boundaries to which the possibilities of the mind are stretched, as well as other possibilities and forms of cognition. the scholasticism of the author’s approach is that the essence – “the thing in itself ” – cannot be given in the experience. only phenomena – “things for us” that exist regardless of feelings, perceptions and forms of prudent thinking are available to knowledge. entities affect our senses, affificate (affïzierung) sensations. external affixing (affection externa), contemplation is associated with sensuality, which “gives” us objects, as well as receptiveness, as a result, contrasts with the spontaneity of discretion. internal affiliation (affection interne) is manifested in the fact that people from the inside are influenced by themselves as intelligent beings, who, moreover, know themselves only as a phenomenon – non-essence. direct to understanding the essence of the fsr has the logical teaching of kant, which distinguishes between two different varieties of logic: – accidental, general (allgemeine logik), capable of giving objective comprehensive and reliable, but formal knowledge within the experience of the phenomenon of the phenomenon “things for us”, explores the relationship of different concepts, judgments and conditions of forms, without distracting from the question of what they think; – transcendental (transzendentale logik), which differently weighs the forms of thinking and their competence depending on the direction on the subject, designed to compare the essence of “the thing within itself ”, which is beyond experience, a creative means of obtaining contradictory knowledge, which in case of an attempt to confirm the theoretical reliability with the need falls into contradictions, because it explores in the forms of thinking what gives the knowledge of an a priori nature, operates with the peculiarities of synthesis in the third category of the two previous opposing categories within each of their four categories – quantity (the only – set – wholeness), quality (reality – denial – limitations), attitude (substance – reason – interaction) and modality (possibility – reality – necessity) (kant, 1994; kant, 2000). the reflection of objective characteristics of reality in the consciousness is manifested in the form of formulated judgments – the relationship between concepts in the analytical (does not give new, but only reveals in the predication the knowledge already contained in its subject) or synthetic (arises from the combination of knowledge contained in the predication with the knowledge contained in the subject) varieties. in turn, synthetic knowledge is divided into a posterior (the predicate’s connection with the subject is based on experience) and a priori (the relationship between the subject and the predicate is thought as a predicate experience and does not depend on it). based only in the a priori knowledge of the relationship of concepts can be universal and unconditionally necessary, kant formulated questions about the sources and boundaries of reliable knowledge as a question about the possibilities of a priori synthetic judgments in each of its important varieties for the author (mathematics, theoretical natural science, metaphysicism). solving the main issues of “critics of the pure mind” is seen by their author in the study of the peculiarities of the use of a priori forms of cognition: sensuality as a capacity for sensation (“transcendental aesthetics”); prudence as the ability to concepts and judgments of the special as subordinate to the general (“transcendental logic”); the mind as a conditioned approach to the formulation of ideas as concepts of unconditional integrity of all conditioned phenomena (“transcendental dialectics”) (kant, 2000). transcendental everything that lies on the other side of any possible experience is accepted, otherwise it is beyond the control even for the transcendental. for real knowledge to arise, it is necessary to synthesize sensual contemplation with categories of discretion. the highest condition for the synthesis of the variety of sense content and the prudent forms covered by this content is the unity of our consciousness, the a priori “unity of transcendental apperception”. another link between sensory contemplation and discretion is the “productive power of imagination”. the combination of these conditions makes it possible to scientific knowledge, which has an objective meaning, that is, logical signs of generality and necessity. regardless of the peculiarities of the ratio of objects and phenomena to each other, scientific knowledge can be carried out only if the discretion thinks them, subject to three higher fundamentals of knowledge – the law of conservation of the substance; law of causality and the law of interaction three seas economic journal 73 vol. 1, no. 4, 2020 of substances. these general and necessary laws do not belong to the nature that exists regardless of them, but only to the mind as the highest a priori laws of communication of all that discretion can think of. thus, consciousness itself builds an object – not in the understanding of the real origin of its existence, but in what gives the recognizable, unknown in its essence the form under which it can only and can be understood – a form of general and necessary knowledge. that is, the things of nature are consistent with the forms of the mind, and not vice versa. the mind finds and is able to find in nature only what he has invested in it and regardless of it, that is, general and necessary forms of experience. therefore, nature, as a subject of knowledge, is built by consciousness. the subject of any science that is built by consciousness on the part of the logical form of knowledge is subjective idealism, and therefore agnostic things are how they exist on their own. however, while kant does not put a boundary on empirical knowledge of things, claiming that “... observation and analysis penetrate into the insides of nature, and it is not known how far we will go along the way over time”, the “thing in ourselves” will always remain on the other side of any possible experience for us. in full accordance with the categories of a priori judgments, the objective idealist kant develops sketches of real natural sciences: “foronomy” – about spatial changes; “dynamics” – about moving forces; “mechanics” – the doctrine of the laws of interaction of moving bodies; “phenomenology” – about the possibility, reality and necessity of movement depending on the differences in the way of representation. in the process of exploring the third possibility of cognition in the field of formulation of a priori theoretical judgments in metaphysics, i.e. theoretical philosophy, kant considers the mind as a conditioned ability, leading to the emergence of ideas – concepts of unconditional, subjects of which cannot be perceived by feelings in experience. trying to find unconditional integrity, unity of conditioned phenomena, the mind must form three ideas: the idea of the soul as the unconditional integrity of all conditioned mental phenomena (the subject of psychology); the idea of the world as an unconditional integrity of an infinite series of causal phenomena (the subject of cosmology); the idea of god as an unconditional cause of all conditioned phenomena (the subject of teleology). kant’s guess about the need for antinomy – opposite and at the same time logically evidence-based ideas about objects in the human sense, led to further recognition that they express not only the subjective, but also objective dialectic of thinking, as well as being. the founding ideas of georg wilhelm friedrich hegel, which may be involved in clarifying the deep essence of the fsr , are set out in his “phenomenology of the spirit” (hegel, 2019). in the paper, the author argues in the opinion that the gender of philosophical knowledge has the form of a translational movement of consciousness from the first direct contrast between it and the subject, to absolute knowledge. along the way, there is a overcoming distance from direct sensual authenticity to philosophical knowledge. the first section of the work examines the categories of consciousness, self-consciousness, mind, and considers the movement of individual consciousness from sensual authenticity to knowledge of reasonable reality. in the first phase (meaningal, empirical stage of cognition), consciousness knows neither its nature nor the essence of the subject. in the second phase, consciousness cools down its own social nature and rises to an understanding of the content of history as a collective activity of individuals. in the third, last phase, the spirit, giving a retrospective look at all the stages of history, rises to absolute knowledge. the central category of “spirit phenomenology” is alienation (entausserung , entfremdung), which hegel understands as the emergence of all subjectivity from the spirit, firstly, the origin of the absolute spirit of nature and society; secondly, any complex relationship between the subject and the object, expedient activity on the disposal of human essential forces; thirdly, people’s distorted perception of products of their own activities, the idea of them as hostile, alien forces living on their own, rule over them. the analysis of “phenomenological knowledge”, “what appears”, becomes the basis for hegel to assert – the most profound idea of all things is an absolute idea that develops on the principle of the johann gottlieb fichte triad “thesis – antithesis – synthesis” (oizerman, 1962) in three main forms of a holistic system: in the form of pure logical entities (logic); in the form of ino-existence of the idea – nature (philosophy of nature); in various forms of a particular spirit (philosophy of spirit). the subject of logic, which makes up the basis, the essence of all activities, is its own absolute idea, which unfolds its moments in the form of categories. pure logical entities are a demiurge, a primary substance in relation to reality. logical categories are comprehensively related, one that goes into each other, so in the dialectic development of categories the real dialectic of “things” is “guessed”. logical doctrine, the main concepts of which can be the basis of fsr in cognitive society, hegel lays out the doctrine of being, about the essence and concepts (hegel, 1929; hegel, 1934; hegel, 1937). analysis of problems of cognition theory regarding the features of the fsr in the philosophy of the twentieth century is characterized by a number of features. marxist current of philosophy one of its sources declared classical german. the fundamental difference between dialectic materialism (marx-engels line) from gnoseological idealism in matters of development of the theory of three seas economic journal 74 vol. 1, no. 4, 2020 cognition, which is directly related to the organization of the fsr , is observed in the following elements: − the material world is recognizable, the objective reality exists outside and regardless of consciousness, in general the world is gnostic; − the dialectic materialism considers ontological and gnoseological aspects of philosophical problems in their unity – dialectics, logic and theory of cognition are the only ones; − the essence and nature of knowledge are social in nature and cannot be understood in isolation from subject-practical activities; − the confrontation to idealistic and metaphysically interpreted sensationalism is declared, the irredience of real cognition to simple summation or mechanistic transformation of sensational data is emphasized; – empirical data operated by science are formed in the process of using theoretical provisions to describe the content of sensory experience and involves a number of theoretical idealizations that should simultaneously be understood as a moment of active practical sensual and subjective activity; – theoretical thinking is guided by the reproduction of the object of cognition by ascent techniques from abstract to specific, inextricably linked with the principles of unity of logical and historical, analysis and synthesis; – categories and laws of materialistic dialectics are not only forming of reflection of objective reality, but also methodological principles of scientific and theoretical activity; – cognitive process is considered not so much in the form in which the individual is carried out in the head, so much in the form of a socio-historical process of knowledge development; – use of the dialectical-materialistic principle of historicism is combined with the recognition of the specific historical nature of the basics of knowledge, is a means of overcoming gnoséological relativism, the development of the doctrine of the dialectic of absolute and relative truth; – social practice acts as the basis, the purpose of knowledge, the criterion of truth; – theory of cognition ≠ the theory of reflection, the process of cognition proceeds not in the form of passive monitoring from the outside of these objects, but in the form of a number of ideal actions organized into the system, operations that form some ideal objects that serve as a means for cognitive assimilation, reflection of the objective world; – the process of human reflection is inextricably linked with the processes of material and ideal creativity; – theory of cognition is not metha-science, theoretical and cognitive interpreting of science begins where theoretical structures are interpreted in terms of correspondence of reality, truth, ability to grant the status of existence to used abstract objects, to evaluate as analytical or synthetic statements of this scientific sphere; – gnoseological interpreting of specific scientific theories acts, on the one hand, as the application of general principles of cognition theory to the analysis of specific cases, on the other – as a kind of assimilation of new scientific results for clarification, sometimes viewing some common gnoseological postulates. development may require a new gnoseological interpretation of scientific theories (marx, 1955; engels, 1955a; engels, 1955b; marx & engels, 1960a; marx & engels, 1960b; lenin, 1972). 4. discussion the current stage of formation of the foundations of the fsr implementation, on the one hand, is associated with a radical revision of the classical paradigm of fundamental theoretical research, which is set out in the teachings of researchers of the ancient period, the new time, classical german, marxist philosophy. instead of deterministic method of scientific thinking, verification logic of substantiation of the process of generating new knowledge (line descartes and pascal), scientists adopt the method of verification toleration/refutation of popper. the theoretical basis of popper’s teachings is (i) positivism (saint-simon, comte, mill, spencer), (ii) empirical criticism (mach, avenarius, pearson, duhem), (iii) neopositivism (vienna school, philosophy of logical analysis), (iv) post-positivism (quine, armstrong, rorty, feyerabend). at the same time, the justification for the truth of the fsr is based on the further rapid development of descartes’ classical teaching about the method. according to the position of this scientist, the analysis is used to discover the truth, and synthesis – to transmit it to others. the need to use clear rules to formulate definitions, axioms, conduct evidence, justify the research method in a narrow sense of the term remains unchanged. in addition, there is a further development of the method of searching for grammatical, logical and metaphysical arguments of evidence. therefore, naturally, the continuation and development of the classical theoretical bases of the fsr implementation, at the same time, as an applied result of the practical application of post-positivist concepts in the field of fsr implementation, consciously probabilistic style of scientific cognition, the principle of verifying the intermediate interpretation of the truth, belonging of statements about it to empirical science and denying the suitability of the use of deterministic method of thinking, metaphysics, psychoanalysis and individual psychology to the procedure of demarcation, substantiation of partial and acceptable scientific value of theories as “inviolable points” in the continuum of continuous inaccuracy and uncertainty. three seas economic journal 75 vol. 1, no. 4, 2020 5. conclusion the prospects for further exploration are seen in an in-depth study of the possibilities of deploying creative potential, which are created using modern approaches to the implementation of the fsr . the metapositivist stage of fsr institutionalization is realized in the field of neo-kantian “pure gnoseology” and its recognition of philosophy with the theory of cognition (bogomolov, 1969); critics of this approach from the camp of transcendental phenomenologistsontologists (husserl, 1994), empirical psychologists (frank, 2007); representatives of the conglomerate of idealistic empiricalism and ontology – empirical critics, english neo-realists, “sensibulists”, american neo-realists ( james & russel, 2010; bogomolov, 1962); linguistic analysts (gryaznova, 1993); adepts of the line “positivism (narsky, 1961) – neopositivism of scenic logical positivism (ayer, 1959; achinstein & barker, 1969) – linguistic philosophy (charlesworth, 1959) – logical pragmatism of the change of truth (instrumentalism, fallibism, anti-realism, radical empirism, verifiationism) ( james & russel, 2010; dewey, 2001) – post-positivism” (panin, 1981; carnap, 1971), as well as the implementation of applied theories of changing scientific 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(2019). economic policy priorities of the income regulation. espacios, 40(38), 11. three seas economic journal 35 vol. 2 no. 1, 2021 corresponding author: 1 classic private university, ukraine. e-mail: kokorinatori29@gmail.com orcid: https://orcid.org/0000-0001-6901-7837 doi: https://doi.org/10.30525/2661-5150/2021-1-6 analysis of global innovation environmental factors of international business and economies victoria kokorina1 abstract. the purpose of the paper is to identify and assess impact of global innovation factors of modern international business development and the world economies development. methodology. the study uses methods of specification and systematic analysis – to determine factors of global economic environment, global innovation factors, statistical and economic methods – to analyze impact of global innovation factors on the development of international business and economies. results of the survey shows impact of innovation development of global economy on macroeconomic, technological, legal, political and cultural environment of global economic environment of international business development; dynamics of global criteria of integrated indicators to determine impact of global innovation factors on the world economies development. practical implications. the factors of global economic environment in the conditions of global innovation development form a regular tendency of transformation of international business development which causes its new structure and qualitative condition. the global competitiveness index (gci) assesses the imperatives of global competitiveness: institutions, infrastructure, ict adoption, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism, innovation capability, – related to rapid spread of ict and digital technologies, idea generation, entrepreneurial culture, innovation, openness and innovation adaptability. the global innovation index (gii) is used to assess comprehensively global innovation factors and innovation development of the world`s countries in the global economy system. with innovation factors manage-ment, estimated by gii, the prospects of innovation development of the world econ-omies could be shown. the gii contains the pillars of the country’s innovation de-velopment: institutions, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology outputs, creative outputs. value/originality. the analysis assesses of international indices of innovation development, the complexity of innovation process, the innovation activity and innovation potential for the development of international business and the world economies. the methodology of indices concerning the pillars of the innovation development or the innovation capacity of countries helps to predict the innovation factors of the national economy development of a country and the environment of international business. key words: global innovation factors, international business, global economic envi-ronment, global innovation index, innovation capacity. jel classification: f23, f64, o31, o57 1. introduction the study of the content of scientific and technological progress determines it as a catalyst for technological changes and a factor of economic growth. as well as, within rapid globalization development and instability of global economy the technological progress is a key factor in international business relations, economies through innovation adoption in manufacturing and other areas. thus, an innovation model of the stakeholders of global economy is formed. the driving forces of the global economic environment are human, intellectual capital and knowledge amount. trends in development of global economic environment are to be formulated to understand the progress of entire system of international economic relations. overall, the main trends in evolution and growth of global economic environment based on its components development can be identified the following: the study of global economic environment through the globalism; the economic basis of global economic environment development is the global transition of states of society, i.e. the transformations (from one state of society to another, mostly more progressive); the global economic environment is three seas economic journal 36 vol. 2 no. 1, 2021 to be understood as a set of economic development conditions; the main pillars (factors) of global economic environment formation are: the macroeconomic subenvironment, the technological sub-environment, the legal sub-environment, the political sub-environment, the cultural sub-environment; the adaptation of the stakeholders of international economic relations occurs through the activities of individuals. finally, the preconditions and trends in global economic environment are sys-temic. the pillars of global economic environment – from macroeconomic to cultural ones – determine the direction of integration of countries, enterprises, business and individuals into global economic environment in the globalism era. 2. survey recent research theoretical and methodological issues of formation and development of global innovation environment, its conditions and factors are discovered in works by o. belarus, d. lukyanenko, z. lutsyshyn, v. novytskyi, eu. panchenko, y. pakhomov, a. poruchnyk, s. sokolenko, eu. savelyev, v. savchuk, a. filipenko, i. shkola, and others. the process of international business development in the global economic system, in particular within the innovation and information globalism and the global innovation competition, is studied by: eu. avdokushyn, k. aswazappa, i. degtyareva, d. johnson, s. paulson, s. robock, k. simmonds, k. turner, l. timashova, w. tomlinson, m. warner, o. shvydanenko, and others. however, the objective further research of innovation factors of economic development in globalization is still urgent, primarily in the areas of identifying priority innovation pillars of the innovation development strategies of international businesses, countries and formation of the national innovation systems in the global innovation competition paradigm. 3. the global innovation competition as a paradigm of modern environment of international business and economies development at the end of the xx – beginning of the xxi century an integral part, a global paradigm of modern model of economic development of enterprises, business, sectors, national economies the following phenomena and processes became: an innovation, innovation activity, innovation potential and innovation capacity. they are the complex economic categories. globalization of the world economy, its innovation way of development is a decisive factor that determines business efficiency, stability and competitiveness of economies in foreign markets (kniazevych, 2013). simultaneously, the need to mitigate the contradictions of globalization necessitates the constructive interaction of stakeholders of global economy. these stakeholders carry out innovation activities and have innovation potential, within the integrative model of competitive behavior. in globalization of the world economy the global innovation competition has been formed. it determines new forms of competitive relations of innovation activity of international business and countries in the world. this process requires them to a certain level of innovation capacity. thus, the features of the global innovation competition can be considered: (1) the innovation determinism of the competitive process components; (2) the acquisition of global competition; (3) the institutionalization of competitive interaction; (4) the competition as a non-conflicting form of competitive relations; (5) an integrative model of competitive behavior; (6) common goals of the competitors (2016); (7) the state innovation support policy concerning the innovation potential of economic entities and industries. 4. innovation factors of global economic environment of international business a «global environment» is defined as «a set of the economic conditions for development: entrepreneurial and business life» (ostapenko, 2019). the economic conditions are formed in the global economic development system. the peculiarities of the global economic environment development determine the efficiency and productivity of the stakeholders of international economic relations. at present the cyclical development of global economy and its innovation ele-ments transforms the global economic development. models of global economic growth are based on innovation factors. the shift in the role of innovation factors is due to a change in paradigms (system of views on a phenomenon, based on a key element) as technological, technical-economic, techno-socio-economic and neo-institutional one. therefore, we have a global innovation development of world civilization, determined by the dominance of the fifth technological mode. the basis of the mode is microelectronics and software; technological set of electronic components and devices, electronic computers, radio and telecommunications equipment, laser equipment, computer maintenance services (matjushenko, 2017). the formation and growth of the sixth mode will form the global innovation development next two to three decades. it was the transition to a new technological mode that formed the basis for a new industrial revolution. a new, fourth, industrial revolution came through: (1) the solution of mankind global problems; three seas economic journal 37 vol. 2 no. 1, 2021 (2) increase labor productivity; (3) the creation of new goods and services. the factors of the shaping global economic environment in the global innova-tion development are worthily to be singled out (table 1). they depend on the cyclical development of world economy, in particular its innovation component. the next condition for the shaping of global economic environment can be considered a nano-economics and the elements of nano-economics system. nanoeconomics is determined by the nature of its object – an individual – in the system of economic objects. thus, the scientist g. kleiner defines the task of nano-economics is «to ex-plain and predict human economic behavior, to determine internal and external determinants and factors of its behavior in various economic situations, particularly in terms of rationality / irrationality» (kleiner, 2004). through nano-economics, the identification of the impact of individuals activi-ties on the behavior of microeconomic objects – the enterprises, households, organi-zations, and the detection of the internal and external factors of customer behavior becomes possible (ostapenko, 2019). thus, first of all, the global innovation development affects macroeconomic, technological and legal subenvironment of global economic environment, together, the nano-economics system affects mostly the political and the cultural sub-environment, where the role of the individual is decisive. 5. global innovation factors of economic development of the countries to define and compare innovation development and innovation activity of the countries and sectors of the national economies, researchers use global criteria and form integrated (composite) indicators (indices). they objectively determine the innovation capacity of comparable countries and global innovation factors of the economic development of these countries. simultaneously, the innovation de-velopment indices based on criteria help to compare the opportunities and prospects of the national development in current society, and also become key innovation factors in a favorable environment for international business. since the innovation capacity and the technological readiness are integral components of the competitiveness of the national economy, the use of the methodology of the world economic forum, davos, to calculate the global com-petitiveness index (gci) is expedient. the methodology tracks the dynamics of global economy in the fourth industrial revolution and focuses on new competitiveness factors related to the rapid spread of digital technologies that were not priority for governance, i.e. idea generation, entrepreneurship, innovation, openness and adaptability. thus, in 2019 gci estimates 141 countries, which produce 99% of world gdp, by 103 components (indicators/factors). the indicators detail the competitiveness of the countries at different stages of their economic development. the wef global competitiveness reports of 2018 and 2019 integrates the indicators into 12 groups of global competitiveness imperatives (pillars): (1) «institutions»; (2) «infrastructure»; (3) «ict adoption»; (4) «macroeconomic stability»; (5) «health»; (6) «skills»; (7) «product market»; (8) «labour market»; (9) «financial system»; (10) «market size»; (11) «business dynamism»; (12) «innovation capability». herewith, the 12 pillars are combined into four groups of factors of global competitiveness in the fourth industrial revolution: 1) enabling environment (1-4 pillars); 2) human capital (5-6 pillars); 3) markets (7-10 pillars); 4) innovation ecosystem (11-12 pillars). table 1 the main factors of global economic environment factors contents of display component macroeconomic sub-environment the macroeconomic preconditions for business development, when the form-ing economic relations at the national economy level determines whether the activities of individual enterprises in the country will be effective. the subenvironment formed by the determinants of the competitiveness of the nation-al economy (m. porter's «national diamond») covers all categories of macroe-conomic development – enterprises, as well as public authorities. technological sub-environment forming the international innovation activity – from the use of foreign tech-nologies to the creation of production facilities based on national technologi-cal solutions. legal sub-environment the harmonization of internal legislation based on the use of international norms and principles, especially regarding the foreign economic activity in accordance with the norms of international economic law. political sub-environment the conditions when the interaction of power, economy and business is. such intertwining determines the possibilities of business autonomy from power. meanwhile, the state is expected to participate in the regulatory activities of the authorities into creating an optimal environment for developing business structures. cultural subenvironment a combination of demographic and psychological aspects of global environ-ment. leveling business stereotypes, forming a global consumer and unifying needs and values, both cultural and material one. source: by the author based (ostapenko, 2019; vdovenko, 2017) three seas economic journal 38 vol. 2 no. 1, 2021 the wef research of the global competitiveness index in 2017–2019 (the global competitiveness report 2017–2018, 2018, 2019) shows the key factors in the development of the competitiveness of the world economies. they are a set of institutions, state policy and productivity factors. table 2 presents the top-ten countries in the world by the level of gci in 2017–2019. note, that in 2018–2019 by gci the top-ten countries are permanent. denmark also strengthened its position, rising from 12th to 10th rank in 2018. the first and second place in 2018 and 2019 are taken by singapore and the united states, which in 2019 have 83.7 scores. that is 2.2% lower than in the previous year. this is the biggest decline of the index among the compared countries. hong kong has the largest advance in the ranking – the third place (83.1 scores) in 2019 against the sixth and seventh ranks in 2017 and 2018, respectively, and the biggest decline in the ranking is germany – the seventh place (81.8 scores) in 2019 against the fifth and third places in 2017 and 2018, respectively. we emphasize the loss of the leading of switzerland in 2017 to the fifth rank (82.3 scores). the dynamics of global competitiveness factors and the gci pillars by regions of the world economy are presented in figure 1. thus, in 2018-2019 there is a maximum growth of «ict adoption» in all regions of the world. the largest increase is in latin america and the caribbean and sub-saharan africa – by 9.8% and 15.8% respectively. conversely, by the pillars of the group of markets factors «product market» there is a decline in all regions except the middle east and north africa – 2.7%. note, that in 2019 by region the highest points in the groups of factors of global competitiveness have the following components of gci: i. enabling environment pillars – «macroeconomic stability» (89.6 and 92.6 scores in east asia and the pacific, europe and north america respectively). ii. human capital pillars – «health» (83.8 and 89.1 scores in east asia and the pacific, europe and north america, respectively). iii. markets pillars – «financial system» (70.9 and 74.3 scores in europe, north america, east asia and the pacific, respectively). iv. innovation ecosystem pillars – «business dynamism» (66.1 and 68.3 scores in east asia and the pacific, europe and north america, respectively). one notes that the component «ict adoption» has the lowest impact on the competitiveness of south asia and sub-saharan africa countries – 35.1 and 34.3 scores, respectively. the integrated global innovation index (gii) is used to comprehensively as-sess the global innovation factors and innovation development of the countries in global economy. the index is calculated by the analytical center of the lausanne school of business (insead). gii takes the first rank among other innovation per-formance indices and has become a control indicator for establishing dialogue be-tween the private and public sectors. the index allows assessing the factors of the country’s innovation activity. finally, the analysis of gii results contributes to the creation of an environment where the innovation factors are constantly to be assessed. that allows timely adjusting and improving the state policy in the area of innovation (ghurova, 2016). on the basis of innovation factors management estimated by gii, the prospects of innovation development of national economies of the world are shown. the index assesses the rating of countries concerning creating a favorable environment for table 2 the global competitiveness index ranking, by the top-ten countries in 2017–2019 country/economy1 years deviation 2019/2018, % (+/-)2017 (137 countries) 2018 (140 countries) 2019 (141 countries) singapore 5.712 (3)3 83.54 (2) 84.8 (1) 1.6 (+1) united states 5.85 (2) 85.6 (1) 83.7 (2) -2.2 (-1) hong kong sar 5.53 (6) 82.3 (7) 83.1 (3) 1.0 (+4) netherlands 5.66 (4) 82.4 (6) 82.4 (4) 0 (+2) switzerland 5.86 (1) 82.6 (4) 82.3 (5) -0.4 (-1) japan 5.49 (9) 82.5 (5) 82.3 (6) -0.2 (-1) germany 5.65 (5) 82.8 (3) 81.8 (7) -1.2 (-4) sweden 5.52 (7) 81.7 (9) 81.2 (8) -0.6 (+1) united kingdom 5.51 (8) 82.0 (8) 81.2 (9) -1.0 (-1) denmark 5.39 (12) 80.6 (10) 81.2 (10) 0.7 (0) note. 1 ranking of the countries in 2019. 2 the index rate. 3 rank of the country. 4 in 2018 the limits of the gci rate were changed from 0-7 scores to 0-100 scores. source: the global competitiveness report 2017–2018, 2018, 2019 three seas economic journal 39 vol. 2 no. 1, 2021 innovation and obtaining innovation outputs. the metodology of gii determines indices of factors, which are the preconditions and the innovation outputs. thus, gii contains 7 pillars (indices), grouped into іnnovatіon іnput sub-indices: (1) «institutions»; (2) «human capital & research»; (3) «infrastructure»; (4) «market sophistication»; (5) «business sophistication», and іnnovatіon output sub-indices: (6) «knowledge & technology outputs»; (7) «creative outputs». a composite gii reflects the cost-effectiveness ratio to objectively assess the effectiveness of innovation efforts in the country. thus, the results of the ranking of countries in the world by the global innovation index (table 3) show switzerland and sweden the leaders in 2017–2019. w hile, in 2018 they take the third rank. note, among the ten leaders of the gii rating, the largest index increase in 2019 compared to 2017 has only the united states – by 1.3%. the united states rise by three ranks – from sixth to third place. the netherlands has the largest fall – by 7.2% to fifth place in the ranking. despite the index fall in 2019 compared to 2017, sweden, denmark and south korea improve their places by one rank and two ranks, respectively. note, in 2019 south korea joints the top-ten most -10 -5 0 5 10 15 20 in st itu tio ns in fr as tr uc tu re ic t a do pt io n m ac ro ec on om ic st ab ili ty h ea lth sk ill s pr od uc t m ar ke t l ab ou r m ar ke t fi na nc ia l s ys te m m ar ke t s iz e b us in es s dy na m is m in no va tio n ca pa bi lit y east asia and the pacific eurasia europe and north america latin america and the caribbean middle east and north africa south asia sub-saharan africa figure 1. dynamics of the global competitiveness index by groups of components, by region in 2018–2019, % source: the global competitiveness report 2018, 2019 table 3 the global innovation index ranking, by the top-ten countries in 2017–2019 country/economy1 years deviation 2019/2017, % (+/-)2017 2018 2019 switzerland 68.402 (1)3 67.24 (1) 66.08 (1) -3.4 (0) sweden 63.08 (3) 63.65 (2) 62.47 (2) -1.0 (+1) united states of america 59.81 (6) 61.73 (7) 60.56 (3) 1.3 (+3) united kingdom 60.13 (4) 61.30 (5) 59.78 (4) -0.6 (0) netherlands 63.32 (2) 61.44 (4) 58.76 (5) -7.2 (-3) denmark 58.39 (8) 58.44 (7) 57.53 (6) -1.5 (+2) finland 59.63 (7) 59.83 (6) 57.02 (7) -4.4 (0) singapore 59.83 (5) 58.37 (8) 56.61 (8) -5.4 (-3) germany 58.03 (9) 58.19 (9) 56.55 (9) -2.6 (0) republic of korea 56.63 (12) 56.55 (11) 56.11 (10) -0.9 (+2) note. 1 ranking of the countries in 2019. 2 the index rate. 3 rank of the country. source: global innovation index 2018, 2019, 2020 three seas economic journal 40 vol. 2 no. 1, 2021 innovation countries in the world with the gii of 56.11 scores. the dynamics of the share of gii pillars by the countries that topped the rank-ing is presented in figure 2. thus, in 2018–2019 the maximum thrice increase of the share of «human capital & research» is in netherlands and «business sophistication» is in germany. the «market sophistication» in germany and south korea, «knowledge & technology outputs» in netherlands and «creative outputs» in sweden, netherlands, finland and germany have fallen by 50%. the shares of all gii indices do not change in 2018–2019 in sweden and the united states. note, switzerland indices have milder fluctuations in the period. note, in 2019, the highest indicators of the gii subindices as global innova-tion factors by leading gii countries are following pillars: i. іnnovatіon іnput subindex pillars – «institutions», «human capital & research» and «infrastructure» have the same shares of 20% in the united kingdom, the netherlands, denmark and finland. also, switzerland has the lowest 5% share of the sub-index in the top-ten ranking of gii. ii. іnnovatіon output subindex pillars – «knowledge & technology out-puts» and «creative outputs» are for switzerland (with 19% respectively). we should emphasize that there is a low share of іnnovatіon output subindex pillars, i.e. the innovation outputs (5%) in most top-ten countries in the gii ranking. 6. conclusions the analysis of global criteria of composite indices assesses the impact of general global innovation factors of economic development. the global innovation factors objectively determine the international innovation capacity of countries and the innovation vector of international business development. the factors of global economic environment within the global innovation de-velopment form a natural trend of transformation of international business develop-ment leading to its new structure and quality. that ensures the priority of innova-tion. the global competitiveness index assesses the imperatives (pillars) of global competitiveness: institutions, infrastructure, ict adoption, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism, innovation capability, – related to rapid spread of ict and digital tech-nologies, idea generation, entrepreneurial culture, innovation, openness and innova-tion adaptability. the global innovation index (gii) is used to assess comprehensively global innovation factors and innovation development of the world`s countries in the global economy system. with innovation factors management, estimated by gii, the prospects of innovation development of the world economies could be shown. the gii contains the pillars of the country’s innovation development: institutions, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology -100,00 -50,00 0,00 50,00 100,00 150,00 200,00 250,00 300,00 350,00 switzerland sweden united states united kingdom netherlands denmark finland singapore germany korea, rep. figure 2. dynamics of the global innovation index in the top-ten countries in 2018–2019, by the share of pillars, % note: the gii pillars: [1] «institutions»; [2] «human capital & research»; [3] «infrastructure»; [4] «market sophistication»; [5] «business sophistication»; [6] «knowledge & technology outputs»; [7] «creative outputs». source: global innovation index 2019, 2020 three seas economic journal 41 vol. 2 no. 1, 2021 outputs, creative outputs. the highest gii by leading countries are: the united kingdom, netherlands, denmark and finland – «institutions», «human capital and research», «infrastructure»; switzerland – «knowledge and technology outputs» and «creative outputs». references: ghurova, v. o., & 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(in ukrainian) three seas economic journal 78 vol. 2 no. 1, 2021 corresponding author: 1 odessa i.i. mechnikov national university, ukraine. e-mail: sjen@ukr.net orcid: https://orcid.org/0000-0002-4503-2351 doi: https://doi.org/10.30525/2661-5150/2021-1-13 blockchain technology into steel industry current state of foreign payment activity yevhen sotchenko1 abstract. the purpose of the article is to analyze the current state of foreign trade in the industrial blockchain of the steel industry, the existing digital platform has gradually formed a large-scale heterogeneous distributed environment. the problems of further development of the metallurgical complex of ukraine in the world electronic system of international cooperation are determined. methodology. the survey is based on a blockchain technology is an interlinked systematic chain of blocks that contains transaction history and other user data. it works under the principle of decentralized distributed digital ledger. results. experimental tests prove that production companies, logistics, international payments and consumers can participate in the information certification of steel products via the modern information system. consumers can understand the real product manufacturing process, effectively avoiding of the incomplete information and low transparency in the traditional information traceability process, and effectively trace the quality of steel products. the system provides an effective payments scheme for promoting the transformation and upgrading of the modern technology steel industry. practical implications. in view of the low transparency of information traceability of current steel products and the defects of information islands, in this article the blockchain-based steel smart contract payment technology quality traceability system is developed and adopted the alliance chain mode and the new digital blockchain platform. the article describes the use of smart payment technology in a full-fledged financial transaction as a transfer funds in cryptocurrency to electronic bank accounts, as well as the transfer of commercial information, including contracts. to do this, the assets and terms of the contract are encoded and placed in the block chain, then the contract is distributed is saved on a set of network nodes and is executed after the condition is triggered. the fulfillment of the obligations of the parties is checked automatically. it is worth noting that the fact that smart contracts only react to transactions. if the asset or the currency is transferred to the program, it starts monitor compliance with the terms of the contract. how as soon as they are fulfilled, the seller receives money, and the buyer is a shipment goods. value/originality. blockchain technologies enable the use of business information systems that are highly resistant to technical failures and malicious attacks. costs and time of carrying out business operations are significant. key words: exports, imports, metallurgical complex, foreign trade payments, steel production technology of blockchain, price, smart contract payments, crypocurrency, smart manufacturing, smart payment, smart structure. jel classification: f13, f39 1. introduction the transformation of the global business environment under the influence of regressive factors causes the emergence of new crises in international economic relations. the interpretation of the word crisis, which comes from (greek κρίσις – solution; reverse) creates a state in which existing means of achieving goals are inadequate, resulting in unpredictable situations that require the development of new approaches to problem situations. crisis, as a phenomenon, reveals hidden conflicts and disproportions, and it can be considered as an independent phenomenon, an external factor, a political, sociological or economic category. the recent economic crisis that has gripped most national economies is manifested in the imbalance between supply and demand for goods and services. in a competitive economy, the relationship between business entities due to the crisis must undergo a massive transformation of business scenarios. crisis phenomena in the economy can lead to the renewal of sociological, ideological, political conditions, and even lead to the reformation of national elites. the covid-19 pandemic has spread rapidly around the world, infecting millions of people and nearly halting economic activity, as most countries have imposed strict restrictions on movement to stop the spread of three seas economic journal 79 vol. 2 no. 1, 2021 the virus. over time, as health threats and human losses increase, the economic damage will become even more apparent and may become the greatest economic shock the world has experienced in decades. the world bank as immediate, as is the immediate pandemic impact and long-term growth due to the damage it has caused has identified the global economic outlook for june 2020. the baseline forecast predicts a 5.2 percent contraction in world gdp in 2020, the deepest global recession in decades, despite governments' extraordinary efforts to counter the economic downturn with support for fiscal and monetary policies. in the longer term, the deep recessions caused by the pandemic will leave long-term scars due to declining investment, "erosion" of human capital due to job or training loss, fragmentation of global trade and supply links. the pandemic crisis requires the development of urgent measures needed to mitigate the effects on public health and economic recovery. the metallurgical complex is one of the main elements of economy of ukraine and plays very important role in its future development. metallurgy is a major contributor to the budget, the main provider of foreign currency in ukraine. production of the metallurgical complex is the main component of export of industrial branch of the country in this connection an actual problem is research of a current state and prospects of development of the foreign trade activity of a metallurgical complex. it should be noted that exact production of metallurgical complex plays a key role of definition of foreign economic activity positive influences on subjects of managing on formation of key macroeconomic indicators to which it is necessary to carry: acceptability of a condition of the balance of payments of the country, inflationary expectations and cost of national monetary unit. 2. analysis of recent research and publications, results and discussion among domestic and foreign scholars who have dedicated their works to the problems of foreign trade activity of metallurgical complex should be mentioned i.p. bulev i.p. (bulev, 2013), mazur v.l. (mazur, 2010), sardak s., stavyts’ka a. (research of the structure and development trends of world market of information technologies, 2015) and others. the presenters in the hallucinations of smart structures were occupied by such presenters, satoshi nakomoto (nakomoto, 2020), george doran (doran, 1981), nick sabo (sabo, 2003). the purpose of this study is to analyze the current state of foreign trade activity of world ukraine’s metallurgical complex and to emphasize problems of effective further development of metallurgical complex with blockchain technology in the modern system of international cooperation. in the world economy, the key factor of stability and high competitiveness in the end should be a policy of constant innovation to implement innovative technological solutions in the field of information technology, development of new international settlement tools, which requires banks and other market participants to make quick and radical decisions. model of their financial behavior and strategic line of development of organizational structure. a special place is occupied by the so-called smart structures and technologies based on them, which are widely used in various fields of human activity. smart structure (smart structure) is a system that contains multifunctional parts that can monitor and activate control; and can act as a primitive analogue of a biological body. to build such intelligent constructions, software is used that can perform the functions of monitoring and tracking the operation of individual parts of the software application using a predicate system as an expression that uses one or more values with the result of a logical type. one of the most well known smart structures in the world of information technology is the concept of smart contracts, which appeared in 1994, when cryptographer and legal expert nick szabo introduced it to use the developed methods of contract law in e-commerce protocols on the internet. this researcher is also one of the developers of bit gold. back in 1996, he argued that the minimum amount of micropayment is determined not so much by technology as by the reasonable effort required to evaluate the product and the decisions made, or, in his words, "its transaction value". however, in practice, the realization of this idea was received only in 2008, thanks to the advent of blockchain technology in bitcoin cryptocurrencies (nakamoto, 2020). next, consider the concept of smart as an mnemonic abbreviation, the components of which are criteria for setting tasks, such as in project management, management and personal development. this abbreviation was first mentioned in november 1981. in a publication by george t. doran for management review (doran, 1981), formed from the words of english. specific, measurable, assignable, realistic, timerelated – concrete, measurable, has a performer, realistic, limited in time. it is believed that the compliance of tasks with these criteria significantly increases the likelihood of their implementation to achieve the goal. for a more detailed idea of smart payment, first consider the standard forms of documentary payments, which are widely used in the implementation of foreign trade agreements and payments for them (sabo, 2003). 3. practical application of blockchain technologies in business as an example, we would like to cite the deal between alfa-bank together with gazpromneft-aero, the three seas economic journal 80 vol. 2 no. 1, 2021 operator of the aviation fuel business gazprom neft, and s7 airlines, which launched a blockchain service that allows airlines to pay instantly for fuel directly when refueling aircraft without prepayment, banks guarantees and financial risks for the parties to the transaction. the service is based on aviation fuel smart contracts (afsc), which run on the blockchain platform hyperledger. through the afsc system, the airline transmits to the supplier information about refueling the desired flight, agrees on the preliminary volume of fuel and its price. this data is used to assign a technical task to the driver of the tanker at the airport. next, the commander of the aircraft in the system requests from the operator the required amount of fuel, after which the online application is sent to the airline's bank to reserve the required amount in the carrier's account. instant confirmation from the bank starts refueling. after the service is performed, the funds are written off, and the commercial services of the fuel supplier and the air carrier are sent information about the closure of the application for refueling and reporting documents. the new technology multiplies the speed of financial transactions and reduces the labor costs of airline staff and suppliers. as an industry leader, gazpromneft-aero is not only a conductor of iata international standards for aviation fuel supply in russia, but also actively implements the world's best practices and innovative solutions aimed at improving business efficiency. the use of this technology in mutual settlements between airlines and fuel operators will give a new impetus to the development of the entire aviation industry, "said vladimir egorov, ceo of gazpromneft-aero. “as a technology leader in the industry, s7 airlines analyzes and, with sufficient justification, implements promising technologies, including blockchain. we were the first to use smart contracts for letters of credit. after that, they developed a blockchain platform for automating trade transactions between several counterparties and launched a service on it for mutual settlements with agents selling air tickets. our next step is a service to automate payments for fuel supply. it is an automated trading operation between three parties: a bank, an airline and a tanker. upon refueling the aircraft according to the pre-established rules, the funds are reconciled and written off. the technology allows to increase the transparency of mutual settlements, to abandon a number of manual operations and speed up processes, ”said pavel voronin, deputy general director for information technology of s7 group. made analysis of current state supply chain around the world revealed to become increasingly interconnected, the influence of blockchain is becoming more prevalent. the factory of the future spans across a whole network of steel production. now, more than ever before, manufacturers face the challenge of securely sharing data within and outside industry walls (riddle & code, 2021; ukrmetprom, 2020; manufacturing global, 2021; gmk center, 2021). to work out the best practice for blockchain, a manufacturer must conduct a structured assessment, which begins with identifying the company’s current business problems and future needs. subsequently, it can then explore how it leverages the technology to relieve the factory’s pain points and addresses its needs. equipped with a strong understanding of the opportunities and challenges it faces, the manufacturer can then choose the most appropriate option from the available technology solutions. (yan cao, 2021). be reviewed the current situation on the global steel products market (figure1). china is estimated to have produced 83.0 mt in february 2021, up 10.9% on february 2020. india produced 9.1 mt, down 3.1%. japan produced 7.5 mt, down 5.6%. the united states produced 6.3 mt, down 10.9%. russia is estimated to have produced 5.7 mt, down 1.3%. south korea produced 5.5 mt, up 1.2%. turkey produced 3.0 mt, up 5.9%. germany produced 3.1 mt, down 10.4%. regions and countries covered by the table 1: – africa: egypt, libya, south africa; – asia and oceania: australia, china, india, japan, new zealand, pakistan, south korea, taiwan (china), vietnam; – cis: belarus, kazakhstan, moldova, russia, ukraine, uzbekistan; – european union (27); – europe, other: bosnia-herzegovina, macedonia, norway, serbia, turkey, united kingdom; table 1 top 10 steel-producing countries countries feb 2021 (mt) % change feb 21/20 jan-feb 2021 (mt) % change jan-feb 21/20 africa 1.2 -6.4 2.4 -6.9 asia and oceania 109.7 7.5 230.8 10.1 cis 8.0 -1.5 16.8 -0.4 eu (27) 11.9 -7.1 24.1 -3.7 europe, other 3.9 5.2 8.2 6.9 middle east 3.2 -0.9 6.8 0.4 north america 8.8 -8.9 18.5 -7.1 south america 3.5 2.2 7.3 6.6 total 64 countries 150.2 4.1 315.0 6.6 source: (worldsteel, 2021) – middle east: iran, qatar, saudi arabia, united arab emirates; – north america: canada, cuba, el salvador, guatemala, mexico, united states; – south america: argentina, brazil, chile, colombia, ecuador, paraguay, peru, uruguay, venezuela. as reported earlier, in 2019, companies of ukraine's mining & metals sector decreased production of steel by 1.2% to 20.85 million tons, pig iron by 2% to 20.6 three seas economic journal 81 vol. 2 no. 1, 2021 million tons, rolled products by 0.9% to 18.2 million tons against 2018 (manufacturing global, 2021). 4. prospects for the use of blockchain technologies in the steel industry of ukraine the ukrainian iron and steel industry is concentrated in central (dnipro, kryvyi rih, nikopol), southern (zaporizhzhia) and eastern (donets basin, mariupol) regions of ukraine. there are 14 iron ore mining companies, 15 iron and steel mills, and three ferroalloy plants (wikipedia, 2021). to review of the situation before the crisis in ukraine in the field of iron and steel as a whole in the pre-crisis times the share of metallurgical complex was 27% in the gross domestic product of ukraine. more than 40% of currency came to the state from metallurgy and it affected state of the economy of the country in crisis. in the conditions of world decline in demand for metal inflow of currency considerably decreased, and the economy experienced decrease much more, than was predicted. the gain of sales proceeds was considerably reduced (table 2). in recent years, the metallurgical complex development is influenced negatively by adverse external economic conditions, which are characterized by decrease in the world prices for ferrous metals. a competition aggravation in the markets of europe and asia against surplus in the world of capacities, domination in the market of cheap chinese hire, reduction of demand for metallurgical production in the middle east which traditionally is one of the greatest consumers of the ukrainian metallurgical production. in 2013 from ukraine about 26,5 million t are exported metal production that for 3,6% exceeds the indicators 2012 (steemit, 2020). in recent years, development of metallurgical complex is influenced negatively by adverse external economic conditions which are characterized by decrease in the world prices for ferrous metals, a competition aggravation in the markets of europe and asia against surplus in the world of capacities, domination in the market of cheap chinese hire, reduction of demand for metallurgical production in the middle east which traditionally is one of the greatest consumers of the ukrainian metallurgical production. in 2013 from ukraine about 26,5 million t are exported metal production that for 3,6% exceeds the indicators 2012 (mazur, 2010).reduction of prices in the world markets of metal and metallurgical production led to that in value terms export deliveries of steel products made about 14,3 bln. usd that is 6,7% less, than in 2012. export deliveries of metal production in 2013 in comparison with 2012 increased by 1,1%, in value terms export deliveries of metal production exceeded 1459 million usd (table 2). dynamics of export-import coverage ratio from the point of view of domestic metallurgical complex is given in figure 1. as show data of figure 1 value of exportimport coverage ratio from the point of view of domestic metallurgical complex is big units in all studied period. data of figure 2 indicate a negative in development of foreign economic activity of subjects of metallurgical figure 1. pattern of growth to world steel production markets source: (worldsteel, 2021) three seas economic journal 82 vol. 2 no. 1, 2021 complex which essence is reduced to the available tendency concerning reduction of coefficient of a covering of export by import of metal production. the insufficient nomenclature of production of deep processing by the domestic metallurgical companies causes strengthening of its import, first of all machine-building enterprises which consume about a quarter of total amounts of the ukrainian import of metal production. according to experts, because of the insufficient nomenclature iron and steel works annually receives less about 3 billion usd (state statistics service of ukraine, 2020). excessive orientation of the domestic enterprises to export of raw production which production demands considerably smaller expenses is the main reason. at present, the global metallurgical market is undergoing significant changes under the influence of the rapid development of china’s economy, which not only had a lot of produce, but also actively buys metal and iron ore for its domestic market. in the case of a decrease in demand for metallurgical products of chinese industry the surplus of produced products are supplied to the world market at very low prices, forcing other manufacturers also to reduce the prices of the metal (figure 2). this situation has a negative impact on the metallurgical industry in ukraine, a major exportoriented industry. therefore, in order to maintain its competitive position and development of new markets for ukrainian producers and topical issues are finding ways to adapt to changes in the world market and the choice of an effective competitive strategy of foreign trade. one of the effective methods of international management company is the concentration of capital and production capacity through vertical integration of production, which includes organizational business combination, related manufacturing operations under common ownership. with the increased competition on the market, the domestic enterprises are vulnerable to major problems that have accumulated in the branch: – a significant lag behind developed countries in terms of modernization; – the high cost of energy and material resources compared with leading; – foreign companies; – an assortment of metal is not wide; – poor environmental performance. foreign trade activity allows metallurgical companies to obtain the economic, scientific-technical and social effects. the decline of the volume of production, the artificial reduction of financial results, raw insecurity of production flows out not from world markets and domestic market factors, but, first of all, out of problems of management of metallurgical enterprises. so, wellchosen competitive strategy of foreign trade activity is the key to efficient operation of the business in the global industry market. table 2 sales proceeds of the metallurgical companies in 2011–2012 company 2011 2012 rate of growth, % аzovstal 35786 44423 24,14 metinvest 26175 35759 36,62 arcelormittal 24280 29889 23,1 alchevsk iron and steel works 12208 21770 78,32 yenakiieve iron and steel works 13238 21363 61,38 zaporizhstal 14368 19376 34,86 dneprovsk iron and steel works 12574 18273 45,33 nikopol ferroalloy plant 10767 7863 -26,97 makiivka iron and steel works 6557 2753 -58 stakhanov ferroalloy plant 1632 1561 -4,3 kremenchuk steel works 1376 1370 -0,4 donetsksteel iron and steel works 780 784 0,4 source: (wikipedia, 2021) table 3 main indicators of the foreign trade activity of ukraine’s metallurgical complex in 2008–2013 indicators 2008 2009 2010 2011 2012 2013 exports, mln. usd 1261,9 1175,2 1548,0 1916,2 1327,3 1459,5 in % to previous year 5,7 6,9 31,7 23,7 30,8 1,1 imports, mln. usd 270,7 250,8 448,3 465,4 394,0 387,8 in % to previous year 7,2 7,4 78,7 3,8 15,4 1,6 balance, mln. usd 991,2 924,4 1099,7 1450,8 933,3 1071,7 export-import coverage ratio 4,66 4,68 3,45 4,12 3,36 3,76 source: (ukrmetprom, 2021) three seas economic journal 83 vol. 2 no. 1, 2021 5. conclusions foreign trade activity of the metallurgical complex is of strategic importance for the national economy. the main contribution of metallurgy makes to the budget was the main supplier of foreign exchange in ukraine. now, there is a decline in the production of metal products in comparison with the pre-crisis period of observations. the efficiency of foreign trade activities of the metallurgical complex affects not only the macroeconomic indicators of the country 's development, but also the welfare of the population, since the industry is the main source of foreign exchange 4,68 3,45 3,36 3,76 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 2008 2009 2010 2011 2012 2013 4,66 4,12 figure 2. dynamics of export-import coverage ratio in metallurgical complex source: (ukrmetprom, 2021) figure 3. prices for the metal in ukraine (compared to china), usd/t source: (problemi innovatsiyno-investitsiynogo rozvitku, 2013) earnings in ukraine. thus, the competitive strategy of foreign trade activities of domestic metallurgical exporters should include the development of a management mechanism based on a comprehensive modernization of its technical re-equipment, energysaving technologies, and the introduction of new information technologies based on the blockchain. this will allow domestic producers of metallurgical products to shorten the supply and settlement chain to effectively compete in the global market and harmonize the interests of the company and its owners and minimize the risks of fraudulent transactions within the international business environment. references: bulev, i. p., & bryuhovetskaya, n. e. (2013). zadachi reformirovaniya gorno-metallurgicheskogo kompleksa ukrainy. ekonomika promyishlennosti, vol. 1-2 (61-62), pp. 219–230. doran, g. t. (1981). there’s a s.m.a.r .t. way to write management’s goals and objectives. management review, vol. 70, issue 11 (ama forum), pp. 35–36. three seas economic journal 84 vol. 2 no. 1, 2021 how blockchain can revolutionise the metal industry. (n.d.-a). riddle&code the blockchain interface company. available at: https://www.riddleandcode.com/how-blockchain-can-revolutionisethe-metal-industry (accessed 28 april 2021). is dag technology the future of payments? official site steemit. available at: https://steemit.com/dag/@edicted/ is-dag-technology-the-future-of-payments (accessed 4 december 2020). mazur, v. l. (2010). metallurgiya ukrainyi: sostoyanie, konkurentosposobnost, perspektivyi. metallurgicheskaya i gornorudnaya promyishlennost, vol. 2, pp. 10–14. metal production in ukraine – wikipedia (n.d.) [official portal]. wikipedia. available at: https://en.wikipedia.org/ wiki/metal_production_in_ukraine (accessed 28 april 2021). nakamoto – bitcoin a peer-to-peer electronic cash system.pdf ’ (no date). available at: https://bitcoin.org/ bitcoin.pdf (accessed 1 november 2020). sardak s., & stavyts’ka a. (2015). research of the structure and development trends of world market of information technologies. technology audit and production reserves, vol. 5(24), pp. 96–100. state statistics service of ukraine. statistical yearbook. kyiv, 2020. szabo, nick the mental accounting barrier to micropayments. system. available at: https://nakamotoinstitute.org/ static/docs/micropayments-and-mental-transaction-costs.pdf (accessed 5 december 2020). the results of the mining & metallurgical complex of ukraine activity for 10 months 2020 (2020 november 13). available at: https:ukrmetprom/org/the-results-of-the-mining-metallurgical-complex-of-ukraine-activity-for-10months-2020 (accessed 28 april 2021). the role of blockchain in manufacturing.smart manufacturing. manufacturing global (n.d.). available at: https://www.manufacturingglobal.com/smart-manufacturing/role-blockchain-manufacturing (accessed 28 april 2021). why the steel industry needs blockchain – opinions – gmk center (n.d.). gmk. available at: https://gmk.center/en/opinion/why-the-steel-industry-needs-blockchain/ (accessed 28 april 2021). worldsteel. february 2021 crude steel production (n.d.). available at: http://www.worldsteel.org/media-centre/ press-releases/2021/february-2021-crude-steel-production.html (accessed 28 april 2021). yan cao (n.d.-a). efficient traceability systems of steel products using blockchain-based industrial internet of things [webportal]. ieee xplore. available at: https://ieeexplore.ieee.org/document/8843946/ (accessed 28 april 2021). three seas economic journal 91 vol. 2 no. 1, 2021 corresponding author: 1 national transport university, ukraine. e-mail: e.taranukha@ukr.net orcid: https://orcid.org/0000-0001-6787-0877 doi: https://doi.org/10.30525/2661-5150/2021-1-15 the world development of the digital economy: the main development stratagems olena taranukha1 abstract. the digital economy allows to compose the new business models, digital platforms and services, which create new types of economic activity, as well as the transformation of traditional industries. due to the industries transformation to the digital economy there is the transformation of the world economy, or rather the economy itself is being digitized the purpose of the paper is to reveal the essence and features of the digital economy formation and to consider what significant transformations will take place in the world by the analysis of major trends in the near future. accumulating all the concepts, we can say that the digital economy is the rather complex term, but we can assume that its development is based on the key components according to forecast estimates, the most advanced retail companies will begin implementing the service of virtual and voice search of goods by 2022. this will require from the company the better understanding of the consumers wishes, their interests and intentions. consider the main technological development trends for 2020–2025 based on the data of the major consulting agencies and the consulting company "cartner" figure 2 shows the forecast curve of the new technologies development. innovative development triggers that will actively influence the technology development include the following: the authenticated provenance, low-cost single board computers at the edge, self-supervised learning, bmi (brain machine interface), active development of "packaged business capabilities" services, digital twin of the person and composible enterprises. the peak of disappointments will be social distancing technologies and secure access service. the source of expectations will be the development of carbon-based transistors technology and human digital ontologies. the formation of a productivity platform will be based on trends in self-development and selfeducation. digital it trends grow, evolve and acquire new properties of social technologies that can influence the structure of the community, form dependencies and demand. therefore, companies, large corporations and government need to move to more flexible composite business architectures. the modular business model is based on four basic principles: modularity, efficiency, continuous improvement and adaptive innovation. this business model allows to move from rigid traditional planning to a flexible response to rapidly changing business needs. in general, it creates opportunities for innovative approaches, reduces costs and improves partnerships. it is important to pay attention to the other technologies in the new business model such as bundled business services, data factories, private 5g networks and embedded artificial intelligence. thus, as a result of the research it is proved that the digital world is a completely new order of life, which requires to change our thinking. the person should be always focused on the new technologies and methods in order the enterprises remain competitive and constantly developed, it will promote the economy development and the growth of well-being of the society. so, taking into account the global trends in technology development, ukraine has to adapt to the new standards quickly and implement innovative solutions for the economic development. the digitalization of the economy, on the one hand, is the key to economic success, on the other hand, it is the driving force in the conditions of the conceptual understanding of the digital economy essence. the growth of the quality and innovation level of domestic goods and services should provide not only sustainable economic growth, but also competitive advantages with further integration into the eu. at the same time, there is the relevant need of the scientific and technological research, the formation of a certain business ("digital") culture, the implementation of smart city ideas in ukraine based on the development of local communities and the emergence of new initiatives and proposals for innovative solutions. key words: digital economy, digital components, digital trends, сloud technology, iiot, augmented reality, big data, spectrum technology platform, hype cycle technologies. jel classification: е27, d40, f55 three seas economic journal 92 vol. 2 no. 1, 2021 1. introducation the digital economy is becoming an integral part of the world economy. the core of the digital economy are undoubtedly the digital technologies. the digital economy allows to compose the new business models, digital platforms and services, which create new types of economic activity, as well as the transformation of traditional industries. due to the industries transformation to the digital economy there is the transformation of the world economy, or rather the economy itself is being digitized. modern economic conditions stimulate the investment to digital transformation, as emerging markets try to increase their demand for technology in order to stimulate further growth. at the same time developed markets are looking for the new ways to reduce costs and to introduce the innovations. therefore, the digital economy research will not only develop the digital potential of industries, but will also bring the economy to the new level with the ability to avoid a global crisis in the future. however, as digital technologies become more sophisticated and integrated, causing the transformation of society and the global economy, the issues of the digital technologies impact on the development of national and global economies remain insufficiently studied. the purpose of the paper is to reveal the essence and features of the digital economy formation and to consider what significant transformations will take place in the world by the analysis of major trends in the near future. in order to achieve the goal and solve the tasks we have used the general and specific research methods: abstract-logical method and critical analysis – to identify the essence of the concept of digital economy and its components; methods of analysis and synthesis, graphical and tabular methods – to assess key trends, and determine the main strategies of the world digital economy development for the next 2021–2023. the research results, conclusions and proposals have been substantiated by an integrated approach. 2. methodology of research the current wave of digital transformation unites the biological, material and digital worlds. the new concept has emerged – the digital economy. it is in our time that humanity on the base of accumulated knowledge of digital technologies during several decades, has approached the new qualitative leap: industry has become ready for the transition to fully automated production systems, the states has become ready and have the ability to provide services online (e-government), transport is preparing for the introduction of autonomous driving without drivers, the service sector is ready for the use of robots (glaxo smith kline plc., 2019). analysis of recent publications. the issues of the digital economy impact have been researched in scientific works of the following researchers: b. van ark, r . inclar, m. timmer, d. sifchlag, a. krimes, r . cleo, f. stevins, t. nibel, w. isaacson, s. brand, j. wales, e. williams, b. gates, b. elbrecht, d. engelbart, j. licklider, j. von neumann, e. peters, s. huntington, s. haller. the problems of digital economy development and transformation processes were considered by ukrainian and foreign scientists, in particular, v. apalkova, s. veretyuk, p. drucker, s. kolyadenko, i. karcheva, b. king, r . lipsi, l. lyamin, i. malik, v. pilinsky, y. pivovarov, k. skinner, e. toffler, v. fishchuk, k. schwab and others. since the digital economy term has been appeared, many scholars and practitioners have made adjustments to the definition of this category. however, the definitions analysis (karcheva, ogorodnya, openko, 2017; deeva, deleichuk, 2018; kolyadenko, 2016; skorobogatova, 2019) confirms our opinion that there are no significant differences between them. in most foreign sources, the emphasis digital economy digital thinking digital datainnovative technologies digital infrastructure continuous access digital platforms figure 1. key components that form the digital economy concept source: formed by the author three seas economic journal 93 vol. 2 no. 1, 2021 is made on the technologies and related changes in the ways in which economic agents interact (miller, claire, 2017; readiness for the future of production report, 2018; glaxo smith kline plc., 2019). specific types of technologies or some forms of changes in economic processes may be mentioned. the digital economy definition is often replaced by a list of areas of its impact on the economy and the social sphere. accumulating all the concepts, we can say that the digital economy is the rather complex term, but we can assume that its development is based on the key components presented in figure 1. the digitalization results are the higher productivity of business and communications, customer satisfaction increase, and in modern conditions, the rapid increase of the development efficiency and competitiveness. this is the major factor in development, because it requires constant progress and innovation. 3. results and discussion the leading scholars research concludes that identifying of the digital economy trends makes it possible to predict global market shifts in real time. it is important that such forecasts should help the heads of government departments, companies, financial advisors and top management of corporations consider future changes in business, industry or global development, using the tools of scenario and forecast analysis. undoubtedly, it will lead to the rethinking of the format of large technology corporations. well-known technology giants such as the american corporations “facebook”, “apple”, “amazon” and “coogle”, and the chinese “alibaba”, “baidu” and “tencent” will start changing the format of their activities on their own initiative. these companies influence will become so significant that it will be increasingly difficult to develop new profit scenarios. in order to be ahead of potential competitors, corporations will have to "undermine" their own markets and change the game rules to take into account all relevant risks (chuprina, orozonova, 2020). according to forecast estimates, the most advanced retail companies will begin implementing the service of virtual and voice search of goods by 2022. this will require from the company the better understanding of the consumers wishes, their interests and intentions. according to analysts of the consulting company "cartner", the result of the innovations introduction can be the revenue increase of e-commerce platforms by 30%, the increase of the attracting new customers rates, customer satisfaction and market share (reputation institute, 2019). consider the main technological development trends for 2020–2025 based on the data of the major consulting agencies and the consulting company "cartner" (global reptrak 100, 2019). the technological development features of the last decade allowed to define the following information trends of the modern world. 1. active development of cloud services and technologies. cloud technology provides the remote access, processing and storage of data on various devices. their use eliminates the attachment to the workplace, which creates new opportunities in the labor market. they also provide a fundamentally new level of mobility and form the communities through the existence of private, public, hybrid "clouds". 2. the emergence of the industrial internet of things – iiot. this is the concept of the computer network of physical objects ("things"), equipped with built-in technologies for interaction with each other or with the external environment. according to idc more than 5.5 billion "smart devices" were used in the world in 2016. the contribution of the iiot to the world economy could reach almost $ 14 trillion by 2030. currently, sensors and chips are used in home appliances, transport, industrial or commercial equipment, information systems (cloud technology), banking, public places (parking, entertainment, tourism), media and other areas. unfortunately, iiot is becoming a social technology capable of forming addictions and phobias (fear of implant chips, etc.). 3. "swarm intellect" use. this is the collective behavior of different objects, each of which performs a number of simple functions, interacting with other objects. like a swarm of insects, bees or flocks of birds, information systems developed on the basis of this principle provide decentralized process management through the collective work of all its elements, which are self-organizing in the process. swarm intellect technology can be used in unmanned vehicles, power grids and during military and rescue operations (unmanned aerial vehicles, drones, military sappers, rescue workers, etc.). 4. augmented reality technologies active use (ar). ar simplify and shorten the process of new product creating by replacing physical prototypes with virtual models compatible with real devices, you can see engineering errors or improvements effects in the early stages. these technologies can reduce the impact of the human factor and equipment repair costs, increase productivity and competitiveness in the market. ar technologies are also used to coordinate the activities of departments and employees and even to create work instructions and technical publications. 5. rapid development of big data technology. big data technology collect all possible information about individuals (users of social networks, shoppers, subscribers of telephone and telecommunications operators, survey and census data, etc.) and make the cluster analysis of this information, ie its "breakdown" three seas economic journal 94 vol. 2 no. 1, 2021 into generalized types of behavioral patterns in which some preferences (for example, in food or clothing) correlate with others (for example, political), which allows you to predict the behavior of relevant groups of people in the right field with the help of some information about them. big data analyzes the behavioral patterns and predictions of the preferences of each individual internet user in order to provide him the information that is likely to be close and interesting to him. 6. 3d printer technology use in various spheres of life. this is a peripheral device that uses a layer-by-layer method of creating the physical object based on a digital 3d model. this technology makes it possible to build the complex technological facilities for various fields of activity from office to medicine cheaper and faster. 7. spectrum technology platform active implementation. the system of services provides on the constant basis the target block-message formation for an individual – at his request or adapting to his interests. this service not only greatly simplifies and facilitates the information search process and provides the quick access to the required resource, but it also meets the current socioeconomic trends – getting the "full package of services", the so-called comprehensive service with all the necessary information at the right time, place. format, etc. eventually, the consumer ceases to notice the extent to which his needs and choices belong to him. 8. rapid development of an artificial intelligence technologies. the property of intelligent systems to perform creative functions, which are traditionally considered as exclusively human ability. 9. formation of the human information ecology format. due to the information amount increase, the issue of the information space pollution, information overload of the person becomes more and more actual. it becomes difficult to find the information you need in a huge stream. it is important not only to be able to operate with information and use the information resources, but also to be able to form an information worldview. 10. formation of new standards of information security. today the individual and collective security demand is becoming a megatrend. the information security can be considered on several levels and in several manifestations, but the essence remains following: information is a dangerous weapon. therefore, in the framework of this trend, researchers analyze the personal data access, technical means of data processing and transmission, computer systems, personal freedom protection and the right of personal information space. the scientists also consider the information terrorism as a violent propaganda effect on the psyche, which unable the person to evaluate the received information critically. in addition to the use of official media, information terrorism is based on the spread of certain types of rumors. they strengthen the atmosphere of fear and terror created by terrorists. another aspect of this trend is cyberterrorism, which is defined by the researchers as an attack on information resources, intrusion into computer systems or networks which result in a threat to human life and health or in the occurrence of other serious consequences – violation of public safety, intimidation of the population, provocation of military conflict. to the threats also belong the information or cyberattacks – as independent influences and as components of a hybrid or information war. it is important to mantion not only the technical and technological component of such communication, but also the content, which is high-tech in terms of forms, methods of submission and the level of its thoughtfulness. today, the fakes creation is very widespread that undermine the system of information regulation (the creation of "noise" does not allow to understand where are the facts and where are the fictions). (robinson, 2007). 11. development of the blockchain and bitcoin technologies. this is a chain of formed blocks of transactions built according to the certain rules. initially, the term meaned the distributed database of the cryptocurrency "bitcoin". the world wide web uses blockchain technology in order to manage the database that records bitcoin transactions. the system operates in a decentralized manner, which means that the network operates on a user-to-user basis. figure 2 shows the forecast curve of the new technologies development. innovative development triggers that will actively influence the technology development include the following: the authenticated provenance, low-cost single board computers at the edge, self-supervised learning, bmi (brain machine interface), active development of "packaged business capabilities" services, digital twin of the person and composible enterprises. the peak of disappointments will be social distancing technologies and secure access service. the source of expectations will be the development of carbon-based transistors technology and human digital ontologies. the formation of a productivity platform will be based on trends in selfdevelopment and self-education. digital it trends grow, evolve and acquire new properties of social technologies that can influence the structure of the community, form dependencies and demand. therefore, companies, large corporations and government need to move to more flexible composite business architectures (martyniuk, 2020). the modular business model is based on four basic principles: modularity, efficiency, continuous improvement and adaptive innovation. this business model allows to move from rigid traditional planning three seas economic journal 95 vol. 2 no. 1, 2021 to a flexible response to rapidly changing business needs. in general, it creates opportunities for innovative approaches, reduces costs and improves partnerships. it is important to pay attention to the other technologies in the new business model such as bundled business services, data factories, private 5g networks and embedded artificial intelligence. 4. conclusions thus, as a result of the research it is proved that the digital world is a completely new order of life, which requires to change our thinking. the person should be always focused on the new technologies and methods in order the enterprises remain competitive and constantly developed, it will promote the economy development and the growth of well-being of the society. so, taking into account the global trends in technology development, ukraine has to adapt to the new standards quickly and implement innovative solutions for the economic development. the digitalization of the economy, on the one hand, is the key to economic success, on the other hand, it is the driving force in the conditions of the conceptual understanding of the digital economy essence. the growth of the quality and innovation level of domestic goods and services should provide not only sustainable economic growth, but also competitive advantages with further integration into the eu. at the same time, there is the relevant need of the scientific and technological research, the formation of a certain business ("digital") culture, the implementation of smart city ideas in ukraine based on the development of local communities and the emergence of new initiatives and proposals for innovative solutions. the implementation of these and other priorities will contribute to the restructuring and digitalization of the national economy sectors. it will increase the availability of the relevant services and products, the innovation level of which will continue to grow. figure 2. hype cycle for emerging technologies (2020) source: formed on the basis of (chuprina, orozonova, 2020) references: chuprina, m. o., & orozonova, a. a. (2020). global trends in the development of the it industry and technology. available at: http://confmanagement.kpi.ua/proc/article/view/201193/201226 (accessed 19 november 2020). сone a porter novelli company (2019). the top ten trends in csr reporting in 2019. available at: https://www.conecomm.com/insights-blog/2019/10/10/the-top-ten-trends-in-csr-reporting-in-2019 (accessed 10 november 2020). three seas economic journal 96 vol. 2 no. 1, 2021 deeva, n. e., & deleichuk, v. v. 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(2019). responsibility reports and data. annual report 2019. available at: https://www.gsk.com/en-gb/responsibility/responsibility-reports-data/ (accessed 10 november 2020). hype cycle for emerging technologies (2019). аvailable at: https://iidf.ru/media/articles/trends/gartnernazval-tekhnologii-budushchego-versiya-2019-goda/ (accessed 19 november 2020). karcheva, g. t., ogorodnya, d. v., & openko, v. a. (2017). digital economy and its impact on the development of national and international economy. financial space, vol. 3(27), pр. 13–21. kolyadenko, s. v. (2016). digital economy: preconditions and stages of formation in ukraine and in the world. economy. finances. management, vol. 6, pp. 106–107. martyniuk, о. а. (2020). the impact of digital technologies on the development of business social responsibility. economics: time realities. scientific journal, vol. 4(50), pp. 78–86. available at: https://economics.opu.ua/files/ archive/2020/nо4/78.pdf miller, а., & claire, c. (2017). how jeanirole's work helps explain the internet economy. the new york times. available at: https://www.nytimes.com/2014/10/15/upshot/how-jeantiroles-work -helps-explain-the-interneteconomy.html (accessed 19 november 2020). reputation institut (2019). global reptrak 100. available at: https://www.reputationinstitute.com/about-ri/ press-release/reputation-institute-says-its-reputation-judgement-day-2019-global-reptrakr (accessed 19 november 2020). robinson, g. e. (2007). jihadi information strategy: sources, opportunities, and vulnerabilities. information strategy and warfare. ed. by j. arquilla, d.a. borer. new york. skorobogatova, n. (2019). conceptual bases of formation of sustainable development of society in the context of industry 4.0. economic bulletin of ntuu "kpi", pр. 388–400. doi: https://doi.org/10.20535/23075651.16.2019.182748 readiness for the future of production report (2018). insight report. in collaboration with a. t. kearney. world economic forum, 266 р. available at: http://www3.weforum.org/docs/fop_readiness_report_2018.pdf (accessed 19 november 2020). three seas economic journal 104 vol. 2 no. 1, 2021 corresponding author: 1 ivan franko national university of lviv, ukraine. e-mail: nataliya.halevych@gmail.com orcid: https://orcid.org/0000-0001-9016-6634 doi: https://doi.org/10.30525/2661-5150/2021-1-17 formation and use of financial potential of investment activity of small enterprises ruslan yurkiv1 abstract. the purpose of the paper is to study the processes of formation and use of financial potential of investment activity of small enterprises. the subject of research is the patterns of formation of financial potential of investment activity of small enterprises. methodology included structural and systems analysis, as well as the theory of optimal control. in addition, methods of economic and statistical analysis were used. the main results of the study include the definition of the essence and selection of types of the financial potential of investment activity of enterprises. it is found that the financial potential of investment activity of the enterprise is its ability to attract financial resources to ensure this activity. the available, aggregate, and long-term financial potentials of investment activity are defined and characterized. the possibility of distinguishing the general, effective and optimal varieties of this potential are also noted. it is shown that the aggregate financial potential of investment activity of the enterprise, in addition to the available potential, also includes the available reserve for the growth of the financial potential of investment activity due to the implementation of measures that do not require investment. it is proven that the financial potential of investment activity of small enterprises is at the intersection of two other types of their economic opportunities: investment potential and the potential of the flow of the financial resources to finance investment activity of enterprises. the generalized model of the course of processes of formation and use of the financial potential of investment activity of small enterprises is constructed and analyzed. a number of indicators for assessing the level of use of the financial potential of investment activity of small enterprises are proposed. in particular, these indicators include the share of the actual volume of realization of the available financial potential of investment activity of enterprises in the amount of the potential, the share of the available financial potential of investment activity of enterprises in the value of their investment potential, the share of the actual volume of realization of the available financial potential of investment activity of enterprises in the value of their investment potential. the third indicator is the product of the previous two. the level of investment activity and use of the available financial potential of investment activity of fifty ukrainian small enterprises is studied. it is established that the largest share includes enterprises with a low and satisfactory level of investment activity. at the same time, the average level of realization of the available financial potential of investment activity of enterprises increases with the growth of investment activity. the practical significance of the results in the work of small enterprises will allow to identify and implement untapped opportunities for growth in the financial potential of investment activity of these enterprises. also, these results make it possible to establish the level of actual realization of this potential and identify areas for increasing this level, which is especially relevant in the context of the covid-19 pandemic. key words: financing, investment, potential, enterprise, model, indicator. jel classification: c10, g30, m21 1. introduction one of the conditions for the successful operation of enterprises is to ensure their sustainable economic development, which is a gradual and steady increase in the value of financial and economic results of economic activity. however, as the experience of this activity shows, many enterprises, especially small ones, face barriers to their sustainable economic development ( jaramillo et al., 2019; tambunan, 2019). one of the main barriers is the lack of adequate capacity of enterprises for their sustainable economic development (yemelyanov et al., 2018; yemelyanov et al., 2016). in turn, an important component of this potential is the financial potential of investment activity of enterprises. nowadays, many small businesses around the world face the problem of insufficient capacity three seas economic journal 105 vol. 2 no. 1, 2021 of the available financial potential (olugbenga et al., 2017; upadhyaya, 2011), which is reflected, among other things, in the difficulty of attracting borrowed financial resources (akinleye et al., 2019; rostamkalaei et al., 2016; yang, 2018). in turn, this reduces the ability of enterprises to benefit from financial leverage (adenugba et al., 2016; hoque, 2017; iqbal et al., 2018; javed et al., 2015). accordingly, the process of forming the financial potential of investment activity of small enterprises should include, first of all, the removal of barriers to external financing of business activity (bhalli et al., 2017; bondinuba, 2012; krasniqi, 2010). the presence of a significant number of such barriers determines the complexity of the mechanisms of formation and use of the financial potential of investment activity of enterprises. nowadays, the functioning of these mechanisms is not fully studied in the scientific literature, so there is a need for further study. in this case, the purpose of the paper is to study the processes of formation and use of the financial potential of investment activity of small enterprises. 2. the essence and types of the financial potential of investment activity of enterprises the financial potential of investment activity of the enterprise is its ability to attract financial resources to ensure this activity. we should note the existence of varieties of this potential. in particular, it is expedient to allocate the available, aggregate, and long-term financial potential of investment activity. the available financial potential of investment activity of the enterprise characterizes its current ability to attract financial resources to support this activity. at the same time, the aggregate financial potential of investment activity of the enterprise, in addition to the available potential, also includes the existing reserve for the growth of the available financial potential of investment activity due to the implementation of measures that do not require investment. in particular, such measures may include improving the competence of managers of the enterprise in the matters of formation of its financial potential and improving the information support of the process of making financial and investment decisions at the enterprise. after all, the long-term financial potential of investment activity of the enterprise is its ability to attract financial resources to ensure this activity in the future. the basic factors that influence the formation of the long-term financial potential of investment activity of the business entity are the improvement of the competence of managers of the enterprise, information support of their activity and conditions of operation of the enterprise in the future. thus, the long-term financial potential of investment activity of the enterprise will contain two main components: the available financial potential of this activity and the expected change of this potential in the future. in turn, the available financial potential of the enterprise’s investment activity will include its used and unused parts. it is also appropriate to highlight the general, effective, and optimal financial potential of investment activity of the enterprise. the aggregate financial potential of investment activity of the enterprise can be estimated by the total amount of financial resources that can be attracted by the enterprise. the effective financial potential of investment activity can be estimated by the maximum amount of financial resources that the company can attract while ensuring the growth of financial results of economic activity. thus, the general financial potential of investment activity of the enterprise contains effective and excess potential. finally, the optimal financial potential of investment activity of the enterprise can be estimated by such amount of financial resources that the enterprise can attract while ensuring the maximum growth of financial results of its economic activity. 3. modelling of the processes of formation and use of the financial potential of investment activity of small enterprises the main feature of the formation of the financial potential of investment activity of small businesses lies in the fact that this type of the aggregate economic potential of enterprises is at the intersection of two other types of their economic opportunities, namely investment potential and the potential for financial resources to finance investment activity of firms (figure 1). in this case, the investment potential of enterprises should be understood as their ability to conduct effective investment activity over time. this will be measured by the optimal amount of investment activity of business entities according to a certain criterion (maximum profit, maximum market value of enterprises, etc.), i.e., the optimal amount of investment that is appropriate to invest in their development. the potential of the enterprise to receive financial resources to finance its investment activity should be interpreted as the ability of the enterprise to receive a certain amount of financial resources from all possible sources for some time to ensure investment activity. this will be measured by the optimal amount of financial resources for financing investment activity of the enterprise according to a certain criterion. under such conditions, the value of the financial potential of investment activity of business entities will be defined as the minimum of the values of the two types of their economic potential described above, namely investment potential and the potential three seas economic journal 106 vol. 2 no. 1, 2021 of financial resources for enterprises to finance their investment activity. we should also note the fact that the processes of optimizing the volume of investment activity of the enterprise and the amount of financial resources that the enterprise receives in order to carry out this activity may be interlinked. the value of the optimal amount of investment in the development of the enterprise, among other factors, is influenced by the price of attracting these investments from certain sources of funds. on the other hand, the price of attraction may grow with increasing investment needs. in addition to the above, the peculiarities of the formation of the financial potential of investment activity of small enterprises should include the presence of this type of economic potential of enterprises of a rather complex structure, its hierarchical structure and the existence of a significant number of factors that directly or indirectly affect the financial potential of investment activity of the enterprises. in particular, both the investment potential and the potential of the enterprise to receive financial resources to finance its investment activity have several components and varieties. the main components of the investment potential of economic entities include the potential of investing in updating the technical and technological base of the enterprise, expanding the production of existing products, development and existing growth reserve of the available financial potential of investment activity expected future growth reserve of the available financial potential of investment activity of the enterprise investment potential of the enterprise potential of the enterprise to receive financial resources to finance its investment activity potential for investment in modernizing technical and technological base potential for investment in expanding the production of existing products potential for investment in the development and production of new products potential for investment in staff development potential for investment in working capital financing and other areas used part unused part used part unused part potential to attract domestic financial resources potential to replenish the company's equity through external sources borrowed potential of the enterprise due to insufficient level of competence of managers due to insufficient level of information support of management activity and other internal reasons due to temporary adverse environmental conditions and other external reasons aggregate long-term financial potential of investment activity of the enterprise available financial potential of investment activity of the enterprise aggregate financial potential of investment activity of the enterprise figure 1. generalized model of formation and use of the financial potential of investment activity of small enterprises source: developed by the author three seas economic journal 107 vol. 2 no. 1, 2021 production of new products, staff training, working capital and more. regarding the potential of the enterprise to receive financial resources to finance its investment activity, it is advisable to distinguish three main components of it, namely – the potential to attract internal financial resources of the enterprise, the potential to replenish equity from external sources and borrowed potential. 4. features of formation and evaluation of the borrowed potential of a small enterprise the borrowed potential plays a particularly important role in ensuring the investment process in small enterprises, as these enterprises are often characterized by rather limited amounts of internal sources of financing for investment projects that are planned to be implemented. under such conditions, borrowed funds can be a powerful source of economic growth for small businesses, provide a significant increase. at the same time, the use of borrowings to finance investment activity of small businesses can be associated with a significant level of investment risk and even lead to a financial crisis in enterprises with the threat of their further bankruptcy. with this in mind, the implementation of investment projects by small enterprises at the expense of borrowed funds should provide for a preliminary evaluation of the borrowed potential of investment activity of these enterprises. it should be noted that the borrowed potential of investment activity of enterprises characterizes their ability to use certain amounts of borrowed financing of this activity while ensuring appropriate levels of effectiveness of this activity and financial stability of the enterprises. evaluation of the borrowed potential of investment activity of the enterprise requires the implementation of the following main phases: 1) creating a block of input information necessary for such evaluation (in particular, information on the available volume and structure of borrowed capital of the enterprise, the expected amount of earnings before interest and taxes, indicators of investment projects considered by the enterprise for their possible implementation, etc); 2) predicting the flow of earnings of the enterprise before interest and taxes in the case of the implementation of its planned investment projects (such predictions should be performed on a moderately pessimistic estimate of the expected profit); 3) establishing the maximum possible amount of borrowed financing of investment activity of the enterprise, at which the expected flow of future profits of the enterprise will allow to pay interest on borro wings timely and in full and repay their principal amount; 4) evaluating the predictive economic efficiency of borrowed financing of investment activity of the enterprises. the use of the described sequence of assessing the borrowed potential of investment activity of small enterprises in the practice of their activity will increase the degree of validity of financial and investment decisions made by the owners of these enterprises. 5. indicators for evaluating the level of use of the financial potential of investment activity of small enterprises the value of the available financial potential of investment activity of small enterprises is often less than the value of their investment potential. this is due, in particular, to the limited capacity of domestic sources of funds and the difficulties associated with obtaining bank borrowings by enterprises. under such conditions, indicators for evaluating the level of use of the financial potential of investment activity of small enterprises can be divided into two groups: general and partial. the general indicators, first of all, should include the following: 1) the share of the actual volume of realization of the available financial potential of investment activity of enterprises in the amount of this potential; 2) the share of the available financial potential of investment activity of enterprises in the amount of their investment potential; 3) the share of the actual volume of realization of the available financial potential of investment activity of enterprises in the amount of their investment potential. the third indicator is the product of the previous two. with regard to partial indicators for evaluating the level of use of the financial potential of investment activity of small enterprises, these indicators are similar in design to general indicators but are calculated by individual areas of investment or by certain sources of financial support for investment activity of business entities. in particular, it is possible to allocate shares of: 1) the actual volume of realization of the available potential of attraction of internal financial resources of the enterprise for carrying out its investment activity in the total value of this potential; 2) the actual volume of realization of the available potential of replenishment of own capital at the expense of external sources of financing of the enterprise for carrying out its investment activity in the general size of this potential; 3) the actual volume of realization of the available potential of the enterprise to obtain borrowings for the purpose of its investment activity in the total amount of this potential. also, the indicators of the impact of such a level on each of the components of this potential on the overall degree of its use should be included in the partial indicators for evaluating the level of use of three seas economic journal 108 vol. 2 no. 1, 2021 the financial potential of investment activity of small enterprises. 6. empirical analysis: the case of small enterprises in ukraine in order to evaluate the level of use of the financial potential of investment activity of small enterprises in ukraine, fifty enterprises were selected. these enterprises belonged to two types of economic activity, namely – trade and provision of household services to the population. at the same time, according to the level of investment activity, all enterprises were divided into four groups as follows: enterprises with a low level of this activity (during 2019, the growth rate of total assets did not exceed 1.05); enterprises with a satisfactory level of investment activity (during 2019, the growth rate of total assets was in the range from 1.05 to 1.2); enterprises with a sufficiently high level of investment activity (during 2019, the growth rate of total assets ranged from 1.2 to 1.4); enterprises with a high level of investment activity (during 2019, the growth rate of total assets exceeded 1.4). results of evaluation of investment activity and level of use of the financial potential of investment activity of small enterprises of ukraine, which trade and provide household services, are presented in table 1 and table 2, respectively. according to the data given in tables 1 and 2, the largest share for both studied economic activity is of enterprises with low and satisfactory level of investment activity. at the same time, with the growth of investment activity, the average level of use of the available financial potential of investment activity of enterprises increases (this conclusion is confirmed by the results of the analysis of variance). a study of the factors that led to incomplete use of the available financial potential of investment activity of enterprises has been also conducted (the possibility of simultaneous action of each of the factors has been considered). the study confirms that the reasons for this phenomenon are, first of all, the lack of the table 1 results of evaluation of investment activity and level of use of the financial potential of investment activity of small ukrainian enterprises in trade titles of indicators the value of indicators by groups of enterprises according to the level of their investment activity low level satisfactory level sufficiently high level high level 1. the number of enterprises in the group 7 9 6 4 2. the share of enterprises of the corresponding group in the total number of enterprises, % 26.92 34.62 23.08 15.38 3. the average growth rate of total assets during 2019 according to the balance sheets, times 1.02 1.13 1.27 1.48 4. the average level of use of the available financial potential of investment activity in 2019, the share of the unit 0.28 0.47 0.68 0.80 5. the share of enterprises in the total number of enterprises of the relevant group, in which the main reason for incomplete use of the available financial potential of investment activity in 2019 is: 5.1. insufficient competence in evaluating the investment potential of the enterprise, % 60.00 44.44 75.00 50.00 5.2. insufficient competence in attracting financial resources to finance investment activity, % 80.00 66.67 37.50 25.00 table 2 results of evaluation of investment activity and level of use of the financial potential of investment activity of small ukrainian enterprises in providing household services to the population titles of indicators the value of indicators by groups of enterprises according to the level of their investment activity low level satisfactory level sufficiently high level high level 1. the number of enterprises in the group 7 9 5 3 2. the share of enterprises of the corresponding group in the total number of enterprises, % 29.17 37.50 20.83 12.50 3. the average growth rate of total assets during 2019 according to the balance sheets, times 1.01 1.17 1.30 1.47 4. the average level of use of the available financial potential of investment activity in 2019, the share of the unit 0.35 0.53 0.66 0.85 5. the share of enterprises in the total number of enterprises of the relevant group, in which the main reason for incomplete use of the available financial potential of investment activity in 2019 is: 5.1. insufficient competence in evaluating the investment potential of the enterprise, % 57.14 55.56 80.00 66.67 5.2. insufficient competence in attracting financial resources to finance investment activity, % 71.43 66.67 60.00 33.33 three seas economic journal 109 vol. 2 no. 1, 2021 appropriate level of competence in assessing the investment potential of the enterprise and attracting financial resources to finance investment activity in managers of the enterprises under study. 7. conclusions the mechanism of formation of the financial potential of investment activity of the enterprises, in particular small businesses, is complex and multifaceted. therefore, the implementation of this mechanism in the practice of business entities requires the preliminary selection of all its main components and the establishment of relationships between them. in particular, it is expedient to allocate the available, aggregate and long-term financial potential of investment activity. the general, effective and optimal varieties of this potential are distinguished. the main feature of the formation of the financial potential of investment activity of the small businesses lies in the fact that this potential is at the intersection of two other types of their economic opportunities, namely – investment potential and the potential for financial resources to finance investment activity of firms. in particular, both the investment potential and the potential of the enterprise to receive financial resources to finance its investment activity have several components and varieties. the main components of the investment potential of economic entities include the potential of investing in: modernizing the technical and technological base of the enterprise, expanding the production of existing products, development and production of new products, staff development, working capital and more. the use of the results of the study in the practice of small enterprises will allow their owners to identif y and implement reserves to increase the financial potential of investment activity. also, the results obtained in the study provide an opportunity to assess the level of use of the financial potential of investment activity of small businesses and identif y areas for improvement of this level, which is especially relevant in the pandemic covid-19. the evaluation of the impact of the capital structure of small enterprises on the value of the financial potential of their investment activity requires further research. references: adenugba, a. a., ige, a. a., & kesinro, o. r . (2016). financial leverage and firms’ value: a study of selected firms in nigeria. eur. j. res. reflect. manag. sci., vol. 4, pp. 14–32. akinleye, g. t., & olarewaju, o. o. (2019). credit management and profitability growth in nigerian manufacturing firms. acta univ. danub. oecon., vol. 15, pp. 445–456. bhalli, m., hashmi, s., & majeed, a. (2017). impact of credit constraints on firms growth: a case study of manufacturing sector of pakistan. j. quant. method., vol. 1, pp. 4–40. bondinuba, f. (2012). exploring the challenges and barriers in accessing financial facilities by small and medium construction firms in ghana. civ. environ. res., vol. 2, pp. 25–35. hoque, m. a. (2017). impact of financial leverage on financial performance: evidence from textile sector of bangladesh. iiuc bus. rev., vol. 6, pp. 75–84. iqbal, u., & usman, m. (2018). impact of financial leverage on firm performance: textile composite companies of pakistan. seisense j. manag., vol. 1, pp. 70–78. jaramillo, j., sossa, j. w. z., & mendoza, j. l. o. (2019). barriers to sustainability for small and medium enterprises in the framework of sustainable development – literature review. bus. strategy environ, vol. 28, pp. 512–524. javed, z. h., rao, h. h., akram, b., & nazir, m. f. (2015). effect of financial leverage on performance of the firms: empirical evidence from pakistan. spoudai j. econ. bus., vol. 65, pp. 87–95. krasniqi, b. a. (2010). are small firms really credit constrained? empirical evidence from kosova. int. entrep. manag. j., vol. 6, pp. 459–479. olugbenga, s., & mashigo, p. (2017). the impact of microfinance on microenterprises. invest. manag. financ. innov., vol. 14, pp. 82–92. rostamkalaei, a., & freel, m. s. (2016). the cost of growth: small firms and the pricing of bank loans. small bus. econ., vol. 46, pp. 255–272. tambunan, t. (2019). recent evidence of the development of micro, small and medium enterprises in indonesia. j. glob. entrep. res., vol. 9(18), pp. 1–15. upadhyaya, a. s. (2011). micro finance in sustainable development: a descriptive study on indian experience. j. econ. dev., vol. 13, pp. 72–88. yang, w. (2018). empirical study on effect of credit constraints on productivity of firms in growth enterprise market of china. j. financ. econ., vol. 6, pp. 173–177. yemelyanov, o., kurylo, o., & petrushka, t. (2018). methodological principles of evaluating economic potential of industrial enterprise sustainable development. scientific bulletin of polissia, vol. 2(14), pp. 141–149. yemelyanov, o., symak, a., & zarutska, o. (2016). modelling the process of forming the potential of economic development of an industrial enterprise. periodyk naukowy akademii polonijnej, czestochowa, akademia polonijna w czestochowie, vol. 3, pp. 128–137. three seas economic journal 53 vol. 2 no. 1, 2021 corresponding author: 1 uzhgorod national university, ukraine. e-mail: viktoria.mashkara@uzhnu.edu.ua orcid: https://orcid.org/0000-0002-1725-2832 2 uzhgorod national university, ukraine. e-mail: yuriy.mayboroda@uzhnu.edu.ua orcid: https://orcid.org/0000-0002-9137-0941 doi: https://doi.org/10.30525/2661-5150/2021-1-9 trade policy of the european union and the united states of america under the covid-19 pandemic viktoriya mashkara-choknadiy1, yuriy mayboroda2 abstract. the pandemic of covid-19 has influenced all sectors of social life, including the global economy and trade relations. the year of 2020 was marked with significant changes in internal and foreign economic policy of almost all nations. the purpose of the paper is to study the measures taken by the eu and the usa as the world's leading economies to regulate their foreign trade in the global crisis caused by the covid-19 pandemic. the tasks of the study are to show the influence of the crisis on changes of global trade policy in front of the threat to national security. methodology. the study is based on the results of statistical analysis of data provided the wto and the unctad. the authors show an analytical assessment of the foreign trade indicators of the eu and the usa. methods of comparison and generalization were used to formulate conclusions on regulatory trends in foreign trade of the us and the eu. results allowed identifying specific features and changes in the regulation of foreign trade of the eu and the us, assessing the impact of the pandemic on their foreign trade. it was found that both mentioned players of the world economy have actively introduced both deterrent and liberalization measures during 2020, which were aimed at providing the domestic market with scarce covid-related goods. the study shows the transition from export restricting to import liberalizing measures in foreign trade policies from the start of pandemic to the late 2020. practical implications. understanding and predicting the possible actions of partners (the us and the eu in this case) in the field of foreign trade regulation is an important practical aspect, which has to be taken into account when developing ukraine's foreign trade policy. value/originality. the study of foreign trade policy of the world's leading countries allows us to understand the behavior of governments of the countries that are largely dependent on participation in international trade in their development, to draw conclusions about the most common instruments of foreign trade policy in the time of humanitarian and economic crises. key words: pandemic, crisis, foreign trade, foreign trade regulation, liberalization, protectionism, export, import. jel classification: f13, f14, f52 1. introduction the global crisis caused by the pandemic of the unexplored virus has significantly affected the economies of almost all countries, affecting all spheres of public life, including international trade. the first signs of the trade downturn were already evident in january, with most of the major economies recording negative trends. still, the sharpest drop in international trade occurred in the second quarter of 2020, with global merchandise trade falling by more than 20 per cent relative to the same quarter of 2019 (unctad, 2021). in the current context of a real threat to the health and security of nations, governments around the world make decisions aimed primarily at solving two main tasks: the first – ensuring the health of nations, and the second – maintaining the stability of the national economy and minimizing economic losses. the study of measures in the field of foreign trade aimed at ensuring these objectives is the purpose of this study. to achieve this goal, the following tasks have been identified: to analyze the general changes in the foreign trade policy of states in a pandemic with an emphasis on covid-related goods; to study the peculiarities of the foreign trade policy of developed countries in modern conditions, in particular the eu and the usa; to assess the effectiveness of the implemented measures in the overcoming of the three seas economic journal 54 vol. 2 no. 1, 2021 consequences of the pandemic and the impact of their introduction on trade and economic relations with partners. 2. general characteristics of changes in the regulation of foreign trade under the covid-19 pandemic the general functions of foreign trade regulation include adjusting the conditions of access to domestic markets for foreign goods (either to protect domestic production or fill the domestic market with scarce goods, or both), and the realization of export opportunities of domestic producers and their advantages in the world market. however, the role of foreign trade policy during the coronavirus crisis, according to experts of the world trade organization, should be aimed primarily at facilitating access to critical medical products and raw materials for their manufacture, preventing restrictions on access to such goods to poor countries; supporting exporters to maintain jobs and foreign exchange earnings; simplification of regulatory and customs procedures to facilitate access to covid-related goods and food (world bank group, 2020). at the same time, the application of export taxation or banning the export of medical goods in order to "keep" them in the domestic market is considered as undesirable. changes in trade policy were among the first steps taken by the governments in the first months of the pandemic, as most of them have activated their interference in export-import activities. thus, in may 2020, three months after the beginning of the pandemic, the w to reported the introduction of restrictions on the export of medical goods by 85 countries (world bank group, 2020). the foreign trade policy of almost all countries has undergone two key changes: the abolition or reduction of restrictions on food imports and the growth of restrictions on exports of medical goods. the depth and dynamics of the application of measures depends on the severity of the situation in the medical sphere of the country and the state of the internal market of a particular product (shortage or surplus), the country 's dependence on export earnings and commitments, i.e. involvement in various trade agreements. it is obvious and predicted that the active application of bans on the export of protective medical goods has significantly affected their price. thus, according to the wto data, the global price of masks and protective clothing increased by 22% and 20%, respectively (evenett et al., 2020). as for the direction and combinations of measures, there are cases of applying either export restrictions or import supporting, but for the most part countries are using both combining them. in particular, in 2020 the most used measures were: restrictions, bans or additional control measures on the export of medical devices (overalls, masks), vaccines and components for their manufacture; reduction of duties or temporary exclusion from the restriction of imports of the above goods, accelerated licensing procedures; physical ban on imports of industrial goods not related to the protection of public health (clothing, cosmetics) that are not critical to the domestic market; restricting food exports and tightening sanitary control procedures. generalization of the data provided by evenett et al., (2020) makes it possible to conclude: 1) during 2020, especially in the first half of it, the states applied various combinations of measures somewhat chaotically and unsystematically. however, by the end of the year, it became clear that most governments were inclined to take measures to liberalize trade in health-related goods and foods; 2) as for the trade in medical goods and food as the main sectors covered by new measures – 32 percent in the total number of measures were those that promote trade in medical goods and 32 percent were restricting it, 16 percent concerned food trade bans and 19 percent liberalized trade in foods; 3) regulatory measures covered about $ 200 billion medical goods and $ 81 billion food; 4) quantitatively, measures to liberalize imports exceed measures that restrict exports; 5) in the regional context, the countries of south asia were the most active in application of measures aimed at facilitating food trade, and the most of the measures promoting the import of medical goods were introduced by the countries of east asia and the pacific region; 6) western europe, the balkans and central asia are the regions with the most active application of export bans. in some high-income countries, and in those in which pharmaceutical concerns-developers of vaccines against covid-19 have succeeded in this direction, the phenomenon of "vaccine nationalism" appeared. vaccine nationalism occurs when governments sign agreements with pharmaceutical manufacturers to supply their own populations with vaccines ahead of them becoming available for other countries (khan, 2021). countries contracted to purchase vaccines from different developers even before the tests were completed, thus booking several doses of vaccines from different manufacturers for each of their citizen. so, rich countries with just 16 percent of the world’s population have bought up 60 percent of the world’s vaccine supply. many of these countries aim to vaccinate 70 percent of their adult population by midyear in pursuit of herd immunity (kretchmer, 2021). further, governments seek to conclude priority bilateral agreements with developers of effective vaccines to ensure that their citizens have priority access to vaccines, thus preventing the world's three seas economic journal 55 vol. 2 no. 1, 2021 least developed countries from vaccinating citizens and, in effect, preventing covax collaboration to ensure equal access to vaccines to the rest of the world. the world health organization, the world forum and other international institutions and some experts emphasize the harmfulness of this approach and warn that the economic losses from the vaccine isolation of underdeveloped countries will primarily affect developed countries. according to the data (international chamber of commerce, 2021) if advanced economies continue to prioritize vaccination of their susceptible populations without ensuring equitable vaccination for developing economies, the total cost to the world varies between us$ 1.5–9.2 trillion. although the world trade organization monitors and records both measures regulating the export of vaccines and other instruments affecting cross-border flows of pandemic-related goods and publishes the list covid-related measures on its website (world trade organization, 2021) the organization has taken a position to criticize unfair practices. it does not affect their application directly and does not take any action to eliminate them, nor does it oblige its members to notify the implementation of such measures. 3. the us trade and foreign trade policy in the pandemic shifts in international trade are reflected in us foreign trade performance. the government's active policy of promoting the import and export of medical supplies, together with rising world prices for this group of goods, could not but affect the us trade balance. some studies (leibovici, santacreu, 2020) point to the fact that, that usually in times of crisis and depression, imports decline faster than exports, which in turn causes a reduction in the trade balance (growth in trade deficit). thus under the great depression in us exports fell by 24.6 percent and imports by 34.3 percent. in the first part of 2020 exports of u.s. goods dropped by almost 25 percent, while imports of goods dropped by about 17 percent, so that by june 2020, the u.s. trade deficit in goods had increased to $50.7 billion (by 20 percent). the share of medical goods in us imports was only 0.7 percent at the beginning of the pandemic, while the trade deficit in the medical goods sector was 0.34 billion dollars out of 42 billion total deficit, which is less than 1 percent. as of june 2020, imports of medical goods to the united states more than tripled to 5.42 billion, the share of medical goods in imports increased from 0.7 percent in january to 2.5 percent, the trade deficit in medical goods increased to 3.9 billion (by 1049 percent). given that the gap between us exports and imports between january and june increased by 8.66 billion (from 42.04 to 50.7 billion dollars), and the increase in the deficit in trade in medical goods was 3.9 billion, it is obvious that the us trade deficit by more than 40 percent was formed by the trade deficit in medical goods (leibovici, santacreu, 2020). along with the increase in imports of medical goods, sales of us expert products like fuel, cars, and clothing have decreased significantly, reflecting the global trend. according to unctad, in 2020 world energy exports decreased by 35 percent, car exports – by 26 percent. the "economic nationalism" in trade regulation has been justified by the threat to national security and was reflected in the actions of the american government. first president trump and later president biden have applied defense production act for stimulation of internal ppe (personal protective equipment) production and provision of vaccines for citizens. this act was adopted in 1950 by president truman and allows the us government to apply special measures to support domestic producers in the face of threats to national security (and this definition includes both external military threat and internal threats – terrorist acts, natural disasters, etc.). the act authorizes the president to require companies to prioritize government contracts and orders seen as necessary for the national defense, with the goal of ensuring that the private sector is producing enough goods needed to meet a war effort or other national emergency. it also authorizes the president to use loans, direct purchases and other incentives to increase production of critical goods and essential materials (selsky, 2021). if these measures have a temporary effect, they will help to address the issue of internal shortages of goods. however, the duration of their action will cause a highdegree influence on global competition as may be used as a measure of protectionism for artificial support of non-viable industries. the impact of the pandemic on the us-china trade relations is of greatest interest. in january 2020, the parties have signed the so-called phase one deal agreement, under which they agreed on significant reduction of tariffs in mutual trade, decided to restore mutual obligations, in particular in the field of technology transfer and intellectual property relations (wong, chipman, 2020). according to the agreement, the united states and china decided to expand trade, under which china undertook to increase purchases of agricultural and energy products from the united states. however, during 2020, experts raised two questions – whether china will be able to continue to meet its obligations in the crisis and whether it will not use force majeure circumstances to review the agreement, and whether the united states can supply the right amount of products in the current conditions (emerson et al., 2020). given that none of the countries has yet expressed its claims, it is clear that apparently the three seas economic journal 56 vol. 2 no. 1, 2021 trade conflict between the united states and china in a pandemic has become latent. both sides have adopted a number of easing of existing restrictions. in particular, china has granted temporary tariff exemptions for medical devices provided by the us government or manufactured by certain us state-owned enterprises that were previously imposed in response to additional duties applied by the united states. the united states has also adopted a number of exemptions from trade restrictions imposed on china, most of them – only for medical goods (plastic and rubber medical devices, plastic medical utensils, protective clothing, shoes and face masks). however, the us government has rejected china's requests for deeper concessions on the abolition of tariffs, so the trade dispute is far from being resolved. the multibillion-dollar customs revenue from taxing chinese imports is an another reason to keep the us government from revising the restrictions. according to the us treasury, tax revenues increased by 73 percent, to a total of $33.9 billion in the first half of 2019 compared to the same period in 2018 (and after 10 months of customs duties on china in action) (cnbs, 2019). during the year of the health crisis, only those sectors directly related to the protection of the population from the viral threat underwent changes in mutual trade between the united states and china, and mutual concessions did not significantly change the tense of trade relations. since the phase one agreement in force, china's average tariff on us goods has fallen slightly from 21.2 to 20.7 percent, and the level of tariff protection for the us economy from chinese exports has not changed at all (19.3 percent). at the same time, china's average import tariff relative to other countries is 6 percent, while the us average tariff relative to other countries is 3 percent (bown, 2021). summarizing the data of the wto report on measures introduced by the united states in 2020 (data do not take into account measures related to vaccines export), show that most of them relate to the promotion of imports of covid-related goods through the abolition or reduction of duties, deferred payment of duties, export control over covid-related export. 4. foreign trade policy of the european union under the covid-19 pandemic foreign trade is an important factor of the european union’s prosperity and determines europe's leading position in the international arena. the eu conducts about 15% of world trade in goods and is the world's largest exporter of industrial goods, of high-quality and high-tech products (eurostat, 2020). the common trade policy of the 27 member states allows the eu to remain a leading player in the world, adhering to the principles of transparency, proportionality, openness and unity. for example, tariffs on imports of eu industrial goods are among the lowest in the world. imports from many suppliers of industrial products to the eu enter the bloc at reduced rates under the terms of bilateral agreements or other import duty suspensions, like the generalised scheme of preferences. at the same time, in response to tariff restrictions on the part of the world's major trading players, the eu's foreign trade is characterized by a fairly high degree of non-tariff barriers to trade, such as technical barriers to trade or sanitary and phytosanitary measures (european commission, 2021). nevertheless, the first months of the covid-19 crisis revealed the most vulnerable points in the eu's foreign trade policy, so that the main principles of it have been severely criticized. the crisis was noticeable not only in extra-eu trade, but also in the internal markets of the eu with a reduction in domestic production, weakening of strategic industries and break of established supply chains. in the spring of 2020, there was a shortage of covidrelated goods, primarily masks, medicines and medical equipment, on the eu internal market. this was due to the rapid growth in demand for this group of goods, export restrictions of third countries and insufficient production capacity in this area, but also the internal ban on member states to export covid-related goods to other members of the union (hervé, 2021). the statistical data on the trade in covid-19 related products between the first semester of 2019 and the first semester of 2020 show that the growth rates for imports were highest for protective garments (+187 percent), sterilization products (+ 73 percent) and oxygen equipment (+28 percent). in exports, the growth rates were the highest for sterilization products (+24 percent), diagnostic testing equipment and medical consumables (+ 13 percent both) (eurostat, 2021). according to eurostat, the united states, china and switzerland were the eu's main trading partners for covid-19 related products =. the united states was the main partner for exports, china – the leading importer. thus, imports of these groups of goods from china increased from eur 1.5 billion in may, 2019 to eur 8.5 billion in may, 2020. this was primarily due to growing european demand for protective garments from china. exports to the united states for these groups of goods increased from eur 4 billion in march 2019 to eur 8 billion in march 2020. the medical consumables and diagnostic testing equipment were the main commodity items of exports to the united states. the eu's foreign trade, like the foreign economic sphere of most countries, has undergone significant changes in 2020. according to eurostat, the annual three seas economic journal 57 vol. 2 no. 1, 2021 decline in exports of goods was -9.4percent and -11.6 percent in imports. the covid-19 pandemic hit trade hardest between march and april with exports falling from eur 176 billion to eur 125 billion and imports falling from eur 148 billion to eur 125 billion (eurostat, 2021). nevertheless, the foreign trade balance of eu goods in 2020 was in surplus and amounted to eur 217 billion, which is eur 26 billion more than in 2019. at the same time, there was a sharp decrease in exports and imports compared to 2019 for the following main product groups: machinery & vehicles (-12 percent), other manufactured products (-10 percent) and in particular energy (-40 percent). at the same time, changes in the eu's foreign trade did not affect trade in chemicals, food & drink, raw materials (there was only a few percent drop in imports of these items) (eurostat, 2021). in these circumstances, the eu called on member states to make careful use of existing instruments of influence in foreign trade policy, in particular those relating foreign investment in health infrastructure or essential supplies. for instance, the european union encouraged international exchange where it might contribute to its public health interests. this was reflected in the commission's decision to suspend customs duties and vat on masks, protective equipment, test kits and medical devices at the beginning of april (hervé, 2021). the vaccine trade is the most delicate aspect of regulation. the european union has been accused of "vaccine nationalism" because of the intent of blocking vaccine exports to britain. the european commission has added new criteria for obtaining a permit to export vaccines – the principles of reciprocity and proportionality. this will take into account the stock of medicines in the importing country, the existence of export restrictions on vaccines or raw materials for their production in this country, the degree of vaccination of the population and the epidemiological situation in general. at the same time, the eu will not stop exporting vaccines, especially to underdeveloped countries, while remaining the world's largest exporter of vaccines (chalmers, abnett, 2021). in general, the eu applied the following measures regulating the its foreign trade under the pandemic (world trade organization, 2021): 1. export restrictions – primarily concerns temporary restrictions of exports of covid-19 related products (like face masks and medical protective equipment) to destinations outside the eu, increase in export bans on medicines within the internal market by the state-members and еxport authorisation of covid-19 vaccines, both for internal market, and for participating countries. 2. import liberalizing measures – relief from import duties and vat exemption for goods needed to combat the effects of the covid-19, implementation of "green lane" border crossings for land (road and rail), sea and air transport to protect health and ensure the availability of goods and essential services, flexibilities provided by the existing eu public procurement framework in emergency situations, measures supporting the essential transport flows, simplifications of customs provisions relating to the customs decision-making process, customs procedures and customs formalities, measures on the optimal and rational supply of medicines, reduced import rate of covid-19 in vitro diagnostic medical devices and services closely linked to those devices, an exemption of vat for covid-19 vaccines. with regard to foreign trade cooperation, the eu demonstrates a balanced approach and selection of the optimal form of mutual trade with major partners, based on the principles of solidarity and mutual support. thus, in december 2020, the eu signed a new investment agreement with china, which last year became the union's main trading partner, displacing the united states. the eu leaders also talk about the possibility of revival of a transatlantic free trade due to closer cooperation with the united states. in turn, the establishment of mutually beneficial trade relations with the united kingdom remains one of the main strategic tasks in the eu trade policy. the signing of the trade and cooperation agreement with the united kingdom in december 2020 demonstrated the union's flexibility and willingness to compromise on relations with countries that are not members of the common market (hervé, 2021). in 2020 the eu took measures aimed primarily at filling the domestic market with strategically necessary covid-related goods. in february, 2021 the european commission suggested a new strategy of trade policy, which includes tougher tools to protect the internal market eu in response to unfair trade practices by the eu's main trading partners (primarily the us and china). at the same time, the european community strives to preserve the strategic autonomy and integrity of the single internal market, basing on the openness of foreign trade principle. at the same time, the eu will monitor major trading players around the world for transparency and fairness and will work to revive the wto as the main platform for resolving disputes in international trade. 5. сonclusions the case of the modern pandemic is unprecedented from the point of view of the application of instruments of foreign trade regulation. the priority of foreign trade policy in 2020 was to provide the domestic market with critical goods – medical equipment, pharmaceuticals and raw materials for their production. the threat to national security has forced governments three seas economic journal 58 vol. 2 no. 1, 2021 to take tough decisions, especially in regulating trade in medical goods and vaccines. trade conflicts between countries, aggravation of relations between members of integration groups, even competition between regions and administrative units of countries have become widespread. the vaccination nationalism appeared as a new case of interfering national governments into foreign trade. as a study of measures undertaken by governments at the start of pandemic show, most economies applied strict restrictions of covid-related export combined with some liberalization of imports. later active measures to curb the export of goods have been replaced by the liberalization of trade in these goods as a necessary step in ensuring access to critical covid-related goods in a pandemic crisis. the us government has applied defense production act for stimulation of internal ppe combined with temporary tariff reductions for medical exports, including those from china. however, neither the ease of trade restrictions related to china, nor the so-called phase one deal agreement between the usa and china have sufficiently changed the “close-to-trade war” relations between the parties. as to the trade measures applied by the european union, a wide range of non-tariff measures were undertaken to fill the lack of covid-related goods, which proves the status of the union a as trade partner which uses non-tariff (especially technical) instruments for regulating the foreign trade in a broad scale. references: bown, c. p. (2021, march 16). us-china trade war tariffs: an up-to-date chart. available at: https://www.piie.com/research/piie-charts/us-china-trade-war-tariffs-date-chart chalmers, j., & abnett, k. (2021, march 9). eu rejects accusations of 'vaccine nationalism'. reuters. available at: https://www.reuters.com/article/us-health-coronavirus-eu-michel-iduskbn2b11ym cnbs (2019, august 2). here’s why us importers and consumers pay trump’s tariffs, not china. available at: https://w w w.cnbc.com/2019/08/02/heres-w hy-us-impor ters-and-consumers-pay-tr umps-tarif fs-not china.html emerson, e. c., o'sullivan, d., hirsbrunner, s., weiss, j. g., cao, h., bao, y., & nelson, j. (2020, march 25). what you need to know about the impact of covid-19 on international trade. steptoe. available at: https://www.steptoe.com/en/news-publications/what-you-need-to-know-about-the-impact-of-covid-19-oninternational-trade.html european commission (2021, march 23). goods and services. available at: https://ec.europa.eu/trade/policy/ accessing-markets/goods-and-services/ eurostat (2020, october). international trade in goods. available at: https://ec.europa.eu/eurostat/statisticsexplained/index.php/international_trade_in_goods eurostat (2021, march). eu trade in covid-19 related products. available at: https://ec.europa.eu/eurostat/ statistics-explained/index.php?title=eu_trade_in_covid-19_related_products#china.2c_the_united_ states_and_switzerland_largest_trade_partners_for_covid-19_related_products eurostat (2021, march). impact of covid-19 on international trade by product group. available at: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=impact_of_covid-19_on_international_ trade_by_product_group eurostat (2021, march). international trade in goods. available at: https://ec.europa.eu/eurostat/statisticsexplained/index .php/international_trade_in_goods#eu_trade_in_2020_strongly_impacted_by_the_ covid-19_pandemic evenett, s., fiorini, m., fritz, j., hoekman, b., lukaszuk, p., rocha, n., ruta, m., santi, f., & shingal, a. (2020). trade policy responses to the covid-19 pandemic crisis: evidence from a new data set. policy research working paper, 9498. available at: https://cadmus.eui.eu//handle/1814/69107 hervé, a. (2021, february 18). the european trade policy in the time of covid-19: adaptation or change of paradigm? robert schuman foundation. available at: https://www.robert-schuman.eu/en/european-issues/0581the-european-trade-policy-in-the-time-of-covid-19-adaptation-or-change-of-paradigm international chamber of commerce (2021, january 25). study shows vaccine nationalism could cost rich countries us$4.5 trillion. available at: https://iccwbo.org/media-wall/news-speeches/study-shows-vaccine-nationalismcould-cost-rich-countries-us4-5-trillion/ khan, a. (2021, february). what is ‘vaccine nationalism’ and why is it so harmful? al jazeera. available at: https://www.aljazeera.com/features/2021/2/7/what-is-vaccine-nationalism-and-why-is-it-so-harmful kretchmer, h. (2021, january). vaccine nationalism – and how it could affect us all. world economic forum. available at: https://www.weforum.org/agenda/2021/01/what-is-vaccine-nationalism-coronavirus-its-affectscovid-19-pandemic/ leibovici, f., & santacreu, a.-m. (2020). the dynamics of the u.s. trade deficit during covid-19: the role of essential medical goods. economic synopses, 41. https://doi.org/10.20955/es.2020.41 selsky, a. (2021, january 23). ap explains: how is the defense production act relevant? ap news. available at: https://apnews.com/article/joe-biden-government-contracts-archive-contracts-and-orders-coronaviruspandemic-bbb0f14dd5032760657c563565ecfe06 three seas economic journal 59 vol. 2 no. 1, 2021 unctad (2021). key statistics and trends in international trade 2020. available at: https://unctad.org/system/ files/official-document/ditctab2020d4_en.pdf wong, d., & chipman a. (2020, august 25). the us-china trade war: a timeline. china briefing. available at: https://www.china-briefing.com/news/the-us-china-trade-war-a-timeline/ world bank group (2020). trade policy responses to covid-19. available at: https://www.wto.org/english/ tratop_e/devel_e/a4t_e/wbg_presentation_trade_policy_response_covid19_updated.pdf world trade organization (2021, march 26). covid-19: measures affecting trade in goods. available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm is based on unofficial sources and is for informational purposes only baltic journal of economic studies 27 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-5 traffic forecasting on the city road net work taking into account the capacity limit denys zhezherun1 abstract. the purpose of the paper is to present a model of traffic forecasting on the road section based on a model of the transport system. traffic forecasting is an integral part of the road design process, from investment to the feasibility study of working documentation. the definition of transportation and distribution of cars by sections is based on a set of interrelated factors. full and reasonable consideration of these factors for complex road networks is possible only with the help of mathematical models and appropriate programs. the accuracy and consistency of the forecast determine the reliability of almost all the main characteristics of the projected object, from the direction of the route and the location of connection points with existing elements of the road network, ending with specific planning decisions for the road objects. subject of research: a road traffic and a traffic intensity. knowledge of forecast data on traffic intensity makes it possible to predict the possible mechanisms to solve the above problems. methodology: analysis and research of methods used to predict traffic volumes. the method of extrapolation and the method of using approximating functions. goal. the aim of the work is to compare the forecasting methods used to determine traffic on the road. it is also necessary to show the experience of traffic forecasting on the road network from a european country. conclusion. all methods for predicting the volume and intensity of movement are shortlived, and if some achieve the desired predicted result, it is very vague and needs to be tested with complex and expensive research to determine and process the initial data. to achieve the desired results, it is necessary to apply new methods of forecasting modeling or improvement of already known ones, which would take into account the evolution of the entire transport system and its components. determining the capacity of highways is necessary perform to identify areas with possible congestion, assessment economy and conditions of movement of vehicles, and also for a choice of methods and means to improve the traffic conditions of all road users. key words: traffic forecasting, road traffic, traffic intensity, transport system, road network. jel classification: r41, o18, l90 corresponding author: 1 national transport university, ukraine. e-mail: denzhezherun@gmail.com orcid: https://orcid.org/0000-0003-1072-9463 1. introduction the constant growth of traffic causes the relationship of changes in traffic between the key numbers in them. it is not enough to control the knowledge base of the transport system of previous periods and the current state, because you need information about your growth rate for future periods to adequately lay perspective requirements to the road network to ensure its efficient operation. such information may be obtained by applying forecasting methods. to forecast and solve transportation problems, it is necessary to know information about the prospects and dynamics of changes in the main indicators of future traffic. in this case, forecasting is a process of predicting the future state of the road network based on the analysis of the existing, as well as a systematic evaluation of information about the qualitative and quantitative characteristics of development in the future. to date, the depth of the forecast usually does not exceed 1015 years, although transport systems often require 3040 years. it is also important that the forecast is a value that indicates the probability, and as the forecast period increases, its reliability decreases. traffic forecast is a very important element as it determines the demand for transport in the future, in relation to the current state and possible scenarios for the development of the network road. data obtained from traffic analysis is used not only in the study efficiency of the network enriched with new elements (capacity, transport performance), performance parameters such as travel speed and impact on safety, but also for environmental analyzes and evaluation of the economic efficiency of investments. determining the capacity of highways is necessary perform to identify areas with possible congestion, assessment economy and conditions of movement of baltic journal of economic studies 28 vol. 2, no. 2, 2021 vehicles, and also for a choice of methods and means to improve the traffic conditions of all road users. ensuring high transport and operational qualities roads and traffic safety on them should be considered as the priority of road organizations. 2. the street and road network the street and road network is a system of transport and pedestrian connections between the elements of the planning structure of the city and parts of its territory, which is intended for the organization of traffic and pedestrians, laying of utilities and landscaping. the planning structure of the street and road network is the basis for the planning of the city master plan. the principle of its organization is to achieve compactness and save time on movement. the boundaries of the street along its width are determined by red lines, which are set by the master plan of the city. red lines are conditional lines that delimit the territory of existing and projection streets and separate them from other areas of the city. a) the width of the streets for main streets is: – citywide value of continuous traffic – 50-90 m; – citywide value of regulated traffic – 50-80 m; – district significance 40-50 m; b) the width for streets of local significance is 15-35 m; c) width for streets for settlement and rural streets (roads) – 15-25 m. the width of streets and roads is determined by calculation depending on the intensity of traffic and pedestrians, a set of cross-sectional elements (carriageways, technical lanes for laying underground communications, sidewalks, greenery, etc.) (figure 1). city street elements: 1. roadway. 2. sidewalks. 3. strips of greenery. 4. distribution lanes separating opposite directions of traffic. 5. underground engineering networks. 6. ways of rail (tram) transport. 7. devices for regulation of movement. 8. devices for drainage of surface waters. 9. devices for passenger service. planning for the development of the street and road network of cities and settlements, as well as the location of city streets and roads should be carried out based on the urban planning standards, land use and development rules, urban regulations, types of permitted land use and capital construction, urban land plans and based on the location of elements of the planning structure (neighborhoods, other elements). the street and road network of settlements should be formed in the form of a continuous hierarchically built system of streets, city roads and other elements, taking into account the functional purpose of streets and roads, traffic, bicycle, pedestrian and other traffic, architectural and planning organization and nature of construction. figure 1. cross profile of a city street   figure 2. planning structures of the road network: a – free scheme; b – radial; c – radial-circular; d – triangular; e – rectangular; f – rectangular-diagonal   baltic journal of economic studies 29 vol. 2, no. 2, 2021 the planning structure of cities is based on natural conditions: terrain, the availability of costs and climate. 3. traffic intensity intensity is one of the primary indicators that characterize the conditions of flow and is determined by the number of vehicles that have crossed the street or road per unit time. one of its features is that it is variable over time and this change is stochastic, the studied values of intensities can differ significantly during certain hours of the day, days of the week, months of the year and so on. while maintaining the existing growth trends, the intensity sooner or later reaches the level of capacity, which in turn will negatively affect traffic conditions: reduced comfort, congestion, increased road hazard, and so on. all these factors harm human health and cause unforeseen costs to the road sector, increasing the energy intensity of streets and roads. knowledge of forecast data on traffic intensity makes it possible to prevent and find mechanisms to solve the above problems in advance. there are several general methodological approaches to forecasting traffic intensity. methods based on the use of data on the change in traffic intensity for previous years (extrapolation methods): linear law of growth of traffic intensity, which is described by the following equation (forecasting for up to 5 years) n n et p t = 0 100* * , n n p tt =      0 100 * , n n tt a= 0 * , where a is the exponent for traffic intensity forecasting models that use the logistics curve. usually these models are described by such a differential equation dn dt cnmov mov= (pnmov ) , where n movement for traffic intensity, bus/hour; p is a road capacity, bus/hour. this model is used for a long-term forecast for a period of 15–25 years. with the help of these data, it is possible to identify what factors and to what extent they affect the intensity of motion and find out whether there is a connection, and if so, what form (direct, inverse, linear or nonlinear) and what equation can describe it, and to what extent the intensity of movement is prone to fluctuations (changes), regardless of the factors affecting it. such factors include condition, arrangement and improvement of roads; population in the study area; the composition of the traffic flow; geographical and climatic conditions; the presence of places of attraction; density of the road network, etc. methods based on multifactor analysis should be used only in those areas of urban space where data on traffic intensity and factors influencing it have been collected. another method of forecasting is the use of approximating functions. to implement this method, an initial series of static data is required, which is aligned by a graph-analytical or mathematical selection of the analytical function, which allows to approximate the theoretical and static data as much as possible. the presence of such a function, approximating the value of a static series (data), is a simple mathematicalstatic model of the rate of motion. during long-term researches of traffic intensity on the main streets of city importance in cities, the character of change of this indicator is defined. applying the linear law of intensity growth, exponential equations and multifactor analysis, its predicted values for the future period are calculated. 4. the capacity of the road network the capacity of the road network is determined by the maximum number of cars passing through the crosssection in a unit of time – an hour. the capacity of the road network depends on the level of a load of individual highways, the method of traffic regulation at intersections, the proportion of continuous highways, the composition of traffic, the state of coverage and other reasons. however, it should be noted that, considering the movement of cars and assessing the limits of possible flow intensity, we characterize not only them, but also the whole complex of dcre (“driver-car-road-environment”). this can be explained by the fact that the characteristics of vehicles and the driver can have no less impact on throughput than road parameters. the state of the environment can have a great influence on the actual value of capacity. bandwidth especially falls in the rain, fog, snow, ice. the road congestion level is estimated by the ratio of traffic intensity to road capacity. this indicator characterizes the functionality of roads and is complex, as it depends on the parameters of the road, the characteristics of vehicles and the driver, ie is one of the main criteria of a comprehensive system dcre. when the value is close to one, the density of vehicles increases and their speed decreases. the operation of the road in the mode of its capacity is inexpedient and unprofitable, because there is a saturation of traffic flow, congestion is formed, the possibility of changing the lane is significantly complicated and the average speed of traffic is reduced. this method does not analyze individual elements and sections of the highway that can provide the necessary conditions for the movement of vehicles. baltic journal of economic studies 30 vol. 2, no. 2, 2021 it should be noted that the main characteristic of the capacity of the highway is the intersection and adjacency at the same level, as these are the junctions and divisions of traffic flows. these elements of the road are obstacles to traffic, forcing vehicles to slow down or stop completely. ensuring high transport and operational qualities of roads and traffic safety on them should be considered as a priority of road organizations. transport and operational properties of highways are determined by: – speed and cost of transportation; – safety and ease of travel on the road; – bandwidth; – road load level. the main transport and operational indicators of roads, city streets, road structures include: – provided speed and bandwidth; – continuity, convenience and traffic safety; – the ability to drive all types of vehicles with the established standard axial load and total weight. the amount of bandwidth depends on: – number of lanes; – speed of vehicles; – condition of the road surface. the capacity of the road along its entire length is not constant. bandwidth can vary under different conditions: – characteristic complex areas; – non-compliance with regulatory parameters of the road plan and profile; – condition of the road surface; – difficult weather conditions during the year; – variety of vehicles in the stream. the capacity of the highway, taking into account the lanes for traffic and the corresponding factor, is determined by the formula: p p n kn n�� � �� �= * * , pn is a bandwidth of one lane for traffic; n is a number of lanes; kn is a coefficient which depends on lanes. the capacity of one lane of any category of the road is determined by the formula. p s lmin = , s is the length of the road traveled by the vehicle in one year, m; lmin is the smallest distance between vehicles, m. the reference section is a horizontal straight section with a length of at least 1 km without intersections and adjacencies, with a lane width of 3.75 m, fortified roadside, dry and clean and rough surface, visibility of at least 800 m, traffic consists of cars, favorable weather and climatic conditions 5. example of experience in calculating the forecast of road traffic in poland the forecast of the average daily traffic flow until 2020 has been prepared for the sections of the national roads of the lubelskie region in connection with the euroregion bug project. the 1995 traffic was based on data, and then the traffic forecast for 2005 and 2020 was set. we can directly compare forecasts and actual developments in 2005 and 2010. based on data from the gpr team in 1995 and previous years, one of the first forecasts was developed and published in 1997 and the results are presented in the table. fifteen years later, the same firm conducted a study of the actual volume of rust on polish roads. the growth rate of traffic in years was: 1.31 between 1995 and 2000. 1.24 between 2000 and 2005 1.19 between 2005 and 2010. 1.16 between 2010 and 2015. the following is a comparison of 2010 traffic developed by warsaw transproject based on gpr research in 1995. as we can understand, all the above methods of forecasting are not without drawbacks. it seems that the main disadvantage is the difficulty of accurately calibrating the motion model. there is a lack of knowledge about the existing traffic, the behavior of drivers on the roads of vehicles, sources and purposes of traffic, as well as the prospects for development (change) of the road network. the problem is also the difficulty of identifying changes in external conditions (political and economic), which are particularly noticeable in the regions of the schengen border area. table 1 the maximum capacity of roads p max number of lanes maximum bandwidth pmax, bus / h (in terms of cars) in both directions on one lane two-lane 2000 three-lane 4000 highways four-lane 2000 six-lane 2200 eight-lane 2300 baltic journal of economic studies 31 vol. 2, no. 2, 2021 6. conclusions the article presents a model of traffic forecasting on the road section based on the transport system. traffic forecasting is an integral part of the road design process, from investment to the feasibility study of working documentation. the definition of transportation and distribution of cars by sections is based on a set of interrelated factors. full and reasonable consideration of these factors for complex road networks is possible only with the help of mathematical models and appropriate programs. the accuracy and consistency of the forecast determines the reliability of almost all the main characteristics of the projected object, from the direction of the route and the location of connection points with existing elements of the road network, ending with specific planning decisions for the road objects. traffic forecasting determines the demand for transport in the future, in relation to the current state and possible scenarios for the development of the network road. data obtained from traffic analysis is used not only in the study efficiency of the network enriched with new elements (capacity, transport performance), performance parameters such as travel speed and impact on safety, but also for environmental analyzes and evaluation of the economic efficiency of investments. today, all methods for predicting traffic intensity are short-lived, and if some achieve the desired predicted result, it is very vague and requires testing with complex and expensive research to determine and process the initial data. to achieve the desired results, it is necessary to apply new methods of forecasting modeling or improvement of already known ones, which would take into account the evolution of the entire transport system and its components. we can assume conclusions about the forecasting of traffic volumes of european countries, that the table 2 projected movement for 2005-2020 road number section of the road average daily traffic of motor vehicles (vehicle / day) in years 1 995 2005 2020 17 kurów – lublin 11 500 18 000 27 800 lublin – kalinówka 16 700 26 400 36 900 kalinówka – piaski 11 000 18 500 27 300 piaski – krasnystaw 4 300 7 500 11 500 krasnystaw – zamość 5 000 9 100 13 800 zamość – wólka łabuńska 7 000 12 800 18 100 wólka łabuńska – tomaszów lubelski 3 800 7 700 11 300 tomaszów lubelski (przejście) 14 700 24 200 32 700 tomaszów lubelski – bełżec 5 500 12 500 19 700 bełżec – granica państwa 4 000 9 200 15 600 82 piaski – biskupice 4 900 9 200 14 300 biskupice – marynin 3 600 7 200 11 000 marynin – chełm 4 200 8 500 13 600 chełm – granica państwa 2 800 6 500 11 200 łoniów – nagnajów 5 200 8 600 12 800 nagnajów – nowa dęba 4 200 7 400 11 200 9 łoniów – nagnajów 5 200 8 600 12 800 nagnajów – nowa dęba 4 200 7 400 11 200 19 niemce – lublin 8 400 12 300 16 800 lublin – kraśnik 6 500 9 900 14 000 kraśnik – janów lubelski 4 500 6 500 9 800 janów lubelski – nisko 2 900 4 300 6 500 nisko – jeżowe 2 700 4 000 6 000 44 puławy – końskowola 6 600 10 600 15 100 końskowola – kurów 5 200 8 400 12 100 74 maruszów – annopol 3 700 6 000 8 600 annopol – kraśnik 4 300 7 000 10 100 83 sawin – chełm 2100 3 200 4 400 chełm – rejowiec 2 300 3 600 5 400 rejowiec – krasnystaw 3 300 5 100 6 800 84 tarnobrzeg – stalowa wola 2 500 3 800 6 400 stalowa wola – nisko 9 000 12 100 16 000 86 janów lubelski – frampol 1 300 1 800 2 400 baltic journal of economic studies 32 vol. 2, no. 2, 2021 accuracy of forecasts is affected not only by the correct application of new modeling methods, the correctness of mathematical calculations, road conditions or traffic figure 3. comparison of total traffic according to data from the general traffic measurement from 2010 (green) and the forecast data developed by warsaw transprojekt based on gtm in 1995 for the year 2010   intensity. the problem may also be the difficulty of identifying changes in external conditions: political and economic. references: huba, v. v., & savenko, v. ya. (2011) transportno-ekspluatatsiini vlastyvosti avtomobilnykh dorih: navch. posibnyk [transport and operational properties of highways: textbook. manual]. donetsk: shee "donntu", p. 229. dolia, v. k., & sanko, ya. v. (2012). prohnozuvannia parametriv transportnykh system [forecasting the parameters of transport systems]. lanovyi, o. t. (2012). merezha avtomobillnykh dorih zahalnoho korystuvannia ta yii vplyv na rozvytok rehioniv [network of public roads and its impact on the development of regions]. project management, systems analysis and logistics. vol. 10. kyiv: ntu, pp. 114–118. lanovyi, o. t. (2010). lohiko-matematychne modeliuvannia funktsionuvannia merezhi avtomobilnykh dorih ta yoho zviazok z ekonomikoiu krainy [logistic and mathematical modeling of the functioning of the road network and its connection with the country 's economy]. visnyk natsionalnoho transportnoho universytetu, pp. 13–15. palchik, a. m. 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(2016). general directorate of national roads and highways opole section. available at: https://www.gddkia.gov.pl/userfiles/articles/k/konsulatacje-spoleczne-obwodnica_25903/analiza%20i%20 prognoza%20ruchu.pdfі kowalski, k. (2015). head of road network and traffic analysis in the department of strategy and studies. available at: http://www.gddkia.gov.pl/pl/992/zalozenia-do-prognoz-ruchu three seas economic journal 56 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-10 the economic basis of wealth and its taxation mykhailo sverdan1 abstract. the purpose of this paper is to examine the current problems of wealth, which is due to the current steady trends of increasing wealth and the increasing number of wealthy people. the aim of the paper is to define the essence, prerequisites for the emergence and development of wealth, as well as to reflect the historical aspects of the evolution of wealth and its present state. the topic of the article is conditioned by the necessity to reveal modern stratification of social strata by the level of wealth, formation of society's wealthy class and its growth, processes of wealth creation and multiplication. at the same time, the purpose of the article is to study wealth as an object of taxation. in this connection, the economic essence of wealth tax and prerequisites for its introduction were considered, the specifics of functioning of wealth tax in the market economy were determined, and the most important features of functioning of wealth tax were revealed. methodology. a correct analysis of the social structure of society in terms of material well-being makes it possible to assess the efficiency of the economy and the quality of public policy in the system of creation and distribution of public income, public goods and wealth. without the results of these calculations, fatal errors arise in the choice of state priorities of socio-economic policy and in making optimal decisions in the financial sphere. the study is based on the comparison of wealth tax data in different countries. results. the question and modern specificity of wealth is explored. the value of wealth to society and the state is determined. wealth tax is an effective fiscal instrument of the state in the distribution of state revenues. wealth tax exists in many countries in various forms. practical implications. possibilities of increasing welfare and increasing wealth are considered. an adequate assessment of wealth and well-being will allow the state to conduct a balanced and effective socio-economic and financial policy to stabilize society and adopt a stable social order. the financial essence of the wealth tax and the prerequisites for its introduction were studied. the specifics of functioning of wealth tax in the market socially oriented economy are considered. value/originality. it was found that wealth is a complex, multifaceted category, which can be characterized as a specific feature of the socio-economic structure of society, which determines its state, results, dynamics and trends of development. wealth characterizes the ability to achieve a positive result (effect) in the market conditions of management and use of socio-economic potential available in the society, which indicates the level of its civilizational development. the features of functioning of wealth tax in different countries of the world are considered. the use of wealth tax as a fiscal tool in the tax system of the state was proposed. key words: wealth, taxation, economy, property, enrichment, well-being, consumption, wealth tax. jel classification: e62, h22 corresponding author: 1 national university of life and environmental sciences of ukraine, ukraine e-mail: sverdanof@ukr.net orcid: https://orcid.org/0000-0002-1773-3919 1. introduction the economy has always been an integral part of human life and society. man has always been and remains the central figure of the economy. outside of man there is no economy and there cannot be any economy. the economy arose with man, with the help of man, and in the name of man. neither society nor humans can exist without the satisfaction of needs. the economic activity of mankind is directed to the creation of certain goods, by means of which mankind creates comfort and well-being for itself. the greatest engine of human history is the production of economic goods. society can exist and develop only through the constant renewal of production processes, so economics and human economic activity are the foundation of any society. with the advent of productive employment and purposeful activity, people simultaneously developed an interest in the results of their own labor. the transformation of the common man into "homo economicus" changes his view of his own status and well-being. humans begin to strive to maximize the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 57 vol. 2 no. 4, 2021 benefits they receive and make appropriate choices because of the importance of economic outcomes; they become interested in their own well-being and its enhancement. so, economics is an economy of needs, of interests, of goods. the study of the economic sphere of social activity seeks to determine the basic principles of production and distribution of economic goods in order to achieve prosperity. welfare economics focuses on the study of the ways in which economic activity and social interaction are organized to ensure well-being. this distribution of economic resources and goods is considered optimal when overall welfare is maximized. the goal of welfare policy is to achieve an adequate standard of living for society as a whole. the history of the development of economics is the history of the development of the science of prosperity and wealth. since the time of xenophon and aristotle there have been two concepts: economics and chrematistics; economics is seen as the science of wealth, its formation and distribution. any wealth is the appropriate level of wealth achieved by each individual. wealth is determined by an individual's economic interests and needs and is limited by the ratio of income to expenses. society is unequally provided for in terms of its social structure – stratification. there is a class hierarchy in society. society and its social stratification are an objective and natural result of human economic activity. class division forms the basis of economic inequality in modern societies. class has a significant impact on people's lives and economic well-being. in large traditional societies and in modern market-developed countries, stratification is viewed through the prism of economic profile as the level of well-being (wealth) achieved. the specific nature of the market objectively determines the uneven distribution of economic goods in society. the distribution of income and wealth always remains too unequal and constantly tilts toward the rich. wealth in modern conditions is turning into an economic epidemic. rich people are getting even richer. in addition, there is a clear trend toward an increase in the number of wealthy people. thus, it is an economic fact that there is a disproportionate distribution of wealth in society. at the same time, a popular slogan is that the economy must be efficient and fair. the question of welfare has always been associated with the problem of justice, which, in turn, has been linked to the distribution of income and wealth. given the diverse nature of wealth, it is logical to ask: is the unequal distribution of wealth among people really an economic problem for society? to improve this situation, taxation of the wealthy has been used. a stronger tax burden has always been initiated for such persons. in every society there has always been a category of wealthy people with considerable wealth who are capable of paying wealth tax. 2. economics and public welfare the development of market capitalism, the spread of selfishness, and the desire for luxury lead to an even more unequal distribution of economic wealth and property stratification in society. the rich become even richer and continue to increase their wealth. wealth becomes the defining indicator and function of the market economic system. the economy, in the content of its natural purpose, is a thirst for wealth, for enrichment; this is its essence (carter, 1968). wealth is not a cause for criticism or envy. the concept of wealth is related to the concept of social inequality. attitudes toward rich people differ from one strata of the population to another and from one socio-economic setting or historical era to another (sturtevant, 1877). wealth is a socio-economic phenomenon inherent in every society throughout the existence and development of civilization. wealth indicates the existence of an affluent stratum of the population, which is a direct consequence of the radical stratification of social strata by level of well-being (atkinson, 1975). the economic status of individuals has always differed in society throughout the historical development of mankind. wealth is the direct logical result of differences in the material situation of individuals and families, and therefore has always existed and exists in all societies. at the same time, the more economically advanced and progressive society is, the more obvious is the presence of a well-to-do population, more rich people, the greater the material stratification and economic inequality of society (cohen, piketty, saintpaul, 2002). the issue of the presence of wealthy people and the formation of appropriate elite groups is one of the most pressing in the modern socio-economic structure of society. wealth is characterized by a significant accumulation of property and large consumption of public goods (abdelnour, whittaker, 2012). economic well-being has always been a measure of one's place in society and has served to confirm social status (cheung, 1978). the problem of wealth is a rather complex, multifaceted social issue. the reasons for its emergence are complex and comprehensive, based on economic, social, political and other circumstances. economic activity and public policy are aimed at improving social well-being, increasing the material well-being of people. this is associated with the accumulation of property and increasing wealth, which in turn forms a certain class of wealthy people. in modern conditions this is stimulated by certain actions of the state, pursuing macroeconomic goals and three seas economic journal 58 vol. 2 no. 4, 2021 solving problems of social stabilization and development of society. the economy is the largest part of social life. regardless of any conditions or circumstances, part of the lives of individuals is spent in the economic sphere. individuals are constantly receiving certain revenues and expenditures, which are always aimed at improving their own well-being. people are interested in earning as much income as possible or acquiring certain property, in spending money on various acquisitions that can improve their well-being (adler, 2019). the goal of such attitudes and actions of individuals is to acquire personal property, create their own wealth, achieve a better level of material well-being and ensure a higher standard of living. welfare and wealth act as a specific goal of individuals' labor activity, constituting its main content and financial and economic interest. economic activity is directed toward the production of various goods and toward the enhancement of human well-being, increasing wealth. this applies to all individuals and social groups. wealthy people who have available wealth try to make it even greater, rich people try to become even richer. and this is quite logical and natural. even in the case of poverty, economics tries to solve this problem and make low-income individuals wealthy with a sufficient level of well-being. however, in the overall economic background of society, only a small number of people become rich. this is explained by the fact that in the process of distributing economic goods, individuals receive their unequal share. the distribution does not have equal and equitable proportions of their appropriation, direction, and placement. as a result, some individuals receive a satisfactory amount, others receive a small amount, and some categories of individuals appropriate the largest amount, allowing them to greatly increase their wealth, increase their assets, and accumulate and multiply wealth. in today 's context, wealth is defined as a certain level of provision and maintenance of a way of life that far exceeds the social average and is characterized by the importance of money and property. because of the abundance of wealth, wealthy people are able to provide for themselves a way of life that far exceeds the level of minimum necessity or the average socially established standards (hore-lacy, 1985). a wealthy person is a person who has significant values in relation to other members of society (little, 1950). social civilization has gone through many different stages of economic development. scientific and technological progress has contributed significantly to economic growth. all actions and measures have contributed to economic development and the growth of well-being in society (gornick, jäntti, 2013). wealth is not a new or original concept. wealth as an economic phenomenon has existed for a long time, having passed a significant evolutionary path and undergone significant conceptual and structural changes. at each stage of transformational development, wealth is characterized by appropriate specific properties, reflecting its formal and substantive essence. economics itself involves the creation and accumulation of wealth. economics is the science of prosperity and wealth; people work to improve their well-being and enrich themselves (improving their lives is a natural desire inherent in people). society strives to improve people's well-being. wealth always attracts much more economic interest than other market institutions. issues of enrichment, property accumulation and wealth creation in the economy are important and relevant, especially in modern market conditions. the tendency to increase wealth and enrichment, to increase wealth is quite obvious and is constantly accelerating in society (mols, jetten, 2017). the economic activity of society is aimed at ensuring the welfare of all people. the economic system seeks to create sufficient economic goods to meet their needs and provide material living conditions. however, the unequal distribution of economic goods does not ensure the same level of well-being in society. moreover, quite a small part of society becomes rich people. this is due to various factors – economic, social, political, etc. and to no lesser extent the level of welfare and wealth depends on the individuals themselves. in general, the progress of civilization helps to stimulate economic growth and increase people's general well-being. the economic laws of the market stimulate economic development and the production of economic goods, but do not ensure their equal distribution in society. social progress is the process of improving the essential forces of humanity, and in the economic context, it is the satisfaction of material needs and economic interests. social progress has certain regularities and trends. one such law is the acceleration of the rate of economic progress. another law is the tendency for unequal social progress, which in an economic context manifests itself in the unequal distribution and consumption of economic goods, different levels of wealth and wealth (robson, 1924). all wealth always has a value. each person enters into various economic relationships with other people. human beings depend on the economy (marriott, 1923). whatever a person's level of wealth, he still owns something and cherishes that little, just as the owner of capital cherishes his wealth. a person cares about the preservation and multiplication of his property, its careful use. the greater the wealth, the greater the concern for it. wealth, on the other hand, requires constant control on the part of the individual, because its diminution can lead to total loss. as a rule, irrevocably. in order to establish a relative economic equilibrium in society, the state intervenes, which with the help of certain levers tries to correct the situation. there can three seas economic journal 59 vol. 2 no. 4, 2021 be no effective market economy without an active regulatory role of the state. the economic policy of the state is important in the context of public welfare. the most important economic goals of the state are to promote economic growth while ensuring economic efficiency. this is especially true in today 's socially oriented market economy. for this purpose, the state redistributes public revenues to maintain social stability. taxation is an effective means for this purpose. the social structure of society is reflected in social strata, which are in different economic situations, have different levels of material security, income and wealth. the category of wealthy people is one of the social strata whose well-being is defined as wealth, characterized by an inflated level of acquired wealth and accumulated property, the receipt of a significant amount of income. in this regard, the phenomenon of wealth of the wealthy, its social value and purpose are of relevant interest (vanberg, 2001). any level of prosperity can be considered accumulated wealth. and any wealth (both in the aggregate and in its various elements) can be taxed. 3. taxation of wealth a fair distribution of wealth is usually required for people with lower levels of wealth. non-market levers and mechanisms are already used to improve social welfare, in the context of achieving relative economic equality and conditional social justice. these are fiscal instruments used by the state to redistribute state revenues. through taxation, the state intervenes in economic processes, accumulates revenues and finances expenditures aimed at improving the welfare of certain segments of society. fiscal instruments are acceptable and necessary, but excessive redistribution is in fact economically inefficient and socially inappropriate. the wealth tax is based on a fiscal orientation and is aimed at taxing only the wealthy. it is imposed on the total amount of private property held by individuals. as a rule, the object of taxation in the context of different countries where the wealth tax is levied, has a similar algorithm of calculation, although in each country the set of its components is not the same and is set independently. wealth tax usually applies to the property of individuals, although in practice it can also apply to businesses. for example, in countries such as belgium and canada, only businesses pay wealth tax. in france, since the introduction of the wealth tax, it was initially paid by individuals and legal entities, but very soon the fiscal focus shifted to individuals (mas montserrat, 2020). wealth tax belongs to the group of property taxes. property has become the main object of taxation. property taxation has been around for about as long as modern civilization itself. taxes under which property is taxed are among the oldest taxes known to most modern states. property taxation has undergone considerable transformation over a long period of its existence, the history of property taxation is extremely varied. this also applies to the wealth tax, which can be fully considered the main form of the state's fiscal impact on society (scheuer, slemrod, 2021). property is the primary basis for the formation of a wealth tax. analyzing the dynamics and trends of fiscal practice, we can state that there have always been attempts to introduce certain universal taxes, which include a tax on wealth. the complex expression of accumulated property in only one holistic object of taxation has its own characteristics and advantages; no other tax paid by the society has similar analogues (sverdan, 2020). wealth tax occupies a certain place in the system of income and wealth distribution. its fiscal importance in the composition of tax revenues of the budget is small, only in some countries it amounts to 3-7%, in most countries it does not reach even 1% (table 1). however, this is no reason to ignore or criticize it, given the specifics of the wealth taxpayer population and the object and level of taxation. wealth taxation is a common form of the state's fiscal influence on the property of wealthy individuals whose material well-being is characterized by a significant level of wealth and the amount of accumulated economic goods. taxation of wealth is not just one of the oldest, but the main form of manifestation of the state's fiscal power in society. wealth tax has been and is currently levied in many countries of the world. over a long period of several millennia, the wealth tax has undergone many transformations, which accounts for the extraordinary diversity of its fiscal models (sleeman, 1988). the relevance of the economic phenomenon of wealth in any form as a real and potential object of taxation is not reduced and does not lose its significance. in modern conditions the tax on wealth, regardless of its qualification and motivation of introduction, is quite widespread, intensively and effectively used in various forms in many countries. the wealth tax is the most variable in modern tax systems because it is often subject to various modifications. the changes are most often not nominal adjustments to individual elements, but the transformation of the tax model itself and the introduction of its new or updated fiscal structure, depending on the essence of the concept embedded in the economic sense of wealth. this explains why in modern market conditions there are various models of wealth tax, which over time are also optimized, modified and adapted as much as possible to the specific socioeconomic situation; the wealth tax has a fairly large scale, scope and methods of application. net wealth taxes are periodic taxes on an individual's wealth minus debt. the concept of a net wealth tax is similar to an estate tax. but instead of taxing only real three seas economic journal 60 vol. 2 no. 4, 2021 estate, it covers all the wealth an individual owns. only three european countries levy a net wealth tax, namely norway, spain and switzerland. france and italy levy a wealth tax on individual assets, but not on the net wealth of the individual as such. norway levies a net wealth tax of 0.85% on the wealth of individuals over nok 1.5 million (152,000 euros or $170,000), with 0.7% going to municipalities and 0.15% to the central government. under measures related to covid-19, individual business owners and shareholders who make a loss in 2020 are eligible for a one-year deferral of wealth tax. the net wealth tax in spain is a progressive tax ranging from 0.2% to 3.75% on wealth over 700,000 euros ($784,000; some regions are lower), with rates varying significantly among spain's autonomous regions (madrid has a 100% relief ). spanish residents are taxed worldwide, while non-residents pay tax only on assets located in spain (durán, esteller-moré, masmontserrat, 2019). in switzerland net wealth tax is levied at cantonal level and applies to assets around the world (with the exception of real estate and permanent establishments located abroad). tax rates and benefits vary considerably between cantons. the classic traditional version of a wealth tax would impose a tax on the total accumulated wealth of individuals. this model of wealth tax has survived in few countries today. an analogue of this tax is used in colombia. at the same time, colombia has the highest property division at which the wealth tax is activated – $1.5 million. for 2019-2021, the new wealth tax is set at 1% on net wealth (shares of colombian firms, receivables of colombian debtors, certain portfolio assets, and financial leases are exempt from taxation). in addition, after the covid-19 pandemic, taxes on the salaries, dividends, and estates of the wealthiest citizens are expected to increase, as well as a one-time solidarity tax on high incomes (londoño-vélez, ávilamahecha, 2021). today it is common in theory and practice to identify wealth with its individual elements, which are often real estate or financial assets, as well as high (super-high) income. n france, up to and including 2017, wealth tax was levied on the total assets of individuals (impôt de solidarité sur la fortune). since 2018, a wealth tax has been imposed only on real estate, and financial assets are excluded from the tax burden. in italy there are two types of wealth tax – separately on real and financial assets, for which different levels of tax burden (tax rates) are set (sverdan, 2021). an alternative to the wealth tax in terms of its individual elements is the widespread use of luxury taxes (in particular on luxury real estate, certain types of vehicles, etc.). significant modifications of the wealth tax have taken place in many other countries. as of 2018, france has switched to a unified wealth tax scheme. instead of the classic model of wealth taxation, real estate taxation has been introduced. financial assets and luxury goods are exempt from taxation. in the netherlands, for a long time until 2000, there was a classic version of the wealth tax (vermogensbelasting). today there is another tax called vermogensrendementheffing. it is essentially an income tax, but it qualifies as a wealth tax because it does not take into account actual income. up to and including 2016, the tax rate was one flat rate of 1.2% (taxing 30% above the assumed 4% yield). beginning in 2017, the tax rate increases as individuals' wealth increases: table 1 wealth tax, % of tax revenues* country 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 argentina 1,08 1,14 1,09 0,94 0,92 1,00 1,02 0,99 0,79 0,71 0,36 0,53 belgium 0,16 0,14 0,15 0,16 0,19 0,25 0,35 0,36 0,52 0,48 0,47 0,45 canada 0,41 0,39 0,29 0,17 0,11 0,07 0,06 0,06 0,06 0,06 0,06 0,06 colombia 3,55 2,15 2,01 3,64 3,20 3,00 2,77 3,36 2,70 2,22 0,25 0,44 france 0,49 0,44 0,53 0,48 0,54 0,45 0,55 0,52 0,47 0,48 0,17 0,19 germany 0,00 0,00 0,00 0,08 0,09 0,07 0,06 0,03 0,03 0,03 0,03 0,03 greece 1,64 1,77 1,76 1,80 1,79 1,68 1,57 1,67 1,67 1,66 1,63 – hungary – – 1,34 1,36 1,26 1,12 1,12 1,03 0,43 0,36 0,27 0,27 iceland – 0,00 0,71 1,08 1,50 1,31 1,39 0,08 0,03 0,03 0,01 – ireland – – – 0,98 1,00 1,05 1,34 0,28 – – – – italy 0,00 0,99 0,31 0,75 0,11 0,36 0,12 0,03 0,06 0,05 0,03 0,03 luxembourg 5,19 5,07 5,53 5,37 5,30 5,50 5,75 6,84 7,02 7,07 7,17 7,43 norway 1,36 1,36 1,30 1,30 1,33 1,40 1,46 1,18 1,39 1,48 1,46 1,45 spain 0,79 0,19 0,20 0,20 0,43 0,61 0,54 0,53 0,54 0,55 0,53 0,52 switzerland 4,41 4,41 4,36 4,17 4,13 4,27 4,43 4,45 4,72 4,71 4,77 4,73 united kingdom – – – 0,35 0,30 0,41 0,49 0,55 0,48 0,38 0,36 0,34 * oecd statistics three seas economic journal 61 vol. 2 no. 4, 2021 the first € 30,360 is exempt from taxation; 0.58% is taxed on annual income between € 30,361 and 102,010; 1.34% is taxed on annual income between € 102,011 and 1,020,096; amounts exceeding € 1,020,096 are taxed at a rate of 1.68%. in the netherlands, in addition, property owners pay a standard tax onroerendezaakbelasting, which is based on the assessed value of the property. thus, wealth is a corresponding fiscal interest. its presence in society does not remain outside the fiscal interests of the state. the state converts wealth into appropriate objects of taxation. in practice, this is accomplished by the state imposing a tax on wealth. 4. conclusions wealth will always accompany the civilization of society. there will always be a category of rich people and a division of society into different strata. this cannot be changed or replaced, such a model is irreparable. throughout social progress, economic inequality and social stratification have always been present in all civilizations, and society has always been divided into classes. in all eras the aristocratic classes have demonstrated and reaffirmed their socially dominant advantages, which were based primarily on propertywealth, luxury, wealth. wealth, as a socio-economic phenomenon, always accompanies the development of society, giving it a certain motivational rhythm. it is in the pursuit of wealth that a deep social meaning is revealed, which gives it a meaningful content. there is a tendency in society to acquire possessions and luxuries, to increase wealth, to accumulate possessions, to accumulate wealth. in this context, the economic component is an important factor in establishing the social status of individuals. on the basis of the indicator of property wealth the corresponding social strata of society are formed. the economic background is an integral part of social loge. the desire to accumulate a variety of property in order to increase one’s own well-being is a perfectly natural instinct of individuals. often the economic component takes precedence over all other values of individuals. in fact, the pursuit of enrichment is limitless and unbounded. the amount of property accumulated is a certain level of material prosperity and well-being of individuals and largely qualifies as wealth of the wealthy class. there are always people who earn high incomes and accumulate considerable wealth. it is advisable to increase taxation of the wealthy, which involves using progressions for high incomes, imposing taxes on luxury and a tax on wealth. the wealth tax is a burning issue of modern tax reforms. many countries are still inclined to introduce a wealth tax because of its fiscal advantages. of course, there are objectively many people in the category of the wealthy. however, the stratum of wealthy people with significant financial and property wealth is very large. thus, in theory, a wealth tax could be introduced in any country, depending on the fiscal position of the state. the experience of the wealth tax varies. in each situation it has both positive and negative manifestations. despite some negative effects, in most cases the use of a wealth tax has been successful. the intention to return or introduce a wealth tax in market economies clearly confirms its social viability. based on these and other circumstances, it can be argued that the state's intentions to impose a wealth tax are well founded. over a long period of evolution, the wealth tax has proven to be pragmatic, so its support and introduction is obvious. the goal of civilization is to live not just in comfort, but in an affluent, prosperous, wealthy society. the wealth tax functions effectively in the context of implementing the principles of the welfare economy, which is based on an efficient, rational, and equitable redistribution of resources in society. analyzing the dynamics and trends of fiscal practice, one can unequivocally state that the state has always initiated attempts to introduce and levy certain universal taxes. such a tax on wealth is one of them. references: abdelnour, z. k., & whittaker, w. a. (2012). economic warfare: secrets of wealth creation in the age of welfare politics. hoboken, n.j.: wiley. xli, 212 p. adler, m. d. (2019). measuring social welfare: an introduction. oxford; new york: oxford university press. xiv, 319 p. atkinson, a. b. (1975). the economics of inequality. oxford: clarendon press. xi, 295 p. carter, c. f. (1968). wealth: an essay on the purposes of economics. london: watts. vii, 175 p. cheung, s. n. s. (1978). the myth of social cost: a critique of welfare economics and the implications for public policy. london: institute of economic affairs. 96 p. cohen, d., piketty, t., & saint-paul, g. (2002). the economics of rising inequalities. oxford; new york: oxford university press. xii, 358 p. durán, j. m., esteller-moré, a., & mas-montserrat, m. (2019). behavioural responses to the (re)introduction of wealth taxes evidence from spain. barcelona: institut d'economia de barcelona. 80 p. gornick, j. c., & jäntti, m. (2013). income inequality: economic disparities and the middle class in affluent countries. stanford: stanford university press. xix, 515 p. three seas economic journal 62 vol. 2 no. 4, 2021 hore-lacy, i. (1985). creating common wealth: aspects of public theology in economics. sutherland, n.s.w.: albatross; tring, hertfordshire: lion. 103 p. little, i. m. d. (1950). a critique of welfare economics. oxford: clarendon press. 275 p. londoño-vélez, j., & ávila-mahecha, j. (2021). enforcing wealth taxes in the developing world: quasi-experimental evidence from colombia. american economic review: insights, 2 (3), 131–148. marriott, j. a. r . (1923). economics and ethics: a treatise on wealth and life. london: methuen & co. ltd. x, 293 p. mas montserrat, m. (2020). essays on wealth taxation, aviodance and evasion among the rich. barcelona: universitat de barcelona. 234 p. mols, f., & jetten, j. (2017). the wealth paradox: economic prosperity and the hardening of attitudes. cambridge: cambridge university press. xvi, 222 p. robson, w. a. (1924). the relation of wealth to welfare. london: g. allen & unwin. 175 p. scheuer, f., & slemrod, j. (2021). taxing our wealth. journal of economic perspectives, 35 (1), 207–230. sleeman, j. f. (1988). the economics of the distribution of income and wealth. edinburgh: centre for theology and public issues, new college, university of edinburgh. 32 p. sturtevant, j. m. (1877). economics: or the science of wealth. new york: g. p. putnam’s sons. xvii, 343 p. sverdan, m. (2020). economics and taxation of wealth. three seas economic journal, 1 (4), 126–132. sverdan, m. (2021). wealth: the economic prerequisites of taxation. three seas economic journal, 2 (1), 71–77. vanberg, v. j. (2001). the constitution of markets: essays in political economy. london: routledge. xv, 207 p. three seas economic journal 65 vol. 2 no. 1, 2021 corresponding author: 1 university of the state fiscal service of ukraine, ukraine. e-mail: riabininano@gmail.com orcid: https://orcid.org/0000-0001-8378-4485 doi: https://doi.org/10.30525/2661-5150/2021-1-11 socio-economic consciousness is a key driver of the tax service of ukraine natalia rіabinina1 abstract. at the intersection of the past and the future there is a point of present, which, due to external and internal socio-economic requirements, activates the subject himself. in the interrelational phenomena of economic consciousness, which bears its personal direction and in manifestations of external economic activity of the subject, acting as a regulator, relying on empirical studies of a dialectic nature, one of the main studies of our time is economic behavior. all factors are unifying, coordination or contradictions of economic consciousness and behavior still act as a dynamic factor for development and progress, which is a key vector of human-tax relations. without an individual vision of the universe, the present, personality problems cannot be covered and seen by all sides of economic and social society, based on trust and reliability. the level of trust and reliability characterizes the quality of economic and social consciousness of citizens, business, representatives of enterprises, which manifests itself and increases in the development of the interrelationships of civil society and carries results for the tax service. formulation of the goals and objectives of the article (setting a task). a large amount of research on social consciousness, a wide and varied direction of studying the direction and connection with other disciplines helps to more closely reveal the problems of society and the individual. the purpose of the study is to separate and determine the individuality of a person in the process of economic and social consciousness, attitude and manifestations of personality and group behavior at all levels of this concept, analysis, specificity and structural content exactly inherent in the tax component. methodology. during the study, to study and achieve the goal, the analysis of theoretical aspects and generalizations of scientific sources, dialectical cognition of formation and manifestations of social consciousness of a person when paying taxes, found a kind of economic concept, methods of induction and deduction, abstraction of theoretical provisions and dialectic cognition were carried out. results. the article raises the issue of the importance of social consciousness of the country's tax service for further socio-economic growth and improvement of people's lives, on the basis of intergroup and interpersonal interactions and relationships at a high micro level, on the foundation of trust and cooperation between society and government, unified work and development of state, economic, civic platforms. it is with a person that the mechanism of development, accumulation and effective use begins, so it is the social consciousness of the individual that carries the basis for the further development of the state. the analysis of elements and component of socio-economic consciousness in the individuality of a person in the economic system is carried out and the main components, such as trust and reliability, are determined. the analysis of economic behavior of the individual when making a rational decision in the world of economic changes of the tax service is carried out. the practical component of the main provisions of the concept and levels of social consciousness, and its role in the general concept of the economic component can further develop and be used in the process of developing the analysis and development of the individual with individual behavior and personal decision-making for the fiscal service when paying taxes. value/originality. the theory of socio-economic consciousness itself is not new, but the direction of study and application of individual characteristics of taxpayers is new and little researched, so it gives a new impetus to interest and further development of the detection of theoretical aspects, generalization to definition and essence, outlining the main directions of development and formation for the future. key words: socio-economic consciousness, behavioral economy, tax service, trust and reliability, tax culture, quality of life. jel classіfіcatіon: e71, a14, d71, o35 three seas economic journal 66 vol. 2 no. 1, 2021 1. introduction at the end of the last century, the influence of geopolitical factors, difficulties in creating market relations, financial crises, neglect of local and national institutions, contributed to the impetus for recognizing the problems of correctness of social and economic decisions. state taxes have always been an urgent topic of society, for the development and further prosperity of the country, so the role of the state and its political and legal component on the moral duty and behavior of a citizen is one of the pressing issues of our time. the multi-vector component of the economic activity of economic entities is aimed at improving the quality of life of the population, because it is the person who stands at the beginning of the development of society, having at the heart of the platform the trust and reliability of citizens to the state and government. one of the indicators of trust in the state is the level of public consciousness and tax culture, which is reflected in the self-organization of payment of taxes and the organization of labor in the tax authorities of the country. today in modern ukraine there is a shortage of such trust, and this, at the same time, inhibits the formation of human social consciousness. one of the tasks of the tax service is to achieve social equality and exclusive attitude to the needs of society, and achieving the effectiveness of the tax service depends on overcoming the negative attitude of business entities. 2. the main components of consciousness the breadth of phenomena and concepts of socioeconomic and psychological science, which has long traditions, theoretical explanations, can be combined into two directions: the phenomenon of economic consciousness with elements (intentions, thoughts, assessments, ideas, etc.) and economic behavior, it is individual and group direction that has been studied and analyzed in recent years widely and effectively. the main components of consciousness are cognitive (various forms of knowledge about social objects), emotionally evaluated (attitude and compassion for social objects) and behavioral (readiness and decisionmaking behavior in the relationship of social objects – motives, intentions, expectations, etc.) we have been clearly observed in recent years when analyzing the results of specific empirical studies, examples of which are: property, material well-being, poverty, wealth, money and attitude to them, types of economic activity, readiness of the individual for self-reliance, social adaptation of the unemployed, psychology of advertising, marketing and others confirm the universality of the structure of economic consciousness phenomena, despite the specific content of those socioeconomic objects and phenomena that are displayed in it. in making a detailed analysis, it is possible to distinguish similar natural trends that combine all the main components of consciousness and can confirm the existence of both basic, unchanged elements of the structure and more superficial, local characteristics, the influence of which can be externally. however, the manifestations and development of economic consciousness should be investigated not only in the external environment, as changes in the composition of ideas, modality of relations, level and direction of behavioral readiness, etc., but also manifestations of internal transformations and contradictions of psychological changes and its elements: the study of the past and the analysis of the new, assessment of changes in social norms, readiness for action, intentions of the individual and others that are currently a problem and vision of serious scientific comprehension. "economic consciousness should be understood as a systemic component of consciousness, a higher level of mental reflection of economic relations by a person." (deineka, 2000). by dividing the economic consciousness into an individual (the individual is manifested and purposefully acting, with her creative transformations and impressions, relying on personal experience), group (generalized consciousness based on the purpose of combining the group's ideas and opinions on decision-making and decision-making), and the mass (public consciousness on economic issues that concern people, are of great importance and bear decisive, alternative consequences) we gradually draw comparisons and analysis , inherent personality to a wider mego equality, uniting society as a whole. 3. elements of economic consciousness economic consciousness is extremely necessary when studying the internal state of a person, because without knowledge of mental manifestations we will not be able to fully understand behavior and decision-making. the structure of economic consciousness consists of economic emotions and feelings (satisfaction from work or process, craving for knowledge, a sense of pride and respect, excitement, risks, overcoming fears), perceptual economic behavior (attitude and promotion of money, goods, services, advertising, consumer psychology) and economic ideas and thinking (representation of the function and work of the economic sphere, phenomena, laws). the economic behavior of the individual is us to focus on the presence of people of limited intervals of attention, so the tax procedure must be simplified and made accessible, because non-payment of taxes leads to an increase in inequality. excessive complexity of taxation, the ability of excess concentration and misunderstanding of taxation can lead to the fact that a disciplined person, with noble intentions, will not pay contributions to the state pocket. by examining the effectiveness of a behavioral economy that helps three seas economic journal 67 vol. 2 no. 1, 2021 simplify citizens' collection of tax information, calculation of payments and tax risks, we can also investigate moral risks. imagine the dangerous practice of granting tax amnesty, which involves reducing fines and interest. human attitudes can change co-ordinated when a person understands that fines for non-payment can be weakened or changed simply by ignoring the rules and looking at uncontrolled by state authorities, completely stop paying, which leads to a reduction in tax revenues in the future. in this situation, it is possible to operate with court sanctions with further consequences. 4. economists of consciousness and international education behavioral economists, studying the role of human consciousness, and voxcheck international education (2014) looked at and investigated the dependence of tax liability of citizens and the possibility of raising public awareness. the economist james andreoni (1998, 2002) revealed the importance of the psychological factor in the tax sphere, arguing that human emotions such as shame, duty, guilt, national character traits, demographic, social and moral components need to be adapted and integrated into traditional economic models. one of the main topics of the tax component is the tax collection system. sometimes, the taxman, from the very beginning, considers a citizen as a fraudster and a potential non-payer, which also contributes to the negative attitude of society to tax authorities and then to pay taxes. professor of economic psychology erich kirchler (2011) criticized the method of "criminal and police", which should be coordinated to a more loyal approach, using the method of "client and eternal service". research by economist james alma (20012, 2014) proved that high tax rates on equal terms also do not contribute to a healthy climate of tax morality and discipline, the more incorrect, harsh punishment for non-payment of taxes and unclear control of fiscal authorities. conducting behavioral experiments with students from 34 countries on bribery, abigail barr and danila serra, (2010) found a link between tax liability with elements of bribery and the influence of the cultural environment and norms of their country 's behavior. bribes aimed at tax evasion, the person who abuses it, reduces the social norms and values of the society in which he lives and develops. in economics, everything is interconnected. tax evasion gives impetus to the growth of the shadow economy, which in turn leads to pressure on the economy and social benefits. more often, the state shifts the entire burden of budget execution to conscientious payers, and sometimes, by increasing tax pressure or increasing tax rates, takes away the latter from entrepreneurs. in the 90s, an australian model appeared, which took as a basis the concept of "motivational position". people who constantly ignored and refused to pay were blacklisted by fiscal authorities. were constantly under the control of the authorities, and, if necessary, applied court proceedings. undisciplined payers were punished with fines and audits. the basis of tax policy is to maintain responsibility through educational initiatives, the comfort of accounting and the convenience of the tax system. northern european countries use the biser model, which consists in deep behavioral analysis from the beginning of each person's tax history, its encouragement to cooperate with the tax service. in the uk, behavioural economics teams are working in the tax departments to study tax behaviour, methods to stimulate fiscal payments and build social tax regulations. in the netherlands, we observe a model of "horizontal monitoring", which is based on the signing of a mutually beneficial agreement between the tax authority and the administration, which affects mutual understanding, cooperation and trust. in sweden, the model is used "from the very beginning", which is an example of the government's use of broad information and a coherent idea of the tax system itself, its work, the end result and prospects among citizens. 5. problems of the tax service how to inform the ukrainian people that payment of taxes is necessary and mandatory for the country and our economy? studies were carried out on warning letters, which reported on inspections of tax reports and the results were predictable: low and middle income taxpayers increased the amount of declared income, and with high incomes ignored the situation. such a study was conducted in a european country. when the issue of fines and their sizes are raised, the opinions of tax authorities and economists differ, because the study on fines did not bring a single result, but the conclusion that effective and optimal fines work only in combination with broad audit control is correct. recently, we have seen interest in studying behavioral experiments in the field of taxation and tax authorities. behavioral economists can offer society a model of fiscal policy behavior. analyzing the study of research and practices in the behavioral economy of different countries, you are once again convinced that punishment and strict administrative methods for stimulating citizens to pay taxes are not fruitful and correct. sometimes, an unobtrusive reminder, a friendly and calm response of the taxman, a high service of the tax system is enough for a positive result. stimulation and "motivation is a set of internal and external driving forces that encourage a person to activity and set the orientation, boundaries and forms of this activity focused on achieving a certain three seas economic journal 68 vol. 2 no. 1, 2021 goal." (vikhansky, nausov, 2003). and the painful topic of ukrainian society is the return and fair use of citizens' money in the form of high-quality social benefits. the question becomes why at such high tax rates, in a country where corruption flourishes and tax evasion is the norm, conscientious taxpayers bear the full burden of the tax system. society sees a connection between the tax service and the welfare of citizens. citizens pay attention to the quality of fiscal services. if social reimbursements are low and inefficient and the quality of public benefits does not correspond to the understanding and vision of society, then tax payments are perceived as unfair and the citizen refuses to pay them. the low average size of the return of social benefits per capita entails a loss of trust in the state, injustice and tax internal protest. "the main task is to carry out tax restructuring in such a way as to cause the least damage to the revenues of the state budget (the so-called income neutral tax shift) and incentives for labor and investment... it is necessary to carry out a general redistribution of the tax burden by applying the entire list of taxes, their elements (taxpayers, objects, base, benefits, rates, etc.), rather than gross actions, jeopardizing budget revenues, abolishing some taxes and introducing unknown things. a sign of a healthy tax policy is the stability of the tax system during the crisis" (schwabi 2020). 6. tax culture tax policy is the main component of the welfare of society and the state, informing and supplementing the population with a culture of taxation in the socioeconomic sphere, forming the tax behavior of all participants in the process. "taxes not only helped create the state. they contributed to the design of it. the tax system became the body whose development caused the appearance of the second bodies" (shumpeter, 1918). the taxation process and development are greatly influenced by the level of tax culture. the problems of low tax culture are social contradictions that carry unfair distribution of income in society with devant forms of tax behavior and contradictions of the interests of the state, regulating socio-economic processes through taxation, low living standards of the majority of the population, which deteriorates in the conditions of economic crisis and growth of the shadow economy. tax culture is a complex socio-economic phenomenon inherent in a society with a market economy, the level of which causes the fiscal potential of the state. the concept of "tax culture" first appeared more than 85 years ago, in an article by the prominent economist and sociologist j. shumpeter (1883-1950), the author of the concept of "tax state" "economics and sociology of income tax", noting that "tax culture is an expression of human spirituality and creativity aimed at increasing the level of tax consciousness of society " (shumpeter, 1918). research in the field of tax culture to the majority was considered comprehensively, without studying the intricacies of tax behavior. fairness, honesty, fulfillment of professional duties, promoting the revival of taxpayers' trust in state bodies is the main goal of creating ethical standards of conduct for employees of tax authorities. "today we are forming a new tax service, in which there is zero tolerance for corruption, and employees are professionals who adhere to a high culture of communication with taxpayers, and taxpayers, in turn, respect the profession of the tax officer." (verlanov, 2019). the topic of paying taxes has always been painful and has been in the spotlight. there is still no reasonable and explanatory answer as to why it is preferred to work in the shadows and wages in the envelope satisfy employees. in the labor market in ukraine, all employed people who are not legally or in fact not subject to national labor legislation, laws of the taxation and social protection system approximately 21.6%, which is about 3.5 million. persons. state authorities are not able to regulate the process because it goes beyond their competencies and legislation. according to statistics, ukrainians are in no hurry to share information about their own income with the state, preferring salary in cash envelope and withdrawal of money abroad, although the parliament has repeatedly approved zero declaration bills (one-time legalization of hidden income). 7. interaction of the taxpayer with the state the main stable source of revenues to local budgets is the entrepreneurial activity of individuals. the functions of the modern sts change according to the functional principle, taking steps to prevent fiscal risks and initiate unified approaches to their detection, dividing the work of tax authorities into several areas: risks in the audit. risks with vat refunds, risks in excises, etc. tax management, working on reforming the administrative and territorial structure, reducing the number of points of tax services, understands that all innovations will affect the structure of the authorities. article 58 of the tax code provides for the content of the tax notice – by the decision of the state tax service on additional non-payment to the payer, a fine, a penalty, which must be finalated in full, according to all the clarifying circumstances of the charges. for reasons of minimization and vat refund, the painful issue in terms of risks at the end of 2019 is vat, followed by excise duty, in particular, shortage in the tobacco industry, sale of fuel and ethyl alcohol. the third risk is associated with rent. for example, this applies to gas prices, which is a painful topic for the majority of the population, especially socially vulnerable. simplifying the payment of taxes consists not in the amount of taxes, but in the plane of three seas economic journal 69 vol. 2 no. 1, 2021 simplification of administration, which can be carried out due to digitization and electronicization, which will lead to a normal, comfortable tax system. the material and legal component of tax law and taxation should be fair: equal income – equal taxes, high incomes – high taxes. article 212 of the criminal code – tax evasion, having 900 thous. uah. threshold for criminal liability. to raise the topic of taxes and their number, first of all, we need to look at the problem frankly and without lies, saying that there are nine taxes on in fact in each tax three more taxes (property tax has: land tax, property tax, transport tax). communication between the tax service of the country and business in our time, it is unfortunate to state this as the relationship of enemies, criminal and police officer, while in civilized countries the attitude is open and transparent, everyone pays taxes, the same and all this contributes to the development of the economy. the only requirement of white business is equal conditions: beps and the exclusion of the use of pseudo-flp (limit set by the flp), which is often used in restaurants and hotels, by using an electronic check, downloading the tax service program. a person who has a turnover of 5 million hryvnia per year and at the same time does not have questions in the tax office, can work on a simplified taxation system using the single tax model, if this amount is per day, then you need to pay taxes fairly without shadow schemes and in case of fraud they are waiting for verification, a rate of 15% and a refusal of a single tax. the tax amnesty is planned to work in a package with beps and ratification of the agreement on the automatic exchange of tax information, which is likely to be paid, a single rate of 5%. reduced – 2.5% when investing in government bonds. the purpose of amnesty is to allow people to bleach in front of the state and return funds to ukraine and replenish the budget, although 300 thousand hryvnias will be amnesty for everyone. amnesty is a voluntary declaration. in the modern economy, "black" lyle is cheaper than "white". "it is necessary to highlight the weight of human motivation in the struggle of human consciousness between rationality and irrationality, therefore, the study of human behavior in the context of individual and social formation is inextricably linked with the study of its feeling as a member of a democratic, legal and social society " (hurochkina & kravchenko, 2020). ukraine needs a new state policy to build a fair and stable tax system, protecting the fiscal interests of the state and the social needs of taxpayers, reducing tax pressure and the number of inspections. over the years of independence, ukraine has gone a difficult way of becoming a state and the tax system and politics are also replaced by constant reform, dictated by the deficit of budget funds and the unevenness of tax revenues to the budget. increasing the tax rate is not an urgent topic, so in modernity all prerequisites for the development of other segments of tax activity are created – finding reserves for reducing the tax burden and increasing income by increasing tax discipline and the level of tax culture in society, strengthening administrative and criminal liability for tax offenses. the concept of "tax culture" is traced in european science as a result of the unification of common philosophical, sociological and economic concepts of culture and tax and there is still no single definition. 8. conclusion an important element of human economic consciousness research when paying taxes is the social policy of the state, namely improving the efficiency of education, health care and other branches of the socio-cultural sphere, which will destroy the negative impact of external factors and simplif y the decisionmaking process of everyone. and this is impossible without the tax authorities of the country. taxes in the system are perceived as an objective loss, not a social responsibility. fiscal discipline of a business or an individual, all attempts by the authorities to introduce social responsibility within the framework of tax reform is perceived negatively. the ability to put common interests above personal ones is still the rules of more conscious socio-market systems. that is why the greatest attention in scientific research should be concentrated on the problems of making economic decisions taking into account the tax culture and public consciousness when paying and administering taxes. references: alm james (2012). developing alternative strategies for reducing tax evasion 2012/7/30 book tax evasion and the shadow economy by edward elgar publishing. available at: https://www.researchgate.net/profile/ james-alm/publication/280019814_designing_alternative_strategies_to_reduce_ta x_evasion/link s/ 56606af908aebae678aa112e/designing-alternative-strategies-to-reduce-tax-evasion.pdf alm james (2014). expanding the theory of tax compliance from individual to group motivations 2014/3/28 book directory on alternative theories of public economicsbyedwardelgarpublishing. available at: https://scholar.google.com/citations?user=nacgaf4aaaaj&hl=en andreoni james, brian erard, & jonathan feinstein (1998). tax compliance. journal of economic literature, vol. 36, no. 2, pp. 818–860. andreoni james, & john miller (2002). giving according to garp: an experimental test of the consistency of preferences for altruism. econometrica, vol. 70, no. 2, pp. 737–753. three seas economic journal 70 vol. 2 no. 1, 2021 barr, abigail & serra, danila (2010). corruption and culture: experimental analysis. journal of public economics, elsevier, vol. 94 (11-12), pр. 862–869, december. deineka, o. s. (2000). economic psychology: a textbook. st. petersburg university: s.-st. petersburg university publishing house, 160 p. hurochkina, v. v., & kravchenko, l. v. (2020). principles and patterns of development of industrial enterprises in the energy economy. market infrastructure, vol. 42. kirchler, e., & rodler, k. (2011). motivation in organs / psychology of labor and organizations psychology; t. 1. kh.: yzd. "humane center", 144 p. schumpeter joseph aloisius (1918). die krise der steuerstaates 1918 № 4 of zeiqragen azu dem gebiet der soziologie. an english translation, by wolfgang f. stolper and richard a. musgrave, appeared (1954) in internationa leconomic papers (n. 4). available at: https://edisciplinas.usp.br/pluginfile.php/5322348/mod_ resource/content/1/crise%20do%20estado%20fiscal.pdf verlanov, s. (2019). eu program "support to public finance management for ukraine – eu4pfm" head of the state tax service of ukraine state fiscal service of ukraine 30.05.2019. available at: http://sfs.gov.ua/mediatsentr/novini/380379.html vihansky, o. s., & naumov, a. i. (2003). management. student. 3rd out. moscow: gardaryks, 528 p. voxcheck (2014). voxcheck: forces politicians to tell the truth 2014 greatidea. available at: https://biggggidea.com/project/voxcheck/ shvabiy, k. (2020). covid-19, budget deficit plus offshore all the country.did the authorities initiat another tax reform on time. available at: https://zn.ua/ukr/internal/covid-19-byudzhetniy-deficit-plyus-ofshorizaciyavsiyeyi-krayini-345056_.html three seas economic journal 64 vol. 3 no. 2, 2022 corresponding author: 1 pavlo tychyna uman state pedagogical university, ukraine e-mail: demchenko.tanya7@gmail.com orcid: https://orcid.org/0000-0002-7471-540x researcherid: f-8601-2018 doi: https://doi.org/10.30525/2661-5150/2022-2-9 features of accounting for current assets of the enterprise tetyana demchenko1 abstract. the purpose of the paper is to study the problem aspects and methods of current assets presentation in the accounting in order to make informed managerial decisions in the enterprise management. methodology. in the process of writing this article various general scientific and specific research methods were used, in particular the dialectic method (in the study of eco-nomic phenomena and categories), the induction and deduction method (in the study of the current assets place in the accounting system), the historical, logical and comparison methods (at the stage of accounts specification of the current assets accounting), the systemic method (by the disclosure of the accounting organization processes of current assets), the observation method (in the process of study the state of current assets at the enterprise), the generalization and comparison method (at the stage of theoretical positions generalization and conclusions formation of this study). results. it was established that current assets are a necessary component of the company property and require the development of an appropriate accounting system in order to provide timely information on the presence, movement and use of current assets of the enterprise. the organization of current assets accounting of an enterprise is complicated by the uncertainty and constant changes in the legal acts. in order to accurately present the inventory accounting of the enterprise, the accountants should timely show the economic operations on the receipt and movement of current assets in the primary accounting documents. taking into account the direction and documentary registration of operations on the receipt and retirement of stocks, we have developed the chart of inventory behaviour at the enterprise, which clearly shows the formation of information of the accounts. the computer accounting program "bas accounting" is offered for use, which will allow to optimize the accounting of current assets at the enterprise in the best way. practical implications. the practical use of the proposed offers will ensure the correct presentation of operations on the organization of current assets accounting and the prompt receipt of the necessary information by the company management. value/originality. the results of the study are aimed at improving the quality, reliability and efficiency of current assets accounting and can be used in the work of ukrainian enterprises. evaluation of current methods of accounting for current assets, development and implementation of recommendations for their practical improvement will improve both accounting and, accordingly, management decisions on their effective use in the enterprise. key words: current assets, accounting organization, computer accounting program, methods of current assets presentation in the accounting, enterprise. jel classification: m40, m41, m42 1. introduction the current transformation of the legislative framework significantly changed the principles and conditions of the enterprise activity. the key to stability and profitability of the enterprise is the financial firmness, ensured by an uninterrupted and continuous process of pro-duction. the enterprise efficiency directly depends on the current assets formation with the justification of their volumes, composition and characteristics of production. current assets are an important element of the production process, which, together with capital assets and labor resources create the preconditions for an expanded reproduction in the industrial sector of the economy. current assets are distinguished and grouped according to the different criteria with various intention and are a prerequisite for the successful organization of accounting, since it depends on the timely and accurately dispose of current assets, the possibility of operational analysis and forecasting, the grounds of managerial this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 65 vol. 3 no. 2, 2022 decisions and ultimately a qualitative presentation of in-formation on current assets in the enterprise re-porting. the highquality system of accumulation and presentation of information from all ac-counting areas will allow simple and quick adaptation of the accountant’s work to the requirements of regulatory acts, which often change. when assessing the financial and property state of an enterprise, it is necessary to obtain the information from the reporting, which, in particular, contains data about the current assets of the enterprise. it is extremely useful and informative, as it characterizes the possibility of cash flow generation in the future. thus, accounting is the collection of documented financial information expressed in monetary form, by documenting business transactions, according to accepted principles and methods, for its analysis, evaluation and reporting to ensure control over the conservation and use of resources, formation of costs and financial results to make informed management decisions of the company 's management. therefore, today the special attention is paid to the organization of accounting for current assets and their presentation in the financial statement as an important element of the enterprise activity, used to control the fulfillment of project tasks, plans, analysis, forecasting, preparation of business plans. 2. the issues of estimation and determination of enterprise stocks are investigated in the foreign and domestic literature great attention is paid to the organization of current assets accounting of enterprises, their correct assessment, which affects the results of the enterprise and the reliability of their presentation in the statements. v. dubova and o. shovkoplias (2013) consider the international and domestic interpretation of the concept of "stock", compare the presentation of information about stocks in the financial statements of enterprises in accordance with the national p(s)a no. 1 "general requirements to financial statements" and sme 1 "presentation of financial statements" (dubova and shovkoplias, 2013, p. 142). o. horbachova and i. oliinyk (2016) considered the main critical issues of the ac-counting process organization and identification the ways of improvement the organization of inventory accounting at the enterprise. the authors studied the issue of inventories assessment at the international level and the probability of use the best international experience in ukraine (horbachova and oliinyk, 2016, p. 102). changes that took place in the form and content of financial statements of the company under the influence of international accounting and reporting standards are considered by m. yermolaieva, yu. skydanenko and a. trushyna (2017), highlighting a number of controversial issues that arise during the balance sheet formation, including the current assets formation of the enterprise. the researchers in-tent to develop proposals, the implementation of which will contribute to the formation of an objective opinion on the company activities by the financial statements user necessary for the adoption of managerial decisions (yermolayeva, skydanenko and trushyna, 2017, p. 206). a number of scholars considered the theoretical background and practical aspects of the formation and effective use of current assets of agricultural enterprises. the authors form the conceptual model of the management policy of the current assets of the agricultural enterprise. the essence of the model is the organic unity of goals, principles, methods, subsystems, and information support for the implementation of the organizational and economic mechanism for the effective use of current assets. it is substantiated that the proposed components of this mechanism are not exhaustive, and their implementation is not the last stage in the system of financial management of agricultural enterprises, but only a part of the complex and multi-component policy of management of circulating assets (ulianchenko, vasylishyn, yefanov and skolotii, 2018, p. 259). the analysis of the scientific works showed that, despite the significant scientific offers for improving the organization of accounting of current assets, there are a num-ber of unresolved issues regarding the complete and accurate presentation of information on current assets in the financial statements of the enterprise. taking into account the importance and relevance of the research, the above issues require new research and practical proposals. 3. methods of current assets presentation in the accounting the organization of current assets accounting is not only the internal business issues of the enterprise, but also the correctness, completeness and timeliness of tax accrual. therefore, when studying the organization of current assets accounting it is necessary to be familiarized with the statutory instruments that directly regulate the current assets accounting. it is also necessary to consider the fact of accounting methodology inconsistency (national accounting standards) with the financial legislation. the law of ukraine "on accounting and financial reporting in ukraine" of july 16, 1999 no. 996 details and clarifies the accounting practices. this law defines the legal principles for the implementation, regulation, organization of accounting and financial reporting in ukraine and is applied to all legal entities, regardless of organizational and legal forms of ownership. three seas economic journal 66 vol. 3 no. 2, 2022 undoubtedly, the function of accounting regulation is entrusted to the ministry of finance of ukraine, which is mainly carried out in accordance with the approved regulation (standard) of accounting, in which, during 1999–2022 34 regulations (standard) of accounting were approved. pursuant to the national p(s)a no. 1 "general requirements to financial statements", current assets are money and their equivalents not limited in use, as well as other assets intended for sale or use during the operational cycle or for a period of twelve months from the balance sheet date (ministry of finance of ukraine, 2013). regulation (standard) of accounting 9 "stocks" defines the methodological principles for the formation of inventory accounting and its disclosure in financial statements (ministry of finance of ukraine, 1999). thus, stocks are current physical assets used in the process of production and circulation and are constantly at different stages of active transformation, starting from purchase to their use at the enterprise or implementation. an important and significant fact is that the current assets of an enterprise are its important component of the property, which requires maximum attention to the creation of an efficient and correct accounting system in terms of the formation of complete information on the presence, movement and use of current assets. on the basis of the study and generalization of the existing system of documenting the operations of the receipt and disposal of current assets used at the enterprises, we have diagrammed the process of inventory accounting at the enterprise (figure 1). constant and significant changes in the legal framework require new effective approaches to solving the issues of accounting for current assets and presentation of information about them in the financial statements of the enterprise. the enterprise should timely and correctly show the economic operations on the receipt and movement of current assets in the primary accounting documents for the reliable accounting of inventories at the enterprise. 4. findings according to the national p(s)a no. 1 "general requirements to financial statements", the second dt 20 "inventories" ct dt 23 "production" ct balance sheet 1) 45000 balance sheet 5) 49000 2) 63000 1) 45000 6) 12000 7) 89000 3) 16000 4) 9000 dt 26 "final product" ct dt 63 "suppliers and contractors" ct balance sheet balance sheet 6) 12000 5) 49000 dt 15 "capital investments" ct dt 372 "settlements with accountable persons" ct balance balance sheet 2) 63000 7) 89000 dt 92 "admin charges" ct balance sheet 3) 16000 dt 93 "sales expenses" ct balance sheet 4) 9000 figure 1. the process of organization of inventory accounting at the enterprise source: author's own developments three seas economic journal 67 vol. 3 no. 2, 2022 section of the asset "current assets" information on highly liquid assets is generalized. this section of the asset contains the following articles: stocks; current biological assets; receivables for goods, works, services; accounts receivable; other current receivables; current financial investments; money and their equivalents; prepaid expenses, other current assets (ministry of finance of ukraine, 2020). changes in the structure of the section "current assets" significantly influenced the indicators that are the source information for the formation, management and analysis of the composition and structure of the company current assets, which in turn created problems in analyzing the changes in current assets, where their detailed analysis is provided, depending on their distribution to certain kinds. using the data of section ii of the assets side of the balance-sheet (financial statement), you can determine the state of use and reserves for improving the efficiency of available current assets, formulate conclusions regarding the investment attractiveness and creditworthiness of the enterprise. in addition, as noted by o. pavlenko and g. bursuk (2017), the presence of qualitative results of analysis allows to take effective management decisions for achievement of the set goals. the authors point out that problems in the formation and use of the company property in a timely manner are revealed, and there are significant chances of deconfliction. also, the effectiveness of using current assets will provide proper property and financial status (pavlenko and bursuk, 2017, p. 984). the role of accounting in the country 's economy is difficult to overestimate. in addition, the current stage of development of the ukrainian economy needs an integrated approach to reforming such a basic component of the information system as accounting, which will contribute to the formation of an effective management function. accounting plays a major role in the process of adaptation and satisfaction of needs aimed at the intensity of the emergence of demand for the provision of timely, objective and reliable information. therefore, there will be a constant need in the modern economy of the state for young qualified workers who will have the desire and continuous determination to introduce new methods and forms of accounting, its reform and improvement. bas (business automation software) is a modern software that helps to automate all processes at ukrainian enterprises of different forms of ownership and fields of activity. for this, the baf platform (business automation framework) is used. these are completely new programs developed by european developers exclusively for the ukrainian market. this computer program will optimize both accounting for current assets and accounting for the enterprise as a whole. 5. conclusions thus, in the period of formation of market relations, an important role is played by accounting, performing informational, analytical, statistical functions. under the new economic conditions, special attention is paid to the organization of accounting for current assets, as they play an important role in the activities of the enterprise. the adoption of appropriate management decisions on the activities of the enterprise is based directly on the accounting data, providing information for: – cash flow management of the enterprise; – increasing the level of solvency of the enterprise, which consists in managing cash and cash flows; – inventory management, in particular decision making on their acquisition, use, choice of methods for assessing their disposal; – management of production and sales, including the decision of questions on introduction of new products of finished goods for release and sale or improvement of available; – formation and timely presentation of financial statements, the use of its indicators for effective management decisions. the company engaged in the production has available current assets, because the successful production activities of the economic entity depend on the degree of current assets security. the adoption of effective managerial decisions is directly proportional to the completeness of the considered accounting and organizational aspects of current assets. it was established that current assets as a necessary component of the company property require the establishment of an appropriate accounting system in order to provide timely information on the presence, movement and use of current assets of the company. implementation of the organization of current assets accounting and presentation of information about them in the financial statements of the enterprise is complicated by the uncertainty and constant changes in legal acts. the accountants of the enterprise should timely present the economic operations on the receipt and movement of current assets in primary accounting documents in order to pro-vide the correct accounting of inventories at the enterprise. taking into account the directions of movement and documentary registration of operations on the receipt and disposal of stocks, we have developed a chart of stock turnover at the enterprise, which clearly shows the formation of information on the bookkeeping accounts. prospects for further research should be carried out in the direction of the assessment of current methods of current assets accounting, the development and implementation of recommendations for their practical improvement. three seas economic journal 68 vol. 3 no. 2, 2022 references: dubova, v. v., & shovkoplias, o. o. (2013). reflection of reserves in the financial statements of enterprises of ukraine according to international standards. ekonomika i rehion, no. 4(41), pp. 141–147. horbachova, o. m., & oliinyk, i. a. (2016). ways to improve inventory accounting. bukhhalterskyi oblik, analiz ta audit, no. 1(55), pp. 102–107. ministry of finance of ukraine (2020). regulation (standard) of accounting 9 "stocks". аvailable at: https://za-kon.rada.gov.ua/laws/show/z0751-99 (accessed 15 march 2022). ministry of finance of ukraine (2020). national provision (standard) of accounting 1 "general requirements to financial statements". аvailable at: https://zakon.rada.gov.ua/laws/show/z0336-13 (accessed 23 march 2022). pavlenko, o. p., & bursuk, h. yu. (2017). financial analysis of current assets and optimization of sources of their formation. molodyi vchenyi, no. 10(50), pp. 981–984. the verkhovna rada of ukraine (2020). the law of ukraine " about accounting and financial reporting in ukraine. аvailable at: https://zakon.rada.gov.ua/laws/show/996-14 (accessed 2 march 2022). ulianchenko, yu. o., vasylishyn, s. i., yefanov, v. a., & skolotii, i. v. (2018). policy improvement of formation and efficient use of the current assets of the agricultural enterprises. financial and credit activity: problems of theory and practice, vol. 4(27), pp. 259–267. doi: http://dx.doi.org/10.18371/fcaptp.v4i27.154204 yermolayeva, m. v., skydanenko, y. d., & trushyna, a. y. (2017). the annual financial report of the enterprise: the impact of international standards in its content and form. visnyk kharkivskoho natsionalnoho tekhnichnoho universytetu silskoho hospodarstva imeni petra vasylenka, vol. 185, pp. 200–215. three seas economic journal 8 vol. 2 no. 3, 2021 corresponding author: 1 institute of market problems and economic&ecological research of the national academy of sciences of ukraine, ukraine. e-mail: natalivern93@gmail.com orcid: https://orcid.org/0000-0002-5968-4211 doi: https://doi.org/10.30525/2661-5150/2021-3-2 institutional prerequisites for organizational and economic quality assurance of ecosystem services of city parks nataliia vernihorova1 abstract. as of today, according to the classifications of ecosystem services, there were developed numerous methods of their assessment. at the same time, there are no studies on institutional support for ecosystems depending on their functional groups. if we want to achieve economic effects in our economic activity in the process of support and improvement of ecosystem functions, we need to know exactly what effects are desirable and which ecosystem functions are responsible for them. therefore, the subject of research of the article is groups of ecosystem services of city parks and the possibility of their institutional support. the purpose of the article is to present a comprehensive approach to support for ecosystem services of city parks by diversifying directions of support by ecosystem functions. the article uses methods of theoretical cognition, namely: induction, deduction and systems analysis. the use of systems analysis is aimed at systematizing data on ecosystem functioning, and known ways of their institutional control and support. conceptual data passes through the border of economics and ecology, and consist of known developments for the assessment of ecosystem services, their functional classification. the study and analysis of these sources allowed to develop a comprehensive approach to institutional support of park ecosystems, in order to obtain certain economic, ecological and social effects. the paper presents the specifics of institutional support of parks according to the landscape and geographical approach. based on the analysis of the characteristics of parks of different categories, it was found that city parks in their organizational and economic support should embody the functions of public space, while maintaining its ecological significance for the city. therefore, the results of the research indicate that due to its versatility, high-quality organization of the city park requires clear and responsible institutional support. a quality city park meets the social and ecological needs of the city, and ideally, contributes to the economic well-being of nearby facilities and areas. the popularity and economic importance of the park depends on the ability to meet all these needs and the quality of ecosystem services of the park. the practical significance of the study is that the diversification of institutional support of city parks by groups of ecosystem services will increase the efficiency of management and organizational apparatus in the field of park management and will improve the quality of services received by park visitors. improvement of the quality of services will contribute towards the increase of the popularity of parks and, consequently, economic benefits. the originality of the article lies in the fact that the author proposed for the first time the support for park facilities by groups of ecosystem services. it is determined that city parks are characterized by the following functional groups of ecosystem services: regulatory, cultural and supportive. the qualitative component with regard to the city park provides not only its support as an ecosystem, but also the possibility of convenient consumption of these services by park visitors. therefore, it is important for city parks to note the availability of infrastructure, which should be considered separately from the support of ecosystem services. key words: city parks, ecosystem services, support, institutional support, diversification. jel classification: q57 1. introduction the novelty of this research lies in the fact that the author proposed for the first time the diversification of institutional support for city parks in accordance with the functional groups of ecosystem services. given that city parks are multifunctional areas, it is expected that they meet the ecological and social needs of the city. the main component that creates demand for this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 9 vol. 2 no. 3, 2021 city parks is their ecosystems, which need support according to their functional groups. therefore, in order to improve the quality of all these needs, it is important to develop organizational and institutional solutions in accordance with the functional classification of ecosystem services. the purpose of the article is to develop a comprehensive approach to institutional support of city parks based on the functional classification of ecosystem services. scientific-research objectives of the article can be formed as follows: – grouping of ecosystem services of parks by their functional groups, – identification of the main objects and functions of ecosystem services, and the corresponding benefits for the state; – identification of the object of influence by the institutions, to support certain groups of ecosystem services. the research methodology consists of methods of theoretical cognition (induction, deduction and systems analysis). first of all, the analysis of existing research on the principles of classification of ecosystem services and the functions of parks in the city environment (kucheriavyi, 2005; solovii, 2016), including classic authors (costanza, 1997; millennium ecosystem assessment. 2005) and recent research (xin cheng, 2021; jenssen, 2021; li, 2021). based on the analysis, it is proposed the following diversification of institutional support of parks: by categories of parks and by groups of ecosystem services. in the process of analysis, there were considered different parks according to their national importance, and, accordingly, functional purpose (diversification by categories of parks). due to the fact that all parks are a cultural space, the use of a geographical approach is proposed while ensuring the quality of ecosystem services. furthermore, there were considered the groups of ecosystem services and the corresponding effects they have (diversification by groups of ecosystem services). accordingly, knowing the category of parks and their purpose, it is possible to regulate certain groups of ecosystem services to achieve the desired social, environmental and economic effects when using parks. 2. quality criteria for parks as a cultural space: landscape-geographical approach usually ecosystem services are considered as “proposition from nature”, “resource”, “favorable natural conditions for economic development”. but at the same time, this resource is not infinite, and needs support from the state and society. therefore, developing in practical terms the concept of quality environment of the park, it can be proposed the directions of support for ecosystem services of parks in accordance with: 1. categories of parks and corresponding quality criteria. 2. groups of ecosystem services (regulatory, cultural, support). the actuality of supporting groups of ecosystem services lies in the increase of the efficiency of administrative regulation of the activity of parks, promotion of the development of relevant ecosystem services of the park, improvement of the quality of service. social and economic activities on the territory of parks comply with the requirements of cultural space. cultural space means a part of geographical space (geospace) that differs in the specifics of cultural activities and features of cultural, informational and leisure needs of citizens, the interconnected elements of which are located in a certain territory (geotory) and develop over time (law of ukraine “on culture”, 2011). the requirements of cultural space depend on the type of park, its specialization and the value of ecosystems. therefore, considering the park as a cultural space, it is important to use a geographical approach, according to which the concept of quality of ecosystem services for different categories of parks should be considered depending on their environmental, scientific and historical and cultural value. as of today, there are works in which landscape assessment of a natural object is used in the assessment and definition of goals in the long-term planning of protected areas, detection of regional features of the nature park (hudzevich, liubchenko, 2020). therefore, in the context of the landscape-geographical approach, parks of national, regional and local significance should be divided (figure 1). based on figure 1, the administrative regulation of parks of national and regional importance should meet primarily environmental standards, research interests and cultural functions of these parks. among the predominant groups of ecosystem services of these categories of parks, which have primary interest for state support, there can be marked regulatory and supportive ecosystem services. for parks of local significance, priority ecosystem services should be determined in accordance with the species classification of the park, its goals and importance in the city system. parks of local importance, especially megacities, are valuable for the entire range of ecosystem services. their institutional regulation seems more complex in modern conditions. on the one hand, parks contribute to the improvement of microclimatic and ecological qualities of the city environment, and accordingly require compliance with environmental regulations. on the other hand, city parks are an important element of public space. modern conditions of the city environment have developed in such a way that a comfortable stay of a person outside his home, and three seas economic journal 10 vol. 2 no. 3, 2021 especially recreation in favorable conditions require special creation and maintenance of greenery. the infrastructure of cities and their planning organization is mostly aimed at conducting efficient economic activities, which include: movement of people and connection with infrastructure (transit areas – streets, avenues, boulevards, roads, highways), location of public services, production, etc. (territories of economic subjects – streets, squares), and residential areas. parks are often outside the interests of economic development and investors, although they are in high demand among visitors. 3. institutional support for regulatory ecosystem services there are no targeted actions and programs to support ecosystems on the part of the state and institutions that take care of parks. therefore, we propose to improve the administrative regulation of park facilities in accordance with the group of ecosystem services. for now, let's focus on city parks. for each of the groups of ecosystem services (regulatory, cultural and support) that are specific to parks, it is possible to offer areas of support that focus on one or another element of the ecosystem that generates certain ecosystem services. for regulatory ecosystem services of city parks, the main areas of support are clearly shown in figure 2. as can be seen from figure 2, for the group of regulatory ecosystem services of city parks, there can be distinguished the following groups of institutional regulation: – administrative regulation and plant protection aimed at plant protection and biocenoses. the purpose of this area of support is to create favorable conditions for plant communities, so within these measures it is necessary to select plants based on their resilience, the need for living conditions, as well as the selection of plants to create symbiotic groups; – administrative regulation and control of sanitation, aimed at quality and species composition of greenery. the purpose of this area of institutional regulation is to create favorable conditions for human existence categories of parks 3. parks of local significance 1. parks of national significance 1.1 natural objects – are national parks 2.1 natural objects – regional landscape parks 2. parks of regional significance 1.2 artificially created environmental facilities – botanical gardens, dendrological parks, zoological parks and parksmemorials of garden and park art 3.1 multifunctional – parks of culture and recreation c) objects of improvement of green economy of settlements (parks of public use) – children's, sports, exhibitional, memorial, waterparks, meadow parks, forest parks, buffer parks а) natural objects – regional landscape parks b) artificially created objects of the reserve fund – botanical gardens, dendrological parks, zoological parks, parks-memorials of garden and park art; 3.2 specialized quality criteria compliance with environmental regulations, provision of scientificresearch and culturaleducational functions, recreation with observance of environmental regulations compliance with environmental regulations, recreation, conduct of environmental educational work compliance with the needs of the geosocial system – providing opportunities for recreation of citizens, maintaining the quality of the natural environment of cities, entertainment and leisure of all segments of the population, the needs of landscape and architectural solutions figure 1. categories of parks and corresponding quality criteria source: compiled on the basis of the (law of ukraine "on the nature reserve fund of ukraine", 1992; order "on approval of the rules for the maintenance of greenery in the settlements of ukraine”, 2006) three seas economic journal 11 vol. 2 no. 3, 2021 through greenery, improve the environment of the city, reduce common groups of human diseases. given the purpose of this area, it is important to exclude plants harmful to human health, such as ragweed, male poplars, etc.; – administrative regulation and geological security, aimed at creating a safe geological environment in the city. the purpose of this area of support is to promote landscaping of vulnerable areas of the city, select plants with appropriate qualities. an example services object of action ecosystem service / state function benefit / feedback from the state regulatory services of city park ecosystems formation of city microclimate city space in general regulation of carbon balance, humidity and air temperature improvement of hygienic and organoleptic conditions of the city environment air ionization city air basin increase of the biological activity of oxygen and the content of light ions increase of air transparency, reduction of manifestations of fatigue, increase of productivityventilation regulation regulation of air flow in the city, prevention of air stagnation improvement of air quality, scattering of impurities, protection against heat impact of park ecosystems organizational and economic support of city landscaping programs, taking into account the peculiarities of the climate protection of green areas and control, planning green plantings of parks, biocenoses institutional support for park ecosystem services regulation of human diseases human saturation of air with phytoncides and oxygen, absorption of harmful impurities in the air improvement of resort and therapeutic properties of the environment for resort cities, reduction of disease incidence of the population impact of park ecosystems creation of separate requirements and programs for landscaping of resort towns; landscaping with regard to the specifics of disease indicators, taking into account the needs of vulnerable groups protection of green areas, administrative activities, planning, forecasting, functional modeling, design green massif, its quality and appearance institutional support for park ecosystem services administrative regulation and plant protection administrative regulation and control of sanitation drain regulation surface of city area moisture retention and absorption, transpiration particle retention reduction of losses from rain showers, humidification of city air prevention of soil erosion and dust in cities, landslides and villages; preservation of viable soilsimpact of park ecosystems administrative regulation and geological security identification of areas of the city vulnerable to erosion, landslides, dust storms, floods, and the creation of a program for their landscaping; selection of appropriate plants monitoring, functional modeling, design park greenery, including grass cover institutional support for park ecosystem services erosion control figure 2. main directions of institutional support for regulatory ecosystem services of city parks source: compiled by the author based on the analysis (kucheriavyi, 2005; solovii, 2016; young-jae, 2018; morsy, 2016; pennino, 2016, liu, 2012) three seas economic journal 12 vol. 2 no. 3, 2021 of such support for ecosystem services is the creation of wetland parks on city territories. for example, the “atlantic de las llamas park” in santander (spain) (prostranstvo, 2021), or the hong kong wetland park in northern ting shui wai (2021), which were designed to preserve wetland ecosystems and create an ecological mitigation zone. it can be said that the object of state support for regulatory ecosystem services are green areas of parks, and the above three areas of support have their purpose. that is, it can be seen that the regulation of ecosystem services through the same object may have different meanings. 4. institutional support for cultural ecosystem services let’s consider the areas of support for cultural ecosystem services of city parks (figure 3). as can be seen from figure 3, institutional areas of support for cultural ecosystem services include: – administrative regulation and social orientation, designed to create a favorable environment for recreation. the functioning of the park should be organized from the standpoint of the status of the territory as a public space, and include specially designed social programs, depending on the type and specialization of the park. green plantations are cultural services of ecosystems of city parks services object of action ecosystem service / state function benefit / feedback from the state rest human, society natural phenomena, phenology, change of impressions recreation within the city, income for nearby service facilities places of public cultural events human, society socialization diversification of impressions and rest; places for communication and meetings; aesthetic experience; job support sport human, society environment for recovery involvement of the population in a healthy lifestyle, creation and support of jobs in the field of sports servicesimpact of park ecosystems creating social and health programs in parks, improving the quality of rest and taking into account the needs of the population monitoring the needs of the population, development of proposals, public hearings, design, organization, assistance green areas of parks and relevant infrastructure, buildings institutional support for park ecosystem services administrative regulation and social orientation aesthetic and cultural space of the city natural phenomena, phenology natural heritage as the property of society; aesthetic values; prerequisites for tourism development, increase of land value cultural historical heritage preservation of cultural and historical heritage tourist attractions, aesthetic values of city space, increase of land value inspiration human natural phenomena, phenology source of inspiration for national symbols or the city, advertising, creativity; opportunities for the development of behavioral and impression economy impact of park ecosystems green areas and infrastructure of culture, recreation and historical sites creation of investment programs for the development of parks of cultural and historical significance, improvement of environmental standards in parks monitoring of cultural and natural heritage parks, adaptation to modern needs institutional support for park ecosystem services administrative regulation and cultural development cultural natural heritage activities figure 3. main directions of institutional support for cultural ecosystem services of city parks source: compiled by the author based on the analysis (kucheriavyi, 2005; solovii, 2016; young-jae, 2018; morsy, 2016; pennino, 2016, liu, 2012) three seas economic journal 13 vol. 2 no. 3, 2021 the object of influence by state regulators, but their qualitative features are considered from the standpoint of benefit to society. this area includes the needs and safety of human health, as well as the possibility of implementing socially beneficial measures; – administrative regulation and cultural development aimed at maintaining the cultural value of parks. institutional support is aimed at supporting those qualities that affect a person through impressions or inspiration. therefore, the object of influence are units of greenery supporting services of ecosystems of city parks services object of action ecosystem service / state function benefit / feedback from the state nutrient retention ground cover and water bodies nutrient retention rate absorption of nutrients and improvement of soil quality and protection of groundwater nitrogen absorption ground cover nitrogen fixation coefficient improvement of the quality of soils, their chemical composition adsorption of waste and toxins ground cover and water bodies decomposition of impurities by biological, biophysical and biochemical processes preservation and improvement of the quality of soils and water bodies, including underground ones green plantations and soil biocenosis approval of the program of protection of soils and underground waters on the territory of the city, the maximum coverage by parks of the areas with high quality of soils, selection of plants and promotion of health of ecosystems monitoring, design, protection of plantations and soil biocenoses, cooperation with geological services and other specialists impact of park ecosystems institutional support for park ecosystem services administration and preservation of biocenoses oxygen production air bassin filling the atmosphere with oxygen and absorbing carbon dioxide maintenance of the rate of oxygen supply per unit of population air quality air bassin absorption of co, co2 and other impurities, retention of small particles, ionization maintenance of air quality as a prerequisite for recreational activities; reduction of the cost of overcoming the effects of corrosion of structures noise protection function city space absorption of sound oscillations by crowns reduction of noise stress for the population, improvement of hygienic norms in the city maintenance of healthy condition of greenery, selection of the most stable and useful species green plantations, their qualitative, species and quantitative composition impact of park ecosystems monitoring, cooperation with specialists, design, protection institutional support for park ecosystem services administration and protection of plants representativ es of the animal world territories for life, food populations of useful species in cities, biodiversity creation of living conditions for safe species of animals and birds; selection of appropriate plants and park planning; combination of parks in a network of green corridors monitoring, planning, protection green plantations and their species and quantitative composition; organizational and planning programs impact of park ecosystems institutional support of park ecosystem services administration and regulation of wildlife animal habitats figure 4. main institutional areas of support and regulation of supporting ecosystem services of urban parks source: compiled by the author based on the analysis (kucheriavyi, 2005; solovii, 2016; young-jae, 2018; morsy, 2016; pennino, 2016, liu, 2012) three seas economic journal 14 vol. 2 no. 3, 2021 in terms of their historical and cultural significance, as well as architectural complexes and objects. today in the city parks of ukraine there are almost no permanent social programs, especially since they are not specified in the documents on the improvement of parks. 5. institutional support for supporting ecosystem services the basis for quality provision of park space is the institutional regulation of supporting ecosystem services. they are the basis for the preservation and development of cultural and regulatory ecosystem services, and create the main qualitative characteristics of the natural space of city parks (figure 4). it can be seen from figure 4 that the main areas of regulation of supporting ecosystem services of parks are divided into: – administration and maintenance of biocenoses aimed at maintaining soil biocenoses through the selection of greenery, especially grass cover. this area should include soil protection programs, because as it is known, in the cities of the steppe zone of ukraine may be high quality chernozems. therefore, the creation of parks should be correlated with areas with valuable landscapes and the presence of groups of valuable biocenoses; – administration and protection of plants aimed at maintaining greenery, in order to improve such functions as: oxygen production, impact on air quality, noise protection properties. it provides for measures with regard to improve the health of greenery; – administration and regulation of wildlife, aimed at creating conditions in parks for the existence of birds, squirrels, hedgehogs. both animal and human safety are important. park areas should include groups of greenery that are far from people's recreation areas, or even out of reach. for example, groups of trees in a circle of low bushes provide opportunities for nesting and other forms of existence. at the same time, there should be no stray animals in the parks, and populations of squirrels and hedgehogs should be supervised by experts for signs of rabies and other dangerous diseases. it can be seen that each of the groups of ecosystem services of urban parks requires different areas of support from the institutional maintenance. the object of influence remains almost unchanged – greenery and biocenoses of parks, but administrative decisions on the development of the park can take on different meanings and, accordingly, give different effects. 6. generalized principle of institutional support for city parks in figure 5 we can summarize the principles of government regulation in the context of improving the ecosystem services of parks. so, it can be seen that the quality of ecosystem services of parks and their diversity are provided primarily by such administrative areas as: protection of ecosystems and social orientation of park activities. rich opportunities to offer ecosystem services of parks are a prerequisite for the implementation of various programs of recreation, rehabilitation and social activities. in ukraine, almost both directions are absent, especially in city parks. the inclusion of parks in the socio-economic space of life of citizens in ukraine takes place only in the areas of commercial benefit. therefore, we can see how a poor understanding of the areas of quality support of parks and the lack of their socially oriented software leads to a qualitative impoverishment of ecosystem services. park ecosystem services subject of action essence of service state support and regulation regulatory due to greenery, and infrastructure and architecture impressions, recreation, income from recreational activities, aesthetic attractions in the city due to quality of greenery and their location regulation of urban microclimate, sanitation and geological safety cultural supporting due to functioning of ecosystems, biocenoses, functional features of green plants creation of enabling environment to support regulatory and cultural services administration and maintenance of biocenoses, plant protection, regulation of the animal world administrative regulation and cultural development, social orientation administrative regulation and plant protection, sanitation control, geological safety figure 5. principles of institutional regulation according to the groups of ecosystem services of parks source: compiled by the author three seas economic journal 15 vol. 2 no. 3, 2021 7. conclusion in conclusion, it may be noted that the main prerequisite for organizational and economic quality support of ecosystem services of city parks is the comprehensive support of their ecosystems as the main resource for the creation of services. in addition, there must be an understanding of the impact of ecosystem groups on the social, ecological and economic environment of the city, to develop an optimal strategy for the development of parks with the desired effect. as of today, the park improvement system lacks specific solutions to support the ecosystem as a whole, or targeted support for a specific group of ecosystem services. that is why there is no clear understanding of the quality of city parks and ways to achieve it. therefore, the following recommendations can be provided at the institutional level of the organization of park development: – diversification of administrative regulation, and organizational and economic support of parks in accordance with groups of ecosystem services; – expansion of cooperation of institutions and organizations on the balance of which the parks are listed, with botanists, ecologists and geologists in regards to creation of parks in vulnerable areas; – creation of a landscaping program in accordance with the problems of cities: sanitary, geological, climatic and specific diseases of local residents; – creation of parks in accordance with the social, environmental and economic needs of the city. references: costanza, r . and other (1997). the value of the world’s ecosystem services and natural capital. nature, 387(6630), 253–260. hong kong wetland park (2021). electronic resources. retrieved june 17, 2021 from: https://www.wigi.wiki/ wiki/uk/hong_kong_wetland_park hudzevich, a., & liubchenko, v. (2020). landscape approach to taking into account the regional features of the organization of nature management of the protected area. bulletin of v.n. karazin’s kharkiv national university, series "geology. geography. ecology", 52, 119–129. retrieved june 20, 2021 from: https://doi.org/ 10.26565/2410-7360-2020-52-09 jenssen, m., nickel, s., & schröder, w. (2021). methodology for classifying the ecosystem integrity of forests in germany using quantified indicators. environmental sciences europe, 33(1), article no. 46. doi: 10.1186/s12302-021-00478-y. retrieved june 21, 2021 from: https://www.scopus.com/inward/record. uri?eid=2-s2.0-85104422202&doi=10.1186%2fs12302-021-00478-y&partnerid=40&md5=f4538980dbc01d29 32e5db29d0b55ca4 kucheriavyi, v. p. (2005). landscaping of settlements. lviv: «svit», 456 р. law of ukraine "on culture" (2011). bulletin of the verkhovna rada of ukraine, no. 24, 168 p. law of ukraine "on the nature reserve fund of ukraine" (1992). bulletin of the verkhovna rada of ukraine, no. 34, 502 p. li, y., fan, s., li, k., zhang, y., & dong, l. (2021). microclimate in an urban park and its influencing factors: a case study of tiantan park in beijing, china. urban ecosystems, 24(4), 767–778. liu, c.-m., and other (2012). experimental studies of the dilution of vehicle exhaust pollutants by environmentprotecting pervious pavement. journal of the air & waste management association, 62(1), 92–102. millennium ecosystem assessment (2005). ecosystems and human well-being [synthesis peport]. island press, washington dc, 160 p. morsy, m., goodall, j., shatnawi, f., & meadows, m. (2016). distributed stormwater controls for flood mitigation in urbanized watersheds: case study of rocky branch watershed in columbia, south carolina. journal of hydrologic engineering, 21(11). order «on approval of the rules for the maintenance of greenery in the settlements of ukraine» (2006). ministry of construction, architecture and housing of ukraine. adoption on april 10, 2006, no. 105. pennino, m. j., mcdonald, r . i., & jaffe, p.r . (2016). watershed-scale impacts of stormwater green infrastructure on hydrology, nutrient fluxes, and combined sewer overflows in the mid-atlantic region. science of the total environment, 565, 1044–1053. prostranstvo (2021). park in the swamp or cantabrian island of urban paradise. retrieved june 17, 2021 from: https://www.prostranstvo.media/uk/park-na-boloti-abo-kantabrijskyj-ostrivecz-urban-rayu/ solovii, i. (2016). assessment of ecosystem services provided by the forests of ukraine and proposals on payment mechanisms for ecosystem services. retrieved june 17, 2021 from: www.enpi-fleg.org xin cheng, sylvie van damme, & pieter uyttenhove (2021). a review of empirical studies of cultural ecosystem services in urban green infrastructure. journal of environmental management, vol. 293. doi: https://doi.org/10.1016/j.jenvman.2021.112895 young-jae, k., lee, c., & jun-hyun, k. (2018). sidewalk landscape structure and thermal conditions for child and adult pedestrians. international journal of environmental research and public health; basel, 15(1), 148. baltic journal of economic studies 54 vol. 2, no. 2, 2021 doi: doi: https://doi.org/10.30525/2661-5150/2021-2-9 forecasting of the tourism industry development and the covid-19 pandemic consequences: geographical and international orientation olesia iastremska1, oleksandra kononova2 abstract. restrictions on transportation between countries because of lockdown caused by the prevalence of morbidity covid-19 have slowed down economic activity worldwide. therefore, in this paper, we examine and estimate the short-term economic impact of the covid-19 pandemic on the global market situation in terms of the international tourism industry. the purpose of the study is to analyze the current economic situation of the world tourism sector, which suffered the most because of the covid-19 pandemic, determine the main tourist flows (inbound and outbound tourism), and identify main tourism trends that characterize travel and tourism in 2020, to form practical directions for improving the tourism industry, domestic tourism in particular. this article analyzes the dynamics of international touristic destinations for the period 2019-2020, with regard to the pre-pandemic period and during the covid-19 lockdown. also, the dynamics of destinations of international tourists by different regions and the world in general for different types of travel limitations in 2020 are analyzed. it is detected an enhancement in percentage change of tourism destinations from july 2020 because the world began to open up to international tourism, mainly in the european union. in this article, it is considered that the implementation of travel restrictions is clearly affected international travel. the dynamic of the international tourists’ destinations with a complete/partial closure of borders and other restrictions by region in 2020 during the covid-19 pandemic are analyzed. the major trends in the tourism sector during the coronavirus crisis are highlighted. the main practical directions for the resuscitation of the tourism industry have been formed, which will have to reduce the negative consequences of the covid-19 pandemic and created a basis for increasing the competitiveness of domestic tourism. it is determined that support for the development of the tourism industry at the central and local levels should be based on the expected preferences of tourists and the risk of using illegal resorts with the possibility of infection. the article examines the main problems of the tourism sphere of ukraine, which arise as a result of the introduction of measures to overcome the coronavirus pandemic in the world and in ukraine in particular. using the experience of other countries and international recommendations, measures for intersectoral cooperation in the context of increased epidemic risks are proposed. the article reveals the peculiarities of the development of the tourist sphere of ukraine in the conditions of increased epidemic risks. modern tendencies of functioning of the tourist sphere of the country are investigated. the tourism sector is suffering on a global scale due to the implementation of measures to overcome the coronavirus pandemic and the uncertainty of further development of the situation. according to various scenarios, in 2020 the volume of international tourist arrivals is expected to fall by 58-78% compared to last year. according to experts, the recovery of demand to the level of 2019 will take at least two years. according to experts, the sphere of tourist services of the coronavirus crisis period will be characterized by giving consumers priority in terms of choice of shorter rest periods, a predominance of individual movement and individual accommodation, choice of health, sea, and rural tourism. key words: tourist flows, international tourism, quarantine restrictions, epidemic risks, covid-19, international prognosis, tourism development. jel classification: c82, e32, l90, i19, z32 corresponding author: 1 simon kuznets kharkiv national university of economics, ukraine. e-mail: iastremska.o@gmail.com orcid: https://orcid.org/0000-0003-1865-0282 researcherid: 0000-0003-1865-0282 2 prydniprovska state academy of civil engineering and architecture, ukraine. e-mail: oleksandrakononova@gmail.com orcid: https://orcid.org/0000-0002-7215-8574 researcherid: aag-2757-2019 baltic journal of economic studies 55 vol. 2, no. 2, 2021 introduction today, tourism continues to be the key industry of the national economy in terms of economic growth, as it contributes to the national income increasing and the payment balance improving, as well as intensifies the multiplier effect – helps to increase the country 's competitiveness. recognition of the growing role of tourism in creating new jobs, reducing poverty, developing small businesses, and increasing economic growth is reflected in the formation of tourism development strategies both in developed and developing countries. the global coronavirus pandemic has affected all spheres of human life negatively. tourism is one of the sectors of the world economy that has suffered the most from the movement restrictions. as a result, the study of theoretical and practical issues of stabilizing the tourism industry functioning, preventing the negative impact of quarantine restrictions, and further ensuring the sustainability of the industry is not just relevant but a priority in today’s dynamic changes in the economic environment. the aim of the paper is to research the issue of the tourism industry stabilization in the context of quarantine restrictions using the other countries’ experience and international recommendations, as well as to justify measures to accelerate the recovery of this area in the conditions of high epidemic risks. 1. methodology of research 1.1. the tourist sphere development in the conditions of increasing epidemic risks the covid-19 pandemic is the hardest experience the world has faced since world war ii. the crisis will have serious consequences on the global economy, and according to the imf report, the projected decline in gdp in ukraine from april 2020 will reach 7.7% (tourism and transport in 2020 and beyond, 2021). a number of international organizations, including the imf, the world bank, and the oecd, have published their economic forecasts of the effects of the covid-19 crisis on the world economy. according to this report in 2020, the gdp of ukraine is projected to fall to 7.7% with unemployment reaching 10%. inflation is expected to be declined in 2020 in ukraine and worldwide. according to the report, all countries, including ukraine, will be able to restore their economic situation by 2022 but it is impossible to fully compensate for the negative consequences of the pandemic in 2020-2021. it is projected that the international economy will be able to reach the economic indicators of 2020 only in 2023 (communication from the commission covid-19, 2021). there are quite different estimates for the further recovery of the global economy – from the v-shaped scenario, which provides the economic recovery in 2021, to a longer recovery and even a long-term recession. in 2019, the number of international tourists reached 1.5 billion people, which is 4 percent more than in 2018. tourism was stopped in mid-march 2020. in the first months of the year, the number of international tourists decreased by 56% and in may – by 98%. this resulted in a loss of almost 320 billion usd in the form of export, which is more than three times the losses of the global economic crisis in 2009 (communication from the commission covid-19, 2021). prospective scenarios indicate the possible reduction of tourists’ number and revenues from international tourism by 58-78% throughout the year that depends on the pandemic spread, the duration of travel restrictions, and the process of gradual border opening, which has been already begun. such a serious problem may reduce the number of international tourists by 850 million – 1.1 billion people and lead to a loss of 910 billion – 1.2 trillion usd in the form of export earnings from tourism, which will jeopardize the tourism sector from 100 to 120 million jobs. there are still many challenges ahead, including the unknown pandemic dynamics and how consumer confidence will be restored. according to the forecasts of the international monetary fund, the volume of the world economy in 2020 will decline sharply – by 4.9%, although it is expected that in 2021 the forecast will be improved (world tourism organization (unwto) reports (2020). although countries and international organizations have taken a number of measures to mitigate the socio-economic consequences of covid-19 and stimulate tourism recovery, the scale of the crisis requires additional efforts and continued support. the pandemic impact on the employment in tourism sector is significant. governments responded immediately to the need to minimize the economic consequences of the covid-19 pandemic, based on two general approaches: the first is to provide affordable credit lines for business, and the second is to delay debt and tax liabilities. for example, seychelles and ecuador have postponed special taxes in the tourism sector, and kenya, south africa, china, lithuania, portugal, poland, and spain have provided needful to pandemic-affected businesses in the form of special funds, a guarantee fund model to pay the travel costs, subsidies, or co-financing of deferred or canceled costs. in switzerland, hotel lending institutions have provided to existing customers the one-year deferral of depreciation, as well as financed the investments of customers who have financed them with cash flow over the past two years. georgian banks have announced the debt restructuring for all individuals, especially for travel companies (world tourism organization (unwto) reports (2020). baltic journal of economic studies 56 vol. 2, no. 2, 2021 today in ukraine, there is a significant lag in the pace of implementation of measures to support the tourism industry that jeopardizes the competitiveness of the industry in the global market during the projected recovery period in 2021. 1.2. features of forecasts forming of tourism industry development there are more than 800 million trips in the world every year, half of which is within europe. about 60% of these trips are related to recreation. the share of tourism in the world export of goods and services is about 13%, in eu countries – 14%. the tourism industry accounts for 8% of the total gdp of the eu countries, provides almost 11% of economic growth, it employs 12% of the world’s labor force. the main trends of the tourism development in the world are: the duration reducing and increasing of the number of tourist trips, which, in particular, has formed a demand for tourism offers that provide the opportunity to visit a significant number of places in a shorter time; active involvement of states in the competition for influence on the parameters of the international tourist flow, also through the state programs implementation; introduction of the regulatory framework and fiscal policy conducive to the tourism industry development; creation of effective mechanisms for establishing and maintaining the balance between the preservation of natural, historical and cultural resources and tourism activities. according to the world tourism organization (wto), the tourism boom is expected in the 21st century: the number of travelers in the world by 2020 was up to 1.6 billion people per year, which means the tourist flows increase in 2.4 times compared to 2000. the leader in the tourist influx was china (137.1 million). the second most popular destination was the united states (102.4 million), followed by france (93.3 million), spain (71.0 million), and hong kong (59.3 million). the daily expenses of tourists, excluding air transportation costs, have increased to 5 billion usd a day. the largest suppliers of tourist flows are the united kingdom, germany, japan, the usa, and china (world travel & tourism council, 2020). in 2001 ukraine ranked 22nd in the world in terms of the number of foreign tourists (5.8 million people that is about 1% of the world’s tourist flows). according to the wto’s projections of the inbound tourism development in ukraine, its number should increase to 15.0 million people by 2020. the tourism industry development in any country is determined by such factors as (communication from the commission covid-19): political and social stability in the country; national policy and interethnic relations; conjuncture of the international tourist market; degree of the tourism state support; the state of the material base of tourism; investment attractiveness of the tourism sector; reasonable pricing policy; integration of domestic tourism into the world tourism; demographic and social structure of the population; safety of tourist trips; availability of highly qualified personnel; national traditions; the existence of recreational areas; natural and human-caused cataclysms that are difficult to predict. the tourism industry nature causes the low level of reliability of various events forecasts because all of them depend on many factors, some of which are unmanageable. the total risk probability multiplicatively depends on the probabilities of each of the factors. therefore the forecasting of the tourism industry development requires economic and mathematical methods and models application. the type of forecast is chosen by time (operational, short-term) and/or territorial level: state, regional, local, etc. the factors that affect the tourism development directly or indirectly are identified and the strength of each factor’s influence on the forecast parameters is determined taking into account the risk and uncertainty of the processes. it is known that in the economic risk theory uncertainty is understood as incompleteness or lack of information about the forecast conditions and about costs and results that are most important (mazaraki, 2019). table 1 forecast of the most popular tourist destinations until 2020 country tourist influx (million people) share in the world tourist market (%) growth dynamics of 2000-2020, % china 137.1 8.6 8.0 usa 102.4 6.4 3.5 france 93.3 5.8 1.8 spain 71.0 4.4 2.4 hong kong 59.3 3.7 7.3 italy 52.9 3.3 2.2 uk 52.8 3.3 3.0 mexico 48.9 3.1 3.6 czech republic 44.0 2.7 4.0 source: ( formed based on global europe 2050) baltic journal of economic studies 57 vol. 2, no. 2, 2021 the appropriate indicators are chosen in the forecasting process, in particular: intensity, mobility, number of tourist flows by types of transport, directions (entry, exit), countries and regions; volumes of service by types of tourism; profit volumes; level of profitability; the number of employees in the industry; material base, etc. it is necessary to determine the trends and growth rates of these indicators in time and in the spatial dimension. it is important to establish the reliability level of forecasts and obtain the socio-economic assessment of their implementation, i.e., the calculation of economic, budgetary, commercial, social efficiency. the long-term forecast of the tourism industry is associated with probabilistic business planning of its development indicators and the assessment of its effectiveness in conditions of uncertainty and risk. these conditions determine the specifics of the forecast. it consists of considering the sources of uncertainties and methods of their consideration in assessing the effectiveness of the forecast. it is also determined the methods of estimating uncertainty by checking the stability of the forecast (especially to external factors changes), formalizing the description of uncertainties, adjusting the forecast parameters. the concept of limit (permissible) values of selected parameters (indicators) is introduced (mazaraki, 2019). a large number of risks and uncertainties are “inherent” in the implementation of investment projects in tourism, which are crucial in the forecasting of its development. among the existing mathematical models of forecasting tourism development, it is actually to use those that take into account the crisis phenomena existence. these include models developed by professor y. blokhin (communication from the commission covid-19). his concept of socio-economic development of tourism in the large city or region is based on the principle of comparing the costs and revenues. analytically, it is expressed as follows: σ s = {(d1+ (1k) * d2) – r }, (1) where: σ s is a total profit from tourism activities in the city or region; d1 is an income from inbound tourism; d2 is an income from outbound tourism; r is the cost of the tourism development of the city or region; k is a transmission ratio. however, this model does not take into account the economic, social, demographic, environmental, and other factors. the tourism development in the world is also influenced by scientific and technological progress, demographic changes, the quality of life improving, increasing the duration of free time, vacations, economic and political stability, and a number of other factors. 2. results and discussion 2.1. economic consequences of the covid-19 pandemic impact on tourism the tourism sector, unlike other economic activities with social impact, is based on the interaction between people. currently, it is one of the sectors the most affected by the covid-19 pandemic, that influences the economic situation in the market. as a direct consequence, the world travel and tourism council (wttc) noted that the pandemic crisis in the tourism business was five times more serious than in 2008. in ukraine, the pre-quarantine level of inflow was not too high, as there was a huge drop after 2014. if the external borders are closed longer than the quarantine within the country is lifted, there will be an increase in the flow of domestic tourism, which can partially replace the external flow. in general, the tourism industry occupies a modest place in the economy of ukraine – about 1.5% of gdp. along with outbound tourism, domestic tourism also suffered significant losses. in general, the losses of the tourism industry in ukraine are estimated at more than 1.5 billion usd. thus, the tourism sector has suffered global losses due to the introduction of measures to overcome the coronavirus pandemic and the uncertainty of further development of the situation: 96% of tourist destinations worldwide have been limited (karaiskaki, bellos, papantoniou, 2020). cruise companies around the world have begun canceling their calls in 2021 due to the coronavirus pandemic. european largest low-cost carrier ryanair has reduced the number of flights by 20% since september 2020 due to falling demand. given the changing nature of the situation, it is necessary to assess the covid-19 impact on international tourism. consider in more detail the percentage change in international tourist arrivals based on data of the world tourism organization (unwto) (figures 1 and 2). the international tourist inflows have decreased by 70% in the first eight months of 2020 compared to the same period the previous year. this came amid the global travel restrictions, including the state borders closure in order to contain the ongoing covid-19 pandemic. international arrivals fell by 81% in july and by 79% in august 2020, traditionally in the two busiest months of the year and the peak of the summer season in the northern hemisphere. however, despite such significant declines, it is worth noting a relative improvement over the decrease of more than 90% in previous months, as some destinations began to open up to international tourism, mainly in the european union. the decrease in the international tourist inflows in january-august 2020 is 700 million less compared to the same period in 2019, which is a loss of 730 billion usd from exports in the international tourism, and exceeds 8 times the loss in 2009 from the impact of the global economic crisis. baltic journal of economic studies 58 vol. 2, no. 2, 2021 in asia and the pacific, the first region to be affected by the pandemic, the number of arrivals decreased by 79% in january-august 2020. africa and the middle east recorded a fall of 69% in the eight-month period, while europe has declined by 68% and the usa – by 65%. the introduction of the travel restrictions has clearly affected international travel (figure 3) (world travel & tourism council, 2020). international tourism spending data continue to reflect very weak demand for outbound trips, although, in several large markets, such as the usa, germany, and italy, there has been a slight increase in spending in july and august of this year. in the european union regions, it was observed the largest reduction in “full” closure – from 92% of the total number of arrivals in the region in late april to 8% in early september). this reflects the significant opening of the destinations in the european union in late may and june. in the asia-pacific region, this share has been also decreased, although to a lesser extent (from 88% in april to 64% in september), as several major destinations, such as china, remain closed. “complete” closure in the usa has been fallen from 40% to 25% over the same period, reflecting the opening of borders at several destinations in the region, mostly in the caribbean. however, the united states and canada remained closed. unlike other regions, in africa and the middle east, the share of “full” closures has been increased in the period between april and june, before declining in july and early september. this is due to the later pandemic impact on these regions compared to asia and europe. in africa, the share of destinations with a “full” stop peaked at 91% in june and fell to 63% in september. in the middle east, the share peaked at 80% before falling to 49%. upper columns – 2019. lower columns – 2020. figure 1. international tourist inflows 2019-2020 by regions in the world (%) source: world tourism organization (unwto), 2021   figure 2. international tourists influxes in the world in 2020 (%) source: world tourism organization (unwto), 2021   baltic journal of economic studies 59 vol. 2, no. 2, 2021 conclusions thus, the current stage of world economic development is characterized by increasing attention to the development of tourism as the socio-economic transformation catalyst. as a result of the transition from the late ‘80s of the twentieth century from mass standardized to mass differentiated tourism, the world is observed the formation of new tourist enterprises, increasing the production of tourist products. for many countries, international tourism is an important source of foreign exchange earnings, one of the leading items in the gdp formation. based on the fact that due to the cumulative effect, the overall contribution of tourism to gdp (especially in the segment of international tourism) is much higher than the direct contribution to gdp (both at the national and international levels), we can conclude that that the tourism sector will continue to be crucial in terms of economic growth in developed and developing countries. historically, tourism has demonstrated an active ability to adapt, innovate and recover from shocks. however, the current unprecedented situation requires new approaches, as well as strong multi-level responses and strong partnerships. recent trends in europe show that the opening of borders and tourism is not without risks, as in some regions this has led to an increase in the number of infections, resulting in the introduction of local restrictions by governments. now the measures are taken in order to eliminate the direct socio-economic consequences of covid-19 for tourism and to accelerate the recovery process with the aim of preserving the livelihoods of millions of people, but at the same time, this crisis enables the sector to transform and become more viable, inclusive and stable. such a transformation implies that priority in the process of tourism development must be given to the well-being of people, to the strong partnership established with governments, the private sector, citizens, and the international community aiming the better planning and regulation of tourism, and to the creation of the measurement systems in order to assess the impact of this sector on the economy, society, and the environment, and for the proper management of strategic and practical activities. according to experts, the main trends in the tourism sector during the coronavirus crisis will be (communication from the commission covid-19: eu guidance, 2021): – development and predominance of domestic tourism, close trips; – choice of shorter terms of rest, booking closer to the date of departure; figure 3. shares of destinations with full closure of borders by regions, 2020, % of arrivals in the region* *share calculated on the basis of international arrivals, as of 2019 source: world tourism organization (unwto) 27/04/20 18/05/20 15/06/20 19/07/20 01/09/20 europe 92 88 20 8 8 americas 40 41 39 34 25 middle east 71 78 80 51 49 asia pacific 88 88 83 68 63 africa 77 85 91 71 64 27.04.2020 18.05.2020 15.06.2020 19.07.2020 01.09.2020 baltic journal of economic studies 60 vol. 2, no. 2, 2021 – increasing the demand for the independent (family) trips by own vehicles and with individual accommodation; – choice of health, sea and rural tourism (outdoor recreation, accommodation in recreational areas, suburban recreation complexes, rent of green estates, individual houses in compliance with the requirements of social distance and providing the necessary means of protection); – sanitary and hygienic conditions and the possibility of distancing during living and recreation will be important competitive factors. taking into account the expected preferences of tourists and the risk of using illegal resorts with the possibility of infection, the support of the tourism industry development has to be provided at the central and local levels. this would reduce the negative effects of the covid-19 pandemic and create the basis for increasing domestic tourism competitiveness. the practical realization of demand in the tourist infrastructure will depend on the ability to establish its activities in the conditions of anti-epidemic restrictions. in order to start the tourism recovering, it needs to be revived by the service improving and strengthening the information campaign, in particular by: – ensuring the availability and reliability of the information on possible travel restrictions and cancellation probability in terms of the main countries of outbound tourism, depending on the degree of epidemic threat; – creation of mechanisms to guarantee the loss of tourists from the cancellation of the trip due to the spread of the epidemic by providing vouchers for canceled reservations; – introduction of a transparent mechanism of the targeted use of funds from the tourist tax exclusively for the development of domestic tourism, related infrastructure, and environmental improvement. – conducting the information and advertising campaigns aimed at reorienting consumer demand for domestic tourism. there are positive tendencies in world tourism even in the economic crisis conditions. new powerful tourist markets and successful players are appearing now. the wto analytical forecast of the world tourism development identifies the most popular types of tourism until 2020: adventure, cruise, environmental, cultural and cognitive, thematic, extreme. in world practice, tourism has a significant impact on the development of socio-economic processes in the country and is an important element of its overall strategy. so, the economic and social forecast of the tourism industry is a part of the forecast of the economic and social development of the country. it needs to take into account its features in modern conditions. in the future, the main directions of tourism development will be determined by factors of social, economic, political, and environmental nature. this deepens the processes of uncertainty and the risk factors existence. references: communication from the commission to the european parliament, the council, the european economic and social committee, and the committee of the regions. tourism and transport in 2020 and beyond. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/communication-commission-tourism-trans-port2020-and-beyond_en.pdf (accessed june 21, 2021). communication from the commission covid-19. towards a phased and coordinated approach for restoring freedom of movement and lifting internal border controls. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/communication_freemove-ment.pdf (accessed june 21, 2021). communication from the commission covid-19. guidelines on the progressive restoration of transport services and connectivity. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/ communication_transportservices.pdf (accessed june 21, 2021). commission recommendation of 13.5.2020 on vouchers offered to passengers and travellers as an alternative to reimbursement for cancelled package travel and transport services in the context of the covid-19 pandemic. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/recommendation_ vouchers_en.pdf (accessed june 21, 2021). communication from the commission covid-19: eu guidance for the progressive resumption of tourism services and for health protocols in hospitality establishments. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/communication_tourismservices_healthprotocols.pdf (accessed june 21, 2021). global europe 2050. luxembourg, publications office of the european union, 2012. available at: https://op.europa.eu/en/publication-detail/-/publication/32cfa157-57fc-409db7c0-75b50faafa1e (accessed june 21, 2021). karaiskaki, t., bellos, i., and papantoniou, s. plan to cautiously reboot tourism sector. available at: https://www.ekathimerini.com/252521/article/ekathimerini/news/plan-tocautiously-reboot-tourism-sector (accessed june 21, 2021). mazaraki, a. a. (2019). determinants of tourism development. zbirka materialiv mizhnarodnoi naukovopraktychnoi konferentsii [collection of materials of the international scientific-practical conference], turyzm xxi stolittia: hlobalni vyklyky ta tsyvilizatsiini tsinnosti [tourism of the xxi century: global challenges and values of civilization]. kyiv: knteu. baltic journal of economic studies 61 vol. 2, no. 2, 2021 oecd tourism trends and policies (2020). available at: https://www.oecd.org/cfe/tourism/oecd-tourismtrends-and-policies-20767773.htm (accessed june 21, 2021). tourism and transport: commission’s guidance on how to safely resume travel and reboot europe's tourism in 2020 and beyond. an official website of the european union. available at: https://ec.europa.eu/commission/ presscorner/detail/en/ip_20_854 (accessed june 21, 2021). world travel & tourism council (2020). available at: http://www.wttc.org (accessed june 21, 2021). world tourism organization (unwto) reports (2020). available at: https://www.unwto.org/internationaltourism-and-covid-19 (accessed june 21, 2021). three seas economic journal 22 vol. 2 no. 3, 2021 corresponding author: 1 institute of industrial economics of the national academy of sciences of ukraine, ukraine. e-mail: ekaterina.kitrish@gmail.com orcid: https://orcid.org/0000-0002-5363-7609 doi: https://doi.org/10.30525/2661-5150/2021-3-4 assessment of the level of constantity of supply chains of industrial enterprises of ukraine kateryna kitrish1 abstract. industry plays a crucial role in solving current problems, namely: the accelerated development of industry, is a generator of scientific and technological progress and innovation, an important factor in the global competitiveness of national economies and a driver of economic growth. therefore, increasing attention to the development of industry and industrial policy is one of the main trends in the modern world economy. the purpose of the paper – to analyze the sustainable development of industrial enterprises of ukraine from the standpoint of security, using a system-structural approach. methodology. the concept of sustainable development is a management structure that contains a general system view of the ways of transition from the current position of the object of management to the desired, includes the following steps: defining the structure of sustainable development; defining the boundaries of safe existence; identification of the level of sustainability of supply chains; identification of imbalances of sustainable development; to substantiate the methodical approach to estimating the level of sustainability of supply chains of industrial enterprises with the use of economic and mathematical tools; determining the impact of threats and developing institutional measures. the results of the study revealed disparities in sustainable development at the level of economic, social and environmental security of the enterprise, at the level of subordinate components and at the level of indicators that determine the list of major threats, which are calculated indicators of social and economic components of sustainable development. to determine the severity of the impact of threats, the coefficients of elasticity of each component and indicator on the integrated index of sustainable development were calculated and ranked, which is the necessary information for the development of priority measures. practical implications. the dynamics of deviations of current values of integrated indices from their average optimal values determines the importance of threats to the components of sustainable development. almost all of these industrial enterprises are characterized by complete neglect of the social status of employees, which inhibits economic growth and makes it impossible to develop domestic demand. under such conditions, the issue of digitalization of business becomes relevant. the digitalization of business has received considerable attention from both academia and the business community, which define digitalization as a focused effort of companies to actively use digital technologies at all levels to optimize internal processes and modify the overall business model. value/originality. the obtained strategic guidelines of key macro indicators, which together with the strategic values of indicators are the ultimate goal of sustainable development regulation, which can be monitored through monitoring to monitor the implementation of the development strategy and evaluate the policy of enterprise management. key words: industrial enterprise, supply chain, supply chain management, sustainability, economic security, indicator, stimulator, disincentive, sustainable development, methodological approach, evaluation, macroindicator. jel classification: o14, l61, l23 1. introduction an important role of scientific and technological progress and innovation in industry is given in the un report, without which the process of industrialization is impossible, which, in turn, hinders development. on the one hand, technology makes the production process more efficient, thereby increasing the competitiveness of countries and reducing their vulnerability due to market fluctuations. on the other hand, economic growth entails an increase in the use of resources, materials and fossil fuels, which leads to pollution and environmental degradation, this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 23 vol. 2 no. 3, 2021 especially in low-income countries. therefore, if countries do not take steps in all three areas and reach compromises between them: support economic growth, promote social development and strive for environmental sustainability – it is unlikely that such countries will go far on the path to sustainable progress, regardless of their level. development. therefore, a balanced development is extremely necessary, taking into account the limitations in all three areas. the issue of supply chain management over the last decade has been widely reflected in the economic literature. well-known foreign scientists such as bauersocks d., christopher m., waters d., stoke j. and lambert d. pay considerable attention to their study from the standpoint of logistics. among domestic scientists it is worth noting, first of all, the works of krykavsky e.v., nikolaychuk v.e., oklander a.m., chukhray n.i., grigorak m.yu. the topic of the impact of digitalization and digital technologies on the business model in general has been considered in the works of many scientists, among whom g. bowman, a. osterwalder, v. apalkova, s. volosovych, l.g. melnyk, a.i. karintseva and v. pleskach, in whose works the processes of digitalization of the economy are studied. the digital economy as the latest vector of reconstruction of the traditional economy was considered in the works of putzenteilo p., humeniuk o., sirko a., kirilov y., granovska v., krikunova v. and others. according to foreign experience, modern industry is a generator of scientific and technological progress and innovation in the economy. the structure and system of indicators of sustainable development of industrial enterprises from the standpoint of safety, which includes the following components of economic, social and environmental security: economic status, financial condition, business risks, labor relations, safety and health, waste management, energy status – in general 25 indicators related to stimulants and destimulators. 2. components and indicators of sustainable development of industrial enterprises the structure of sustainable development of an industrial enterprise includes a number of interconnected structural elements that reflect certain areas of activity of an industrial enterprise in the supply chain. the presence of economic, social and environmental security in the structure of sustainable development of an industrial enterprise is due to modern trends in understanding sustainable development, which is associated with such economic growth, material production and other activities, when they occur within the limits determined by the ability of ecosystems and to support the livelihoods of present and future generations. it is this requirement – the observance of the limits of safe existence of dynamic systems – that unquestionably connects the problem of sustainable development with the problem of economic security, the main task of which is to compare the components of development with thresholds, which translates "development" into "security ". this approach allows the use of methodological tools for identification and strategy, tested in economic security, for the needs of sustainable development of industrial enterprises (kharazishvili, 2020). each component of the first level (economic, social, environmental) has components of the second level with the corresponding indicators. the number of levels of subordination depends on the degree of formalization of the group of indicators. thus, for the components of the first level, the following subordinate components and indicators are defined (table 1), divided into stimulants (increase of which is desirable) and destimulators (decrease of which is desirable). the diversity of their action is reduced to unidirectional through the procedure of normalization of indicators. to determine the threshold values of development indicators, it is proposed to use the following methods (the list is based on their priority): – functional dependencies (macro/ microeconomic analytical or statistical equations; akhiezer-goltz; information theory; "golden section"); – macroeconomic models that adequately reflect the effects of destabilizing factors on the conditions of a particular country in the current period; – stochastic (t-test; diagnosis: cluster analysis, fuzzy sets; logistic regression); – nonlinear dynamics (wavelet analysis); – legislative approach (setting thresholds at the legislative level); – heuristic ("snowball"; analog approach – focus on indicators of analogue countries; "calibration"); – expert assessments; taking into account the assessments of international organizations. to determine the vector of threshold values of industrial indicators, we will use the most accessible method of "t-test", which consists in constructing the probability density function, calculation of statistical characteristics (mathematical expectation, standard deviation and asymmetry) and formalized calculation of the threshold vector. according to the results of the analysis of the diversity of indicators, three characteristic types of distribution were revealed: normal, lognormal and exponential, for which a formalized definition of the vector of threshold values was proposed, where ∝ – average value, σ – standard deviation, t – taken from student's t-distribution tables: normal: lower threshold = µ σ− ⋅t ; upper threshold = µ σ+ ⋅t . three seas economic journal 24 vol. 2 no. 3, 2021 table 1 components and indicators for assessing the level of sustainability of supply chains components indicators the nature of the impact 1. economic: 1.1. economic condition – the share of the enterprise in the domestic market of products supplied in the supply chain, %; – price competitiveness (the ratio of average market price and product price of the enterprise); – the level of manufacturability of production (the ratio of gross value added to output); – level of investment (ratio of capital investment to output), %; – the level of renewal of fixed assets, % stimulator stimulator stimulator stimulator stimulator 1.2. financial position – return on capital of the enterprise, % – financial independence (share of own sources in the liabilities of the enterprise), %; – absolute liquidity of the enterprise at the time of evaluation, %; stimulator stimulator stimulator 1.3. risk in the enterprise – the level of non-compliance of product quality, (the volume of products returned to the company and which received complaints on quality parameters in relation to the total sales for the analyzed period), %; – depreciation rate of the active part of fixed assets, %. disincentive disincentive 2. social: 2.1. labor relations – the share of wages in the issue; – the ratio of the average at the enterprise and the official minimum wage; – the share of workers covered by the collective agreement to the total number of employees of the enterprise; – costs of the enterprise for social purposes in relation to the annual output, %; stimulator stimulator stimulator stimulator 2.2. safety and health; – level of occupational injuries, %; – loss of working time due to illness of employees, % to the regulatory fund of working time; – share of employees laid off voluntarily due to unsatisfactory production conditions, % of the number of employees; – specific weight of jobs that do not meet the established sanitary and hygienic norms, % to the number of people employed in production disincentive disincentive disincentive disincentive 3. environmental 3.1. waste management – the level of emissions of pollutants into the atmosphere, per 1 thousand uah of production; – the level of generated solid production waste per 1 thousand uah of production volume, kg / thousand uah; – level of disposed production waste per 1 ton of production volume, t/t; – level of discharge of polluted water into surface water bodies, per 1 ton of production volume, thousand m3/t; – level of harmful substances in effluents, to the total volume of effluents, kg/thousand m3; disincentive disincentive disincentive disincentive disincentive 3.2. energy state – level of total energy consumption, uah per 1 ton of production volume; – the level of exceeding the established norms of total consumption of drinking and technical water by uah 1,000. production volume, times. disincentive disincentive source: compiled by the author lower optimal = µ σ+ ; upper optimal = µ σ− ; lognormal: lower threshold = µ σ− ⋅t kas/ ; upper threshold = µ σ+ ⋅t ; lower optimal = µ σ− / kas ; upper optimal = µ σ+ ; exponential: lower threshold = µ σ− / kas ; upper threshold = µ σ+ ⋅t ; lower optimal = ∝; upper optimal = µ σ+ . similar data from eu countries, regions of ukraine and industrial enterprises of ukraine were used to determine the vector of threshold values, and in the absence of such data – expert estimates (kitrish, 2021). for specific indicators, the countries, regions or enterprises that have the best values of the relevant indicators and can be a promising model were selected. choosing the same list of countries, regions and businesses and the same time period is desirable, but not always possible. a similar opinion is expressed by libanova: "during the development of the hypothesis should take into account not only the existing trends of their country, but also the parameters of their development in other countries, especially those that can serve as a benchmark for ukraine" (libanova, 2014). thus, the definition of the vector of threshold values is similar to the construction of a hypothetical enterprise with the highest level of sustainable development for all indicators. three seas economic journal 25 vol. 2 no. 3, 2021 3. integral assessment of the level of sustainable development of industrial enterprises from the standpoint of economic security due to the fact that each indicator has its impact in a dynamic system and may increase or decrease in individual periods, it is necessary to determine the assessment of the system as a whole, taking into account all existing factors – ie integrated assessment of the system. in itself, determining the dynamics of integrated indices means nothing but a decrease / increase in certain periods. to determine the state of security of system development, it is necessary to compare the dynamics of integrated indices with integrated threshold values on the same scale – namely the identification of the state of the system. problems of internal development of ukraine's economy, dynamic changes in the global economic space and increasing the degree of openness of the national economy require improvement of the methodology for identifying the level of economic security in order to adequately respond to destabilizing factors. thus, first, it is difficult to overestimate the importance of the stage of identifying the level of economic security. second, the strategic vision of sustainable development first involves establishing the distance from it at which the social, economic and environmental components are located. that is, it is advisable to determine the starting point for each component of sustainable (socio-ecologicaleconomic) development, on which depends its strategic vision, and then – to apply theoretical approaches to justify the strategic guidelines for achieving sustainable development. therefore, the importance of economic security assessments of any level is unquestionable, such assessments are the basis for decisions not only on economic security, but also opportunities for system development, determining the necessary resources, creating and using system reserves, assessing the effectiveness of economic security and division of the enterprise. to date, there are several noteworthy approaches to integrated assessment of the level of economic security: – at the official level, the approach of the ministry of economic development and trade (for the macro level) and the state statistics service of ukraine (for the regional level); – at the informal level, the approach of the national institute for strategic studies and its further development of the institute of industrial economics of the national academy of sciences of ukraine. in 2013, the national institute for strategic studies published a scientific-analytical note, which substantiated the shortcomings of the methodological approaches proposed by medt and the state statistics service of ukraine, the main of which relate to the list of indicators, expert determination of weights, forms of integrated index, activities, rationing methods, the impossibility of comparing the dynamics of integrated indices with integrated threshold values (because they are not calculated). the biggest drawback is the definition of the generalized integral index as the arithmetic mean of the values calculated by two methods of indicator normalization (the first – in one scale range, the second – in five scale ranges), which is not mathematically correct and similar to adding correct fractions without bringing them to a common denominator. this disadvantage makes it almost impossible to use such approaches. the identified shortcomings indicate the need to improve formal methodological approaches to assessing the level of economic security and the level of socio-economic development. in accordance with the regulation on the ministry of economic development and trade of ukraine by the order of the president of ukraine dated 29.10.2013 № 1277 the previous methodology was repealed and new methodological recommendations were approved, which are informative, recommendatory, explanatory and optional (according to authors of methodical recommendations). in 2014, the national institute for strategic studies published an article in the journal "economy of ukraine", which conducted a detailed analysis and attempt to apply new guidelines, which revealed new comments on the types of indicators, rationing methods, determination of weights. the main remarks about the new medt methodology, which complicate or make its use impossible, are as follows: – the choice of five ranges of economic security relative to some optimal value is subjective and unreasonable; – artificial "trimming" of indicators during rationing, which leads to loss of information; – switching of the mixed type of indicator “stimulatorde-stimulator "and the scale of rationing violates continuity the functions of the normalized indicator and, accordingly, the integrated index, which makes it impossible to use optimization methods to adjust the ecb level by calculating the gradient of the integral index function; – in case of using the proposed rationing methods, including 5 ranges and insensitivity zone, the transition from normalized values of indicators to their initial dimension is also ambiguous – one normalized value of the indicator corresponds to more than one value of the original indicator in natural units, which makes it impossible to apply this technique for strategizing; – expert determination of weights, which contains subjectivism and, of course, reduces the scientific and practical value of the results; – consistency of weights throughout the analyzed period, which does not correspond to reality; three seas economic journal 26 vol. 2 no. 3, 2021 – lack of simultaneous definition of integrated indices and integrated thresholds, which does not allow to identify the security level. to determine the dynamics of integrated indices of sustainable development, integrated threshold values were calculated through the integrated convolution of threshold values of economic, social and environmental security of industrial enterprises of ukraine (table 2). the following convolution of the main components of sustainable development allows to obtain integrated indices of sustainable development of industrial enterprises as a whole, which comprehensively reflect the current state of sustainable development (figure 1). i i i icp t екон t a соц t a екол t at t t , , , , , , ,= ⋅ ⋅1 2 3 where icp t, – integrated index of sustainable development; iекон t, – integrated index of economic development; iсоц t a t , ,1 – integrated index of social development; iекол t a t , ,2 – integrated index of ecological development; a t1, , a t2, , a t3, – dynamic weights. according to calculations, the level of sustainable development of industrial enterprises is extremely unsatisfactory and is in a critical zone – below the lower threshold, and azovstal is the best among the worst industrial enterprises in the last 2 years. the worst of the worst is arcelor-mittal. the data obtained indicate a failed economic, social and environmental policy. the vectors of the integrated threshold values of the components of sustainable development differ significantly, which indicates different proximity (disproportionate development) of the integrated indices to the average optimal value for each component of sustainable development, which can be considered criteria for achieving sustainable development (figures 2-5). under such conditions, the issue of digitalization of business becomes relevant. the digitalization of business has received considerable attention from both academia and the business community, which define digitalization as a focused effort of companies to actively use digital technologies at all levels to optimize internal processes and modify the overall business model (unece, 2012; 2013). 4. findings the structure and system of indicators of sustainable development of industrial enterprises from the point of view of safety was developed, which includes the following components of economic, social and environmental security: economic condition, financial condition, business risks, labor relations, safety and health, waste management, table 2 vector thresholds for sustainable development * indicators lower threshold the bottom is optimal the upper is optimal upper threshold economic security 0,3173 0,5841 0,7697 0,9694 social security 0,5507 0,7434 0,8658 0,9753 ecological safety 0,5620 0,6893 0,7793 0,8729 sustainability 0,4606 0,6697 0,8055 0,9404 source: author's calculation figure 1. dynamics of integrated indices of sustainable development of industrial enterprises of ukraine three seas economic journal 27 vol. 2 no. 3, 2021 figure 2. disproportion of components of sustainable development of the industrial enterprise azovstal figure 3. disproportion of the components of sustainable development of the industrial enterprise arcelormittal figure 4. disproportion of components of sustainable development of ilyich's industrial enterprise three seas economic journal 28 vol. 2 no. 3, 2021 energy status – a total of 25 indicators related to stimulants and disincentives. the dynamics of deviations of current values of integrated indices from their average optimal values determines the importance of threats to the components of sustainable development. almost all of these industrial enterprises are characterized by complete neglect of the social status of employees, which inhibits economic growth and makes it impossible to develop domestic demand. 6. conclusions the main task of any development strategy is to get an answer to the question: what should be the indicators and relevant macro indicators to achieve the desired level of development? unfortunately, most existing strategies and relevant publications on this topic are limited to general declarations such as: provide, enhance, create, shape, update, implement, improve, engage, develop, and so on. without scientific substantiation of target strategic guidelines. in recent years, more and more companies are focusing on environmental, social and management initiatives (esgs) led by key investors and stakeholders. this encourages organizations not only to reevaluate the methods by which they measure and communicate their risk, compliance, sustainability, and management effectiveness, but also how esgs can be incorporated into their culture to meet their organizational responsibilities. over the years, digital transformation has become a basic need for all companies. investing in technology solutions, both to automate operational processes and to improve team performance, is so crucial that it can even determine the success of companies in the current scenario, characterized by high investment in innovation to improve processes and attract the attention of an increasingly demanding audience. figure 5. disproportion of components of sustainable development of industrial enterprise zaporizhstal also in this context of digital travel, the concept of esg (environment, social security and governance) has also gained popularity – an indicator that measures companies according to their impact on these three axes of sustainable development. constant changes in the profile of the public, as well as society as a whole, put pressure on companies to take unprecedented action in the development of their services and products. as a result, digital transformation and esg have taken the lead in discussing new management models. one area of business models is the blockchain. in addition to digital travel, esg is a necessary transformation that goes hand in hand with digitization. therefore, the connection of both allows for more strategic and profitable actions for both organizations and society as a whole. from industrial and mining companies, customers are increasingly demanding information on metals and raw materials: 1. origin: from which mines / mining companies do they get the minerals and metals contained in their final products? 2. production methods: what methods are they produced? are they produced responsibly? blockchain technology has the potential to meet the above requirements within robust supply chain systems. blockchain is a technology that allows you to check data and then store it as a fixed "block" in a distributed digital database. the resulting chain of blocks is unchanged, because each block is checked on the basis of previous blocks, which makes it very difficult for the snake, because changing the recorded transaction requires changing all previous blocks. the blocks are checked either by an algorithm or by a third party. in further research, attention should be paid to the environmental component, namely the development of green solutions, the implementation of which will contribute 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(in russian) three seas economic journal 1 vol. 2 no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-1 diversification of gas supplies as a cornerstone of gas security in the framework of the three seas initiative danylo stonis1 abstract. the article overviews approaches to the diversification of gas supplies in the framework of the three seas initiative. the modern geopolitical situation in eastern and central europe is characterized by transformation processes in the energy sector. due to the implementation of decarbonization policy in the european union and subsequent shift from coal as a main energy source, a need in alternative fuel sources, such as natural gas, emerges. therefore, a significant increase in natural gas consumption is expected, which raises a number of issues, such as dependence on a single gas supplier and orientation of the eu’s gas transmission system in east-west direction only. this issue is crucial for eastern and central european states, due to the underdeveloped gas infrastructure in the region and heavy dependence on a single gas supplier, such as russia or turkey. hence, the three seas initiative is considered as a powerful tool, designed to develop energy, transport and digital infrastructure of the region in the north-south direction, where one of the most potentially promising projects within the framework of the three seas initiative is represented by the development of gas infrastructure, aimed at solving the diversification of supplies in the gas market in eastern and central europe. the implementation of developed gas infrastructure and diversification of gas supplies consists of several regional projects that are relevant for those countries in the region in which they are implemented in particular and for all member states of the three seas initiative in general. the main purpose of the implementation of these projects is the creation of a unified natural gas transportation infrastructure in eastern europe along the north-south axis. the result of such a grand reorganization in the field of gas supplies to europe will be an increase in the number of independent suppliers in the european gas market and a decrease in the dependence of the eu countries on gas supplies from russia. in the article, the author traced in detail the tendency of the formation of energy infrastructure along the north-south axis with focus on the projects that are being implemented by each of the participating countries within the framework of the three seas initiative. this approach allows to assess the scale and integrity of the gas transportation infrastructure, that is being created in the eastern europe region and its contribution to the common european energy security policy. key words: three seas initiative, north-south axis, diversification, gas transportation system, energy security. jel classification: f52, p48 1. introduction the three seas initiative (tsi) is an ambitious project in the central and eastern european states, which offers great opportunities for the development of energy, transport and digital infrastructure in the countries of the region. it is an international forum that includes 12 member states of the european union between the baltic, adriatic and black seas (babs): austria, bulgaria, croatia, the czech republic, estonia, hungary, latvia, lithuania, poland, romania, slovakia and slovenia. after the first tsi forum in dubrovnik, the three seas initiative is becoming a new format for strengthening cooperation between the eu member states from central and eastern europe, the ultimate goal of which is to increase their economic and political opportunities, as well as to ensure security and sovereignty within the european union. the geopolitical situation in the region requires the development of a new energy security policy. if we look at the tsi member states, most of them are former members of the soviet sphere of influence (were incorporated in the ussr or were members of the eastern bloc and acted as satellites of the ussr). as a result, all tsi member states, except austria, were closed off from the rest of europe by the ussr’s iron curtain. this has led to the fact that the eu member corresponding author: 1 charles university in prague, czech republic. e-mail: daniell486486@gmail.com orcid: https://orcid.org/0000-0002-4771-0144 baltic journal of economic studies 2 vol. 2, no. 2, 2021 states, which are located between the baltic, adriatic and black seas, do not have a common infrastructure with other eu countries in terms of energy and transport. despite the aforementioned, the unifying element of tsi is the development of energy, transport and digital infrastructure between states in the baltic, adriatic and black sea regions, as well as between the eu member states in eastern, central and western europe. another key feature of tsi is the diversification of energy supplies as part of an energy security policy, which aims to ensure that tsi member states can obtain natural gas from a variety of sources. in addition to this, the concept of informal platform was introduced, which allows to secure political support and facilitate specific cross-border and macro-regional projects in order to improve connections between northern and southern europe through energy and infrastructure projects (maćešić and manovelo, 2016). the purpose of this article is to provide an overview of the energy projects that are being implemented in the three seas initiative framework. this overview focuses on a number of priority gas infrastructure projects that could shift the focus of regional energy discussions related to security of natural gas supplies to europe. the main issue is that for over a decade, in both the eu and the tsi member states, natural gas supplies still remain an important energy source of the tsi region. therefore, in the next decade, security of supply and large investments in the development of natural gas infrastructure are among the top priorities on the tsi agenda. one of the major problems in the region is related to the eu’s decarbonization policy, which requires a deep transformation process in the energy sector. eastern european countries may have to come up with national commitments for renewable energy and energy efficiency goals in line with the new eu regulations and reflect them in their national energy system and climate action plan. if these energy and climate plans are implemented and a significant number of coal units in the region are closed down, there will be a need for alternative energy sources, such as natural gas, which will act as a transition fuel. consequently, as a result of the significant decline in domestic energy production in the tsi region, energy security issues will be largely linked to natural gas imports. this overview pays great attention to assessing the formation of a new energy infrastructure for gas supplies to europe and its role in energy security. the tsi region is highly dependent on gas for several reasons. while domestic gas consumption in households may decline due to investment in energy efficiency and the growing share of electric heating, natural gas is expected to remain an important fuel source for the industrial sector as well as for electricity generation. the implementation of energy projects, initiated within the framework of the three seas initiative, will help stimulate economic growth in the region, develop the north-south infrastructure corridor and eliminate regional imbalances within the eu in order to achieve cohesion and unity in europe. currently, most of the region’s strategic infrastructure, including road and rail infrastructure, runs along the east-west corridor. transportation routes, highways, railways and gas pipelines all stretch from east to west, and therefore it is in the interests of the region to create analogical routes in the north-south direction. therefore, the implementation of projects under the three seas initiative has great potential for diversifying the energy market in europe and strengthening its energy security. 2. region of the three seas initiative, as a zone of opportunities for the diversification of energy supplies the fundamental goal of the three seas initiative is to provide a sufficient political and economic basis for the implementation of specific strategic cross-border projects, hence enhancing transatlantic cooperation between tsi member states, stimulating economic prosperity and bringing eu to stronger cohesion. in order to achieve this goal, it is crucial for tsi member states to include not only the participation of governments, but also private companies that are interested in the development of the region and seek to invest in priority projects, thereby contributing to the overall goal of the three seas initiative, which is designed to facilitate achieving real convergence among the eu member states, helping participating states to the three seas initiative to get closer to the economic development level of the other eu member states, thereby contributing to enhanced eu unity, increased eu cohesion and coherence, further eu integration, as a basis for the re-launching of the european project (tsi, 2018). however, despite the region’s economic and infrastructural development, the three seas initiative has a strong political agenda. thus, the ultimate political goal of the three seas initiative may be the creation of a new north-south corridor, which will ensure the geopolitical and energy security of the participating countries, as well as ensure the further development of new technologies, attract a large number of new investors to the region and lead to diversification of oil sources and gas in the region. during the third tsi summit in bucharest in 2018, one of the main goals of the tsi member states was “to contribute to the economic development of their states and of the region through better connectivity in the transport, energy and digital fields, especially on the north-south axis, thus boosting economic relations, energy security, trade and investment flows in the region and with other partners from the euro-atlantic community” (tsi, 2018). according to pierre-emmanuel thomann (2019), the main idea of the tsi is to develop infrastructure baltic journal of economic studies 3 vol. 2, no. 2, 2021 for energy and transport along the main north-south axis because the current infrastructure is oriented in the east-west direction. it is planned, that financing of these ambitious goals will be carried out not only by the participating countries of the three seas initiative, but also through the attraction of private capital. above average economic growth in the region, together with government support, will act as an incentive to attract private capital, allowing tsi to achieve its goals. this overview aims to show that, despite the significant differences in tsi projects, they all have one common goal: to diversify the supply of gas energy in order to strengthen the energy security policy in the tsi region and to create a north-south axis that will act as a key supply line in the region aimed at creating a developed economic cluster that will connect all tsi member states into a single intertwined infrastructure. this approach to the development of the eastern european region is relevant in spite of europe’s decarbonization policy and the potential future role of natural gas as a transitional fuel, resulting in a growing dependence of tsi member states on gas imports. today, russia occupies a large share of gas imports to europe. russia’s share in imports will grow from 34% in 2017 to almost 40% by 2030 on an eu level (diallo’s et al study (based on rekk modeling, 2018). however, the degree of dependence on russian gas supplies in the countries participating in the three seas initiative is not the same. for central european states such as the czech republic, slovakia, slovenia and croatia, a significant number of alternative gas sources are available. there are fewer alternatives for the baltic states, hungary, romania, and bulgaria, while poland is currently unable to meet its demand without russian gas. the diversification of energy supply routes is aimed at connecting the tsi member countries to the global lng market through regasification terminals in poland (swinoujscie) and croatia (krk island), with norwegian fields through the baltic pipe, and also with romanian offshore gas fields through the romanianhungarian interconnector. it should be noted that almost one third of the priority projects (32%) of the three seas initiative are related to energy, which underlines the relevance of this overview (tsi, 2020). the projects presented in the overview include the construction of several lng terminals, which will allow to receive more supplies of liquefied gas, thereby diversifying the number of energy supply sources and transportation routes to ensure energy security in the three seas region. this includes the lng terminal on the island of krk in croatia, the paldiski lng terminal in estonia and the skulte lng terminal in latvia. in addition, energy projects include several new gas pipelines that will provide direct and cost-effective transportation of natural gas not only between the three seas region and western europe (gipl, brua), but also between the middle east and the eu as a whole (eastring). each tsi member state has selected its own set of projects for investment and participation. some of these projects include several states of the three seas region, while others are designed specifically for a particular state for its own needs. nevertheless all these priority projects share one common goal: to create a new north-south axis in the eu, which will act as a new eu market for investment and innovation, as a tool for developing sustainable energy policies by diversifying gas supplies, thereby reducing the eu’s dependence on a single gas supplier such as russia or turkey. 3. overview of energy projects aimed at diversification of gas supplies in the tsi region an overview of energy projects within the framework of the three seas initiative, formed with the aim of following how the implementation of projects in different countries contributes to the creation of the north-south gas transmission energy axis. the first priority project is represented by the regional lng terminal in paldiski, estonia. the construction of an lng terminal in paldiski is an investment project ordered by the baltic states and finland. its main function is to receive liquefied natural gas, which will be delivered by tankers, store lng in storage tanks and pump it as natural gas into a high-pressure distribution pipeline. the terminal is planned to be located in a strategically important place, namely in the middle of the future regional baltic and finnish energy markets, therefore the lng terminal in paldiski will be located between the baltic states and finland (balticconnector), and will function as a link between the finnish, estonian and latvian gas markets. the estonian company alexela group will participate in the construction of the terminal. in 2018, a memorandum of understanding was signed between the port of tallinn and alexela group, which will propose solutions for the construction of a terminal and maintenance of tankers and lng bunkers, as well as the creation of port facilities for loading and unloading of liquefied natural gas (greenport, 2018). the total project cost is estimated at 400 million eur (tsi projects, 2020). according to a study completed under the baltic energy market interconnection plan (bemip), the construction of an lng terminal in paldiski will have a positive impact on the gas market of the baltic states. the study noted that the construction of an lng terminal in paldiski in conjunction with the balticconnector would improve security of supply both in estonia and finland and would also activate competition on the wholesale market of gas. taking into consideration the regional gas market, the lng terminal, with possible baltic journal of economic studies 4 vol. 2, no. 2, 2021 location in paldiski, would be of regional importance (bemip, 2012). the next project is represented by the skulte lng terminal construction project in latvia. the main goal of this project is the development of an economically viable terminal for liquefied natural gas in the skulte port area near riga. its main feature is the possibility of a direct pipeline connection with the inčukalns underground gas storage (inčukalns ugs). the main advantage of this project is that there is no need to build a cold storage facility, because the subsea and onshore pipelines are connected to the inčukalns ugs facility, which makes this lng terminal the most costeffective entry point for lng to the baltic and finnish markets. at the same time, given the low capital costs of the terminal construction, one should count on a low regasification tariff in the entire baltic sea region. this result will attract gas trading companies and large consumers to buy gas on the spot market and open up the possibility of alternative gas supplies in relation to russian gas supplies on the baltic gas market. in turn, the skulte lng terminal will stabilize natural gas and energy supplies to latvian consumers and will strengthen latvia’s energy security. in addition to the aforementioned, the skulte lng terminal together with the klaipeda lng terminal and two estonian projects in paldiski and tallinn are considered as a long-term solution for lng import to the baltic region. moreover, the skulte lng terminal is considered the most competitive lng import terminal project in the region as it will play a decisive role in the supply of gas to the baltic gas market. according to the inter-tso compensation agreement between the gas transmission operators in finland, estonia and latvia, from the beginning of 2020, a single tariff zone for gas transportation was introduced for finland, estonia and latvia. as a result, the supply of natural gas to and from the inčukalns ugs facility will be supported without additional entry/exit fees (conexus baltic grid, 2019). the total project cost is estimated at 120 million eur (tsi projects, 2020). in general, the implementation of the skulte lng terminal project will reduce the dependence of the baltic region on gas supplies from russia, increase the diversification of gas supplies and increase their flexibility to accelerate the integration of the baltic gas market and direct connection to european natural gas centers. the next priority project considered is the gipl project – a tsi project, which consists of a natural gas pipeline and auxiliary infrastructure. this gas pipeline is designed to connect the polish and lithuanian, finnish and baltic natural gas transportation systems to the continental gas system of the european union. the gipl gas pipeline will be bi-directional in order to maintain the reverse gas flow. it is planned that by the end of 2021 a gas corridor between poland and lithuania will be created. the significance of the project is confirmed by the fact that gipl was selected by the european commission as a project of common interests (pci). (official journal of the european union, 2020). the most important role of this gas pipeline in the creation of the north-south energy infrastructure corridor in the tsi region is aimed at eliminating the energy isolation of the baltic countries from the eu and in ensuring sustainable competition in the gas market. following the commissioning of the balticconnector gas pipeline, which connects estonia and finland, the gipl connection will encourage consumers in the baltic states and finland to buy and sell gas competitively at the best price and make even more efficient use of the capacity of the lng terminal by transporting gas along the new north-south corridor (amber grid, 2019). the importance of the gipl project for the baltic states was stressed by lithuanian energy minister žygimantas vaičiūnas (2020) in a following statement: the international gas pipeline gipl will not only be a pipeline between lithuania and poland, but will also become the main artery connecting gas markets throughout the eu, the baltic countries and finland. thus, the process of developing a single european gas market will be completed in our region, and lithuania, as well as the other baltic countries, will have complete freedom of choice regarding gas supplies. the most important thing today is adherence to a pre-set schedule with fast progressing construction work and completion of the project by the end of 2021 as planned (newsroom, 2020). the gipl gas pipeline is included in the bemip gas network, which is designed to connect the baltic countries with the gas market of continental europe. the creation of such an interconnected gas network like beimp in the eu is one of the top priorities not only for the tsi region, but also for europe as a whole. according to climate and energy commissioner miguel arias cañete, “diversification of energy sources and routes, as well as unification of energy markets, is at the heart of the energy union. this is the key to ensuring safe, affordable and sustainable energy for all the eu citizens” (invest in estonia, 2016). the european commission has included the gipl gas pipeline in the list of projects of common interest (pci), which means that the project can receive government funding in the form of grants through the connecting europe facility (cef) initiative (official journal of the european union, 2020). the cef has approved funding of 306 million eur . latvian and estonian gas transmission system operators will also contribute to the financing of the project. the investment budget in lithuania is 136 million eur , but savings are expected. in june this year, the european investment bank provided a loan of up to 65 million eur for the implementation of the gipl. the project is funded not only by the eu, lithuania and poland, baltic journal of economic studies 5 vol. 2, no. 2, 2021 but also by latvia and estonia (ministry of energy of the republic of lithuania, 2020). the next project in this overview is the brua gas pipeline – proposed by romania and officially named “development of the national gas transportation system in romania along the bulgaria-romaniahungary-austria corridor.” it is aimed at the development of gas transmission capacities through the unification of the national gas transmission systems of bulgaria, romania, hungary and austria. preparations for the project began in 2016, although the actual construction of the pipeline began in 2019. the construction of the first phase of the pipeline is operated by the romanian state company transgaz (tzanetakou, 2019). the construction of the pipeline is designed to increase the energy security of southeast europe by diversifying gas supply routes, thereby reducing the country’s dependence on russian gas supplies. the main goal to be achieved during the implementation of the brua project is to combine the gas transmission systems of romania with the corresponding gas transmission systems of bulgaria and hungary. it is also planned that the pipeline will provide the tsi region with access to potential large paneuropean gas infrastructure projects such as the trans adriatic pipeline (tap). this pipeline will also allow bi-directional gas flow to maintain interconnection and therefore interdependence between the gas transmission systems of the brua project participants. according to romanian energy minister toma petcu, “the pipeline will include reverse flow technology, which will allow natural gas to be pumped in any direction to meet needs during periods of peak demand or emergencies” (sam, 2017). an important factor for the implementation of the brua project is that the project will become part of the north-south gas connections in central and southeast europe (nsi east gas) and join the priority gas corridor, which includes gas infrastructure for regional connections between the baltic sea region, the adriatic and the aegean seas, the eastern mediterranean and the black sea, as well as within it. eastring is another new gas pipeline project presented by slovakia in 2018. it will be part of a natural gas pipeline that connects slovakia with the bulgarianturkish border of the tsi region, as well as the eu, crossing the territories of hungary and romania. an important feature of this pipeline will be its bi-directional nature. this will make it possible to supply gas from the black sea region, the caspian region and the middle east. accordingly, such a campaign presupposes diversification of gas supply sources to the tsi region, which enhances its energy security and independence. the expected budget for the project is estimated at 2.06 billion eur (tsi projects, 2020). according to the chairman of the board of directors of eustream, operator of the gas transmission system in slovakia, the project will be financed mainly by clients who will use the pipeline, who will participate in financing the project through long-term contracts, part of the amount will be covered by the eu and a loan from the european investment bank or the european bank for reconstruction and development. finally, some of the resources will also come from the companies that will participate in the construction: eustream in slovakia, fgsz in hungary, transgaz in romania and bulgartransgaz in bulgaria (tsi projects, 2020). it should be noted that if for lithuania, latvia and estonia participation in the projects of the three seas initiative is mainly the strengthening of energy security and independence from one source of energy resources, then the interest of slovakia in energy projects is slightly wider. this is due to the fact that slovakia is one of the tsi members, whose energy security largely depends on the transit of gas from russia, the black sea region, the middle east and the caspian region to central and western europe. after the escalation of the conflict between russia and ukraine in 2014, negative expectations arose regarding the termination of gas transit through the brotherhood pipeline, through which russian gas is delivered to europe via ukraine and slovakia (mišík and nosko, 2017). in spite of the aforementioned, the eastring project is very important for slovakia, as a measure to increase the energy security of the tsi member states. in order to strengthen energy security, the slovak operator of the eustream gas transmission system proposed the development of the eastring gas pipeline with the aim of a bi-directional connection of the slovak gas transmission system with south and eastern europe (see) (mišík and nosko, 2017). overall, the implementation of the eastring pipeline will not only diversify gas transportation routes in southern and eastern europe, thereby providing access to currently inaccessible lng terminals in europe for the balkan states and turkey, but will also contribute to the establishment of the north-south axis. the next important route and a promising option for diversifying sources and routes of gas supply, is the hu-si-it (hungary-slovenia-italy) natural gas corridor project, which is planned to enable the transit of natural gas from romania, as well as from other offshore gas resources of the black sea to italy. also, the aforementioned gas corridor can serve as an access point for hungary and a number of other tsi member states, which can transfer natural gas directly to the italian lng market. the purpose of the corridor is to provide a natural gas supply route for the tsi region and parts of southern europe, as well as to provide italy and slovenia with access to hungarian gas terminals. this gas corridor will also be bi-directional and will provide interconnection between the gas transmission systems of slovenia and hungary. the implementation of the project will expand opportunities for diversifying gas sources and baltic journal of economic studies 6 vol. 2, no. 2, 2021 gas supply routes that will allow access to lng sources from the adriatic region. for example, in the hu-si-it gas corridor project, auxiliary infrastructure will be available, which is designed to increase the diversification of entry points. this will provide an opportunity to choose the source of gas supply and will allow the use of regional storage facilities by enabling a reverse flow (bidirectional flow) (fgsz, 2020). the importance of the hu-si-it pipeline for the tsi region is of utmost importance due to the fact that in 2013 the project received the status of a project of general interest (pci) in accordance with eu regulation no. 347/2013. it was included in the second pci list of the european commission in 2015 as part of an update to the list that came into force in february 2016. in november 2017, it was again assigned pci status in the third list, which came into force in april 2018 (plinovodi, 2020). the next priority project is represented by the expansion of ugs chiren. it envisages a capacity increase of the only gas storage facility in bulgaria. the project is aimed at modernizing ugs facilities in order to provide a system of large volumes of gas and ensure the quality of its storage. the relevance of the project is further stressed by the fact that after the gas crisis of 2009, when russia stopped the supply of natural gas to europe, bulgaria had to deal with the problem of energy security, since there are no alternative sources of gas supply. therefore, the need to expand and modernize the ugs chiren facility is a very important strategic priority for bulgaria, since gas storage facilities ensure gas safety during emergencies, provide uninterrupted operation of the gas transmission system and protect against economic losses in the event of supply disruptions. the increase in the capacity of the bulgarian gas transmission system allows diversification of the supplier market, stimulating the pricing policy and the development of the regional gas market, thus creating positive conditions for the implementation of the balkan gas hub project. in addition to the impact of the project on the regional gas market, its contribution to the pan-european structure of gas supplies should be considered. the european union strongly supports the development of a reliable gas storage infrastructure and the diversification of gas supplies. he also prioritizes market liberalization, including private sector participation in the transit, storage and trading of natural gas, which still remain under the management of the stateowned bulgartransgaz. thus, the chiren ugs facility expansion project was included in the eu list of projects of general interest (pci) dated november 18, 2015 under the number pci 6.20.2. the project was included under the same number in the eu’s third pci list, published on october 31, 2020 (official journal of the european union, 2020). the project’s listing gives bulgaria the opportunity to obtain eu funding to modernize and expand its existing storage capacity. the expansion project is co-financed by the connecting europe facility (cef). so far, the total investment cost of the project is provided in the amount of 226.4 million eur (tsi projects, 2020). the next very significant and promising project envisages the construction of an oil and gas terminal in the port of ploče in croatia. the attractiveness of this project is that the port of ploče is located in a convenient geostrategic location at the intersection of traffic flows between the adriatic and mediterranean regions, as well as central europe. the potential significance of the construction of an oil and gas terminal in the port of ploče is the possibility of distributing oil products through this terminal. the new terminal will enable a cheaper and safer import of petroleum products and lpg by sea, as well as the distribution of petroleum products to numerous markets in south-east europe (energia naturalis, 2020). it is expected that the successful implementation of the project, which is created according to the highest safety standards, involving technologies that comply with the latest european environmental standards, will play an important strategic role in strengthening the security of the region's energy supply and smoothly integrate into the energy infrastructure along the north – south axis under the three seas initiative. the last significant energy infrastructure project in the tsi region is the creation of an lng terminal on the island of krk with an evacuation pipeline. the project includes floating terminal for regasification of liquefied petroleum gas (lpg) in croatia. the main goal of the project is to meet energy needs and improve the security of gas supply by creating a new gas supply route for the central and southern parts of the tsi region. in general, the project consists of an lng terminal on the island of krk for receiving, storing, reloading and regasification of liquefied natural gas, and the omišaljzlobin gas pipeline. the omišalj-zlobin gas pipeline will allow gas to be transported from the lng terminal towards hungary via the existing gas transmission system. on january 1st 2020, the krk lng terminal began operating and accepted batch of lng, delivered from united states (reuters, 2021). the lng terminal on the island of krk will play an important role in the diversification of natural gas supplies, as well as in strengthening the energy security of natural gas supplies to the central and southern parts of the tsi region. it should also be noted that this project will be part of the european commission’s common interest (pci) projects under the nsi east gas priority corridor. according to european commissioner margrethe vestager, “the new lng terminal in croatia will increase the reliability of energy supply and increase competition for the benefit of the citizens of the region. we have approved the support measures that will be baltic journal of economic studies 7 vol. 2, no. 2, 2021 provided by croatia, as they are limited to what is necessary for the implementation of the project and are in line with our state aid rules” (safety4sea, 2019). the total investment costs are estimated at a maximum of 233.6 million eur, including: 159.6 million eur for the purchase of fsru vessels, 60 million eur for the land works of the epc and 14 million eur for the land out of 100 million eur provided by the government of the republic of croatia, 101.4 million eur in eu grant and 32.2 million eur in share capital. this final investment decision was made by the lng shareholders in croatia on january 31, 2019 (lng croatia, 2019). it can be assumed that the successful implementation of the project will lead to the strengthening of the gas transportation infrastructure in central and eastern europe, which will eventually become part of the northsouth gas transportation axis, which is necessary for a stable, safe and competitive single european market. 3. conclusions the overview of the priority projects, designed to diversify natural gas supplies in the tsi region, shows, that such projects as the creation of an lng terminal in paldiski, lng skulte in latvia, the gipl gas pipeline, the eastring gas pipeline and the brua gas pipeline, the hu-si-it gas corridor, the expansion of the chiren ugs facility, the construction of an oil and gas terminal in the ploce port and the lng terminal on the island of krk will not only interconnect the gas markets of the tsi member states in the north-south direction, but also allows to transfer natural gas via slovenia and hungary to western european gas system. this approach to expanding and diversifying gas markets in the northsouth and east-west directions will lead to an efficient connection of gas sources located in the caspian region, the black sea region, newly built lng sources in the adriatic sea (lng terminal on the island of krk in croatia), and sources of gas in the mediterranean region. the implementation of these projects will also result in numerous economic benefits. the overview shows the planned amounts of investments that will be attracted and directed for the implementation of these projects from both the governments of the interested states and from the european union and private investors. this approach to financing shows the extreme interest of the tsi member states in the diversification of gas suppliers to ensure the rapid and flexible adaptation of the gas transportation infrastructure to the increasingly dynamic gas market in the region, which is characterized by gas transit needs, the volumes of which are difficult to predict. by linking gas markets with various gas sources along the north-south gas transmission corridor, the tsi region will enhance the security of gas supply. this is a key aspect that will ensure energy independence by eliminating dependence on a single source. it should be assumed that the implemented energy projects on the formation of a gas transmission system on the north-south axis in the tsi region will make a significant contribution to improving the operation of the gas market 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priority projects (2020). ugs chiren expansion. available at: https://projects.3seas.eu/ projects/ugs-chiren-expansion (accessed 27 january 2021). three seas summit in tallinn, estonia. three seas priority projects in numbers (2020). available at: https://www.3seas.eu/about/progressreport (accessed 25 january 2021). tzanetakou nefeli (2019). romania: construction of the brua pipeline to finally begin. independent balkan news agency. available at: https://balkaneu.com/romania-construction-of-the-brua-pipeline-to-finally-begin/ (accessed 26 january 2021). baltic journal of economic studies 40 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-7 the lending of agricultural producers in ukraine tetiana mulyk1, yaroslavna mulyk2 abstract. the purpose of the paper is to analyze and study the issues of lending to agricultural producers in ukraine. methodology. general scientific economic and mathematical methods as analysis, synthesis, abstraction, concretization, and special methods as comparison, tabular were used. results of the study have shown that banks are actively involved in lending to agricultural producers, including microcredit. the volumes of short-term loans of banks of agricultural enterprises, including small and micro enterprises during 2013-2018 were studied. the rating of domestic banks that offer the most favorable lending conditions for agricultural enterprises is also studied. it is determined that the microcredit mechanism, presented in ukraine as the support for small business, was first mentioned in the procedure for using funds provided in the state budget for 2004 for financial support of farms through the microcredit mechanism of march 17, 2004, no. 325. currently, such support regarding the partial compensation of interest on loans from commercial banks and the reduction in the cost of loans also exists. the procedure for lending to agricultural enterprises in 2018 and 2019 is analyzed. in particular, the number of agricultural enterprises, which attracted soft loans in 2015-2018 and the volume of soft loans, attracted by agricultural enterprises in this period, were estimated. practical implications. factors, that hinder the development of microcredit in ukraine, have been identified. the basic directions of the further development of microcredit of subjects of small agrarian business are defined. it is determined, that the microcredit market provides conditions for stable development of the domestic economy, and the result of the use of microcredit should be the development of production aimed at priority sectors of the economy, including agriculture, the production of competitive products, and providing high-quality services. key words: crediting, microcredit, agrarian sector, support of the small business. jel сlassification: q10, q12, q14 corresponding author: 1 vinnytsia national agrarian university, ukraine. e-mail: mulyk_t_o@ukr.net orcid: https://orcid.org/0000-0003-1109-2265 researcherid: l-5677-2018 2 vinnytsia national agrarian university, ukraine. e-mail: mulyk.yaroslavna@ukr.net orcid: https://orcid.org/0000-0002-8166-2481 researcherid: l-5837-2018 1. introduction agriculture is one of the priorities, strategically important sectors of the national economy. the agricultural sector is a leader for the ukrainian economy, which plays an important role in the formation of gross product, export potential, food security of the country, employment, etc. over the last decade, including the years of crisis, the industry has shown a positive financial result, which contributes to the competitiveness of domestic products in foreign markets, fertile land in favorable climatic conditions, a highly skilled workforce, developed transport infrastructure, etc. however, a study of the financial security of agricultural producers shows that they work mainly from their resources, which are now significant in proportion, but insufficient for self-financing. limited own funds make agricultural enterprises hope for support from the state and determine the need to develop the relations to attract funds. for agricultural production, the problem of access to credit resources is always relevant. current banking products have a fairly high usage fee, they are not available to most manufacturers. at the same time, agricultural holdings can use international loans, where the rate is more acceptable. to level the playing field, the state should take care of agricultural producers who need to support their financial resources. under such conditions, the issue of financing small business, which is quite well developed in the agricultural sector, is important, where one of the important sources is lending, where an important role is played by microcredit carried out by domestic banks, non-banking institutions, foreign banking institutions and various funds. baltic journal of economic studies 41 vol. 2, no. 2, 2021 2. literature review a significant contribution to the assessment of the lending market is being studied by many scientists: m.ya. demyanenko, o.d. vasylyk, і.м. bryukhovetsky, в.k . zbarsky, r .a. layko, і.о. lyuty, v.p. ryabokon, g.m. podlisetsky, a.m. podderogin, d.v. polozenko, v.m. fedosov, s.i. yuriy, v.g. andriychuk, i.g. kyrylenko, o. babiak, m.m. baranovskyi, r . kotsovska, a. kudinov, o. kuzhel, o. masna, and other scientists. however, the problem of financial support for microcredit for small and medium-sized businesses in the domestic literature and publications of scientists is insufficiently developed and covered. lack of scientific works that would comprehensively consider and thoroughly reflect: the economic nature, role and place of microcredit; features of its implementation in the agricultural sector; the state and sources of financial resources for lending to small businesses in the agricultural sector; problems and directions of improving lending. 3. the role of microcredit of that origin microcredit is a relatively new and, as international experience shows, the most effective form of credit cooperation between banking institutions and small and medium-sized businesses. today, the use of microcredit mechanisms is one of the main trends in the development of relations between small and medium-sized businesses and the banking sector. at the same time, the further effective development of microcredit requires a broad scientific substantiation of existing domestic and foreign experience in this field and the development of new theoretical concepts of implementation of microcredit activities. microcredit was first used in 1983 in bangladesh, one of the world’s poorest countries. and the man who invented small loans for the poorest of his fellow citizens, muhammad yunus, won the nobel peace prize in 2006. at that time, microcredit took root not only in the poorest and developing countries but also in the countries with the stable and developed economy (kiyoshi, 2005). in general, the main idea of microfinance correlates with the idea of social entrepreneurship and is to overcome poverty, ensure the economic sustainability of socially vulnerable groups of the population and support their integration into the labor market through the development of small businesses. the current interest in microcredit stems from the microcredit summit on february 2-4, 1997 in washington. the definition of microcredit developed at the summit was: microcredit is a program designed to extend small loans to very poor people, their incomegenerating self-employment projects, thus enabling them to take care of themselves and their families (kiyoshi, 2005). as you can see, the main requirements for microcredit are a small loan amount and its issuance for a short period. 4. the state of lending in the agricultural sector the functioning of microcredit in the agricultural sector of the economy is directly related to the problems of microfinance of households in rural areas. it does not make sense to consider microcredit in the agricultural sector of the economy in isolation from microfinance in rural areas. the latter are not only producers of agricultural products, but also the basis of rural communities. today, small business plays an important role in the development of ukraine’s agricultural sector, agricultural production and job creation in rural areas. this is confirmed by the data presented in figure 1, on the number of small enterprises operating in agriculture in ukraine. as we can see, the share of small enterprises (farmers, peasant farms) is significant, it is 97% and according to statistics, it is growing in dynamics. the issues of financing small farms are relevant in terms of stabilization and development of ukraine’s economy. the share of small forms of management reaches ½ in the structure of gross agricultural output, with farmers accounting for no more than 8%, the rest – for farmers. in ukraine, microcredit is developing. among the forms of loans to farmers and support for microcredit, there can be distinguished: direct government lending, non-government lending, government loan guarantee, non-government loan guarantee. regarding bank lending, it should be noted that banks are actively involved in lending to agricultural producers, including microcredit. forms of financial and credit support for microcredit for small businesses and practical methods of their application are the following: forms of financial and credit support for small business microcredit: – direct government lending; – non-government lending; – state loan guarantee; – non-state loan guarantee. practical methods of application: – direct guaranteed government loans; preferential government lending; creation of preferential conditions for obtaining loans; formation of state credit lines; – banking system: lending by commercial banks; international financial assistance; – non-banking system: lending by financial non-banking institutions (business support funds, mutual financing companies); – guaranteeing and insuring mp loans at the expense of the state fund of funds or with the participation of the state in non-state guarantee funds; provision of state guarantees to non-state guarantee funds; baltic journal of economic studies 42 vol. 2, no. 2, 2021 – guaranteeing and insuring mp loans at the expense of independent non-governmental financial institutions or their associations through the creation of guarantee funds (mulyk t. and mulyk y., 2020). as you can see, the volume of short-term loans in the agricultural sector is accounted for by small and micro enterprises, but we must remember that there are more of them. volumes of short-term loans of banks of agricultural enterprises, including small and micro enterprises are given in table 1. thus, in 2019 the volume of loans to small enterprises amounted to 23,293.3 million uah that is increased, compared to 2013 by 17,978.1 million uah. the share of loans to these entities increased by 20.63%. among loans to small enterprises in the agricultural sector, a significant share falls on loans to microenterprises, their share ranges from 30-58%. during the study period, there was a slight decrease in the share of loans to micro-enterprises (-6.32%). landlord magazine together with the audit and consulting company kreston gcg found out who and on what terms are ready to finance ukrainian farmers. the rating of ukrainian banks (table 2), which offer the most attractive conditions for lending and support to farmers, was created by kreston gcg on the basis of a survey of financial institutions. the questionnaire included general questions about the bank’s policy on lending to farmers, specific proposals in the field of credit programs and partnership proposals, current credit products, restrictions on the profiles of companies that can be credited, etc. (reliable leverage: top-15 banks lending to the agricultural sector, 2018). the microcredit mechanism presented by the state as support for small business was first mentioned in the order for using funds provided in the state budget for 2004, for financial support of farms through the microcredit mechanism from 17.03.2004, no. 325 (radchenko and lazutina, 2018). at present, this problem is partially solved by compensation from the budget for interest rates on loans, for certain programs, the study of which we have carried out before. in particular, the program “financial support for measures in the agro-industrial complex by reducing the cost of loans”, the funds of which are directed to economic entities of the agro-industrial complex for partial compensation of interest rates on bank loans, attracted in the national currency, has been operating since 2015. it is based on the law of ukraine “on state support of agriculture of ukraine” of 24.06.2004 no. 1877 and the resolution of the cabinet of ministers “on approval of the procedure for using funds provided in the state budget for financial support figure 1. number of business entities (enterprises) in agriculture in 2019 (activities of large, medium, small and micro enterprises: a statistical collection, 2020)   subjects of large business, un.; 34; 0% subjects of medium business, un.; 2285; 3% subjects of small businesses, un.; 73131; 97% subjects of large business, un. subjects of medium business, un. subjects of small businesses, un. baltic journal of economic studies 43 vol. 2, no. 2, 2021 of measures in the agro-industrial complex by reducing 233 loans” no. 300 of 29.04.2015. the law of ukraine “on the state budget of ukraine for 2020” (“on the state budget of ukraine for 2020: law of ukraine”, 2019) provides for expenditures under the program 1201300 “formation of the authorized capital of the partial loan guarantee fund” in the amount of 240 million uah. the program’s passport does not exist yet, it is likely to be the successor of the still existing compensatory credit operations. 4 billion uah has also been pledged on the program 1201150 “financial support of agricultural producers”, which is not listed in the directions, but is presented as the support for the purchase of land. 5. problems and directions of small business lending development in the agricultural sector in general, assessing the characteristics of the microcredit market in ukraine and its positive developments, z. sorokivska notes the low level of its development. factors that, in her opinion, hinder the table 1 volumes of short-term bank loans to agricultural enterprises years types of enterprises large enterprises medium enterprises small enterprises of which microenterprises million uah % million uah % million uah % million uah % 2013 3050.3 13.66 13962.7 62.53 5315.2 23.80 2316.7 43.59 2014 4141.3 14.99 15588.7 56.42 7899.9 28.59 4600.5 58.23 2015 3694.8 13.27 14113.4 50.68 10040.9 36.05 4687.9 46.69 2016 2562.1 8.82 16238.1 55.88 10257.8 35.30 5983.7 58.33 2017 2179.5 4.65 25599.4 54.64 19074.6 40.71 6224.8 32.63 2018 1603.8 2.92 27896 50.86 25347.6 46.21 8448.1 33.33 2019 4356.1 8.31 24777.3 47.26 23293.3 44.43 8680.1 37.26 deviation 2019 /2013 (+,-) 1305.8 -5.35 10814.60 -15.3 17978.10 20.63 6363.40 -6.32 source: formed by the author on the basis of (activities of large, medium, small and micro enterprises: a statistical collection, 2020) figure 2. volumes of short-term loans of banks of agricultural enterprises, million uah (activities of large, medium, small and micro enterprises: a statistical collection, 2020) 30 50 ,3 41 41 ,3 36 94 ,8 25 62 ,1 21 79 ,5 16 03 ,8 43 56 ,1 13 96 2, 7 15 58 8, 7 14 11 3, 4 16 23 8, 1 25 59 9, 4 27 89 6 24 77 7, 3 53 15 ,2 78 99 ,9 10 04 0, 9 10 25 7, 8 19 07 4, 6 25 34 7, 6 23 29 3, 3 23 16 ,7 46 00 ,5 46 87 ,9 59 83 ,7 62 24 ,8 84 48 ,1 86 80 ,1 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 large enterprises medium enterprises baltic journal of economic studies 44 vol. 2, no. 2, 2021 development of microcredit in ukraine can be divided into two groups: problems facing small and mediumsized businesses, and problems for banking institutions. problems, that prevent banking institutions from more actively developing microcredit for small and medium enterprises include the high cost of resources in the country 's banking system and their short-term nature; small amounts of financial support from international financial institutions and business support funds; significant risks to the functioning of the small and medium business segment; low level of quality of credit applications of clients; insufficient development of microcredit technology in banks; insufficient protection of creditors' rights at the level of legislation and the judiciary; underdevelopment of credit bureaus (sorokivska, 2014). despite the fact that microcredit in ukraine has some restraining factors, it is developing, but at the same time, there are some points, that need to be improved. o. radchenko and l. luzina believe that a necessary condition for further development of microcredit of small agricultural enterprises is to streamline this process, bring it to certain rules, in a qualitatively new regulatory field for standardization of procedures, that is involvement and dominance of the state in this process. they note, that it is also necessary to intensify the activities of credit and guarantee institutions, increase the share of public spending on small business table 2 ukrainian banks that offer the most attractive conditions for lending and support to farmers bank credit limit rate banking commission lending programs otp bank from 25,000 uah to more than 10,000,000 uah in hryvnia – 9.5-17%, in dollars – 5.5%, in euros – 5% depends on the terms of the specific agreement capital financing, investment loans, credit line, overdraft, deposit loans, factoring, bank guarantees, agricultural receipts. raiffeisen bank aval from 50,000 uah to more than 10,000,000 uah in hryvnia – 16%, in dollars – 6.5%, in euro – 5% 0.5% of the loan amount capital financing, investment loans, credit line, overdraft, deposit loans, factoring, promissory note programs, bank guarantees, agricultural insurance first ukrainian international bank (fuib) in the absence of collateral – up to 35 million uah , in the presence – 250 million uah in hryvnia – 19%, in dollars – 8.5%, in euro – 7.5% 0.5% of the loan amount capital financing, investment loans, credit lines, deposit loans, factoring, promissory note avalization, bank guarantees, agricultural receipts mega bank up to 30 million uah hryvnia – 20%, in foreign currency – 8-9% 1% of the loan amount microloans, promissory notes, bank guarantees and others oschadbank with collateral is absent, without collateral – 10 million uah in hryvnia – from 16.9%, in foreign currency – 7.5-8.5% 0.2% of the loan amount working capital financing, investment loans, financial leasing, promissory notes, etc. procredit bank from 2,000,000 uah to 10,000,000 eur in hryvnia – 16-18%, in foreign currency – 6–8% 1% of the loan amount capital financing, investment loans, credit lines, overdrafts, deposit loans. credit dnipro from 300,000 uah to 5,000,000 uah in hryvnia – 14-21% 1% of the loan amount capital financing, investment loans, promissory note programs, bank guarantees, credit lines credit agricole the minimum is 1,000,000 uah, the maximum is determined by the borrower’s financial condition in hryvnia – 16-17%, in foreign currency – 4.5-5.5% 1% of the loan amount working capital financing, investment loans, credit line, overdraft, project financing, deposit loans, export / import financing, factoring, promissory note avalization, bank guarantees, agricultural insurance ukrsibbank more than 20,000,000 usd in uah – 14.9% for small and medium business depends on the specific case working capital financing, credit lines, export / import financing, bank guarantees and partnership proposals for financing farmers under forward contracts with buyers ukrgasbank for small and medium business – more than 10,000,000 uah . in hryvnia – 19-21%, for smes in hryvnia – 14.6-19.5% 0.5-1% of the loan amount working capital financing, investment loans, credit line, overdraft, project financing, deposit loans, export / import financing, bank guarantees. source: (mulyk t. and mulyk y., 2020) baltic journal of economic studies 45 vol. 2, no. 2, 2021 development, develop financial support programs on the example of foreign countries, especially poland, whose experience in microcredit shows that this mechanism is much more effective than the programs of commercial banks, the eu member states, the usa (radchenko and lazutina, 2018). svinchuk a.a. proposed a number of measures to improve the domestic microcredit system, which can be grouped into the following areas: creation and improvement of the regulatory framework for microfinance/microcredit, credit unions; improvement of existing state mechanisms for the development and support of microcredit; development of a guarantee system for both creditors and union members; ensuring the protection of credit unions; construction of a multilevel system of credit cooperation; promoting the development and transformation of credit unions into public banks; provision of educational and information services for microcredit borrowers; monitoring and control over the activities of credit unions (svynchuk, 2015). an effective way to support small business in the agricultural sector is to promote the attraction of foreign investors, which can be achieved through the following measures: removal of legal and administrative barriers to foreign investment; providing tax benefits to enterprises that direct funds to the development of their own production, accompanied by the creation of new jobs; providing tax benefits for companies operating in priority areas. the experience of the czech republic is useful for ukraine in terms of attracting foreign investment, where foreign investors are offered low interest rates on loans for further development and expansion, attractive interest rates on deposits, provide preferential lending conditions for the purchase of real estate (mulyk t. and mulyk y., 2020). for ukraine, one of the promising areas for improving the credit infrastructure is the creation of a specialized bank for lending to agricultural enterprises, as well as the development of a three-tier system of credit cooperation on the model of developed countries, including germany and france. these measures should partially solve the problem of financial support for the activity of agricultural enterprises (grubinka, 2016). in general, all measures of state support for lending to agricultural enterprises can be formed into 3 groups: – measures of direct allocation of funds or compensation to the enterprise, carried out individually at the enterprise by direct allocation or transfer of funds, when a certain part of the loan rate is reimbursed; – measures to compensate and support credit institutions, that provide loans to agricultural enterprises by changing the reservation norms, or their preferential lending, which depends on the volume of loans to agricultural enterprises in the structure of the loan portfolio of the institution; – measures to create specialized credit institutions for lending to the agricultural sector, based on the need for low profitability, control over public funds and strategic importance and individual approach to this industry (grubinka, 2016). interest rates on loans, raised to cover the costs, associated with the purchase of fuels and lubricants, seeds, fertilizers, plant protection products, feed, raw materials and ingredients for the production of feed, veterinary drugs, young farm animals and poultry, equipment for livestock farms and complexes, spare parts for repair of agricultural and irrigation machinery and equipment, energy, and payment for services related to repair works, works (services) for soil preparation and cultivation, protection of plants from diseases and pests, are subject to compensation (radchenko, 2020). each of these groups has its advantages and disadvantages, depends on the characteristics of the country’s economy, the state of its credit system, agricultural and economic policy. it is possible to combine these groups of support measures, as they are not mutually exclusive and depend on the country’s financial capabilities and the development of its credit infrastructure. characteristically, successes in lending to agricultural enterprises are observed in countries that use measures from different groups, respectively, we can talk about the dependence of the effectiveness of a measure from the thoughtfulness and its careful implementation, as well as securing financial resources for it and transparency and clarity of access to it and its use. thus, high results in lending to farms have been achieved in countries with specialized credit infrastructure (germany, france, indonesia, tunisia), in the us we see a high efficiency of combining specialized credit institutions and direct support measures against the background of a high degree of development of the land and stock market, which is especially noticeable when lending to farmers (grubinka, 2016). analyzing the foreign experience of microcredit to small and medium-sized businesses, o.i. masna in her study notes, what should be done in ukraine: to create separate non-profit microfinance institutions which would be endowed with the rights of crediting of the enterprises of small and average business; to create appropriate structural subdivisions or small sectors in banking institutions, which would be engaged only in studying the demand for microcredit and would study the history of small enterprises activity; to finance more actively small and medium-sized businesses that use energy-saving technologies and produce energyintensive products; to introduce a system of guaranteeing micro credits by local authorities or various funds; to promote more efficient lending to small businesses that export products or produce products that reduce imports; develop national and regional programs for micro-lending to small and medium-sized businesses by the non-banking system (credit unions, insurance and baltic journal of economic studies 46 vol. 2, no. 2, 2021 leasing companies, etc.); to expand the system of training and retraining of entrepreneurs, especially in matters of microcredit to small businesses (masna, 2008). 6. conclusions the support of small businesses in the agricultural sector through lending mechanisms is important and is currently carried out in different areas and conditions, both by commercial banks and by various funds and organizations. microcredit is an important and one of the most promising tools in promoting the development of small and medium enterprises. however, the high level of risk of such operations significantly reduces the activity of banks in this direction. therefore, to ensure full credit financing of small and medium-sized businesses, it is necessary to establish a mechanism for its support by the state. microcredit is one of the elements of financing, which involves the provision of a small amount by a bank or other organization. the main idea of microfinance correlates with the idea of social entrepreneurship and is to overcome poverty, ensure the economic sustainability of socially unprotected groups of population and support their integration into the labor market through the development of small businesses. it has been established, that the volumes of attracted short-term loans in the agricultural sector account for a significant amount of small and micro enterprises, but it should be remembered, that there are more of them. thus, in 2019 the volume of loans to small enterprises amounted to 23,293.3 million uah, which means that they increased compared to 2013 by 17,978.1 million uah. the share of loans to these entities increased by 20.63%. among the loans to small enterprises in the agricultural sector, a significant share falls on loans to micro-enterprises, their share ranges from 30-58%. according to the results of the study, the rating of domestic banks that offer the most favorable lending conditions for agricultural enterprises is given. it is established that otp bank is in the lead. in its activities, loans issued to the agricultural sector account for up to 50% of otp bank’s total loan portfolio. the bank finances not only agricultural producers, but also traders, suppliers of seeds, fertilizers, plant protection products, machinery and fuel. the problems that prevent banking institutions from more actively developing microcredit for small and medium enterprises are the high cost of resources in the country’s banking system and their short-term nature, small amounts of financial support from international financial institutions and business support funds, significant risks to the functioning of the small and medium business segment; low level of quality of credit applications of clients; insufficient development of microcredit technology in banks; insufficient protection of creditors’ rights at the level of legislation and the judiciary; small amounts of financial support from international financial institutions and business support funds; underdevelopment of credit bureaus. the main directions of further development of microcredit in the agricultural sector of ukraine’s economy should be: the creation and improvement of the regulatory framework for microfinance/ microcredit, credit unions; improvement of existing state mechanisms for the development and support of microcredit; development of a guarantee system for both creditors and union members; ensuring the protection of credit unions; construction of a multilevel system of credit cooperation; promoting the development and transformation of credit unions into public banks; providing training and information services for microcredit borrowers; monitoring and control over the activities of credit unions. references: grubinka, i. v. (2016). directions for improving the credit security of agricultural enterprises in ukraine through the prism of foreign experience in its implementation. collection of scientific works, vol. 2, pp. 112–122. activities of large, medium, small and micro enterprises: a statistical collection. (2020) kyiv. available at: http://www.ukrstat.gov.ua/druk/publicat/kat_u/2020/zb/12/dsvsmm_19.pdf kiyoshi, abe (2005). microcredit: eastern europe and ukraine. journal of european economy, no. 3, pp. 307–327. masna, o. i. (2008). financial support of microcredit of small and medium business in ukraine: author’s ref. dis ... cand. econ. science: 08.00.08. nas of ukraine. inst region. research. l., 20 p. mulyk, t. o., materinska, o. a., & plonsak, o. l. (2017). analysis of economic activity: a textbook. kyiv: center for educational literature. (in ukrainian) mulyk, t. o., & mulyk, y. i. (2020). microcredit of the agricultural sector in ukraine: status, problems and prospects. gesellschaftsrechtliche transformationen von wirtschaftlichen systemeninden zeiten der neo-industrialisierung. kornieiev v., pasichnyk, yu., radchenko o., khodzhaian a. undandere: collective monograph. verlag swg imex gmbh, nuremberg, germany, pp. 432–445. mulyk, t. o. (2020). environmental impact assessment of agriculture: regional aspect. modern economics, no. 19, pp. 135–142. reliable leverage: top-15 banks lending to the agricultural sector (2018). available at: https://landlord.ua/ reytingi/nadiyne-pleche-top-15-bankiv-shho-kredituyut-agrosektor (accessed 10 january 2021). on the state budget of ukraine for 2020: law of ukraine of november 14, 2019. № 294-ix. baltic journal of economic studies 47 vol. 2, no. 2, 2021 pravdyuk, n. l., mulyk, t. o., & mulyk, y. i. (2019). management of financial security of enterprises: accounting and analytical aspect: monograph. kyiv: center for educational literature. (in ukrainian) radchenko, o., & lazutina, l. (2018). support of rural entrepreneurship through microcredit mechanisms. agricultural science and education in the context of european integration: a collection of scientific papers intern. scientific and practical conf. part 2. (march 20–22, kamyanets-podilsky). ternopil: krok, pp. 203–206. radchenko, o. d. (2020). formation of agrarian microcredit system. entrepreneurship in the agricultural sector: global challenges and effective management: materials of the i international scientific-practical conference (february 12–13). zaporizhzhia: znu, pp. 232–235. svynchuk, а. а. (2015). microcrediting of social enterprises in ukraine: state and prospects of development. financial space, no 2, pp. 343–348. sorokivska, z. (2014). characteristics and problems of microcredit development in ukraine. ukrainian science: past, present, future: yearbook: in 2 parts / ed. m. v. lazarovich; ed.board.: s. v. adamovich, v. ya. brych, o. e. homotyuk [etc.]. ternopil: tneu, vol. 19; part 1, pp. 138–145. three seas economic journal 38 vol. 2 no. 3, 2021 corresponding author: 1 kyiv national economic university named after vadym getman, ukraine. e-mail: kmargobl@gmail.com orcid: https://orcid.org/0000-0001-6315-3168 doi: https://doi.org/10.30525/2661-5150/2021-3-6 state and prospects of the derivatives world market development marharyta krasnova1 abstract. the purpose of the paper is to determine the current state of the global derivatives market in the context of structural and dynamic processes and to substantiate the prospects for its further development, given the existing global challenges. methodology. the research is based on analysis and comparison of data from the bank for international settlements (bis) for the period from 2000 to 2020. the paper uses methods of correlation analysis to establish the relationship between the state of the world economy and the size of the derivatives market. the method retrospective study of the dynamic series was applied to structure information of derivatives world market development. to reveal the features, the specifics of the usage of various mechanisms and tools for the distribution of derivatives, and established the differences between exchange and over-the-counter trading article applies elements of structural analysis. the results of the study showed the importance and scale of the global derivatives market for the global economy. they allowed us to reveal a close relationship between market size and world gdp and assess the structural features of the market. accordingly, the derivatives market development has been periodized since 2000. its structural features have been revealed in terms of the type of transactions, underlying asset, place, and currency of derivatives trading, their maturity, etc. consequently, a significant predominance of otc derivatives trading has been found, due to greater flexibility of instruments and less formalized control. the predominance of different types of derivative instruments in different segments of the market has been determined. practical implications. the obtained conclusions are of interest in terms of monitoring the world derivatives market. they allow the correct assessment of the processes occurring in the market and respond to them rationally. the scientific confirmation of the connection between the size of the world economy and the market for derivative financial instruments is of particular practical importance. systematization of market reform directions allows a better understanding of the ongoing processes in the over-the-counter derivatives market. value/originality. the value of the article lies in the complexity of the analysis of the state and prospects of the derivatives world market development. it is provided through a detailed structural analysis, extrapolated to measures of market system transformation, as well as possible prospects for its further development. key words: derivative, exchange, futures, options, forwards, swaps, clearing, over the counter. jel classification: g15, g23 1. introduction in the 21st century, globalization and digitalization have deeply permeated all aspects of human life. they have covered almost every country in the world, providing access to the benefits of modern civilization, including effective economic instruments. among the existing global institutions, a special place is occupied by the global financial market and its components: money and currency markets, credit market, securities, and financial services markets, the market of derivative financial instruments (derivatives). derivative instruments hold a special place in the structure of the world financial system. first of all, their derivative nature and connection to various underlying assets (goods and raw materials, securities, interest and credit rates, exchange rates, stock indices, statistical reporting data, environmental indicators, etc.) allow the unification of the world financial market into a single harmonious system. in addition, the purpose and functional features of derivatives create favourable conditions for their widespread use as an effective tool for hedging risks, improving the liquidity of assets and increasing their value, forecasting economic and financial indicators. today, the global derivatives market is the subject of profound research and monitoring among scientists (afrina, beg, zayed, hossain, shahi, 2020; sheludko, 2014; vo d., huynh s., vo a., ha d., 2019), this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 39 vol. 2 no. 3, 2021 experts (bank for international settlements (bis), 2019; greenberger, 2010; the financial crisis…), government and international officials (the world bank, 2021). despite the significant positive effect, its instruments also include considerable speculative risks. it is considered that the global financial crisis of 2008, the numerous shocks to the financial sector, and the bankruptcy of leading financial institutions are all connected to these risks. due to the current importance and scale of the global derivatives market, significant scientific tasks occurred including the need for continuous monitoring of its condition, identification, and analysis of key indicators, as well as substantiation of further prospects of operation, based on existing trends and global processes. accordingly, the purpose of our study is to determine the current state of the global derivatives market in the context of structural and dynamic processes and to substantiate the prospects for its further development, given the existing global challenges. the objectives of the study are subordinated to achieving the purpose and focused on the following aspects: determining the importance of derivatives in the world economy; analysis of the current state of the world derivatives market and identification of its structural features; coverage of the processes related to the reform of the global derivatives market; substantiation of prospects for its further development. the methodological basis of the study is the analysis of the most relevant and large-scale summary data from the bank for international settlements (bis) (bank for international settlements (bis), 2019), which covers derivatives traded on organized exchanges, outstanding positions in over-the-counter (otc) derivatives markets, and turnover in foreign exchange and otc interest rate derivatives markets. comparison of the mentioned data with world economy state indicators carried out based on correlation analysis allowed to establish the relationship between global gdp and the size of the derivatives market. a retrospective study of the dynamic series of the derivatives market made it possible to structure information on the stages of its development. structural analysis of the derivatives market revealed the geographical features, the specifics of the usage of various mechanisms and tools for the distribution of derivatives, and established the differences between exchange and over-the-counter trading. based on the processing of monitoring data by the financial stability board (fsb) (the financial crisis…), the main areas of reforming the system of derivative financial instruments were systematized and generalized, the impact of the applied transformations on the market situation was determined. based on the results of the study, by extrapolating them to the current situation in the financial market, the prospects for further development of the derivatives market were substantiated. based on the result of the study, extrapolating them to the current situation in the financial market were substantiated the prospects for further development of the derivatives market. 2. the meaning of derivatives in the world economy the global derivatives market has undergone tremendous change over the past two decades and, by most measures, has come out more robust and efficient than ever. its main features are increased transparency, more central clearing, and vastly improved technology for trading, clearing, and risk – managing everything from futures to swaps to options (mcpartland, manohan, 2020). since the end of 2000, the derivatives market has received a push to development due to the signing of the commodity futures modernization act of 2000 (cfma), which minimized the ability to control the derivatives market. such actions, on the one hand, provided a six-fold increase increase in the volume of transactions with derivative financial instruments in just seven years (from $ 107.9 trln to $ 657.5 trln), and on the other hand, led to market imbalance and, according to m. greenberger (greenberger, 2010), became one of the causes of the global financial crisis of 2008. following the situation, measures had been taken to control the market. that led to a slowdown in growth, and after 2013 – a reduction in transactions on the derivatives market. as a result, the total volume of the studied market in 2020 was $ 648.0 trln (figure 1). in the context of retrospective analysis, we will highlight the existence of distinct periodization of the market development for derivative financial instruments within the study period: 2000–2007 – rapid growth and formation of preconditions for the global financial crisis; 2008–2013 – slowing down the market growth rate, implementation of strict market control measures; 2014–2020 – market downturn and stabilization, application of systemic reforms to control market functioning. evaluating the importance of derivatives for the world economy, we note that the total size of the derivatives market in some periods (2007–2010) exceeded world gdp by more than 10 times. evaluating the importance of derivatives for the world economy, we note that the total size of the derivatives market in some periods (2007–2010) exceeded world gdp by more than 10 times. as of 2020, this advantage was 7.6 times. thus, the high liquidity of derivatives as financial instruments can be considered one of the factors in the development of the world economy. we used correlation analysis in order to three seas economic journal 40 vol. 2 no. 3, 2021 test this assumption. the analysis also examined the correlation between the size of the world gdp (x2), the derivatives market (x3) with the time factor (x1), as well as the correlation between the components of the derivatives market (exchange-traded – x4 and otc – x5) with these factors. the results of the analysis are presented in table 1. according to the results, it was found that all mentioned factors are characterized by a high degree of cross-correlation (rxx>0.7). in addition, the closest linear correlation with the time factor is characterized by the value gdp (rх1х2=0.974) and exchange-traded derivatives (rх1х4=0.828). the mutual linear correlation between gdp and the size of the derivatives market is rх2х3=0.875. the size of the derivatives market itself depends almost entirely on the otc segment (rх3х5=0.998). thus, the dynamics of the global derivatives market are closely correlated with the volume of global gdp. this allows economic agents to use derivatives effectively in the interests of business related to risk hedging, the value of assets, their liquidity increase, and allows the financial institutions to predict the dynamics of prices for underlying assets and more effectively manage financial resources. 3. the current state of the world derivatives market as already stated, the global derivatives market has a complex structure. depending on the place of transactions conclusion, it operates both exchangetraded and over counter (otc) derivatives. depending on the type of transaction, it uses futures, options, forwards, and swaps. the first two types of transactions are standardized instruments and are traded on the exchange, while forward and swap contracts are more often objects of otc trading. depending on the underlying asset, derivatives are divided into the interest rate, equity-linked, foreign exchange, commodity, credit derivatives, and others. at the same time, there are differences both between the instruments themselves and the underlying assets of exchange and over-the-counter derivatives. yes, for example, exchange-traded interest rate derivatives are ltir (long-term interest rate) and stir (short-term interest rate) options and futures, 0 10 20 30 40 50 60 70 80 90 100 0 100 200 300 400 500 600 700 800 900 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 derivatives gdp figure 1. comparison of the dynamic of the world gdp size and the world derivatives market in 2000-2020, $ trln source: bis (http://stats.bis.org) table 1 results of correlation analysis of the global gdp time trend and the world derivatives market indicators years gdp derivatives exchange-traded derivatives otc derivatives х1 х2 х3 х4 х5 years х1 1.000 gdp х2 0.974 1.000 derivatives х3 0.774 0.875 1.000 exchange-traded derivatives х4 0.828 0.825 0.767 1.000 otc derivatives х5 0.746 0.856 0.998 0.720 1.000 source: bis (http://stats.bis.org); worldbank (https://databank.worldbank.org/source/world-development-indicators) three seas economic journal 41 vol. 2 no. 3, 2021 otc interest rate derivatives are called forward rate agreements (fra), interest rate swap (irs), options cap, floor , collar , and others. exchange instruments related to shares are stock options and futures, stock indices, or shares of exchange-traded funds (etfs). relevant instruments on the otc market are forwards, options, and swaps (sheludko, 2014). during the analysis of these derivative instruments, most of them can be divided by currency, location or counterparty, sometimes – by maturity, instrument and commodity, rating category. the key parameters of the size and structure of the world market of derivative financial instruments are given in table 2. the derivatives market overall was demonstrating growing dynamics during 2015–2020. to the greatest extent, this is typical for the otc market, which has continued to grow even during the crisis of 2020. in contrast, the exchange-traded derivatives segment last year fell by almost $ 30 trln (-31.2 %). the leading role in the market structure is played by the otc segment, which share ranges from 8590%. constant growth of the exchange-traded derivatives segment role was a distinctive trend of the last six-year period (increase in share from 11.4% to 14.6% in 2019). under these circumstances, the covid-2019 pandemic proved to be a deterrent to organized exchange trading in derivative financial instruments. in contrast, these events were not reflected in the otc sector. it was the over-thecounter derivatives market that, due to its flexibility, hedged the risks of economic agents related to covid-2019 and showed an increase of $ 23.5 trln (+ 4.2%). table 2 the size and structure of the world derivatives market, $ trln market, tools 2015 2016 2017 2018 2019 2020 $ trln % $ trln % $ trln % $ trln % $ trln % $ trln % exchange-traded derivatives 63.5 11.4 67.2 12.2 81.0 13.2 94.8 14.8 95.8 14.6 65.9 10.2 interest rate 63.1 11.4 66.9 12.2 80.6 13.1 94.5 14.8 95.4 14.6 65.5 10.1 foreign exchange 0.4 0.1 0.3 0.1 0.4 0.1 0.4 0.1 0.4 0.1 0.5 0.1 otc derivatives 492.5 88.6 482.4 87.8 531.9 86.8 544.4 85.2 558.5 85.4 582.1 89.8 interest rate contracts 395.1 71.1 385.5 70.1 426.6 69.6 436.8 68.3 449.0 68.6 466.5 72.0 foreign exchange contracts 76.0 13.7 78.8 14.3 87.1 14.2 90.7 14.2 92.2 14.1 97.6 15.1 credit derivatives 12.6 2.3 10.1 1.8 9.6 1.6 8.4 1.3 8.1 1.2 8.6 1.3 equity-linked contracts 7.2 1.3 6.3 1.1 6.6 1.1 6.4 1.0 6.9 1.1 7.1 1.1 commodity contracts 1.5 0.3 1.7 0.3 1.9 0.3 1.9 0.3 2.1 0.3 2.1 0.3 other derivatives 0.1 0.0 0.1 0.0 0.1 0.0 0.2 0.0 0.2 0.0 0.2 0.0 in total, including by types of derivatives 556.0 100 549.7 100 612.9 100 639.2 100 654.3 100 648.0 100 interest rate 458.3 82.4 452.4 82.3 507.2 82.8 531.3 83.1 544.4 83.2 532.0 82.1 foreign exchange 76.3 13.7 79.1 14.4 87.5 14.3 91.1 14.2 92.6 14.1 98.0 15.1 credit derivatives 12.6 2.3 10.1 1.8 9.6 1.6 8.4 1.3 8.1 1.2 8.6 1.3 equity-linked contracts 7.2 1.3 6.3 1.1 6.6 1.1 6.4 1.0 6.9 1.1 7.1 1.1 commodity contracts 1.5 0.3 1.7 0.3 1.9 0.3 1.9 0.3 2.1 0.3 2.1 0.3 other derivatives 0.1 0.0 0.1 0.0 0.1 0.0 0.2 0.0 0.2 0.0 0.2 0.0 source: bis (http://stats.bis.org) assessing the role of exchange institutions for the derivatives market, we determine that by 2020, more than 70% of derivative transactions took place in the markets of north america. last year, this market was negatively affected by the pandemic and lockdown of the economy in most countries. as a result, the positions of european stock exchanges strengthened significantly (30.6% instead of 22.9% in 2019), while the share of american exchanges decreased to 64.5%. the total share of asian, pacific, and other exchanges during this period ranged from 3.2 to 5%. in terms of the currency of exchange transactions with the interest rate derivatives, the largest share in 2020 was occupied by the us dollar (63.3%), pound sterling (15.9%), and eur (14.5%). in terms of the currency of derivative transactions, us dollar was one of the currencies in 96.9%, eur – in 33.9%, brazilian real – in 29.7% of cases (given that there are two currencies in exchange transactions, the total share of all currencies is 200%). thus, the current state of the global derivatives market development is characterized by restrained positive dynamics, which to some extent (depending on the region or derivative instrument) has been adjusted due to the pandemic of covid-2019 (afrina, beg, zayed, hossain, shahi, 2020). otc derivative transactions, for which the impact of the pandemic was insignificant, play a leading role in the market. instead, the lockdown had a negative impact on the exchangetraded derivatives market. the greatest negative impact was recorded on the exchanges of north america, while in europe it was less noticeable. as for the otc derivatives market segment, it continued to grow despite the new circumstances. moreover, it hedged three seas economic journal 42 vol. 2 no. 3, 2021 some of the risks, the number and volume of which increased significantly in a pandemic. 4. the structure of the world derivatives market based on data published by the bis (bank for international settlements (bis), 2019), more than 82% of the derivatives market is provided by interest rate contracts. of this – 72 % due to the otc segment and only 10% – due to exchanges. within otc derivatives, swaps take the lead (76.3%). the share of fras is 15.6%, options are 8.0%. herewith, the main contractors are the central counterparty (ccp) (77.7 %), mainly clearing house, an entity that helps facilitate trading in various derivatives and equities markets. the share of non-financial customers is only 2.7 %. foreign exchange derivatives are also important in the market. if within exchange trading their volume is only $ 0.5 trln (0.1% of the total volume), then in the otc segment it is $ 97.6 trln (15.1% of the total volume). within the exchanged market, future contracts predominate ($ 326 trln – 72.4%). options account for $ 37.0 trln (27.6%). at the same time, most agreements (over 90%) are concluded on a shortterm basis and provide for quick liquidation. the outright forwards and forex swaps (59.5%) and currency swaps (28.5%) are the main derivative financial instruments in the otc market. the share of options is 12.0 %. by counterparty, the reporting dealers (38.0 %) and other financial institutions (49.1 %) take an important place. however, unlike interest rate contracts, the share of ccps in circulation is only 3.9%. by maturity, in the analysed segment preferences are given to short-term (up to 1 year) instruments (77.9%), by currency, the share of the us dollar reaches 87.5%. in the commodity contracts market, the main underlying asset is gold (46.7%), and other derivative instruments (54.7%), including energy resources, agricultural products, and other commodities. the leading type of transaction in this market is forwards and swaps (70.8%). in the structure of credit derivatives, the vast share of transactions is covered by credit default swaps (96.6%). the main counterparties are central counterparties (60.4%), the share of nonfinancial customers is quite low – 3.5%. the equity-linked contracts market is distinguished by the parity of the instruments used (51.4% forwards and swaps, and 48.6% options). other financial institutions (65.8%) play a key role in this segment, however, the share of central counterparties does not reach the level of even 1%. the us equities (46.8%) and european equities (29.3%) are the main markets for the use of these derivatives. thus, in the structure of the world market of derivatives, interest rate and foreign exchange contracts are leading. at the same time, future contracts are most often used on the exchanged market for trading in these instruments, and on the otc market – outright forwards and forex swaps. by counterparty in trading, this derivative on the stock exchange is dominated by a central counterparty, while in the over-thecounter market their participation is very limited. forwards, swaps and options are most often used in the commodity and equity-linked contracts markets. in the credit market of derivative instruments, the main buyers are central counterparties, but in the commodity market, their role is minimalized. 5. reform and prospects for the development of the derivatives market the financial crisis of 2008 necessitated the reform of the derivative financial instruments system. in the absence of strict control, they were exposed to significant speculative risks. this, in turn, negatively affected the entire financial system and the world economy. in november 2009 the g-20 finance ministers and central bank governors endorsed 20 recommendations to address information gaps described in the report “the financial crisis and information gaps” prepared by the financial stability board (fsb) secretariat and international monetary fund (imf) staff (the financial crisis…). from the mentioned list, recommendations 13 provided «investigating the issue of monitoring and measuring cross-border, including foreign exchange derivative, exposures of non-financial, and financial, corporations with the intention of promoting standardized reporting guidance and the dissemination of data». from the expert point of view, the main factor that needed to be addressed was the lack of data on crossborder exposures of non-financial corporations, in particular of larger corporations using foreign affiliates to raise finance, provide implicit guarantees, or engage in derivative transactions. small and medium firms that were highly concentrated in exporting in some instances also acquired foreign exchange exposures through derivatives contracts booked in foreign markets. to solve the identified problems, during 20102020 a number of measures were taken to reform the system of derivative financial instruments. as a result, significant progress has been made in many aspects of the reform, including: – process improvement was provided to reduce reporting barriers and masking relief, wider use of the legal entity identifier in trade reporting, and streamlining reporting processes and trade repository operations; – the standards and criteria of the central clearing were improved, as a result, a significant proportion of otc derivative transactions have been standardized; – complex margin requirements for non-centrally cleared derivatives were formed and systematized; three seas economic journal 43 vol. 2 no. 3, 2021 – higher capital requirements for non-centrally cleared derivatives were established; – comprehensive platform trading requirements were formed and applied. according to the taken measures, a significant number of procedures for the use of derivatives were unified, most standards and criteria for control and monitoring were improved, and separate operations were centralized and unified according to market requirements (the financial crisis…). today, the most relevant processes that transform the derivatives market are the transition away from libor, expected in 2021, and the implementation of phases 5 and 6 of the uncleared margin rules (umr) over the next two years. both have the potential to impact end-users at many levels by, among other things, changing their product mix to include more products linked to alternative reference rates to manage the former and more cleared products to manage the latter. new challenges and opportunities that will have an impact on the global derivatives market in the nearest future will remain, on the one hand, covid-19, and technological progress, on the other, including the creation of new technologies and derivatives. response to covid-19 impacts on the otc derivatives markets, the efficacy of the otc derivatives market reforms was tested during the pandemic and has so far held up, with no severe disruptions being reported in otc derivatives markets, fmis, or market participants across jurisdictions, notwithstanding the sharp increases in volatility and trade volumes in march 2020. after the initial spike, volumes have generally stabilized to precovid-19 levels (afrina, beg, zayed, hossain, shahi, 2020). accordingly, the derivatives market has responded effectively to new risks and adapted them through its own instruments. concerning the application of technological advances, in addition to the development of new tools, today 's promising areas of market development are the formation of the segment of cryptoderivatives. the available information and technological resources can already fully operate with these tools. however, cryptocurrency markets today still have a controversial status in the world's financial system. moreover, they are characterized by excessive volatility and cannot yet fully meet market requirements. thus, nowadays the derivatives market is gradually unifying and gaining controllability, especially in the otc segment, despite the significant miscalculations in the management of the derivative system in the late 2000s. in such conditions, the role of clearing companies grows, conditions are created for clearer identification of market participants, management of margin, capital, trading platforms, etc. promising directions for its further development today are the adaptation of the derivative system to the challenges associated with covid-19, as well as to the opportunities arising from the spread of block chain and cryptocurrency technologies. 6. conclusions as a result of our research, we systematized information on the state of the derivatives market, conducted a study of its parameters, and substantiated the prospects for its further development. accordingly, the following conclusions are noteworthy: 1. the global economy is exposed to many challenges and risks due to the high dynamism, political and economic instability. the sensitivity of the financial system to all kinds of shocks necessitates the widespread use of derivatives to reduce uncertainty and hedge risks. given this, the global derivatives market today is 7.5 times the size of world gdp, and its indicators significantly affect global and local economic processes. 2. the current state of development of the derivatives market has a restrained positive trend. considering the dominating otc segment, it has been found that the availability of more flexible derivatives and less formal controls create an additional advantage for economic agents seeking to hedge their risks. this conclusion is confirmed by the positive reaction of the otc market to the covid-2019 crisis and the maintaining positive growth trend. 3. the main part of the derivatives market is formed by highly liquid instruments – interest rate and foreign exchange contracts. their use is typical for both exchanged and otc market. the key tools for securing derivatives are future contracts, outright forwards, and forex swaps. commodity and equity-linked contracts most often operate forwards, swaps and options. 4. considering the reform of derivative financial instruments launched after 2008, special attention is paid to counterparties that work with derivatives. in this context, we note the growing role of central counterparties in the market of exchanged future contracts, and in the market of credit default swaps. 5. in line with the ongoing transformation, the otc derivatives market is increasingly taking on the features of a unified and standardized system. on the one hand, this increases the level of its manageability, and on the other hand, reduces its attractiveness for speculative capital. therefore, in current conditions using global risks, opportunities, and their adaptation to the risk management system is important for maintaining a high level of attractiveness of the derivatives market is. the risks related to the covid-19 along with current scientific developments and the cryptocurrency market deserves special attention. in view of the findings, the possibility of introducing derivative financial instruments in the block chain and three seas economic journal 44 vol. 2 no. 3, 2021 cryptocurrency system is an important area of further research. particular attention should be paid to the argumentation of the derivatives' potential, determining the degree of their possible market impact, and the development of clear sequences and algorithms for their implementation in the work of financial 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(2014). suchasni tendentsii rozvytku svitovoho rynku deryvatyviv [modern tendencies of development of the world market of derivatives]. bulletin of taras shevchenko national university of kyiv. economics, 10, 81–87. shmuratko, y. (2015). tendentsii rozvytku svitovoho ta vitchyznianoho rynkiv pokhidnykh finansovykh instrumentiv [trends of development of global and national derivatives market]. hlobalni ta natsionalni problemy ekonomiky, 8, 1075–1079. the financial crisis and information gaps progress report action plans and timetables prepared by the imf staff and the fsb secretariat (2010). available at: https://www.fsb.org/wp-content/uploads/r_100510.pdf (accessed 19 september 2021). the world bank (2021). world development indicators. databank. available at: https://databank.worldbank.org/ source/world-development-indicators (accessed 19 september 2021). vo, d., huynh, s., vo, a., & ha, d. (2019). the importance of the financial derivatives markets to economic development in the world’s four major economies. journal of risk and financial management, 12(1), 35. doi: https://doi.org/10.3390/jrfm12010035 three seas economic journal 60 vol. 2 no. 1, 2021 corresponding author: 1 petro mohyla black sea national university, ukraine. e-mail: ovchynnykovao@gmail.com orcid: https://orcid.org/0000-0002-0624-5549 2 petro mohyla black sea national university, ukraine. e-mail: kostnet1@gmail.com orcid: https://orcid.org/0000-0002-5322-4986 doi: https://doi.org/10.30525/2661-5150/2021-1-10 synergistic approach to the capital adaptation: capital as a multifunctional dissipation system oleksandra ovchynnykova1, kostiantyn netudykhata2 abstract. the research subject of the paper is the process of capital adapting. the purpose of the article is to present capital as a multifunction dissipation system, which consists of the number of interconnected subsystems that operates being under the influence of destabilizing socio-economic factors. there is still no explicit definition of economic adaptation, and capital is not regarded as a set of tangible and intangible assets. taking into account that the current operating environment, at both the macro and micro levels, may be characterized as unsustainable, and each system strives to organize itself to achieve the main objective, it is worth considering the process of adaptation, using a synergistic approach. this requires looking at the concept of capital as a multifunctional system, firstly, identifying which economic categories are made as subsystems of capital and which of them form capital, secondly, assessing potential areas of adaptation, thirdly, and identifying where adaptation can be targeted in the first place, fourthly. determination of priority goals is the task of rapid financial analysis, using the results of strategic analysis it is possible to determine long-term goals of adaptation. methodology. the article uses methods of empirical knowledge aimed at structuring approaches to the concepts of capital, their selection and analysis. based on the empirical research, theoretical studies have been carried out. it was used such methods us analysis and synthesis, deduction, abstraction and generalization. the conceptual framework is based on the theoretical developments in various scientific fields that have studied capital, the enterprise, the economic system as an economic category, the concept of adaptation, synergies in the economy, and methods of strategic and financial analysis. by examining and analysing existing approaches to the listed issues, it has become possible to propose a definition of capital adaptation as a multifunctional dissipation system. as a result of the research, it became clear that for sustainable adaptation, it is advisable to use the tools of strategic management, and for instantaneous adaptation tools to ensure the economic and financial security of the enterprise. in the process of writing this research, it became clear that it was necessary to study issues related to the characteristics of subsystems, their assessment and analysis in order to make the adaptation process more multifaceted and effective. key words: capital, capital adaptation, synergistic approach, economic system, enterprise and entrepreneurship. jel classification: d24, g32, l26, o29, в10 1. introduction there is still no clear definition of the term "capital adaptation", so the methodology of the process is lack. adaptation is essential for accommodation organisms to volatile environments (often negative). similarly, like living organisms, the economic system and its components, like subsystems, have to respond to environmental change and react to them saving a certain balance. the aim of research is to understand what is capital adapting. to this, it is necessary to take the enterprise as a part of the economic system and to pay attention to the way in which economic agents react to potential stimuli. the research problem is as follows: if can capital be considered as a narrow definition, scoring only tangible or intangible values? if it is worth considering capital as manifestations of heterogeneous forms of property, based on what the enterprise is a symbiosis of property, knowledge, skills, experience, business ambitions, practice background? thus, using the methods of analysis and synthesis of existing approaches to solving declared problems, the article introduces the idea of considering capital as a multifunctional system that shows signs of dissipation and seeks self-organization to adapt to external and three seas economic journal 61 vol. 2 no. 1, 2021 internal influences. the logic of material delivery makes it possible to follow the etymology of the development of the "capital" definition, to understand the concept of multifunctionality of capital, to define the concept of adaptation in the enterprise, taking into account factors of tactical and strategic management. according to this, basic tools are proposed to identify "weaknesses" in order to adapt to the environment’s fragility. 2. development of the capital concept the first attempts at scientific analysis of the term "capital" are found in the works of ancient greek philosophers. in the middle of the 6th century bc, aristotle proposed to divide the science of housekeeping "economics" and the science of the art of managing property (capital) – "chrematistics". thus, activities aimed at obtaining the necessary benefits are bound to become activities aimed at accumulating those benefits (palekhova, 2007). the next stage of the study of the definition of capital began almost two thousand years later with the emergence in western europe of the 16th century of the mercantilism economic school, which sought an answer to the question of what is wealth and how to determine the sources of that wealth (mochernyi, 2005). the classical school of political economy, which was founded in the 18th century in great britain, reverted to aristotle’s ideas. by investigating the essential of capital, they came to believe that capital takes part in production. in the 20th century, scientists did not attempt to provide a universal definition of capital but formulated a multipolar definition. the mathematics school suggested considering capital as any resource that could be used in the production process. economists have proposed a definition of capital as resources created by productive activities that are used to the further production of goods and services; goods that are not destined for direct human consumption: investment goods, capital goods (mcconnel & brue, 2003). institutionalists have characterized capital as investment wealth, which is measured by the value of the future income that will bring capital to its owners (korniichuk, tatarenko & poruchnyk, 1999). blank (2004) defines capital as economic benefits that have been accumulated as cash reserves and in the form of real capital goods, which are involved by the owners of these benefits in the economic process as an investment resource and a factor of production. the main purpose of using capital as an economic good is to generate income which in the economic system is based on the principles of a market economy and is related to the factor of time, risk and liquidity. in classifying the capital of an enterprise, blank (2004) distinguishes such forms of capital: financial flows, money, tangible and intangible assets. paul theodore heyne (1993) introduced into economic science the concept of human capital, which allows the efficient use of capital as any form of property. according to the oxford dictionary, capital is a good of property (tangible assets) and other assets. ethan roland (2015), referring to this definition of capital, proposed to equate "other assets" with "tangible assets," and to consider the financial system and capital as an ecosystem that consists of a number of subsystems as: empirical, intellectual, spiritual, social, material, cultural, basic (providing basic needs) and financial capital. this concept of capital is based on the permaculture principles, which is based on natural relationships in the ecosystem. 3. synergistic approach: capital as a multi-functional system by analysing the proposed approaches to understanding the nature of capital, it is possible to determine that capital is an extended, multifunctional system, following the example of an ecosystem. the system of capital is formed from the enterprise itself as an economic entity, from property in any form of its manifestation, and from a number of socio-economic components. these are all subsystems that make capital (figure 1). this symbiosis ensures the continued operation of enterprises at all stages of their life cycle. each of the subsystems works together and ensures the efficiency of the capital system. since the main purpose of entrepreneurship is to generate profits, and capital (as a multi-functional system) is the key to successful business, it is possible to identify capital with the enterprise. if any organism or system (as a group of organisms) is forced to adapt to environmental changes in order to survive, the enterprise and capital have to adapt to the current conditions of exposure in order to sustain successful activity. considering that the economic system is an openminded dissipation system and that the operating conditions of enterprises in modern economic realities are characterized as unstable and destabilizing, each enterprise has to adapt in one way or another to external and internal influences. therefore, capital like an enterprise is constantly in a state of adaptation, which is identified with a continuous process of evolution (change or adaptation) like any living organism. it is appropriate to view the process of adaptation as the use of a body of knowledge, skills and experience that are hold by human capital. it is the labour force that is useful and indispensable in ensuring the successful completion of a firm’s life cycles. labour is the link between tangible and intangible values. it is an intellectual capital that makes it possible to assess the level and nature of external influences, and to select and use the necessary mechanism that will enable an adequate response to stress. therefore, a balanced and motivated use of information and management tools is an essence of the adaptation mechanism (tevanyan, 2017). three seas economic journal 62 vol. 2 no. 1, 2021 4. immediate and long-term adaptation: stages of assessing destabilizing factors a distinction needs to be made between immediate adaptation, which enables a rapid response to destabilizing factors, and sustainable (long-term) adaptation. it is sustainable adaptation that identifies potential destabilizing influences on capital (as a multifunctional system) and reflects the negative impacts of externalities in the long run. changes in financial performance are signals (markers) of immediate adaptation. in turn, systemic (sustainable) adaptation aims at comprehensive change and accommodation of tangible and intangible property. in determining the direction of immediate capital adaptation, these steps should be followed in assessing the conditions of the enterprise: – assessment and analysis of external influences; – assessment and analysis of internal influences; – monitoring of the actual conditions of the enterprise; – identification of destructive factors; – identification of sources of potential risks; – development of ways to minimize the impact of risk factors. the development of the adaptation mechanism and tools will be possible as a result of the identification of a set of objectives that will emerge from the analysis of the potential challenges and the existence of the “bottlenecks” (the problem spot in the system). to this end, a preliminary assessment of the enterprise’s potentials is carried out by using strategic analysis methods and tools (table 1) (lepeyko & kryvobok, 2016). strategic analysis focuses on the assessment of external influences on the enterprise, its place in the branch or in the market. from the above proposed methods or tools for estimating and analyzing the externality impact on capital (as a multifunctional system), the economic entity decides at its own discretion, based on the availability of the necessary information. it can be used one method or combination of several ones. the main purpose of the adaptation process is to support an enterprise in a condition that meets the criteria of economic safety at any stage of the business life cycle (melnik, 2016). the essence of economic security assessment is the ability of an enterprise to withstand potential threats and be able to sustain its own operations and further development (melikhova, 2018). an economic and mathematical approach can effectively determine the relationship between factors that directly or indirectly affect economic security, assess the degree of influence of these factors, make an analysis, and build a model for strengthening economic security (koknayeva, 2012). as mentioned earlier, the main function of a business entity is to make a profit. this means that the formation of a methodological approach for assessing the economic security of capital as a multifunctional system should take into account changes in the profitability indicator (suvorov, 2001). it is worth noting that the change in financial performance indicators has a correlation with the rate of capital as a multifunctional system tangible values intangible values intangible assets tangible assets cash finance basic capital human capital intellectual capital spiritual capital cultural capital social capital figure 1. the essence of capital as a multifunctional system three seas economic journal 63 vol. 2 no. 1, 2021 table 1 methods and tools of strategic analysis methods and tools of analysis characteristic area featuresexternal influencing factor internal influencing factor steeplanalysis it is evaluated an influence on the enterprise of such factors as: s (socio-demographic); t (technological); e (economical); e (ecological); p (political); l (lawmaking). ✓  helps to identify trends in external influences on the enterprise. swotanalysis helps to identify and assess external and internal influences: s (strong points); w (weak points); o (opportunities); t (treats). ✓ ✓ enables socio-economic facilities to be analysed at both the micro and macro levels. snwanalysis used to assess the internalized environment by strength, neutrality and weakness.  ✓ used as a second step after swotanalysis. gap-analysis used to estimate gaps between current, maximum, projected and planned enterprise performances. ✓ ✓ helps to adjust business strategy. industry analysis determines the potential of an industry in relation to an enterprise according to economic, consumer, competitive criteria; assesses the possibility of entering and leaving the market. ✓  it is necessary to obtain information on the state and prospects of the industry, technological level, actual and potential production, profitability, direct influence on the enterprise. maps of strategic groups useful for assessing competition in the branch. ✓  allows to predict the profitability of the enterprise and to adjust the company development plan. porter's five forces model used to analyse competition in the market according to such criteria: threat of substitution products; threat of new entrants to the market; assessment of the market power of counterparty; evaluation of the influence of the buyers on a market; level of existing competition. ✓  enables the development of a long-term enterprise development strategy, taking into account potential competitive advantages, which were identified. bcg matrix assesses the position of a company in the market by defining the role of a product in the market through a product life cycle model. ✓  the evaluation takes into account the performance of the strongest market participant, allows for the adjustment of the strategy in the short or medium term, shaping the enterprise’s tactics. adl matrix the matrix is based on the changing life cycle and competitive position of the enterprise in the market. ✓  allows to track changes in the market over time, similar to changes in the stages of the product life cycle. ge analysis the analysis takes into account the attractiveness of the strategic economic zone and the competitive position. ✓  identifies the highest potential product. ansoff matrix built from quadrants of product penetration, market development, product development, diversification. ✓  determines the position of the product in the market. abel matrix it helps to define who the consumer is, what consumers need, how to meet the needs of consumers. ✓  the matrix helps to identify new consumer needs and meet them by minimizing production costs. it is possible to achieve the aim by means of a synergistic effect during the search for new market segments. three seas economic journal 64 vol. 2 no. 1, 2021 development of the enterprise, and at the same time, the guarantee of economic security is equilibrium. thus, the economic development of the enterprise should be achieved through economic growth, while maintaining the existing level of economic security or by improving performance while maintaining a conditional equilibrium. accordingly, in the process of capital adaptation, it is important to conduct an economic and mathematical assessment of the financial security of an enterprise, and to take methods of ensuring sustainability or improving financial security indicators as tools for instant adaptation. financial security assessment is carried out by analyzing the financial condition of the enterprise. for this, vertical and horizontal analysis of absolute indicators of the capital structure and coefficient analysis – express analysis of the financial condition of enterprises are effective. at the same time, the balance, which is the key to financial stability and security, makes the development of the enterprise impossible. the motivational impetus is precisely the violation of the equilibrium conditions. instability arises as a consequence of the impact on a heterogeneous (inhomogeneous) system. this proves that economic adaptation should be seen as a synergistic process. since synergistic systems are self-regulating, adaptation should not be directed towards capital management. the adaptation process should be aimed at creating sustainable positive relationships. the condition for successful synergy is the union of intangible and material values that form a multifunctional system (kuznetsov, 2004). combining subsystems into a single system allows you to overcome the dichotomy (plurality) and consider capital as an integral open economic system. it has an internal structure, the dynamics of which is influenced by various factors, both external and internal (dombrovskyi, 2013). 5. conclusions having considered capital as a dissipative multifunctional system that combines intangible and tangible values, social capital, it is worth applying a synergistic approach as understanding the process of capital adaptation. to determine the primary goal of adaptation and assess the state of the enterprise's capital, it is enough to conduct a thorough analysis of external and internal factors of influence, using the methods of strategic analysis and express analysis of the financial condition of the enterprise. as a result (successful adaptation), it is worth considering the creation of effective relationships between the elements of the capital system and irritants of any level, the ability of the system to respond in a timely manner to influencing factors. in the future, it is necessary to investigate ways to assess the state of capital subsystems and classify the factors influencing them in order to develop methods and tools for adapting the components of the capital system. references: blank, i. (2004). financial management. kyiv: elga nika center. dombrovskyi, o. (2013). economic system in terms of synergetics: temporal and spatial context. efektyvna ekonomika, vol. 2. available at: http://www.economy.nayka.com.ua/?op=1&z=1788 heyne, p. (1993). economic mindset. moscow: delo. koknayeva, m. (2012). features of research methodological tools financial security trading companies. economic annals-xxi, vol. 5–6, pp. 53–55. available at: http://soskin.info/en/ea/2012/5-6/contents_16.html korniichuk, l., tatarenko, n., & poruchnyk, a. (1999). economic history. kyiv: kneu. kuznetsov, b. (2004). economic synergy as a methodology for economic development. available at: http://lib.usue.ru/ resource/free/12/s69.pdf lepeyko, t., & kryvobok, k. (2016). improving the tools for adating enterprises to influence of the competitive environmental. business-inform, vol. 12, pp. 176–181. mcconnel, c., & brue, s. (2003). dictionary of definitions and terms. economics. principles, problems, and policies (4th ed.). moscow: infra m. melikhova, t. (2018). assessment of the level of the enterprise financial security as the main component of economic security: a synthesis of existing methodological approaches and critical analysis. problems of systemic approach in the economy, vol. 1(63), pp. 87–91. melnik, m. (2016). adaptation of an enterprise as backer-up of him economic security. visnik of the volodymyr dahl east ukrainian national university, vol. 6 (230), pp. 87–90. mochernyi, s. (2005). the social and economic essence of capital, economic theory. kyiv: publishing house “academia”. palekhova, v. (2007). evolution of economic thought, political economy. mykolaiv: petro mohyla black sea state university. roland, e., & landau, g., (2013). regenerative enterprise. available at: http://www.regenterprise.com/regenerativeenterprise/ suvorov, v. (2000). synergistic concept of organization. moscow. tevanyan, a. (2017). adaptation of economic system to stress through the medium of intellectual capital management. journal of creative economy, vol. 11(11), pp. 1133–1143. three seas economic journal 129 vol. 3 no. 1, 2022 corresponding author: 1 national university of water and environmental engineering, ukraine e-mail: e.v.mikhailova@nuwm.edu.ua orcid: https://orcid.org/0000-0002-1539-1548 2 national university of water and environmental engineering, ukraine e-mail: s.v.mykhailov@nuwm.edu.ua orcid: https://orcid.org/0000-0003-4120-4686 doi: https://doi.org/10.30525/2661-5150/2022-1-18 theoretical approaches to crisis management during the information war yelyzaveta mykhailova1, stanislav mykhailov2 abstract. the study is devoted to crisis management in information warfare. modern society, transformed into an information society, together with access to information and knowledge has received new threats to personal and national security. information and communication are realized in the information space, which is a social or geographical space within which typical communication processes take place. its subjects are individuals, social groups and organizations, and its objects are information or those who receive this information. the field of information warfare is constantly expanding, but its main part remains the media and the internet. the purpose of the research is to describe and analyze the methods of crisis management of any organization in conditions of information warfare. methodology. since crisis management is seen as a process of interrelated functions, at the pre-crisis stage of its formation it is necessary to find out the factors that can prevent a crisis situation, to develop strategic business marketing plans, control risk factors to avoid possible losses and negative consequences. when developing strategies and management methods that prevent a crisis situation (pre-crisis management), preference is given to factors and tools that can activate the exit from the crisis (crisis management), and then to strategies aimed at renewal and post-crisis management systems. results. considering that information warfare is universal and can be implemented in all spheres of life, including economic, it affects the efficiency of the enterprise. in such a situation anti-crisis management is used, the purpose of which determines its stages: planning of strategies and programs; organization of optimal structure; motivation of personnel; control of timely changes. in accordance with the purpose of crisis management, its positive results can be observed in: restoring the financial equilibrium of the enterprise; alignment of imbalances of internal and external parameters of the enterprise; ensuring the financial stabilization of enterprises; ensuring and maintaining the viability of the enterprise. another aspect of crisis management is public administration, which is implemented in the creation of a system of interaction between the state and the market economy, with the ability to overcome macroand microeconomic crises, provided through financial and legislative regulation, industrial policy and income redistribution. key words: crises, anti-crises management, informational war, informational society, public administration. jel classіfіcatіon: i20, i21, i22, i25, i26 1. introduction as modern society has been transformed into an information society, with access to an infinite amount of information and knowledge, there are new threats to individual and national security. in a society where information has become global, there is a need for a new decision-making mechanism for dispute resolution and coordination. however, in the information society, where any process takes place in the information space, where economic, political, cultural and even psychological impact occurs through information, a new phenomenon of "information warfare" has emerged. the works of such scientists as e. aronson (2007), s. grinyaev (2001), h. kissinger (2017), o. kurban (2016), m. libicki (2007), e. toffler (2000) were devoted to the problem of information wars. a striking example of the modern development of information warfare technology, marked by the emergence of specialized strategies, methods and tools, was the war in iraq (2003). during this armed conflict, separate military units were created to conduct psychological operations (psyops), which specialized in influencing emotions, motives and objective this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 130 vol. 3 no. 1, 2022 thoughts through the use of certain information, and since 2010 it has been called "military information support operation" (miso). at the present stage, and especially in the infor mation society, there are problematic crisis processes and phenomena, which are associated with the movement of information in the economic system of the country and in a particular economic sphere. the consequences of external and internal information influences lead to the destruction of the functioning system, which, in turn, requires the improvement of anti-crisis management mechanisms. 2. trends and trends in information warfare crises in any organization, especially in a state organization, in the face of information challenges can arise systematically and suddenly, in the form of growing conflicts that lead to disintegration. the obsolescence of the technologies used and the loss of competitive advantages, a significant outflow of resources are also signals of a growing crisis. in addition, in addition to external influences, any acute disputes arising within the organization are in one way or another related to its financial and economic activities. that is why crisis management is aimed at eliminating and preventing gaps in the allocation of resources and optimization of economic activity. in a time of information warfare that is unfolding within the information space, where information is exchanged through the media, the media is a major tool for shaping human thinking. therefore, the current ukrainian situation, in which the main subject of the information and psychological impact is the media, is more relevant than ever (samokrutova, 2017). because of its ability to create reality, the media becomes an arena of struggle and propaganda. by creating different kinds of tactics that play on prejudice and emotion, modern propagandists exploit two basic human tendencies: the desire to exploit mental stereotypes and the rationalization of behavior. modern propaganda p refers to "workarounds" of persuasion and aims to benefit at the expense of most people's limited cognitive ability to process information. today 's information environment, saturated with messages, advertisements, etc., minimizes the opportunity for in-depth understanding of important problems and solutions (bogush, 2007). typical information warfare strategies include: 1) the ability of a self-learning information system to purposefully reprogram another similar system; 2) the need to reprogram the system to search the outside world or create an information system that would be similar; 3) the ability of the information system to "look at the world through the eyes of others; 4) the usage effective areas, such as culture, art, religion for the rapid and mass reprogramming; 5) the ruination the most important basic elements for preliminary chaos (samokrutova, 2017, p. 100). 3. anti-crisis management in information warfare system analysis of specific signals allows us to identify a number of parameters that serve as indicators of crisis phenomena in the conditions of information warfare. but it is worse to emphasize that this methodology is effective at the stages of early diagnosis of crises, when the goal is to prevent their occurrence, to prevent further deterioration of indicators: 1. falling demand for the organization's goods, decreasing purchasing power of the population, increasing demand for competitors' goods. 2. deterioration of the parameters of production factors, such as a reduction in the supply of raw materials, an increase in the price of raw materials and equipment, an increase in the cost of licenses. 3. reduction of production in related industries, stagnation of their scientific, technical and economic potential, growth of prices for infrastructure services. 4. the proximity of competition when the competitive status of the organization, the active "switching" of customers to substitute products, price wars. 5. adverse changes in the activities of state and governmental structures: an increase in tax rates and the introduction of new taxes, adverse changes in exchange rates, customs duties, changes in civil and commercial legislation, state control over price fluctuations. 6. random events: location of the organization in a region prone to natural disasters; instability of foreign policies of foreign business partners, demographic shocks; unexpected scientific and technological breakthroughs presented by competitors. 7. deterioration of technical resources of the organization: wear and tear of technological equipment, use of outdated service stations. 8. worsening parameters of technological resources: lack of opportunities for systematic scientific research; use of technology that does not allow to effectively change the generation of products within a single life cycle. 9. reduction of human resources: employees are focused on the use of command and administrative methods of management, performance of traditional types of work due to the stability of technology; ensuring technical, social and environmental safety is not of paramount importance. 10. lack of flexibility in the organizational structure: its stagnation and focus on functions, bureaucratization. 11. financial policy is characterized by the systematic attraction of borrowed funds (avdoshina, 2018). three seas economic journal 131 vol. 3 no. 1, 2022 the main features of anti-crisis management in the conditions of information warfare, which are observed in the process of withdrawal of the company from the crisis, are based on the implementation of programs to improve competitiveness and financial recovery. in addition, the main distinction of this type of management is the company 's ability to respond constructively and quickly to changes and threats arising from the information impact. moreover, the ability to develop optimal ways out of the crisis, to determine the priority values of the enterprise during the information war, to promote effective work in extreme conditions should predict and prevent the insolvency of the enterprise in advance (kovalevsjka, 2016). in accordance with the definition of the concept and directions of crisis management in the information war, it is possible to identify the following functions: – planning covers the process of defining the organization's goals and their changes, strategies and programs to stabilize the crisis, and resources to achieve them; – the organization forms the optimal structure and volume of used funds, management personnel and staff for the efficient use of labor, material and financial resources; – motivation includes a system of incentives and sanctions, which will interest the entire team and each employee in improving the efficiency of the enterprise in order to exit the crisis as soon as possible; – control is aimed at predicting deviations from set goals in order to make timely operational changes to improve the effectiveness of anti-crisis measures (ghasanov, 2012, p. 49). the economic mechanism of crisis management in the information war consists of the following basic elements that make up the system of crisis management: diagnosis and forecasting of financial condition; evaluation of the company 's business and its development; evaluation of external and internal marketing environment; development of organizational, industrial and strategic management; personnel management; development of financial management system; availability of anti-crisis investment policy; implementation of measures in crisis business planning, organizational measures for the liquidation of the company (rodin, 2015, p. 4). implementation of crisis management in information warfare at the micro level can be ensured by sequential implementation of the following steps: step 1. creation of a specialized group based on a matrix management structure, consisting of company employees and invited specialists, for the period of a potential or real crisis. step 2. monitoring and evaluation of the feasibility and timeliness of implementation of crisis management measures. step 3. justification of expediency and timeliness of the use of rational methods and techniques of crisis management and implementation of anti-crisis solutions. step 4. forming a set of measures to resolve conflicts of interest on the part of third parties. step 5. analysis of the implementation of management measures in accordance with the planned and actual indicators in the course of crisis management. step 6. developing measures to anticipate future crises and creating preventive measures (rodin, 2015, p. 12). in the system of crisis management, the state plays two roles, which correspond to its two functions in the system of social relations: civil-law and public-law. the public-law role of the state is observed in providing legislative regulation and administrative management, taxation, organization of the financial system of the state, issue of national currency, support of its rate. the role of civil law is manifested in the participation of the state in civil relations (subachev, 2016, p. 31). the role of the state in the crisis management system is realized in the creation of a system of interaction between the state and the market economy, ensuring the overcoming of macroand microeconomic crises. at the same time, state regulation of crisis situations is characterized by a significant variety of models and types. 4. conclusions thus, information and communication, which form the basis of information warfare, are realized in the information space, which is a social or geographic space within which there are typical communication processes, the subjects of which are individuals, social groups, (organizations), and the object – the information or those who receive this information. since information warfare is universal, it can be implemented in all spheres of life, including the economy. infor mation warfare affects the efficiency of the enterprise, the decline of which is expressed by certain indicators that precede the crisis. in accordance with the purpose of crisis management are defined its functions: planning strategies and programs; organization of the optimal structure; motivation of staff; control of timely changes. given the purpose of crisis management, its positive results are manifested in: restoring the financial equilibrium of the enterprise; alignment of imbalances of internal and external parameters of the enterprise; ensuring the financial stabilization of enterprises; ensuring the viability of the enterprise; maintaining the viability of the enterprise. a separate aspect of crisis management is public administration, which is implemented in the creation of a system of interaction between the state and the market economy, with the ability to overcome macro and microeconomic crises, implemented through financial and legislative regulation, industrial policy and income redistribution. three seas economic journal 132 vol. 3 no. 1, 2022 references: aronson, e. 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(in ukrainian) three seas economic journal 76 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-13 ecological and economic aspects of the transformation of construction enterprises on the basis of biosphere compatibility hanna shpakova1, andrii shpakov2 abstract. the purpose of the article is the question of creating an indicative base to determine the level of biosphere compatibility of construction market participants. biosphere compatibility is considered as a characteristic of the processes of production, management and organization from the point of view of preservation of natural resources and ensuring sustainable development in the construction industry. the relevance of creating adaptive mechanisms of construction enterprises for the implementation of transformational changes at the micro, mesoand macrolevels has been determined. methodology. typical sustainability indicators were grouped and analyzed using a three-year (2018, 2019, 2020) dataset of 15 construction companies, although these indicators are universal regardless of the industry in which they apply. on the basis of these indicators, the meaningful parameters of the state of the construction enterprise system that can be obtained as a result of transformations based on biosphere compatibility have been established. the result is a model for obtaining indicators, which helps to predict and evaluate the effectiveness of sustainable transformation of the enterprise. factors influencing the formation of the concept of urban environment production, resource use policy, energy efficiency of production and operation of the final construction products during the life cycle, the main factors influencing the formation of the environmental and economic mechanism of development of construction enterprises on the principles of biosphere compatibility are considered. practical implications. formation of the concept, the strategy of development of the construction industry, fully taking into account global, national, regional conditions and restraining (limiting) regressive influences, especially important in circumstances where the current circumstances of the industry sometimes contradict the principles of sustainable development. the reasons determining the transition to biospherecompatible construction are based on generally accepted concepts of conscious consumption of resources and modified models of urban society economy that take into account the social component. comprehensive assessment of design solutions for the construction of biosphere-mixing facilities, based on a system of not only economic factors, but also environmental and social, which corresponds to the principles of sustainable development. value/originality. targeted biosphere-compatible transformation of construction market participants, based on the biosphere-compatibility assessment system in this article, should become a leading tool for the development of modern cities, as it takes into account not only technological, but also social, economic and environmental aspects. key words: sustainable development, biosphere-compatible change management, greening the economy, biosphere compatibility of production, assessment of biosphere compatibility. jel classification: q01, р18, о14, о22, l15, q55 corresponding author: 1 kуiv national university of construction and architecture, ukraine e-mail: shpakova.gv@knuba.edu.ua orcid: https://orcid.org/0000-0003-2124-0815 2 kуiv national university of construction and architecture, ukraine e-mail: shpakov.аv@knuba.edu.ua orcid: https://orcid.org/0000-0002-7498-4271 1. introduction the priority development of ukrainian cities, their dominance in the social and domestic infrastructure of the population, is the cause of the deformation of the moral and ethical components of human consciousness as an element of the biosphere, which is a unique self-regulating system. the deterioration of urban ecology, population density and, as a consequence, the decreasing demands on the living conditions of urban society cause a number of problems that lead to a demographic crisis, extinction and biological and genetic degradation of the people. according to stephen r . mann's chaos theory, small actions will be sufficient for the extinction of humanity, as the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 77 vol. 2 no. 4, 2021 "butterfly effect" leads to a loss of balance on the scale of global processes. usually these imbalance processes return to equilibrium because the stabilizing forces of nature are great, but it is unknown whether humans will exist at the moment of stabilization. after all, the range of human existence is very narrow. the balance between the spheres of the human and the natural must be maintained not so much from the position of the impossibility of existence from each other – human egocentric thinking, but from the position of v. vernadsky 's noosphere reality – the possibility of existence and development of nature without humanity. therefore, the dominance of anthropogenic factors in any sphere of human activity can no longer be considered an absolute axiom. given the ecological and biological threats of today 's world, humanity 's future depends on obligatory collective responsibility for the actions and consequences of our technological civilization, affecting nature as a necessary condition, in terms of transforming or substantially changing development goals from economic to combined, socio-ecological ones. in this context, the greening of the economy through changes in the construction industry and the optimization of social and environmental factors is a relevant opportunity to achieve synergy. 2. transition to biosphere-compatible change management any modern major city is a system of complex, inextricably linked natural and anthropogenic components, where the advantages of one lead to the dominant impact on the architecture of the city (tsygychko, 2012). the anthropogenic component has the most irreversible effects. but even in this case, there is always the opposite effect of natural components. for example, air pollution in large cities, in turn, negatively affects the condition of the materials of building envelopes, and the construction of multistory buildings with a small building area affects the natural level and direction of groundwater, which leads to wetting of foundations, corrosion of structures, subsidence or removal of buildings and loss of bearing capacity of individual structures and buildings as a whole (tsygychko, 2009). greening the economy also has a marketing side, it causes people to have "greener" needs (ottman, reilly, 2006). therefore, the introduction of biosphere-compatible construction as a modern concept of urban planning that meets the goals of sustainable development, aimed at meeting a set of socio-environmental, economic and economic needs of the population, is quite relevant. small changes in the initial conditions of decision-making lead to a huge impact on aspects of strategic development (mann, 1992). what is biosphere-compatible construction? in the author's interpretation, it is a special type of complex social, environmental and economic (complex and open) system, which is centrally subordinated to the regulatory and permissive framework of acts in design, construction and operation, has a clearly defined regional aspect, socio-economic anomalies and depends on natural resources (shpakova, 2020). modern design and construction of any local objects or large urban complexes, as well as the reconstruction of buildings and territories, can no longer be carried out without taking into account environmental standards. studies by many international environmental organizations have shown that the desire to improve environmental efficiency can lead to negative social and/or economic consequences. therefore, it is almost never possible to make progress in the three dimensions in the same period of time. hence the conclusion that not every new production technology, beneficial in terms of productivity and capital, is suitable for the environment. the key to resolving a certain contradiction between economic growth and ecology, as foreign experience shows, is mutual understanding and coordination between government and business. therefore, the ecological and economic assessment of production should be based simultaneously on the principles of sustainable development, i.e. on structuralcriteria indicators. on the basis of e. warhurst's research for the warwick business school (warhurst, 2002), the indicators (hereinafter indices) of sustainable development can be represented as conditionally divided into environmental, social and economic components, which are also the limiting parameters of the "ecology " – "economy " – "society " system. this ranking of parameters is justified from the point of view of universalization of the assessment of biocompatibility of production through the use of data from the statistical and accounting database, formed in enterprises in accordance with the requirements of business. the grouping of sustainable development indices by type can be represented as follows: – a group of universal indices that describe all three components: descriptive (i), production (ii), economic (viii); – a group of transitional indices describing two components – environmental and economic: production (v), accounting (reporting) (vii), quality (ix); – a group of unique indices that describe only one environmental component: effective (iii), regulatory (iv), regulatory (vi), environmental (x) (shpakova, 2019; warhurst, 2002). the principles of biosphere-compatible construction, based on the principles of sustainable development, have polymorphic belonging to the group, provoked by the overlapping areas of the system "ecology " – "economy " – "society " (figure 1). "aggregating" the indicators of the three components in the measurement of sustainable development may require analysis to determine the importance (significance) in the hierarchy of biosphere building compatibility assessment. three seas economic journal 78 vol. 2 no. 4, 2021 it is necessary to normalize the data, focusing on the principles of biosphere compatibility of any production. therefore, it is advisable to compare the components of sustainable development by type and the components of biosphere compatibility. the principles of biocompatible production, implemented on the basis of the concept of sustainable development, are comprehensive in nature. their analysis and evaluation should be based on a systemintegrated approach, that is, the definition of multifactor indicators (indicators) reflecting the relationship of economic, social and environmental components in terms of the usefulness of biocompatible construction technologies at the state level. this requires regrouping and specifying sustainable development indicators in accordance with the principles of biosphere compatibility. 3. assessment of design solutions in the socio-ecological-economic system the main difficulty at the microeconomic level, where eco-economic problems are localized and spatially contingent, is the need to make a difficult choice between "economic upliftment" and biosphere-compatible technological progress. this means that production must be evaluated according to an environmental standard in terms of emissions and/or use of primary natural resources. thus, the choice made by enterprises in connection with the greening of production and products will depend not only on a number of purely economic factors (economic calculation), but also on mandatory legal regulation and environmental expertise, and especially in the case of industrial innovation – on the knowledge and environmental awareness of consumers and the economic benefits they receive, also accounted for by a significant number of factors, indicators, etc. it should also be borne in mind that it is impossible to take into account the effects of all factors, as this could lead to a loss of control over the system. therefore, an important task is to determine a limited set of major factors that allows a focused assessment of the criterion of "biocompatibility" of production under study in this case. as a result, the groups of indicators for assessing biosphere-compatible production by direction are as follows: 1. socio-ecological direction – index of compliance with current conditions (standards) of labor protection at the enterprise (1.1), coefficient of pollutant emissions (greenhouse gases, waste water, solid toxic waste, etc.) according to the results of environmental expertise (1.2), occupational illness rate (1.3); 2. eco-economic direction, the growth rate of production costs (2.1), the closed cycle resource ratio or processing ratio (2.2), the product energy consumption rate (2.3), the product specific resource consumption rate (2.4), the index of compliance with certification requirements (2.5), index of compliance with environmental requirements of local, regional, national regulations (2.6), payment for the use of natural resources (2.7), fixed asset renewal rate (2.8), production growth rate (2.9), natural resource turnover rate (2.10), use of primary resources, associated resources in production (packaging), rejected products (2.11), costs to overcome environmental pollution consequences in case of emergency (2.12); 3. socio-economic direction – labor productivity (3.1), productivity factor (3.2), labor costs (3.3), environmental efficiency coefficient (3.4), job creation coefficient (3.5), production social prestige coefficient (relative to living wage) (3.6), production social prestige coefficient (3.7), cost coefficient for training and retraining personnel for greening production (3.8). the general system of biosphere compatibility indicators is presented in figure 2. these indicators have a different mathematical nature: one part of them – absolute values, and the other – the coefficients, partially integrated, which are relative characteristics of production. in addition, there are a number of indicators that are actually protective, automatically eliminating the need for further data analysis to determine the biosphere compatibility indicator due to non-compliance with regulatory and additional (voluntary) restrictive requirements. these nuances must be taken into account in the mathematical evaluation apparatus of the complex index. the effectiveness of design decisions depends on targeting one, two, or all three areas of biosphere compatibility. the visualization of this model is presented in figure 3. the quantitative assessment (positive or negative) of the environmental component of the decision on such a model is plotted, for example, on the x-axis. in turn, the assessment of the economic and social components – on the axes y and z, respectively. figure 1. schematic diagram of polymorphism of parameters of the system "geology" – "economy" – "society" three seas economic journal 79 vol. 2 no. 4, 2021 the elements of assessment of the effectiveness of project solutions in the socio-ecological-economic system are presented in figure 4. from figure 4(a) shows that point a, i.e., the quantitative assessment of the project solution is in the area of the desired positive decision, which is the most attractive in the development of the project. the corresponding evaluations, labeled points b, c, and d, are less acceptable because they have two negative or minimal quantitative evaluations of the three areas, and are in the areas of critical but acceptable solutions. figure 4(c) denotes the area of unsatisfactory solutions, where none of the project requirements are positively evaluated. in ukraine, the main indicator of environmental assessment is environmental expertise, which is carried out by state environmental protection authorities. "environmental expertise in ukraine is a type of scientific and practical activity of specially authorized state bodies, environmental expert formations and associations based on interdisciplinary environmental research, analysis and assessment of pre-project, design and other materials or objects, the implementation and operation of which may negatively affect or will affect the environment and human health" (smovzhenko, 2015). modern world standards for the standardization of environmental parameters of the architectural and construction industry relate mainly to the environmental, energy and economic efficiency of so-called "green buildings". on their basis, in parallel with european national norms (directives) relating to the standardization of environmental quality, corporate and voluntary environmental quality rating certificates of production have been developed and exist. the most famous of these are the english breeam and the american leed. the mechanisms of these systems are based on the monitoring of environmental indicators, namely monitoring the state of the biosphere, assessment and prediction of its condition, identification of factors and sources of influence, determination of the degree of anthropogenic impact on the environment. but the data obtained as a result of environmental observations should be evaluated at the macro level of sustainable development of urban society as a whole, taking into account the greening component of the urban environment, the industrial anthropogenic component. in turn, the assessment of the industrial anthropogenic component should take into account the symbiosis of regulatory design factors, construction conditions and economic reserves of the period of operation of buildings and structures in terms of social responsibility and future commercial potential of the object for customers, developers, owners (smovzhenko, 2015). under these conditions, the implementation of the concept of biocompatible construction for urban society is divided into the following stages. figure 2. the system of indices and indicators that characterize the assessment of biocompatibility of production figure 3. the space of modeling the effectiveness of design solutions in the social and eco-economic system three seas economic journal 80 vol. 2 no. 4, 2021 the first stage is the creation of a targeted strategy for the biocompatible construction of a modern city, taking into account the infrastructure and the cityforming factor (industrial, resort, tourist, etc.). the second stage is the creation of a symbiotic system of mutual development of the city and man "sine qua non", critically taking into account the mutual influence of natural and anthropogenic components. the third stage is the creation of a unified system of diagnostics, assessment and monitoring of the system of biosphere-based existence, which aims to study the anthropogenic criteria (city population) and the natural potential of territories. the fourth stage is the establishment of regulatory boundaries for the implementation of biocompatible construction, relating to requirements for the design, construction, operation, reconstruction and/or disposal of facilities throughout the life cycle, in accordance with national, international environmental standards and socio-humanitarian paradigms. the fifth stage is the creation of a national system of ecological certification of construction products, aimed at a comprehensive assessment of the environmental, social and economic parameters of projects, existing buildings and structures (shpakova, 2020). this formalized approach seeks to follow a clear logic of consistent implementation of biocompatible construction at the request of urban society, a clear architectonics of the interrelations in the system "ecology " – "economy " – "society " is created, and the step-by-step implementation of the strategy allows to solve local problems. these local problems include the legislative framework at the macrolevel, taking into account the specifics of the construction site in the design at the microlevel, followed by integration into a single industry-wide program of state reform. the structural and logical scheme of the strategy does not provide for the removal of any of the stages, as this would lead to an imbalance of the system and the loss of time for the development of the industry in terms of sustainable development. each of the proposed steps should have its own practical results. the first stage should clearly form the orientation of the city within the industrial complex of the state as a budget-forming unit, which will avoid contradictions between the social and environmental constraints and design standards of facilities and urban infrastructure, i.e. will take into account the priority for the city design solutions for the construction and modernization of areas, which will correspond to the practical results of the second stage of the strategy. the result of the third stage is the development of a national system for monitoring the biosphere-oriented existence of society, its adaptation to international standards of environmental quality and integrated use within a unified coordinate system for real-time assessment of the state of the industry. this approach will allow a rapid response to changes in the system that lead to progressive or regressive developmental effects. at the fifth stage, based on the monitoring of biocompatibility within the construction industry, a rating scale of national manufacturers should be formed, supported by the state apparatus with image and fiscal incentives (national quality certificates, tax benefits and environmental fines, etc.). the basis for the application of state regulation mechanisms should be the legislative framework – the practical result of the fourth stage. 3. conclusions to determine development priorities, evaluation criteria and recommendations for the implementation of mechanisms to regulate the relationship between man and nature at the macro level, carrying mainly socio-ecological burden, and business and government at the mesoand macrolevel, where the nature of relations is more clearly seen in the eco-economic plane, it is necessary to define with the tools used (a) (b) (c) figure 4. elements of the assessment of the effectiveness of project decisions in the social and eco-economic system: (a) projection on the social-ecological plane of decision-making with a positive economic assessment; (b) projection on the eco-economic plane of decisionmaking with a positive social assessment; (c) projection on the social-ecological plane of decision-making with a negative economic assessment three seas economic journal 81 vol. 2 no. 4, 2021 to determine a comprehensive index of biosphere compatibility. on the basis of studies of indicators of sustainable development, statistical data of the construction industry, developments of domestic and world scientists proposed a method for calculating indicators of assessment of biosphere compatibility of production, which is based on an analytical set of diffuse indicators that take into account entropic data of construction companies and evaluate the development of the system (project) in accordance with the declared regional, national or international environmental standards for the integral indicator of biosphere compatibility. the general formula for the indicator of biocompatibility of production can be represented as: z k i z mbs bs bs i i i n = { } { } ⋅ = ∑ ( ) 1 , (1) where zi – indicator of biosphere compatibility of the i-th component of the overall assessment; m m k m ii i i={ }( ); ( ) – weights of the relevant factors affecting biosphere compatibility depending on the branch, determined by various methods (preference method, ranking method, pairwise comparison method, etc.); kbs{ } the system of coefficients of social and ecological, eco-economic and socio-economic components of assessment of biosphere production compatibility; ibs{ } a system of indicators of the socio-ecological and ecological-economic components of the assessment of the biosphere's compatibility with production. it should be noted that the system of indicators defined in the binary system (1 or 0) is a fuse to exclude from the calculation of incorrect data or those that do not meet the specified standards. global attention to the ecological existence of urban society only began in the twentieth century. in 1993, the 18th world congress of architects in chicago adopted the declaration of interdependence for a sustainable future, which recognized environmental sustainability and consideration of environmental requirements as a priority in design and construction, and in 2002 the european organization of the construction industry decided to introduce a set of environmental protection measures in the construction process. however, the ukrainian state and the construction industry in particular must promptly engage in the concept of implementing biospherecompatible construction in the context of our country 's policy to achieve sustainable development goals. in this connection, the development of a system of standards for the balanced development of biosphere-compatible construction requires profound changes in the economic, social, environmental, and ethical spheres, as well as their harmonization with the laws of biosphere development and the principles of humanism. it should be noted, however, that biospherecompatible construction should not be adapted to maximize the economic downturn based on the linear model of production inherited from the country 's post-industrial revolutions. the linear model assumes that the cost of raw materials (resources) increases in direct ratio to the volume of production, which contradicts the task of conserving them. the circular economy model is optimal under conditions of sustainable development. therefore, a simultaneous transformation of relations in the national economy as a whole is necessary. references: mann, s. r . (1992). chaos theory and strategic thought. parameters, vol. xxii, pp. 54–68. tsygychko, s. p. (2012). ekologhija v arkhitekturi i mistobuduvanni [ecology in architecture and urban planning]. kharkiv: knamg. (in ukrainian) tsygychko, s. p. (2009). arkhitekturna ekologhija jak zasib zabezpechennja stalogho rozvytku suchasnykh mist [architectural ecology as a means of ensuring sustainable development of modern cities]. kommunalnoe hozyaystvo gorodov [municipal economy of cities], vol. 90, pp. 21–25. shpakova, h. v. (2019). ekologho-ekonomichnyj mekhanizm rozvytku biosferosumisnogho budivnyctva v ukrajini: teorija, metodologhija, praktyka [ecological and economic mechanism of biosphere-compatible construction development in ukraine: theory, methodology, practice]. kyiv: artek publishing house. (in ukrainian) shpakova, h. v. (2020). teoretyko-metodologhichni zasady formuvannja ekologho-ekonomichnogho mekhanizmu rozvytku biosferosumisnogho budivnyctva v ukrajini [theoretical and methodological principles of ecological and economic mechanism formation for biosphere-compatible construction development in ukraine] (doctor of sciences thesis), kyiv: kyiv national university of construction and architecture. warhurst, a. (2002). sustainability indicators & sustainability performance management. mining and energy research network, vol. 43. smovzhenko, t. s., & skrynnyk, z. e. (2015). ukrajinsjka ljudyna v jevropejsjkomu sviti: vymiry identychnosti [ukrainian man in the european world: dimensions of identity]. kyiv: ubs nbu. (in ukrainian) ottman, j. a., & reilly, w. r . (2006). green marketing : opportunity for innovation. booksurge ltd. p. 288. three seas economic journal 93 vol. 3 no. 1, 2022 corresponding author: 1 kyiv national university of technology and design, ukraine e-mail: yulia.kostinets@gmail.com orcid: https://orcid.org/0000-0001-6427-675x 2 kyiv national university of technology and design, ukraine e-mail: valeriya1989@i.ua orcid: https://orcid.org/0000-0002-4222-7620 doi: https://doi.org/10.30525/2661-5150/2022-1-12 modeling the processes of development of the domestic market of tourist services and hospitality iuliia kostynets1, valeriia kostynets2 abstract. the study is devoted to the issue of modeling the processes of development of domestic market of tourist services and hospitality. accordingly, the purpose of the study is to model the development of domestic market for tourism services and hospitality. during the study, the authors concluded that under current conditions of competitiveness of tourist regions of ukraine on a global scale is directly related to the mechanism of cluster management of tourism development, including domestic. the authors established that the subjects of cluster policy are legislative and executive bodies of state and/or local authorities, which in the process of its implementation interact with each other and with business associations, manufacturing enterprises, educational, scientific and financial institutions, transport and logistics companies, service organizations, etc. methodology. the theoretical basis of the study were the fundamental principles of economics, approaches to the general and special methods of scientific knowledge, scientific achievements of domestic and foreign scientists on modeling the development of tourism and hospitality. when modeling the processes of development of domestic market of tourist services and hospitality, methods of analysis of economic dynamics, structural and functional analysis, scientific abstraction, as well as the graphical method, econometric methods of linear regression and other methods of economic and mathematical modeling were used. the results and value of the research are to develop an author's model of development of the domestic market of tourism and hospitality of ukraine, the essence of which is to use a cluster approach. in the mechanism of cluster management of the domestic tourism market it is important to determine the means and methods of targeted state influence, including levers of influence of local authorities, in order to effectively develop the cluster system of tourist destinations in ukraine. the proposed mechanism is the basis for the implementation of cluster policy as a system of relations between the state and economic entities to improve the competitiveness of the national tourist product through the formation and development of tourism and hospitality clusters. the authors have improved the scientific and practical approach to clustering, which is based on the construction of a cluster model of the domestic market of tourist services of ukraine, which provides an effective state policy of development of individual tourist clusters and the domestic market of tourist services as a whole. 1. introduction tourism as the most widespread phenomenon of the modern period can be considered as a significant socio-economic and political fact, capable of influencing the economic system and economic development of regions and countries as a whole. world experience and practice of socio-economic stability of developed countries show that their natural, climatic, historical and cultural resources, as well as ethnic features become a common asset due to the development of tourism, which can be equated to a highly profitable industrial business. analyzing the scientific achievements of foreign and domestic scientists (aleeva, mochalova, 2018; bran, manea, 2012; bujok, klempa, jelinek, porzer, rodriguez gonzalez, 2015; garnov, krasnobaeva, 2012; gorelova, tultaev, 2012; ghemawat, 2018; gronroos, 1985; sahaidak, kostynets, kostynets, 2019; yong-hyun, wang, fesenmaier, 2002), it should be noted that they comprehensively cover the theoretical and practical aspects of the organizational and economic mechanism for the creation and effective functioning of tourism entities. however, the current situation in the tourism markets of the world in the context of globalization this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 94 vol. 3 no. 1, 2022 and globalization requires constant identification and assessment of the current socio-economic aspects of tourism, analysis of factors, causes and consequences that promote or hinder the development of tourism. in this aspect, the development and application of scientific approaches to the study of the factors of development of the modern market of tourist services, its segmentation, the formation of levers of economic regulation and improvement of forms and methods of management of tourism in the regions, in particular through the cluster approach to managing the development of the internal market of tourist services, acquire significant importance. accordingly, the purpose of the study is to model the processes of development of the domestic market of tourist services and hospitality. when modeling the processes of development of the domestic market of tourist services and hospitality the methods of economic dynamics analysis, structural and functional analysis, scientific abstraction, as well as the graphical method, econometric methods of linear regression and other methods of economic and mathematical modeling were used. 2. the need for clusters in the field of tourism and hospitality in modern conditions, tourism can be seen as a catalyst for economic development of regions, allowing the maximum use of the full range of recreational resources, social, cultural, industrial and climatic potential of the territories. there are many different types of tourism, the popularity of which varies depending on the season, region, political situation, category of consumers and current market trends. each tourist decides for himself how to organize his vacation, what type of tourism he will enjoy, taking into account his needs, expectations and interests at the moment. some tourists prefer recreational or health tourism, others prefer extreme or ecological tourism, but all are willing to allocate financial resources for cognitive tours. in modern conditions of management in the tourism industry there is a significant crisis situation. despite the existing difficulties with recreation in foreign countries, familiar to domestic tourists, reorientation to domestic tourism is practically not happening. in many regions there is a lack of quality tourist infrastructure, even in the presence of recreational or cultural and historical potential. a large part of today 's tourists are not satisfied with the standard range of tourist offers – beach vacations or sightseeing tours with visits to museums. many tourists are attracted by the "complex product" with a large number of components that can be changed depending on individual needs. accordingly, there is currently a need to create clusters in tourism and hospitality. thus, in the process of organizing the cluster it is necessary to determine the list of benefits for each of the cluster participants and ways of their optimization; formation of a set of necessary initial data (analytical, statistical, mathematical, empirical, etc.); preparation of a package of documents for institutionalization of the cluster, giving it the status of a legal entity; expertise of developed intra-cluster concepts, strategies, programs, projects, plans and the formation of a comprehensive strategy for the implementation of local cluster initiatives; formation of a system of monitoring and control of the implementation of cluster initiatives strategy; assistance in assessing the potential product of the cluster for compliance with national and international standards; integrating strategies for implementing cluster initiatives with city and regional development strategies; publicizing cluster initiatives at public hearings, assessing whether they meet the expectations of experts and the local community; and promoting international relations and cooperation at various levels; organization of information and communication support, in particular, the organization of pr-campaigns, social advertising, creating a positive image of the cluster, informing businesses about the opportunities and benefits of cluster associations and cooperation within the cluster; development of appropriate educational and methodological support; organization and conduct of trainings, seminars, conferences, other information and communication activities for potential participants of clusters; other technical, financial, consulting assistance (kostynets, 2018). the activity of many clusters has shown a higher level of their results and competitive advantages compared with the activities of business entities that are not included in certain structural associations, which means that clusters play a leading role in achieving competitiveness (pushkar, fedorova, 2011). at the same time, one of the main tasks in the system of increasing the competitiveness of the national economy is to identify the potential for intrasectoral clustering or clustering at the regional level. it should be noted that the cluster strategy of economic development should be seen as a set of actions and plans of the government (state economic policy) to implement the network principle of governance for the transition to a cluster model of development, the ultimate goal of which is to improve the well-being of citizens by accelerating economic growth. the formation of cluster strategy is based on the principles of the cluster policy (aftandilyants, 2018). accordingly, the overall state regulation of economic development in the field of tourism and hospitality should be carried out taking into account the cluster strategy for the development of domestic tourism and hospitality market of ukraine. three seas economic journal 95 vol. 3 no. 1, 2022 3. modeling processes of development of the domestic market of tourist services and hospitality industry to build a model for the development of the domestic market of tourist services and hospitality, it is necessary to determine the factors and criteria of clustering. accordingly, it is necessary to determine the most significant factors of tourism and hospitality development in ukraine, on the basis of which to build a model of the domestic market of tourist services and hospitality in ukraine to model ways and means of achieving a positive effect. to confirm the significance of these factors and identify their dependencies it is necessary to conduct a correlation and regression analysis by constructing a multiple linear regression model. below is the constructed multifactor regression equation for all groups of species factors: y = a0 + a1 x1 + a2 x2 + ... + an xn + c, (1) where y is dependent variable; х1,2,…, n – independent variables; n – number of independent variables; a0 – free term of the equation; a1, 2,..., n – parameters of the multifactor model; c – equation residues. according to econometric and statistical patterns, the parameters of the multifactor model can be found by acting with matrices according to the formula: a = (х’х)–1 х’у (2) first, it is necessary to construct a multifactor linear regression of the economic development of the domestic tourism and hospitality market and determine the strength of the relationship between the factors for 2015–2020. determine the dependence of the share of tourism and hospitality in gdp as the main indicator of its strategic development (y) on the consumer price index (x1), the number of tourism entities in the market (x2), the average number of employees in tourism (x3), number of employed population in the economy of ukraine (x4), the share of investments from the state budget for the tourism development (x5), the number of tourists served by tourism entities (x6), the number of incoming (foreign) tourists (x7), the profitability of tourism entities (x8) and the number of hotels in ukraine (x9) according to the state statistics service of ukraine. a linear relationship (multicollinearity) may exist between the factors, respectively, one of them should be excluded from the model, since the inclusion of linearly dependent factors leads to the construction of a fully or partially unpredictable regression model. the selection of factors is carried out by means of a correlation matrix. let us build a correlation matrix to determine the factors on which the share of tourism and hospitality in gdp depends. at the intersection of columns and rows is the correlation coefficient, which becomes important within [-1; 1]. if the correlation coefficient is within [-0,2; 0) u (0; 0,2] – the correlation is very weak; [-0,5; -0,2) u (0,2; 0,5] – correlation is weak; [-0,7; -0,5) u (0,5; 0,7] – correlation is average; [-0,9; -0,7) u (0,7; 0,9] – correlation is strong; [-1; -0,9) u (0,9;1] – correlation is very strong. the analysis has revealed that the share of tourism and hospitality in gdp (y) is weakly correlated with the consumer price index (x1), the number of tourism entities (x2), the share of investment from the state budget for the tourism development (x5), the number of tourists served by tourism entities (x6), the number of incoming (foreign) tourists (x7), the profitability of tourism entities (x8). the strong correlation is with the number of hotels (x9) and the number of employed population in the economy of ukraine (x4). it is important to exclude factors with weak correlation and build the regression equation y from x4 and x9 by method of least squares, because it allows to get such estimates of parameters, for which the sum table 1 correlation matrix of the relationship between the share of tourism and hospitality in gdp and the factors influencing it y x1 x2 x3 x4 x5 x6 x7 x8 x9 y 1 x1 0,3469 1 x2 -0,2686 -0,0031 1 x3 -0,6296 -0,7782 0,5135 1 x4 0,7257 0,2830 0,3359 -0,2466 1 x5 0,4078 0,9868 0,0367 -0,7880 0,4060 1 x6 0,2520 -0,5277 0,4695 0,5542 0,6107 -0,4370 1 x7 0,4570 -0,4881 0,2107 0,3768 0,6354 -0,4040 0,9538 1 x8 -0,2433 -0,6227 0,0133 0,6448 -0,4228 -0,7178 0,2968 0,3155 1 x9 -0,8325 -0,6092 0,5727 0,9139 -0,3294 -0,6096 0,3210 0,0805 0,3486 1 source: authors' calculations three seas economic journal 96 vol. 3 no. 1, 2022 of squares of deviations of actual values of the result indicator from calculated ones is minimal. the result is a regression equation as follows: y = -34,67 + 0,00277x4 – 0,0020x9 (3) the model should be evaluated for adequacy and compliance with real data by the coefficient of determination r2 (r-squared), student's t-test criterion, fisher's criterion (f-test), estimation of equation residues, estimation of predicted and actual values of y. the coefficient of determination is one of the most effective assessments of the adequacy of the regression model, a measure of the quality of the regression equation, the characteristics of the predictive power of the analyzed regression model. r2 determines the dependence of the performance indicator (y) – in this case the indicator of the share of tourism and hospitality in gdp – on all factors, ranging from (0; 1). if r2 → 1, there is a close relationship between the variables, the model is adequate and corresponds to the real data, if r 2 → 0 – vice versa. in our case r2 ≈ 0,9217 → 1, that means that the share of tourism and hospitality in gdp (y) is strongly dependent on the number of hotels (x9) and the number of employed population in the economy of ukraine (x4). student's t-test criterion gives the observed value of t-statistics. its value is used to verify the significance of the appropriate estimation of the regression parameter. there are two hypotheses: hypothesis н0 about the equality of zero of the corresponding coefficient (factor x does not affect y); hypothesis н1 about the inequality of zero of the corresponding coefficient (factor x affects y). in this case, the hypothesis н1 (t-test x4 = 2,9605; t-statistics x9 = -3,8910). that means that the number of hotels (x9) and the number of employed population in the economy of ukraine (x4) affect the share of tourism and hospitality in gdp (y). fisher's criterion (f-test) is used to test the model for adequacy using the probability value. there are two hypotheses: hypothesis н0 about the equality of zero of all regression coefficients (the model is not adequate); hypothesis н1 about the inequality of zero (the model is adequate). if the probability value is less than the accepted value of α (5%), the null hypothesis is rejected. all coefficients of the constructed regression are not equal to 0 and f-test (0,022) is less than the assumed value of α, so hypothesis н1 is fulfilled – the constructed model is adequate and can be used to predict the share of tourism and hospitality in gdp and to allocate tourism clusters by region of ukraine. the results of the correlation and regression analysis of the factors of strategic economic development of tourism and hospitality in the national economy of ukraine are summarized in table 2. it should be noted that the most significant factors of economic development of tourism and hospitality in ukraine are the number of employed population of ukraine and the availability of tourist infrastructure, in particular hotels. the resulting regression model can be used to predict the targets of economic development of tourism and hospitality in ukraine. to form effective tourist clusters it is proposed to take into account the relatedness of tourist regions on the basis of common borders and availability of tourist resources, the level of tourist infrastructure, etc. and to use this model to identify tourist clusters in the domestic tourist market. figure 1 shows the distribution of regional sectors of tourism and hospitality in ukraine, depending on the significant factors of correlation and regression model. in general, the implementation of cluster policy should also be aimed at identifying, forming, supporting and consolidating clusters of small and medium-sized enterprises in the tourism business and hospitality, meeting the actual needs of business entities interested in improving their competitiveness by implementing joint projects within the cluster. 4. conclusions it should be noted that the essence of the model proposed by the authors of the development of domestic tourism and hospitality market in ukraine is to use the cluster approach. in the mechanism of cluster management of domestic tourism market it is important to determine the means and methods of purposeful state influence, including the leverage of local authorities for the effective development of the cluster system of tourist destinations in ukraine. the proposed mechanism is the basis for the imple mentation of cluster policy as a system of relationships between the state and business entities to improve table 2 the results of the correlation and regression analysis of factors of economic development of tourism and hospitality in the national economy of ukraine target indicator influencing factors coefficient of determination r2 f-test share of tourism and hospitality in gdp of ukraine, % – number of hotels (x9) – the number of employed population in the economy of ukraine (x4) 0,9217 17,6637 y = -34,67 + 0,00277x4 – 0,0020x9 source: developed by the authors three seas economic journal 97 vol. 3 no. 1, 2022 kropyvnytskyi reg. volyn reg. chernivtsi reg. ternopil reg. chernihiv reg. kherson reg. sumy reg. rivne reg. mykolaiv reg. zhytomyr reg. zakarpattia reg. cherkasy reg. khmelnytskyi reg. iv.-frankivsk reg. poltava reg. vinnytsia reg. zaporizhzhia reg. donets… kyiv reg. odessa reg. lviv reg. kharkiv reg. kyiv city dnipro region -500 0 500 1000 1500 2000 2500 3000 -5 0 5 10 15 20 25 30 figure 1. distribution of regional sectors of tourism and hospitality in ukraine for the purpose of their clustering source: developed by the authors the competitiveness of the national tourist product through the formation and development of clusters of tourism and hospitality. in conclusion, it is important to note that in order to implement effective public policy on the development of regional tourist clusters and domestic market of tourist services in ukraine, it is necessary to conduct qualitative research to determine the actual number of existing tourist associations and hotel enterprises within the cluster. this task should be carried out mainly by local and regional authorities, because they have more differentiated information about the development of local businesses. at the same time, it is important for the authorities not only to ensure overall control over the activities of tourism and hospitality enterprises to pay taxes and monitor migration processes, but also to ensure the development and implementation of an effective mechanism of interaction between government agencies and all stakeholders of the enterprises. equally important is the development of programs to support small and medium-sized businesses in tourism in ukraine, which is a prospect for further research. references: aftandilyants, m. v. 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(2002). searching for experiences. journal of travel & tourism marketing, 12(4): 1–17. three seas economic journal 52 vol. 3 no. 2, 2022 corresponding author: 1 pavlo tychyna uman state pedagogical university, ukraine e-mail: gvozdej@ukr.net orcid: https://orcid.org/0000-0002-7251-7696 researcherid: https://publons.com/publon/27084765 doi: https://doi.org/10.30525/2661-5150/2022-2-7 cooperation of ukraine with international financial and credit organizations: current status and expansion prospects nataliia gvozdej1 abstract. the article analyzes the state of ukraine's cooperation with leading international financial organizations, paying special attention to such organizations as the international monetary fund, the european bank for reconstruction and development, the world bank, the international bank for reconstruction and development and the international development association. the article identifies the advantages and disadvantages of cooperation with the imf. the investment and credit activity of ifrs in ukraine is analyzed. the influence of ifrs on the economic development of the country has been studied. the features of ukraine's cooperation with the european bank for reconstruction and development are revealed. the most relevant joint projects of the world bank and the government of ukraine are given. the subject of the study is theoretical and practical issues related to the role of international financial organizations in financing the state development of the country. the purpose of the article is to open to identify the impact of international financial and credit institutions on financing the social development of ukraine. research methods. the work uses a combination of general scientific and specific methods and approaches, such as dialectics, consistency, the method of scientific abstraction, comparative and factor analysis, and the logical approach. work results. the role and significance of the ifc as an important source of external financial resources are disclosed. scientific approaches to the use of international financial assistance and ensuring economic development in conditions of financial imbalances are summarized. it is shown that the experience of international financial organizations and their recommendations make it possible to take into account global and regional trends and processes, risks and problems in the financial environment. this is important for shaping the financial policy of sovereign states and improving the formats of their cooperation in the international arena. findings. financial cooperation with international institutions is a powerful source and an effective tool for the development of the national economy. the resources of international financial institutions are used to implement programs aimed at market reform, ensuring the stability of the national currency, solving socio-economic problems, economic growth, financing the state budget deficit and balancing the balance of payments. but financial debt to these institutions makes the country's economy vulnerable and dependent on foreign creditors. now, when ukraine is in a state of crisis, the issue of finding resources in the external market needs an urgent solution. of particular relevance is the search for ways to expand international financial cooperation of ukraine, which is associated with the need to provide the national economy with the necessary amount of financial resources due to a lack of funds in the ukrainian market. a sovereign country has advantages in obtaining external official financial resources in comparison with other economic entities, which are determined by the trust in the sovereign state. this means support in the international arena and better conditions for receiving financial assistance. additional financial resources as part of external official assistance allow the introduction of the latest technologies and financing mechanisms of the ifc, which improves the best management of financial resources and increases the efficiency of their use. key words: international credit and financial organizations, imf, ebrd, world bank group, ibrd, ifc, gods, ukrainian economy, investments. jel classification: f34, g15, h81, p33 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 53 vol. 3 no. 2, 2022 1. introduction international organizations are an effective regulator of international relations in the economic sphere. their importance as institutional units of the international economy is growing. financial cooperation with international institutions is a powerful source and an effective tool for the development of the national economy. the resources of international financial institutions are used to implement programs aimed at market reform, ensuring the stability of the national currency, solving socio-economic problems, economic growth, financing the state budget deficit and balancing the balance of payments. but financial debt to these institutions makes the country 's economy vulnerable, dependent on foreign creditors. ukraine, as a country with a transitive economy, today is most vulnerable to market conditions, which have developed under pressure not only from economic factors, but also from political processes. the significant economic potential of the country today is partially realized precisely through close cooperation with international financial organizations in many areas. modern globalization contributes to the openness of the economies of countries, activates their foreign economic relations. ukraine is implementing its strategy of integration into the global economic space. one of the important measures in this direction, which it is implementing, is the formation of cooperation with various international organizations, including financial ones, since they play an important role both in regulating the world economy and in promoting the economic development of individual countries of the world. therefore, the issue of relations between ukraine and international financial organizations is relevant, the study of which is of significant scientific and practical interest. 2. literature analysis given the importance of ukraine's integration into the world economic space and its relations, a number of scholars have studied it with international financial organizations in these circumstances. for example, p. kutsik, a. kovtun, g. bashnyanin, v. shevchuk analyzed the problems and prospects of integration of the ukrainian economy into the global economy. n.m. halazyuk, о.м. zelinskaya, о.а. urban considered the modern features of integration into the world economic space. t. melnyk studied the realities and prospects of development of the foreign economic sector of ukraine. v.p. kolosova studied the theoretical aspects of the influence of international financial organizations on the economic development of the country, and together with i.m. ivanova studied ukraine's cooperation with international financial organizations. n.e. skorobogatova and n.m. balev considered the possibility of improving the mechanism of financial cooperation between ukraine and the eu. a.v. bohan and a.g. tsybulyak analyzed the environmental aspect of cooperation with international organizations. scholars have considered certain aspects of ukraine's foreign economic activity and its relations with international organizations, including financial ones. but a comprehensive analysis of cooperation ukraine with international financial organizations, its importance for the integration of the state into the world economy and the impact on the national economy in the context of modern globalization have not received sufficient coverage in the scientific literature. 3. object, subject, and methods of research the object of the study is international financial organizations, primarily universal ifis, namely the imf and the world bank, as well as regional ifis. the subject of the research is the place and activities of mfis in the global financial architecture, as well as their role in the socio-economic transformation of the countries of the world and the regulation of the international financial system. research methods: – theoretical – analysis of scientific literature on research issues, systematization, classification, generalization, synthesis, inductive and deductive methods of research; – empirical – analysis of individual regulatory documents, analysis of reporting of individual international financial institutions; – mathematical and statistical for the analysis of nume rical data on the activities of relevant organizations; – graphical for presenting analysis data, etc. 4. results the modern economy is becoming increasingly global. its functioning requires an appropriate financial system, which contributed to the emergence of international financial organizations. ukraine, integrating into the world economy, began to build relations with international organizations, primarily financial ones, in order to ensure equal participation in international integration processes through the effective attraction and use of credit resources, the creation of conditions for sustainable economic growth and the formation of a modern market economy (kolosova, 2016). having become a member of the international monetary fund (imf) in 1992, ukraine joined the structure of the world bank (which includes the international bank for reconstruction and development, the international development association, the international finance corporation, three seas economic journal 54 vol. 3 no. 2, 2022 the multilateral investment guarantee agency, the international center for the settlement of investment disputes) (kolosova, ivanova, 2014). among the joint projects with the international bank for reconstruction and development (ibrd) are: – development of urban infrastructure (loan amount – 140 million usd); – transmission of electricity (loan amount – 200 million us dollars); – rehabilitation of hydroelectric power plants (loan amount – 166 million us dollars); – energy efficiency project (loan amount – 200 million usd); – improvement of roads and traffic safety (two projects) (total loan amount – 850 million us dollars) (kolosova, ivanova, 2014). the european integration strategy contributed to the establishment of cooperation with european financial institutions. the structure of the eu includes: the european bank for reconstruction and development (ebrd), which is part of the leading international financial institutions with a high credit rating – aaa; european central bank (ecb), european investment bank (eib), european investment fund. according to the ministry of finance of ukraine, as of january 1, 2014, the ebrd portfolio in our country consisted of 337 projects with a total funding of 8.7 billion euros. the sectoral structure of the ebrd loan portfolio in the public sector of the economy was as follows: 50% – to finance projects for the development of transport infrastructure, 39% – tosupport projects in the energy sector, 8% – in the financial sector, 2% – for communications, 1% – for municipal development (skorobogatova, 2016). in general, the european union and its member institutions are ukraine's most important financial donors. since 1991, the amount of eu financial assistance to ukraine has been increasing every year. in early 2014, the european commission adopted a financial assistance package for ukraine, within which it can receive up to 12 billion euros by 2020. it includes grants from the european budget (up to 1.57 billion euros), macro-financial assistance (1, 61 billion euros), as well as loans from the european investment bank (eib, up to 3 billion euros) and the european bank for reconstruction and development (ebrd, up to 5 billion euros). in 2015, the package was increased by another 1.8 billion euros of macrofinancial assistance (skorobogatova, 2016). relevant for ukraine is the joint implementation of projects with the eu in the field of radiation safety, which combines the modernization of the sarcophagus with the help of the ebrd, the shelter fund and the nuclear safety fund and the creation of the chernobyl biosphere reserve, the development of projects for the construction of storage facilities for radioactive waste (bohan, 2016). active cooperation with the international monetary fund should also be noted. according to available data, as a result of cooperation with the imf within the framework of credit programs during 1994–2002. ukraine received 4289.1 million dollars usa, for 2008–2013 – 14430 million dollars usa. in april 2014, the imf approved the stand-by program, according to which ukraine was to receive $17.1 million over the next two years usa (kolosova, 2016). the main goals of cooperation with the imf are the stabilization of the financial system of ukraine, the implementation of structural reforms and the creation of a basis for sustainable economic growth. the ihn is helping ukraine to restore its own financial viability by suggesting how to most effectively implement the reform program. in addition, interaction with the imf at the present stage opens up opportunities for attracting funding from other ifis (ib, ebrd, eib and others) and governments of other states, including the usa, eu, germany, canada, japan, etc. the main tasks of providing financial assistance to the imf at present are (skorobogatova, 2016): – ensuring stability and confidence in the financial sector by stabilizing the banking system through a balanced provision of the nbu on collateral and a clear monitoring of the state of banks' liquidity; improving the efficiency of the regulatory and supervisory framework, modernizing and implementing the bank resolution strategy due to a decrease in the amount of lending to related parties; recapitalization and resolution of banks; strengthening the system of corporate governance and financial performance in the dgf and state banks; (improvement of the existing system for the solution; – formation of an effective monetary policy to stabilize the hryvnia, reduce inflation, fill gold and foreign exchange reserves; – increasing the level of stability of public finances and reducing державних spending on the regulation of public debt; – carrying out the reform of social assistance programs and additional financial resources to finance the relevant programs; – reforming the energy sector, in particular the reform "naftogaz" to reduce the level of its deficit and the introduction of additional programs in order to generate sufficient income streams; – deepening structural reforms, focused on a radical restructuring in the field of public administration and combating corruption, improving the business climate and reforming state-owned enterprises. as follows from the above data, ukraine is gradually increasing the amount of financial resources received from the imf. this applies to both individual tranches and the total amount of funds received. three seas economic journal 55 vol. 3 no. 2, 2022 – carrying out the reform of social assistance programs and additional financial resources to finance the relevant programs; – reforming the energy sector, in particular the reform "naftogaz" to reduce the level of its deficit and the introduction of additional programs in order to generate sufficient income streams; – deepening structural reforms, focused on a radical restructuring in the field of public administration and combating corruption, improving the business climate and reforming state-owned enterprises. the data characterizing the volumes of funds received by ukraine from the imf are presented in table 1. as follows from the above data, ukraine is gradually increasing the amount of financial resources received from the imf. this applies to both individual tranches and the total amount of funds received. the current extended financing mechanism is aimed at increasing the level of nbu reserves, preventing capital outflow, strengthening government measures aimed at stabilizing the state's balance of payments, and helping the state overcome structural problems in its economy through the implementation of appropriate reforms. thus, the receipt of this tranche made it possible to immediately double the reserves (from about 5 to 10 billion us dollars). $1.7 billion the us of the second tranche, received in august 2015, was all used to replenish the reserves of the nbu, which helped to increase stability in the country 's foreign exchange market. in october 2018, the imf and ukraine reached an agreement on a new 14-month stand-by policy support program to replace the extended financing program that was due to end in march 2019. table 1 volumes of lending to ukraine by the international monetary fund period amount approved, million sdr amount disbursed, million sdr 1996–1997 997,3 538,65 1997–1998 598,20 598,20 1998–1999 398,92 181,33 1999–2002 1919,95 1193,00 2004–2005 411,60 0,00 2008–2010 11000,00 4000,00 2010–2012 10000,00 2250,00 2014–2016 10976 3014,7 2015–2020 12348,00 3546 at present, due to certain political changes in our country, the provision of the following tranches is still suspended. the imf is still monitoring ukraine to establish the possibilities and features of further lending to the country. the corresponding imf mission worked in ukraine in early autumn 2020. however, so far there are no specific agreements between the government of ukraine and the imf on further cooperation. for the entire period of interaction, ukraine received about 27.8 billion dollars from the imf usa (bohan, 2016). according to the world bank classification, ukraine belongs to the category of countries with a lower middle income level, so the maturity of loans is up to 20 years with a grace period of 5 years. interest on the loan is paid at a floating rate and is about 6.5% per annum. the security council cooperates not only with governmental structures, but also with nongovernmental organizations, multilateral institutions and donors. the wb offers flexible schemes for granting loans for joint projects with the government. the participation of donors and non-governmental organizations in the projects of ukraine and the world bank is one of the main success factors. in addition, for the development of projects in ukraine, the security council attracts grant resources in the form of technical assistance on a non-reimbursable basis, and also assists the government of ukraine in the development and implementation of economic reforms through consulting, conducting joint economic studies and approving loans for reforms (melnyk, 2016). over the entire period of cooperation, the world bank has approved 50 loans for ukraine with a total volume of 10.1 billion dollars. usa, of which 7.4 billion dollars were received usa. the vast majority of these financial resources were loans for structural adjustment and reform of the financial sector and further development of the banking system. currently, 12 projects are being implemented, the purpose of which is the modernization of infra structure, in particular hydroelectric power plants, electricity transmission, urban infrastructure development, improvement of roads and traffic safety, energy efficiency, incl. in the district heating sector, the development of urban infrastructure, the modernization of the system of social support for the population of ukraine, and the improvement of healthcare. for 28 years of cooperation, the world bank has offered ukraine funds totaling more than 7.94 billion dollars usa (of which more than 5.5 billion us dollars have already been used). the state of implementation of the world bank projects in ukraine is shown in figure 1. ukraine became a member of the ibrd in 1992 in accordance with the law of ukraine dated 03.06.92 – 2402-xii "on joining the international monetary fund, the international bank for reconstruction and development, the international finance corporation, three seas economic journal 56 vol. 3 no. 2, 2022 the international development association and the multilateral investment guarantee agency " (kutzyk, kovtun, bashnyanyn, shevchuk, 2017). the purpose of this concept is to promote sustainable and comprehensive recovery of the ukrainian economy. according to the concept, the areas of strategic partnership between ukraine and the world bank in 2017–2021 are (melnyk, 2016): – public finance management and reforming the public administration system; – anti-corruption activities; – managing fiscal risks and improving public investment management; – strengthening the financial sector; – improvement of infrastructure; – formation of a system of equal partnership in the private sector; – land reform; – health care reform; – privatization; – effective, efficient and integrated service delivery; – social help; – targeted assistance to conflict-affected communities. the main projects in the state and municipal sectors of ukraine, which are currently planned for ebrd financing (kutzyk, kovtun, bashnyanyn, shevchuk, 2017): – construction of the pan-european corridor provided for ukravtodor (with corresponding parallel financing from the eib); – expansion of the trade facilitation program (trade facilitation programme), which enables ukrainian banks to confirm through the ebrd relevant trade documentary instruments; – modernization of gas compressor stations on the urengoy-pomary-uzhgorod pipeline (with parallel provision of finance from the eib); – a number of projects in the field of utilities and energy saving in accordance with the program of the eastern european partnership for environmental energy efficiency ("eastern europe energy efficiency and environment partnership – e5p"). it should be noted that the ebrd finances both public and private projects. the structure of the investment portfolio according to the corresponding criterion is shown in figure 2. it should be noted that the ebrd finances both public and private projects. the structure of the investment portfolio according to the corresponding criterion is shown in figure 2. as you can see, in the process of ukraine's cooperation with ifis, a lot of different options for projects were implemented, both at the national level, as well as individual regional projects or projects to support individual production processes. from three groups: projects of macroeconomic stabilization of the economy and structural reforms in certain sectors (systemic projects). on figure 3 the structure of ebrd loans by sectors of the economy is presented. therefore, it can be concluded that ukraine also cooperates closely with individual ifis, in particular with the imf, ibrd and ebrd. this cooperation began in 1992 and continues to this day. thus, in the process of cooperation with the imf, ukraine has received more than 30 billion dollars in 28 years us financial aid. also, in accordance with the recommendations of the imf, ukraine was forced to carry out certain economic reforms, which to a certain extent contributed to the development of the economy of our country. ukraine also actively cooperates with the ibrd and the ebrd, which are implementing certain projects in ukraine, such as supporting the agricultural sector, developing the energy sector, etc. over the years of ukraine's independence, about a hundred such projects have been implemented, which also favorably contributed to the development of our country. 5. conclusions and offers so, in the process of its integration into the world economic space, ukraine demonstrates active cooperation with international financial organizations. incomplete 17% activelyі 16% in preparation 1% 66% figure 1. status of implementation of world bank projects in ukraine, for all years three seas economic journal 57 vol. 3 no. 2, 2022 but the practice of this cooperation testifies to the presence of negative and positive sides. the main problems arising in the financial cooperation of ukraine with the eu and other international organizations include: 1) inefficient activity of the apparatus of employees and specialists involved in the process of developing and implementing projects of international financial transactions; excessive bureaucracy in the preparation of a loan application, which leads to an increase in the time for loan approval by international financial institutions; 2) non-transparency of work with the funds of international organizations; 3) insufficient support for small and medium-sized businesses, both at the legislative level and in terms of real money programs; . and services 9% 9% transport 6% energy 3% pension resources 6% security, mutual funds, 3% municipal and ecological infrastructure 21% 36% 13% natural insurance, the property and tourism, 3% production figure 2. structure of the ebrd loan portfolio by types of persons (%) private sector 36% government sector 64% figure 3. structure of the ebrd loan portfolio in ukraine by sectors of the economy (%) 4) the slow pace of implementation of reforms led to the need to borrow funds from the imf, the eu, and others, which led to an extremely high level of debt, which in 2015 amounted to 79.4% of gdp. today, this debt to international organizations is constantly growing. but at the same time, there are factors that demonstrate a positive trend in cooperation between ukraine and international financial organizations: 1) the very fact of relations with international organizations is an important step towards its integration into the world economic space; 2) membership of ukraine in international organizations increase its authority as a subject of the world economy, spread economic relations. for example, membership in the imf contributed to the entry of ukraine into the structure the world bank; three seas economic journal 58 vol. 3 no. 2, 2022 3) the activities of international organizations are aimed at supporting structural reforms in the economy of ukraine; improving the efficiency of the state economy. consequently, cooperation with international financial organizations contributes to the solution of many financial, economic and social problems in ukraine. in addition, it testifies to the desire of ukraine to integrate into the world economy and helps to take significant steps in this direction. the goal of the policy of cooperation with international financial organizations should be to ensure equal participation in international integration processes through the effective attraction and use of credit resources, the creation of conditions for sustainable economic growth and the formation of a modern market economy. in order to increase the level of ukraine's cooperation with international financial organizations and its return to the national economy, it is advisable to develop projects for international financial transactions with a specifically defined, most effective direction of funds; and having received these funds, strictly control their use. this will make it possible to carry out a structural reform of the ukrainian economy, promote its innovative development, and as a result, increase the competitiveness of the national economy, which will help it successfully integrate into the global economic space. references: kolosova, v. p. (2016). the impact of the international financial institutions in economic development: theory. ekonomika ukrainy, vol. 12, pp. 61–71. kolosova, v. p., & ivanova, i. n. (2014). cooperation of ukraine with international financial organizations: current situation and prospects of expansion. finansy ukrainy, vol. 11, pp. 33–47. tsybulyak, a. g. (2016). financing of environmental programs by international organizations in ukraine. investytsii: praktyka ta dosvid, vol. 8, pp. 32–35. skorobogatova, n. e. (2016). the mechanism of financial cooperation between ukraine and the eu. ekonomika ta derzhava, vol. 12, pp.72–77. bohan, a. v. (2016). environmental vector commercial diplomacy, ukraine and germany. ekonomika ukrainy, vol. 4, pp. 57–67. kutzyk, p., kovtun, o., bashnyanyn, g., & shevchuk, v. (2017). integration of ukraine into the global economy: problems and prospects. ekonomist, vol. 2, pp. 11–19. melnyk, t. (2016). ukraine's external sector: realities and prospects. visnyk kyivs'koho natsional'noho torhovel'noekonomichnoho universytetu, vol. 4, pp. 38–55. galaziuk, n. m., zelinsky, o. n., & urban, o. a. (2014). modern features of ukraine's integration into the world economy. ekonomichnyj chasopys–ххі, vol. 9/10. three seas economic journal 105 vol. 3 no. 1, 2022 corresponding author: 1 financial director of «highline media» ltd., kyiv, ukraine e-mail: katya.malinoshevska@inter.ua orcid: https://orcid.org/0000-0002-1475-6429 doi: https://doi.org/10.30525/2661-5150/2022-1-14 implementation of the company's economic development strategy kateryna malinoshevska1 abstract. the article analyzes various approaches to the company strategy, reveals the practical aspects of formatting and structuring the strategy. the purpose of the article shows that the problems of forming an effective system of strategic management of an enterprise, as well as the development of its development strategy are very relevant. the strategy needs constant changes with additions and acquisition of new value and high quality. in the activities of the largest companies approaches to the formation of the strategy correlate with the recommendations of modern theory of strategic planning. open and urgent strategy with breakdown by spheres of activity proved to be preferable, within each sphere sets of strategic decisions or directions of vectors of development in this sphere were formulated. in the management system of enterprises the main task is not a quick response to the current changes in the external environment, but the formation of a strategic vision of the future of the enterprise, the development of a flexible and viable development strategy, the anticipation of tactical and strategic threats to the enterprise, their timely elimination, as well as the practical use of strategic management ideas for sustainable development. in the conditions of modern economic development the role and importance of strategic planning in enterprises is increasing. new trends emerged in the market, one of which is joint venture. the impetus for the development of joint ventures was the growth of exchange rates and the fact that domestic production is much more profitable than importing the necessary products. in this situation, it is necessary to adopt foreign experience and thoroughly test strategic methods in joint ventures and collectively improve them in a dynamically developing market. macro environment includes factors that do not have a direct impact on the short-term activities of the enterprise, but can affect its long-term functioning. conducted research allows enterprises within the integrated structure, to determine its place in the integrated structure and the nature of the relationship with the leadership of this structure in the design and implementation of their economic development strategies. methodology. the scientific approach to problem solving allows predicting the opportunities of the enterprise and avoiding threats through unclearly formed and implemented strategy. the main purpose of this article is to identify methodological approaches to assess the characteristics of the impact of factors, properties of enterprise development strategy and the introduction of new technologies based on the performance of enterprises, which characterize the effectiveness of their market. results. based on the factors that are most important for the development of the enterprise, the most important criteria of the strategy were identified, on the basis of which the classification of strategies for the development of the enterprise was developed. the article indicates that there are a number of approaches to the content of the strategy, so it should be noted that the development of enterprise strategy is a set of decisions about the goals and objectives of the enterprise on the theoretical basis of the unity of resources and means of implementation. the strategy includes all areas of the enterprise: personnel, social culture and is aimed at high results. managers should pay attention to the fact that approaches to company management should be better than competitors, achieve business advantages, create a business idea, provide the strategy with resources with the introduction of new technologies and highly qualified personnel, assess the state of the company and implementation conditions. only in this case the strategy will be implemented both inside and outside the company. key words: economic development strategy, management strategy, functional strategy, development strategy concepts, classification of enterprise strategy. jel classification: f19, p20 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 106 vol. 3 no. 1, 2022 1. introduction nowadays, the development of economic development strategy is the main warehouse activity of an enterprise. achieving a long-term competitive advantage to ensure the organization's profit, survival and stable operation is the main goal of the strategy. strategy includes mutual management decisions, prioritizing business activities, realizing goals, and increasing potential. the process of strategy formation is unique for a skin company and includes strategic schemes and approaches that ensure success and leadership in the market. such planning is necessary for every company in order to keep up with changes in the market situation, timely change technologies and implement developments, and constantly raise the level. this is an opportunity not to fall by the wayside in market relations without income. it is necessary to constantly monitor the release of new products, development trends. track the production characteristics of competitors and the ways in which they perform better. the main objective of developing a company strategy is to bring the company to the leading position and increase productivity. a plan of action is created and approved that each business unit will follow to achieve the ultimate goal. practice shows that those organizations that carry out comprehensive strategic planning and management operate more successfully and make profits well above the industry average. many seasoned planners and energetic individuals fail to achieve the success they desire because they spread themselves thin, trying to reach as many markets as possible, producing as many different products as possible, and meeting the needs of different groups of consumers. success requires a focused concentration of effort and the right strategy. in other words: the one who plans his strategy better achieves success faster. the company 's strategy is selected by the manager based on the analysis of key factors (state of growth and position of the company in the industry, company goals, financial resources of the company, qualification of employees, degree of dependence on the external environment, etc.) that characterize the company, taking into account the results of portfolio business analysis, as well as the nature and nature of implemented strategies. 2. implementing the economic development strategy the strategy of economic development of the organization is aimed at evaluating the result obtained. the assessment depends on the company development project, goals and objectives of departments, methods of comparison with the results of competitors and with previously achieved results. the implementation of economic development strategy can be based on the positive experience of other enterprises by comparing the results. engineers, managers, financiers, consultants, and other specialists evaluate the completeness, adequacy, complexity, and systematicness of strategy development. each expert has his own subjective opinion, so evaluations will differ. when choosing a methodology for economic development strategy, it is necessary to evaluate the strategy within the framework of many criteria, taking into account the influence of external and internal factors. in solving the tasks it is necessary to consider: the evaluation of the effecti veness of the strategy at the organizational level; economic, technical, environmental, social indicators affecting the development of the strategy; investments that have been raised in the short and long term; quantitative and qualitative methods; the idea of strategy development and its final result, involvement of all participants in the process of strategy develop ment to measure and evaluate the financial result, the study of all stages of strategy development from the alternative to the planned return of capital. strategic monitoring includes technologies of development: analysis, thinking, vision, decision-making, adaptation to changes in the external environment, the chosen direction of development, aspiration for implementation, methods of adjustment of external and internal factors. each stage of strategy development includes a decision-making process as a basis for achieving a high result. the strategy must take into account all threats, prevent the influence of factors, precede the adoption of practical decisions, the choice and implementation of alternative development options. processes must be based on a system of control, evaluation of results. these processes are continuous, provide anticipation of risks, implementation of plans and adjustments, strategic vision, formation of the system of strategic management – organization and motivation. achieving the strategic goals of the company is under the power of a team of professionals combined with practical experience and the mobili zation of creative potential. correct choice of perspective directions of development of the organization is important at realization of strategy are techniques which are based on introduction of strategic matrixes. when building a strategic analysis matrix it is necessary to consider the growth rate of the market, the prospects for business development, the competitiveness of strategic business partners (figure 1). factors that have the greatest impact on the activities of enterprises in a particular industry should be evaluated on the basis of the developed strategy of economic development: if the attractiveness of the market is weak, you need to develop a plan of invest ment action to maintain the market position, the restoration of lost customers. specific strategy will maximize the level of development of the enterprise three seas economic journal 107 vol. 3 no. 1, 2022 and its efficiency, will help the manager to realize opportunities, defend the interests of the company, ensure growth in those areas where conditions are most attractive. if the condition of the enterprise is stable, strengthens and expands the achieved positions, attracts additional investments – an increase in production is guaranteed in accordance with the expansion of the market, income and increased competitiveness (kryshtanovych, 2021). a powerful tool to analyze the implementation and development of the strategy are methods of diversification of the organization, the position of each type of business, a specific strategy for a particular type of business, expert evaluations based on the study of various quantitative and qualitative indicators. it is difficult to quantitatively assess qualitative parameters, as these methods involve a rating assessment. the lack of qualified specialists blocks the work of businesses, creating difficulties in conducting research. which area of business to invest in, how to build a decision-making plan, how to predict the final result, which alternative methods of analysis to use, which mathematical methods to choose – a task for managers and consultants. with the help of mathematical models it is possible to describe the process of economic strategy development on the basis of quantitative data, taking into account the values that include information about the conditions of production, taking into account the specifics of a particular production. algorithms of changes in the state of the enterprise depend on its behavior at different points in time and allow revealing the influence of various external and internal factors on economic activity (figure 2). these methods allow us to study many factors affecting the management system as a whole. the study uses comprehensive methods to design strategies for economic development: both quantitative and qualitative, to pay attention to all factors of influence. mathematical methods, which are formed to implement the strategy, take into account the variable conditions of production, taking into account the peculiarities of a particular production (kubiniy, 2019). statistical methods, linear programming methods, matrix methods, methods of expert evaluations and other mathematical methods provide correct calculations of tactical plans. calculation of parameters regulating the given criteria of formation of economic development strategy requires the maximum selection of requirements when building the structure of the model (miklovda, 2020). analytical tools are used in stable enterprise environments with powerful mathematical programming techniques (figure 3). managers of the organization build a plan of action that is focused on the current state of the organization, the power of industry attractiveness the average side of the attractiveness of the industry weakness of the attractiveness of the industry invest (grow) or hold a position defend the positions achieved. limited investment invest profits make a profit limited investment, maintaining the status quo achieving results is quite slow limited investment (strengthening of strategic positions) figure 1. the main strategic alternatives for the development of the enterprise three seas economic journal 108 vol. 3 no. 1, 2022 internal tasks and changes occurring outside the company, because in a competitive environment, developed strategic measures will help to adapt in time, responding to the environment. analysis of the impact of internal and external factors must be done correctly, the implementation of the strategy depends on it. external factors are subject to change, are outside the organization, are constantly reacting to the components of the company, so coping with this influence is a critical component of success and is a condition for the implementation of the planned strategic changes. explore the threats and opportunities that the company must discover to achieve its goals, ensure strategic development and conduct analysis to develop the company 's strategy. the need for management approaches is important for enterprises in various fields of activity. strategy development creates alternatives for development and a positive financial result: creation of a favorable image of the enterprise, analytical work, analysis of consumer behavior. creating a management system, providing favorable conditions for the introduction of new technologies, updating the production fund, strategic decisions at the enterprise, training highly qualified personnel, the introduction of product quality certification, studying economic policy will help the company to work in conditions of constant change. 3. possibilities of the company to design a strategy for economic development to determine the prospects for the development of the organization, it is necessary to study the strengths and weaknesses, namely the material and technical base, supply chain, highly qualified personnel, economic stability and other indicators. the main external factors affecting the activities of the enterprise are: political, legal, scientific and technical, sociocultural and natural-geographical, economic. the formation and implementation of the strategy is threatened by difficulties with financing and credit, a high tax burden, high inflation, difficulties in selling goods, reduced production, instability in the country, outdated technology, and others. the company is also affected by competitors, consumers, and raw material supplies. one of the methods for studying the influence of external and internal environment on the enterprise is factor analysis, which can be a survey of managers on the competitiveness of products, development and implementation of management decisions, product quality, long-term cooperation with suppliers. as a rule, the most important factors are high quality, affordable price, solving problems with attracting investment, advertising and purchasing raw materials. production of products that will be available to the customer at low prices and high quality, strategic plan of action of the company, winning a place in the market, the potential of the company should be focused on supply and demand – the strengths of the organization (pityulych, 2021). the company 's ability to develop an economic development strategy depends on the resources available, so management must understand and consider this factor for all activities. availability of competitive products, effective quality control system, susceptibility to new developments, large production volume, wide assortment portfolio, ability to quickly recruit and train specialists, constant improvement of labor productivity, good material base for scientific discoveries, price advantages in the domestic market, high product reputation, competent top and middle management, well-functioning system of operational management will help to gain profit and, if necessary, to attract investment. but such factors as high material intensity, rapidly aging production facilities, the presence of harmful industries, low wages, high turnover among the most qualified and able-bodied employees, lack of funds and expensive loans for scientific activities, inefficient distribution and trade channels, lack of experience of employees, lack of a strategic management system slow the development of the company and could lead to its closure or takeover by competitors. lack of strategy in enterprise management can lead to insufficient financial resources methods of strategic forecasting expert (intuitive) forecasting functional and logical prediction mathematical prediction forecasting by analogy structural forecasting figure 2. methods of strategic forecasting three seas economic journal 109 vol. 3 no. 1, 2022 to implement scientific and technical projects, ensure current activities and development, lack of long-term plans and uncertainty about marketing research, low product quality, focus on short-term results. for the successful functioning of the enterprise sometimes necessary to make changes in the organizational and legal form of activity, the strategic direction, to develop measures to create a management system and marketing system in accordance with the laws of the market. if the company does not analyze the market opportunities in time, do not create a marketing system, do not have a clear pricing policy, advertising – the company will not be focused on the development of new products and will not be able to take an important place in the market. profitability of the enterprise can be achieved by optimizing taxation, minimizing purchase prices, expanding the range of products, the right choice of management decisions, intensification of production activities. the enterprise can make a profit by selling related goods and ensure further development of the enterprise through repayment of accounts payable. achieving a leading position m at he m at ic al m et ho ds methods of expert forecasting mathematical analysis growth/market share matrix the mckinsey matrix methods of applied mathematics methods of functional forecasting simulation modeling differential and variational calculus methods of classical mathematics methods used in the development of enterprise strategy f or ec as ti ng m et ho ds m et ho ds o f p or tf ol io a na ly si s methods of optimal and linear programming, mathematical statistics, combinatorics, theory of schedules and games, queue and inventory management, matrix models, simplex method, method of expert evaluations roundtable, delphi, brainstorming methods methods of scenario forecasting, morphological analysis, goal tree method, spectral analysis, factor analysis shell / dpm model adl / lc product life cycle model figure 3. methods of strategy development three seas economic journal 110 vol. 3 no. 1, 2022 in the market, increasing sales volume, maintaining unification of goods in its industry, fulfilling obligations to employees, attracting investment – the company's goals, which can be attributed to the program of strategy development. in our opinion, what is necessary to form a strategy is, first of all, a wide range of goods, which will allow to increase sales, focus on perspective market segments, expand sales, strengthen personnel policy and conduct regular advertising campaigns. the implementation of the strategy depends on the development of industry in the country, as it is necessary to determine the importance of production in general (shaulska, 2020). careful regulation of financial flows, making the right decisions, accurate analysis of the current situation, the use of modern management methods, and the development of new technologies are also important steps on the way to building a strategy. correct orientation in the market environment allows to develop dynamically, to keep one's positions, to have working capital and to achieve positive results. for some companies, one-third of profits go to taxes, so the tax code can slow down the development of the company. 4. conclusions the key to the success of the company can be conditions for professional growth, qualified personnel, training of staff – this will make it possible to create a unified system of planning, accounting and analysis, control and ensure maximum profitability, minimizing production costs, minimizing purchasing prices, expanding mutually beneficial relationships, reducing material consumption, the transition to optimal selling prices, rational use of material resources, the use of perspective wages. the implementation of the considered theoretical and methodological approaches to the strategic management of enterprises faces significant difficulties. this is largely due to outdated management methods, stereotypes of thinking that have developed in this area. until recently, enterprises in various industries did not pay due attention to long-term perspectives and development strategy. most of them were focused on solving current, operational problems. this is one of the main reasons for the instability of their development, the deterioration of their financial condition and the decline in efficiency. when choosing the directions of development of the enterprise, conquering new markets and developing a strategy, it is necessary to pay great attention to the creation of new high-quality goods available to the customer at a price, as well as the use of marketing tools. the chosen strategy and its implementation plan cannot foresee all the problems that may arise along the way. the main reason is the high level of variability of the environment, which leads to the constant emergence of new and unforeseen circumstances. the course of external and internal events sooner or later forces to reconsider the purpose of the company, the goals of activity, the strategy itself and the process of its implementation. performance evaluation, change analysis, and strategy adjustment become natural and necessary components of strategic management processes. in the process of evaluating the results of activities as one of the tasks of strategic management, there are three clearly distinguishable stages: determining the system of performance indicators, by which the strategy is evaluated; achieved changes and comparison with the desired ones; taking the necessary corrective actions. references: kryshtanovych, m., akimova, l., akimov, o., kubiniy, n., & marhitich, v. (2021) modeling the process of forming the safety potential of engineering enterprises. international journal of safety and security engineering. vol. 11, no. 3, june, pp. 223–230. available at: http://iieta.org/journals/ijsse kubiniy, n., marhitich, v., & kosovilka, t. (2019) potential of strategic development of regional economy / challenges of globalization in economics and business (the 4th international scientific conference. georgia, tbilisi, november 1-2, 2019 proceedings). tbilisi: ivane javakhishvili tbilisi state university. economics and business faculty, 237–242. miklovda, v. p., pitiulych, m. i., hoblyk, v. v., pityulych, m. m., & keretsman, n. i. (2020). socio-economic transformations of small rural settlements of zakarpattia amidst decentralisation. international journal of criminology and sociology, 9, 3089–3094. doi: https://doi.org/10.6000/1929-4409.2020.09.375 pityulych, m., sochka, k., makarovych, v., yoltukhovska, o., & keretsman, n. (2021). sustainable development in polyethnic border regions of ukraine (on the example of transcarpathia). e3s web of conferences, 255, article number 01052. doi: https://doi.org/10.1051/e3sconf/202125501047 shaulska, l., & tomchuk, o. (2020) human potential in the context of the covid-19 pandemic: issues of inequality and fulfillment efficiency. the mechanism of economic regulation, 4, 6–18. three seas economic journal 74 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: jana_2006@ukr.net orcid: https://orcid.org/0000-0002-6819-5997 researcherid: https://publons.com/researcher/1905266/yana-yana-ishchenko/ doi: https://doi.org/10.30525/2661-5150/2022-2-11 documentation of the production processes of organic crop production yana ishchenko1 abstract. the subject of the study is the accounting system and in particular the system of documenting the costs of production of organic crop products. economic and statistical research methods were used to analyze the state of organic production. general trends in the development of the system of accounting for production processes in organic crop production were studied using the methods of induction and deduction. the methods of theoretical generalization and comparison were used in the study to reveal the features, nature and content of organic production and its elements as objects of accounting. the method of observation was used to study the state of primary accounting of production processes in the field of organic crop production. the publication is devoted to the study of the state of primary accounting of the costs of organic crop production and the development of scientifically sound recommendations for agricultural enterprises to improve it. organic agricultural production in ukraine is one of the priority areas of development of the agricultural sector of the economy, based on the adopted national economic strategy for the period up to 2030. initial observation is the only basis for the formation of information flows of management, financial, statistical and tax reporting, which is provided by continuous and continuous documentation of business transactions. as a result of the research, the directions of using the information of primary documents, which formalize the costs of organic production, are grouped. the functions of primary documents in the management of organic production are outlined. the necessity of creation of specialized forms of primary accounting of expenses of seeds, planting material, means of protection of plants, fertilizers as those which need special control in the course of production of organic products is substantiated. the organizational and technological features and specifics of control during the transition period, in terms of "pure" organic production and in terms of parallel production of organic and inorganic products, which should be taken into account when documenting costs. the general approaches to documentation of expenses are offered and the form of the act on use of substances (ingredients, components) which is allowed to be used in the course of organic production and which are allowed to use in maximum admissible quantities is developed. the developed proposals will allow providing control over observance of the legislation in the field of organic production, to realize control and information functions of primary documents on the account of expenses of organic plant growing. promising areas of further research on this issue are the development of a package of primary documents for other sectors of organic production and the formation of guidelines for documenting all its business processes, which will form the basis of information management system of organic production at all levels. and forming a strategy for its development. key words: documentation, primary documents, production costs, organic production, crop production, details. jel classification: м11, q10 1. introduction it is a well-known fact that ukraine is a world leader in the production and export of agricultural products. the military aggression of the russian federation undermined ukrainian agricultural production. according to forecasts, this year's grain harvest in ukraine will be about 20% lower than in 2021. this is due to a significant reduction in sown areas. in the context of hostilities in the country and the threat of food crisis, the problems of organic agricultural production have receded into the background. however, organic production is identified as one of the priority ways to achieve the strategic goals of the state for the development of the agro-industrial sector (national economic strategy until 2030, 2021). due to favorable soil and climatic conditions, age-old this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 75 vol. 3 no. 2, 2022 agricultural traditions and, despite difficult economic conditions, in ukraine over the past ten years there has been a positive trend in the number of certified operators of organic production, agricultural land, range of organic products; domestic and foreign markets for ukrainian organic products are expanding; the legal basis for regulating the certification, production, labeling and circulation of such products is being formed. organic production in an agricultural country like ukraine is one of the key factors in solving environmental, economic and social problems. therefore, a growing number of people are interested in obtaining information about the state of development of organic production, its costs, the cost of organic products and so on. the basis and basis of information support of management is the primary accounting. further grouping, generalization and quality of information that will be used to meet the needs and requests of users depend on the initial display (documentation) of transactions. the purpose of the article is to study the state of primary accounting for the costs of organic agricultural production and the development of scientifically sound recommendations to agricultural enterprises on the documentation of accounting for the costs of organic production of crop products. problems of organization of ecologically oriented activity of subjects of agrarian entrepreneurship and organization of organic agricultural production are the object of scientific research of leading ukrainian scientists, including scientists of vinnytsia national agrarian university. among them: g.m. kaletnik (2017), i.v. goncharuk (2017) and others. the organization and methods of accounting for the production of organic products are devoted to the research of o.a. podolyanchuk (2018), yu.s. tsal-tsalka (2019). however, the research of scientists on this issue is fragmented, unsystematic. the development of an information support system for all levels of organic production management needs attention. lack of information about the organic segment of production leads to a slowdown in investment and, consequently, to a slowdown in its development. the formation of a comprehensive methodology for accounting for organic production should begin with the documentation of cost accounting and yield of organic products. 2. survey methodology economic and statistical research methods were used to analyze the state of organic production. general trends in the development of the system of accounting for production processes in organic crop production were studied using the methods of induction and deduction. the methods of theoretical generalization and comparison were used in the study to reveal the features, nature and content of organic production and its elements as objects of accounting. the method of observation was used to study the state of primary accounting of production processes in the field of organic crop production. 3. findings the development of organic production in ukraine is characterized by a fairly high rate (table 1). demonstrating in recent years the steady positive growth of agricultural land, which is certified organic production, there is a steady growth in both the number of operators of the organic market and the level of consumption of organic products in ukraine, which contributes to the tendency organic raw materials. these include cereals, flour, dairy and meat products, eggs, juices, honey, oils, teas and herbs. official statistical reviews of ifoam confirm that if in 2002 there were 31 farms registered in ukraine that received the status of "organic", in 2020 there were already 549 organic operators, and the total area of agricultural land on which organic production is carried out was 462225 ha (federation of organic movement in ukraine. organic in ukraine, 2021) (figure 1). most ukrainian organic farms are located in kyiv, odesa, kherson, poltava, vinnytsia, zakarpattia, lviv, and zhytomyr regions. ukrainian certified organic farms – of various sizes – from a few hectares, as in most european countries, to several thousand hectares of agricultural land. given the growing number of small organic farms, their specialization is focused primarily on growing fruits and vegetables and berries. however, the export orientation of producers, especially legumes and berries, remains a fact. table 1 dynamics of development of organic production in ukraine indexes years 2020 to 2015, %2015 2016 2017 2018 2019 2020 number of operators of organic production, units 210 360 375 510 617 549 261 total area of agricultural land with organic status and transition period, thousand hectares 410,55 411,20 420,00 429,10 467,98 462,23 113 volumes of the domestic consumer market of organic products, million euros 17,5 21,2 29,4 33,0 36,0 38,0 2117 source: federation of organic movement in ukraine. organic in ukraine, 2021 three seas economic journal 76 vol. 3 no. 2, 2022 in recent years, there has been a trend of actively filling the domestic market with domestic organic products by establishing their own processing of organic raw materials. according to the research of the federation of organic movement of ukraine, since the early 2000s in our country there has been a stable annual growth of the domestic consumer market of organic products, as shown in table 1. among the target indicators for achieving the strategic goals of the agro-industrial sector are an increase in the area of land with organic status to at least 3% of the total area of agricultural land (up to 1.3 million hectares) and an increase in organic exports to $ 1 billion by 2030 year (federation of organic movement in ukraine. organic in ukraine, 2021). one of the prerequisites for achieving the goals of the development of organic production and its proper functioning is to effectively meet the information needs of stakeholders, which is based on the primary accounting of all stages of organic production. primary observation is the only basis for the formation of information flows of management, financial, statistical and tax reporting, which is provided by continuous and continuous documentation of business transactions. according to the regulation on documentary support of accounting records, primary documents are documents created in written or electronic form, which contain information on business transactions and are the basis for their further accounting. mandatory details of primary documents are the name of the enterprise, institution on whose behalf the document is drawn up, the name of the document (form), date of compilation, content and scope of business transaction, unit of business transaction (in kind and/or value), position and name persons responsible for the transaction and the correctness of its design, personal signature or other data that allows to identify the person who participated in the transaction. the ministry of agrarian policy and food of ukraine provided clarifications on possible forms of primary documents, which, in particular, states that given the martial law in ukraine, in the absence of technical feasibility of printing the document, the entity may send electronic payment documents provided by consumers subscriber number or e-mail address. in addition, the business entity can reproduce a qr code on the display of the software registrar of settlement operations, which allows the consumer to read and identify it with the settlement document according to the structure of the data contained in it. given the complexity of time, it is possible to provide consumers with payment documents in other forms. however, these documents must contain all the required details. thus, in the special conditions of economic activity, to ensure the continuity of documentation and the formation of optimal information flows, businesses can form primary documents in both paper and electronic form, using both standard and arbitrary forms. arbitrary forms of primary documents must contain the mandatory details specified in the regulation on the documentary support of records in accounting of 24.05.1995 № 88. given the organizational, technological and legal features of organic production, which we studied and covered in previous publications (ishenko ya., 2019), objectively there is a need to obtain and group information on selected objects of accounting in terms of costs of organic production, transition costs period and costs of inorganic production. primary documents are drawn up on forms of standard and specialized forms. however, it is envisaged that the documentation of business transactions can be carried out using self-made forms, which must contain the required details. the lack of developed standard documents for cost accounting and yield of organic products necessitates the independent formation of a package of primary documents by business entities. at the same time, the standards of organic production, the requirements of current figure 1. number of organic operators in ukraine source: according to ifoam, the federation of organic movement of ukraine and the ministry of economy of ukraine three seas economic journal 77 vol. 3 no. 2, 2022 legislation on the production, circulation and labeling of organic products, production technology must be taken into account. when modeling business processes of organic production and the formation of their regulations should take into account the use of cost information. regarding the accounting support of all levels of government, the primary documents on the costs of organic production should contain information on the following areas of further use: – operational analysis, internal control and management; – external control (state control in the field of organic production, circulation and labeling of organic products by operators, control of certification bodies, control of buyers, etc.); – formation of information for the purposes of financial reporting according to national and international standards; – formation of information for tax and statistical reporting. therefore, each document must be well thought out and modeled. in a complex with definition of the list of documents it is necessary to form a substantial part of each document which is realized by definition of the necessary information for maintenance of all directions of its use. under such an integrated approach, the primary document will perform control and information functions. implementation of the internal control function is ensured by initiating the operation, its resolution, setting the task, monitoring its implementation and recording the fact of the operation and the results of the task. the functions of external control in the field of organics are assigned to certification bodies (during the certification and inspection of production) and the state service of ukraine for food safety and consumer protection, which is responsible for state control (supervision) over compliance legislation of the market of organic products legislation in the field of organic production, circulation and labeling of organic products. according to article 4 of the law of ukraine "on basic principles and requirements for organic production, circulation and labeling of organic products" (2018), organic production operators are required to certify their activities annually to confirm compliance with legislation in the field of organic production, circulation and labeling organic products. to this end, producers of organic products must cooperate with certification bodies and ensure unimpeded access of organic production inspectors to their facilities and sampling, and provide, at the request of certification bodies, documents required for certification of organic production, including access to financial documents. accordingly, certification bodies have the right to require from the operator documents confirming compliance with the provisions of the legislation on organic production. such evidence is the primary documents reflecting the cost of production. the implementation of the information function is ensured by including in the content of the document all the necessary information with the selection of its features in the areas of further use. selection of features of information by areas of use makes it possible to group information for different levels of government, in different sections for the formation of reporting and analytical forms. given the requirements for organic production (figure 2), when forming a package of primary documents, special attention should be paid to documenting the cost of production resources. these requirements and prohibitions necessitate the creation of specialized forms of primary accounting of costs of seeds, planting material, plant and animal protection products, fertilizers to ensure effective control over the process of organic production. it is necessary to take into account organizational and technological features and specifics of control during the transition period, in terms of "pure" organic production and in terms of parallel production of organic and inorganic products. in the context of both traditional agricultural production and organic production, businesses use specialized, as well as some standard forms of documents to document the operations of receipt, storage, movement and disposal of stocks. thus, receipt of material values from suppliers is made out by invoices, payment requirements with the specification, consignment notes on the general bases. these documents should be registered in the form № m-1 "journal of goods received". during the transition period and in the conditions of parallel production of organic and inorganic products, enterprises need to organize separate storage of stocks for each of the types of production. incoming accompanying documents should be marked, for example, "organic composition" and "inorganic composition". in the case of parallel production, the operator is obliged to provide the certification body with documentary evidence of compliance with the provisions of article 26 of law № 2496-viii and ensure: – taking appropriate measures for the permanent separation of organic and inorganic products, the separation of organic and inorganic animals; – separation of manure and feed; – proper cleaning of production equipment for technological operations with organic products; – submission to the certification body of information on the amount of produced organic products and products of the transition period, inorganic products; three seas economic journal 78 vol. 3 no. 2, 2022 – submission of information on harvesting to the certification body not later than two working days before the beginning of harvesting; – submission to the certification body of information on any movement or sale of animals, livestock products; – submission of information to the certification body on the harvest, livestock and livestock products and measures taken to separate organic and inorganic products. to provide documentary evidence of these mea sures to the standard and specialized agricultural forms of primary documents, it is necessary to enter additional details. it is advisable to form additional forms of documents that are necessary to confirm compliance with the law, but are not in the list of already developed forms. one-time release of materials, feed, seeds, fertilizers, plant and animal protection products, raw materials, spare parts and other inventory items for use or movement on the farm is carried out on invoices (domestic). the invoice is usually issued in two copies, one of which is transferred to the warehouse, and the other – to the recipient of valuables. at systematic release of materials instead of one time invoices use the accumulative document – a limit-withdrawal card for reception of material values. after application of mineral, organic and bacterial fertilizers and chemical plant protection products for each field in the context of crops, an act on the use of mineral, organic and bacterial fertilizers, pesticides and herbicides is drawn up. to control compliance with the requirements of organic production in these primary documents should include details that allow you to identify the used material values, as allowed or allowed in the maximum allowable quantities. for this purpose it is expedient to indicate in additional columns the section and number of used substances, ingredients, components according to the list № 1073 from 09.06.2020 and which are allowed for use in the maximum allowable quantities (figure 3). organic crop production requires the use of organic seeds and organic planting material for sowing. in order to obtain organic seeds and planting material, the mother plant and other plants must be propagated r e q u ir e m e n t s f o r o r g a n ic p l a n t s r eq ui re m en ts it is fo rb id de n to u se – separation in time or space of production and storage of organic products, including accounting of such products, from the production and storage of inorganic products and products of the transition period; – use of technologies that meet the requirements of legislation in the field of organic production, circulation and labeling of organic products; – use of mainly renewable resources and own resources, including products of waste processing and by-products of plant and animal origin, provided that they meet the requirements for organic production; – the use of technologies that do not harm human health, plants, prevent or minimize environmental pollution; – use of microelements and additives for technological purposes in the maximum permissible quantities specified by the legislation in the field of organic production, circulation and labeling of organic products; – use of water as an ingredient in organic products that meets the requirements established by law; – prohibition of mixing the same organic and inorganic ingredients in one organic product. – ny unnatural or uncontrolled effect on the genome of agricultural plants through the use in the production of genetically modified organisms and products containing, consisting of or produced from genetically modified organisms; – synthetic substances, including agrochemicals, pesticides, growth stimulants; – ionizing radiation; – hydroponic methods; – use of artificially bred polyploid plants; – substances and technological methods of production, the results of which may mislead the consumer about the nature (origin) of the product; – growth stimulants, hormones or similar substances, except for the use of substances included in the list of substances (ingredients, components), which may be used in organic production and which are permitted for use in maximum permissible quantities, in cases established by this law. figure 2. general requirements for organic crop production source: formed by the authors on the basis of the law of ukraine "on basic principles and requirements for organic production, circulation and labeling of organic products" dated july 10, 2018 №2496-viii three seas economic journal 79 vol. 3 no. 2, 2022 in accordance with the requirements of organic legislation for at least one generation, and for perennial crops for at least one generation and two growing seasons. to write off seeds and planting material to the costs of growing the respective crops, a specialized form "act of consumption of seeds and planting material" is used. in the specified document in the conditions of organic production, besides standard requisites, it is necessary to specify additional information: – on which lands sowing was carried out (certified for organic production, transition period); – specification of the purchased sowing material as one grown in the conditions of organic production; – section and number of used substances, ingredients, components according to list № 1073, which were used for seed treatment from diseases and pests. organic operators are obliged to provide separate storage and special conditions for transportation of organic products. for this purpose it is necessary to organize a separate warehouse and separate warehouse accounting of organic plant products obtained from production. such requirements are defined in the law of ukraine "on basic principles and require ments for organic production, circulation and labeling of organic products" (2018). in particular, the law requires that during the storage of unpac kaged crop products to ensure accounting and identification of such products and each batch as organic and to prevent its mixing with inorganic products, including products of the transition period, as well as with pollutants. immediately before sending the product, samples are taken for its laboratory analysis. after confirming the quality of the product, it is packed and sealed. unpackaged organic products should only be transported in sealed packaging, containers or vehicles closed in such a way as to prevent opening without «i approve» _________________________ initials signed by the head «___» ____________ 20__ р act № _____ on the use of substances (ingredients, components) that are allowed to be used in the process of organic production and which are allowed to be used in maximum permissible quantities by ____________ 20__ р. purpose and method of application of substances (ingredients, components) ______________________________ basic, pre-sowing, etc. ____________________________________________________________________________________________ feeding, continuous, local, etc. imported on land ___________________________________________________________________________ certified for organic production, transition period name of substances (ingredients, components) se ct io n an d nu m be r a cc or di ng to l is t № 1 07 3 synthetic accounting code u ni t pr ic e field number, name of the culture im po rt ed to th e ar ea , h a qu an tit y (p hy si ca l w ei gh t) in tr an sl at io n to th e ac tiv e su bs ta nc e sum debit credit agricultural enterprise ___________________________________________________ usreou identification code structural unit __________________________________________________ figure 3. the proposed form of the act on the use of substances (ingredients, components) in the process of organic production source: author's own development three seas economic journal 80 vol. 3 no. 2, 2022 damaging the seal. sealing of packaging, container or vehicle is carried out by the operator. in practice, all procedures related to sampling for laboratory analysis, packaging, packaging, sealing are photographed to provide additional evidence of compliance with organic production legislation. the consignment note for sending organic products must provide additional information that is not provided in the standard and specialized forms of this document. in particular, this information on: – names of organic products and their description; – name and registration code of the certification body that carried out the certification of organic production; – list of attached documents confirming the quality of products. 4. conclusions taking into account the peculiarities of the organization of business processes of organic production, the functions of primary documents in the management of organic production are highlighted. proposals have been developed to document the costs of seeds, planting material, plant protection products, fertilizers to ensure effective control over the process of organic production. this takes into account organizational and technological features and the specifics of control during the transition period, in terms of "pure" organic production and in terms of parallel production of organic and inorganic products. in particular, a form of the act on the use of substances (ingredients, components) is proposed, which is allowed to be used in the process of organic production and which is allowed to be used in the maximum permissible quantities. given the limited scope of the publication, in this article we have developed proposals for documenting the costs of organic crop production. promising areas of further research on this issue are the development of a package of primary documents for other sectors of organic production and the formation of guidelines for documenting all its business processes, which will form the basis of information management system of organic production at all levels and forming a strategy for its development. references: national economic strategy for the period up to 2030: resolution of the cabinet of ministers of ukraine of march 3, 2021 №179. available at: https://www.kmu.gov.ua/npas/pro-zatverdzhennya-nacionalnoyi-eko-a179 kaletnik, h. m., & pryshliak, n. v. (2017). production and certification of organic products: us experience. economy, finances, management: topical issues of science and practice, 9, 7–22. honcharuk, i. v., & tomashuk, i. v. (2017). influence of the ecological and economic factor on the peculiarities of the organizational and economic mechanism of using the resource potential of rural territories. economy, finances, management: topical issues of science and practice, 4, 52–62. podolianchuk, o. a. (2019). the essence and basics of accounting for organic products. agrosvit, 16, 51–57. tsal-tsalko, yu. s. (2018). statistical and accounting of organic production. scientific horizons, 5, 70–77. ishchenko, ya. p. (2019). accounting for costs and yield of organic agricultural crop products. institute of accounting , control and analysis in the context of globalization, 3–4, 26–36. ishchenko, ya. p. (2019). features of the organization of the account of expenses of organic agricultural production. economy, finances, management: topical issues of science and practice, 7, 122–132. organic in ukraine. available at: http http://organic.com.ua/organic-v-ukraini/ law of ukraine on basic principles and requirements for organic production, turnover and marking of organic products from july 10 2018, № 2496-viii. available at: https://zakon.rada.gov.ua/laws/show/2496-19 list of substances (ingredients, components) that are allowed to be used in the process of organic production and which are allowed to be used in the maximum permissible quantities: order of the ministry of economic development, trade and agriculture of ukraine dated 09.06.2020 № 1073. available at: https://zakon.rada.gov.ua/laws/show/z0763-20#text regulations on documentary support of records in accounting: order of the ministry of finance of ukraine dated 24.05.1995 № 88. available at: https://zakon.rada.gov.ua/laws/show/z0168-95#text procedure (detailed rules) of organic production and circulation of organic products: resolution of the cabinet of ministers of ukraine of 23.10.2019 № 970. available at: https://zakon.rada.gov.ua/laws/show/970-2019%d0%bf#text three seas economic journal 38 vol. 2 no. 4, 2021 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: angelikaam@ukr.net orcid: https://orcid.org/0000-0001-9514-504x researcherid: l-5938-2018 doi: https://doi.org/10.30525/2661-5150/2021-4-7 organization of payment accounting at the enterprise and directions of its improvement anzhelika mashevska1 abstract. the article examines the accounting of the pay organization and its elements, indicates what leads to an unfair wage system. the objectives are in the process of organizing payroll accounting, as well as problematic issues in the organization of accounting of labor and its payment, arising in the implementation of business operations. one of the peculiarities of payroll accounting is described, namely the use of a separate document – the payroll regulations, which defines the use of payroll in the enterprise and contains all the necessary elements of accounting. methodology. payroll is an important economic process in any enterprise and an effective means of motivating employees to be highly productive. payroll accounting is an important component of payroll management, and its proper organization provides clear, reliable and accurate information on payroll. this is the most time-consuming and responsible stage in further accounting. in today's business there are many different disadvantages, including the correct and effective organization of payroll, which makes the selected topic relevant. results. the study points to the importance of the order (regulation) on accounting policy, which defines alternative approaches to the reflection of information on employee payments in accounting and reporting. it is noted that the accounting of payroll settlements will be facilitated by detailing the sub-account 661 "payroll". practical implications. suggestions for improving payroll accounting registers are offered. the author emphasized that the organization of payroll accounting, its size and structure are of common interest to business owners and employees. the instruments of state regulation of the organization of labor remuneration are considered. it also suggests its own ways of improving payroll accounting, in particular, the use of software products designed specifically for payroll accounting, constant updating of the database and constant monitoring of payroll accrual. value/originality. to improve the calculation and organization of accounting wages for employees at the enterprise it is necessary to introduce an individual system of payment, using the established rates for high-quality work performed by an employee, or set rates, which will increase the effectiveness of incentives for employees. the main objective of writing this article is to provide recommendations for improving the organization of labor remuneration. however, please note that despite the large number of articles and other scientific works on improving the organization of accounting for payroll at enterprises the questions related to the automation of accounting and implementation of really effective ways to improve and facilitate the organization of accounting for payroll are still unresolved. key words: wages, organization of wage accounting, tools of state regulation, calculations of payments to employees. jel classification: j30, j31, j39, m40 1. introduction payroll is the main source of income for employees of any enterprise. accounting for it is a complex part of the accounting process that requires reliable documentation of the time worked, products produced, work performed, services rendered and paid for. today, the organization of payroll accounting at the enterprise requires a more detailed study, since in modern conditions it performs such important functions as reproductive and stimulating. in addition, constant changes in the legal and organizational basis of accounting require the modern accountant to make timely adjustments both in the accounting procedure and in the display of information on wages and salaries in the statements of the enterprise. wages, the level of payments to employees, their nature and structure are of great social importance and influence not only the standard of living but also the current and future performance of the enterprise. in addition, the efficiency of the enterprise depends this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 39 vol. 2 no. 4, 2021 on the work of the employees themselves, and their motivation, in turn, depends on the level of wages and working conditions. therefore, the chosen topic is very relevant, because in conditions of automation of accounting greatly facilitates and speeds up the work of the employees themselves. this creates all the conditions for more effective accounting, which contributes to the increase of the company 's profits in the future. the organization of payroll means its construction, bringing its elements into a certain system, providing the interrelation of the quantity and quality of labor with the amount of wages. organization of payroll at the enterprise is determined by three elements: tariff system, labor regulation and forms of labor remuneration (shepel', 2018). 2. the task of organizing payroll accounting the use of inefficient or unfair payment system leads to a decrease in labor productivity, product quality, violation of labor discipline, emergence of social and labor conflicts between the employees and the employer, negatively affects the final results of the enterprise. each company is characterized by peculiarities of activity, sets specific goals, and each employee has its own values and attitudes (vasyurenko, 2017). in the process of organizing payroll accounting are the following tasks: – ensuring timely payment of wages (accrual of wages and other payments, calculation of deductions); – ensuring the timeliness and accuracy of the distribution of the amount of accrued wages and deductions for production costs; – ensuring control over the number of employees, the use of working time and compliance with labor discipline; – grouping of indicators for the purposes of operational control and preparation of necessary reporting (katkova and maslova, 2017). it is advisable to specify problematic issues in the organization of accounting of labor and its payment, arising in the performance of operations: a) control over the use of working time and ensuring growth in labor productivity; b) timely and correct determination of amounts of accrued wages and contributions to social insurance bodies and their inclusion in the cost of production (works, services); c) making all payments to employees for wages and other payments in due time; d) accounting and control over the use of the wage fund and other funds allocated to pay employees of the enterprise.; e) introduction of work motivation for the employees of the company (myronova and panasenko, 2016). one of the peculiarities of payroll accounting is the development of a separate document at the enterprise – the payroll regulations, which defines the procedure for applying wages at the enterprise and includes: – general principles of labor remuneration at the enterprise, systems and forms of remuneration applied to various categories of employees; – the staff schedule of the company; – construction of basic (tariff ) wages by positions and professions; – the size of tariff rates and fixed salaries or the procedure for calculating payments depending on the performance of the employee and the company as a whole; – other bonus systems used at the enterprise (saukh, 2011). the order (regulation) on accounting policy defines alternative approaches to the reflection in the accounting and reporting of information on payments to employees and the formation of security payments, it should also be specified elements of accounting policy, namely methods of accounting for payroll, a list of accounting information at all stages of accounting, the timing of their presentation, provisions for payment of leave. and as an appendix, attach the work plan of accounts. 3. reflection in the accounting of wage settlements y. m. krot believes that the important tasks of improving the calculation of wages are the acceleration of scientific and technological progress, mechanization of labor-intensive work, optimization of the use of labor resources, reducing the loss of working time. the researcher also presented a working model of analytical accounting of wages, which should be streamlined and improved. for this purpose the researcher suggested introducing appropriate subaccounts to account 66 "settlements on employees' remuneration": – 661 "payroll"; – 6611 " settlement of accrued charges"; – 66110 "current payments"; – 66111 "salaries and wages"; – 66112 "other accruals for wages"; – 66113 "overtime pay "; – 66114 "bonuses and other incentive payments"; – 66115 "commissions"; – 6612 "termination allowance"; – 6613 "payments after employment"; – 6614 "vacation pay calculations" (krot and nakonechna, 2012). namely, for more convenient accounting of wage settlements it is advisable to develop it by detailing the sub-account 661 "payroll" and to use the facet method of grouping information for its formation, which will provide information for various purposes by accounting information simultaneously in several analytical sections. three seas economic journal 40 vol. 2 no. 4, 2021 to group wages by employee category, accounts of the third order should be opened: 6611 " wage settlements for administrative and managerial personnel"; 6612 " wage settlements for engineers and technicians of structural units"; 6613 " wage settlements for workers". the composition of each analytical account must be detailed in the breakdown of payments: salary, additional payments (by type) and allowances (by type) (ostroverkha, 2014). also, the company, in accordance with the peculiarities of its specialization can develop registers of synthetic and analytical accounting with the help of special computer programs. and one of the most important components of the organization of payroll accounting is the organization of control, which is the systematic monitoring of the use of the payroll fund, accrual of wages for each employee and the timeliness of payment. therefore, the organization of payroll accounting should ensure a high level of labor productivity and accurate payroll calculation. tasks should correspond to the specialization of enterprises, and actions on payroll accounting should be reflected in the accounting policy. after all, the motivation of employees and the reliability of information depends on the rational organization of accounting. in accordance with the innovations introduced in the regulations of accounting standard 26, and a number of other regulations, including the chart of accounts and the instruction on its application, i. v. shepel' proposes changes to the text of the instruction on the use of registers in the journal-order form of accounting for agricultural enterprises (order no. 390) (shepel', 2018). that is, these changes apply to journal-orders to summarize the information they contain about employee benefits. in accordance with the methodological recommendations on the organization and maintenance of accounting in the journal-order form in enterprises of agroindustrial complex i. v. shepel' given control procedures for checking entries in the journal-order № 5 s.-g. and in general control of synthetic accounting settlements with employees (table 1). the authors of this work fully agree with the opinion of l. v. vasyurenko, that the unified wage scale, with all its imperfections, can become a fundamental tool, taken as a basis for improving the calculation of wages in commercial and nongovernmental enterprises and organizations. a unified wage scale, developed for each individual enterprise with appropriate justification, must be approved by management and recorded in a separate paragraph of the order on accounting policy and in the provision on the organization of accounting at the enterprise. such a mechanism for organizing the accrual of wages will become a link for improving labor relations (vasyurenko, 2017). the organization of labor accounting and its payment should take into account that labor payment, and especially its size and structure, is a point of intersection of interests of different users: owners and enterprises. the wide range of operations falling under the forming table 1 proposals for improving the accounting registers of payments for labor name and purpose of registers proposed changes journal-order 5 b s.-g. journal-order 5 b s.-g. on credit accounts: 65 "insurance settlements" sub-accounts: 651 "on pension provision" 652 "on social insurance" 653 "unemployment insurance" 656 "on insurance against accidents at work and occupational diseases" 66 "settlements on employee benefits" journal-order 5 b s.-g. on credit accounts: 65 "insurance settlements" sub-accounts: 651 "according to the calculations of mandatory state social insurance" 652 "on social insurance" 654 "on individual insurance" 655 "for property insurance" 66 "payments to employees" statement 5.1 s.-g. summary statement of accrual and distribution of wages and salaries and deductions from it on the objects of cost accounting on adjusted deductions sub-accounts. statement 5.2 s.-g. book of settlements with depositors – statement 5.3 s.-g. summary list of settlements with workers and employees statement 5.4 s.-g. statement of analytical accounting on the account 65 "insurance settlements" sub-accounts: 651 "on pension provision" 652 "on social insurance" 653 "unemployment insurance" 656 "on insurance against accidents at work and occupational diseases" statement of analytical accounting on the account 65 "insurance settlements" sub-accounts: 651 "according to the calculations of mandatory state social insurance" 652 "on social insurance" 654 "on individual insurance" source: (shepel', 2018) three seas economic journal 41 vol. 2 no. 4, 2021 factors of labor and its payment, causes the necessity of their organizational support (shepel', 2018). 4. approaches to raising wages o. o. hryhorevska believes that improving or building the basic organizational provisions of accounting for labor remuneration transactions, businesses must be reasonable and balanced approach to this issue, taking into account the scientific results of previous studies. when developing internal documents (regulations on remuneration, bonuses, etc.) it is necessary to expand the use of personalized rates and salaries for the most qualified employees, focused on increasing labor productivity; take into account industry specifics, in particular, to determine specific job evaluation factors for the methods of the bonus system for each category of personnel, strengthening the regulatory and incentive functions of wages; the list of factors and criteria for evaluating bonus conditions should include levels of qualification, degree of responsibility for the work performed, skill level, initiative, work experience, etc. that is, the criteria to which the current state, tactical and strategic action plans and management tools meet (hryhorevs'ka and khrystos, 2015). effective organization of wage accounting, correct classification of wage components, timely analysis of operations on wage accrual ensure the search and choice of ways to increase wages and motivate employees to perform their work. it is important to take into account labor rationing, dynamics of its indicators, control over the performance of tasks and functions. users of such information have the opportunity to implement control functions in the structural elements of the use of working time, the implementation of such a system of ways to improve, which will correspond to a rational ratio of labor productivity growth and wages. therefore, of course, it is necessary to reduce the volume of paper copies of payroll documents and completely switch to an automated accounting system. according to o. s. kriuchko, the formation of conceptual approaches to improving wages in the context of socio-economic development of regions should be based on the following principles: – improvement of remuneration of labor, taking into account the results of monitoring the sectoral and regional level of labor remuneration; – a combination of systemic and individual approaches to remuneration, which will reduce subjectivity in assessing labor results and increase individualization in remuneration; – compliance of the remuneration and motivation system goals with the strategic goals of the company and the socio-economic development of the region; – elimination of demotivating factors: conflict, internal discomfort, unattainable goals and objectives, lack of necessary resources to perform tasks, dependence of wages on the individual contribution of an employee; – transparency and clarity of the remuneration system; – fairness in remuneration; – timeliness of payment of remuneration; – a set of remuneration systems that combines tangible and intangible rewards; – empowering businesses in the region and giving them the responsibility to monitor gender equality (kryuchko, 2013). i. v. dymedenko proposed a bonus system that would include the following types of bonuses: – current premiums on the main financial indicators of the company for the reporting period; – bonuses for completing certain tasks, which are essential for the company to achieve high results in the form of bonuses, commissions; – one-time bonuses for achievements or significant merits of the employee; – a bonus based on the results of the year; – a bonus based on the results of the production program of the company, calculated for three to five years (dymedenko and dymedenko, 2012). to improve the wage system in today 's business environment is necessary: – to ensure a higher level of workplace organization; – to ensure timely issuance of work assignments; – to improve the technical condition of the workplace, timely preventive and routine repairs and upgrades; – to improve coordination of work at a specific workplace with the work of the structural unit as a whole and technologically interconnected workplaces; – to intensively implement effective labor organization models; – to develop a flexible unified wage scale adapted to the enterprise, its own progressive scale between grade factors, taking into account the complexity of the work, the level of qualification and responsibility; – to provide a mechanism for the consistent establishment of the minimum rate of the first tariff category at the level of the minimum subsistence level; – to ensure that the remuneration system takes into account labor conditions, variability, professional skills, productivity, intensity, complexity, quality of work, rhythm, economic, labor and technological discipline (varakuta and bobyl', 2012). 5. conclusions to summarize, it can be said that the process of improving the organization of accounting and payroll is a set of rules and requirements of the head-owner of the organization, which ensure the registration of economic life, in order to obtain verified information, with which the reporting is formed and the necessary management decisions are made. three seas economic journal 42 vol. 2 no. 4, 2021 having analyzed the above information, according to the authors, it is advisable to implement the following ways to improve the organization of payroll accounting: – use software products designed specifically for payroll accounting; – constantly update the database; – to carry out regular monitoring of the accrual of wages. attention is paid to such main points in the field of organization of accounting for payroll at enterprises as insufficient provision of some areas of accounting with automated systems, a slight difference in wages of different categories of workers. thus, to improve the calculation and organization of labor remuneration at the enterprise it is necessary to introduce an individual system of payment, using the established rates for high-quality work performed by an employee, or set tariffs, which will increase the effectiveness of incentives for employees. references: dymedenko, i., & dymedenko, k. (2012). assessment of the remuneration system and ways of its improvement at an industrial enterprise. economic analysis, 10(4), 73–76. available at: http://nbuv.gov.ua/ujrn/ ecan_2012_10(4)__18. (in ukrainian) hryhorevs'ka, o. o., & khrystos, i. v. (2015). ways to improve the organization of accounting for payroll at the enterprise. problems of theory and methodology of accounting, control and analysis. avg. accounting , control and analysis, 2, 97–105. available at: http://nbuv.gov.ua/ujrn/ptmbo_2015_2_10. (in ukrainian) katkova, n.  v., & maslova, k.  v. (2017). features of accounting of wages in modern conditions and ways of its improvement. economy and society, 8, 762–767. (in ukrainian) kriuchko, o. s. (2013). improvement of remuneration in the context of socio-economic development of regions. financial space, 1, 106–110. available at: http://nbuv.gov.ua/ujrn/fin_pr_2013_1_24. (in ukrainian) krot, yu. m., & nakonechna, d. m. (2012). ways to improve payroll calculations. collection of scientific works of cherkasy state technological university. collection of scientific works of cherkasy state technological university. avg.: economic sciences, 30(1), 244–247. available at: http://nbuv.gov.ua/ujrn/znpchdtu_2012_30(1)__56 (in ukrainian) methodical recommendations for the use of registers of log-order accounting form for agricultural enterprises: order ministry of agrarian policy of ukraine. available at: https://zakon.rada.gov.ua/rada/show/v0390555-09 (in ukrainian) myronova, yu. yu., & panasenko, v. a. (2016). problems of organization of accounting of payments on labor at the enterprise. economy and region, 1, 121–126. available at: http://nbuv.gov.ua. (in ukrainian) ostroverkha, r . e. (2014). theoretical foundations for improving the organization of payroll. university "lviv polytechnic". management and entrepreneurship in ukraine: stages of development and development problems, 797, 284–291. available at: http://nbuv.gov.ua. (in ukrainian) saukh, i. v. (2011). documentary provision of payroll calculations. international collection of scientific works. series: accounting , control and analysis, 1(19), 311–319. (in ukrainian) shepel', i. v. (2018). organization of accounting and control of remuneration at agricultural enterprises and suggested ways of their improvement. black sea economic studies, 35(2), 151–158. (in ukrainian) varakuta, yu.  m., & bobyl', v.  v. (2012). ways to improve the organization of remuneration in the management accounting system at the railway enterprises. collection of scientific works. view of dnipropetrovsk. nat. un-that of iron. trans. them. acad. v. lazaryan, 3, 18–22. (in ukrainian) vasyurenko, l. v. (2018). theoretical and methodological principles of forming the instruments of state regulation of the organization of remuneration. black sea economic studies, 28(1), 53–56. available at: http://nbuv.gov.ua. (in ukrainian) vasyurenko,  l.  v. (2017). problems and ways to improve the organization of remuneration as a part of the accounting system. young scientist, 10, 824–826. available at: http://nbuv.gov.ua. (in ukrainian) baltic journal of economic studies 21 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-4 the mechanism of state support for small business development: synergistic aspects artem degtiarov 1 abstract. the purpose of this research is the development of theoretical foundations for the functioning of the mechanism of state support for small business in a decentralized government based on a synergistic approach. the subject of the study: theoretical and methodological foundations for the functioning of the mechanism of state support of small business in the context of synergetics. research methodology is a set of principles, approaches, general theoretical, special, and interdisciplinary methods of scientific knowledge, namely morphological analysis, comparative analysis, methods of deduction and logical generalization, analysis and synthesis. functioning of the mechanism of state support for small business is considered on the basis of a synergistic approach. the synergistic approach is one of the most effective methodological bases for the development of modern economics. the article considers the key theoretical provisions for understanding this approach, substantiates the possibility and feasibility of its application in the implementation of this mechanism in modern economic conditions. results. it is determined that the reform of decentralization of power has led to the creation of institutional problems in the economic mechanism of state support for small business. in the regions and territorial communities, there is no single mechanism to support the development of small business, which causes the inefficiency of this area of public policy. this justifies the relevance of the use of new methodological approaches to the formation of the mechanisms for implementing the state policy of business regulation. the importance of small business for the development of the national economy, ensuring its stability, is substantiated, the main approaches to the essence of entrepreneurship are investigated. theoretical aspects of the functioning of the mechanism of state support for small business on the basis of traditional and systemic approaches are systematized, their positive aspects and shortcomings are determined. it is substantiated that in the conditions of economic transformations and introduction of the reform of decentralization of power it is expedient to use the synergistic approach in the research of the mechanism of the state support of the small business. it is emphasized that the very synergistic approach is able to study the process of functioning of the mechanism of state support for small business on the basis of evolutionary development and self-organization of complex systems. we propose to consider the mechanism of state support in the conditions of decentralization as a process of self-organization of small business entities and public authorities, which is carried out through their interaction with the mesoand macroenvironment. conceptual bases of the use of the synergistic approach in the research of the mechanism of the state support for the development of entrepreneurship and its economic levers are developed. it is substantiated that the application of a synergistic approach in the process of formation and application of the mechanism of state support of small business will allow to take into account interdependence of economic processes and phenomena, to investigate the interaction of local authorities and small businesses under decentralization. the use of a synergistic approach as a research method also makes it possible to take into account the dynamics of the state support mechanism. the synergistic methodology in the study of the mechanism of state support for small business allows to take into account the existence of connections and interactions between the components of the mechanism, as well as the integrity and ability to change. based on a synergistic approach, it becomes possible to ensure the development of small businesses by preventing threats. the next advantage is the ability to take into account the alternative scenarios of small business development of a particular region or territory in a changing socio-economic environment. consideration of the mechanism of state support as a self-organized system makes it possible to study the patterns of self-organization, which in the future should become the basis for calculating the synergistic effect of the mechanism. key words: state regulation, state support, decentralization, economic mechanism, economic levers, small business. jel classification: в41, f63, l26 corresponding author: 1 national university “сhernihiv polytechnics”, ukraine. e-mail: artemdeg@online.ua orcid: https://orcid.org/0000-0003-2665-2544 baltic journal of economic studies 22 vol. 2, no. 2, 2021 1. introduction ukraine’s strategic goal is integration with the countries of the european union due to which the country’s economy is becoming more open to foreign business partners every year showing an increased interest in small business. given the relevance of small business for the development of the national economy and individual regions and territories, the public administration processes aimed at creating favorable conditions for its development become significantly important. in this regard, we consider it relevant the issue of providing effective state support for the development of small business on the basis of government interaction with business and communities, which is impossible without the development and implementation of an appropriate mechanism for state support for the development of business structures. at present, the goal of the ukrainian economy is to transit to the modernization of the public administration system, accompanied by the formation of new economic institutions, implementation of reforms in the field of state regulation based on decentralization, the use of leading mechanisms and instruments of public policy. however, the reform of the economic system, the decentralization of power led to the creation of institutional problems in the economic mechanism of state support for small business, cooperation of public administration and private property, which requires the use of new methodological approaches to the formation of mechanisms for implementing public policy on entrepreneurship. the unsystematic state support is a consequence of the difference in the regional conditions of formation of small business institutions and insufficient consideration of the specifics of decentralization management, especially in the economic component. each region forms a system of economic state support for small business, based on the ideas of local authorities, and there is no regulation on the formation of state support systems at the regional and territorial levels, which often slows down achieving the required level of business support. in the regions and territorial communities, there is no single mechanism to support the development of small business, which causes the inefficiency of this area of public policy and incoherence of support institutions. in addition, the theoretical aspects of the formation and improvement of the mechanism of state support for small business, taking into account the basics of the synergistic approach, are currently insufficiently disclosed. some tools of this mechanism are not adapted to the conditions of system modernization and the formation of the information economy. consequently, the aim of the article is to develop theoretical foundations for the functioning of the mechanism of state support for small business in decentralization in the context of a synergistic approach based on the principles of self-organization and the evolution of the mechanism’s potential. achieving the goal requires the following tasks: determining the role of small business in the development of the national economy; studying the essence of entrepreneurship; determining the mechanism of state support for small business in the context of basic theoretical approaches; substantiating conceptual bases of use of the synergetic approach in the research of the mechanism of the state support for the development of business and its economic levers. the use of morphological and comparative analysis allows to specify conceptual and categorical apparatus, to explore approaches to the definition of “entrepreneurship”, “mechanism of state support”. based on the method of analysis and synthesis, it becomes possible to study the evolution of these categories, to draw conclusions about the main theoretical provisions of the mechanism of state support for small business. the application of a synergistic approach makes it possible to explore this mechanism as a self-organizing system and provide suggestions for determining the effectiveness of the interaction of the components of the mechanism and their impact on economic development. 2. the essence of small business and its role in economic development entrepreneurship and, in particular, small business, is a complex phenomenon that operates on the basis of the interaction of economic, legal, social, market and other public relations. however, the impact of small business on the state of socio-economic development of countries is different: in the eu countries, the share of small business in gdp is 52-70%, and the share in total employment population – 55-82%, while, according to world bank research, these figures in ukraine are 14.5-15.8% and 19.2-20.7%, respectively (the world bank, 2020). according to s. zahra, small business is a significant factor in socio-economic development, providing millions of jobs, offering a variety of goods and services, increasing national prosperity and competitiveness (zahra, 1999). so, supporting the formation and development of the institution of small business at the expense of economic levers by public authorities is a priority of public policy in the context of reforms and compliance with the european integration course of economic development. the initial stage of the study of the phenomenon of entrepreneurship characterizes it as an activity associated with risk and aimed at generating income. so, according to a. smith, entrepreneurial activity enables a person to meet their needs through labor (smith, 1962). since the 19th century, as the development of entrepreneurial activity and the separation of functions of ownership and baltic journal of economic studies 23 vol. 2, no. 2, 2021 management, the essence of entrepreneurship has been considered in the context of the organization of production. for example, the economist j.-b. say considers entrepreneurship in the focus of 3 components: the economic concepts of “capital”, “land”, “labor” as key factors of production. in turn, the neoclassical theory ( j. clark, a. marshall, l. walras) identifies entrepreneurship as a specific management function, and the entrepreneur acts as a manager who combines the factors of production (mochernyi, 2000). starting from the middle of the 20th century, there is a prevailing approach in economics, according to which entrepreneurship is associated with innovation. j. schumpeter sees the unique role of the entrepreneur in overcoming the inertia of the economic system and the desire of economic entities to act in accordance with sustainable practices (schumpeter, 1982). according to the law of ukraine “on development and state support of small and medium business in ukraine” (2012), small business entities in ukraine are individuals and legal entities of any kind of organizational and legal form and form of ownership, in which the average number of employees for the reporting period does not exceed 50 people and the annual income from any activity does not exceed an amount equivalent to 10 million eur at the average annual rate of the national bank of ukraine. 3. defining the essence of the mechanism of state support for small business the system of state support for small businesses in modern realities does not fully reflect the state of economic relations, which requires a wide range of instruments of state support in the direction of decentralization. according to z. varnalii, state support for small business is a set (complex) of priority solutions that determine the main directions and forms of legal, economic, and organizational assistance for the development of small entrepreneurship taking into account the interests of the state and business entities (varnalii, 2002). most researchers adhere to the following classification of means of state regulation of support for small business: 1) direct state influence, i.e., through the system of state procurement and state contracts, establishment of norms and standards, legislative acts, targeted comprehensive development programs; 2) indirect influence, i.e., through government loans, grants, tax benefits, subsidies, prices, etc. (melnyk, 2000). the mechanism of state support and the use of economic instruments, namely debt financing with the use of bank loans, as well as forms of support aimed at maintaining employment, providing tax benefits, covering business costs, etc., has become relevant because of the pandemic challenges (pichkurova, 2020). the priority is to analyze the category of the “mechanism” in the context of state regulation of small business development. o. komiakov considers the mechanism of state regulation as a set of organizational and economic methods and tools that allow to perform functions for continuous operation of the studied system (the state) to improve the functional condition of the economic environment (komiakov, 2000). instead, m. koretskyi considers the meaning of the concept of the “mechanism of state regulation” as a system of tools, levers, methods, and incentives through which the country regulates economic processes, as well as ensures the implementation of socio-economic functions (koretskyi, 2004). in turn, l. koval considers the mechanism of state regulation of business as a single organism with internal and external links with other mechanisms (koval, 2011). a. butenko (butenko, 2011) and l. yavorska (yavorska, 2013) emphasize the systemic and complex mechanism of state support for business. thus, the conducted research makes it possible to identify traditional and systemic approaches to determining the essence of the mechanism of state support for small business. within the traditional approach, the mechanism of state support for small business is considered in the context of a set of public administration measures to support business. we consider it expedient to note that the disadvantage of this approach is the point impact on business, as well as insufficient involvement of public authorities in the implementation of the mechanism. the reviewed approach, as a rule, is realized through the system of normative regulation with the involvement of instruments of financial support. the application of the systemic approach is based on a comprehensive study of the components of the mechanism and the relationships between them. the development of a state support mechanism in the context of a systemic approach allows for a comprehensive analysis of the system of state support but does not allow to determine the systemic effect, as it considers the mechanism as a sustainable system without taking into account aspects of improvement and change. on the other hand, the advantage of this approach is the consideration of state support for small business as an element of the higher-level system, namely the national economy, the effectiveness of which affects the functioning of small business entities at the regional level. 4. the synergistic approach in the study of the mechanism of state support for small business the application of a synergistic approach in the process of formation and application of the mechanism of state support of small business will allow to take baltic journal of economic studies 24 vol. 2, no. 2, 2021 into account interdependence of economic processes and phenomena, to investigate the interaction of local authorities and small businesses under decentralization. this position is based on the theoretical and methodological principles of synergetics as a science that explores aspects of the emergence, interaction and evolutionary transformation of open self-organizing systems. for h. haken, “… synergetics explores the combined action of many subsystems (mostly the same or several different species), which results in a macroscopic level of structure and corresponding functioning” (haken, 1980). in this regard, the solution of the economic mechanism of state support of small business is associated with the feedback of the subject and the environment in the process of their interaction, and the mechanism of state support in decentralization is considered appropriate as a process of self-organization of small business and public authorities, which is carried out through their interaction with the mesoand macroenvironment. as o. mykhailovska notes, the synergistic approach is an approach in which a specific phenomenon or process is considered not in isolation, but in the context of the evolution of systems (mykhailovska, 2011). the synthesis of systemic and synergistic approaches in the context of consideration of the economic mechanism of state support for small business allows to study its structure as a complex system of interconnected elements and to substantiate the principles and laws of functioning and development. notably, state support is not only a mandatory function of the state for small business entities but a system of connections and tools to identify the most effective business representatives to address the strategic objectives of the national economy. this is possible within the framework of their integration to find optimal solutions, establish business cooperation and obtain a synergistic effect as the end result of the mechanism. the application of a synergetic approach also makes it possible to take into account the dynamics of the state support mechanism. the synergy of the mechanism of state support for small business also involves the impact of economic levers and tools of the mechanism not only on the objects of management but also their operating environment. consequently, the synergistic effect of the mechanism of state support for small business entities is the result of the interaction of its components, which can change the quality of the business environment and keep the economy on a certain trajectory of development by adapting to negative changes. the functioning of the state support mechanism should be based on purpose, i.e., there must be some goals and specific priorities, which in the context of a synergistic approach should be reviewed in the light of economic and political external changes. this avoids duplication of state support tools at different levels of public administration. on the other hand, the purposefulness of the mechanism should also take into account the balance of interests of the national economy, economic entities and public authorities on the basis of economic levers. improving the mechanism of state support in the context of decentralization is possible on the basis of effective interaction between business entities and public authorities. the application of a synergistic methodology in operating the mechanism of state support of small business entities will allow to combine the main tools and economic levers that are currently used in each region but are not always effective enough. the study of the synergistic aspects of the functioning of the mechanism of state support for small business development brought us the opportunity to identify the following conceptual principles of its functioning (figure 1). the synergetic methodology explores the possibility of ensuring the development of small businesses by preventing threats and allows to take into account the alternative scenarios of small business development of a particular region or territory in a changing socioeconomic environment. in the context of nonlinear dynamics as the basis of synergistic methodology, the mechanism of state support for small business development is a complex hierarchical system, the interaction of elements of which (public authorities, businesses, levers, goals, objectives, tools) is based on self-organization. the dynamism of the mechanism gradually leads to a nonequilibrium state, which is called the “bifurcation point” in synergetics. according to the development theory, at this very point, there are several options for the evolution or change of the studied mechanism. choosing one of the options allows the mechanism of state support as a system to evolve and achieve a steady state. the risk of the mechanism functioning and the increased level of uncertainty of the operating environment are observed with the distance from the steady state and the approach to the next bifurcation point. this allows us to conclude that the availability of alternatives or attractors throughout the implementation of the state support mechanism requires monitoring the changes in external and internal factors and the introduction of necessary adjustments to the developed mechanism. this shows the ability of the mechanism of state support for small business development to selforganization. it should also be borne in mind that in the process of formation and operation of the mechanism there may appear new characteristics and properties that must be taken into account when making corrective changes. thus, economic efficiency of the mechanism of state support for small business in the context of baltic journal of economic studies 25 vol. 2, no. 2, 2021 decentralization from the standpoint of a synergistic approach is provided by performing the following tasks: – formation of a socio-economic environment that ensures the development of small business and individual business entities; – financial provision of state support on the basis of decentralization of local budgets; – availability of infrastructure services to business entities; – expanding the powers of public authorities in the implementation of support for small business; – ensuring cooperation between government and entrepreneurship, involvement of small businesses in the creation of the documents for development. 5. conclusions thus, the application of the synergistic methodology in the study of the mechanism of state support for small business allows: – to take into account the existence of connections and interactions between the components of the mechanism, as well as the integrity and ability to change; – to study the patterns of self-organization, which in the future should become the basis for calculating the synergistic effect of the mechanism. the implementation of the mechanism of state support for small business development requires the improvement of existing levers and the introduction of new economic methods and tools that in the figure 1. synergistic principles of the mechanism of state support for small business source: author’s development it is considered as an open nonequilibrium system there are different options for changing the components of the mechanism, so it is considered as an adaptive system the implementation of the mechanism is based on the coordination of subsystems and individual elements the presence of feedback between the components of the mechanism and the external environment the ability of the mechanism to evolve elements of the mechanism are subordinated to the goal according the presence of coordinated interaction the functioning of the mechanism is ensured by the exchange of resources with macroand mesoeconomic systems mechanism of state support for small business baltic journal of economic studies 26 vol. 2, no. 2, 2021 strategic perspective will contribute to the formation of a perfect system of business regulation in the context of decentralization reform. the functioning of the mechanism should be considered from the standpoint of dynamics and synergistic interaction between public authorities and the business entities. the study of feedback, the process of choosing alternatives in the implementation of the mechanism will determine the possibilities and directions of its further selforganization. references: butenko, а., voinarenko, m., & liashenko, v. (2011) modernizatsiia mekhanizmiv rozvytku maloho ta seregnoho biznesu [modernization of mechanisms for small and medium business development]. donetsk. (in ukrainian) haken, h. (1980). sinergetica [sinergetics]. moscow: mir. (in russian) komiakov, o. (2000). derzhavne rehuliuvannia perekhidnoi ekonomiky [state regulation of the transition economy] (phd thesis). kyiv: kyiv. nats. ekon. un-t. (in ukrainian) koretskyi, m. (2004). derzhavnyi іnstrumentarіi rehuliuvannia innovatsii rozvytku pidpryiemstv [state tools for regulating the innovative development of enterprises]. visnyk donetskoho derzhavnoho universutetu upravlinnia, vol. 3 (29), pp. 84–90. (in ukrainian) koval, l. (2011). pidtrymka pidpruiemnytstva v systemi derzhavnoho rehuliuvannia ekonomiky [entrepreneurship support in the system of state regulation of the economy]. formation of a market economy. kyiv: kyiv. nats. ekon. un-t. (in ukrainian) melnyk, a. 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(1999). the changing rules of global competitiveness in the 21st century. academy of management executive, vol. 3, pp. 36–42. three seas economic journal 117 vol. 3 no. 1, 2022 corresponding author: 1 odessa national medical university, ukraine e-mail: emartynuk2017@gmail.com orcid: https://orcid.org/0000-0002-0377-7881 researcherid: b-8635-2019 2 odessa polytechnic national university, ukraine e-mail: lingurl@ukr.net orcid: https://orcid.org/0000-0002-0730-2381 doi: https://doi.org/10.30525/2661-5150/2022-1-16 modern economy digital transformation main trends in the context of the bsr olena martyniuk1, liubov lingur2 abstract. the article considers the main stages of development of social business standards and the evolutionary path that led to the formation of the concept of "digital space of socially sustainable business development." based on the study of trends inherent in modern society, it is determined what characteristics a company's business model should have in order to gain the key benefits of specificity in the market. defined as requirements define information technology it technology. research by consulting firm cartner and business trends altered by quarantine conditions related to the covid-19 pandemic shows that global trends in the business environment are increasingly leaning toward digitalization and the creation of new digital business models. that is why it is proposed to define a new paradigm for the development of corporate social responsibility in the context of digitalization. however, on the basis of the new paradigm, key elements have been identified that will allow the formation of new cis csr standards. it is also proposed to consider an integrated approach that combines the concepts of sustainable development, social responsibility and digitalization in a single format "digital space for enterprise sustainability." to support this format, an integrated corporate information system is proposed, which includes three blocks: a digital business infrastructure, an information and communication system and a system for managing digital business processes at the enterprise. this will determine the algorithm for upgrading the existing system or implementing a new is, the key idea of which will be the concept of sustainable development of the enterprise with elements of corporate social responsibility. key words: sustainable development, social responsibility of business, digitalization, models of digitalization, industry 4.0, small business, csr ip. jel classification: м11, м14, g13, о35 introduction in recent years, the social responsibility of business has become increasingly relevant. in developed countries, perceptions of the public perception of business, not only in terms of its profitability, but also in terms of its tools, consequences and environmental impact, are being formed. that is, at the present stage, the market mechanism of functioning of economic entities is integrated with social and environmental functions, which actually has its impact on the market value of the company. in ukraine, these processes are still in their infancy but are gradually developing. the greatest interest to the corporate social responsibility (csr) in our country is shown by some managers-practitioners of leading financial companies and industrial groups, as well as enterprises with foreign entities in the structure of their stakeholders (kolot, grishnova, 2012). for most european countries and countries with developed economies this is already becoming one of the mandatory standards of doing business. the problems of "digitalization" of the economy and the application of digital technology in ukraine are now being studied by various scientific schools and specialists, with research beginning with macroeconomic processes followed by consideration of deep micro-processes and micro-cybernetic models. and it is not surprising, because in the concept of development of the digital economy and society of ukraine for 2018–2030, as the priority areas for "actualization of the introduction of digital technology " are defined such as public safety, education, health, tourism, e-democracy, ecology and environmental protection, urban life, cashless payments, harmonization with this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 118 vol. 3 no. 1, 2022 european and global scientific initiatives, public administration (starodubska, 2016). 1. methodology of research the authors define the current stage of csr development as a specific stage in which managers are particularly responsible for the implementation of the company 's external and internal policies. a characteristic feature of the modern period is that this stage in the development of social responsibility in business is associated with the emergence of globalization processes and the emergence of various information technologies. in addition, many managers have come to understand that business profitability depends not only on economic efficiency, but also on the willingness of companies to comply with the laws of society. figure 1 shows the periods and sequence of the emergence of concepts related to the essence of csr . with the emergence of special responsibility of corporate managers in the implementation of external and internal company policies, the financial performance and market value of such structures are increasing, and the brand and image of the company are being promoted both at home and abroad. thus, in modern conditions, a special direction of corporate social responsibility of business is formed, which provides for the current costs of enterprises and the long-term development of their social relations, thereby the subject creates the conditions for sustainable profits. the transformation of standards of social ethics and social responsibility of business took place in accordance with the development of entrepreneurship, business models and the challenges of society and the economy, which have changed and acquired new characteristics. at the present stage, the formation and implementation of certain elements of social responsibility or philosophy are not just a requirement and need of society, but are defined as a key factor of the company 's competitiveness. therefore, it is necessary to consider the formation of a new concept of corporate social responsibility in the digital space. world processes of globalization and current trends show the rapid development of digital models in business, communications, forms of government regulation, and even activities that have emerged over the past 20 years, thereby transforming simply the forms of interaction in society. as any global phenomenon, csr is the subject of numerous discussions among scholars, businessmen, and representatives of ordinary citizens. this study is based on the indisputable need to implement standards of social responsibility of business and individuals to determine the possibilities of dynamic development of each company, economic space and public welfare. 2. results and discussion 2.1. identify major it trends that will influence the development and changes in business, society, and technology over the next 20 years the rapid development of new technological tools, software products, electronic and communication networks determines the need to analyze the current state of business informatization in ukraine and corporate social sustainability of business corporate citizenship the concept of stakeholders corporate social activities corporate social favors social sustainability (internal and external environment) corporate social responsibility 195 196 197 198 199 200 202201 the digital space for sustainable development of society 202 figure 1. coevolution of concepts on approaching the "digital space of social sustainable development" source: summarized by the authors three seas economic journal 119 vol. 3 no. 1, 2022 determine its future prospects and development trends in the context of the introduction and widespread use of information and communication technologies in enterprises. today 's business realities establish that the development of information technology has a direct impact on the growth of business performance of enterprises. therefore, the introduction of information technology with the definition of the most adapted business models for use opens up broad competitive opportunities. in the context of the transition from an industrial society to an information society, information technology must meet the following requirements (chuprina, orozonova, 2020; martyniuk, 2020): – ensuring document management and information processing in accordance with their performance criteria; – including a full range of information processing devices, as well as hardware and software to support it processes; – embodiment of a flexible organizational structure, which should ensure efficient planning and regulation of data processing; – application of methods for implementing and controlling business processes in terms of their optimal design; – adherence to a functional and meaningful procedure for implementing information technology, as well as their use as the basis for adapting automation tools; – take advantage of advanced information technology, the implementation of modern it solutions and the use of it services. in the coming years, by 2025, according to the consulting company cartner (hype cycle for emerging technologies), the proliferation of voice interfaces, the internet of things (iot) and chatbots, the democratization of artificial intelligence (ai), and the emergence of unverified information in record volumes, have prompted a rethink of the format of large technology corporations. it is projected that by 2022, the most promising retailers will begin to implement virtual and voice search services. this, in turn, will require such a company to better understand the desires and demand of consumers, their interests and intentions. according to analysts from the consulting company cartner, "as a result of innovations, the revenue of e-commerce sites can grow by 30%, while also increasing the rate of attracting new customers, their level of satisfaction and controllable market share" (glaxosmithkline plc., 2019). we should consider the trends of rethinking the format of the activities of large technology corporations, well-known technology giants such as american corporations facebook, apple, amazon and coogle and chinese companies alibaba, baidu and tencent are indeed planning to change the form of their activities on their own initiative. this is because the scale of influence of these companies is expected to grow so much that it will become increasingly difficult to develop new profit scenarios. to get ahead of potential competitors, companies will have to "explode" their own markets and change the rules of the game, weighing all the risks involved. trends in digital it are growing and progressing, acquiring the characteristic of social technologies capable of influencing the structure of the community and forming dependencies to create new formats of communication and business models. the main it trends that will influence the development and changes in business, society and technology in the next 20 years are identified and summarized in figure 2 (global reptrak 100). with the introduction of modern it technologies in mass production there are both positive and negative consequences in various spheres of social life. positive consequences (technological sphere): increasing the efficiency of enterprises, the possibility of saving on scheduled repairs of equipment and general operating costs, minimizing the occurrence of accidents in production. and also increase of predictability of industrial systems, increase of energy efficiency and competitiveness of economy, variability of production, decrease of anthropogenic impact on environment (reputation institut). negative consequences (socio-humanitarian sphere): displacement by machines of low-skilled labor (physical and mental) and emergence of new types of competences requiring high skills; moral and ethical problems in the interaction between man and machine; opposition of human and machine abilities to perceive and process information; information noise (excessive and unreliable information); complexity of information verification. 2.2. forecast of bsr development trends towards digitalization consider the main influences and trends in the implementation of new trends in terms of social responsibility, corporate responsibility of business, and the approach to the business environment from the perspective of social and sustainable development of the digital space. begin the study with an analysis of it technologies that have had the greatest impact on industry shifts in the 2019–2020 economy. modern it technologies expand and at the same time limit the range of people to whom information is available. the constant development of digital content increases the importance of information skills such as analytical modeling and the ability to use digital tools. the rapid proliferation of mobile devices, integrated networked data collection sensors in equipment and infrastructure, 3d printing technologies and three seas economic journal 120 vol. 3 no. 1, 2022 artificial intelligence translation systems will also have a significant impact on the global information economy. here will be substantiated trends in the global implications of information technology related to social, economic, societal and communicative changes. the first trend is the emergence of a new historical type of property: intellectual property. this property can be both individual and public, that is, common to citizens. at the same time, collective intellectual property is the new economic basis of post-industrial civil society, a necessary condition for individual freedom and autonomy. the second trend is a change in motivation to work (in cyberspace everyone can be simultaneously a producer, publisher and distributor of information). the content of work, the possibility of self-fulfillment, the prospects for professional and social growth become the determining motives of labor behavior. the employee turns into a co-owner or partner, he or she participates in the financial and economic activities of the company and is willing to give part of the income received to expand the business. in addition, there are new jobs and professions that did not exist before (domain name registrars, cyber consultants, system administrators, digital marketers, smm and seo managers). the third trend is a radical change in the social differentiation of the information society, divided into classes and poorly differentiated in information communities. this differentiation will erase the information gap in access to knowledge and information. knowledge is no longer the privilege of the rich, the noble, and the successful few. the boundaries between traditional classes are gradually "blurring" (this is especially noticeable in the blogosphere). the development of education, science and information creates an objective basis for bringing people together in a post-industrial society. as a consequence, another interesting trend emerges: the development of social protection, education, health care, and it services. this gives people's relationships a new civic meaning, which arises from the awareness of belonging to a common culture, participation in social development. 2018–2019 2020–2021 2022–2023 2025–2027 2028–2029 2030–2032 accelerated transition to the cloud; by the end of 2021, 80% of enterprises will be moving to the cloud twice as fast as before infrastructure and applications (compared to pre-pandemic environments). intelligent digital workspace, by 2023, 75% of businesses will focus on a shared intelligent workspace that allows them to work efficiently on collaborative projects. opportunities to expand it capabilities. by 2023, 25% of companies will express a desire to buy an it development startup. and organizations that develop their own solutions based on these it services will move to subscription models. new technological trends will also emerge: fault tolerance. hyper-automation, cellular network technology in cybersecurity. universal access operating model distributed cloud services. services that ensure privacy major trends that will significantly change business and society. composite business architecture. algorithmic trust models. silicon-free technologies. dynamic artificial intelligence. digitization of the personality. peripheral computing becomes a priority, 80% of investments will be directed to peripheral computing, business models will take into account the changes in office work and work from home associated with the pandemic. transition to autonomous it operations. by 2023, all it and automation initiatives will use the cloud ecosystem as a foundation sustainability, it has become responsible for implementing a sustainable way of doing business. by 2025, 90% of companies will require material reuse and cost reduction. figure 2. identification of major it trends that will influence the development and changes in business, society, and technology over the next 20 years source: summarized by the authors three seas economic journal 121 vol. 3 no. 1, 2022 the fourth trend is related to the virtualization of social and political relations. traditional contacts between citizens, or between citizens and government, or between business and government are supplemented by virtual contacts. there are non-traditional forms of political communication, participation in political life, making managerial decisions, as well as control over their implementation: electronic democracy, voting, petitions, appeals, and so on. the fifth trend is the creation of new mechanisms of public administration, there, electronic administration and management. this facilitates international contacts between countries and becomes a new instrument of so-called global governance. examples and trends in the virtualization of the economy are shown in figure 3. the sixth trend is that the development of social networks creates direct (horizontal) connections between citizens. for example, facebook or telegram can replace political parties, discussion boards, business conferences, and mass meetings. most modern politicians and statesmen have accounts on social networks and actively communicate there with their supporters, voters and citizens. the seventh trend is cybersecurity and loss of privacy. according to analysts at the consulting company cartner, it can be determined that in 2022 almost 50% of companies and firms will spend more money each year on developing chatbots than they do on developing mobile apps. the post-application era is beginning, characterized by the use of virtual assistants with built-in artificial intelligence (ai) and the penetration of chatbots into all areas of communication. thus, the evolutionary processes of formation of the information society naturally influence the formation of new requirements and standards of doing business, as well as new conditions for the formation of id, taking into account the requirements of csr (сone a porter novelli company). conclusions based on the results of this study, the following conclusions can be made. • e xa m pl es a nd t re nd s in e co no m ic v ir tu al iz at io n • unsupported by real goods the amount of money in most currencies of the world (for example, the amount of u.s. dollars in global circulation alone is three times the gdp of all countries of the world in a single year); • shifting the flow of invested funds in developed countries from manufacturing to services; • the spread of "futures" or "forward" type transactions in exchange trading, which are often based only on speculative profits and do not take into account the realities of today; • "brandization" of production, that is, the distribution of the global market for a certain product among several well-known manufacturers, who in fact are only brand owners, while the actual production of branded goods is carried out in no-name factories in china or other developing countries; • transition from real financing to financial and portfolio investment (formation of derivative assets, royalty assets and other hybrid financial assets); • increased costs for collecting, processing and using data that is not considered an asset of the company according to existing financial reporting (e.g., customer base, employee knowledge, etc.); • the increasing role in the economy of intangible goods and services, the cost of which, compared to the cost of production, is often too high (e.g., software, transport tariffs, etc.). figure 3. virtualization of the economy: examples and trends source: developed by the authors based on (saprykina, sayensus, zinchenko, 2011; fleishmanhillard) three seas economic journal 122 vol. 3 no. 1, 2022 the definition of the concept of corporate social responsibility of small and medium-sized businesses in the context of digitalization of the economy proves that, despite the rather large number of studies devoted to the problems of the relationship between business and society, the scientific community still lacks a single unified approach to the definition of the interpretation of corporate social responsibility. therefore, the analysis of the definition of csr was conducted depending on the impact on changes in the external or internal environment. the transformation of standards of social ethics and social responsibility of business took place in accordance with the development of entrepreneurship, business models and the challenges of society and the economy, which have changed and acquired new characteristics. at the present stage, the formation and implementation of individual elements of social responsibility or philosophy is not only a requirement and need of society, but is defined as a key factor in the competitiveness of the company. it is analyzed that modern trends in the process of informatization and digitalization indicate the rapid development of cloud services and technologies, mobile applications, voice interfaces, internet of things and chatbots, the introduction of artificial intelligence in various areas of human life, the active use of augmented reality technologies, the rapid development of big data technologies, and the use of 3d printer technologies in various spheres of social activity, the creation of a new format of "human information ecology " and information security – all of this in sum radically changes the business space and involves a revision of both business models and business rules. such findings are also supported by research on digitalization spending in 2021–2022 globally, increased by 60% over that 2020 figure. references: chuprina, m. o., & orozonova, a. a. (2020). global trends in the development of the it industry and technology. available at: http://confmanagement.kpi.ua/proc/article/view/201193/201226 saprykina, m. a., sayensus, m. a., & zinchenko, a. g. (2011). korporatyvna socialna vidpovidalnist: modeli ta upravlinska praktyka [corporate social responsibility: models and management practice]. kyiv: fabovanyj lyst. kolot, a. m., & grishnova, o. a. (2012). socialna vidpovidalnist: teoriya i praktyka rozvytku [social responsibility: theory and practice of developmen]. kyiv: kneu. starodubska, m. (2016). efektyvnist socialnyx proektiv potribno vymiryaty. novyj marketyng, vol. 8, pp. 36–42. global reptrak 100 (2019). the top most loved brands. available at: https://www.rankingthebrands.com/ the-brand-rankings.aspx?rankingid=248&year=1206 (accessed 27 january 2022). reputation institut (2019). global reptrak 100. available at: https://www.reputationinstitute.com/about-ri/ press-release/reputation-institute-says-its-reputation-judgement-day-2019-global-reptrakr (accessed 27 january 2022). fleishmanhillard (2019). fleishman hillard celebrates two silver pr lions with aflac. available at: https://fleishmanhillard.com/2019/06/news-and-opinions/fleishmanhillard-celebrates-t wo-silver-prlions-2019/ (accessed 27 january 2022). сone a porter novelli company (2019). the top ten trends in csr reporting in 2019. available at: https://www.conecomm.com/insights-blog/2019/10/10/the-top-ten-trends-in-csr-reporting-in-2019 (accessed 02 january 2022). martyniuk, o., & poplavska, t. (2021). neuromarketing in the context of sustainable development philosophy. three seas economic journal, vol. 2, no. 3, pр. 61–67. doi: https://doi.org/10.30525/2661-5150/2021-3-9 martyniuk, о. а. (2020). the impact of digital technologies on the development of business social responsibility. economics: time realities. scientific journal, vol. 4(50), pp. 78–86. available at: https://economics.opu.ua/files/ archive/2020/nо4/78.pdf glaxosmithkline plc. (2019). responsibility reports and data. annual report 2019. available at: https://www.gsk.com/en-gb/responsibility/responsibility-reports-data/ (accessed 12 january 2022). hype cycle for emerging technologies. available at: https://iidf.ru/media/articles/trends/gartner-nazvaltekhnologii-budushchego-versiya-2019-goda/ (accessed 19 january 2022). baltic journal of economic studies 34 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-6 the study of consumer behavior in the market of bakery products in the conditions of brand management hanna maiboroda1 abstract. bread and bakery products are the traditional main component of the ukrainian market basket. however, in recent years, there has been an annual reduction in the consumption of bakery products. according to the state statistics of ukraine, the average annual consumption of bread products in 2015 was at the level of 103 kg per person, while in 2020 this figure was 98 kg per person. according to experts, one of the main reasons for the decline in this indicator is the decrease in consumer demand. thus, the study of consumer behavior in the market of bakery products is a very relevant and indispensable issue. the object is the consumer behavior in the market of bakery products. the subject of research is a set of factors that determine consumer behavior in the market of bakery products. methodology. to study consumer behavior, there was conducted a consumer survey at the oblast level using an external questionnaire with 15 questions to gather the necessary information. since bread and bakery products are goods of daily and primary demand, the article determines that the general population is the entire population in the region. their confidence probability is 95%, the confidence interval (error) is 5%, and the sample size was 500 respondents. the questionnaire was compiled using google forms software, and survey data were processed using excel computer software. as a result of research, commodities were reduced, what actual to the consumer in this time, awareness about present brands, factors that induce the consumers of bakery products to render a preference to the separate brand. nowadays, there is a need to supply the population with quality bakery products of a wide range, as well as those that take into account the consumer’s wishes. manufacturers of bread and bakery products have every opportunity to meet these requirements, and the creation of a strong brand will help ensure the competitiveness of products. research results may draw on the construction of the future general strategy of the enterprise. they will help in the construction of a strong brand of products for the achievement of competitive edges, an increase of market share, and the general profitability of enterprises. key words: bakery products, consumer behavior, marketing, brand, brand management, enterprise strategy. jel classification: d12, l66, m31 corresponding author: 1 dmytro motornyi tavria state agrotechnological university, ukraine. e-mail: annabritsyna@gmail.com orcid: https://orcid.org/0000-0002-8190-0259 1. introduction development of the world economy and globalization of the consumer market leads to increased competition between producers of similar products. every entrepreneur seeks to expand their production, increase profitability by entering new markets and attracting more and more consumers. there is a competition not only for markets but also for each customer individually. therefore, there is a need to study consumer behavior in the market. knowing and considering the peculiarities of human perception of the product, we can form a positive image (brand), thus giving companies significant competitive advantages. to date, the issue of consumer behavior in the market of bread and bakery products is not fully studied in the scientific literature. hence, there is a need for further study. the purpose of the article is to substantiate the behavior model of a consumer who buys products from the bakery industry, to study his/her motivation, preferences, factors influencing the purchase of products. these results can be used in the overall strategy of enterprises. 2. theoretical foundation many foreign and domestic theorists and practitioners in the field of marketing have been involved in determining consumer behavior in different food markets. in particular, it is necessary to mention the works of o. yashkina, l. zakrevska, t. kulish, s. bolila, baltic journal of economic studies 35 vol. 2, no. 2, 2021 n. buga, t. fedorova, a. marchuk, d. legeza, y. sokil, n. popadynets, a. konovalenko. according to o.i. yashkina (yashkina, 2018), consumer behavior is a set of aspects (economic, social, psychological) that arise in the process of purchasing products, its use, or transfer of experience to other consumers. l.m. zakrevska (zakrevska, 2018) notes that the main task of studying consumer behavior is to identify the influence of psychological factors on the decisions of people, a particular group, or society in general in different economic situations. modeling consumer behavior for manufacturers allows you to identify the products relevant to the consumer in a given time, the amount of effective demand in the market, awareness of existing brands, factors that have the most impact on the decision to purchase, etc. 2. research methodology in recent years, the number of small bakeries is rapidly growing, competition in the market is increasing, so manufacturers are focusing their efforts on creating a strong brand. nowadays, brand loyalty, trust, and commitment to a particular brand are some of the main indicators of business efficiency (kulish, 2019). the authors conducted a consumer survey at the oblast level for this purpose, using an external questionnaire with 15 questions to gather the necessary information. since bread and bakery products are goods of daily and primary demand, the article determines that the general population is the entire population in the region. their confidence probability is 95%, the confidence interval (error) is 5%, and the sample size was 500 respondents. the questionnaire was compiled using google forms software, and survey data were processed using excel computer software. 3. finding 3.1. general information about bakery product consumers the largest number of respondents were women – 365 people (73%), men – 27% (135 people), i.e., it is women who most often shop and are responsible for food in the family. the age category was the following: 17-25 years – 24%, 26-45 years – 46%, 46-59 years – 25%, 60 + – 6%. regarding social status, 77% of the respondents are the working population (civil servants, entrepreneurs, agricultural workers, social workers, employees), 14% – students, and only – 9% – the unemployed (housewives, women on maternity leave, pensioners, or the unemployed). 89% of respondents live in the city, 11% live in the village and urban-type settlement. one of the priority questions in the survey was to determine the place of bread and bakery products in the diet of the population in the region. we know that the demand for bakery products on the market depends on how many bakery products on average a person consumes. the majority of respondents – 55%, consume bakery products every day (69% of them are women), 43% – every other day (78% of them are women). according to the frequency of purchasing products, respondents were distributed as follows: 35% buy bread and bakery products 1-2 times a week (27% of them were women, 8% – men), 33% – every other day (77% of them women), 20 % – every day (64% of them women), 7% – buy very rarely. this depends, firstly, on the number of family members, the refusal of a certain category of consumers from flour products due to health and diet indicators. the number of people who start baking bread on their own (5% of the total number of respondents) also increases (figure 1). figure 1. frequency of acquisition of bakery products, % source: author’s research   33% 20% 7% 5% 27% 8% 35% every other day everyday buy very rarely bake myself 1-2 times for a week (women) 1-2 times for a week (men) baltic journal of economic studies 36 vol. 2, no. 2, 2021 of the entire range, consumers prefer bread made from wheat flour – 60%. rye bread takes second place (32%), other (alternative) types of bread, increasingly popular among the population, take third place (30%). they are pita bread, tortilla, ciabatta. rye-wheat bread ranks fourth in the frequency of purchase among consumers – 23%; 21% buy bran, whole grain bread. 12% of the respondents prefer unleavened bread, 10% of the population buy bread with dried fruits and nuts. there is a certain number of people who do not have special advantages (0.4%) as well, 0.8% do not buy bread (they bake it themselves). 3.2. consumption of different types of bread in terms of various factors the article studies various factors influencing the consumption of different types of bread, such as gender, type of settlement, well-being, and age (table 1). of the total number of respondents, women prefer bread made from wheat flour (27.2%), other types of bread (such as pita, tortilla, ciabatta) – 16.8%, rye bread – 16.6%, bran – 12, 5%, and rye-wheat – 12%. men, on the other hand, prefer three types of bread. almost half of them – 45.7% – wheat bread, 18.3% – rye bread, 12.9% – rye-wheat. other types of bread are not so popular with men. unlike women, men are more committed to their habits and sometimes do not even think of trying new flavors of bread. as to the settlement types, the author has found that consumers who live in both urban and rural areas prefer wheat (white) bread (30.9% and 35.4%, respectively). among the rural population, in contrast to the urban population, traditional types of bread, such as rye, rye-wheat, and bran bread, are more popular. the urban population buys more alternative types of bread (pita bread, ciabatta) (respectively in the city – 15.7%, in the village – 11.0%). from the well-being point of view, we see the following tendency: with the increase of consumers’ incomes, the level of wheat bread consumption decreases, people prefer healthier “ bread” types, such as rye, bran, whole grain, unleavened. in terms of age, there is a tendency to reduce the consumption of wheat bread, and the transition to more useful types. thus, the amount of rye bread consumption among consumers aged 17-25 is at the level of 14.8%, in the category “over 60” it is 17.5%. the consumption of rye-wheat bread has almost doubled (from 10.4% to 20%). there is redistribution of consumer preferences in the direction of increasing demand for such types of bread as bran, whole grain, bread with dried fruits. moreover, alternative types of bread (pita, ciabatta, tortilla) are most in demand in the age category “26-45 years”. 3.3. brand in consumer behavior consumers most often prefer to buy bread and bakery products in branded stores (40%), in contrast to the number of consumers who most often buy bread and bakery products in stores near the house (19% of respondents). that is, the brand or branded products of the enterprise are in great demand. consumers begin to trust the chosen brand, distinguishing it from others, and buy the appropriate brand more often (legeza, brunner, kerimova, kulish, konovalenko, 2019). 26% of respondents answered the question “how important is it for you to buy a certain brand of bread table 1 distribution of bread consumption in terms of personal consumers characteristics bread products gender type of settlement level of well-being age, years old women men urban area rural area low average high 17-25 age 26-45 age 46-59 age over 60 wheat bread 27.2 45.7 30.9 35.4 40.2 39.1 37.4 44.5 28.9 24.8 17.5 rye bread 16.6 18.3 16.7 19.5 15.1 16.2 15.4 14.8 16.8 19.1 17.5 rye-wheat bread 12.0 12.9 12.0 13.4 13 13.5 14.3 10.4 11.6 13.5 20.0 bran (whole grain) bread 12.5 4.8 10.5 12.2 11.4 12.1 12.6 9.3 10.7 9.9 17.5 other types (pita, tortilla, ciabatta) 16.8 10.2 15.7 11.0 9.3 8.4 9.9 13.7 17.3 11.3 10 unleavened bread 7.0 3.2 6.7 1.2 8 9.3 9.7 1.6 7 9.2 5.0 bread from other types of flour (corn, rice) 1.1 1.1 1.1 1.2 0.1 0.1 0.1 1.5 1.4 bread with dried fruit, nuts, seed 6.2 3.2 5.5 6.1 2.3 1.3 0.6 5.5 5.3 5.7 7.5 there are not the special advantages 0.3 0.5 0.4 0.1 0.9 1.4 2.5 does not buy bread (bake) 0.3 0.4 0.5 3.5 source: author’s research baltic journal of economic studies 37 vol. 2, no. 2, 2021 and bakery products” as very important, i always choose products of a certain brand; 37% of respondents – important, but sometimes other factors influence the purchase at the moment; 24% of respondents – equally important and unimportant; 13% of respondents say that they do not mind buying products from different manufacturers and different brands. according to the respondents, high-quality bakery products need advertising. when buying products, 33% of respondents mainly rely on the advice of relatives and friends, 20% – on local television, 18% – outdoor advertising, 15% – print media, 12% – exhibitions and fairs. in the study of consumer preferences, we give the respondents 10 main criteria that influence the decision to purchase bakery products. they are taste, quality, price, product appearance, product weight, packaging (design), date of manufacture and expiration date, the manufacturer (separate brand), composition and useful substances, and form of the product. the task was to prioritize these criteria from 1 to 10, where 1 is not important, 10 – pay maximum attention when making a purchase decision (figure 2). during the survey, the author determined the most important factors for consumers of bread and bakery products. the indicators are: “product quality” (94%), “taste characteristics” (83%), “manufacturer (individual brand)” (79%), “date of manufacture and expiration date” (74%), “packaging (design)” (70%). category “price” – takes 6th place (61%), and then, in descending order: “appearance of the product” (40%), “composition and nutrients” (32%), “product weight” (21%)) and, finally, consumers pay attention to the shape of the product (13%). that is, when making a purchase decision, consumers of bakery products pay more attention to non-price factors (taste, quality, brand, packaging) than the price factor. 3.4. the model of consumer behavior of the bakery products table 2 the model of consumer behavior of the bakery products № criteria respondents, % 1 2 3 1. gender: men; women. 27 73 2. age, years old: 17-25 age; 26-45 age; 46-59 age; over 60. 24 46 25 6 1 2 3 3. social status: employee; state employee; employer; student; unemployed; retired; others. 57 12 8 14 3 2 4 4. number of family members: 1 person; 2 people; 3 people; 4 people; 5 and more. 4 19 34 27 16 5. residence: city; village; urban-type settlement. 89 3 8 6. level of well-being: low; average; high. 25 64 11 7. frequency of acquisition  of bakery products: everyday; every other day; 1-2 times for a week; buy very rarely; bake myself. 20 33 35 7 5 8. consumer factors that influence the purchase (%): product quality; taste characteristics; manufacturer (individual brand); date of manufacture and expiration date; packaging; price; appearance of the product; composition and nutrients; product weight; shape of the product. 94 83 79 74 70 61 40 32 21 13 source: author’s research the behavior model of a consumer of the bakery industry is an employed woman 26 to 45 years old, who has a family of 3-4 members and lives in the city with an average well-being level. she buys bread or bakery products mainly 1-3 times a week. as for the preferences, she buys wheat bread and bakery products most often. she has requirements for the product in terms of quality, taste, date of manufacture and expiration date, availability, and functionality of packaging. (continuation of table 2) baltic journal of economic studies 38 vol. 2, no. 2, 2021 4. conclusions bread and bakery products are foods of permanent demand that are included in a market basket by practically everyone. but recently, there has been a reduction in the amount of consumption of bakery products. at the same time, the number of producers of these products is growing, there is a large number of small businesses (mini-bakeries), which are beginning to compete with large bakeries. to hold out in the market, manufacturers needed to pay great attention to the study of consumer behavior, using the results obtained in the formation of a strong brand, and in the future – for the overall strategy of the enterprise. with the help of the conducted research, the results of which are covered in this article, a model of consumer behavior of bakery products was compiled and the following results were obtained. 1. the largest number of respondents were women – 365 people (73%), men – 27% (135 people), i.e., it is women who most often shop and are responsible for food in the family. 2. the majority of respondents consume bakery products every day or every other day. however, according to the frequency of purchasing products, a larger number of respondents answered that they buy bread and bakery products 1-2 times a week or every other day. 3. of the entire range, consumers give the greatest preference to bread made from wheat flour, rye bread, and such types of bakery products as pita, tortilla, ciabatta. at the same time, the urban population gives more preference to wheat bread and alternative types of bakery products, and the rural population – rye, ryewheat, bran bread. 4. consumers most often prefer to buy bread and bakery products in branded stores. a larger number of respondents noted that a certain manufacturer or brand is important for them when buying. that is, the brand or branded products of the enterprise are in great demand. consumers begin to trust the chosen brand, distinguishing it from others, and buy the appropriate brand more often. 5. w hen making a purchase decision, consumers of bakery products pay more attention to non-price factors (taste, quality, brand, packaging) than the price factor. therefore, in modern market conditions, there is a need to supply the population with quality bakery products of a wide range, as well as those that take into account the consumer wishes. manufacturers of bread and bakery products have every opportunity to meet these requirements, and the creation of a strong brand will help ensure the competitiveness of products. references: bolila, s. y., & fedorova, t. v. 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(2015). marketynhove doslidzhennia povedinky spozhyvachiv na rynku sokiv [marketing research of consumer behavior in the juice market]. proceedings of the iii international scientific-practical conference: marketing education in ukraine (april 12–13, 2015), pp. 341–349. available at: https://ir.kneu.edu.ua/bitstream/handle/2010/19314/341-349.pdf ?sequence=1 (accessed july 1, 2021). yashkina, o. i. (2018). marketynhovi doslidzhennya spozhyvachiv dlya vdoskonalennya smakovykh yakostey vyna [consumer marketing research to improve the taste of wine]. marketing and digital technologies, vol. 2, no. 4, pp. 80–93. zakrevska, l. m. (2018). povedinkova ekonomika yak instrument zabezpechennia stalykh konkurentnykh perevah [behavioral economics as a tool to ensure sustainable competitive advantage]. scientific works of the national university of food technologies, vol. 24, no. 3, pp. 55–61. doi: three seas economic journal 85 vol. 2 no. 1, 2021 corresponding author: 1 cherkasy state technological university, ukraine. e-mail: jul.subotina@gmail.com orcid: https://orcid.org/0000-0003-3717-3231 2 cherkasy state technological university, ukraine. e-mail: sergienko07@ukr.net orcid: https://orcid.org/0000-0001-5061-4287 doi: https://doi.org/10.30525/2661-5150/2021-1-14 approaches to agricultural enterprises positioning julia subotina1, alexander sergienko2 abstract. with the development of market economic relations and the intensification of competition in ukraine, the problem of adequate positioning of enterprises among competitors, as well as in the consumers` minds becomes relevant. the author summarizes scientific approaches of foreign and domestic scientists to the interpretation of the concept of "positioning", which are reflected in the following: f. kotler (positioning as a way of identifying goods), j. trout, e. reiss (as a certain position of the enterprise among competing goods), belyaeva n.s. (as an element of the enterprise strategic management system). three basic components to understanding the essence of positioning are generalized and allocated: positioning as a concept that defines the ideological aspect in its definition (ideas and views), which are the basis of the enterprise product proposal; positioning as a strategy that involves the development of a competitive position of the enterprise product and the relevant marketing complex; positioning as a set of actions that characterizes a set of measures, specific ways to convey the position to the target segment in the implementation of marketing programs; so it is a set of tools to help forming a brand image that should strongly differ from competitors. due to the fact that the agricultural component is important to the ukrainian economy development, it is necessary to ensure the effective positioning of agricultural enterprises in foreign markets, which is the source of their sustainable competitive advantage. the opinions of ukrainian scientists on the agricultural enterprises products positioning were summarized: kozak l.v., who proposes strategies for the agricultural enterprises development; kosharna p.s., who offers strategic tools for the agricultural enterprises; artyukhova k.v. and bondarenko v.v., who substantiate the necessary market position of agricultural enterprises. approaches and factors for positioning of agricultural products that should be taken into account in the foreign economic activity of enterprises such as planning, staff, practice, partners that can strengthen opportunities, positioning, protection are analyzed. peculiarities of agricultural enterprises products positioning were determined: production seasonality, high level of natural and climatic conditions dependence, role and value of products, variety of management organizational forms, time discrepancy in finished products growing and manufacturing, level of state participation in agro-industrial complex development. the author has formed a structural and logistical scheme of agricultural enterprises product positioning, which has the following main elements: purpose, means, conditions of activity, support (including the development of enterprise products positioning strategy) and marketing tools. the main marketing tools that must be used in positioning the products of agricultural enterprises include: the type of product, its quality, functional properties, type of packaging, guarantees; price formation conditions; logistics sales channels used in the delivery of products to the customer; products promotion; qualification of the personnel carrying out marketing support of agricultural enterprises production. key words: positioning, positioning of agricultural products, marketing strategy, positioning factors, positions of enterprises. jel classification: q13, q16, p13 1. introduction one of the most effective areas in the activities of any company is the positioning of its product on the market. positioning is an activity to ensure the product's competitive position in the market and the development of a detailed marketing mix. many companies, starting their business and using marketing for the first time, successfully apply this direction. it is no secret that the correct and competent positioning of the product in relation to competing products allows three seas economic journal 86 vol. 2 no. 1, 2021 it to provide current positions that bring significant profits. an important step in choosing the direction of market orientation of the organization is to determine the position of the product in individual market segments. product positioning primarily refers to the definition of a certain group of consumers, target market segments, relative to the most important properties of the product. it characterizes the place that a particular product occupies in the minds of consumers in relation to the product of competitors. the product must be perceived by a certain group of target consumers as a clear image, which distinguishes it from the products of competitors. of course, you must also take into account the fact that the position of the product is influenced by the reputation and image of the company as a whole. the positioning of the product, therefore, is that, based on consumer assessments in the market of a particular product, to choose such product parameters and elements of the marketing mix, which in terms of target consumers will provide the product with competitive advantages. the issue of positioning of ukrainian agricultural enterprises engaged in the sale of agricultural products is becoming increasingly important. it is important not only to expand the influence in the domestic market, but also to penetrate and conquer foreign markets. effective positioning of the company shapes its image and success in the markets. positioning, as a component of marketing, determines the need for detailed theoretical and practical research, given the lack of sufficient thorough work on this issue by domestic scientists and, accordingly, the lack of foundation for the practical implementation of this element of marketing policy. 2. review of literature sources in accordance with the research issues a large number of researchers are currently dealing with the positioning of enterprises in the markets, as the marketing program is an integral part of the company 's sales policy. at the same time, many works of scientists are devoted to the positioning of agricultural products. in particular, one of the leading scientists engaged in marketing positioning of the enterprise is kozak l.v. (kozak, 2014), who in his works considers theoretical and methodological approaches to the formation of strategic vision and goals of positioning products of agricultural enterprises, the formation of strategies for agricultural enterprises positioning products and world markets. the research of kosharna p.s. (kosharna, 2015) on the formation of strategic tools for positioning the products of agricultural enterprises, artyukhova k . v. and bondarenko v.v. (artyukhova, bondarenko 2015) – on the formation of the market position of agricultural enterprises, petryk o. o. (petryk, 2016) – on the formation of an enterprise competitive positioning strategy in foreign markets, belyaeva n. s. (belyaeva, 2016) – on strategic positioning as an element of strategic management of the enterprise, f. kotler (kotler, 2002) – positioning is a set of measures by which in the minds of target customers the product in relation to competing products occupies its own, different from others and profitable for the company, the way in which consumers identify a product by its most important characteristics, j. trout and e. rice (trout, rice, 2004) – the creation of a product certain position among competing products, a kind of niche that would be reflected in the hierarchy o f values created in the minds of potential buyers. in these works, a study of the positioning basics of ukrainian enterprises in foreign markets is initiated mainly from a theoretical point of view, identified features of agricultural enterprises positioning in general and individual sectors of agriculture in particular. to date, the issue of positioning the products of ukrainian agricultural enterprises in international markets can be considered fully open. 3. theoretical basis for the formation of enterprise positioning the generalization of the main approaches to understanding the category of "positioning" made it possible to identify the following features. first, positioning is more a long-term strategy than a shortterm tactic. properly selected positions are stable, protected and adapted to the conditions and future development. they are able to evolve and change at the stages of the life cycle of a product, brand, firm. second, positioning occurs in the minds of consumers, and therefore, it is what the consumer thinks about the company, product or service. third, positioning is based on the benefits that the consumer receives from the purchase of goods or a partner from cooperation with the company. fourth, because positioning is based on benefit, and because different customers often look for different benefits from buying, using, in fact, similar products and services, the position of an individual product in the perception of one buyer may differ from the position of this the product itself from another buyer. finally, positioning is a relative concept. products and brands occupy positions relative to competing products and brands. the founders of the theory of positioning defined it as "the creation of a certain position for the product among competing products, a kind of niche that would be reflected in the hierarchy of values created in the minds of potential buyers, the development of such an image of the product. competing products (trout, rice, 2004). the basic principle of positioning, in their opinion, is not to create something new and different from others, but to manipulate thoughts that already lives in the minds of consumers, to use existing connections. three seas economic journal 87 vol. 2 no. 1, 2021 positioning was a fashionable expression in advertising and marketing circles in the 1970s, and the word "positioning" characterized the development of advertising. that is, in essence, positioning was originally used as a tool to improve the effectiveness of advertising or the process of identifying the competitive advantages of the company 's products and their subsequent use in promotions and other aspects of promotion. after 15 years of the predominance of the positioning theory of ella rice and jack trout, a lot of work has appeared on the concept of "positioning". however, despite numerous publications (in the united states alone over the last 30 years, more than a hundred major papers have been published on positioning), there is still no consensus among marketing practitioners and theorists on what positioning is. this is confirmed by the description of the current state of understanding the term, given by p. bainsfeir: "positioning – a word that is used by all but few understand" (bainsfeir, 1990). considering the concepts of "positioning" presented in the modern theory of interpretation, the author identified three of its basic components: positioning as a set of actions; positioning as a concept; positioning as a strategy. the content of these components is summarized in table 1. positioning as a concept is considered in the works of e. rice and d. trout – the founders of the concept, who said that it is important to build positioning on a strong concept, it will distinguish the company from a number of competitors. this approach includes the ideas of david krevens, who defines positioning as the formulation of the essence of the company 's offer, which indicates the ability of the organization to meet the needs and preferences of consumers (krevens, 2003). the concept of positioning should be based on the reasons why customers prefer to do business with it, rather than its competitors, and broadcast these reasons to the target audience. the essence of positioning according to this approach is to formulate the essence of the company 's proposal (concept) taking into account the needs of the target segment, the expectations of other groups and the understanding of the benefits for the company itself. positioning as a strategy. according to this approach, positioning is defined as the process of developing a competitive position for a product and the relevant marketing complex. f. kotler in his works on marketing defines positioning as a process by which a product is distinguished by consumers by its main characteristics, ie the place that this product, according to consumers, occupies compared to similar products offered by competitors (kotler, 2002). consumers are overwhelmed with information about goods and services, they cannot evaluate every offer every time they make a purchase decision. to simplify the procedure for making a purchase decision, consumers divide goods and services into different categories, ie they mentally "position" the products offered to them. david aaker defines positioning as the process of creating image and value in consumers mind from the target audience so that they understand why there is a company or brand compared to competitors (aaker, 1995). hooley graham follows a similar approach, believing that positioning is a thoughtful, proactive and repetitive process of determining, measuring, modifying and monitoring consumer perception of the object that is exposed to marketing influence (graham, 2005). thus, based on these formulations, as well as on the general economic and managerial interpretation of the term "strategy " (plan to achieve long-term goals), we can conclude that positioning is characterized as a long-term process (strategy) aimed at achieving and maintaining the desired competitive position. market. t. ambler describes positioning as a set of actions. this approach characterizes positioning as a set of measures, specific ways to convey the position to the target segment during the implementation of marketing programs, as follows: it is a set of tools to help form a brand image, and this image should be as different as possible from competitors' brands. use both real and imaginary characteristics of the product or service (ambler, 2006). s. garkavenko defines positioning as marketing efforts of the corporation to develop and implement in the minds of target consumers a special image of the company, product, service, which differs from what competitors offer (garkavenko, 2002). thus, the essence of this approach is that positioning is seen as a set of elements of communication policy that are perceived by the consumer. if each proposal table 1 components of the "positioning" components content conceptual (positioning as a concept) reflects the ideological aspect in the definition of positioning as a system of ideas, views ( formulation of the proposal essence) strategic (positioning as a strategy) considers positioning as a strategy (methodology for competitive position developing) functional (positioning as a set of actions) defines positioning as a set of actions or a set of measures (a set of marketing tools and actions) source: compiled by (trout, rice, 2004; bainsfeir, 1990; krevens, 2003; kotler, 2002; aaker, 1995; graham, 2005; ambler, 2006) three seas economic journal 88 vol. 2 no. 1, 2021 occupies a certain position in the minds of the client, then positioning is a policy of influencing the perception of this proposal. 4. marketing tools for product positioning of agricultural enterprises in modern conditions of economic instability, the problem of using positioning in the management of agricultural enterprises becomes especially important. modern entrepreneurial activity is characterized by a high degree of competition in the market, which requires agricultural enterprises to pay more attention to ensuring their competitiveness. in addition, the ukrainian agro-industrial complex, being one of the main sectors of the national economy, due to the specifics of its economic and production activities, depends on many other sectors of the economy. this problem in the agro-industrial complex of ukraine negatively affects the pace of development of this complex. the solution of the above problems depends on how correctly and economically justified agricultural enterprises will develop or select their competitive product positioning strategies. they can increase the efficiency of economic and marketing activities of agricultural enterprises, as well as ensure high competitiveness in the domestic and foreign markets. to achieve this goal, the company must develop a set of marketing tools, which should ensure effective positioning of the company and its products in the target market. it is necessary to provide a systematic approach to the formation of strategies for positioning individual elements of the marketing complex: to agree on their goals and general direction. effective positioning and development of an appropriate marketing complex for the target market is a source of sustainable competitive advantage of the enterprise in this market. to achieve this goal, the company must develop a set of marketing tools, which should ensure effective positioning of the company and its products in the target market. it is necessary to provide a systematic approach to the formation of strategies for positioning individual elements of the marketing complex: to agree on their goals and general direction. effective positioning and development of an appropriate marketing complex for the target market is a source of sustainable competitive advantage of the enterprise in this market. to position agricultural products, companies must emphasize the distinctive features of their product, or try to create an appropriate image through a marketing combination. as soon as the company takes a leading position, it becomes competitive. in the foreign market there are factors "6p", which should be taken into account during the foreign economic activity of the enterprise (kharenko, bobko, 2016): 1) planning – business, market, sales strategies, etc.; 2) staff – identifying the necessary skills for development and delivering the product; 3) practice – business practice within the culture of the target market; 4) partners who can strengthen opportunities; 5) positioning – how the company wants to be perceived by intermediaries and customers; 6) protection – assessment of potential risks in all aspects of the enterprise. therefore, we see that the company 's positioning in terms of this approach is a significant factor in the competitiveness of the enterprise. positioning is one of the most powerful marketing concepts. initially, product-oriented positioning became increasingly popular, including the creation of product image and ranking among competitors' products. first of all, we are talking about "the place that the brand occupies in its target audience subconscious". product positioning is often used as a tool to enter foreign markets. there is no single interpretation of the enterprise "market position" concept or product in the foreign literature on product marketing management. if foreign authors widely use the category of the enterprise market position during the study of effective sales management, then for domestic researchers is more typical to use the conceptual apparatus of product positioning, as a result of market segmentation by commodity price or consumer criteria (kozak, 2015). the organization of agricultural enterprises product positioning is carried out taking into account the peculiarities of agriculture, namely: seasonality of production, high level of dependence on climatic conditions, role and importance of products, diversity of management organizational forms, time discrepancy in growing and manufacturing finished products, level of state participation in the complex development, etc. (lohosha, 2018). in the conditions of constant competition aggravation, there is a need for positioning of the enterprise production. quite a clear and comprehensive definition of positioning offers kozak l.v., as a direction of future product development in the market on the basis of initially formed consumer value, able to most effectively meet the needs of consumers. in addition, in accordance with the modern concept of multiattribution, the product acquires unique properties through a professional symbiosis of its functional and associative qualities that meet the needs of consumers (kozak, 2015). figure 1 shows the structural and logical scheme of agricultural enterprises product positioning. the products of agricultural enterprises should be considered not only in accordance with standard qualities (satisfaction of food needs), but also as services and ideas. it is important to offer ideas that promote care for the environment, care for safe and healthy food for customers. three seas economic journal 89 vol. 2 no. 1, 2021 5. conclusions summing up, we note: positioning – is one of the most important marketing processes, which determines the adequate market position of the product or enterprise as a whole. positioning is characterized by multifaceted actions and requires separate consideration; tactics indicate the relationship with the marketing mix, and in the latter the main role is given to promotion. because positioning is based on consumer value, which in any approach includes a category of quality, the article examines the nature and relationship of these important marketing categories. there is a close link between positioning and internal marketing, which stems from the relationship between the above categories. the main approaches to understanding the category of "product positioning" are considered and the characteristic features and components of the agricultural enterprises product positioning strategy are highlighted. while creating a marketing strategy for positioning the agricultural enterprises products they should coordinate their potential to meet the end users needs in terms of range, quality and price; take into account the maximum use of their own competitive merits and weaknesses of opponents. achieving the goal of increasing sales in today 's market competition without proper product positioning sometimes becomes an impossible task. actually, this is the product positioning on the market. in fact, product positioning in the market is a search for new ways to consolidate the image of your brand or product in the minds of buyers, creating and developing models to promote products to increase sales activity. the mechanism of agricultural enterprises products effective positioning provides for the integrity, unity, orderliness of all steps. the prospect of further research is to determine the methodological tools for selecting and implementing positioning strategies, as well as assessing the positioning effectiveness and providing forecasts on the possible consequences of their implementation. figure 1. structural and logical scheme of product positioning of agricultural enterprises source: built by the author according to the data (dudar, 2017; krevens, 2003) references: kozak, l. v. (2014). theoretical and methodical approaches to the formation of strategic training and the goal of positioning the products of agricultural enterprises. scientific notes of the national university "ostrozka academy", series "economics", vol. 25, pp. 42–49. available at: http://ecj.oa.edu.ua/articles/2014/n25/10.pdf kozak, l. v. (2015). formuvannia strategii pozitsiuvannia produktsii agrarnykh pidpryiemstv na vitchyznyanomu ta svitovykh rynkakh [formation of strategies for positioning the products of agricultural enterprises in the domestic and world markets]. kyiv. (in ukrainian) kosharna, p. s. (2015). formuvannia stratehichnoho instrumentaria pozitsionuvannia pidpryiemstva [formation of strategic tools for enterprise positioning]. available at: http://www.hneu.edu.ua/web/public/moved/hneu/ nauka/vchenna_rada/kosharnap.s.-disertaciya.pdf artyukhova, k. v., & bondarenko, v. v. formation of the market position of agricultural enterprises. available at: http://www.khntusg.com.ua/files/tez3.pdf agricultural enterprise goal: profit maximization means: economic activity conditions: market provision: product positioning strategy marketing tools agricultural products: product range; quality; property; packaging; guarantee. price: basic price; discounts; benefits; loan terms. product distribution: – distribution planning; – sales channels; – logistics; – localization of outlets; – stocks. product promotion: – advertising; – sales promotion; – direct marketing; – public relations. personnel: – quality of work performance; – qualification; – market his skill. three seas economic journal 90 vol. 2 no. 1, 2021 petryk, o. o. (2016). formuvannia strategii konkurentnoho pozitsiyuvannia pidpryiemstva na zarubizhnomu rynku [formation of the strategy of competitive positioning of the enterprise in the foreign market]. kyiv. available at: http://management.fmm.kpi.ua/wp-content/uploads/2016/02/avtoref_petryr_2016.pdf belyaeva, n. s. (2016). strategic positioning as an element of the system of strategic management of the enterprise. scientific bulletin of the international humanities university, vol. 1, pp. 119–123. (in ukrainian) trout, j., & rice, e. (2004). positioning. the battle for recognition. translated from english by s. zhiltsova. spb: peter. (in russian) bainsfair, p. (1990). create your own context and find place in a public mind. campaign, vol. 16, (november), p. 18. krevens, d. v. (2003). strategic marketing. translated from english by a. r . ganieva, a. g. grishko, e. v. kondukova. moscow: williams. (in russian) kotler, f. (2002). marketing. hospitality. tourism. moscow: uniti. (in russian) aaker, david a. (1995) strategic market management, fourth ed. new york, ny: john wiley & sons, inc. hooley, g. (2005). marketing strategy and competitive positioning. translated from english. balance business books. (in russian) ambler, t. (2006). practical marketing. translated from english ; under total. ed. yu.n. kapturevsky. st-petersburg: peter. (in russian) garkavenko, s. s. (2002). marketing: textbook. kyiv: libra. (in ukrainian) kharenko, a. o., & bobko, v. v. (2016). osoblyvosti zbutovoi diialnosti silskohospodarskykh pidpryiemstv: rehionalni aspekty [features of marketing activities of agricultural enterprises: regional aspects]. zbirnyk naukovykh prats umanskoho natsionalnoho universytetu sadivnytstva, vol. 88(2), pp. 319–334. (in ukrainian) kozak, l. v. (2015). formuvannia stratehii pozytsiiuvannia produktsii ahrarnykh pidpryiemstv na vitchyznianomu ta svitovomu rynkakh [formation of strategies for positioning agricultural products on domestic and world markets]: monohrafiia. ostroh: vydavnytstvo natsionalnoho universytetu «ostrozka akademiia». (in ukrainian) lohosha, r . v., & polova, o. l. (2018). osoblyvosti formuvannia marketynhovykh stratehii silskohospodarskykh pidpryiemstv [features of formation of agricultural enterprises’ marketing strategies]. mizhnarodnyi naukovyi zhurnal «internauka», vol. 11(2), pp. 22–26. (in ukrainian) dudar, t. h., & dudar, v. t. (2017). marketynhovi instrumenty zabezpechennia pozytsionuvannia na rynku orhanichnoi produktsii [marketing tools for positioning at organic produce market]. naukovyi visnyk uzhhorodskoho universytetu. seriia: ekonomika, vol. 1(2), pp. 71–76. (in ukrainian) three seas economic journal 49 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-9 institutional changes and dynamics of product competitiveness in ukraine oleh pustovoit1 abstract. the purpose of this article is to theoretically clarify the content of the concept of "competitiveness", to summarize the main results of institutional reforms in ukraine, to test approaches to a more accurate macroeconomic assessment of the dynamics of competitiveness of major domestic commodity groups and technological complexity of foreign trade. methodology. the article proposes to consider the concept of "competitiveness" as the level of compliance of goods (services) with consumer preferences of market participants. this conceptual position is used to interpret the basic competitiveness of large product groups and determine methods for its evaluation. the results of the assessment of the methodology and technique showed that in 2017-2019 the basic competitiveness of ukrainian exports gradually increased, but in its composition the shares of certain types of raw materials and products of their shallow processing increased. at the same time, the competitiveness of consumer and investment products in the domestic market decreased and was gradually replaced by imported analogues. these trends suggest that ukraine is selling more raw materials on international markets and producing fewer goods of higher technological sophistication with innovative or higher quality characteristics. despite this, ukraine's specialization in the global economy remains economically justified and effective. however, in the long run, this position of ukraine is socially undesirable, as it holds back the development of the economy and throws it to the margins of technological progress. practical implications. it is substantiated that, despite institutional changes, ukraine has not approached the goal of increasing the level of competitiveness of products of high technological complexity, which have a relatively large share of added value. value/originality. the study uses the dynamics of macroeconomic competitiveness of large commodity groups as a criterion of the effectiveness of institutional reforms in the country. key words: institutional transformations, competitiveness, consumer preferences, market shares, foreign trade by technology complexity, unit value. jel classification: e66, f14, o14 1. introduction since the beginning of the economic crisis of 2014-2015, institutional reforms have accelerated in ukraine. the strategy of institutional reforms is often declared by officials as aimed at the formation of a competitive economy without bureaucracy and corruption with favorable conditions for business development (fair justice, low taxes, availability of investment guarantees). the first steps in formulating the strategy were taken in 2014-2015, when state agencies reduced the number of taxes, the scale of redistribution of financial resources through the state budget, reduced the number of procedures, time and money spent on registration and creation of new businesses. in the second half of 2019 and the first half of 2020, these measures were actively supplemented by new measures aimed at revising certain approaches to the taxation of income of employees and certain categories of entrepreneurs, simplifying the conditions for investing in the production of traditional products. at the same time, the main means of improving economic expectations in the economy were: mitigation of inflation, reduction of the discount rate of the national bank of ukraine (nbu) in order to reduce the cost of bank loans for businesses. at the end of 2019 the inflation rate in ukraine decreased to 4.1%, in the fourth quarter of that year the nbu lowered the discount rate twice, and ukrainian banks lowered interest rates on loans by 2.4 points – corresponding author: 1 state organization “institute of the economy and forecasting of the national academy of sciences of ukraine”, ukraine e-mail: avvit@ukr.net orcid: https://orcid.org/0000-0002-2095-064x this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 50 vol. 2 no. 4, 2021 to 15.7% per annum. these consequences of institutional changes gave hope that business, having received access to cheaper credit resources, in the nearest future will decide itself: what kind of economic activity is expedient to develop for renewal of production structure, increase of output of new kinds of competitive products of higher technological complexity with innovative and higher quality properties. this direction of economic development was to lead to an acceleration of ukraine's economic growth, an increase in the standard of living of the population and an end to its labor migration. it is difficult to gather facts about the level of implementation of this scenario, if we rely on the data of international organizations. for example, in 2013-2014, ukraine ranked 84th out of 148 countries in the annual global competitiveness index (gci) compiled by the geneva-based world economic forum (wef). in 2016, ukraine began to experience economic growth. according to the global competitiveness index, in 2016-2017 ukraine ranked 85th out of 138 countries, in 2017-2018 it ranked 81st out of 140 countries, and in 2019 it ranked 85th out of 141 countries. these data reflect changes in ukraine's competitiveness compared to other countries. at the same time, the question arises, how has the level of competitiveness of the ukrainian economy changed in 2019 compared to the pre-crisis year of 2013, after which institutional changes accelerated? this formulation of the question has actualized a number of theoretical and applied problems that scientists have to solve. the most complicated among them are related to the development of state policy measures to improve the competitiveness of the economy. however, issues related to macroeconomic evaluation of the level and dynamics of competitiveness of national products on domestic and foreign markets have acquired no less scientific importance. the purpose of this article is to theoretically clarify the content of the concept of "competitiveness", to summarize the main results of institutional transformations in ukraine, to test approaches to a more accurate macroeconomic assessment of the dynamics of competitiveness of major domestic product groups and the technological complexity of foreign trade. 2. the search for approaches to the study of competitiveness "competitiveness" is a widely used economic concept, which has no unambiguous generally accepted interpretation. based on the achievements of scientists such as r . martin (martin, 2003), k . aiginger, s. berentaler-sieber, and j. vogel (aiginger, bärenthaler-sieber, vogel, 2013), m. delgado, k. ketels, m. porter, and s. stern (delgado et al., 2012), and t. syudek, and a. zavoyska (siudek, zawojska, 2014), it can be argued that over the past fifty years, the contents of "competitiveness" is often explained by such general terms as ability, potential, probable future opportunities of firms and countries to successfully sell goods and services under the conditions of market competition. however, the scientists faced the problem of evaluating such characteristics as "capabilities", "potential", "opportunities", which reflect not the essence, but the accidental nature of competitiveness. a way out of this situation was found. economists began to describe not competitiveness as a phenomenon, but its factors and features. analysis of studies has shown that historically the main characteristics of competitiveness of firms and countries were considered: the share of sales of their products in the market, relatively lower local production costs, deficit-free trade balance or current account, gdp per capita. today, some economists are of the opinion that the ability of a country or region to export more value added than to import should be considered as such a characteristic (atkinson, 2013), as well as the expected level of production per person of working age (delgado et al., 2012), that is, the possible productivity of a potential worker. at the same time, some european scholars call for a rethinking of the traditional characteristics of competitiveness. they propose to include not only the contribution to production (production costs, productivity), but also the results of economic activity, as well as the level of their focus on solving modern problems associated with the transition of countries to socially inclusive and environmentally sustainable growth. according to them, the main of such results is the ability of the country (region, local formations) to achieve for its citizens the goals that go "beyond gdp". the need to use this characteristic to determine competitiveness is justified by the fact that the social system and environmental aspirations of public and private institutions can become a "productive force. the contribution of firms and countries to its development goes beyond the goals of gdp (aiginger, bärenthaler-sieber, vogel, 2013). the peculiarities of competitiveness were actively analyzed first at the level of firms, industries and countries, and then – economic regions. this process was combined with the search for and refinement of factors of competitiveness. in this regard, economists have noted that the real issue of competitiveness analysis is not to describe its results, but to identify the factors that explain it (martin, 2003). some advances in these areas of research can be summarized as follows. the basic analysis of the basic signs and factors (sources) of competitiveness of firms was carried out by indian scientists a. ambastha and k. momaya. on the basis of their researches, they came to a conclusion that the signs of competitiveness of firm can be the following results of its activity: increase three seas economic journal 51 vol. 2 no. 4, 2021 in customer satisfaction, productivity, profitability, market share, as well as product range, development of new products, generation of value. according to these scientists, the sources of results can be combinations arising from the combination of tangible and intangible assets available in firms (human resources, technology, production structure, reputation, brands) with the processes of strategic management, operational management, quality, product design, technology improvement and marketing activities (ambastha, momaya, 2004). macroeconomic competitiveness is quite actively analyzed. in particular, the experts of the world economic forum (wef) proposed a research method for the global competitiveness index, developed to assess the integrated contribution of macroeconomic factors (favorable environment, human capital, markets and innovation ecosystem) to aggregate factor productivity. the latter was considered as the main characteristic of competitiveness, the factors of which were assessed and described using 103 indicators (world economic forum, 2019). in turn, scientists of the international institute for management development (imd) in the world competitiveness yearbook (wcy) suggested that the main characteristic of macroeconomic competitiveness is the presence of a favorable competitive environment for enterprises. the most influential factors of its formation include indicators of the economic environment, state efficiency, business efficiency, and infrastructure. more than 330 criteria were used to assess them (imd world competitiveness center, 2019). the scientific search for signs and factors of macroeconomic competitiveness has been a matter of debate and is far from over today. discussions about the features and factors of regional competitiveness are no less contrasting. generalizing scientific research in this area, r . martin proposed the concept, according to which the features of the competitiveness of regions with different levels of development can be the facts of their transformation into sites (places) of production, increasing profits or knowledge centers. the most influential factors shaping the first of these types of regions include: production factors (labor, land, capital), the second type – the regional investment climate (infrastructure, human resources and production environment), and the third type – institutions, availability of technology, scientific infrastructure, social capital, demographics, qualitative characteristics of the area and the environment (martin, 2003). croatian scholar d. borozan proposes to consider technological, social, infrastructural and institutional assets as features of regional competitiveness. among the factors determining the emergence of these features are unique regional characteristics that can be used to create reliable conditions for living and working (borozan, 2008). different understandings of the factors of competitiveness increasingly confuse the issue of shaping appropriate policies. if we consider competitiveness as a random phenomenon that emerges each time under the influence of a new combination of micro-, mesoand macroeconomic factors, it is impossible to determine exactly what their future combination should be, which will not only increase the capabilities, potential and opportunities of economic entities, but will also ensure their guaranteed success in market competition on the market. difficulties in policymaking are likely to persist until economists begin to view competitiveness not as a random phenomenon, but as a legitimate one. in our opinion, science has already accumulated enough evidence to change the view of this phenomenon. the most important of them is the following: the main criterion of a random phenomenon is not the unpredictability of its occurrence, but the totality of factors which cause it. according to this assumption, a random phenomenon is caused each time by a new combination of factors that will never be repeated in the future. if scientists describe and specify a set of constant factors causing a particular economic phenomenon (including competitiveness), this means that the phenomenon is inherently deterministic and occurs logically under the action of certain forces. if it is realized that competitiveness is a natural phenomenon, then the problem of a more precise definition of the content of its generalizing concept inevitably arises. the search for its solution should begin with an analysis of the hierarchy in the system of concepts which the term "competitiveness" contains. it is advisable to recognize as fundamental among them the concept that is used to characterize goods and services. the argument in favor of this approach is simple. it is impossible to prove or imagine that there can be competitive firms, industries, regions or countries which do not produce competitive goods or services. they are the main condition for the competitiveness of all other economic actors. however, this approach to describing the hierarchy of concepts containing the term "competitiveness" raises the question of understanding what makes goods and services competitive. at first glance, the answer is simple – the special unique properties of the product and its availability. in this context, it should be noted that every year a large number of affordable products with new properties are produced around the world. however, only a few of them become sales leaders in the markets and bring big profits to companies and countries. the above-mentioned fact can be used as an argument in favor of the conclusion that only the consumer's priority to buy a product makes it competitive. thus, the concept of "competitiveness" should be generalized to nothing more than the conformity of a good (service) with the consumer three seas economic journal 52 vol. 2 no. 4, 2021 preferences of market participants. in other words, this approach can be described as follows. in the market any good (service) remains competitive as long as its properties and price are within the limits of consumer preferences of buyers. the proposed conceptual understanding of competitiveness allows us to interpret a common feature of all relevant studies. it can be assumed that the compliance of goods (services) to consumer preferences of market participants can have both minimum and maximum values, which vary, for example, in the range of 1-100%. at the same time, the accumulated empirical facts give grounds to assert that conformity of the goods (services) to consumer preferences of buyers can reach the maximum possible values only under condition of activation in economy of all available micro-, mesoand macroeconomic factors of competitiveness. therefore, applied research should use the concept of "basic competitiveness. it is expedient to use it to describe in the economy the compliance of goods (services) with consumer preferences of market participants maximized with the help of micro-, mesoand macroeconomic factors. 3. the method for assessing the competitiveness of basic products the proposed conceptual treatment of the concept "basic competitiveness" allows to find methods of direct estimation of the phenomenon generalized by it. in particular, in economics, the maximum conformity of goods (services) to consumer preferences of buyers can be accurately enough described by a quantitative assessment of its share in the total volume of market sales of products of similar purpose. the analytical possibilities of this indicator are described in economic science (wilson et al., 2002). its peculiarity lies in the fact that it contains information that the purchase of a particular good (service) is perceived as a priority by consumers generating a separate part of market demand. the authors believe that in order to assess the macroeconomic dynamics of the basic competitiveness of a country 's goods, it is advisable to use three main indicators and one additional indicator. in particular, to assess the competitiveness of consumer goods in the domestic market, it is advisable to use the indicator "goods of the country in the structure of retail turnover." by analogy, the indicator "goods of the country in the structure of capital investment" can be used to evaluate investment products. and at the same time to assess the basic competitiveness of export goods we can use the indicator "a country 's share in world merchandise exports. in order to understand whether this indicator reflects an increase in the share of raw materials or technologically sophisticated products in the structure of exports, it is advisable to use the unit value index (uv). although there are other approaches to assessing the technological sophistication of trade (broekel, 2019), such as the analysis of international trade flows by technological intensity (panagiotis, constantina, georgiou, 2010). however, for the purposes of our macroeconomic analysis, the uv index looks preferable, as its dynamics can be interpreted more unambiguously and considered as a vector of development of the commodity structure of the country 's exports. the uv index measures the change in the average cost of units that are not homogeneous and can be affected by fluctuations in both the range of goods and their prices. in this study, the average unit value of a country 's exports (imports) is estimated in u.s. dollars per kilogram weight of a set of goods of a certain group j or set of commodity groups t. the value of 1 kilogram of weight is described by the indices uvіх and uvіт, which reflect the unit value of exports and imports of commodity groups of country i. some analytical possibilities of these indices can be presented as follows. the uvіхt and uvітt indices can be used to compare the cost of a unit of a set of exports and imports. if the index uvіхt / uvітt >1, indicates that the unit of export commodity group t of country i has a higher average price in foreign markets and technological complexity than its imported counterparts in the domestic market, and vice versa, if uvіхt / uvітt <1. 4. main results of the study basic competitiveness of investment and consumer goods in the domestic market of ukraine. domestic investment goods enter the sphere of production in the form of capital investments. in 2014-2015, ukraine's capital investment index declined from the previous year, and in 2016-2019, it rose between 115.5 and 121.1%. the latter trend indicates an increase in demand for means of production. in order to meet the demand, entrepreneurs had the opportunity to buy domestic or imported products. their choice is characterized by the data of table 1, reflecting the shares of domestic and imported products in the structure of capital investments of ukraine in 2015-2019. the data in table 1 show that in 2015-2019, the share of domestic investment products in the structure of capital investments decreased from 37.6% to 32.2%, while the share of imported products increased from 37.0% to 47.4%. these trends indicate a decrease in the competitiveness of domestic investment goods compared to their imported counterparts. the dynamics of consumer goods sales can be analyzed with the help of indicators characterizing fluctuations in the shares of domestic and imported products in the structure of retail turnover. for this purpose, we will use the data of table 2, reflecting the share of domestic products in the structure of retail turnover of ukraine. three seas economic journal 53 vol. 2 no. 4, 2021 the data in table 2 show that in the post-crisis period of 2016-2019 in ukraine in the structure of retail turnover the share of sales of domestic food products decreased from 85.2% to 80.0%, and nonfood products – from 39.3% to 32.0%. this means that in the domestic market the level of competitiveness of domestic consumer goods decreased compared to imported counterparts. the basic competitiveness of ukrainian exports. today, economists view exports as a "facade" of the economy, a "showcase" of its possibilities. the latter is confirmed by empirical facts showing that exporting companies are 8-12% more productive than those supplying products to domestic markets (de loecker, 2004). the level of basic competitiveness of ukraine's export goods can be determined by assessing their share in world merchandise exports. in 2013-2019, ukraine's share in world merchandise exports decreased from 0.34% to 0.27% (world bank, 2020; state statistics service of ukraine, 2020). at the same time, this data also shows that basic export competitiveness has been trending upward since 2017 compared to 2015-2016. so, what caused the increase in the share of ukrainian goods in world exports, namely the increase in sales of raw material or technologically complex products? the search for an answer to this question should begin with an analysis of the change in the unit value of products that ukraine imported and exported in 2013-2019. to do this, we will use the data in table 3. the data in table 3 show that in 2013-2019, the cost per kilogram weight of the entire set of goods that ukraine exported and imported decreased. in particular, the value of the unit of total merchandise exports (uvіхt)) decreased from $0.36 to $0.30us/kg. for comparison, it should be noted that in developed countries this figure is about 7.5 us dollars/kg (kostoska et al., 2012). ukraine's significant lag in this indicator is evidence of the low technological sophistication of this country 's exports. at the same time, the unit value of total merchandise imports (cu) decreased from 1.02 to 0.80 usd/kg. this meant that the ukrainian consumer further reduced requirements to the properties of imported products, and ukrainian businesses did not try to import modern, expensive technological equipment to modernize their own enterprises to expand the production of innovative and higher-quality products. despite this, in 2013-2019 the average specific value of total merchandise imports to ukraine was more than 2.6 times higher than the value of total merchandise table 1 domestic and imported products in the structure of capital investments of ukraine in 2015-2019 years 2015 2016 2017 2018 2019 capital investments, million uah 273116 359216,1 448462 578726,4 623978,9 share of imported products, % of capital investments 37,0 46,3 51,0 46,0 47,4 share of national products, % of capital investments 37,6 32,6 34,0 32,0 32,2 source: compiled by author based on data for relevant years: (state statistics service of ukraine, 2021) table 2 national products in the structure of retail turnover of ukraine in 2013-2019 years 2013 2014 2015 2016 2017 2018 2019 consumer goods in the structure of retail trade, % 57,2 57,8 58,1 55,8 52,3 53,2 52,4 including food products, % 85,5 85,6 85,2 84,8 82,2 81,4 80,0 non-food products, % 39,0 39,5 39,3 35,6 32,6 31,7 32,0 source: compiled by author based on data for relevant years (state statistics service of ukraine, 2021) table 3 dynamics of the specific value of exports and imports of ukraine in 2013-2019 years total merchandise imports total merchandise exports value (mіt), thousand usd net weight, ton unit value (uvітt), usd/kg value (xіt), thousand usd net weight, ton unit value (uvіxt), usd/kg 2013 76850494 75344171 1.02 63264122 174392468 0.36 2014 52533379 59475536 0.88 54044054 174031481 0.31 2015 36569603 57782723 0.63 38170630 159897001 0.24 2016 38869503 60690174 0.64 36364059 150323936 0.24 2017 49537383 73829551 0.67 43260180 153155757 0.28 2018 56875461 73277660 0.78 47328962 149107552 0.32 2019 60414393 75413733 0.80 50061057 166976286 0.30 source: compiled by author based on data for relevant years (state fiscal service of ukraine, 2020) three seas economic journal 54 vol. 2 no. 4, 2021 exports. this indicates that the latter had a lower technological complexity compared to imports. in order to understand how ukraine compares to other countries in terms of uvіхt / uvіmt, the data from table 4, which provides estimates of the average unit value of export and import commodity groups in the top 10 in individual countries in 2019, is used. the data in table 4 show that in 2019, ukraine's average unit cost of the top 10 export product groups exceeded that of only the russian federation, and its import product groups exceeded that of kazakhstan. in addition, with the exception of russia, ukraine differed in that within the top 10 product groups it imported products of much higher technological sophistication than it exported. this is evidenced by the ratio of the average unit cost of the 10 largest export and import product groups, which is less than unity, namely uvіхj / uvіmj = 0.24. the most pronounced inverse trend was observed in sweden, which exported much more technological products in the top 10 product groups than it imported (uvіхj / uvіmj = 1.53). 5. conclusions the verkhovna rada of ukraine of the ix convocation at the 1st and 2nd sessions (august 2019 – january 2020) adopted 155 laws. do modern ukrainian reforms create opportunities for products with increased competitiveness and technological complexity to become part of the largest commodity groups in the near future? this question is becoming more and more relevant today. the results of the study prove that in 2017-2019 the competitiveness of ukrainian exports gradually increased, but in its composition the share of certain types of raw materials and products of their shallow processing increased. at the same time, the competitiveness of consumer and investment goods in the domestic market decreased and was gradually replaced by imported analogues. these trends suggest that ukraine is selling more raw materials on international markets and producing fewer goods of higher technological sophistication with innovative or higher quality characteristics. despite this, ukraine's specialization in the global economy remains economically justified and effective. however, in the long run it is socially undesirable, as it holds back the development of the economy and throws it to the margins of technological progress. it follows that, despite institutional transformations, ukraine is no closer to realizing the goal of increasing the level of competitiveness of products of increased technological complexity, which have a relatively large share of added value. ukraine's economy can get out of this situation only if entrepreneurs begin to actively acquire additional comparative advantages in the production and sale of technologically complex goods. skilled labor and quality institutions can serve as additional sources of comparative advantage. considering that qualified workers actively migrate from ukraine, the state has only one way to bring the economy to a new level of competitiveness – to create a favorable institutional environment for innovative activities of enterprises. references: aiginger, k., bärenthaler-sieber, s., & vogel, j. (2013). competitiveness under new perspectives. www for europe working paper, 44. available at: http://www.oecd.org/economy/competitiveness-under-new-perspectives.pdf. ambastha, a., & momaya, k. (2004). competitiveness of firms: review of theory, frameworks and models. singapore management review, 26: 1, 45–61. available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2146487. atkinson, r . d. (2013, august). competitiveness, innovation and productivity: clearing up the confusion. information technology and innovation foundation. washington, d.c. 7. р. borozan,  d. (2008, may). regional competitiveness: some conceptual issues and policy implications. interdisciplinary management research, 4, 50–63. available at: http://www.efos.unios.hr/repec/osi/journl/pdf/ interdisciplinarymanagementresearchiv/imr4a03.pdf. table 4 average unit value of the 10 largest export-import commodity groups in selected countries in 2019 country the average unit cost of the 10 largest product groups j uvіхj/uvіmj, times export groups j (uvіхj), usd/kg import groups j (uvіmj), usd/kg russian federation 0.52 31.75 0.02 ukraine 2.37 9.94 0.24 kazakhstan 6.54 9.48 0.69 spain 8.50 15.34 0.55 greece 10.67 11.08 0.96 sweden 27.04 17.66 1.53 france 61.71 82.26 0.75 note: the average unit cost was calculated only for those product groups that were valued in usd/kg and did not contain rare resources. source: compiled by author based on statistics data (united nations, 2020) three seas economic journal 55 vol. 2 no. 4, 2021 broekel, t. 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(2002, september) assessing singapore’s export competitiveness through dynamic shift-share analysis. occasional paper, 23. available at: https://www.mas.gov.sg/-/media/ mas/resource/publications/staff_papers/masop023_ed.pdf. world bank (2020). goods exports (bop, current us$): world bank national accounts data. washington, d.c. available at: https://data.worldbank.org/indicator/bx.gsr .mrch.cd. world economic forum (2019). the global competitiveness report 2019. geneva. available at: http://www3.weforum.org/docs/wef_theglobalcompetitivenessreport2019.pdf. three seas economic journal 42 vol. 2 no. 1, 2021 corresponding author: 1 ivan ziaziun institute of pedagogical education and adult education of the national academy of pedagogical sciences of ukraine, ukraine. e-mail: l.liktej@ukr.net orcid: https://orcid.org/0000-0001-7348-4286 doi: https://doi.org/10.30525/2661-5150/2021-1-7 state of development of teachers' method competence in foreign countries liudmyla lyktey1 abstract. in the review article the development trends of teachers' competence in the educational institutions from abroad are analyzed. based on the scientific analysis of psychological, pedagogical and methodological research, the emphasis is put on the importance of the concept of «competence». the role of competence and its influence over methodical growth, improvement of teachers’ professional qualities is defined. it was found that the multi-vector nature for the method competence improvement depends on the conditions of development of scientific and educational space. the necessity of borrowing european experience and continuous integration development of teachers' method competence in ukrainian educational institutions taking into account the world а scientific and methodological thought is substantiated. it is proven that due to globalization social processes, competence in the foreign scientific and educational environment is rapidly transforming. thus, the development issue of teachers method competence is relevant for our study, because the concept of «competence» is the subject of numerous scientific researches, meetings, conferences of domestic and international scientists in the european union and beyond it. the issue of studying and borrowing international practices and world experience that would contribute to the full development of the domestic educational sector remains extremely important. to obtain a complete picture of the development of teachers' method competence, it is advisable to study the experience of foreign scientists and educational institutions from abroad, as well as clarification the essence of numerous methodological and pedagogical concepts. in the context of the study of this problem, we draw attention to the fact that the presentation of world best pedagogical experience, embodied in cooperation, study and promotion is not only relevant and important, but is also very necessary. key words: competence, method competence, methodological culture, methodological activity, methodical work, development. jel classification: c18, f63 1. introduction today, in times of intense educational change, ukraine is making great efforts to get as close as possible to european educational standards. however, these efforts are accompanied not only by modernization and reformation processes of the ukrainian educational sector, but they also require a highly educated and professionally pedagogical community. in accordance with the society 's needs and demand, a number of new requirements are put forward to teachers of vocational pre-higher education institutions, because teachers are the driving force that forms human capital – a highly educated person. in view of this, an important teachers' task is to borrow world experience in combination with theoretical knowledge and their successful implementation in practice, which is a consequence of improving method competence. the purpose of the study is to analyze the trends in the development of college teachers' method competence in the scientific and educational space from abroad. based on the analysis, there is an aim to find out the importance of borrowing and implementing theoretical, methodological and practical experience in the educational sector of ukraine. in foreign and ukrainian educational discourse, competence is studied mainly as an integral component of professional development and it is described from the perspective of theoretical, empirical, statistical, research methods based on the competence approach. 2. presentation of main material nowadays the definition of trends in the development of teachers' method competence, particularly the three seas economic journal 43 vol. 2 no. 1, 2021 teachers of humanities from vocational pre-higher education institutions, is considered to be a priority adoption, which is implemented to develop ukrainian education. the right choice of teaching strategy creates the conditions for a proper solution to the problem of the methodological competence development. in the research context of this problem, we pay attention that presentation of the world advanced pedagogical experience embodied in cooperation, studying and popularization acquires importance and necessity. the works of world-class scientists reflect a number of opinions about the teacher's personality, their competencies, in particular: – the teacher's professional competitive ability (yu. liannoi, n. demyanenko, i. havrysh, etc.). (liannoi, 2017; demyanenko; havrysh, 2006); – readiness to realize own potential for successful productive activities in the social and professional spheres; awareness of the importance and personal responsibility for the results of their own activities, the need for its continuous improvement (yu. tatur) (tatur, 2004); – readiness for systematic transfer of knowledge, skills, abilities; acquisition of new ones (n. kuzmina) (kuzmina, 1990); – readiness and ability to find alternative ways for development, improvement of skills of personalityoriented communication, on the basis of the transformational component of cultural and intercultural components (e. taylor) (tatur, 2004); – possession of methodological tools for students' differentiated training, changes in their own methodological profile in order to improve themselves (d. hargreaves) (hargreaves, 2004); – ability to self-organization in solving certain tasks of professional orientation, self-development, focused on knowledge, values, abilities, volitional decisions, etc ( j. erpenbeck, p. heyse) (avsheniuk, desiatov, diachenko, et al.). on the road of the development of 21st century european education, in 2000 the european commission approved the targeted program named «the education and training 2010» (the lisbon strategy), which provided for a fundamental modernization of european education system, including the transformation of education levels and elements. a lot of attention is paid on the issues of improving the education, development of the professional level of teachers and educators, who, according to this document, play a key role in restarting this project. already in 2003, the european commission together with the european university association initiated the creation of a project called «setting up educational structures», according to which the process of learning in higher education was aimed at ensuring the development of general competencies. the developers divided these competencies into three closely related groups: instrumental competencies, interpersonal competencies and systemic competencies, which are intended to form professional competencies as the highest results in european education. based on the actions carried out in 2005, the document «common european principles for teacher competences and qualifications» was developed, which regulates the course of providing a single approach in order to define common criteria for pedagogical education in europe. the document provides the main messages for the teacher: to work with others; using knowledge, information and technology; to work in society at the local, regional, national, european levels. in addition, a number of documents was developed that regulated the teachers' educational activities in the coming years. soon later, in 2018, the council of the european union in its recommendations identified the key competencies that would be needed for a person to be able to work, to realize oneself personally and develop in the period of rapid global change (recommendations council). studying the european educational experience, we pay attention to the work of finnish researcher olli vesterinen, who analyzed a number of laws and regulations of european countries in order to promote the teaching profession and highlight the most important competencies of teachers, which he combined into five groups: pedagogical and psychological competence, interpersonal competence, special subject-oriented and methodological competence, organizational and intercultural competence. we correlate the proposed competencies of olli vesterinen with the concepts that interest us, in particular, methodological culture – intercultural competence; methodical work and activity – special subject-oriented, pedagogical and psychological competence; methodical competence – methodical competency. in their scientific works, foreign scientists t. rudneva and n. solovova consider the concept of «methodical work» somewhat more narrowly and concisely than the concept of «methodical activity», as they believe that methodical activity is an independent type of pedagogical professional activity of a teacher and involves the implementation of methodological recommendations, instructions, etc., and methodical work, according to scientists, is a pre-planned activity of the teacher, which simultaneously aims to improve existing forms, principles, methods of educational process and develop new (rudneva, solovova, 2012). methodical work and methodical activity are inseparable components that establish the concept of "methodical culture" of the teacher. in our opinion, methodological culture is a phenomenon that does not diminish the importance of method competence and plays an important role in its development. thus, n. nikula interprets this concept as the teacher's ability to build their own three seas economic journal 44 vol. 2 no. 1, 2021 professional and pedagogical activities on the basis of psychological and pedagogical knowledge (nikula, 2002). complementing this scientist's opinion, l. plekhanova defines methodological culture as a socioprofessional characteristic, which is a reflection of a high level of pedagogical activity, methodically conscious use of pedagogical tools in teaching, creation and updating of new pedagogical values, etc. (plekhanova, 2012). methodological culture, methodological activity, method competence, methodical accumulation and improvement of skills in order to carry out highquality educational activity as well as borrowing of world experience have considerable influence over the development of the teacher's personality in a professional and methodological context which is directed on the systematic analysis of own pedagogical activity according to standards, which will be partially considered. today, the united states, the united kingdom of great britain, the federal republic of germany, denmark and others are the leading world leaders in the field of education. in order to popularize the international pedagogical experience in ukraine, domestic scientists and scholars cover a number of studies about education in foreign countries, because it is education that has always attracted attention. thus, the us experience shows that education can be the highest example of a decentralized education system with competent management, and higher education, however can be broad autonomy, assisted by the state. this is the main difference between education in the united states and ukraine, as the accreditation of colleges, control by government institutions is voluntary (in ukraine, such procedures are mandatory). teachers and students freedom comes first. higher education institutions, in particular colleges, are characterized by autonomy, diversity, flexibility, variability, commercialization, continuity, and so on. there are a number of requirements and criteria for the teachers' activity. however, the teacher is free to make management decisions, choosing methods, techniques and principles of teaching. typically, the assessment of the activities of colleges and universities in the united states is based on the performance of the institution, candidates access to education, economic and financial activities, and the quality of teaching staff. therefore, not only the quality of the teachers teaching activity, the availability of educational content developed by them, but also their scientific and publishing activity and their own scientific degree are assessed. the us education standards, requirements for teachers of educational institutions are very different from european ones; however, meet the requirements of the time and the needs of modern society. there is an intensive interaction of educational institutions with the labor market, and the issues of cooperation with stakeholders are becoming very important. the educational experience of great britain shows that the professional standard in this country is developed on the basis of the competence approach. the model of professional competence is represented by a set of competencies, which, in our opinion, are closely related: cognitive competencies (formal and informal knowledge); functional competence (skills or know-how); personal competencies (behavioral competencies); meta-competencies (ability to cope with uncertainty, edifications and criticism); ethical competence (avsheniuk, desiatov, diachenko, et al.). it should be noted that, unlike other countries, teaching at universities is not widespread here, but tutoring, which does not involve student training, but management and mentoring in the form of group discussions and individual consultations during which the student develops a number of professional skills and competencies. a tutor can be not only a mentor, but also a master teacher, a teacher-curator, a teacheradministrator, a teacher-concierge. this system of work requires a teacher with a high level of professional and qualified competencies. it also regulates the processes that affect his/her self-education and selfimprovement, forms a teacher-innovator capable to think, to teach pragmatically and to be an integral part of the modern educational community. unlike tutors, facilitators conduct seminars according to the courses chosen by the students. such seminars involve a combination of theoretical and practical activities. on the basis of theoretical knowledge, teachers together with stakeholders develop practical tasks. this type of cooperation helps to coordinate the development of professional competencies of the teacher and future specialists. the experience of raising the teachers professional level at universities and colleges of the united kingdom of great britain (wales) is interesting, as educational institutions with scientific, academic and pedagogical staff are responsible for the growth of professional competence. most of them have their own research departments, centers and administrative departments, which take care of raising the teachers professional level. we consider the discussion with the teaching staff their individual personal needs to be a key remark for raising the teachers methodological level in this country. using algorithms of teachers professional development, a university certification takes place, which plays the role of motivator. professional development is increased annually, clearly according to the developed plans. the teaching staff takes responsibility for improving their own professional level and career growth, looks for new opportunities for development and improvement of competencies, determines their learning needs independently, taking into account the experience of certification. the centre for didactics in higher education of england provides considerable methodical help to teachers. their task is three seas economic journal 45 vol. 2 no. 1, 2021 to organize courses, seminars, trainings, pedagogical and scientific meetings, etc., in order to promote the personal experiences of each teacher, since holding courses according to another teacher's recommendations or using developed textbooks is considered humiliating. this practice also started working in ukraine. the regulatory document that clearly prescribes this condition is the resolution of the cabinet of ministers of ukraine № 800 of 21.08.2019 «some issues of professional development of pedagogical and scientificpedagogical workers» with changes according to the resolution of the cabinet of ministers № 1133 of 27.12.2019, where in p. 8 it is stated that the amount (duration) of professional development of pedagogical and scientifically pedagogical staff is set in hours and/or credits of the european credit transfer and accumulation system (one ects credit – 30 hours per year) under the accumulative system. that is, within 5 years the college teacher raises his professional level and accumulates 5 ects credits (150 hours). the main types of advanced training are training in the in-service training program, including participation in seminars, workshops, trainings, webinars, master classes, etc. (deiaki pytannia pidvyshchennia kvalifikatsii pedahohichnykh i naukovo-pedahohichnykh pratsivnykiv). analyzing the experience of denmark, we see that in this highly developed country there are also a number of requirements for teaching staff, in particular, the teacher must be highly qualified (master, doctor), conduct an active research, participate in social and scientific projects, exchange experiences, daily improving the competencies. according to these criteria, teachers are divided into adjuncts (contract for 3 years), lecturers, associate professors, professors. an important aspect of the professional competence development of pedagogical staff is that at the state level the partnerships of higher pedagogical education institutions and schools are expanded and strengthened. it helps to improve the quality of work of both structures. for the stable systematic development of the teacher, the transition to continuous pedagogical education has been made (roliak, 2010). we also pay attention to the education system of finland. in the last century, the main goal of the finnish government was to reform the education sector on the basis of traditional education. the initial stages of the educational reform included specialized teacher training programs, which became an integral part of finland's academic higher education. education in such programs took place only in accredited universities. it gave a great impulse to the continuity of pedagogical education and lifelong learning. at the legislative level, the issue about the requirements for teaching staff at schools, colleges and universities was settled. only a teacher with a master's degree can become an educational worker at school, a licensee or a doctor is needed at college, while only a doctor should work at university. at universities, the emphasis is put on training researchers in the fundamental and human sciences. obtainment of pedagogical education for specialists applying for the positions of teachers at colleges and universities is regulated by target competencies and qualification requirements. teachers of vocational colleges and universities have a whole list of qualification requirements: a high level of professional competence, humanity, individualization and differentiation in training students, continuing educational development and more. the tasks for the teacher set by the state is the ability to teach students how to think and act on the basis of theoretical knowledge and research, to justify pedagogical decisions with formal and systematic arguments, to use a practice-oriented component and so on (avsheniuk, desiatov, diachenko, et al.). such programs are reinforced by a number of competencies that are implemented through training in traditional, innovative, alternative, visual and practical methods. an important aspect of success is interactivity, which is the basis of finnish education. according to k. kotun, the main approaches to the implementation of continuous development are socio-cultural, resourcebased and professional, continuous analytical, legislative, competent, certified, innovative and ethno-national, liberal and civic (kotun, 2020). properly chosen strategy and implementation of educational modernization processes in finland has led to the emergence of the most successful educational system in europe, which should be looked up to. in order to borrow and overspread this practice in the domestic educational space, in 2018 the state standard of primary education was adopted, which is based on the education development through a competent approach. already in 2019, a joint ukrainian-finnish project «learning an together. finnish project support nush. new ukrainian school», which was implemented with the assistance of the company fcg international ltd, and the university of helsinki and the ministry for foreign affairs of finland. this project involved teachers, lecturers, principals, rectors, a number of educators, who in the future would act as trainers in educational institutions in order to qualitatively implement educational changes within a competent approach. the work of the education sector of the federal republic of germany is based on the framework law for higher education. the activities of educational institutions are detailed in so-called land laws «on teacher education». requirements for teachers from higher education pedagogical institutions in germany are extremely high. every teacher in an educational institution must have fundamental competencies. according to the germans, the most important three seas economic journal 46 vol. 2 no. 1, 2021 fundamental competencies are intellectual knowledge, which involves lifelong learning; educational competence that determines the ability to learn; method competence, which is aimed at improving language competence and mastering it. at the same time social competencies are developed in order to establish social cohesion, the ability to work in a team, conflict resolution; valuable orientations that promote social, democratic and individual values (kubenko, 2010). it should be noted that every year social needs change, and the teachers' competencies in germany assume a new significance and shade. therefore, in connection with the world events of the last decade (military conflicts, social migration, etc.) in 2016 in some cities of germany with the assistance of the council of europe the program designed to spread a culture of democracy, including in educational institutions, began to be actively implemented because from the german educators point of view, education is a long-term investment. specialists working with the council of europe have developed three methodological volumes about the competencies and their implementation. the first manual contains a model of the most relevant competencies, which consists of twenty such examples. these competencies were divided into four areas – values, attitudes, skills, knowledge and critical understanding – and supplemented with information about the model bases, a process description of its development and ways for the future use. the second volume contains definitions about educational goals and outcomes for each of the competencies in particular. the third is advice about the use of the competency model in the educational space (demyanenko). ukraine does not stay away from the modernization of the education sector. at the initial stage of implementation of nus (new ukrainian school) reforms, in cooperation with the european education fund, the program “schools for democracy: supporting education reforms in ukraine” was presented and a number of trainings «development of civil and social competences in the teacher training system in ukraine», «developing and assessing competence in nus: framework of competences for democratic culture», etc. for trainers of the educational institution network in ukraine and representatives of postgraduate pedagogical education institutions. such a platform was launched to accelerate ukraine's integration into european education standards. according to n. avsheniuk research, it is the european educational system that forms the «european professionalism» of a teacher who must have a «european approach». in the field of his subject, he studies the core topics of the curriculum in the european perspective, exchanges the content and teaching methods his subject with colleagues from other european countries and at the same time pays attention to the ways of teaching and education traditions in different countries by learning them (avsheniuk, desiatov, diachenko, et al.). the possibility of borrowing european pedagogical experience involves expanding and improving the method competence development of teachers of humanities at colleges with a focus on european professionalism and professional development. in the psychological and pedagogical literature it is noted that «professional development» is a consequence of the formation and growth of professional knowledge, skills, abilities and personal qualities, i.e. competencies. it is a process when the teacher independently or together with his/her colleagues reviews, updates, expands his/her own responsibilities according to the teaching purpose, as well as he/she critically develops knowledge, skills, professional thinking, planning and practice of working with children, youth and colleagues at each stage of his/her professional life (day, 1999). 3. conclusions therefore, analyzing the world educational practice, we can conclude that an important issue is the method competence of teachers, although we consider not so much the method competence of the teacher as the ability to develop and improve it in a wide professional range. emphasizing the scientific works of foreign researchers, we note that there is no such thing as «method competence». however, we often meet the concepts of «competence», «activity», «development», «culture» and so on. references: avsheniuk, n. m., desiatov, t. m., diachenko, l. m., postryhach, n. o., pukhovska, l. p., & sulyma, o. v. (2014). competence approach to teacher training in foreign countries: theory and practice: monohraph. kirovohrad: imeks-ltd, 280 p. day, s. (1999). developing teachers: the challenge of lifelong learning. london: falmer press, 239 p. demyanenko, n. general pedagogical training of teacher in the history of a higher school of ukraine (xix – first quarter xx c.). doctor of science dissertation. kyiv, 469 p. hargreaves, d. h. (2004). personalizing learning: next steps in working laterally. london. specialist schools trust, 128 p. havrysh, i. v. (2006). theoretical and methodological bases of forming of readiness of future teachers to innovative professional activity. doctor of science dissertation. kharkiv, 572 p. three seas economic journal 47 vol. 2 no. 1, 2021 kotun, k. (2020). adult education: theory, experience, prospects. adult education: theory, experience, prospects, vol. 1(17), p. 134. kubenko, i. m. (2010). what is competence and how it is understood in education. appendix to the journal «theory and methods of education management», vol. 1. kuzmina, n. v. (1990). professionalism of the personality of the teacher and the master of industrial training. kyiv: vyisshaya shkola, 119 p. liannoi, yu. (2017). theoretical and methodological foundations of professional training of future masters in physical rehabilitation at higher educational establishments. doctor of science dissertation, national pedagogical dragomanov university, 663 p. nikula, n. (2002). formation of innovative activity. specialist, vol. 12, pp. 17–18. plekhanova, l. a. (2012). development of methodological culture of a lecture of an additional education institution. modern problems of science and education, vol. 2, pp. 43–47. recommendations council. council recommendations of 22 may 2018 on key competencies for lifelong learning (text with eea relevance) (2018/c189/01). available at: https://eur-lex.europa.eu/legal-content/en/ txt/pdf/?uri=celex:32018h0604(01)&from=l roliak, a. (2010). teacher training in denmark: guidelines. kamianets-podilskyi: sole proprietor sysyn o.v., 48 p. rudneva, t. i., & solovova, n. v. (2012). the managament of methodological work in an institutionof higher education: theary and experience. vesnik of samara state university, vol. 2-1 (93), pp. 151–155. tatur, yu. h. (2004). competence in the structure of the quality model of specialist training. vysshee obrazovanye sehodnia, vol. 3, pp. 20–26. taylor, e. w. (1994). intercultural competence: a transformative learning process. adult education quarterly, vol. 44(3). r , рр. 154–174. deiaki pytannia pidvyshchennia kvalifikatsii pedahohichnykh i naukovo-pedahohichnykh pratsivnykiv. available at: https://zakon.rada.gov.ua/laws/show/800-2019-%d0%bf three seas economic journal 16 vol. 2 no. 3, 2021 corresponding author: 1 shei «ukrainian state university of chemical technology», ukraine. e-mail: spkiris@gmail.com orcid: https://orcid.org/0000-0001-6905-9682 doi: https://doi.org/10.30525/2661-5150/2021-3-3 implementation of energy efficient principles in management of an apartment building in ukraine stanislav kiris1 abstract. the purpose of this article is to analyze the efficiency of management of an apartment building in the context of energy efficiency. the article describes the conduct of an energy audit for apartment buildings, which allows a thorough assessment of this problem and identify optimal ways to save energy resources by apartment buildings. energy audit is a special examination of residential buildings or enterprises, conducted by specialized specialists in energy certification of buildings to determine their technical condition and energy efficiency. methodology. within the framework of this article, the results of a sociological survey conducted among the heads of condominiums to analyze the level of their interest in the implementation of energy efficiency measures were analyzed. the value of the cost of 1 apartment for the implementation of the energy modernization project is calculated. currently, "energy efficiency" and "energy saving" are extremely popular in ukraine, due to the following: increasing the cost of energy resources;limited financial capacity of vulnerable groups to pay for services. results of the survey showed an insufficient level of implementation of energy-saving technologies, although the level of interest of apartment building heads is very high. the development of energy efficiency programs for an apartment building is carried out not only taking into account the necessary priority measures, but also based on the financial capacity of the co-owners of the apartment building. the reason for the insufficient implementation of energy saving measures is the insufficient financial capacity of co-owners and, as a consequence, the apartment buildings themselves. state support for the implementation of energy efficiency in the management of apartment buildings has been studied in detail. it is concluded that large-scale involvement of apartment buildings in the implementation of energy efficiency programs is constrained by the following problems: insufficient funding; insufficient state support for project financing; distrust of co-owners to the effectiveness of the project; unsatisfactory condition of the apartment building, which requires significant financial costs. the growth rate of the number of condominium applications shows an increase in public confidence in the program. however, they are not enough to talk about launching large-scale energy modernization of multi-apartment housing. financial support of local authorities to their residents in the implementation of energy saving measures will contribute to even better results. key words: energy efficiency, energy saving, effectiveness of apartment building management, warm credits program, cost of energy resources, energyhouse. jel classification: r20, r29, m19, l99 1. introduction the analysis of the effectiveness of apartment building management should include all aspects of this process, however, due to limited statistical and other information on apartment building management across the country as a whole, rather than by individual cities or regions, it seems appropriate to analyze the following aspects of management process: 1. organizational efficiency of apartment building management. 2. the effectiveness of the system of legal regulation of apartment buildings in ukraine. 3. the effectiveness of involving co-owners of apartment buildings in management. 4. the effectiveness of communications in the management of apartment buildings. 5. energy efficiency. issues of energy efficiency of apartment buildings have recently come to the fore, because the achievement of its high level gives co-owners of apartment buildings the following advantages: – reduction of heating costs; – improving the condition of common property; – the possibility of further modernization of management processes; this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 17 vol. 2 no. 3, 2021 – improving the quality of life (ensuring proper heating and water heating), etc. 2. researches of the level of interest in the energy efficiency increasing the level of energy efficiency of apartment buildings contributes to improving the payment discipline of co-owners, modernization of housing. thus, in january 2020, the ministry of development of communities and territories of ukraine conducted an analysis of the results of a survey conducted among the heads of condominiums to examine the level of their interest in implementing energy efficiency measures. the conducted researches, first of all, were carried out to determine public opinion on the reform of energy efficiency of apartment buildings, the level of their involvement and attitude to possible benefits. the results of the researches were as follows (figure 1). also, among the respondents, the largest share is occupied by those apartment buildings that have installed energy-saving lamps in the house, and the smallest share – those houses that have reduced the heating area (figure 2). in our opinion, such results of insufficient introduction of energy-saving technologies are caused by the following: association of co-owners of an apartment building from dnipropetrovsk and zaporizhia oblasts showed the greatest efficiency in this survey, and although the data obtained and presented in the study cannot be used to analyze the energy efficiency of all apartment buildings in ukraine, they give a general idea of the state of energy efficient technologies in apartment buildings. 3. an energy efficiency and energy audit currently, the terms "energy efficiency " and "energy saving" are extremely popular in ukraine, due to the following: – increasing the cost of energy resources; – limited financial capacity of vulnerable groups to pay for services; – deterioration of the state housing stock and heat loss by many apartment buildings in the process of increasing their service life. therefore, in ukraine, an energy audit has been introduced for apartment buildings, which allows for a thorough assessment of this problem and the identification of optimal ways to save energy resources by apartment buildings. energy audit is a special examination of residential buildings or enterprises, conducted by specialized specialists in energy certification of buildings to determine their technical condition and energy efficiency. the law of ukraine "on energy conservation" established that the energy audit is "determining the efficiency of fuel and energy resources and developing recommendations for its improvement". based on the interpretation of the provisions and norms of this law, we note that energy audits are conducted to assess the efficiency of use (in our case – apartment buildings) of energy resources and the development of economically viable measures to reduce their consumption, namely to identify areas of energy efficiency. this assessment provides an opportunity to determine the level of fuel efficiency of homes and identify the most vulnerable places where excessive energy loss occurs. based on the results obtained, figure 1. the main results of the researching source: built by the author three seas economic journal 18 vol. 2 no. 3, 2021 audit specialists develop appropriate energy saving measures, as well as programs and recommendations for apartment buildings that need to be implemented to increase energy efficiency and reduce energy losses in the house. in addition, the priorities for the implementation of the recommended measures are determined, taking into account the current level of funding for these measures. the energy audit process provides an opportunity to obtain recommendations for the implementation of energy management systems, which can be provided as an option. thus, the development of energy efficiency programs of an apartment building is carried out not only taking into account the necessary priority measures, but also based on the financial capacity of the co-owners of the apartment building. we believe that taking into account financial capacity is one of the determining factors in the implementation of energy saving programs, because, according to the researches, to participate in energy modernization condominiums can spend a maximum of 20.8% of the energy efficiency project (figure 3). such indicators of the ability to finance energy projects by co-owners of apartment buildings are due to the fact that the main share of apartments in an apartment building is ready to finance an amount not exceeding uah 500 per month (figure 4). an expanded list of domestic energy auditors has been opened for use as part of the interactive energy auditors' map developed by giz and the energy efficiency fund. the map contained contacts of specialists on energy efficiency certification of buildings, regions of their activity, information on work experience and other information. the resource provided opportunities to find experienced energy auditors for work in apartment buildings. it should be noted that the cost of energy audit works and reimbursement of their cost from local budgets are important enough to make a decision. in particular, among the surveyed condominiums, 48.6% determined that the percentage of reimbursement of the cost of the energy efficiency program is important for them (figure 5). 4. state support for energy efficiency it is also worth noting that state support for the introduction of energy efficiency in the management of apartment buildings includes the following: state support for energy efficiency projects (warm credits program). the program of state support for energy efficiency measures in apartment buildings is implemented under the state targeted economic program for energy efficiency and development of energy production from renewable energy sources and alternative fuels for 2010-2021, (warm credits program), which provides for encouraging co-owners of apartment buildings and housing cooperatives to introduce energy efficiency measures by reimbursing part of the cost of loans raised for the purchase of energy efficient equipment and materials. according to the procedure for the use of funds provided in the state budget for the implementation of measures for the efficient use of energy resources and energy conservation, the mechanism for implementing figure 2. use of energy efficiency practices in apartment buildings in ukraine source: constructed by the author three seas economic journal 19 vol. 2 no. 3, 2021 6,3% 6,3% 3,5% 4,2% 15,3% 9,0% 20,8% 19,4% 9,0% 6,3% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% figure 3. minimum percentage of compensation that is ready to finance condominiums of ukraine to participate in energy modernization source: constructed by the author figure 4. the cost of 1 apartment for the implementation of the energy modernization project (project duration – 6 months) source: constructed by the author figure 5. the most important characteristics of condominiums' participation in energy efficiency programs source: constructed by the author three seas economic journal 20 vol. 2 no. 3, 2021 the program and the mechanism for determining its responsible executors was determined. in 2019, according to the resolution of the cabinet of ministers of ukraine "some issues of optimizing the system of central executive bodies" to optimize the system of central executive bodies is the process of reorganization of individual central executive bodies, primarily the ministry of community of energy and environmental protection of ukraine (ministry of energy of ukraine). in turn, there have also been changes in the powers and tasks of the relevant ministries. today, according to this procedure, the responsible executor of the program "warm loans" – the state agency for energy efficiency and energy saving of ukraine, and the main administrator of budget funds – the ministry of energy of ukraine. we also note that in 2020, according to the resolution of the cabinet of ministers of ukraine "on amendments to the resolutions of the cabinet of ministers of ukraine from 01.03.2010 № 243 and from 17.10.2011 №1056" amendments were made to the procedure and program, which provided funding for account of the state budget in the amount of uah 150 million. and the direction of the program in 2021, which aims to repay part of the amount of loans in the following areas: incentives for co-owners of apartment buildings; encouraging citizens to purchase boilers using any type of fuel and energy (the exception is natural gas and electricity). for 2021, the program and the procedure did not provide for the reimbursement of part of the amounts of loans raised to stimulate condominiums and housing cooperatives to implement energy efficiency measures in apartment buildings. development of local programs to support the development of apartment building management, which implement energy efficiency measures. it should be noted that on september 2, 2021, 43 communities approved their own programs to support condominiums in order to reduce the financial burden on co-owners in the process of implementing energy efficient projects in apartment buildings. note that the 16 local programs that were approved earlier do not need to be changed or adapted, and 34 are under development. thus, the latest programs analyzed by the fund were approved by local governments in the following cities: – bar; veselivska utc; energodar; krasnopil utc; mukachevo; – netishyn; butts; pereyaslav; uzhhorod; chortkiv. 5. conclusions the purpose of the programs is to stimulate the creation of condominiums and provide them with financial support by partially reimbursing the costs of loans taken to implement energy saving measures in apartment buildings. analyzing the results of the implementation of the «energyhouse» program in ukraine, we note that in ukraine, 53 condominiums participating in the program have fully or partially carried out construction and installation work in buildings. thus, at the end of 2020, some co-owners of apartment buildings estimated the savings in utility bills through the introduction of energy saving measures. it was planned that by the end of 2021 the first projects in 11 regoins should be fully implemented, and this should be a significant impetus and a worthy example for other apartment buildings that have not yet decided whether to participate in this program or not. yulia holovatyuk-unguryanu, director of the energy efficiency fund, notes that “the growth rate of the number of condominium applications shows an increase in public confidence in the program. however, they are not enough to talk about launching large-scale energy modernization of multi-apartment housing. financial support of local authorities to their residents in the implementation of energy saving measures will contribute to even better results. we agree with the expert that the large-scale involvement of apartment buildings in the implementation of energy efficiency programs is constrained by the following problems: – insufficient funding; – insufficient state support for project financing; – distrust of co-owners to the effectiveness of the project; – unsatisfactory condition of the apartment building, which requires significant financial costs. in total, from september 2019 to the second quarter of 2021, 151 memoranda of cooperation were signed between the energy efficiency fund and the mhi. in 2021 it is planned and partially signed memoranda with the cities of the following regions of ukraine: zaporizhia; kherson; sumy; dnipropetrovsk; transcarpathian; cherkasy; kirovograd; mykolayivska; odessa; kyivska; rivne; lviv; zhytomyr; volyn; ivano-frankivsk; poltava. the foundation in 2021 also sent letters of invitation to more than 250 cities and communities. references: energy efficiency fund (2021). enerhodim [energy house]. retrieved september 16, 2021 from: https://eefund.org.ua/ponad-40-gromad-zatverdili-miscevi-programi-pidtrimki-osbb-scho-vprovadzhuyutenergoefektivni law of ukraine of july 01,1994 № 74/94-vr (1994). pro enerhozberezhennia on energy saving]. retrieved september 02, 2021 from: https://zakon.rada.gov.ua/laws/show/74/94-%d0%b2%d1%80#text three seas economic journal 21 vol. 2 no. 3, 2021 ministry of development of communities and territories of ukraine (2020). enerhoaudyt – tse diahnoz dlia vashoho budynku abo pidpryiemstva [energy audit is a diagnosis for your home or business]. retrieved september 02, 2021 from: https://www.minregion.gov.ua/press/news/za-otsinkoyu-minregionu-ponad-3700osbb-gotovi-vzyati-uchast-u-programi-energodim/ ministry of development of communities and territories of ukraine (2020). rezultaty opytuvannia osbb shchodo vprovadzhennia enerhoefektyvnykh zakhodiv [results of the survey of condominiums on the implementation of energy efficiency measures]. retrieved september 02, 2021 from: https://www.minregion.gov.ua/press/news/energoaudyt-cze-diagnoz-dlya-vashogo-budynku-abo-pidpryyemstva/ ministry of development of communities and territories of ukraine (2021). derzhavna pidtrymka enerhoefektyvnykh zakhodiv v ramkakh prohramy «teplykh kredytiv» u 2021 rotsi [state support for energy efficiency measures under the warm credits program in 2021]. retrieved september 02, 2021 from: https://cutt.ly/xrkbutl postanova kabinetu ministriv ukrayiny (2020). pro zatverdzhennya derzhavnoyi cilovoyi ekonomichnoyi programy energoefektyvnosti i rozvytku sfery vyrobnycztva energonosiyiv z vidnovlyuvanyx dzherel energiyi ta alternatyvnyx vydiv palyva na 2010–2021 roky: vid 01.03.2010 № 243 [on approval of the state targeted economic program for energy efficiency and development of energy production from renewable energy sources and alternative fuels for 2010–2021: resolution of the cabinet of ministers of ukraine of march 1, 2010 № 243]. retrieved september 02, 2021 from: https://zakon.rada.gov.ua/laws/show/243-2010-%d0%bf#text postanova kabinetu ministriv ukrayiny (2019). deyaki pytannya optymizaciyi systemy centralnyx organiv vykonavchoyi vlady vid 02.09.2019 № 829 [some issues of optimization of the system of central executive bodies: resolution of the cabinet of ministers of ukraine dated 02.09.2019 № 829]. retrieved september 02, 2021 from: https://zakon.rada.gov.ua/laws/show/829-2019-%d0%bf#text postanova kabinetu ministriv ukrayiny (2018). pro vnesennya zmin do postanov kabinetu ministriv ukrayiny vid 01.03.2010 № 243 i vid 17.10.2011 №1056, vid 14.03.2018 № 158 [on amendments to the resolutions of the cabinet of ministers of ukraine dated 01.03.2010 № 243 and dated 17.10.2011 №1056: resolution of the cabinet of ministers of ukraine dated 14.03.2018 № 158]. retrieved september 02, 2021 from: https://zakon.rada.gov.ua/ laws/show/158-2018-%d0%bf#text three seas economic journal 1 vol. 2 no. 1, 2021 corresponding author: 1 the bucharest university of economic studies, economics i doctoral school, bucharest, romania. e-mail: andreeaipuiu@gmail.com orcid: https://orcid.org/0000-0003-3461-1144 doi: https://doi.org/10.30525/2661-5150/2021-1-1 the effect of the consumer decision-making process on the perceived value toward slow fashion puiu ionela-andreea1 abstract. slow fashion designates a new paradigm in the clothing industry that promotes the importance of fashion goods realized with natural and durable products, empowering consumers to use the purchased clothes for a longer time, decreasing, in this case, the environmental and societal impact of fashion pieces. even if it designates the opposite of fast fashion production, the slow fashion notoriety is not remarkably high among consumers. this study proposed to examine the effect of the consumers' decision-making process on the noticed value toward slow fashion. in this regard, we considered multiple decision-making constructs and tested their impact on consumers’ perceived value toward slow fashion. also, we examined if there are discrepancies in the perceived value toward slow fashion based on gender. a survey was designed and administrated in romania to a sample of 330 consumers aged between 18-25. we applied to the collected data exploratory analysis to identify the distribution of manifest variables into factors, followed by confirmatory factor analysis to test the performance of the obtained factors. finally, we tested the proposed hypotheses using the structural equation model procedure. were identified seven dimensions that compose the decision-making process of the consumers, namely, recreational shopping, perfectionism, brand knowledge, over choice confusion, fashion awareness, impulsive buying, and brand loyalty. also, were found three dimensions that constitute the consumers' perceived value toward slow fashion, namely, emotional, social, and financial dimensions. the results showed that over choice confusion exhibits a positive effect on the emotional and financial value; fashion awareness manifests a positive effect on the social value, while brand loyalty manifests a positive impact on the financial value. in the case of gender impact on the emotional value, it was identified that, if a respondent is a female, the influence is positive and statistically significant. key words: fashion industry, consumer behavior, slow fashion, structural equations, innovation resistance. jel classification: c38, d12, l67, p36 1. introduction there is remarked an increase in the number of consumers that became more conscious of the environmental and scarcity difficulties that may affect their lifestyles and inevitably their consumption behavior. an industry that is facing this problem is the fashion industry that paid meaningful attention to sustainability and ethical issues, aggressively promoting this awareness also to fashion producers. in this context, developed slow fashion as a widespread reaction to the fast fashion movement. slow fashion appoints the process of creating and consuming fashion items ethically and consciously by introducing an alternative method of technological production to reduce as much as possible the waste of available resources and to find alternative fabrics that present regenerable properties. essentially, slow fashion connects social and environmental awareness with the responsibility for the future and the satisfaction of getting and wearing attractive, well-realized, and long-lasting fashion items, contrary to the immediate satisfaction produced by fast fashion consumption. in the research process that we have undertaken, we proposed to realize an inventory of the consumers’ decision-making influence on the perceived value toward slow fashion. in this regard, we applied exploratory factor analysis, finding seven components that encompass the decision-making process and three factors that compose the perceived value toward slow fashion. secondly, it was applied a confirmatory factor analysis followed by hypotheses testing using the structural equation model procedure. in the first section of the study, it was realized a summary of the existing studies in the domain, followed by the research method, results, and conclusions. in the last section were presented practical implications and limitations of the present research. three seas economic journal 2 vol. 2 no. 1, 2021 2. theoretical foundation people confront every day, consciously or unconsciously, with decisions. when it comes to the process of purchasing goods, consumer choices are influenced by mental and cognitive biases regarding their shopping experience and purchase decisionmaking techniques (sproles, 1985; stankevich, 2017). in this respect, the existing literature (sproles and kendall, 1986) identified eight dimensions that could characterize the consumer’s decision-making process, namely recreational shopping consciousness, perfectionism, brand consciousness, confusion by over choice, fashion consciousness, price consciousness, impulsiveness, and brand loyalty. in the following, we would expose the implications of each dimension. the first dimension, recreational shopping experience, refers to the satisfaction that arises from the buying session, consumers looking for new emotional experiences, and adventure during the shopping activity. the second dimension, perfectionism, refers to the people's tendency toward maximization and realization of the best choices, considering the available resources. perfectionist consumers search for highquality products that provide them with a greater added value. the third dimension, brand consciousness, describes that purchase decision that is influenced by the rename of a brand, consumers getting only the most well-known brands that have the higher prices, this last aspect being considered a sign of quality. brand consciousness is also managed by the consumer's desire to adhere to a social class or to confirm his social status (goldsmith et al., 2010). another aspect that could affect the decision-making process is the existence of multiple available options. in this case, the consumer is oversaturated with various options from whom he can choose (claudy, 2011; puiu, 2019). the decision process becomes embarrassed and produces interference in the consumer subconscious. the other two aspects that influence the consumer decision-making process are fashion consciousness and price consciousness. fashion consciousness refers to people's inclination to favor the newest styles and the latest appeared fashion trends. price awareness limits the bias toward impulsive and irrational shopping because consumers are sensitive to the financial part. impulsiveness appoints people's inclination to realize purchase decisions irrationally. therefore, buyers assume those choices without examining all factors that affect the purchase process and implicitly its unfavorable effects. the last dimension, brand loyalty, describes people's tendency toward attempting consistency and the default choice. so, consumers prefer to buy previously recognized and tested products or brands rather than trying new ones, even if the last category of products will supply them with a higher satisfaction or economic utility. we expect that the previously presented dimensions will reveal a significant impact on the consumer’s perceived value toward slow fashion, even there will be a positive or a negative influence. this perceived value was identified as being the overall efficacy of a product based on consumer investment and its expected returned earnings. consumers perceived value toward a particular output includes four dimensions: the emotional, social, price, and quality values. emotional value refers to the affective sensations that consumers manifest toward products. it is known that consumers exhibit attachment to the products that they own (tversky and kahneman, 1991). the social value shows people's wish to be part of a community. the social value includes the products that consumers buy and use to be accepted by their social group and realize a good impression on their peers. price value appoints the cost-benefit investigation to verify if a product creates the proper value for its implicit cost. the last dimension, quality value, refers to the overall perceived quality of a product and whether this quality produces satisfaction to the consumer or not. considering that we are examining the influence of the decision-making dimensions on the perceived value toward fashion, we expect to register differences among males and females because their attitude toward fashion is different. considering previously exposed theoretical aspects, we hypothesized the following statements that will be tested. hypotheses h1: decision-making components manifest a statistically significant influence (eighter negative or positive) on the consumers’ perceived values toward fashion. h2: gender manifests a positive influence on the perceived values of slow fashion. 3. research methodology 3.1. the instrument, sample, data collection and, method of analysis to collect data, it was applied a questionnaire that connects scales validated in previous research. to measure the consumer decision-making styles, it was adjusted the scale validated in sproles and kendall's study (1986). it was evaluated the consumers' perceived value toward slow fashion applying the perceived value scale, adapted from sweeney and soutar (2001). the items were ranked using a sevenpoint likert scale, where one belongs to strong disagreement and seven to strong agreement. the original survey was translated into romanian. there was gathered a total of 330 responses from romanian consumers; aged between 18 and 25 years (the mean age of the participants was 23.38). regarding the gender distribution in the sample, three seas economic journal 3 vol. 2 no. 1, 2021 we encountered 262 women (79.00%) and 68 men (21.00%), while regarding the residence: 225 of the respondents (68.3%) were from the urban areas, while only 105 of them (31.7%) were from rural areas. regarding their county of residence, most of them were from bucharest (18.81%), followed by iași (13.86 %), bacău (6.6%), neamț (5.28%), brașov (5.00%) and mureș (5.00%). regarding the monthly net revenue, 44.9% recorded a net monthly income lower than $225, while only 6.6% reported an income higher than $1350. concerning the frequency of clothes purchase, 43.40% stated that they purchase clothes when there is needed, while 27.10 % used to buy clothes weekly. we exposed descriptive statistics of the sample in table 1. before testing the hypotheses, it was conducted exploratory factor analysis using the minres extraction procedure and oblimin rotation, followed by reliability tests. there were eliminated from the analysis factor loadings lower than 0.40. further, it was employed the confirmatory factor analysis to examine the performance of the obtained constructs in the exploratory analysis, followed by fit indices calculations. to test the stated hypotheses, it was employed a structural equation procedure. all statistical procedures were tested using the r software (r core team, 2020). 4. findings 4.1. preliminary analysis the first part of the research method started with a graphical representation of the presumed correlations among the investigated dimensions. it was observed that most of the variables correlate positively, not being registered scores lower than 0.3 to indicate the lack of association among investigated variables. in the next step, it was checked the appropriateness of the sample size to run the exploratory factor analysis employing the kaiser mayer olkin statistics (kmos) for both scales included in the questionnaire. the kmos registered meritorious scores of 0.84 (decision-making style), respectively, 0.88 (perceived value). the parallel analysis suggested that seven factors appear from the decision-making style dimension and three factors from the perceived value dimension. in the case of the decision-making dimension, the primary factor explained 10.40% of the variance, while the remaining four factors accounted for 9.20%, 8.40%, 8.00%, 7.20%, 5.90%, 5.00%. the cronbach alpha registered scores among 0.64 and 0.89 (table 2). regarding the fit indices, the tucker-lewis index of factoring reliability encounters a value of 0.929. the root means square of the residuals (srmr) registers a score of 0.03, while the root mean square of error approximation (rmsea) a value of 0.049. regarding the perceived value dimension, the primary factor explained 24.30% of the variance, while the other two factors explain 23.20%, respectively 19.10%. for this scale, we registered cronbach alpha scores among 0.86 and 0.92. for this scale, the tucker lewis index registers a value of 0.936. the srmr registers a value of 0.02, while rmsea registers a score of 0.088. after the exploratory analysis, we employed the confirmatory factor analysis, using the maximum likelihood estimator, to verify the performance of the already obtained factors. to diagnose the model, we considered the following indices: goodness of fit and adjusted goodness of fit indices (gfi ≥ 0.95 table 1 sample characteristics item classification n = 330 no. % gender women 262 79.00% men 68 21.00% residence urban 225 68.3% rural 105 31.7% income lower than $225 149 44.9% between $225-$450 58 17.5% $450-$675 47 14.2% $675-$900 30 9.00% $900-$1125 10 3.00% $1125-$1350 16 4.80% greater than $1350 20 6.60% frequency clothes purchase weekly 8 2.60% at two weeks 19 5.50% monthly 90 27.1% every season 69 20.8% where it is needed 144 43.4% source: author’s calculation, 2020 three seas economic journal 4 vol. 2 no. 1, 2021 figure 1. items correlation source: author’s calculation, 2020 table 2 exploratory factor analysis model items loadings cronbach alpha f1 – r ec re at io na l sh op pi ng shopping is not a pleasant activity. 0.664 0.78 shopping in different stores is a waste of time. 0.627 shopping is very enjoyable for me. 0.864 i enjoy shopping just for fun. 0.504 it is fun to buy something new and exciting. 0.523 f2 – pe rf ec tio ni sm i make a special effort to choose the best quality products. 0.728 0.89 in general, i usually try to buy the best overall quality. 0.896 getting good quality is important to me. 0.859 i have remarkably high standards and expectations for the products i buy. 0.752 f3 b ra nd k no w le dg e the most advertised brands are good choices. 0.678 0.84 the higher the price of the product, the better the quality. 0.706 i prefer buying best-selling brands. 0.751 i usually buy well-known brands. 0.670 good quality department stores and specialty stores offer the best. 0.552 f4 – o ve r ch oi ce c on fu si on i am confused by all the information on different products. 0.548 0.64the more i learn about products, the harder it seems to choose the best. 0.816 there are so many brands to choose from that i often feel confused. 0.510 f5 – f as hi on a w ar en es s i usually have at least one outfit of the newest style. 0.846 0.88i keep my wardrobe up to date with the changing fashions. 0.914 fashionable, attractive styling is important to me. 0.634 f6 – im pu ls iv e b uy in g i often make purchases i later wish i had not. 0.734 0.75i frequently purchase on impulse. 0.807 i should spend more time deciding on the products i buy. 0.498 f 7 – b ra nd l oy al ty when i find a brand i like, i buy it regularly. 0.792 0.79i have favorite brands i buy every time. 0.960 i go to the same store each time i shop. 0.463 source: author’s calculation, 2020; scale items were adapted from sproles and kendall, 1986 three seas economic journal 5 vol. 2 no. 1, 2021 agfi ≥ 0.90), tucker-lewis index (tli ≥ 0.95), comparative fit index (cfi ≥ 0.90), root mean square error of approximation (rmsea < 0.08) and standardized root mean square residual (srmr < 0.08). the seven factors model concerning the decision-making process fit well on the data, registering good scores of the fit indices (gfi = 0.981, agfi = 0.974, tli = 0.914, cfi = 0.926, rmsea = 0.056, srmr = 0.062). the same good results were obtained in the case of the perceived value dimension, but the tucker-lewis index registers a score slightly above the threshold; while the root mean square error of approximation registers a score above the threshold (gfi = 0.978, agfi = 0.960, tli = 0.926, cfi = 0.943, rmsea = 0.096, srmr = 0.049). 4.2. hypotheses testing to test the proposed hypotheses, it was applied a structural equation model, implemented using the lavaan package (rosseel, 2012). the gathered results were graphically outlined in the following image (figure 2). table 3 results exploratory factor analysis on the perceived value dimension items loadings cronbach alpha f1 e m ot io na l va lu e slow fashion clothing has an acceptable standard of quality. 0.783 0.92 slow fashion clothing is one that i would feel relaxed about using. 0.887 slow fashion clothing would make me want to use it. 0.834 slow fashion clothing is one that i would enjoy. 0.836 f2 – s oc ia l va lu e slow fashion clothing would improve the way i am perceived. 0.772 0.90 slow fashion clothing would make a good impression on other people. 0.819 slow fashion clothing would give its owner social approval. 0.866 slow fashion clothing would help me to feel acceptable. 0.851 f3 – f in an ci al va lu e slow fashion clothing is reasonably priced. 0.751 0.86 slow fashion clothing would be economical. 0.814 slow fashion clothing is a good product for the price. 0.800 slow fashion clothing offers value for money. 0.634 source: author’s calculation, 2020. scale items were adapted from sweeney and soutar, 2001 notes: f1 = recreational shopping; f2 = perfectionism; f3 = brand knowledge; f4 = over choice confusion; f5 = fashion awareness; f6 = impulsive buying; f7 = brand loyalty; f8 = emotional value; f9 = social value; f10 = financial value; figure 2. results of the structural equation model estimation source: authors’ calculation, 2020 three seas economic journal 6 vol. 2 no. 1, 2021 the results of the structural equation models (table 4), that test potential relationships between decision-making dimensions and their perceived value toward slow fashion, identified several significant influences. in this respect, it was identified that over choice confusion exhibits a positive effect on the emotional value (β = 0.291, p-value = 0.001) and on the financial value (β = 0.158, p-value = 0.035); fashion awareness manifests a positive impact on the social value (β = 0.123, p-value = 0.029), while brand loyalty manifests a positive influence on the financial value (β = 0.086, p-value = 0.034). regarding the gender influence on the perceived value, gender variable was transformed in a binary variable that takes the value of 0 if a respondent is a male and a value of 1 if a respondent is a female. in the case of the gender influence on the emotional value, we identified that if a respondent is a female, the influence on the emotional dimension is positively increasing, the influence being also statistically significant (β = 0.301, p-value = 0.024). on the other hand, we observed that if a respondent is a female the overall influence on the social (β = -0.222, p-value = 0.145) and financial value (β = -0.037, p-value = 0.751) is negative and not statistically significant. overall, the model that we have tested proved to registers good scores of the fit indices, namely the comparative fit index (cfi = 0.915), root mean squared error of approximation (rmsea = 0.052), and standardized root mean square residual (srmr = 0.061) registered desirable values. regarding the tucker lewis index, the obtained value is slightly below the 0.95 threshold. 5. general discussion and implications the present research aimed to contribute to the slow fashion literature by supplying empirical evidence about the consumer's decision-making styles in understanding their perceived value toward slow fashion. the existing literature revealed that the decision-making style scale includes eight factors, namely, recreational shopping consciousness, perfectionism, brand consciousness, confusion by over choice, fashion consciousness, price consciousness, impulsiveness, and brand loyalty. the perceivedvalue scale is composed of four factors, namely the emotional, social, price, and quality values. in the exploratory analysis that we conducted, we have found that in the case of the decisiontable 4 direct effects – hypotheses testing direct effects estimate standard error z-value p-value emotional value ~ recreational shopping -0.002 0.057 -0.028 0.978 emotional value ~ perfectionism 0.102 0.057 1.788 0.074 emotional value ~ brand knowledge -0.011 0.086 -0.131 0.896 emotional value ~ over choice confusion 0.291 0.090 3.249 0.001** emotional value ~ fashion awareness -0.010 0.049 -0.202 0.840 emotional value ~ impulsive buying -0.064 0.051 -1.257 0.209 emotional value ~ brand loyalty 0.052 0.046 1.136 0.256 emotional value ~ gender 0.301 0.133 2.259 0.024* social value ~ recreational shopping 0.002 0.065 0.024 0.981 social value ~ perfectionism 0.064 0.065 0.024 0.981 social value ~ brand knowledge 0.102 0.099 1.037 0.300 social value ~ over choice confusion 0.179 0.098 1.832 0.067 social value ~ fashion awareness 0.123 0.056 2.183 0.029* social value ~ impulsive buying 0.085 0.058 1.463 0.143 social value ~ brand loyalty 0.048 0.053 0.916 0.360 social value ~ gender -0.222 0.152 -1456 0.145 financial value ~ recreational shopping 0.005 0.049 0.094 0.925 financial value ~ perfectionism 0.061 0.049 1.233 0.217 financial value ~ brand knowledge 0.034 0.075 0.454 0.649 financial value ~ over choice confusion 0.158 0.075 2.104 0.035* financial value ~ fashion awareness 0.013 0.043 0.306 0.760 financial value ~ impulsive buying -0.037 0.044 -0.829 0.407 financial value ~brand loyalty 0.086 0.040 2.126 0.034* financial value ~ gender -0.037 0.115 -0.317 0.751 fit indices cfi = 0.915; tli = 0.904; rmsea = 0.052; srmr = 0.061; source: аuthors’ calculation, 2020 three seas economic journal 7 vol. 2 no. 1, 2021 making styles, the price consciousness loadings were exceptionally low, and the reliability score was poor performing. therefore, we decided to drop it from the analysis. the same happened to the quality value from the perceived-value scale. regarding the hypotheses testing, we noticed that over choice confusion presents a positive impact on the emotional and financial values. while fashion consciousness manifests a positive impact on social value and brand loyalty shows a positive influence on financial value. the positive impact of fashion awareness on the price value was expected considering the results of existing research (sung and woo, 2019). regarding the gender influence on the emotional value, it was remarked that if a respondent is a female, the impact is positively improving by 0.301, being also statistically significant. we consider that those findings are in the interest of fashion retailers to develop proper marketing strategies for consumers to enhance their interest in slow fashion. also, it is essential to make consumers aware of the positive features of the slow fashion, the time and financial benefits in the long term, the high quality offered while supplying the environmental protection function. 6. limitations and future research even if the present research contributes to existing literature about the slow fashion movement and our empirical evidence could be in the interest of fashion retailers to develop appropriate strategies to contribute to a positive attitude toward slow fashion, some limitations should be kept in mind when generalizing the gathered results. the results have limited generalizability considering the sampling method that we have used to collect the data, namely the snowballing sample procedure. moreover, our sample is unbalanced because we have more women (79.00%) than men (21.00%) respondents and more people from urban areas (68.3%) than from rural areas (31.7%). from the fact that most of the respondents reported a net monthly income lower than $225 (44.9%), we question that they are willing to invest lots of money in clothing acquisition. considering those aspects, we believe that there is a need to extend the present research to a more homogeneous and unbalanced sample. for the future, we propose to investigate the consumer's perceived value influence on their attitude and their purchase intention about the slow fashion phenomena. references: claudy, m. (2011). an empirical investigation of consumer resistance to green product innovation, doctoral thesis, dublin institute of technology, dublin. goldsmith, r . e., flynn, l. r ., & kim, d. (2010). status consumption and price sensitivity. journal of marketing theory and practice, 18(4), 323–338. puiu, i. a. (2019). consumer resistance to innovation in the fashion industry. studies in business and economics, 14(2), 127–140. r core team, r . (2020). a language and environment for statistical computing. r foundation for statistical computing, vienna, austria. available at: https://www.r-project.org/ rosseel, y. (2012). lavaan: an r package for structural equation modelling. journal of statistical software, 48(2), 1–36. available at: http://www.jstatsoft.org/v48/i02/ sproles, g. b. (1985). from perfectionism to faddism: measuring consumers' decision-making styles. in: proceedings, american council on consumer interests, 31, 79–85. sproles, g. b., & kendall, e. l. (1986). a methodology for profiling consumers' decision-making styles. the journal of consumer affairs, 20(2), 267–279. stankevich, a. (2017). explaining the consumer decision-making process: critical literature review. journal of international business research and marketing, 2(6), 7–14. sung, j., & woo, h. (2019). investigating male consumers’ lifestyle of health and sustainability (lohas) and perception toward slow fashion. journal of retailing and consumer services, 49, 120–128. sweeney, j. c., & soutar, g. n. (2001). consumer perceived value: the development of a multiple item scale, journal of retailing , 77, 203–220. tversky, a., & kahneman, d. (1991). loss aversion in riskless choice: a reference-dependent model. the quarterly journal of economics, oxford university press, 106(4), 1039–1061. three seas economic journal 24 vol. 2 no. 4, 2021 corresponding author: 1 pervomaisk branch of the national university of shipbuilding named after admiral makarov, ukraine e-mail: tanyshabukina@gmail.com orcid: https://orcid.org/0000-0003-3628-6859 researcherid: aao-5442-2021 2 kherson state university, ukraine e-mail: perminova@i.ua orcid: https://orcid.org/0000-0002-6818-3179 doi: https://doi.org/10.30525/2661-5150/2021-4-5 cultural diplomacy: institutional contexts tetiana bukina1, liudmila perminova2 abstract. the article analyzes the leading types of modern diplomacy. problem statement. changes in the system of international relations have led to increased attention to the study of issues related to modern diplomacy. however, in the scientific community, the study of the features and essence of the varieties of modern diplomacy is considered to be fragmented. the lack of thorough general theoretical works on this issue, as well as the frequent misunderstanding of the essence and tasks of modern diplomacy in the scientific and publicist literature, causes confusion and different interpretations of the terms. this points to the relevance and significance of further research in the field of modern diplomacy. the purpose of the study is to reveal the essence and define the terms " public diplomacy", " people' diplomacy", "civil diplomacy", "new public diplomacy", to establish their classification according to the subjects of implementation, addressees and peculiarities of practical implementation. the aim of the work is also to conduct a comprehensive analysis of "cultural diplomacy" and to identify the main achievements in this area in ukraine. methodology. this study uses the methodology of interdisciplinary level science. the interdisciplinary integration of knowledge and the integration of disparate characteristics into a system allowed to obtain new scientific knowledge, which consists in a comparative analysis of the leading types of modern diplomacy, highlighting "cultural diplomacy" as the main one and analyzing the main institutional achievements of ukraine in cultural diplomacy. results. the article summarizes the definitions of the concepts of "public diplomacy", "civil diplomacy", "people's diplomacy", "digital diplomacy", "new public diplomacy". their essential features and main characteristics are highlighted, their comparative analysis is presented, and "cultural diplomacy" as the leading direction of modern diplomatic practice is analyzed. the institutional context of cultural diplomacy of ukraine is considered. the conclusion is made that despite the failure of systemic cultural reforms in the past, today there are positive changes in cultural diplomacy. ukraine's cultural vector in foreign policy acquires a systemic and strategic balance. value/originality. a comparative analysis of different types of modern diplomacy is conducted, the definition of "cultural diplomacy" is clarified and the peculiarities of its institutional formation are considered. practical implications. the materials of the article can be used for research and educational purposes, as well as for the further development of the vectors of ukrainian cultural diplomacy. key words: formal and informal diplomacy, public diplomacy, citizen diplomacy, people's diplomacy, digital diplomacy, new public diplomacy, cultural diplomacy. jel classification: f29, l86, z10 1. introduction the beginning of the xxi century was marked by significant transformations in all spheres of human life. the processes of globalization and active development of the latest information and communication technologies have affected the system of international relations. new actors became active in the international arena, new levers of influence began to prevail and new centers of state decision-making and implementation emerged. domestic and foreign theorists and practitioners have studied various aspects of diplomacy. the paper is based on the achievements of g. atamanchuk (democracy, 2005); n. bogolyubova, s. gutsal, t. zonova, m. cummings, a. lukina, d. mostova, j. nye, k. plavšak, g. pocheptsova, t. sivak, i. sukhorolska, p. sukhorilsky and i. misyuk, and many others, which allowed to summarize the features of modern diplomacy, to highlight its main types and make a classification, this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 25 vol. 2 no. 4, 2021 based on the essential characteristics and peculiarities of functioning in modern diplomatic practice. these and other works attempt to define the term "cultural diplomacy " and explore different aspects of it. despite the diversity of interpretations of "cultural diplomacy," there is consensus on the importance and priority of this type of diplomacy today. in this study, the authors were guided by empirical level methods, that is, inductive generalization. the formation of the empirical basis of the theory requires a theoretical interpretation of the main empirical dependencies and facts, and further development of the initial scientific abstractions. theoretical activity organizes empirical activity, it predicts and draws new facts into the circle of research. theoretical knowledge reflects the object at the level of its internal connections, regularities of formation and peculiarities of functioning of cultural diplomacy in the modern space of international relations. 2. formal and informal diplomacy in modern international space today, diplomacy is undergoing a truly profound transformation. in the twenty-first century, the multilateral nature of diplomacy is being asserted. in addition to formal diplomacy, informal diplomacy is becoming increasingly important. the functions of diplomacy, which used to be the de facto prerogative of foreign ministries and were performed mainly by embassies, are now implemented through numerous state and even non-state channels, in particular through the second line of diplomacy, track ii diplomacy. the phenomenon of informal diplomacy is not a legacy of the modern system of international relations. formal and informal diplomacy have existed as a whole since antiquity, as the greek polis often turned to famous actors to deal with important political issues (zonova, 2003). it is known that as early as the middle ages, representatives of the state appealed to doctors, bankers, and monks on various diplomatic commissions. informal representatives are often approached by official diplomatic services because they can use methods to achieve the desired outcome, even though they cannot formally participate in the signing of formal agreements. because unofficial diplomacy has no leverage, it is for this reason that official diplomacy turns to them for help when they are unable to reconcile the parties or reach agreement on important international issues. the main task of informal diplomacy is to resolve conflict situations and find compromise, peaceful solutions. however, informal diplomacy cannot be seen as the equivalent of formal diplomacy, which can guarantee the full achievement of a positive result, it can only prepare the ground for complex negotiations and the signing of formal agreements by representatives of the diplomatic services of states. representatives of formal and informal diplomacy do not oppose each other. their concerted action is the key to the development and implementation of important decisions. m. arkhipova's sees modern diplomacy as a complex conglomerate of formal and informal actions and is quite right (arkhipova, 2007). 3. public diplomacy: the essence and main characteristics public diplomacy is among the priority types of modern diplomacy today, when it has become an increasingly important factor in the international life of most developed countries. despite its popularity, public diplomacy is not a relatively new area of international politics. as d. vosel notes, public diplomacy has always been present in the practice of international relations, but only now has this phenomenon been defined (seyidov, 2020). the practice of public diplomacy even preceded the integration of its terminology into the work of the diplomatic services. the united states has been an ancestor of public diplomacy since its inception in the 1960s, a concept that is now widespread. the term "public diplomacy " was first coined by edmund gallion, who defined it as "a government-sponsored program aimed at influencing public opinion" (smirnov, 2017). public diplomacy is defined as international activity aimed at public representation of the interests of states or legal institutions (state institutions, non-governmental organizations, and individuals) in international relations. "public" in the context of public diplomacy means that it takes place in the presence of people. the focus is on the public (the population of foreign countries) (nesterovich, 2016). the second important factor of public diplomacy is the information impact on the audience in the context of its foreign policy and national interests. public diplomacy is understood as one of the components of strategic communications, which has the key task of forming the image of the state and its institutions at the international level, the consolidation of important brands in the global information space. in the works of domestic scientist g. pocheptsov, public diplomacy is considered as a method of promoting one's own "picture of the world" to a foreign audience (pocheptsov, 2008). public diplomacy also refers to the way in which a government, individuals, and groups can directly or indirectly influence public opinion and attitudes affecting the foreign policy decisions of another government. the main tools of public diplomacy are the media, international and national nongovernmental organizations, and international informal contacts. three seas economic journal 26 vol. 2 no. 4, 2021 public diplomacy is considered different from traditional state diplomacy because it engages nonstate actors. it expands the scope of traditional diplomatic activity: from the sphere of "high politics" on various issues and aspects of daily life and from the "closed" sphere of governments and diplomats to new actors and target groups – individuals, groups and institutions entering into international and intercultural communication activities and influencing political relations between countries (plavšak, 2005). firstly, public diplomacy is open, transparent to the general public, whereas disclosure of information about "official" diplomatic activities is very limited. secondly, public diplomacy involves communications between governments and the public, whereas traditional diplomacy involves cooperation only at the level of governments. american analytical center (r&d) researcher charles wolf draws a parallel between official diplomacy and classical diplomacy and highlights the main differences: "public diplomacy is directed from government to the general public, official diplomacy is directed from government to government; the topics and issues of official diplomacy are related to state policy, whereas public diplomacy is related to the attitudes and behavior of the population." (what is public diplomacy, 2021) public diplomacy takes place at all levels of communication, when one country communicates with the society of another, shaping its potential, consciousness, worldview (mostova, 2020). thirdly, official diplomacy focuses on the behavior and policies of governments, while in the case of public diplomacy, the attitudes and behavior of the population are of paramount importance. depending on the extent to which public attitudes influence government strategies, public diplomacy can influence government policies indirectly through the population. the term "public diplomacy " is often confused with propaganda. in fact, public diplomacy means building relationships: understanding the needs of other countries, cultures and peoples, respecting our views, correcting misconceptions, finding areas where we can find a community with common problems and interests. the difference between public diplomacy and traditional diplomacy is that public diplomacy involves a much wider range of people on both sides, as well as a wider range of interests that involve more than just state issues. public diplomacy is based on the claim that a state's image and reputation are public goods that can create both favorable and unfavorable conditions for international relations. work on specific issues in this area is instantly reflected in the state's reputation (leonard, 2020). in practice, the differences between propaganda and psychological operations are often unclear (slisarenko, 2008), and discussions about the differences between propaganda and public diplomacy continue today. it is known that developed countries are always tempted to use their advantages in information technologies and means of manipulating public consciousness for informational and cultural expansion (drobot, 2008). these threats need to be taken into account in the formation of the information security system in ukraine. this type of diplomacy is relevant because it has a number of advantages over classic diplomatic activity. first of all, it has a wide arsenal of tools, which are implemented exclusively peacefully, without any military intervention. public diplomacy does not require significant costs and resources, and can become a more effective tool when classical diplomacy is difficult or impossible to use. it is not without reason that it is regarded "as the fourth dimension of foreign policy " (leonard, 2017). the revolution in international relations has manifested itself in the fact that states are increasingly competing not for territory or resources, but for their attractiveness and reputation (pocheptsov, 2008). unlike traditional diplomacy, which provides contact only within the diplomatic corps, public diplomacy is aimed at the general public of another country and tries to communicate with it in a two-pronged way – dialogue. such actions by individual states are part of the arsenal of so-called "soft power," or the "soft power" of positive stereotypes. american political scientist joseph nye, author of the concept of "soft power," considers public diplomacy as one of the effective methods of establishing long-term relations with other countries, which is realized in the ability to achieve the desired result through the voluntary participation of allies, rather than through coercion. "soft power" manifests itself in motivating people to adopt certain attitudes, and unlike "hard power" it is able to achieve the same goal for less money (rogozin, 2008). joseph nye points to three sources of state soft power: political action, culture, and values. these can be used by the state to tell the world about itself. in contrast to propaganda, which can be perceived as something dishonest, it declares the principle of truthfulness formulated by former u.s. news agency director e. murrow: "truth is the best propaganda, and untruth is the worst. to be credible, we have to be reliable, to be reliable, we have to be honest” (rogozin, 2008). public diplomacy is a time-consuming, slow, step-bystep activity. it is often based on stereotypes that exist in certain countries about other people and cultures. stereotypes can be positive, helping to create a good image of a certain culture among others by showing its positive traits and achievements. public diplomacy can then use them for its own needs and purposes. stereotypes can also be negative, in which case public diplomacy tries to change them. along with the term "public diplomacy," "civil diplomacy " and " people' s diplomacy " are also used. these types of diplomacy should be distinguished. three seas economic journal 27 vol. 2 no. 4, 2021 4. "citizen diplomacy," "civil diplomacy," and "people's diplomacy" in the system of international relations there is no single definition of the terms "citizen diplomacy," "civil diplomacy," and "people's diplomacy. the concept of citizen diplomacy, which emerged in the united states in the 1960s, was identified with "public diplomacy " and used to refer to foreign policy involving the public of foreign countries. according to american politicians, the phenomenon of civil diplomacy has existed in international relations since ancient times, and the american administration has been using it since the late 1940s (seyidov, 2002). the identity of the definitions of public diplomacy and civil diplomacy is explained by the peculiarities of the translation of the english term "public diplomacy," as it has many meanings. the phrase "public diplomacy " (as well as "public relations") refers to the target audience of the public. the definitions use the word "publics," which emphasizes the presence of several such audiences, but not a general "public. that is, "public diplomacy " is "diplomacy with the public, citizens," meaning the international actor's connections with foreign target audiences, but not with the general population. the use of the term "citizen diplomacy " demonstrates the inextricable connection of this phenomenon with the pr sphere, the obviousness of which is increasing every day. many researchers note a clear tendency to unite national and foreign audiences in the process of discussing international issues. this is natural when these audiences can easily find points of contact outside the state. the term "civil diplomacy " is used to define "community diplomacy ". such diplomacy is widely understood in the context of public interest lobbying (seidov, 2009). this "civil diplomacy " can extend to any relationship between communities with the goal of building long-term relationships rather than achieving certain one-time goals. public organizations and associations as an element of "people's diplomacy " play an important role in modern conditions. significant theoretical and practical importance is to identify the functions of public organizations and movements, as this helps to understand their place in the system of civil society and the rule of law, as well as to show the forms and methods of their activities (people's diplomacy, 2021). some experts distinguish the concepts of "public diplomacy " and "civil diplomacy," as the latter refers to the activities of non-governmental institutions (makarenko, 2010), as in the case of "citizen diplomacy". from the authors' point of view, using the term "civil diplomacy" to refer to the diplomacy of public organizations will only complicate terminological confusion. the authors of this paper fully agree with scholar i. sukhorolska that the use of the term "civil diplomacy" exclusively for the activities of nongovernmental organizations, communities, or other voluntary associations is not sufficiently justified. certain territorial communities generally do not engage in international activities, unlike local governments, businesses, or civil society organizations. a more accurate term for this is "citizen diplomacy". the notion of "people's diplomacy" is currently unproductive, since in democracies the position of the people and society is expressed by state power. thus, "citizen diplomacy" is characterized by the realization of national interest. its main objectives are to form a positive perception of the state, to explain the essence of the internal policy of the state, the processes taking place in it, to inform the international community about the state's position on important international issues (luzan, 2005). also common is the focus on foreign audiences and the public. thus, the direct object of foreign policy implemented through citizen diplomacy is not the authorities of a foreign state, but rather certain target audiences and the public, which coincides with the definition of "public diplomacy ". so, a common feature of the terms "public diplomacy " and "citizen diplomacy " is their focus on the "public" – an active target audience. however, their main difference is that "citizen diplomacy " is carried out by nongovernmental institutions, while the subjects of "public diplomacy " can be both governmental and non-governmental organizations and associations. 5. technological transformations and "digital diplomacy" the modern foreign policy of states in the international arena is a combination of tradition and innovation. thanks to the internet and the rapid development of new technologies, the concept of "digital diplomacy," or " web 2.0 diplomacy," is emerging. today, diplomacy that contains elements of internet activity using electronic devices has a number of definitions: e-diplomacy, electronic diplomacy, social network diplomacy, and so on. but the more common name for the new direction is "digital diplomacy ". according to p. dosh, a professor at the school of communication at american university (usa), "digital diplomacy" is a new field in which governments interact directly with the public abroad through any available internet resources, including websites, blogs and social networks. "digital diplomacy " is also defined as the use of web, information and communication technologies to realize foreign policy goals (litra, 2021). digital diplomacy is predominantly applied, and is particularly useful in working with foreign audiences on issues of communicating the official position and shaping the image of the state. the importance of digital diplomacy in international practice is steadily growing. thanks to the internet, the three seas economic journal 28 vol. 2 no. 4, 2021 average citizen can get explanatory information about alternative viewpoints in international relations. it opens public access to the results of traditional diplomacy and explains to non-specialists the nature, patterns and prospects of adopted diplomatic documents. digital diplomacy is a dynamic tool in dealing with foreign audiences, especially when it comes to disseminating the official position and shaping the image of the state. "this allows state and non-state actors (figures) to convey their information to a multimillion foreign audience in the shortest possible time and to respond flexibly by changing the content of their diplomatic activities." (what is public diplomacy, 2020) today, information from a variety of sources allows global players to bypass previously established diplomatic channels and requires quicker responses from officials, as well as allowing various ngos to express their positions more clearly. it should be noted that digital diplomacy in the international information sphere contains a number of threats and risks. firstly, such risks include the lack of trained specialists. secondly, the internet is perceived as an unreliable source because it is a channel for extremism, terrorism, the imposition of someone else's ideology, foreign policy propaganda, and a means of conducting information wars. thirdly, there is the possibility of information leaks and the spread of viral products. another important point is the uncertainty of the status of a diplomat's statements in social networks: whether they are personal statements or express the official position of the country. failure to understand this difference can lead to serious negative consequences. the worsening epidemiological situation in the world due to the spread of the coronavirus has greatly actualized the potential of digital diplomacy. for the first time in the history of global diplomatic practice, virtual platforms have become virtually the only meeting place for diplomats, politicians and statesmen, transforming the tools of digital diplomacy from auxiliary to key in international cooperation issues. table 1 types of diplomacy: a comparative table of the main characteristics types of diplomacy by subject (active participants) by object (passive participants) the main tasks public diplomacy formal and informal governmental and nongovernmental organizations, associations certain target audiences, the public informing and influencing foreign audiences, as well as expanding international dialogue. formation of public opinion about the image of the state and its institutions at the international level, consolidation of significant brands in the global information space, etc. people's diplomacy an unofficial form of diplomacy unofficial representatives, scientists, artists, businessmen, ordinary citizens governments and a wide range of citizens solving the problems in a humane, non-violent, peaceful way. citizen diplomacy formal and informal non-governmental institutions (individuals and legal entities, civil society institutions regardless of the state in the interests of the state), the public. influence on foreign target audiences (on the policies of governmental and non-governmental structures of foreign countries) implementation of national interests. the main objectives are to form a positive perception of the state, to explain the essence of the internal policy of the state, the processes taking place in it, to inform the world community about the state's position on important international issues. digital (network diplomacy) formal and informal governmental and nongovernmental entities, citizens, organizations. influence on the mass consciousness and political elites the use of the internet and information and communication technologies (new media, social networks, blogs, etc.) to solve diplomatic problems, promote foreign policy interests, and informational propaganda through internet television, social networks, and cell phones. new public diplomacy formal and informal participants, weakening of the state control there has been a change among the actors – states are forced to compete with networked nongovernmental actors. governments and a wide range of citizens the realization of its own foreign policy interests in international relations by methods based on the creation of an atmosphere of trust and equality, the establishment of permanent contacts between civil society institutions of different states, and the development of international networks. cultural diplomacy formal and informal institutions of state power, non-governmental organizations, public activists, artists, journalists, scientists, students, politicians different segments of society development of communication channels and networks between representatives of creative, scientific, business and other groups of different states, inter-ethnic interaction and expansion of the state's cultural presence abroad, thereby forming a positive image in foreign audiences. source: the table is formed by the authors three seas economic journal 29 vol. 2 no. 4, 2021 thus, the development of digital diplomacy is related to the emergence of new technologies. digital diplomacy is applied to social interaction via the internet. the use of digital technologies in the field of diplomacy opens up new opportunities in international activities. the new format of interaction between society and diplomatic institutions makes diplomacy more public. the concept of the new public diplomacy was born at the turn of the century in the form of general forecasts of the development of international communication, and then became more concrete through practical experience. the spread of new technologies and the increase in the number of international nongovernmental actors can be considered the main factors that influenced the formation of a new public diplomacy. in the early 2000s, there was a steady increase in the number of internet users (now called netizens or networkers). based on a review of the leading types of modern diplomatic practices, their main characteristics were summarized and a comparative analysis presented in table 1. the second important factor in the transformation of public diplomacy is the growing number and role of non-state actors in the international arena (zaharna, 2010). new technologies have played no small part in this process. international associations with a network form of organization have become so influential that they have achieved the ability to compete with state bodies in performing certain public functions. they participate in the formation of international policy, and their position is important for shaping the image of international actors. the main differences of the new public diplomacy are the changes among the participants. states now have to compete with networked nongovernmental structures, which have such advantages as flexibility, reliability, adaptability, and the ability to grow quickly and respond instantly to international developments. 6. conclusions thus, cultural diplomacy has long been an unknown area for ukrainians, and there has been a conceptual vacuum in ukraine. until recently, cultural diplomacy was used on the residual principle. in recent years, however, there have been significant positive changes in this area. first, despite the fact of terminological inconsistency due to the relative "youthfulness" of modern diplomatic activity, interest in it is steadily growing. second, ukraine has a deliberate and balanced strategy of state promotion based on the cultural component. the relevant institutions are being 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(2008). nato's "public diplomacy ": russia's information security. governance, 9, 26–32. what is public and public diplomacy, real-life examples (2019). available at: https://jak.koshachek.com/articles/ shho-take-narodna-diplomatija-prikladi-z-zhittja.html. three seas economic journal 88 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: angelikaam@ukr.net orcid: https://orcid.org/0000-0001-9514-504x doi: https://doi.org/10.30525/2661-5150/2022-2-13 economic essence, forms and types of payments for employee benefits anzhelika mashevska1 abstract. the article reveals the economic essence and importance of wages as a component of current payments to employees and studies the methodology and organization of accounting and taxation of remuneration. the problems of organization and methods of payroll accounting are determined. these are the main shortcomings in the field of taxation, as well as the problems of using the tariff system as the basis for accounting and documenting payments for remuneration with personnel. methodology. the normative and legislative regulation of accounting and documentation of payments for remuneration is analyzed. the requirements for the formation of the organization of remuneration accounting, which determine the tasks, the system of indicators, documentation and the system of accounts on which the relevant information is accumulated, are presented. results. it is concluded that the improvement of labor accounting and its remuneration at enterprises should be based on the optimization of tariff regulation of wages, namely: improvement of the tariff system by establishing ratios of tariff rates depending on the level of qualification of the worker; introduction of flexible forms and systems of remuneration, including contract and tariff-free; collective regulation of wages. the main ways to improve the display of wage accounting are proposed. practical implications. the organization of document circulation on employee payments is investigated, the methodology of synthetic and analytical accounting of payments to employees for worked and unworked time is determined. the methodology of conducting audit procedures for payments to employees is considered, the effectiveness of employee benefits is evaluated. value/originality. the scientific novelty of the work consists in summarizing theoretical and practical material on the methodology, economic essence, forms and types of payments for employee benefits. the theoretical essence of calculations on remuneration of the enterprise is determined, the regulatory and legal regulation of payments to employees in ukraine is investigated, the tasks of accounting, auditing and analysis of employee benefits are considered. key words: organization of accounting, payroll taxation, accounting methodology, tariff system, documentation, accounting accounts, remuneration. jel classification: m41, j30, j31, j39, m40 1. introduction in modern conditions, the need to ensure stable economic development of ukraine and increase the living standards of its population is particularly acute. the issue of employee payments is now concerned not only by legal scholars or economists, but primarily by ordinary citizens whose desire is to have a guaranteed stable salary. ukraine's exit from the crisis and socioeconomic development of the country are primarily related to the development of production. the solution to this problem depends on the level of interest of the employee in high-performance work on the basis of ensuring proper payments from the actual personal labor contribution of the employee, the share of his participation in the property, as well as the final results of the enterprise's work (kabachenko, 2015). effective management of a modern enterprise is impossible without taking into account one of the most valuable resources of today – a person who acts as a multifaceted subject of economic relations, which not only directly creates added value of products, but is also an engine of progress realized due to unlimited labor potential. after all, it is a person who, with the help of his own knowledge, skills and abilities, generates and implements ideas that allow optimizing and improving various aspects of management (production, management, marketing, etc.) for which he must be guaranteed to receive proper payment (laptev, 2015). employee payments are one of the significant components of the company 's costs. however, the accounting of employee benefits is imperfect and is this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 89 vol. 3 no. 2, 2022 in the process of reforming. scientists unanimously express the opinion about identifying the essence of employee benefits in their functions, but their number and content are the subject of discussion, which leads to an ambiguous interpretation of the composition of employee benefits at different levels of their management (zubilevych, veyuk, 2014). payments to employees are the most important component of all expenses of the enterprise, and their accounting is one of the most important aspects of the accounting process. the introduction of innovations in wages at enterprises allows more efficient use of human resources and adapt them to changes in the enterprise management system. with the development of the market economy at agricultural enterprises, there are a number of problems of various nature, in particular, in the organization of accounting for employee benefits. improving the methodology, methodology and organization of accounting for payments to employees at agricultural enterprises is of fundamental importance for facilitating control over the socioeconomic return of all types of resources, impro ving the quality indicators of their activities. in normative documents on regulation and accounting at enterprises of ukraine, the concept of "employee payments" is absent. in addition, there are not sufficient studies of ukrainian scientists devoted to the deep and justified disclosure of the definition of this concept. as a result of the study of the problems of improving the accounting support for the management of payments to employees of the enterprise, o.f. yarmolyuk defines "payments to employees as compensation payments for services rendered by employees accumulated as part of long-term and current obligations and provisions of the enterprise" (yarmolyuk, 2014). the essence of the concept of "employee payments" by scientists is considered as a category of accounting. it should be noted that the definition of the concept of "employee benefits" given in ias 19 "employee benefits" is limited and does not fully reflect its essence and objects of accounting. it should be noted that the clear definition of the concept of "employee payments" of ias 26 does not provide, only details what payments are included in which group, and defines individual terms. payments to employees, in accordance with p(c)bu 26, are divided into five groups (figure 1) (zhydeeva, starodub, 2017). it is proved that payments to employees are part of the income of an individual received from the employer, a set of accounting objects related to their current and future income, which the employee receives (will receive) at the expense of the enterprise directly or through a third party, as well as the obligation of the enterprise to transfer primary and secondary equity instruments to the employee (len, stupun, 2015). in particular, employee benefits include wages, which in turn consist of basic wages, additional wages (payments for unworked time, participation in profits, etc.), other incentive and compensation payments, the composition of which is determined by the instruction on wage statistics (ukraine, 2004). 2. the economic essence of payments for employee benefits employee payments are one of the essential components of the total costs of any enterprise and one of the complex objects of accounting, which include a fairly significant list of payments, each of which has its own characteristics of displaying both in accounting and in the external reporting of the enterprise. the level of payments to employees and their structure are also of great social importance and affect not only the current, but also the future performance of the enterprise. in this regard, the issues of understanding the essence of payments to employees, their structure and accounting are relevant, which is a rather important basis for justifying their reflection in accounting accounts and in financial statements (len, stupun, 2015). employee benefits current payments (mandatory payment within 12 months after the end of the execution period) payments in case of dismissal payments after the end of work other long-term payments payments by equity instruments of the enterprise figure 1. structure of payments to employees of the enterprise in accordance with psb 26 "employee benefits" three seas economic journal 90 vol. 3 no. 2, 2022 in our opinion, having examined the economic essence of the meaning of "employee payments", we can note that employee benefits are all types of compensations and additional benefits provided and paid by the enterprise for the work performed by the employee and services provided under the employment contract. remuneration is the basic category in the system of employee benefits. it is the signal indicator in which all the contradictions of society, all its achievements and miscalculations are reflected, therefore, it is necessary to approach the solution of legal issues of remuneration through the study of objective real social relations. since wages are a complex economic category and are an element of social and labor relations between the state, employer and employee, that is why it is the object of many scientific studies. modern theorists quite diversely substantiate various aspects of the essence of remuneration. in the conditions of the administrative-command economy in what was called socialist, it was argued that the worker does not sell his labor force, and wages are a form of division by labor. this understanding generally corresponded to the existing ideology, but was not confirmed in practice (kostyshyna, 2015). wages are defined as the main form of distribution of the personal consumption fund between employees in accordance with their shares of participation in the total social labor, which establishes the state in the planned manner in accordance with the quantity and quality of labor; as expressed in money, the share of workers and employees in the fund of individual consumption in national income, which is the main form of the necessary product in its distribution and as the amount of monetary remuneration paid to the employee for the performance of a certain task of the amount of work or the performance of his official duties for some time (kolot, 1998). in today 's conditions, wages are the main tool for implementing social protection of employees. the effectiveness of work and results depend on its rational organization, and therefore the development of the country as a whole. scientists reasonably argue that today wages have actually become one of the options for social assistance, which depends little on the results of work. in accordance with the law "on remuneration" – a large platform – it is a wine, in a large whirlpool, which is with a hard work (law of ukraine, 1995). believes that the economic basis for the formation of wages as the price of labor can be reflected schematically (figure 2). from the point of view of an employee, wages are the main part of his labor income, which he receives as a result of the realization of the ability to work and which should ensure the objectively necessary reproduction of the labor force. the labor market of the labor force of employees is expressed in the form of goods. like any other commodity, labor has a consumer value. the consumer value of labor is its ability to create additional value, to be a source of capital increase. the cost of labor is determined by the amount of vital benefits that provide objectively necessary reproduction of labor force (kostyshyna, 2015). from the entrepreneur's point of view, wages are an element of production costs, and at the same time the main factor in ensuring the material interest of employees in achieving high final labor results. according to ilyash o.i. and hrynkevych s.s. in their scientific research, the effectiveness of work is to some extent determined by the current wage system. wages as a socio-economic category, on the one hand, employer marginal labor costs that guarantee the necessary profit cost of labor demand for labor worker the cost of living necessary to meet the needs of the employee and his family labor market (labor) demand for labor the price of labor figure 2. economic basis for the formation of wages as the price of labor three seas economic journal 91 vol. 3 no. 2, 2022 are the main source of monetary income of workers, so its value largely characterizes the level of well-being of all members of society. on the other hand, its correct organization is of interest to workers to increase the efficiency of production, and also affects the pace and scale of socioeconomic development of the country (grishnova, 2009). the variety of salary definitions is due to the following reasons: – uncertainty of the goods purchased and sold in the labor market; – transitional state of remuneration in a transformational economy, where there are new elements characteristic of the market system of remuneration, and the old ones that have moved from the command and administrative system; – difference in methodological approaches to the analysis of the system of relations, expressed by the category of remuneration; – different levels of scientific abstraction to the definition of the system of economic relations expressed in this category, caused by certain research goals (kostishina, 2009). when determining wages as the price of labor, it is necessary to take into account a single measure of remuneration, the criterion of which is the real cost of living of the employee and his family. as the price of labor, wages are formed in the labor market and are external, relative to the enterprise. as an element of the production price, the share in the value created by the enterprise should determine wages. in the process of forming a share of wages, it is necessary not to allow compensation for excess labor costs, to ensure its increase only due to an increase in the number of products produced, more efficient use of resources, and an increase in labor productivity. the essence of remuneration is determined by the theoretical and conceptual principles, which consist: in the formation of relations of the sphere of production and exchange of labor, while wages should provide vital benefits for the reproduction of labor and the resistance of production activities that the worker receives in exchange for his work (lisetska, 2016). at the present stage, wages are, first of all, the motivation and material incentive of the worker to reproduce a quality product with his work and the interest of employees in achieving high final results. the amount of wages should depend on the following criteria: professional and business qualities, complexity of work, effectiveness, initiative, responsibility, organizational and executive competence, urgency, etc. also, wages express the market value of the use of hired labor, therefore, it is an instrument of the labor market, which acts as the price at which an employee sells his labor force. thus, remuneration should be considered as a key component of the cost of labor, which has peculiar features and depends on the employee's labor contribution and performs important functions in the development of society (lisetska, 2016). it should also be noted that wages have always acted as the greatest active motivator for the activation and use of human potential. at the same time, the use of the existing qualification and creative potential of employees should depend entirely on the scientific validity and choice of methods for linking wages with qualifications, the content of the work performed, the results of work and the conditions in which it is carried out. when determining wages as the price of labor, it is necessary to take into account a single measure of remuneration, the criterion of which is the real cost of living of the employee and his family. as the price of labor, wages are formed in the labor market and are external, relative to the enterprise (ostrowerkha, 2014). 3. forms and types of employee benefits with the development of society, increasing economic development, more and more attention is paid to the issue and directly the mechanism of motivation to work. for, as you know, work is a complex and multidimensional phenomenon that plays an extremely important role in the life of society and each individual and in a broad sense is inalienable from human life. the issue of pay is part of the employment relationship. they include the obligations of employers reflects the relationship between the employer and the employee labor market element production cost element wage the bulk of the employee's income monetary reward for work figure 3. components of the "salary" category three seas economic journal 92 vol. 3 no. 2, 2022 and their associations on remuneration, the provision of material compensation payments in various forms and the organization of this process. according to the essence of wages, the main condition for building a rational system of remuneration is the harmonization of its forms and systems with the peculiarities of the enterprise, the specifics of production technology, the organization of management and maintenance (guryanov, kostin, 1973). as stated in the law of ukraine "on remuneration" – wages have the following components: – basic salary – remuneration for the work performed in accordance with established labor standards; – additional wages – remuneration for work, above the established norm, for labor success and ingenuity and for special working conditions; – other incentive and compensation payments – remuneration based on the results of work for the year, bonuses under special systems and provisions, compensation and other monetary and material payments (law of ukraine, 1995). a more detailed structure of the components of wages can be shown in figure 4. analyzing this figure, we propose to add the following types of payments to the category "other payments", since they are absent in the national regulatory framework but are regulated in ias 19 additional paid leave for seniority and additional one-time payments for long-term disability. the proposed types (structure) of payments are regulated by ias 19, but are absent from the national regulatory framework. with the development of the economy, ukraine wants to compare with countries with a developed market economy, which widely use completely different forms and systems of remuneration, a wide variety of systems of material incentives for workers and stimulating them to increase performance. therefore, the study of the issue, forms and systems of remuneration in ukraine and foreign countries, their comparison, research of positive and negative aspects in the use of a particular system are quite relevant. to use the most effective wage system, it is necessary to investigate both domestic payment systems and the experience of foreign countries (bozhok, balanovych, 2015). the form of remuneration establishes the dependence of the amount of remuneration of the employee on the results of labor (work performed) achieved by him for a certain period of time. the wage system is a way to implement the appropriate form of remuneration, specially developed and enshrined in regulatory documents, and establishes the procedure for remuneration of employees. wage basic salary additional salary other incentive and compensation payments salary accrued for the work done amounts of interest or commission accruals author's fee allowances and surcharges to tariff rates and salaries premiums for production results rewards for seniority, work experience pay for work on weekends and holidays other payments payment of downtime through no fault of the employee rewards based on the results of work for the year bonuses, one-time incentives material assistance the amount of labor and social benefits provided by the enterprise to employees additional paid leave for seniority additional lump sum payments for long-term disability figure 4. structure of wages at the enterprise three seas economic journal 93 vol. 3 no. 2, 2022 the system of remuneration is the organizational and economic mechanism of the relationship between indicators characterizing the measure (norm) of labor and the degree of its payment in accordance with the actual achieved (relative to the norms) of labor results, tariff conditions of remuneration and the price of labor agreed between the employee and the employer. at the enterprise, remuneration systems are established in a collective agreement in compliance with all legislative norms and guarantees. transferring workers to another pay system is a change in essential working conditions and requires warning workers in two months. practice has developed two main systems that are used both in "pure" form and with different modifications – timely and piecework systems of remuneration (slepyan, belova, 2016). the most important warehouses of the organization of payment for the price of goods, tariffs, tariffs for the production of payments, the development of forms and systems of payment for prices. thus, in the context of the remuneration system, n.b. bolotin and g.i. chanyshev understand the method of calculating the amount of remuneration, proper payment to employees in accordance with labor costs and, in some cases, their results (bolotina, chanysheva, 2000). o.m. yaroshenko and s.m. prylypko give a broader definition, pointing out that the wage system is a certain relationship between indicators characterizing the measure (norm) of labor and the degree of its payment within and above the labor rate, which guarantee the employee's receipt of wages in accordance with the actual achieved labor results (relative to the norm) and the price of his labor force agreed between the employee and the employer (prylypko, yaroshenko, 2011). kabachenko m.o. noted that the introduction of a single tariff system into the practice of organizing remuneration was one of the central aspects of the wage reform and meant the transition to intersectoral, intercategory and interprofessional ordering of tariff conditions of remuneration, as well as at enterprises and institutions of various forms of ownership (kabachenko, 2015). in ukraine, the following main two forms of remuneration are most often used, which, in turn, are divided into systems. let's display the data of the form and wage system in figure 5. thus, in the piece form of remuneration, payment is made for the quantity and quality of manufactured products or the amount of work performed. in this case, the measure of labor is the amount of production produced. the piecework system can be individual or collective, depending on the method of organization of labor. an individual piecework system is used at the production site, where a clear accounting of the labor of individual workers is provided. collective piecework is established according to the overall results of the brigade's work. at the same time, the distribution of earnings is carried out using the coefficient of labor participation (ktu). under a direct piecework system, the amount of wages depends on the performance of each employee, and the indirect piecework system is used for the material remuneration of auxiliary workers engaged in servicing the main pieceworkers. at the same time, their earnings depend on the results of the work of the pieceworkers they serve (bolotina, chanysheva, 2000). we also draw attention to the fact that the piece form of remuneration is divided into piecework-premium and piece-progressive. in the piece-premium system, remuneration, the employee, in addition to earnings under a direct piece system, is charged a premium for the performance (or over performance) of certain quantitative and qualitative indicators. the amount of such a premium is set by the management with the consent of the trade union as a percentage of tariff earnings determined at piece rates (bozhok, balanovych, 2015). with a piece-progressive system of remuneration, the employee's earnings are determined by the implementation of the production rate, as well as with direct piecework payment, that is, at established rates. when exceeding the established norm, surcharges to the main piece rate progressively increase. accrual of progressive surcharges is carried out based on the results of monthly work. such a system of remuneration is usually used in crucial areas, which is a "bottleneck", in case of a special need for material incentives for workers in the growth of production. the disadvantage of this system is that an employee's earnings are growing faster than productivity (bozhok, balanovych, 2015). forms and systems of remuneration piecework direct piece-premium system; pieceprogressive system hourly indirect hourly premium system; hourly progresфsive system figure 5. forms and systems of remuneration three seas economic journal 94 vol. 3 no. 2, 2022 the main advantages of piecework wages are that, as already noted, it provides a direct link between wages and its quantitative result and, under appropriate conditions, seems fair. it is also important that the calculation of earnings is methodically simple and understandable for each employee (fisunenko, boychenko, 2017). at the same time, the piece form of remuneration has certain disadvantages that manifest themselves in different ways depending on the specific conditions. these include: – it is possible to weaken attention to the quality of products by the performers of technological operations in order to direct all efforts to the quantitative aspect of the work; – temptation of violation of optimal modes of technological processes, their excessive intensification, non-compliance with the rules of maintenance of machines, safety, which leads to additional costs; – complex and time-consuming work on labor rationing and setting the rate of production and piece rates, dissatisfaction of workers with their level (greschak, grebeshkova, kotsyuba, 2001). consequently, piecework remuneration requires enhanced observance of the regimes of the technological process, the regulations for its maintenance and product quality (fisunenko, boychenko, 2017). piecework remuneration is rational to apply under the following conditions: – a clear quantitative measurement of labor results and their dependence on one or more employees (brigades); – employees have the opportunity to increase production or the amount of work performed (products); – there is an accurate accounting of the work of each performer; – there is a need at a certain site to stimulate an increase in labor productivity or an increase in the volume of production; – at the proper level, the rationing of labor is organized (murashko, 2008). these conditions are inherent primarily in processes where manual labor plays a significant role in their implementation. these are, for example, manual assembly work (not in the system of regulated conveyors), processing parts at individual machine workplaces, performing other mass works (cargo movement, extraction of raw materials), etc. with an increase in the level of mechanization and automation of production, machine regulation of the production process and with the corresponding change in the functions of workers, the scope of traditional piecework wages narrows. however, it always remains an effective stimulating tool in a direct or modified form in the specific conditions of the enterprise's divisions (fisunenko, boychenko, 2017). but, unfortunately, not all enterprises carry out accruals and remuneration for the performance of work by employees that require additional physical activity (as noted above, these are manual assembly works; securing cargo, for safe transportation; movement of cargo, etc.). please note that the remuneration of such types of work in european countries is paid additionally and is controlled at the legislative level. in ukraine, it is legally provided, but not a mandatory requirement, but only has as a recommendatory nature and can be applied at enterprises at the request of the head or in case of indication in the collective agreement. in our opinion, it would be advisable to introduce such methods of surcharges on an ongoing basis, this will make it possible to improve labor productivity and the quality of work by employees. under the direct hourly wage system, the amount of earnings is determined depending on the tariff rate of the employee and the amount of time worked by him for a certain period of time (bozhok, balanovych, 2015). the tariff system of remuneration includes: a) tariff grid – coefficients that are assigned to employees depending on qualifications; b) tariff rates – amounts accrued for a certain period of time (hour, day) to employees of the relevant qualification (category). the tariff system of remuneration is used to distribute works depending on their complexity, and workers – depending on their qualifications and responsibility for the categories of the tariff grid. it is the basis for the formation and differentiation of wages. the main elements of the tariff system are tariff-qualification certificates of works and professions of workers, qualification certificates of positions of managers, specialists and employees, tariff grids and rates and schemes of salaries, or a single tariff grid. in modern economic conditions, each enterprise can independently develop a tariff system, adhering to state guarantors and the requirements of general, sectoral, regional tariff agreements in accordance with the current legislation. according to the hourly-premium wage system, the employee's earnings are charged not only for the time worked, but also for the achievement of certain quantitative and qualitative indicators. quantitative indicators include overtime, unscheduled and overplanned tasks, and qualitative – improving the quality of a certain type of product, saving raw materials, materials, compliance with technological requirements, etc. the hourly-progressive system is based on wages for the implementation of regulatory tasks. that is, each employee performs a specific amount of work (in pieces, norm-hours), and the result of these works is taken into account when calculating tariff earnings. three seas economic journal 95 vol. 3 no. 2, 2022 the collective-hourly wage system is based on a collective payroll fund earned by brigade members jointly, depending on the amount of time worked, certain premium indicators, and then, using a specific method, is distributed among employees (bozhok, balanovych, 2015). at the enterprises, local regulations on ktu are adopted, specific indicators are established, the procedure for calculating earnings. the qualification of the employee is also taken into account. the amount of wages may not be lower than the established minimum wage. such a system as chord pay is also used – remuneration for the performance of a complex of works (construction object). the final calculation is carried out according to the chord outfit after the adoption of the entire amount of work, which is the act. the formation of a methodology for analyzing the effectiveness of the remuneration system should be carried out on the basis of a number of principles that make it possible to consider the wage system as a comprehensive system of interrelated indicators. the main principles for assessing the effectiveness of the remuneration system are: the principle of consistency; the principle of complexity; the principle of consistency; the principle of continuous variability; the principle of stable inequality; the principle of sufficiency; principle of conformity foreign experience testifies to the predominant use of timely remuneration in its various modifications: hourly (clean), hourly with collective premium, hourly with individual bonuses. the main condition for paying salaries is the full amount of work calculated on the basis of progressive labor cost standards. the use of a systematic approach made it possible to determine that an effective wage system has a close relationship with the categories of competitiveness: competitiveness of the workforce, products, enterprises, industries, countries, global competitiveness (slepyan, belova, 2016). the priority criteria for the development of the efficiency of the remuneration system were the intensity of competition and ensuring the necessary legislative, social, institutional conditions for its development. factors of positive (negative) impact on these conditions were attributed to the indicator of stimulating (restraining) impact on the formation of the efficiency of the wage system (chervinska, malaya, 2009). the result of the study of remuneration systems is the provision of recommendations on the use of an effective remuneration system at enterprises of ukraine, namely: – respect for the constitutional rights and freedoms of man to work, which will enable wages to play the role that he must play in the realization of social human rights and, above all, his right to work; – ensuring an increase in the price of labor for the purpose of its self-sufficient and high-quality reproduction due to democratic regulation, taking into account the qualifications of the employee, the conditions and complexity of labor, the comparison of supply and demand in the labor market; – creation of an effective mechanism for the formation of the minimum wage; ensuring individualization in the organization of wages, strengthening its dependence on the level of labor efficiency, professionalism, qualifications, complexity, working conditions, which will increase labor activity, increase motivation for effective work; – application of modern motivational and stimulating mechanisms of high-performance work, in particular, determining the size of wages through the assessment of personal contribution and business qualities of the employee; – creation of an optimal mechanism for the formation and regulation of remuneration funds at enterprises of various industries and forms of ownership, depending on the results of production and financial and economic activities (slepyan, belova, 2016). 4. conclusions thus, if the remuneration system is applied rationally, complying with all legislative norms, it will contribute to the effective creation of a motivational mechanism and improve wages, and this in turn increases the competitiveness of workers, products, enterprises and the economy of ukraine as a whole. thus, wage research occupies an important place among modern problems in society. wages have been the subject of research by economists for years. it is especially relevant under modern conditions of development of the ukrainian economy due to increased competition, globalization of business and increased entrepreneurial risks. today, the economy is focused on ensuring the material interest of workers and on increasing labor efficiency. social and economic life developed, there was a division of labor of varying complexity and this led to the emergence and development of a system of accounting for payments for employee benefits. three seas 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(2014). improvement of the methodology of analytical accounting of payments to employees at enterprises of ukraine. young scientist, 6(1), 124–127. three seas economic journal 97 vol. 2 no. 1, 2021 corresponding author: 1 taras shevchenko national university of kyiv, ukraine. e-mail: l_chubuk@ukr.net orcid: https://orcid.org/0000-0003-2217-7117 doi: https://doi.org/10.30525/2661-5150/2021-1-16 simulation modelling as a tool for risk analysis and development of strategy to increase real estate income lesia chubuk1 abstract. the purpose of th article is to substantiate the possibility of applying methods for assessing the effectiveness and risks of investing for the analysis of income in the strategic management of real property. methodology. the methodical bases of sensitivity analysis and simulation modeling of cash flows of real property income are stated. results. the critical factors of costs and revenues affecting net present value of total cash flow from grain elevator real property object have been revealed. it is evidenced that the most significant factors influencing the amount of cash flows are the volume of sales of grain elevator services, to a lesser extent the total costs and the lack of sensitivity of net present value to staff salary variations. simulation modeling of the change in net present value due to the change of the most significant uncertain factors was performed, which confirmed the assumptions about the efficiency of the investigated real property. the key factors are the main services that generate net operating income and critical expenses. namely, services: storage, drying, shipment by road and rail, costs: fuel for drying, electricity, fuel for transportation of grain, staff salaries. for each factor, the relevant limits of change were established (determined by experts taking into account the average annual growth rate of the indicator) and cash flow simulation was performed. practical implications. statistical analysis of the model's behavior under the influence of random factors shows that the most probable value of the net present value of cash flows will be positive, despite the simulation of a significant change (+/– 40%) in electricity and fuel consumption factors for grain transportation. the values of the simple and discounted payback period also confirm the efficiency of the elevator property functioning. the indicator of the stability level demonstrate the need of planning input cash flows sources to cover the output cash flows. value/originality. the expected profitability of grain elevator real property is largely determined by the factor of the volume of basic services sales (storage, drying, shipment and transport of products). this creates the preconditions for the subsequent assessment of the value of grain elevator real property based on the methodology of the income approach. key words: strategic real property income management, sensitivity analysis, simulation modeling method, cash flows, net operating income, net present value, grain elevator real property. jel classification: l21, o22, e27 1. introduction real estate is one of the main types of resources of the enterprise, occupying a significant part in their structure and acting as a consumer good, means of production, investment goods and financial assets. however, as studies of the evolution of concepts and the development of real estate management, real estate management only from the 90s of the twentieth century began to be considered as part of strategic management. strategic real estate management is subordinated to the general goal of ensuring the realization of business goals in the long run perspective the most efficient use of long-term real estate assets at minimal cost. the basis for the implementation of strategic management is a strategy as a set of long-term actions aimed at: establishing compliance between the characteristics of the property and the opportunities that determine its position in the market and in the real estate portfolio; maintaining competitive positions in the market; development (development) of real estate as a whole or its individual parts. from the point of view of the real estate efficiency as the property, it is accepted that allocating kinds of management strategies focuses mainly on the following purposes: three seas economic journal 98 vol. 2 no. 1, 2021 – increasing of capitalization and/or market value of the real estate object; – maximizing the cash flow of income from the use of real estate in the short term, minimizing the cash flow of costs; – ensuring a stable cash flow of income from the use of real estate for a long period of time; – using of real estate for production or social purposes, removal of its useful properties. the issues of increasing real property income, in particular, net cash flows and net operating income, along with reducing costs and maximizing value are of great practical importance in the process of strategic real property management. at the time of managing real property, choosing investment alternatives, developing management strategies, there is a need to assess the effectiveness of real property investments and cash flows from real property, and therefore there are prerequisites for using methods of assessing efficiency and risk based on discounting techniques and dynamic investment analysis. 2. literature review publications of some national scientists are devoted to the issue of strategic cost and profit management of enterprises (prodanchuk, 2012; skibenko & chimeris, 2011; tyutyunnyk s. & tyutyunnyk yu., 2016; vlasenko & starodubtseva, 2018). however, these works focus mainly on the theoretical aspects of the study of strategic management of the enterprise as a whole, without detailing the management strategies of certain important types of assets and property of the enterprise, especially real property. today in the scientific literature are almost not studied as highly specialized issues of application of risk analysis methods in assessing the effectiveness of grain elevator real property, however, they are of great practical importance. in practice, it is traditionally preferred to take into account the static indicators of efficiency assessment (profit after payment of interest and taxes, investment rate, specific investment income per unit of storage capacity, simple payback period). however, there is a need to use in the study of efficiency and in the development of management strategies indicators, based on the technique of discounting, supplementing such an assessment by risk analysis. first of all, the indicators of net present value of cash flows from real property and present value of net operating income are required to be more widely introduced in the field of grain elevator real property profitability analysis. these indicators are traditionally not only the basis for estimating the value by discounting, but are used to evaluate real options and build optimal strategies (hitchner, 2006, pp. 1119, 1121; pratt & niculita, 2008, pp. 516, 518–519; manganelli, 2015, pp. 121–135, 137–188). the purpose of the research material – demonstrate the possibilities and advantages of using methods to assess the effectiveness and analysis of investment risks, in particular, simulation modeling method to justify areas of increasing in real property income in strategic management. 3. methods the development of strategies to increase net cash flow and net operating income through the use of real property is based on identified factors and income growth potential through methods of assessing effectiveness and risks: sensitivity analysis, scenario analysis (or decision tree), simulation modeling method end so on. 3.1. sensitivity analysis method the method of sensitivity analysis is one of the basic methods of quantitative risk analysis, which consists in changing the values of critical parameters, substituting them into the financial model of the object and calculating the key performance indicators of the property at each change. the sequence of sensitivity analysis in the general case is as follows (savchuk, 2020, pp. 400–401; dmitriev & koshechkin, 2001, pp. 28–29). 1. selection of a key indicator of investment efficiency (most often – npv). 2. the choice of factors in relation to which the developer of the investment project does not have the same judgment (i.e. is in a state of uncertainty). the following factors are typical: capital investments and working capital; market factors – the price of goods and sales; components of the cost of products, services; time of construction and commissioning of fixed assets, etc. 3. establishment of nominal and limit (lower and upper) values of uncertain factors selected in the previous step of the procedure. there can be several limit values, for example, +/– 5%, +/– 10% of the nominal value. 4. calculation of the key indicator for all selected limit values of uncertain factors. 5. plotting the sensitivity graph for all uncertain factors. this graph and/or the calculated coefficient of elasticity of the key performance indicator for each individual uncertain factor allows us to make inferences about the most critical factors that are affecting the operation of the facility. the aim is to pay the greatest attention to these factors in order to reduce risks. the advantages of the method are the clarity of the results, the possibility of implementation using software. the disadvantage is the separate analysis of the influence of factors on the key performance indicator, while in reality such influence is simultaneous. three seas economic journal 99 vol. 2 no. 1, 2021 3.2. simulation modeling method simulation modeling method (monte carlo method) is a procedure by which a mathematical model for determining a certain financial indicator (in particular, the net present value of cash flows from real property) is subjected to a number of simulations using a computer (manganelli, 2015, pp. 160–162; savchuk, 2020, pp. 402–404; blank, 2003, pp. 291–292). the analysis process can be divided into the following stages (figure 1). during the simulation process, sequential scenarios are built using the original data, which are uncertain, based on the context of the situation, and therefore in the analysis they are taken as random variables. the simulation process is performed in such a way that the random selection of values from certain probability distributions does not violate the existence of known or assumed correlation relations among variables. the results of the simulation are summarized and analyzed statistically, in particular, in order to assess the degree of risk. the first stage in the process of simulation is the creation of a predictive model. this model determines the mathematical relationships between numerical variables that relate to the forecast of the selected indicator. as a basic model for the analysis of the efficiency of real property use (income generation) will be used the model of cash flow and the calculation of net present value (npv): npv cf it n t t = +( )= ∑ 0 1 �, (1) were cft – net cash flow, the difference between input flows and output flows of real estate object (uah); i – annual discount rate (units per unit); t – calculation period (years), t n= …0 . in the simulation process, the values of the variables are chosen randomly within the specified ranges and in accordance with the probability distribution and correlation conditions. generation of random numbers application packages are carried out according to a certain algorithm. the peculiarity of software data processing is that correlated random numbers are generated. for each set of such variables, the value of the performance indicator (use of the real property object) is calculated. all obtained values are stored for further statistical processing. the final stage of risk analysis is the processing and interpretation of the results obtained at the stage of model calculations. each individual calculation (experiment) is characterized by the probability of the event, which is equal to: р = 100/n (2) where р – probability of single calculation (experiment); n – sample size. when modeling the net present value of cash flow from the use of real estate, it is advisable to use the forecast model preparation of a model for forecasting the calculation of real property efficiency probability distribution (substage 1) determining the law of probability of distribution of random variables probability distribution (substage 2) setting the limits of the range of values of variables correlation conditions establishing the relations of correlated variables simulation calculations generating of random scenarios based on a set of assumptions analysis of results statistical analysis of simulation results figure 1. stages of the process of simulation of real property efficiency sourse: compiled based on (savchuk, 2020, p. 403; blank, 2003, p. 292) three seas economic journal 100 vol. 2 no. 1, 2021 probability of obtaining a negative value of npv as a measure of risk. this probability is calculated based on statistical results of simulation as the product of the number of results with a negative value and the probability of a single calculation (experiment). after performing several hundred calculations, a set of npv values is obtained, for which the average value (m) is calculated, as well as the risk indicator (standard deviation, d). according to the statistical rule of three sigma, the value of npv should be in the following intervals: – with a probability of 68,3% – in the range (npv) ±d; – with a probability of 94,5% – in the range ( ) ±2d; – with a probability of 99,7% – in the range ( ) ±3d. 4. results 4.1. sensitivity analysis of the net present value of cash flows to income and expense factors the sensitivity analysis of the net present value of cash flows to changes in income and expense factors was performed on the basis of the cash flow model (formed by the equity scheme) from income and expenses of rain elevator real property of “zernokompleks “sivash” llc (kozyatyn, vinnytsia region). this company is part of the association of “tessla group” companies («tesslagroupe». kompanii, 2020). elevator real estate has significant features in valuation, as these objects are simultaneously operating business, integral property complexes and it is impossible to separate real property cash flows from business cash flows for such objects (except in the case of renting). in the formation of the model of total cash flow from all activities, the data of the operational reporting of the enterprise for the five-year period (from 2015–2016 marketing year to 2019–2020) and the forecast for 2020–2021 were used. for reference, the main characteristics of the studied elevator property are as follows: fair value (property purchased in 2010) – $3.2 million (uah 25.92 million), capacity is 53 thousand tons, annual turnover for 2015–2016 is 60 thousand tons (1.13 times per year), there are significant costs for equipment and repairs during 2015–2018 , which were associated with the construction of a warehouse with a capacity of 8 thousand tons of grain. according to the initial data on the construction of cash flows from the grain elevator property (for years 2015–2021), a sensitivity analysis of income and expense factors for the retrospective and forecast period as a whole was done using project expert software. the actual values of tax rates (income tax, value added tax, single social contribution) were used for calculations. the discount rate was chosen as 16%, which corresponds to the level of the average market deposit rate on longterm deposits for businesses for the year of the study (2015) according to the national bank of ukraine. the results of the sensitivity analysis demonstrates in table 1–2. the volume of sales of services (sales price), general expenses, staff salaries and tax rates were chosen as uncertain factors for sensitivity analysis in the model. calculations shows that the volume of sales of grain elevator real property services is the most significant factor influencing the amount of cash flows. reducing sales by 30% from the regulatory (baseline) level causes a negative value of cash flow at constant fixed costs and becomes critical for the efficiency of the grain elevator property. based on the value of the coefficient of elasticity of npv on income, an income reduction by 1% causes a decrease in the present value of cash flows by approximately 3.88%. when determining income targets for certain types of grain elevator real property services and total income, it is advisable to establish a specific relationship between the change in income and the present value of cash flows to develop a strategy. thus, the prognostic function of real property management can be implemented. total costs as an uncertain factor taking into account the entire period of the initial data of the model shows a smaller degree of influence on the resulting present value of cash flows (for comparison: the coefficient of elasticity npv to change costs in the analysis of cash flows only the first marketing year (2016–2016) is 14.21). according to the results of the calculation, the critical from the standpoint of loss of efficiency is the growth of total costs by 40% or more. the factor of salary loses priority according to the degree of influence; the coefficient of elasticity behind it becomes less than one, which indicates the insensitivity of net present cash flow to changes in salary. the factor of change in table 1 change in the net present value of cash flows of the grain elevator property in 2015–2021 depending on changes in income and expense factors from 0 to -50% income/ expense factor npv, uah -50% -40% -30% -20% -10% 0% sales volume -17767214 -10020531 -2871825 3874512 10352716 16811541 general expenses 35029985 31421075 27806195 24189519 20552376 16811541 staff salary 21274879 20392810 19509868 18619797 17719112 16811541 tax rates 21606502 20570048 19574134 18616529 17696083 16811541 source: calculation according to the company llc “zernokompleks “sivash” data (association of enterprises “tessla group”) three seas economic journal 101 vol. 2 no. 1, 2021 tax rates demonstrates the lack of significant impact on net present value. given the shortcomings of the method of sensitivity analysis (separation of the influence of factors on the resulting indicator), it should be considered only as a preliminary step in the study of income to develop a management strategy. to ensure the complexity of the study, changes in the profitability factors of a real property object should be considered in connection with changes in other uncertain factors, primarily costs, using the methods of scenario analysis, decision tree and simulation modeling method. in the case when accurate estimates of risk parameters (as in the methods of scenario analysis or decision tree (probability tree)) cannot be set, and only the intervals of probable fluctuations of cash flow can be determined by experts, it is advisable to use the simulation modeling method (monte carlo method). 4.2. simulation modeling of cash flows under the influence of changes in key factors of incomes and costs to analyze the efficiency of the operation of elevator real property and to study the critical factors of income, simulation modeling method based on cash flows for the period 2015–2021 was used. instead of unambiguous values of operating parameters, uncertainty intervals were set, based on the assumption of a uniform probability distribution on each of the intervals. according to the central limit theorem of probability theory, if the sample is large enough, then under certain, fairly common conditions, the sum of a set of random variables will follow the normal distribution regardless of the type of distribution of each individual random variable. based on the default normal distribution in the software product project expert, the simulation of key factors was carried out and taking into account the obtained values, the indicators of economic efficiency were calculated. the key factors of calculation are the main services that form the net operating income and critical total costs, namely: the volume of grain storage services; volume of grain drying services; the volume of shipment services for road transport; the volume of shipment services for railway transport; fuel costs for drying; electricity costs; land lease costs; fuel costs for grain transportation; staff salaries. for each factor in the software product project expert using the simulation module “monte carlo” the corresponding limits of change were set (determined by experts taking into account the average annual growth rate) (table 3). the results of simulation modeling (series of 500 calculations) are given in table 4. the discount rate for calculations was chosen at the level of 16%. statistical analysis of the model's behavior under the influence of random factors shows that the most table 2 change in the net present value of cash flows of the grain elevator property in 2015–2021 depending on changes in income and expense factors from 0 to + 50% income/ expense factor npv, uah coefficient of elasticity (npv / factor of income (expenses)) +10% +20% +30% +40% +50% sales volume 23044678 29154287 35254339 41353402 47451949 3,88 general expenses 12902051 8982783 5001201 982155 -3116574 2,27 staff salary 15893249 14966356 14040082 13114912 12191968 0,54 tax rates 15961174 15135309 14337151 13569536 12829752 0,52 source: calculation according to the company llc “zernokompleks “sivash” data (association of enterprises “tessla group”) table 3 limits of change in key factors for simulating modeling cash flows from a grain elevator property № factor deviation, -% deviation, +% 1 2 3 4 1 the volume of grain storage services -20 +20 2 the volume of grain drying services -10 +10 3 the volume of grain shipment services for road transport -20 +20 4 the volume of grain shipment services for railway transport -20 +20 5 fuel costs for drying -40 +40 6 electricity costs -40 +40 7 the cost of renting land -30 +30 8 fuel costs for transportation -30 +30 9 salary -30 +30 source: complete by the author three seas economic journal 102 vol. 2 no. 1, 2021 probable value of the net present value (npv) of cash flows of real estate will fluctuate around the value (npv) =16 787 479 (uah). according to the rule of three sigma, with a probability of 99.7%, the value of npv will fit in the range (npv ) ± 3d, even the lower limit of which will be positive (9,737 thousand – 23,838 thousand uah). the distribution of npv (95% confidence interval) is illustrated in figer 2. in all 500 experiments, the value of the indicator is positive, and the uncertainty is 14%, which corresponds to a low level of risk (up to 20%). 5. discussion it should be noted that in this study, the increase in the number of simulations of npv change (from 100 to 500) led to the approximation of the expected value to the value of npv, obtained by the basic formula without taking into account the probability of risk. this can be interpreted as confirming the stability of the efficiency of a particular property. however, it is not obvious that in all cases more simulations are better in terms of improving the quality of the simulation results. the choice of the optimal number of experiments in modeling is at the discretion of the researcher. w hen setting quantitative goals for the strategy of increasing income from elevator real estate, it is advisable to focus on the identified relationship between the increase in sales and changes in net present value of cash flows. a 1% increase in revenues from any of the basic services or a combination of them will cause an increase in npv by 3.88%, which as a result of direct capitalization is equivalent to an increase in property value by 24.25% (at a capitalization rate of 16%). the latter conclusion indicates the possibility of applying sensitivity analysis and simulation modeling in value-based management. thus, the scope of application of simulation modeling in economic research is wider than has been mostly stated so far (wu &olson, 2013). the author identifies the following difficulties in the practical application of the simulation method (monte carlo method) for risk analysis and efficiency of real estate: – complexity of collecting factual data to model for calculation of the performance indicators; table 4 indicators of efficiency and risks of operation of the grain elevator real property object in 2015–2022 № indicators of efficiency average value uncertainty (coefficient of variation) 1 discounted payback period, months 28 0,28 2 profitability index 4,43 0,17 3 net present value of cash flows, uah 16 787 479 0,14 4 internal rate of return, % 119,82 0,22 5 simple payback period, months 24 0,32 6 average rate of return (accounting) 124,01 0,17 7 modified internal rate of return, % 48,05 0,09 source: calculation according to the company llc “zernokompleks “sivash” data (association of enterprises “tessla group”) figure 2. npv distribution of the grain elevator real estate cash flow source: simulation modelling (monte carlo method) in project expert three seas economic journal 103 vol. 2 no. 1, 2021 – problem of correlation of variables, which can lead to incorrect conclusions; – accuracy of the result depends on the number of experiments performed (“runs” of the model), but their optimal number is unknown; – complexity of detection, breadth of the list of key risk factors and choice of limits of their changes. 6. conclusions the operation of grain elevator real property in the studied model is generally efficient and characterized by a low degree of risk, because with a high probability npv cash flow is positive, despite the imitation of a significant change in electricity and fuel consumption factors for grain transportation. the expected profitability is largely determined by the sales price factor (sales volume) of basic services – storage, drying and shipment by road and railway transport. the high value of the internal rate of return can be explained in particular by the fact that the cash flow model was built as cash flow to equity (excluding the financial cost of paying interest on loans). simple and discounted payback periods also confirm the efficiency of operation of the researched object of grain elevator real property. the discounted payback period of investments in construction and purchase of equipment is 2.33 years, and the coefficient of variation on this indicator is within 30%, which indicates a generally acceptable level of risk. among the indicators of the model, which allow to diagnose problematic aspects of the operation of the object and the formation of cash flows – an indicator of the level of stability, which in this case is 0%. this indicator shows the share of calculations of their total number (as a percentage), which would not cause a shortage of cash and desynchronization of cash flows. thus, randomly generated real estate cash flows in all cases require planning to cover cash outflows with sources of cash inflows. the main measures that allows increasing the profitability of grain elevator real estate in strategic management are follows: raise the turnover of storage tanks, in particular by increasing the speed of shipment to transport; reduction in the cost of transportation; growth in sales volume of services (tariff increases, development of loyalty programs for customers). therefore, the use of methods for assessing the effectiveness and risks of investing in real estate based on the technique of discounting, in particular, sensitivity analysis and simulation modeling method is convenient and clear from an analytical point of view to develop a strategy for real estate income management. another positive aspect of using the simulation modeling method for the analysis of income from the operation of real property, the development of strategies to maximize them is the ability to assess the effectiveness (risks) at the stage of construction or acquisition of real property. references: prodanchuk, m. a. (2012). strategic cost management of agricultural enterprises. oblik i finansy apk : bukhhalterskyi portal. available at: http://magazine.faaf.org.ua/ekonomika-pidpriemstv.html (accessed 2 february 2020). (in ukrainian) skybenko, s. t., & chymerys, v. m. (2011). formation of profit management strategy of the enterprise. naukovyi visnyk poltavskoho universytetu ekonomiky i torhivli, vol. 6(51), part 2, pp. 153–154. (in ukrainian) tiutiunnyk, s. v., & tiutiunnyk, yu. m. (2016). mechanisms of factor analysis of indicators of financial condition of branches of economy. aktualni problemy ekonomiky, vol. 5, pp. 421–429. (in ukrainian) vlasenko, t. o., & starodubtseva, o. s. (2018). profitability of the enterprise: the essence and efficiency of management. molodyi vchenyi, vol. 12(64), pp. 256–258. (in ukrainian) hitchner, j. r . (2006). finance valuation. applications and models. 2nd edition. john wiley&sons, inc. pratt, s. p., & niculita, a. v. (2008). the analysis and appraisal of closely held companies. 5th edition. mcgraw-hill. manganelli, b. (2015). real estate investing: market analysis, valuation techniques, and risk management. springer. savchuk, v. p. (2020). enterprise financial management / derivative electronic edition based on a printed analogue (4th edition). moscow: binom. laboratoriya znaniy. (in russian) dmitriev, m. n., & koshechkin, s. a. (2001). methods for quantitative analysis of the risks of investment projects. ekonomika stroitelstva, vol. 5, pp. 27–34. (in russian). blank, i. a. (2003). enterprise investment management. kiev: nika-tsentr, elga-n. (in russian) «tesslagroupe». kompanii (2020). elevatirist.som. available at: https://elevatorist.com/kompanii/253--gktesslagroup (accessed 2 may 2020). (in russian) wu, d. d., & olson, d. l. (2013, november). computational simulation and risk analysis: an introduction of state of the art research. mathematical and computer modelling, vol. 58, 9–10, pp. 1581–1587. three seas economic journal 14 vol. 2 no. 1, 2021 corresponding author: 1 uzhgorod national university, ukraine. e-mail: kateryna.brenzovych@uzhnu.edu.ua orcid: https://orcid.org/0000-0002-1935-3581 2 uzhgorod national university, ukraine. e-mail: myroslava.tsalan@uzhnu.edu.ua orcid: https://orcid.org/0000-0003-1878-1346 doi: https://doi.org/10.30525/2661-5150/2021-1-3 global impact and regional dimensions of services market development in ukraine kateryna brenzovych1, myroslava tsalan2 abstract. in the context of decentralization processes in ukraine, the development of perspective segments of the service sector that can be oriented at an external domestic or foreign consumer, should be in the focus of attention of local authorities and self-government bodies. for this reason, the purpose of the paper is to explore the theoretical foundations and practical realities of developing regional service markets in ukraine, to study the influence of national and global factors on the tertiary sector development. methodology. the study is conducted with the application of general scientific and specific methods of economic research. in particular, the methods of analysis and synthesis were used in assessing the structure of the services market according to statistical observations. the classification method is applied in the author's vision of division of services. the use of induction and extrapolation methods made it possible to distinguish the general features of services, based on certain occasions and market indicators and to extend them to a general structure. results show the current state and development specifics of the services market of ukraine in the regional dimension and the prospects of export specialization of its regions and trade in services in the context of ukraine’s participation in the wto and association with the eu. particular attention is paid to the study of the development of services market at the regional level, since the functioning of the services market has a clearly identified regional orientation, which causes significant differences in the development of entrepreneurship in the service sector at both the regions of the global economy, country and the local administrative and territorial entities. some types of services are "tied" to the territory (for example, tourist locations), others have to be close to potential consumers (utility, personal, household services). the financial services sector is excluded from the subject of the study, which is explained by higher globalization of this type of services and much lower relation to regional development. practical implications. the study of services sector development will be useful for local and national authorities while taking measures on local development programs. value/originality. the study takes into account both local and global factors influencing the services market development, which is especially valuable in the context of ukraine’s aspirations of integration to the european union. key words: service, services sector, development, foreign trade, export, import. jel classification: f14, r12, r50 1. introduction it is widely recognized that in current time, services sector is one of the major drivers of economic growth in all countries, regardless of the level of development of their productive forces. however, while in developed countries the basis of economic development is now formed by the highly productive services in the field of it and business services, in the countries under transition to the market economy and in underdeveloped countries the main contribution to the gross product is made by transport and communication services, tourism. at the same time, the analysis of the world experience shows that the services sector is an extremely dynamic part of the economy, which plays an important role in solving a range of problems, including improving the efficiency of munufacturing and overcoming unemployment, ehhancing the quality of life. the residual approach in the study of service sector in ukraine in the past as in other post-socialist countries, has led to an underestimation of its role in the structure of the national economy, as a result – to the slow and three seas economic journal 15 vol. 2 no. 1, 2021 disproportionate development of this sector in the context of market economy restructuring. thus, in soviet times, services sector was considered ‘nonproductive’ comparatively with manufacturing. at the same time, unavoidable reforming of the service sector in the context of restructuring property relations has led to the development of new forms of activity based on the principles of private property, competition and free pricing. 2. results regional services markets, as well as commodity markets, are parts of a single integrated complex of the national market, also being a system of local relations regarding the production and consumption of services, which are indispensable components of the economic functioning of the region, and therefore require a comprehensive management approach. the services market, as compared to the goods market, is characterized by a higher level of localization, which arises primarily from the feature of the service – the continuity of the process of its production and sale. the territorial proximity of manufacturers and consumers of services enables more close reflection of the needs for services and taking into account the product requirements that are addressed by local consumers (there is a kind of "involvement" of customers in the process of development and improvement of services production). the higher the degree of customer involvement in the processes of service delivery, the greater importance is attached to the study of customer interests in the activities of enterprises in the market – the greater the degree of integration of the territorial complex of services in the system of regional and national economy. the processes at the services market in the region are determined by the influence of factors at three levels – regional, national and global. local (regional) factors, such as resource background for the development of the service sector, real opportunities for enterprises to create the supply of such services, demand for services in the region (consumer needs), the role of local authorities in facilitating the development of the regional market, in our view, are of extreme importance. here is an example of the development of tourism enterprises related to the service sector around a particular tourist attraction in the region. resources (availability of tourist attractions) form the basis for offering tourist, hotel and restaurant services and amenities around such an attraction. if the existing entrepreneurial potential is able to accumulate its capabilities, and able to show elasticity if necessary – to change the specialization by responding to the need (in this case – the need for recreation), then with the assistance (or at least not impediment) from the side of local authorities, the result can be to create a range of enterprises at a certain territory, which will provide tourist and recreational services in accordance with the emerging demand. national factors include legislative background, the macroeconomic situation in the country, the governmental support for the development of the regions. the macroeconomic situation describes the general conditions for the functioning of services markets – for example, the presence of solvent demand for services which is highly dependent from the income level. national legislation in the sphere of functioning of a service company both creates general conditions for work and implementation of the principle of freedom of enterprise, and can provide special favorable conditions for business development in particular areas by easing tax pressure. global factors shape the general trends in the service sector, promote the diffusion of innovative technologies and best management practices in service delivery, create favorable or discriminatory conditions for international trade in services, including restrictions or ease in the entry of local service providers into the international market. table 1 lists the factors influencing the development of regional services market. thus, the formation and development of the services market in the region is influenced by the intra-regional needs of certain services from the side of the population and enterprises. after all, as some authors point out, the industries that are intended to serve the population of the region are more oriented towards meeting specific regional needs. they fulfill the common economic needs as regional needs, which are part of the national economic needs, as well as the regional economy is a structural part of the national economy of ukraine (yemets, lendyel, 1992). thus, the sphere of services of the region is intended, firstly, to meet the needs of the population and enterprises of the region, and, secondly, to create and implement services for external consumers outside the region – to citizens of ukraine and enterprises from other regions, and to foreign consumers. at the same time, the status of the border area and close proximity to the state border should create significant advantages for enterprises willing to meet a foreign buyer. on the other hand, such a territorial approximation implies an increased reverse effect of cross-border trade in services on the emergence of local markets. for a detailed analysis of the status, trends and prospects of the services market development in ukaine in regional context, it is necessary to define the institutional and specific structure of the market. considering the general approaches to the allocation of services sector in the structure of the national economy (danylyshyn, 2005), (chernysh, 2005), (fedoron’ko & kovalchuk, 2017), their consistency with the existing rules of statistical accounting and the three seas economic journal 16 vol. 2 no. 1, 2021 system of national accounts, it is possible to define the regional services market as a system that integrated elements (institutional units providivng services) which are referred by the methodology of statistics to certain kinds of activity and provide services that can be considered as marketable by their economic characteristics. the division of services by economic characteristics and institutional units is based on the definition of market and non-market output by the system of national accounts (sna) and is widely used in scientific research as the main criterion for the division of services. institutional units that provide services under the sna are: non-financial corporations, financial corporations, public sector, household sector and non-profit sector serving households (united nations statistics division, 2012). it should be added that the great role of service providers at the regional level is played by individual entrepreneurs, but the statistical account of the volume of services provided by them is extremely imperfect, which narrows the possibilities of an adequate assessment of their role at the market. since 2002, the statistical service of ukraine is conducting a statistical survey of the non-financial services enterprises activities, which covers the activities of business entities identified as service businesses (by their main activity). such surveys are conducted in accordance with the national classification of kinds of economic activity, in accordance with the system of national accounts and with the requirements of the united nations. according to the methodology of service statistics, non-financial services by types of economic activity are classified into sections: section g (maintenance and repair of motor vehicles, motorcycles; repair of household goods and personal items), section h (operation of hotels and other temporary accommodation), section i (transport and communication activities), section k (real estate activities, renting, engineering and business services), section m (education), section n (health and social assistance), section o (provision of public utilities and individual services; cultural and sports activities) (state statistics service of ukraine, 2011). the study of regional service markets development requires introduction of an additional criterion of classification – the direction (level) of provision on the basis of consumer’s residence. in the processes of regionalization and globalization of the economy, the problem of identifying those sectors of the regional economy that form competitive positions of the territory, including in the world market, is of great importance. thus, in the direction of service delivery, it is advisable to divide them into those that provide services mostly for local needs (from the population, businesses), and those that are considered in the long term as a product of industries specializing in the region and focused on external consumers. thus, by all defined criteria, the regional services market covers the activities of economic entities (legal entities, their branches and separate subdivisions and natural persons – entrepreneurs of the region), providing non-financial services on a market basis, at economically significant price for the aim of getting profit. the main indicators for assessing the development of regional service markets are: the total volume of services produced and rendered, the share of regions in national production of services, the contribution of the service sector to the creation of gross regional product (in %), the number of enterprises active in the service sector and employment in such enterprises, as well as the level of integration of regional services markets into the global one, which is estimated by the overall indicators of foreign trade performance (exports, imports, trade balance, foreign trade ratio). the total value of the services provided in 2018 was more than 702 uah billion (state statistics service of ukraine, 2019). however, this sum is not including the data of enterprises, which are not covered by a regional statistics and are submitting statistical reports without distribution by region. the additional amount of such services is more than 70 uah billion. the study of regional shares in the total production of services shows that the kyiv city, odesa, dnipropetrovsk and kharkiv regions are the main producers of services in ukraine. these regions however are the most populated and developed in the sense of number of table 1 factors, influencing the development of regional services markets global national local (regional) scientific and technological progress, and structural and technological changes in production general macroeconomic situation in the country needs for services from local and external customers increasing living standards and growing demand for services national legislation in the field of entrepreneurship resource potential of the region in terms of development of specific sectors of services liberalization of international trade in services level of involvement of the country in international trade and integration processes competitiveness of regional enterprises and elasticity of production structure international economic integration a vision of the development of services market by local authorities source: built by the authors three seas economic journal 17 vol. 2 no. 1, 2021 active enterprises that explains the high demand for services. the less populated regions – khmelnytsky, chernivtsy, sumy, and the unoccupied territory of luhansk regions have less than 1% share in the total productions of services across the national economy. lviv region is a unique for having a share of almost 6% that is almost equal to the share of kyiv region (while lviv region is having relatively less population and high share of people living in rural area, that usually causes low demand for services). most services in ukraine are consumed by the enterprises (about 65%). however all the regions can be divided into three groups: those, in which services predominantly are consumed by the enterprises, those where services are provided mostly to individuals and those where the share of legal entities and individual consumers is about equal. enterprises in ukraine are consuming transport services, warehousing and support activity in the sphere of transport, services in the sphere of law, accounting and auditiong, architecture and engineering, technical testing and research, activity of the head-offices, management consultancy, r&d. individual consumers are mostly buying temporary accommodation and catering, education, telecommunications (electric communications), healthcare, art, sport, entertainments and recreation services. table 2 shows the breakdown of regions according to the share of enterprises and individuals in the total consumption of services. as the table 2 shows, in most (17) regions enterprises prevail in the share of consumed services, in others (6) businesses and individual consumers have roughly the same numbers. only in the unoccupied part of the luhansk region and in the chernivtsi region services are mainly consumed by the population. kyiv, kirovohrad and dnipropetrovsk regions have the largest share of enterprises in the structure of consumption of services, which is explained by high entrepreneurial activity in the regions itself. this division, in our opinion, does not significantly depend on the geographical location, but rather on the level of development of business in the region. it should also be borne in mind that a significant amount of services in ukraine is provided by self-employed individuals. however, statistical records in terms of services provided by them are not maintained, and therefore cannot be taken into account. the number of jobs created in services sector is an important aspect of the services market development and way of assessing the contribution of the tertiary sector to regional development. in general, agriculture in ukraine employs about 18% of workers, industry – 15%, construction – 4%, the rest 63% of jobs refer to services sector, including financial services and public administration. this indicator is close to employment data of developed countries, but the leading role of education and health services, which remain labor intensive even in developed countries due to the specific nature of their delivery, must be taken into account. in all regions of ukraine, the largest number of population is employed in education and medicine – more than 2.4 million people (state statistics service of ukraine, 2018). most educational and medical institutions are budgetary institutions and provide non-market services, and therefore cannot be calculated in our study. the analysis of the other services sectors in terms of employment shows the following: 1) in spite of the expectation that the regions in which the largest number of employees are involved in the table 2 regions of ukraine according to the share of enterprises and individuals in consumption of services regions, where services are predominantly consumed by enterprises (17) regions, where services are predominantly consumed by individuals (2) regions with almost equal share of enterprises and individuals in consumption of services (6) volyn dnipropetrovsk donetsk zhytomyr zakarpattya zaporizhzhya kyiv kirovohrad lviv mikolayiv odesa poltava rivne kharkiv khmelnytskiy cherkasy city of kyiv chernivtsi luhansk vinnytsya ivano-frankivsk sumy ternopil kherson chernihiv source: built by the authors based of data of (state statistics service of ukraine, 2019) three seas economic journal 18 vol. 2 no. 1, 2021 service sector are the most populated regions, the latter do not have high employment rates in the enterprises providing market services, since the largest share of population is still employed in the "budget" part of services sector – education and medicine; 2) in highly urbanized regions (dnipropetrovsk, kyiv, kharkiv regions) the role of employment in the transport sector is especially significant; a high number of jobs is created in close-to-border lviv region and the coastal region of odessa; 3) lviv oblast is unique in terms of employment development in the catering sector and accommodation, which exceeds all regions of ukraine except kyiv by the number of employed in this field. this is explained by the tourist attractiveness of the region and the high level of development of tourist and recreational infrastructure; 4) kyiv is the undisputed leader in terms of employment in information and telecommunications sector, with more than 90,000 jobs (for comparison, in kharkiv region, where population is 200,000 more than the population of kyiv city, only 25,000 people are working in the field of information and telecommunications). after ukraine's participation in the wto, particularly in the general agreement on trade in services, the competitive environment in the national market has improved significantly, and consumers have accordingly benefited from the consumption of a larger range and quality of service products. ukraine has made commitments in the main sectors of gats, including business services, communications, distribution, education and environmental services, finance (insurance and banking), and healthcare. this list also includes social services, tourism and travel services, recreation, culture and sports, transportation services, beauty services (hairdressing, spa and massage). ukraine has pledged not to discriminate against foreign companies in the vast majority of service sectors, except in such areas as security and investigation services, audiovisual services, space transport services, towing and unloading services by sea and rail. restrictions were introduced in a number of sectors (inland waterway and rail transport, land operations), as well as on foreign capital and the presence of foreign persons. ukraine is actively applying wto mechanisms to protect national interests, while liberalizing access rules to the national market, which ultimately leads to an increase in exports and imports of services. the eu-ukraine association has also had a positive impact on ukraine's foreign trade in services with the eu member states. the overall indicators of export and import have increased, the positive balance of trade in services is maintained and the share of the innovative, scientific and technical and information services in the structure of ukrainian exports is constantly growing. in 2019, ukrainian enterprises sold export services for more than us $ 15,5 billion, that is nearly 2,5 times more than the volume of services imported into ukraine (us $ 6,4 billion) (state statistical service of ukraine, 2020). data available on the quantity of active enterprises show that in total, almost 7,000 ukrainian enterprises exported services in 2018. most of the enterprises were registered in kyiv city (2,823 units) and in kyiv region (300), in the coastal odessa (812) and western regions bordering the eu – transcarpathian region (194) and lviv (576) (state statistical service of ukraine, 2019). exporters from mykolaiv, chernivtsi, transcarpathian, ternopil and lviv regions were the most effective in their activity, as the export coverage ratio was 7.1 and higher (with an average ratio of 2,4 in ukraine). only 4 regions have had negative foreign trade in services coverage ratio (much less than 1) – donetsk, dnipropetrovsk, volyn and vinnytsya regions, and three regions were close to 1.0 ratio when export and imports were almost equal. data on the autonomous republic of crimea and the occupied territories of donetsk and luhansk regions are not taken into account in the calculation of indicators. almost one-third of all exports of services from ukraine refers to the city of kyiv (30.5% in 2018 and 26,8% in 2019), and the largest amounts of services related to national exports were coming from lviv, mykolaiv, kharkiv, kyiv and transcarpathia regions. kyiv city imports almost half of the services from abroad (50,5% in 2019), followed by dnipropetrovsk, kyiv and odesa regions (state statistical service of ukraine, 2020). liberalization of trade in services generally and improvement of trading conditions with the eu countries in particular had the most obvious impact on the indicators of regions of ukraine, which are bordering with the union. for example, 10 years ago (in 2010), the transcarpathian region ranked only 15th in ukraine in terms of export of services, while today it is at the 7th place according to this indicator. considering the state and dynamics of foreign economic activity of enterprises, given by the official statistics service, we can state: – most regions of ukraine show positive dynamics of foreign trade in services; – by the period of 2015–2019, the rapid decline in trade in services caused by military conflict in the east of ukraine was compensated due to the increase in exports from kyiv and kyiv region, southern odessa and mykolaiv, and western lviv and transcarpathian regions; – the structure of foreign trade in services is being improved in all regions – the role of traditional services (transport and communication) is decreasing, while the share of the modern services in the field of telecommunications, computer and information is increasing. at the same time, the import volumes of leasing operations, tourist trips abroad and the three seas economic journal 19 vol. 2 no. 1, 2021 volume of air transport are also increasing (which is a clear consequence of the liberalization of trade with the eu and the introduction of a visa-free regime with the eu). 3. conslusions the socio-economic nature of the services market is seen in its economic and specific functions. the services market acts as a set of relations in production and consumption of services, based on the processes of their sale and purchase at a price, which is set by the forces of supply and demand under the indirect influence of the non-market segment on the environment of these relations. the main two functions of the services market are the creation of a comfortable and favorable living environment for the population, and the provision of conditions for the development of efficient manufacturing and other sectors of the national economy. the study of regional peculiarities of the services market development confirms, that the dynamics of processes in the market, the structure of consumption of services is determined first of all by the needs of potential consumers. some regions, such as industrial kharkiv and dnipropetrovsk, have regional service markets focused on providing business services (services provided to enterprises), and at the same time have a developed transport services sector due to the high degree of urbanization. kyiv region and kyiv city concentrate the largest number of enterprises and employees in the service sector and are the leaders of the information and telecommunication services market. the bordering regions of lviv and transcarpathia make a significant contribution to foreign trade in services of ukraine, mainly with the european union. the ukrainian tertiary sector is developing under the influence of local, national and global factors. over the past years, ukraine's economy has experienced at least two external shocks – the global economic crisis and the russian military invasion. however, significant reductions in the volume of service provision due to the loss of parts of donetsk and luhansk regions were successfully offset by the revitalization of enterprises in other regions. the positive impact of ukraine's accession to the w to was reflected in the growth of foreign trade in services, improvement of the structure of exports due to increasing the share of modern research, information and business services. currently, ukraine’s economy is overcoming economic crisis caused by the covid-19 pandemic, which will unevitably cause great losses in regional and foreign trade in services. thus, the influence of pandemic on trade in services will be the topic of the further studies. references: chernysh, o. (2005). services market: mechanisms of state regulations in transitional economy. donetsk. danylyshyn, b. (2005). services sector and services market in the context of social modifications of society. kyiv: rvps of nas ukraine. fedoron’ko, n., & kovalchuk, n. (2017). current situation at services market of ukraine. young researcher, 3(43), 871–874. state statistics service of ukraine (2011). classification of kinds of economic activities-2010. available at: http://kved.ukrstat.gov.ua/kved2010/kv10_i.html state statistics service of ukraine (2019). regions of ukraine, 2020 (in two parts). kyiv. state statistical service of ukraine (2020). ukraine’s foreign trade in 2019 (statistical yearbook). kyiv. united nations statistics division (2012). system of national accounts-2008. available at: https://unstats.un.org/ unsd/nationalaccount/docs/sna2008russian.pdf yemets, h., & lendyel, m. (1992). regional approach to managing economic processes. kyiv. three seas economic journal 1 vol. 2 no. 3, 2021 corresponding author: 1 batumi state university & batumi state maritime academy, georgia. e-mail: giazoidze@yahoo.com orcid: https://orcid.org/0000-0002-0155-5775 researcerid: https://publons.com/researcher/4610363/gia-zoidze/ doi: https://doi.org/10.30525/2661-5150/2021-3-1 importance of euro-atlantic integration: democracy, security and economic development gia zoidze1 abstract. the article overviews that international organizations play an important role in managing and reforming the security sector. these organizations provide expertise, advice, and knowledge enhancements on security issues; trainings on financial capacity building issues; programs and projects on important topics such as technical skills development, security sector management, oversight and conscientiousness. in recent times, a number of studies have been devoted to the prospects of nato-georgia relations and its deepening. there are always conversations about the reasons why georgia needs to join euro-atlantic alliance. however, in this regard, georgia first needs to give nato member states some important reasons why they would benefit from georgia's membership in euroatlantic alliance. the main reason for this may be the fact that without a secure and stable black sea region, the security and stability of europe is inconceivable. according to the author of the article, the process of rapprochement and eventual accession to nato, in addition to guaranteeing security, promotes and improves the institutional framework of the economy, the rule of law, effective governance systems, corporate security, and the reduction of uncertainty and externalities, which, in turn, provides stability, reduces political risk, facilitates foreign direct investment and trade. consequently, liberalizing the country's economy and shifting to market principles reduces social pressures, ensures increased prosperity and the accumulation of wealth. as a result, society becomes more protected and less vulnerable when it comes to various types of external and internal shocks. key words: euro-atlantic alliance, integration, security, economic development. jel classification: f15, f63, p16 1. introduction international organizations play a crucial role in setting norms and standards, ensuring accountability, and upholding the rule of law. these organizations are the communication channel between governments and societies, between nations, and other international actors involved in security sector management and reform. international organizations became more active in the field of security sector reform in the 1990s, when it became apparent that development efforts, especially in a conflict and post-conflict context, could not have been successful in a low-security environment. security management has since become an integral part of institutional construction, governance, development and reconstruction projects. at the same time, democratic oversight of the security sector has become a necessary condition for partnership and membership with institutions such as nato and the council of europe (geneva centre for security sector governance, security sector integrity, international organisations). 2. euro-atlantic integration in the political and economic aspects the country 's economic development largely depends on the country 's ability to ensure longterm security and stability by creating strategically important narratives and frameworks that, on the one hand, create the conditions for favorable cooperation of economic agents and, on the other, facilitate the country 's integration into regional and international supply chains (kutelia, 2016). it is true that the economic development and prosperity of the country is not the main goal of nato, but its function – to guarantee security, ensures the political and economic stability of the country. it can be said that economic development is a central aspect of a country 's foreign policy, because without sufficient economic means the state will not be able to exert direct or indirect pressure on current events at the global level. consequently, economic development is directly linked to a country’s ability to facilitate the existence of an international military this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 2 vol. 2 no. 3, 2021 force to overcome challenges to global security (kutelia, 2016). significant positive economic effects are evident in countries where nato membership has been decided and comprehensive reforms are underway to achieve political, economic and military compatibility with the allies. to support this view, we can look at the data dynamics of nato 4th, 5th, 6th, 7th, 8th enlargement countries and nato aspirant countries (georgia, ukraine, bosnia-herzegovina) 1999–2019 (figure 1, figure 2 and figure 3). the main positive effects of nato membership on the economic development of the above associated countries can be assessed in terms of foreign direct 0,0 5000,0 10000,0 15000,0 20000,0 25000,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 gdp per capita (usd) in nato's 4th enlargement countries (1999), by years czech republic hungary poland figure 1. gdp per capita – dynamics of 1999–2019 data from the 4th nato enlargement countries (1999) (czech republic, hungary, poland) source: the figure is compiled by the author based on data from world bank 0,0 5000,0 10000,0 15000,0 20000,0 25000,0 30000,0 199920002001200220032004200520062007200820092010201120122013201420152016201720182019 gdp per capita (usd)-in nato's 5th enlargement countries (2004), by years bulgraria estonia latvia lithuania romania slovak republic slovenia figure 2. gdp per capita – data dynamics of the countries of nato 5th enlargement (2004) (bulgaria, estonia, latvia, lithuania, romania, slovak republic, slovenia) 1999–2019 source: the figure is compiled by the author based on data from world bank three seas economic journal 3 vol. 2 no. 3, 2021 investment and a safe and secure business climate. however, there are other areas from which nato membership can benefit, as they are also related to the country 's economic development and stability, as well as the creation of institutional frameworks for successful state-building (kutelia, 2016). a safe, secure and stable environment is a fundamental prerequisite for attracting investment and rapid economic development. this factor is crucial for the simple reason that no one will create material wealth where there are no guarantees of the protection and security of that wealth. attracting investment is unthinkable in a country where the state fails to ensure the security and protection of investments that make up its territories, population, and wealth; in a country where unidentified military groups can cross into state territory and seize specific property. the fact is that this problem affects not only the investment attractiveness of a particular region of the country. such facts affect the investment climate of the country as a whole, because the message to existing and potential investors is clear: the state cannot defend its territories and cannot ensure the defense and security of the country. creating an investment environment in such conditions is unthinkable. 3. the main strategic orientations of georgia and nato defense and security, according to the constitution, is one of the primary obligations of the state. the state must ensure the protection and security of its territories, citizens and legal entities. everyone in the country should feel protected. if this is not the case, then the state does not or cannot perform its function. it is important to note that the key is not what reality is, but how people and investors perceive that reality. the goal of georgia's euro-atlantic integration is to protect georgia's security and sovereignty and to develop the country, which should ensure the security and well-being of its citizens. georgia's integration with nato and the eu means a tradition-based and new knowledge-based economy, the rule of law, high military standards, better education and health care (tsereteli, 2016). more specifically, increasing the country's security (nato integration) will provide: – additional political, economic, social and security guarantees for georgia as well as for the whole region (south caucasus); – peaceful and stable development of the country; – high military standards; – opportunity to increase foreign direct investment; – increasing the share of expenditures on education and innovation; – reducing unemployment and improving social status; – increase investment in healthcare in response to increasing demand for it; – a sharp drop in loan interest rates; – increased flows of tourists entering the country in the footsteps of security; – solving the chronic problem of budget deficit at the expense of increasing foreign direct investment; – sustainability of the economy against internal or external shocks; – getting closer to european institutions; – striving to reduce corruption; – increase in average life expectancy; – balancing territorial problems, which will help increase the country 's international prestige; – increasing the standard of living, which will contribute to receiving higher professional education and more involvement of qualified staff in various fields: agriculture, tourism, science, education, industry...; – development of art fields (theater, cinema, music, painting) as a result of increasing living standards; – return of georgia to a large european and euroatlantic family (nato is a community of democracies, and with georgia's integration into nato, we are, in fact, returning to a large european and euro-atlantic family from which we have unfortunately been "excluded" for a long time). here we should mention the specific factors why georgia's euro-atlantic integration is a top priority for nato itself: 1. the key factor: without a secure and stable black sea region, the security and stability of europe is unimaginable. 2. given its good location and full realization of its transit potential, the region can significantly diversify its energy supply to europe and become a guarantor of future european energy security. 3. at the same time, it should be noted with great pride that today we act as a de facto ally, we are not only consumers but also security providers. georgian military units are actively participating in peacekeeping operations in kosovo, iraq and afghanistan. 4. georgia's integration into nato is beneficial for europe because it will expand the democratic space to the east. to further improve democracy in the caucasus, europe will benefit from a common safe spaces and reliable partners in order to achieve international security and stability. 5. georgia's accession to the euro-atlantic security system will significantly reduce modern security threats to europe, such as terrorism, arms and drug trafficking, trafficking, illegal migration and organized crime. 6. following the accession of bulgaria and romania, the eu directly borders the black sea, making this area three seas economic journal 4 vol. 2 no. 3, 2021 an integral part of european trade, security and the legal sphere. 7. the overall task is to establish and strengthen a black sea security system. this system will be linked to the mediterranean security system and will be the final stage of the security of the united europe. consequently, the black sea basin will be of even greater strategic importance to the eu and nato, both politically and militarily, and so on. the black sea region has always been a place of intense socio-economic relations and it is increasingly transformed into a center of attraction for the growing political and economic interaction of various actors. against the background of the growing economic interdependence of the countries of the region and not only, there are more and more new opportunities and challenges intertwined. unfortunately, the political interest in creating dividing lines and zones of influence has a negative impact on the political and economic situation in the region, as well as on the overall picture of interpersonal relations (ministry of foreign affairs of georgia). in addition to stabilizing the local economy, nato membership also stimulates foreign investment. this is evidenced by estonia, where, after joining nato, foreign investment has increased considerably. a similar trend was observed in albania, bulgaria, latvia and lithuania. in all these countries, foreign investment has increased significantly, the level of which, despite the severe impact of the economic crisis of 2008, still remained at a high level compared to 2000. even in the case of slovenia, despite its unstable development path, foreign investment increased before the onset of the economic crisis, and in 2014 the level of foreign investment was quite high compared to previous years. such a trend can be seen as a product of political stability and military security that nato membership brings, as nato membership is one of the guarantees for foreign investors to minimize political and economic unpredictability and increase the potential for investors to succeed in these markets (kutelia, 2016). due to these increased activities in economic and various directions, there is a sharp increase in the gdp per capita of the newly joined nato countries (figure 1, figure 2, figure 3). 4. the impact of european integration on the level of education in the country in democracies with open and free market economies, there is a direct correlation between the share of investment (private or public) in education, research and development and job creation, investment growth, which over time is reflected in improved employment and living standards (kutelia, 2016). the euro-atlantic integration path underscored the importance of developing an educated and competent workforce needed to ensure strong, sustainable and figure 3. gdp per capita – nato 6th (2009), 7th (2017), 8th (2020) enlargement countries and nato aspirant countries (georgia, ukraine, bosnia-herzegovina) 1999–2019 data dynamics source: the figure is compiled by the author based on data from world bank 0 5000 10000 15000 20000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 g d p pe r ca pi ta years gdp per capita (usd) in 6th (2009), 7th (2017), 8th (2020) enlargement countries and aspirants, by years albania-6th expanditure croatia-6th expanditure montenegro-7th expanditure north macedonia-8th expanditure georgia-aspirant ukraine-aspirant bosnia&herz-aspirant three seas economic journal 5 vol. 2 no. 3, 2021 balanced growth in the candidate countries. therefore, the new nato member states, which have a guarantee of collective security, have been able to increase spending on education. the growing investment in education over the years has created a relatively cheap and educated workforce in the new nato member states and, consequently, increased the potential for further investment in research, development and new technologies. therefore, it is vital for georgia to increase spending on education, as it is directly related to reducing unemployment and social spending, as well as increasing the overall income of citizens, which contributes to increasing capital in the economy (kutelia, 2016). due to the growth of economic globalization, which is accompanied by the integration of new nato member states (large or small) into the alliance, there is a growing possibility that nato member states, to varying degrees, remain vulnerable to global or regional trends and become dependent on them; however, the fact that the above countries have already been able to increase investment in education, research, development and technology – and consequently diversify their economies – makes them more resilient to external and domestic shocks. the formation of a healthy and competitive economy can be a source of long-term (continuous) improvement of the overall quality of life of citizens and equal distribution of income. in addition, low unemployment is one of the main indicators of a market economy, as low unemployment is a result of the high purchasing power of citizens in the country, which allows them to purchase high quality products, food and health services (kutelia, 2016). as an increase in the quality of education and a decrease in the unemployment rate towards higher wages, the above trends provide a basis for improving life expectancy as citizens have access to high quality medical services. thus, there is a strong correlation between citizens' total income and access to quality health services. it is true that the effect of improving life expectancy is not seen in the short term, but the long-term result of increased investment in the health care system, capacity building and optimal resource management is a healthier population with longer life expectancy and a more active role in the country 's economy. this alleviates the social burden of the country. the above healthy trends will significantly improve the equal distribution of income in the country and the ability of the government to spend funds more purposefully and efficiently (kutelia, 2016). collective security guarantees provide a solid foundation for closer regional economic and political integration, economic diversification and resilience. integration is a source of promoting economic prosperity, peace and security in the region through the development of a liberalized economy and political strategies between participating countries. 5. conclusions new membership for nato has brought greater opportunities for long-term economic growth. the primary effect of nato and eu membership was to strengthen the economy, which would ensure the country 's security and economic stability. the stability that nato membership has brought was quite important in stimulating foreign direct investment. given that nato membership provided the country with political strength and protection from external shocks, nato integration has intensified the efforts of the newly formed countries to achieve long-term prosperity. the "nato effect" can be manifested through a simple but effective cycle that brings significant benefits to ordinary citizens. nato involvement in the process of strengthening black sea security is extremely important and georgia, as a country interested in peace and stability in the region, should continue to deepen close cooperation with the alliance in all areas. it should be noted that the stability of georgia and ukraine and their integration into the euro-atlantic space are of special importance for the security of the black sea region. since 2014, both countries have been actively involved in discussions and initiatives on black sea security within nato, enabling them to move even closer to alliance standards and increasing the prospects of joining the collective defense organization. the main principle should be lobbied and put into practice, so that the security of georgia should be in the strategic interest of all neighbors and global actors. this, of course, cannot be conditioned by militarypolitical factors alone. if the united states in georgia is directly viewed in terms of the sustainability, growth and guarantee of military defense (military-technical cooperation and increased joint exercises), which is logical, the eu should focus on achieving the goals set by the neighborhood policy and association agreement, both political and especially, in economic terms. georgia's accession to nato will bring security, a stable political and socio-economic environment to the country, which will increase international interest in investing in georgia. this will lead to an increase in the income of the country 's population, which in turn will be reflected in a significant increase in gdp per capita. this will improve the socio-economic situation of the society. examples of this are the recent increase in the gdp per capita of the new member states of nato. that is why institutional reforms must be carried out in georgia as soon as possible in areas where there is three seas economic journal 6 vol. 2 no. 3, 2021 a sharp lag behind similar figures to nato member states. it should also be emphasized that georgia's integration into nato is very important for each member of the euro-atlantic alliance. georgia's transit role (due to its strategic geographical location) for the development of closer trade and energy relations between europe and asia carries a broad context. given its good location and full realization of its transit potential, the region can significantly diversify its energy supply to europe and become a guarantor of future european energy security. at the same time, georgia's integration into nato will be beneficial for european countries because it will expand the democratic space to the east. to further improve democracy in the caucasus, europe will benefit from a common safe spaces and reliable partners in order to achieve international security and stability. references: aladashvili, i. 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(2004). the geopolitics of euro-atlantic integration. routledge. three seas economic journal 110 vol. 2 no. 1, 2021 corresponding author: 1 national technical university "kharkiv polytechnic institute", ukraine. e-mail: nosyriev@ukr.net orcid: https://orcid.org/0000-0003-4089-3336 researcherid: aan-2590-2020 2 pervomaisk affiliate national university of shipbuilding admiral makarov, ukraine. e-mail: tanyshabukina@gmail.com orcid: https://orcid.org/0000-0003-3628-6859 researcherid: aao-5442-2021 doi: https://doi.org/10.30525/2661-5150/2021-1-18 socio-cultural transformation of ukraine in the context of european values oleksandr nosyriev1, tetiana bukina2 abstract. the article considers the issues of changing accents and cultural transformation in ukraine, great britain and other european countries. in recent years, ukraine has seen an active revival in the cultural sphere. from publishing to music, from film production to theater, from fashion to curatorial exhibitions – the ukrainian cultural environment has become bold, diverse and large-scale. euromaidan has given impetus to a powerful wave of cultural activism: from discussion platforms to spontaneous exhibitions, from urban regeneration projects to volunteer groups seeking to protect dilapidated national heritage sites. the impetus for it was the dynamism of the ukrainian creative community. and further development became possible thanks to the support of new state cultural institutions. these institutes emerged after euromaidan, such as the ukrainian cultural foundation, the ukrainian book institute, and the ukrainian institute. institutions with a long history, such as the state agency of ukraine for cinema, have strengthened their positions. the creation of these new institutions marked the departure from the post-soviet system of cultural management. and the transition to a consistent and comprehensive cultural policy. the main thing is that the creation of a new system of culture in ukraine has helped to bridge the gap between the state and cultural activists and the creative sector. one of the most important problems of the cultural sector in ukraine for the last 25 years is funding. this problem is also relevant for the united kingdom. but when it comes to finding resources for artists and cultural institutions, british policy has a respectable tradition and a number of successful answers. support for the arts by both the state and business seems to be a matter of course for the british. at the same time, the idea of the self-worth of art is also supported by the idea of its social significance, as well as the perception of art as a primary source of creativity, innovative development, creative industry. the relationship between the european union and the society of ukraine is already yielding some results in the context of ensuring the democratic and european development of the state. for the successful implementation of european integration in ukraine, it is necessary to apply such mechanisms that will ensure coordinated management of social processes of the state in the direction of european integration. the main mechanism is cultural policy, which should be aimed at regulating the regulatory framework. and the application of regulations in practice. this will allow culture to take a leading position on the path to national modernization. legislation should be a mechanism for achieving goals, and the main thing should remain that the person should be at the center of cultural policy of the state. given the experience of the united kingdom, the formation of ukraine's cultural policy should be based on the idea of the all-encompassing impact of culture on modern society. accordingly, such a policy, being aimed at the cultural sector, effectively affects all spheres of public life. consistent support for culture at the financial and fiscal, legislative and executive, national and local levels should, above all, be based on an awareness of the value of culture. culture enriches people's lives, changes their worldview and inspires creativity. in the social dimension, its impact has the most significant impact on education, health and cohesion. key words: culture, cultural policy, state cultural policy. jel classification: м14, d61, i31, i38, z10 three seas economic journal 111 vol. 2 no. 1, 2021 1. introduction following the revolutionary events of euromaidan in 2013–14 and the subsequent russian aggression against ukraine, the country has seen a remarkable revival in the cultural sphere. from publishing to music, from film production to theater, from fashion to curatorial exhibitions – the ukrainian cultural environment has become bolder, more diverse and larger. euromaidan has given impetus to a powerful wave of cultural activism: from discussion platforms to spontaneous exhibitions, from urban regeneration projects to volunteer groups seeking to protect dilapidated national heritage sites. the impetus for this was the dynamism of the ukrainian grassroots creative community, and further development has become possible due to the support of new state cultural institutions that emerged after euromaidan, such as the ukrainian cultural foundation, the ukrainian book institute and the ukrainian institute (kravchenko, 2015). institutions with a longer history, such as ukrainian state film agency, strengthened the position. the creation of these new institutions marked the transformation from the post-soviet system of cultural management in the direction of a consistent and comprehensive cultural policy. the most important result is that the creation of new cultural ecosystem in ukraine has helped bridge the gap between the state, its cultural activists and the creative sector. ukraine has made significant progress in shifting the emphasis in the controversy over culture – previously it was seen as a waste of public funds, now it is increasingly seen as an important source of the national economy development, that is able to generate income and create jobs, promote innovation and social inclusion. creative industries have become an important part of the discourse on cultural policy, but the public support of the sector remains weak. 2. socio-cultural trends determination in comparison with the developed countries analyzing the modern conceptualization of cultural policy in ukraine, o. kravchenko (kravchenko, 2015). states that it is based on the historical experience of the world's leading countries in the second half of the twentieth century on the instrumental use of the social potential of culture. socio-cultural concepts "economy of culture", "cultural production", "creative industries", which are operated, in particular, by british scientists and government officials (cultural policy and art education: process modeling, 2013), reflect the strategies of cultural policy as a way to meet social needs in accordance with the notions of quality of life in the paradigm of "human development". the researcher also notes that the basis of european cultural policy in recent decades are the ideas of decentralization and democratization of culture as ways to reconcile individual cultural rights and freedoms with the need of flexibly stimulation of the innovative dynamics of society. o. bezgin (cultural policy and art education: process modeling, 2013) investigates the managerial experience of european countries in the arts and determines that the tradition of british cultural policy is based on the principles of national prestige, economic significance, "civilizational" mission and welfare state. the researcher covers the institutional and financial aspects of british policy in the field of culture and art. h. tsymbalova's research, which focused on the foreign policy aspects of cultural policy, in particular, through the prism of the british council, is also valuable for understanding of the british concept of cultural policy (tsimbalova, 2015). in the research of john street it is not only shown the values in british cultural policy, but also highlighted the conflicts between the concepts of diversity, popularity and professional excellence in it. analyzing this confrontation, the researcher examines how the specific political forces use competing evaluative judgments to manage the concepts of diversity and perfection, and whether the former is in fact populist and the latter is elitist in nature. this study helps to understand the ideological orientation of the current british policy in the field of culture ( john street, dave laing, simone schroff, 2015). no doubt that one of the most important problems of the cultural sector in ukraine for the last 25 years remains funding. this problem is also relevant for the great britain in the matter of finding resources for the activities of artists and cultural institutions. british policy has a respectable tradition and a number of successful responses. the arts support by both the government and business seems to be a matter of course for the british. at the same time, the idea of the self-worth of art is also supported by the idea of its social significance, as well as the perception of art as the primary source of creativity, innovative development, creative industry. thus, the culture supporting seems to be useful for business. the problem solution of the british art material support in the postwar period is understood as the need to attract funding not only of public sector but also private, to develop the activities of institutions aimed to search the funds, generating their own profit, and improving self-government systems. but the business support does not replace, it complements the government funding. at the same time, the government encourages mixed funding in art projects, which comes from various sources: the state, patrons, fundraising (including crowdfunding), as well as funds earned by the institutions themselves (2015 to 2020 government policy). those cultural institutions that have revised their structure, management, business models and three seas economic journal 112 vol. 2 no. 1, 2021 diversified sources of income have been able to adapt to changing economic circumstances. similarly, the flexibility and adaptability are considered the key task of cultural organizations and the best response to changes in the financial environment, especially at the regional or local levels. at the same time, the government stimulates such development by making appropriate changes to the legislation, creating and maintaining funds with mixed sources of funding, tax benefits for cultural institutions and patrons (mulcahy kevin, 2006). strong public support and significant political interest in the cultural sector development have a corresponding social burden. david cameron notes the interdependence of funding the culture and the arts at public expense (including the state budget) and open access to them for the public. regardless the origin, everyone (children and youth above all) should enjoy the opportunities offered by culture. a clear embodiment of this policy is free entrance to museums, introduced in 2001. and now the government has maintained consistently free public access to the permanent collections and exhibitions of national museums and galleries. the growing demand to meet cultural needs, in particular, the rapid rise of the number of museum institutions visits over the next decade is associated with this event (crossick, kaszynska, 2016). in the culture white paper, government programs and reports culture is seen as a powerful tool for revitalizing of the society and the economy at the national and local levels and the associated creative industry is considered to be one of the best investments the british can make. the government recognizes the significant contribution of culture to the economic development, the labor market, education, improving the health and well-being of communities in villages, towns and cities, regions of the country. as examples of practical implementation of these ideas can be mentioned the creation of places of creativity, cultural quarters, which are aimed to be realized at the local level, opposed to large infrastructure projects (mould oli., comunian rober, 2015). borrowed from the united states the cultural quarters establishment should bring together partners from the public, private, non-profit sectors. the aim of such association is to revitalize the local space with its buildings and streets, to improve the efficiency of local business and public safety, to involve to business and cultural industry different people who can generate jobs and profits, new products and services, and to attract and retain unrelated companies and skilled workers. at the same time, the cultural policy implementation to revitalize the declining urban environments by creating cultural quarters with the creative industry is the subject of criticism in the recent scientific research, as such policy leads to marginalization of production, social gentrification, accompanied by rising of the real estate values, services and life in general in such quarters which results in the growing of inequality in urban space (the culture white paper, 2019). however, the revival and restoration of quarters by means of culture does not imply, first of all, a direct economic effect, but the strengthening of ties between people and the growth of social capital. 3. the ukrainian cultural policy development in the conditions of european integration the strategically important document that defines the ukrainian diplomacy vector was the decree "on the main directions of ukraine's foreign policy " approved by the verkhovna rada of ukraine on july 2, 1993. it stated: “given its geopolitical position, historical experience, cultural traditions, rich natural resources, strong economic, scientific, technical and intellectual potential, ukraine can and have to become an influential world state that is capable to play the significant role in ensuring of the political and economic stability in europe" (botanova, 2016). the last important step towards the european community was the signing of the association agreement between ukraine and the european union, on the one hand, the european atomic energy community and their member states, on the other hand, that was signed on march 21, 2014 (the culture w hite paper, 2019). most of the international agreements are focused on the economic and political issues. but it is important to note that convergence in the economic and political direction is not possible without cooperation and interaction in the cultural sphere. so, together with cooperation in the political, economic, and legal spheres, non-economic policy also becomes a priority, such as educational, linguistic, cultural, sports and other policies. the european cultural community has always promoted the belief that it is the culture (or rather the common cultural policy) that should be the basis of european integration processes. this discourse embodiment was the creation of an alliance in 1992, called the culture action europe. it should be considered that the cultural policy of european countries is open to the new forms and changes, but at the same time, it leaves behind each nation something traditional and unique to it. the enlargement of the european union (eu) that is linked with the growth of the common market, migration, new trade links, education, globalization, increases contacts between cultures, religions, ethnic groups and languages. so, every citizen of the country has to understand one's belonging not only to one's own nation, but also to a community larger than the national – european. eu countries have formed their own common european values, symbols, ideas, which have created a common european society. three seas economic journal 113 vol. 2 no. 1, 2021 the general principles of cultural policy in europe are reflected in the unesco international document "the mexico city declaration on cultural policies" ( july 26 – august 6, 1982). the document states: “any cultural policy should restore to development its profound, human significance, so the development plans and strategies have to be formed considering the historical, social and cultural context of each society. the assertion of cultural identity contributes to the liberation of peoples, and vice versa – any form of domination is a denial of identity or a threat to its existence" (eu neighbours portal, 2020). thus, over the last decade, ukrainians, especially the young generation, have become aware of themselves as europeans. first of all, ukraine needs to understand that "being a european" means accepting european values, which are often neglected in our post-soviet society. for the post-soviet population of ukraine, where most people are brought up in a "socialist ideology ", forced to experience "soviet", although in fact it was "russian" as "their own", it is difficult to perceive and identify oneself with the european world community, because european and american values were treated as "foreign". so, the state policy of ukraine has to be formed on the public awareness of new opportunities brought by european integration processes. in order to reach successful awareness more public information is needed on the following questions: " what is the eu?", " what is european integration?" etc. the majority of the population simply does not understand the differences between the european union and the council of europe and other international organizations. according to the results of the survey, presented by the institute of world politics in the framework of the program enhance non-governmental actors and grassroots engagement (engage) 37.5% of ukrainians admitted that they need more information about the benefits of the association agreement, while 62.5% of ukrainian citizens consider themselves sufficiently aware. at the same time, the greatest need for information was evidenced by residents of the western and north-central regions (42% and 41%, respectively), the smallest – residents of the eastern region (26%). the survey was conducted from may 17 to 24, 2017 by telephone interview with calls to mobile phones. a total of 1,000 respondents aged 18 and older were interviewed (house of europe, ‘our strategy, 2021). the opportunity to be european for ukrainians is an opportunity to have a high level of culture in society, which has recently been rightly correlated with a high standard of living, social consolidation, environmental security and many material benefits. european ideals and values are expressed in the recognition of civil and political rights, which guarantees everyone the opportunity to express their differences not only in spiritual, religious, political or philosophical views, but also in ways of life and self-expression. it is important for our state to establish cultural exchanges and dialogue, as well as change the system and approaches to governance in this area, which would be based on the principles of democracy, recognition of cultural rights and freedoms. 4. analysis of the low cultural activism research the revolution of dignity of 2013–2014 has become a massive canvas for artistic expression and an important stage for various public organizations that defended their right to "be a citizen, claim power and initiate change". a number of public cultural initiatives have been emerged: experimental art and curatorial projects, crowdfunding-funded film festivals, an experimental theater dealing with the traumas of war through art, platforms for restoring post-industrial landscapes in the eastern ukraine, groups to preserve the national heritage and different platforms to discuss identity. like a number of other civil society initiatives in ukraine at that time, this broad movement had similar features, including active citizenship, a horizontal structure, open dialogue and consensus building, and resourcefulness in funding (often using grant funding, usually provided by western donors as well as crowdfunding within the country). in the result it was opened a new understanding of culture as a tool for development and social inclusion eu neighbours portal (2020). the methods used in the sphere of culture are used for broader purposes, such as strengthening social cohesion, resilience, community empowerment, inclusion of vulnerable groups, urban regeneration and more. while many of these initiatives were kept away from the government, including the ministry of culture and information policy of ukraine, others sought to motivate the ministry. a number of non-governmental organizations even organized the provocative selfseizure of the ministry 's premises in 2014. the action developed into a two-month open discussion in the ground floor of the ministry between cultural activists, cultural managers and ministry officials, including the minister on the cultural reform (house of europe, ‘our strategy, 2021). in 2014, this alliance began to develop a strategic document for the sustainable development of ukrainian culture called “culture 2025” and collaborated with the ministry of culture and information policy of ukraine to develop its founding principles. cooperation with the ministry was made possible due to the appointment of experienced cultural leaders to senior positions in the ministry, in particular olesya ostrovska-lyuta was appointed deputy minister of culture in 2014. subsequently, 8 regional strategic sessions were held, covering 9 areas three seas economic journal 114 vol. 2 no. 1, 2021 of culture and involving about 700 activists across the country (house of europe, ‘our strategy, 2021). cultural activism and a network of ngos have created parallel structures that have filled a gap created by an incompetent state. their active involvement determined the model of cultural policy in ukraine for the following years: collective and agreed decisions, not decisions made by civil servants in isolation from the community; cultural diversity, not monoculture; attention to different groups; a culture that is considered a factor in the development and improvement of society, not a "luxury item" (eu neighbours portal, 2020). cultural policy reform in ukraine has received strong support from a number of western donors and partners. eu has been a major driver in this process, coordinating with national cultural institutions. the british council and the german goethe institute played a leading role in this process. in 2007 eu launched a comprehensive program of cultural financial support, developing a "european program of cultural development" (2015 to 2020 government policy). lisbon treaty of 2009 has provided the cultural cooperation between eu member states and third countries. in 2011 the program of cultural cooperation between eu and the eastern partnership countries was started with the aim of "cultural policy reform" and "cultural operators ensuring" in six eastern partnership countries: ukraine, belarus, moldova, georgia, azerbaijan and armenia. the program was developed for the period up to 2015, with a budget of 12 million euros. it included the grant component – for the first time eu grants for culture became available in ukraine, that aroused great interest (house of europe, ‘our strategy, 2021). the culture and creativity program (budget: 4,3 million euro) was started in 2015 which became a platform for networking and discussion of cultural operators in the specified above countries and contributed to the development of capacity and understanding of the concept of “creative economy” (eu neighbours portal, 2020). due to the coronavirus pandemic, house of europe has launched a 0.8 million euro emergency package for cultural organizations and professionals to find "new business models", "create digital projects" and purchase office equipment. local experts estimate that the program could help 2,000 cultural activists. both the british council and the goethe institute have played a significant role in implementing the eu's cultural policy in ukraine. in addition, each of these institutions funds comprehensive programs in order to support civil society, education, culture and youth with the financial support of their national governments. after euromaidan, these programs were scaled up. the british council's most effective program in this category is active citizens. it has promoted the civic activism development among young people in the regions of ukraine and helped to create favorable conditions for the future cultural activity platforms. the flagship program of the goethe institute in ukraine, the academy of cultural leaders, is aimed to fill the gap in the professional competencies of cultural operators in the regions of ukraine. working in partnership with the ministry of culture and information policy of ukraine, the goethe institute found a balance in combining the ministry 's vision with the competence of german cultural experts that acted as facilitators, and in developing content adapted to the unreformed institutional environment of provincial ukraine (house of europe, ‘our strategy, 2021). 5. conclusions the relationship between the european union and the society of ukraine has been already yielding some results in the context of ensuring the democratic and european state development. for the successful implementation of european integration in ukraine, it is necessary to apply such mechanisms that will ensure coordinated management of social processes of the state in the direction of european integration. the main mechanism is the cultural policy, which should be aimed primarily at the legal framework regulating. on the practical application of regulations, it is important to ensure that culture takes a leading position on the path to national modernization. legislation should be only the mechanism for the goals achieving, and the main is that a person should be at the center of cultural policy of the state. based on the experience of great britain, the formation of ukraine's cultural policy should be based on the idea of the all-encompassing impact of culture on modern society. accordingly, the policy, aimed at the cultural sector, effectively affects on all spheres of public life. consistent support of culture at the financial, fiscal, legislative, executive, national and local levels should be based on an awareness of the value of culture. culture enriches people's lives by changing their worldview and inspiring to the creativity. in the social dimension, its impact has the most significant impact on education, health and cohesion. the economic dimension of cultural policy is also important due to the creative industry development, employment increase and the potential for revitalization of certain areas. however, inflated expectations about the direct economic effect of cultural policy, "monetization" of culture is a questionable conceptual approach, because its impact is manifested primarily in the growth of creativity and social capital of individuals and communities. cultural policy should also be recognized as an important component of foreign policy aimed to increase the country 's international prestige, attracting foreign investment and tourists. the public three seas economic journal 115 vol. 2 no. 1, 2021 opinion formation, based on the specified above ideas, on the cultural sector importance is an urgent task for the state, along with the formation of appropriate public policy. such ideological principles should become the base for the development of practical steps in the implementation of cultural policy in ukraine. the combination of three factors – civil society activism, political support of reforms and support of western institutions of cultural relations – has created the unique window of opportunity to develop the qualitatively different state infrastructure in the field of culture in ukraine. three new institutions have appeared on the scene – the ukrainian cultural foundation, the ukrainian institute and the ukrainian book institute. and another, created before the revolution of dignity – the ukrainian state film agency – has undergone significant restructuring. several state museums and art venues, including the oleksandr dovzhenko national center, the art arsenal, and the national art museum of ukraine, have become centers for curatorial projects and discussion platforms. the situation with the covid-19 pandemic demonstrated the inconsistency of the policy of ministry of culture and information policy of ukraine. the ministry initially announced the reduction in the budgets of cultural institutions to 75%, but agreed to a softer cut after protests of the heads of these institutions. as a result, the ministry announced the allocation of an additional uah 590 million (16.6 million pounds sterling) for the “institutional support” of the creative sector in connection with the pandemic through a special ministry’s grant program. however, the conditions of these grants did not always correspond to the realities of the sector, and the demand for the program was low. as decentralization reform has taken place in ukraine in recent years, that means the transfer of powers from the central to the local level, funding from the state budget has stopped, but the newly formed communities have not been authorized to close basic cultural institutions and have to wait for approval from the ministry. so many basic cultural institutions exist only "on paper". despite the resistance and inconsistency, the ukrainian state has made significant progress in cultural policy reforming by creating the number of new cultural institutions based on the ideas of open access and stakeholder engagement. the ministry of culture and information policy of ukraine has taken important steps to restructure itself, but these reforms have not been completed, so the danger of the rollback remains real. ukrainian experience has shown that reforms have been made possible by a strong alliance of civil society activists and part of the creative and political elite that has supported change. external institutions on cultural relations have become catalysts for this process, investing in human capital and creating opportunities for new partnerships and competence development. references: kravchenko, o. v. (2015). key problems of modern cultural policy of ukraine: culturological context. culture of ukraine, vol. 49, pp. 188–199. bezgin, o. i., bernadska, a. e., kocharyan, i. s., & uspenska, o. y. (2013). cultural policy and art education: process modeling. kyiv: institute of cultural studies, national academy of sciences of ukraine, 176 p. tsimbalova, h. (2015). the emergence and development of cultural diplomacy and the british council in the uk: stages of institutionalization. scientific works of the historical faculty of zaporizhia national university, vol. 44(2), pp. 68–72. 2010 to 2015 government policy: arts and culture. available at: https://www.gov.uk/government/policies/ supporting-vibrant-and-sustainable-arts-and-culture 2015 to 2020 government policy: museums and galleries. updated 1 june 2016. available at: https://www.gov.uk/ government/uploads/system/uploads/attachment_data/file/529489/2016 john street, dave laing, & simone schroff (2015). collective management organizations, creativity and cultural diversity. create working paper. glasgow: university of glasgow, 30 p. crossick, j., & kaszynska, p. (2016). understanding the value of arts & culture. the ahrc cultural value project. swindon: arts and humanities research council, 204 p. mulcahy kevin (2006). cultural policy: definitions and theoretical approaches. journal of arts management law and society, vol. 35, issue 4, pp. 319–330. mould oli, & comunian rober (2015). hung, drawn and cultural quartered: rethinking cultural quarter development policy in the uk. european planning studies, vol. 23, issue 12, pp. 2356–2369. street john (2011). the popular, the diverse and the excellent: political values and uk cultural policy. international journal of cultural polis, vol. 17, issue 4, pp. 380–393. the culture white paper (2019). london: department for culture, media & sport. botanova, k. (2016). culture and art in transforming society. culture and education academy: encouragement and guidance. goethe institut, p. 75. eu neighbours portal (2020). ‘eu-eastern partnership culture and creativity programme. available at: https://www.euneighbours.eu/en/east/stay-informed/projects/eu-eastern-partnership-culture-and-creativityprogramme?fbdid=iwar3jmhu4msf ycfqwy962wxxyd1q3ucosk4kuz3s7dxderf0litxmb9qypzw house of europe, ‘our strategy (2021). available at: https://houseofeurope.org.ua/en/our-strategy three seas economic journal 71 vol. 2 no. 1, 2021 corresponding author: 1 national university of life and environmental sciences of ukraine, ukraine. e-mail: sverdanof@ukr.net orcid: https://orcid.org/0000-0002-1773-3919 doi: https://doi.org/10.30525/2661-5150/2021-1-12 wealth: the economic prerequisites of taxation mykhailo sverdan1 abstract. the purpose of the paper is to study the economic issues of wealth, which is the rationale and basis for the introduction of a wealth tax. this is due to current sustainable trends in wealth growth and an increase in the number of wealthy individuals. the aim is to determine the economic content, preconditions for the emergence and spread of wealth, to reflect the historical aspects of the development of wealth and its current state, to determine market conditions for the availability of wealth. at the same time, the goal is also the economic justification of wealth from the standpoint of the possibilities of its taxation. the topic of the article is due to the need to reveal the modern market infrastructure for the formation and growth of wealth, its economic status in the context of tax opportunities. in this regard, the economic essence of wealth as a potential subject of taxation is considered, the specifics of the functioning of the wealth tax in a market economy, the most important features of the functioning of the wealth tax are determined. methodology. economically adequate and objective justification of wealth in terms of the effectiveness of market conditions for its formation and growth allows us to assess the effectiveness of the economic system and the possibilities of public policy in the context of its taxation. this partially ensures the redistribution of public revenues, public goods and wealth. the survey is based on a theoretical generalization and analysis of empirical data on the market economy, wealth generation and its taxation. results. the issue of wealth and its economic nature is studied. the importance of wealth for society and the state is determined. the economic specifics of wealth for its taxation are substantiated. practical implications. market requirements and opportunities for the formation and increase of wealth are studied. adequate assessment of the preconditions for taxation is carried out. on this basis, the content of the wealth tax and the preconditions for its introduction are studied. the specifics of the functioning of the wealth tax in a market socially oriented economy are considered. wealth taxation is considered from the standpoint of economic, social and fiscal efficiency. value/originality. it was found that wealth – a comprehensive, multi-faceted category, which can be characterized as a specific feature of the socio-economic structure of society, which determines its condition, results, dynamics and development tendencies. wealth characterizes the ability to achieve a positive result in market conditions of managing and using the existing social and economic potential in the community, as evidenced by its level of civilization development. the peculiarities of the functioning of the wealth tax in different countries of the world are considered. the using of the wealth tax as a fiscal instrument in the state tax system is suggested. key words: wealth, economy, taxation, property, justice, efficiency, wealth tax. jel classification: e62, h22 1. introduction in the modern world, the tax is a holistic and complex social institution that has a long history and directly reflects the level of socio-economic, financial, economic and political development at a particular stage of social evolution. at the same time, the tax can also have a significant impact on the state of social, political and financial and economic systems. in modern conditions, no country in the world can do without taxes, because they are the basis of the resource base of the state and are the main source of funding for public expenditures. and the more taxes, their structural branching – the better for the state. another thing is how much taxes and the tax system of the state are acceptable to society, because, from a functional point of view, taxes must play not only a fiscal role, but also have a socio-economic effect. and if, according to the traditional interpretation, taxes embody the economically expressed existence of the state, then any tax for society is, above all, an additional element of the tax burden. taxes represent in essence a specific form of financial and economic relations between the state and society, a certain part of which is a taxpayer. these are both three seas economic journal 72 vol. 2 no. 1, 2021 business entities and the population in terms of its individual groups. for a certain category of citizens as taxpayers, a wealth tax is levied. focusing on the subjects of taxation in the collection of wealth tax, it should first be noted that this is the wealthiest segment of society. the basic basis for the introduction of a wealth tax for the affluent category of society is the object of taxation – wealth. in this situation, wealth has not an arbitrary abstract form, but, instead, a clear form and a specific monetary value, which, in turn, has an individual character and personalization in relation to the taxpayer – the wealth taxpayer. the wealth tax is also one of the youngest and oldest in world tax history. its appearance in modern conditions occurred much later than all other types of taxes and tax payments. wealth tax is the most perfect type of state tax in the tax system of the state, which is the most perfect form of fiscal administration in the context of individual-personal (income and property) taxation of income (property) of citizens. 2. economic justification of wealth taxation taxes appeared as a prototype of their expression, long before the emergence of the state and the class division of society. as it developed, taxes were constantly improved: existing taxes were improved in terms of form and method of collection, the tax system was optimized, the inefficient taxes were gradually replaced by more efficient and rational ones, and new types of taxes were introduced. the latest innovation in tax practice is the introduction of a unique tax – the wealth tax. the specifics of the tax on wealth turns it into a separate, non-alternative element of the tax system of the state. tax systems of modern economically developed countries consist of a large list of taxes of various functional nature. the majority of taxpayers are citizens who bear the main tax burden (when paying both direct and indirect taxes). the trend of tax development is to increase the level of tax burden on citizens through the mechanisms of collecting direct taxes – on income and property (personal and real taxes). a kind of "peak" of the tax burden for citizens is the wealth tax as the latest innovation in the tax practice of the state. during the evolution of the state and society, in unison with them, various concepts of taxation also appeared and developed, in the context of which the hypothesis of wealth taxation gradually became more and more important. in every evolutionarycivilized society there is always a wealthy segment of the population. from a fiscal point of view, it is also a taxpayer, but, unlike most taxpayers, it is generally a category with a special, more powerful tax status. first of all, there were various elements that are identified with the concept of "wealth", as well as certain luxury items, which began to act as separate, special objects of taxation. however, in contrast to the taxation of these objects, which occurs separately in the context of each of them separately, the wealth tax is quite specific in its economic nature and technique of fiscal administration. and if the issue of taxation of certain items of "wealth" and "luxury " is already quite old and quite resolved (although perhaps not definitively and with significant controversy), the issue of the introduction of "wealth tax" is relatively recent, but relevant (with even greater counter-argumentation and confrontation of interests) (beinhocker, 2006). the main features that distinguish the wealth tax from other taxes are: (1) taxpayers – only citizens; (2) recovery occurs in the context of personal income taxation; (3) acts as a logical continuation of property taxation; (4) collection is usually carried out (similarly to personal income tax and property taxes in most countries of the world) also on a progressive basis; (5) is imposed on the total amount of income and property (property) of citizens ( james, 1978). the wealth tax takes effect when the total amount of income and property specified in the last item (5) reaches a certain value division, which is usually quite high. it is important that the emphasis is mostly not on obtaining high incomes by citizens, but on the fact that they own a variety of property (as a result of significant financial and investment transactions and as a result of the use of significant income). thus, a necessary precondition for the introduction of a wealth tax is the achievement of a high level of financial and property status by a “potential” taxpayer. of course, the wealth tax becomes an additional tax burden for the payer, which is determined solely by the ability of the individual to pay the tax. therefore, it is in the interests of the state to lay the appropriate foundations for the formation of not only a strong middle class in society, but also to create appropriate conditions for its gradual transformation into a certain elite, wealthy population, which will allow it to significantly expand tax practices and intensify tax activities, new additional taxes, including the wealth tax (alm, 2006). this requires: (1) real provision of high incomes; (2) creation of appropriate financial market conditions and infrastructure; (3) promoting the development of the property and property market. thus, the necessary prerequisites for the introduction of the wealth tax and its effective functioning are: (1) the property market, as well as appropriate methods, mechanisms and tools for assessing the real market value of property; (2) the financial market, financial assets and fictitious capital (various financial instruments), as well as, similarly to the previous one, appropriate methods, mechanisms and tools for estimating their real market value. the wealth tax is unique. the economic nature of the wealth tax is not so much in the possibility of obtaining significant income by citizens, as provides for the fact of their capitalization and based on the three seas economic journal 73 vol. 2 no. 1, 2021 need to own various property (property – movable or immovable, investment – real or intangible, etc.); that is, everything has a monetary value, a monetary value and, accordingly, it is quite possible that it will be subject to tax distribution. a distinctive feature of the wealth tax is that it is imposed on the total amount of property (property) of citizens. the specifics of the tax on wealth gives it the status of an unalterable element of the tax system – as the pinnacle of tax skills of the state in maximizing the fiscal potential of taxation. the wealth tax is the last fiscal product of the state. wealth tax is collected independently from other taxes (personal income tax, property taxes, etc.); it functions together with them, but occupies a special, special place in the tax system of the state and in the system of taxation of income and property of citizens. an important element in the mechanism of tax collection on wealth is the subjects of taxation – the category of citizens who make up the wealthiest stratum of society. thus, a necessary prerequisite for the introduction of wealth tax is the achievement of a "potential" taxpayer a high level of financial and property status, and the additional tax burden for the taxpayer is determined solely by the ability of citizens to pay tax. obviously, wealthy citizens have the highest level of tax solvency. the wealth tax is levied independently from other taxes – personal income tax, property taxes and more. it functions together with them, but occupies a special, special place in the tax system of the state and in the system of taxation of income and property of individuals. in order to achieve a high effect from the introduction of wealth tax, based on purely tax positions, you need: (1) a perfect mechanism for collecting personal income tax (in the classic, standard-traditional form); (2) perfected mechanisms for collecting property taxes, in terms of: 1) taxation of property belonging to the owner; 2) taxation of income generated by the use of property; 3) taxation of income from property transactions; (3) perfect mechanisms for collecting taxes on money and fictitious capital, in addition, similarly to the previous situation, also in terms of: 1) real assessment of financial and monetary assets as objects of taxation; (2) taxation of income generated by fictitious and monetary capital; 2) taxation of income from transactions with various financial instruments. the purpose of the introduction of the wealth tax was to further strengthen the positions of the principles of social efficiency and justice in the mechanism of personal income taxation of citizens. first of all, the primary element for initiating a wealth tax is the object of taxation, which is defined as "net asset value" (total assets less liabilities). that is, for the calculation of the object of taxation is not taken individual types of property or wealth owned by citizens, and their total amount. an appropriate tax is applied to each type of property or transactions with it. the same applies to certain types of property, which are equated, according to international standards, to wealth – inheritance and gifts; however, they also have special tax regimes: inheritance tax and gift tax. these groups of taxes for the relevant objects of taxation are payable (in appropriate situations) for all citizens, regardless of their income level and financial and property status. thus, the wealth tax is a universal fiscal category intended to be used as a practical tax instrument exclusively for wealthy citizens (maslove, 1994). therefore, full or partial implementation of the wealth tax is possible. if all the above elements are not present and the introduction of a wealth tax is difficult, then effective mechanisms for collecting personal income tax and property taxes should be developed and implemented, along with the simultaneous allocation of luxury taxes (this possibility is quite obvious and real due to easier implementation). 3. the concept of justice in the context of wealth taxation analyzing the wealth tax, we must proceed from the basic premise that taxes are associated with the distribution (redistribution) of public income. the dominant hypothesis of modern tax policy is the creation of an efficient and fair tax system, which is relevant, for the most part, to the taxation of income and property of citizens; this applies to both the general tax system and each individual tax, including the wealth tax. at the same time, it is expedient to analyze not the redistributive mechanism as a whole (taking into account the process of spending taxmobilized funds), but only the fact of taxation of income (property) in terms of certain categories of taxpayers and features of collection of certain taxes (wehner, 2011). the principle of fairness in taxation is based on the need to evenly distribute the tax burden between taxpayers in proportion to their income. creating a standard of "fair tax": (1) provides for equality in taxation; (2) based on the principle of solvency. the criterion of fairness (equality) characterizes the relative tax regime of different taxpayers. in economic terms, there are two main aspects of the principle of tax justice: horizontal and vertical. horizontal equality means direct equality of tax liabilities for all persons in the same tax position (have equal solvency, which implies equal taxation of equal income: for the same levels of income is the payment of equal amounts of taxes based on the same tax rates). vertical equality means that the level of taxation is set according to the degree of solvency of citizens. according to the principle of vertical fairness, people who are in an unequal position must be in an unequal tax position: if they receive more income, they must also pay more taxes (this is a tax system where different tax rates are applied depending on income level; three seas economic journal 74 vol. 2 no. 1, 2021 this implies that the tax the burden should be progressively distributed between income levels – that is, the tax rate should increase as the taxpayer's income increases, reflecting the belief that high-income taxpayers have an increased ability to pay higher taxes). each of the tax systems has its advantages and disadvantages. as a result, they are often used as part of a set of taxes, as virtually all countries in the world mobilize income through many different taxes. thus, the state tries to solve the issue of tax burden, achieving the maximum possible implementation of tax principles of fairness and efficiency by creating an "optimal" model of taxation of citizens by introducing a set of taxes: (1) personal income tax; (2) property taxes (at the same time with the allocation of an additional group from them – luxury taxes); (3) wealth tax. the hierarchical construction of personal taxation is based solely on the income and property status of taxpayers, and taxes are paid only from the income of citizens (except when certain property and property are able to generate income; another situation is possible when property and property are the main source income generation). however, it is necessary to take into account and proceed from the fact that in fact the principles and mechanism of implementation of these principles of taxation in different taxes are almost the same, which ultimately gives the same effect (bernardi, 2005). the methodological basis for the implementation of the principle of justice is progressive taxation. according to the traditional definition, taxation is progressive if, after the payment of taxes, inequality in the economic situation of taxpayers is reduced (bernardi, 2004). justice (with different concepts) is related to the taxation of personal income and is most embodied in the mechanism of personal income tax. when collecting the wealth tax, it is no longer income that is taxed, but various types of private property of citizens united in one integral complex; income serves only as a source of financing the wealth tax (similarly to the case of paying property taxes). it is also necessary to differentiate concepts and identify differences between property taxes and wealth tax. the obvious differences between property taxes and wealth tax are: (1) property taxes are paid separately for each of them separately on the same basis by all taxpayers, and the wealth tax is a complex tax that covers the total property and is paid separately from property taxes by a separate category of taxpayers; (2) the wealth tax is intended to be paid only to wealthy citizens, provided that the monetary value of their total property reaches a certain division, and the level of income, in fact, does not have a clear meaning and direct relation to this property and wealth tax. based on the principle of fair taxation, the wealth tax: (1) acts only as an additional element of the tax burden for wealthy citizens as taxpayers, contributing to the additional mobilization of tax revenues to the budget; (2) other categories of taxpayers do not receive anything (the level of their income does not increase, nor does the level of their wealth increase, and the amount of tax liabilities does not decrease). that is, both the level of income and financial and property status, and the tax position and level of tax solvency of other categories of citizens – taxpayers who are not taxpayers of wealth, remain completely unchanged; in principle, this situation cannot change, as the purpose of introducing a wealth tax is to achieve completely different goals (slemrod, 1999). the separation of "vertical" and "horizontal" justice does not allow to solve one of the main tasks that exist in the tax sphere: how to determine the degree of fairness of taxation? after all, for wealthy citizens – wealth tax payers – only increases the level of tax burden. if we assume that the tax policy of the state should be based on the principles of redistribution of tax payments between taxpayers with different opportunities, it means that the very idea of "uniformity in taxation" is unconvincing and even unprofitable. the principle of justice is understood differently. the problem here is that justice is a category, first of all, social, moral and ethical; in economics, however, it is an "alien" element, a relatively relative concept, subjective in nature and therefore far from ambiguous. different notions of justice give rise to different notions of economic and tax justice. the choice of directions for reforming the tax system and different taxation mechanisms should be made taking into account the presence among potential taxpayers of different groups, which are united by the ability to bear the same tax burden. on this basis, a separate category of taxpayers (wealthy citizens) is allocated and a special type of state tax is introduced: the wealth tax (sverdan, 2020). thus, balancing is a relatively relative concept: at best, it is only partially realized only in the mechanism of personal income tax payment and is hardly inherent in the collection of property taxes (including luxury taxes); therefore, with regard to the collection of the wealth tax, it can be stated that even the relative effect of balancing is absent at all. it also argues that fairness in taxation does not involve balancing income and wealth between different categories of taxpayers; no tax, including the wealth tax, can ensure this. in this case, it is appropriate to emphasize that fairness in the redistribution of income is realized only at the level of the relevant category of wealth taxpayers, and their financial and property status allows to allocate additional taxation and with the help of wealth tax to increase tax revenues. 4. fiscal expediency of wealth taxation the practice of implementing the wealth tax shows the presence in the country that practices it, a significant number of citizens who pay it. at the same three seas economic journal 75 vol. 2 no. 1, 2021 time, this is evidenced by the fact that the country 's population has the opportunity to receive high incomes, which are taxed not only on a progressive scale in the personal income tax mechanism, but also allow the state to introduce additional higher tax regimes. this is reflected, in particular, through wealth taxes. the introduction of wealth taxes into fiscal practice is evidenced by the fact that taxation is at a fairly high level of social (socio-economic) evolution, a fairly high degree of civilized perception of tax matters and, to the same extent – fiscal democracy. wealth taxes in the modern world are quite rare. moreover, the trends of tax practice over the past decades allow us to state unequivocally the gradual and quite obvious reduction of the mechanisms of wealth taxation. in today 's world, there are hardly a dozen countries in the global international environment where the fiscal practice of wealth taxation takes place. most countries once abandoned the practice of wealth tax. however, the consequences of the financial and economic crisis of 2008 prompted european countries to recover the wealth tax, as its fiscal efficiency is quite significant and can be quite a significant part of tax revenues (grahl, 2009). the possibility of introducing the functioning of the wealth tax is influenced by a number of factors of various kinds: most of all it concerns the financial and economic basis of its existence, and recently it is also significantly influenced by the political factor (mccready, 1992). taxes is the main type of state budget revenues. the issue of fiscal adequacy of taxation always remains important and relevant, as the obvious trend in the development of modern tax systems is the lack of mobilization of tax revenues. the main task in this situation is to find alternative sources of tax revenue that has national financial significance. this can ensure the strengthening of the financial and economic system in the country and the stabilization of the budget system of the state as a whole. therefore, it is necessary to find additional tax reserves as one of the ways to modernize the tax system and improve the financial situation in the country. market-developed countries around the world are constantly transforming and adjusting tax systems. the main dominant features of tax policy – dynamics, mobility, efficiency. according to these criteria, the construction and development of modern tax systems. according to them, tax reforms are being implemented, which focus on improving tax systems and mechanisms for collecting certain taxes. also, there may be processes of improvement and expansion of certain groups of taxes. in economically developed countries, income and consumption taxation systems have been formed and function effectively for a long time. in addition, a significant source of accumulation of tax revenues are also property taxes, which constitute a potential and quite powerful tax reserve. typically, the category of property taxes includes land tax and an extensive system of property taxes, which also include inheritance and gift taxes. in addition, in countries with market economies, another element of them functions effectively – the wealth tax as a unique integrated form of private property taxation. the experience of using the wealth tax is quite long – not only in economically developed countries, but also in many other countries. its popularity was especially evident in western europe (andersson, 2007) and latin america (lymer, 2002). the economic nature of the wealth tax is not only the ability of an individual to receive significant income, but also includes the fact of ownership of various property (property – movable or immovable, investment – real or intangible, etc.). in any case, everything has a monetary value, a monetary value and, accordingly, it is quite possible that it will be subject to tax distribution. the fiscal nature of the wealth tax is a comprehensive taxation of wealth (income and property) exclusively of wealthy citizens. the content of the wealth tax is revealed by the fact that the payer of personal income tax reaches a fairly high level of its financial and property status, which gives the state the potential to introduce it and mobilize additional funds to the budget. in fact, the wealth tax itself is, in fact, an additional tax on wealthy citizens in the context of personal income taxation. thus, for the effective use of the wealth tax is necessary for the effective functioning of the current tax system of the state, especially – personal income tax. obviously, in this context, an important prerequisite for the likelihood of the introduction of a wealth tax is the presence of property taxes (property). but first of all, it is a perfect mechanism of personal income taxation, and further – a mechanism of property taxation, which operates in the context of personal income taxation. the perfection of the mechanism of personal income taxation and experience in collecting property taxes are the basis for the introduction of wealth tax (messere, 1998). it is obvious that the wealth tax is an additional burden for wealthy citizens in the context of personal income and property taxation. and the smaller the individual deduction (non-taxable minimum, or taxfree threshold), the more opportunities to initiate a wealth tax. from a fiscal point of view, this is more profitable because it automatically increases the number of wealth taxpayers, which, objectively, are much smaller than other taxes. in any case, the fiscal efficiency of the wealth tax is successfully realized through an organic combination of elements of its collection: a high object of taxation and low tax rates. the limited number of wealth taxpayers and low tax rates are well offset by the significant size of taxable three seas economic journal 76 vol. 2 no. 1, 2021 items. thus, due to this, the fiscal efficiency of the wealth tax can be quite significant. the relatively low level of the tax-free minimum automatically determines a fairly large number of wealth taxpayers. thus, from a fiscal point of view, the wealth tax is full, well-founded, efficient and fair. at the level of the whole set of taxpayers, the fiscal fairness of the wealth tax is embodied in the fact that its collection provides significant individual discounts and deductions, which significantly reduces the tax burden: the exemptions significantly increase the tax-free minimum, as some private property is not included to the taxable base. in addition, there is a special fiscal limit in the context of the collection of wealth tax, which sets a certain quota of taxes paid. according to this standard, the total amount of tax liabilities should not exceed a certain division: the total tax mass, which includes personal income tax and wealth tax, should not exceed the corresponding percentage. thus, so that the tax burden for a particular category of citizens is not too discriminatory, there is a set of tools to establish the position of fiscal justice. the social significance of the wealth tax is also important for society. taxation is generally viewed in terms of social justice. the wealth tax greatly contributes to further strengthening the position of social justice of taxation, as its potential allows us to implement the principle: the rich pay more (hallerberg, 2009). thus, the wealth tax is market-adequate, socially acceptable and fiscally efficient, which is guaranteed to give it a proper place in the tax system of the state. the experience of using the wealth tax in foreign countries clearly demonstrates the fact that the annual number of its payers is growing. the presence of a taxpayer is the basis for the introduction of any tax. and for each type of tax there is a corresponding object of taxation. with regard to the wealth tax, the object of taxation is quite specific. in addition, the number of taxpayers in the context of wealth taxation is the lowest compared to other types of taxes. however, the fiscal efficiency of the wealth tax is significantly enhanced by the object of taxation and the tax base and turns it into a universal fiscal instrument of the state in the system of taxation of income, property (property) of a certain category of the population in society. 5. conclusions given this characteristic, it should be noted that the fact of the introduction of the wealth tax is not a natural accident, but a complex and lengthy process consisting of numerous procedures. first of all, it is the experience of tax practice and the perfection of the collection of existing taxes: the high level of tax efficiency is currently the basis for modif ying existing taxes and modernizing the tax system by introducing new types of taxes, including wealth tax. another essential prerequisite for the introduction of a wealth tax is the development of the market, market relations and market institutions, in particular – the institution of property and financial institutions, ensuring their branching and effective functionality. without this, the introduction of a wealth tax will be either significantly complicated or ineffective in the nature of its practice. the determining element for initiating and activating the wealth tax is the income of the population – the basis of wealth, its creation and increase. full or partial implementation of the wealth tax is possible. if all the necessary elements are not available and the introduction of a wealth tax is difficult, then effective mechanisms for collecting personal income tax and property taxes should be developed and implemented, while allocating luxury taxes among them (this possibility is quite obvious and real due to easier implementation). the wealth tax is levied autonomously from other taxes; it functions together with them, but occupies a special place in the tax system of the state and in the system of taxation of income and property of citizens. references: alm, j., martinez-vazqez, j., & rider, m. 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(2011). wealth & justice: the morality of democratic capitalism. washington, d.c.: aei press; summit distributed by the national book network, xxi, 67 p. three seas economic journal 54 vol. 2 no. 3, 2021 corresponding author: 1 lviv ukrainian national forestry university, ukraine. e-mail: r.kupchyk@nltu.edu.ua orcid: https://orcid.org/0000-0002-3777-6844 2 alfred nobel university, ukraine. e-mail: galyna.miasoid@duan.edu.ua orcid: https://orcid.org/0000-0001-7781-7535 researcherid: n-9310-2014 doi: https://doi.org/10.30525/2661-5150/2021-3-8 world culturological trends of communications development in the conditions of digitalization rostyslav kupchyk1, halyna miasoid2 abstract. the rapid development of modern digital technologies entails an increase in the quantity and quality of changes in the communication system. digitalization affects the transformation of communication processes, creating new conditions for information exchange, interaction and communication. the aim is to study the modern cultural trends in the communication development in the conditions of digitalization. in order to achieve the goal, the article provides the terminological analysis of the concepts of "communication" and "digitalization", considers the main features and trends of the digitalization process, analyzes the transformation of communication and highlights the features of digitalization in ukraine. methodology. the culturological approach was used as the methodological tool of the research, which allowed to carry out scientific analysis of the studied phenomena through cultural determination and provided a panoramic multidimensional view and polysystemic explanation of the essence of cultural trends in the communication in conditions of digitalization. results. it is concluded that digitalization is the process of systematization, use, processing of information in digital format to optimize, automate, improve communication and increase its productivity. modern digitalization processes appear as a cultural trend that affects all spheres of human life, has a global character and creates fundamentally new forms and means of communication. on the one hand, there is an optimization and improvement of communication interaction, on the other – there is a commercialization of the communication environment, its pragmatism and rationalization. value/originality. the analysis of digitalization as a cultural trend is carried out and the essence of its influence on communication in modern culture is revealed. practical implications. the results of the research are an analysis of communication transformations in the conditions of digitalization in integrity and systematization, which, in our opinion, will complement the theoretical developments on this issue, as well as will help to develop the practical solutions to overcome the consequences of these transformations and will help to determine these changes in the future. key words: digitalization, communication, trend, digital trend, technological trend, communicative design, transformations, culture. jel сlassification: m14, l86, d46, f20 1. introduction the general transformations of modern culture require the review of established relationships and identification of cultural trends that produce qualitatively different forms of its functioning. the concept of "trend", which was stated in the title, is understood as the dominant direction of cultural development and it reflects the significant cultural changes that have recently been caused by the influence of scientific and technological innovations. today, the growth of digital technologies entails an increase in the quantity and quality of changes in the communication system. digitalization of all spheres of life transforms communicative processes, creating new conditions for information exchange, interaction and communication between people. to understand the nature of transformations under the influence of technical innovations that take place today and are constantly accelerating, as well as to determine the direction of these changes in the future, it is necessary to define the characteristics of their current state. a number of works of domestic and foreign scientists are devoted to the study of communication in the scientific thought: d. bell, m. weber, n. luhmann, t. parsons, d. riesman, m. robertson, a. toffler, m. mcluhan, w. rizun, o. kholoda and others. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 55 vol. 2 no. 3, 2021 international organizations, consulting and government agencies have also contributed to the research of global digitalization processes, however, these studies are not systematic and holistic. however, the main attention in their research was paid to the essence and features of communication, various aspects of mass, political and social communications. the digitalization impact on the communication has hardly been considered in scientific works. attention to the communicative aspect of digitalization is paid only in some studies on business and corporate culture (varlamova, dem'yanova, 2020). considering the rapid development of ongoing processes and the importance of understanding the various technological impacts, including digitalization, both on culture in general and on the communication transformation, we believe that this issue is relevant and needs further research. the culturological approach was used as a methodological tool of the research. the application of the culturological approach is no longer limited by the philosophy, history or any other humanities. the consideration of processes as cultural phenomena is realized in a broader sense. theories of neo modernization (r . darendorf etc.) are the realm of the growing influence of the culturological component in the western intellectual tradition. if in the classical versions the modernization efficiency was derived almost exclusively from the economic growth, now the important role of values, meanings and cultural codes is recognized; it focuses on the creative use of local, even archaic, traditions, etc. this is the radical rethinking of the cultural approach in the research, "not as a reconstruction of culture, but as the determination by culture" (kislyuk, 2011). the culturological approach as "the chosen point of view, even within the general idea, will directly influence the direction of scientific analysis." it is "polar", able to more prominently convex the primacy of culture than the usual research in the "culturological context / aspect", etc. (оnоrе, 2016). the culturological method appears as "a method of socio-cultural determination, the definition of relevant features as leading in the explanation of any studied phenomena", that is understanding of the cultural value for all spheres of human life and society (kislyuk k., 2011). the culturological approach expands the research and applied boundaries, provides the panoramic multidimensional view and the polysystemic explanation of the essence of processes and phenomena in its entirety. 2. communication and digitalization: terminological constants communication (from latin communicatio) – the transmission of messages and the process of information exchanging (facts, ideas, views, emotions, etc.). communication can be between two or more people through verbal and non-verbal means with the purpose of transmitting and receiving information. communication is a universal reality of social existence and an expression of the ability of a social person to coexist, that is an indisputable condition of life. the definition of "communication" is considered in various aspects. first of all, communication is the way of life of an individual, a measure of inclusion in the society, a form of human interaction with society, with other people. it involves large number of relationships, interpersonal communications and is a complex process (andrushkevich, 2020). communication is the exchange of information. communication is a special type of active information exchange, a source of development of the individual communicative capabilities. modern research proves the inseparability of the concepts of communication and information. any communication involves the transmission of information, and any processing of information is the communication presence. the main purpose of communicative activities is a certain exchange of information. "communication" can also serve as a general term to denote different types of interaction. it is what j. peters uses in the sense of the project of coordination of "i" with "other" (gribinenko, 2018). in addition to the fact that a person wants to understand the surrounding reality, he seeks mutual understanding and understanding with other people. according to m. heidegger, this is not just a human ability, but a way of its existence", the ability to communicate and the communication need are perhaps the most important essential features of a human. in contrast to "communication", the terminological boundaries of which have been already formed, the situation with "digitalization" is completely different – we can state inconsistencies both in the writing and formulation of the definition of this cultural phenomenon. in ukrainian scientific literature the term "digitalization". thus, in our research, we will consider the "communication" as the process of information exchange and social interaction in various spheres of human life. "digitalization" will be defined as the process of systematization, use, processing of information in digital format, as well as the indication of changes in all spheres of public life that are associated with the use of information and digital technologies, including communication. 3. features of digitalization: main characteristics and trends digital technologies capture all areas of life and extend to all areas of human existence. this process is called "digitization of being" by the researcher three seas economic journal 56 vol. 2 no. 3, 2021 o.v. halapsis (2017). digitalization is developing at an incredible rate due to its ability to collect, use and analyze vast amounts of information (digital data). it is quite legitimate to consider digitalization as a trend of effective world development. in the early stages the digitalization has covered the most developed countries – the united states, japan, germany. later, digitalization has spread to other countries. today, digitalization covers all areas – business, science, social sphere and ordinary life of citizens, and it is accompanied by the effective use of its results. there are five large parameters: "connection" of the country to the results of digitalization – connectivity; human capital / digital skills; use of internet by citizens; integration of digital technology by businesses and digital public services (digital economy and society index methodological note, 2018). a common feature of the digitalization process is the radical transformations, which are expressed in the deep penetration of digital technologies in all spheres of human activity. the basis of digital transformations are the so-called digital trends – areas of digital technology development. their analysis allows to predict the development of specific economic, technological and even social phenomena in the future. figure 1 shows the digital trends until 2030 (based on data from the ukrainian institute of the future and the digital agenda of ukraine 2020). the latest huawei global industry vision (giv) report outlines the technology impact in the coming years and identifies the technological trends (technotrends) of the future until 2025. the most important of them are the following: – use of bots (penetration of bot technology into public life is projected at up to 14%); – virtual and augmented reality technologies (the percentage of industries that use vr/ar will increase to 10%); – maintenance without search (the trend of equipping the daily used devices with special sensors allows to predict the human needs and meet them directly without human influence. giv predicts that 90% of smart device owners will use intelligent personal assistants); – automation; – the spread of cloud technologies (up to 85% of applications are projected to be cloud-based) (martyniuk, 2020). the term "digital economy ", which was first mentioned in the scientific literature in 1995 by the american scientist n. negroponte, is increasingly used in scientific works (varlamova, 2020). business, management and economics experts highlight a number of benefits of digitalization. moreover, they emphasize that digitalization is a necessary process in the neo-economy (ligonenko, 2018). the digitalization for business is the driving force which contributes to its promotion. there is the automation of production and other processes, which leads to time savings and increased productivity, cross-selling / upsell-sales opportunities that means reaching a new level of customer service, competitive opportunities by improving customer experience and overall workflow optimization. in addition, digitalization allows to form new needs and demands of consumers, namely – focus on time saving, search and purchase of goods on clear parameters; creation of new values, properties of goods; changing the conditions of the competitive environment. thus, the author l. lazebnyk highlights among the global trends of the business information transforming into digital form the business information sharing, computerization of office work on the internet; removal of physical due to the networks use; building the entire production infrastructure on the base of computers as information devices; displacement of the cash method of payment for goods and services, transfer of information about electronic plastic card numbers via telephone networks or e-mail; opening and expanding opportunities for a new type of mediation: electronic communication begins to perform analytical functions, providing buyers with information about the nature of markets and trades, n e e d s a n d c h a l l e n g e s 20 20 –2 03 0 ye ar s implantation technologies artificial intelligence robotics blockchain and cryptocurrency 3-d technology and 3-d printing self-driving machines distributed and cloud computing economics of sharing new technologies in energy figure 1. global trends in the digitalization of society source: https://strategy.uifuture.org/app/img/illustrations/6.2/2.jpg three seas economic journal 57 vol. 2 no. 3, 2021 changes in supply and demand, the emergence of unique or rare goods (ligonenko, 2018). today you have to be not only a specialist, but you need to adapt quickly to technological innovations. there is a growing need for qualified personnel in the field of digital technologies. thus, the digitalization processes introduction affects the growth of the digital economy and contributes to the emergence of many new economic opportunities. 4. transformation of the communication communication is not only an integral part of culture, but also a condition for its functioning. the features of communication functioning in each specific historical and cultural period are an indicator in the direction of development of this period. m. mcluhan also noted that "the epochs change in the history of mankind directly depends on the change of communication channels" (mcluhan, 2005). the modern models of communication are also experiencing a break with historical patterns, which are increasingly becoming obsolete, or are recognized as such under the influence of new technologies. there is often a clear tendency to break with communicative traditions. according to d. robertson, there was a "communication revolution", which has led to the new information system emergence (robertson, 1990). digitalization has become a necessary part of modern communication. it has affected the different levels of communication from personal to mass. according to m. mcluhan "the qualitative specificity of the current stage of the communication development is its globality and its transformation into the productive force" (mcluhan, 2005). communication and information in the modern culture are undoubtedly a product, a raw material (this was also mentioned by e. tofler). the commercialization topic of the communicative environment, its pragmatism and rationalization is relevant today. the formation of the so-called "electronic communication" is taking place (polovik, 2019). there is an optimization and improvement of both internal and external communications in business processes, "improvement of communication interaction with consumers", "improvement of communication with clients, suppliers and partners and all institutes of external environment, formation of new bases of interaction within the enterprise – between divisions, employees (ligonenko, 2018). digitalization helps to expand the information space, creating the new information products and reducing the information costs. this significantly speeds up and simplifies the search of information, its exchange and strengthens cooperation between companies, which affects the methods of operational activities of economic entities, the search for favorable living conditions, as well as the quality of interaction between the citizens and its government. emphasis is placed on the transformation of marketing communications. the development and implementation of an effective communication policy is becoming one of the key factors for success, and the issue of choosing and coordination with each other of the communication means through which information will be delivered to the target audience is undergoing the certain transformation compared to the past. "today the digital tools introduction is the use of all possible forms of digital channels in marketing processes. digital marketing involves the active presence of the company in the social networks and the use of all possible means of digital communications, optimization of information flows, improving the quality and competitiveness of products and services of enterprises. this includes the promotion in blogs and social networks, the creation of special internet sites, the viral advertising, seo (search engine optimization), smm (social media marketing), contextual advertising, qr-codes, social marketing, targeting, lidogeneration and other forms that combine advertising tools with the study of the target audience (andrushkevich, nianko, sitarchuk, 2020). in general, the social network’s role is growing in communication processes. in today 's digital evolution, they are becoming a strategic platform and an integral part of doing business. the main communication advantage under the influence of digitalization is an interactivity. d. dayton, a professor of administration at harvard business school, defines this concept as the tool for individuals and organizations that provides direct communication regardless of distance and time, which allows you to reach the target audience, collect and store customer data, solve individual consumer problems (chaffey, 2006). personalization is also an important feature of the modern communication. thanks to the digital technologies, customer information is collected, that is considered as a unique unit. the consumer information structuring and its segmentation allows to define and personalize the customer experience – there is an optimization of network presence in accordance with the customer behavior. the idea of digital transformation is to create a personalized, individual offer and to deliver it to the customer in the convenient for him way. the digital technologies development provides the transition from a multi-channel to omnichannel approach – the use of different communication channels with the customer, that is characterized by the single system base with such components as the single customer profile and the consumer behavior information (оnоrе, 2020). the omnichannel is achieved through four technologies: cloud computing, artificial intelligence, three seas economic journal 58 vol. 2 no. 3, 2021 data platforms and mobile technologies. together, they allow to track and analyze the customer's experience at all points of presence and interaction with the company. it is very important that the channels are tuned and the information in them is synchronized. thus, the communication revolution provoked a new management technology. the paradigm of communication with the client is changing, a certain set of communication means is being formed, through which information will be conveyed to the target audience. the rapid technological progress, its impact on all areas, including communication, still needs to be understood. as n. luhmann notes, "technologyinduced communication becomes explosive, it has its own dynamics, the consequences of which we have yet to assess…" (sitarchuk, 2020). 5. digitalization of communication: ukrainian context the relevance and significance of the digitalization process in modern domestic culture is evidenced by an interesting fact recorded in the online dictionary "myslovo" – digitalization, according to the compilers of the dictionary, has become the most popular among search queries on their site (myslovo, 2019). among the most used words of the past years were "euromaidan" (2013), "cyborgs" (2014), " blockade" (2015), "visa-free" (2017), "corruption" (2016), "tomos" (2018), but in 2019 the "digitalization" term appeared, that indicates its popularity and social significance. the appearance and active use of this term is evidence that our language is a dynamic system that is constantly evolving and keeping up with the times. therefore, word popularity ratings are an interesting tool for observing scholars both in the change and modernization of language, and in the sense of studying other cultural phenomena of modern reality. the latest technologies are the response to the demands of the current stage of the civilizational development. institutional environment – public policy, legislative and regulatory framework, fiscal instruments are one of the key factors influencing the pace of digitalization. digitalization of ukraine: internet banking, online services and the state in a smartphone, etc. – it is obvious that ukraine is trying to keep up with the global trend of digital transformation. the un has provided some recommendations for countries' transition to digital governance and digital transformation. "the recommendations are to change the digital thinking at the individual and systemic levels, to change the institutional and regulatory framework in public policy, to make information accessible through open government data and to have equal access to it" (martyniuk, 2020). until recently, the digital transformation in ukraine has been somewhat slow compared to the western market. among the causes of the digital path problems were “the limited budget and the outdated network infrastructure, low staff skills and low interest of management in the digital initiatives conducting (lazorenko, 2020). the sluggish development of innovation processes in our economy was due to the long absence of significant regulations that would promote progress in the development of innovative production, very weak development of the innovation infrastructure, reluctance of large and medium-sized businesses to invest in serious and valuable types of innovative entrepreneurship. it is very important to note that currently in ukraine there have been positive developments in the implementation of plans using digitalization tools. first, the significant changes in ukrainian legislation should be noted – the ministry of digital transformation of ukraine has been created and the regulatory framework governing digital transformation is being formed. the cabinet of ministers has approved an updated program of activities, in which the digitalization of the country is identified as one of the priorities of the government. normative documents and basic laws regulating digitalization processes in ukraine are given in table 1. among the significant achievements of ukraine is the creation of the digital government. digital government is a way of organizing of the public administration with the help of digital technologies, the main purpose of which is to satisfy the rights, freedoms and interests of citizen at all levels of interaction with the state. the digital governance development in the state helps to improve business and reduce unemployment. digitalization also leads to the reduction of the government spending on civil servants and corruption reduction. free and equal access to public services and public control over the budget and tenders will help to improve the living standards of citizens and the positive reputation of the state in the world. one of the implemented programs of digital government, which is aimed at facilitating communication between citizens and the state, was the state initiative "state in the smartphone" – almost the main manifestation of digitalization. it was primarily created to provide electronic administrative services, transform the public services into the electronic format, as well as to use electronic document management instead of paper. in the nearest future, the government intends to transform most of the processes in the government agencies fully into electronic format, starting with personnel document management and the provision of public services. as part of the "state in the smartphone" project, the "action" (ukrainian "дія") application (short for state and i) was launched. "action" is a mobile application, three seas economic journal 59 vol. 2 no. 3, 2021 web portal and brand of the digital state in ukraine developed by the ministry of digital transformation of ukraine. "action" was first presented in 2019 and officially launched in 2020. the achievements of ukraine in government reform are that in the 2020 un research on e-government ukraine was among the countries with the highest e-participation index in 2020. also, ukraine was recently among the top 20 countries in the number of patents in the field of revolutionary technological innovations: 3-d printing (11th place) and robotics (17th place), blockchain technology. the number of it specialists in the country is growing, the quality and creativity of startups is impressive, the entry of products into the international arena is accelerating. however, "image of ukraine as an e-state requires considerable effort, so covering positive changes only in social networks is not effective enough, it is required the comprehensive work not only of the ministry of digital transformation of ukraine, but also other authorities, the public and the media" (fedyunin, 2019). however, there are still problems that ukraine needs to solve – uneven coverage of the internet and a large number of people without identification (id-cards), as well as the number of government agencies whose services and activities need to be digitized. another problem is the low literacy of the population in the field of digital skills. despite the launch of the national digital literacy campaign, and "action. digital education" project and educational series with media representatives that can help improve digital skills among citizens, the awareness of these processes is low. also, the ministry of digital transformation of ukraine published the digital competence framework for citizens of ukraine (https://bit.ly/3rbs8kl) that is a tool designed to improve the digital competence of ukrainians, to help to create public policy and plan educational initiatives aimed at improving digital literacy and practical use of it tools and services by specific target groups. but all this is just some steps that should form a holistic management model based on the latest technological advances. thus, it can be stated that digitalization is completely new for the domestic cultural space, as long as the legislative framework is being formed, but there have already been significant changes in the digitization of public services. the issue of digital literacy of the majority of ukrainian citizens remains problematic. 6. conclusions digitalization is a process of systematization, use and processing of information in digital format. digitalization is the reorganization of processes through automation and digital communication. in a broad context, the term "digitalization" is used to denote changes in all spheres of public life that are related to the use of information and digital technologies. the digitalization processes have covered all spheres of human existence, it can be stated by penetrating all business processes to optimize and automate them, increase productivity and improve communication with consumers. digitalization is characterized by high speed and global character. a common feature of the digitalization process is the radical transformations that lead to the communication processes reformation in the field of information exchange, communication, social interaction, and in the field of business communications and public administration. communication in the conditions of digitalization becomes global, it becomes a productive force. in modern culture, it appears as a product and raw material. there is a commercialization of the communicative environment, its pragmatism and rationalization. digitalization helps to expand the information space, creating new information products, reduces information costs. there is an optimization and improvement of both internal and external communications in business processes, communication with consumers, customers, suppliers and partners and all institutions of the environment, new principles of interaction between participants in the communication process are formed. nowadays, digitalization is becoming a trend of effective global development because the digital transformation of information is gradually gaining table 1 digitalization and ukrainian legislation 17th of january 2018 "the concept of development of the digital economy and society of ukraine for 2018–2020". 2nd of september 2019 the ministry of digital transformation of ukraine was created. 2019 resolution of the cabinet of ministers of ukraine on "some issues of digital development" 2020 resolution of the cabinet of ministers of ukraine "some issues of the departments on digital development, digital transformations and digitalization of central executive bodies and deputy heads of central executive bodies, regional, kyiv and sevastopol city state administrations on digital development, digital transformations and digitalization" 27th of september 2019 the ministry of digital transformation of ukraine presented the "action" project (ukrainian "дія"). 12th of june 2020 resolution of the cabinet of ministers of ukraine no 471 – the national project on digital literacy "action. digital education ". 3rd of march 2021 national concept for the development of digital competencies until 2025, approved by the order of the cabinet of ministers of ukraine no 167-r. three seas economic journal 60 vol. 2 no. 3, 2021 momentum and covers almost all industries. but the important feature of the digital transformation remains that the results will be available not only to professionals but also to the ordinary citizens. ukraine is actively involved in the global digitalization process, a consistent digitalization policy is being formed in order to optimize communication between citizens and the state. the measures are being developed to overcome digital illiteracy and incompetence. however, the current stage of the technological innovation’s development puts on the agenda the question of the social and humanitarian nature of the changes that take 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(1990). the information revolution. communicationpres [text], vol. 17, no. 2, рр. 235–254. baltic journal of economic studies 48 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-8 features of the lean production implementation at the enterprises of ukraine’s dairy industry mariia foshchii1, natalia krasnokutska2 abstract. the purpose of the paper is to study the features of the lean production implementation in the dairy industry of ukraine. methodology. to achieve the purpose and solve the tasks set in the paper, a system of general and special research methods was used, namely methods of scientific knowledge (scientific abstraction, analysis and synthesis, deduction, generalization) to study the theoretical principles of the lean production implementation in ukraine’s enterprises, and questionnaire to assess the lean production implementation’s effectiveness in the enterprises of ukraine’s dairy industry. results of the survey examine the theoretical and methodological foundations of the “lean production” concept: taking into account all the definitions mentioned above, the following author’s definition of lean production is put forward: lean production is a system of the enterprise, which is constantly improving, aimed at building all processes in a continuous flow of value creation by preventing and eliminating all types of losses, involving staff in teamwork based on project approaches and maintaining safe working conditions in order to create attractive value for the consumer. methodological support for rapid assessment of the lean production implementation’s effectiveness on the basis of employee surveys has been developed and the efficiency of the lean production implementation at the enterprises of ukraine’s dairy industry has been assessed. it is concluded about the lack of effectiveness of implementing lean production at three enterprises of ukraine’s dairy industry. this is due to the short period of the lean production implementation, as enterprise 1 only started implementation at the end of 2020. based on the survey and questionnaire of employees and managers of ukraine’s dairy industry, the main stereotypes related to the implementation of lean production are identified and refuted, and the reasons for the slow and inefficient implementation of lean production are identified. lean manufacturing cannot be implemented once and for all, it must be done constantly, because lean manufacturing is a tool for gaining a competitive advantage. scientific novelty: methodological support for rapid assessment of the lean production implementation’s effectiveness has been further developed, which, unlike others, takes into account the peculiarities of the dairy industry and allows to determine problems and prospects for enterprise development on the basis of a questionnaire. a promising direction of research is a more detailed analysis of the “lean production polygon”, which is based on the survey. a more detailed analysis of the underlying three pentagons will reveal problems in the three subsystems of lean production. key words: lean production, concept, implementation of lean production, efficiency assessment, problems of the lean production implementation. jel classification: м10, l23, о10, о39 corresponding author: 1 national technical university “kharkiv polytechnic institute”, ukraine. e-mail: mfoschiy1994@gmail.com orcid: https://orcid.org/0000-0003-1555-3110 2 national technical university “kharkiv polytechnic institute”, ukraine. e-mail: krasnokutskaya.natalia@gmail.com orcid: https://orcid.org/0000-0001-8184-3816 researcherid: j-4698-2018 1. introduction in modern constant changes of market conditions, many companies seek to increase the efficiency of their activities through various tools and methods of organizing production. one of the most popular and effective methods currently implemented in the practice of economic entities is lean production. many ukrainian companies, against the japanese and western companies, have recently begun to apply this concept; at the same time, they have already formed and continue to develop their systems. despite the fact that the founders of lean production are exclusively foreign scientists, in ukraine studies have also been conducted in close contact with the provisions baltic journal of economic studies 49 vol. 2, no. 2, 2021 of this concept. these are the works of such scientists as omelianenko t. v., shcherbyna o. v., barabas d. o., vakulenko a. v. (2009), kobyliuk o. ya., melnyk h. m. (2012), kolos i. v. (2017), kharchenko h. a., kharchenko v. v. (2021). scientific works and developments of the mentioned authors have made a significant contribution to the study of various problems of lean production in enterprises. at the same time, most of the topical issues related to the implementation of lean production in ukrainian enterprises have not yet received a sufficiently comprehensive, systematic coverage and appropriate scientific explanation in the literature. the purpose of the paper is to study the features of the lean production implementation in the dairy industry of ukraine. to achieve this goal, the following tasks were performed: the theoretical and methodological foundations of the “lean production” concept are studied; the methodological support for rapid assessment of the lean production implementation’s effectiveness on the basis of employee surveys are developed; the efficiency of the lean production implementation at the enterprises of ukraine’s dairy industry is estimated; on the basis of the conducted survey and questionnaire of workers and heads of ukraine’s dairy industry enterprises the basic stereotypes which are connected with implementation of lean production are allocated and refuted; on the basis of the whole research the reasons of slow and inefficient implementation of lean production at the enterprises of ukraine’s dairy industry are revealed. to achieve the purpose and solve the tasks set in the paper, it was used a system of general and special research methods: methods of scientific knowledge (scientific abstraction, analysis and synthesis, deduction, generalization) to study the theoretical principles of the lean production implementation in ukraine’s enterprises, and questionnaire to assess the lean production implementation’s effectiveness in the enterprises of ukraine’s dairy industry. 2. theoretical and methodological foundations of the “lean production” concept the study of lean production’s implementation peculiarities will begin with an analysis of the concept. the phenomenon of lean production originated in japan, whose companies in the mid-50s formed a special approach to the organization of production processes and later other processes, which allowed a country that has virtually no natural resources, to take second place in the world in terms of gdp. the system is gaining more and more recognition in the world when us industrialists have felt fierce competition from the japanese in their own car market. the term “lean production”, or “lean manufacturing”, was firstly used in the mid-1980s by production organization specialist john krafcik in a comparative study of japanese and american automobile companies (krafcik, 1988). the term “lean production” summarizes the production system of “toyota” company, the main elements of which were developed over 26 years (from 1947 to 1973) by specialists such as ohno taiichi (taiichi, 2012) and shigeo shingo (shingo, 2010). today, the term “lean” is interpreted differently by some authors. in our opinion, in the scientific literature today, there is no most complete and clear formulation and definition of the “lean production” concept. some authors try to present “lean production” as a management concept, opposed to mass production, the essence of which is to accelerate production processes by reducing seven types of losses that do not add value to the product (taiichi, 2012; vumek et al., 2007), others try to present it as philosophy management, focused on the continuous development of the organization employees (shingo, 2010; krige, 2012). a number of “lean production” definitions, which are found in the works of many authoritative foreign and domestic scientists, were studied, and therefore we can say that nowadays the first approach prevails in the literature. lean production is one of the most relevant and effective management models, aimed at streamlining the production process by steadily eliminating all types of losses and involving each employee in the process of optimizing the business. the significance of this concept is determined by such important laws of capitalist production as the desire for a steady increase in profits and growing competition, which require not only continuous improvement of products (services) and technological systems but also constant work to reduce the costs of production and commercial activity in enterprises. however, in management science uncertain and one-sided vision of this concept continues to remain, which is well traced in the evolution of ideas about lean production. thus, in this study, taking into account all the definitions mentioned above, the following author’s definition of lean production is put forward: lean production is a system of the enterprise, which is constantly improving, aimed at building all processes in a continuous flow of value creation by preventing and eliminating all types of losses, involving staff in teamwork based on project approaches and maintaining safe working conditions in order to create attractive value for the consumer. 3. evaluating the effectiveness of implementing lean production to assess the effectiveness of the enterprise in the implementation of lean production, scientists (kovaleva et al., 2013) propose to use the “wheel of lean production”. the wheel of lean production includes a strategic triangle, intellectual triangle, and baltic journal of economic studies 50 vol. 2, no. 2, 2021 industrial triangle (kovaleva et al., 2013). each of these triangles shows the problems and opportunities for the development of lean production in relevant areas. similar to a wheel, it is possible to offer the use of a lean production polygon. the polygon is based on three pentagons in three subsystems of lean production. figure 1 shows the methodological support for rapid assessment of the lean production implementation’s effectiveness, which, unlike others, takes into account the peculiarities of the dairy industry and allows to identify problems and prospects for enterprise development on the basis of questionnaires. on the basis of the developed methodological support, the estimation of the lean production implementation’s effectiveness at three enterprises of ukraine’s dairy industry is carried out. according to stage 1 (formation of an expert group to conduct a survey), expert groups of 20 people were formed at each of the three enterprises. the expert groups included both managers and employees of the production shops of ukraine’s dairy industry. according to the stage 2 of the developed methodological support, a questionnaire was conducted on the basis of 45 questions. to answer the question, the experts gave scores in points from 0 to 3: where 0 is the complete absence of a sign in the enterprise; 1 point – score for extremely low level, no result; 2 points – there is an assessment for the available positive results, but there are reserves for revitalization; 3 points – an assessment for the highest level of results, continuous improvement of the enterprise in this direction. as a result of the survey among the expert groups formed at three enterprises of ukraine’s dairy industry, 60 questionnaires with answers to 45 questions were received. according to the stage 3 of the developed methodological support, the results of the survey were processed and systematized. to do this, 45 questions were divided by 3 between 15 indicators. so, the average score is determined using the arithmetic mean for 15 indicators in three subsystems of lean production. the maximum number of points for each component is 9 points. based on the systematized results of the survey, in figure 2 a “lean production polygon” was constructed. to systematize the evaluation results, they are summarized in three subsystems of lean production: 1. subsystem “management”: availability of strategic management; the presence of a lean production philosophy; declaration and principles of the lean production; use of key performance indicators (kpis), involvement of top management in the implementation of lean production. 2. subsystem “business processes”: the presence of 5c; work with suppliers and dealers; study of customer’s requirements and satisfaction; cost reduction; product quality management. 3. subsystem “staff ”: the effectiveness of employee training; cohesion of employees; education of leaders who profess the philosophy of lean production; availability and quality of kaizen-proposals; use of labor division. figure 1. methodological support for rapid assessment of the lean production implementation’s effectiveness on the basis of employee surveys source: developed by the authors stage 1. formation of an expert group to conduct a survey stage 2. selection of the questionnaire (45 questions are recommended) and conducting a survey stage 3. processing and systematization of survey results stage 4. building a “lean production polygon” stage 5. identification of problematic and promising directions for enterprise development baltic journal of economic studies 51 vol. 2, no. 2, 2021 according to figure 2, we can conclude about the lack of effectiveness of implementing lean production at three enterprises of ukraine’s dairy industry. this is due to the short period of the lean production implementation, as enterprise 1 only started implementation at the end of 2020. at the next stage of the research the main problems of the lean production implementation at the enterprises of ukraine’s dairy industry are defined. 4. stereotypes associated with the implementation of lean production ukrainian companies often try to implement lean production in at least a few months, up to a year. even with a positive attitude, the interest of senior management, minimal staff resistance, companies come to a standstill in the implementation of lean production. some of the problems are related to the existing stereotypes about the implementation of lean production. based on questionnaires and surveys of employees and managers in ukrainian dairy companies, the main stereotypes related to the implementation of lean production are identified. there are many definitions of a stereotype. the most common definition of stereotype is the following (chekanova, 2017): a stereotype is a schematic, standardized image or representation that expresses a person's habitual attitude to a phenomenon that has developed under the influence of social conditions and previous experience. the main stereotypes associated with the implementation of lean production in the dairy industry of ukraine: 1. the implementation of lean production is always quick, easy and simple, so the effective result will be noticeable immediately. 2. the implementation of lean production does not require additional costs. 3. lean production is a universal method that will solve the main problems in the enterprise. 4. lean production is the right inventory management policy by reducing inventory. 5. the implementation of lean production means mandatory job cuts. let us refute the above stereotypes, which were obtained on the basis of questionnaires and surveys of employees and managers in ukrainian dairy companies: 1. the implementation of lean production is not always quick, easy, and simple. the implementation of lean production often requires many attempts. ten or more options for optimizing the planning of the shop – it is a little. even more attempts to build a value chain are also few. just bringing all the requirements to each employee requires a lot of time and may cause complications. therefore, the effective result from the implementation of lean production will not be noticeable immediately. 2. the implementation of lean production does not require additional costs. costs are required for both staff training and the actual implementation of lean figure 2. “lean production polygon” based on a survey for three enterprises of ukraine’s dairy industry source: developed by the authors 0 2 4 6 8 10 the presence of strategic management the presence of a lean production philosophy declaration and principles of lean production the use of key performance indicators (kpis) involvement of top management to the implementation of lean production the presence of 5c work with suppliers and dealers learning requirements and customer satisfactioncost reduction product quality management the effectiveness of employee training cohesion of employees educating leaders who profess the philosophy of lean manufacturing the availability and quality of kaizen-proposals using the division of labor enterprise 1 enterprise 2 enterprise 3 baltic journal of economic studies 52 vol. 2, no. 2, 2021 production methods. however, if methods are properly implemented, all costs are quickly reimbursed. 3. lean production is just one of the powerful management tools that work in conjunction with others. lean production is not a universal method that will solve the main problems in the enterprise. it is a tool to increase the competitiveness of the enterprise, which is needed to make products faster than competitors, cheaper than competitors, and better than competitors. 4. inventory reduction is not yet lean production, it is just one of the tools to reduce losses and increase processes efficiency. reduce inventories is not a problem, the problem is to reduce inventories so as to maintain the stability and rhythm of production and even improve compliance with the requirements of all consumers throughout the product range. 5. the implementation of lean production is not a reduction, but a redistribution of resources. at any enterprise there is an uneven distribution: someone is loaded (or even overloaded), someone is underloaded. well, as for staff reductions, it is true that european companies sometimes also reduce staff. the japanese have a completely different approach. continuous improvement requires resources, so if “free” workers appear, they are included in the improvement process. this is how the “chain reaction of quality” is started. thus, the stereotypes identified on the basis of questionnaires and surveys of employees and managers in ukrainian dairy companies were refuted. however, on the basis of these stereotypes, as well as other results of questionnaires and surveys, it was possible to identify the reasons for the slow and inefficient implementation of lean production in the dairy industry of ukraine. 5. reasons for slow and inefficient implementation of lean production according to the authors, the reasons for the slow and inefficient implementation of lean production in the dairy industry of ukraine: reason 1. misunderstanding of the concept of lean production and the presence of stereotypes about the implementation of lean production. moreover, misunderstanding is inherent in both managers and employees who directly produce products. reason 2. lack of understanding or disregard mandatory stages of implementing lean production. often companies enthusiastically implement lean production without understanding the passage of mandatory stages of implementation. mandatory tasks are the obligatory stages for the implementation (definition of value, definition of a value chain, the organization of a chain movement, extraction of a product, perfection, inclusion of workers in activity and granting powers to them). reason 3. fuzzy understanding of the lean production goals. it is necessary to choose a pilot area, determine the value from the consumer's perspective, describe the situation as it is, develop a program to reduce all types of losses and increase the efficiency of processes, systematically reduce losses. reason 4. due to the misunderstanding of the concept, philosophy, and goals of lean production, there is a misunderstanding of the need to systematize lean production tools and the stages of their implementation in the enterprise. the most important thing is to understand very clearly what tools of lean production and in what sequence you need to implement and apply “step by step”. without this understanding, the implementation of lean manufacturing will turn into an obstacle course. reason 5. misunderstanding of the lean production relationship with other methods. if there is an understanding of the relationship between lean production tools and the quality management system (qms), the synergy will achieve significant results with minimal effort. however, often in the enterprises of the dairy industry in ukraine, quality management and implementation of lean production are two separate projects implemented by two independent structures, spending twice as much effort. lean production cannot be implemented once and for all, it must be done constantly, because lean production is a tool for gaining competitive advantage. 6. conclusions the paper examines the theoretical and methodological foundations of the “lean production” concept: taking into account all the definitions mentioned above, the following author's definition of lean production is put forward: lean production is a system of the enterprise, which is constantly improving, aimed at building all processes in a continuous flow of value creation by preventing and eliminating all types of losses, involving staff in teamwork based on project approaches and maintaining safe working conditions in order to create attractive value for the consumer. methodological support for rapid assessment of the lean production implementation’s effectiveness on the basis of employee surveys has been developed and the efficiency of the lean production implementation at the enterprises of ukraine’s dairy industry has been assessed. it is concluded about the lack of effectiveness of implementing lean production at three enterprises of ukraine’s dairy industry. this is due to the short period of the lean production implementation, as enterprise 1 only started implementation at the end of 2020. based on the survey and questionnaire of employees and managers of ukraine’s dairy industry, the main stereotypes related to the implementation of lean production are identified and refuted, and the reasons for the slow and inefficient implementation of lean baltic journal of economic studies 53 vol. 2, no. 2, 2021 production are identified. lean manufacturing cannot be implemented once and for all, it must be done constantly, because lean manufacturing is a tool for gaining a competitive advantage. scientific novelty: methodological support for rapid assessment of the lean production implementation’s effectiveness has been further developed, which, unlike others, takes into account the peculiarities of the dairy industry and allows to determine problems and prospects for enterprise development on the basis of the survey. a promising direction of research is a more detailed analysis of the “lean production polygon”, which is based on the survey. a more detailed analysis of the underlying three pentagons will reveal problems in the three subsystems of lean production. references: 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(in russian) three seas economic journal 25 vol. 2 no. 1, 2021 corresponding author: 1 main department for coordination and evaluation of the effectiveness of regional policy, ukraine. e-mail: kinshchakav@minregion.gov.ua orcid: https://orcid.org/0000-0001-7241-6628 researcherid: aae-7659-2021 2 state institution "institute of regional research named after m.i. dolishniy of nas of ukraine", ukraine. e-mail: solomiia@klioba.com orcid: https://orcid.org/0000-0003-4697-4866 researcherid: r-4509-2018 doi: https://doi.org/10.30525/2661-5150/2021-1-5 strategic priorities and mechanisms for ensuring the competitiveness of amalgamated hromadas in the context of decentralization of power alla kinshchak1, solomiia kloba2 abstract. the purpose of the article is to summarize and present strategic priorities and mechanisms for ensuring the competitiveness of regions in decentralization. the sequence of actions, the algorithm that will determine the strategic importance of development and select appropriate means to ensure the area's competitiveness. methodology. the swot-analysis method is based on the analysis of factors and factors of competitive advantages of regions with the help of fundamental parameters (accessibility, the economic feasibility of use; sufficient transport potential; involvement of the local population in resource development). to determine the priorities of directed financial flows, the structure of community expenditures was considered (velykomostyska city amalgamated hromada as a representative of amalgamated hromada with a city centre; solonkivska rural amalgamated hromada as a representative of amalgamated hromada – a satellite of a large city; slavske village amalgamated hromada as a representative of amalgamated hromada tourism). the effective use of tools has been identified, and the priorities facing the region (including amalgamated hromada) need to be clearly defined to achieve enhanced competitive advantages. results. results show that an additional mechanism to strengthen competitive advantage is the inclusion of local producers of products or services in the global chain of multinational companies while considering the threat of significant dependence on foreign markets. the implementation of mechanisms must include at least two components: financial, economic and organizational. all measures include synchronization of actions of local authorities, public organizations, business to ensure mechanisms for implementing strategic development programs based on analytical research and monitoring in the context of adaptation to global challenges, the need to implement the rules of the association agreement between ukraine and the eu. practical implications. the active position of the community in defining strategic priorities and clearly defining the mechanism for strengthening the competitive advantages of amalgamated hromada will significantly improve the quality of life and, consequently, the attractiveness of the territory for potential residents. increasing the population intensifies the development of the social sphere and the sphere of trade, which will increase revenues to the community budget. thus, a clear vision of the community leadership of strategic guidelines allows the community to develop faster than before the reform. value/originality. strategic priorities and mechanisms for ensuring the competitiveness of regions in the context of decentralization of power provide a better understanding of their effectiveness by the budget process of the area or amalgamated hromada. key words: strategic priorities, cooperation mechanisms, competitiveness, support mechanism. jel classification: h72, o12, p27 1. introduction the practise of increasing the competitiveness of territories, as well as the study of foreign experience on this issue, showed the need to find new forms and methods to increase community competitiveness, develop a systematic approach to identif ying strategic competitiveness goals, and implementing measures to achieve them. strengthening competithree seas economic journal 26 vol. 2 no. 1, 2021 tive advantages is the key to the effective functioning of the united territorial community, including the achievement of such results as increased revenues to the community budget, efficient use of natural, demographic, financial, infrastructural, and other resources to achieve community self-sufficiency and meet all needs. in today 's conditions of decentralization, ensuring the competitiveness of local communities is a difficult problem because the level of socio-economic development of newly created communities differs dozens of times, and budget revenues can not meet all the needs of the community. strategic priorities and mechanisms for ensuring the competitiveness of regions in the context of decentralization of power in ukraine since 2014 are natural processes of ukraine's transition to liberal conditions of functioning in the economic environment and the economic environment in the socio-political one. decentralization processes consist of redistribution of responsibilities, powers and financial flows from the state to the regional level. for the regions, especially in the era of decentralization processes, the priority areas in which the newly received revenues from the redistribution of the revenue part of the consolidated budget of ukraine will be spent become significant decentralization of power. 2. research results significant experience of enterprise competitiveness should be adapted to the conditions of communities and take into account that local governments are not directly producers of marketable products (koshlupov, 2012). let's form the list of tools to increase of competitiveness of amalgamated hromada: a thorough study of consumer demands and analysis of competitors; advertising; creation of new amalgamated hromada products or services; improving the quality characteristics of products/ services; modernization of equipment, infrastructure; comprehensive cost reduction; service improvement; qualification of the workforce; labour costs; development of the transport system; cost of energy, approach to suppliers; quality of the management system; local tariffs and taxes; quality of the local banking system; availability of higher educational institutions; availability of research institutions; positive image of the city/region; living conditions; strengthening the health care system; institutions of culture, sports, recreation; public safety, etc. for a quality solution, the evaluation of ways and tools to increase competitiveness, as a result, must meet the requirements shown in figure 1. summarizing the content of figure 1, note that at all stages of the evaluation of measures aimed at strengthening competitiveness, it is necessary to identify obstacles, overspending and ways to optimize the budget expenditures of the community. the use of tools used to ensure the competitiveness of amalgamated hromada in the context of decentralization reform in ukraine alone will not have a sufficient effect to strengthen competitive advantage. therefore, in our opinion, it is necessary to form a sequence of actions. this algorithm will determine the strategic priorities of development and select appropriate mechanisms to ensure the region's competitiveness (figure 2). when forming a decision on defining strategic priorities, first of all, it is necessary to determine: – the purpose of managing the region – what is the value created for the region (incoming cash flow, growth of customer base, increasing the number of innovations, etc.); – identify a system of factors that affect regional potentials and their transformation, which are determined by the actual quantitative and qualitative availability, as well as management efficiency; – to determine the person responsible for developing the organizational component, which will be tasked with the main tasks of implementing the strategy of the region through mechanisms to ensure regional competitiveness. determine the level of success of the investment project in the interests of the community; identify problems at all stages of the investment project for rapid response; to establish the success of achieving the set goals during the project implementation; to adjust the action plans within the investment project if necessary; check the effectiveness of new ideas in the implementation of projects; determine the best option for prompt correction of the project, if necessary; prove the need for further project funding under community development strategy plans. figure 1. requirements for evaluation of amalgamated hromada investment projects. source: developed by the author on the basis of (vasilchenko, parasiuk, & eremenko, 2015) three seas economic journal 27 vol. 2 no. 1, 2021 we must not forget the external factors influencing competitiveness, which are objective for local communities. their impact must be taken into account at almost every stage of determining the region's strategic priorities. for example, a change in state policy for the development of regional agriculture may provide amalgamated hromada with additional resources in grants. therefore, strategic priorities should be reconsidered. an important place in the proposed algorithm is given to the collection and sorting of information. after making a final decision on the need to determine strategic priorities, it is worth considering the region's potential: resource, demographic, investment, economic, social and more. it is complete information about the area's features, and its potential will significantly improve its competitiveness. to do this, a careful accumulation of available information about the potential and problems of the region and the appropriate sorting, in our opinion, it is advisable to use the method of swot-analysis. 3. the sequence of analysis of factors and factors of competitive advantage the following parameters should analyze factors and factors of competitive advantage: – availability; – economic feasibility of use; – sufficient transport potential; – involvement of the local population in resource development, etc. after conducting an analysis of competitive advantages and identifying key areas, the general direction of the necessary funding is formed either from local budgets or (if possible) from specialized funds, such as the state fund for rural development (1) sp f x x x xn=∑ …( )� � � �max , , , ,1 2 3 , (1) prioritization demographic potential infrastructure economical development tourismagriculture analysis of competitive advantages and opportunities for their financing strengthening key benefits pulling up weaknesses uniform development determining the strategic priority of development formation of mechanisms to ensure the competitiveness of the region forming a decision on defining strategic priorities factor analysis of the region's potential periodic monitoring of the results of the region's strategy implementation introduction of mechanisms to ensure competitiveness collection and sorting of information use of mechanisms of inter-municipal cooperation external factors figure 2. algorithm for determining strategic priorities for regional development and implementation of mechanisms to ensure their competitiveness source: author's own development three seas economic journal 28 vol. 2 no. 1, 2021 where sp is a strategic priority, f(x) is an aggregate expert assessment of the parameters of competitive advantage. as an alternative to expert evaluation, evaluating the effectiveness of the implementation of funded projects can serve (2) esp developmentcosts revenues from projects = ∑ ∑ � � � � (2) if the calculated efficiency is less than one, then the financing of these projects can be confirmed by a significant social effect. otherwise, there may be irrational financing of the competitive advantages of the region. when choosing a strategic priority for the region's development by "pulling up weaknesses", state support mechanisms are often used. the issue of support and regulation of regional development by the state is quite deep, and we will consider in detail the means for increasing the competitiveness of regions through state influence: – "stimulating" (with the predominance of market instruments and the creation of a favourable environment for the development of environmentally friendly industries and other activities in the ecosphere); – "hard" (using administrative and financial and economic instruments of coercion and suppression through a strict tax policy for the development of environmentally hazardous industries); – "soft" (with the establishment of a liberal restrictive environmental framework, which partially affects the pace and scale of ecological development). ukraine has now formed a soft regulatory mechanism. also, ukraine pays considerable attention to the foreign economic activity of the regions, for example, at the national level (in the export strategy of ukraine ("road map" of strategic trade development) for 2017–2021) identifies the country 's efforts to export knowledge-intensive innovative products for sustainable development and entering global markets. including through the development of regional enterprises. the priority sectors of the economy for export development are the following (zvit po ukraini, 2018): – development on an innovative basis of enterprises that are currently in a state of decline or the pace of development of which has slowed down, and which are concentrated in the aerospace industry and related (creation of software, information and communication technologies, production of spare parts, components and maintenance services for the aviation industry and mechanical engineering); – promising in terms of improving the image of ukraine abroad, which are in the process of formation (tourism sectors and creative industries) to attract tourists and promote the country 's appearance on the world market by holding some relevant events by the government; – strategic in terms of processing in ukraine of raw materials for the production of high value-added products, which are in the growth stage and depend on the agro-industrial complex (food, processing industry and related industries, which provide positive results shortly). to determine the priorities of financial flows, it is necessary to consider the cost structure of communities, taking into account the preferences and competitive advantages for analysis were taken amalgamated hromada: – velykomostsy city amalgamated hromada, as a representative of amalgamated hromada with the centre in the city; – solonkivska rural amalgamated hromada, as a representative of amalgamated hromada – a satellite of a large city; – slavske village amalgamated hromada, as a representative of amalgamated hromada tourist direction (figure 3). according to figure 3. there is a significant disproportion of expenditures, namely the concentration of urban amalgamated hromada expenditures on education (60%) and health care (15%) of the local population. thus, in our opinion, there is an attempt to optimize such a strategic priority of the city amalgamated hromada as human potential, improving education and health care. maintaining the strategic direction of the region's development is especially important due to the circumstances that: – taxpayers – individuals and legal entities are the primary source of local budget. therefore, the growth of their number is highly relevant to this community and region. – mostyska amalgamated hromada is exceptionally close to the border with poland, and therefore emigration processes are highly developed. emigration of the working population creates unemployment and increases labour resources, which reduces the competitive advantages of this amalgamated hromada. – given the fact that, on average, expenditures on education and medicine were the most significant expenditures before the decentralization process, it can be argued that mostyska amalgamated hromada has established a strategic priority aimed at strengthening competitive advantages over residents and employees of this amalgamated hromada (weak alignment). lets's consider the tourist slavske amalgamated hromada and amalgamated hromada – satellite solonkivske amalgamated hromada. there is a noticeable distribution between budget items aimed at national functions (e.g., fire protection), education and economic activity. this situation is due to the peculiarities of the functional direction – providing three seas economic journal 29 vol. 2 no. 1, 2021 solonkivska amalgamated hromada space for the construction of residential complexes and directing funds slavske amalgamated hromada for education to meet their own needs with highly qualified staff. it should also be noted that solonkivske amalgamated hromada spends only 5% of the budget on health care (support of paramedics), as a large part of the population has the opportunity to visit hospitals located in the regional centre. thus, there is a strategic priority – strengthening the strengths of amalgamated hromada. to determine strategic priorities, it should be noted to conduct both an analysis of resources and potential and the possibility of implementing mechanisms to increase the competitiveness of regions, as a combination of existing and potential tools to increase competitiveness into a single system. 4. strategic priorities for increasing the competitiveness of regional development for example, consider such a strategic priority as human development. to achieve this, you can use a variety of tools: thorough study of consumer demands and analysis of competitors; advertising; qualification of the workforce; cost of energy, approach to suppliers; quality of the management system; local tariffs and taxes; quality of the local banking system; positive image of the city/region; living conditions; public safety, etc. some measures will be sporadic and will not, in our opinion, have a significant impact on achieving the interest of citizens to immigrate or look for work in a particular region. it would be better to combine these tools into a single system. thus, increased public safety, infrastructure and high living conditions will interest potential immigrants to the region, and low tariffs due to the proximity to the supplier and the availability of a sufficient number of bank branches and atms will be an additional incentive pay attention to this amalgamated hromada. at the same time, reducing this information to a single presentation, for example, in the form of infographics compared to other regions in the form of advertising, will potentially increase immigration due to its accessibility, informativeness and ease of presentation. thus, the mechanisms can differ – depending on the strategic priority of increasing competitiveness and the target audience. for effective use of tools, it is necessary to clearly define the region's priorities (including amalgamated hromada) to achieve enhanced competitive advantages (figure 4). 3%11% 2% 8% 60% 15% 4% 28% 8% 26% 27% 5% 2% 22% 7% 25% 35% 8% amalgamated hromada budget structure public order, security and the judiciary spiritual and physical development economic activity utilities national functions education health care environmental protection social protection and social securityamalgamated hromada velyki mosty amalgamated hromada amalgamated hromada slavske township figure 3. amalgamated hromada budget structure source: compiled by the author on the basis (karta donoriv detsentralizatsii) strategic priorities for regional development strengthening strengths / strengths alignment of weaknesses uniform development figure 4. regional development priorities source: author's own development three seas economic journal 30 vol. 2 no. 1, 2021 according to figure 4, the main strategic priorities are determined as a result of the analysis of the resource, social, political and economic component. depending on the available potential, the direction of investing funds in the region is determined. 1. strengthening of strengths (e.g. tourism or industry) due to the sufficient current development of non-priority competitive advantages in the region, for example in the presence of transport infrastructure in solonkivska amalgamated hromada (close location of the regional centre formed the necessary utilities) to prioritize infrastructure development is inappropriate from an economic point of view. therefore, it is needed to focus on other competitive advantages of the region. this approach should be applied to amalgamated hromada leaders in terms of competitiveness, such as tourism or economic development. thus, due to the growth of the local budget, amalgamated hromada can compete not only within the region but also within ukraine (for example, tourist complexes). 2. equalization of weaknesses involves investing funds in solving the region's most complex and problematic regional problems. if we continue the parallel with the infrastructure, the lack of quality road surface in vilshanska amalgamated hromada significantly reduces the competitive position of the part. thus, preference should be given to infrastructure projects that aim to improve the quality of transport connections between the studied amalgamated hromada and other centres of the area or country (economic, social, industrial, etc.). in our opinion, this approach should be used by amalgamated hromada outsiders to improve the existing competitive advantages. 3. in the absence of significant gaps in competitive advantage and sufficient funding, the region (including amalgamated hromads) can evenly allocate available resources to a variety of socio-economic needs. such development, in our opinion, is not compelling enough, as the priority development of potential strengths of the region will significantly increase the occupancy of local budgets over time. in our opinion, this approach should be used by those amalgamated hromads that do not have significant competitive advantages, but their unprofitability (a local budget deficit) is not substantial. it is worth noting the alternative of focusing on the individual development of the region. yes, there are options for several amalgamated hromadas to work together to complement the "weaknesses" of communities. such a mechanism is provided by the existing law of ukraine "on cooperation of territorial communities" since 2014 (pro spivrobitnytstvo terytorialnykh hromad, 2014). to date, such a mechanism is not actively used due to the incompleteness of decentralization reform, the focus of communities on their resources or state support, low awareness of existing tools for cooperation. consider the means of collaboration of united territorial communities in figure 5. given that decentralization reform aims to selfdetermination by communities of amalgamated hromada boundaries, problems arise when objects essential to the existence of communities are absent in newly created districts. thus, as a mechanism of community cooperation, it is best represented in the commission of fire safety. in this example, both authority and finances are delegated to one of the amalgamated hromads under the cooperation agreement. as of april 1, 2020, there are at least 40 similar agreements (reiestr dohovoriv po spivrobitnytstvu terytorialnykh hromad, 2020). the following mechanism of cooperation in implementing joint projects, usually infrastructure, includes the creation of archives, garbage collection, preschool education and more. cooperation mechanisms consisting in the joint formation and financing of enterprises and institutions of organizations can also have infrastructural or social significance, for example, provision of gas, water and energy supply to residents and enterprises of amalgamated hromada, creation of new infrastructure (dams, reservoirs of power plants, etc.). which funding from one amalgamated hromada will not be enough. the formation of a joint governing body is not a popular mechanism for cooperation (about ten cooperation agreements have been signed (reiestr potential mechanisms of cooperation between amalgamated hromada formation of joint utilities, institutions and organizations delegation of individual tasks implemen tation of joint projects joint financing (maintenance) of enterprises, institutions and organizations of communal ownership formation of a joint governing body figure 5. mechanisms of cooperation between communities source: compiled by the author on the basis (pro spivrobitnytstvo terytorialnykh hromad, 2014) three seas economic journal 31 vol. 2 no. 1, 2021 dohovoriv po spivrobitnytstvu terytorialnykh hromad, 2020)), and they usually deal with environmental issues. in summary, as of april 1, 2020, there are 603 cooperation agreements between amalgamated hromadas (reiestr dohovoriv po spivrobitnytstvu terytorialnykh hromad, 2020), while the number of amalgamated hromadas created on the same date is 980 communities. thus, there is little activity in the direction of establishing cooperation between communities. to improve this situation, in our opinion, it is worth: introduce preferential lending for such projects; to carry out explanatory works among community leaders; intensify public-private partnerships, including on a competitive basis; actively implement cross-border cooperation between communities; create networks for the exchange of information on interregional cooperation, etc. given the orientation of the regions based on resource potential, it is advisable to identify the prospects for the development of areas (including state assistance in the form of project financing, such as sfrd), where production facilities are located through the following mechanisms: – achieving a world level of efficiency in the use of material and production resources in production activities; – formation of the optimal production structure of the region (including amalgamated hromada groups) for integrated development using available resources and natural competitive advantages of the areas; – stimulating the creation and renewal of communication and transport infrastructure; – involvement of business entities of other regions to create interregional cooperation; – expert assessment of the state and trends of scientific and technical achievements in combination with marketing forecasting of changes in consumer demand; – improving the quality of material resources used in production; – structural transformation of production complexes to increase the volume of competitive products, reduce energy consumption and material costs; – creation of regional and interregional economic alliances between enterprises and local governments to increase the competitiveness of regions; – synchronization of the activities of territorial authorities, local governments and public institutions in motivating innovations and increasing the competitive advantages of the regions; – concluding agreements between higher education institutions, research institutions and industrial companies to stimulate the fulfilment of orders to be used in industrial production. an additional mechanism for enhancing competitive advantage is the inclusion of local producers of products or services in the global chain of multinational companies while considering the threat of significant dependence on foreign markets. about regions that focus on the development of demographic potential, the primary mechanisms for the development of these regions can be the following: – identification of trends in demand for the profession, the need for qualified personnel, the development of staffing plans; – support of small enterprises based on production cooperation with leading business structures of the regional level; – diversification of financial support of economic activity through subsidies of research and development in priority areas at the regional level, increasing the motivation to invest in scientific and practical results; – raising the level of qualification of labour resources, first of all with engineering, production or design skills; – improvement of living conditions, subsidizing at the expense of the local budget part of mortgage loans to young people in the region; – active privatization of non-residential areas for sale for construction for cheap property, which will be sold exclusively to residents of the region; – active financing of the social sphere (hospitals, schools, kindergartens, sports grounds, etc.). strategically oriented agricultural regions, and especially amalgamated hromada with a centre in villages and their groups, in our opinion, should use the following additional mechanisms: – strengthening the efficiency and intensification of innovation and investment activities to ensure resourceefficient and environmentally friendly production (primarily for the formation of export supply); – financial incentives for intersectoral integration of agro-industrial production and scientific organizations; – formation of processing capacities near agricultural areas for production and sale not of semi-finished products, but finished products; – increasing the amount of funding for scientific and practical developments in the agricultural sector to increase the level of high-tech industry and competitiveness of enterprises and the region. for example, we give the structure of exports from ukraine (figure 6). according to figure 6, a third of exports (36.8%) are products of the agricultural sector of the economy, and another 10% are products of the extractive industry, which are sent for export. and given the growing demand for food in world markets and growing demand for organic products in the eu and other countries, agricultural exports to the regions can be a beneficial factor in increasing the competitiveness of amalgamated hromada among other areas. consider the mechanisms for increasing the competitiveness of regions that focus on infrastructure development: three seas economic journal 32 vol. 2 no. 1, 2021 – use of mechanisms for implementation of programs and projects through the state fund for regional development and creation of a system of transparent selection and evaluation of projects for state support of infrastructure projects; – formation of regional transport and logistics clusters, including warehousing for the transit of goods through ukraine; – joint financing of institutional infrastructure projects at the expense of financial resources of eu funds and national institutions; – carrying out technological re-equipment and diversification of production, products (goods) based on new technologies; – formation and effective use of transport and logistics potential (including lviv region) to promote domestic, regional products on the world and interregional markets. the implementation of mechanisms must include at least two components: financial, economic and organizational. the financial and economic component in increasing the region's competitiveness should stimulate the implementation of tasks to ensure the timely finding of financial resources and differentiation of sources for the performance of priority mechanisms to increase the region's competitiveness in terms of changing competencies. the organizational component should include the development and implementation of tools, creating incentives for business development, which will allow the development of products that form the region's innovative potential. all measures include synchronization of actions of local authorities, public organizations, business to ensure mechanisms for implementing strategic development programs based on analytical research and monitoring in the context of adaptation to global challenges, the need to implement the association agreement between ukraine and the eu. turning to monitor, it should be noted that the periodicity of reviewing the effectiveness of mechanisms to increase the competitiveness of the region should be carried out following the budget process of the part or amalgamated hromada, for example, annually, and in case of inefficiency, inconsistency or bias, strategic development priority and competitive priority area to which special attention should be paid. 5. assessment of development priorities of trostyanets city amalgamated hromada let's consider using strategic planning mechanisms and determining the priorities of the region's development on the example of the trostyanets city united territorial community. given the fact that trostyanets amalgamated hromada has a population of almost 22 thousand people, and the community budget for two years (2017–2018) has quadrupled – to nearly 200 million hryvnias, including increased development budget, the community sent funds for the construction and renovation of parks, hospitals, schools, sports facilities, etc. thus, there is a community orientation on demographic specialization. it is worth noting that according to the long-term plan, 11 more village councils are to join the community, which will increase both the number of residents and the objects of taxation, as well as funding from the budget. a concrete example of the development of human potential as a competitive feature is that in the village of kamyanka, amalgamated hromada repaired roads, bought buses, and were allowed into the town. these measures were implemented for the first time in the last 12 years. trostyanets, as the centre of amalgamated hromada, aims to continue within the strategy of amalgamated hromada development, to develop the following priorities: 24,6 20,9 9,89,5 9,2 6,4 4,0 3,2 12,6 base metals and articles thereof products of plant origin machines, equipment and mechanisms; electrical equipment fats and oils of animal or vegetable origin mineral products ready-made food products of the chemical and allied industries wood and wood products others figure 6. structure of exports from ukraine in 2018, % source: compiled by the author on the basis (tovarna struktura zovnishnoi torhivli, 2018) three seas economic journal 33 vol. 2 no. 1, 2021 – working places; – investments; – infrastructure development; – tourism. in 2018, the amalgamated hromada "card of a resident of trostyanets city amalgamated hromada" began to operate, allowing select categories of citizens to travel free of charge on public transport in the city. local readers have unique readers for such cards. cardholders are served in the public library on an emergency basis, and they also receive a discount in one of the city 's pharmacy chains. the purpose of introducing this card is, in particular, transparent accounting and optimization of budget expenditures allocated for social purposes. the trostyanets community uses the open city platform so that utilities can quickly learn about faults in the city and respond accordingly. with its help, residents can indicate on the map the place where the problem occurred. the open city system was created as a platform for the whole of ukraine. the community pays 35,000 hryvnias a year to the association of open cities, supporting various electronic services. as for the infrastructure, during the operation of amalgamated hromada, in the city: modernized communal infrastructure and installed energy-saving technologies; by 2018, all apartment buildings in the city were converted to individual heating; all roofs of the housing stock are repaired; communications have been replaced in the entrances, and intelligent lighting systems that respond to traffic have been installed; pumps and automatic water supply systems have been installed in all water intake facilities of the city. now wells from the wells enter the network directly, bypassing the water towers, mostly clogged. most city yards do not have garbage containers. the garbage truck arrives on a precise schedule, beeps, and residents take out the garbage. people decided that such a system was more convenient for them. 98% of residents have concluded contracts for a garbage removal. after the unification, the community began removing garbage from villages at the city rate. during its work, the community received funding for about 20 projects: an inclusive playground, restoration of architectural monuments, creation of an educational centre, etc. these infrastructural measures are aimed primarily at improving the social component of the city. therefore the statement about the strategic priority of demographic development of trostyanets amalgamated hromada has found additional confirmation. as for the economic component, it should be noted that since 1994 the chocolate factory "ukraine" (located in trostyanets) has become part of the international corporation kraft foods (since 2012, the company is called mondelēz international). the factory performs a complete cycle of cocoa bean processing. the company employs more than 1,000 people. the company was actively invested: in 2012–2018 in the amount of about $ 200 million investment. people from other villages and settlements of amalgamated hromada go to work at the factory. a significant number of employees and a large manufacturer allows filling local budgets with large enough amounts of funds, which are redirected, including for the renovation of amalgamated hromada medical facilities. at the beginning of 2018, and primary care facilities, the trostyanets community, took over the district hospital, which serves almost 40,000 patients. for six months, significant repairs were made in the therapeutic department, gynaecological and maternity departments. by 2022, the community plans to complete renovations throughout the hospital: wi-fi systems are installed all over the floor. there is video surveillance as a nurse so she can see what is happening in the corridor. there are call buttons next to each bed. the beds are adjusted to the needs of each patient. each room has a tv set, a refrigerator, a washbasin, a toilet and a shower. about two million were worth repairing the therapeutic department and about a million – equipment. this is all – exclusively community funds. a large part of the community budget goes to education. in addition to maintaining schools and kindergartens, trostyanets invests in the repair of classrooms, new equipment and software: schools that have joined the community have not previously been involved in energy saving, have no multimedia equipment, and so on. in 2018, 13 classes were repaired at the expense of amalgamated hromada budget funds. in 2018, a renewed public library was opened in trostyanets on city day. in addition to the reading room, the library has a coworking centre, communication rooms, a multimedia hall-transformer for events, a children's area. in the summer of 2018, an inclusive resource centre for children with disabilities opened in trostyanets. the institution provides psychological and pedagogical assistance to children, as well as promotes their social adaptation. sports and tourism are actively developing in amalgamated hromada (trostianetska hromada). trostyanets' quarries are an additional source of amalgamated hromad's budget and are actively used to supply the region's construction projects with sand and clay. in general, we summarize that the strategic priority of trostyanets amalgamated hromada, which is reflected in the development strategy of trostyanets amalgamated hromada, is to develop a human reserve and encourage the immigration of residents of surrounding villages to the region. three seas economic journal 34 vol. 2 no. 1, 2021 at the same time, in the strategic document of the regional level, among the shortcomings, it is worth emphasizing that there is a justification of the main directions and accumulation of recommendations without detailed interpretation and development of tactical plans to achieve goals, as well as lack of identification of resources. the implementation of such documents may be hindered by the political instability of the country, insufficient funding (for example, trostyanets amalgamated hromada is not sufficiently outlined, as it is united around the city, but rural communities are less protected from scarce trends), limited stakeholder participation, the shadow sector. economy, which complicates their implementation. 6. conclusions the need to improve the institutional and economic mechanisms to ensure the competitiveness of regions in the context of decentralization reform is due to both the slowdown of the reform itself and the lack of significant experience of community leaders in implementing such reforms. algorithm for determining the strategic priorities of the region's development and implementation of mechanisms to ensure their competitiveness, the phased implementation of which will simplif y and systematize the bureaucratic element of identif ying strategic priorities. this algorithm is based on the need for amalgamated hromada leaders to understand the importance of strategic priorities. in the case of a formal approach, this algorithm will not be effective at a sufficient level. it should be noted that the strategic priority should be based on the potential of both resource and demographic and financial. attracting additional funding will reduce own costs, but will increase dependence on third parties, including the state. sufficient resources will strengthen the strengths, and low stocks – will save almost all costs, which is relevant for rural amalgamated hromada, away from important infrastructure or administrative facilities. inter-municipal support as a mechanism to increase the competitiveness of ukrainian communities is actively developing, however, compared to the total number of functioning amalgamated hromada, cooperation agreements between communities have been signed only about 60%, which indicates both the potential and low interest of communities in this mechanism. in general, when setting strategic priorities, communities should realistically assess social, economic, political, infrastructural, demographic, and other components not only in retrospective analysis but also as development potential. in conclusion, we note that the active position of the community in defining strategic priorities and clearly defining the mechanism for strengthening the competitive advantages of amalgamated hromada will significantly improve the quality of life and, consequently, the attractiveness of the area for potential residents. increasing the population intensifies the development of the social sphere and the sphere of trade, which will increase revenues to the community budget. thus, a clear vision of the community leadership of strategic guidelines allows the community to develop faster than before the reform. references: koshlupov, i. f. (2012). programs for improving the competitiveness of organizations. visnyk sotsial'noekonomichnykh doslidzhen', vol. 1(44). vasilchenko, g., parasiuk, i., & eremenko, n. (2015). planning the development of local communities. a manual for local government officials. kyiv: llc "enterprise" v n a". zvit po ukraini (2018). available at: http://bit.do/eejyd karta donoriv detsentralizatsii / usi proekty. available at: https://donors.decentralization.gov.ua/projects pro spivrobitnytstvo terytorialnykh hromad: zakon ukrainy vid 17.06.2014 № 1508-vii. vidomosti verkhovnoi rady (vvr), 2014, № 34, st. 1167. available at: https://zakon2.rada.gov.ua/laws/show/1508-18 reiestr dohovoriv po spivrobitnytstvu terytorialnykh hromad. available at: https://www.minregion.gov.ua/ wp-content/uploads/2020/04/reestr-17.04.2020.pdf tovarna struktura zovnishnoi torhivli u 2018 rotsi. available at: http://www.ukrstat.gov.ua/operativ/operativ 2018/zd/tsztt/tsztt_u/tsztt1218_u.htm trostianetska hromada: promyslovo-turystychnyi klaster. available at: https://decentralization.gov.ua/ news/11256 three seas economic journal 63 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-11 clustering of the national economy as an effective tool for the sustainable development of european countries nataliia trushkina1, valerii shiposha2 abstract. the cluster model is an effective tool for ensuring the effective development of national economies and the transformation of the innovative ecosystems of european countries. this is determined by the goals of the cluster approach. in most european countries, cluster structures are recognized as the most effective means of implementing regional policies that promote balanced sustainable development of regions based on the use of local conditions, resources and competitive advantages. world practice testifies to the intensification of the processes of formation of cluster associations of organizations in recent decades. currently, about 50% of the economies of developed countries are covered by the processes of creation and functioning of clusters. the purpose of the article is the analysis and synthesis of the european experience in the development of cluster structures to develop recommendations for the possible use of clustering the national economy as an effective tool for sustainable development of european countries in ukraine. methodology. the theoretical and methodological basis of the study are the provisions of institutional theory, in particular the paradigm of evolutionary development, clustering theory, the concept of strategic and logistical management, enterprise development management. in the process of research the following general scientific methods were used: analysis and synthesis (for the analysis of scientific schools of development of cluster theories, generalization of existing theoretical approaches and provisions, scientific developments on the problems of managing the development of cluster structures, clarification of terminological apparatus); classification and systematic approach (to systematize the conceptual approaches to defining the concepts of "cluster", "clustering", to identify industry-specific development of cluster structures in europe); comparison and structural-logical generalization (to determine the features of the european practice of clusters and the possibility of its use in ukraine). results. the study revealed the sectoral focus of cluster structures in european countries. the features of the implementation of cluster policy and the key objectives of support for the development of cluster structures in a number of eu countries were identified. it is proved that the clusterization of the national economy, cluster policies and initiatives in the last decade have become important elements of strategies and concepts of innovative and sustainable development of european countries. based on the analysis and synthesis of sectoral trends in the creation of cluster structures in european countries, it was found that the national characteristics of existing cluster policy determine the direction of cluster initiatives; strategic cluster alternatives are determined by national characteristics and the adopted cluster concept; to assess the feasibility of the cluster strategy of development of the territory it is necessary to correlate the level of investment potential and investment activity; methodological principles of formation of a national cluster strategy need to be refined and clarified, taking into account the current challenges. practical implications. on the basis of summarizing the best european experience, it was found that to increase the competitiveness of the national and regional economy it is necessary to create cluster structures as effective forms of partnership. but as a result of the study, it was found that the current legislation of ukraine does not pay proper attention to the formation and functioning of clusters. this requires changes and additions to the concept of creating clusters in ukraine, the regional development strategy until 2027 and action plans for their implementation in 2021-2023 years to create cluster structures as a business entity. it is advisable to develop and approve the concept of cluster policy and the target program "the formation and development of cluster formations in the regions of ukraine for 2021-2023 years", which should corresponding author: 1 institute of industrial economics of the national academy of sciences of ukraine, ukraine e-mail: nata_tru@ukr.net orcid: http://orcid.org/0000-0002-6741-7738 2 llc "institute of scientific-pedagogical and production infrastructure", ukraine e-mail: vshyposha@gmail.com orcid: https://orcid.org/0000-0002-9012-8627 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 64 vol. 2 no. 4, 2021 provide for the creation of clusters as a special type of associations of enterprises in different fields of activity and taking into account regional characteristics. value/originality. the author's approach to improving the regulatory support for the development of cluster associations in ukraine, taking into account the best european practices was formulated. key words: national economy, clustering, cluster initiative, cluster policy, cluster approach, cluster structure, form of partnership, model of cooperation, stakeholders, globalization, european practice, sustainable development. jel classification: f15, f20, l22, p51, r40 1. introduction currently, cluster formations are recognized as one of the most effective production systems and forms of network partnerships in the era of globalization, digitalization and knowledge economy. at the same time globalization processes strengthen the role of clusters in the economy of different countries and contribute to their further formation and functioning. these structures have become a kind of "new wave" that sets the modern vector of development of the global ecosystem and logistics networks. it should be noted that globalization opens up real opportunities for most international companies to move capital freely and quickly, facilitates access to the necessary knowledge, provides a choice of location depending on the convenient geographical location, availability of transport and logistics infrastructure, availability of raw materials, proximity to markets, etc. international practice shows that one-third of companies operating within clusters tend to increase employment consistently. in regions with developed clusters, innovative sectors also emerge more quickly. the successful experience of austria, germany, france, finland, the netherlands and other countries shows the prospects of automation and digitalization of industry through the creation of digital regional and interregional clusters (yurchak o. et al., 2020). it should be emphasized that regions with more developed clusters demonstrate a high level of profitability. thus, clustering is a powerful tool and opportunity for structural institutional change in national and regional economies of european countries, which is a strategic priority for the implementation of smart specialization strategies and the concept of sustainable development in modern conditions. 2. literature review and problem statement the problems of cluster development are actively considered by economists. cluster as an economic category reflecting new trends in the formation of competitive structures in the world economy was introduced into scientific turnover by m. porter (1998). he conducted a study of spatial competitiveness in the context of the world economy and substantiated the historical and intellectual premises of cluster theory. in modern conditions, the application of the cluster approach is seen as one of the most effective mechanisms of structural development of the economy. among the characteristic features of the cluster model of economic structure are the presence of competitive enterprises; the presence of competitive advantages in the region for the development of the cluster; geographical concentration; a wide range of participants and the presence of "critical mass"; interaction between cluster participants (pyatinkin & bykova, 2008). the strategic task of implementing the cluster model of economic structure at the meso-level is to change the psychology of entrepreneurs, their understanding of the possibility of mutually profitable cooperation of all members of the cluster association for a common economic benefit (gasanov & kanov, 2013). the cluster approach is based on the concept of "cluster", which is a network structure of geographically adjacent interconnected companies (suppliers, producers and buyers) and related organizations (educational institutions, state and regional authorities, infrastructure companies) that work in a particular area and complement each other (yasheva, 2009). cluster as a conceptual apparatus and market organizational and structural institution has a broader meaning because in addition to production and technological features, it concentrates social, economic, institutional and cultural-mental parameters that give this formation high potential for mobility, stability and competitiveness. clusters are groups of interconnected companies in a certain territory, their vertical and horizontal connections strengthen social relations and create stable integrated networks (egorov & chigarkina, 2006). some foreign scholars (devlin & bleackley, 1988; marshall, 1993; swann & preveser, 1996; feser, 1998; bergman & fese, 1999; feldman & audretsch, 1999; dussauge, garrette & mitchell, 2000; pentikäinen & luukkainen, 2000; sölvell, lindqvist & ketels, 2003) argue that clustering is a process that consolidates the diverse elements of the social system at the local level and unlocks the internal regional potential for vertical and horizontal integration. thus, the regional cluster is recognized as a spatial economic form that emerged as part of the informal association of several organizations, which achieves the necessary concentration of production, management, information infrastructure three seas economic journal 65 vol. 2 no. 4, 2021 to ensure a high level of competitiveness in the regional product (prokopenko, 2016). the cluster model of national economic development is a conceptual approach that involves the use of clusters as strategic elements of the modern market economy, allowing to realize the country 's competitive advantages within the international economic space (pankova & potapenko, 2018). s. sokolenko (2004) and m. voynarenko (2018) made a significant contribution to the development of the clustering system in ukraine. they considered the cluster approach from the perspective of institutionalism, justified and implemented cluster models in the regional economy. l. ryneyska (2016) investigated the role of clusters in the development of national and regional economies (for example, the eu economies), which are components of the modern global economic space. in recent decades, a number of leading domestic scientists (heyets, 2008; zahorskyi, kyzym & khaustova, 2010; tishchenko, 2010; kyzym, 2011; mamonova, kuts & makarenko et al., 2013; komar, 2014; oskolskyy, 2014; nochvina, 2016; voynarenko & dubnytskyi et al., 2019; bilyk, 2019; shashyna, 2020; tsyplitska, 2021) have conducted research on cluster issues, considering clusters as fundamentally new institutions of the economic system, which appear under the influence of factors of the institutional environment and the development of global competition. despite the wide range of research on this topic, at present the methodological issues of improving the management of cluster structures in european countries in accordance with the modern challenges associated with smart specialization, modernization of production and digitalization of organizational and managerial processes remain underdeveloped both scientifically and practically. 3. research methodology and purpose of the article the theoretical and methodological basis of the study are the provisions of institutional theory, in particular the paradigm of evolutionary development, clustering theory, the concept of strategic and logistic management, enterprise development management. in the process of research the following general scientific methods were used: analysis and synthesis (for the analysis of scientific schools of development of cluster theories, generalization of existing theoretical approaches and provisions, scientific developments on the problems of managing the development of cluster structures, clarification of terminological apparatus); classification and systematic approach (to systematize the conceptual approaches to defining the concepts of "cluster", "clustering", to identify industryspecific development of cluster structures in europe); comparison and structural-logical generalization (to determine the features of the european practice of clusters and the possibility of its use in ukraine). in this regard, the purpose of the article is the analysis and synthesis of the european experience of the development of cluster structures to develop recommendations for the possible use of clustering the national economy as an effective tool for sustainable development of european countries in ukraine. 4. presentation of the main material of the study the key driver for stimulating the formation and functioning of cluster structures should be measures aimed at deepening network ties between territorially concentrated enterprises and institutions. this will save financial resources, expand opportunities for the implementation and use of innovative technologies, and through cooperation and mutually beneficial cooperation gain competitive advantages in various areas of economic activity and achieve a balanced sustainable regional development. this is confirmed by the experience of many european countries that use the cluster approach to implement the national and regional economy. in european countries, cluster associations are recognized as an effective tool for sustainable development. according to the european observatory for clusters and industrial change report on cluster support in 29 european countries, including an in-depth analysis of 30 national and 55 regional programs, individual policies and strategies to support clusters are widespread in europe and around the world (yurchak o. et al., 2020). interstate, regional, national and public organizations are united in the european cluster alliance. this corresponds to the eu cluster manifesto (brussels, 2007) and the european cluster memorandum (stockholm, 2008), which currently define the development strategy of the european and global community and are based on the principles of cluster regional policy through the effective activities of the economic entities of the respective regions. thus, in most eu countries clusters are recognized as an effective institution for socio-economic development at various levels. this is because cluster structures concentrate economic activity; expand market segments; intensify inter-firm and network cooperation; increase competitive advantage through joint research and development; generate new value chains based on cross-linkages between firms, which strengthen the sustainability of the entire network system; and create systemic synergy. an online survey conducted in 2018 by the european observatory on clusters and industrial change identified tools and areas of support for three seas economic journal 66 vol. 2 no. 4, 2021 cluster formations in national and regional programs. these include: support for sme participation; support for international cluster cooperation in one sector; support for cross-industry cooperation; funding for meetings and networking (i.e., events aimed at exchanging information between people with common professional or personal interests; building longterm trust relationships based on social networking); support for access to other markets; promotion of environmental efficiency; creating quality new cluster infrastructure, etc. it turned out that the range of stakeholders and annual budgets vary in a number of european countries (for example, funding in france is 144 million euros). the main sources of funding for cluster development are state budgets, company membership fees, local government funds, alternative private funds (crowdfunding, venture capital), trust funds, ngos. however, despite the widespread use of the cluster approach in foreign economies, there is a serious differentiation in the principles, forms and methods of cluster policy, the degree of state regulation of cluster formations, sectoral advantages in the organization of clusters (table 1). thus, the greatest influence on the implementation of cluster initiatives in the eu countries has a supranational regional and industrial policy, as well as the differentiation of member countries by the level of development of the national innovation system. it should be noted that within the european union, cluster policy in the vast majority of countries is not an independent policy, because there are no documents regulating it. instead, it is implemented as part of innovation, industrial or regional policy. approximately 70% of countries consider cluster policy to be an innovation policy, 25% – to the regional one. the analysis shows that a number of countries are developing clusters through mechanisms of support for internationalization, best practices of cluster members, strengthening structures of cooperation between companies or between industry and science (table 2). where national cluster strategies exist, public authorities pay special attention to the conditions and organizational process of clustering; coordinate the activities of governing bodies at the regional and local levels for the effective development of clusters. thus, in many foreign countries the development of clusters of different sectoral affiliation is purposefully stimulated on the basis of a special cluster policy. the european commission, the asian development bank, the world bank, and the organization for economic cooperation and development also develop recommendations for the implementation of cluster policy. the national cluster policy uses a wide range of instruments and mechanisms to stimulate clusters (creation of special advisory and coordinating bodies, provision of expert and organizational support, direct state co-financing of cluster development programs, etc.). for example, the european commission initiated the creation of a number of organizations that should provide various support to clusters (the european cluster observatory, the european cluster policy table 1 industry-specific features of cluster structures in european countries country the main types of economic activity 1 2 3 4 5 6 7 8 9 10 11 12 13 czech republic lithuania poland hungary romania slovakia latvia finland netherlands switzerland estonia germany norway france denmark italy great britain notes: it sector and cybersecurity (1); smart specializations (2); agricultural sector (3); chemical industry (4); energy and eco-energy efficiency (5); metalworking (6); mechanical engineering and engineering (7); construction (8); transport (usually aviation and maritime industry) and logistics (9); biotechnology and medicine (10); tourism and recreation (11); woodworking (12); creative industry (13). source: (yurchak o. et al., 2020) three seas economic journal 67 vol. 2 no. 4, 2021 group, the european cluster alliance, the cluster innovation platform). in most developed countries the state provides direct funding for cluster development programs. thus, in germany there are programs bioregio, innoregio, "better clusters"; in france – the program competitive poles. these programs are highly effective. for example, as a result of the bioregio program, the number of biotech companies tripled, creating more than 9,000 jobs. this led to a narrowing of the gap between germany and great britain in the field of biotechnology, which allowed germany to become the european leader in this sector. however, it should be noted that european countries have developed different approaches to clustering strategies. this is due, firstly, to different levels of socioeconomic development and the business environment, institutional and cultural features, and systems of state regulation. secondly, eu countries use different approaches to identify clusters. for example, sweden, portugal, the netherlands, france and denmark initially supported clusters at the regional and national levels, while belgium and spain – only at the regional level. other countries (austria, germany, italy, norway, and finland) used cluster development measures as tools for implementing regional and innovation policies. thus, the phenomenon of clustering as an economic agglomeration of interrelated enterprises in a particular territory has been known since the times of craft production, and in the classical sense the cluster is considered as a permanent territorial and sectoral partnership of enterprises and organizations of one or more interrelated industries. global trends in clustering testify to the relevance and success of this concept in the practical experience of many foreign countries. at the same time, a single concept for the formation of clustering mechanisms has not yet been developed, but each country has its own set of successful practices for the implementation of elements of cluster policy, taking into account their national characteristics. the clustering of national economies, cluster policies and initiatives in the last decade have become important elements of strategies and concepts of innovative and sustainable development of european countries (shiposha, 2020; trushkina, dzwigol & kwilinski, 2021; liashenko, ivanov & trushkina, 2021). the analysis of the main industry trends in the creation of cluster structures in european countries allows to draw the following conclusions: – national features of existing cluster policy determine the direction of cluster initiatives; – strategic cluster alternatives are determined by national characteristics and the accepted cluster concept; – to assess the feasibility of the cluster development strategy of the territory it is necessary to correlate the level of investment potential and investment activity; – methodological principles of forming a national cluster strategy need to be refined and clarified in the light of current challenges. 5. conclusions as a result of the study it was found that the need to study the vectors of development of the national and regional economy of ukraine from the perspective of the cluster approach is due to the following problems: low level of socio-economic development of the region due to the decline in industrial production, deterioration of the environmental situation, lack of opportunities to find a decent job and a stable income, which, in turn, negatively affects the purchasing power and leads to dissatisfaction and a sense of despair. these problems can be solved by uniting stakeholders in a cluster structure to achieve the strategic goals of industrial development, taking into account international best practices. relevant institutional conditions for the creation of clusters include the following: appropriate opportunities in the territory; diversified structure of the national economy; availability of related and interdependent industries, scientific and human resources; interest of potential participants in the association, supported by material, moral and power motivation; consequences of cluster formation for the regional economy, etc. it has been established that the principles of logistics management table 2 priorities for supporting the development of clusters in eu countries countries task poland, hungary, romania, slovakia, czech republic, lithuania, latvia support for internationalization poland, estonia, hungary, romania, czech republic, lithuania promotion of research and development and implementation of new technologies hungary, romania, slovakia, czech republic, lithuania, latvia strengthening cooperative structures between companies or between industry and science poland, hungary, romania, czech republic, latvia support for the best practices of cluster participants poland, romania, czech republic, lithuania strengthening innovation ecosystems and regional innovation potential hungary, czech republic, lithuania, latvia enhancing the development of smes source: (yurchak o. et al., 2020) three seas economic journal 68 vol. 2 no. 4, 2021 are a system of scientifically sound principles for managing the financial-economic and production and sales activities of industrial enterprises in the region in modern conditions. clusters are created mainly in those regions where there are already objective conditions for their functioning. it is impossible to initiate the creation of a cluster by a "state directive" for reasons related to regional specifics, the presence of transport corridors, and the socio-political situation. the participants of cluster structures complement each other and simultaneously strengthen their competitive position at the regional, national and international levels. such a cluster model is able to respond quickly to radical changes in management principles, transformational changes in the institutional environment, and adapt to modern realities, which makes its application more flexible and efficient compared to other forms of business combinations. in addition, all participants of cluster formation independently, without the help of state grants or bank loans, receive local, regional benefits, i.e., the so-called local, "passive" and "active" benefits. the state, through local legislative and executive bodies, can initiate the formation and development of cluster structures both at the regional and national level. cluster policy (cluster support activities) in the region should be a key element of a balanced regional development strategy in order to maximize the benefits and risks of clustering the regional economy and be based on a triune goal: economic growth and economic efficiency; security (economic, social, environmental); socio-cultural identity of the region. necessary for the development of the cluster is the environment formed by the developed infrastructure of business support (logistics and innovation) and the potential of the education system and science, sufficient social capital, based on socio-cultural identity and trust. however, it was found that the current legislation of ukraine does not pay proper attention to the creation and functioning of cluster structures. therefore, the definition of the terms "cluster" and "clustering" at the legislative level remains an urgent issue. general provisions on clusters as a territorial association of enterprises should be included in chapter 12 of the commercial code of ukraine, and the specification of their legal status should be set out in a special law of ukraine "on cluster associations of enterprises". at the same time, the content of the legislation on clusters should be formed taking into account the fact that the cluster relations have a specific organizational and legal nature and can operate both with and without the rights of a legal entity, using other organizational and legal forms of associations, and without them. it is necessary to make changes and additions to the concept of creating clusters in ukraine, the regional development strategy until 2027 and action plans for their implementation in 2021-2023 years to create cluster structures as a business entity. it is advisable to develop and approve the concept of cluster policy and the target program "the formation and development of clusters in the regions of ukraine for 2021-2023 years", which should provide for the creation of clusters as a special type of associations of businesses in different fields of activity and taking into account regional characteristics. the transformation of regional innovation ecosystems in ukraine requires a conceptual approach to the formation of a cluster formation as a specific type of partnership of business structures, research, banking, financial, investment institutions, higher education institutions, institutions of transport and innovation infrastructure, regional and local authorities on a circular basis, application of methodology to develop a smart specialization strategy, introduction of digital technologies and logistic concepts, use of modern financial instruments (venture investments, crowdsourcing, public-private partnerships by attracting private investments, credit organizations, pension funds, foreign investment resources, grants from international financial organizations). the expediency of creating cluster formations to intensify the development of the machine-building and ceramic industry, as well as the modernization of transport infrastructure has been established. it is proposed a structural scheme of interaction between the cluster and the innovation ecosystem to achieve the strategic goal "innovative development of the region on the basis of smart specialization" in the implementation of strategic documents for the period up to 2027. the organizational and economic mechanism of regulation of regional development based on the creation of cluster structures of individual regions is proposed. it was revealed that the main feature of this mechanism is the establishment of systematic motivated interaction between all participants of the regional economy, aimed at achieving a common goal of functioning, which is to improve the management of industrial regions of ukraine and improve their competitiveness. it is proved that the development and implementation of the proposed algorithm for implementing the organizational and economic mechanism of cluster structures will create appropriate conditions for increasing the volume and improving the quality of transport services, enhance innovative development, as well as the implementation of a qualitatively new regional model of sustainable development of modern management requirements. the implementation of the developed recommendations to improve the mechanism of formation and management of the development of cluster structures in the regions of ukraine will allow to obtain a synergistic effect, the components of which are: – economic effect – increase in the level of investment attractiveness of territories; 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(in ukrainian) three seas economic journal 97 vol. 1, no. 4, 2020 corresponding author: 1 odessa national economic university, ukraine. e-mail: kovalskiy_a@i.ua orcid: https://orcid.org/0000-0002-2243-0234 doi: https://doi.org/10.30525/2661-5150/2020-4-14 methods of risk management of investment projects’ expertise of municipal infrastructure enterprises andrii kovalskyi1 abstract. the issue of risk assessment of investment projects at the state level is not given much attention and there is no proposed method for assessing such risks. considering the transition of public utilities under the conditions of decentralisation to the need for self-sufficiency, the latter must use a well-established methodology for assessing risks and uncertainties, which is carried out by private sector entities expert assessments, or methods of mathematical statistics when evaluating their investment projects. a partial answer to the lack of a methodology for assessing the risk levels of investment projects should be the concept of modelling decision-making under uncertainty. the concept of modelling decision-making is based on two essential properties that constitute the very essence of the modelling process. firstly, the model must be similar to the object under study; secondly, it must be more direct than the object under study to be considered. the main purpose of the model is the ability to conduct experiments with the model, analysis and study, which are impossible with the object under study. the paper develops the concept of modelling decision-making in conditions of uncertainty for investment projects’ expertise of municipal infrastructure enterprises, the essence of which is to develop different scenarios for the business entity using the technique of modelling decision-making, taking into account different parameters and characteristics under uncertainty. uncertainty decision-that decision-making is based on the fact that the probabilities of different scenarios for the entity making the risk decision are unknown. key words: decision-making, technique of modelling, municipal infrastructure enterprises, forecast, uncertainty. jel classification: d81, o18, j11, d81 1. introduction the decision-making process is an integral part of any managerial influence. along with information processing, decision-making becomes a key factor in determining the effectiveness of strategic planning and forecasting. at the same time, the choice of specific decisions in the framework of strategic forecasting is often closely related to risks because of the unknown specific behaviour of the initial parameters, which do not allow to determine the value of the final results of these decisions clearly. it should also be taken into account that decisionmaking is the result of specific management activities, a creative process based on the principles of consistency and rationality aimed at choosing the best course of action. the task of decision-making arises when there is a goal to be achieved, there are different ways to achieve it, and there are factors that limit the ability to achieve the goal. in essence, the decision goes through the following stages (figure 1). analysing the presented scheme, it should be noted that the decision-making process is cyclical, in addition, this scheme is an idealised model because due to the variety of situations and problems that need to be solved, the real decision-making processes usually differ from it, it means the actual structure of management decision-making largely determined by the situation. at the same time, decisions made in the field of strategic forecasting should be based on data from future periods. of course, it is physically impossible to do this, which is why it is often necessary to operate with data from past periods, as well as information about the current situation, extrapolating them over time. it turns out that the forecasting data already contain a significant share of uncertainty due to their very nature. depending on the degree of uncertainty of future behaviour of the initial decision-making parameters, there are risk conditions under which the probability of occurrence of individual events affecting the final result can be established with some degree of accuracy, three seas economic journal 98 vol. 1, no. 4, 2020 analysis of the situation problems identification goals setting monitoring and data collection formation of options for possible solutions evaluation of decisions by criteria decision evaluation choosing the best solution planning implementation evaluation of results and uncertainty conditions in which such probability cannot be established. modelling as a method of research of control systems is used in the development of quite complex management decisions and is the construction of models of the studied object for its study. the study of object models allows to clarify the properties and characteristics of the phenomenon under study. like all tools and methods, the decision model can contain errors. the main reason for their occurrence is the inaccuracy of initial assumptions. because any model is based on some initial and other assumptions, some of them can be estimated and can be objectively verified and calculated. at the same time, some preconditions are not measurable and cannot be objectively verified, in particular in the conditions of insufficient initial information. since such assumptions are the basis of the model, the accuracy of the latter depends on the accuracy of the assumptions. the model cannot be used to forecast, for example, inventory requirements if sales forecasts for the next period are inaccurate. figure 1. stages of decision making in conditions of uncertainty in addition, there may be information uncertainty, which may be caused by either incompleteness or redundancy of the original data. uncertainty decision-making is based on the fact that the probabilities of different scenarios for the entity making the risk decision are unknown. in this case, choosing an alternative solution, the subject is guided, on the one hand, by the advantage of risk, and on the other hand, by the appropriate selection criteria from all alternatives in accordance with its “decision matrix”. the task of decision-making under uncertainty is the task of choosing the optimal strategy, the result of which, among other things, depends on many uncertain factors, resulting in each specific strategy (decision) corresponds not to a single outcome but many outcomes. 2. methodology for modelling decision making under uncertainty for investment projects’ expertise of municipal infrastructure enterprises consider the classic decision-making criteria under uncertainty (table 1) three seas economic journal 99 vol. 1, no. 4, 2020 table 1 criteria for decision-making under uncertainty criteria сore conclusions wald criterion according to this criterion, playing with “nature” (external conditions, “environment”) is a game with an aggressive and intelligent opponent. choose a strategy with an index for which the position is a position of extreme pessimism. it is reinsurance for the decision maker. wald criterion is acceptable when the decision-making situation has the following features: – nothing is known about the possibility of implementing “nature” (external conditions, “environment”) of their strategies; – it is necessary to take into account different strategies of “nature”; – the decision is unique, it can be made only once; – any risk must be eliminated. maximax criterion the simplest variant of uncertainty is “benign” stochastic. in this case, the optimal strategy is the one for which the criterion reaches a maximum. it is assumed that the decision-making situation has the following properties: – the probabilities of applying “nature” strategies are unknown and do not depend on time; – decisions are made (theoretically) infinitely many times; – for a small number of implementations, the solution involves some risk. savage criterion this is also a rather pessimistic criterion, as well as the maximin criterion. however, in the case of choosing the optimal strategy, it focuses on minimal risk. savage criterion should be used when it is necessary to choose a strategy that will protect against excessive losses. savage test is used when there is confidence that a possible loss will not lead to a complete collapse. hurwitz criterion (criterion of “optimism-pessimism” or “alpha criterion”) according to this criterion, when choosing a solution, one should not focus on pessimism or optimism. it is necessary to take a certain combination of them, setting the coefficient of optimism. the criterion allows to take into account the level of optimism (riskiness) of the decision maker. this makes this criterion more acceptable before the maximin and maximax criteria. laplace criterion this criterion makes it possible to identify the best solution in the case when none of the conditions of “nature” has a significant advantage. the criterion should be used when each state of “nature” is equally probable compared to others. in this case, the optimal alternative is the one with the highest average score. 3. application of the methodology for modelling decision making under uncertainty for investment projects’ expertise of municipal infrastructure enterprises we will carry out the procedure of selecting one of a number of alternative market segments to promote new services of the municipal enterprise (me) “odesmiskelektrotrans”, which plans to purchase electric buses for use in its activities. to increase the efficiency and investment attractiveness of the company, it is advisable to develop other activities. based on the specifics of consumer demand, segment capacity, profitability, etc., acceptable, in addition to the main activity, are four segments (corporate services, schools and other educational institutions, rental of vehicles, excursions). it is known that when targeting each of the market segments, a number of alternative results can be realised, which differ in the size of the profit. the differences in the results are explained by different scenarios in selected target market segments. possible solutions (choice of a specific segment) and their consequences (results – average annual profit) are formally given in table 2. table 2 decision (win) matrix alternatives possible results y1 ... yj … ym х1 q11 ... q1j … q1m ... ... ... ... ... ... хі qi1 ... qij ... qim … … ... … … … хn qn1 ... qnj … qnm as follows from table 2, each of the alternative solutions may lead to certain consequences. many of these consequences have been identified, but which of them are realised at the time of the decision is unknown. this is the element of uncertainty and risk. alternatives cannot be compared by any estimate, as it is not known what result is realised. it is necessary to evaluate the whole set of values of the results for each alternative, which is generally a row of the matrix (table 2). after that, you can compare the alternatives for this comprehensive assessment. thus, you can choose the best alternative not for any particular result, but for the whole set of results because it is unknown which of them three seas economic journal 100 vol. 1, no. 4, 2020 will happen. we will carry out the procedure of choosing the best alternative for me “odesmiskelektrotrans”. we have calculated the amount of profit that the company can get from entering different segments of the transportation market; the results are presented in table 3. table 3 alternative options of the target market segment and their consequences (profit) in different conditions of the volume of traffic, thousand uah market segments volume of traffic, thousand uah 15.0 25.0 35.0 45.0 schools and other educational institutions 72.3 93.0 95.2 102.1 corporate services 75.5 94.0 134.0 178.4 rental of vehicles 74.1 96.5 112.7 135.2 excursions 83.8 87.4 99.0 97.0 wald criterion is designed to choose from the considered options of strategies the option with the highest efficiency indicator from the minimum possible indicators for each of these options. this criterion maximises the minimum gain that can be obtained in the implementation of each of the options. the criterion orients the decision maker to a cautious course of action aimed at generating income and minimizing possible risks at the same time. that is, it corresponds to a pessimistic type of behaviour in conditions of uncertainty. according to wald criterion, the preferred alternative is x *, which satisfies the conditions: 1) for the matrix of acquisitions x max min qi j ij * = � 2) for the loss matrix x minmax qi j ij * = � it is seen that the best of the worst indicators has the alternative excursions; for it qij = 83.8 the most: x maxi * , ; , ; , ; , ,= ( ) =� 72 3 75 5 74 1 83 8 83 8 the maximax criterion is based on the idea that the decision maker, having the opportunity to manage the situation to some extent, expects that there will be a development of the situation that is most beneficial. that is, it corresponds to a suboptimistic type of behaviour. according to this criterion, the best of the alternatives is selected by the rules: 1) for the matrix of acquisitions x max max qi j ij * = � 2) for the loss matrix x minminx qi j ij * = � thus, in our variant the alternative corresponding to the maximum element of a matrix of winnings is accepted: x maxi * , ; , ; , ; , ,= ( ) =� 102 1178 4 135 2 99 0 178 4 thus, the best of the best indicators has the alternative “corporate services”, for which qij =178.4 the most. in order to apply savage criterion, it is necessary to construct a risk matrix. based on the risk matrix, the best alternative would be the one that can lead to minimal losses. the results of calculations of the risk matrix are presented in table 4. according to savage criterion, the alternative “corporate services” is optimal, as its implementation leads to the least negative consequences. hurwitz criterion focuses on striking a balance between cases of extreme pessimism and extreme optimism when choosing a strategy by weighing both finals using a coefficient of optimism (confidence). the estimate zi for the alternative хi is calculated according to the rule: z max q minqi i ij i ij= + −( )� � � �α α* *1 the coefficient of optimism (trust) α shows how much the decision maker can manage the situation and to some extent counts on a favourable outcome. if the probabilities of favorable and unfavourable situation for the decision maker are equal, then α = 0 5, .� should be taken. at α = 1, this criterion is converted into a maximax. if we choose α close to 0, then we follow a pessimistic type of behaviour, the least risky. the best alternative is chosen according to the following rules: 1) for the matrix of acquisitions x max zi i * ,= � 2) for the loss matrix x minzi i * .= � since in our conditions we do not have the opportunity to rely on a certain level of optimism of the decision maker, we will take it equal to α = 0 5, . тhen: z1 0 5 102 1 0 5 72 3 87 2= + =, * , , * , , z2 0 5 178 4 0 5 75 5 127 0= + =, * , , * , , z3 0 5 135 2 0 5 74 1 104 7= + =, * , , * , , z4 0 5 99 0 0 5 83 8 91 4= + =, * , , * , , x maxi * , ; , ; , ; , ,= ( ) =� �87 2 127 0 104 7 91 4 127 0 according to the calculations, you should choose the alternative “corporate services”. laplace criterion allows you to choose the best option for management decisions, based on equal probabilities of the external environment. according to this criterion, the best of the alternatives is selected by the rules: 1) for the matrix of acquisitions x max xqj ij * = � three seas economic journal 101 vol. 1, no. 4, 2020 2) for the loss matrix x minx xqj ij * = � then: x1 1 4 72 3 93 0 95 2 102 1 90 7= + + +( ) =/ , , , , , x2 1 4 75 5 94 0 134 0 178 4 120 5= + + +( ) =/ , , , , , x3 1 4 74 1 96 5 112 7 135 2 104 6= + + +( ) =/ , , , , , x4 1 4 83 8 87 4 99 0 97 0 91 8= + + +( ) =/ , , , , , , x maxi * , ; , ; , ; , ,= ( ) =� 9 7 120 5 104 6 91 8 120 5 according to the calculations, the alternative is “corporate services”, so it is advisable to choose it. the results of the calculation of decision-making criteria allow us to conclude that the best option for me “odesmiskelektrotrans” is the alternative “corporate services”, as all criteria, except the wald criterion, showed that it is the best. thus, we have managed to offer the utility a balanced and sound strategic decision on the choice of alternative development. 4. conclusions the technique of modelling decision-making, taking into account various parameters and characteristics, in conditions of uncertainty, justifies itself and allows for qualitative analysis and strategic forecasting of the company’s development. modern approaches to forecasting development make it possible to take into account any possible options for the development of the situation, as well as to simplify the construction of a model for making sound management decisions. the paper develops the concept of modelling decisionmaking in conditions of uncertainty, the essence of which is to develop different scenarios for the business entity using the technique of modelling decisionmaking, taking into account different parameters and characteristics in conditions of uncertainty. uncertainty decision-making is based on the fact that the probabilities of different scenarios for the entity making the risk decision are unknown. in this case, choosing an alternative solution, the subject is guided, on the one hand, by the advantage of risk, and on the other hand, by the appropriate selection criteria from all alternatives in accordance with its “decision matrix”. the task of decision-making in conditions of uncertainty is the task of choosing the optimal strategy, the result of which, among other things, depends on many uncertain factors, as a result of which each strategy (decision) corresponds not only to a single result, but many results. based on the calculation of decision-making criteria in conditions of uncertainty me “odesmiskelektrotrans” proposed a balanced and sound strategic decision on the choice of alternative development. table 4 risk matrix market segments profit in terms of traffic volume, thousand uah risk matrix in terms of traffic volume, thousand uah 15.0 25.0 35.0 45.0 15.0 25.0 35.0 45.0 schools and other educational institutions 72.3 93.0 95.2 102.1 11.5 3.5 38.8 66.3 corporate services 75.5 94.0 134.0 178.4 8.3 2.5 0 0 rental of vehicles 74.1 96.5 112.7 135.2 9.7 0 21.3 43.2 excursions 83.8 87.4 99.0 97.0 0 9.1 35.0 81.4 references: edi karni (2007). a new approach to modeling decision-making under uncertainty. economic theory, vol. 33(2), pp. 225–242. doi: 10.1007/s00199-006-0138-y vinod venkatraman, & scott huettel (2012). strategic control in decision making under uncertainty. european journal of neuroscience, vol. 35(7), pp. 1075–1082. doi: 10.1111/j.1460-9568.2012.08009.x semenova, k. d. (2013). substantiation of business decisions and risk assessment: textbook. odesa: oneu, rotaprint. korepanov, o., mekhovich, s., karpenko, n., kryvytska, o., & kovalskyi, a. (2019). modelling decision making under uncertainty for strategic forecasting. international journal of recent technology and engineering (ijrte), vol. 8, issue 3, september, pp. 7251–7255. bashynska, i., sokhatska, o., stepanova, t., malanchuk, m., rybianets, s., & sobol, o. (2019). modeling the risks of international trade contracts. international journal of innovative technology and exploring engineering, vol. 8, іssue 11, september, pp. 2815–2820. doi: 10.35940/ijitee.k2313.0981119 ronald hochreiter, & daniel kuhn (2012). optimal decision making under uncertainty. computational management science, vol. 9(1), pp. 1–2. doi: 10.1007/s10287-011-0136-9 baltic journal of economic studies 9 vol. 2, no. 2, 2021 doi: https://doi.org/10.30525/2661-5150/2021-2-2 forecasts design for management of travel&tourism industry sustainable development and mitigation of the consequences of the covid-19 pandemic kateryna horiunova1, viktoriia kiptenko2 abstract. restrictions on transportation between countries because of the lockdown caused by covid-19 have slowed down economic activity worldwide. therefore, in this paper we examine and estimate the short-term economic impact of the covid-19 pandemic on the global market situation in terms of the international tourism industry. the purpose of the study is to analyze the current economic situation of the world tourism sector, which suffered the most because of the covid-19 pandemic, determine the main tourist flows (inbound and outbound tourism) and identify main tourism trends that characterize travel and tourism in world in 2020, to form practical directions for improving the tourism industry, domestic tourism in particular. the dynamics of the international tourists’ destinations with complete/partial closure of borders and other restrictions through the region in 2020 during the covid-19 pandemic are analyzed. the major trends in the tourism sector during the corona crisis are highlighted. the main practical directions for the resuscitation of the tourism industry have been formed, which will have to reduce the negative consequences of the covid-19 pandemic, and have created a basis for increasing the competitiveness of domestic tourism. it is determined that support for the development of the tourism industry at the central and local levels should be based on the expected preferences of tourists and the risk of using illegal resorts with the possibility of infection. the article examines the main problems of the tourism sphere of ukraine, which have arisen as a result of the introduction of measures to overcome the coronavirus pandemic in the world and in ukraine in particular. using the experience of other countries and international recommendations, measures for intersectoral cooperation in the context of increased epidemic risks are proposed. the article reveals the peculiarities of the development of the tourist sphere of ukraine in the conditions of increased epidemic risks. modern tendencies of functioning of the tourist sphere of the country are investigated. the tourism sector is suffering on a global scale due to the implementation of measures to overcome the coronavirus pandemic and the uncertainty of further development of the situation. according to various scenarios, the volume of international tourist arrivals is expected to fall by 58-78% in 2020 compared to the previous year. according to experts, the recovery of demand to the level of 2019 will take at least two years. according to experts, the sphere of tourist services of the corona crisis period will be characterized by giving consumers priority in terms of: choice of shorter rest periods, predominance of individual movement and individual accommodation, choice of health, sea and rural tourism. key words: tourist flows, international tourism, quarantine restrictions, epidemic risks, covid-19, international prognosis, tourism development. jel classification: c82, e32, l90, i19, z32 corresponding author: 1 donetsk state university of management, ukraine. e-mail: thepastukh@gmail.com orcid: https://orcid.org/0000-0002-2236-4919 2 taras shevchenko national university of kyiv, ukraine. e-mail: viktoriia_kiptenko@knu.ua orcid: https://orcid.org/0000-0003-2147-9957 introduction every year there are over 800 million trips globally, half of which are within europe. about 60% of these trips are leisure-motivated. the share of tourism in the exports of goods and services constitutes about 13% in the world and 14% in the eu countries. the travel&tourism (t&t) industry accounts for 8% of the total gdp of the eu, provides almost 11% of baltic journal of economic studies 10 vol. 2, no. 2, 2021 economic growth, 12% of the world’s labor force is employed in the industry (world tourism organization (unwto) reports (2020). world practice suggests that tourism has a significant impact on the development of socio-economic processes in the country and is an important element of its overall strategy. therefore, the economic and social prognosis for the tourism industry is a part of the national economic and social development forecast, and requires considerations of its features under current conditions. many countries conduct research on tourism’s impact on the state’s economy. the t&t sector is known to impact the national economy more than industry. the low level of imports and intensive use of local raw materials in this sector of the economy serves to the above end. thus, we explore the current trends in world tourism and describe the features of forecast design for the development of the t&t industry considering risk factors and uncertainty. the global crisis caused by the covid-19 pandemic has radically affected the t&t industry around the world, including ukraine in particular. as a result, the key provisions of the roadmap for a competitive development of the ukrainian travel and tourism industry require revision to ensure their relevance in the turbulent times of the covid-19 pandemics. the working materials reveal updating the situational analysis results and the reorientation of the priority actions plan for t&t industry of ukraine in order to overcome the consequences of the crisis (communication from the commission covid-19). 1. methodology of research 1.1. theoretical bases of forecasts for tourist industry t&t represents an industry of a high level of competition. therefore, it is important to have reliable forecasts of its development. the t&t industry development in any country depends on several factors, namely: political and social stability; national policy and interethnic relations; the situation on the international t&t market; degree of state support for travel and tourism; the state of tourism infrastructure; investment attractiveness of the t&t industry; reasonable pricing policy; global and regional integration of domestic tourism; demographic and social structure of the population; safety of travels; availability of highly qualified personnel; national traditions; existence of recreational areas; natural and human-made cataclysms that are difficult to predict. the nature of the t&t industry causes a low level of various events forecasts’ reliability, because of the influence of a large number of factors, many of which are unmanageable. the probability of the total risk multiplier depends on the probabilities of each of the factors. therefore, the forecasting of travel and tourism development requires application of economic and statistics methods and models. the type of forecasting is chosen by time (operational, short-term) and/or by area scale: state, regional, local, etc. in addition, considerations include factors impacting t&t directly and indirectly, and the strength how each factor influences on the forecast parameters the risk and uncertainty of the processes in addition to factors influencing the development of t&t directly or indirectly and the strength of each factor impact on the forecasted parameters the risk and uncertainty of the processes require a proper assessment. following the theory of economic risk, the uncertainty has to deal with incompleteness or lack of information about the conditions of the forecasted parameters, and, about the costs and results, in particular. relevant indicators inform the forecast design, including intensity, mobility, tourists flows by modes of transport, directions (inand outbound), countries and regions of origin, volumes of services by tourism types, profit volumes, level of profitability, number of employees, etc. the task foresees determining changes, trends and growth rates of these indicators in time and space. it is essential to establish the level of reliability of forecasts and perform a socio-economic assessment of their implementation, i.e. the work out of economic, budgetary, commercial, and social efficiency. the long-term forecast for t&t industry involves the probabilistic business planning of its development indicators and the assessment of its effectiveness under uncertainty and risk. these terms determine the specifics of the forecasts (tourism and transport in 2020 and beyond). the above means considering the sources of uncertainties and methods of taking them into account when assessing the effectiveness of the forecast. in addition, design has to determine the methods of estimation of uncertainties accounting by check of the forecast stability (before the changes of external factors, in particular), formalization of the description of uncertainties, adjustment of parameters of the forecast, as well as include the limit (permissible) values of selected parameters (indicators). uncertainty and risk factors should deserve consideration if they significantly influence the efficiency, the cost of forecasting, in particular. the forecast assessment relies estimation of risks and uncertainties types as follows: – the risk associated with the instability of economic legislation, the current economic situation, investment conditions and use of profits; – foreign economic activities risk (supply restrictions, trade, border closures); – uncertainty of political situation; – incompleteness or inaccuracy of information on the dynamics of selected technical and economic indicators; three seas economic journal 11 vol. 2 no. 2, 2021 – fluctuations in market conditions, prices, exchange rates; – uncertainty of natural and climatic conditions (for example, due to global warming mountain winter tourism has become risky), the probability of natural disasters; – production and technological risk; – uncertainty of the purposes, interests and behavior of participants of t&t services market; – incompleteness and inaccuracy of information about the financial condition and business reputation of the partner (bankruptcy, insolvency, etc.). 2. results and discussion 2.1. key economic forecasts for 2020 the crisis will seriously affect the global economy. according to the imf, the projected decline in ukrainian gdp from april 2020 will reach 7.7%. quite different estimates suggest the further recovery of the global economy: from the v-shaped scenario, which provides for economic recovery at 2019 level in 2021, to a longer recovery and even a long-term recession (world travel & tourism council, 2020). t&t represents one of the sectors of the world economy that has suffered the most from restrictions on movement, given the particular difficulties in aviation. as of april 20, 2020, due to a pandemic, 100% of all international destinations have imposed entry restrictions (table 1). however, pinpointing future prospects remains extremely difficult. ukraine currently experiences a significant lag in the pace of implementation of measures to support the t&t sector, which seriously jeopardizes the competitiveness of the industry in the global market during the projected recovery period during 2021. key industry players, including international hotel chains, introduce number of external and internal solutions to minimize the covid-19 pandemic impacts: market security guarantees (rescheduling or reimbursement of booked rooms, optimized loyalty programs, community support), health and safety measures and internal reorganization (staff reductions, unpaid leave, reductions/waivers of capital investments, etc.). countries that have already crossed the peak of covid-19 are gradually lifting restrictions on business activities and services. however, t&t sector starts to recover locally (within one country). the next step in its retrieval foresees the opening of borders between neighboring countries with a relatively similar situation (for example, australia and new zealand, thailand and china, etc.). the european commission has issued a number of recommendations on the opening of borders in two stages. the first phase envisages gradual removal of restrictions on border crossings between the eu member states. the second step includes plans to lift all coronavirus-related restrictions between member states. the situation regarding the opening of the eu's external borders to third-country nationals (including ukraine) remains uncertain. as of may 12, 2021, the number of people infected with covid-19 since the beginning of the pandemic in ukraine constituted 2,129,073 people, with 46,987 death cases and 1,797,136 people cured. globally compared, more than 160.3 million people got ill since the beginning of the pandemic, among which more than 3.3 million died and almost 139.1 million were cured (commission recommendation of 13.5.2020). the date of the first recorded case of covid-19 is almost the same (march 1 to 7, 2020) in neighboring countries (e.g., poland, romania, slovakia, hungary). yet, each country developed and applied different approaches to combating the pandemic, and therefore had different rates of diseases and deaths. the key eu countries (e.g., germany, great britain, italy) recorded the first cases of the virus almost in the same period (mid-february), but later got the highest number of people infected with covid-19 (communication from the commission covid-19). after the outbreak of coronavirus infection, the forecast for 2020 decreased several times, which was caused by a high level of uncertainty. current table 1 the imf economic forecast (april 2020) years world european union developing countries * poland ukraine gdp (% of change) 2019 2.9 1.7 2.1 4.1 3.3 2020 -3.0 -7.1 -5.2 -4.6 -7.7 2021 5.8 4.8 4.2 4.2 3.6 inflation (% of change ) 2019 3.6 1.4 6.5 2.3 7.9 2020 3.0 0.6 5.1 3.2 4.5 2021 3.3 1.2 5.0 2.6 7.2 unemployment (% of labor force) 2019 n/a n/a n/a 3.3 8.5 2020 n/a n/a n/a 9.9 10.0 2021 n/a n/a n/a 8.0 9.3 *according to the imf, developing european countries include albania, belarus, bosnia and herzegovina, bulgaria, croatia, hungary, kosovo, moldova, montenegro, northern macedonia, poland, romania, russia, serbia, turkey, and ukraine (world travel & tourism council, 2020). three seas economic journal 12 vol. 2 no. 2, 2021 scenarios indicate a decline in international tourist arrivals to 58-78% per year, depending on the rate of spread of coronavirus infection and the duration of restrictions and border closures. at the same time, the prospects for further developments remain unclear. the scenarios envisage three possible options for monthly changes in the number of arrivals between april and december 2020: the movement restriction will be lifted and the national borders will be reopened in early july (scenario 1: -58%), in early september (scenario 2: -70%), or in early december (scenario 3: -78%) (figure 1). the world still faces serious challenges, ranging from the indefinite duration of the pandemic to restrictions on movement, all in the context of the global economic recession. countries around the world are implementing a wide range of solutions to minimize the effects of the covid-19 pandemic and stimulate the recovery of the t&t sector. according to the unwto report on covid-19 related restrictions on movement, published on 20 april 2020, all international destinations have imposed restrictions on movement due to a pandemic (world tourism organization (unwto) reports (2020): – 97 destinations (45%) completely or partially closed their borders to tourists; – 65 destinations (30%) completely or partially suspended international flights; – 39 destinations (18%) close their borders on more differentiated grounds (prohibiting entry for passengers from certain countries of origin). the scenarios follow models with different recovery patterns for different regions of the world. the asiapacific countries seem to meet trend changes much earlier – as the pandemic in this region began much earlier than in the rest of the world. in addition, seasonality in asia is a less important factor compared to other areas, where the bulk of demand loads the period from june to september. potential global impacts in 2020 (compared to 2019) include as follows: – reducing the number of international tourist arrivals from 850 million to 1.1 billion usd; – loss of export earnings from t&t amounting from 910 billion to 1.2 trillion usd; – the risk of losing 100 to 120 million jobs in t&t. currently there are two common approaches to overcoming the crisis: the first is to provide affordable credit lines for businesses, and the second is to defer payment of debt and tax liabilities. despite the fact that countries focus on both approaches, more developed economies having a higher credit rating rely mostly on available credit lines realizing that this will restore the competitiveness of the national economy in the shortest possible time. by the logic of things, the total cost of economic measures as a% of gdp positively correlates with the level of gdp per capita. the rest of the countries, having no other choice, rely more on delaying the payment of tax and debt liabilities which can lead to a negative chain reaction in the economy in the long run (long-lasting budget deficit, problems with overall solvency, etc.). the t&t industry enjoys particular attention by those countries which prioritize the sector and guarantee the return of the cost of tourist trips booked but canceled due to the covid-19 pandemic. air transportation, as an industry with a relatively low margin (up to 10%) and high turnover, is in a particularly difficult situation. figure 1. arrival of international tourists, 2000–2019 and scenarios for 2020 (in millions) (world tourism organization (unwto), reports (2020) all three presented scenarios for the development of international tourism in 2020 are not and forecasts, but they can’t be wrong. the smell is based on the available tourist tributes for the period from very early to birch and the latest information, from the old days of these national cordons around the world at the beginning of the day, with a few of the number of deaths. 2003 sars 3 million -0.4% 2009 global crisis 37 million -4.0% scenario 2020. covid-19 scenario 1: -850 million(-58%) – 610 scenario 2: -1020 million(-70%) – 440 scenario 3: -1140 million(-78%) – 440 320 baltic journal of economic studies 13 vol. 2, no. 2, 2021 the european approach currently demonstrated by france and germany excersises the gradual nationalization of major airlines (air france and lufthansa). some countries (e.g., hungary, croatia) facilitate programs to introduce “tourist cards” or certificates, which will allow employees to receive partial compensation from their company to pay for recreation services domestically in order to keep tourism contributions to the economy as high as possible. the horeca sector (hotels, restaurants, catering) пще зукьшіішщт to resume restrictions in some european countries during may 2021, subject to strict rules to prevent a recurrence of a pandemic outbreak. given that these rules will inevitably reduce the enterprises profits due to the limitations on the number of visitors and, at the same time, increase their operating costs, the future of the horeca sector is causing great concern globally. for example, a proponent of the “soft response” method, lithuania, took the first step in solving the problem and allowed restaurants and cafes to use citysquares and public areas. this decision simplified the procedure for obtaining permits to use such places and provided support to entrepreneurs in achieving a critically important economy of scale. 2.2. measures taken to restore the international hotel industry the hotel industry found itself internationally in an unprecedented situation: a large number of hotels and resorts in each country were forced to close due to the implemented quarantine measures to combat covid-19. the majority responses to the problems of the hotel industry included three logical pillars (communication from the commission covid-19): 1. market and community responses: a. market promotion for booked rooms – the possibility of re-booking or receiving compensation for the full cost of the booked room, depending on the applicable regulations of the country / market; b. suspension of loyalty programs in cases when the accumulated points or bonuses expire; c. community support – providing hotel accommodation for medical staff, availability of hotels for quarantine, cooking for people in need and emergency response. 2. health and safety responses: a. programs to implement stricter health and safety rules – cleanliness, hand hygiene, cleaning of hotel rooms, products, protocols to prevent the risk of virus infection (for example, hilton cleanstay program together with the manufacturer of the antiseptic lysol); b. financial assistance to employees of international hotel chains who need support due to the financial crisis. 3. responses related to the internal structure and organization of the company: a. reduction of arbitrary costs, salaries and bonuses, including owners and management of companies; b. complete exclusion of additional costs (including capital costs) and suspension of all operations in the capital markets; c. granting unpaid leave for all employees for a period of 60-90 days and closing all real estate facilities. t&t also embraces a number of specific sub-sectors, including bars and restaurants, meetings and events, museums, translation centers, nature reserves and national parks. all of them were in a similar situation during the period of isolation: closed and without any opportunity to earn money and receive visitors. recently, the governments of asian (mainly china) and european countries have been easing restrictive measures. the decisions made in the process of gradually opening accessibility of certain t&t services are various. bars and restaurants (mostly restaurants and fast food restaurants) during the quarantine could only provide “takeaway” or “delivery” services. after the quarantine easing, the institutions wishing to resume work must follow the rules of physical distance and hygiene. visitors are only allowed in the open air, and customers must sit at different tables at a distance of at least two meters. cinemas and theaters were completely closed. so, all they had to do was wait for the government’s permission to resume work. european theaters have already begun to open with restrictions: at least one empty seat between guests, as well as one empty row between rows occupied by visitors. museums, galleries and information centers have mainly switched to virtual tours, video blogs on social networks and educational content. after re-opening, they must follow the same rules as the stores, i.e., follow the hygienic standards and social distancing with a limit on the maximum number of people who can be in the room at the same time. meetings and conferences are held in virtual scapes, and the vast majority of the largest conferences are currently held online at a very low cost of participation. currently, the issue of lifting restrictions in this area are still under consideration, but organizers may hold small meetings subject to social distancing and hygiene measures in conference rooms/meeting rooms. concerts and grand-events are still the subject of governmental consideration around the world, given the high risk of spreading the coronavirus. by canceling concerts and large-scale events, the organizers are trying to find a way to reimburse those customers who have already purchased tickets for the event. in particular, the possibility of issuing certificates for next year's events or a complete waiver of reimbursement (due to lack of funds from the organizers) is being considered. three seas economic journal 14 vol. 2 no. 2, 2021 3. conclusions based on the results of the study, we form the conclusions as follows. the positive trends in the global t&t industry manifest themselves despite the economic crisis. ukraine lacks the rapid systemic response from the government in the form of possible measures to support the t&t industry, compared to the average responses and the types of solutions implemented by the governments of neighboring countries and the eu member states. such a course of events further complicates the situation of small and medium-sized businesses (smes) operating in the hospitality, tourism and leisure sectors. at the end of 2019, the intensive work of all key stakeholders in t&t sector of ukraine with the ebrd support and participation of external partners resulted in elaboration of the roadmap for a competitive development of the ukrainian travel and tourism industry. as the global covid-19 pandemic ends, it is necessary to initiate the implementation of the steps and follow-up measures recommended by the roadmap for competitive tourism development in ukraine, as well as to monitor and adapt to possible irreversible t&t changes caused by this crisis globally. the conclusions of the authors shown in the article are confirmed and а number of international organizations, including the imf, the world bank, and the oecd, have published their economic forecasts for the effects of the covid-19 crisis on the world economy, the most up-to-date and complete being the imf report published in april 2020. according to this report, in 2020 gdp in ukraine is projected to fall to 7.7%, with unemployment reaching 10% (figures analyzed in the article). inflation is expected to decline in 2020 both in ukraine and around the world. ukraine, as well as the rest of the world, will be able to restore its economy in 2021, but it is impossible to fully compensate for the negative consequences caused in 2020. it is projected that the international economy will be able to reach the state of 2020 only in 2022. the pace and model of economic recovery remain the subject of intense debate: – a number of experts expect that the recovery will take place according to the v-shaped scenario, which envisages the continuation of the situation as it is. this applies to both the global economic model and economic relations between countries, conclusions in view of the financial reforms recently introduced by ukraine, as well as the relatively small share of t&t sector in the country 's economy. – others, however, predict a longer period of crisis and even a recession with significant social consequences, which, in turn, can lead to significant changes in the socio-economic model of the world. at present, the latest official documents of international agencies (such as the european commission's may 6 report 2021), leading banks and economists, actively emphasize the seriousness of the negative effects of the covid-19 pandemic on the world economy and its reduction. references: tourism and transport in 2020 and beyond. european commission. 2020. available at: https://ec.europa.eu/info/ sites/info/files/communication-commission-tourism-trans-port-2020-and-beyond_en.pdf (accessed 10 may 2021). communication from the commission covid-19. towards a phased and coordinated approach for restoring freedom of movement and lifting internal border controls. european commission. 2020. available at: eu/info/ sites/info/files/communication_freemove-ment.pdf (accessed 10 may 2021). communication from the commission covid-19. guidelines on the progressive restoration of transport services and connectivity “. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/ communica-tion_transportservices.pdf (accessed 10 may 2021) commission recommendation of 13.5.2020 on vouchers offered to passengers and travellers as an alternative to reimbursement for cancelled package travel and transport services in the context of the covid-19 pandemic“. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/recommendation_ vouchers_en.pdf (accessed 10 may 2021). communication from the commission covid-19: eu guidance for the progressive resumption of tourism services and for health protocols in hospitality establishments. european commission. 2020. available at: https://ec.europa.eu/info/sites/info/files/communication_tourismservices_healthprotocols.pdf (accessed 10 may 2021). parfinenko, a. yu. (2020). hlobalni transformatsii rynku mizhnarodnoho turyzmu ta industrii hostynnosti [global transformations of the international tourism market and hospitality industry]. “tourism and transport: commission's guidance on how to safely resume travel and reboot europe's tourism in 2020 and beyond“. an official website of the european union. 2020, 13 may. available at: https://ec.europa.eu/commis-sion/presscorner/ detail/en/ip_20_854 (accessed 10 may 2021). world travel & tourism council (2020). available at: http://www.wttc.org (accessed 26 june 2021). world tourism organization (unwto) reports (2020). available at https://www.unwto.org/internationaltourism-and-covid-19 (accessed 26 june 2021). three seas economic journal 118 vol. 2 no. 3, 2021 corresponding author: 1 taras shevchenko national university of kyiv, ukraine. e-mail: fato.sharoian@i.ua doi: https://doi.org/10.30525/2661-5150/2021-3-15 the role of trade barriers in international trade in metallurgical industry of ukraine fato sharoian1 abstract. the purpose of the paper is to analyze and present the role of the metal-lurgical industry for the economy of ukraine and evaluate the impact of trade re-strictions on the international activity of the metallurgical industry of ukraine. as a result, this study evaluated the risks of international activities of metallurgical enter-prises of ukraine with key partner countries. methodology. assessment of the role of the metallurgical industry for the ukrainian economy and the extent of the impact of trade barriers on international activities is based on several statistical data and a few methods and rules for their analysis. their use will allow managers of metallurgical companies to form a strategy for the development of the enterprise in international markets and quickly respond to changes in the external market situation. these methods include statistical analysis, strategic segmentation, deductive and inductive methods, data comparison method, forecasting and risk assessment. results. per capita steel consumption growth rates have shown positive dynamics since 2010. volatility levels of per capita steel consumption of the population is significantly lower than the growth of world gdp. against the backdrop of slowing global gdp growth rate of steel consumption continues to grow. according to the level of consumption of steel per capita, the author singled out three stages in the development of countries. the share of exports of products of the metallurgical industry of ukraine in 2020 amounted to 18.3% in monetary terms. this indicator is the second after the volume of exports of agricultural products. among the total export of steel products in ukraine 95% are engaged in export of ferrous metals, which is a raw product. the trade balance of ukraine in the trade of metallurgical products has been decreasing since 2018 amid a decrease in export volumes and has not yet reached the level of 2016. according to the world trade organization, at the end of 2020, there were 3,208 non-tariff trade barriers in the world regarding trade in metals and metal products. in terms of the number of anti-dumping measures, the market of metals and metal products ranks first – 843 measures out of 2160 measures for all product groups. this tool is used by countries to protect the domestic market and as a tool in international competition. as a result of a matrix analysis of the rates and volumes of growth of ukraine's metallurgical products in the context of partner countries and the number of introduced trade barriers, the countries with the highest risk in international activities and the most promising sales markets were identified. the russian federation and the united states are identified as the countries with the highest risk of the impact of trade barriers on international activities for ukrainian metallurgical companies. the most promising sales markets are saudi arabia and italy. practical implications. with the help of the results of this paper, managers of metallurgical enterprises in ukraine can form and adjust the strategic directions for the development of companies in the framework of international activities. key words: international trade, metallurgy, trade barriers, ukrainian metallurgical sector, export strategy. jel classification: f13, l25, o24, p33 1. introduction the metallurgical industry is one of the most strategically important for the ukrainian economy. this is confirmed by the volume of revenues to the state budget from enterprises of the metallurgical industry, the number of people employed in the industry and the volume of foreign exchange earnings. according to the state statistics service of ukraine, the volume of exports of metallurgical products in 2020 decreased compared to 2014 by 40% in monetary terms (state statistics service of ukraine, 2020). this factor determines the problem of analysis of causal factors influencing the international trade of products of the metallurgical industry of ukraine to diversify the international activities of enterprises of the metallurgical industry and increase the economic security of ukraine. one of the most important factors influencing ukraine’s international trade is the role of trade barriers in the metallurgical industry. trade barriers are an this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 119 vol. 2 no. 3, 2021 effective method of protecting the domestic market of the initiating country and an important tool of international competition. according to the wto classification, trade barriers are divided into tariff and non-tariff trade barriers. in turn, import and export tariffs, ad valorem and specific tariffs and combined act as tariff barriers. non-tariff trade barriers are divided into technical barriers, sanitary and phytosanitary measures, quantitative restrictions, tariff-rate quotas, export subsidies, safeguards, countervailing and anti dumping barriers. this tool became especially popular in 2016, when the largest number of trade barriers was recorded. in 2016, the us government imposed several large-scale trade barriers, including 25% antidumping barriers on imports of metallurgical products to all suppliers. that is why the issue of updating risk management is important in the analysis of international trade in products of the metallurgical industry of ukraine in the framework of all international activities by analyzing the impact of international trade barriers on the metallurgical industry of ukraine. 2. the global steel industry according to the world steel association, since 2003 there has been an annual increase in world steel production, which indicates the importance of ferrous metallurgy and its sustainable development. at the same time, we can say about a close relationship between world steel production and gdp. on average, for every $ 100. us gdp growth is required to produce 2 kg of steel (world steel association, 2019). world steel production in 2019 amounted to 1,875 million tons, which is 2.7% more than the previous year. for comparison, the level of world gdp growth in 2019 was 2.3%. the largest steel producer is the asian region, which produces 72% of the world's steel. that is why asian markets are very important in the process of redistribution of steel production and consumption, which in turn affects world prices for metallurgical products. for comparison, figure 1 shows comparative graphs of per capita steel consumption and the dynamics of global gdp growth according to the world bank (world bank, 2021). from the data of the figure, we see that the volume of steel consumption per capita has a positive trend, and shows lower volatility compared to world gdp growth. this fact confirms the growing importance of the metallurgical industry in international markets and the development of countries. it is also important to note that the volume of steel consumption characterizes the level of technological development of the national economy. analysis of the dy-namics of gdp per capita and consumption of rolled steel on the example of countries such as the united states and japan, allows us to identify three stages of economic development: 1. steel consumption is growing, outpacing gdp growth, and reaching a maximum of 700-800 kg/person per year. this indicator characterizes the economic development due to industry. 2. during the transition from the industrial to the post-industrial system of the economy, metal consumption decreased, but was accompanied by a further increase in gdp. 4,3 3,1 2,5 2,7 2,9 2,9 2,6 3,3 3 2,3 204 217 219 231 230 220 220 233 241 245 0 50 100 150 200 250 300 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 gdp growth per capita steel consumption in kg figure 1. the level of steel consumption per capita compared to world gdp growth three seas economic journal 120 vol. 2 no. 3, 2021 3. in a post-industrial economy, rolled consumption stabilized at 400-600 kg/person per year with a subsequent gradual decrease with moderate gdp growth. 3. ukrainian metallurgical sector according to the results of 2019, ukraine continues to rank 13th in terms of steelmaking in the world. according to the state statistics service, the share of ex-ports of metallurgical products in total exports of ukrainian goods in 2020 is 18.3%, which is the second largest export after the group of products of plant origin – 24.2% (state statistics service of ukraine, 2020). it is worth noting the importance of ferrous metallurgy for ukrainian exports, the basis of which, in addition to agricultural goods, are metals and metal products. thus, the share of base metals and their products in 2020 amounted to 18.3% of total exports, compared to 2019, the volume of exports in monetary terms decreased by 11.9%. according to the data shown in figure 2, it is possible to analyze the commodity structure of both exports of goods of ukraine and commodity groups of the metallurgical industry of ukraine according to 2020. the main item of exports of base metals and articles thereof in 2020 are ferrous metals and articles thereof (95% of exports of metallurgical products). among these 95% of ferrous metal exports, only 10% are ferrous metal products. thus, it can be argued that 85% of exports of metallurgical products are raw materials and semi-finished products (state statistics service of ukraine, 2020). this factor suggests that ukraine is still a raw material appendage for partner countries. the reduction in exports in 2020 amounted to 11.9% compared to 2019, in 2019 the reduction was 11.8%. the dynamics of exports and imports of products of the metallurgical industry of ukraine can be analyzed according to the data in figure 3. the decline in exports of metallurgical products in 2020 is due to lower con-sumption in international markets in the context of the covid19 pandemic, which led to the suspension of many enterprises and projects. the decline in imports of metallurgical products of ukraine has a lower rate compared to exports. this factor carries risks of ukraine's economic security, despite the positive trade balance. this trend describes the significant impact of trade barriers in international markets, which have increased their relevance over the past 5 years. this is one of the reasons for the urgency of reducing the risks of international activities of metallurgical enterprises through the diversification of international activities. 4. trade barriers in metallurgical industry according to the world trade organization, at the end of 2020, there were 3,208 non-tariff trade barriers in the world regarding trade in metals and metal products. in figure 4 shows the types of non-tariff barriers to trade in metals at the end of 2019. the most common types of barriers to trade in metals are technical barriers and anti-dumping measures (2003 measures and 843 measures at the end of 2019, respectively) (world trade organization, 2021). it is important to note that in terms of the number of anti-dumping measures, the market of metals and metal products ranks first – 843 measures out of 2160 measures for all product groups. this tool is used figure 2. commodity structure of ukraine's exports, share of commodity groups of the metallurgical industry total export ferrous metals 95% aluminum 1,2% copper 0,9% other metals and articles thereof 2,9% base metals and articles thereof, 18,3% three seas economic journal 121 vol. 2 no. 3, 2021 by countries to protect the domestic market and as a tool in international competition, as the metallurgical industry is capital-intensive and labor-intensive (novikov, zemlyanskaya, 2021). in terms of the dynamics of the use of non-tariff barriers in figure 5 shows the number of measures introduced to restrict trade in metals and metal products. since 2014, there has been a steady increase in the number of non-tariff barriers, which is a reaction to the growth of world production capacity and the aggrava-tion of trade relations between producer countries. it is with the help of non-tariff barriers that actions in international competition between countries were actively carried out (shirinova, 2018). a special aggravation in the metallurgical market occurred after the introduction of anti-dumping measures by the united states on imports of steel and metallurgical products, which strongly affected the world metallurgical market. however, in 2020, the number of non-tariff barriers to metals and metal products in the world has decreased significantly. the main reason for this was the factor covid-19, which won the lockdown in almost all countries. as a result, consumption of steel and metal products has decreased in many countries, which has reduced the relevance of the introduction of non-tariff barriers in 2020. thus, the increase in steel production capacity in the world leads to the application of active protectionist measures, which are manifested in trade barriers in international markets. considering the above analysis of the dynamics and structure of international trade in metallurgical 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 2014 2015 2016 2017 2018 2019 2020 trade balance export import figure 3. dynamics of international trade in metallurgical products of ukraine, million usd sanitary and phytosanitary 3% technical barriers 62% anti dumping 26% countervailing 4% quantitative restrictions 5% figure 4. non-tariff barriers to trade in metals in the world as of december 31, 2019 three seas economic journal 122 vol. 2 no. 3, 2021 2014 2015 2016 2017 2018 2019 2020 safeguards 25 2 24 quantitative restrictions 12 15 6 2 countervailing 29 29 34 25 31 30 anti dumping 147 169 204 159 137 137 technical barriers 79 90 116 140 170 227 160 sanitary and phytosanitary 1 7 1 23 22 5 9 0 50 100 150 200 250 300 350 400 450 figure 5. dynamics of the number of non-tariff barriers in trade in metals and articles thereof by types of non-tariff restrictions products, and the emergence of new sources of risks to trade barriers, it is proposed to conduct a matrix assessment of source risks and prospects of trade barriers to export activities of metallurgical enterprises of ukraine. the effective matrix of key importers of ukrainian metallurgical products in relation to the number of introduced trade barriers can be considered in figure 6. statistics of 2019 were taken as a basis for risk assessment, as 2020 in a pandemic may reflect a non-standard picture. the given matrix on the x axis shows data on the volume of exports of metallurgical products to ukraine in million usd, along the y axis – the growth rate of export volumes in 2019 compared to 2018, the diameter of the circle is determined by the number of existing non-tariff trade barriers in relation to trade in metallurgical products. this matrix can be used to assess risks in trade with key countries-importers of ukrainian metallurgical products. according to the data, exports of metallurgical products to china can be attributed to the average level of risk. because the country plays an important role in international markets for metallurgical products and actively applies non-tariff trade restrictions, which in most cases apply as appropriate measures against barriers that are initiated against china. the middle level of risk also includes european countries (poland, bulgaria, and germany), as the number of existing trade barriers is relatively small (104 cur-rent trade restrictions at the end of 2019 in relation to metallurgical products). also, the volume of exports of metallurgical products to eu countries is much higher compared to other regions of international trade (the total share of exports of metallurgical products to ukraine to italy, poland, bulgaria, and germany is 24% of total exports). the riskiest export markets under this matrix include the united states and the russian federation. in the first case, a significant role of risk is played by the number of existing trade barriers to trade in metallurgical products (466 barriers at the end of 2019). in the second case, political risks play a significant role in the form of trade barriers, with exports to the russian federation second only to italy. the most promising markets for the development of international trade in metallurgical products are italy and saudi arabia. prospects for the development of trade with italy are determined by the significant volume of consumption and the low level of trade barriers in relation to ukrainian metallurgical products. the second reason is that italy is a logistically convenient trading hub for sales throughout europe and north africa. saudi arabia is a promising market for the development of international activities for enterprises in the metallurgical industry of ukraine, as this market has a high growth rate of construction and development of the oil and gas industry. three seas economic journal 123 vol. 2 no. 3, 2021 -2,00 -1,00 0,00 1,00 2,00 3,00 4,00 5,00 -200 0 200 400 600 800 1000 1200 1400 1600 e xp or t g ro w th r at es export of metallurgical products of ukraine, million usd china saudi arabia germany bulgaria poland usa turkey russian fegeration italy figure 6. matrix of countries-importers of ukrainian metallurgical products and the number of introduced non-tariff customs barriers in 2019 5. conclusions the metallurgical industry is strategically important for ukraine's economy, as it is one of the key products of exports, an industry that generates a significant share of ukraine's budget revenues, an industry that generates a significant number of jobs. the high volatility of exports of metallurgical products indicates a high dependence on external factors and is a risk to ukraine's economic security and stable trade balance. one of the most important factors influencing the international activity of enterprises of the metallurgical industry of ukraine are trade barriers to metal products. this tool has a positive dynamic in the number of applications since 2016. according to the number of trade barriers in the cross-section between sectors of the economy, the largest number falls on the metallurgical industry. that is why it is proposed to use a matrix of the interaction of the number of trade barriers and export volumes by partner countries. this tool will identify the riskiest areas of international trade and promising areas of development. according to the results of our study, in figure 6 formed this matrix. the conclusions to this matrix identified the riskiest areas of international trade (usa and russia), medium risk areas (poland, bulgaria, germany) and the most promising areas of international trade (italy and saudi arabia). with the help of this matrix, it is possible to identify countries, trade with which may pose a potential risk for ukrainian producers. this risk is manifested in the growth of activities aimed at protecting the domestic market and national producers. these factors should be compared with the weight of each individual country in the international trade of ukraine. thus, the main goal of this method and matrix is to determine the strategic directions of development and reorientation of current trade flows. references: novikov, m., & zemlyanskaya, s. (2021). the system of customs and tariff regulation of the eаeu in the context of globalization: problems, trends and prospects of development. shs web of conferences, vol. 92. shirinova, a. (2018). on the issue of the application of fea (foreign economic activity) non-tariff regulation instruments in the context of the wto (world trade organization) regulations. bulletin of taras shevchenko national university of kyiv public administration, 1(10), 56–62. world steel association (2019). the world steel association report 2019. geneva, 2019. world bank (2021). global economic prospects 2021. usa, june 2021. state statistics service of ukraine (2020). ukraine`s foreign trade 2020. ukraine, 2021. world trade organization (2021). world trade statistical review 2021. geneva, 2021. three seas economic journal 13 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-3 the ethnic peculiarities of the negotiation process tеtiаnа аlеksiеiеvа1, lie khyonh ti2 abstract. the purpose of the article is to determine the influence of ethnic and cultural characteristics on the successful outcome of the negotiation process. the study is based on an understanding of the cultural component of the negotiation process, national, ethnic stereotypes and the formation of national style on their basis. an important aspect to consider is the influence of cultural sensitivities on the course of negotiations, which should lead to a positive end result. methodology. the paper used the methodology of general scientific and interdisciplinary research. the authors of the article applied methods of analysis and synthesis, research, and description. a number of scientific works on intercultural negotiations and the influence of ethnic and cultural characteristics on the negotiation process were analyzed. the result of the analysis of the cultural factor in negotiations showed that culture as a social category, covering the mentality, habits, traditions of a particular social group, directly affects the behavior and motivation of the participants in the negotiation process. in this context, national stereotypes (the generalized image of representatives of a particular nation) are of great importance in the parties' perception of each other. these collective traits can be both positive and negative, but more often the stereotypes are negative. therefore, it is important for participants in intercultural negotiations not only to study, but also to understand the ethnic and national characteristics of their partners, to be able to change their perception of the other culture and not to base their attitudes and actions on purely national stereotypes. although cultural differences can make joint decision-making difficult, this factor can also have a positive impact on the end result of negotiations. more attention is paid to common interests, and as a result, the likelihood of reaching consensus is higher when the parties have strong cultural differences. in addition, an important factor influencing the conduct and outcome of negotiations is the interpreters, whose role should be not only language skills, but also the cultural context of the negotiations. practical meaning. cultural analysis of the negotiation process is an important element in the training of negotiators and can be the key to success in achieving mutually beneficial results. value/originality. learning and understanding ethnic and national characteristics and styles is an important factor in successful negotiations and in creating favorable decision-making conditions that can satisfy all parties to the negotiation process. key words: culture, negotiation process, ethnic features, intercultural negotiations, international negotiations, national stereotypes. jel classification: d91, f51, j52 corresponding author: 1 v. n. kаrаzin khаrkiv nаtiоnаl univеrsity, ukrаinе е-mаil: t.аlеksееvа@kаrаzin.uа оrcid: https://оrcid.оrg/0000-0002-9805-5143 rеsеаrchеrid: n-2888-2016 2 v. n. kаrаzin khаrkiv nаtiоnаl univеrsity, ukrаinе е-mаil: liekhyonhti@gmail.com оrcid: https://orcid.org/0000-0001-9766-4089 1. introduction each person's ethnicity influences his or her mentality. mentality is expressed in the attitudes and actions of each participant in the negotiation process. the peculiarities of different cultures influence the behavior of individuals in international negotiations and manifest themselves in diplomatic relations. diplomatic tools are important in the negotiation process, especially in the era of globalization, when many countries do not view global warfare as a means of conflict resolution. culture often influences negotiations, as do countless other elements. the question arises what might be the impact of culture on negotiations, on creating unexpected opportunities to resolve disputes, and on removing obstacles to reaching agreement (garcha, 2007). international negotiations reflect the complexity of negotiation with the addition of cultural diversity. to negotiate successfully, it is extremely important to check your own cultural style in advance for appropriateness and for strategies or behaviors that could negatively affect the atmosphere. this requires this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 14 vol. 2 no. 4, 2021 an in-depth understanding of negotiating styles with people from other cultures (kammhuber, 2010). it is through a proper understanding of national styles that the most effective negotiation tactics and strategy can be chosen. proper preparation can dramatically affect the negotiation process from the beginning to the final decision. when studying the negotiating styles of different countries, one often looks at national and ethnic stereotypes, but a much more important factor in effective negotiations is the ability to change one's stereotypical thinking about other cultures. without this understanding, cultural diversity makes effective communication difficult. because people from different countries perceive, interpret, and evaluate the world differently, it becomes very difficult to explain their needs and interests in a negotiated communication in a way that all parties can fully understand each other. but when communication becomes more complex, it can become easier to create mutually beneficial options. achieving mutually beneficial options requires the recognition and use of differences. if cross-cultural differences are recognized, articulated, and misunderstood, they can become the basis for mutually beneficial solutions. this requires a negotiating approach and tactics that use cultural differences as a resource rather than an obstacle to the negotiation process, allowing international mediators to increase the benefits to both sides (todorova, 2007) thus, learning and understanding different cultures is important not only because it can greatly influence the negotiation process itself, but also because it can be a key element of mutually beneficial outcomes. 2. the connection between culture and negotiation culture is a broad concept that describes basic things of human mentality and behavior, such as language, tradition, ideology, attitudes and style. negotiation, in turn, is part of human problem-solving activities that focus on peaceful means of dispute resolution. culture is a quality not only of individuals, but also of the society of which they are a part. culture is acquired through a process of socialization between individuals and society. therefore, each culture is a unique set of attributes that encompass every sphere of social life (garcha, 2007). negotiation is the process by which groups and individuals attempt to resolve misunderstandings and disputes that may arise from their interactions (chance, 2011). in this context, negotiations can be seen as a manifestation of culture, since they embody a certain code of conduct oriented toward civilized ways of resolving disputes (garcha, 2007). culture reflects the shared norms, beliefs, and values of people in a social group and determines how people perceive negotiations, identifying which strategies and behaviors are appropriate for a particular cultur-al context (mor, semnani-azad, zhale z, toosi, shan, amanatullah, 2019). the influence of cultural factors on the negotiation process is often under-estimated. other factors, such as national, political and specific organizational interests or the balance of power, prevail over the cultural aspects. in fact, the negotiation process is determined by many external influences, and there is such a thing as international agreement on how international nonnegotiations should take place. however, this ignores the fact that any negotiation is also a social encounter, during which people constantly communicate with each other. the actors in the negotiation process inevitably bring their culture's specificities into the negotiation model. in the absence of a standardized negotiating culture, there is a high probability that culture-specific norms, values and rules will begin to be established. this can provoke misunderstandings or conflict, ultimately leading to an undesirable outcome (kammhuber, 2010). 3. national and ethnic stereotypes given that culture is a social category, stereotypes are part of our everyday lives and influence our judgment and behavior toward others. cultural stereotypes held by negotiators can have a significant impact on their decisions and behavior, as well as on the process and outcome of negotiations. stereotypes can tell us about a person's perceptions, and a person's perceptions can tell us about the stereotypes they have (semnani-azad, sycara, lewis, adair, 2012). ethnic stereotypes are simplified, schematic, emotional and extremely static images of any ethnic group, which are easily extended to all its members. at the heart of ethnic stereotypes, which in many ways provoke ethnic conflicts, is the division of people into groups. stereotypes are based on various characteristics (positive, negative and neutral) attributed to different groups of people (racial, ethnic, gender, etc.). unfortunately, ethnic stereotypes are often overgeneralized, vague and mostly negative (lozhkin, poviakel, 2006). a national stereotype is an averaged image of a person of a certain nation in terms of his character traits and behavior. national style of negotiation is the features of national character and culture, the most common features of thinking, perception and behavior that affect the process of preparing and conducting negotiations (kakhovych, levchenko, makarenkina, 2011). the american national stereotype is characterized by democratic and pragmatic thinking. but americans tend to be fairly straightforward, use pressure in three seas economic journal 15 vol. 2 no. 4, 2021 negotiating a joint solution, and are not prone to strict adherence to the stages of negotiation and formalities (kakhovych, levchenko, makarenkina, 2011). although american businessmen have a reputation as the most unscrupulous business people in the world, they are in many ways the easiest to deal with. this is because americans strive to earn as much and as quickly as possible, using tools such as hard work, speed of action, and power (including the power of money itself ) to achieve this goal. this purposeful pursuit of profit by americans is often perceived as ruthlessness (pshyk-kovalska, kara, 2012). during business meetings and negotiations, chinese participants pay great attention to two main elements. first, they pay close attention to gathering information about the subject under discussion, as well as about the negotiating partner; second, to forming a "spirit of friendship". the chinese attach great importance to the establishment of friendly informal relations with foreign representatives (kakhovych, levchenko, makarenkina, 2011). as for the contribution of the parties, the chinese often provide material goods and the foreigners provide technology, the best of which the chinese try to provide at the lowest cost. the chinese negotiator may knowingly or unknowingly use any of the 300-year-old "thirty-six stratagems," which offer tactics for use in politics, war, and civil interaction. strategies that are characterized by deception, military stratagems, can be grouped into six broad categories, namely: stratagems against the stronger (the winner), stratagems of equal force (conflict), stratagems attacker (direct attack), stratagems to confuse the enemy (chaos), stratagems to achieve advantage, stratagems of stalemate situations (chance, 2011). the french national stereotype has had a significant impact on the formation of diplomatic protocol and etiquette in the world. before entering into a business relationship with french firms, it is necessary to clearly define the purpose of the relationship. the french do not like the use of english or german in business communication with them, believing that it limits their sense of national dignity (pshyk-kovalska, kara 2012). the french do not like compromise, so they are prone to conflict during negotiations and, without looking for a compromise solution, may enter into an argument. a feature of the french national stereotype is that the french try to avoid formal "one-on-one" discussions. they pay great attention to preliminary agreements and prefer the opportunity to discuss some issues before negotiations (kakhovych, levchenko, makarenkina, 2011). as for the cultural peculiarities of the negotiation process of ukrainians, they have certain peculiarities in the preparation and conduct of political negotiations. for example, ukrainians prefer face-to-face meetings to distance communication to resolve important issues. if an agreement on a meeting is reached, it is customary to confirm it with a phone call about an hour before the appointed time. during negotiations ukrainian politicians show tolerance, ability to compromise and goodwill, but on the other hand they can be too emotional and impulsive. according to foreigners, during the "official" part of negotiations ukrainian representatives behave quite reservedly, but in general the nature of business communication in ukraine is more emotional than in other countries, and the political environment is no exception. researchers also consider unpunctuality and the use of not always correct arguments to be signs of the ukrainian style of negotiation (vahina, 2021). 4. successful result of intercultural negotiations the main goal of negotiation is to reach mutually agreed upon results. in a successful negotiation, the interests and needs of both parties are recognized and met, which means a win-win for both parties. mutually beneficial options emerge as a result of 1) understanding the real interests, values, and needs of both parties; 2) identifying areas of similarity and difference; and 3) creating new options based primarily on the differences between the two parties. the basis for creating mutually beneficial options is to identify the interests that are more valuable to one side than to the other and to use those differences as a source. particularly in intercultural negotiations, there is much more room for finding and forming mutually beneficial options than in monocultural situations because of the differences inherent in the parties (todorova, 2007). the negotiator must be aware of the culturally conditioned expectations of the negotiating parties regarding the situation and the negotiation process. therefore, it is necessary to create a negotiating situation in which all parties can cooperate on a mutually beneficial basis. the ability to change perceptions is one of the most important factors for success. the more intensely the interests of the other culture and their causal patterns are studied, the more likely it is that when a conflict of interest arises, alternative solutions will be perceived and used in the interests of both parties (kammhuber, 2010). national stereotypes play an important role in creating the conditions for decision-making in the negotiation process. in addition to influencing intercultural negotiators' perceptions of the nature and tactics of negotiations, stereotypes can also cause negative prejudice against participants with a different culture and positive perceptions in a group of negotiators with a similar culture. although stereotypes can evoke both positive and negative feelings about a particular social group, negative attitudes toward another group are much more common. three seas economic journal 16 vol. 2 no. 4, 2021 this is because people tend to pay more attention to people or events that are new and unique or different from their usual culture. because interaction with members of another group is quite rare and at the same time culturally unacceptable behavior is rare, people tend to overestimate the connection between belonging to another social group and negative behavior. this leads to an illusory correlation between the other group and undesirable behavior, reinforcing hostility and negative perceptions of a member of the other group. consequently, because of group bias and illusory correlation, intercultural negotiators are more likely to have negative perceptions of one another than are negotiators in a single-cultural context. this is why participants' ability to change their approach to other cultures and avoid unfair biases is an important factor in successful negotiations (semnani-azad, sycara, lewis, adair, 2012). however, this strong perception and division between "our" and "foreign" culture can not only complicate the negotiation process, but, on the contrary, can be the key to a successful outcome. researchers believe that the closer people are ethnically, the more significant are their differences in views of the situation and ways of solving problems. and therefore, the more ethnically different the contracting parties are, the more meaningful the consensus will be for their representatives. if the interests of the parties coincide, national differences usually are not noticed, but in a situation of conflict they begin to play an important role (todorova, 2007). interpreters are a necessary element of successful negotiations, the importance of which is often underestimated. their role in the negotiation process is often limited to language translation. however, it is the interpreters who know the specific cultural connotations of expressions and can explain them to both sides when linguistic translation is no longer sufficient. they can directly influ-ence the behavior of negotiators or change wording to avoid misunderstandings or violations of etiquette. limiting such highly qualified interpreters to routine translation work is a waste of valuable resources. choosing a culturally competent and reliable interpreter is extremely important, and this factor can be key to the successful outcome of the negotiation process (kammhuber, 2010). 5. conclusions culture is an important element of negotiation because it determines the attitudes of negotiators in addition to the context, process, and outcome of the negotiations themselves. cultural factors can hinder the relationship as a whole, complicate, delay, and even destroy specific goals if there is otherwise some basis for cooperation. to use intercultural approaches effectively requires training, education, and experience to learn to move beyond one's own cultural stereotypes and misconceptions. by providing training in cultural diplomacy, many significant problems can be prevented. without such training, international negotiators rely heavily on their subjective cultural assumptions. these cultural assumptions are heavily influenced by the national stereotypes of different countries. stereotypes are structures that include knowledge, beliefs, and expectations about a particular social group. stereotypes influence perceptions, limit personality, guide behavior, and evoke positive or negative emotions about a social group. w hen negotiators perceive their partners only through the prism of ethnic stereotypes, actors will attribute to themselves motives characteristic of their common culture without examining specificity and cultural differences, and will essentially not engage in effective dialogue, but instead negotiate with themselves. if participants are carefully prepared for intercultural negotiations, learn about the other side's cultural background, have the ability to change their perceptions, and avoid internal prejudices against other nationalities and ethnic groups, cultural differences can be a factor in success rather than conflict. perceived cross-cultural differences make it easier to find mutually beneficial solutions, which are not possible if all parties to the negotiations hold the same cultural views. in effective negotiation, participants approach the process by seeking solutions that benefit both parties. the art of negotiation lies in developing creative options and alternatives, rather than using persuasive tactics that may offend your partners rather than lead to an agreement. references: chance, k. (2011). the intricacies of the chinese negotiation process. available at: https://xavierchance.files. wordpress.com/2011/01/the-intricacies-of-the-chinese-negotiation-process.pdf (accessed 29 october 2021) garcha, a. (2007). diplomatic culture or cultural diplomacy: the role for culture in international negotiation?”. available at: http://culturaldiplomacy.org/content/pdf/icd_diplomatic_culture_of_cultural_diplomacy.pdf (accessed 13 november 2021). kakhovych, yu. o., makarenkina a. v., & levchenko, t. v. (2011). vplyv natsionalnykh stereotypiv na provedennia mizhnarodnykh perehovoriv [the influence of national stereotypes on international negotiations]. investytsii: praktyka ta dosvid [investments: practice and experience], vol. 7, pp. 51–53. available at: http://biblio.umsf.dp.ua/ jspui/bitstream/123456789/2465/1/16kakhovich.pdf (accessed 13 november 2021). three seas economic journal 17 vol. 2 no. 4, 2021 kammhuber, s. (2010). intercultural negotiation. handbook of intercultural communication and cooperation, pp. 255–263. available at: https://www.researchgate.net/publication/342701138_intercultural_negotiation (accеssеd 13 november 2021). lozhkin, h., & poviakel, n. (2006). psykholohiia konfliktu: teoriia i suchasna praktyka [psychology of conflict: theory and modern practice]. kyiv: profesional. available at: https://ela.kpi.ua/bitstream/123456789/25821/3/ psihologiakonflikty.pdf (accеssеd 17 november 2021). mor, s., semnani-azad, zhale z., toosi, n., shan, w., & amanatullah, e. (2019). how perceptions of negotiations are shaped by culture, race, and gender. handbook of gender and negotiations. available at:  https://www.researchgate.net/publication/334597295_how_perceptions_of_negotiations_are_shaped_by_ culture_race_and_gender (accеssеd 13 november 2021). pshyk-kovalska, o., & kara, n. 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(2007). kroskulturnyi menedzhment [cross-cultural management]. donetsk: donetsk national technical university. available at: http://ea.donntu.edu.ua/jspui/bitstream/123456789/2021/1/ccm_ todorova.pdf vahina, o. m. (2021). formuvannia natsionalnoho styliu politychnoho spilkuvannia v ukraini yak vyklyk suchasnoi hlobalizatsii [formation of the national style of political communication in ukraine as a challenge of modern globalization. aktualni problemy filosofii ta sotsiolohii [actual problems of philosophy and sociology], vol. 30, pp. 78–82. available at: http://apfs.onua.edu.ua/index.php/apfs/article/download/982/633 (accеssеd 05 november 2021). three seas economic journal 30 vol. 2 no. 3, 2021 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: natkov@i.ua orcid: https://orcid.org/0000-0002-2877-4302 researcherid: l-5920-2018 doi: https://doi.org/10.30525/2661-5150/2021-3-5 peculiarities of formation and report submission by farms natalia koval1 abstract. the article reveals the role, significance, features of the formation and submission of reports by farms. attention is drawn to the fact that at the present stage the problems of transformation of the domestic agricultural sector are intensifying. farming is considered one of the most common forms of entrepreneurial activity in the agricultural sector. in an uncertain, ever-changing environment, the effective functioning of an enterprise often depends on the ability to develop and implement creative management decisions based on analytical information. in order for all farm reporting to be as useful as possible, it should be simpler in structure and order of filling and at the same time – concise. the composition and reporting structure of farms depends on the one hand on the types of accounting, and on the other – on the information needs of users. in addition, the organizational and legal form of the entity and the form of accounting should be considered. if the farm is established in the form of a legal entity, it is subject to the requirements of mandatory accounting. the peculiarities of the organization of farm accounting and reporting are determined. it is noted that in addition to the volume of activity, other factors also influence, among which it is worth noting the specialization, the number of business transactions, the system of taxation of the farm. the specifics of financial and statistical reporting of farms as legal entities and natural persons-entrepreneurs are revealed. a farm as a legal entity compiles the same reports as a regular agricultural enterprise. a farm (natural person-entrepreneur) prepares reports as an ordinary natural person-entrepreneur. peculiarities of formation and submission of tax reporting are investigated. if the farm is on the general system of taxation, it is obliged to file a declaration of income tax (the form approved by the order of the ministry of finance dated 20.10.2015 № 897 as amended). taxpayers who are registered during the reporting (tax) year (newly created) pay income tax on the basis of an annual tax return for the period of activity in the reporting (tax) year. if the farm is on a simplified taxation system, it will submit, depending on the selected group, either a declaration of a single taxpayer of the third group (legal entity), or a declaration of a single taxpayer of the fourth group (form of declaration approved by order of the ministry of finance from 19.06.2015 № 578 with changes). it is established that farms that own or rent wells and are required to report in accordance with ifrs. such reporting is subject to publication together with the auditor's report on its website (in full). the impact of qualitative characteristics of reporting and the principles of its formation on the completeness of economic processes and features of economic activity in the reporting system. key words: farming, organization of accounting, taxation, reporting, factors of influence. jel classification: m21, m41, h25 1. introduction the development of the agricultural sector has led to the emergence of various organizational and legal forms of entrepreneurship in agriculture – from individual entrepreneurs and ending with farms, private enterprises, societies, associations and more. farming is considered one of the most common forms of entrepreneurial activity in the agricultural sector. for most agricultural regions of the country, farms are one of the main activities and an important element of the agricultural production system. in general, farming can be in the form of a legal entity or in the form of individual entrepreneurs. each form of farming has its advantages and disadvantages. reporting of business entities is the final step of the accounting system, which summarizes and systematizes information about the activities of the economy, necessary for all stakeholders to make effective economic decisions. the composition and structure of reporting depends on the one hand on the types of accounting, and on the other – on the information this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 31 vol. 2 no. 3, 2021 needs of users. in addition, it is necessary to take into account the organizational and legal form, size and scope of the farm. disclosure of information about the activities of the farm is through the publication of financial statements. according to the law of ukraine "on accounting and financial reporting in ukraine", the financial statements of enterprises are not a trade secret of the enterprise. in an uncertain, ever-changing environment, the effective functioning of an enterprise often depends on the ability to develop and implement creative management decisions based on analytical information. the problem of the ratio of the amount of reported data and the quality of information, its usefulness and demand comes to the fore. in order for all farm reporting to be as useful as possible, it should be simpler in structure and order of filling and at the same time – concise (gudzenko, 2018). the study of the specifics of the organization of accounting, information support of the process of financial support, taxation and the formation of various types of reporting of agricultural enterprises, including farms, is given considerable attention in the works of domestic and foreign scientists: m.i. bondar, n.m. gudzenko (2018), v.m. zhuk, g.m. kaletnik (2020), n.i. koval, о.а. podolyanchuk (2019), n.l. pravdyuk (2010), m.m. shigun and others. however, most of the above scientists study the vast majority of the nature, classification, structure and opportunities for improvement of individual reporting forms, focusing more on the financial statements of agricultural enterprises, including farms. however, it is important to further study the existing approaches and features of the formation and submission of all types of reporting by farms. 2. organizational and legal form of the business entity the composition and reporting structure of farms depends on the one hand on the types of accounting, and on the other – on the information needs of users. in addition, the organizational and legal form of the entity and the form of accounting should be considered. if the farm is established in the form of a legal entity, it is subject to the requirements of mandatory accounting. requirements on the obligation to keep records and reporting by enterprises are provided by: the commercial code of ukraine (articles 19, 71, 90, 145) (commercial code of ukraine, 2003); laws of ukraine "on accounting and financial reporting in ukraine" of 16.07.99 № 996-х (1999), "on business associations" of 25.06.1991 № 1251-хіі with changes and additions (1991), "about the state statistics" from 19.09.1992 № 2614-хіі with changes and additions (1992), "about the state support of small business" from 19.10.2000 (2063-ііі (item 11) with changes and additions ), "on the farm" from 20.12.1991 № 2009 (article 24) with changes and additions (1991); "on amendments to the tax code of ukraine and certain other legislative acts of ukraine concerning the simplified system of taxation, accounting and reporting" № 4618-vi of march 22, 2012, as amended (2012); national accounting standards. farms without the status of a legal entity established on the basis of the activities of natural personsentrepreneurs are not required to keep accounts. according to part one of art. 2 of the law "on accounting", this law applies to all legal entities established in accordance with the laws of ukraine, regardless of their organizational and legal forms and forms of ownership, as well as representative offices of foreign economic entities that are required to keep accounts and submit financial statements in accordance with the law (podolyanchuk, koval, gudzenko, 2019; law on accounting, 1999]. thus, if a farm is a legal entity, it must keep accounts in the general order established for legal entities. the same is established by art. 28 of the law "on farming": such a farm keeps accounts of the results of its activities and submits to the relevant authorities financial statements, statistical information and other data provided by law (podolyanchuk, koval, gudzenko, 2019; law on farming, 2003). however, today the farm can be created in the form of both legal entities and individuals. according to the amendments to the law "on amendments to the law of ukraine" on farming "to stimulate the establishment and operation of family farms" № 1067-viii of 31.03.2016, a farm without the status of a legal entity is organized on the basis of the activities of an individual – entrepreneur and has the status of a family farm, subject to the use of labor of members of such a farm, which are exclusively a natural person-entrepreneur and members of his family in accordance with article 3 of the family code of ukraine (podolyanchuk, koval, gudzenko, 2019). therefore, accounting is not required for individual farmers. based on the conditions of management, farms differ in the area of land under cultivation: from a few hectares of arable land (small in size) to hundreds and thousands of hectares (medium and large). as of july 1, 2021, 48.4 thousand farms were registered in ukraine. in 2013, a record number of farmers was registered – 49.1 thousand. however, by 2015 their number decreased by 11%, ie by 5467. from 2015 to 2021 there is only a positive growth trend, almost 11% or 4714 farms (agropolit, 2021). farms can cultivate both their own land and leased land. therefore, it is obvious and appropriate to divide farms into the following types: private, privatethree seas economic journal 32 vol. 2 no. 3, 2021 leased and leased, which will affect the organization of accounting and further reflection of transactions in the reporting. farms have different areas of specialization, but most of them are engaged in growing cereals and oilseeds. the total area of agricultural land of farms is 4.439 million hectares, then under cereals were 2.2 million hectares, oil – 1.5 million hectares. farmers are also engaged in the cultivation of sugar beets, potatoes, vegetables, food melons, but their share in the structure of crops does not exceed 1% (podolyanchuk, koval, gudzenko, 2019). the size of the farm, its specialization affect the organization of accounting, formation and content of reporting information. therefore, clarification of the criteria for determining the scope of activities of the farm is necessary in order to establish approaches to the possibility of simplifying accounting in them. at the same time, the criteria established by the commercial code of ukraine for determining the subjects of micro-entrepreneurship (the number of employees does not exceed 10 people and the annual income is 2 million euros) do not take into account the national characteristics of management. after all, even 10 employees can cultivate a large area of land and perform a large amount of work, and the annual income of 2 million euros is typical for medium and large enterprises (podolyanchuk, koval, gudzenko, 2019). based on the selected criteria at the stage of organization of accounting and in order to optimize the structure of reporting information, it is advisable to classify farms according to the criteria proposed by the law of ukraine "on accounting and financial reporting". however, the value criteria set out in the law № 996 regarding the book value of assets and the amount of income received in relation to farms should be reduced and appropriate changes made to the guidelines for the organization and maintenance of farms № 189 and guidelines for the use of accounting registers for small enterprises № 422 (koval, gudzenko, 2019; methodical recommendations, 2009). 3. factors influencing the formation of reporting solving the problem of inconsistency in the classification of farms in economic and accounting legislation will provide a differentiated approach to the organization of the accounting process. the organization of accounting and reporting of the farm, in addition to the volume of activity, is influenced by other factors, including specialization, the number of business transactions, the taxation system and so on. the list of factors that must be taken into account in the process of organizing accounting and reporting of the farm is presented in figure 1. among the features that affect the accounting and reflection of transactions in the reporting, there are the following: 1. in farms, operations that are not typical for other forms of entrepreneurial activity are quite common. this applies to the formation of farm capital, the distribution of its income, labor relations of farm members (the classifier of professions provides specific names of professions for farm members) and the payment of remuneration for work (farm members are not paid. they receive part of income), which is determined as a result of the activity of the farm, and the requirements for the minimum amount are set only for wages received under the employment contract (article 95 of the labor code), formation of reporting (code of labor laws of ukraine, 1971). f ac to rs in th e or ga ni za ti on o f a cc ou nt in g an d re po rt in g sy st em production structure and production technology taxation system (general, simplified) volumes of activity and number of business transactions in the reporting period specialization of economy (crop production, animal husbandry) the level of accounting staff qualification information support of the organization and accounting ability to automate the accounting process figure 1. factors in the organization of accounting and reporting system of the farm source: (podolyanchuk, koval, gudzenko, 2019) three seas economic journal 33 vol. 2 no. 3, 2021 2. farms are engaged in the cultivation of agricultural products and specialize mainly in crop production, which requires proper assessment, accounting and reporting of land and operations related to their use and lease. a significant number of farms specialize in horticulture and berry growing, which requires the reflection of operations with long-term biological assets. farms (family, micro, small, medium and large) form of accounting taxation system financial statements statistical reporting tax reporting general system of taxation; simplified taxation system (single tax payer of the fourth group; the possibility of choosing to pay vat for certain categories of fg general using the recommended chart of accounts; simplified form; a simple form using a simplified chart of accounts forms of statistical reporting for all farms: the main indicators of economic activity of a farm, a small enterprise in agriculture. (f. 2-ferm); the main economic indicators of agricultural enterprises (f. 50 this year) sown areas of agriculture crops for harvest (f. 4-sg); balance of agricultural products for 20_year (f. № 16-sg) the state of animal husbandry (f. 24-sg); results of the agricultural harvest crops, fruits, berries and grapes (f. 29-sg); harvesting of agricultural crops on december 1, 20_year from watered irrigated lands, from drained lands (f. № 29-sg (reclamation) sales of agricultural products (f. 21-general); application of mineral, organic fertilizers, plastering and liming of soils for harvest (f. 9-b-sg); the presence of agricultural machinery in agricultural enterprises (f. 10-mech); report on the balances and use of energy materials and refined products (f. 4-mtp); report on the results of fuel and heat use; and electricity (f. 11-mtp); sowing and harvesting of agricultural cultures, conducting others. field work (f. 37-sg). general taxation system: income tax return; vat tax return; report 1-df; excise tax return; calculation of the amount of the fee for the first registration of vehicles; declaration of environmental tax; tax return on land fees; calculation of the amount of the fee for the development of viticulture, horticulture and hop growing simplified tax system: tax return of the single tax payer of the legal entity; financial statements in full form: balance sheet (statement of financial position) (f. № 1); statement of financial results (statement of comprehensive income) (f. № 2); statement of cash flows (by the direct method) (f. № 3); statement of cash flows (by indirect method) (f. № 3); statement of equity (f. № 4); notes to the annual financial statements (f. № 5). financial report of a small business entity: balance (f. № 1m); report on financial results (f. № 2nd) simplified financial report of a small business entity: balance (f. № 1-ms); report on financial results (f. № 2-ms). tax return on land fees; report 1-df fixed agricultural tax return of a fixed agricultural tax; vat tax return; report 1-df; tax return of environmental tax; figure 2. the impact of the size and activity of farms on accounting and reporting source: (podolyanchuk, koval, gudzenko, 2019) three seas economic journal 34 vol. 2 no. 3, 2021 3. quite often in small farms there is a problem of qualification of accountants, because accounting and reporting is carried out directly by the head of the farm or members of his or her family. this feature affects the quality of accounting and reporting information. therefore, it is proposed to simplify the accounting process as much as possible or to involve consulting firms specializing in the provision of accounting services in the formation of reporting. 4. there is a need to reflect in the accounting and reporting of state support to farms, provided on a revolving basis. 5. it is possible to choose a simplified system of taxation for certain groups of farms, which affects the choice of form of accounting and reporting (podolyanchuk, koval, gudzenko, 2019). disclosure of information about the activities of the farm is through the publication of financial statements. according to the law of ukraine "on accounting and financial reporting in ukraine", the financial statements of enterprises are not a trade secret of the enterprise (figure 2). 4. the main types of reporting of the farm farms prepare financial, statistical and tax reports. 1. financial statements are financial statements that contain information about the financial condition, results of activities for the reporting period. the possibility of using a simple form of accounting and reporting by small businesses is provided by the law "on state support of small business" from 19.10.2000 № 2063. article 11 of this law states that the simplified form of accounting, as well as the simplified taxation system , can be used along with the generally accepted form of accounting at the choice of the small business entity, ie it is allowed, not mandatory (law on state support of small business, 2000). enterprises, which according to the results of activity for the last year are determined in accordance with the current legislation by small business entities, apply the national regulation (standard) of accounting 25 "simplified financial statements" in the current (reporting) year. if such enterprises, as well as newly created as a result of activities for the 1st quarter or 1 half of the current (reporting) year can not be recognized as small businesses in accordance with applicable law, the financial statements of these enterprises are prepared for this and subsequent periods of the current (reporting) year. in accordance with the provisions (standards) of accounting, approved by the order of the ministry of finance of ukraine on march 31, 1999 № 87, which was registered in the ministry of justice of ukraine on june 21, 1999 for № 391/3684. enterprises that according to the results of activity for 9 months of the current (reporting) year cannot be recognized as subjects of small business according to the current legislation, can make the financial report for 9 months and the reporting year with application of the provision (standard) 25 (podolyanchuk, koval, gudzenko, 2019; np (s) bu simplified financial reporting, 2000). the vast majority of farms are small businesses and in accordance with applicable law form simplified financial statements. according to the resolution of the cabinet of ministers of ukraine of july 11, 2018 № 547 for enterprises, which in accordance with the law of ukraine "on accounting and financial reporting in ukraine" establishes abbreviated financial statements in the balance sheet (statement of financial position) and statement of financial results (statement of comprehensive income) (other than those required to prepare financial statements in accordance with international financial reporting standards), and companies that keep simplified accounting of income and expenses in accordance with tax legislation, submit to the appropriate authorities annual financial statements for small businesses. the selected category includes farms that are considered small and micro enterprises. large and medium-sized farms have the right to choose the ifrs reporting format. for microand small fg ifrs-reporting format is not appropriate, because it requires additional costs for its formation and accounting support of the process of generalization of reporting data. however, in accordance with the changes introduced by the law of ukraine dated 05.10.2017 № 2164-viii, which came into force on 01.01.2018 for those farms that have a well on their own balance (or the farmer rents it and produces water and is considered the primary water user), there is a need to prepare financial statements in accordance with international standards (ifrs). volumes of extracted water and directions of its use do not matter (podolyanchuk, koval, gudzenko, 2019). that is, if the farm by volume of activity refers to small businesses and even has the right to choose a simple or simplified form of accounting in the presence of a well or on condition of its lease (especially relevant for farms engaged in horticulture), must form ifrs reporting. changes updated part 2 of art. 12-1 of the law on accounting, which states the need to prepare financial statements in accordance with international standards, including enterprises engaged in mining activities of national importance: "enterprises that in accordance with the law prepare financial statements and consolidated financial statements in international standards that are required to ensure accounting in accordance with accounting policies in accordance with international standards after the submission of the first financial statements or consolidated financial statements in accordance with international standards, which is recognized as such three seas economic journal 35 vol. 2 no. 3, 2021 in the manner prescribed by international standards. thus, starting from 2019, accounting should be conducted in accordance with accounting policies according to international standards, regardless of the direction and volume (podolyanchuk, koval, gudzenko, 2019). 2. statistical reporting is a report compiled by all economic entities (including farms) and which provides information to the state statistics bodies on the assessment of the state and development of the state economy and the planning of macroeconomic indicators. each farm submits to the state statistics bodies of ukraine several types of different forms of reporting that characterize its activities, as a comprehensive reflection of the results of farm activities is summarized through statistical observations. however, the law of ukraine "on state statistics" states: "primary data obtained by state statistics bodies from respondents during statistical observations are confidential information protected by law and used exclusively for statistical purposes in a consolidated impersonal form." that is, primary statistics are used for consolidated statistical work, compilation of collections, surveys of the socio-economic situation and research (law on state statistics, 1992). in addition to the above forms of statistical reporting, farms may compile other reports that reflect other aspects of their economic activities. tax reporting is a document (declaration, calculation), which according to the tcu is submitted by taxpayers to the state tax service and on the basis of which the tax is charged and/or paid, collected (mandatory payment) (podolyanchuk, koval, gudzenko, 2019). taxpayers are recognized, including legal entities and their separate subdivisions, which have, receive (transfer) objects of taxation or carry out activities (operations) that are subject to taxation in accordance with the tcu or tax laws, and which are obliged to language for the payment of taxes and fees. in ukraine, national and local taxes and fees are set. national taxes and fees established by art. 9 of the tcu, and the list of local taxes is provided in art. 10 tcu (tax code of ukraine, 2010). depending on the chosen system of taxation – general or simplified, you need to submit the appropriate declarations. 1. if a legal entity is in the general system of taxation, it is obliged to file a declaration of income tax (the form approved by the order of the ministry of finance dated 20.10.2015 № 897 as amended). taxpayers who are registered during the reporting (tax) year (newly created) pay income tax on the basis of an annual tax return for the period of activity in the reporting (tax) year. if a legal entity switches to a simplified taxation system, depending on the selected group, either the declaration of the single taxpayer of the third group (legal entity) or the declaration of the single taxpayer of the fourth group will be submitted. both forms of such a declaration were approved by the order of the ministry of finance dated 19.06.2015 № 578 as amended in 2021. if the farm is newly established, therefore, taking into account paragraphs. 291.4.7 tcu, the first reporting period it will be on the general system of taxation. 2. if the newly established farm considers it appropriate to voluntarily register as a vat payer, there is an obligation to file a vat return (form approved by the order of the ministry of finance from 28.01.2016 № 21 as amended by the order of the ministry of finance from 01.06.2018). the reporting (tax) period is equal to a calendar month. 3. according to paragraph 240.1 of the tcu, the payers of the environmental tax are economic entities that emit pollutants into the atmosphere by stationary sources of pollution or directly into water bodies. stationary source of pollution in accordance with paragraphs. 14.1.230 a tcu is an enterprise, shop, unit, installation or other fixed object that retains its spatial coordinates for a certain period of time and releases pollutants into the atmosphere and/or discharges of pollutants into water bodies. the basic tax (reporting) period is equal to a calendar quarter (the form approved by the order of the ministry of finance dated august 17, 2015 № 715). if the farm has such sources of pollution that are listed in paragraphs. 14.1.230 tcu, it automatically passes into the category of environmental tax payers (tax code of ukraine, 2010). 4. if a farm uses the work of individuals on the terms of an employment agreement (contract) or on other terms provided by law, the following may be submitted to the sbgs: – report on the amounts of accrued ssc (form № d4 – monthly, approved by the order of the ministry of finance dated 11.04.2016 № 441 with changes dated 15.05.2018 order № 511); – tax calculation of the amounts of income accrued (paid) in favor of individuals and the amounts of tax withheld from them (form №1 sf – quarterly, approved by the order of the ministry of finance dated 13.01.2015 № 4). thus, users of farm accounting information have the right to be all members of society, despite the fact that their economic interests differ significantly. satisfaction of users' interests occurs through financial reporting, which goes through the stages of formation, submission and disclosure. 5. conclusions given the information requests of users and the requirements for submission of financial statements three seas economic journal 36 vol. 2 no. 3, 2021 by farms as self-employed legal entities, it should be noted that the farm with the creation of a legal entity (article 1 of the law of ukraine "on farming") is subject to the law of ukraine "on accounting and financial statements in ukraine", procedure № 419 and relevant uas (podolyanchuk, koval, gudzenko, 2019). in accordance with the law, the farm keeps accounts of the results of its work and submits to the relevant authorities financial statements, statistical information and other data established by the legislation of ukraine, which allows to determine the financial result, make calculations with the budget and prepare reports. accounting can be done independently (by the accounting department of the farm, one person – the farmer or a member of his family), or with the involvement of consulting or auditing companies. there is nothing significant about farm reporting. as an exception, there are farms that own or rent well and are required to report in accordance with ifrs. such statements shall be published together with the auditor's report on its website (in full). that is, the business will be required to have its own website where you can publish financial statements. so, if there is no page – you need to create. second, the financial statements must be confirmed by the auditor's report. third, the annual financial statements will be made public on the same page. for the average small farm, which has a well and will not switch to ifrs, there is no obvious responsibility, as such farms are payers of the single tax of the 4th group and do not pay income 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(2003). ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: http://zakon.nau.ua/doc/?uid=1088.283.2 (accessed 25 september 2021). three seas economic journal 45 vol. 2 no. 3, 2021 corresponding author: 1 lviv polytechnic national university, ukraine. e-mail: tetiana.v.kulinich@lpnu.ua orcid: https://orcid.org/0000-0003-0110-7080 researcherid: r-6627-2017 2 zaporizhzhya national university, ukraine. e-mail: terentieva_nataliya@ukr.net orcid: https://orcid.org/0000-0001-6930-879x doi: https://doi.org/10.30525/2661-5150/2021-3-7 the using of modern marketing tools in the context of social responsibility of business tetiana kulinich1, nataliia terentieva2 abstract. the article is devoted to the problem of using modern marketing tools in the context of corporate social responsibility. it was offered the mechanism of introduction of principles of social responsibility of business through implementation of the concept of socio-ethical marketing in business practice. it was substantiated the elements of the marketing complex for the concept of socio-ethical marketing and the modern vision of this concept, which involves the use of digital marketing tools to promote goods, services and ideas. it was analyzed the factors of global influence on the conditions of doing business, which were formulated in the following areas: a single information space; creation of new business models using artificial intelligence; the economy of shared consumption, which enhances the ability to access various sources of information, providing a multidimensional picture of consumer behaviour; increase consumer loyalty to the use of digital search tools about the characteristics of the product and the possibilities of its purchase and further use; new systems of marketing information in terms of expanding its subsystem of internet research; the spread of cognitive technologies creates new approaches to information processing and management principles, and also contributes to the transformation of many areas of social and economic development in terms of displacing human labour as a factor in the production of some of them. it was proposad the author's approach to the modern interpretation of socio-ethical marketing, which is based on the needs of consumers in the context of the principles of social responsibility and modern digital tools for their implementation, taking into account the factors of global influence. in the context of such an approach, ethical norms and principles of corporate social responsibility must be implemented. the main purpose of socio-ethical marketing should be the formation of consumer loyalty through the creation of associations with social programs conducted by enterprises and organizations. in this context, the tasks of socio-ethical marketing should be: the analysis of the target audience; development of measures to form a system of customer loyalty and strengthen the position of the brand in a niche market; the improving the quality of goods and services and their compliance with socio-economic and environmental standards; the formation of a system of measures that will improve the quality of life. it was carried out the analysis of marketing tools in the context of realization of the concept of socioethical marketing in the conditions of digitalization. it was considered the conditions of development of digital marketing tools. it was determined that the marketing tools that are implemented in the digital economy have certain advantages in the formation of socially defined attributes and needs of specific social groups. however, it does not sufficiently regulate the ethical issues of using personal data of consumers in the context of digitalization. however, studies show a trend of change in the field of socio-ethical relations with consumers, the formation of a paradigm of social responsibility of doing business in new conditions with the spread of cognitive technologies for managing consumer behavior. key words: consumer marketing, social responsibility, marketing tools, the concept of socio-ethical marketing. jel classification: м31, l86, a13, z32 introduction in the era of rapid innovative business development (aaker, 2003), social responsibility is the obligation of business to make a voluntary contribution to the development of society, including all areas – economic, social, environmental, innovative and other areas. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 46 vol. 2 no. 3, 2021 in today 's global world, socio-ethical issues of doing business are becoming increasingly important (barna, melnyk, baran, 2021). among the key modern trends of dynamic revolutions are the informatization of society, digital economy, social integration, globalization of markets and more. the outlined trends reinforce the temporal factor of change and require a rapid response to them not only in the conceptual sense, but also in applied aspects. current trends and various challenges undoubtedly influence the formation of new marketing tools, directing them to the social context, as social responsibility and marketing ethics are a projection of these trends and changes, should be based on high socio-humanistic standards. with this in mind, domestic businesses should be aware of and use the benefits of socioethical marketing as a long-term perspective, exclusive competitive advantage, special reputational capital. in european countries, the concept of social responsibility was officially formed at the end of the xx century and was reflected in the document of the european commission "green paper " (2001). according to the green paper of the european union (2001), corporate social responsibility means the integration of social and environmental aspects into the day-to-day commercial activities of enterprises and their interaction with stakeholders on a voluntary basis (barna, melnyk, baran, 2021). given this approach to the implementation of the principles of social responsibility in all spheres of society, the implementation of these measures is carried out at different levels and contributes to the implementation of sustainable development strategies in the international community, the country and businesses. based on this vision, the concept of social responsibility is justified for use at different socio-economic levels: international or global, national, regional, local (community) and at the level of business units. ukraine has committed itself to implementing the principles of sustainable development at all socio-economic levels, which has contributed to the promotion of the concept of social responsibility as a practical mechanism for implementing these principles. a significant contribution to the introduction of the principles of sustainable development and the development of the concept of social responsibility belongs to the business sector. the idea of public service has long historical roots in the business sphere and is realized through the mechanisms of voluntary contributions of business to the development of society in social, economic and environmental spheres related to the main activities of the company or beyond a certain minimum (chukurna, 2020). this approach is aimed at introducing the principles of sustainable development through the concept of social responsibility. 1. methodology of research 1.1. theoretical aspects of the formation of the concept of socio-ethical marketing the practical implementation of the concept of social responsibility is possible through modern tools of socio-ethical marketing, which aims to meet the needs not only of a particular group of consumers, but also the needs of society as a whole. this mechanism ensures the practical use of corporate social responsibility in the context of the main directions of sustainable development, namely: social, economic and environmental. the methodological basis of the study is based on the research of many scientists who have substantiated various aspects of the development of the concept of socio-ethical marketing. the problem of social responsibility of the company is considered in the works of such scientists as s. aaronson, s. adame, r . bennett, t. bradgard, d. woody, p. drucker, a. carroll, a. mcwilliams, p. rodriguez, r . solomon, p. watchman, m. forster, m. friedman, k. fukukawa, s. hedberg, a. shapiro. theoretical foundations of the evolution of marketing concepts have been studied by many scientists, namely: aker d. (2003); drucker p. (2004), kotler  f. (2012), keller k . (2005), minzberg g., lamben j.-j. (2004), porter m. (2005), martyniuk о. а . (2020), oklander m. (2020), chukurna o. (2020), etc. despite the significant contribution of scientists to the development of the theory and evolution of marketing concepts, the further implementation of approaches to sustainable development strategies have created the conditions for updating the principles of social responsibility in business practice. the study of the implementation of these principles is in the process of constant transformations and changes, which is associated with many factors that affect the socio-economic processes in society. this determined the need to study modern marketing tools, the use of which will contribute to the implementation of the principles of social responsibility. 1.2. theoretical principles of transformation of modern marketing tools in the concept of socio-ethical marketing as a mechanism for implementing social responsibility of business the concept of socio-ethical marketing arose as a result of the search for measures to rationalize consumption, humanize production and environmental protection of society from unwanted processes of production and consumption. the founder of the classical theory of marketing f. kotler substantiated the concept of socio-ethical three seas economic journal 47 vol. 2 no. 3, 2021 marketing, the mandatory conditions for the implementation of which are the following: – the main purpose of the enterprise should consist in meeting the various needs of customers in accordance with the interests of society; – the need for constant search and development of goods that better meet the demand that meets the interests of consumers; – the availability of constant work to increase the loyalty of regular and potential consumers. in the traditional sense, socio-ethical marketing involves minimizing the negative consequences for society through irrational consumption, taking into account ethical norms and environmental principles. the modern view of the concept of socio-ethical marketing should be based on the use of the latest and innovative tools for promotion, digitalization, the emergence of new standards of consumption and the achievements of cognitive technologies. in addition, the using of modern marketing tools in the digital economy exacerbates the problems of ethics and the use of personal data of consumers. the problem of using modern marketing tools in accordance with the concept of social responsibility is exacerbated by global factors influencing the conditions of doing business, which can be represented in the following areas: 1) in the context of globalization, when the information space becomes unified, consumer behaviour changes towards loyalty to the use of digital search tools about the characteristics of the product and the possibilities of its acquisition and subsequent use. in this context, it were widely used a following instruments: smm tools, marketplaces (rozetka, prom.ua), platforms for comparing the price characteristics of goods (price.ua). thus, consumers become researchers who react instantly to any changes in the characteristics of the product. 2) there are created new operational business models on the basis of the latest digital platforms, which allow to collecting and processing analytical data on consumer’s behaviour. this allows you to use targeting when promoting goods and services over the internet and simplifies the collection of marketing information. 3) there are formed a new systems of marketing information in terms of expanding its subsystem of internet research, which can be organized on a regular basis. 4) under the influence of global factors formed a fundamentally new type of economic relations – the economy of shared consumption, which enhances the ability to access various sources of information, from personal to industrial, providing a multidimensional picture of consumer behaviour. the phenomenon of the economy of shared consumption is the technological opportunity for individuals or legal entities to share a product or service at a level that was previously impossible. such distribution of goods or services becomes possible with the help of virtual platforms and mobile platforms. they contribute to the reduction of transaction costs in the system to such an extent that all its participants receive economic benefits. 5) the economy of shared consumption contains a number of components and characteristics or descriptions: technological component, the advantage of access over ownership; interaction between two equal parties; shared access to personal assets; ease of access; strengthening social interaction; consumption in cooperation and feedback from consumers in free access (chukurna, 2020). 6) the spread of cognitive technologies and artificial intelligence creates a new system not only information processing and new management principles, but also contributes to the transformation of many areas of social and economic development by displacing people from areas such as: services; trade; office and administrative activities; maintenance and repair; production; transportation and logistics; management; marketing; business. given the above provisions, the author's approach to the modern interpretation of socio-ethical marketing is based on the needs of consumers in the context of the principles of social responsibility and modern digital tools for their implementation, taking into account factors of global influence. in contrast to the traditional understanding of the concept of socio-ethical marketing, which aims to meet the needs of consumers in the interests of society, the modern vision of this concept involves the use of digital tools to promote goods, services and ideas. it must be implemented an ethical norms and principles of corporate social responsibility in the context of such an approach. as moral and ethical norms of use of personal data of consumers are an actual question of modern development of the theory and practice of marketing. in addition, the traditional concept of marketing aims at a constant violation of needs and demand, and this leads not only to meet the needs and desires of customers, but also to the desire for unbridled profit growth, which, as practice shows, often causes violations of rational consumption, lack raw materials, energy resources, environmental pollution. in this context, the using of the principles of social responsibility through the tools of socio-ethical marketing are aimed at solving these problems. at the same time, the main purpose of socio-ethical marketing is to form consumer loyalty by creating associations with social programs conducted by enterprises and organizations. in this context, the tasks of socio-ethical marketing should be: analysis of the target audience; development of measures to form a system of customer loyalty and strengthen the position of the brand in a market niche; improving the three seas economic journal 48 vol. 2 no. 3, 2021 quality of goods and services and their compliance with socio-economic and environmental standards; formation of a system of measures that will improve the quality of life. the using and implementation of the conceptual foundations of socio-ethical marketing will promote the development of social responsibility of society. however, in the context of digitalization and informatization of society, the tools of socio-ethical marketing are changing, using innovative technologies that analyze the demands of the target audience, make a portrait of the consumer, respond quickly to changing consumer priorities and increase demand and customer loyalty. all these trends, which intensify the formation of the economy of shared consumption and the use of cognitive technologies in marketing contribute to the transformation of the marketing complex in terms of the social component of each element of the marketing complex, emphasizing corporate social responsibility and adding another element of the marketing complex – the consumer. thus, the concept of socio-ethical marketing, implementing the principles of corporate social responsibility, creates the basis for further development of long-term partnerships with the consumer, who joins the promotion process and becomes an active participant. this approach becomes possible and is actively developing due to the use of digital marketing tools that promote the active involvement of the consumer in the system of marketing activities of the manufacturer of goods and services (martyniuk, 2020). 2. results and discussion 2.1. development of the market of digital marketing tools the use of digital channels to promote and move businesses online has been growing rapidly in recent times. according to soul partners, baker tilly ukraine and aequo, with the support of the usaid competitive economy of ukraine program, a study of the e-commerce market in ukraine for 2020 was conducted. according to the results of the study, since the beginning of the coronavirus pandemic, the market size has grown by 41%. the growth of retail trade in the e-commerce market has increased in recent years by almost 3 times (figure 1). this is almost twice as high as the average in central and eastern europe – 21.5% (emarketer). the main drivers of growth of the e-commerce market in ukraine are the following: increasing the level of internet coverage and the number of smartphone users; quarantine restrictions associated with the coronavirus pandemic; growing confidence in digital payment systems. in the top of the largest marketplaces in ukraine: rozetka, prom, allo, bigl and epicentr (figure 2). ukraine has the lowest annual level of spending per person in e-commerce compared to neighbouring countries – $ 104. the most spent in the czech republic – $ 841 (figure 3). another modern marketing tool that has developed in the digital economy is social shopping. this tool is actively developing in the world and it is expected that it will gain popularity in ukraine as well. today, the development of social shopping in ukraine is limited to the use of the "old school" method or through direct communication. however, global trends in this direction are due to the fact that in ukraine later appear the functions of shops and shop windows in social networks. the main marketplace of social shopping in ukraine remains instagram, especially for small local brands (figure 4). according to research on sales of social shopping tools, 12% of women and 2.8% of men buy clothes, shoes, accessories through the social network instagram. the spread of social networks as a marketing tool for promotion and sales contributes to several important trends in the field operation of online stores. firstly, consumers switch to using video content when making a choice and, even on the pages of the site, want to view products in dynamics. that is why it is increasingly important to fill the site with video content, which helps to improve consumer perception and increase loyalty. secondly, users on social networks use information gained from the experience of interacting with leaders who shape public opinion and bloggers who broadcast personal experiences of using the product. the presence of photo and video content with real consumers of goods, in the presence of reviews, enhances the perception of the product and promotes loyalty. another most effective modern marketing tool to influence consumer behavior, the formation of loyalty systems and the promotion of goods and services are mobile applications. today, almost all large companies, banks, retail have their own mobile applications that allow not only to form a system for promoting services, but also to form a system for collecting and analyzing marketing information. in addition, mobile applications are a way to attract an active audience of consumers who have a high degree of mobility and engagement in an interactive digital space. in addition, mobile applications have a high level of customer focus, which is why they are used by consumers who value their time. the main barriers to online sales are the danger of unethical use of personal data of consumers, the inability to verify the quality of the product and the difficulty of trusting online stores (figure 5). three seas economic journal 49 vol. 2 no. 3, 2021 figure 1. the volume of the e-commerce market, billion dollars source: сompare the market, 2021 figure 2. the largest marketplaces in ukraine, billion dollars source: сompare the market, 2021 figure 3. the amount of spending per person on e-commerce per year (usd) compared to the e-gdp of the country (%) source: data bridge, 2021 three seas economic journal 50 vol. 2 no. 3, 2021 in order to reduce these barriers, e-commerce and online stores are developing secure agreements with sellers on marketplaces and creating opportunities for live interaction with the product. in addition, there is a tendency to create points of delivery of goods in online stores. for example, large marketplaces, such as "rozetka" are actively offline, not only opening their stores, but also selling the franchise. in turn, kasta opened 50 branches in ukrposhta's premises to provide fitting. “nova poshta” has accelerated the development of the network of post offices to get even closer to the home of buyers and increase the value of delivery (no need to stand in line, contact people, you can pick up the parcel 24/7). the most of these measures are aimed, inter alia, at reducing the delivery price, which averages 5% to 15% of the purchase price. as the number of orders increases, buyers will increasingly pay attention to the availability of free delivery in the online store and the possibility of free return. figure 4. dynamics of social shopping development in ukraine source: (chukurna, 2020) figure 5. online barriers for users of online stores and e-commerce source: data bridge, 2021 three seas economic journal 51 vol. 2 no. 3, 2021 2.2. identification of marketing tools that can provide the principles of csr digitization and spread of e-commerce have contributed to the formation of new marketing tools for promotion and sales. let's analyze modern marketing tools that ensure compliance with the principles of social responsibility and at the same time provide for the use of digital promotion channels (table 1). given the above comparative analysis of marketing tools that ensure compliance with the principles of social responsibility and provide for the use of digital promotion channels, it can be concluded that the issues of ethical use of personal data of consumers table 1 modern marketing tools that ensure compliance with the principles of social responsibility and provide for the use of digital promotion channels modern marketing tools advantages disadvantages 1) digital marketing tools seo long-term result and the ability to promote the site yourself. increase site traffic. not very significant costs for promotion. high conversion of site visitors into buyers. minimum of the negative effect of imposing on the buyer. simplify target audience search. a time consuming tool that requires constant support efforts. the first results become apparent only after several months of site operation. requires constant monitoring of site content to meet search engine queries. timely updating of site content. the need to adapt the same site to the criteria of different search engines. smm availability of an interactive audience. absence or low level of advertising costs on social networks. ability to quickly work with suggestions and objections from customers. forming an audience of regular customers who will monitor the development of the company, changes, promotions, etc. not suitable for b2b market. not all areas are progressing equally well on social networks. smm usually works well for markets b2c and c2c. the need to spend a lot of time on the community. social networks need constant attention. a long break contributes to the fact that consumers forget about the company or its product. require careful monitoring of reputation and image. having made a few not the most effective posts, you can permanently damage your reputation and lose the loyalty of subscribers. the presence of high competition, where everyone is trying to stand out in the top leaders. targeted contextual advertising this type of advertising is aimed at an already covered audience. advertising is immediately displayed in search engines, without the mandatory optimization of the site to the requirements of search engines. provides remarketing when a potential customer who has left the site for some reason is "haunted" by contextual advertising on third-party resources. ability to track spending. payment is made not for impressions by quantity or time, but for the actual conversions of potential customers to the site. fast effect. unlike the work of seo, the work of context can be felt in a shorter time. a small number of conversions from advertisements (depending on the subject of the site). not fixed cost of the show, auction system. the budget is much higher than in seo. e-mail marketing ability to form a target audience for various parameters: type of activity, geographical location, age, etc. detailed reporting and the ability to assess effectiveness. obsession. ability to get into spam. banner and teaser advertising this type of advertising involves the promotion of goods through the placement of banners with images and drawings and text (teasers). the user clicks on the text or image goes to the company 's website. this provides an instant effect from advertising. the main advantage is the relative cheapness compared to contextual and targeted advertising. you need a professional approach to placing ads on certain advertising platforms. relatively expensive type of advertising are insufficiently regulated. the above marketing tools, which are implemented in the digital economy, have certain advantages in the formation of socially defined attributes and needs of specific social groups. however, it does not sufficiently regulate the ethical issues of using personal data of consumers in the context of digitalization. however, research shows a trend of change in the field of socio-ethical relations with consumers, the formation of a paradigm of social responsibility of doing business in new conditions with the spread of cognitive technologies for managing consumer behaviour. all these trends contribute to the actualization of the formation of socially three seas economic journal 52 vol. 2 no. 3, 2021 responsible relations in the practical business sphere, which becomes possible through the implementation of the concept of socio-ethical marketing. conclusion the research allowed us to conclude that the social responsibility of business is based on the creation of a system of social relations in terms of compliance with certain social standards and norms, the mechanism of which can be implemented through the concept of socio-ethical marketing. this approach contributes to the creation of a system of relations with consumers of goods and services, which guarantees security and progressive development, ensures the coordination of the interests of the subjects involved in these relations and their management. in the context of the introduction of such an approach, modern marketing tools are used, which meet the conditions of digitalization of the economy and society as a whole. however, its use creates certain risks and dangers of unethical dissemination of personal data. modern marketing tools advantages disadvantages mobile applications this marketing tool is used to analyze the target audience by the phone models used and the traffic generated by mobile applications. this makes it possible to collect data on the characteristics of the target audience who use mobile applications. an additional advantage is the speed of order processing, the possibility of instant payments and information updates. the main audience of mobile application users are young people aged 20-45. high degree of competition among companies operating in one segment. viral marketing post information quickly and easily. increase customer loyalty due to the lack of irritating effect from advertising and increase trust in the product. cost-effective marketing tool. absence of restrictions and censorship temporary effect. it is difficult to predict the outcome of the campaign. high cost of production. target audience restrictions. content marketing ability to quickly gain the trust of readers. even the first article can make a company famous and bring it to the top in search engines. widely recognizable content. with each new publication, the impression of the company, resources and product is formed, customers remember the brand better. excellent interaction with seo. increase traffic by writing content that will work in seo. we need good copywriters and authors of texts. it takes time to write these texts. it is not always high the conversion of content advertising readers into the company 's clients. native advertising with the right approach allows you to recoup costs several times. this type is not intrusive to consumers unlike teaser and banner advertising. requires a significant investment. does not bring fast results. messengers an effective free tool for quick personal appeal to the target audience and promotion of the company. negative reaction of consumers to personal advertising messages storytelling influences the consciousness of people, inspires them with the necessary thoughts, forms involvement and is able to cause the planned reaction and further behaviour. the effectiveness of storytelling is due to the suppression of denial and unconscious rejection of information needs the use of experienced and creative professionals. forever successful and protracted stories gamification provides adaptation of game methods to non-game processes and events for greater involvement of participants in the process. has a high level of emotional involvement and promotes better assimilation of information the main target audience is generation z. not suitable for most consumer goods. source: based on the results of the authors’ expert assessments (end of table 1) references: aaker, d. 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(2002). a novel with a buyer / per. from english ed. yu.n. kanturevsky. st. petersburg: peter, 224. three seas economic journal 95 vol. 2 no. 3, 2021 corresponding author: 1 vinnytsia national agrarian university, ukraine. e-mail: podolianchuk_l@i.ua orcid: https://orcid.org/0000-0003-0234-8943 researcherid: i-4429-2018 doi: https://doi.org/10.30525/2661-5150/2021-3-13 tax and accounting systems of small agricultural enterprises in the conditions of european integration olena podolianchuk1 abstract. globalization processes around the world affect the activities of economic entities, which in turn leads to changes in their accounting and taxation systems. the article is devoted to the study of the peculiarities of the application of the simplified system of accounting and taxation of agrarian businesses of small businesses in order to identify problematic aspects and areas of state support for their functioning in the context of european integration. a study of the main aspects of the association agreement between ukraine, on the one hand, and the european union, the european atomic energy community and their member states, on the other hand, in terms of accounting and taxation. it is determined that the implementation of domestic legislation to the regulations of the european union (directives) is tangible for both businesses and individuals. analytical data on the activities of small businesses in ukraine, including agricultural enterprises, are presented. the results of the analysis show a decrease in the number of small enterprises for the period 2015–2019. at the same time, the volumes of produced and sold products of small businesses and micro-enterprises are growing, which testifies to the importance of the activities of these businesses. it is determined that the conditions of production and economic activity of business entities are accompanied by constant changes in current legislation, which causes uncertainty in their position in the competitive environment, leads to the risk of transactions and increased tax burden, and as a result – business closure or withdrawal in the shadows. "the current systems of taxation of small businesses are studied and their advantages and disadvantages are identified. the main criteria for assigning business entities to the group of small businesses in the agricultural sector, taking into account the tax and commercial codes of ukraine, as well as the provisions of the law of ukraine "on accounting and financial reporting in ukraine". the system of taxation and accounting of small agricultural enterprises is studied. it was found that the current situation in agriculture indicates the shortcomings and lack of efficiency of the tax system, which requires scientific and methodological support for a consistent and stable tax policy for this category of taxpayers, the use of tax in-centives for small businesses, improving the simplified taxation of small businesses . examining the organization of accounting for small businesses in the context of eu-ropean integration, the framework of the feasibility of changes in the accounting sys-tem. it is noted that a certain problem is the inconsistency of financial and tax ac-counting for the formation of a harmonized information product for different groups of users. the opinion is expressed that the fiscal orientation of accounting should be reoriented to the needs of the management system and high-quality information sup-port of stakeholders, including foreign investors. it is noted that the legislation on accounting and taxation systems, opening and registration of small and micro enterprises needs to be changed. in order to properly support the development of small business, it is proposed to create favorable conditions for taxation and a clear accounting system: providing information and financial support for the process of business organization and the transition to international accounting standards; organization of the system of training of entrepreneurs and retraining of accountants; streamlining mechanisms to protect the rights of small businesses. key words: accounting, taxation, small enterprises, businesses. jel classification: н25, m41 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 96 vol. 2 no. 3, 2021 1. introduction the current state of the economy, social and globalization challenges that are occurring in the world, affect the domestic accounting system of business entities. it is a proven fact that accounting information provides management decisions. however, the information generalized in the accounting system does not always meet the requirements of different user groups. accordingly, accounting as a holistic system develops, transforms and adapts under the influence of changing requirements of interested stakeholders. it is worth noting that the process of european integration in ukraine is ac-companied by a number of changes in various sectors and spheres of life. one of the vectors of european integration is cooperation aimed at improving the tax system and tax authorities of ukraine. ukraine's accession to the european union implies the need to harmonize the accounting system and the formation of financial statements in accordance with the rules of international accounting standards. therefore, the general state of development of the agricultural sector of the economy of ukraine is associated with constant changes in accounting and tax legislation. since the beginning of ukraine's cooperation with the european union, scientists have been actively conducting research on accounting and tax harmonization and adaptation. artemyeva o.o., denisovets n.o. (2020) reveal the position of agricultural enterprises in the current tax system and determine the high level of tax burden. kohut m.g. (2021) notes the need to accelerate the harmonization of ukraine's tax legislation with the tax legislation of the european union, given that such changes should not violate the principle of stability, which is one of the main tax principles. nebiltsova o.v., korol` v.i. (2015) reveal the conceptual framework of the international financial reporting standard for small and medium-sized enterprises, the preconditions and problems of its application by these economic entities in the european union and ukraine. rudyk n.v. (2020) substantiates the importance and significance of a simplified taxation system for small businesses and local budgets in the context of lockdown in ukraine. sidorenko r .v. (2021) identifies the shortcomings of the regulatory framework for the tax administration of small and medium-sized businesses in ukraine. in my own research (podolianchuk, 2017, 2020) revealed the problematic issues of accounting and taxation of small businesses, including agricultural enterprises. the research conducted is undoubtedly significant. however, the urgency of the topic is due to the need to comply with the association agreement between ukraine, on the one hand, and the european union, the european atomic energy community and their member states, on the other hand (association agreement with the eu) in terms of accounting and taxation systems. of small business in the agricultural sector of the economy. the purpose of the scientific publication is to study the features of the simpli-fied system of accounting and taxation of small businesses to identify problematic aspects and areas of state support for their functioning in terms of european integra-tion. 2. the main aspects of the association agreement with the eu in terms of accounting and taxation before moving on to accounting and taxation, let us recall the historical and identify key aspects of the association agreement with the eu on the topic of the study. the process of european integration began in 2007, when ukraine and the european union negotiated the replacement of the partnership and cooperation agreement with the association agreement with the eu. after numerous negotiations (21) in 2011, all the provisions of the test of the association agreement with the eu were agreed. however, it was signed in 2014 in two stages: on march 21 – the political part, on june 27 – the economic part. the document was ratified on september 16, 2014, and entered into force in full on september 1, 2017. key aspects related to accounting and taxation are identified in sections iv "trade and trade-related issues" and v "economic and sectoral cooperation" (as-sociation agreement with the eu). article 76 of chapter 5, customs and trade facilitation, section iv sets out cost reductions and increased predictability for businesses, in particular small and medium-sized enterprises. ongoing cooperation takes place on issues covered by section v "economic and sectoral cooperation". article 387 of chapter 13 “legislation on the application and operation of companies, corporate governance, accounting and auditing” provides for cooperation on the implementation at the national level of relevant international standards and approximation to eu law in the field of accounting and auditing. articles 349-354 of chapter 4 "taxation" define cooperation in the taxation system in order to further improve economic relations, trade, investment and fair competition. in particular, article 378 of chapter 10 "industrial and entrepreneurship policy " stipulates that the parties improve the business environment for all businesses with a special focus on small and medium-sized enterprises (smes). indepth cooperation should improve the administrative structure and regulatory framework for ukrainian and european businesses in ukraine and the eu and should be based on eu policies for the development three seas economic journal 97 vol. 2 no. 3, 2021 of small and medium enterprises and industry, taking into account internationally recognized principles and practices in these areas (association agreement with the eu). the implementation of domestic legislation to the regulations of the european union (directives) is tangible for both businesses and individuals. according to research (sidorenko, 2021), in countries with developed econo-mies, small business is one of the main sources of filling budgets at various levels, the basis for creating new (free for the state) jobs, a driving factor in the development and introduction of new goods, works and services . according to the source (sidorenko, 2021), small and medium enterprises (smes) play a major role in most economies, especially in developing countries. smes represent more than 90% of all businesses and create more than 50% of all existing jobs. in developing economies, according to official data, smes generate more than 40% of national income. if we take into account the "shadow sector", these figures will be much higher. in today 's business environment, smes create seven out of ten new jobs. 3. evaluation of the activities of small businesses in ukraine we describe the actual situation regarding the presence of small businesses in ukraine in recent years (table 1). analyzing the data in table 1, we can conclude that the number of business entities as a whole is declining, although there is an increase in 2019 compared to 2015, the number of large – by 95 units and medium-sized enterprises – by 2619 units. the number of small businesses is declining. thus, in 2019, the number of small enterprises in table 1 number of large, medium, small and micro enterprises businesses total by years, units including agriculture, forestry and fisheries, units 2015 2016 2017 2018 2019 deviation, 2019+2015 2015 2016 2017 2018 2019 deviation, 2019+2015 large 423 383 399 446 518 +95 29 20 18 23 34 +5 medium 15510 15113 15254 16476 18129 +2619 2535 2505 2391 2307 2285 -250 small, 1958385 1850034 1789406 1822671 1922978 -35407 76720 72095 74184 73998 73131 -3589 of which micro 1910830 1800736 1737082 1764737 1864013 -46817 71649 66905 68819 68492 67627 -4022 including: natural persons-entrepreneurs medioum 307 281 317 419 378 +71 2 4 8 9 4 +2 small, 1630571 1558880 1466486 1483297 1560650 -69921 32538 29618 26470 25815 25207 -7331 of which micro 1626589 1553041 1458980 1471965 1550633 -75956 32412 29448 26307 25585 24994 -7463 % of agriculture, forestry and fisheries to the total indicator of economic entities large 6,86 5,23 4,52 5,16 6,57 -0,29 medium 16,35 16,58 15,21 14,01 12,61 -3,74 small, 3,92 3,90 4,15 4,06 3,81 -0,11 of which micro 3,75 3,72 3,97 3,89 3,61 -0,12 source: formed by (economic statistics. activities of enterprises, 2021) 2019 compared to 2015 decreased by 35,407 units, of which micro-enterprises – by 46,817 units. the situation is the same in the sphere of activity of natural persons-entrepreneurs. as for agricultural enterprises, in combination with fisheries and forestry, the number of medium and small businesses is also declining, including and micro-enterprises and individual entrepreneurs. this situation indicates a decrease in the share of agriculture, forestry and fisheries in the total number of business entities. however, analyzing the data in tables 2-3, there is a tendency to increase the volume of products produced and sold by small businesses. the data in table 2 confirm the conclusion about the growth of production of small businesses and micro-enterprises. in 2019, compared to 2015, the volume of products (goods, services) increased by 7.2% for small enterprises, of which 5.2% for micro-enterprises. the same trends in the agricultural sector. as for the activities of natural per-sons-entrepreneurs, their share is constant and does not contain significant changes. characterizing the volume of sold products of business entities follows the conclusion about the growth of its sales of small businesses and micro-enterprises. in 2019, compared to 2015, the volume of sold products (goods, services), although insignificant, increased by 1.9% for small enterprises, of which 1.6% for microenterprises. the same statistics in the agrosphere. the activities of individual entrepreneurs have steady results and contain a slight increase. however, since 2016, a quarter of the products of ukraine's economy are produced and sold by small enterprises and individual entrepreneurs. summarizing the data of the analysis, we can say about the importance of small businesses. it would three seas economic journal 98 vol. 2 no. 3, 2021 seem that the state is obliged to stimulate the creation of new and development of existing small businesses, including agricultural sector. however, the conditions of production and economic activity of business entities are accompanied by constant changes in current legislation, which causes uncertainty in their position in a competitive environment, leads to the risk of transactions and increasing the tax burden, and as a result – the closure of business or its withdrawal shadow". 4. taxation of small businesses in the agricultural sector given the research of scientists (sidorenko, 2021) and the provisions of european union directives, it can be argued that in developed economies apply various types of tax benefits and simplify accounting and reporting, thus reducing the cost of business time on these aspects of activity . table 2 the volume of products (goods, services) produced by business entities businesses total by years, in% to the total indicator of busi-ness entities including agriculture, forestry and fisheries, in% to the total indicator of economic entities 2015 2016 2017 2018 2019 deviation, 2019+2015 2015 2016 2017 2018 2019 deviation, 2019+2015 large 41,7 37,5 38,3 37,9 35,9 -5,8 16,5 12,2 8,8 10,3 12,7 -3,8 medium 36,7 38,5 37,0 36,2 35,9 -0,8 к 51,7 51,4 50,8 49,1 х small, 21,6 24,0 24,7 25,9 28,2 +7,2 к 36,1 39,8 38,9 38,2 х of which micro 10,8 12,5 13,3 14,1 16,0 +5,2 10,1 12,7 13,7 13,6 14,1 +4 including: natural persons-entrepreneurs, in% to the general indicator of natural persons-entrepreneurs medium 2,8 2,7 2,8 3,6 2,7 -0,1 к 1,3 1,4 1,6 0,9 х small, 97,2 97,3 97,2 96,4 97,3 +0,1 к 98,7 98,6 98,4 99,1 х of which micro 92,3 93,2 92,9 91,9 93,2 +0,9 92,4 93,5 90,7 89,9 91,2 -1,2 k – data are not disclosed in order to ensure compliance with the requirements of the law of ukraine "on state statistics" on the confidentiality of statistical information (primary and second-ary blocking of vulnerable values) source: formed by (economic statistics. activity of enterprises, 2021) table 3 the volume of sold products (goods, services) by business entities businesses total, in% to the total indicator of busi-ness entities including agriculture, forestry and fish-eries, in% to the total indicator of eco-nomic entities 2015 2016 2017 2018 2019 deviations, 2019+2015 2015 2016 2017 2018 2019 deviations, 2019+2015 large 37,0 35,6 35,2 35,3 34,5 -2,5 16,5 12,8 8,3 10,1 12,9 -3,6 medium 39,3 39,9 39,9 39,7 39,9 -0,6 к 49,8 50,9 50,4 48,2 х small 23,7 24,5 24,9 25,0 25,6 +1,9 к 37,4 40,8 39,5 38,9 х of which micro 12,0 12,1 12,7 13,0 13,6 +1,6 11,6 13,5 14,2 13,8 14,1 +2,5 including: natural persons-entrepreneurs, in% to the general indicator of natural persons-entrepreneurs medium 3,9 3,0 3,1 3,9 2,9 +1 к 1,3 1,3 1,5 0,8 х small 96,1 97,0 96,9 96,1 97,1 +1 к 98,7 98,7 98,5 99,2 х of which micro 90,1 91,9 91,7 91,1 92,5 +1,9 92,8 93,9 91,0 90,6 91,8 -1 k – data are not disclosed in order to ensure compliance with the requirements of the law of ukraine "on state statistics" on the confidentiality of statistical information (primary and second-ary blocking of vulnerable values) source: formed by (economic statistics. business activities, 2021) in ukraine, the norms of the tax code (tcu) provide for small businesses two versions of the tax system: general or simplified (tax code of ukraine). business entities that have chosen any taxation system are payers of personal income tax (base rate for taxation of wages (18%), military duty (1.5%), single social contribution (22%) and, under certain circumstances – payers of value added tax (vat). the general system of taxation does not provide for restrictions on the types of activities of economic entities and determines the payment of income tax at a rate of 18% of the financial result of the activity. the complexity of the general system is that when achieving the annual income from any activity (excluding indirect taxes), determined by the accounting rules for the last annual reporting (tax) more than 40 million hryvnias, the taxpayer is obliged to adjust the accounting financial result on tax differences. the simplified taxation system provides for the payment of a single tax for each of the four groups three seas economic journal 99 vol. 2 no. 3, 2021 of taxpayers at separate rates and the simultaneous mainte-nance of simplified accounting and reporting. the simplified taxation system has be-come one of the areas of state policy on the development and support of small busi-ness. scientific research confirms both the advantages and disadvantages of these tax systems (figure 1). the choice of the system of taxation of small businesses is influenced by a number of factors, including: type of activity, number of employees, the amount of annual income, ownership of agricultural land. at the same time, it is necessary to take into account the norms of the tcu and the commercial code of ukraine, as the latter provide conditions for the number of employees. we substantiate the main criteria for assigning business entities to the group of small businesses in the agricultural sector, taking into account the norms of the tax and commercial codes of ukraine (table 4). agricultural enterprises and legal entities in the general taxation system are payers of income tax at the rate of 18% of the amount of income received. individual entrepreneurs are payers of personal income tax at the rate of 18% of net income, which is defined as the difference between revenue in cash and in kind and documented expenses related to the business activities of such individual entrepreneur. usually agricultural enterprises choose a simplified system of taxation and payment of a single tax of 4 groups. the tax is paid on 1 hectare of agricultural lands or lands of the water fund and is calculated as a percentage of the tax base – normative monetary assessment (tax code of ukraine, 2021): – for arable land, hayfields and pastures (except for arable land, hayfields and pastures located in mountainous areas and in polissya territories, as well as agricul-tural lands in closed soil conditions) – 0.95%; – for arable land, hayfields and pastures located in mountainous areas and in polissya territories – 0.57%; – for perennial plantations (except for perennial plantations located in moun-tainous areas and in polissya territories) – 0.57%; – for perennial plantations located in mountainous areas and in polissya territories – 0.19%; – for water fund lands – 2.43%; – for agricultural lands in closed soil conditions – 6.33%. also, agricultural enterprises can act as payers of the single tax of 3 groups and both natural personsentrepreneurs can be on the general system of taxation (with payment of personal income tax) and on the simplified system of taxation (payers of the single tax of 2-3 groups). the rate of the single tax for taxpayers of group 2 is set by village, settlement, city councils or councils of united territorial communities in the amount of not more than 20% of the minimum wage. for taxpayers of the single tax of group 3, an interest rate of 3% of income is set – if the business entity is рис. 1. переваги та недоліки систем оподаткування fig. 1. advantages and disadvantages of these tax systems of ukraine. source: formed for (podolyanchuk, 2017) taxation systems in ukraine general simplified advantages: no restrictions on the types of activities and the amount of income and number of employees; greater possibility of tax planning and optimization (due to the impact of expenditures on the tax base); the amount of income tax paid directly depends on the amount of profit for the reporting period disadvantages: the complexity of administration (more stringent requirements for accounting and reporting); rather high tax burden, especially in the presence of employees, etc. advantages: simplicity of calculation of the uniform tax; simplified accounting and relative ease of filling out reports; exemption from payment by the payer of the single tax, a number of taxes and obligatory payments; the costs of paying for the products of single taxpayers-legal entities may be attributed to the costs of counterparties-payers of income tax disadvantages: the tax base is the entire amount of revenue from sales of products (goods, works, services), without deducting the costs of the enterprise figure 1. advantages and disadvantages of tax systems source: formed by (podolianchuk, 2017) three seas economic journal 100 vol. 2 no. 3, 2021 a vat payer or 5% of income – if the business entity is not a vat payer. registration of a business entity as a vat payer is conditioned by the norms of the tcu, which define the conditions of mandatory registration: if the total amount of transactions for the supply of taxable goods (services) accrued (paid) to such person during the last 12 calendar months, exceeds 1,000,000 hryvnias (excluding value added tax), except for a person who is a payer of the single tax of the first – third group (tax code of ukraine, 2021). given the above and estimating the volume of sales of agricultural enterprises, it can be argued that in the system of indirect taxation of agricultural enterprises, vat calculations occupy a significant place. the country 's european direction has led to changes in this tax, including increased collection and control capacity, with particular emphasis on vat refund procedures to avoid debt accumulation, ensure effective tax collection and strengthen the fight against tax fraud, as well as tax evasion (agreement on association with the eu, 2021). according to the eu directives, the vat rate can be set at less than 15% with the possibility of further revision, but not less than 5%. at the same time, each eu member state has the right to set its own tax rates, which range from 15% (in luxembourg) to 25% (in sweden and denmark). vat rates in excess of 20% are applied in belgium, the czech republic, spain, latvia, lithuania, the netherlands (21%), italy, slovenia (22%), greece, ireland, poland, portugal (23%), romania and finland (24%), croatia, sweden (25%). the highest rate – 27% – is applied in hungary. in accordance with the commitments of the association agreement with the eu, in ukraine in 2017, a special vat tax regime for agricultural producers was abolished. this influenced them to be equated with enterprises of other spheres of activity and the use of the general vat rate of 20%. instead, the state introduced a budget subsidy system to compensate for possible losses from the abolition of the special vat regime. the law of ukraine “on state support of agriculture” was amended and supplemented by section v “state support of producers of certain types of agricultural products” and article 161 “budget grant for development of agricultural producers and stimulation of agricultural production”. however, it should be noted that not all agricultural producers can receive a subsidy, but only those who carry out activities specified in paragraph 161.3 of the law № 1877-iv "on state support of agriculture in ukraine" [on the support]. the study of the provisions of this law shows that among the possible recipients of the subsidy there are no agricultural enterprises that grow cereals, sunflowers and other common crops. note that the provision of subsidies to agricultural enterprises is a fairly common practice in eu countries, but in them subsidies are paid per 1 hectare of land, and not as a refund of part of the tax. in march 2021, based on the amendments to the tcu, a vat rate of 14% was introduced for certain types of agricultural products. as of today, the 14% rate applies to the supply of wheat and a mixture of crushed wheat and rye (meslin), barley, corn, soybeans, seeds of rapeseed, sunflower seeds (tax code of ukraine, 2021). this situation meets the requirements of the association agreement with the eu. however, the analysis of tax changes (rudyk, 2020) showed table 4 small business entities in the agricultural sector group of payers criteria entrepreneur average number of employees the amount of income during the year according to the tcu other (special) general system of taxation individual entre-preneur up to 10 people – micro-enterprises, up to 50 – small businesses agricultural activity legal entity simplified taxation system – a single tax 2 group individual entre-preneur up to 10 people – micro-enterprises, up to 50 – small businesses 834 minimum wages agricultural activity 3 group individual entre-preneur 1167 minimum wages vat payers or non-payers legal entity 4 group legal entity without re-strictions the share of agricultural production for the pre-vious tax (reporting) year is equal to or ex-ceeds 75% individual entre-preneurs who carry out activities within the farm the area of agricultural land is not less than 2 hectares but not more than 20 hectares of members of the farm source: formed by (commercial code of ukraine; tax code of ukraine, 2021) three seas economic journal 101 vol. 2 no. 3, 2021 the process of stagnation of ukraine's economy, increasing tax burden (especially on individual entrepreneurs), lack of economic growth, increasing the scale of the negative of tax innovations. therefore, the consequences were layoffs, closures, "shadowing" of businesses and the expansion of the shadow economy in the country as a whole. ukrainian tax legislation, which seems to provide opportunities for work in a simplified way, is still supported by many negatives. and above all – the instability of tax legislation does not improve the functioning and development of small businesses. addressing these issues requires improving the transparency of the tax system, introducing simplifications in the tax burden, increasing the effectiveness of government decisions. state support for the agricultural sector in the european union is different from that in ukraine, it is more about social considerations and food security than the economic component. according to research (artemyeva, denisovets, 2020), it is determined that in the european union 40% of the state budget is spent on supporting small agricultural enterprises. in ukraine, on the other hand, this figure is 1% of the state budget. we share the opinion (kohut, 2021) that one of the main reasons for the negative perception of indirect taxes by its payers is the complexity of the mechanism of its accounting and reporting, which leads to misunderstanding or misunderstanding of the economic nature of these taxes. there is a need for constant outreach among taxpayers, training and retraining of tax officials, ensuring and protecting the rights of taxpayers and a gradual transition from the application of enhanced and strict tax control to the ideology of partnerships with taxpayers with positive changes in economic development – institutional environment. based on the study, it should be noted that the development of small business is of increasing importance in filling the country 's budget. however, this category of entrepreneurs experiences the greatest tax burden and pressure. the current situation in agriculture indicates the shortcomings and insufficient efficiency of the tax system, which requires scientific and methodological support for a consistent and stable tax policy for this category of taxpayers, the use of tax incentives for small businesses, improving the simplified system of small business taxation. 5. accounting for small businesses in the agricultural sector addressing the issue of organization of accounting by small businesses in the context of european integration, it is necessary to outline the scope of the feasibility of changes in the accounting system. the international regulatory standard that defines the accounting aspects of small and medium-sized enterprises is the international financial reporting standard for small and medium-sized enterprises (ifrs for smes, 2021). however, the approach to its application in different countries of the european union is different, due to the difference in the criteria for classifying an enterprise as a small business entity. the standard is not mandatory even in countries that comply with international financial reporting standards, although it is adapted to the needs of a certain category of business entities. researchers note that the use of ifrs for smes may be essential for ukrainian businesses that have decided to voluntarily prepare financial statements based on the requirements of international standards. one of the priorities of the european union's economic policy is to reduce the regulatory burden on smes, including reducing their costs for preparing, presenting and publishing financial statements, which should be facilitated by the application of ifrs for smes (nebiltsova, korol, 2015). however, this standard is based on the principles of a "complete set" of international financial reporting standards, provides for the formation of a complete package of forms of financial statements. this document is quite voluminous, contains 35 sections. its use requires an appropriate level of knowledge in the field of accounting and taxation – and we are talking about simplification for small businesses. at the same time, we do not reduce the role of primary accounting and accounting registers, which are the initial data for the formation of indicators of financial and tax reporting. note that the law of ukraine "on accounting and financial reporting in ukraine" (on accounting) for micro and small enterprises, in addition to those required to prepare financial statements in accordance with international standards, sets abbreviated financial statements as part of the balance sheet and statement of financial performance, the procedure for which is governed by the regulation (standard) of accounting 25 "simplified financial statements". for the formation of abbreviated reporting, certain criteria are defined, at least two of which must be met: – micro-enterprises: book value of assets – up to 350 thousand euros; net in-come from sales of products (goods, works, services) – up to 700 thousand euros; average number of employees – up to 10 people; – small businesses: book value of assets – up to 4 million euros; net income from sales of products (goods, works, services) – up to 8 million euros; average number of employees – up to 50 people. at the same time, micro-enterprises include enterprises that keep simplified ac-counting of income and expenses in accordance with tax legislation. three seas economic journal 102 vol. 2 no. 3, 2021 for accounting generalization of economic activity, natural persons-entrepreneurs keep records in any form in accordance with the law of ukraine "on amendments to the tax code of ukraine on the functioning of the electronic cabinet and simplify the work of natural persons-entrepreneurs" 86786-ix. thus, in july 2020, the use of the book of fr. thus, it can be argued that the level of organization of accounting depends on the effectiveness of the entire system of interests of users of financial statements and the functioning of accounting in the enterprise as a whole. a certain problem is the inconsistency in the accounting system of financial and tax accounting for the for-mation of a harmonized information product. it is clear that ukraine is obliged to comply with the agreements under the as-sociation agreement with the eu. however, it is necessary to harmonize various legislative documents and regulations that determine the order of operation, accounting and reporting of small businesses, including agricultural sector. it is necessary to create organizational and legal conditions, conduct training of entrepreneurs and explanatory work on the priorities of the transition to international accounting standards. table 5 approved forms of accounting in ukraine name of methodical recommenda-tions approved forms of accounting recommended for use methodical recommendations on the organization and maintenance of accounting in peasant (farmer) farms order of 02.07.2001 № 189 simple peasant (farming) farms without the involvement of employees simplified peasant (farming) farms with the involvement of employ-ees methodical recommendations on the use of accounting registers by small enterprises order of 25.06.2003 № 422 simple small businesses simplified small businesses methodical recommendations on the use of accounting registers by small enterprises order dated 15.06.2011 № 720 simplified small businesses that meet the requirements of art. 156 tcu methodical recommendations on the use of accounting registers order of 29.12.2000 № 356 journal-order enterprises and organizations and other legal entities (except banks and budgetary institutions) methodical recommendations on the use of registers of journal-order form of accounting for agricultural enterprises order of 04.06.2009 № 390 journal-order agricultural enterprises source: (podolianchuk, 2020) 6. conclusions in the context of the european integration vector, the issues of improving the domestic model of small business development, accounting and taxation systems should be considered taking into account the national interests of economic development. the fiscal orientation of accounting should be reoriented to the needs of the management system and quality information support of various user groups, including foreign investors. legislation on accounting and taxation systems, opening and registration of small and micro enterprises needs to be changed. state support for the development of small business should be aimed at creating favorable tax conditions and a clear accounting system. to do this, it is necessary to: provide information and financial support for the process of business organization and the transition to international accounting standards; to organize a system of training of entrepreneurs and retraining of accountants; streamline mechanisms for protecting the rights of small businesses. the state will be able to receive significant benefits from the implementation of these measures in the form of improving the system of tax administration, increasing tax revenues, reducing "shadow transactions" and "tax carousels". references: artemyeva, o. o., & denisovets, n. o. 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(2021). podatkove administruvannya diyalʹnosti maloho ta serednʹoho biznesu v ukrayini [tax administration of small and medium business in ukraine]. visnyk onu imeni mechnykova, 26, 2(37), 73–78. uhody pro asotsiatsiyu mizh ukrayinoyu, z odniyeyi storony, ta yevropeysʹkym soyuzom, yevropeysʹkym spivtovarystvom z atomnoyi enerhiyi i yikhnimy derzhavamy-chlenamy, z inshoyi storony [association agreements between ukraine, of the one part, and the european union, the european atomic energy community and their member states, of the other part]. ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: https://zakon.rada.gov.ua/laws/show/984_011#text (accessed september 20, 2021). three seas economic journal 105 vol. 3 no. 2, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: tomashuk.inna@ukr.net orcid: https://orcid.org/0000-0001-6847-3136 researcherid: https://publons.com/researcher/1928765/inna-tomashuk/ doi: https://doi.org/10.30525/2661-5150/2022-2-15 green economy as a guarantee of sustainable development inna tomashuk1 abstract. the purpose of the article is to analyze current trends in the concept of sustainable development in the world economy, taking into account new trends in the "green" economy and "greening" of the international financial system, which is the basis of "green" investment. methodology. the work uses general and special methods and techniques of cognition: methods of theoretical generalization, analysis, synthesis and grouping, logicalhistorical method, deduction and induction. the strategic priorities of formation of new "green" directions of economy and ecological transformation of economy of existing branches are analyzed. it is proposed to find ways of further development based on the preservation of natural potential, which is associated with numerous benefits for the international community and all nations in terms of food, energy and water security and climate change. the priority formations of the state policy on the basis of introduction of innovative ecologically safe technologies which will be able to provide sustainable development of a society in strategic perspective are defined. the current trends in the implementation of the concept of sustainable development in the world economy are analyzed, with special attention to new trends in the "green" economy and "greening" of the international financial system, which is the basis of "green" investment. results indicate that the transformation of the economy in the direction of ecology has laid the foundations for the concept of sustainable development. the "green" economy is the basis for the implementation of the concept of sustainable development on the basis of more efficient resource and energy consumption, reduction of co2 emissions, reduction of harmful effects on the environment and development of a socially integrated society. practical implications. "greening" the economy requires "reformatting" current and future investments, additional costs beyond the usual approach. the un conference on sustainable development rio + 20 in 2012 became a platform for the development of a "green" economy at the international level: the "green" economy has been officially recognized as an appropriate tool for promoting sustainable development. an obvious barrier to the development of "green" investment at the state level is the lack of quality of basic strategic documents on sustainable development and their practical effectiveness. in line with its commitments under the paris agreement and the global sustainable development goals (csds), international financial organizations, banking unions and institutions, as well as governments in most parts of the world, have begun to work actively for green finance. value/originality. green funding is seen today as funding for the "future": the need to combine funding and meeting the csds. the contribution of business to environmental issues involves the commitment to compensate for environmental damage due to economic activities. key words: green economy, sustainable development, competitiveness, efficiency, green investment, globalization, greening, modernization. jel classification: q50, e60, f60 1. іntroduction an urgent problem facing ukraine is to substantiate the directions of increasing competitiveness in the field of "green economy ", gaining a strong position in the international market. after all, ensuring the competitiveness of the economy is a priority of any state that cares about its place in the world market and its economic growth. since 2020, ukraine has had the law "on the basic principles of the state environmental policy of ukraine until 2030", in which the country declared its commitment to sustainable development goals and the principles of "green economy ", which provide for environmentally sustainable or environmentally balanced economic growth. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 106 vol. 3 no. 2, 2022 the "green economy " is based on the principles of innovation, security for man and nature, rational and economical treatment of limited natural resources, is most acceptable for countries aiming at the transition to sustainable development, care for quality of life and future generations. at the same time, the country is not able to make the transition to sustainable development and the green economy alone – it requires the joint efforts of as many countries as possible and the establishment of effective international cooperation (green economy as a factor in ensuring the competitiveness of the state, 2022). the need for the evolution of ukraine through sustainable development, green economic growth, combined with active social policy of the state, democratization of components of public life, requires the formation of a qualitatively new state and regional policy. the national economy needs to adapt to the requirements of competition, increase the efficiency and knowledge intensity of production, update environmental standards and implement environmental standards harmonized with inter national and european (order of the cabinet of ministers of ukraine "on approval of the energy strategy of ukraine for the period up to 2035, 2017). sustainable consumption and production involves stimulating the efficiency of resource and energy use; formation of sustainable infrastructure; free access to basic social services; providing "green" and decent jobs and a better quality of life for all. 2. the transition of the national economy to a "green" model of development modern processes of modernization of the national economy of ukraine face the problems of limited resources and environmental pollution, which further negatively affect the factors of production. one of the ways to ensure the sustainable develop ment of the national economy is the introduction of the so-called "green" economy, which helps reduce risks to the environment and resource conservation, as well as attract private, public and international investment. it is the green economy that stimulates green growth, which, according to the requirements of the organization for economic cooperation and development (oecd), is to identify cleaner sources of growth, development of new environmentally friendly industries, job creation and technology (the strategy of "green" growth oecd, 2021). today, ukrainian companies are looking for new ways to achieve environmental cleanliness, opening new avenues in the green economy, which not only preserves the environment but also improves its competitiveness in foreign and domestic markets by modernizing the production process (makovoz, perederiy, 2018). in figure 1 presents a model of sustainable consumption and production. one of the important tasks facing ukraine is the transition of the national economy to a "green" model of development based on sustainable production and consumption, efficient use of material resources, as well as promoting business activities in the field of resource-efficient and environmentally friendly production (the strategy of "green" growth oecd, 2021). the concept of a green economy invites govern ments, businesses and citizens to move towards balanced development paths, including promoting investment in natural capital (increasing the share of protected areas, strengthening forest protection, etc.), solving energy problems and providing clean food, focusing on land use and land use planning, optimal allocation of limited resources and improved resource management. the model of "green economy " provides a harmonious combination of economic needs of society with the need for constant recovery and preservation of the environment (green economy as a factor in ensuring the competitiveness of the state, 2022; tomashuk, 2019). the course for greening the economy, which is guided by the european union, is based on the principles of the concept of sustainable development. accordingly, the scale of measures for cooperation between the eu and ukraine in the field of environmental protection and greening of our economy is outlined by the desire to minimize environmental externalities for the full existence of future generations. the transition to such an economy can be ensured by annual investments of 2% of world gdp (approximately $ 1.3 billion) during 2012–2050. the simulation showed that the scenario of "green" investment will provide for 5-10 years higher annual growth rates than investment in conventional development. greening the economy is a way to eradicate poverty. there is a direct link between the eradication of poverty and the sound management of natural resources and ecosystems, as the poor benefit directly from increasing natural capital. implementation of the model of "green" economy involves increasing the role of the state and intergovernmental bodies in economic regulation, creating conditions for business development based on new environmental standards and technologies for cleaner production, greening of industrial sectors. 3. the main tools and structure of the "green economy" in the conditions of resource and energy dependence of ukraine, which is formed by the situation when environmentally harmful technologies are used in obsolete energy inefficient enterprises, it is the gradual three seas economic journal 107 vol. 3 no. 2, 2022 waste management steel purchasessustainable marketing sustainable resource management eco labeling and certification sustainable consumption and production became a model of behavior sustainable transport environmentally sustainable design environmentally friendly production and resource efficiency figure 1. model of sustainable consumption and production source: formed according to the results of the study • it is impossible to infinitely expand the spheres of influence in a limited space. • it is impossible to demand the satisfaction of endlessly growing needs in conditions of limited resources. • all surfaces of the earth are interdependent. figure 2. axioms of the theory of "green economy" source: formed according to the results of the study replacement of "brown" industrial economy with new "green" as a strategic priority gives a chance to ensure national security in the coming decades ("green" economy, 2022). the theory of green economy is based on 3 axioms (figure 2). a wide range of tools is proposed for the intro duction of the "green economy " (figure 3). at the regional level, the problems of ukraine’s "green economy " are solved through the implementation of international economic cooperation projects, especially in the framework of the association agreement with the eu. european countries, respectively, are the largest partners in regional "green" development (green economy as a factor in ensuring the competitiveness of the state, 2022). in figure 4 presents the structure of the "green" economy. in the conditions of modern development of production there is a necessity to overcome or at three seas economic journal 108 vol. 3 no. 2, 2022 iv  introduce targeted state support for research and development related to the creation of environmentally friendly technologies. ііі  reform the "environmental" taxation system, which will eliminate the emphasis of the labor tax on pollution taxes. і  introduce pricing in accordance with the principles of sustainable development, including the rejection of inefficient subsidies. assess natural resources in monetary units. introduce the introduction of taxes on what is harmful to the environment. іі  introduce a public procurement policy that will encourage the production of ecological products using such production methods that will comply with the principles of sustainable development. v  develop social strategies designed to ensure consistency between industry goals and existing or proposed economic strategies. vі  promote public investment in sustainable infrastructure (including public transport, renewable energy, construction of energy efficient buildings) and natural capital to restore, maintain and increase natural capital. • ecosystem (natural capital) purpose: to maintain environmental sustainability • economy (production and financial capital) purpose: to increase the efficiency of resource use • human well-being (social and human capital) purpose: to increase social justice l is t o f i ns tr um en ts o f t he "g re en e co no m y" figure 3. the main tools of the "green economy" source: (green economy, 2022) iv  introduce targeted state support for research and development related to the creation of environmentally friendly technologies. ііі  reform the "environmental" taxation system, which will eliminate the emphasis of the labor tax on pollution taxes. і  introduce pricing in accordance with the principles of sustainable development, including the rejection of inefficient subsidies. assess natural resources in monetary units. introduce the introduction of taxes on what is harmful to the environment. іі  introduce a public procurement policy that will encourage the production of ecological products using such production methods that will comply with the principles of sustainable development. v  develop social strategies designed to ensure consistency between industry goals and existing or proposed economic strategies. vі  promote public investment in sustainable infrastructure (including public transport, renewable energy, construction of energy efficient buildings) and natural capital to restore, maintain and increase natural capital. • ecosystem (natural capital) purpose: to maintain environmental sustainability • economy (production and financial capital) purpose: to increase the efficiency of resource use • human well-being (social and human capital) purpose: to increase social justice l is t o f i ns tr um en ts o f t he "g re en e co no m y" figure 4. the structure of the "green" economy source: formed according to the results of the study least partially minimize the revealed contradictions between the level of technological process and the means supporting ecological safety of human life. on the way to sustainable development of production it is necessary to find innovative ways to ensure economic growth and at the same time improve the environmental performance of production processes and products. the role of the state in this process is to create the most favorable conditions for the development of environmentally friendly business (law of ukraine, 2019). three seas economic journal 109 vol. 3 no. 2, 2022 4. sustainable development goals as the basis of a "green" economy key global initiatives – the 2030 agenda for sustainable development, the sustainable development goals and the paris agreement – demonstrate efforts to find a global consensus on strengthening the importance of the environmental factor in international organizations, institutional investors and tncs, and global politics. the manifestation of this effort was the increasingly pronounced transition of countries to a "green" economy. the human development index is one of the components of a green economy. in the table 1 presents a list of countries on the human develop ment index. ukraine ranks 74th, although it has improved by 14 points over the past year. the "green" economy is a new trend that is seen as an important area of structural reform and aims to raise awareness of the real environmental, energy and socio-economic situation of the world by identifying ideological options for better understanding the dilemma "of economic growth vs environmental protection" and finding optimal ways and more effective tools to solve the problems faced by society. the goal of the green economy is to ensure, in line with the global sustainable development goals (sdgs), a shift towards sustainable production and consumption while integrating environmental issues into the decision-making process. it is obvious that achieving progress is the result of accumulating and investing considerable finances and investments. in this regard, the international financial system needs not only stronger regulation to ensure stability, but also a deeper transformation in order to be able to finance economically sustainable, "green" growth. and today, thanks to the consolidation of efforts of state and supranational authorities, as well as international business and financial institutions to build an effective mechanism of "green" funding, practical steps have been taken in this direction. ukraine, which has joined the sustainable development goals (sdgs) (table 2) and the paris agreement, has managed to "declare" its commitment to the new trend. although progress is not very noticeable, through the introduction of financial instruments to support the "green" economy, the country has begun to take steps towards "green" growth: promote renewable energy, implement energy efficiency measures, promote clean technologies in industry and agriculture. develop "green" construction (green investments in sustainable development: world experience and ukrainian context, 2019). the main goal of the concept of "green" economy is to achieve significant progress in the relationship "ecology ", as a "pillar" of the concept of sustainable development and proposals to governments to move to sustainable development, which includes promoting investment in natural capital, solving energy problems and providing the population with ecologically clean food, paying attention to land use and optimal resource management, transition to more efficient, environmentally and resource-saving technologies aimed at reducing pollutant emissions, stopping resource depletion, mitigating the effects of climate change (green investments in sustainable development: world experience and ukrainian context, 2019; baldynyuk, tomashuk, 2021). in the table 3 presents information on the main communication "platforms" of the "green" economy in the world. at the international level, for example, one of the first was the declaration of g20 business leaders on green growth (during the 2012 b20 summit in los cabos, mexico), which proposed a number of measures. in the table 4 presents information on the priority measures of the declaration on green growth. the european union has adopted a pan-european economic recovery plan, which provides € 400 billion table 1 list of countries according to the human development index place in 2019 (report in 2020) difference with previous period (place) country human development index (hdi) difference with previous period (hdi) 1 norway 0,957 +0,003 2 +1 ireland 0,955 +0,013 2 switzerland 0,955 +0,009 6 -2 germany 0,947 +0,008 13 +2 united kingdom 0,932 +0,012 16 -2 canada 0,929 +0,007 52 -3 russia 0,824 53 -3 belarus 0,823 +0,006 61 +9 georgia 0,812 +0,026 74 +14 ukraine 0,779 +0,029 90 +17 moldova 0,750 +0,039 116 egypt 0,707 +0,007 source: (list of countries according to the human development index, 2022) three seas economic journal 110 vol. 3 no. 2, 2022 table 2 sustainable development goals № the name of the goal 1 overcoming poverty in all its forms and everywhere; 2 overcoming hunger, achieving food security, improving nutrition and promoting sustainable agricultural development; 3 ensuring a healthy lifestyle and promoting well-being for all at any age; 4 providing comprehensive and fair quality education and encouraging lifelong learning opportunities for all; 5 ensuring gender equality, empowerment of all women and girls; 6 ensuring the availability and rational use of water resources and sanitation for all; 7 ensuring access to low-cost, reliable, sustainable and modern energy sources for all; 8 promoting progressive, inclusive and sustainable economic growth, full and productive employment and decent work for all; 9 creating sustainable infrastructure, promoting inclusive and sustainable industrialization and innovation; 10 reduction of inequality within and between countries; 11 ensuring openness, security, sustainability and environmental sustainability of cities and towns; 12 ensuring the transition to rational models of consumption and production; 13 take urgent action to combat climate change and its consequences; 14 preservation and rational use of oceans, seas and marine resources in the interests of sustainable development; 15 protection, restoration of land ecosystems and promotion of their rational use, rational forest use, combating desertification, stopping and reversing the process of land degradation and stopping the process of biodiversity loss; 16 promoting a peaceful and open society for sustainable development, ensuring access to justice for all and creating effective, accountable and participatory institutions at all levels; 17 strengthening the means of implementation and intensification of work within the framework of the global partnership for sustainable development. source: (global sustainable development goals 2016–2030, 2021) table 3 the main communication "platforms" of the "green" economy № platform name platform description 1 global green growth institute (gggi) an intergovernmental organization headquartered in seoul, established at the rio + 20 summit to promote green growth. the tasks of the institute are: implementation of national plans for "green" growth and dissemination of research results. the institute operates mainly in low-income economies and developing countries, and focuses on sectors such as energy, water management, land use. 2 green growth knowledge platform (ggkp) an initiative of various international organizations (gggi, unep, oecd and wb), established in january 2012, exchanges policy recommendations, best practices, tools and data needed to support the transition to a green economy. one of the few initiatives that for the first time brought together large international institutions with different goals and objectives in order to accelerate the development and dissemination of knowledge about the "green" economy. 3 green economy coalition the world’s largest stakeholder network in the green economy, established in 2009. its main participants are intergovernmental organizations, business, trade unions, research institutes and non-governmental organizations. according to the coalition members, economic, social and environmental crises are interrelated and can be resolved through a global transition to a green and fair economy. 4 global green growth forum. 5 environment and security initiative. 6 seoul initiative network on green growth. 7 green growth cities. 8 green growth group. 9 green growth initiative. source: (green investments in sustainable development: world experience and ukrainian context, 2019) in aid to increase purchasing power, boost economic growth and create jobs. the economic recovery plan envisages the adoption of a number of environmentallyoriented measures, in particular to combat climate change, energy efficiency, clean technologies, increase environmentally-oriented professional knowledge and support environmentally-oriented products (gritsyuk, vasilenko, 2014). in figure 5 presents the priorities of the low-carbon economy roadmap. along with the countrie’s adoption of green growth strategies, the assessment of the implementation of actions and tasks set out in these documents remains an issue. a balanced framework for a green economy needs to be complemented by a comprehensive and appropriate framework for measuring progress. today, the "greenness" of the economy is considered mainly at the qualitative level, and so far no unified system of its measurement and evaluation has been developed. three seas economic journal 111 vol. 3 no. 2, 2022 due to the lack of measurability, it is impossible to say clearly which country’s economy is more or less "green". without effective measurement, it is extremely difficult to assess policy effectiveness, identify and measure the potentially transformative role of the green economy concept or the level of achievement of sustainable development goals (sdgs). today there are a number of systems for evaluating and measuring the practical implementation of the concept of "green" economy. thus, in 2009 the international organization gresb (global real estate sustainability benchmark) published the first system of assessments of sustainable development and compliance with esg principles. gresb methodology allows monitoring of infrastructure projects, including energy, electricity transmission, sewerage, transport, social infrastructure, telecommunications. when calculating the gresb rating, it relies on management quality indicators, information disclosure policies, risk profile, performance of the operating company, etc. other evaluation systems include the united nations ’system of environmental-economic accounting table 4 priority actions of the declaration on green growth № the name of the event the main characteristics of the event 1 free trade in "green" goods and services. initiate the liberalization of trade in energy goods and services in order to eliminate tariffs, local content requirements and other non-tariff barriers, and coordinate technical standards. this will provide positive incentives for the development and expansion of the use of goods and services from clean energy sources, helping to reduce ghg emissions and ensure energy security. 2 reliable pricing for carbon emissions. ensure a high and sufficiently stable carbon price to change investment interests, which will increase incentives to invest in environmentally sustainable technologies. 3 cessation and reorientation of inefficient subsidies for fossil fuels. development of national plans for phasing out inefficient subsidies for fossil fuels and redirecting some of these subsidies to ensure access to energy for the poorest and other public investment priorities in "green" infrastructure. 4 introduction of low-carbon innovations. use the proceeds of carbon pricing to increase support for research, development, demonstration and deployment of low-carbon technologies by joining international efforts. 5 make considerable efforts in terms of public funding to create conditions for the mobilization of private investment. source: (green investments in sustainable development: world experience and ukrainian context, 2019) іі increasing the share of renewable energy sources (res) in the energy balance. (the share of res in final energy consumption should reach 75%, and in electricity consumption – 97%. the scenario is in line with the forecast of eu energy development prospects proposed by the european renewable energy council (erec) – "re-thinking 2050". there is a real possibility to cover the eu's energy needs in 2050 by almost 100% through res. this can be achieved through the use of "clean" technologies) iv reduction of ghg emissions in the industrial sector by 83-87% in 2050. (this will be possible through the use of better resourceand energy-efficient industrial processes and equipment, as well as the introduction of technologies that will help reduce emissions such as nitrous oxide and methane) ііі decarbonization of energy. (introduction of tax policy aimed at reducing co2 emissions) і improving energy efficiency and energy saving. (energy needs in the eu in 2050, compared to 2005, should decrease by 40%) figure 5. priorities of the low-carbon economy roadmap source: (a 100% renewable energy vision for the european union. european renewable energy council, 2010) three seas economic journal 112 vol. 3 no. 2, 2022 (seea) [22], which has become a global attempt to establish harmonized accounting standards that measure the financial commitment of the economy to the environment. this system was adopted as an international standard by the un statistical commission at its 43rd session in march 2012 and created as a conceptual framework for understanding the interaction between the economy and the environment; wealth accounting and valuation of ecosystem services (waves) global partnership. its activities are aimed at developing internationally agreed methods of accounting for natural capital and ecosystem services, assisting countries in reporting and including it in policy development; the organization for economic co-operation and development (oecd) has identified a number of green growth indicators [23], which are divided into four main groups: environ mental and resource productivity, natural asset base, environmental quality of life, economic opportunities and policies reaction. 5. new green agreement for european countries and swot analysis оf the concept of "green" economy in the summer of 2019, the new president of the ec ursula von der leyen presented a program proposal for the restructuring of the eu, entitled "the green new deal for europe" (the green new deal). the program combined three "pillars": green public work; the environmental union; environmental justice commission. one of the main tenets of the agreement is to respond to the climate crisis, which must be "alive and dynamic". green public works – an investment program designed to transform europe and pursue the concept of environmental justice (aims to achieve the decarbonisation of the european economy, reduce biodiversity loss and provide decent jobs on the continent). the program will be financed by "green" bonds issued by the european investment bank (eib). funding will be provided to private companies that will be able to achieve social and environmental goals: reorient production to recycling and repair, extend the product life cycle and reduce the working week. as well as those companies in which workers are appointed to higher positions, and part of their profits are transferred to a fund that pays dividends to employees and generates additional resources for a fair transition. union for the environment – a package of legal acts that bring eu policy in line with science and consolidate the principles of sustainability and solidarity in european law. the union offers a credible and comprehensive package of documents for european policy restructuring, based on climate change and environmental degradation, with a view to making europe a world leader in "green" transition. in particular, a legal framework is being developed to ensure the sustainability and elimination of environmentally destructive methods in europe and table 5 swot analysis of the concept of "green" economy strengths weak sides promotion of the concept at the international level. no internationally established definition of a “green” economy. positive impact on environmental, economic and social transformations. systems for measuring the size of the “green” economy remain unclear and uncertain. comprehensive approach that promotes cross-sectoral integration. introduction of the concept and its effectiveness at the global level largely depends on the potential of individual territories, regions and countries, which is not always sufficient. use of local / regional practices and knowledge. lack of a clear understanding of the possibilities of obtaining financial benefits from the transition to a “green” economy. promoting stakeholder involvement and empowering local communities. lack of understanding of losses for existing business models, jobs and existing economic entities operating in the “brown” economy. opportunities threats focusing on climate change and sustainable development. lack or insufficient public and private funding for appropriate development and adaptation measures. opening new business opportunities. challenges regarding changes in consumer and production regimes and lifestyles that are commonplace. promoting energy independence, as well as food security and water security. involvement of the interests of those who represent the interests of companies operating in sectors of the "brown" economy. the transition to a green economy may result in the loss of jobs and income for those working in the brown economy. reducing poverty, promoting equitable distribution of wealth and social justice. increasing the resilience of society to internal and external threats / shocks. creation of skilled jobs. source: (green investments in sustainable development: world experience and ukrainian context, 2019; нoncharuk, tomashuk, 2019) three seas economic journal 113 vol. 3 no. 2, 2022 across all supply chains that link european structures with production processes outside it. under the sustainable development legislation package, the union is calling for a radical overhaul of eu energy policy, one of which is the refusal to provide subsidies for fossil fuels (both direct and indirect). at the same time, the sectors that generate the most emissions should be taxed, and the income generated should be used to address the daily lives of europeans. commission for environmental justice – an independent body that will research, monitor and advise eu policymakers on environmental justice. called to implement the prescribed "systemic changes" and is the first international body whose task is to ensure a fair "green" transition. the commission will develop and apply its dimensions of international justice in several key areas, including migration. the commission will develop the first comprehensive database on environmental migration and advise the eu authorities on the recognition of climate refugees and their asylum rights (green investments in sustainable development: world experience and ukrainian context, 2019). general conclusions from the concept of "green" economy can be outlined in the swot analysis (table 5). the theory of sustainable development can be traced in the world happiness rating (figure 6). the authors of this project believe that the research will be able to help government leaders, politicians and public figures to better respond to the needs and expectations of their citizens in order to improve the well-being and sustainable development. the study is being conducted by the earth institute research center at columbia university under the auspices of the united nations as part of the un sustainable development solutions network’s global initiative to showcase the achievements of countries and regions in terms of their ability to provide their residents with a happy life. the ranking appeared at a time when international organizations in comparative studies of the achievements of countries began to pay more attention to the intangible component, the development of views, which is important for further development and affects indicators related to human development, environment (sustainable development theory) etc. in this ranking, ukraine ranks 110th among 149 countries. the main idea of the ranking of world countries on the level of happiness of the population was to understand that the focus of international comparative research on economic indicators such as gross domestic product per capita and others does not provide an objective picture of their well-being, change and sustainable development. 6. formation of the financial system in the conditions of sustainable development the world community has recognized that sustainable development "should be a priority on the agenda of international cooperation". it is generally accepted to understand balanced development as a harmonious combination of economic, social and environmental components of development. only achieving a balance between them will provide an opportunity to move to a social development that 1 2 3 4 5 34 44 46 53 65 75 76 110 149 0 20 40 60 80 100 120 140 160 finland denmark switzerland iceland netherlands slovakia poland romania hungary moldova belarus russia ukraine afghanistan figure 6. the place of some countries in the world happiness rating for 2018–2021 (world happiness report 2021) source: (world happiness report 2021) three seas economic journal 114 vol. 3 no. 2, 2022 will not deplete natural and human resources, and therefore will be able to last long enough (what is sustainable development, 2022; tomashuk, 2020). in figure 7 presents the main aspects of sustainable development of production. sustainable development is one of the main goals of ukraine’s economic policy in the near future, and finance is the main source of achieving this goal. the task of the financial system in the context of sustainable development is to "serve" sectors of the real economy and provide a wide range of financial services to households and can be developed as follows: – the transition of the real sector of the economy to sustainable development creates requirements for the financial system, which is manifested in large-scale mobilization of capital with an emphasis on social and environmental factors; – the existing financial system shapes environmental and social outcomes in the real economy through political and regulatory measures. the formation of the financial system in terms of sustainable development must go through a number of stages: gradual introduction of sustainable financing, active development of financial products / services and instruments, formation of special institutions that are sustainable (including funds and banks), institutionalization of the process the activities of financial institutions should be built in line with the global sustainable development goals (sdgs), renewal of financial management and organizational strategy, change of financial culture (markevych, 2022). in the table 6 presents the main ways to update the financial system of sustainable develop ment. the financial system needs to change gradually: in the way relevant regulations and documents are adopted, and the private sector defines its responsibilities and obligations. changing the financial system will require the development and adoption of a strategy for financing sustainable development, which should take into account all possible sources of funding – from public and private to domestic and international. in figure 8 shows the impact of sustainable development on the interaction of the financial system and the real economy. the strategy of sustainable financing must be consistent with the main pillars of social justice: investing in human capital and promoting employ ment. at the same time, at the legislative level it is necessary to define the categorical apparatus and provide an interpretation of "sustainable finance" in order to avoid ideological, methodological, regulatory and economic contradictions. 7. findings global environmental challenges have posed new challenges and challenges to society in reducing the negative impact on the environment. the tasks are solved by implementing projects that help reduce carbon emissions. today, such projects require the use of the latest forms of capital raising. active introduction and use of innovations in financial technologies will be necessary in the near future. economic (income) social (people) innovative development environment (resource) sustainability * equity * environmental effect * the possibility of existence figure 7. aspects of sustainable development of production source: formed according to the results of the study three seas economic journal 115 vol. 3 no. 2, 2022 table 6 ways to update the financial system of sustainable development № name characteristic і inclusion of the sustainable development goals (sdgs) by 2030 in the strategy of reforming national financial systems and development strategy it is a question of unification of national features and new practices of financial regulation, development of the basic tools of "green" financing, maintenance of cooperation of the public and private finances. (in 2016, about 10 countries had national plans for sustainable finance. by 2020, the goal was to develop 50 national and / or regional roadmaps, create major financial centers that will be key in shaping new global finance standards). іі use of new financial technologies (fintech) to finance sustainable development (technology will play a more important role in the comprehensive transformation of finance and will affect the ability of finance to "serve" the needs of sustainable development. this will require the integration of technical aspects into national strategies aimed at aligning the development of the financial market with the expected results of sustainability:) expanding access to sustainable financing for low-income communities, micro-enterprises and small and medium-sized enterprises (smes). strengthen the mobilization of domestic savings for long-term sustainability-oriented investments. (it is proposed to create an international coalition of leading fintech participants, which will facilitate the development of codes, standards and rules, as well as policy incentives to better align fintech development with sustainable development). ііі active use of the potential of public finances in the areas: budget financing and subsidies. assistance in creating new environmentally responsible financial institutions and markets. promoting relevant regulatory rules and practices. in particular, to strengthen the role of public finances, it is necessary to assess the effects of certain fiscal incentives, namely "unjustified subsidies" (perverse subsidies) and identify fiscally neutral tax incentives that will help achieve "green" goals of the real economy. (it is advisable to assess the role of public finance in the formation and growth of major "green" and sustainable financial markets ( for example, the market of "green" bonds). among other things, identifying ways in which innovative rules and practices adopted by public finance institutions for sustainable development can be communicated and adopted by private financial institutions). iv awareness raising and capacity building in the system (raising awareness and capacity building through market and political institutions is critical. ensuring the involvement of policy makers and regulators in the imperatives and risks associated with such plans, as well as the public, which is a "driver" of change. it needs:) awareness raising through intergovernmental platforms such as the g20 and g7, as well as international organizations and various specialized financial institutions. empower professionals in international finance, as well as policymakers and regulators, to make sustainability a core part of the skills and behaviors that shape the overall financial culture. raising public awareness of sustainable development through shared approaches to improving financial literacy and education. v incorporate the principles of sustainable development into existing methods, tools and standards of global financial reform. the most effective step would be to establish a common approach to such actions (including international organizations such as the imf and the world bank). it is necessary to cooperate primarily with standard-setting organizations, as well as to integrate with existing methodologies for assessing systemic risks. (financial standards should support and reflect the alignment of the financial system with sustainable development (especially performance standards). this alignment can be achieved by avoiding a “one size fits all” approach by: reviewing the implications for sustainable development – both positive and negative – of existing standards and processes; developing guidelines for studying compliance with sustainable development factors for existing standards and processes; assessing the impact of new work on financial standards and processes for sustainable development). source: (green investments in sustainable development: world experience and ukrainian context, 2019; kovalchuk, 2020) three seas economic journal 116 vol. 3 no. 2, 2022 modern digital technologies can facilitate financial and investment transactions and encourage investors to invest in the development of the future, encouraging society to be responsible for challenges and threats to the environment. for foreign investors, ukraine is attractive for several essential factors of economic development in general and doing business in particular. first, ukraine is a large market for the development and sale of technological innovations that can be made easily accessible to consumers. secondly, ukraine still has scientific and intellectual potential, which, given the creation of a proper labor market, can dynamically implement digital technologies in various sectors goals and challenges of sustainable developmen the real sector of the economy financial system capital mobilization transmission mechanisms response channels policy and regulation figure 8. the impact of sustainable development on the interaction of the financial system and the real economy source: formed according to the results of the study of the economy, including low-carbon production. third, the ukrainian energy market is currently undergoing a phase of renewal along with the search for alternative energy sources and their interaction with information technology. in order to improve the dynamics of attracting investment to ukraine to accelerate the development of "green" technologies, it is advisable to implement specific proposals (table 7). for an effective transition to a green economy, the country must have an effective policy framework in place to develop and implement strategies for developing a green economy based on an integrated and integrated approach, covering all spheres of public life. і a green economy is an economy that promotes growth human well-being and social strengthening justice while substantial reducing risks to the environment and scarcity environmental resources (unep definition). іі sustainable development is such development, which meets today’s needs of society, without compromising the possibility future generations to satisfy their own needs (unep commission). ііі brown economy – economic growth without regard to environmental requirements safety, depletion criteria available natural resources and pollution environment. і – "green" economy іі – sustainable development ііі – brown economy figure 9. definition of concepts of social development source: (galushkina, musina, potapenko 2017) three seas economic journal 117 vol. 3 no. 2, 2022 in the era of globalization transformations, the economy has become the dominant driving force of society, and security issues – the basis for determining the directions of state policy of social development. an important feature of the "green" economy is the attitude to maintain a variety of systems in which "green" criteria act as a filter to test the system for fairness and sustainability. at the same time, each such system has something to offer the world. the concept is aimed at improving global governance through a system of democratic institutions to achieve sustainable development and realization of human rights and dignity around the world (galushkina, musina, potapenko, 2017; kaletnik, lutkovskaya, 2022). in figure 9 defines the concepts of social development. the strategic goal of the industrial complex of ukraine in the period 2021–2030 provides for an evolutionary transition to sustainable development in the post-industrial world society based on the preservation and safety of human living space, industrial activities at the lowest cost through high efficient use of material and intellectual potential. 8. conclusions the transformation of the economy in the direction of ecology has laid the foundations for the concept of sustainable development. the dynamics of global co2 emissions show that the world economy has reached a critical level of carbon saturation. successful implementation of the concept of "green" economy, aimed at achieving the global goals of sustainable development (sdgs), can be achieved through the mobilization of financial resources with a focus on the transition to an environmentally responsible resource-efficient, low-carbon economy that supports progress in social development. the mobilization of financial resources for investment and innovation activities in the field of environmental protection is currently carried out due to the increase in banking institution’s operational activities to stimulate the implementation of "green" projects on the basis of environmentally and socially responsible financing. the investment attractiveness of sustainable development is quite high, the actual investment in a developed "green" economy remains table 7 proposals to accelerate the development of "green" technologies in ukraine № offer essence 1 take urgent measures to preserve the scientific and intellectual potential of ukraine, reduce the rate of its labor emigration with the involvement of leading foreign experts in digital technologies. to do this, it is necessary to increase funding for educational and research institutions to ensure decent living standards for scientists and educators. even with a slightly lower level of remuneration and working conditions than in the countries of emigration, it is possible to preserve the intellectual and labor potential in ukraine, thus slowing down the process of "brain drain". at the same time, it is necessary to expand the capacity of the intellectual labor market by increasing the number of international investment projects in the environment. 2 create a transparent energy market that will allow the development of healthy competition to gradually balance energy prices with market methods. creating a free market will increase the demand for new financial technologies in calculations, information exchange, cost optimization and more. thus, the gradual elimination of obstacles and the consolidation of clear legislation on the development of "green" energy in ukraine will create the basis for the active use of blockchain technologies, internet platforms, mobile applications and data automation. 3 develop, taking into account the domestic realities of the internet platform for the creation of innovative financial technologies and gradually implement them in environmental projects, periodically making appropriate changes to legislation. by improving the mechanisms of legal relations in the information field, it is possible not only to increase the intensity of financial infusions into ukraine from abroad, but also to direct them to those "green" projects that need the greatest financial support. 4 review current fundraising policies. radically review the current policy of raising funds by issuing domestic government bonds (iglbs) (terms of payment, interest rates, maturities, etc.) and strategically direct investment flows from portfolio to foreign direct investment with a significant share of "green" in the structure of the latter. 5 develop a system of state guarantees for investment in "green" projects, along with the impossibility of selling real investment objects and limiting the outflow of capital abroad in the short term (up to one year). on the one hand, state guarantees will help increase the confidence of foreign investors in conducting "green" business in ukraine, and on the other – will be an alternative tool to protect investment in advanced sectors of the real economy. at the same time, the state should help ensure that in the conditions of short-term market imbalances (for example, price volatility, currency fluctuations, temporary legislative restrictions) the national bank of ukraine (nbu) does not sell real assets and withdraw capital from the country using the latest financial technologies. source: formed according to the results of the study three seas economic journal 118 vol. 3 no. 2, 2022 extremely insufficient: actual investment in this area (even in the renewable energy sector, which is the largest recipient of such investment) is much less than objective needs. the introduction of effective mechanisms for "green" investment involves the integration of environmental and social elements in the processes of analysis, evaluation and decision-making of economic and financial decisions. the role of the state in the issue of ecology is key, because it is she who forms and implements environmental policy, the main task of which is to stabilize and improve the ecological condition of territories. references: the strategy of "green" growth oecd (2021). retrieved november 28, 2021 from www.oecd.org/greengrowth makovoz, o. s., & perederiy, t. s. 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(2019). governance and regulation as an indispensable condition for developing the potential of rural areas. baltic journal of economic studies, 5, 5, 67–78. doi: https://doi.org/10.30525/2256-0742/2019-5-5-67-78 three seas economic journal 91 vol. 1, no. 1, 2020 corresponding author: 1 institute of regional researchers of national academy of sciences of ukraine, ukraine. e-mail: yu.bashynska@ukr.net doi: https://doi.org/10.30525/2661-5150/2020-1-13 why is it reasonable to invest in renewable energy in ukraine? yuliia bashynska1 abstract. the purpose of the paper is to present the current status of renewable energy development in ukraine and to highlight the main advantages of investing in renewables in ukraine. the purpose is also to reveal the biggest renewable energy installations in ukraine. the paper displays the main financial initiatives of several international organizations and world economic leaders that have already announced plans to aid ukraine’s transition to renewable energy. methology. the survey is based on an analysis of the natural potential, legislative frameworks of the industry and active financial programmes. results of the survey provide the most attractive opportunities for investing in the emerging market of renewable energy in ukraine. the survey also shows the amount of economically viable potential of different renewable energy sources. besides, it is expected that renewable energy will enhance energy security and reduce the negative impact of industry on the environment. practical implications. since 2009 when the green tariff was first introduced in ukraine, the renewable energy sector has been developed to a great extent. although the sector faced some policy challenges in 2015, such as the imposition of new taxes, but technologies experienced rapid growth. nowadays the use of renewable energy sources is a priority way of sustainable energy system building in ukraine. there are several state and regional financial initiatives promoting renewable energy sources. as policymakers have focused on the renewable energy development, new investment centered in energy efficiency technologies. there will be a big step in the direction of renewables usage in private housing complexes. due to the survey, the main problem of renewable energy development is lack of funding. all the efforts made by the government create an enabling environment for foreign direct investments in renewable energy in ukraine. value/originality. wide renewable energy use would be a good solution for ukraine to decrease the amount of imported energy resources. boosting of renewable energy will also help to tackle global warming and negative changes of climate. that is why promoting of renewables use is very important for ukraine. on the other hand, renewable energy can become a profitable business for investors. key words: renewable energy, investments, energy efficiency, capacity, development, project. jel classification: e22, o38, q01 1. introduction one of the main problems with the current ukrainian energy sector is low energy efficiency and too much consumption of natural gas, oil, and coal. due to recent advances in technology there are several excellent alternatives to traditional energy sources such as gas, coal and oil. these alternatives are renewable energy sources and they are available in nearly every country in the world, as the sun shines and wind blows everywhere. today’s economic climate and pressing environmental issues make it ever more crucial to promote sustainable development in order to save our planet’s natural resources for future generations. i believe that renewable energy sources are the best all around solution for enriching ukraine’s industrial, agricultural and residential sectors. based on the successful implementation of renewable energy throughout the european union, ukraine is advantageously positioned to become a highly energy effective and independent state. ukraine has long been a key energy partner on the continent and already possesses renewable energy infrastructure and rich natural resources that, properly tapped, will greatly reduce dependence of ukraine on fossil fuel imports from russia. the current ukrainian government has already identified renewable energy as a very high priority for securing independence from russian gas and oil imports in the near future. three seas economic journal 92 vol. 1, no. 1, 2020 with the adoption of directive 2009/28/ec ukraine committed to a binding 11% target of energy from renewables in gross final energy consumption in 2020, up from 5,5% in 2009, and 10% in the transport sector. a major expansion in renewable electricity generation is planned, in particular from wind, but also from solar photovoltaic, biomass, and large-scale hydro. renewable sources (bioethanol) goal for the transport sector was listed as a voluntary 5% share of the total fuel volume in 2013. this amount then became a mandatory 5% in 2014, though ukraine did not manage to meet its target of 5% for 2014 (shevchuk and malysheva, 2014). there is a very ambitious plan of action to increase energy efficiency already underway that calls for the reduction of energy intensity by 20% until 2015, as compared to 2008, which is very difficult to achieve, given the present constraints in legal and financial support. the second, possibly even more crucial reason for promoting renewables in ukraine is ecological. to a large extent, leaders in business and government share consensus that investing in renewable energy is the most desirable way to promote sustainable development. the traditional methods for generating electricity currently in use produce heavy pollutants and continue to cause negative outcomes linked to diseases, structural damage, biosphere disruption, and species degradation. 2. the gas factor in ukraine the single most factor driving the development of renewables is the desire for more autonomy in economic relations with russia. ukraine has remained dependent on russian gas, oil, petroleum and nuclear fuel since gaining independence in 1991. throughout the decade immediately following independence many domestic and foreign policy decisions were tied to speculations on the price of natural gas in particular. in the present situation, in which relations between ukraine and russia are extremely tense, ukraine’s security and autonomy relies on reaching energy independence. the only alternative would be for russia to continue to set inflated gas price increases, a trend that has adversely affected both ukraine and europe in the past. in 2014 ukraine is slated to import highly over-priced gas ($485 per 1 thousand m3). although russia is continuing to sell gas to europe at a lower rate, the majority of this gas and other fuel products sold to european clients transits through ukrainian territory. it should be mentioned that in 2013 ukraine imported nearly 26 billion m3 of gas from russia. the price of this gas, which was not economically justified, was a heavy burden for the ukrainian budget. the ukrainian government is considering a multiple options plan for replacing russian gas, as the 2015-2016 heating season will be a big challenge for the country. unfortunately, russian gazprom has proven that it is an unreliable and unpredictable partner to ukraine. that’s why every effort needs to be made to diversify the energy sector of ukraine and to safeguard the country against inevitable future breakdowns in relations with gazprom. wide renewable energy use would be a good solution for ukraine to decrease the amount of imported energy resources. according to the energy industry research center, ukraine’s heating supply accounts for about 40 percent of all gas imported from russia, which could be replaced with renewable energy within three to five years. by 2030, renewables could account for about 15 percent of ukraine’s electricity supply, up from about 2 percent now, with adequate investment (wingfield, 2014). the ukrainian government is encouraging the renewable energy sector to achieve four important nationwide aims: to improve energy security, to reduce the dependence on fossil fuels imports, to boost clean energy generation, and to and lower greenhouse gas emissions. in order to support these four priority areas, the state provides guarantees to all investors involved in renewable energy projects. according to the law on state guarantees to promote the use of renewable energy sources, which was adopted in june 2011, ukraine guarantees that all electricity produced from renewables will be purchased at the established green tariff for the duration of the green tariff application. the green tariff rate is established individually for each business entity and each renewable energy source until 2030. 3. projected growth many positive steps forward in renewable energy development are already taking place. several international organizations and world economic leaders have already announced plans to aid ukraine’s transition to renewable energy. the u.s. agency for international development (usaid) recently launched a program that aims to help 17 ukrainian cities conduct energy reform three seas economic journal 93 vol. 1, no. 1, 2020 and improve energy efficiency, with emphasis on developing a renewable energy sector. usaid has promised us $13.5 million towards the program (vorotnikov, 2014). the logic follows that with the rapid growth of industry and population, ukraine will need more electricity and heat production. it is more efficient to cover the deficit of energy that will occur in the future with renewable energy sources than with traditional energy. achieving this aim for ukraine is not easy because of many factors. the main reason is the lack of funding for renewable energy development. the current political infrastructural changes and budgetary constraints in ukraine pose specific challenges to immediate state investments in the construction of renewable energy objects. thus, ukraine must attract more foreign investment in renewable energy projects. during last few years, ukraine has developed renewable energy more intensively than traditional, enhancing energy security and reducing the negative impact of industry on the environment. following the results of 2011-2013, more solar and wind power plants were installed than coal and gas power plants, both in number and by installed capacity. in 2013 the total new renewables capacity reached 535.5 mw. during the period of 2011-2012 more than two 2 billion euros were invested in the renewable energy sector. according to ebrd, ukraine may soon become a key leader among environmentally friendly economies in europe with its renewable energy sector being among the most prospective and attractive for investments. the forecast is that investments in ukrainian renewable energy generation, including solar and wind energy, biomass and biofuel production, could reach nearly 5 billion usd in the next 5 years (yevtushenko, 2012). 4. areas of investment: hydro, wind, solar, biomass for 2014 ebrd has prolonged financing energy efficient projects in ukraine, launching a new financial programme of 100 million euro to develop sustainable energy sources and to promote energy efficiency in ukraine. having invested 2.8 billion usd into renewable energy projects, ukraine has outstripped several other developing countries, even those with slightly higher economic rakings: turkey, thailand, morocco, argentina, mexico and all countries of latin america excluding brazil. according to unep data, ukraine was among ten dominant countries of the world in asset finance* of renewable energy assets in 2012. investments in renewable energy rose from 919 million usd in 2011 to 2.8 billion in 2012, which is equal to 205% of growth. the advance was driven by the financing of a series of small hydro projects totaling 980 mw and worth 2.1 billion in the dnipro river. the largest project in another sector was that for the 90mw, 126 million botievo wind farm (phase 1) on the cost of the azov sea in zaporizhia region (global trends in renewable energy investment, 2013).1 in 2013 wind power llc signed a loan agreement in the amount of 138 million euro for the second phase of the botievo wind farm. the construction is expected to be complete by the end of 2014. the loan was granted by the landesbank berlin (lbb), one of the largest banks in germany. the loan has a tenure of 10 years and will be used for financing the second stage of the botievo wind farm, which includes thirty five vestas wind turbines v112-3,0 mw with total capacity of 105 mw. the total investments in botievo wind farm are valued at 340 million euro. despite the difficult political and economic situation in ukraine, wind power llc is not going to stop constructing wind farms in ukraine. the company is planning to build 2 new wind farms with a total capacity of 350 mw in the south of the country. wind energy is being developed in ukraine at a fast pace. during 2013 alone 95.3 mw of new wind energy capacity was put into operation. thus, on the 31st of december 2013 the total installed capacity of wind energy sector in ukraine amounted to 371.2 mw compared with 276 mw in 2012, which corresponds to the rate of growth of the industry at a level of 56%. the amount of electricity generated form wind reached 633 million kwh which is equivalent to 0.33% of total electricity generation in ukraine. in general, at the end of 2013 the total capacity of mounted wind turbines in the country amounted to 472.9 mw, and 101.7 mw of them are currently under connection to the grid. furthermore, many projects of wind power plants construction were started in lugansk , kherson regions and in crimea. in 2013, all wind farms of ukraine produced more than 630 million kwh of electricity, accounting 1 * all money invested in renewable energy generation projects (excluding large hydro), whether from internal company balance sheets, from loans, or from equity capital. this excludes refinancings. three seas economic journal 94 vol. 1, no. 1, 2020 for 0.33% of total electricity production in the country. thanks to "green" electricity produced by wind energy, co2 emissions have been reduced by 512 000 tones. the leading wind power companies in ukraine are “wind parks of ukraine” ltd and “wind power " ltd dtek (uwea, 2014). in terms of the entire territory of ukraine it’s not a powerful achievement, but it’s only the beginning of wind energy development in the country and we hope it will continue. a significant growth was seen also in solar energy. in 2012 the installed capacity of solar energy accounted to 372 mw which is 95,8% more than in 2011. the share of solar energy in all renewables capacity was 6% and 0.7% of all electricity generation. due to the forecast made by the company energici holdings inc, in 2017 the total installed solar capacity in ukraine will amount to 3087 mw. ukraine took the 22nd place in the world in comparison with the other solar markets. the legislation is also attractive with stimulus and policies in 5 categories out of 14. at various stages of implementation there have been more than 100 projects of solar power plants construction with a total capacity of over 1380 mw. most of the objects are built by foreign companies from portugal, germany, france, austria, czech republic, israel and some ukrainian developers. due to hans-josef fell, who framed the german renewable energy legislation, ukraine can produce enough biogas even to export it to europe instead of russian natural gas. the main reason that hampered the development of electricity generation from biogas in ukraine was the absence of "green tariff " for biogas until april 2013. due to the new legislation, the companies that produce electricity from biogas or biomass can claim to sell it to the national energy market at the price of 0.1 euro/kwh (the rate of "green tariff " for march 2014). nowadays there are only five companies generating electricity from biomass and four entities using biogas which work on “green tariff ” in ukraine. besides, according to the review of the energy sector of ukraine prepared by the international energy agency, ukraine should develop a new energy strategy that will allow it to make full use of the country’s potential for renewable energy development, particularly biogas and municipal waste for heat and power generation. before the political crisis, ukrainian solar energy was rated as the most attractive for investing among eurasian countries and took 29th position at the world list. after a positive change of government and the election of a new president, there is now an even stronger political will in ukraine to attract the funds to support an even wider range of renewables. 5. current initiatives thanks to a joint investment by ebrd and eig engineering a first biomass heat power plant was constructed in the kyiv region with a capacity of 6 mw. total planned capacity of the plant is 18 mw and it will help ukraine to save 40 million cubic meters of natural gas annually. for now the plant works in a test regime. the option of using biofuel (wood, straw and other waste of agricultural plants) is especially attractive and economically sound for villages and towns with no more than 20,000 residents and they happen to account for nearly half of the country ’s population. in today’s difficult economic climate most ukrainians cannot afford to buy pv systems, wind turbines or biogas machines because they are too expensive. that’s why small utility-scale projects are not widespread in ukraine. most of the realized projects are of large capacity. but thanks to global trends, solar and wind systems prices have fallen. for ukraine the sharply reduced cost of solar pv systems is a good sign. it means that a greater amount of pv capacity can be installed at a lower cost. the ukrainian renewable energy market is very attractive for foreign investors now because it is just being developed. additionally, over a 5-year period to the first quarter of 2014 the worldwide average cost of electricity has declined by 53% for crystalline silicon pv systems, and 15% for onshore wind turbines. over the same timeframe, the cost per mwh of coaland gas-fired generation has increased in many countries, including ukraine (global trends in renewable energy investment, 2014). energy-smart technologies is a brand new branch of industry for ukraine that is just now entering a rapid stage of development. the rich prospects to be found in ecologically-friendly production may soon also lead to establishing an energy-efficient car industry within the country. ukraine is in the process of designing a scientific research test center for safe, environmentally-friendly and energyefficient vehicles that will involve a new state-ofthe-art complex of laboratories with high-tech equipment. three seas economic journal 95 vol. 1, no. 1, 2020 6. the five main reasons to invest: 1) ukraine possesses a very rich natural potential of all renewable energy sources: – the country’s wind technical potential is one of the highest among cis countries (around 5,000 mw). according to the wind energy association, wind energy potential in ukraine is estimated at 30 000 gw h. ukraine is in top-four european countries, most suitable for generating electricity from wind. the greatest wind energy potential is located in the vast areas adjacent to the black sea and the azov sea, as well as the carpathian mountains, transcarpathian and lower carpathian areas. ukraine’s renewable energy sector currently produces power at a much lower cost than other countries. for instance, producing one mw h of wind energy costs roughly usd 33,1 compared with usd 145 in the czech republic, and usd 50 in china in terms of 2012 (ervin and o’sullivan, 2012). ukraine has an impressive potential of biomass available for energy generation. according to the ministry of agrarian policy of ukraine, potential of biodiesel production is estimated at 1 mln tons/year and nstitutio production – 2 mln tons/ year. biomass technical potential is high: nearly 50 twh. biomass energy production can be based on agricultural and forestry waste. annual economic potential of crop waste expected to be equivalent to 14 million tons of coal. the full annual biomass resources available in ukraine are equal to 70 million tons per year. to use it it’s possible to create a network of stations with the total capacity of 7000 mw. moreover, biomass energy development in ukraine is the most cost-effective due to the presence of stable raw material during the day and night and all seasons, as opposed to more expensive and cyclic solar energy and wind. – according to the ukrainian agricultural confederation, burning even a half of the straw and corn stalks left on the fields can produce the energy equivalent of 11-13 bn m3 of natural gas. – average solar technical potential is close to 4 kwh/ m2/ day. the potential of solar energy in ukraine is high enough for a wide introduction of the heat energy and pv equipment almost on the entire territory. use of the available technical potential can allow saving nstitu. 5 bln. m3 of natural gas. an average annual amount of the total solar radiation which accesses 1 km2 of the surface on the territory of ukraine is within 1070 kwh/m2 in the northern part of ukraine up to 1400 kwh/m2 inn the south of ukraine and higher in the ar crimea. the period of effective operation of the helioenergy equipment in the southern regions of ukraine is 7 months (from april to october), in the northern regions – 5 months (may to september – data of unido, gef). by comparison, the amount of solar energy reaching the earth’s surface in ukraine in terms of 1 sq.m is higher than in germany which has been the world’s top pv installer for several years. – technically feasible hydro power potential of small rivers of ukraine amounts to about 8.4 billion kwh or about 4,5% of total electricity consumption in 2010. majority of hydro power plants need modernization. according to the ukrainian legislation, small hydro power plants are those electric power stations with installed generation capacity not exceeding 10 mw. western region of ukraine has the biggest potential for development of small hydro power stations, but it requires some investments in this sector (ervin and o’sullivan, 2012). – hydroenergy has been historically strong, but technology needs upgrading. ukraine’s 22 400 rivers are a significant source of renewable energy capacity in the form of hydroelectric potential. however, because only 110 of these rivers are broader and longer than 100km, future hydroelectric growth will come from small hydroelectric installations. the ministry of energy and coal industry provides estimating that hydroelectric capacity could reach 5.8 gw by 2030. and according to data provided by the renewable energy institute of the national academy of science of ukraine, the hydroenergy potential could even reach 12.5 gw (ukraine alternative energy sector outlook, 2011). 2) in ukraine there is an enabling legislation to support the renewables sphere. the main advantage is high “green tariffs” and exemption from some tax and customs duties. tax exemptions are granted to: enterprises selling energy-saving equipment of their own production (on 80% of income) and enterprises implementing energy-saving projects (on 50% of income). enterprises generating electricity from renewable energy sources and biofuel producers are exempt from income taxes until 2020, inclusive. no customs duties or vat are leveraged on equipment imported for renewable energy production. additionally, the state energy market is obligated to purchase all electricity generated from renewable energy sources. three seas economic journal 96 vol. 1, no. 1, 2020 3) the ukrainian renewable energy market is not widely advertised and promoted abroad. for this reason levels of foreign investment and competition have so far remained low, but are expected to grow exponentially. the share of renewables in total energy supply is still very low (below 3%) but the number of companies engaged in this sector is increasing. 4) ukraine has a developed scientific and technical base for renewable energy development. in addition, the country has developed the production of modern high-tech equipment for the “green” energy during the last three years. ukraine is one of europe’s largest producers of solar panels and components to them, though they are often more expensive than imported equipment. ukrainians also have their own research and development achievements in this area. recently, the american journal of r&d magazine has ranked among the best world scientific developments the autonomous energy supply system, invented by scientists of the national university “lviv polytechnic”. this device can charge household appliances, mobile phones and illuminate a small room. the system that catches stray light, can, for example, be sewed to a bag or a tourist tent. another ukrainian inventors led by the chief designer doctor olexiy onipko developed a wind turbine that can generate electricity at a low wind speed. the successfully designed rotor installation is driven even when the wind speed is of 0.1 m per second. this device can be used almost on the entire territory of ukraine. the advantage is that the turbine operates in a wide range of wind speeds – up to 20 m/s. so at a speed of 15 m/s its efficiency is equivalent to the classical powerful wind plant. the invention won the “green oscar” in the global competition as the best invention in the field of renewable energy in 2013. 5) active national programs and international organizations’ support for renewable energy projects. – european union: budget support to the implementation of the energy strategy in the field of energy efficiency and renewable energy, capacity building on domestic solar heating, hot water and insulation for rural and remote areas, implementation of energy efficiency measures in several cities, etc.; – the ukraine sustainable energy lending facility (uself) is an investment facility of up to €50 million established by the european bank for reconstruction and development (ebrd) for fostering renewable energy projects in ukraine; – national project “energy of nature” (prefeasibility studies, partner search and investment support): construction of wind farms (eur 40 million for a 10 mw plant) and solar power plants (eur 150 million for a 100 mw plant), with an irr of 15-20% and a payback period of 5-7 years (data of state agency for investments and national projects of ukraine); – national project “biomass energy” (pre-feasibility studies, partner search and investment support): construction of co-generation plants using biomass in kyiv and other industrial cities and operation during more than 25 years (investment up to eur 7 million) with an irr of more than 25% and a payback period of 5 years; – the green for growth fund southeast europe (ggf) provides megabank, ukraine with a credit line for financing energy efficiency (ee) and renewable energy (re) investments to ukrainian micro, sme and corporate clients. through its technical assistance facility (taf) megabank is supported with a technical assistance component for development of ee strategy and loan products with the final goal of institutionalizing the ee lending into the bank’s structure. according to the the brattle group/seia report the energy independence provides great energy and economic security. germany would have been in a much more difficult situation with the recent crisis in ukraine if it were not for the country’s strong renewable energy market. but this sort of energy independence is important all around the world, especially if we take into account oil and the potential to electrify our ground transport. as the recent ukraine crisis has shown, the transition has also helped reduce the exposure of germany to potentially volatile input prices to the traditional power system, a benefit that has largely remained unquantified, but could prove significant in the future (shanan, 2014). 7. сonclusions for ukraine it is very important to develop renewable energy because of the critical dependency on imports of fossil fuels and tough ecological problems within the country, but also throughout europe. the main obstacle to wide renewable energy sources use is the lack of funding. because of the budget deficit, the state cannot afford enough three seas economic journal 97 vol. 1, no. 1, 2020 financing to fully transition to a renewable energy sector at the present time. however, recent changes make investment in ukrainian renewables highly favorable. the current government is encouraging private entities to invest in the renewable energy sector by providing enabling legislation and beneficial economic initiatives such as a “green tariff ”. thus, it is economically beneficial not only for ukraine, but also for the e.u. and u.s. to invest in ukrainian renewable energy development, because the u.s. and e.u. cannot solve global warming on their own. moreover, since ukraine borders the e.u. directly, sustainable ecological conditions in ukraine will also have a positive impact on its neighboring countries. ukraine is the largest country by landmass in europe and possesses a great renewables potential, tech capital, human resources, and geostrategic position between europe and russia. now is a prime time for foreign investors to capture an emerging market. investments in ukraine’s lowcarbon future need to be made now. given the recent positive political changes in ukraine, there is a determined political will and support to attract investments in this new and exciting sector. references: brian wingfield (2014, april, 29). ukraine seeks renewable energy investors to loosen russia’s grip. renewable energy world. retrieved from: http://www.renewableenergyworld.com/rea/news/ article/2014/04/ukraine-seeks-renewable-energy-investors-to-loosen-russias-grip?cmpid=bionl tuesday-april29-2014 carolyn ervin, anthony o’sullivan, elena miteva, attracting investments in renewable energy in ukraine. private sector development policy handbook. oecd. nov. 2012, p. 16. fs-unep collaborating centre, global trends in renewable energy investment 2014, р. 16. retrieved from: http://fs-unep-centre.org/publications/gtr-2014 vladislav vorotnikov (2014, april, 22). renewable energy may help ukraine abandon russian gas. renewable energy world. retrieved from: http://www.renewableenergyworld.com/rea/news/ article/2014/04/renewable-energy-may-help-ukraine-abandon-russian-gas?cmpid=solarnl -tuesdayapril22-2014 press release of the ukrainian wind energy association (uwea), 2014. ukrainian wind market in 2013. retrieved from: http://www.uwea.com.ua/news.php?news_id=183&lng=eng sergiy yevtushenko, vladimir vakht (2012). renewable energy in ukraine, industry overview. retrieved from: http://investukraine.com/wp-content/uploads/2012/06/renewable-energy-inukraine_230_230_www.pdf state agency for investments and national projects of ukraine, national project energy of nature. retrieved from: http://www.ukrproject.gov.ua/en/project/energy-nature shevchuk, v., & malysheva, n. (2014). the policy of energy-efficient development and climate change. monograph. kyiv: cp “comprint”, 64 p. united nations environment programme (unep) and bloomberg new energy finance, global trends in renewable energy investment, 2013, p. 25. retrieved from: www.unep.org/pdf/gtr-unep-fs-bnef2.pdf unido, gef. available potential of solar energy development in ukraine. retrieved from: http://www.reee.org.ua/en/renewable-energy/solar/ zachary shanan (2014, august, 8). german solar feed tariffs wildly successful. reneweconomy. retrieved from: http://reneweconomy.com.au/2014/german-solar-feed-tariffs-wildly-successful-63851 three seas economic journal 1 vol. 2 no. 4, 2021 corresponding author: 1 alexandru ioan cuza university of iasi, doctoral school of economics and business administration, iasi, romania e-mail: drugarazvanionut@gmail.com orcid: https://orcid.org/0000-0002-9434-0684 doi: https://doi.org/10.30525/2661-5150/2021-4-1 a career in the romanian banking sector: opportunity or threat? răzvan-ionuţ drugă1 abstract. due to the covid-19 pandemic, a significant part of the activities carried out by the banking units is moved to the online environment. this fact automatically decreases the number of subsidiaries and, implicitly, generates the staff layoff. also, this phenomenon affects the potential candidates for a position within a banking unit. here, the most vulnerable category is students studying in the department of economics. one of the reasons they choose to enroll in a department with an economics major is the opportunity to work in the banking units. a survey was conducted to find out how economics students in romania perceive these threats. a questionnaire was used as an instrument. respondents (n=453) had the opportunity to express their intentions regarding career development in the banking sector, given the context created by the covid-19 pandemic. the article concludes with the most representative findings on this research topic. key words: banking unit, career, covid-19, students, survey. jel classification: g21, j60, c83 1. introduction the covid-19 pandemic has led to changes in the behaviour of many people. whether consumers, entrepreneurs, or workers, each category has been affected in different ways. an example in this regard is the adaptation of the way employees work, with some activities moving online. in romania, the banking sector was one of the most active in this direction. the transition was also emphasized by certain decrees of the authorities, which encouraged the active use of e-banking services. one of the positive aspects of this whole transformation was the increased use of such services. according to eurostat (2021), while romania's use of the internet for banking services was only 8 percent in 2019, it rose to 12 percent in 2020 (eurostat, 2021). also, according to the national bank of romania, the number of active cards has recently increased. while in march 2020 there were at least 14,163,211 active cards, in march 2021 the number increased to 14,592,364 active cards, according to the same source (bnr , 2021). using such means, citizens can also protect themselves from possible infection by the new coronavirus, as trips to bank headquarters or the nearest atm become rarer. taking into account the statistical data presented above, it can be said that the romanian banking system is in continuous development. however, over time, these growth trends may encounter some constraints. one of them is the level of financial literacy among the users of banking services, in particular, and among the population, in general. according to a study published in 2020 (oecd, 2020), romania scored the lowest among the southeast european countries included in this sample (figure 1). for the ranking, data were collected in the second half of 2019 (oecd, 2020). romania’s percentage can be explained by the fact that “the country is still adapting to a capitalist economy and most of the adults grew up under a communist economy” (căprioară et al., 2020, p. 121). even if this explanation can be extended to other countries, which have had a similar history, romania seems to be much slower in the process of adaptation. in addition, due to the non-participation of citizens in financial education programs, romania has a small percentage compared to the other analyzed states (drugă, 2021). at the same time, the growth in the use of e-banking and card payment services may generate certain threats for various stakeholders. one of them may be a decrease in the number of bank branches and subsidiaries, which will automatically lead to a reduction in the number of employees in this sector. in the following two graphs it is possible to observe the dynamics of changes in the number of credit units and their employees in the period 2016–2020 (figure 2 and figure 3). this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 2 vol. 2 no. 4, 2021 according to the data presented in fig. 2 and fig. 3, it can be assumed that at least two categories of people will be affected in the coming years: current and future employees of banking units. therefore, this paper aims to analyse the opinion of those who are in the position of being future employees in the banking sector. here, in particular, are found the students of the faculties with an economic profile. if the transition to online becomes accelerated, facilitated by the effects of the covid-19 pandemic, they will have to reorient themselves professionally due to a lack of opportunities. but do students similarly perceive things? to answer this question, a quantitative study will be used, the instrument of which is a questionnaire. the research conclusions can open new horizons not only for the students included in the research sample but also for the representatives of the banking units. 2. literature review having benefited from the change in their status from student to employee, people find themselves facing certain problems. one of them is the adoption of a new social identity (loughnane et al., 2021). this refers, on the one hand, to the new groups of members and, on the other hand, to how they will figure 1. overall levels of financial literacy in south-east europe source: oecd (2020) 58% 59% 57% 60% 55% 56% 53% 48% 50% 52% 54% 56% 58% 60% 62% bulgaria croatia georgia moldova montenegro north  macedonia romania overall levels of financial  literacy in south‐east  europe (%) figure 2. the number of credit units, in romania, during 2016-2020 source: own processing ; european central bank data (2021) 0 1,000 2,000 3,000 4,000 5,000 6,000 2016 2017 2018 2019 2020 credit institutions in romania (2016‐2020) number of local units (branches) three seas economic journal 3 vol. 2 no. 4, 2021 henceforth be perceived in relation to the new position they occupy in society. in addition, another problem may be how the systems in which they will work will evolve. some of the information they have learned in faculty may become irrelevant when they are in the job market. in such situations, graduates will be encouraged to participate in various training programs to keep up with the changes. the romanian banking system is a case in point. for more than three decades, it has faced "a complex process of adaptation to an economic environment governed by technological innovation, which has led to significant changes in the range of financial services offered" (ghiţă-mitrescu et al., 2019, p. 191). this dynamism may even lead to the creation of new jobs or the elimination of others. according to adhikari (2020), job satisfaction is "the mismatch between people's job-related expectations and desires and what is actually offered to them” (adhikari, 2020, p. 59). in this case, the relevance of the research is no longer the factor that determined this level of satisfaction. this raises the question of employers' honesty about the conditions presented to candidates in interviews or in recruitment announcements. disgruntled employees will be able to send messages that put the organization in a bad light. thus, future candidates will be much more reluctant to apply for a position at such an institution. instead, when organizations care about enhancing the quality of work life, they can take advantage of the following: increased productivity, improvement of the employees’ morale and of their motivation to work, improvement of the workers’ potential (thipsena et al., 2019). in this way, employees may want to continue working for the organization in question. in addition to the aforementioned opportunities, organizations will be able to reduce certain costs associated with hiring new employees due to the security created by those currently employed. 3. methods and results 3.1. research methodology the purpose of this study was to determine how economics students from romania perceive the effects of the covid-19 pandemic related to career development in the banking sector. thus, a questionnaire with at least 34 questions was developed. they dealt, on the one hand, with the respondent's profile and, on the other hand, with the purpose of the study. closedand open-ended questions were used. in addition, a 7-point likert scale (from 1 – complete disagreement to 7 – complete agreement) was used for some questions. the questionnaire was distributed between march 15 and may 15, 2021, online and supported by student associations from major university centers around the country. a total of 453 questionnaires were collected. ibm spss statistics software was used to analyze and process the data. participation in this study was voluntary and without restrictions, and all rgpd rules were followed. the objectives of the study were as follows: o1: to identify the motivation of economics students to work in the banking unit. o2: identify the strengths and weaknesses of the romanian banking system, from the perspective of economics students. o3: to identify the main opportunities and threats arising from the effects of the covid-19 pandemic, in the view of economics students, with reference to the possibility of developing a career in the banking sector. figure 3. the number of employees in credit units, in romania, during 2016-2020 source: own processing ; european central bank data (2021) 51,000 51,500 52,000 52,500 53,000 53,500 54,000 54,500 55,000 55,500 56,000 2016 2020 credit institutions in romania:  employees of  domestic credit institutions (2016‐2020) 2017 2018 2019 number of employees of domestic credit institutions three seas economic journal 4 vol. 2 no. 4, 2021 3.2. sample structure in table 1 the main elements of the research sample can be identified. table 1 sample structure variable n % gender male 36 7,9% female 417 92,1% age 18-24 years 381 84,1% 25-34 years 60 13,2% 35-44 years 9 2% 45-54 years 3 0,7% area urban 336 74,2% rural 117 25,8% marital status married 33 7,3% unmarried 378 83,4% divorced 3 0,7% celibate 39 8,6% revenues 1-2.300 lei 156 34,4% 2.301-3.000 lei 129 28,5% 3.001-4.000 lei 51 11,2% 4.001-5.000 lei 3 0,7% over 5.000 lei 3 0,7% no income 111 24,5% study cycle bachelor 306 67,5% master 138 30,5% doctorate 9 2% source: own processing as can be seen from the table above (table 1), the majority of respondents were women (92.1%). in terms of age, the majority are between 18 and 24 years old (84.1%). in addition, 74.2% of the students surveyed are urban dwellers, and 83.4% are single. when it comes to average monthly income, 34.4% earn an income between 1 leu and 2,300 lei, and 28.5% earn between 2,301 lei and 3,000 lei. the surveyed students came from nine university centres located in the following cities: constanta (64.1%), cluj-napoca (12.6%), iasi (9.3%), timisoara (6.6%), bucharest (4%), craiova (1.3%), alba iulia (0.7%), brasov (0.7%) and suceava (0.7%). 67.5% of them are enrolled in an undergraduate program. the most representative fields of study are finance (26.3%) and business administration (24.3%). 3.3. results and discussion of the total number of respondents, only 35.1% are studying in their hometown, and 44.4% currently have jobs in various fields such as: financial consulting (29.9%), horeca (14.9%), finance and banking (10.4%), and others. of those who are working, only 47.8% want to keep their current job. after graduation, most students will want to work in finance and banking (23.8%), consulting (17.2%), or start their own business as entrepreneurs (15.9%). all respondents were asked to consider several items when they had to make a decision about choosing a particular job. a 7-point likert scale with a range of 1 (complete disagreement) to 7 (complete agreement) was used. the results are presented in table 2. analyzing the results of the previous table (table 2), it can be concluded that, being in the situation of choosing a certain job, students put non-financial motivation in the first place. according to the literature, it represents "incentives for employees to work better, more efficiently, with pleasure, with satisfaction, without material incentives" (micu, 2016, p. 255). of all these reasons, the opportunity for career advancement provided by the respective economic unit is the one that respondents consider the most. this can create a state of happiness in the group (micu and necula, 2017), generated by employees' interest in standing out, collaborating with other colleagues, and taking advantage of as many learning and professional development opportunities as possible. the least significant reason was the opinion of the family. this indicates that students prefer to make table 2 factors in choosing a job items n mean median mode sd min. max. salary 453 5.82 6.00 6 1.388 1 7 social position 453 5.21 5.00 5 1.540 1 7 position held 453 5.50 6.00 6 1.537 1 7 family opinion 453 4.28 5.00 5 1.950 1 7 work schedule 453 5.96 7.00 7 1.637 1 7 responsibility 453 5.87 6.00 7 1.447 1 7 tasks complexity 453 5.70 6.00 6 1.405 1 7 team 453 5.81 6.00 7 1.608 1 7 interaction with the public 453 5.38 6.00 6 1.629 1 7 company reputation 453 5.64 6.00 7 1.518 1 7 possibility to advance in the career 453 6.13 7.00 7 1.472 1 7 considerations from the management of the unit 453 5.85 6.00 7 1.504 1 7 source: own processing three seas economic journal 5 vol. 2 no. 4, 2021 this decision on their own, because the fate is only in their hands. since the banking system is a key element in the development of this study, respondents presented the strengths and weaknesses of this system. the information is presented in the following table: analyzing the results from table 3, it turns out that some elements are considered to be both strengths and weaknesses. the most effective example is the communication process between bank employees and their clients. on the one hand, some consider it a strength because of the promptness with which they received a response to inquiries during the covid-19 pandemic. also, other respondents did not consider this communication to be very effective and considered it a weakness because the response to their requests was slower. given the aforementioned context of the covid-19 pandemic, respondents were asked to provide their views on the online orientation of activities conducted by banking divisions. 62.9% of respondents saw this transition as an opportunity. only 16.6% of respondents called it a threat, and 20.5% of respondents did not know what to answer or declined to answer. in table 4 it is possible to analyze the main elements that classify the transition to online activities as an opportunity or a threat. according to the information presented in table 4, it appears that the romanian banking system will become much more efficient, developing its activity thanks to digitalization. at the same time, due to this phenomenon, some employees may lose their jobs. in addition, because of the decrease in the rate of interaction with the branch staff, the consumers may face difficulties in using the banking products and services. this last threat may be related to the level of financial education and the level of digital education among banking consumers. for this reason, employers should consider the results of the research and keep certain jobs to maintain consumer-employee relations. in this way, the threats presented by the respondents will be reduced. one suggestion in this regard could be the creation of online platforms through which consumers can interact with bank employees in a clear time frame. however, even if, according to one study, "online civic engagement only indirectly affects civic behavior" and "the positive impact of offline civic engagement on civic behavior is much stronger" (zait et al., 2017, pp. 220-221), by using such a platform, some of the uncertainty consumers have about using banking products and services can be reduced. another advantage of such a tool could be that other consumers who have encountered this problem or know how to avoid it could respond to inquiries. thus, online civic engagement can be a key element in orienting banking units toward the electronic environment. at the same time, to support the opportunities presented by respondents, consumers could be encouraged to use mobile apps for those transactions that do not require much intellectual effort. table 3 strengths and weaknesses of the romanian banking system strengths (%) weaknesses (%) diversified offerings (34.4%) communication with customers (12.6%) online orientation (11.3%) quality of employees (10.5%) location of subsidiaries and branches (5.3%) conditions for obtaining credit (4%) i don’t know/ i don’t answer (21.9%) security and/or safety of transactions (26.5%) the level of commissions and interest (21.9%) current legislation (9.3%) waiting time at the counter desk (8.6%) communication with customers (6.6%) quality of employees (5.3%) the amount of information available on the internet (2.6%) competition (2%) i don’t know/ i don’t answer (17.2%) source: own processing table 4 opportunities and threats for the romanian banking system as it transitions to an online environment opportunities (%) threats (%) streamlining banking services (34.7%) development of the banking system (26.3%) reducing the waiting time at the counter desk of banking units (17.8%) no trips to unit headquarters (7.4%) lower costs for the banking system (7.4%) much easier to access information (3.2%) creation of new specific jobs (3.2%) lack of interaction between employees and customers (44%) the disappearance of certain jobs (24%) lack of digital skills among consumers (24%) security of the information received/provided (8%) source: own processing three seas economic journal 6 vol. 2 no. 4, 2021 considering the above, 84.1% of the surveyed students are ready to try to find a job in a bank after graduation. among the most popular reasons for such a career: the opportunity to acquire new skills (28.3%), job security (14.2%), passion for this field (13.4%), its popularity (12.6%) or the specifics of training (12.6%). only 3.1% of respondents cited salary level as a reason. the explanation for this could be the position they currently occupy, which is that of a student. the status they will have after graduation will automatically give them the opportunity to get a well-paying job, which will also provide them with some financial security (brannelly et al., 2011). people who do not want to develop a career in banking indicated the following reasons: lack of attractiveness of this field (83.2%), previous experience (4.2%), lack of guarantees (4.2%), salary (4.2%) and the specifics of training (4.2%). last but not least, in terms of developing a career in banking with the digitalization trend in mind, 56.3% of respondents believe that this context presents an opportunity for them. among the reasons they cite are: the activities performed will be much more efficient (38.8%); it will be possible to work from home (29.4%); the online environment represents a new dimension of the banking system (22.4%); the quality of workers will improve because employers will need certain specific skills (7.1%); and there will be an opportunity to create new jobs adapted to the new environment (2.3%). in addition, if they decide to pursue a career in banking, 18.5% of the students surveyed believe that digitalization will be a threat to them. the main reasons for this are: reduced customer interaction, which would slow down the banking division (32.1%); collaboration with colleagues would become more difficult (28.6%); some jobs would be eliminated (21.4%); young people would have fewer job opportunities due to lack of experience (14.3%); and poorly developed digital skills (3.6%). 4. testing hypotheses a number of statistical hypotheses were formulated and subsequently tested: h01: there is a statistically significant relations between the gender of respondents and whether they are considering a career in banking in their current context. the chi-square test for independence showed a significant relation between respondents' gender and their consideration of a career in banking in their current context, x2 (2, n = 453) = 11.512, p = .003. h02: there is a statistically significant relations between the place of residence of respondents and their consideration of career development in the banking sector in the current context. the chi-square test for independence showed no significant relations between respondents' place of residence and whether they would consider a career in banking in their current context, x2 (2, n = 453) = = 3.935, p = .140. h03: there is a statistically significant relationship between the professional status of respondents and their consideration of the possibility of career development in the banking sector in the current context. the chi-square test for independence showed a significant relations between the professional status of respondents and their consideration of career development in the banking sector in the current context, x2 (2, n = 453) = 43.679, p = .000. 5. conclusions taking into account the goals of this study, established at the beginning of the analysis, it is possible to say the following: – among the reasons students want to work in banking, given the environment in which digitalization of operations will intensify, are the following: the opportunity to learn new skills and the security provided by the specific nature of the job; – according to economics students from romania, the diversified offer is the most representative strength of the banking system; at the same time, its weaknesses are the level of security and reliability of transactions, as well as the level of fees and interest; – for economics students from romania, developing a career in the banking sector as a result of the effects caused by the covid-19 pandemic could be an opportunity, since the activities would be much more efficient and, in addition, they would have a chance to perform their domestic responsibilities; – at the same time, for economics students from romania, career development in the banking sector could be at risk; given the effects caused by the covid-19 pandemic, interactions with clients will decrease, collaboration with other colleagues will be more difficult, and finally, some jobs will disappear forever. in addition to the above, it was found that the efficiency of services is the biggest opportunity that will benefit the banking system in romania, due to the orientation of the activity towards the online environment. automatically, this will lead to an improvement in the system. to achieve this, however, it is necessary to synchronize the requirements of employees with what employers can provide. in addition, service efficiency will have to be maintained by the atmosphere within the banking unit, such as: "employees must be happy, and managers must be able to maintain a state of contentment, satisfaction, happiness at work through specific skills" (micu and necula, 2017, pp. 421). thus, even if there three seas economic journal 7 vol. 2 no. 4, 2021 are certain restrictions for some employees to carry out various procedures or perform certain duties, through connection with other colleagues everything can be overcome much easier. according to the data collected, another advantage of online orientation may be to gain certain advantages from a financial point of view. for example, banking divisions will be able to reduce certain costs for building maintenance, rent or staff salaries. this money can then be invested either in financial education programs aimed at consumers or in improving networks and it infrastructure. in this way, the security of online transactions can be improved, leading to an increase in the use of e-banking services. training programs can also be developed for employees to learn how to use new digital software and equipment. thus, the aforementioned idea regarding the state of mind in banking departments can be further supported. at the same time, the interest of romanian companies to improve the skills of their employees can be confirmed (antohi et al., 2012). given the statistics presented in the introduction, there are fewer and fewer opportunities for economics students from romania to develop careers in the romanian banking sector. it is true that new jobs can be created due to digitalization, but not enough to cover all the needs of the market. moreover, an important prerequisite for new jobs to be highly effective is that they must be filled by highly qualified and dedicated people. for this to happen, universities should also adapt their curricula and programs to the new trends. the solution can be represented by entering into partnerships with institutions active in the employment field to provide a direct and strong link between theory and practice, taking into account, of 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(pp. 215–225). vienna: austrian computer society. three seas economic journal 68 vol. 2 no. 3, 2021 corresponding author: 1 state institution “m.i. dolishniy institute of regional research of the national academy of sciences of ukraine”, ukraine. e-mail: oliochka.mulska@gmail.com orcid: https://orcid.org/0000-0002-1666-3971 2 state institution “m.i. dolishniy institute of regional research of the national academy of sciences of ukraine”, ukraine. e-mail: taras@klioba.com orcid: https://orcid.org/0000-0002-3354-3648 * the study was performed under the grant 2020.02 / 0215, "financial determinants of economic growth of regions and territorial communities based on behavioral economics," with the support of nfdu. doi: https://doi.org/10.30525/2661-5150/2021-3-10 decomposition of financial capacity of ukrainian households in the conditions of changing economic environment: regional section* olha mulska1, taras kloba2 abstract. challenges of economic instability update the study of their impact on the architecture of economic and consumer behavior of ukrainian households, which determines their financial capacity. the purpose of the article is to carry out a comparative analysis of the financial capacity of ukrainian households at the regional level and to identify applied features of consumer behavior in the economic crisis. the object is the financial capacity of ukrainian households in terms of regions. the subject of research: analysis of different models of behavior of households in ukraine (consumer, investment, and savings), which will determine the financial orientation of families by region. research methodology. the methodological tools for assessing the economic behavior of households with the definition of its leading models – consumer, investment, savings, the correlation of which allows to determine the decomposition of the financial capacity of the territory (country, region, community). the methodological approach has been tested, which can serve as a basis for structuring management tasks in terms of strengthening the investment activities of households, ensuring the optimal structure of consumer spending to form the territory's resilience to financial shocks. an analysis of the economic behavior of households, based on the assessment of reflections – consumer, investment, and savings – as a result of the subject's understanding of its financial capacity, expressed in terms of costs and financial resources. the study results can help reflect the state of providing the entity with financial resources. these other tangible and intangible assets may be capitalized shortly and reoriented from consumption and savings to investment purposes of financial capacity of households in ukraine. improving the financial condition of households is closely linked to the resumption of economic activity of enterprises, as families are one of the most critical economic categories. an essential tool is an effective regional policy to level interregional disparities and effective long-term strategies for household financial behavior. particular attention should be paid to financial planning, which is a prerequisite for effective management and control over the financial condition of households, which will balance the structure of income and expenditure, avoid unplanned expenses, rational use of available resources. when it comes to making financial decisions, they are always sensible, planned based on the real needs of household members or the adequacy of financial resources. prospects for further research will be problem-solving, which is possible only at the state level and requires effective management decisions and the identification of different macroeconomic trends in the national economy. key words: economic growth, financial capacity, economic behavior, territory, household, conditions of variability. jel classification: о13, о18, d19 1. introduction the issue of consumer research has a multifaceted nature. on the one hand, modern society is evolving as a consumer. the ideas of thrift, conservation of environmental resources with the promotion of longterm consumption are increasingly promoted. on the other hand, the priorities of consumerism remain with the growing rights of consumers, particularly regarding access to quality products and in sufficient quantities. for societies that are developing or in this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 69 vol. 2 no. 3, 2021 a transformational environment, to which ukraine belongs, the study of consumption and cost structure has a rather acute social character. however, it is intertwined with the structural shortcomings of the economy and the contradictions of innovative development. the issue of studying the financial capacity of households is relevant in both theoretical and applied sense. for ukraine, it acquires socially significant features given the need to improve the welfare of the population, improve other quality indicators of its life, and the formation of regional development programs, the concept of the financial well-being of communities and territories. in the scientific discourse, there are numerous studies of consumer behavior, and the financial capacity of households, in terms of analyzing the structure of expenditures in the regions of ukraine to identify the importance of consumer, investment, and savings activities. the results of the study develop ideas about the content of behavior in economic theory (harasymiv, 2016; teremtsova, 2010), the specifics of consumer behavior (vasylkevych, 2011; derkach, 2020; kuzmuk, 2015; pohorila, 2006). identifying the features of the analysis of consumer behavior at the household level is carried out taking into account the regulations (stankevych, 2008) and the results of research (melykh, 2020; stankevych, 2008; cherenko, 2019; bil, 2021; mulska, 2021). as a rule, consumer behavior is considered through the prism of the influence of marketing tools at the individual level. however, consumer behavior needs research with a more fundamental vision – forming a behavioral economy, ensuring the welfare of the population, and the impact on sustainable economic growth. therefore this publication develops a methodology for researching consumer behavior in a more complex context. 2. materials and methods of research in the course of this study, various scientific methods and approaches were used, in particular, a systematic approach to ensure the analysis of the theoretical basis of the behavioral economy of households and the study of the processes of formation of consumer behavior. the dialectical method in the analysis of the current state and prospects of development of the behavioral economy of households at the level of regions of ukraine; methods of economic analysis in the study of the characteristics of consumer, investment and savings activity of homes, in identifying interregional differences and relationships; methods of scientific abstraction, induction, and deduction in the formulation of recommendations for the regulation of consumer behavior of households, it's theoretical modeling in modern conditions. the information base was primary sources, monographs of domestic and foreign authors, scientific publications in specialized publications, statistical and information bulletins of government agencies. 3. results and discussion the consumer behavior of households in ukraine is constantly changing under economic shocks, political instability, growing social vulnerability, and, consequently, societal tensions. moreover, the lack of sustainable economic growth over time leads to increased social inequality and deepening poverty, reduces the ability of households to save, and even more investment, their resources, causes the spread of migration among the population, especially young people, and generally threatens the quality of life, in the country. according to a sample survey of the socio-economic situation of households, the absolute poverty rate in ukraine in 2019 was nominally 1.1% (in 2016 – 3.3%), which indicates a slight reduction in the share of households with per capita equivalent total income, lower than the statutory subsistence level. at the same time, the de-facto poverty rate is much higher when comparing incomes with the estimated subsistence level: in particular, in 2016 and 2019, the poverty rate reached 48.2% and 23.3% of households, respectively (derzhavna sluzhba statystyky ukrainy. sotsialno-ekonomichne stanovyshche, 2019). thus, despite reducing absolute poverty in ukraine, its level remains high and varies significantly by region. thus, considering the depth of income poverty, the worst situations traditionally include rivne, kherson, luhansk, zhytomyr, and kyiv (excluding the city of kyiv) oblasts, which affect the patterns of consumer behavior in these regions. (cherenko, 2019). in general, the regional specificity of the formation of financial capacity of households is determined by socio economic determinants of the development of a particular region, the activity of territorial communities of which it consists, settlement structure, and other objective and subjective environmental factors. the analysis of the dynamics of consumer aggregate household expenditures for 2009–2019 (table 1) shows a relatively uniform growth of the indicator by region during the study period, in particular, 3.1-4.3 times compared to 2009 (the average value in ukraine in 2009 and 2019 amounted to 2417.1 and 8826.3 uah per month, respectively). however, if we compare the currency equivalent of household consumption expenditures (in eur), the dynamics are less pronounced (an increase of 1.2-1.6 times) due to the depreciation of the national currency. thus, the increase in consumption and household income is evidence-primarily of the impact of inflation in three seas economic journal 70 vol. 2 no. 3, 2021 the country against the background of overall low purchasing power. at the same time, the share of cash income accounted for by total consumer expenditures of households in ukraine in 2019 was 79.2%, which is 11.3 percentage points. less than in 2009 (90.5%) (figure 1). therefore, nominally households have become more solvent because they consume less of their cash income and conserve resources to finance non-consumer needs. however, in reality, these changes did not significantly affect the population's living standards, which remains one of the lowest among european countries. nevertheless, the noticeable social stratification in the regional aspect attracts attention. thus, according to the above indicator, the least financially viable in ensuring their consumer spending (according to 2019) are households of mykolaiv (88.8%), chernihiv (88.7%), and zaporizhzhia (86.9%) regions, while the most secured – families of odesa region (67.0%). almost 70-90% of cash income goes to consumption, thus limiting households' savings and investment activity. thus is direct evidence of the monetary poverty of the population. in previous years, this figure in some regions (volyn, ivano-frankivsk, rivne, ternopil, cherkasy, etc.) exceeded 100%, i.e., the income received did not cover the consumer needs of households, to meet which, probably, used savings, borrowed capital, and other sources. among the reasons for this situation are the higher percentage of the rural population in these areas and the larger share of the people employed in agriculture, forestry, fishing, and hunting. and this, in turn, affects the structure of the comprehensive resources of households. thus, the share of cash income in more urbanized regions is higher compared to areas where households make extensive use of non-monetary sources, in particular in the form of products obtained from personal farms and self-procurement. thus, the importance of the socio-demographic characteristics of households in shaping their consumer behavior. table 1 dynamics of total consumer expenditures of households by regions of ukraine (on average per month per household, uah), 2009–2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019/2009 ukraine 2417,1 2765,7 3118,3 3265,5 3444,6 3707,4 4602,1 5331,5 6634,1 7655,4 8826,3 3,7 autonomous republic of crimea 2342,4 2660,2 2927,5 3090,7 3354,4 … … … … … … х vinnytsia 2281,4 2564,9 2939,7 3119,4 3137,9 3504,6 4704,5 5384,2 6982,1 7547,1 8824,3 3,9 volyn 2219,7 2733,5 3151,2 3286,7 3502,8 3788,7 5065,6 5755,4 6714,1 7850,8 8889,4 4,0 dnipropetrovsk 2310,7 2530,1 2797,7 2947,1 3050,4 3389,3 4082,0 4973,7 6205,7 7707,0 8225,2 3,6 donetsk 2365,1 2731,9 3124,3 3344,7 3610,7 3333,0 3936,7 4704,0 5799,5 6440,7 7952,2 3,4 zhytomyr 2254,1 2524,0 2663,1 2976,7 2900,8 3342,8 4260,7 4604,8 5930,1 6651,1 8211,8 3,6 zakarpattia 2818,8 3147,1 3701,9 3860,9 4336,8 5000,3 6538,4 8054,1 9167,5 10814,3 12161,7 4,3 zaporizhzhia 2196,1 2643,0 3044,4 3340,7 3233,8 3890,2 4522,0 4734,6 6151,9 7747,8 8035,8 3,7 ivano-frankivsk 2727,7 2993,8 3184,9 3322,1 3580,7 4012,1 5146,8 6617,8 8411,0 8733,9 10442,0 3,8 kyiv 2573,8 2762,1 2947,9 3097,8 3434,8 3400,5 4390,2 4867,1 5600,0 7062,5 8429,7 3,3 kirovohrad 1887,3 2067,9 2537,1 2538,2 2835,2 3033,4 4013,9 4655,7 5918,9 6831,8 7740,5 4,1 luhansk 2199,2 2557,3 2744,0 3137,3 3014,5 2893,2 3319,5 4017,7 5280,4 6158,7 6703,7 3,1 lviv 2646,5 2991,2 3227,7 3474,3 3878,8 4157,4 5369,5 6541,7 7820,1 9252,3 11053,6 4,2 mykolaiv 2546,6 2957,8 3337,2 3597,1 3686,0 3849,2 4263,3 5155,6 6074,1 7642,1 8856,0 3,5 odesa 2327,5 2927,9 3147,0 3185,7 3274,4 3786,0 4680,1 5136,3 6330,3 7164,7 8261,7 3,6 poltava 2023,1 2434,5 2884,0 2864,4 3241,8 3454,2 4312,3 4802,8 6278,8 6694,4 7366,9 3,6 rivne 2431,3 2746,1 2975,0 3044,5 3030,5 3240,2 4193,1 4538,6 6000,4 6489,4 8267,0 3,4 sumy 1868,8 2482,1 2631,0 2563,3 2780,4 3162,4 4187,8 4683,6 6061,2 6845,2 7747,7 4,2 ternopil 2420,4 2610,3 3026,8 3115,7 3286,7 3651,6 5243,2 5905,7 8553,8 8039,6 9716,0 4,0 kharkiv 2347,8 2689,7 2921,2 3095,7 3404,6 3653,6 4380,5 4884,0 6168,9 7106,2 7463,5 3,2 kherson 1938,2 2397,9 3172,1 3175,3 3234,4 3709,8 4060,4 5026,6 5907,1 6363,9 7164,8 3,7 khmelnytskyi 2249,5 2518,7 2622,4 2645,5 3008,5 3124,9 4000,5 4978,5 6000,0 6764,6 8229,3 3,7 cherkasy 2530,5 2957,6 3307,3 3410,7 3506,6 3584,8 4698,3 4945,1 6141,7 6954,5 7948,9 3,1 chernivtsi 2607,4 2713,6 3057,4 3244,4 3411,1 3984,4 4813,8 6300,3 7317,5 8528,4 9310,3 3,6 chernihiv 2171,9 2534,9 2913,1 2874,6 3174,6 3342,8 4573,9 4969,6 6406,8 7998,2 8683,9 4,0 kyiv (city) 3638,8 3983,9 4905,7 4945,3 5203,0 5088,7 6097,3 7156,8 8787,3 10351,6 13058,2 3,6 sevastopol (city) 3131,0 3699,1 4541,2 4591,1 3810,8 … … … … … … х note: "…" – no data. source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) three seas economic journal 71 vol. 2 no. 3, 2021 almost half of the total household expenditures are spent on food and non-alcoholic beverages (46.6% in ukraine as a whole in 2019), while in volyn, donetsk, kyiv (excluding kyiv), odesa, and rivne oblasts this figure exceeded 50, 0%. at the same time, in developed countries, households spend no more than 30% of their total family income on food (melykh, 2020).this trend is one of the reasons for ukrainians' passivity towards savings. despite this, positive changes in the consumer capacity of households have taken place. compared to 2009, in 2019, the share of homes that spend more than 50% of total expenditures on food decreased. moreover, the percentage of households with high risks of social exclusion has significantly reduced (with average per capita equivalent total income per month below the statutory subsistence level) – from 16.2% in 2009 to 1.1% in 2019. this trend indicates a reduction in the depth of poverty. the investment behavior of households is statistically estimated by the average monthly expenditures on the purchase of shares, real estate (houses, apartments, cottages, garages), construction, major repairs, bank deposits, and the number of contributions to private pension funds. according to official statistics, on average, in 2019, this figure in ukraine was uah 445.9 per month per household (4 times more than in 2009) it ranged from uah 44.0 in the kyiv region (excluding capital) to 1528.1 uah in the chernivtsi region (table 2). there is a significant scope of variation due to different income levels and different consumer behavior patterns in the regions. it should be noted that the investment potential of the population in ukraine is not fully involved due to low financial capacity. and foreign investment in the country 's economy has declined due to general socio-economic instability and the military conflict in eastern ukraine. this situation requires an effective domestic investment policy based on its financial resources. from 2009 to 2019, the share of investment expenditures in the structure of total spending of households in ukraine increased from 4.1% to 4.6% (figure 2); in most regions, there were also constructive changes. of course, these are not significant structural changes, but still, a positive factor is a fact that the population thus increases its financial capacity, forms a resource base for passive income, raises living standards. however, it should be noted that the share of such expenditures in households in developed countries is much higher, so to optimize the structure of total spending, it is necessary to increase investment costs (investments). another model of financial behavior of households is saving activity, which is a significant source of economic development and an effective tool to protect capital from economic shocks. in this context, it is necessary to distinguish financially active and financially passive households by region and compare the savings activity of homes with macroeconomic 2417.1 8826.3 90.5% 79.2% 0,0 20,0 40,0 60,0 80,0 100,0 0,0 2000,0 4000,0 6000,0 8000,0 10000,0 12000,0 (%)(uan) consumer spending in 2009, uah consumer spending in 2019, uah % cash income in 2009 % cash income in 2019 figure 1. the number of consumer expenditures of households and the share of cash income that provides them, by regions of ukraine in 2009 and 2019 (on average per month per household) source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) three seas economic journal 72 vol. 2 no. 3, 2021 table 2 investment expenditures * of households by regions of ukraine (on average per month per household, uah), 2009–2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019/2009 ukraine 112,7 133,1 147,2 132,2 166,1 131,7 125,5 141,7 225,0 313,3 445,9 4,0 autonomous republic of crimea 151,7 160,9 97,5 126,9 162,6 … … … … … … х vinnytsia 124,8 101,1 191,7 141,5 100,2 90,2 71,3 139,8 293,3 146,4 607,5 4,9 volyn 41,5 78,7 65,2 81,9 115,7 143,6 83,1 76,4 188,4 292,4 361,1 8,7 dnipropetrovsk 108,1 106,3 162,8 133,1 133,4 133,8 170,2 201,1 309,8 691,3 796,7 7,4 donetsk 107,8 136,3 99,8 90,6 97,4 63,2 29,5 32,3 246,8 203,9 131,7 1,2 zhytomyr 175,4 63,4 105,2 51,8 311,0 120,7 88,1 303,1 141,3 122,5 230,9 1,3 zakarpattia 193,9 145,8 248,6 202,0 125,0 255,8 263,3 60,5 151,8 583,7 155,1 0,8 zaporizhzhia 193,6 214,2 288,3 308,4 363,0 305,5 305,3 277,2 576,0 661,1 766,3 4,0 ivano-frankivsk 66,6 57,8 63,8 49,9 16,8 14,6 5,6 17,7 135,7 16,7 143,6 2,2 kyiv 127,8 94,8 193,3 91,2 153,8 98,1 44,6 1,1 68,5 16,5 44,0 0,3 kirovohrad 64,7 100,1 221,6 176,5 151,1 129,2 168,3 165,4 161,1 202,6 884,9 13,7 luhansk 152,8 147,2 166,9 221,7 212,8 290,0 307,9 230,1 380,7 691,0 680,8 4,5 lviv 53,5 38,5 66,6 55,0 55,6 69,3 44,8 101,6 86,0 199,2 346,2 6,5 mykolaiv 207,8 112,9 231,9 207,8 125,9 151,2 136,9 252,6 398,8 430,3 712,1 3,4 odesa 96,1 197,7 65,0 58,4 132,9 94,0 60,5 72,6 84,1 41,3 249,9 2,6 poltava 78,1 97,1 124,1 102,2 149,3 57,1 102,1 37,4 121,2 120,6 121,2 1,6 rivne 60,2 110,6 71,9 69,7 97,9 182,9 148,7 101,7 85,1 97,3 231,6 3,8 sumy 142,0 154,1 229,5 127,2 123,8 172,9 370,7 389,3 264,3 258,5 287,5 2,0 ternopil 75,8 112,8 54,2 146,5 148,8 77,5 109,1 85,3 523,9 379,0 859,5 11,3 kharkiv 71,7 87,6 99,1 127,6 140,1 223,9 167,1 169,0 121,0 413,2 545,5 7,6 kherson 39,9 55,4 56,0 34,0 39,1 26,4 4,1 90,5 149,6 57,8 133,7 3,4 khmelnytskyi 166,4 208,6 180,3 261,5 281,6 139,2 61,3 52,4 122,0 171,0 726,2 4,4 cherkasy 83,5 86,3 78,6 106,1 103,6 125,8 64,7 79,8 242,5 569,1 527,4 6,3 chernivtsi 273,2 219,4 206,6 320,6 348,3 454,3 462,8 531,5 817,9 982,5 1528,1 5,6 chernihiv 132,2 175,4 225,2 272,1 223,7 141,0 129,9 145,9 346,6 547,4 525,5 4,0 kyiv (city) 69,7 301,2 273,0 79,3 405,8 42,2 54,1 122,8 105,1 127,2 146,6 2,1 sevastopol (city) 35,8 32,1 121,5 131,0 41,9 … … … … … … х notes: * according to the methodology of the state statistics service of ukraine, the investment expenditures of households include the following items of non-consumer expenditures: purchase of shares, real estate, construction, overhaul, bank deposits. "…" – no data. source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) development. therefore, the empirical indicator can be the gross regional product (grp) to analyze the latter. experts have determined that the economic growth of a country or region directly depends on investment, a sufficient amount of which is at least 27-35% of gdp or grp. however, for a long time, gross savings in ukraine (from the population, enterprises, and the state) do not exceed 15% of gdp. thus, more than 60% of gross savings are provided by non-financial corporations and households – only 20%, while the proportion is reversed in developed countries (kraina proidannia, 2019). there are no comprehensive regional statistics on organized and unorganized household savings, except for some surveys conducted by the statistical system. therefore, the size and dynamics of potential savings can be estimated by deducting the accumulated capital of households not used in the current year after making all (consumer and non-consumer) expenditures. in essence, this is the difference between total resources and total household expenditures. the saved resources can potentially be used to invest in future income or become a financial "cushion" to protect the population from economic crises and shocks (table 3). it is important to note that the savings capacity, as the total capacity of households to accumulate resources, during 2009– 2019 increased in ukraine 9.4 times: the most – in ivano-frankivsk region (20.5 times), the least – in kirovograd, chernivtsi, and zaporizhia regions (3 times). however, the dynamics of the indicator during the analyzed period were unstable, which is evidence of the influence of various factors on these processes, including macroeconomic crises, imbalances in regional labor markets, the spread of the shadow economy, and informal employment. according to figure 3, most oblasts of ukraine in 2019 showed a lower level of accumulated total three seas economic journal 73 vol. 2 no. 3, 2021 112.7 445.9 13,6 9,7 7,7 8,4 8,2 7,7 7,1 8,7 6,1 6,6 6,0 5,3 4,6 3,8 3,0 3,4 2,9 2,7 2,6 1,2 1,1 1,3 1,7 1,6 1,6 0,5 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 0,0 300,0 600,0 900,0 1200,0 1500,0 ch er ni vt si ki ro vo hr ad te rn op il 5 ni pr op et ro vs k za po riz hz hi a kh m el ny ts ky i m yk o la iv lu ha ns k v in ny ts ia kh ar ki v ch er ka sy ch er ni hi v u kr ai n 9 v ol yn lv iv su m y o de sa ri vn e zh yt om yr za ka rp at tia ky iv (c ity ) iv an ofr an ki vs k kh er so n 5 on et sk po lta va ky iv (%)(uan) investment costs in 2009, uah investment costs in 2019, uah % in the structure o f total costs in 2009 % in the structure o f total costs in 2019 figure 2. distribution of investment expenditures of households by regions of ukraine and their share in the structure of total spending, 2009 and 2019 (on average per month per household) source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) 261.2 2448.3 16.2 % 2009 р. 1.1 % 2019 р. -10 -5 0 5 10 15 20 25 30 -300,0 300,0 900,0 1500,0 2100,0 2700,0 3300,0 3900,0 4500,0 ky iv (c ity ) o de sa ri vn e vo ly n za ka rp at tia lv iv po lta va do ne ts k iv an ofr an ki vs k dn ip ro pe tr ov sk ky iv u kr ai ne zh yt om yr lu ha ns k kh er so n kh m el ny ts ky i te rn op il kh ar ki v su m y vi nn yt sia ch er ka sy ki ro vo hr ad ch er ni hi v ch er ni vt si m yk ol ai v za po riz hz hi a (%)(uan) accumulated total resources in 2009, uah accumulated total resources in 2019, uah % of poor hous eholds (2009) % of poor hous eholds (2019) figure 3. the amount of accumulated total resources of households * and the share of low-income families with real incomes below the statutory subsistence level, by regions of ukraine, 2009, 2019 note: * saved (unused) resources that could potentially be used to invest in future income. calculated as the difference between total resources and total household expenditures (average per month per household). source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) three seas economic journal 74 vol. 2 no. 3, 2021 table 3 accumulated total resources of households * by regions of ukraine (on average per month per household, uah), 2009–2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019/2009 ukraine 261,2 396,4 385,7 542,5 640,3 514,4 279,7 518,4 1025,8 1595,5 2448,3 9,4 autonomous republic of crimea 330,9 265,0 291,8 404,5 412,2 … … … … … … х vinnytsia 133,6 130,1 68,4 122,2 408,9 331,8 575,8 471,9 591,3 1254,1 1647,8 12,3 volyn 332,2 367,2 343,5 674,8 694,4 443,4 66,9 585,0 1456,0 1806,4 3481,7 10,5 dnipropetrovsk 319,0 508,7 416,4 612,3 749,6 543,5 478,3 374,4 814,6 1124,2 2554,5 8,0 donetsk 255,8 628,8 661,5 1017,6 1023,5 349,2 367,5 320,4 1027,8 1824,0 2648,3 10,4 zhytomyr 222,9 195,5 397,5 253,0 521,6 425,6 28,9 432,7 700,9 1540,8 2216,2 9,9 zakarpattia 220,5 287,0 269,6 559,5 414,0 320,7 227,5 221,2 1110,0 1013,3 3413,3 15,5 zaporizhzhia 180,5 255,7 216,7 262,8 288,1 209,0 228,4 399,3 403,0 454,2 546,1 3,0 ivano-frankivsk 126,4 174,5 213,6 319,8 405,0 419,6 426,6 394,4 1310,1 1661,6 2587,2 20,5 kyiv 337,2 461,6 487,0 764,9 661,1 1042,7 885,8 994,8 1541,0 1944,9 2535,0 7,5 kirovohrad 366,8 392,5 568,9 651,1 570,5 448,4 51,4 582,4 944,5 1542,6 1208,1 3,3 luhansk 272,6 336,6 521,2 537,1 934,8 405,8 626,7 881,0 1173,3 1460,5 2069,2 7,6 lviv 278,9 320,2 416,8 602,7 604,9 601,4 -54,9 397,5 1172,1 1860,7 3202,5 11,5 mykolaiv 154,9 164,9 71,3 136,6 164,8 206,9 160,5 284,0 551,9 564,4 576,3 3,7 odesa 520,6 591,7 445,8 1006,4 1142,3 1115,4 502,2 1306,7 2146,9 3378,3 4163,3 8,0 poltava 263,4 645,1 283,7 551,2 631,9 705,8 190,4 771,6 1235,5 2536,7 2752,4 10,5 rivne 260,3 488,0 354,1 594,8 781,6 773,2 562,8 1255,5 1812,6 2818,3 3669,7 14,1 sumy 241,0 298,9 312,4 546,2 553,6 352,9 205,0 504,1 612,7 976,2 1856,4 7,7 ternopil 380,4 222,9 417,7 280,3 577,1 293,3 -87,8 470,3 777,2 1666,8 2007,2 5,3 kharkiv 250,5 374,7 339,5 445,0 515,7 471,3 357,0 354,8 726,7 1110,6 1982,5 7,9 kherson 361,6 346,1 89,9 263,7 282,7 403,7 348,8 609,7 1059,9 1537,5 2033,1 5,6 khmelnytskyi 265,8 299,6 375,5 519,0 524,4 652,9 415,5 600,0 1185,8 1722,2 2032,2 7,6 cherkasy -225,3 -124,4 -156,8 -109,0 66,7 84,7 -359,3 -27,9 908,0 355,1 1450,4 х chernivtsi 217,2 329,4 286,5 421,6 468,7 400,9 103,2 113,8 152,4 573,6 678,9 3,1 chernihiv -7,9 84,9 -75,0 264,7 205,9 329,1 25,0 161,4 440,2 578,5 1184,3 х kyiv (city) 422,0 995,3 1051,4 805,4 1062,0 671,9 83,4 503,1 1280,5 2687,7 4609,2 10,9 sevastopol (city) -23,5 -243,6 -325,0 110,8 690,5 … … … … … … х notes: * saved (unused) resources that could potentially be used to invest in future income. calculated as the difference between total resources and total household expenditures. "…" – no data. source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) resources of households relative to the national indicator (uah 2,448.3 on average per household per month). at the same time, almost all regions of this majority (except for ternopil, cherkasy, mykolaiv, and zaporizhia oblasts) were characterized by a higher level of household poverty according to the income criterion compared to the national average (1.1%). accordingly, in those regions where households tended to accumulate more resources, the percentage of lowincome families mainly was lower than in ukraine as a whole. based on the analysis of different models of household behavior in 2009–2019, the structure of their general activity (consumer, investment, and savings) was compiled, which allowed to find out the financial orientations of households by region. listed in figure 4, the decomposition of the financial capacity of households in 2019 shows that most of them focus on consumer behavior (i.e., do not have the opportunity to allocate a significant portion of income to savings) with a share of consumer spending from 64.2% to 84.0%, with a predominance of values higher than the national level (72.8%). the investment costs also vary region – from 0.4% to 12.8%, and the share of unused resources into savings ranged from 5.5% to 32.3%. given that there is no empirically proven optimal level of investment costs and optimal savings, we should focus on increasing the shift of emphasis in the direction of organized saving behavior and the transformation of accumulated capital into investment resources. thus, the leading role in these processes is played by the credit and banking system. however, recent structural reforms in ukraine's banking sector have harmed household deposits' protection and confidence three seas economic journal 75 vol. 2 no. 3, 2021 12,83 8,59 7,77 6,88 6,75 6,62 6,55 6,35 5,33 5,22 5,13 4,70 3,68 2,77 2,76 2,32 2,08 1,94 1,87 1,37 1,19 1,15 1,05 0,96 0,80 0,39 5,70 11,72 5,54 20,91 5,46 21,22 15,29 17,77 19,36 14,15 14,11 10,59 20,20 17,85 26,63 21,44 19,97 32,33 29,58 20,90 23,94 26,15 18,90 21,09 25,30 22,47 0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00 chernivtsi kirovohrad zaporizhzhia luhansk mykolaiv dnipropetrovsk ternopil khmelnytskyi kharkiv vinnytsia cherkasy chernihiv ukraine sumy volyn lviv zhytomyr odesa rivne kherson donetsk poltava ivano-frankivsk zakarpattia kyiv (city) kyiv % savings costs % of investment costs a) investment and savings behavior of households figure 4. decomposition of financial capacity of ukrainian households: regional section, 2019 source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) in financial institutions. the low level of financial literacy of citizens, who are more prone to disorganized saving behavior in accumulating cash without placing it in the relevant financial institutions, also contributes. however, the natural source of domestic investment in the national economy is primarily organized household savings. the latter's growth is evidence of improving the welfare of the population and strengthening confidence in financial institutions and the state in general. unfortunately, there are few reasons for increasing the savings activity of the population in ukraine, as wages predominate in the structure of total household resources. as you know, it is an indicator that determines the overall standard of living and savings and investment behavior of households. in ukraine, the average monthly salary at the beginning of 2020 was 397 eur , while in poland, the value of this indicator was 1114 eur , in romania – 742 eur , in the czech republic – 1250 eur , in germany – 3260 eur (labour market (incl. lfs) hus, ukraine lags behind the eu countries (including the poorest) several times the average wage. moreover, the deteriorating economic situation in the country and regions, and, consequently, the reduction of guarantees of stable employment and a decent standard of living of households push citizens to try to find a job with higher wages, to get an education in other countries. accordingly, with declining incomes, active inflation, exceeding the growth rate of household expenditures over income growth rates, limited opportunities for citizens to save and invest due to high food expenditures, migration sentiment is growing. these sentiments change especially sharply during periods of crisis and revolutionary change, as confirmed by a recent study by the authors (levytska, mulska, 2020).critical periods in the economic and political life of ukraine (the orange revolution, three seas economic journal 76 vol. 2 no. 3, 2021 the great recession of 2008–2009, and the dignity revolution) significantly affected the trends of external migration of the population of ukraine and border regions, increasing disparities in regional labor markets and reducing the financial stability of households. 4. conclusions the financial potential of households, expressed in terms of cash and non-cash income, affects the formation of a model of their economic behavior and natural and potential consumer capacity. at the same time, savings activity is determined mainly by the level of total household income and, accordingly, the share of resources accumulated after implementing all expenditures. however, not all household savings are converted into investment resources, so the 78,14 75,12 81,52 67,76 83,96 68,33 74,01 71,98 72,87 75,79 77,33 77,67 72,83 74,51 67,98 74,00 74,00 64,17 66,64 73,66 71,89 69,99 76,26 75,16 71,66 74,72 3,33 4,56 5,17 4,45 3,82 3,83 4,15 3,90 2,45 4,83 3,43 7,03 3,28 4,87 2,63 2,24 3,95 1,56 1,91 4,06 2,98 2,71 3,79 2,79 2,24 2,42 0,00 10,00 20,00 30,00 40,00 50,00 60,00 70,00 80,00 90,00 chernivtsi zaporizhzhia mykolaiv ternopil kharkiv cherkasy ukraine volyn zhytomyr rivne donetsk ivano-frankivsk kyiv (city) % of mixed costs % of consumer spending b) consumer and mixed behavior of households figure 4. decomposition of financial capacity of ukrainian households: regional section, 2019 source: compiled by the authors according to the data (derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy, 2009, 2019) ukrainian economy is experiencing acute shortages. it was found that the average monthly volume of investments made by households in ukraine through the purchase of shares, real estate (houses, apartments, cottages, garages), construction, overhaul, bank deposits, as well as contributions to private pension funds in 2019. was only 3.7% in the structure of total household resources. thus, this indicates the need to shift the emphasis in consumer behavior to strengthen the role of non-consumer, particular investment, costs. the state must provide favorable institutional conditions to stimulate public investment and maintain the internal socio-economic environment, resistant to various crises and shocks. an essential tool here is an effective regional policy aimed at leveling interregional disparities and forming effective long-term strategies for the financial behavior of households with full use of its investment potential. references: bil, m. m., & mulska, o. p. (2021). modeli spozhyvchoi povedinky domohospodarstv ta rehionalni osoblyvosti yikh formuvannia v ukraini [models of consumer behavior of households and regional features of their formation in ukraine]. regional economy, 2. cherenko, l. m. (2019). kompleksna otsinka bidnosti ta sotsialnoho vidchuzhennia v ukraini za 2016–2018 roky: analitychna zapyska [comprehensive assessment of poverty and social exclusion in ukraine for 2016–2018: an analytical note]. mv institute of demography and social research birds of the national academy of sciences of ukraine. three seas economic journal 77 vol. 2 no. 3, 2021 derkach, t. v. (2020). uzahalnena kupivelna povedinka spozhyvachiv torhivelnykh posluh [the generalized purchasing behavior of consumers of trade services]. market economy: modern theory and practice of management, 2(45), 19. doi: https://doi.org/10.18524/2413-9998/2020.2(45).201420 derzhavna sluzhba statystyky ukrainy. sotsialno-ekonomichne stanovyshche domohospodarstv ukrainy u 2019 rotsi (za danymy vybirkovoho obstezhennia umov zhyttia domohospodarstv) [socio-economic situation of households in ukraine in 2019 (according to a sample survey of living conditions of families)]. available at: http://www.ukrstat.gov.ua/druk/publicat/kat_u/publdomogosp_u.htm derzhavna sluzhba statystyky ukrainy. vytraty i resursy domohospodarstv ukrainy (za 2009, 2019 rr.) [expenditures and resources of households in ukraine (for 2009, 2019)]. available at: http://www.ukrstat.gov.ua/ druk/publicat/kat_u/publdomogosp_u.htm harasymiv, t. (2016). povedinka liudyny: filosofsko-pravova refleksiia «diialnist» ta «aktyvnist» [human behavior: philosophical and legal reflection "activity " and "activity "]. bulletin of the national university "lviv polytechnic". series: legal sciences, 855, 147–151. kraina proidannia. chomu vlada ne stymuliuie ukraintsiv zaoshchadzhuvaty? economic truth. available at: https://www.epravda.com.ua/publications/2019/08/26/650910 kuzmuk, o. m. (2015). spozhyvatska povedinka yak mekhanizm identychnosti [consumer behavior as a mechanism of identity]. faces, 4, 12–16. labour market (incl. lfs). earnings / eurostat. available at: https://ec.europa.eu/eurostat/web/labour-market/ earnings levytska, o. o., & mulska, o. p. (2020). modeliuvannia intensyvnosti zovnishnoi mihratsii naselennia ukrainy v umovakh posylennia seredovyshcha vyshtovkhuvannia [modeling of intensity of external migration of the population of ukraine in the conditions of strengthening of the ejection environment]. ukraine economy, 9, 48–65. available at: https://doi.org/10.15407/economyukr.2020.09.048 melykh, o. yu. (2020). zaoshchadzhennia domohospodarstv: sotsialno-ekonomichna rol ta tendentsii formuvannia v ukraini [household savings: socio-economic role and trends in ukraine]. efficient economy, 11. doi: https://doi.org/10.32702/2307-2105-2020.11.67 mulska, o. p. (2021). kontseptualna sutnist zviazku ekonomichnoi povedinky domohospodarstv i rozvytku terytorii [the conceptual essence of the connection between economic behavior of households and territorial development]. economy and society, 24. doi: https://doi.org/10.32782/2524-0072/2021-24-16 pohorila, l. m. (2006). ekonomichnyi zmist ta sutnist vidnosyn spozhyvannia [economic content and essence of consumption relations]. formation of a market economy, 16, 28–37. stankevych, yu. yu. (2008). sutnist ta kharakterni rysy suchasnoho domohospodarstva [the essence and characteristics of the modern household]. formation of a market economy, 19, 40–46. teremtsova, n. v. (2010). the nature of lawful human behavior (culture of human behavior, the mechanism of individual behavior, anti-social behavior, conformist behavior...) [pryroda pravomirnoi povedinky liudyny (kultura povedinky liudyny, mekhanizm indyvidualnoi povedinky, antysuspilna povedinka, konformistska povedinka...)]. bulletin of ntuu "kpi". politology. sociology. right, 2(6), 167–170. vasylkevych, l. o. (2011). struktura povedinky spozhyvachiv i kharakterystyka yii osnovnykh komponentiv u systemi ekonomichnykh vidnosyn [the structure of consumer behavior and the characteristics of its main components in the system of economical relations]. economy and region, 4, 187–191. three seas economic journal 189 vol. 3 no. 1, 2022 corresponding author: 1 kyiv national university of technologies and design, ukraine e-mail: vladyslava.tymkovan@gmail.com orcid: https://orcid.org/0000-0003-4178-6719 doi: https://doi.org/10.30525/2661-5150/2022-1-27 the role of agro-industrial associations in industrial agriculture vladyslava tymkovan1 abstract. the subject of the study is agroindustrial associations and their role in the industrial agriculture of ukraine. during the study the following research methods were used: empirical, theoretical methods, as well as observation, analysis and synthesis. the purpose of the study is to analyze the state of the enterprises-participants of agroindustrial associations to identify positive or negative trends in the sustainable development of their activities and to provide suggestions for their further effective development. the relevance of the topic is confirmed by the need to ensure food security of ukraine, which can be supported primarily by enterprises of agro-industrial complex. the study analyzed the volume of products produced by agricultural enterprises and compared the size of the costs of agricultural production and the amount of net profit of enterprises. it was concluded that the sustainable development of agro-industrial enterprises has declined. to improve these indicators, the authors proposed a number of measures that would help enterprises to get out of the pre-crisis state, namely, state support in various manifestations. the study "support for agrarian and rural development" within the framework of the project of the united states agency for international development (usaid) was also taken into account. the study examined in detail the external and internal negative factors affecting on the activities of agro-industrial associations. key words: agro-industrial associations, development of agro-industrial associations, government support, industrial agriculture, activity of agro-industrial enterprises. jel classification: q13, q18, o13, p32 1. introduction industrial agriculture is a system of national economy, which forms a significant part of the gross domestic product of ukraine. in particular, the system of industrial agriculture includes production, processing of agricultural products and logistical support of production areas. the system of industrial agriculture on the territorial basis is formed of national, regional and local agro-industrial formations. in particular, regional agro-industrial formations are mainly represented by agro-industrial associations. the author believes that agro-industrial associations play an important role, because after the association of enterprises the production and economic relations between industrial agriculture enterprises and industries that are related to each other develop. this, in turn, has a positive effect on the sustainable development of the national economy, which is the main objective of the law of ukraine "on state support of agriculture in ukraine", the law of ukraine "on the priority of social development of the village and industrial agriculture in the national economy " and a number of orders of the ministry of agrarian policy and food of ukraine. this, in turn, has a positive effect on the sustainable development of the national economy, which is the main objective of the law of ukraine "on state support of agriculture in ukraine", the law of ukraine "on the priority of social development of the village and industrial agriculture in the national economy " and a number of orders of the ministry of agrarian policy and food of ukraine. the purpose of the study is to analyze in detail the state of industrial agriculture and to determine the role of agro-industrial associations in industrial agriculture. in accordance with the purpose of the study, the scientific and research objectives are: 1. a study of the essence of the concept of industrial agriculture. 2. determination of the current state of agroindustrial associations and their role in industrial agriculture. 3. a detailed study of the problems and prospects for the future development of members of agroindustrial associations. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 190 vol. 3 no. 1, 2022 2. the theoretical essence of the concept of industrial agriculture a number of scientists, including andriichuk v. (2002), andriichuk v. (2013), dakhno i. (2002), kachan e. (2011), derhalyuk m. o. (2018), sivachenko i. yu., korovjakovskij d. z. (1987), atamas o. p. (2011) and others investigated the essence of the concept of industrial agriculture. andriichuk v. (2013) believes that industrial agriculture is the broadest concept and includes 5 spheres in the system, namely: the first sphere – products for agriculture, food industry enterprises, means of production; the second sphere – own agriculture; the third sphere – production and storage of agricultural raw materials, its processing, which is the main section of this sphere; the fourth sphere – market infrastructure (agricultural exchanges, wholesale markets, auctions, own trading network of agricultural producers and processing enterprises); the fifth sphere – production infrastructure. kachan e. (2011) believes that the industrial agriculture of ukraine is "part of the national economy, which is the only holistic production and economic system that connects a number of agricultural, industrial, educational, scientific and production sectors aimed at obtaining, transporting, storing, processing and marketing of agricultural products." dakhno i. (2002) gives the following definition of this concept: "industrial agriculture is a set of branches of the national economy associated with the production of food and consumer goods from agricultural raw materials and their supply to the population." in turn, derhalyuk m. o. (2018) believes that industrial agriculture should be considered as a complex holistic socio-economic system of interrelated industries for the production, distribution, exchange and consumption of agricultural products. the scientist believes that these interrelated branches have specific functional features that complete the reproduction of products and production relations. sivachenko i. yu. and korovjakovskij d. z. (1987) note that "industrial agriculture is a system of production and economic relations of agriculture with the industries serving it and other sectors of the national economy, reaching the level of agro-industrial integration". atamasd o. p. (2011) believes that industrial agriculture is an inter-sectoral territorial production unit, the level and balance of development of its constituent spheres depends on the provision of food and well-being of the population. scientists have different views on the definition of industrial agriculture, but if we connect all the above definitions, we can give the following definition of the concept. industrial agriculture is a system of agriculture and interrelated branches of the national economy, between which production relations are created to improve food security and reproduction of manufactured products. 3. the role of agro-industrial associations in industrial agriculture before examining in detail, the role of agro-industrial associations in industrial agriculture, it is necessary to define the concept of "agro-industrial associations". the widest definition is given by andriichuk v. (2002): “agro-industrial association – a voluntary association of enterprises on the basis of the main enterprise – meat processing and packing plant or dairy plant, which retain their economic independence and the right of a legal entity.” the purpose of the association is to unite the interests of agrarian and processing enterprises and to achieve an increase in the production of meat and meat products, milk and dairy products and obtain greater profits. currently, there are almost 90 ukrainian agroindustrial associations in ukraine according to usaid (2017), among which the largest are: association of enterprises-manufacturers of machinery and equipment for agro-industrial complex "ukragromash", association "ukrainian club of agrarian business", association of farmers and private landowners of ukraine, all-ukrainian public organization "ukrainian agrarian confederation", the ukrainian stockbreeders association, association of milk producers, the “ukrainian agrarian council”, national association of sugar producers of ukraine, the ukrainian pig breeders association, association "union of poultry farmers of ukraine", ukrainian grain association, ukroliyaprom association, “ukrsadprom” association, public organization "agrarian union of ukraine". it should be noted that the main objectives of any association are: 1. protection of the rights and legitimate interests of its members. 2. supporting conditions for their development. 3. assistance in the reform and development of the relevant industry and market. with the decline in agricultural production in industrial agriculture, one possible support body for agricultural enterprises is their membership in agroindustrial associations, as there is mutual support among association members for the effective operation of the enterprise. 4. study of problems and prospects for the development of members of agro-industrial associations to study the problems of the members of the agroindustrial association it is necessary to analyze the volume of products produced, the cost of production, three seas economic journal 191 vol. 3 no. 1, 2022 the trend of increasing or decreasing net profit (loss) of agro-industrial enterprises and the level of profitability of operating activities of enterprises. according to the ukrstat (2020), the volume of production has been increasing over the past 6 years. according to figure 1, it can be concluded that the crisis situation in ukraine did not affect the activities of the enterprises in terms of production. the next step is to compare the costs of agricultural production and net profit (loss) of enterprises, presented in figure 2. the increase in the cost of production and a decrease in net profit indicate the emergence of a pre-crisis state at most enterprises, which negatively affects the industrial agriculture of ukraine as a whole. negative trends in the development of agricultural enterprises are also described in a study on the assessment of institutional capacity and development of self-sufficiency of industry associations and public associations in the agricultural sector of ukraine. this study was conducted within the framework of the u.s. agency for international development (usaid) project "support for agricultural and rural development". according to usaid (2017), one of the reasons for the negative impact on the effective activities of agricultural associations is the 409,11 465 511,16 600,96 620,55 660,95 0 100 200 300 400 500 600 700 2015 2016 2017 2018 2019 2020 the volume of production of agricultural enterprises in ukraine the volume of production of agricultural enterprises, billion uah figure 1. the volume of production of agricultural enterprises in ukraine for 2015–2020, billion uah 0,0 100000,0 200000,0 300000,0 400000,0 500000,0 600000,0 2015 2016 2017 2018 comparison of agricultural production costs and net profit (loss) of agricultural enterprises for 2015–2020 costs for the production of agricultural goods, million uah 2019 2020 net profit (loss), million uah figure 2. comparison of agricultural production costs and net profit (loss) of agricultural enterprises for 2015–2020 three seas economic journal 192 vol. 3 no. 1, 2022 lack of government funding for rural development, dependence on one source of funding, lack of qualified initiative personnel. 5. conclusion the study of the role of agro-industrial associations in industrial agriculture has shown the importance of effective activities of associations and the impact of membership in them on the activities of agricultural enterprises. the main advantages of joining an association are the constant receipt of legal and methodological assistance, the offer of modern scientific developments, access to information on the main trends in the development of the industry, etc. the author believes that the analysis of the main performance indicators of agricultural enterprises (the cost of agricultural production, the volume of production and the amount of net profit) indicates a negative trend of reducing the effectiveness of the participants of agroindustrial associations, which is caused by the following factors: 1. lack of a systematic and targeted policy to support associations. 2. unapproved unified comprehensive strategy and action plan for agricultural and rural development in ukraine for 2015–2020. 3. instability of the competitive position of agricultural products on the foreign market. 4. delayed technological and technical production. in turn, government support in the form of state support is necessary to improve the activities of the participants of agro-industrial associations: 1. adoption of a unified strategy and action plan for the development of industrial agriculture for 2022–2028. 2. guaranteed annual state support for the development of members of agro-industrial associations. 3. tax cuts for small and medium-sized agricultural enterprises. references: andriichuk, v. (2013). economy of agro-industrial enterprises: a textbook. kyiv: kneu, 779(5). andriichuk, v. (2002). economy of agricultural enterprises: a textbook. kyiv: kneu, 624. dakhno, i. (2002). the international economy. kyiv: iapm, 248. kachan, e. (2011). regional economy: textbook. kyiv: znannya, 670. derhalyuk, m. o. (2018). pidkhody shchodo vyznachennya sutnosti ponyattya" ahropromyslovyy kompleks" [approaches to defining the essence of the concept of "agro-industrial complex"]. ekonomika ta derzhava, (5), 34–37. sivachenko, i. yu., & korovjakovskij, d. z. (1987). formirovanie i razvitie celostnoj sistemy agropromyshlennogo kompleksa [formation and development of an integrated system of agro-industrial complex]. kyiv: vyscha shkola. atamas, o. p. (2011). the essence and classification of the industrial infrastructure of agro-industrial complex. efektyvna ekonomika, [online], vol. 12. available at: http://www.economy.nayka.com.ua usaid (2017). assessment of institutional capacity and self-government development of branch associations and public associations in the agricultural sector of ukraine. available at: http://www.efaidnbmnnnibpcajpcglclef indmkaj/v iewer.html?pdf url=https%3a%2f%2fwww.prostir.ua%2fw p-content%2fuploads%2f2017%2f09%2f2017_09_11_report_ngosassessment_sros.pdf&clen=1692199&chunk=true ukrstat (2020). website of the state statistics service of ukraine. available at: http://www.ukrstat.gov.ua/ draft unified comprehensive strategy and action plan for the development of agriculture and rural areas in ukraine for 2015–2020. available at: https://ips.ligazakon.net/document/nt1978 three seas economic journal 103 vol. 1, no. 1, 2020 corresponding author: 1 odessa national maritime university, ukraine. e-mail: elennika@bigmir.net 2 odessa i.i. mechnikov national university, ukraine. e-mail: edkuznietsov@gmail.com 3 national university “odessa maritime academy”, ukraine. e-mail: elit-@ukr.net doi: https://doi.org/10.30525/2661-5150/2020-1-15 ways of development of the potential of state in the marine economic complex: ecological and economic aspects olena borshchevska1, eduard kuznetsov2, sergiy stepanov3 abstract. at present, issues of assessing the impact of economic activity on the environment as an integral part of the country’s economic development are becoming more and more relevant. environmental problems of the development of a marine economy complex may restrain the development of the economic potential of the state. moreover, the dynamic development of the state’s economy is possible only when economic entities adhere to the norms of an ecological nature. in this regard, the problem of assessing the impact on the environment, in particular, in the maritime complex in the projection of the economic component of development, as well as in this sense and the rational use of natural resources, is of paramount importance. the environmental tension is most often due to the placement of powerful chemical and petrochemical industries in the area of the maritime complex. in some areas, the level of environmental pollution is quite high due to the location of large facilities in the electric power industry (thermal and nuclear power plants). the economic component of the environmental impact assessment of the maritime complex is that one and the same natural resource is most often used by the economic entities of several countries. therefore, the assessment of the impact on the environment and the achievement of a balanced distribution of ecological and economic benefits for the rational use of natural resources, especially in the maritime complex, are today of great relevance. the purpose of the article is to analyse the problems of ecological and economic orientation in the maritime complex and, on the basis of generalization of such problems, to provide recommendations on systematization of measures for the comprehensive rational development of economic relations, taking into account the features of the coastal zone and the marine economic complex. methodology. analytical market reviews, materials of periodicals, resources of the internet are the informational and methodological basis of the investigation. to achieve the goal set, the following general scientific and special methods were used: economic and mathematical methods, structural-logical analysis, analogy, synthesis, comparison and integration, factor analysis. result. the system of measures of an economic and legal nature, which should be taken into account for successful and rational use of the marine economic complex in economic activity, is substantiated. problematic aspects and directions of their elimination are determined. the proposed model of the ecological and economic system of the maritime complex acquires a special significance in the context of the supranational task of developing measures for optimizing and rational use of natural resources on a global scale. the directions of the reform of the legal framework are considered. practical value. the system of measures of economic and legal character and their individual types can be applied for optimization and rational use of marine (water) resources, taking into account the peculiarities of economic development and the state of the marine-economic complex in ukraine and in other states. value/originality. most scientific works are devoted to the consideration of theoretical aspects of ecological-economic systems, namely, the refinement of the essence of this instrument as a form of modern financial and economic dynamics. a part of the work is devoted to the consideration of the common features and national peculiarities of ecological and economic systems in individual countries and regions. the authors consider the issues of elaboration of measures for the optimization of economic activity, which combines the abovementioned aspects with the peculiarities of the formation of ecological-economic systems in the marine faring complex. it is also important three seas economic journal 104 vol. 1, no. 1, 2020 to take into account the impact of planned legislative reforms on the development of economic activity in the marine faring complex of ukraine. the account of the peculiarities of the maritime complex in the framework of the national economy allowed developing directions for its further development. key words: ecological-economic system, marine economic complex, economic activity, rational use of resources, estimation of influence of economic activity on environment. jel classification: q22, q25, r19 1. introduction at the opening of the un conference in stockholm in 1972, its leader m. strong spoke about the need for people to move from an economic concept to an ecological and economic system. in recent years, the concept of “ecological and economic system” (further ees) scientists treated differently. for example, it is defined as a limited part of the technical sphere, in which natural, social, and production structures and processes are interconnected with flows of matter, energy, and information (akimova and khaskin, 2001). eеs is flexible and, for each region, it is necessary to develop an individual specific nature management (syromyatnikova, 2011). this should be accepted since people often neglect the balance of ecology and industry, pumping out natural resources, deforesting forests, flooding certain territories (“industrial regions”), because of which, at best, the ecological situation in them is in imbalance, and at worst – floods, earthquakes, technogenic catastrophes, etc. begin. in the classical sense, the ecological and economic system is represented in the form of a biochemical cycle of natural resources that are extracted as a result of production activities and are directed to meet human needs. the next step is the recycling of the waste material or its disposal, which results in secondary resources that are sent for re-consumption (figure 1). analysing the above interpretations of the ecological and economic system, it can be concluded that the stability of eеs depends waste external resources ecological and economic system production products (building materials, structures, etc.) human means of production n a t u r a l r e so u r c e s environment (ecological subsystem) assimilation biochemical cycle secondary resources waste treatment and recycling figure 1. ecological and economic system three seas economic journal 105 vol. 1, no. 1, 2020 on the balance of human-nature relations. the development of technical progress leads to an increase in the volume of consumption of natural resources, but their extraction and waste from their use cause irreparable harm to the environment. the development of production leads to a steady increase in the volume of consumption of resources and the expansion of their range. but, firstly, the resources are limited. secondly, the use of almost every kind of resources causes the emergence of a large amount of waste that is harmful to the environment. there is a need to include environmental factors in the system of modern production. the solution of this task is achievable on the basis of the concept of ecologically sustainable development. it provides an opportunity to overcome the ecological crisis with simultaneous movement along the path of economic development and is directed to implement a system of economic principles aimed at preserving the environment, incorporating environmental factors into the functioning mechanism of the market (malyshev and solodkov, 2014). many domestic and foreign scientists were engaged in studying the impact of economic activity on the ecological situation in the world: v. andreitsev, yu. arutyunov, t. dietz, a. getman, v. gurman, v. kiseleva, v. kirilenko, a. malovsky, p. nesterov, s. pereverzeva, v. razumovsky, r . rycroft, j. regens, g. serov, k. smith, m. sharygina, m. shulga, s. voduanitskaya, a. yablokov, and others. intensive economic activity at marine exacerbated the problem of the ecology of the world ocean, which began to be regarded as a global problem. 2. the economic complex as an important component of the development of the real sector of the economy with the growth of the economies of the world’s states, the volume of international trade and, as a consequence, the importance of the marine economic complex increases. the development of the country’s marineeconomic complex is one of the priorities for the development of the economic potential of the state that has access to the marine. according to modern research, the transport infrastructure occupies a leading role in the system of the world economic complex. since our planet is surrounded by a 2/3 water shell, which includes the seas and oceans, the main economic resource for economic activities is the marine economic complex. particularly relevant for ukraine as a sea power is the rational economic development of the marine economic complex in terms of both economic growth and rational use of natural resources from an ecological point of view. a positive factor in this sense is the interest of the legislator in the sphere of development of the marine economic complex. undoubtedly, the positive factor was the adoption of the sea doctrine of ukraine for the period until 2035, approved by the cabinet of ministers of ukraine on october 7, 2009, no. 1307. at one time, scientists such as o. kibik, o. podtserkovnyi, yu. drapailo, v. kotlubai and others made efforts to study the questions of determining the marine economic complex. as well as v. kovalevsky, yu. sednev, s. savelyev, but not one of the definitions did not take into account the environmental component, as equivalent to economic and legal activities. the marine economic complex is defined as “the territorial combination of economic entities of the maritime transport industry, subjects of other industries, regardless of ownership, that interact with each other and compete within the same field of activity, in order to meet the needs of the population and social production in maritime transport products and services by means of use of natural, intellectual-professional and man-made means” (kotlubai, 2014). other scientists define the marine economic complex as “a complex, multicomponent managed system, which objective functions are to ensure the economy of the countries with natural resources of the seas and oceans, expand the external economic potential that is formed at the level of enterprises, regions, and countries” (kovalevsky, 1998). however, these definitions do not take into account the ecological orientation of the marine economy, although this orientation should promote the development of partnership and good-neighbourliness with other countries since, unlike the state borders, if desired, the economy of the country can be separated, the ecological state of marine natural resources cannot be objectively limited by any boundaries, since a person cannot influence the laws of the functioning of nature as a single cyclically circulating system. it seems expedient to define the marine economic complex as a multi-purpose system of economic activity in the sphere of the use of marine natural resources, taking into account the rational and three seas economic journal 106 vol. 1, no. 1, 2020 balanced development of the country’s economy and the preservation and restoration of the ecological state of the marine environment of the country itself and preventing the deterioration of the ecological state of the natural resources of the neighbouring countries. 3. “environmental” problems and directions of development of the marine economic complex the world approach at the moment is expressed in the fact that environmental safety is the priority of any activity. however, with the growth of human needs, the emergence of engineering, the extraction of minerals and the imbalance of nature management, the global environmental situation has recently deteriorated significantly. according to world analysts, the coastal objects of seaports cause the greatest harm to the region’s ecology – 77% – are industrial facilities that throw waste into the atmosphere and water resources (semina, 2006). intensive use of watercourses, surface and underground water bodies often leads to depletion of water resources. so, during irrigation about 50-75% of all water used is lost, industry and municipal services give 10-20% of irretrievable runoff. in order to maintain the condition of the water body in accordance with environmental requirements, the volume of the maximum permissible irrevocable water withdrawal is established and the requirements for environmental releases (discharge of water from the reservoirs) are established. the main criterion, at the same time, is the provision that in water bodies there should remain such a quantity of water that would ensure not only the ecological well-being of the water body but also the necessary conditions for water use. one of the priority directions of sustainable development of the black sea region of ukraine is cruise shipping since it has a huge effect on the development of the regional economy. ukraine has all the opportunities for the development of various types of marine tourism: cruise, yacht, beach, and others (golubkova, 2017, р. 205). the development of this sector will provide additional revenues to budgets of all levels, first of all, the local budget, creation of new jobs in the spheres involved in servicing cruise passengers, stimulation of the development of related industries, including shipbuilding and ship repair (golubkova, 2018). however, in recent years, the number of cruise ships entering the black sea has significantly decreased (table 1). table 1 analysis of ship calls of passenger liners to the port of odesa year quantity of ships 2013 106 2014 32 (applications – 159) 2015 13 2016 5 (applications – 36) 2017 1+12 (applications – 17) 2018 17 applications (forecast) source: (golubkova, 2018) the reasons for such a sharp decline were events in the east of ukraine, high port charges, unprofitable cruises in the black sea region, insufficient volumes of investment in modernization of the port cruise and tourist infrastructure and fleet. however, this area has opportunities for redirecting the economic activities of cruise operators in the development of domestic routes (sea, river, river-sea). however, the problem of pollution of the sea (coastal zone) from ships is topical. according to forecasts, the volume of international traffic will grow by an average of 4.5% per year, which, accordingly, entails the number of emergency events with tankers, and the risk of pollution of the marine environment by oil and oil products (gutsulyak, 2000). therefore, a comprehensive, systematic approach is required in the cooperation of states in the field of protection of the marine environment from pollution from ships and the study of such cooperation in interaction. according to the international maritime organization (imo) of the united nations, the ships of the world fleet annually transport 10 billion tons of ballast water, which carries 7-10 thousand species of viruses, bacteria, invertebrates, eggs and larvae of fish, other components of plankton that potentially become harmful in the ports of call. for example, it is proved that the cholera pandemic (1961-91), on the island of sulawesi, epidemics of cholera on the coast of peru are associated with shipping. in 1991-92 years in the usa, the causative agent of cholera in the water ballast of ships was found. when analysing the ballast water samples from ships arriving from china, india, japan, vietnam and north africa, causative agents of intestinal infections and helminth eggs were detected (korotkiy, 2002). in 2004, imo adopted the international convention on the control and management of ships’ ballast water and sediment (ballast water three seas economic journal 107 vol. 1, no. 1, 2020 management convention, 2004). this issue is also regulated internationally by the united nations convention on the law of the sea (1982), the international convention for the prevention of pollution from ships (1973), the convention on the prevention of marine pollution from dumping of wastes and other matter (1972), the convention on intervention on the high seas in cases of oil pollution casualties (1969), the convention on civil liability for oil pollution damage (1969). cities in the coastal zone are often at the same time the centres of shipping companies, ocean fisheries (odesa), ports and resorts (mykolaiv), coordinate research and training activities for the marine economy, they accommodate sea transport, fishing industry (coastal and sea fishing), and resort economy. for example, in the city of odesa and the nearest suburban zone, which have unsurpassed resort potential, there are chemical facilities, an oil terminal for reloading and processing crude oil, a reloading cargo centre operates in the port in the centre of odesa, oil and gas exploration and production on the black shelf and the sea of azov. all this contributes to the development of economic potential, but the environment suffers from this. in modern conditions, the development of cities is accompanied by an increase in the volume and pace of construction, the complexity of the transport complex, the removal of industrial enterprises to the outskirts, the desire to smooth differences in the quality of the urban environment of new buildings and the centre, which implies the specialization of development projects. atmospheric air pollution is the most serious environmental problem of the modern city; it causes significant damage to the health of citizens, to the material and technical facilities located in the city (buildings, facilities, facilities, industrial and transport equipment, communications, industrial products, raw materials and semi-finished products) and green plantations. as a result of the work of industrial enterprises in the coastal zone of the sea, atmospheric air pollution is observed. excess of standards of air pollution in ukraine is observed in such cities as odesa, mykolaiv, chornomorsk, yuzhne. the main substances that determine the high level of pollution in odesa are: formaldehyde, benzo(a) pyrene, phenol, carbon fluoride, nitrogen dioxide, dust (lysenko, 2017). therefore, guidelines for integrated coastal zone management, in conjunction with the directive of the european parliament and commission 2014/89/eu of july 23, 2014, approving the standards of marine spatial planning, which define the principles of rational coastal and marine planning and management, become especially topical. the purpose of such legal regulation is to promote the rational and sustainable use of seas and coastal resources, balance the socio-economic and environmental interests, as well as improve the quality of decisions. “the maritime policy and territorial structure of the eu are very closely related, and this can be seen in the fact that marine politicians are beginning to shift into the sphere of state internal affairs, which requires a rethinking of how power is distributed among territorial bodies that have the legal authority to be involved in the formation of these policies and some tools such as marine spatial planning” ( j.l. suárez de vivero, j.r . mateos and d.f. corral, 2009). a clear implementation of the eu urban wastewater treatment directive, the agricultural nitrate directive, the directive on the creation of a basis for the planning of maritime areas, etc. it should be noted that the implementation of the association agreement with the eu, in particular, the directive no. 2011/92 on impact assessment of certain public and private projects on the environment, as well as the relevant provisions of directive no. 2003/4 on public access to environmental information, the convention on environmental impact assessment and the con vention on access to information, public participation in decision-making and access to justice in environmental matters (aarhus convention), ukraine adopted the law “on environmental impact assessment” on may 23, 2017. unfortunately, at present, the obligation to conduct an environmental impact assessment of the project has not yet been adequately implemented. according to the ministry of ecology and natural resources of ukraine, as of march 2018, there are 200 procedures initiated, and by the end of the year, it is expected that this amount will reach 1,000. but compared to our neighbours, in poland, there were approximately 1500 applications for this procedure in 2017 (ukrinform.ua, 2018). at the same time, the lack of this law is that economic activity, which is already underway, does not require an environmental impact assessment, which may harm it. the most painful environmental factors affect the economy in case of catastrophes. on the territory of ukraine, an environmental disaster was the event three seas economic journal 108 vol. 1, no. 1, 2020 in the kerch strait of the black sea, when due to a storm on november 10-11, 2007, 15 vessels were damaged in the strait. catastrophic for the ecology of the sea and coastal area was the pouring into the sea of about 1.2 thousand tons of fuel oil from the russian tanker “volgoneft-139”, which broke in half (medvjedjeva and andrusevych, 2015). in addition, because of the storm, vilnohirsk, khachizmail, nakhchivan, and kovel, which transported about 2,000 tons of sulphur, also sank. during several days following the accident, there was a massive loss of birds and fish in the kerch strait. already five days after the shipwreck, the azov-black sea territorial department of the federal agency for fisheries of the russian federation estimated the total ecological damage in more than 10 billion us dollars. however, the amount of insurance of the owner of “volgoneft-139” to the third parties was $5 million, which is clearly not enough to compensate (medvjedjeva and andrusevych, 2015). the settlement of the ecological catastrophe and the search for a compromise are still going on. 4. conclusions and suggestions in the economic and environmental assessment, it is necessary to distinguish two aspects related primarily to the intensity of economic activity of the objects of the marine complex, as well as to its direct and indirect influence on the coastal zone and marine areas (lysenko, 2017). the main task of researchers in this field is the formation of a balanced interaction of the environment with the economy through the introduction of environmentally friendly technologies in production. the essence of ecologization is the preservation of the balance of production, the introduction of innovative technologies, the restructuring of the production and consumption, the rationalization of nature management, processing and utilization of waste, implemented at macro and microeconomic levels (melnik, 2001). to fulfil this task, it is necessary to develop and take into account the following environmental and economic aspects: 1. study of the impact of the economic project, plan or program of the marine complex on the ecological situation in the region, starting with the development and construction (implementation) phase. when studying the correlation of economic and ecological expediency of using one or another component of the ecosystem, the main result should be the allocation of the greatest economic effect with minimal environmental losses. 2. ensuring standards. the project documentation should include a comprehensive assessment of the envisaged technical solutions for the rational use of natural resources and measures to prevent the negative impact of construction (including the processes of production, installation, commissioning, operation, storage, transportation, sale, and disposal) and operation of the marine complex facility on the environment sanitaryepidemiological, ecological requirements, fire, industrial, nuclear, radiation and continued safety). it is also important to strengthen the responsibility of bodies and persons carrying out expert environmental activities. 3. tightening control over the extraction of natural resources, the impact of construction and operation of the facility on the environment. it is necessary to understand that the resources of the planet are not unlimited, so it is necessary to seek an economic and ecological balance – both for the extraction and processing of useful resources in order to save them. the economic activity of a person in any territory should be based on the use of local renewable natural resources, but not exceed their ability to regenerate. 4. development of environmental sections for the feasibility study of urban development projects in the coastal zone. “involving terrestrial designers and decision support methods that they use offers special advantages ... marine spatial planning should be applied across the jurisdiction of individual countries but with varying degrees of detail” (p.m. gilliland and d. laffoley, 2008). when planning the construction of facilities within the city in the coastal zone, the following priorities should be observed: strict adherence to the technological sequence of construction; reduction of construction time; complex use of the underground space of the city. when planning the construction of environmentally hazardous enterprises and organizations in the coastal zone, the following priorities should be observed: maximum reform and (or) elimination of environmentally hazardous enterprises and organizations; the maximum delivery of these facilities beyond the city limits, taking into account the opportunities for people’s work and economic activities. summarizing the above, it should be noted that for the development of the state’s marine complex, three seas economic journal 109 vol. 1, no. 1, 2020 it is necessary, first of all, to assess the impact of the development of this sector of the economy on the environment in the region and then develop that direction of the economy that is the least harmful to the environment in the region and only in view of this can bring large economic benefits. references: akimova, t. a., & khaskin, v. v. 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(in russian) paul m. gilliland, & dan laffoley (2008). key elements and steps in the process of developing ecosystembased marine spatial planning. marine policy, no. 32, pp. 787–796. three seas economic journal 10 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 batumi state university, georgia (corresponding author) doi: https://doi.org/10.30525/2661-5150/2022-3-2 on the issue of determining the size of the public sector of the economy besik bolkvadze1 abstract. one of the most pressing problems of modern economic science in a mixed economy is the definition and calculation of the size of the market and non-market (state, public, government) sectors. the calculation of the scale of the non-market sector is of fundamental importance in view of the following factors: it allows to easily distinguish the public sector from the market sector from the analytical point of view (statistical significance); promotes the development and implementation of effective state budget policy (fiscal importance); promotes the rational use of state property and the effective functioning of state-owned enterprises (asset management importance); enables the analysis of the impact on the economic growth of the sector and the adoption of sound economic decisions (macroeconomic importance). it should be noted that in modern conditions, various indicators are used to measure the size of the public sector of the economy, which have both theoretical and empirical significance, but due to their specificity are not homogeneous economic indicators and are characterized by understanding the size of the sector in different aspects. this paper reviews and analyzes these indicators and proposes a rather complex approach to calculating the public sector of the economy, which is fundamentally important for a comprehensive analysis and relevance of the sector's impact on economic growth. key words: gross domestic product (gdp), economy and state, private and public sector, public sector indicators. jel classification: j45, h71 1. introduction the economic role of the state for any country, no matter at what stage of economic development it is, remains one of the key and problematic issues, as it largely determines the prospects of economic development of the country both at the micro and macroeconomic levels. in general, and including in the conditions of transition economy, the quality of solving socio-economic problems in the world, in the context of sectoral analysis, in the author's opinion, significantly depends on the solution of two interrelated issues: 1. how methodologically accurately and comprehensively the sizes (volumes, scales) of the private and public sectors of the economy will be calculated; 2. to what extent the impact of the private and public sectors on the economic growth of the country will be taken into account. the focus of our study is an attempt to answer the first question. 2. analytical importance of measuring the scale of the public sector of the economy as it is known from theory and proven by the world practice, the market as a special economic mechanism is not perfect and sustainable enough to solve all socio-economic problems facing society. the mentioned shortcomings are focused on the notion of the so-called "market fiasco" (hillman, 2003, p. 9; tanzi, 2011, p. 43; klumph, 2013, p. 95), which raises the need of participation of the state, as a special and specific economic entity, along with the market in the economic space. from the point of view of regulating economic processes, such a synthesis of the market and the state is known in the world as a mixed economy, the core of which is the market infrastructure. it should be noted that at the present stage the necessity and expediency of state regulation of the economy is not the main issue, but its scale and intensity, forms and methods of implementation, tools and mechanisms remain critically important (morozov, 2006, p. 22). at the same time, the degree of interaction between state mechanisms, market regulators and the correlation of forms and methods of their use, which is never static, is of particular importance in the implementation of the system of state regulation of the economy and, accordingly, in the implementation of the state economic policy. it undergoes permanent changes in accordance with three seas economic journal 11 vol. 3 no. 3, 2022 the peculiarities of the current stage of the country 's development, economic, social, political, legal and other factors, as well as changes in the conceptual priorities of the strategy of socio-economic development of the country. the state, as a business entity participating in market relations, belongs to the state (public) sector of the economy. it is well known that in countries with developed economies, market mechanisms and, accordingly, private sector entities dominate the market. the transition to a market economy, however, puts on the agenda the activation of the private sector, increasing its scale, transforming it into a driving force of the economy, while reducing the direct participation of the state in the economy, as the private and public sectors are integral segments of the economy as a single integral system. increasing the size of one of the sectors of this system and, accordingly, reducing the size of the other sector is a closely interrelated process that can be caused by many factors, the most important of which is the structural reorganization of the economy. it should be noted that in the conditions of gradual transition to a market economy, the economic role of the state acquires a double meaning. in particular, the state, as an organizing phenomenon of the economy, must simultaneously perform two interrelated tasks: in particular, the state, as an organizing phenomenon of the economy, must simultaneously perform two interrelated tasks: on the one hand, it is called to create the most favorable conditions for the intensive introduction of market institutions in the economy, and on the other – to ensure moderate regulation of the economy through the use of appropriate mechanisms. it is important to note that in a transition economy, state regulation of the economy is significantly and fundamentally different from the state regulation of a developed market economy. the latter is also not universal. in particular, in the state regulation of economies of developed countries there are reactive and proactive models of regulation of the market as an economic system. the reactive model (us, uk, etc.) mainly relies on the least possible "interference" of the state in the economy of the country, which particularly strengthens when it comes to identifying the shortcomings of the market economy and reducing the effectiveness of the functioning of market mechanisms, while the proactive model ( japan, germany, etc.) is based on the preventive actions of the state to compensate for market defects, regardless of the effectiveness and quality of functioning of market mechanisms (anisimov, 1995, p. 57–58). it should be noted that, compared to countries with developed market systems, state regulation of the economy and, accordingly, the implementation of the goals and objectives of regulation in countries undergoing transition to market relations is more complex, as they face a whole range of tasks that are difficult to implement, among which are the following: 1. effective organization of structural reorganization of the economy. 2. demonopolization of the economy in accordance with the principles of market economy. 3. formation and improvement of mechanisms for regulating the economy. 4. maximum promotion of the implementation and development of market infrastructure elements. 5. creation of an adequate legislative framework for the effective functioning of the economy. 6. changing the ratio between administrative and economic mechanisms of state regulation of the economy. 7. inclusion of the country 's economy in the world economic relations in the conditions of constantly growing globalization, etc. note that in purely terminological terms, when interpreting and using the sectoral understanding, the following concepts are used in economic science with almost identical meaning "public sector", "government sector", "state sector", "non-market sector". in economic theory and practice, the issue of the relationship between the public and private sectors, public and private ownership, public and private enterprises has always been a sensitive and fundamental paradigm (roland, 2008, p. 9–17), since in most cases these relationships depend on the efficient functioning of the public sector and the efficient operation of the private sector, which complement each other in the context of overall economic development. 3. methodological approach to measuring the scale of the public sector of the economy it should be noted that in the modern economic literature there is no single, generally accepted indicator of the scale and size of the public (and hence the private) sector of the economy, which would set a sharp boundary between these sectors of the economy. this is due to the fact that there are different interpretations of the essence of the public sector. for example, according to one of the definitions, the public sector is a combination of all economic resources, factors of production, and financial resources, which is state-owned and disposed of and used by state authorities (azrilian, 1998, p. 109). according to other definitions the public sector is defined as the combination of economic resources at the disposal of the state, designed to generate public wealth (hillman, 2003, p. 94). what is common in these definitions is that the state (public) sector of three seas economic journal 12 vol. 3 no. 3, 2022 the economy is mainly devoted to financial resources managed by the state, i.e., the state budget, its revenues and expenditures. this is the financial aspect of the public sector, but in the economy of any country, as noted above, the state is more or less involved in the formation of newly created value through the use of state property (in particular, stateowned enterprises). the latter can be considered as the economic aspect of the public sector. thus, the public sector of the economy can be defined as a set of public funds – public finances (financial aspect) and state property (economic aspect), with the help of which public wealth is created in the country. in most cases, the public sector is considered as isolated from the state regulation of the economy, which, in our opinion, is economically unreasonable, while the financial aspect of the public sector involves the creation of goods and services necessary for society at the expense of public finances, which is reflected in a specific budget policy, which is a set of active and effective indirect economic measures of state regulation of the economy. therefore, the public sector is an integral part of the system of state regulation of the economy. the scale of the public sector, i.e., the size of the government, is primarily determined by the share of public expenditure in gross domestic product, according to which the public sector can be large, medium and small. within a large public sector, public expenditures are more than 50% of gdp, medium – 40-50%, small – less than 40% (tanzi, 2011, p. 232). in general, the role of the state in the economy is associated with public (budget) expenditures per gdp, although this is not the only tool and indicator of the role of the state in the economy. determining the scale (size) of the public sector of the economy is of great contextual importance not in itself, but because the "size of the state" has a certain impact on the country 's economic growth, labor productivity, employment, economic freedom and other parameters (khan, 2011). moreover, the researches based on the data from eu and oecd countries show that different government size parameters (subsidy, transfer, investment, consumption) correlate differently with economic growth (afonso, furceri, 2010). the majority of theoretical and empirical studies point to a negative correlation between the size of government and economic growth, although the degree of this correlation may vary depending on which political-economic system and type (market, mixed, socialist or other) one is dealing with (gusen, 1997, pp. 181–182). therefore, in view of its importance, it is extremely delicate to look for ways of measuring the size and scale of the public sector. various indicators are used to determine the size of the public sector in economic science, including the following indicators: 1. specific weight of the state budget volume (mainly expenditures) in relation to the size of gdp (so-called "budgetary burden" coefficient), which is different in the market economy countries and is characterized by an upward trend. for example, this figure increased from 1960 to 2007, from an average of 28.0% to 42.0%, namely: in the usa – 27.0% to 36.6%, in japan – 17.5% to 36.0%, in germany – 32.4% to 43.9%, in france – 34 , 6% to 52.6%, in the uk – 32.2% to 44.6%, in switzerland – 17.2% to 35.4%, in sweden – 31.0% to 52.6%, in canada – 28.6% to 39.3% (tanzi, 2011, p. 9). by 2011, the state budget / gdp-related index worldwide accounted for 33% in terms of expenses and 31% in terms of revenues (matteo, 2013, p. 85). in the georgian economy in the last decade this figure is 28.5% on average (mof, geostat). 2. in some cases, the share of state consumption in gdp is also used to determine the size of the public sector of the economy (hägge, 2003, p. 74). this figure is close to the figure above, as the public consumption is known as the same budgetary expenditures with the exception of its specified portion – subsidies and transfers. for example, this figure in georgia was 13.2% in the last decade (geostat). 3. one of the indicators is the share of state consumption in the final consumption of gdp (consumption of households and consumption of public authorities), which shows how much of the final consumption of gdp created comes directly on the public consumption. for example, in 2008, in the member countries of the organization for economic cooperation and development (oecd), this figure was on average 20.6% (tanzi, 2011, p. 101). in georgia, in the last years (2010–2018), the share of state consumption in the final consumption of gdp is on average 15.8% (geostat). 4. in many cases, the share of government investments in the total volume of investments in the economy is often used to determine the size of the public sector. this implies the cost of state-financed investment-infrastructure projects, which is measured by the size of the capital expenditures of the budget. in the eu countries, for example, 20 percent of investments come on the state sector (khodov, 1997, p. 17). 5. an important indicator of determining the size of the state sector is the scale of direct participation of state-owned enterprises in joint domestic production. in particular, in developed market economies, the state sector enterprises produce 15-20 percent of the gross national product (gogokhia, 1996, p. 73). also, by the early 2000s, states in western europe were still major shareholders of privatized enterprises with almost 30% of shares (roland, 2008, p. 64–65). it should be noted that in 2003, 35 percent of goods and services produced by enterprises engaged in entrepreneurship in georgia came from the public three seas economic journal 13 vol. 3 no. 3, 2022 sector, and 65 percent from the private sector (ccg, 2004: 3), and in 2018 only 4.4 percent of business output came from state-owned enterprises (geostat). 6. the number of employees in the public sector is also used to evaluate the public sector (gupta and othets, 2001, p. 6, 15), which is a pure quantitative indicator and does not fully reflect the economic scale of the public sector. according to this indicator, in georgia in 2018 the public sector accounted for 17.7% of the total number of employees, while in the same year in the business sector the state-owned enterprises employed only 7.7% (geostat). the assessment of the public sector of the economy by the above indicators gives different results. the question arises: which of the above criteria most fully reflects the scale of the state (public) sector? to answer this question, it is necessary to distinguish two types of the public sector: the first is that the state creates a certain part of added value, i.e., acts as a producer (even with limited scale), and the second, unlike private sector entities, distributes the created value. in the author's opinion, the starting point for calculating the public sector should be the two above-mentioned points. in order to calculate the share of the public sector in the economy, let's make the following sequence of considerations: assume that the gdp created in the country annually is 10 billion euros (denoted by g). suppose that the value created by the state in the volume of gdp is 15 percent, that is, 1.5 billion euros (denoted by s), and the rest of gdp – 85 percent, that is, 8.5 billion euros is created by private sector entities (denoted by p). consider, however, that the state allocates 20 percent of the created product through the budget – 2 billion euros (mark d). when calculating the size of the public and private sectors, it should be assumed that the state creates a certain share of gdp and distributes it in parallel, so the joint effect of the state (public sector) can be expressed as follows: (1.5 + 2) / 10 * 100% = 35%, while the contribution of the private sector is 85% (p). the effect of the joint participation of the public and private sectors is (35% + 85%), 120% = (s + d) + p should be approximately 100, then the following proportion will be obtained: (s + d + p) 120 — 100 (s + d) 35 — x x = (s + d) / (s + d + p) * 100% = 35 / 120 * 100% = 29,16%. the share of the private sector will be 100% _ 29.16% = 70.84%. as a result of transformations of the equations, the exact formulas for calculating the sectors are obtained, namely the formula for calculating the scale of the public sector of the economy: r s d s d p 1 100� � � � � �* %, s p g then r s d g d 1 100� � � * % the formula for calculating the magnitude of the private sector would be: r s d g d g d s d g d g s g d p g d 2 1 100 100 100 100� � � � � � � � � � � � � � ( ) * % * % * % * % r s d g d g d s d g d g s g d p g d 2 1 100 100 100 100� � � � � � � � � � � � � � ( ) * % * % * % * % i.e. r r s d g d p g d s d p g d g d g d 1 2 1� � � � � � � � � � � � � � this formulation of the public and private sectors allows to avoid ambiguity of their division and to outline a certain boundary between these sectors of the economy. in the author's view, this calculation of the public sector reveals two types of its nature in relation to the economy: 1) what is the value of the product it creates together with the market; 2) to what extent it participates in the distribution and allocation of the created product. the indicators calculated in this way more or less reflect the scale of the public and private sectors in the economy and the nature of their participation, which is of particular importance for countries with transit economies, when the private sector is formed and expanded through privatization and at the same time seeks certain limits of "interference" in the state economy. it is also important to note that in the conditions of georgia's transition economy, the calculation of the public and private sectors of the economy is complicated by the lack of data necessary for such calculations, in particular, the lack of aggregated statistics on the share of the public and private sectors in joint ventures. in the process of methodological improvement and operation of the database necessary for the above calculation, it is quite possible to determine the share of sectors at this particular stage of development in order to determine the ratio between state and market regulators. furthermore, it should be emphasized that the above calculations are purely methodological in nature. any level of the ratio of sectors cannot be considered optimal and/or static, since its change depends on many factors, including the stage of economic development of the state, the goals and objectives of economic policy, how effectively market mechanisms operate three seas economic journal 14 vol. 3 no. 3, 2022 under these conditions, the level of market infrastructure, the degree of openness of the country 's economy, the priorities of its macroeconomic and structural policy and much more. 4. conclusions thus, the calculation of the scale of the state (nonmarket) sector in the economy has both purely scientific and theoretical, and practical and empirical importance for sustainable economic growth of any country, and in a transition economy – for an analytical approach to the optimal relationship between the state and the market (non-market and market sectors). in modern conditions, economic science uses different indicators to determine the size of the public sector, among which the "top" indicator is mainly the ratio of state budget expenditures to gdp. however, other indicators are also used: the share of public consumption in gdp; the share of public consumption in final consumption of gdp; the share of public investment in total investment; the scale of direct participation of state-owned enterprises in domestic production; the number of employees in the public sector and others. in the proposed model of sectoral accounting, the author tried to take into account the dual nature of the state in relation to the economy: in particular, on the one hand, the state creates part of the value added in the economy, and on the other hand, unlike private sector entities, it distributes the created value. references: afonso, a., & furceri, d. (2010). government size, composition, volatility and economic growth. european journal of political economy, no. 26. anisimov, a. (1995). adaptation of economic structure to the market requirements. the russian economic journal, no. 2. (in russian) azrilian, a. n. (ed.) (1998). big economic dictionary. the third edition. moskow. institute of new economy. (in russian) chamber of control of georgia [ccg] (2004). 2003 year’s report about the georgian state budget fulfillment concerned with government report. tbilisi. gogokhia, r . (1996). market economy. tbilisi: ''saqprofgami". gupta, s., leruth, l., mello, l., & chakravarti, s. (2001). transition economies: how appropriate is the size and scope of government? imf working paper. international monetary fund. available at: https://www.imf.org/ external/pubs/ft/wp/2001/wp0155.pdf gusen, j. s. (1997). government size and economic growth in developing countries: a politicaleconomy framework. journal of macroeconomics. available at: http://citeseerx.ist.psu.edu/viewdoc/ download?doi=10.1.1.461.8553&rep=rep1&type=pdf häge, f. m. (2003). determinants of government size: the capacity for partisan policy under political constraints. department of politics and management. university of konstanz. available at: https://d-nb.info/1079554270/34 hillman, a. l. (2003). public finance and public policy: responsibilities and limitations of government. "cambridge university press". kahn, j. (2011). can we determine the optimal size of government? center for global liberty and prosperity. development policy briefing paper, no. 7. available at: https://www.cato.org/sites/cato.org/files/pubs/pdf/dbp7.pdf khodov, f. g. (1997). fundamentals of the state economic policy. saint peterburg: "pnevma". (in russian) klumph, r . (2013). economic policy: purposes, instruments and institutions. translated from german into georgian. "ivane javakhishvili tbilisi state university ". matteo, l. d. (2013). measuring government in the twenty-first century: an international overview of the size and efficiency of public spending. fraser institute. available at: https://www.fraserinstitute.org/ sites/default/files/measuring-government-in-the-21st-century.pdf ministry of finance of georgia [mof] (2018). state budget performance reports. available at: https://mof.ge/5117 morozov, t. g. (ed.) (2006). state economic policy. moskow. iuniti. (in russian) national statistics office of georgia [geostat] (2018). national accounts. gross domestic product. employment. business sector. available at: https://www.geostat.ge/ka/modules/categories/23/mtlianishida-produkti-mshp; https://www.geostat.ge/ka/modules/categories/38/dasakmeba-da-umushevroba; https://www.geostat.ge/media/28061/business-sector-2018.pdf roland. g. (ed.) (2008). privatization: successes and faiilures. new york: "columbia university press". tanzi, v. (2011). government versus market: the changing role of the state. new york: "cambridge university press". received on: 3th of september, 2022 accepted on: 11th of october, 2022 published on: 31th of october, 2022 three seas economic journal 21 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: baldynyuk@gmail.com orcid: https://orcid.org/0000-0001-9014-8866 doi: https://doi.org/10.30525/2661-5150/2022-3-4 features of innovation management at modern enterprises vasyl baldynyuk1 abstract. the article is aimed at substantiating the peculiarities of managing the innovative activity of enterprises in modern conditions. methodology. the article substantiates the importance of innovation activity and innovations for modern enterprises. the review of statistical data on sources of financing of innovation activity in ukraine is carried out. the reasons that led to the actual state of innovation in the country are indicated. the main stages of innovation management at enterprises, shortcomings and the most pressing problems are determined. results. considering the issue of innovation management, it is worth noting that currently there is no country where economic competition for leadership in world markets would not be associated with innovation, the innovation impetus, to a greater extent, concerns ukraine. as never before, ukraine must be ready to use innovative chances, increase competitiveness in order not only not to suffer losses, but on the contrary – to take advantage of new opportunities associated with eu enlargement. under such conditions it is necessary to increase the efficiency of production factors, develop new competitive advantages that should ensure successful integration into the european and world markets. practical implications. innovation activity involves the development and implementation of new products, goods, technologies, organizational and managerial innovations through the development and use of the innovative potential of the enterprise. that is, development based on innovations enables enterprises to keep up with the times. value/originality. it should be noted that the process of managing the development of an enterprise on an innovative basis includes the processes of introducing and using new equipment, technologies, management, organizational and other types of innovations carried out through the coordination, organization, streamlining, regulation of innovation processes and innovation activities of the enterprise. all this is aimed at preserving, maintaining and strengthening the competitiveness of the enterprise as a whole. key words: management, innovative activity, management of innovative activity, innovation, management process, enterprise. jel classification: m11, m21, o31 1. introduction in modern conditions, the main way to increase the competitiveness of industrial goods, maintain high rates of development and profitability of enterprises is the introduction of innovations. however, innovations are a source of development only under the condition of their active and effective use, as well as the creation of a favorable environment for their implementation. thus, of particular importance is the strategic management of innovative development of corporate enterprises, which focuses production activities on the needs of consumers, allows for a more flexible response and timely changes, to achieve long-term competitive advantages. that is why the strategy of innovative development of an enterprise can be defined as a set of actions and methods of innovative activities that provide competitive advantages through the development and implementation of innovations. the ability to create and use innovations today is recognized as the most important factor in the formation of competitive advantages of the company. the acceleration of innovation processes has contributed to the emergence of a new category of companies for which innovation is the main activity, which leads to an increase in competitive position. for these companies, innovation can be interpreted as a factor that precedes changes in the external environment. three seas economic journal 22 vol. 3 no. 3, 2022 2. the essence of innovation processes management at the enterprise the innovation process is the preparation and gradual implementation of innovative changes. the result of this process is innovation as a change that is implemented and used. in general, the innovation process consists of three stages – preparatory, production and market, each of which contains separate stages. the innovative activity of the enterprise is aimed at creating and attracting innovations from the external environment, which contribute to increasing its competitiveness, strengthening its position in the market and provide development prospects. however, the ability of different companies to attract innovation varies significantly, which is mainly due to existing resource constraints. management of innovative activity of the enterprise should be carried out, on the one hand, taking into account the potential of innovative activity in the formation of competitive advantages, and on the other – taking into account the investment opportunities of the enterprise (telenchuk, 2022). management of innovation activity is a component of the management of a modern enterprise, which includes planning, organization and stimulation of innovation activity, implementation of innovative projects aimed at gaining competitive advantages and strengthening the market position of the enterprise (stadnyk, 2006). according to the law of ukraine "on priority areas of innovation activity in ukraine", innovation potential is considered as a set of scientific and technological, financial and economic, industrial, social, cultural and educational capabilities of the country (industry, region, enterprise, etc.) necessary to ensure innovative development (law of ukraine "on priority areas of innovation activity in ukraine", 2003). at the same time, such a potential component as innovative culture, which characterizes the level of educational, general cultural and socio-psychological preparation of the individual and society as a whole for the perception and creative implementation of the idea of developing the country 's economy on an innovative basis, is separately distinguished. a high level of education and intellectual activity, a pronounced sense of self-esteem, initiative, independence and independence of views, inherent creative inspiration, high efficiency, interest in obtaining results, the ability to perform labor functions at the level of world standards are important for the implementation of innovative activities. the more creative tasks and intellectual functions are involved in the work, the more noticeably the role of intangible incentives in the process of innovation increases. management of innovative development of a business entity should be focused on achieving its goals (winning a larger market share, increasing profits in the current period or in the future, ensuring high rates of sustainable economic development, etc.) in a competitive environment, even when the goals of other enterprises may not coincide (and usually do not coincide) with their goals (cherep, oleynikova, cherep, tkachenko, 2012). this conflict of goals must be duly taken into account, and the goals outlined must be reconciled with the possibilities for achieving them. in today 's economy, the role of innovation has increased significantly. this is due to the fact that in a market economy innovation is a weapon of competition, as innovation leads to lower costs, lower prices, increased profits, the creation of new needs, the flow of money, to improve the image (rating) of the manufacturer of new products, to open and capture new markets, including foreign ones. 3. features of innovation process management the main fundamental principle of economic prosperity of any enterprise and the country as a whole is the constant implementation of innovative activities and creation of industrial property objects – the basis for the production of new competitive products, the introduction of new competitive technologies, providing super-profits. the peculiarity of innovative activity is that it is an activity of increased risk compared to ordinary entrepreneurship (which is also carried out at one's own risk). this increased risk is due to the novelty, the creative nature of scientific and technical work, the possibility of obtaining both positive and negative results, so most entrepreneurs do not want to engage in innovation (steblii, tuvakova, 2016). the peculiarity of innovation management is to ensure quality decision-making under conditions of uncertainty and risk. however, the successful implementation of this task in most cases is hindered by the creation of the necessary organizational structure, which is especially relevant for large enterprises. in this regard, it is advisable for the latter to pay attention to the flexibility and adaptability of small firms to constantly changing conditions (tomashuk, 2020). in such cases, the efficiency of innovation management can be significantly improved by creating special units or structural units on a permanent or temporary basis, for example, such as an internal enterprise. adaptation of the organizational structure of a large enterprise to the specifics of innovation activity will contribute to its efficiency and effectiveness. the process of management of innovative activity involves the implementation of certain functions three seas economic journal 23 vol. 3 no. 3, 2022 related to the organization, planning, motivation, regulation and control of the implementation of innovation. to ensure the effectiveness of this process, domestic enterprises should create appropriate systems for the implementation of these functions, that is, it is necessary to pay special attention to the formation of an effective mechanism of innovation activity management, both in theory and in practice. 4. innovative activities of industrial enterprises effective management of innovative activities involves the implementation of the following basic steps: 1) determination of the most risky areas of the enterprise's activity; 2) use of various sources of innovative ideas; 3) determination of the quantitative goals to be achieved by the innovative project; 4) determination of the main stages of work on the implementation of the innovative project, while the transition to the next stage is impossible until the previous one is completed. table 1 shows the number of innovatively active enterprises in ukraine by type of economic activity. in practice, the investment activity of industrial enterprises decreases from year to year. for example, the share of the number of innovation-active industrial enterprises in 2017 was 16.2%. in 2019, 782 enterprises carried out innovative activity in industry. at the same time, the share of the number of industrial enterprises that implemented innovations (production and/or technological processes) in the total number of industrial enterprises was 15.8%. of the total number of innovatively active enterprises were: internal and external gdrs – 24.4%; purchase of machinery, equipment and software – 64.7%; acquisition of external knowledge – 4.5%; other work – 20.6% of enterprises. by types of economic activity, the largest shares of innovatively active enterprises are food production – 16.8%, machinery and equipment production, n.i.i.o.g. (not included in other groups) – 10,2%. the dynamics of changes in the number of innovatively active enterprises in ukraine is shown in figure 1. table 1 the number of innovatively active enterprises by type of economic activity the number of innovatively active enterprises, units share of innovation-active enterprises in the total number of enterprises, % 2016–2018 2018–2020 2016–2018 2018–2020 total 8173 2281 28,1 8,5 industry 4060 1550 29,5 12,9 mining and quarrying 107 26 21,9 10,7 processing industry 3626 1452 31,8 13,1 supply of electricity, gas, steam and air conditioning 143 37 20,0 11,5 water supply; sewerage, waste management 184 35 15,8 8,9 transport, warehousing, postal and courier activities 568 133 15,5 3,6 information and telecommunications 619 121 31,5 6,4 financial and insurance activities 222 12 38,3 6,5 source: formed according to the data of the state statistics service of ukraine 1462 1679 1758 1715 1609 824 834 759 777 782 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 n um be r of e nt er pr is es , u ni ts years figure 1. number of innovatively active industrial enterprises in ukraine (2010–2018), units source: formed according to the data of the state statistics service of ukraine three seas economic journal 24 vol. 3 no. 3, 2022 based on figure 1, it can be concluded that in recent years there has been a significant decrease in the number of innovatively active industrial enterprises in ukraine, which can be partially explained by the fact that part of the country 's territory with industrial production has become beyond ukraine's control and, in general, by the deterioration of the cyclical component of the industrial products market. 5. financing of innovative activity development and implementation of innovations requires investment resources, which are necessary to finance research and development, initiation and implementation of production of innovative products, their implementation and improvement. effective innovation activity is possible only if the optimal amount of investment resources is attracted. the conditions for attracting investments depend on the investment climate of the country, region and enterprise. today, the pace of investment in the country is low, and the distribution of investments by regions and sectors of the economy of ukraine is uneven. to a large extent, investment activity in ukraine is constrained by low effective demand of the population. the analysis of statistical data on the sources of financing of innovation activities showed that only a small share of the costs of innovation activities is covered by the state budget (table 2). the innovative activity of industrial enterprises in ukraine directly depends on the results of their economic activity, as the largest source of financing for innovations at industrial enterprises is their own funds, which in 2020 amounted to uah 12,297.7 million. general trends in the development of market economic systems show that the most effective is the activity of business entities that choose an innovative model of development. for successful management in modern economic conditions, strengthening the position of the enterprise in the market, it is important to constantly improve existing products, production technologies, methods of their implementation, introduce technical innovations, develop new products and bring them to market (steblii, tuvakova, 2016). the enterprise, which relies on innovations, is forced to improve the production base (logistics, structure of the distribution network, system of goods movement) and restructure the organizational structure of management in order to find strategic ways to increase competitiveness. on this basis, the adaptability of the enterprise to the dynamics of the market environment is expanding. the direction (development) of innovation development should correspond to both the internal and external environment, which is determined by the market table 2 sources of financing of innovative activity of industrial enterprises years expenditures on innovations, uah mln including at the expense of own funds of enterprises state budget funds funds of non-resident investors funds from other sources uah mln uah mln uah mln uah mln 2000 1757,1 1399,3 7,7 133,1 217,0 2001 1971,4 1654,0 55,8 58,5 203,1 2002 3013,8 2141,8 45,5 264,1 562,4 2003 3059,8 2148,4 93,0 130,0 688,4 2004 4534,6 3501,5 63,4 112,4 857,3 2005 5751,6 5045,4 28,1 157,9 520,2 2006 6160,0 5211,4 114,4 176,2 658,0 2007 10821,0 7969,7 144,8 321,8 2384,7 2008 11994,2 7264,0 336,9 115,4 4277,9 2009 7949,9 5169,4 127,0 1512,9 1140,6 2010 8045,5 4775,2 87,0 2411,4 771,9 2011 14333,9 7585,6 149,2 56,9 6542,2 2012 11480,6 7335,9 224,3 994,8 2925,6 2013 9562,6 6973,4 24,7 1253,2 1311,3 2014 7695,9 6540,3 344,1 138,7 672,8 2015 13813,7 13427,0 55,1 58,6 273,0 2016 23229,5 22036,0 179,0 23,4 991,1 2017 9117,5 7704,1 227,3 107,8 1078,3 2018 12180,1 10742,0 639,1 107,0 692,0 2019 14220,9 12474,9 556,5 42,5 1147,0 2020 14406,7 12297,7 279,5 125,3 1704,2 source: formed according to the data of the state statistics service of ukraine three seas economic journal 25 vol. 3 no. 3, 2022 (market opportunities and threats), taking into account the pace of scientific and technological progress and is determined by changes in the micro and macro environment. for an industrial enterprise, the technological and product innovations that have the greatest impact on its sustainable economic development can be divided into the following main categories: 1) innovations related to the method of manufacturing the product; 2) with a change in product characteristics; 3) with a change in the range of products. management of innovative activity is an integral part of the production and economic activity of the enterprise, which carries the impetus for development based on new approaches to solving ordinary production problems (tychynsky, 2006). the optimal combination of production and innovation activities allows not only to constantly improve the production process and products, but also to act proactively, identify new promising areas or forms of business, diversify activities to meet new social needs. 6. expenditures on innovation activities in 2020, enterprises spent uah 14,406.90 million on innovations, including uah 10,185.11 million on the purchase of machinery, equipment and software, uah 3,486.30 million on internal and external research and development, uah 37.49 million on the acquisition of other external knowledge (acquisition of new technologies), and uah 1,079.45 million on other work related to the creation and implemen tation of innovations (other costs) (table 3) (ministry of economy of ukraine, 2022). consider the structure of expenditures on innovation by type of economic activity (figure 2). by types of economic activity, the largest amount of funds for innovation activities was spent by food production (2927.252 million uah), metallurgical production (1924.217 million uah), production of basic pharmaceutical products and pharmaceuticals (1868.092 million uah). 7. implementation of innovations at industrial enterprises in 2020, the ukrainian industry introduced 4066 units of new products, see table 4. among the most important areas of innovative development of industrial enterprises should be highlighted further improvement of products in terms of integration into its characteristics of modern digital technologies related to the operation of products. expanding the range of products with different price-quality ratio will also contribute to reaching a wider range of consumers (kolomiets, tomashuk, 2021). it is important to change the priorities of industrial production development in favor of those industries that are able to create high-tech products and move away from the raw material model of national economic development. the innovation policy of the enterprise should take into account the specifics of the industry to which it belongs, try to ensure the efficient use of available resources, build partnerships with all potential participants in the innovation process. at the same time, when making managerial decisions, it is important to determine the effects of the introduction of innovations in the areas of their formation (economic, technological, social, environmental). among the promising directions of increasing the innovative potential of an industrial enterprise, it is necessary to note the need to develop teamwork methods among table 3 innovation expenditures of industrial enterprises year expenditures on innovations, uah mln among them scientific research and development (gdr) including other innovation costs (excluding gdr) gdr performed by own forces gdr performed by other enterprises uah mln uah mln uah mln uah mln 2010 8045,5 996,4 818,5 177,9 7049,1 2011 14333,9 1079,9 833,3 246,6 13254 2012 11480,6 1196,3 965,2 231,1 10284,3 2013 9562,6 1638,5 1312,1 326,4 7924,1 2014 7695,9 1754,6 1221,5 533,1 5941,3 2015 13813,7 2039,5 1834,1 205,4 11774,2 2016 23229,5 2457,8 2063,8 394,0 20771,7 2017 9117,5 2169,8 1941,3 228,5 6947,7 2018 12180,1 3208,8 2706,2 502,6 8971,3 2019 14220,9 2918,9 2449,9 469,0 11302,0 2020 14406,9 3486,3 2650,4 835,9 10920,6 source: formed according to the data of the state statistics service of ukraine three seas economic journal 26 vol. 3 no. 3, 2022 2927,3 581,8 1025,2 1868,1 1924,2 525,5 1358,5 production of food products production of beverages production of chemicals and chemical products production of basic pharmaceutical products and pharmaceutical preparations metallurgical production production of electrical equipment figure 2. structure of expenditures on innovation by types of economic activity source: formed according to the data of the state statistics service of ukraine table 4 implementation of innovations at industrial enterprises year share of the number of industrial enterprises that implemented innovations (production and/ or technological processes) in the total number of industrial enterprises, % number of types of innovative products (goods, services) introduced in the reporting year, total units among them share of the volume of sold innovative products (goods, services) in the total volume of sold products (goods, services) of industrial enterprises, % are new to the market were sold machines and equipment 2000 14,8 15323 631 9,4 2001 14,3 19484 610 6,8 2002 14,6 22847 520 7,0 2003 11,5 7416 710 5,6 2004 10,0 3978 769 5,8 2005 8,2 3152 657 6,5 2006 10,0 2408 786 6,7 2007 11,5 2526 881 881 6,7 2008 10,8 2446 840 758 5,9 2009 10,7 2685 719 641 4,8 2010 11,5 2408 606 663 3,8 2011 12,8 3238 900 897 3,8 2012 13,6 3403 672 942 3,3 2013 13,6 3138 640 809 3,3 2014 12,1 3661 540 1314 2,5 2015 15,2 3136 548 966 1,4 2016 16,6 4139 978 1305 … 4 2017 14,3 2387 477 751 0,7 2018 15,6 3843 968 920 0,8 2019 13,8 2148 418 760 1,3 2020 5 14,9 4066 691 647 1,9 source: formed according to the data of the state statistics service of ukraine three seas economic journal 27 vol. 3 no. 3, 2022 the staff, to improve the skills of those employees whose activities are related to innovative developments. 8. conclusions thus, it can be stated that the innovative activity of the enterprise is the key to its effective functioning. however, innovation activity, like any other, requires systematic management through a mechanism that should be an element of the overall mechanism of strategic management of the enterprise. innovation activity is one of the main components of the process of ensuring the successful functioning of enterprises. therefore, modern economic conditions require intensive innovation activities, effective organization of research and development, implementation of innovations, reduction of innovation risks, strategic management of innovation activities of each enterprise. intensification of innovation activity of domestic enterprises will contribute to strengthening the competitive advantages of the industry both in domestic and foreign markets through the implementation of scientific and technical potential, which will be manifested in: 1) increasing the quality and, accordingly, competitiveness of products due to the use of new or modernized production methods; 2) capturing new markets and increasing the volume of product sales through the introduction of innovative technologies in the sales organization and positioning of goods on the market; 3) improving the financial results of enterprises due to the increase in cash receipts from the sale of innovative products; 4) optimization of business processes and rational use of the enterprise's production capacities by launching advanced innovative technologies. industrial enterprises in ukraine are the main subjects of the market economy, and the competitiveness of the national economy as a whole depends on their competitiveness. therefore, the introduction of innovations at industrial enterprises should be considered as a continuous process aimed at creating products and organizing production processes that are more efficient than their existing counterparts in the market environment. references: bokovets, v. v. (2017). improvement of management of innovation processes at modern enterprises. scientific bulletin of kherson state university. series "economic sciences", 24, 1, 88–92. state statistics service of ukraine. retrieved august 08, 2022 from http://www.ukrstat.gov.ua state statistics service of ukraine. retrieved august 09, 2022 from https://ukrstat.gov.ua/druk/publicat/ kat_u/2020/zb/09/zb_nauka_2019.pdf kaletnik, g. m., zabolotnyi, g. m., & kozlovskyi, s. v. (2011). innovative models of strategic economic potential management within contemporary economic systems. actual problems of the economy, 118, 4, 3–11. kolomiets, t. v., & tomashuk, i. v. (2021). entrepreneurship and development of rural areas in ukraine. solloquium-journal, 9(96), 3, 29–42. law of ukraine "on priority areas of innovative activity in ukraine" dated january 16, 2003, № 433-iv [latest revision dated july 14, 2009]. retrieved august12, 2022 from www.zakon.rada.gov.ua ministry of economy of ukraine. retrieved august 16, 2022 from https://www.me.gov.ua/documents/ detail?lang=uk-ua&id=69b9a9bf-5fbc-4035-8c0f-ac26b853c0eb&title=informatsinimaterialischodostanuinno vatsiinoidiialnosti stadnyk, v. v. (2006). innovative management. kyiv: akademvydav. steblii, g. ya., & tuvakova, n. v. (2016). the mechanism for improving the management of innovative activities of enterprises. economic analysis, 15, 185–187. telenchuk, v. s. theoretical principles of management of innovative activity. retrieved august 21, 2022 from http://intkonf.org/telenchuk-vs-teoretichni-zasadi-upravlinnyainnovatsiynoyu-diyalnistyu-pidpriemstva/ tychynsky, a. v. (2006). management of innovative activities of companies: modern approaches, algorithms, experience. taganrog: trtu. cherep, a. v., oleynikova, l. g., cherep, o. g., & tkachenko, o. v. (2012). management of innovative development of enterprises based on reengineering: monograph. zaporizhzhia: zaporizhia national university. tomashuk, i. (2020). features of formation and use of innovative potential of rural territories of ukraine. slovak international scientific journal, 46, 2, 27–42. tomashuk, i. v., & tomashuk, ir. o. (2021). enterprise development strategy: innovation and internal flexibility. solloquium-journal, 3(90), 4, 51–66. received on: 5th of september, 2022 accepted on: 10th of october, 2022 published on: 31th of october, 2022 three seas economic journal 15 vol. 3 no. 4, 2022 1 odessa national medical university, ukraine (corresponding author) e-mail: daryaguz26@gmail.com orcid: https://orcid.org/0000-0002-6429-2191 researcherid: ack-4158-2022 2 odessa national medical university, ukraine е-mail: elena.rudinskaya@gmail.com orcid: https://orcid.org/0000-0002-0059-7295 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-3 modern competencies and tasks of managers of health care institutions daria huz1, olena rudinska2 abstract. purpose. the purpose of the article is the scientific and theoretical substantiation of modern competencies and tasks of health care managers. tasks. achievement of this goal necessitated the following tasks: to analyze the role of managers and their impact on the activities of health care institutions; to consider the scope of management activities of managers of modern medical institutions; to consider the main competencies of managers of health care institutions; to determine the current tasks of managers and their impact on the activities of health care institutions. object. the object of the study is health care institutions. methodology. the information base of the study was formed by legislative and regulatory documents, periodicals, electronic resources. the work uses general scientific and special methods: monographic research, generalization, systematization. this made it possible to consider the impact of modern environmental factors on the functions and responsibilities of managers in health care institutions. also to explore the modern competencies and tasks of managers and their impact on the activities of health care institutions. results. the role of managers and their influence on the activities of health care institutions are considered. the influence of modern environmental factors on the functions and responsibilities of managers in health care institutions is analyzed. the purpose of health care institutions is considered. two spheres of management of managers are defined: external and internal. the main competencies of managers in health care institutions are considered. the necessity of performing additional duties by managers in today's unstable economic conditions is substantiated. the modern tasks of managers and their impact on the activities of health care institutions are analyzed. value/originality. it is found that when managing health care institutions, managers must take into account endogenous and exogenous challenges to make effective management decisions and manage the quality of health care institutions. it is determined that the key competencies of an effective manager are conceptual, technical and interpersonal skills. it is concluded that in modern conditions the heads of medical institutions also face new challenges, which are determined by such modern trends as: management in difficult conditions, management in conditions of constant change, management in a creative way. conclusion. in today's volatile economic environment, healthcare managers must develop critical new skills and competencies to ensure the effective development of healthcare institutions. healthcare managers must also continuously improve them in accordance with market requirements. when managing health care institutions, managers must take into account endogenous and exogenous challenges to make effective management decisions and quality management of health care institutions. constant changes in environmental factors lead to changes in the competence and responsibility of health care managers. key words: health care institutions, management, manager, domains of management, competences, tasks. jel classification: i10, i19, m11, m19 1. introduction the healthcare sector requires significant changes in the management system as well as in the management of healthcare institutions. improving the functions and tasks of managers is one of the most effective tools to improve the management of modern healthcare institutions. in today 's unstable economic environment, three seas economic journal 16 vol. 3 no. 4, 2022 managers must develop new critical skills and competencies to ensure the effective development of healthcare institutions. management in health care institutions has significant features that are determined by the specifics of the activities of medical institutions. healthcare organizations are complex and dynamic. the nature of organizations requires managers to provide leadership as well as supervision and coordination of employees. organizations were created to achieve goals that are beyond the capabilities of any single individual. in healthcare organizations, the volume and complexity of tasks performed in the provision of services are so great that individual employees working independently cannot cope with the work. in addition, the complex tasks of service delivery in healthcare organizations require the coordination of many highly specialized disciplines that must work in harmony. managers are needed to ensure that organiza tional tasks are performed in the best possible way to achieve organizational goals and that appropriate resources, including financial and human resources, are adequate to support the organization. that is why the study of modern competencies and tasks of health care managers is relevant and appropriate. the purpose of the article is the scientific and theoretical substantiation of modern competencies and tasks of heads of health care institutions. achievement of this goal necessitated the following tasks: to analyze the role of managers and their impact on the activities of health care institutions; to consider the scope of management activities of managers of modern medical institutions; to consider the main competencies of managers of health care institutions; to determine the current tasks of managers and their impact on the activities of health care institutions. the work uses general scientific and special methods: monographic research, generalization, systematization. this made it possible to consider the impact of modern environmental factors on the functions and responsibilities of managers in health care institutions. 2. analysis of recent research and publications theoretical and practical aspects of health care management are considered in the scientific works of domestic and foreign scientists o. v. baeva (2022), v. i. borshch (2022), m. cuthbert (2012), i. a. golovanova, v. m. zhdan, n. l. kusyk, a. marriner-tomey (2008), cheban, l. roussel, rc. swansburg . m. cuthbert, c. duffield, j. hope (2012), a. marriner-tomey (2008), lingur l., martyniuk o. (2022) considers the role of managers in the activities of health care institutions; tasks of managers, their functions and competencies. baeva o. v. (2022), considers health care institutions as an object of management; functions of managers in the activities of health care institutions. borshch v. i., rudinska o. v. (2022), considers strategic health care management; role of the strategy; prossess of thestrategy development; challenges and realities of emergencies. however, despite active scientific research and certain achievements, insufficient attention is paid to the problems of effective management of health care institutions at the micro level. 3. health care institutions as an object of management healthcare organizations operate in conditions of uncertainty, competition, risk, complexity of management decisions, etc. as a result, the manager's responsibility for performance, profit, and fierce competition increases. the manager must be effective, independent and responsible for the organization of financial, material, labor and information resources. management is important both for the individual manager and for each employee. provides knowledge of the principles of teamwork, cooperation and business communication, office management, conflict resolution, basics of labor law, etc. an organization is a specific social formation systematically focused on the production of goods and (or) provision of services. all organizations have the following common features: 1. purpose. 2. personnel. 3. structure. the goal of an organization is closely related to its mission. healthcare organizations set goals in several directions: 1. social responsibility, manifested in the improvement of public health. 2. medical care of the population. 3. needs and welfare of employees. 4. profits of the organization (for commercial healthcare institutions). three seas economic journal 17 vol. 3 no. 4, 2022 management is a set of principles, methods, means and forms of management of economic organizations in order to improve their efficiency and increase profits in market conditions. methods and tools for researching the needs and demands of consumers are of great importance for management in a market economy. this is where management meets marketing. marketing is considered as an integrative function of management, which transforms the needs of consumers into the profit of the enterprise. management can be divided into: production management; financial management; personnel management; innovation management; marketing management (roussel, swansburg, swansburg, 2006). 4. areas of management a manager is a leader who works in the economic, industrial and market sphere, has professional knowledge in the field of organization and management of production. the manager organizes specific activities of subordinate employees and simultaneously performs many management functions. the manager performs interpersonal, informational, and decision-making roles. managers must consider two spheres as they perform different tasks and make decisions (table 1). these are the external and internal spheres. the external sphere refers to influences, resources and actions that exist outside the organization but significantly affect it. these factors include community needs, population characteristics, reimbursement from commercial insurance companies, and government plans. table 1 areas of management of health care institutions external internal community demographics/ needs licensure accreditation regulations competitors managed care organizations staffing budgeting quality services patient satisfaction physician performance new service development the internal domain refers to those areas that managers must address on a daily basis, such as ensuring the right number and types of staff, financial performance and quality of service. these internal areas reflect the activities of the organization where the manager has the most control. 5. key competencies of the leader management is necessary to support and coordinate the services provided in health care organizations. management is a process consisting of social and technical functions and actions that take place in organizations in order to achieve predetermined goals through human and other resources. to perform these functions effectively, a manager must possess several key competencies. the term "competence" means a state in which a person has the necessary or sufficient abilities or qualities to perform certain functions. the key competencies of an effective manager include the following: conceptual, technical and interpersonal skills (figure 1). these competencies are defined as follows: 1. conceptual skills are those skills that involve the ability to critically analyse and solve complex problems. for example: a manager analysing the best way to deliver a service or identifying a strategy to reduce patient complaints about food. figure 1. key competencies of an effective manager in healthcare institutions three key competencies of managers conceptual skills. example: a manager analysing the best way to deliver a service or identifying a strategy to reduce patient complaints about food. technical skills. example: а manager develops and implements a new employee incentive program or develops and modifies a computerized recruitment model. interpersonal skills. exampls: empathy, active listening, and emotional intelligence. three seas economic journal 18 vol. 3 no. 4, 2022 2. technical skills are skills that reflect experience or ability to perform a specific work task. for example: a manager develops and implements a new employee incentive program or develops and modifies a computerized recruitment model. 3. interpersonal skills are skills that enable a manager to communicate (marriner-tomey, 2008). in today 's economic environment, to ensure the effective development of healthcare institutions, managers must develop two critical skills – business planning and budget management. service priorities must be set to ensure that resources are allocated efficiently and effectively to meet the most important health care needs of the population. the business planning approach is based on identifying service needs and objectives, and planning how best to allocate available resources to achieve these objectives. health facility managers can work within agreed business plans if they are able to understand, control and manage costs using the budget as a framework. 6. relevant functions and tasks of the manager the function of institution management is to provide medical care in all its forms at the highest level. other functions of management of medical institutions include: 1. provide a safe environment with minimal cross-exposure. 2. maintain patient privacy, comfort and accessibility during their stay. 3. protection of people and property, including records, controlled substances and equipment. 4. simplify navigation for professionals, patients and visitors. 5. coordinate the use of shared equipment and resources to ensure timely assistance. 6. control costs associated with complex business lines. management of health care institutions has its own specifics due to the complexity, multidimensionality and socio-economic nature of the industry. given the peculiarities of the activities and development of health care institutions, as well as their functioning in a turbulent environment, managers face new challenges: 1. management in difficult conditions involves: – availability of reliable and transparent approaches to decision-making on health care financing; – the presence of complex and delicate appro aches to decision-making regarding the reorganization of services in health care systems; – understanding and using new approaches to evaluating and prioritizing new health technologies; – development of new approaches to the treatment of chronic diseases and long-term conditions; – availability of consistent and thought-out plans for combating infectious diseases; – ability to adopt a range of strategies to enable health care providers to work closely with other institutions whose activities affect health. 2. management under the conditions of constant changes provides: – ability to develop robust capital and service development plans in an increasingly globalized world; – finding new ways to develop strategy in a political context that continues to become increasingly complex; – development of appropriate levers and incentives for use in financing and commissioning and thereby bringing about desired changes in healthcare delivery; – creating a broader culture and environment in which it development can be most effective; – providing human resource management focused on the development of new ways of working required in a changing world; – possess the necessary powers of influence and persuasion to work effectively with clinicians and board members; – using these influencing and persuasive skills to develop strong partnerships with other agencies in a way that also ensures shared goals are achieved. 3. management in a creative manner involves: – developing emotional intelligence to understand the style and behavior of other people; – developing as reflective and self-aware practitioners; – development and continuous updating of core management skills such as project and resource management; – ability to design and implement robust yet flexible processes to improve services and ensure appropriate user engagement; – the organization's focus on diversity and inclusion. healthcare facility management focuses on coordinating funds, assets and people to focus on providing a high level of patient care. healthcare also involves levels of compliance, security and emergency planning. all of this creates a three seas economic journal 19 vol. 3 no. 4, 2022 functional healthcare environment that is convenient for healthcare professionals and comfortable for the people they treat. 7. conclusions in today 's volatile economic environment, healthcare managers must develop critical new skills and competencies to ensure the effective development of healthcare institutions. healthcare managers must also continuously improve them in accordance with market requirements. when managing healthcare institutions, managers must take into account endogenous and exogenous challenges in order to make effective management decisions and quality management of healthcare institutions. constant changes in environmental factors lead to changes in the competencies and responsibilities of health care managers. thus, the key competencies of an effective manager include conceptual, technical and interpersonal skills. in modern conditions, the heads of medical institutions also face new challenges, which are determined by such modern trends as: management in difficult conditions, management in conditions of constant change, management in a creative way. references: baeva, o. v. (2022). kontseptuali zasady systemy menedzhmentu v zakladakh okhorony zdorovya [conceptual principles of the management system in healthcare institutions]. ekonomichnyy visnyk dniprovskoho derzhavnoho tekhnichnoho universytetu, vol. 1(4), pp. 30–37. borshch, v., rudinska, o., rogachevskyi, o., kusyk, n., & huz, d. (2022). strategic health care management: challenges and realities of emergencies. economic affairs, vol. 67(4), pp. 851–857. cuthbert, m., duffield, c. & hope, j. (2012). management in nursing. sydney: harcourt brace jovanovich. lingur, l., martyniuk, o., ivchenko, i., & ivchenko, o. (2022). creating a digital space of socially sustainable development for food enterprises. eastern-european journal of enterprise technologiesthis link is disabled, vol. 4(13-118), pp. 22–33. available at: http://journals.uran.ua/eejet/article/ view/263540/260010 marriner-tomey, a. (2008). guide to nursing management and leadership. 8 ed. st louis: mosby. roussel, l., swansburg, r . c., & swansburg, r . j. (2006) management and leadership for nurse administrators. 4 ed. sudbury: jones & bartlett. received on: 6th of november, 2022 accepted on: 15th of december, 2022 published on: 30th of december, 2022 three seas economic journal 175 vol. 3 no. 1, 2022 corresponding author: 1 simon kuznets kharkiv national university of economics, ukraine e-mail: yulia.sivash@gmail.com orcid: https://orcid.org/0000-0001-9768-344x doi: https://doi.org/10.30525/2661-5150/2022-1-25 identification of strategies for the development of creativity yuliia syvash1 abstract. there are many views on the concept of creativity, but so far it has not been possible to group all the variety of approaches to its definition on various aspects. the purpose of the article is to clarify the concept of "development of creativity" and identify strategies for the development of creativity on the example of machine-building enterprises. methodology. the approach to the study and understanding of creativity (as a result, as a process, as an ability (property) of a person and a characteristic of the "creative environment") is considered as a 4p – model of creativity. the matrix is built on integral indicators, which are obtained by the method of multiplicative convolution. the proposed partial indicators were substantiated using the method of multivariate factor analysis, which allowed us to choose the most significant of them. for further analysis of integral indicators we used the improved harrington scale and determined the level of company's creativity development according to its creative potential and dynamic abilities. results. in the context of the study, creativity is a process, it is about its development in dynamics. therefore, the development of creativity is a factor of innovation, which changes in dynamics and considers four components: personality, process, result and climate (or environment), which characterize qualitative change. having obtained the value of the level of creativity development in the creative and dynamic areas, a strategy for increasing the development of creativity of the enterprise in accordance with the values of integral indicators, based on reasonable indicators, was designed and planned. having received integral indicators of the level of creativity development in terms of creative and dynamic approaches in quantitative and qualitative dimensions, the determination of strategies for further development of creativity of industrial enterprises was carried out. the coordinates of the positioning of enterprises in the matrix of strategies are integral indicators, and the distribution of the matrix by quadrants is carried out in accordance with the improved harrington scale. the positioning of the studied enterprises is presented in the form of a matrix. practical implications. by constructing a matrix of strategies for the development of creativity of machine-building enterprises for 2020, it was concluded that all of the analyzed enterprises have high creative potential and mostly low dynamic capabilities (pjsc "kharkiv machine tool plant", pjsc "pivdenkabel plant", pjsc "kharkiv electrotechnical plant "transvyaz", jsc "ukrainian power machines", pjsc "kharkiv electric equipment plant", pjsc "kharkiv bearing plant", sse "association of communards" – they are characterized by the traditional strategy). for pjsc "kharkiv tractor plant named after s. ordzhonikidze" and pjsc "fed" appropriate strategy is offensive. among the analyzed enterprises in 2020, only pjsc "electromashina" corresponds to a synergistic strategy, ie has high and dynamic abilities and creative potential. value/originality. development of a theme of work solves very important scientific and practical problem – perfection of offers on definition of development of creativity of the industrial enterprises and revealing of strategy of development of creativity of the enterprises. having defined the strategy of development of creativity of the enterprise, there is a basis for formation of the plan of tactical and strategic actions on development of creativity for the concrete, analyzed enterprise. key words: development strategies, creativity development, machine-building enterprises, creative potential, dynamic abilities, matrix of strategies. jel classification: c69, l19, o12 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 176 vol. 3 no. 1, 2022 1. introduction in the conditions of modern globalization the main competitive advantage of each enterprise is the innovative orientation of its activity. the modern market requires companies to innovate in all areas. organizational changes in enterprises, arising in response to the new business environment, cause a corresponding restructuring of approaches to personnel management, which are based on determining the place of individual labor potential in the innovation process of enterprises and should be aimed at ensuring innovative transformation. in this regard, one of the main ways to increase the impact of personnel is the development and use of latent abilities of the individual, which can include creativity. the main factor determining innovation is the creativity of managerial decisions. the carrier of creativity is the personnel of the enterprise, creative displays and creative approaches which promote increase of innovativeness. therefore, managers of enterprises and scientists face the problem of defining the essence of the concept of creativity development and revealing strategies of enterprise creativity development. the study of such a phenomenon as creativity is in the center of attention of foreign and domestic scientists. the issues of creativity development have been studied by mazurenko  v. p., kopiikа  d. v., merzhvynska a. m., pakulina a. a., bielohlazova k. v., pakulina h. s., posnova  t. v., khymoroda o. p., tershak  n. a., pulina t. v., sotnikova  yu.  v., timonin  o. m., ushkarenko  yu.  v., chmut a. v., and syniakova k. m., shumpeter y. a., yastremska o. m., bardadym o. i., yamnenko h. etc. however, among scientists there is no consensus on the definition of creativity and the identification of creativity strategies of the enterprise, which creates an objective need for continued research. there are many views on the concept of creativity, but so far it has not been possible to group all the variety of approaches to its definition according to different aspects. therefore, the purpose of this article is to clarify the concept of "creativity development" and to define strategies for creativity development on the example of machine-building enterprises. 2. analysis of the concept of creativity development and strategies nowadays creativity as a way of implementation of new techniques or approaches in this or that sphere of activity is considered not as a peculiarity of individuals, but as a property of any person. there are more than 70 definitions of creativity (mazurenko, kopiika, 2018; ushkarenko, chmut, syniakova, 2018), which should be divided into 4 groups. the definitions assigned to the first group relate to the characteristics of the subject, the second group to the characteristics of the process, and the third group to the characteristics of the results of creativity. these three groups define the three main aspects of creativity, which are defined in the literature as person, process, and product. in addition, there is a fourth group that focuses on the aspect of creativity related to the environment (context) of creative activity – press (climate or environment). these aspects are universal and common points for creativity in science, art, technology, entrepreneurship and other fields. this approach to the study and understanding of creativity (as a result, as a process, as abilities (properties) of the individual and the characteristics of the "creative environment") should be considered as a 4p – model of creativity (timonin, syvash, 2016). the highlighted aspects are closely connected with each other. thus, creative abilities depend on the characteristics of the environment in which they are realized, and the results of individual creative activity, in turn, change the surrounding organizational context. thus, it is possible to determine (and the experience of studying creativity confirms it) that the final results of labor, including creative activity, influence both individual-psychological and professional qualities of the worker, and the characteristics of the enterprise where he works. on the basis of the analysis of various approaches to the definition of "creativity ", it was clarified. thus, creativity is a factor of innovation, taking into account four components: personality, process, result and climate (or environment) (pakulina, bielohlazova, pakulina, 2019). but in the context of research creativity is a process, it is about its development in dynamics. therefore, the development of creativity is a factor of innovation, which changes in dynamics and takes into account four components: personality, process, result and climate (or environment), which characterize qualitative change. having obtained the importance of the level of creativity development in creative and dynamic areas, it is possible to design and plan a strategy for the development of creativity of the enterprise based on reasonable indicators. thus, determining the level of development of creativity in terms of creativity and dynamic abilities can be carried out in the following steps (mazurenko, kopiika, 2018; merzhvynska, 2019): 1. determining the value of partial indicators to analyze the development of enterprise creativity in terms of creativity and dynamic abilities. 2. calculation of integral indicators of creative potential and dynamic capabilities of the enterprise. 3. the choice of strategies for the development of creativity of the enterprise according to the level of three seas economic journal 177 vol. 3 no. 1, 2022 integral indicators of creative potential and dynamic abilities of the enterprise in accordance with the matrix of strategies. in the transition period in ukraine, the main goal of the vast majority of enterprises is to adapt to the conditions of increased dynamism of the external and internal environment. therefore, companies need an appropriate development strategy, which would be the basis for effective management decisions. the preliminary research (posnova, khymoroda, tershak, 2018) allows to reasonably determine the level of development of enterprise creativity, which becomes the first step in formulating a strategy for further development of enterprises. today, in connection with the concept of dynamic competences, it is necessary to use such characteristics as creativity and abilities directly, based on the types of development and innovation strategies, to determine the creative development strategies. modern scientists (pulina 2016; yastremska, bardadym, 2013) believe that development can be considered in two directions: both positive and negative. regarding positive development, two types of strategies can be considered: the strategy of reverse vertical integration, the strategy of direct vertical integration. analyze the existing development strategies according to the two main types of development strategies (sotnikova, 2017): 1. the strategy of reverse vertical integration is aimed at developing the enterprise by acquiring or strengthening control over suppliers. the enterprise can create subsidiaries or join companies that already supply. implementing a strategy of reverse vertical integration can give the company very favorable results, making it less dependent on component price fluctuations and supplier requests. moreover, supply as a cost center of the company can become a source of income. 2. the strategy of direct vertical integration is the development of the enterprise by acquiring or strengthening control over the structures between the enterprise and the end consumer, namely the distribution and marketing systems. this type of integration is extremely advantageous if the intermediary services are significantly expanded due to the high level of work. the first group of strategies of reverse vertical integration includes a strategy of diversified development, which is implemented when the company can no longer develop in a given market with a given product in a given area. the main strategies of diversified development include (posnova, khymoroda, tershak, 2018): – strategy of centered diversification, based on the search and use of additional opportunities for the production of new products in the developed market. that is, existing production remains at the center of the business, and new production arises from existing technologies using a specialized distribution system; – horizontal diversification strategy, which seeks opportunities to develop in the existing market through new products that require new technology. according to this strategy, the company focuses on producing non-technologically related products that would take advantage of the company 's existing capabilities, such as in the supply chain. the new product should be focused on the consumer of the main product, accompanying the quality of the already produced product. an important condition for the implementation of this strategy is a preliminary assessment of the company 's own competence in the production of the new product; – the strategy of centralized diversification consists in the fact that the company expands by producing technologically new products, unrelated to those already produced, which are sold in new markets. this is one of the most difficult development strategies to implement, since its successful implementation depends on many factors, including the competence of existing personnel and especially managers, the seasonality of the market, the availability of necessary financial resources, and much more. according to the allocation of destructive development, it is possible to consider strategies to reduce the company, indicating a qualitative change, but subject to a decrease or decrease in the values of key economic indicators. note that enterprise downsizing strategies are used for targeted curtailment of production. there are four types of enterprise downsizing strategies (pulina, 2016): – the liquidation strategy is a particular case of the closure strategy, which is carried out when the company cannot continue its activities; – harvest strategy – allows to abandon the long-term view of the business in favor of maximizing income in the short term. this strategy applies to unpromising businesses that cannot be sold profitably but can generate income during the "harvest". this strategy reduces purchasing costs, wages, and maximizes income from the sale of existing products while reducing production; – downsizing strategy is when a company closes or sells one of its divisions in order to make a long-term change in the boundaries of the business. this strategy is often used by diversified companies when they need to raise funds to develop a more promising or start a new business that is more in line with the company 's long-term goals; – cost reduction strategy – this involves looking for opportunities and taking appropriate measures to reduce costs. it focuses on eliminating small sources of costs, and its implementation is temporary or shortthree seas economic journal 178 vol. 3 no. 1, 2022 term in nature. the implementation of this strategy involves reducing the cost of production, increasing productivity, reducing hiring and even firing personnel, discontinuing the production of non-commercial goods, and closing non-commercial facilities. it can be assumed that the cost reduction strategy transitions to the previous reduction strategies when the sale of units and fixed assets begins. at the initial stage of forming an innovation strategy, a company must determine its type. there are several types of strategies, and different economists define them differently. according to the classification (ushkarenko, chmut, syniakova, 2018), there are five types of innovation strategy of the enterprise: offensive, protective, imitation, traditional, synergistic. these five types of innovation strategies should be used in further research. innovation strategy, which is part of the overall strategy of the enterprise, is a purposeful activity to determine the most important areas, the choice of priorities for the future development of the enterprise and the development of a set of measures necessary to achieve them. innovative development of the enterprise begins with formation of management strategy. in most developed countries, such a strategy covers the stages: innovation plan, innovation project, innovation plan, which are used to obtain information support for innovative development. an effective innovation strategy for the development of an enterprise involves the evaluation of all forms of innovation activities of the enterprise. in practice, compliance with this provision is quite difficult, because it means that the innovation process of the enterprise should cover all aspects of economic activity, integrating into all divisions of the enterprise. innovation strategy of the enterprise is determined by the following main components: the object and nature of the resources that the enterprise has (or plans to obtain), as well as market positions and overall economic structure (controlled market share, access to finance and raw materials, competitiveness) (ushkarenko, chmut, syniakova, 2018). 3. forming strategies for the development of entrepreneurial creativity since the strategies of creativity development are considered, it is advisable to synthesize the analyzed development strategies and innovation strategies in terms of dynamic abilities and creativity and include them in the proposed matrix, which is built on these two criteria. the paper does not use the strategies of downsizing of enterprises, as they do not consider the development in terms of destructive. table 1, which characterizes the matrix, shows the generalized strategies of creativity development of industrial enterprises, which are based on the existing level of development of the creative potential and dynamic abilities of enterprises. next, it is useful to describe each quadrant of the strategy matrix. protective strategy. the company has a low level of creativity. it is necessary to gradually take measures to develop each component of the creative potential and the dynamic component, and it should start with the improvement of human resources and innovation potential. centralized diversification strategy. the company has a low level of creativity. to improve the indicator, attention should be paid to dynamic abilities, especially creativity. traditional strategy. the company has a satisfactory level of competitiveness in the short term. it has enough opportunities to implement ideas, but there is absolutely no innovation. therefore, it is necessary to attract more qualified personnel to innovative research and implementation of innovative projects, as well as to increase funding for these activities. strategy of direct vertical integration. the company has a low level of creativity. it is potentially ready to develop innovative projects, but it lacks resources. therefore, it is necessary to develop its personnel and production potential. horizontal diversification strategy. the company has an average level of creativity. therefore, it is necessary to develop each component of creativity and dynamic abilities in a harmonious way. offensive strategy. the company has an aboveaverage level of creativity. on the background of the creative potential the dynamic abilities are insufficiently developed. it is recommended to take specific measures to intensify the implementation of innovative developments at the company. reverse vertical integration strategy. the company has a satisfactory level of creativity. it has well developed dynamic capabilities, but it lacks the table 1 matrix of strategies for the development of entrepreneurial creativity creative potential low average high dynamic abilities low protective strategy centralized diversification strategy traditional strategy average strategy of direct vertical integration horizontal diversification strategy offensive strategy high reverse vertical integration strategy imitation strategy synergistic strategy three seas economic journal 179 vol. 3 no. 1, 2022 resources to implement ideas. there is a need to increase creativity, starting with the internal component, namely the provision of fixed and working capital. imitation strategy. the company has an aboveaverage level of competitiveness. the weak point is the resource potential. it is necessary to pay attention to the improvement of the external component of the creative potential, aimed at intensifying the interaction with the agents of the external environment. synergistic strategy. the company has a high level of creativity. therefore, in order to achieve a sustainable competitive advantage in the strategic aspect, it is necessary to develop each component of creativity and dynamic abilities evenly. the application of this matrix in the process of formation of the development strategy of creativity of industrial enterprises will allow to take into account the factors of the internal environment of the enterprise, to determine the dynamic abilities and creative potential of the enterprise, and most importantly – to make reasonable decisions. the matrix is built on integral indices, which are obtained by the multiplicative convolution method. the integral indicator of creativity includes: the share of marketing costs in total innovation costs; the share of investment in intangible assets in the total value of assets; the equipment flexibility factor; the share of costs for participation in exhibitions and other image events in the total value of sales; profitability of equipment; profitability of employees; share of costs for the development of information support in total costs; coefficient of liabilities to credit and financial institutions; coefficient of provision of units with technical means; production growth rate; growth rate of market share; coefficient of actual capacity utilization; coefficient of workplace organization; coefficient of timely payment of wages to enterprise employees. and the integral index of dynamic capabilities included: the growth rate of the share of long-term investment in technological innovation; the growth rate of the share of innovative products in total production; the growth rate of intangible assets of the enterprise; the coefficient of flexibility of the organizational structure; coefficient of regulation of structural divisions; the share of employees who graduated from the university; growth rate of the number of implemented innovative processes and projects; coefficient of orientation of the organizational structure to the market. the proposed partial indicators are justified using the method of multivariate factor analysis, which allowed us to choose the most significant of them (yastremska, syvash, 2018). for further analysis of integrated indicators, it is advisable to use the improved harrington scale (pulina, 2016) and determine the level of creativity of the enterprise by its creative potential and dynamic abilities (table 2). table 2 improved harrington scale the level of integrated indicators of creative potential and dynamic abilities the value of the coefficient low 0 – 0,27 average 0,27 – 0,51 high 0,51 – 1 having received the value of the level of creativity development in the creative and dynamic areas, it is possible to develop and plan a strategy for increasing the creativity of the enterprise on the basis of the values of integral indicators (table 3), relying on justified indicators. thus, having received integral indicators of the level of creativity development in terms of creative and dynamic approaches in quantitative and qualitative dimensions, we move on to the definition of strategies for further development of creativity of industrial enterprises. since the coordinates of the positioning of enterprises in the matrix of strategies are integral indicators, and the division of the matrix into quadrants is carried out according to the improved harrington scale. the positioning of the studied enterprises in the matrix is given in accordance with table 4. table 3 results of the analysis of the level of creative potential and dynamic abilities in 2020 № name of company creative potential dynamic abilities integral indicator level integral indicator level 1 pjsc "electromashina" 0,96 high 0,62 high 2 pjsc "kharkiv machine-tool plant" 0,98 high 0,10 low 3 pjsc "pivdenkabel plant" 0,95 high 0,24 low 4 pjsc "kharkiv electrotechnical plant "transvyaz" 0,82 high 0,23 low 5 pjsc "kharkiv tractor plant named after s. ordzhonikidze" 0,96 high 0,48 average 6 jsc "ukrainian power machines" 0,96 high 0,20 low 7 pjsc "kharkiv electric equipment plant" 0,84 high 0,27 low 8 pjsc "kharkiv bearing plant" 0,73 high 0,20 low 9 pjsc "fed" 0,71 high 0,46 average 10 sse "association of communards" 0,96 high 0,18 low three seas economic journal 180 vol. 3 no. 1, 2022 table 4 matrix of strategies for the development of creativity in machine-building enterprises 0 creative potential low 0,27 average 0,51 high 1 dynamic abilities low 0,27 2, 3, 4, 6, 7, 8, 10 average 5, 9 high 1 0,51 1 having constructed a matrix of strategies for the development of creativity of machine-building enterprises for 2020, we can conclude that all analyzed enterprises have high creative potential and mostly low dynamic capabilities (pjsc "kharkiv machine tool plant", pjsc "pivdenkabel plant", pjsc "kharkiv electrotechnical plant "transvyaz", jsc "ukrainian power machines", pjsc "kharkiv electric equipment plant", pjsc "kharkiv bearing plant", sse "association of communards" – they are characterized by a traditional strategy). for pjsc  "kharkiv tractor plant named after s. ordzhonikidze" and pjsc "fed" appropriate strategy is offensive. among the analyzed enterprises in 2020, only pjsc "electromashina" corresponds to a synergistic strategy, ie has high and dynamic abilities and creative potential. 4. conclusions the development of the theme of the work solves a very important scientific and practical issue – the improvement of proposals for determining the development of creativity of industrial enterprises and the identification of strategies for the development of creativity of enterprises. on the basis of the conducted research the following conclusions can be made: thus, the research process developed the concept of creativity as a factor of innovation, which changes in the dynamics and takes into account four components: personality, process, result and climate (or environment), which characterize qualitative changes. having obtained integrated indicators of the level of creativity development in terms of creative and dynamic approaches in terms of quantitative and qualitative dimensions, strategies for further development of creativity of industrial enterprises were identified and it was established that pjsc  "kharkiv machine tool plant", pjsc "pivdenkabel plant", pjsc "kharkiv electrotechnical plant "transvyaz", jsc "ukrainian power machines", pjsc "kharkiv electric equipment plant", pjsc "kharkiv bearing plant", and sse "association of communards" are characterized by the traditional strategy. for pjsc "kharkiv tractor plant named after s. ordzhonikidze" and pjsc "fed" appropriate strategy is offensive. among the analyzed enterprises in 2020, only pjsc "electromashina" corresponds to the synergistic strategy, i.e., it has high and dynamic abilities and creative potential. the 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(2016). mekhanizm upravlinnia protsesamy rozvytku pidpryiemstva [the mechanism of management of processes of development of the enterprise]. ekonomichnyj prostir, no. 106, pp. 231–240. three seas economic journal 116 vol. 1, no. 1, 2020 corresponding author: 1 institute of market problems and economic & ecological studies of national academy of sciences of ukraine, ukraine. e-mail: andreevann@ukr.net 2 kyiv national university of trade and economics, ukraine. e-mail: vgotsuliak@ukr.net doi: https://doi.org/10.30525/2661-5150/2020-1-17 analysis of institutional risks of sustainable sea development in ukraine natalya andryeyeva1, volodymyr hotsuliak2 abstract. the research objective is to define institutional risks in the process of formation of the institutional environment of the maritime economy sphere within the context of the implementation of international sustainable development policy into ukrainian economy. the article considers the risks and threats of the emergence of institutional risks and “traps” in the economy, their influence on maintaining sustainable development of the maritime economic sphere in ukraine. the article analyses peculiarities and causes of the crisis situations of 2013– 2017 in the ukrainian maritime economy, discovers the existing structural imbalance of institutional environment and offers a set of measures for the integration of national objects of the maritime economy into european maritime clusters. methodology. the research defines the essence and interrelation of institutional risks and institutional “traps” in the modern institutional theory. it was established that institutional “traps” in the maritime economy emerge due to management misjudgements in relation to new regulations suggested by policymakers and inefficient institutions without taking into account the existing economic and environmental risks for economic activities at the microeconomic level. that is to say when the state ignores the main institutional threats: resilience of shadow arrangements; a procedural overload of the management system; immaturity of the regulatory-legislative sphere, resource-intensiveness of organisations and their interrelations. practical implications. the conducted research on the existing institutional risks (traps) of the ukrainian maritime economy allowed discovering the level of structural deformations of the institutional environment in accordance with sustainable development methodology, to offer an action plan for improving the institutional environment that would allow removing the existing social, economic and environmental risks. value/originality. the article demonstrates that though institutional risks are of common nature for various countries and scopes of activity, they do not work in the same way and have different symptoms of emergence in each separate sphere, in particular, in maritime economy. thus, the recommendations for their prevention and overcoming substantially differ from each other. the research offers a set of priority tasks for overcoming the crisis phenomena in the sphere of the maritime economy of the ukrainian black-sea region related to the transition of ukrainian business structures to sustainable development. the authors have determined that institutional risks that influence various segments of economic activities are complex in nature. in this context, determination of interrelations between institutional risks and other types of risks, in particular, economic and environmental ones, becomes especially important. key words: institutional risks and “traps”, sustainable development, maritime economic sphere, ukrainian black sea region. jel classification: b52, o44, q01, r49 1. introduction relevance of research works on institutional risks of sustainable development of the ukrainian black sea region’s maritime economic sphere is conditioned by the lack of regulation of strategic development priorities, low level of environmentalization of economic activities virtually in all the production domains, increasing degradation of the natural and resource potential, and exacerbation of economic, social, and environmental situation essentially in all regions of ukraine. in ukraine, in the current conditions, a special place should be given to the institutional policy three seas economic journal 117 vol. 1, no. 1, 2020 of establishing it as an economically independent (sovereign) maritime state. at the same time, it is necessary to clearly understand that, firstly, the role of the maritime factor will be growing each year for ukraine and will play a landmark role in the future; secondly, establishment of ukraine as a maritime state is, first of all, closely related to the development of port industrial areas. we deem it necessary to underscore that the state interests of ukraine and global community related to sustainable development of maritime economic sphere are determined by the geoeconomic and geostrategic importance of using the black sea for transportation and reclamation of its resource potential. in general, the state interests of ukraine in the maritime domain constitute a total of economic, social, political, environmental and other interests of the state. but it is due to the uncertainty of the institutional reforms in accordance with the world standards that the further balanced development of the maritime economic sphere is slowed down. this article determines the essence of institutional risks, demonstrates interrelations between institutional risks and institutional “traps”; provides research on separate most topical and problematic aspects of formation of the institutional environment related to ensuring economic and environmental interests of ukraine within the context of sustainable development of the management systems for objects of functioning of the ukrainian black sea region’s coastal zone. analysis of research works and publications. determining institutional risks (traps) and improvement of the institutional environment of the maritime economy sphere in ukraine in accordance with the international paradigm of sustainable development and the best world practices is a new problem both for the economy of ukraine and for the entire international community, which tends to become very topical in the nearest future. the analysis of general approaches to the formation of state institutional policy, social and economic situation, problematic environmental issues of sustainable development of the maritime economic sphere of the ukrainian black sea region have motivated ukrainian researchers for intensive and deep study of the phenomenon of formation of the new institutional foundation related to overcoming the current economic and environmental imbalance and discovery of crisis phenomena in the formation of the state maritime policy. issues of the creation of rules and regulations for the functioning of societies have been considered by a large number of renowned scientists, analysts, and practitioners of institutional theory, state governance, and other directions of economic or social sciences. thus, j. brennan and j. buchanan (2005), e. ostrom (1990), j. mokyr (2002) favour the social nature of their emergence. in the works of p. knopfel, s. varon, n. malysheva (2010), t. eggertsonn (2005), v. lowndes (1996), there can be traced an inclination towards the consideration of this range of problems from the point of view of political variations. r . coase (2007), d. north (1997, 2010), e. furubotn and r . richter (1991) tend to see the transformation of economic environment as the reason for changes of institutions. gradstein (2008) pays a special attention in his research to determining the interrelation between institutional “traps” and economic growth. however, as a rule, the points of view of each author complement each other when it comes to the causes of the emergence of institutional risks or “traps” in the public sphere. unfortunately, examination of most of the studies allows emphasizing that institutional risks are usually considered only through the social and economics lens. at the same time, most of the scientific articles do not pay any attention to the environmental aspect of studies. the modern approach to the international sustainable development paradigm provides for comprehensive social, environmental, and economic consideration of the existing transformational issues of formation of the institutional infrastructure of the economy. a number of ukrainian scholars have made their contribution to the research to determine the mechanisms and tools related to institutional support of sustainable development of the maritime economic activities of the objects of ukrainian black sea region, in particular: r . kryzhanovskyi (1991), o. hromova (2001), b. burkynskyi and v. stepanov (2008), a. fylypenko, v. baryshnikova (2013), and others. the applied task of the research is the discovery of problems and assessment of crisis situation related to the formation of new institutes in economic and environmental spheres of the objects of maritime economic activities of the ukrainian black sea region, as well as the development of offers to improve the institutional environment. three seas economic journal 118 vol. 1, no. 1, 2020 2. the methodology of implementation of the theory of institutional risks in the maritime economic sphere of ukraine institutional aspects of development are currently acquiring a special importance. in the presentday conditions, ignoring an institutional crisis or attempting to tackle it with typical measures aimed at overcoming local issues (for instance, financial and economic or economic and environmental crisis) using examples of developed countries, where institutional crisis is absent or far less evident, leads to its conservation or growth, which would permanently reduce the efficiency and management capabilities of public administration, as well as efficiency and competitiveness of national economy. a special group of institutional risks is constituted by the risks arising out of the unconcerted behaviour of the state in the economic and environmental management sphere. all of this can lead to growing social tensions and risks of emergence of civil unrest. as a result, the economy of ukraine is deprived of efficient possibilities of growth, and the country’s political structure is isolating itself in the system of unresolved issues of its own economic and environmental efficiency of sustainable development, which reduces the country’s competitiveness and bears unforeseen consequences for the functioning of the state organism. thus, the issues of investigating the risks of activation of institutional “traps” arise on a new scale, for these traps can potentially cause emergence of new shadow arrangements in the country’s economy (corruption, large-scale cases of monopolistic collusion on the markets, latent lobbying of individual interests etc.) alongside the new conditions of functioning of the society and state. overcoming such risks requires a nonlinear response to the emerging social, economic and environmental challenges by way of changing the quality of institutions and institutes, i.e. realization of efficient institutional transformations. the interdisciplinary approach to studying risk allows considering risk in the context of institutional analysis. scientific and analytical literature usually defines the institutional risk as a social and economic phenomenon characterized by a possibility of the advent of an undesirable event caused by institutions of the economy. there is a controversy in the economic science regarding the nature and conceptual framework of institutional functions and dysfunctions. the institutional theory determines that the function of coordination is expressed in the fact that awareness of a separate rule allows individuals to carry out mutually beneficial actions (kouz, 2007). this function ensures coordination of actions of economic entities and reduces the level of uncertainty in social and economic relations. the distributive function provides for the prohibition of certain actions, the concentration of resources only with unprohibited ones or those that are directly suggested. institutes carry out redistribution of resources, expenses, and benefits from certain economic entities to others. informational and motivational functions of institutes are also distinguished. these functions are not universal, but their failure also leads to inefficiency of institutes. dysfunctions of institutes determine their inefficiency, there emerges a possibility that interests and objectives of economic entities will not be achieved, and an institutional risk comes up. therefore, the author’s understanding of the reason of emergence of institutional risks is related to the disorders in the institutes of the economy. research of the main functions of institutes and consequences of their disorders allowed singling out the results of institutional dysfunctions: 1) institutional uncertainty; 2) institutional traps; 3) atrophy, degeneration, and extinction of an institute; 4) institutional conflict and rejection of an institute. to sum up the above, let us specify the definition of an institutional risk as a social, economic, and environmental phenomenon that is caused by dysfunctions of institutes, which is characterized by the possibility of advent of an undesirable event for an economic entity, which hinders realization of its economic interest due to growth of transaction costs. study of peculiarities of reformation of the maritime economic complex of ukraine, first of all, envisages paying most of the attention to the stages of institutional uncertainty and discovery of an institutional trap. there were attempts in the world’s scientific literature to research the reasons for the emergence of institutional traps. naturally, an institutional trap can be avoided or overcome by means of revision of formation rules for organizations’ (enterprises’) structure and the structure of their relations in the context of transactional and transformational expenses, as well as of the level of inefficient institutions’ penetration into economic activity. therefore, management mechanisms should be used for modelling relations three seas economic journal 119 vol. 1, no. 1, 2020 between economic entities, inside them, and with government agencies by means of operating all the expenses of economic entities to carry out business activities (weimer & vining, 1998). as a result, in realistic conditions of a competitive (not necessarily a market) environment, the crucial role is played by the level of behavioural preparedness and predictability of balance of interests of direct and indirect competitors in a future system (weimer & vining, 1998). institutional transformations emerge as a result of the development of situations of collective and constitutional choice, in particular, a situation of institutional choice (ostrom, 1990) – achievement of political and economic consensus in the society by the entire range of interested parties. thus, according to e. ostrum (1990), the situations deemed as typical are those when institutional traps come into play as a result of three principal risks prevailing in the process of choice of reaction and behaviour of economic agents in the conditions of institutional transformation: total hostility; limited perspective; and unpredictable result. the risk of total hostility. the essence of the risk can be determined in the following way: efforts to prevent the threat of “resilience of shadow arrangements” (for example, reduction of official payments, limitation of time frames for consideration of applications etc.), in case of preservation of the threats of “procedural overload” and “resource-intensiveness of the enterprise’s organization”, leave the environment without changes. the risk of limited perspective. efforts to remove the threat of the “resource-intensiveness of the enterprise’s organization” (for example, introduction of short time-frames for procedures, guaranteeing inviolability of property, investments, contractual terms etc.), in case of preservation of the threats of “resilience of shadow arrangements” and “procedural overload”, will create the conditions where each economic agent, due to the previously obtained informal connections, will be trying to use them in a most efficient way in the algorithm of passage of the procedures and, if possible, expand them, so that the removed competitive obstacles turn into full-fledged competitive advantages. the risk of the unpredictable result. activities of government agencies aimed at neutralization of the “procedural overload”, in case of preservation of the threats of “resource-intensiveness of the enterprise’s organization” and “resilience of shadow arrangements”, will create a situation of confusion for market participants and government officials. therefore, destruction of the usual algorithms of maintaining economic decision-making may result only in the complication of economic activities. informal expenses will only grow due to the necessity of establishment of new shadow arrangements; moreover, there will also be an increase in time necessary for entering the market or entering into agreements between counterparties or in unsustainable use of natural resources. for the majority of economic agents, it becomes unclear, which type of behaviour they should choose and what results they should expect (abide by new formal rules or adjust the shadow arrangements) because no result can now be achieved automatically. the agents’ decisions are now more and more depending on how they would construe the contents of the new procedures, and on whether they would really abide by those procedures (knopfel, larue, varon, & malysheva, 2010). this increases direct risks related to the achievement of the desired result for each participant and brings into question the acceptance of any new rules in a long-term perspective. as a result, there emerges an unsystematic (dispersed) resistance, which was clearly demonstrated by the attempts of implementation of reforms in the ukrainian marine economic sphere in 2013–2017. therefore, an attempt to transform the institutional framework (a number of fundamental regulations) is followed by a change in the structure of stimuli for economic agents. that is to say, in the process of establishment of any reforms, in order to improve their understanding by market participants, it is necessary to be aware of the strategic consequences of a change of a specific institution on the environment of operation, and on the extension of knowledge about its potential possibilities. continuous accumulation of various institutional traps promotes gradual unfolding of negative phenomena in the institutional environment, which with the time becomes a cause of the emergence of an institutional crisis. it is noteworthy that as a result of the global financial and economic crisis, in ukraine, there occurred a dramatic exacerbation of the main drawbacks of the national economy with prominent features of theretofore latent institutional crisis (zhalilo, 2009), its overflowing from economic into social, political, and environmental domains. three seas economic journal 120 vol. 1, no. 1, 2020 3. institutional imbalance and risks of the policy of sustainable development of objects of ukrainian port industrial areas the peculiarity of determining economic and environmental problems of development of ukrainian maritime coastal areas is conditioned, first of all, by the reformation of the maritime economic complex and the necessity to actively use modern forms of investment into the development of port infrastructure. a seaport and industrial infrastructure within port industrial areas is a complex subsystem, which is closely related to the economic, social, and environmental subsystems of the region and is developing under the influence of the factors of external (globalization, socialization, and environmentalization of the economy, integration processes etc.) and internal environment (institutional environment of a region, its level of competitiveness etc.). therefore, evaluation of competitiveness and efficiency of functioning of facilities of port industrial areas requires determination not only of its functional characteristics but also of its role in ensuring the quality of transportation and transshipment operations of the facilities of port industrial areas, as well as economic growth of the region. it should be noted that during the last year, ukraine rose from the 85th to 81st position in the rating of competitiveness (global competitiveness index, gci). one of the key criteria of the rating is an evaluation of the competitiveness of transport infrastructure. the quality of port infrastructure in ukraine has been constantly growing in the recent years, while that of the railway one is decaying. as for the motorways, ukraine is among the ten countries with the worst roads in the world. this is declared in the annual report of global competitiveness index issued by the world economic forum. as for the quality of infrastructure, during the last year, ukraine worsened its rating by three points falling from the 75th to 78th position, its grade being 3.9 of the 7-point scale. as a positive aspect of development, it should be emphasized that ukraine has been included into indicative maps of the european transportation network ten-t. this means that in the nearest future, ukraine’s transport infrastructure should become an integral part of the eu infrastructure and develop in a harmonious accord. the trans-european transport network (ten-t) project envisages the creation of a new transportation system on the territory of the eu up to 2030 uniting 94 maritime and river ports, 38 international airports, and nearly 15 thousand kilometres of high-speed railways. there are two corridors going towards the territory of ukraine – the mediterranean corridor (from the iberian peninsula up to hungarian-ukrainian border) and the rhine-danube corridor (through the waterways of main and danube, with arms from munich to prague, žilina, kosice, and up to ukrainian border). analysing the state of infrastructure of the maritime economy complex, it should be noted that it is closely connected with the consideration of the development of port industrial areas. at present, the legislative framework of ukraine does not have an unambiguous approach to the definition of the term of the essence of port industrial areas. in the opinion of the authors, this term should be considered in two aspects. firstly, port industrial areas is a form of territorial organization of maritime economy and neighbouring coastland, interrelated and interdependent association of maritime ports, industrial enterprises, coastal settlements, social and manufacturing infrastructure, whose location in the coastal area is caused by the usage of resources of land and sea, as well as by maintenance of environmental, social-economic, and external economic functions. secondly, port industrial areas are cluster associations of coastland population centres, neighbouring facilities of port and industrial infrastructure operating within the limits of specific territories. the article offers the following classification of types of activities carried out within the frameworks of the functioning of the facilities in the coastal zones, in particular: – business operations of ports, commercial and naval transport (infrastructure of ports and facilities of port enterprises; dredging; dumping; building of hydro-technical constructions; intermodal centres within ports, ship repair and shipbuilding facilities; navigational objects); – geological prospecting works, drilling operations and development of raw resources deposits within the territorial waters (in particular, prospecting and extraction of oil and gas); – fishery (operations of the fishing fleet with relevant port infrastructure, as well as fish processing enterprises; aquaculture operations: fish breeding, farming of shell-fish etc.); – business operations of portside plants belonging to other industries (metallurgical, three seas economic journal 121 vol. 1, no. 1, 2020 chemical, agricultural enterprises (excluding fish processing)); – recreation and resort operations (usage of beaches and seashore areas for health improvement and recreation); laying of pipelines and communication lines. maritime economic activities in ukraine are, first of all, based on the extensive infrastructure system of maritime ports. this system includes 18 maritime trade ports with 4 maritime fishing ports operating together as a complex. modern trends of development of objects of port industrial areas in the ukrainian black sea region show positive dynamics. thus, according to the data of the ukrainian sea ports authority, in 2017, the cargo turnover in the maritime ports of ukraine preserved positive dynamics for the entire 12 months. from january to december of the previous year, the maritime ports of ukraine processed 132.57 million tons of cargoes, which is 0.6% more compared to 2016. this is indicated in the operation data of the ukrainian sea ports authority. the volume of transportation of import cargoes in 2017 rose by 29.1% year on year to 20.479 million tons, the volume of export cargoes fell by 1.7% to 98.517 million tons. within the import structure, the largest growth (6-fold) occurred with chemical and mineral fertilizers – from 20.66 thousand tons in 2016 to 123.63 thousand tons in 2017, and oil – from 506.98 tons to 848.76 tons (by 67.4%). coal and ore also demonstrate a sharp rise in cargo turnover, their transshipment volumes rose by 64.2% and 15.9% compared to 2016 to 6.141 million tons and 6.491 million tons respectively. grain has an important share in the export cargoes turnover – almost 38 million tons, and metallurgy products – 14.91 million tons. at the same time, exports of vegetable oils rose to 5.2 million tons (19% growth compared to 2016). the volume of transit cargo processing rose by 14% to 11.804 million tons, and the volume of container processing rose almost up to 531 thousand teu. at that, the largest volumes of cargo were processed by the pivdennyi port – 41.889 million tons with transshipment increasing by 6.6% compared to 2016. the odesa port – 24.12 million tons, mykolaiv – 23.533 million tons, and chornomorsk – 17.633 million tons. thus, in 2017, ukrainian maritime ports increased cargo processing by 0.832,53 million tons compared to 2016 (table 1). the data analysis allows to state that ukrainian ports mostly deal with transshipment of cargoes with essential impact on the environment, and therefore, we deem it extremely necessary to determine institutional risks of negative impact on sustainable development of the ukrainian maritime economy. table 1 total volumes of cargo processing in maritime ports of ukraine in 2016–2017 indicator total for maritime ports 2016 2017 % total cargoes 131745.91 132578.44 100.6 liquid 10788.58 11016.26 102.1 dry-cargo, loose 93413.41 95745.71 102.5 unit load 27543.92 25816.47 93.7 in addition, it is worth mentioning that recently alongside with development of ports, there has also been a dynamic growth of the port-side industry. enterprises of oil and fat sector have recently seen the greatest development in the maritime coastal zone of the ukrainian black sea region, in particular, in odesa region. the growth in exports of sunflower oil, which in most cases is carried out through seaports, has a special meaning for the entire external trade of ukraine. according to the state fiscal service of ukraine (the state fiscal service of ukraine), in 2016, over 4.8 million tons of this type of oil was shipped abroad to the total amount of $ 3.7 billion, which is a 10% increase in the total volume of ukrainian exports. the following can be named among the most significant conflict and crisis issues constituting an institutional “trap” and slowing down sustainable development of objects of maritime coastal zones: – imbalanced operations of separate structural elements of the maritime coastal zones’ objects are conditioned by the absence of programand goaloriented approach to the development of ports, maritime fleet, port-side industrial and recreation facilities, as well as other objects of maritime coastal zones; – low efficiency of the fulfilment of innovation and investment plans and development programs for maritime coastal area objects is conditioned by the inadequacy of managerial decisions regarding their implementation, especially in conditions of crises; – low efficiency of financial and economic, commercial and operational activities, as well as measures for the provision of environmental, industry-related and new types of the safety of development of port industrial areas, is conditioned three seas economic journal 122 vol. 1, no. 1, 2020 by the inadequacy of regulatory environment and organization of management of maritime economic activities. the cause-and-effect basis of the problem of the necessity of improvement of the institutional system for managing environmentalization of port industrial areas of ukraine is as follows: – intensive man-made transformation of the natural and resource potential of territories and offshore zones as a result of deployment of industrial, transport, utility and other objects, including those posing threat to population and environment; – extensive (inefficient) usage of natural resources (resource-intensive production), conditioned by the low level of technological development; – consumer attitude towards natural resources and environmental systems, the predominance of bureaucratic and temporary interests in contrast to long-term ones; – saturation of coastal territories of ukraine, especially in certain regions, with environmentally dangerous facilities; – continuous practice of evaluation of investment projects and decision-making on the deployment of dangerous business systems and facilities without a comprehensive assessment of their impact on the environment and taking into account factors and forecasts of natural and man-made risks; – the insufficiency of regulatory framework on maritime environmental management from the point of view of both contents and structure (including the fuzzy character of obligations, authorities and responsibility of government agencies of various hierarchy levels and separate persons regarding decision-making on deployment and operation of dangerous facilities, responsive measures to situations related to resource and environmental safety); – the inadequacy of the system of government environmental regulation, including economic instruments of maritime environmental management and environmental protection activities, mechanisms for prevention and reduction of volumes of damage, stimulation of reduction of environmental pollution and relative indicators of resource usage, mechanisms of environmental insurance, funding of environmentally beneficial investment projects; – the inadequacy of organization of prompt response in case of resource and environmental emergencies caused by natural or human factors. this situation is conditioned by the persistence of systemic negative trends in 2013–2017 on the governmental level in relation to the reformation of the maritime sphere in general, including the following: 1) lack of proper regulation on the issues of property rights to port complexes and coastal facilities of the port-side industry. prevalence of state ownership due to lack of investments does not allow efficiently renewing the vessel fleet of ports and carrying out infrastructure works. the maritime industry needs reorganization of the ownership system and transfer of a certain share of port infrastructure facilities to private investors; 2) persistence of technological inferiority problems in maintenance of the principal port operations mainly due to the obsoleteness of port complex, non-compliance of the throughput capacity of ukrainian maritime ports infrastructure with international standards; 3) persistence of high tariff rates on servicing container transportation in maritime ports of ukraine; 4) uncertainty in the issues of assurance of economic and environmental safety. in particular, the port infrastructure system is lacking relevant port constructions for warehousing and processing environmentally hazardous cargoes; 5) persistence of low environmental quality of the internal transportation network, limitation of the speed of transit traffic (fylypenko & baryshnikova, 2013). analysis of the existing practice of functioning of national maritime coastal zones shows that there is an ongoing diversification of port services going beyond the actual port limits (its internal and external water area) and encompassing a large number of onshore and other business operations of the transportation chain. such factors, on the one hand, condition association of transportation process participants seeking to obtain a greater economic effect from common operations; on the other hand, they stimulate implementation of innovations in the organizational and technological process of functioning of the port economy. at the same time, there exist a number of factors with a negative impact on the very environmental quality of service provision in the commercial maritime ports of ukraine, and among them, the following structural institutional imbalance will be gaining particular importance: three seas economic journal 123 vol. 1, no. 1, 2020 1) the absence of a unified comprehensive environmental program of development for both maritime sector of ukraine in general, and its separate components. in the recent years, a number of resolutions have been adopted aiming to develop the maritime industry. at the same time, the above-mentioned regulatory framework has a predominantly fragmentary nature where different regulatory documents cover only some of the industry development aspects, are not interrelated and do not take into account environmental peculiarities of regions’ development. a number of laws have been adopted in ukraine regulating the issues of strategic priorities in the development of the innovation and investment sphere of the objects of industry and transportation of maritime coastal areas, in particular, of publicprivate partnership. at the same time, the national legislation still has not defined such new forms of organization of business as “cluster” in general and “environmental cluster” in particular, there is no legal regulation of types, forms, and peculiarities of creation and operation of clusters. the drafts of regulatory aspects on the formation of the bases of state policy in the sphere of clustering are still waiting for approval. 2) different departmental affiliation of enterprises and institutions operating in the maritime industry leads to incoherent management decisions, the absence of coordination of the state environmental, as well as innovative and investment policies related to the development of maritime economic complex and optimization of its infrastructural maintenance. state-owned seaports and shipping companies of ukraine are subordinated to the ministry of infrastructure; fishing-industry and fishing ports – to the ministry of agricultural policy and food; while educational institutions training maritime industry experts are subordinated to the ministry of education and science. the issue of formation of environmental policy is a priority for the ministry of environment and natural resources. 3) the absence of systemic environmental information and methodological support of economic entities whose activities are related to a maritime economic complex of the region, lack of training of highly qualified experts in environmental specialties; 4) low level of investment into environmental innovations of the country’s maritime economic complex, insufficient level of interaction of the maritime economic complex with educational and scientific institutions, wear of the principal manufacturing facilities, outdated technologies that are used for transportation and processing of cargoes determine the low environmental quality of transportation and transshipment services. the present-day dynamic situation is conditioned by the significant renovation of science and scientific directions in the system of the interrelation of economy, society, and nature. this research is using the perspective of scientific approaches to economic-environmental security of maritime economic industry to define the author’s vision regarding the determination of problematic issues of the existing economic-environmental imbalance of development of port industrial areas of ukraine, also, on the basis of implementation of international experience into national legislation, there were suggested recommendations regarding the improvement of environmentalization management of functioning of maritime coastal zones facilities of the ukrainian black sea region by the institutional system. it should be noted that the infrastructure of maritime ports of ukraine should achieve a new level of development that will ensure proactive development for satisfying the needs of economy and society; will ensure improvement of the system of assurance of safety of human life and prevention of human-caused emergencies at sea and adjacent territories; will be based on the modern technologies of works performance that are safe for people and environment; will ensure equal possibilities for operation of transportation process participants of all ownership types; will allow more comprehensive use of the country’s transit potential; and will promote expedited integration of ukrainian transportation system into the international and european transportation systems. in its turn, the environmental component of the strategy of sustainable development of enterprise should determine the objectives of innovative activities of maritime commercial ports, as well as define the choice of means for their achievement and sources of those means. the priority objectives of the sustainable development strategy of port industrial areas, first of all, have to be as follows: creation of maritime environmental clusters; improvement of quality of transshipment process and port services; separation of social and environmental component of cost price of cargo transportation and port services provision; improvement of technical level and efficiency of use of the main production three seas economic journal 124 vol. 1, no. 1, 2020 facilities; intensification of loading and unloading works by means of improvement of organization and technology of transshipment; optimization of energy use by way of introduction of energy saving technologies and usage of unconventional energy sources; assurance of safety of seafaring in the port aquatic area and its vicinity; raising efficiency of use of labour resources; assurance of environmental safety of the transshipment process. the abovementioned problems require a search for new forms of integration of financial, industrial, and intellectual capital with the aim of development of material environmental and competitive advantages of the functioning of the ukrainian maritime economic complex. the international practice shows that clusters presupposing informal voluntary association of enterprises and organizations (producing goods and services and operating on a certain territory) have a great potential in relation to raising the competitiveness of national economic entities on both internal and external markets. the principal objectives of the cluster include optimization of the process of use of the region’s and industry’s available economic potential. a case in point of cluster development is the european union countries where clusters in the marine sphere have been in existence for many years. in november 2005, the european network of maritime clusters (enmc) was created in paris. the european network of maritime clusters is a confederation of clusters or equivalent structures. it has to be understood as a best practices dissemination and exchange platform through the website, informal talks, and an annual summit during which each country gives a brief presentation of the economic situation of its maritime sector and the recent actions of its national organization. the aim is to establish a framework for future common targeted actions. all of the member organizations are, or tend to be, cross-industry organizations gathering all or a part of the maritime subsectors of their countries. the type of each national cluster varies, with some being almost state-controlled or purely private-owned or being an intermediate mix. some clusters include inland navigation and or logistics sectors, port industries, coastal tourism, insurance, and finance in their scope; others do not (enmc website). at present, clusters as a form of organization of interaction between different sectors of maritime industry are becoming more and more wide-spread. but, unfortunately, environmental infrastructural elements and objectives are absent in the philosophy of formation of international maritime clusters. therefore, with the aim of implementation of the sustainable development paradigm into maritime economic activity in general and industrial port operations in particular, we suggest the building of maritime environmental clusters within ukraine. to generalize the international experience, we should note that the following definition is the most relevant to the present-day requirements of economic activities: maritime environmental cluster is a territorial and sectoral voluntary informal association of enterprises and organizations of port operations and related maritime economic industries, which closely cooperate in the process of realization of regional strategy of sustainable development of maritime economic complex with scientific, educational, financial, consulting, and other economic structures, as well as local government agencies with the aim of raising the environmental level of quality of economic operations and competitiveness of all the participants of the association and economic growth of the coastal region. in the authors’ opinion, the environmental maritime clusters that are offered to be built in the coastal area of ukraine should include environmental infrastructural objects of the industrial port sphere; mineral mining sector; dredging, development of sea hydrocarbon resources; sea recreational activities; burial of waste and dredging waste; as well as financial and scientific-educational institutions whose activities are aimed at environmentalization of maritime economic activities. 4. conclusions within the framework of the conducted research, it was proven that the further sustainable development of separate industries and markets of ukraine is first of all related to the formation of the institutional environment. in the conditions of unstable social-economic and environmental situation in the state, research of institutional risks and “traps” will be gaining a special importance. the definition of an institutional risk presupposes that emergence of an institutional trap is not a unique phenomenon for separate economic systems. it has a relatively stable set of risks that come into play automatically in case of disturbance of the balance of growing costs threats prevention for economic agents (transactional and transformational) three seas economic journal 125 vol. 1, no. 1, 2020 regarding maintenance of certain property rights transfer and exchange institutions in the market. these risks are as follows: total hostility; limited perspective; unpredictable result. secondly, the course of post-crisis restoration in ukraine bears signs of development of the institutional crisis in all domains of public life, in particular, in public administration, as a result of the longterm accumulation of institutional traps in the country’s economic system. and, thirdly, removal or prevention of any institutional trap, as well as unblocking of an institutional crisis in ukraine is possible as a result of institutional reforms based on prediction and modelling of economic agents’ behaviour. the author of the article proves that formation of an institutional system of port industrial areas integrated management in ukraine needs to be organically interconnected: with the structural reorganization of ukraine aimed at raising the social-economic and economic-environmental efficiency of use of the black sea natural resources of high priority for ukraine; with reformation of the entire system of public administration and local self-government based on integration of efforts of the state and regional government agencies, entrepreneurs, non-governmental organizations, and population. the following are the most important issues of formation of an efficient institutional system of sustainable development of the facilities used for economic activities in maritime coastal areas of ukrainian black sea region: scientifically grounded organization of relations between territorial and sectoral subjects of environmental management that function within objects of maritime coastal areas (seaside territories – industrial port areas) with the aim of subsequent entry into the european maritime cluster; formation of special institutes and regulatory framework for economic operations in the coastal area of the black and azov seas, which should be based on new legislative acts of ukraine, which have to be developed within relatively short terms; development and realization of the main directions of formation of the national maritime policy taking into account the priority of the environmental factor and creation of the system of integrated management of the ukrainian sector of the black sea coastal area, which would promote establishment of ukraine as a maritime state, strengthening of its state independence, improvement of its international authority and affirmation of the ability of ukraine to comprehensively resolve important socialeconomic and economical-environmental issues. references: brennan, j., & buchanan, j. 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(in ukrainian) enmc website (2017). european network of marine clusters. retrieved from: http://enmc.eu/who-we-are three seas economic journal 1 vol. 3 no. 4, 2022 1 ivan franko national university of lviv, ukraine (corresponding author) e-mail: oleksandra.belz@lnu.edu.ua orcid: https://orcid.org/0000-0001-7462-8501 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-1 use of schema.org micro-markup in e-commerce projects olexandra belz1 abstract. the purpose of the article is to identify the most effective schema.org micro-markup schemes used in e-commerce projects. methodology. the research included competitive intelligence among the leading online platforms operating in europe in general and in ukraine in particular. the study involved top-8 e-commerce projects in ukraine and top-9 global cross-border marketplaces operating in europe. the service validator. schema.org was chosen as the research tool. results. the study showed that the most popular schema.org micro markup format is json-ld. in general, 82.4% of the surveyed sites use json-ld microdata format. some sites use two microdata formats: json-ld and microdata. but none of the top online marketplaces use the rdfa micromarkup format. popular marketplaces operating in ukraine and europe often use the same types of schema. org vocabulary. however, the frequency of using micro-markup by top marketplaces operating in ukraine is much higher than the frequency of using micro-markup by top marketplaces operating in europe. in addition, ukrainian marketplaces use a much wider list of schema.org micro-markup properties than marketplaces operating in europe. however, no online store has implemented the properties of advantages and disadvantages of goods recommended by google in the scheme. practical implications. the study suggests schema.org micro-markup schemes for homepage, category page, product page, about page, payment and delivery page, warranty and returns page, contact page and blog. the proposed templates of micro-markup schemes were validated using the validator.schema.org service. the study recommends using the json-ld format for semantic markup of website content. value/originality. implementation of effective semantic markup of site content will allow search engines to more accurately identify the information presented on the site. this, in turn, will improve the visibility of the online marketplace in the search engine results page of google, bing, yahoo! etc. key words: e-commerce, online marketplaces, schema.org, semantic markup of site content, seo, micro-markup of site content, formats json-ld, microdata and rdfa. jel classification: o32, f23, c80 1. introduction today the communication environment of the internet creates new opportunities for business development. promotion of business in the internet is a necessary condition for ensuring the competitive position of the company. the most popular platform for doing business on the internet is a website. however, it is not enough to have a website to run a business. the website must be visible to potential customers. for this purpose, various measures are implemented to promote the site: seo-optimization; contextual advertising; google shopping; dynamic and classic remarketing; targeted advertising; smm-marketing; e-mail marketing, etc. an integral part of successful seo optimization is the use of web page markup data. his allows search engines to more accurately identify the information presented on the site. in addition, competent markup expands the snippet – a short description of a web resource or its individual page. rich snippet looks more informative and attractive, increases the relevance of the page and its ctr (click-through rate). the most popular markup to web pages supported by many search engines, including bing, google and yahoo!, is the schema.org. this micromarkup was developed in 2011. it involves the use of so-called "schemas". schemas are a set of types, each of which is associated with a set of three seas economic journal 2 vol. 3 no. 4, 2022 properties. the types are arranged in a hierarchy. the vocabulary currently consists of 797 types, 1457 properties, 14 datatypes, 86 enumerations and 462 enumeration members (schema.org, 2022). additionally, there are currently three schema.org micro-markup formats: microdata, rdfa, and json-ld. that is why website developers have to decide which web page markup schemes to use. the issue of using schema.org micro-markup has received much attention in scientific literature and practical projects. since 2008, the common crawl project has been crawling websites to collect web page data (extracting metadata and web page text). at the time of writing, the latest scan took place from november 26 to december 10, 2022. as a result of this scan, 3.35 billion web pages were processed and 420 petabytes of content were removed (common crawl, 2022). both scientists and practitioners are working with the obtained data sets of the common crawl project. on september 22, 2022, the web data commons (wdc) project released the schema.org table annotation benchmark (sotab) for public download (web data commons, 2022). sotab is based on data from schema.org and common crawl. sotab has two annotation tasks: column type annotation and column property annotation. the purpose of the column type annotation (cta) task is to annotate table columns with 91 schema.org types. the purpose of the columns property annotation (cpa) task is to annotate pairs of table columns with one of 176 schema.org properties. that is, sotab collects the most used types of web page markup with the most used properties describing them. the benchmark consists of 59,548 tables annotated for ctas and 48,379 tables annotated for cpas, originating from 74,215 different websites. scientists analyzed sotab data. the authors identify the top 19 most common types of schema.org. the study shows that only a small number of schema.org properties are widely used on the internet (bizer, primpeli, peeters, 2019). based on data from the common crawl project, researchers analyzed the popularity of data micromarkup formats and identified the most popular types of schema.org vocabulary (tonon, felder, difallah, cudre-mauroux, 2016; muhleisen, bizer, 2012). based on data from the common crawl and web data commons projects, researchers analyzed the best practices of using the product type of the schema.org vocabulary (selvam, kejriwal, 2020). the vision of extending schema.org micro-markup to describe the semantic profile of a corporate web resource is presented (zosimov, bulgakova, pozdeev, 2021). as can be seen from the above review, scientists and practitioners do not focus on the use of effective schema.org micro-markup schemes. the aim of the work is to identify the most effective schema.org micro-markup schemes used in e-commerce projects. the research toolkit is the validator.schema.org service. the search for effective schema.org micromarkup schemes will be conducted by analyzing the most successful e-commerce projects. the following were selected for the study: 1. top 8 by attendance of e-commerce projects of ukraine: rozetka.com.ua; olx.ua; prom.ua; epicentrk.ua; tabletki.ua; allo.ua; comfy.ua and ria.com (krotovskaia, 2022). 2. top 9 global cross-border marketplaces operating in europe, namely: amazon.com; aliexpress.com; ebay.com; etsy.com; discogs. com; vinted.com; bandcamp.com; ubereats.com; zalando.com (cross-border commerce europe, 2022). 2. the schema.org micro-markup format in the studied projects the most popular schema.org micro-markup format is json-ld. in general, 82.4% of the studied sites use this microdata format. however, the study found that not all website developers follow the recommendations for using this format. only sites rozetka.com.ua, olx.ua, comfy.ua, etsy.com and discogs.com have json-ld code in the <head> section. marketplaces prom.ua, epicentrk.ua, tabletki.ua, allo.ua, amazon.com, aliexpress.com, ebay.com, ubereats.com and zalando.com place json-ld code in the <body> section or after the <body> section. this practice violates the validity of the program codes of sites. this has a negative impact on search engine optimization in general. some sites (rozetka.com.ua, epicentrk.ua, allo.ua, comfy.ua, ria.com and ebay.com) use two microdata formats: json-ld and microdata. marketplaces ria.com, vinted.com and bandcamp.com use only microdata format. 57.1% of the surveyed sites use microdata format. three seas economic journal 3 vol. 3 no. 4, 2022 none of the top online marketplaces use the rdfa micro-markup format. search engines also do not recommend using this format for semantic markup of website content. 3. popular schema.org microdata types in top e-commerce projects top-8 ukrainian online marketplaces use twenty-nine types of schema.org micro-markup to form extended snippets. top-9 european online marketplaces use twenty-eight types of schema.org micro-markup. however, there are only twenty-one common types, namely: aggregateoffer, aggregaterating, answer, brand, breadcrumblist, faqpage, imageobject, itemlist, listitem, offer, organization, person, place, postaladdress, product, question, rating, review, searchaction, website and webpage. popular online marketplaces operating in ukraine and europe most often use the same types of schema.org vocabulary (table 1 and table 2). however, the frequency of using micromarkup by top marketplaces operating in ukraine is significantly higher than the frequency of using micro-markup by top marketplaces operating in europe. top online marketplaces operating in ukraine, on average, use 1.6 types of schema.org micromarkup on the homepage, 5.9 types on the category page, 7.1 types on the product page, 2.1 types on the about page, on the payment & delivery page – 2.3 types, on the guarantees & returns page – 1.4 types, on the contact page – 1.6 types, on the blog – 1.3 types. the top online marketplaces operating in europe use an average of 1.8 types of schema.org micro-markup on the homepage, 2.0 types on the category page, 2.9 types on the product page, and 0.8 types on the about page, on the payment & delivery page – 0.2 types, on the guarantees & returns table 1 schema.org micro-markup types that are most often used by the top 8 ukrainian online marketplaces type of micro-markup percentage of online marketplaces that use micro-markup on a web page homepage category page product page about page payment & delivery page warranty and returns page contact page blog aggregaterating 0.0 0.0 50.0 0.0 0.0 0.0 0.0 0.0 breadcrumblist 0.0 100.0 87.5 25.0 50.0 37.5 50.0 25.0 listitem 0.0 100.0 87.5 25.0 50.0 37.5 50.0 25.0 offer 0.0 50.0 75.0 0.0 0.0 0.0 0.0 0.0 organization 37.5 50.0 62.5 37.5 12.5 12.5 12.5 12.5 person 0.0 0.0 37.5 0.0 0.0 0.0 0.0 0.0 product 0.0 37.5 87.5 0.0 0.0 0.0 0.0 0.0 searchaction 50.0 37.5 25.0 25.0 12.5 0.0 12.5 12.5 website 50.0 25.0 25.0 25.0 12.5 0.0 12.5 12.5 source: compiled by the author based on competitive intelligence of online marketplaces operating in ukraine (service validator.schema.org , 2022) table 2 schema.org micro-markup types most often used by top 9 online marketplaces operating in europe type of micro-markup percentage of online marketplaces that use micro-markup on a web page homepage category page product page about page payment & delivery page warranty and returns page contact page blog aggregaterating 0.0 0.0 33.3 0.0 0.0 0.0 0.0 0.0 brand 0.0 0.0 44.4 0.0 0.0 0.0 0.0 0.0 breadcrumblist 0.0 33.3 11.1 0.0 11.1 0.0 0.0 0.0 listitem 0.0 33.3 11.1 0.0 11.1 0.0 0.0 0.0 offer 0.0 11.1 44.4 0.0 0.0 0.0 0.0 0.0 product 0.0 11.1 55.6 0.0 0.0 0.0 0.0 0.0 searchaction 44.4 0.0 0.0 11.1 0.0 0.0 0.0 0.0 website 55.6 11.1 11.1 33.3 0.0 0.0 11.1 11.1 source: compiled by the author based on competitive intelligence of online marketplaces operating in europe (service validator.schema.org , 2022) three seas economic journal 4 vol. 3 no. 4, 2022 page – 0.0 types, on the contact page – 0.1 types, on the blog – 0.3 types. in addition, ukrainian marketplaces use a much wider list of schema. org micro-markup properties than marketplaces operating in europe. however, not a single online store has implemented the properties of advantages and disadvantages of goods recommended by google in the micro-markup schemes (google search central, 2022). 4. recommended micro-markup schemes for use in e-commerce projects analyzed the experience of using schema.org micro-markup by popular online marketplaces and analyzed the recommendations of micromarkup developers (schema.org, 2022 & google search central, 2022). therefore, the author recommends using the json-ld format for semantic markup of site content. also for e-commerce projects, the author has developed recommended micro-markup templates for the main types of pages of the site. recommended micro-markup schemes for the homepage: 1. organization: <script t y p e = " a p p l i c a t i o n / l d + j s o n " > { " @ c o n t e x t":" http://schema.org ","@type":"organization", "brand":"my-website", "logo":"https://my-website. com.ua/icons/icon.svg","name":"my-website", "a l te r n a te na m e " : " m y-w e b s i t e " ,"s a m e a s " : [" https://w w w.facebook .com/my website.ua", " https://tw itter.com/mywebsite_ua"," https:// w w w.yo u t u b e.co m / c han n e l / u cr 7 r 1 z 7 9 t yfqs2iperr47a"," https://www.instagram.com/ my w e b s i t e u a / " ," h t t p s : / / t . m e / my w e b s i t e " ] , " u r l " : " h tt p s : / / myw eb s i te.c o m .u a / " ,"d e pa r t m e n t " : { " @ c o n t e x t " : " h t t p : / / s c h e m a . o r g " , "@type":"organization", "image":"https://my website.com.ua/assets/icons/icon.svg","telephone": ["+38 (032) 000-00-00","+38 (032) 111-11-11","+38 (032) 222-22-22"],"name":"name-my-shop","email": " i n f o @ m y w e b s i t e . c o m . u a" , " a d d r e s s " : { " @ type":"postaladdress", "addresslocality ":"my-city ", "streetaddress":"my-street-address"}}}</script> 2. website: <script t y pe="application/ld+json">{"@contex t ": "http://schema.org", "@type": " website", "url": "http://my-website.ua", "potentialaction": {"@type": "searchaction", "target": " http://my-website.ua/search?search_term={search_term}", "query-input": "required name=search_term"}}</script> 3. faqpage: <script t y pe="application/ld+json">{"@contex t ": " h t t p s : / / s c h e m a . o r g / " , " @ t y p e " : " faqpage","mainentity ":[{"@ty pe":"ques tion","name":"my-question 1","acceptedanswer ":{"@type":"answer ","text":"my-answer 1"}},{"@type":"question","name":"my-question 2","acceptedanswer":{"@type":"answer", "text":"my-answer 2"}}]}</script> recommended micro-markup schemes for the category page: 1. organization, faqpage – similar to the corresponding schemes of the homepage. 2. action: <script t y pe="application/ld+json">{"@contex t ": " h t t p : / / s c h e m a . o r g " , " @ t y p e " : "a c t i o n" , "potentialaction":{"@type":"searchaction", " t a r g e t " : " h tt p s : \ / \ / my w e b s i te.c o m .u a \ /search\/?text={search_term_string}","query input":"required name=search_term_string"}} </script> 3. breadcrumblist: <script type="application/ld+json">{"@context":"http://schema.org", "@type":"breadcrumblist", "itemlistelement": [{"@type": " l i s t i t e m " , " p o s i t i o n " : 1 , " i t e m " : { " @ i d " : "https://my-website.com.ua", "name":"namemy-shop"}}, {"@type":"listitem","position":2, "item":{"@id":" https://my-website.com.ua/" ,"name":"my-category "}}]}</script> 4. product (if a line of products of the same type is sold on the site): <script type="application/ld+json"> {"@context": " https://schema.org/","@ty pe":"product ", "name":"name-product ","offers":{"@ty pe": "a ggregateof fer ","pricecurrenc y ":" uah ", " lowprice":"4.44"," highprice":"9.99","offercount":3,"availability ":"instock"}} </script> 5. webpage: <script t y pe="application/ld+json">{"@contex t ": " htt p://schema .org ","@t y pe":" webpage", "name":"my-title","description":"my-description","url":" http://my-website.ua/my-page"} </script> recommended micro-markup schemes for the product page: three seas economic journal 5 vol. 3 no. 4, 2022 1. organization, faqpage – similar to the corresponding schemes of the homepage. 2. action, breadcrumblist, webpage – similar to the corresponding schemes of the category page. 3. product: <script t y pe="application/ld+json">{"@contex t ": "http://schema.org","@type":"product","sku": " 0 0 0 0 0 0 0 0 0 " ," u r l " : " h t t p s : / / my w e b s i te. com.ua/product1","name":"name-product 1", " i m a g e " : [ " h t t p s : / / m y w e b s i t e . c o m .u a / g o o d s / i m a g e s / p r o d u c t 1 . j p g " , " h t t p s : / / myweb s i te.co m.u a / go o d s / i mages / p ro duct2.jpg"],"description":"description-pro duct 1"," itemcondition":" htt ps://schema .org/ new condition","of fers":{"@t y pe":"of fer ", "availability ":" http://schema.org/instock", "url":" https://my-site.com.ua/product1","pr ice":"999.99","pr icecurrenc y ":" uah ","pricevaliduntil":"2023-11-16t17:52:22"}, " b r a n d " : { " @ t y p e " : " b r a n d " ," n a m e " : " my b r a n d " , " u r l " : " h t t p s : / / m y s i t e . c o m . u a / producer/brand1/"},"rev iew ":[{"@t y pe": " r e v i e w " , "a u t h o r " : { " @ t y p e " : " pe r s o n" , "name":"name-author 1"},"datepublished": "2022.12.01","description":"my-description 1","positivenotes":{"@type":"itemlist","itemlistelement":[{"@type": "listitem","position":1, "name":"positive 1"},{"@type":"listitem", "position":2,"name":"positive 2"}]},"negative notes":{"@type":"itemlist","itemlistelement": [{"@t y pe":" listitem","position":1,"name": "negative 1"},{"@type":"listitem","position":2, "name":"negative 2"}]}},{"@type":"review", " a u t h o r " : { " @ t y p e " : " p e r s o n " , " n a m e " : "name-author 2"},"datepublished":"2022.10.30", "description":"my-description 2"}],"aggregaterating":{"@type":"aggregaterating","ratingvalue":4.7,"ratingcount":12," bestr ating ":5, "worstrating":1}}</script> recommended micro-markup schemes for the about page, the payment & delivery page, the warranty & returns page, the contact page: 1. organization, faqpage – similar to the corresponding schemes of the homepage. 2. action, breadcrumblist, webpage – similar to the corresponding schemes of the category page. recommended micro-markup schemes for the blog: 1. organization, faqpage – similar to the corresponding schemes of the homepage. 2. action, breadcrumblist, webpage – similar to the corresponding schemes of the category page. 3. blog: <script t y pe="application/ld+json">{"@contex t ": "https://schema.org/","@type":"blog","@id": " h t t p s : / / m y w e b s i t e . c o m . u a / b l o g / " , "mainentit y of page":" https://my-website. com.ua/blog ","name":" my-title","descr ip t i o n" : " my -d a s c r i p t i o n" ," p u b l i s h e r " : { " @ t y p e" : "o rgan i z at i o n" ," @ i d " : " htt p s : / / my website.com.ua","name":"name-myshop", " logo":" https://my-website.com.ua/icons/ icon.svg"}}</script> 4. blogposting: <script t y pe="application/ld+json">{"@contex t ": " https://schema.org/","@ty pe":"blogposting","mainentityof page":"https://my-website. com.ua/blog/my-post","name":"my-post-tit l e" ,"d esc r i p t i o n" : " my-po st-desc r i p t i o n" , "datepubli shed ":"2022-01-14","datemodified":"2022-12-14","author ":{"@ty pe":"perso n" ," @ i d " : " htt p s : / / myweb s i te.co m.u a / a u t h o r / m y n a m e " , " n a m e " : " my na m e " } , " i m age " : { " @ t y p e " : " im age o b j e c t " ," @ i d " : "https://my-website.com.ua/image/image.jpg", "url ":" https://my-website.com.ua/image/ image.jpg"},"url":"https://my-website.com.ua/ blog/my-post"}</script> the proposed micro-markup schema templates were validated using the validator.schema.org service. the validation result is as follows: zero errors and zero warnings. 5. conclusions in this work, a competitive intelligence of the top online stores operating in the ukrainian and european markets was conducted in order to use schema.org micro-markup. in the process of work, the shortcomings of using the schema. org micro-markup scheme by top online stores were revealed. it was also found that ukrainian online marketplaces use more informative schema markup schemes. based on the results of the work, templates to schema.org micro-markup schemes are proposed for the homepage, the category page, the product page, the about page, the payment & delivery page, the warranty & returns page, the contact page and blog. three seas economic journal 6 vol. 3 no. 4, 2022 since the schema.org dictionary is dynamically updated, seo specialists need to follow the recommendations of search engines regarding the use of micro-markup and, if necessary, make changes to the program code of the site pages. references: bizer, c., primpeli, a., & peeters, r . (2019, april 12). using the semantic web as a source of training data. available at: http://www.webdatacommons.org/largescaleproductcorpus/papers/bizer2019_ article_usingthesemanticwebasasourceof.pdf common crawl (2022, november/december). november/december 2022 crawl archive now available. available at: https://commoncrawl.org/2022/12/nov-dec-2022-crawl-archive-now-available cross-border commerce europe (2022). top 100 marketplaces in europe: annual ranking 2022. available at: https://www.cbcommerce.eu/press-releases/top-100-marketplaces-in-europe-annualranking-2022-out-now google search central (2022). product (product, review, offer) structured data. available at: https://developers.google.com/search/docs/appearance/structured-data/product google search central (2022, august 5). new in structured data: pros and cons. available at: https://developers.google.com/search/blog/2022/08/pros-and-cons-structured-data krotovskaia, o. (2022, august 15). ukraintsi pochaly chastishe tsikavytysia tsinamy na haz i dyvytysia filmy: top-25 saitiv za lypen 2022 roku [ukrainians became more interested in gas prices and watching movies: top 25 sites for july 2022]. available at: https://thepage.ua/ua/news/top-25najpopulyarnishih-sajtiv-v-ukrayini-za-lipen-2022-roku (in ukrainian) muhleisen, h., & bizer, c. (2012). web data commons – extracting structured data from two large web corpora. www2012 workshop: linked data on the web (ldow2012). lyon, france, 16 april, 2012. available at: https://ceur-ws.org/vol-937/ldow2012-inv-paper-2.pdf schema.org (2022). full hierarchy. available at: https://schema.org/docs/full.htm schema.org (2022). organization of schemas. available at: https://schema.org/docs/schemas.html selvam, r . k., & kejriwal, m. (2020, july 27). on using product-specific schema.org from web data commons: an empirical set of best practices. kdd ’20, august, 2020, san diego, california. available at: https://arxiv.org/pdf/2007.13829.pdf tonon, a., felder, v., difallah, d. e., & cudre-mauroux, p. (2016). voldemortkg: mapping schema.org and web entities to linked open data. in iswc. springer international publishing , 2016. available at: https://exascale.info/assets/pdf/voldemort.pdf web data commons (2022, september 22). web data commons – schema.org table annotation benchmark. available at: http://webdatacommons.org/structureddata/sotab zosimov, v., bulgakova, o., & pozdeev, v. (2021). semantic profile of corporate web resources. selected papers of the viii international scientific conference ‘information technology and implementation’ (it&i-2021). workshop proceedings. kyiv, ukraine, december 1-3, 2021, 389–397. available at: https://ceur-ws.org/vol-3179/short_13.pdf received on: 2th of november, 2022 accepted on: 10th of december, 2022 published on: 30th of december, 2022 three seas economic journal 145 vol. 3 no. 1, 2022 corresponding author: 1 kyiv national university of technologies and design, ukraine e-mail: oleksii.petrivskyi@gmail.com orcid: https://orcid.org/0000-0002-9466-9324 2 kyiv national economic university named after vadym hetman, ukraine e-mail: annamgmn18@gmail.com orcid: https://orcid.org/0000-0002-5470-704x doi: https://doi.org/10.30525/2661-5150/2022-1-21 financial inclusion as a factor in the transformation of financial markets in the context of sustainable development oleksii petrivskyi1, hanna medvid2 abstract. the article discusses the concept of financial inclusion and its factors. the relationship between the level of financial awareness of the population and the level of its financial well-being was investigated. the priority directions of the strategy for the development of financial inclusion and financial intermediation, contributing to the achievement of sustainable development goals, are determined. methodology. the percentage of non-cash transactions with payment cards in ukraine was calculated, the dynamics of the number of holders of plastic cards was analyzed, and the financial literacy of ukrainians was studied. results. the results of the study showed that financial inclusion has a direct impact on economic development, as well as on the reduction of poverty and inequality and the achievement of the un sustainable development goals. practical implications. inclusive growth expands traditional models of economic growth by focusing on living standards and quality of life, environmental quality, social protection, financial literacy, access to financial services, and financial opportunities for citizens. value/originality. the experience of developed countries in the context of financial literacy is compared and the directions of increasing the level of financial accessibility in ukraine are proposed. key words: financial inclusion, financial services, financial literacy, cashless economy, sustainable development. jel classification: g2, g52, q01, q56 1. introduction financial inclusion is fundamental to both poverty reduction and economic growth. access to digital financial services is crucial to entering the new digital economy. attention should be paid to the concept of sustainable development, focusing not only on the environmental aspects but also on the green economy. in addition, sustainable development is the basis for economic growth and meeting the needs of the present generation, but it does not threaten the ability of future generations to meet their own needs, so it aims to preserve the connection between generations. first, sustainable development means human dignity, social inclusion, and environmental protection; it is a future in which economic growth does not exacerbate inequality but ensures economic prosperity for all, where the environment and labor markets are for all their rights and opportunities, and economic activity is environmentally sound (unesco, 2016). the following scholars have researched financial inclusion in the context of sustainable development: m. miroshnyk, i. didenko, i. avanesova, d. klymenko, i. bobukh, s. shchegel, o. solodovnik, o. popova, l. dudynets, v. starostina, n. radchenko and others. based on the analysis of scientific papers, it should be noted that the development of banking services is seen primarily in the context of sustainable development, that is, improving the welfare of citizens, increasing consumer protection and financial literacy, which will contribute to the inclusive economic development of ukraine. according to o. sokhatska and s. kyrylenko, "financial inclusion is the process of providing timely and full access to a wide range of financial products and services, spreading their use among all segments of society through the implementation of existing innovative approaches, including financial awareness and education to promote both financial well-being and economic and social integration, regardless of income and place of residence" (sokhacjka, kyrylenko, 2019). d. klymenko considers that financial inclusion is a process of encouraging as many subjects (especially this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 146 vol. 3 no. 1, 2022 citizens) as possible to participate in economic activities (klymenko, 2020). studies in kenya have shown that m-pesa has helped lift nearly 200,000 people out of extreme poverty. increased economic activity will a priori promote economic growth. a growing body of research shows many potential benefits of developing financial inclusion, especially from digital financial services, including mobile money services, payment cards, and the development of fintech. financial inclusion helps achieve the goal of sustainable development, which is poverty reduction, by giving poor people access to financial services, developing their businesses, and increasing financial literacy among citizens (tavneet suri and william jack, 2016). thus, financial inclusion has not only an economic but also a significant social orientation, which puts its improvement in the center of strategies of both national financial regulators and a large number of international organizations. financial inclusion helps different segments of the population to make daily payments without risk, allows them to access credit and improve their financial situation. this saves money and improves access to insurance products and credit, which can be critical in solving both household and small business problems. 2. impact of financial services on the level of financial inclusion new technologies and fintech innovations have certainly shown their effectiveness as a gas pedal of global financial inclusion, but it is impossible to create a one-size-fits-all solution. the internet provides financial services to most customers, removing geographical and time barriers, so now the main task is to improve financial literacy, creating products and services simple enough to use, creating the appropriate infrastructure for financial services. the following factors have an impact on access to financial services and, accordingly, on the level of financial inclusion: – accessibility of financial services. most commercial banks open branches only in economically justified locations, so people in rural and remote areas have difficult access to financial services; – financial literacy. some categories of the population do not understand financial products and have little understanding of the basic principles of the financial market; – a significant factor is the income level of the population. people's financial capabilities always play a key role in accessing financial services, even if these services are intended for a low-income group. financial inclusion is closely tied to financial literacy. without proper financial literacy, a person cannot fully utilize the potential of financial services. the concept of inclusive development implies that every economic entity is unique, important and valuable to society and has the ability to meet its needs. international financial organizations and local financial market regulators stress the importance of financial inclusion. the national bank of ukraine has also recently focused on this area, as financial inclusion is important for the development of the financial ecosystem and economic growth, and is therefore working to ensure that financial services reach as wide a population as possible, particularly micro-businesses, lowincome rural residents, people with disabilities and older people. citizens and even financial institutions are not always fully aware of the benefits of digital finance. the reason is that digital finance is constantly changing, improving, and not always all categories of citizens are able to make the first transaction of the new type without appropriate explanations and training. 3. the experience of developed countries in the context of improving financial literacy the experience of developed countries in the process of improving financial literacy demonstrates various forms of state participation in addressing this issue. in particular, the state can coordinate the activities of entities implementing information and educational programs, ensuring the functioning of unified information databases and information distribution channels, it can also finance the implementation of relevant educational programs. today, nearly a third of the world's population does not have access to basic banking services, which is why leading international organizations set financial inclusion as one of their priority goals. the most common reasons for financial exclusion are low income, lack of need for accounts, high cost of financial services, remote financial institutions and inability to serve remotely, lack of trust in the financial system, lack of documentation, and religious beliefs (the world bank group, 2017). the level of financial literacy and financial inclusion varies significantly from country to country. there are different methods, tools and forms of communication in the financial education system, which are deter mined by the national specifics of the country where financial literacy programs are implemented. for proper systematic work to improve financial literacy, young people between the ages of 10 and 24 (generation z and generation alpha) should be considered as the main target audience. it is young people who can become agents of change by teaching their friends, parents and grandparents the financial knowledge and skills citizens need to make informed three seas economic journal 147 vol. 3 no. 1, 2022 decisions and take adequate responsibility for their financial behavior. according to mastercard digitalization trust survey 2019, ukrainians are extremely open to innovation, outperforming many european countries: 87% of ukrainians prefer to pay by smartphone, 58% of citizens use payment apps, one of the highest rates in europe. but this figure refers to financially engaged citizens, while the level of financial inclusion is among the lowest in europe (mastercard, 2019). the experience of managing one's own finances in ukraine is a soviet legacy of an extremely primitive financial system that required virtually no financial decision-making because individual decisions were not encouraged in such a system. everything was clear: wages in cash, one savings bank, and the state would take care of pensions. with the transition to the market system, reality changed, but financial literacy remained at the same level. with the emergence of commercial financial institutions, credit for the purchase of goods became available, the offer of deposits at different interest rates expanded, and finally, previously unknown atms and cards appeared. a loan at 5% is more profitable than at 15%, a deposit at 20% is more profitable than at 15%. at the same time, few worried about risk assessment – for example, a loan at a lower rate could be in a foreign currency, and a deposit at a high rate – in an unreliable bank, and so on. the study of financial behavior of the population of ukraine shows the primitive structure of citizens' budgets, even despite the emergence of new forms and ways of investing personal savings. more than 70 years of the country 's development under the socialist economic model and ideology practically erased for the majority of citizens the idea of simple financial products and services. the country 's transition to a market economy showed the absolute inability of the population to make the right financial decisions. financial illiteracy has a negative impact not only on personal well-being, but also on the financial sector as a whole. for example, due to improper planning or lack of a clear understanding of their income and expenses, citizens have debts and more often become victims of fraudulent schemes. when such things become widespread, it can lead to a financial crisis in the country 's economy. ukrainians know little about their financial abilities, their rights and obligations, most are not ready to use almost anything new, except the basic and necessary functions, they are lazy to study the terms or make calculations, as a result they often get into unpleasant stories with additional commissions, additional overpayments on loans and so on, which leads to disappointment in the financial system and forms the belief that banks exist only to fool the citizens and make money on them. 4. methodological study of the level of financial inclusion recently the national bank of ukraine has become quite active in improving the financial literacy of the population, but for a significant change in the situation requires years of active work in this direction. the connection between the level of financial awareness of the population and the level of its financial wellbeing is obvious – the financial well-being of a family depends on active savings, proper investment and prudent use of credit instruments. the more active the population of the country uses financial services, the higher the level of welfare of citizens and their quality of life, which ultimately has a positive impact on national security. 37% of ukrainians in 2017 were outside the financial system, meaning they did not have a single bank account (the world bank group, 2017). nevertheless, significant progress has been made in recent years. according to a june 2019 usaid study, ukraine's financial literacy index is 11.6 out of a possible 21. ukraine's index is at its lowest level. questions included understanding the nature of rates and inflation, preference for spending versus saving, planning, getting advice, using financial products, and so on (the world bank group, 2017). one of the possible solutions to the problem of low level of financial inclusion is financial education, which allows consumers of financial products and services to make more informed and rational decisions. the overall effect of each citizen's well-considered and competent financial decisions on the country 's economy should be considered in more detail. if economic agents are financially literate, the central bank can conduct monetary policy more effectively. real changes are made faster and better if they are understood, which means that the central bank can achieve its goals, such as maintaining price and exchange rate stability, more quickly. financial markets and their stability also depend on financial literacy: understanding the capabilities of financial products allows markets to operate more successfully and profitably, it reduces the threat of disruption to the entire financial system, because bad individual financial decisions do not become a disaster. prior to the global financial crisis, only a few countries were engaged in financial education of citizens. the results of people's lack of understanding of the consequences of their financial decisions were underestimated in many states, including ukraine. however, after 2008 it is difficult to name a single central bank that would ignore the issue of financial literacy. financial inclusion solves another very important issue for ukraine: taking the economy out of the shadows. ukraine has been trying to bring the economy out of the shadows for 30 years, but mostly three seas economic journal 148 vol. 3 no. 1, 2022 by coercive and prohibitive methods. at the same time, financial inclusion is a tool that will absolutely painlessly get from 1 to 3% of gdp, will make the population richer, more educated and more active. more than 92 billion us dollars as of the 3rd quarter of 2020, according to the national bank of ukraine are outside the financial system (proekt usaid "transformacija finansovogho sektoru", 2019). instead of fighting the shadow economy with methods that have proven ineffective over 30 years, it is better to create conditions in which people can get their savings out of their mattresses and put them into the system by buying securities, putting them into card, current or deposit accounts, etc. the number of active payment cards in ukraine is almost 35 million, or 82% of the population as of 2018 (bezghotivkovi operaciji, 2020). but the real level of banking services is much lower, especially in small towns and villages. according to the world bank, the share of the ukrainian population over 15 years old who have an account at a financial institution was 63% in 2017, but ukraine lags behind the global average (69%). and this is certainly the basis for deepening the penetration of financial services. the ability of consumers to easily access financial products and services is a major factor in financial inclusion. while in european countries more than 95% of retail payments and transfers are made through remote channels, domestic bank branches are still overloaded with cash transactions. in ukraine, the payment card infrastructure and the number of noncash transactions have increased dramatically in recent years. the achieved size of the payment card market in ukraine can further promote the use of payment cards mainly for non-cash payments (table 1). table 1 shows that in recent years the infrastructure of electronic payment cards in ukraine has been developing rapidly. ukrainian holders of payment cards are increasingly switching from cash withdrawals from atms to cashless payments for goods and services. one of the key challenges in the new cashless economy remains simply changing people's habit of paying only in cash. cash payments are quite closely linked to the shadow economy of the country. the high share of the shadow economy is one of the factors restraining the development of financial services in ukraine. representatives of the gray sector do not need bank accounts, as they work exclusively with cash. according to the ministry of economic development and trade, the level of shadow economy in ukraine in 2018 was at least 31% (payment card market in ukraine, 2018). increased financial inclusion will certainly contribute to the growth of the country 's gdp. for the state, the use of non-cash payments reduces the need for cash hryvnia, so there is no need to spend huge sums on printing paper money and minting metal. the economy becomes more transparent, and the system of social payments is simplified as much as possible. in figure 1 there is a graph with the dynamics of the number of plastic cardholders in ukraine for 2002–2019. during the analyzed period, there is a tendency of increase in the number of holders of electronic means table 1 volume and number of transactions with the use of electronic means of payment issued by ukrainian banks data for amount of transactions (million uah) number of operations (million units) cashless transactions сash receiving total cashless transactions сash receiving total 2002 1 163 18 885 20 048 6 68 74 2003 1 356 26 744 28 100 7 115 122 2004 3 418 60 341 63 759 12 226 238 2005 3 196 96 542 99 738 18 306 324 2006 5 049 147 597 152 646 31 428 459 2007 8 118 217 003 225 121 45 487 532 2008 16 980 355 438 372 418 67 567 634 2009 18 375 334 791 353 166 77 513 590 2010 29 463 421 189 450 652 121 571 692 2011 46 346 529 633 575 979 214 661 875 2012 91 583 649 897 741 480 348 725 1 073 2013 159 138 756 889 916 027 584 755 1 339 2014 255 194 763 841 1 019 035 879 693 1 573 2015 384 795 848 001 1 232 796 1 287 678 1 965 2016 571 275 1 038 985 1 610 260 1 775 738 2 513 2017 834 957 1 289 721 2 124 678 2 311 780 3 091 2018 1 297 429 1 579 092 2 876 521 3 073 842 3 915 1st quarter of 2019 395 453 400 873 796 326 906 206 1 112 source: built by the authors according to (cashless payment preference, 2021) three seas economic journal 149 vol. 3 no. 1, 2022 of payment, the highest indicator is in 2015, which is 51.549 thousand people. it should be noted that the popularity of non-cash payments contributes to the sustainable development of non-cash settlements with the use of payment cards in ukraine. it should be noted that the population of ukraine is increasingly preferring cashless payments. due to the pandemic and quarantine restrictions, the citizens of ukraine are increasingly switching to cashless payments and using e-commerce services more often. therefore, we calculated and compared the percentage of non-cash transactions from the total number of payment card transactions as of 2020 and the end of 2021. the results of calculating the percentage of non-cash transactions from the total number of transactions with payment cards (data for 2020–2021) show that cash transactions decreased by 3.3%, non-cash transactions with payment cards from the total number increased by 3.3%. in the context of the study of financial inclusion, it should be noted that the level of inclusion of the population of ukraine is quite low, and the population's neglect of financial innovation complicates the 3 214 5 696 10 525 15 735 21 831 29 414 35 723 37 232 39 395 39 942 35 179 44 339 49 719 51 649 43 058 41 746 41 721 42 304 42 644 0 10 000 20 000 30 000 40 000 50 000 60 000 figure 1. dynamics of the number of plastic cards holders in ukraine for 2002–2019 (holders of electronic means of payment, thousand person) source: built by the authors according to (cashless payment preference, 2021) cash transactions 13,6% cashless transactions 86,4% cash transactions 10,3% cashless transactions 89,7% figure 2. percentage of non-cash transactions of the total number of transactions with payment cards as of 2020 source: built by the authors on the basis of their own calculations figure 3. percentage of non-cash transactions of the total number of transactions with payment cards as of 2021 source: built by the authors on the basis of their own calculations three seas economic journal 150 vol. 3 no. 1, 2022 process of its increase. in order to start using financial products, the consumer must understand not only their practical value, but also enjoy their use. of course, to form an effective system of cashless payments in ukraine it is necessary to install more pos-terminals all over the country – from big cities to small towns or to launch mobile technologies – analogues of pos-terminals in smartphones. it is not enough for financial regulators and businesses to simply create technical conditions for the use of financial products and services, which ensures that citizens form access to the financial system, it is equally important to study the real needs of consumers and direct all efforts to meet them. the tasks of payment market participants in ukraine are to develop legislation in accordance with european standards, which will give an impetus to the competitive development of the market, whose participants will become more flexible and their services will be cheaper. the implementation of the national bank of ukraine's strategy for the financial inclusion program is aimed at the following directions (shadow economy in ukraine, 2020): – development of payment infrastructure by introducing remote identification of customers to receive financial services and transfer transactions into electronic channels, making payments using mobile devices, expanding the use of international and national payment systems, familiarizing the population with the benefits of cashless payments; – decrease in demand for cash – by increasing the level of the cost of obtaining cash and reducing the maximum amount of cash payments; – joint stock company "ukrposhta" together with certified banks should consider installing payment terminals in all post offices located in rural areas, which will increase the availability of banking services for local residents; – the ministry of social policy in agreement with the pension fund of ukraine and the relevant banks should gradually transfer all recipients of various social payments to non-cash forms of payment by issuing payment cards in the branches of one of the banks, which will increase banks' obligations and increase non-cash payments. it is important to coordinate such a transfer for each locality with a guarantee of cash receipt at any suitable nearest point. according to the strategy of the national bank of ukraine, innovations in the financial sector will cover a wide range of activities, including the development of a separate identification system bankid, creating a platform for crowdfunding and venture capital and regulatory sandboxes, the introduction of new technologies for payments and transfers, expanding access of financial market participants to public registries, the development of bigata, blockchain, cloud technology, etc. the strategy for developing financial inclusion should include the following key priorities: – creating the financial products and services that have value to customers, especially for groups outside the banking system; – formation of the sustainable business models and programs to deliver financial services to the poor citizens; – the favorable infrastructure development to enable people to connect to the financial services in the digital world; – the political environment promotion that supports and protects consumers. to increase the level of financial accessibility it is necessary to act in the following directions: to introduce new financial services in ukraine, to expand access to existing ones, in particular, to integrate financial services into urban infrastructure, such as transport, social projects and so on. the key condition for increasing the level of financial accessibility in ukraine is to create conditions for the maximum transfer of payments into non-cash form. ukraine needs a cashless economy because it plays an important role in increasing financial inclusion. first, non-cash payment is a reduction of the shadow economy, because it is much easier to track monetary transactions. cashless payments make the economy more transparent. second, the money stays in the system. this is also an important factor for the government, because customer account balances can be used by banks to lend to the economy. in addition, it is the speed of transactions. the cashless economy is effective not only in the consumer sector. it is also subsidies and pensions, payment of fines, taxes, etc. all of these transactions can be done much faster, with all the consequences of such transfers. among the products that will increase financial inclusion, credit can play an important role. of course, it is not about microfinance organizations that lend to the public at 700-1200% per annum, but in principle it is possible to develop an easy-to-use and affordable loan product, allowing, for example, to borrow a small amount of money for a certain period with a minimum interest in a few clicks by using a cell phone through bankid, cell phone number, social networks, biometric or any other identification. 5. conclusions a key objective of financial inclusion is to ensure equal access to markets, resources, and an impartial regulatory environment for different social groups, developing mechanisms to ensure productive employment, and overcoming poverty. the concept of inclusive growth extends traditional models of economic growth by focusing on equality three seas economic journal 151 vol. 3 no. 1, 2022 of human capital, standard of living and quality of life, environmental quality, social protection, financial literacy, access to financial services, and financial opportunities for citizens. from the point of view of the authors, the process of improving the level of financial inclusion in ukraine should take place in the following directions: – development and mass implementation of innovative financial technologies; – more efficient use of ukrposhta's resources and capabilities as the channel for delivery of financial products and services; – state initiative to transfer the payments to cashless; – set of activities to increase financial literacy and motivation of the population. in order to increase the financial inclusiveness of the population of ukraine, the process of bankid implementation was started, and since august 2020 the national bank of ukraine provided the possibility to withdraw cash through registrars of settlement transactions. these services, if actively implemented, will contribute to the dilution of the economy, the further development of the cashless segment and the growth of financial accessibility in general. financial inclusion helps create the conditions to attract all segments of the population to use a variety of financial services that are affordable, meet the needs of households, and are available to all segments of society regardless of income and location, which will contribute to the economic growth of the state and its regions, and reduce social inequalities. that is why financial inclusion plays a very important role in achieving the un's sustainable development goals and reducing poverty and inequality. references: unesco (2016). education for the benefit of the people and the planet: building a sustainable future for all. world education monitoring report. available at: https://unesdoc.unesco.org/ark:/ pf0000245752_rus sokhacjka, o. m., & kyrylenko, s. v. (2019). udoskonalennja bankivsjkogho obslughovuvannja v konteksti zabezpechennja finansovoji inkljuziji. finansy ukrajiny, no. 6, рр. 118–128. klymenko, d. b. (2020). finansovi inkljuziji u bankivsjkij praktyci. ekonomichnyj visnyk. serija: finansy, oblik, opodatkuvannja, (4), 34–42. doi: https://doi.org/10.33244/2617-5932.4.2020.34-42 tavneet suri and william jack (2016). the long-run poverty and gender impacts of mobile money. doi: https://doi.org/10.1126/science.aah5309 the world bank group (2017) / global findex. available at: https://globalfindex.worldbank.org/sites/ globalfindex/files/chapters/2017%20findex%20full%20report_chapter2.pdf mastercard / ukrajinci obyrajutj cyfrovi prystroji ta servisy dlja platezhiv: 87% nadajutj perevaghu oplatam smartfonom (2019). available at: https://newsroom.mastercard.com/eu/uk/press-releases/digitalization-trustsurvey/ the world bank group (2017) / ukraine. available at: https://datatopics.worldbank.org/g20fidata/country/ ukraine proekt usaid "transformacija finansovogho sektoru". finansova ghramotnistj, finansova inkljuzija ta finansovyj dobrobut v ukrajini (2019). available at: http://www.fst-ua.info/wp-content/uploads/2019/06/financialliteracy-survey-report_june2019_ua.pdf bezghotivkovi operaciji (2020) / nac. bank ukrajiny. available at: https://bank.gov.ua/ua/news/all/za-kilkistyuta-sumoyu-v-ukrayini-perevajayut-bezgotivkovi-operatsiyi cashless payment preference (2021) / nbu. available at: https://bank.gov.ua/ua/news/all/ukrayintsi-dedalibilshe-viddayut-perevagu-cashless-rozrahunkam payment card market in ukraine (2018) / statystychni dani / nac. bank ukrajiny. available at: https://old.bank.gov.ua/control/uk/publish/category?cat_id=79219&page=0 tinjova ekonomika v ukrajini (2020) / nac. bank ukrajiny. available at: https://bank.gov.ua/ua/news/all/ doslidjennya-tinovoyi-ekonomiki-v-ukrayini--mayje-chvert-vvp--abo-846-mlrd-griven--perebuvaye-v-tini strateghija rozvytku finansovogho sektoru ukrajiny do 2025 roku / nac. bank ukrajiny. available at: https://bank.gov.ua/ua/about/develop-strategy bobukh, i. n., & shheghelj, s. m. (2018). strateghichni orijentyry ekonomichnogho zrostannja v ukrajiny. inkljuzyvnistj jak kljuchovyj priorytet. visnyk nan ukrajiny, no. 7, рр. 55–70. blahun, i. (2020). bankivska systema ukrainy v umovakh turbulentnosti finansovoho rynku: teoriia, metodolohiia, praktyka [the banking system of ukraine in conditions of financial market turbulence: theory, methodology, practice]. ivano-frankivsk: vasyl stefanyk precarpathian national university vasyl stefanyk precarpathian national university, 364 p. (in ukrainian) lozynska, o. (2021). analiz tendentsii i perspektyv tsyfrovizatsii finansovoho rynku ukrainy [analysis of trends and prospects for digitalization of the financial market of ukraine]. in materialy mizhnarodnoi naukovopraktychnoi konferentsii "priorytety finansovo-ekonomichnoho upravlinnia" [proceedings of the international scientific and practical conference "priorities of financial and economic management"], pp. 63–67. odesa: skhidnoievropeiskyi tsentr naukovykh doslidzhen. (in ukrainian) three seas economic journal 152 vol. 3 no. 1, 2022 akimova, o. v. (2015). finansova inkljuzija ta inshi peredumovy rozvytku finansovogho monitorynghu v ukrajini. molodyi vchenyi, vol. 12(27), рр. 198–204. pakhnenko, o. m. (2017). analiz pidkhodiv do ocinjuvannja rivnja finansovoji inkljuzyvnosti. problemy i perspektyvy rozvytku finansovo-kredytnoji systemy ukrajiny: zbirnyk materialiv ii vseukrajinsjkoji naukovopraktychnoji konferenciji (23 lystopada 2017 r., m. sumy). sumy: sumsjkyj derzhavnyj universytet, рр. 170–174. the inclusive growth and development report 2017. world economic forum (geneva, 2017). available at: https://www.wefo-rum.org/reports/the-inclusive-growth-and-development-report-2017 serhiy frolov, volodymyr orlov, olha lozynska and fathi shukairi (2021). strategic and tactical benchmarks for restructuring the financial system of ukraine. economics of development, 20(1), 11–22. doi: https://doi.org/10.21511/ed.20(1).2021.02 three seas economic journal 60 vol. 3 no. 4, 2022 1 dnipro state agrarian and economic university, ukraine (corresponding author) e-mail: yasinskaya.dv@gmail.com orcid: https://orcid.org/0000-0001-8127-6065 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-9 ensuring the efficiency of managing the financial and economic security of the enterprise during the crisis daria yasynska1 abstract. the purpose of the article is to present effective anti-crisis management measures to bring enterprises out of the crisis situation and improve their financial and economic security. the subject of this study is the financial and economic security of an enterprise during a crisis. methodology. using the historical and comparative methods, the author analyzes the events of recent years and analyzes the impact of external factors on the formation of the crisis state of an enterprise. the economic and statistical method made it possible to analyze the scale of damage caused by the russian federation to the state of ukraine during almost nine years of active hostilities in violation of such principles of international law as the principle of non-use of force or threat of force; the principle of sovereign equality of states; the principle of equality and self determination of peoples; the principle of peaceful settlement of international disputes; the principle of noninterference in the internal affairs of states; the principle of peaceful cooperation; the principle of fulfilling international obligations in good faith; the principle of inviolability of borders; the principle of territorial integrity of states; the principle of universal respect and protection of human rights; and to see what level of crisis the terrorist state of the russian federation has spread in the largest country of the european union, namely ukraine. using the philosophical dialectical method, the author analyzes the very phenomenon of crisis in the broad sense of the word and finds a way to respond to the challenges of the crisis. results. this study assesses the benefits that have contributed to the development of economic relations with countries in africa, asia, and europe. the losses suffered by the ukrainian economic system due to the destructive processes of the crisis are analyzed. the author examines the peace formula approved by volodymyr zelenskyy, which provides for the implemen tation of measures aimed at shaping peace in the european space and correcting the mistakes made by officials of the terrorist state of the russian federation, which led to terrible consequences; the author analyzes the achievements of this peace formula and determines how much benefit and lives it has already brought. the practical significance lies in the definition of reorganization as one of the best anti-crisis management measures that can bring an enterprise out of a crisis. in particular, attention is drawn to the effectiveness of rehabilitation measures that can restore the solvency of an enterprise. in turn, taking into account the established practice of attracting investment capital as a means of improving the economic activity of an enterprise, the author analyzes the risks of losing property and non-property assets in the event of adverse conditions and proposes to create a mechanism for investment guarantees, which consist in preserving assets by the investor in the event of adverse market fluctuations. the scientific novelty lies in the proposal to amend the current legislation to guarantee the safety of the rehabilitation procedure to the investor by mitigating the risk of loss of invested assets in restoring the enterprise's solvency. key words: crisis, rehabilitation, investor, crisis management. jel classification: g00, g01 1. introduction during february-march 2014, the military aggression of the russian federation against the territorial integrity of the state of ukraine began, which resulted in the annexation of the autonomous republic of crimea, which is part of ukraine, on the basis of a pseudo-referendum held on march 16, 2014, contrary to the provisions three seas economic journal 61 vol. 3 no. 4, 2022 of the constitution of ukraine and the law of ukraine "on all-ukrainian referendum" (law of ukraine "on all-ukrainian referendum"). already on 12.04.2014, part of the territory of the state of ukraine was occupied, namely the cities of: sloviansk, kramatorsk and druzhkivka. the military aggression has been going on for more than 8 years, where, as a result of the large-scale invasion of the state of the russian federation into the state of ukraine, on february 24, 2022, on the basis of a proposal by the national security and defense council of ukraine, in accordance with paragraph 20 of part one of article 106 of the constitution of ukraine, the law of ukraine "on the legal regime of martial law", presidential decree no. 64/2022 was issued, which introduced martial law in ukraine. in addition, in 2019–2021, ukraine experienced an additional crisis due to the spread of the covid-19, which affected the functioning of the national economy. thus, as a result of the military aggression of the russian federation and the spread of the covid-19, ukraine has faced the challenges of the crisis and learned to respond to the threats that cause the onset of a crisis. the goal of the article is to identify actions that can overcome the crisis situation of enterprises and restore their solvency. 2. the impact of the economic crisis as a result of the military aggression of the russian federation, the state of ukraine suffered significant damage and losses. thus, it became necessary to calculate the losses and damage caused by the russian federation to the state of ukraine. in order to develop a methodology for calculating damages, the resolution of the cabinet of ministers of ukraine of 20.03.2022 no. 326 "on approval of the procedure for determining damage and losses caused to ukraine as a result of the aggression of the russian federation" established a procedure for determining damage and losses caused to ukraine as a result of the armed aggression of the russian federation, starting from 19.02.2014 (resolution of the cabinet of ministers of ukraine). as of november 2022, according to calculations by the kyiv school of economics (murdoch, knorr, trager, 2001), ukraine has suffered losses of more than $149.8 billion, as shown in figure 1. in addition, ukraine's economy has suffered significant losses in recent years due to the covid-19 pandemic. thus, the large-scale war of the russian federation against the state of ukraine, together with the occupation of the autonomous republic of crimea and part of donetsk, luhansk, zaporizhzhia, kharkiv and 0 10 20 30 40 50 60 figure 1. ukraine's losses from the military aggression of the russian federation (according to the calculations of the kyiv school of economics as of november 2022) three seas economic journal 62 vol. 3 no. 4, 2022 kherson regions, has caused not only legal damage, which consists in the violation of the territorial integrity of ukraine, which is guaran teed by international law, but also economic damage, as many businesses have ceased to operate and many people have suffered severe losses. in turn, the challenges and external threats to ukraine's economy have caused not only losses but also a struggle for core national values that has affected the entire world. for example, the struggle for ukraine's territorial integrity led to a victory in a battle at sea, where several enemy warships were hit, given that ukraine does not have its own navy. however, the decisive factor in this case was not the sighting of enemy ships, but the possibility of exporting grain, which prevented the onset of a global food crisis. thus, at the world trt forum 2022, president of ukraine volodymyr zelenskyy announced a formula for peace, which will be defined as follows: l={l1, l2, l3, l4, l5, l6, l7, l8, l9, l10}, where l1 – radiation and nuclear safety; l2 – food security; l3 – energy security; l4 – release of all prisoners and deportees; l5 – implementation of the un charter, restoration of territorial integrity and world order; l6 – withdrawal of russian troops from ukraine and cessation of hostilities; l7 – justice; l8 – protection of nature; l9 – preventing escalation; l10 – recording the end of the war; l – preservation of peace and prosperity in the european space; earlier, as part of the implementation of this peace formula, the grain from ukraine program was launched and since august 1, 2022, more than 15 million tons of food have been exported from odesa ports to countries in europe, asia and africa, where, in particular, the onset of famine has been prevented and hundreds of thousands of lives have been saved from starvation. 3. consequences of the economic crisis for national enterprises as for the national enterprises, the occupation of some ukrainian territories led to the cessation of economic activity and, as a result, to the application for bankruptcy. the bankruptcy procedure in ukraine is regulated by the bankruptcy code of ukraine (kopyliuk, shtanhret, 2005). given the fact that most enterprises have undergone the process of crisis, as already mentioned, precisely because of external threats to economic reality, it would be advisable to pay attention to the possibility of restoring the solvency of the enterprise through anti-crisis regulation of the bankruptcy procedure, which involves a rehabilitation procedure. the participants in the company 's rehabilitation procedure are: the debtor, the rehabilitation manager, creditors and the investor. speaking about the participants in the rehabilitation procedure, it is worth mentioning the insolvency receiver, who is the rehabilitation manager in this procedure and plays a key role in imple menting measures to restore the company 's solvency. thus, a rehabilitation manager is an insolvency officer (or debtor's manager) appointed by a commercial court to carry out the rehabilitation procedure. when exercising its rights and obligations, the rehabilitation manager is obliged to act in good faith and reasonably, taking into account the interests of the debtor and creditors, guided by the principles of the rule of law, legality and economic efficiency. in order to financially rehabilitate the company, the insolvency practitioner begins by identifying the financial crisis. the next step is to conduct a cause-and-effect analysis of the financial crisis. based on the primary information (primary accounting documents, resolutions of shareholders' meetings, financial plans, etc.), external and internal crisis factors, as well as the actual financial condition of the company, are identified. the analysis diagnoses the financial condition of the company, examines its strengths and weaknesses. in order to understand the state of the company 's business, the insolvency officer analyzes the financial factors that led to insolvency; analyzes non-current and current assets, in-depth analysis of accounts receivable and payable, profitability of the company and production costs, and the use of labor resources. the insolvency officer also analyzes investment and innovation activities at the enterprise and looks for reserves to improve the efficiency of the enterprise and restore its solvency (iasynskaia, 2014). three seas economic journal 63 vol. 3 no. 4, 2022 based on the results of the above analysis and the search for reserves to restore solvency, a report is prepared, which subsequently becomes the basis of a rehabilitation plan, setting out measures to restore the debtor's solvency and the terms of repayment of creditors' monetary claims. the code does not specify specific deadlines for repayment of creditors' claims. in other words, the terms for restoring the debtor's solvency are set based on the company 's production volumes, the amount of its debt obligations and the number of creditors who agree on all the actions set out in the rehabi litation plan. thus, the rehabilitation procedure is able to bring most national enterprises out of the crisis and resume economic activity. there are many classifications of crisis management strategies that are implemented as part of rehabilitation measures. for example, there are differentiated types of crisis management strategies as follows: offensive (i.e., improvement of production technology, modernization of economic activity through the use of the mechanism of innovative activity of the enterprise); delegation (delegation of the company 's problem to a third party (owners, creditors, the state) in order to solve it through investment activities); compromise and consensus (consolidated efforts to block the competitor's destructive actions and restore solvency) and defensive (reduction of production, dismissal of employees and flight from the market). however, an effective and quick way to bring an enterprise out of a crisis is to attract investment funds, and in this regard, it is important to provide guarantees to the investor that in the event of unfavorable circumstances, he will not lose his assets. thus, in order to improve the investment climate, it is necessary to implement a rapid and, at the same time, as safe as possible for the ukrainian military de-occupation of ukrainian territory, which will save as many lives as possible. in turn, in order to provide greater guarantees, it seems advisable to detail the rights of investors in the rehabilitation procedure, for example, by amending the bankruptcy code of ukraine to provide for the possibility of recognizing investor's monetary claims and satisfying them out of turn. this guarantees the safety of the rehabilitation procedure for the investor and mitigates the risks of asset loss, which is crucial in the implementation of the rehabilitation procedure involving investment assets. 4. conclusions the results of the study suggest that ukraine has experienced a number of challenges and threats that led to the onset of the crisis. nevertheless, the ukrainian economy is coping with the crisis with dignity and heroism and is developing a crisis management mechanism. as noted above, despite the fact that in 2022 the state suffered significant losses, which led to the suspension of economic activity of many enterprises, there is still a struggle both at the front and in the rear. in particular, schematic representation changing the structure of the enterprise an offensive strategy for rehabilitation quick change of structure strategy of delegation of authority change the structure as needed a strategy of compromise and consensus change of structure by agreement defensive strategy no change in structure figure 2. types of strategies in the rehabilitation procedure three seas economic journal 64 vol. 3 no. 4, 2022 a number of measures have been taken to keep the state's economy at a decent level and an action plan has been created to help restore both ukraine's macroeconomic system and individual enterprises at the regional level. in turn, the de-occupation of the entire territory of the state of ukraine and the guarantee of investors' rights in the current legislation by providing for the repayment of monetary claims in the event of bankruptcy of an enterprise out of turn will improve the investment climate and attract more assets to restore the solvency of enterprises in crisis and implement an anti-crisis strategy. investing in restoring the company 's solvency will be a safe, transparent and reliable process. crisis is a rather specific and difficult process, however, humanity has always faced crises that could both worsen the economic situation and give impetus to a qualitatively new development of economic activity. many scholars point out that crises are cyclical and can be tracked and predicted. indeed, if to focus on the economic activity of an enterprise, one can notice the preconditions that represent the onset of a crisis. both crises arising from external threats to business operations and crises arising from internal threats to business operations can and should be monitored, prevented, and responded to in a timely manner. for example, in the latter process, it is considered effective to systematically diagnose the financial condition of the company and monitor financial ratios, such as the absolute liquidity ratio, coverage ratio, and profitability. timely response to the challenges of internal and external threats to the company 's business activities can not only prevent the onset of a crisis, but also make good use of the situation in such a way as to develop the company 's business activities and bring them to a qualitatively new level. references: murdoch, c., knorr, k., & trager, f. (2001). economic factors as objects of security: economics security & vulnerability. economic interests & national security. lawrence. na lystopad 2022 roku zahalna suma zbytkiv, zavdana infrastrukturi ukrainy, skladaie maizhe $136 mlrd [as of november 2022, the total amount of damage caused to the infrastructure of ukraine is almost $136 billion]. available at: https://kse.ua/ua/about-the-school/news/na-listopad-2022-roku-zagalnasuma-zbitkiv-zavdana-infrastrukturi-ukrayini-skladaye-mayzhe-136-mlrd/ nelson, r . n., belkin, p., mix, d. e., & weiss, m. a. (2012) the eurozone crisis: over-view and issues for congress. congressional research service report r42377, may 31, 2012. the eurozone crisis: overview and issues for congress. available at: http://de.slideshare.net/kamalsood/ r42377 zvit pro finansovu stabilnist. hruden 2022 roku [report on financial stability. december 2022]. available at: https://bank.gov.ua/admin_uploads/article/fsr_2022-h2.pdf ?v=4 dorozhnia karta intehratsii ukrainy do yevropeiskoho doslidnytskoho prostoru (era-ua) [roadmap for ukraine's integration into the european research area (era-ua)]. available at: https://mon.gov.ua/ ua/tag/era-ua (in ukrainian) kopyliuk, o. i., & shtanhret, a. m. (2005). finansova sanatsiia ta bankrutstvo pidpryiemstv: navchalnyi posibnyk [financial rehabilitation and bankruptcy of enterprises: a study guide]. kyiv: tsentr navchalnoi literatury. kosevtsov, v. o., & binko, i. f. (1996). natsionalna bezpeka ukrainy: problemy ta shliakhy realizatsii priorytetnykh natsionalnykh interesiv [national security of ukraine: problems and ways of realizing priority national interests]. kyiv: nisd. krakos, yu. b., & razghon, r . o. (2008). upravlinnia finansovoiu bezpekoiu pidpryiemstv [management of financial security of enterprises]. ekonomika ta upravlinnia pidpryiemstvamy mashynobudivnoi haluzi, vol.1(1), pp. 86–97. kodeks ukrainy z protsedur bankrutstva [code of ukraine on bankruptcy procedures]. available at: https://zakon.rada.gov.ua/laws/show/2597-19#text konstytutsiia ukrainy: pryiniata na piatii sesii verkhovnoi rady ukrainy 28 chervnia 1996 r. [the constitution of ukraine: adopted at the fifth session of the verkhovna rada of ukraine on june 28, 1996]. available at: https://zakon.rada.gov.ua/laws/show/254%d0%ba/96-%d0%b2%d1%80 luchka, a. v. (2009). biudzhetnyi potentsial finansovoi nezalezhnosti mistsevoho samovriaduvannia: avtoref. dys. ... kand. ekon. nauk [budget potential of financial independence of local self-government: autoref. dis. ... cand. economy sciences: 08.00.08]. ternopil. three seas economic journal 65 vol. 3 no. 4, 2022 liashenko, o. m. (2015). kontseptualizatsiia upravlinnia ekonomichnoiu bezpekoiu pidpryiemstva: monohrafiia [conceptualization of management of economic security of the enterprise: monograph]. available at: http://www.nisss.gov.ua/content/articles/files/lyashenko_1_druk-43fc7.pdf marchenko, o. m. (2003). kontseptualni zasady upravlinnia finansovoiu bezpekoiu pidpryiemstva [conceptual principles of managing the financial security of the enterprise]. bulletin of lviv state university, vol. 32, pp. 100–105. iasynskaia, d. v. (2014). konstytutsyonno-pravovoe rehulyrovanye mestnykh referendumov v ukrayne [constitutional and legal regulation of local referendums in ukraine]. priorities of national reform of the state and law: theory and practice: collection of materials of the international legal scientific and practical internet conference (kyiv, october 8, 2014). kyiv, pp. 106–108. iasynskaia, d. v., & bondarchuk, n. v. (2020). rol venchurnoho ynvestyrovanyia v razvytyy ahropromyshlennoho proyzvodstva ukrayny [the role of venture capital investment in the development of agro-industrial production in ukraine]. economy in the context of global changes in society: materials of the international scientific and practical conference (dnipro, july 18, 2020). dnipro, pp. 34–36. yak maie rozvyvatysia ukrainska nauka pislia viiny [how should ukrainian science develop after the war]. zn.ua. available at: https://zn.ua/ukr/education/jak-maje-rozvivatisja-ukrajinska-naukapislja-vijni-.html nakaz ministerstva ekonomiky "pro zatverdzhennia metodychnykh rekomendatsii shchodo vyiavlennia oznak neplatospromozhnosti pidpryiemstva ta oznak dii z prykhovuvannia bankrutstva, fiktyvnoho bankrutstva chy dovedennia do bankrutstva" vid 19.01.2006 № 14 [decree of the ministry of economy "on the approval of the methodological recommendations on the revealing of a sign of incompatibility of entrepreneurship and a sign of bankruptcy, fictitious bankruptcy and bringing to bankruptcy " dated 19.01.2006, № 14]. available at: https://zakon.rada.gov.ua/rada/show/ v0014665-06#text zakon ukrainy "pro vseukrainskyi referendum" vid 26.01.2021, № 1135-ix [law of ukraine "on allukrainian referendum" dated 26.01.2021, № 1135-ix]. available at: https://zakon.rada.gov.ua/laws/ show/1135-20#text zakon ukrainy "pro pravovyi rezhym voiennoho stanu" vid 12.05.2015, №389-viii [law of ukraine "on the legal regime of martial law"]. available at: https://zakon.rada.gov.ua/laws/show/389-19#text ukaz prezydenta ukrainy vid 24.02.2022, №64/2022 [decree of the president of ukraine dated february 24, 2022 no. 64/2022]. available at: https://www.president.gov.ua/documents/642022-41397 postanova kabinetu ministriv ukrainy "pro zatverdzhennia poriadku vyznachennia shkody ta zbytkiv, zavdanykh ukraini vnaslidok zbroinoi ahresii rosiiskoi federatsii" vid 20.03.2022, № 326 [resolution of the cabinet of ministers of ukraine "on approval of the procedure for determining damage and losses caused to ukraine as a result of the armed aggression of the russian federation" dated march 20, 2022 №. 326]. available at: https://zakon.rada.gov.ua/laws/show/326-2022-% d0%bf#text received on: 2th of november, 2022 accepted on: 8th of december, 2022 published on: 30th of december, 2022 three seas economic journal 160 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: ruda.ol@i.ua orcid: https://orcid.org/0000-0002-3266-7470 researcherid: l-8308-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-23 forms of manifestation and methods of regulation of the banking crisis in ukraine oksana ruda1 abstract. the banking system is the core of the financial sector. it is crucial to examine that crises in banking systems are largely consequences of macroeconomic and political instability. understanding the nature of banking crises allows developing adequate preventive measures and instruments for timely reaction of regulators and banks themselves to the crisis. with the intensification of globalization processes in the world, the number and scale of banking crises have increased significantly, including due to the presence of various external shocks, including the so-called "contagion effect", the essence of which is a chain reaction in global and national financial markets, when a shock in one of them leads to a shock in another. along with the growth of the number of banking crises and their scale, the losses from them grow the economy. thus, the problem of anticipation of banking crises and methods of their regulation is extremely relevant and represents an important scientific task. the aim of the paper is to identify and explain the causes of modern banking crises and methods of their regulation. the study was conducted using an interdisciplinary and integrated approach to a wide range of transformations and phenomena that have long dominated the public life of the country and encompass various types of economic activity and specific natural processes. the article reveals the concept of banking crisis, the classification of modern banking crises. also, the analysis of the state of the banking system during the quarantine period and before it began, highlighting the main indicators of ukrainian banks. three main types of situations that contribute to the emergence of banking crises are identified. the causes and prerequisites of a large number of banking crises in the late twentieth and early twentieth century and the twenty-first century are described. the first-priority measures to neutralize threats to the security of the banking system as part of the implementation of the anti-crisis management scheme have been proposed. the instruments of anti-crisis policy of the national bank are presented in their improved form for managing systemic banking crises and overcoming their consequences. at the end, the results of this article are summarized. key words: crisis, bank, loans, deposits, financial system, management, regulation. jel classification: g01, g21, g32 1. introduction the banking system is the lifeblood of any national economy. therefore, its effective functioning is an important factor of stability and development of the country 's economic life. the current systemic banking crisis in our country is one of the main sources of instability and slowdown of economic development, growth of unemployment, deepening of poverty and aggravation of social and political risks. this crisis is the result of the intertwining of three groups of problems: long-term structural and institutional imbalances in the ukrainian economy, which create constant risks of worsening financial and currency crises; systemic problems of the banking system, which existed in a latent state for more than a decade; a sharp exacerbation of problems of the banking system in 2014 under the influence of force majeure foreign policy factors and shocks from improper actions of the monetary regulator – the national bank of ukraine. this led to a threefold devaluation of the hryvnia and the outgrowth of the banking crisis into a systemic crisis. banks redistribute cash flows from depositors and assume the risks associated with intermediary functions. in a market economy, banks play a key role in supporting the economy by acting as profit-making institutions and making decisions about their own risks. the importance of analyzing the crisis of the banking system is due not only to the peculiarities of the banking system, but also to its importance for the economy and financial system of the state as a whole and directly for each of its subjects. therefore, the issue of quality diagnostics of the banking system, this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 161 vol. 3 no. 1, 2022 foreseeing probable crises and minimizing their negative consequences for each subject of economic relations, ensuring economic security of the country, and secondly, determining the role of public authorities in this process, is relevant. a significant level of state regulation of the banking system. to predict or predict the crisis of the banking system, to determine the necessary tools and develop any anti-crisis program is impossible without a qualitative detailed study of the nature and essence of the crisis, its characteristics, characteristics and parameters. the purpose of the article is to identify and explain the causes of modern banking crises and methods of their regulation. 2. the banking crisis: causes and preconditions in recent decades, two interrelated trends have been clearly visible in the development of the world economy: globalization and growing instability. they are most noticeable in the banking sector of the economy as the most sensitive to all changes, especially external ones, in the economy, politics, and social sphere. the banking crisis is characterized by a sharp increase in the share of doubtful and bad debts in the loan portfolios of commercial banks, an increase in their losses due to revaluation of uncovered market positions, and a decline in the real value of bank assets. this leads to a large-scale deterioration of banks' solvency and reflects the inability of the banking system to effectively distribute financial resources. the banking crisis may arise against the background of a relatively stable state of other segments of finance, money and credit and become a "trigger mechanism" that will turn a local crisis phenomenon into a large-scale financial crisis (kozmenko, shpyh, voloshko, 2003). banking crises occur when the accumulation of troubled assets in individual banks and their insolvency lead to bank panic, mass withdrawals of deposits, a sharp decline in interbank lending, etc. as a result, against the backdrop of growing distrust, banks may suspend payments, followed by destabilization of the payment system and financial markets (pernarivskyi, 2004). there are two main groups of determinants of banking crises: internal (microeconomic) and external (macroeconomic). the study of internal causes characterizing the quality of management and stability of a credit institution is extremely important for ensuring financial stability of banking institutions; otherwise it would be impossible to explain the fact why some banks go bankrupt even under conditions of strong financial and banking crisis, while others stay afloat. internal causes are usually studied by examining the most famous cases of bankruptcy of credit institutions. quite often crises arise as a result of inefficient banking business: ill-conceived credit policy, excessive risk taking, poor organizational management, insufficient internal control, as well as miscalculations in monetary policy and differences in requirements and liabilities in terms of timing by banks themselves or their borrowers. external causes, the main one being an unfavorable economic situation, are crucial for the stability of banking systems. they test banks for sustainability of their management, as a result, after each crisis there is a peculiar selection of the most competitive credit institutions. external (or macroeconomic) causes of banking crises include: macroeconomic imbalances (severe imbalance of economic sectors, large or growing budget deficits and public debt, low or slow gdp growth, unfavorable business conditions), and ignoring the need for structural change; financial instability, characterized by high inflation, sharp fluctuations in prices for goods and financial assets, outflow of capital from the country and the national economy, declining foreign exchange reserves, strong fluctuations in the national currency; excessive credit expansion during the long economic recovery. significant growth of domestic lending in the conditions fixed exchange rate leads to a reduction in reserves. easier access to liquid resources for banks often leads them to take excessive risks; a decline in public confidence in the financial system of the country as a whole and the national banking sector in particular; a lack of corporate standards in the management of financial institutions. among the main problems in the corporate governance of ukrainian banks should be highlighted: the uncertainty of strategy and abstract business models, focus on related party services, the low quality of management personnel, conflicts of interest in the management, inadequate risk assessment system and formal internal control. the classification of current banking crises, which are taking place in the global economy, and therefore – have common features for all countries they affect, should be carried out on a small list of basic features, which are shown in the table 1. there are three main types of situations contribute to the emergence of banking crises (prymostka, 2004): 1) problems of one or more banks without obvious signs of systemic banking crisis; 2) hidden form of destabilization of the banking system; 3) systemic banking crisis. banking crises are a multidimensional and complex combination of interacting factors, ranging from fundamental and structural weaknesses in the economy, risky incentives, weak and ineffective regulatory policies, inadequate official supervision, and the inability or unwillingness of the market to three seas economic journal 162 vol. 3 no. 1, 2022 discipline banking institutions. thus, having studied the essence of the concept of "banking crisis" and the main classification attributes, it is advisable to consider the prerequisites and causes of its emergence. among the causes and prerequisites of a large number of banking crises in the late twentieth – early twentieth century, the xxi century, it is possible to distinguish the following (figure 1). among these problems are, first of all: errors in recognizing reliable and problem loans; the development of herd behavior; the weakening of lending conditions; the spread of lending based on speculative growth in asset prices. in addition, due to the significant growth of bank lending, there is often a concentration of loan portfolios (sometimes with a high content of the property factor). to some extent, this is due to periods of growth in the value of financial assets, property acts as a protected form of collateral for bank loans. however, in fact, such lending is speculative in nature, since little attention is paid to the value of collateral under inflation; the development of crisis phenomena can be accelerated by a change in the perception of the region's economic prospects by foreign investors; the rapid growth of speculative operations, facilitated by modern financial innovations and the development of the derivatives market. in such an environment, the likelihood of declining net worth encouraged some firms to speculate in the financial markets to "restore financial health"; insufficient level of competition in the banking system, which was especially pronounced in the transition economies, should also be considered as a factor weakening the stability of the country 's banking system; the vulnerability of individual countries' financial systems is greatly increased by so-called "poor banking practices" (or "regulatory deficiencies"). thus, modern banking crises are a multidimensional and complex combination of interacting influences and weaknesses, typical for all countries, regardless of the level of economic development. financial instability reveals existing weaknesses in the banking system itself, while a narrow focus on certain causal components creates a distorted view and inadequate policies to reform the banking sector. a prerequisite for the effective functioning of the economy of any country is the effective development of the banking sector. banks are financial market institutions that ensure the accumulation and redistribution of free financial resources, ensure the flow of funds between all economic entities and support the processes of economic reproduction (donets, 2006). table 1 classification of modern banking crises classification feature kind of crisis crisis characteristics the nature of the occurrence cyclical it is a consequence of a cyclical downturn in the economy of the country and depends on the level of market relations in specific countries, is usually a form of monetary crisis specific is a consequence of the accumulation of problems in the banking sector or a sudden change in the economic environment under the influence of external factors affecting the banking system scale of distribution (degree of systematization) systemic a crisis involving the entire banking system manifests itself in the mass bankruptcy of banks and negatively affects not only the banking business, but also the entire system of finance, money and credit of a particular country, in the form of inflation, credit restrictions and state and local finance deficits local (partial) crises in separate sectors of the banking system (interbank credit market, mortgage market, market liquidity, consumer credit market, etc.) or in a small number of banks that do not have a negative impact on the situation in the banking system form of manifestation latent it is characterized by a decrease in capital, unprofitable activities of some (troubled) banks, other negative trends that accumulate over time, reach a critical level and acquire an open form open characterized by banks' failure to meet their obligations to customers, the inability of the banking system to ensure smooth settlements, the mass desire of depositors to take their deposits from banks, a sharp decline in lending, bankruptcy of banks geography of distribution national a crisis caused solely by domestic macroeconomic imbalances and destructive factors within countries regional a crisis involving a group of countries with similar destabilizing factors and crisis prerequisites in major regions of the world (america, asia, europe) world (global) the crisis, which has engulfed all world powers, is gaining global momentum, regardless of where it originates or how quickly it spreads the scale of the consequences macroeconomic causes macroeconomic recession, high inflation and demonization of the economy (usually systemic) microeconomic causes serious problems for a number of banks, which, with the passive policy of the central bank, may be declared bankrupt and liquidated source: (vasiurenko, volokhata, 2006) three seas economic journal 163 vol. 3 no. 1, 2022 3. the state of the banking system of ukraine the banking system is in constant motion, and constant quantitative and qualitative changes in the activities of banking institutions meet the modern needs of the process of providing credit and financial services to market participants. thus, qualitative changes are connected, first of all, with the improvement of banking technologies, provision of remote services, individual approach to customer service in accordance with the growing needs. in terms of quantitative changes, there has been a significant reduction in the number of bank branches, as well as in the number of employees of individual banks due to the transition to new, more advanced types of customer service (e.g. mobile and electronic banking). in general, it is possible to name a significant number of factors, both external and internal, which affect the development of the banking system and to which banking institutions need to adapt. however, external influences can be completely unpredictable or simply new, and people are aware of their unpreparedness for them. this necessitates an immediate assessment of both the factor itself and the possible consequences of its impact, which means that anti-crisis measures to minimize possible risks must be taken as quickly as possible. such factors include the current situation with the spread of the covid-19 virus, which is taking place all over the world, and its consequences were completely unexpected for all mankind. because of the rapid spread of the virus and the large number of infected and dead people in various countries, a global pandemic was declared, which led to many negative consequences. first of all, it is the closure of borders by most countries and the announcement of a strict quarantine regime, involving the temporary suspension of many areas of society: businesses ceased to function normally, some institutions were forced to work remotely, and some stopped indefinitely. as the quarantine continued depending on the epidemiological situation. money and the banking system are rightly called the "circulatory system of the economy ", because the economic development of the country largely depends on the speed of funds, the performance of payments, the reliability of the banking system. in addition, banks, provided effective lending, can become the locomotive of development, market entry of new goods and services, the emergence of new enterprises and industries (pernarivskyi, pernarivska, 2018). the banking sector continues to recover from the covid-19 pandemic. in july-september 2020, banks' key indicators resumed growth. the share of non-performing loans reached a minimum after the introduction of a new definition of non-performing loans, compliant with international standards. at the same time, the focus remains on proper risk assessment by banks. losses from loan portfolio deterioration will continue to be a major problem for banks' profitable operations. the lifting of strict quarantine restrictions and a further decrease in lending rates in july-september contributed to a recovery in demand for credit from businesses and retailers. credit risk remains a major risk for banks in 2021. despite a significant improvement in the c au se s an d pr er eq ui si te s of b an ki ng c ri se s rapid growth of bank lending to the private sector rapid growth in speculative transactions insufficient level of competition in the banking system deterioration of the financial condition of financial institutions changes in the perception of economic prospects of the country (region) by foreign investors and creditors, the emergence of banking panic excessively optimistic forecasting in conditions of rapid economic growth (boom) increasing vulnerability of the financial system figure 1. causes and preconditions of banking crises (volkov, 2013) three seas economic journal 164 vol. 3 no. 1, 2022 economic situation in the second half of the year, some bank borrowers are still experiencing financial difficulties. this may have a negative impact on the quality of loan servicing and, accordingly, will require additional formation of reserves by banks. to make sure that the quality of the loan portfolio declared by banks corresponds to reality, the nbu will assess the quality of assets in the banking sector, and 30 banks will undergo additional stress-testing. since january 2021, the nbu has obliged banks to gradually calculate the value of non-core assets from fixed assets. this rule will encourage banks to get rid of them in time, which will increase financial stability and make their financial statements more reliable. also from this year the gradual increase of risk weights for securities in foreign currency issued by the ukrainian government as well as for unsecured consumer loans will begin. the net stable fund ratio (nsfr) will take effect in april, prompting banks to reduce maturities in assets and liabilities. its initial minimum value will be set at 80% and gradually increased to 100% by april 2022 (official website of the nbu). the main factor of uncertainty for the financial result of the banks remains the amount of deductions to the provisions for the impairment of the loan portfolio. banks must still correctly assess credit risk based on current macroeconomic forecasts and reflect expected losses in their financial statements (table 2). banks entered the crisis in good shape. capital adequacy is well above the minimum level. banks can now use their surpluses to absorb credit losses and further lending. financial institutions have become highly efficient and profitable, so they end up generating capital themselves. the funding structure is also favorable – more than 90% of liabilities are table 2 key performance indicators of ukrainian banks indicator as of 01.04. 2018 2019 2020 2021 number of operating banks 82 77 75 73 of them: with foreign capital 39 36 34 33 including with 100% foreign capital 20 23 23 23 assets 1295020 1341271 1564275 1835527 foreign currency assets 478283 465290 584735 584773 total assets (not adjusted for provisions for active operations) 1840705 1888169 2095334 2214100 of them: non-residents 179248 176866 306895 248601 total assets (not adjusted for provisions for active operations) in foreign currency 748715 744603 855372 740056 cash 38521 42481 63764 70082 bank metals 277 358 310 511 funds in the national bank of ukraine 44064 48276 59231 54962 correspondent accounts opened with other banks 100886 79873 192140 183074 time deposits in other banks and loans to other banks 27323 40183 40147 54419 loans provided to customers 1059884 1099595 1108052 967664 loans granted to public authorities 1650 2770 4367 11156 loans granted to business entities 882813 894924 885238 750736 loans granted to individuals 175386 201834 218411 205739 loans to non-bank financial institutions 34 67 36 33 investments in securities and long-term investments 436054 470490 524111 768923 reserves for active operations of banks (including reserves for operations accounted for on off-balance sheet accounts) 550916 552805 535629 383929 liabilities 1295020 1341271 1564275 1835527 capital 159081 171338 205817 216715 of which: share capital 495605 469365 470733 479988 liabilities of banks 1135939 1169933 1358458 1618812 liabilities of banks in foreign currency 573471 556729 650604 646330 time deposits (deposits) of other banks and loans received from other banks 47174 36091 23272 23661 funds of business entities 375106 390778 516145 645858 funds of individuals (with savings (deposit) certificates) 474410 515925 610451 687948 funds of non-bank financial institutions 22960 24257 28209 36690 return on assets, % 2.66 3.81 4.21 2.4 return on capital, % 21.94 31.29 30.75 20.48 source: official website of the nbu three seas economic journal 165 vol. 3 no. 1, 2022 raised in the domestic market. the banking sector today does not depend on the situation on international capital markets. the liquidity of financial institutions is high both in hryvnias and foreign currencies. in the first days of the quarantine a significant outflow of individuals began. this reaction of clients is typical of uncertainty and was observed during the two previous crises. however, this time it was very short-term – already in ten working days the balances on the accounts began to grow again. the banks had no trouble paying depositors out in full at short notice thanks to high liquidity. the maximum aggregate outflow of funds in hryvnia was 7%, which is much lower than in previous crises (iepifanov, vasylieva, kozmenko, 2012). the liquidity of the banking system is not under threat, the national bank reports a significant excess of the liquidity norm in the system, and provided more than 13 billion uah refinancing loans for 30 days in april-june. people have withdrawn about 10% of term foreign currency deposits from banks, but the balances of the population in hryvnia current accounts have increased sharply. the most likely reason for this is that because stores and other establishments were closed, many people simply had nowhere to spend their money, and some people were consciously saving by reducing current consumption. in midapril, company funds dropped to at least 90-95% of quarantined levels, but are already back to the level of the beginning of the year. but lending is slowing down (kuzmak, 2016): banks take into account the risks of non-return of funds, so lowering the interest rate, although it plays a role, but in general is not too great. after the easing of the quarantine, the first (and only) resumed retail turnover of hryvnia, but so far, its pace lags behind the pre-crisis level. banks place free funds mainly in iglb, financing the budget deficit. decreasing solvency and deteriorating consumer sentiment also affected credit demand. according to the survey of banks, it is constrained by a sharp decline in consumption of services and many groups of goods, especially durable goods. however, the decline in consumer lending, which occurred in the spring, is unlikely to last. this will be facilitated by the gradual recovery of the economy and a significant supply of loans from banks and other financial institutions. the volume of lending will still be somewhat lower than the pre-crisis level. uncertainty about quarantine restrictions and the crisis led to a decrease in the share of time deposits. therefore, the volume of funds in current accounts will increase significantly in the near future, including through payroll and social projects. the share of term deposits will increase only in 2021–2022 due to improved economic expectations (official website of the nbu). at the same time, the negative effects of the current crisis may manifest themselves next year. the main threats facing the sector are a decline in demand for banking services and deteriorating credit quality. 4. anti-crisis management of the banking system to neutralize crisis processes in the initial stages of the global financial crisis, national governments and central banks provided assistance to banking institutions aimed at providing their liquidity and buying out troubled assets. priority anti-crisis measures were concentrated in the monetary sphere. in modern conditions, a set of interrelated measures is needed to overcome the crisis trends in its development and to ensure sustainability, reliability and safe operation in the post-crisis period. ensuring stability, reliability and security of the banking system of ukraine and its institutions should be, in our opinion, the main objective of the anti-crisis policy of the government, national and commercial banks and a pledge to prevent the negative effects of possible banking crises in the future. to achieve this goal, anti-crisis management of the banking system and its institutions should be carried out both at the general economic level in the framework of the anti-crisis strategy of the state (macro level), and at the intra-branch level – in the policy of the national bank of ukraine (micro level) and commercial banks (micro level). comprehensive development of anti-crisis strategy of economic security of the banking sector (as part of national security), associated with the active work of state institutions in this area, which would include a set of measures and security mechanisms, risk management system and neutralization of identified threats in the banking system as a whole, and in individual banks. after all, such threats pose a potential danger not only to the banks themselves, but also to their customers (businesses and citizens), which may ultimately affect the economic and then the national security of the state. therefore, according to the author, it is important not only to record the threats that have already arisen, but also to identify and diagnose the most likely threats that may arise in the future. the priority measures to neutralize security threats to the banking system within the implementation of the crisis management scheme include the following (panchenko, 2018): strengthening the function of ensuring the security of the banking system as a priority for all government and banking bodies that implement supervisory and control tasks in the field of banking; formation of a subsystem for monitoring its economic security in the banking system monitoring system; development of the classification of threats three seas economic journal 166 vol. 3 no. 1, 2022 to the security of the banking system and preparation of special schemes for neutralization of threats according to the main ones; development of special methodological and practical support for the system of prevention and forecasting of security threats; counteracting mergers and acquisitions, which may be exacerbated in the process of post-crisis resumption of banking activities, including the following measures (maximum use of existing legal institutions to protect property rights; creation in banks of special services capable of resisting potential actions aimed at seizing property; strengthening control over top managers of banks capable of carrying out dishonest transactions with the assets of banking institutions; establishing high-quality information support for the processes of identifying possible threats to the life of individual banks and the functioning of banking systems in general; strengthening the work of supervisory authorities on the practice of unscrupulous banking, fraud and criminal acts in carrying out banking operations). the following tools of anti-crisis policy of the national bank in their improved form can be used to manage systemic banking crises and overcome their consequences (volkov, 2013): refinancing of banks on non-standard terms (emergency liquidity assistance, emergency liquidity financing – nonstandard refinancing), aimed at restoring the normal situation with liquidity in the banking sector and supporting the smooth operation of the payment system; administrative measures applied when other, more market-based instruments fail to control the situation, including the securitization of deposits with forced increases in maturities, the introduction of a moratorium on the return of deposits, and restrictions to prevent the outflow of nonresidents from the country 's banking system; financial recovery of banks that have problems with solvency, in particular through their recapitalization and restructuring of troubled assets; reorganization and liquidation of unviable banks; measures aimed at protecting the interests of depositors, including measures provided by the deposit guarantee system, as well as full government guarantees, the use of which is designed to restore confidence in banks by creditors and depositors, reduce negative expectations of market participants, stop the outflow of funds from bank accounts. the choice of a specific set and conditions for the application of anti-crisis policy instruments will depend on the characteristics of the systemic banking crisis, as well as on its type. some of these instruments, such as emergency financing or the use of full government guarantees, are aimed primarily at solving liquidity problems, preventing outflows from bank accounts, and ensuring the proper functioning of the payment system. instruments related to the restructuring of the banking system, support of economically viable and withdrawal of weak credit institutions, as well as protection of the interests of creditors of banks, solve primarily the problems of solvency (pernarivskyi, pernarivska, 2018). managing banking crises, especially systemic solvency crises, is a process requiring coordination between the national bank, the government, financial regulatory and supervisory authorities, the deposit guarantee fund, other responsible government agencies, and the coordination of their structural subdivisions. one effective approach in this case could be the creation of a permanent high-level interagency working body, which should include representatives (as a rule, heads) of government agencies, organizations involved in financial supervision, and necessarily representatives of the national bank. the main function of such a body should be the development of a general strategy of anti-crisis policy and coordination of activities of organizations directly implementing it. the main goals and objectives of this body, the composition and powers of the participants, the main functions and other necessary issues should be enshrined in a separate document, such as a charter, regulation, memorandum, etc. it is also assumed that the organizations that will directly implement anti-crisis policy should have the necessary personnel and infrastructure. 5. conclusions the study of banking crises and crisis management has become increasingly relevant in recent years. most crises have the same nature and prerequisites and are a significant destabilization of the whole or part of the banking sector. therefore anti-crisis regulation can be defined as a set of systemic regulatory actions of public authorities aimed at preventing, overcoming the crisis, eliminating its negative consequences for banking activities in order to ensure the stable functioning of the banking system and the economy as a whole. the most important place in this process belongs to the levers of anti-crisis regulation, reflecting the specifics of their technology, which should be based on: the regulation of financial processes; protection of strategic and economic interests of the state related to the stable functioning of the banking sector and its recovery; protecting the interests of depositors and creditors of banking institutions. anti-crisis regulation in banking institutions should be daily, constant, continuous throughout the whole period of their functioning, an effective regulatory process, where the subject is the state regulatory bodies, and the object – banks and the banking system. a comprehensive approach to the problem of anti-crisis regulation of the banking three seas economic journal 167 vol. 3 no. 1, 2022 system, qualitative interaction at all levels will give a long-term effect. summarizing the above, we note that in the formation of anti-crisis strategy of economic security of the banking system must take into account the fact that its implementation involves appropriate measures both in its normal functioning, and in crisis situations, because the crisis – a critical exacerbation of contradictions in the system. threatening its stable and safe functioning. the emergence of a crisis usually only exacerbates the threats, and their elimination requires appropriate action at the state level, at the level of law enforcement agencies and at the level of individual banks. thus, the main directions of anti-crisis management of banking activity should be aimed at strategic guidelines for the stable operation of banks, the achievement of competitive advantages in the market, taking into account risks in order to stabilize and eliminate or avoid crises. references: vasiurenko, o. v., & volokhata, k. o. (2006). ekonomichnyi analiz diialnosti komertsiinykh bankiv [economic analysis of commercial banks]. navchalnyi posibnyk. kyiv: znannia. (in ukrainian) vitlinskyi, v. v., & verchenko, p. i. (2000). analiz, modeliuvannia ta upravlinnia ekonomichnym ryzykom [analysis, modeling and management of economic risk] navchalnometodychnyi posibnyk. kyiv: kneu. (in ukrainian) volkov, d. p. (2013). analiz bankivskykh ryzykiv: osnovni pidkhody do vyznachennia [analysis of banking risks: basic approaches to definition]. economic sciences. ser.: accounting and finance, 10(3), 131–139. donets, l. i. (2006). ekonomichni ryzyky ta metody yikh vymiriuvannia [economic risks and methods of their measurement]: navchalnyi posibnyk. kyiv: tsentr navchalnoi literatury. (in ukrainian) iepifanov, a. o., vasylieva, t. a., kozmenko, s. m. ta in. (2012). upravlinnia ryzykamy bankiv: t. 2: upravlinnia rynkovymy ryzykamy ta ryzykamy systemnykh kharakterystyk [risk management of banks: vol. 2: management of market risks and risks of system characteristics]: monohrafiia u 2 tomakh / za red. d-ra ekon. nauk, prof. a. o. yepifanova i d-ra ekon. nauk, prof. t. a. vasylievoi. sumy: dvnz "uabs nbu". (in ukrainian) kyrychenko, o., hilenko, i., rohol, s., syrotian, s., & niemoi, o. (2002). bankivskyi menedzhment [banking management]: navch. posib. kyiv: znannia-pres. (in ukrainian) kozmenko, s. m., shpyh, f. i., & voloshko, i. v. (2003). stratehichnyi menedzhment banku [strategic management of the bank]: navch. posib. sumy: universytetska knyha. (in ukrainian) kuzmak, o. m. (2016). mekhanizmy neitralizatsii bankivskykh ryzykiv [mechanisms for neutralizing banking risks]. scientific bulletin of uzhgorod university. series: economics, 1(1), 374–377. official website of the nbu. available at: https://bank.gov.ua (accessed 12 february 2022). panchenko, k. s. (2018). otsinka ta upravlinnia rynkovym ryzykom komertsiinoho banku [assessment and management of market risk of a commercial bank]. investments: practice and experience, 5, 45–48. pernarivskyi, o. v., & pernarivska, o. o. (2018). metody otsiniuvannia ryzykiv u bankivskii diialnosti [methods of risk assessment in banking]. eastern europe: economics, business and management, 6(17), 828–833. pernarivskyi, o. v. (2004). analiz, otsinka ta sposoby znyzhennia bankivskykh ryzykiv [analysis, assessment and ways to reduce banking risks]. bulletin of the national bank of ukraine, 4, 44–49. prymostka, l. o. (2004). finansovyi menedzhment u banku [financial management in the bank]: pidruchnyk. 2-he vyd., dop. i pererob. kyiv: kneu. (in ukrainian) three seas economic journal 124 vol. 2 no. 3, 2021 corresponding author: 1 national technical university "kharkiv polytechnic institute", ukraine. e-mail: vladyakovlev62@gmail.com orcid: https://orcid.org/0000-0003-4331-5101 2 national technical university "kharkiv polytechnic institute", ukraine. e-mail: drugova.elena.sergeevna@gmail.com orcid: https://orcid.org/0000-0002-2404-1910 doi: https://doi.org/10.30525/2661-5150/2021-3-16 analysis of management of production potential of machine-building enterprises of kharkiv region vladyslav yakovlev1, olena druhova2 abstract. the purpose of the article is to study the management of production potential of machine-building enterprises in the kharkiv region, 9 enterprises were analyzed and their production indicators were studied. the effectiveness of the production potential is characterized by production, technological, financial and innovative components. it should be noted that since the production potential is a component of the economic potential of the enterprise, the structure presented in figure 1 is quite conditional. if we consider the production potential from this point of view, then, for example, its innovative component is inextricably linked with the innovative potential, and the financial component – with the financial potential. sustainable development and competitiveness of an industrial enterprise depends on the level of production potential, which is the foundation of production activity. the production potential of an industrial enterprise is a complex, dynamic and stochastic system consisting of a number of interconnected components. at the legislative level, an attempt has been made to build a single model of an integrated indicator of the financial condition of large, medium and small enterprises. according to the approved ifi procedure for assessing the financial condition of a potential beneficiary of an investment project, the level of financial condition of the enterprise is determined depending on the value of the integrated indicator, which allows the classification of enterprises in the industry or region. at the same time, questions about the structure of innovation potential remain controversial in the scientific literature. the development of an integrated module for the assessment of production potential is the first stage of the presented methodological approach. the next step is to improve the information subsystem of monitoring the financial and economic activity of industrial enterprises, which in turn is an integral part of the it system of enterprise management. at this stage, it is necessary to develop software that provides analysis and comprehensive assessment of production capacity. after integrating the software module with is monitoring, we have to test the software using the collected database on the financial and economic activity of the enterprise. comparing the results of the assessment with the assessment from the analytical reports of independent experts will allow to determine the level of adequacy of the presented model and software. methodology. the analysis was conducted on the basis of financial statements of enterprises of the machine-building industry of kharkiv region for the period 2018, 2019, 2020. results of the study show that the enterprises of the machine-building industry have low indicators of production potential, so enterprises need to change the strategy in the market to improve production capacity to increase competitiveness and improve. practical implications. given that companies have lost traditional markets in recent years and products are not in high demand in european markets, it is necessary to develop ways to improve the management of the potential of machine-building enterprises, seek new markets and strengthen cooperation with international companies. value/originality. the study will help the management of enterprises to more effectively manage the enterprise and improve their production capacity. key words: indicator, enterprise, competitiveness, efficiency, management, production potential, capacity, market. jel classification: d20, d24, o32 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 125 vol. 2 no. 3, 2021 1. introduction in modern economic conditions in the world and in ukraine questions of efficiency of production at machine-building enterprises, optimization of their activity and preservation of competitive advantages in the market acquire special value. production potential has undergone profound changes through the development of new technological solutions, modernization and innovation. the task of competition in the field of increasing production capacity and finding new markets has shifted to the areas of it, marketing and non-manufacturing activities. however, the role of the productive aspect cannot be underestimated. production is the basis of industrial enterprises, and therefore requires the search for new, targeted and specific solutions to increase its potential, taking into account the requirements and wishes of consumers to gain a lasting competitive advantage in the market in the long run. as noted by the author in work (yakovlev, 2018), the production potential is a system of components that provides the production of competitive products based on the resources of the enterprise to strengthen market positions and consumer needs. due to technological changes and innovative development in production, it is important to understand the company 's potential as a feature of practical and effective performance of production operations and the maximum use of technological possibilities. without knowledge of the production potential, it is impossible to strategically develop and plan other activities of the enterprise, because the nature of production processes determines the relative role of the living labor force, facilities, equipment, financial resources and raw materials in creating opportunities for the enterprise to develop. the study of the potential in theoretical and practical terms is primarily determined by its role in the reproduction of the country 's economy, in the reproduction of a socially oriented economy. fuller use of the potential is the key task of the intensification of the country 's economy and its enterprises (haievska, 2011). largescale investment projects and the introduction of new innovative processes have a positive impact on the dynamics of the company 's potential growth. the company 's potential is a complex and dynamic system. this agglomeration is characterized by certain patterns of development, the ability to be used, which largely depends on the efficiency of the economy, the pace and quality of its growth (haiduchynskyi, lupenko, balytska, 2014). the main task of the production potential of each enterprise is to create products with minimum resource costs, and the company must constantly search for new reserves in order to update production capacity and adapt it to the conditions of uncertainty (zhuk, 2014). 2. research to assess the production potential since it is assumed that the company has a management information system, it is essential to use a database that contains the necessary information about production processes. in addition, it makes sense to find additional sources that will provide the existing database with information needed to analyze and assess the production potential of the enterprise (figure 1). for a substantial assessment of production potential, it is necessary to form a set of indicators in accordance with the created criteria, which fully reflect the contribution of each component of production process. the analysis of scientific researches made possible to formulate the following criteria for selection of indicators: – reaching the target numbers; – availability of information needed to calculate the indicator; – presence of clearly defined limit ranges or critical values; – lack of a pronounced correlation with other selected indicators; – comprehensibility; – reliability and independence; – spatial and temporal invariance; – completeness of presentation and minimization; – minimization of the number of indicators. based on the structure of production potential (figure 1), the author proposes a system of quantitative indicators with subsequent selection of the most significant ones and aggregation of indicators according to the selected criteria. initially, eighteen indicators, which characterise the production potential of the industrial enterprise, are selected. adhering to the criteria of accessibility, minimization, lack of correlations, a number of indicators, which either did not affect the result of the integrated assessment, or there were difficulties in obtaining the information needed for calculation, are excluded from the set. as a result of the previous research, the author offers to estimate the innovation potential of machine building enterprise (ipme) with use of twelve indicators which quantitatively characterize components of potential (table 1). table 3 shows the results of indicators calculation for ten industrial enterprises of kharkiv region in 2020. indicators calculation for the year 2018–2020 is presented in annex a. after forming a set of indicators that meet the criteria, it is necessary to standardise them, making them dimensionless indicators. the choice of measurement scale must be justified, and under certain conditions, several scales can be used to check their impact on the outcome of the monitoring study. three seas economic journal 126 vol. 2 no. 3, 2021 3. analysis of the production potential of machine-building enterprises table 2 assessment indicators of the production potential of an industrial enterprise in 2020 № indicator № 1 № 2 № 3 № 4 № 5 i1 salary of production staff 9,68 3,14 2,55 2,92 8,71 i2 work efficiency of production staff 2013,98 473,03 267,09 594,08 1725,78 i3 operational profitability of production 0,1094 -0,1078 -0,6510 0,0626 0,0903 i4 turnover ratio of inventories 9,12 2,44 1,50 0,80 4,60 i5 return on capital of fixed assets 2,64 0,49 0,18 0,65 2,25 i6 coefficient of suitability of fixed assets 0,44 0,76 0,41 0,18 0,76 i7 coefficient of renewal of fixed assets 0,01 0,06 0,00 0,00 0,06 i8 used material efficiency 2,30 1,40 1,55 3,17 1,09 so ur ce s fo r t he d at ab as e of a n in du st ri al e nt er pr is e m an ag em en t i nf or m at io na l s ys te m implementation of innovative products global present and expected functional problems of the enterprise complete information on the status and efficiency of staff domain related and other external sources of information (prediction of national and foreign production market development, rating of the domain enterprises, analytical reports, etc.) financial and economic activity of the enterprise regulatory and legal support of production activities of the enterprise, statistical reporting stakeholders figure 1. information sources for databases table 1 assessment indicators of the production potential of an industrial enterprise № i/e quantity indicator calculation formula i1 salary of production staff i1 = pcp/wps where pcp – production cost for the period; wps – wages of production staff i2 work efficiency of production staff i2 = pcp/ans where pcp – production cost for the period; ans – average number of production staff i3 operational profitability of production i3 = froa/pcp where froa – financial result from operating activities; pcp – production cost for the period i4 turnover ratio of inventories i4 = cgsp/agp where cgsp – cost of goods sold for the period; agp – average goods price i5 return on capital of fixed assets i5 = pcp/apfa where pcp – production cost for the period; apfa – average price of fixed assets i6 coefficient of suitability of fixed assets i6 = sdfa/ipfa where ipfa – initial price of fixed assets; sdfa – sum of depreciation of fixed assets i7 coefficient of renewal of fixed assets i7 = pfao/ipfae where ipfae – initial price of fixed assets in the end of report period; pfao – price of the fixed assets put into operation i8 used material efficiency i8 = pcp/sc where pcp – production cost for the period; sc – sum of all costs source: author’s own workings three seas economic journal 127 vol. 2 no. 3, 2021 before building the model of integrated assessment, let us conduct a comparative analysis of indicators that characterise the production potential of nine industrial enterprises in the kharkiv region. figure 2 shows the indicators of operating profitability of enterprises in 2018–2020. the leader among the surveyed enterprises of the kharkiv region is pc "turboatom". at the same time, in three years the profitability of production has decreased tenfold. pc "khpz" is unprofitable in 2019–2020. pc "kharkiv tractor plant" and pc "svitlo shakhtar" also recorded losses in 2019 and 2020. also, the following companies had positive growth rates of the indicator: pc "kharkiv tile factory " (48%), pc "elektromashine" (39%), pc "svitlo shakhtar" (17%), pc "frunze plant" (9%). table 4 shows production staff efficiency for costs in 2018–2020. during the assessed period, the efficiency decreased for all surveyed enterprises except for pc "khkmz". the largest rate of decline was recorded in pc "khpz". at the end of 2020, pc "pivdenkabel" and "frunze plant" exceeded 8 points. the lowest figure of 2.55 was recorded in pc "khpz". pc "elektromashin" has the highest indicators of fixed assets capital efficiency, pc "kharkiv tractor plant" has the lowest indicators in 2018–2020 (figure 3). almost all enterprises have a decrease in the indicators in three years period, the largest rates of decline (more than 200%) were recorded in pc "kharkiv tractor plant" and pc "khkmz". figure 2 shows the indicators of material recovery of production. we can see growth of the indicator for 7 production enterprises, with the highest growth rates and indicator level in oc "turboatom". pc "khkmz" has the lowest rate, with of decline of 46% over three years. table 3 assessment indicators of the production potential of an industrial enterprise in 2020 (part 2) № indicator № 6 № 7 № 8 № 9 i1 salary of production staff 3,21 3,19 4,04 3,27 i2 work efficiency of production staff 367,79 742,18 984,57 295,26 i3 operational profitability of production 0,0834 0,0584 0,1778 0,0057 i4 turnover ratio of inventories 10,14 4,59 12,68 0,52 i5 return on capital of fixed assets 8,46 4,76 0,93 2,74 i6 coefficient of suitability of fixed assets 0,22 0,48 0,65 0,23 i7 coefficient of renewal of fixed assets 0,01 0,01 0,04 0,01 i8 used material efficiency 1,39 2,56 1,43 0,80 № 1 – pc "frunze plant"; № 2 – pc "kharkiv tractor plant"; № 3 – pc "khpz"; №4 – pc "turboatom"; № 5 – pc plant "pivdenkabel"; № 6 – pc "elektromashine"; № 7 – pc kharkiv machine-building plant "svitlo shakhtar"; № 8 – pc "kharkiv tile factory "; № 9 – pc "khkmz" source: author’s own workings -80,0% -60,0% -40,0% -20,0% 0,0% 20,0% 40,0% 60,0% 80,0% №1 №2 №3 №4 №5 №6 №7 №8 №9 2018 2019 2020 figure 2. dynamic of operating profitability of production enterprise № 1 – pc "frunze plant"; № 2 – pc "kharkiv tractor plant"; № 3 – pc "khpz"; № 4 – pc "turboatom"; № 5 – pc plant "pivdenkabel"; № 6 – pc "elektromashine"; № 7 – pc kharkiv machine-building plant "svitlo shakhtar"; № 8 – pc "kharkiv tile factory "; № 9 – pc "khkmz" source: author’s own workings three seas economic journal 128 vol. 2 no. 3, 2021 table 4 salaries of production staff of surveyed enterprises № enterprise 2018 2019 2020 rate of decrease, % 1 pc "frunze plant" 13,69 11,95 9,68 41,4 2 pc "kharkiv tractor plant" 4,56 4,51 3,14 45,2 3 pc "khpz" 5,12 3,22 2,55 100,8 4 pc "turboatom" 3,41 3,62 2,92 16,8 5 pc "pivdenkabel" 14,89 12,2 8,71 71,0 6 pc "elektromashin" 4,58 4,86 3,21 42,7 7 pc "svitlo shakhtar" 3,25 3,12 3,19 1,9 8 pc "kharkiv tile factory " 6,4 5,48 4,04 58,4 9 pc "khkmz" (kharkiv boiler and mechanical plant) 2,73 1,59 3,27 -16,5 0 2 4 6 8 10 12 №1 №2 №3 №4 №5 №6 №7 №8 №9 2018 2019 2020 figure 3. return on fixed assets in 2018–2020 * № 1 – pc "frunze plant"; № 2 – pc "kharkiv tractor plant"; № 3 – pc "khpz"; № 4 – pc "turboatom"; № 5 – pc "pivdenkabel"; № 6 – pc "elektromashin"; № 7 – pc kharkiv machine-building plant "svitlo shakhtar"; № 8 – pc "kharkiv tile factory "; № 9 – pc "khkmz". source: authors own workings 0 0,5 1 1,5 2 2,5 3 3,5 №1 №2 №3 №4 №5 №6 №7 №8 №9 2018 2019 2020 figure 4. material efficiency of production in 2018-2020 * № 1 –pc "frunze plant"; № 2 – pc "kharkiv tractor plant"; № 3 – pc "khpz"; №4 – pc "turboatom"; № 5 – pc "pivdenkabel"; № 6 – pc "elektromashin"; № 7 – pc kharkiv machine-building plant "svitlo shakhtar"; № 8 – pc "kharkiv tile factory "; № 9 – pc "khkmz". source: author’s own workings three seas economic journal 129 vol. 2 no. 3, 2021 thus, based on the analysis, we can indicate the position of each company for individual indicators that characterize the production potential. the main requirement for indicators is dimensionlessness and having a single scale of measurement. the following formulas for calculating dimensionless indicators used in [1]: 1. xk = − − i i k i i , k min k max k min (1) if the indicator iк corresponds to the highest value (straight connection); xk = − − i i i i k max k k max k min , (2) if the indicator iк corresponds to the lowest value (opposite connection). here i and ik min k max – minimal and maximal indicator values. 2. xk = −i ik k kσ , (3) where ik – average indicator value, σk – average square deviation of k-value. 3. xk k = − − − − 1 i i max{(i i ),(i i )} k opt opt min max opt kj k kj kj , (4) where i kj opt – optimal (normative) indicator value. the development of economic and mathematical model for integrated assessment of an enterprise production potential must begin with the study of various methods for processing multidimensional statistical information. the main criterion for such a method would be the availability of appropriate software and accessibility of results interpretation for an average person. studies have shown that the methods of principal components, cluster, discriminant, factor, and taxonomic analysis prove to be optimal for solving most problems. the method of taxonomic analysis is characterised by the simplicity of the mathematical apparatus and calculation program, as well as the absence of any special requirements for the set of studied objects. the other methods listed above are implemented in the "statistica" programs. the paper proposes to use the methods of the main components of taxonomic analysis, which will help to confirm the reliability and adequacy of the selected model for integrated assessment of production potential. integrated evaluation allows for determining the position of each industrial enterprise in an industry or separate region. 4. conclusions the advantage of the proposed approach to the integrated assessment of the level of production potential is the ability to use software for multidimensional statistical analysis, among which is the software package statistica. development of an integrated assessment module of production potential is the first stage of the presented methodological approach. the next stage is to improve the information subsystem for monitoring the financial and economic activities of industrial enterprises, which in turn is an integral part of the information system of enterprise management. at this point, it is necessary to develop software that provides analysis and comprehensive assessment of production capacity. after the integration of the software module in the is monitoring, we need to test the software using the accumulated database of financial and economic activities of an enterprise. comparing the evaluation results with the rating from analytical reports of independent experts will allow us to establish the level of adequacy of the presented model and software. after confirming the adequacy of the selected assessment model, it is necessary to organize a process of continuous analysis of the state and change of production capacity, which will automate the process of forming operational and final analytical reports. the results of the integrated assessment allow us to obtain a rating of the studied industrial enterprises according to the following ranking scale: 1) high level – the values of the integral index are in the range of [0,7 – 1,0]; 2) sufficient level – the values of the integral index are are in the range of (0.3 – 0.7); 3) low level – the values of the integral index are in the range of [0,10,3); 4) critical level – the values of the integral index are in the range of [0 – 0,1). references: haievska, l. m., & chernova, o. v. (2011). vyrobnychyi potentsial – osnova rozvytku pidpryiemstva [production potential is the basis of enterprise development]. vіsnyk zhdtu, 1(55), 184. (in ukrainian) haiduchynskyi, p. і., lupenko, yu. o., balytska, v. v., and other (2003). rozvytok pidpryiemstva v ukraini [enterprise development in ukraine]. kyiv: noradruk. (in ukrainian) zhuk, o. e. (2014). vyrobnychyi potentsial yak faktor rozvytku pidpryiemstva za umov nevyznachenosti [production potential as a factor of enterprise development under conditions of uncertainty]. vіsnik hmelnickogo nacіonalnogo unіversitetu, 3, 207. (in ukrainian) yakovlev, v. і. (2018). traktuvannia ekonomichnoi katehorii vyrobnychoho potentsialu [interpretation of the economic category of production potential]. prichornomorskі ekonomіchnі studіi, 34, 115–120. (in ukrainian) three seas economic journal 64 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 kherson state university, ukraine (corresponding author) e-mail: perminova@i.ua orcid: https://orcid.org/0000-0002-6818-3179 doi: https://doi.org/10.30525/2661-5150/2022-3-10 science diplomacy in the context of socio-cultural development of education liudmila perminova1 abstract. the article is devoted to the problem of development of scientific diplomacy of educational institutions by means of creative cooperation. the main task of scientific diplomacy to form the image of the educational institution and interpersonal relations of all participants in the educational process is substantiated. attention is paid to the communicative activity as a phenomenon of scientific creativity; the theoretical content of the concepts of "diplomacy", "communicative culture", "educational diplomacy" is considered; diagnostics of the readiness of educational institutions for the development of educational and scientific diplomacy is carried out. the conducted analysis of the essence of pedagogical interaction in an educational institution allows us to conclude that the concept of "educational diplomacy" is a rather complex and multifaceted concept that is used in various spheres of human activity, covers a large number of objects and phenomena, as it is manifested in the educational process, personal interaction, technological processes, communications, etc. the article also pays attention to the development of science diplomacy, peculiarities of its implementation and influence on the generation of international initiatives in the globalized world. using a comparative methodology, the approaches to understanding science diplomacy in domestic and foreign discourse are analyzed, taking into account the existing practice of its application. it is established that science diplomacy, as a type of public diplomacy, serves as a means of promoting and protecting the national interests of the state, and also plays a regulatory role in a complex system of international interaction. at the same time, science diplomacy can serve to solve specific foreign policy tasks of regional importance – first of all with neighboring countries in the fields of ecology, forecasting and elimination of the consequences of natural and man-made disasters, mining and rational use of marine natural resources, in the social and humanitarian sphere. the availability of permanent and sufficient funding for bilateral scientific projects on such topics, especially with neighboring countries, can actually be a manifestation of scientific diplomacy for establishing good international relations. developing the institution of science diplomacy, it is extremely important to maintain a balance of interaction between scientific and political components, to prevent the use of political tools in the scientific sphere. it is also extremely important that scientific and diplomatic goals remain transparent to avoid manipulation of science for political purposes and to prevent politicization of science. the results of the study give grounds to assert that the development of educational diplomacy is a priority area of personal development and professional development of scientists and teachers of educational institutions, based on psychological and pedagogical theory and practice and focused on subject-subject relations in work. this direction is consistently implemented in the process of studying in the system of postgraduate pedagogical education by acquiring the necessary competencies, gradual improvement of communicative qualities and accumulation of experience in communicative interaction. key words: science diplomacy, scientific cooperation, educational diplomacy, diplomacy for science. jel classification: м14, d61, i31, i38, z10 1. introduction the dominant trend of modern social development is the integration of intellectual potentials and technologies. combining the efforts of scientists from different countries significantly expands the boundaries of knowledge. the growing trend of international scientific and technical cooperation is the most characteristic feature of modern science and an important tool for its global internationalization. countries with sufficient scientific potential have additional opportunities to realize their interests both within individual regions and in the space of three seas economic journal 65 vol. 3 no. 3, 2022 world politics as a whole. science diplomacy is of particular importance, because, on the one hand, it ensures the national interests of the state through the use of a wide range of classical and specific foreign policy actions that determine the prospects and status of the state in the international arena, and on the other hand, it creates additional means of counteracting global challenges of today (berkman, 2018). terrible events in ukraine, the beginning of a full-scale war forced ukrainians to break into the scientific and educational european space. thousands of scientists, women and children were forced to become temporarily displaced persons, fleeing from the occupation and the front line. highly educated scientists and teachers were left without jobs (many universities in kharkiv and mykolaiv were physically destroyed), without homes, without their scientific achievements in home archives. they are forced to look for a job and actually start all over again, so the issues of science diplomacy and integration require thorough research, the need to develop a new paradigm and a new concept for the development of science diplomacy, scientific and educational space in europe and around the world. such turbulent simultaneity has created a unique synergistic effect and forced the integration of educational systems of different countries. joining the european educational space leads to the possibility of introducing pedagogical innovations that will contribute to the formation of a new strategy for the development of the world educational system, one of the vectors of which is to increase the level of pedagogical interaction of the subjects of the pedagogical process and improve the ways of education development. it has already become clear that education is the basis of intellectual, spiritual, physical and cultural development of the nation, through successful socialization and economic prosperity, the key to the development of a society united by common values, culture, development of self-awareness and self-identification of statehood (romanova, 2017). 2. terminological definition of "science diplomacy" and its role in the socio-cultural development of the country certain types of diplomacy, such as economic, trade, energy, social, information, cultural, etc. are increasingly becoming the subject of research in scientific publications. recently, the topic of science diplomacy has become the subject of domestic scientific discourse, although in the context of the concept of "soft power", which is considered in the works of m. g. kapitonenko, o. v. levchenko, myronchuk o. (2019). the works of p. berkman (2018), r . holt (2015), and v. turekyan are devoted to the problems of the scientific dimension of politics in general, as well as the place of science diplomacy in the field of foreign policy. the foreign experience of the use and implemen tation of science diplomacy, which is increasingly considered by scientists in different countries, was also investigated in the works of m. v. silantieva, o. m. kharitonova, r . o. reinhardt, and k. a. ibrahimova (fedoroff, 2009; science diplomacy, 2022). despite the fact that modern scientific research is quite multifaceted, in the domestic scientific discourse, insufficient attention is paid to the issues of interstate cooperation in the form of science diplomacy, the peculiarities of its implementation, and the improvement of the practice of making mutually acceptable political and economic decisions of countries through the use of science diplomacy. since february 2022, this problem has instantly aggravated and actualized due to the outbreak of a full-scale war in ukraine. as of 01.05.2022, 88 educational institutions were completely destroyed, 869 institutions were partially damaged, 33 institutions of higher and vocational higher education were forced to leave the places of permanent displacement and moved to other territories to organize the educational process (word and deed: analytical portal, 2022). it is clear that science diplomacy as a format of support and interaction should be used both inside and outside ukraine. in view of this, the urgent need to strengthen science diplomacy in ukraine's foreign policy should be considered in the leapfrog aspect of revolutionary impulses, as a consequence of the declared course of integration into the european and world scientific space. that is why the issue of science diplomacy requires a comprehensive study both in terms of its theoretical aspects and existing world practices adapted to the possibilities of modern realities. therefore, the purpose of the article is to analyze the approaches to understanding science diplomacy established in domestic and foreign discourse, as well as to clarify the peculiarities of its implementation and influence on the generation of international initiatives in the context of socio-cultural development. to understand the practical value of using the tools of science diplomacy, it is advisable to consider modern theoretical approaches to the concept of "science diplomacy " and its main components. science diplomacy is generally understood as the use of scientific cooperation between countries to solve common problems and build constructive international partnerships. science diplomacy has become an umbrella term for a range of formal or informal scientific and technical exchanges. it is important to note that there is no single approach to the interpretation or definition of this form of international interaction. three seas economic journal 66 vol. 3 no. 3, 2022 the directions of science diplomacy that have already become "classical" are scientific and information support (science in diplomacy); promotion of international scientific cooperation (diplomacy for science); the use of scientific cooperation to improve relations between countries (science for diplomacy) – were formulated in the report on the results of the conference "new horizons of science diplomacy ", organized by the american association for the advancement of science in cooperation with the royal society (uk) in june 2009 (zewail ahmed, 2010). in 2017, scientific advisers to the foreign ministers of the united states, new zealand, great britain and japan formulated the concept of science diplomacy as actions aimed at directly promoting the national needs of the country; actions aimed at addressing cross-border interests; actions aimed at meeting global needs and challenges (enhancing and focusing eu, 2012). today, science diplomacy is also understood as a global service that should use scientific cooperation between states to solve common problems and create constructive international partnerships (materials of the conference, 2021). paul berkman, who is engaged in the research of science diplomacy, believes that trust and successful interaction among scientists from different countries causes the emergence of a wave-like "goodwill effect", and science diplomacy offers a unique opportunity for building a common future (berkman, 2018). highlighting certain features of diplomatic activity in the scientific sphere, this issue should be linked to the security factor, since the national security of the state largely depends on its intellectual, scientific and technical potential. leading scientific organizations that implement strategic goals to ensure the national interests of the state in the scientific and technical sphere, together with professional diplomats, lay the foundation for the implementation of the state's scientific policy in the international arena. the architecture of such policy depends on cooperation of diplomatic structures, scientific institutions and centers in the spheres of scientific and technical information exchange, joint research, analytical work, implementation of joint scientific programs, etc. thus, science diplomacy is becoming increasingly important for solving global problems, working on the implementation of two groups of tasks – classical and modern, determined by the dynamism of scientific and technological progress in the 21st century, as well as existing challenges and potential threats. science as a tool of diplomacy and one of the components of "soft power" has been used in many countries for several decades. significant experience in the use of "soft power" has been accumulated by the leading countries of the world, in particular, the united states, the european union and asian countries (turekian vaughan, neureiter norman, 2012). one of the first steps in this direction was the creation in 1931 of the international council of scientific unions, today – the international council for science (ics), whose resources and tools are aimed at developing scientific solutions to world problems. the fundamental principle of the international council for science is the universality of science, which confirms the right and freedom of scientists to unite in international scientific activities regardless of such factors as ethnicity, religion, citizenship, language, political beliefs, etc. (new frontiers in science diplomacy, 2010). an example of science diplomacy is the european organization for nuclear research (cern) – an international research center of the european community, the world's largest laboratory of high-energy physics. this influential international organization consists of 23 member states, 5 associate members, including ukraine, as well as countries with observer status. in total, about 80 countries participate in cern activities in one form or another. today, about 12000 researchers from more than 600 scientific centers and universities work on the experimental equipment of cern – this is half of all physicists-researchers of the microcosm (mironchuk, 2019). today, the american association for the advancement of science (aaas) is actively working in the field of science diplomacy. this is an international non-profit organization whose efforts are aimed at promoting cooperation between scientists, protecting freedom of research, encouraging scientific responsibility, supporting education and science. the association is a powerful scientific community and publisher of the famous scientific journal "science" with a weekly circulation of more than one hundred thousand copies. the association has a center for science diplomacy, which aims to use science and scientific cooperation to promote international understanding. no less unique example of international cooperation through the instruments of science diplomacy is the european research area (era), which has become an ecosystem of interaction between scientists and policymakers from different eu countries in order to increase the competitiveness of the eu as a whole. the uniqueness of the era lies in the duality of the purpose of its creation, because on the way to a common goal there are always contradictions that require a compromise and the need to coordinate the internal interests of countries, even in the field of science. to solve this complex task, the european commission has built a structured system of advisory and working bodies that deal with the three seas economic journal 67 vol. 3 no. 3, 2022 formation of a common research strategy and priorities – the european research area and innovation committee (erac), the development of joint research infrastructures – the european strategic forum for research infrastructures (esfri), the formation and implementation of research programs and projects, etc. such bodies are composed of state-nominated experts from a cohort of scientists whose main task is to represent and secure the interests of their own countries through the prism of demonstrating the active position and significant contribution of each country to the common good (nye, joseph s. jr., 2011). the last condition is the key to success, because in the world of science diplomacy you are worth and have the right to vote exactly as much as your contribution to solving common scientific problems. as a rule, countries that invest huge resources in their r&d sector can definitely shape the global technological agenda and achieve foreign policy goals with the help of science diplomacy tools. at the same time, science diplomacy can serve to solve specific foreign policy tasks of regional importance – first of all with neighboring countries in the fields of ecology, forecasting and elimination of the consequences of natural and man-made disasters, mining and rational use of marine natural resources, in the social and humanitarian sphere. the availability of permanent and sufficient funding for bilateral scientific projects on such topics, especially with neighboring countries, can actually be a manifestation of scientific diplomacy for establishing good international relations. in any case, the presence of a background of scientific cooperation in the sensitive topics allows real diplomacy to have a non-zero starting point for political dialogue and historical memory, for example, regarding the issue of ecological monitoring of the danube delta or historical-cultural dialogue in zakarpattia or volhynia (pyschak, 2021). each country has developed its own system of implementation and functioning of science diplomacy. of particular interest for ukraine is the european experience of using the instruments of science diplomacy in view of the intensification of ukraine's european integration course, in particular the common research area, as well as the fact that the eu is an active participant and donor of modern reforms in ukraine, a significant part of which is directly related to the scientific sphere. 3. ukrainian context of science diplomacy development for the first time in the history of ukraine, the mfa has developed and approved the public diplomacy strategy for 2021–2025. the public diplomacy strategy outlines the goal, objectives, key areas of activity in the relevant field for the medium term, ensuring the synergy of diplomatic and cultural policies. it was developed in the context of the foreign policy concept of ukraine and reflects its main provisions (strategy of public diplomacy, 2020). in addition to clear and measurable goals and objectives, the document defines seven main areas of public diplomacy: economic; expert; cultural; scientific and educational; digital; sports; culinary. it is noteworthy that in the strategy of the ministry of foreign affairs of ukraine for 2021–2023, the term "science and education diplomacy " appeared, which is defined as a direction of public diplomacy that promotes building strong partnerships with other countries through scientific and educational exchange; addressing global, regional and national challenges using scientific achievements; forming foreign policy decisions based on evidence. education and science are important factors of socio-cultural diplomacy. science is an environment free from the influence of political ideologies, where ideas can be exchanged despite cultural, national and religious differences (strategy of public diplomacy, 2020). the concept of "science diplomacy " appeared relatively recently and is now distinguished as an independent direction of the state's foreign policy. the purpose of science diplomacy is to promote the deepening of international cooperation in the field of science and education. educational diplomacy is inextricably linked with science diplomacy, because for most modern universities, which are the main subjects of educational diplomacy, successful functioning is possible only in an inseparable combination of scientific, educational and commercial activities (rozumna, chernenko, 2016). educational diplomacy involves the definition of a new content of relations and mission of organizational culture in the educational institution, focused on the modern needs of teachers, students, parents, the state and society, international mobility of students, teachers, university staff, the growing interest of educational institutions in attracting foreign students, the optimal combination of all needs into a single cultural and educational whole, which is a living organism with humanistic principles and tolerant rules (bukina, perminova, 2021). there are several definitions of the term "educational diplomacy ". the most successful, in the authors' opinion, is the statement that educational diplomacy is a means of forming the image of an educational institution and an opportunity to show ukraine to the world with the help of intellectual potential and professionalism (myronchuk, 2019). this became especially important in 2022, in the midst of three seas economic journal 68 vol. 3 no. 3, 2022 ukraine's full-scale war against russia, when a large number of phds and doctors of sciences were forced to become temporary migrants and were forced to move to european countries. many of them got jobs in educational institutions abroad and were able not only to confirm their status, but also to define a new approach to existing models of education. the authors would like to define the following functions of educational and scientific diplomacy: – promotion of values through their study and research; – an informational function designed to inform and educate; – the development of socio-cultural relations, that is successfully carried out in universities where representatives of different countries study; – promotion of positive perception of culture and national identity through education. ukraine has a fairly extensive network of higher education institutions, which as of 2022 had quite serious international relations and great potential to influence foreign audiences – through foreign students, politicians, diplomats, scientists, educators from foreign countries, etc. international university cooperation is undoubtedly the most effective form of scientific and educational diplomacy. believe that now, despite the change in the model of relations, this cooperation will be even stronger and more effective. ukrainian higher education institutions play a significant role in interstate relations. this especially emphasizes and strengthens the fact of the presence of national minorities in the regions where educational institutions are located, the study of language, history, culture, contacts of higher education institutions with organizations of the countries of origin of national minorities, etc. already now, in 2022, the ministry of education and science of ukraine recommends ukrainian universities to take advantage of the opportunities to attract additional funding for the development of science, material and technical base, participation in international student and faculty mobility programs through programs funded by the eu, other foundations and international organizations, as the eu and almost all countries of the world support ukraine in its struggle and help it to survive until the victory for its independence. there are certain channels of science and educational diplomacy that include: – digital: websites, social networks, youtube channels, personal blogs, vlogs, elearning platforms; – media: local and international, all-ukrainian, regional mass media – tv, radio, online, print; – events: activities. the tools of such diplomacy are quite diverse: – scientific research; – participation in the international conferences, seminars; – scientific meetings organized by one of the parties; – exchange of lecturers for giving lectures and consultations; – development of joint courses; – publication of the results of scientific works in periodicals; – exchange of scientific literature; – organization of joint cultural events; – submission of joint projects for obtaining external grants; – exchange of lecturers/students/researchers; – studying under double degree programs. 4. improving the instruments of science diplomacy development at the first global meeting on science diplomacy "eu science diplomacy beyond 2020" in madrid in december 2018, the "madrid declaration on science diplomacy " was signed, which addresses the need to strengthen science diplomacy strategies and practices around the world to support universal scientific and democratic values. in the context of this declaration, science diplomacy is seen as a set of practices at the intersection of science, technology and foreign policy: clearer science diplomacy strategies at the national and supranational levels will allow for better alignment of interests and more effective coordination of resources (madrid declaration, 2019). today, the modern world is experiencing economic, political and religious "turbulence", which puts new demands on science diplomacy. as noted by the former un secretary general (1997–2006) kofi annan, "95% of the world's new science is created in countries where only one fifth of the world's population lives." (zewail ahmed, 2010) on the other hand, the existing risks are also associated with stimulating the transfer of not only new but also outdated technologies to countries where their use is still economically feasible (myronchuk, 2019). therefore, one of the urgent tasks of science diplomacy is to support new scientific communities of those countries that are in the process of building their own scientific potential. science diplomacy is designed to help understand current trends and challenges that stand in the way of progress, and this, in turn, requires greater recognition of the scientific drivers of the new diplomacy (holt rush, 2015). experts in the field of science diplomacy are convinced that countries should use one of their best currencies – science – to achieve foreign policy goals, and the term "scientopolitics" should enter the lexicon of diplomacy. back in 1999, the us national academy of sciences concluded that thirteen of the three seas economic journal 69 vol. 3 no. 3, 2022 sixteen us foreign policy goals are related to science and technology (тurekian vaughan, neureiter norman, 2012). the authors believe that the scientific and educational potential for the development of scientific and socio-cultural diplomacy is just beginning to manifest itself in ukraine. therefore, it is important to focus on solving a number of issues. this will be especially relevant immediately after the victory and the beginning of the reconstruction of the country. the key issues include the following: 1) formation of its own model of international activity, which provides for cooperation with ministries of education, diplomatic and consular institutions, local governments, city halls, educational institutions, foundations, state and public organizations of foreign countries. 2) establishment of an appropriate unit within the structure of each university to implement the strategy of international activities of the university. its work should be aimed at developing, expanding and strengthening international relations and the authority of the university in the world educational and scientific community, that is: – establishment of international relations with foreign partners (universities), organizations, associations, scientific institutions through the conclusion of bilateral or multilateral cooperation agreements; – organization, coordination and control of international programs and university academic mobility; – organizational and documentation support of foreign internships, international exchange programs, "double diploma", etc; – informing about international scientific and educational grant programs, projects, funds, scholarships; – organization of visits and receptions of foreign specialists and delegations; – reporting on the results of the university 's international activities. 3) expansion of academic mobility of the university, its integration into the world and european educational and scientific space through the involvement of students, graduate students, faculty, researchers to participate in international projects, programs and research. in general, academic mobility involves the involvement of participants in the educational process of the university in the educational process of another higher education institution (scientific institution) in ukraine or abroad, conducting research with the possibility of re-enrollment of mastered disciplines in the prescribed manner. the right to academic mobility can be realized on the basis of international agreements on cooperation in the field of education and science, international programs and projects, agreements between ukrainian or foreign higher education institutions (scientific institutions), their main structural units, and can also be realized by the participant of the educational process on his own initiative, on the basis of individual invitations and other mechanisms. according to the place of implementation of the right to academic mobility it is divided into internal and international. international academic mobility is the participation of representatives of the educational process of the university in the educational, scientific and pedagogical or scientific activities of a foreign higher education institution, scientific institution, organization for a certain period. the optimal period is considered to be a semester or one academic year. academic mobility programs should correspond to the educational activities of the university. 4) the educational process at the university should be organized in accordance with modern standards of quality education, which, in particular, initiate the development of international cooperation of universities and the process of internationalization of higher education. thus, with the assistance of the british council in ukraine, more than 20 ukrainian higher education institutions received grants for study visits and partnerships with british universities in various fields (pyschak, 2021). 5) stimulation of scientific research through the formation of scientific schools, scientific departments, staff researchers, scientifically active students at universities, as science at universities is an important segment of science in the state. university science has three important areas of application: – use of the latest achievements of science in the formation of adequate content of education (new textbooks, manuals, specialties and educational and professional programs); – training of scientific personnel through postgraduate and doctoral studies; – a source of new knowledge, a base of the latest innovative educational technologies. 6) systematic and coordinated efforts towards the development of educational and scientific diplomacy of the university in order to improve the quality of higher education; increase the efficiency of scientific research; enrich the individual experience of participants in the educational process by familiarizing themselves with other models of creating and disseminating knowledge; increasing the competitiveness of both graduates and the university as a whole in the ukrainian and inter national markets of educational services and labor; creating a positive image among ukrainian and foreign higher education institutions. concretization of the directions of diplomacy is promising. these provisions formed the basis of our beliefs in identifying the features, directions, levels of three seas economic journal 70 vol. 3 no. 3, 2022 development of educational diplomacy in the education system, in connection with which a diagnostic study was conducted, because educational diplomacy is the interaction of all participants in the educational process. diplomatic art is the professionalism of a manager, reduced to creativity, that is, an activity that generates a qualitatively new level of professionalism. here are the main results of the study among 46 pedagogical workers to determine the level of development of educational diplomacy in the institution of vocational (vocational-technical) education (table 1) (pyschak, 2021). the results of the survey (table 1) showed that the majority of teachers of vocational (vocational-technical) education institutions consider communication qualities to be important for their professional activity, with the majority of respondents preferring to listen rather than talk. almost half of the respondents (55.5%) can find a topic for conversation with a stranger. the question "do you like to give advice?" was answered by respondents on a scale from 6 to 8 points. if the conversation is not interesting, more than half of teachers (88.7%) hide it from the interlocutor. the study also showed that 76.3% of teachers get annoyed when they are not listened to and almost all respondents have their own opinion on any issue. in communication, teachers are attracted by the exchange of ideas, receiving new information, expanding their horizons, that is, 85% of respondents said that they like to be in the spotlight. instead, only 36% of teachers consider themselves good speakers. the study identified ways to improve the development of educational diplomacy for heads of educational institutions: – рroviding the management staff of educational institutions with knowledge of the psychology of communication of managers (through lecture courses, online courses, special seminars and psychological counseling during in-service training courses in the system of postgraduate pedagogical education); – formation of communicative competence (through interactive trainings); – raising the level of communication culture in educational institutions – it is advisable to use innovative technologies (discussions, didactic and business games, trainings, projects, multimedia learning tools, web blogs, technologies for the development of critical thinking, etc.); – an important vector for the effective development of educational diplomacy for educational institutions is organized self-education, which is used to solve a wide range of problems in the educational sphere and can be successfully adapted in the process of developing the communication culture of heads of educational institutions. the conducted analysis of the essence of pedagogical interaction in an educational institution allows us to conclude that the concept of "educational diplomacy " is a rather complex and multifaceted concept that is used in various spheres of human activity, covers a large number of objects and phenomena, as it is manifested in the educational process, personal interaction, technological processes, communications, etc. educational diplomacy contributes to the implementation of qualitative changes in the pedagogical system (in education, in the upbringing of students, in the educational and sociocultural environment), forms a high level of culture of relations between the subjects of the educational process in the context of humanistic relations. 5. conclusions science diplomacy is a new and progressive direction of development of the system of international relations. the development of science diplomacy mechanisms as a type of public diplomacy should become one of the key elements of the state scientific table 1 the level of development of educational diplomacy in vocational (vocational and technical) education question answer options (%) yes no 1. do you prefer to listen rather than talk? 66,7 32,4 2. can you always find a topic to talk to a stranger? 55,5 42,7 3. do you always listen carefully to the interviewer? 77,7 21,3 4. do you like to give advice? define on a 10-point scale 44,2 32,3 5. if the topic of conversation is not interesting to you, do you hide it from the interlocutor? 88,7 11,6 6. do you get annoyed when you are not listened to? 76,3 21,9 7. do you have your own opinion on any issue? 73,4 22,2 8. if you do not know the topic of the conversation, will you continue the conversation? 55,4 47,8 9. do you like to be in the spotlight? 43,2 55,8 10. are there at least three areas of your activity in which you have sufficiently deep knowledge? 65,4 33,7 11. do you consider yourself a good speaker? 53,7 43,2 source: compiled by the authors based on (pyschak, 2021) three seas economic journal 71 vol. 3 no. 3, 2022 and technical policy of ukraine. the tasks of the development of ukrainian science should include the formation of such a model of international scientific and technical cooperation and international integration in the field of research and technological development, which allows to protect the identity of the national scientific sphere and state interests in the context of internationalization of science and to increase the efficiency of ukrainian science through mutually beneficial international cooperation. the development of science diplomacy in our country, given the significant scientific potential, is an extremely promising area of activity of the society, which requires more active promotion of the possibilities of ukrainian scientific potential and intensification of work on the popularization of ukrainian science; attraction of international funds for the implementation of scientific projects; strengthening of academic mobility programs – exchange of scientists and specialists, especially young scientists and students; creation of centers of excellence; creation of conditions for full participation of domestic scientists in international projects; development of a consistent and comprehensive, not fragmented policy in the field of science diplomacy. in the process of developing the institute of science diplomacy, it is extremely important to maintain a balance between the interaction of scientific and political components, to prevent the use of political instruments in the scientific sphere. it is also extremely important that scientific and diplomatic goals remain transparent to avoid manipulation of science for political purposes and to prevent politicization of science. the results of the study are the basis for the statement that the development of educational diplomacy is a priority direction of personal and professional development of scientists and teachers of educational institutions. it is based on psychological and pedagogical theory and practice and is focused on subject-subject relations in work. this direction is consistently implemented during the educational process in the system of postgraduate pedagogical education by acquiring the necessary competencies, gradual improvement of communicative qualities and accumulation of experience in communicative interaction. references: berkman, p. a. 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(2010). science in diplomacy. cell, vol. 141, issue 2, april 16, рр. 204–207. available at: https://www.sciencedirect.com/science/article/pii/s0092867410003764 received on: 22th of august, 2022 accepted on: 26th of september, 2022 published on: 31th of october, 2022 three seas economic journal 34 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 educational and scientific institute of culture and arts, sumy state pedagogical university named after a. s. makarenko, ukraine (corresponding author) e-mail: tokarenkonat@gmail.com orcid: https://orcid.org/0000-0003-2598-4336 2 research institute social cohesion (risc), section hannover, leibniz universität hannover, germany e-mail: johannes.crueckeberg@uni-hildesheim.de orcid: https://orcid.org/0000-0001-6850-1168 doi: https://doi.org/10.30525/2661-5150/2022-3-6 formation of a new educational paradigm of socio-cultural development of ukraine in the new historical discourse nataliia zlenko1, crückeberg johannes2 abstract. the article deals with the formation of a new educational paradigm of socio-cultural development of ukraine in the new historical discourse. nowadays it is impossible to determine a single determinant of the development of human society. in the system of humanities there are different concepts of the determining factors of social development, but, according to the authors, the priority place in the formation of a new system of social relations and global development is occupied by socio-cultural factors. this problem is becoming increasingly important and requires serious socio-empirical research and scientific analysis. the article is an attempt to substantiate the need to define a new paradigm in education, caused by the factors of socio-cultural development, even in the most difficult period for ukraine. the article identifies the socio-cultural determinants of the educational paradigm in modern ukrainian realities. social being and processes of culture formation are in dialectical unity. evidence of this unity is the presence of social determinants in culture. among the main factors that influence its development is heredity, that is, the connection of generations. that is why socio-cultural factors play a leading role in the overall impact on the development of society and the management system in particular. the main features of the project of socio-cultural development of ukrainian society include: creation of the institute of science; emergence of an "intermediate environment" and qualitative change of the educational institution itself. educational innovations have become especially relevant since the beginning of the large-scale war unleashed by the russian federation on the territory of ukraine. the functioning of the education system under martial law is characterized by an intensive search for new approaches to education, innovative forms of organization of the educational process, effective pedagogical and information technologies. for example, students from all over ukraine who have access to the internet can use the materials of the school "optima" after registration, the team of the online school "grand expo" has opened access to 532 case lessons for the period of martial law in ukraine, the center for distance education "a+" conducts lessons in zoom for all children of ukraine. in wartime, it is also important to create a protected educational environment and organize the educational process, especially for those children who have suffered psychological trauma. for the modern ukrainian society, higher education is determined as the foundation of personal development, a priority area of state policy, so it is not accidental that scientists are interested in the study of various aspects of the functioning of higher education. from the point of view of socio-cultural planning, higher education should be considered as a project aimed at shaping the worldview of the individual, equipping him/her with knowledge, educating a patriot and citizen of the state. and since these strategic tasks are a contribution to the future, the future of the people and culture will depend on their implementation. under the influence of the processes of socio-cultural transformations, scientific knowledge should become a tool that will allow to respond decisively to the modern challenges of society. and it will become a solid foundation for further development and prosperity of ukraine in the world. key words: socio-cultural determinant, educational paradigm, historical discourse, socio-cultural development, war in ukraine. jel classification: м14, d61, i31, i38, z10 three seas economic journal 35 vol. 3 no. 3, 2022 1. introduction it is a well-known fact that the 21st century is marked by the intensive development of the new forms of information and communication technologies. new scientific achievements and the general global health situation lead to the need to adopt new non-standard solutions and reform the education sector as a whole. this situation has become especially acute in ukraine since february 2022, when a full-scale war between ukraine and russia began. according to statistical estimates, almost 6 million people were forced to leave the country, and almost 10 million people became internally displaced. among them, the vast majority are women, children, adolescents and young people of pre-conscription age, and this is exactly the contingent of the educational environment. the introduction of prolonged quarantine restrictions earlier, as well as military actions in ukraine for an indefinite period, force educational institutions to look for new forms of education. and not just to move from the usual offline face-to-face education to blended and distance learning, but to launch new forms of transmission and preservation of ukrainian culture and traditions. there is an urgent need to invent innovative forms in conditions of limited resources and opportunities. the educational process of youth coincides with the period of formation of value consciousness, its moral and professional qualities. and now, more than ever, in order to support statehood and ukrainian selfidentification, there is a need to create a socio-cultural educational environment that adheres to the principles of tolerance, creativity, interpersonal communication in order to reproduce the values and cultural norms of ukrainian society, consolidation and dissemination of cultural innovations around the world (zlenko, 2020). it is impossible to determine a single determinant of human society development. in the system of humanities, there are different concepts regarding the determinants of social development, but, according to the authors, socio-cultural factors occupy a priority place in the formation of a new system of social relations and global development. this problem is becoming increasingly relevant and requires serious socio-empirical research and scientific analysis. the article is an attempt to substantiate the need to define a new paradigm in education, caused by the factors of socio-cultural development, even in the most difficult period for ukraine. 2. determination of socio-cultural determinants of the educational paradigm in modern ukrainian realities education and upbringing are the most important issues of human existence, as they have a direct and immediate connection with its evolution. revealing the inner essence of man and shaping his character, they form the man himself. that is why much attention has always been paid to them. the fate of both an individual and the entire universe depends on them. all nations and states always care about preparing a generation that meets modern requirements in the person of their children. the works of foreign scientists who study the problems of national identity and its upbringing are based on the theory of social identity, civic identity, because a person in the process of education presents himself as a member of society, organization, state (r . brown, m. petchen, g. harris, j. cameron etc.); on the processes of identification of a person with their nation and demonstration of belonging to their nation (s. salfet, r . ayala, a. mummendey, a. klink, etc.); on the determination of the european national identity, that affirms the existence of the european nation in its real and abstract senses (m. hroch). it is also possible to draw a parallel with the ideas of the famous ukrainian thinker ivan franko, who paid considerable attention to the problem of the general progress of ukrainian society and, above all, selforganization at the community level. he emphasized that the social self-realization of ukrainians is absolutely necessary in the context of the general development of human civilization, but at the same time it is an integral, "organic", "natural" component of the process of "emancipation of the human unit" (i. franko, 1986). without individual development and growth in the spiritual sense, general sociocultural development and any manifestations of social interaction and self-organization are impossible. in this aspect, it is appropriate to use the concepts of "sociocultural sphere", "sociocultural space", "sociocultural dynamics" introduced into scientific circulation by the famous sociologist p. sorokin as components of his integral sociocultural system. it is important to understand the deep meaning of all these phenomena of sociocultural direction. p. sorokin himself emphasizes that they do not need to be explained in terms of the psychological characteristics of their members, and even vice versa, "psychological characteristics should be explained in terms of the properties of the socio-cultural interaction in the matrix of which they are embedded." (zhyvohliadova, 2020) thus, the structural and dynamic properties of a social system are not a simple sum of individuals. interaction changes their biological and psychological characteristics and produces socio-cultural reality, so the researcher considers society and culture as a single phenomenon through the prism of which all forms of human life should be studied. a similar position is also taken by p. bourdieu, a wellknown researcher of social space or so-called social three seas economic journal 36 vol. 3 no. 3, 2022 field. his social space is a kind of ensemble of various fields, including political, religious, economic, cultural, ethnic, which live according to their own laws. he interprets space as a field of forces, or rather – "a set of objective relations of forces that are imposed on everyone who enters it, and which are not reduced to the intentions of individual agents, as well as to their interaction." (bourdieu, 2005) in fact, this concept resonates with the socio-cultural space of p. sorokin with an emphasis on the uniqueness and objectivity of the interaction process itself. obviously, p. bourdieu offers his version of the classical structure of the social system, in which traditionally there are three spheres: economic, political and spiritual, which are actually closely intertwined. the question of the structure of the social system is directly related to the problem of determining the main factors of development of both the system as a whole and its individual component, in this case – public administration. in this paper, the authors substantiate their position on socio-economic factors, defining them as derivatives of socio-cultural factors. as for the classical system of political factors, they are associated, on the one hand, with the processes of gaining, retaining, transferring power and struggle for it, and on the other – with the development and implementation of state policy. the analysis and consideration of the influence of the political factor on the process of forming a new educational paradigm is important and relevant for understanding the widest range of socio-cultural system and socio-cultural dynamics, since it is based on the following sociocultural processes: citizens' trust in government, political activity, responsibility of the state and local governments, activity and level of development of civil society, the rule of law, the level of freedom and justice in society, the level of civic culture (atamanyuk, 2017). now these factors are the most important for the formation of ukrainian mentality and identity of ukrainians. these factors played the most important role in the formation of the defense forces and army of ukraine. in the processes of social interaction, such a factor as social capital plays an extremely important role. p. bourdieu, who, in fact, introduced this concept into scientific circulation, defines it as a system of existing social relations. he emphasizes that the main driving force of economic development is human resources, and the level of education and cultural development in general are the determining factors of all processes of social dynamics, in particular, economic and political subsystems. therefore, from his point of view, the most significant component of social capital is cultural capital. through cultural capital, the main goal of reforming the modern education system can be realized – the transition from a complex vertical structure to simple organizations consisting of a horizontal network of autonomous self-governing communities. power is determined by the degree of ownership of capital, and capital can be different (bourdieu, 2005). thus, the researcher demonstrates the unity and interdependence of such important concepts as power and political relations; capital and economic relations with the concept of "culture" in its broad sense, which unites all the knowledge, skills and system of values developed by a particular society. social existence and processes of culture formation are in dialectical unity. evidence of this unity is the presence of social determinants in culture. among the main factors that influence its development is heredity, that is, the connection of generations. the influence of culture on its future development is considered by researchers as one of the "internal mechanisms of cultural dynamics". without this, cultural development and formation of national culture is impossible (hook, 2019). first of all, it is appropriate to note that we interpret the concept of "culture" as a unique phenomenon that generally covers all human activity and the entire system of human relations. culture is a kind of mechanism that is built into the information process and produces and broadcasts socially significant information. in other words, the product of culture is social information, that is produced and stored in society with the help of symbolic means. according to the famous dutch researcher h. hofstede, it is the software of the mind (hofstede, hofstede, minkov, 2010). and although human behavior is only partially determined by its mental programs, a person has a basic ability to deviate from them and react differently: in a new, creative, destructive or unexpected way. at the same time, culture has always been a collective phenomenon, common to people who live or have lived in the same social environment. it consists of unwritten rules of the social game. it is therefore a collective programming of consciousness that distinguishes members of one group or category of people from others. in addition, each individual community has the ability to preserve its distinctive culture for generations to come, despite the diverse and numerous forces of change, because the deeper layers remain stable and they are the core of this identity. that is why socio-cultural factors play a leading role in the overall impact on the development of society and the management system in particular. so, the task of their classification arises. cultural qualities, hidden in socially conscious individuals and societies, are manifested in all achievements of human civilization and form a complex socio-cultural space, which is characterized by its own original mentality, its own system of three seas economic journal 37 vol. 3 no. 3, 2022 knowledge, religious beliefs, its own worldview and its own unique system of values (kostiuk, 2022). in the modern world, empirical studies of the problem of values and value expectations, which are the semantic core of each individual cultural organism, are becoming increasingly widespread. among such empirical studies, one of the most popular and effective today are cross-cultural studies in the direction of the process of globalization of humanity as a whole and each country separately. two main tasks of cross-cultural research were clearly formulated by the researcher e. aronson. the first task is to find out to what extent a certain psychological phenomenon or process is considered universal and can be applied to explain the behavior and understanding of the psyche of all people on the planet. the second goal is to find differences between people belonging to different cultures and to explore how culture affects basic mental phenomena and processes (aronson, wilson, eickert, 2002). considering these important tasks, such well-known researchers as s. schwartz, g. hofstede, r . inglegart have developed original practical methods, on the basis of which comparative studies are conducted to determine the value system of coordinates in different countries in the conditions of globalization in the modern world. the generalization of the developments of all the above-mentioned researchers allowed the authors to form their own classification of the main sociocultural factors that influence the development of management and the formation of statehood at the present stage. according to the authors, the basis of any processes of a certain society is, first of all, the historical factor. understanding of the whole complex social system at the present stage of existence of the ukrainian state is impossible without a deep historical excursion and analysis of the processes of state-building in the past, the processes of formation of public consciousness. however, it is appropriate to emphasize that a true historical analysis does not simply consist in ascertaining historical facts, but requires a detailed rethinking of key ideas, basic values, which have a decisive influence on the formation of the entire complex system of social interaction of modern societies (petrova, 2007). the following three factors in the classification of the authors of the work are so intertwined that it is advisable to combine them into a subgroup called "socio-psychological basis of public administration". however, they belong to the cohort of sociocultural factors, since we adhere to the position of p. sorokin that psychological characteristics are part of the overall socio-cultural matrix of society. in fact, this is a deepening into the layers of the collective unconscious of the nation, the analysis of which is extremely important for understanding the specifics of the value core of culture, on which a particular society has grown and formed its own original system of social relations. three components of this socio-psychological base were identified: 1) mentality; 2) collective memory; 3) national and cultural identity. mentality is a special way of thinking, specific to a certain community, not always conscious; it is a system of values that is lived, but not prescribed (they are the deep basis of the experience of coexistence of a certain community). it is formed, first of all, as a component of the psychological base of social being of a person of a certain culture. it is about the ability of human consciousness to perceive the world within certain limits, a kind of matrix, on the basis of which the system of values, manner of behavior, way of perceiving the world and other important components of the socio-cultural supersystem are formed. according to researcher m. halbwachs, the collective memory is defined as an active past that shapes our identity. the researcher associates the process by which individual memories are integrated into collective memory with tradition, which preserves, consolidates or modifies social boundaries: "our individual thinking is able to remember only because it is located within this social framework and participates in collective memory." (hofstede, hofstede, minkov, 2010) the author considers the "social framework" as an integral system of social values, traditions, ideals that outline the boundaries of a person's worldview in accordance with the social group with which he identifies himself. cultural and national identity, being formed in a certain socio-cultural environment in a specific spatial and temporal continuum, is based on a conscious choice and depends on the rational awareness of the individual, ethnic group, nation of common historical, political and civil values. this group of factors, which constitutes the sociopsychological basis of the socio-cultural matrix, directly affects the formation of the worldview of society, which occurs at the highest, visible level. the system of values, which is established in the course of historical development and deep psychological processes, is the basis of national and cultural identity and the main manifestation of mentality, penetrating into the deeper layers of the psyche with the determining vector of collective memory and laying the foundations of the worldview of society. through the value component of the worldview, the civic culture of society is established, the specifics of economic activity are manifested and social capital is formed, which in the complex of social interaction directly affect the system of state-building, therefore they are the main socio-cultural factors of its development. three seas economic journal 38 vol. 3 no. 3, 2022 3. main features of the project of socio-cultural development of ukrainian society at the same time, the transformation of education is a direct consequence of the changes that are taking place in culture. therefore, "the crisis in the educational process, and not only in ukraine, is a reflection of the general spiritual crisis at the turn of the millennium. on the other hand, transformational phenomena in education occur under the influence of internal factors, that is, caused by innovative processes in the educational and pedagogical activity itself." (hook, 2019) according to the authors, among the sociocultural factors that served as a source of formation of a qualitatively new education system, it is advisable to highlight the following (ivanii, vertel, 2020): – the emergence of the institute of science; – the emergence of an "intermediate environment" related to the consolidation of knowledge in the word, which includes printing, means of copying information, means of preservation (libraries), reproduction and conservation of knowledge in the form of a printed word; – the qualitative change in the institution of education itself. education together with science are becoming the main dominants in society. education in the 21st century is continuous, as a person has the opportunity to study throughout his life, it is also multi-level and paid. the continuity of education is determined by the informatization of society, the need for constant updating of knowledge, technology and professional development. multilevel education corresponds to the idea of its continuity. on the one hand, it provides a variety of educational needs of a person for personal development and self-realization, and on the other – its professional training, which should become the basis for changing social status. since knowledge is the most important resource in the information society, it is for possessing it that one should pay. science is a special sphere of spiritual culture. science is "a branch of culture that is associated with specialized activities to create a system of knowledge about nature, society and man." (prokopenko, omelyanenko, 2018) science is one of the most important determinants of spiritual culture. "its special place in spiritual culture is determined by the importance of knowledge in the way of human existence in the world, in practice, in the material transformation of the world." (ivanovska, 2018) hook o. (2019) notes that classical european education has lost its spiritual values, it is aimed at ensuring the development of only professional and intellectual abilities, ignoring the moral qualities of the individual. not only education has changed, the meaning of its acquisition for the majority of young people has also changed. its pragmatic nature becomes more and more obvious: to get a highly paid profession, to make a career, to achieve success, etc. the transformation of values is reflected in the changing attitude of young people to education. the value of highly skilled labor has increased, especially in commercial structures. "by the level of importance among the values of labor activity, the factor of high salary came to the first place."(ivanii, 2020) if once the specialty was chosen by the call of the soul, now people appeal more to the material side of life, choose a specialty that would bring money and material support in the future. so, now education has become one of the means to achieve material well-being. therefore, the question is whether education remains a dialogue in search of truth or is just a form of adaptation to the changing conditions of the social environment. in the conditions of modern ukraine, there is a socio-cultural adaptation of citizens to two contradictory processes of modernization (westernstyle) and traditionalist national-restorative nature. 4. development of ukrainian educational space under martial law ukraine's access to the path of innovative economic development has led to the modernization of all sectors, including the educational sphere. educational institutions that implement innovative developments in their activities, actively use the achievements of science, are the driving force behind the promotion of innovative development and the necessary essential transformations in the education system. the development of innovative technologies becomes the basis for large-scale educational reforms that turn education into a productive sector of the economy. the fundamental principles of educational changes, defined by the concept of the new ukrainian school, explain the ideology of transformations in education, outlined by the laws of ukraine "on education", "on complete general secondary education" and the main directions of its reform to create a new modern educational environment, prerequisites for innovation, introduced by the new state standards of all levels of education. the educational process can be considered perfect only when it provides not only successful satisfaction of today 's social demands, but also defines general approaches to solving the problems of the future. the formation of the intellectual elite of the nation (scientists, researchers, public figures, innovators-entrepreneurs) is another basic component of the development of education, it is the support of future leaders of world science three seas economic journal 39 vol. 3 no. 3, 2022 and hi-tech, the introduction of stem-education, equipping of appropriate laboratories, raising the status of the teacher as a professional elite of the nation (ivanovska, shulgina, 2018). innovation in education is considered as a realized innovation in the content, methods, techniques and forms of educational activities and personal development (such as methods, technologies), in the content and forms of management of the education system, as well as in the organizational structure of educational institutions, in the means of education and upbringing, in approaches to social services in education. the spread of innovative technologies in the field of education has become an objective regularity determined by the new philosophy of education. innovations should be considered as effective and productive in the content, methods, means and forms of education and upbringing of the individual, in the management of the education system, in the organization of the educational process, in the structure of educational institutions. innovations became especially relevant with the beginning of the large-scale war unleashed by the russian federation on the territory of ukraine, when it became vital to make quick, non-standard, essentially innovative decisions. the functioning of the education system under martial law is characterized by an intensive search for new approaches to education, innovative forms of organization of the educational process, effective pedagogical and information technologies. that is why the support of active implementation of innovations in the educational sphere during the war has become one of the key areas of work of the ministry of education and science of ukraine and its subdivisions. it is worth noting that in this difficult time, educators themselves have become more active in finding ways to solve problems in the organization of education of students. many educational institutions have opened platforms with their educational materials for free access. for example, school children from all over ukraine who have access to the internet, after registration, can use the materials of "optima-school" – an educational online platform from the scientific lyceum named after klim churyumov. for the period of martial law in ukraine, the grand-expo online school team has opened access to 532 case lessons that can help children learn, develop, and distract from the problems associated with the war. for the same period "atmospherna school" has offered to join the "listener" package free of charge. distance education center a+ conducts zoom lessons for all children of ukraine (scarlet, 2022). in the conditions of war, the issues of creating a comfortable educational environment and organizing the educational process have become important, especially for those children who have suffered psychological trauma. with the support of olena zelenska, the national program of mental health and psychosocial support was launched to provide psycho-emotional support to the population during the war, to train teachers to work with children. to assist the specialists of the psychological service of the education system of ukraine, a cross-cutting educational program on extracurricular valeological education "fundamentals of life safety in the conditions of hostilities" and methodological recommendations for this program were developed, the best practices of psychological and pedagogical support and support of participants in the educational process in the conditions of hostilities and armed conflicts, such as: "stress as a resource", "psychological support and support for adults and children in crisis situations: workshop", "features of the organization of distance learning in martial law", "first psychological assistance to participants of the educational process during and after the end of hostilities", "self-help under stress", "palms of peace" and others (scarlet, 2022). both during the war and after its end, the main task of the education sector is to ensure the quality of education at all levels. therefore, it is quite natural to conduct scientific research in education and implement their results in practice, introduce innovative technologies, provide educational institutions with new teaching aids, scientific, methodological and educational literature. 5. socio-cultural design of the educational paradigm of ukraine higher education for modern ukrainian society is defined as the foundation of personal development, a priority area of state policy, so the interest of scientists in the study of various aspects of the functioning of higher education is not accidental. from the point of view of socio-cultural planning, it is also possible to consider higher education as a project aimed at shaping the worldview of the individual, providing him/her with knowledge, educating a patriot and citizen of the country. these strategic tasks are a great contribution, because the future of people and culture depends on their implementation. the scientists n. ivanovska, v. shulgina, and o. yakovlev rightly note, that the sociocultural design is an organic synthesis of cultural and social aspects of human existence, aimed at the development of society on the basis of innovative technologies together with the preservation of the peculiarities of the national mentality and archetypes of the culture of the nation. it includes innovative and research three seas economic journal 40 vol. 3 no. 3, 2022 activities (іvanovska, shulgina, yakovlev, 2018). specifying these types of activities, it can be noted that innovative activity is the implementation of socio-cultural projects in modern ukrainian society, and research – in the implementation of the project concept as a technology, mechanism. according to i. petrova, design is interpreted as a set of interdependent measures aimed at achieving of the certain goal with the limited time, budget, personnel and other resources (petrova, 2007). within the framework of design theory, it is determined that higher education is a design of sociocultural development of modern ukrainian society, which is due to the following features: – purposefulness: in a broad sense – the functioning of the higher education system is aimed at innovative development of the country, self-realization of the individual, meeting the needs of society, the labor market and the state in qualified specialists. in a narrow sense, it is aimed at mastering by a particular person the knowledge, skills, abilities, acquisition of views, values and other personal qualities that are defined within each specific educational program as program learning outcomes; – integrity – is ensured by the functioning of the educational environment, or, according to the theory of socio-cultural design, the life field, which provides not only opportunities for the formation of an individual educational trajectory of each student, but also provides for the encouragement of students to participate in socio-cultural projects, academic mobility programs, including international. this contributes to the development of the cultural potential of our country, the growth of its positive image in the international arena: foreign citizens enter our higher education institutions, in particular, educational programs in the field of knowledge 02 culture and art, 024 choreography, 025 musical art, 028 management of socio-cultural activities; – limited in time and space – this feature is fixed in each specific educational program at each educational level; – innovativeness – higher education as a project of socio-cultural development of modern ukrainian society is constantly improving, thanks to the development of scientists on topical issues, the introduction of distance learning technologies, the implementation of student-centered learning. for example, many universities successfully operate a distance learning system based on the microsoft office 365 (teams) platform. the innovative nature of modern higher education is determined by the objective reasons for the evolutionary development of society; – adaptability to external conditions – even in the context of both the coronavirus pandemic and the armed military aggression launched by russia, higher education continues to function – ukrainian higher education institutions have been relocated from the temporarily occupied territories, the educational process has been launched in a distance form, academic staff and students demonstrate their own active civic position, mutual respect, partnership. this leads to another important aspect – communication techniques and the ability to use partner technologies are important for project implementation. the project environment, its participants, project team members, stakeholders generate a huge number of relationships and information flows. 6. conclusions despite the difficult conditions in which ukraine is today, innovative and experimental activities in the education system continue, and its result is a new pedagogical thinking, new pedagogical ideas, forms of education and models of organization of the educational process. the proposed model of socio-cultural factors of the country 's development is presented as a kind of matrix of socio-cultural reality, the basis of which is the formed system of basic social values. the authors believe that the main socio-cultural factors that influence the development of the country are the historical factor as the basis for the development of any social processes; mentality, collective memory and national-cultural identity as components of the deep psychological base, which in their unity form the worldview as a determining socio-cultural factor of development, since it is based on a system of value coordinates. it is the worldview that is manifested at the level of social interaction in society, where a group of such important socio-cultural factors as civic culture, economic activity, social capital directly affect the formation of the state's identity. the model of the national technopark of education quality improvement, presented by the minister of education and science of ukraine s. scarlet in 2021, is of particular importance for the further development and reform of the country and the development of the new ukrainian school. the ideas of the national technopark are relevant today, in the conditions of war, as they relate to the implementation of improving the quality of education; development of the intellectual elite of the nation; creation of a safe environment for life and health; transformation of the education management system. therefore, higher education today is a global sociocultural project for the development of modern ukrainian society, the strategic objectives of which are the formation of a personality that assimilates socio-cultural norms of behavior that have cultural and historical significance. thus, the essential features of the modern education system are determined primarily by the three seas economic journal 41 vol. 3 no. 3, 2022 compliance of the modernization of educational processes with global socio-cultural transformations of the general civilizational nature of the post industrial model. the theoretical and methodological basis of the strategy of educational reforms in ukraine is the development of post-non-classical principles of functioning and development of education. the basis for further research of the problem is the analysis of the mechanisms of influence of post-non-classical methodology on the practice of educational reforms. under the influence of socio-cultural transformation processes, scientific knowledge should become a tool that will allow to respond decisively to the modern challenges of society. and it will become a solid foundation for further development and prosperity of ukraine in the world. references: atamanyuk, z. (2017). understanding of freedom in the philosophy of existentialism. scientific cognition: methodology and technology, vol. 2(39), pp. 6–12. aronson, e., uilson, t., & eikert, r . (2002). social psychology: psychological laws of human behavior in society. sankt-peterburg: prajm-evroznak. franko, i. (1986). at the turn of the century [conversation on the night before the new year, 1901]. collection of works (vol. 45, p. 292). kyiv: naukova dumka. bourdieu, p. (2005). social space: fields and practices. sankt-peterburg: aleteiia. hook, o. (2019). the priority influence of sociocultural factors on the development of public administration. аcademic papers collection. "democratic governance", vol. 2(24). available at: https://science.lpnu.ua/sites/ default/files/journal-paper/2022/jan/26417/198729-articletext-443925-1-10-20200319.pdf hofstede, g., hofstede, g. j., & minkov, m. (2010). cultures and organizations. software of the mind. intercultural cooperations and its importance for survival. [s. p.]: mcgraw-hill ebooks. ivanovska, n. v., shulgina, v. d., & yakovlev, o. v. (2018). sociocultural design in art: theory and practice: a textbook. kyiv: national academy of managers of culture and arts. ivanii, i., & vertel, a. (ed.) (2020). competence and professional skills in training future specialists in the field of physical education and sports. propósitos y representaciones, vol. 8(2), pp. 37–45. kostiuk, o., & vaskevych, o. (ed.) (2022). the philosophy of design in the innovation space of the postmodern world: consciousness of cultural practices. postmodern openings, vol. 13, no. 1, pp. 170–185. petrova, i. (2007). designing in the socio-cultural sphere: a study guide. kyiv: knukim publishing house. prokopenko, o., & omelyanenko, v. (2018). institutional basis of national security providing sectors innovation development. coventry: agenda publishing house. scarlet, s. (2022). education of ukraine under martial law. innovative and project activity: scientific and methodical collection / general editor. s. m. scarleta. kyiv: chernivtsi "bukrek". zhyvohliadova, d. (2020). actual: about cultural policy. available at: https://uaculture.org/texts/aktualno-prokulturnu-polityku/ zlenko, n. (2020). socio-cultural development and cultural policy of ukraine: experience of formation and implementation. three seas economic journal, vol. 1(4), pp. 48–53. doi: https://doi.org/10.30525/26615150/2020-4-8 received on: 9th of september, 2022 accepted on: 14th of october, 2022 published on: 31th of october, 2022 three seas economic journal 49 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: mulyk_t_o@ukr.net orcid: https://orcid.org/0000-0003-1109-2265 researcherid: l-5677-2018 2 vinnytsia national agrarian university, ukraine e-mail: mulyk.yaroslavna@ukr.net orcid: https://orcid.org/0000-0002-8166-2481 researcherid: l-5837-2018 doi: https://doi.org/10.30525/2661-5150/2022-3-8 exports of ukrainian agricultural products to the european union: analytical assessment, problems and prospects tetiana mulyk1, yaroslavna mulyk2 abstract. the purpose of the work is to study the issue of domestic exports of agricultural products to the european union (eu). methodology. general scientific economic and mathematical methods as analysis, synthesis, abstraction, concretization and special methods as comparison, tabular were used. results. it is noted that an important step in terms of deepening trade relations between ukraine and the eu was the conclusion of the association agreement and the establishment of a free trade area in the framework of this agreement. for ukraine, this is both one of the greatest achievements (in terms of shaping the worldview and social development) and a challenge (in terms of ensuring economic growth of the country, search for internal sources and incentives). it is noted that european guidelines provide the agricultural sector with an effective direction of development and reveal modern opportunities for its recovery, create additional preferences in the agri-food market. it is investigated that since the beginning of 2014 there have been dramatic changes in the geographical structure of domestic exports. before that, about a quarter of goods were sent to the eu countries, about a third – to the markets of the cis countries, the rest – to other countries. during 2014–2020, this distribution changed towards a significant decrease in the share of the cis countries and a gradual increase in the share of the eu and other countries of the world. the article provides an analytical assessment of the geographical structure of ukraine's merchandise exports by three main blocks of countries – the eu, the cis and the rest of the world. the role and importance of the free trade area between ukraine and the eu, which is a powerful milestone in bilateral trade relations and opens new economic opportunities for both the eu and ukraine, is determined. the main trading partners of ukraine in the export of goods are characterized. the geographical structure of exports with the eu countries is investigated and it is noted that ukraine supplies goods to almost all eu countries. the total value of exports in 2020 decreased by 1552103 thousand us dollars compared to 2018. the largest share of exports falls on poland, germany, italy, the netherlands and spain. the commodity structure of agricultural exports with the eu countries during 2018–2020 was studied, a significant share of agricultural products was noted, which ranges from 34%. practical implications. the factors that influenced the formation of exports in 2020 are identified. the problems that affect the development of exports and the prospects for its increase are identified. key words: export, agricultural products, export of agricultural products, commodity structure of export, geographical structure of export, association agreement, free trade zone, european union, ukraine. jel classification: g10, g18, g20 1. introduction the development of european integration is a sign of progressive changes in the country as a whole and in its individual sectors. european guidelines provide the agricultural sector with an effective direction of development and open up modern opportunities for its recovery, create additional advantages in the agrifood market. an important step in deepening trade relations between ukraine and the european union (hereinafter – the eu) was the association agreement (association agreement, 2014), the establishment of a free trade area (hereinafter – the fta) under three seas economic journal 50 vol. 3 no. 3, 2022 this agreement and ukraine's candidate status for accession to the european union, which was adopted on june 23, 2022 in the context of a full-scale russian invasion of ukraine. for ukraine, the association agreement is both one of the greatest achievements (in terms of shaping the worldview and social development) and a challenge (in terms of ensuring economic growth of the country, finding internal sources and motivations). this agreement contributes to the approximation of the agricultural sector of ukraine to european standards and the expansion of the presence of new eu member states in the ukrainian agri-food market. to fulfill the tasks of european integration, the domestic agrarian sector has a sufficiently rich resource potential, the qualitative properties of which and rational combination in the process of economic activity are the initial prerequisite for the production of competitive products. in addition, on the basis of its use, food, production, export, natural resources and infrastructure bases of balanced socio-economic development of the country are formed (mulyk, 2017). in view of the above, ukraine faces the task of developing mechanisms of state policy to improve the efficiency of the use of natural resources and export potential of the agricultural sector and its adaptation to new conditions. in view of this, the issue of exporting ukrainian agricultural products to the eu markets is quite important and relevant. theoretical and practical aspects of domestic agricultural exports to the eu countries, its problems, threats and directions of expansion are widely covered in scientific research. in particular, such scientists as i. demchak, o. mytchenok, s. kovalchuk, yu. kashuba, t. vasyltsiv, v. boyko, and others paid attention to this issue. however, in modern conditions, the processes of formation of domestic exports of agricultural products to the eu countries, export potential of agricultural enterprises, identification and assessment of problems and threats to export operations, directions of export growth, prospects for its development, taking into account the current conditions, require a more comprehensive and in-depth study. 2. geographical structure of merchandise exports of ukraine at the present stage of economic management, an important problem of the ukrainian economy is to promote the development of domestic production as the main direction of economic development (mulyk, 2022). currently, ukraine has all the prerequisites for establishing close relations with the eu, including in the field of trade, export-import operations. changes in the direction of european integration became especially noticeable in 2014 after the signing and ratification of the association agreement, when ukraine's relations with the eu gained significant importance and created a number of privileges for the domestic agricultural sector. among them, are the following: the unification of phytosanitary and sanitary measures, the liberalization of trade in food products, which covers all methods of providing services, as well as investment provisions, protection of intellectual property, including geographical indications, public procurement, competition rules, sustainable and harmonious development, deepening of cooperation in the veterinary field and agriculture as a whole, elimination and prevention of non-tariff restrictions in trade, in particular technical barriers, standardization, metrology, accreditation and conformity assessment, etc. thus, since 2014, there have been fundamental changes in the geographical structure of ukraine's foreign trade. before that, about a quarter of domestic exports of goods were directed to the eu countries, about a third – to the markets of the cis countries, and the rest – to other countries of the world. during 2014–2021, this distribution changed towards a significant decrease in the share of cis countries and a gradual increase in the share of the eu and other countries of the world (strategic guidelines for deepening trade and economic relations of ukraine with the countries of the european union under the terms of the association agreement, 2021) (figure 1). this change in the structure of ukraine's export commodity flows was the result of the interaction of three interrelated factors: – the granting of autonomous trade preferences to ukraine by the eu in 2014 and the entry into force of the deep and comprehensive free trade agreement (dcfta) as part of the association agreement in 2016, which to some extent expanded the access of domestic products to the european market; – closure of the russian market for domestic producers of food and industrial products and, as a consequence, partial reorientation of export commodity flows to the markets of the eu and other countries (in particular, southeast asia); – aggravation of the systemic crisis and macroeconomic problems due to the difficulties of finding alternative markets (to replace the lost russian market) for many manufacturers of engineering products and due to the partial destruction of industrial potential in the temporarily uncontrolled territories of donbas (strategic guidelines for deepening trade and economic relations between ukraine and the european union under the association agreement, 2021); – closure of the russian market for domestic producers of food and industrial products and, as a consequence, partial reorientation of export three seas economic journal 51 vol. 3 no. 3, 2022 commodity flows to the markets of the eu and other countries (in particular, southeast asia); – aggravation of the systemic crisis and macroeconomic problems due to the difficulties of finding alternative markets (to replace the lost russian market) for many manufacturers of engineering products and due to the partial destruction of industrial potential in the temporarily uncontrolled territories of donbas (strategic guidelines for deepening trade and economic relations between ukraine and the european union under the association agreement, 2021). the main achievements for the agricultural sector within the free trade area (fta) with the eu are as follows: – in 2014, there was a rapid increase in poultry meat export to the eu; – in 2015, ukraine was included in the list of third countries that are allowed to export milk and dairy products and table eggs to the european union market; – in 2019, the agreement in the form of an exchange of letters on poultry meat was signed and ratified; – in january-november 2020, customs authorities issued 98,124 eur .1 certificates. in total, since the beginning of the application of fta 415,329 eur .1 certificates have been issued; – the number of european-oriented exporters who have received the status of an authorized exporter and can export to the eu without issuing a eur .1 certificate is also increasing. currently, there are 266 such enterprises already (ukraine's foreign trade in goods and services in 2020). exporters of agricultural products were: in 2014 – 10002 ukrainian enterprises, in 2019 – 14545, january-november 2020 – 13329. in 2014, 185 ukrainian enterprises had the right to export their products to the eu, in 2019 – 319 enterprises, in 2020 – 333 (153 enterprises – producers of products for consumption, 180 – enterprises – producers of non-food products) (foreign trade of ukraine in goods and services in 2020, 2021). that is, as can be seen, the number of business entities that export their products to the eu is constantly growing. 3. main trade partners of ukraine in export of goods today the eu is an important trading partner of ukraine. this is confirmed by the data presented in table 1, which shows that the main share of trade (39.7%) falls on the eu countries. at the same time, according to experts, over the past five years, the eu has become the main trading partner of ukraine in the agricultural market – 34% of ukrainian agricultural exports go to europe. the structure of agricultural exports is dominated by such goods as cereals, oilseeds and oils (foreign trade of ukraine in goods and services in 2020, 2021). last year, ukraine exported the most goods to china ($ 8 billion; 12.7% more than in 2020), poland ($ 5.23 billion; 59.7% more) and turkey ($ 4.14 billion; 70.0% more). the main commodity items of ukrainian imports in 2021 were: mineral fuels, petroleum and products of its distillation (by $ 14.33 billion, which is 79.5% more than in 2020), machinery, equipment and mechanisms (by $ 14.20 billion, which is 22.9% more), products of chemical and related industries (by $ 9.74 billion, which is 32.8% more). 4. evaluation of exports to eu countries analytical assessment of the geographical structure of exports with the eu countries (table 2) shows 0 20 40 60 80 100 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 26 25 26 32 34 37 40 43 41 38 40 38 36 35 26 20 16 16 15 13 13 11 36 39 39 42 46 47 44 42 46 49 49 eu cis other countries of the world figure 1. geographical structure of merchandise exports of ukraine by three main blocks of countries – eu, cis and the rest of the world in 2011–2021, % source: built by the authors on the basis of (unctad stat. merchandise trade matrix – exports of individual economies in thousands of united states dollars, annual; state statistics service of ukraine) three seas economic journal 52 vol. 3 no. 3, 2022 table 1 the main trade partners of ukraine in the export of goods, 2021 № the name of the country export of goods, million usd growth / decline rate, 2021 to 2020, % specific weight of the country in the total volume of exports of ukraine, % 1 eu countries (27) 26794,7 149,4 39,7 2 china 8003,6 112,7 11,8 3 turkey 4142,7 170,0 6,1 4 india 2494,4 126,5 3,7 5 egypt 1944,6 120,2 2,9 6 usa 1622,3 164,9 2,4 7 united kingdom 1083,2 162,4 1,6 republic of moldova 864,2 127,2 1,3 8 indonesia 809,9 110,1 1,2 9 saudi arabia 768,6 106,9 1,1 10 israel 731,1 129,7 1,0 source: (state statistics service of ukraine) table 2 geographical structure of exports with eu countries during 2019–2021 eu countries 2019 2020 2021 deviation 2021/2019 thousand us dollars specific weight, % thousand us dollars specific weight, % thousand us dollars specific weight, % thousand us dollars the pace of change, % total 20750741,7 100,0 18604909,8 100,0 26792969,3 100,0 6042227,6 21,7 including austria 598319,5 2,9 579988,3 3,1 915155,5 5,6 316836,0 42,1 belgium 680704,4 3,3 560930,3 3,0 659034,3 3,1 -21670,1 20,4 bulgaria 482168,2 2,3 511502,7 2,7 835270,9 1,5 353102,7 13,5 greece 274211,5 1,3 178809,9 1,0 212785,1 0,8 -61426,4 13,1 denmark 254684,7 1,2 216888,6 1,2 285816,4 5,1 31131,7 90,0 estonia 139859,9 0,7 109748 0,6 168628,9 3,2 28769,0 101,8 ireland 153235,2 0,7 94365,8 0,5 97882,3 2,7 -55352,9 77,8 spain 1500801,3 7,2 1250213,7 6,7 1677241,7 1,7 176440,4 5,0 italy 2418875,4 11,7 1928906,3 10,4 3469269,2 2,8 1050393,8 5,2 cyprus 43043,5 0,2 31820,8 0,2 47441,0 8,8 4397,5 920,0 latvia 300080,9 1,4 229426,4 1,2 288575,1 1,1 -11505,8 16,7 lithuania 410796,4 2,0 431448,5 2,3 576917,6 1,6 166121,2 17,4 luxembourg 20179 14,4 17423,1 0,1 15743,2 0,7 -4435,8 154,6 malta 41427,2 4,5 8851,6 0,05 30209,6 5,7 -11217,6 613,2 the netherlands 1848424,7 8,9 1802205,9 9,7 2262530,2 7,2 414105,5 17,6 germany 2383003,1 11,5 2071739,4 11,1 2866373,4 16,0 483370,3 30,1 poland 3295846,6 15,9 3272683,1 17,6 5227413,1 10,3 1931566,5 14,0 portugal 282174,2 1,4 233971,3 1,3 341202,1 0,4 59027,9 6,6 romania 1005591,3 4,8 1080954,2 5,8 1543445,3 2,8 537854,0 12,4 slovakia 709620,1 3,4 446759,5 2,4 999275,1 1,0 289655,0 6,5 slovenia 38945,3 0,2 40280,9 0,2 75524,5 0,6 36579,2 66,9 great britain 628087,7 3,0 666851,9 3,6 0,0 -628087,7 0,0 hungary 1562809,4 7,5 1263810,4 6,8 1622073,1 5,7 59263,7 16,3 finland 46178,7 0,2 54540,1 0,3 110813,2 0,8 64634,5 78,0 france 596505,8 2,9 592395,2 3,2 896493,5 5,6 299987,7 41,9 croatia 37197,4 0,2 29593,1 0,2 45742,3 0,2 8544,9 29,7 czech republic 920901,6 4,4 826278,3 4,4 1414558,4 2,7 493656,8 13,3 sweden 77068,7 0,4 72522,5 0,4 107554,5 2,6 30485,8 148,8 source: (state statistics service of ukraine) three seas economic journal 53 vol. 3 no. 3, 2022 table 3 commodity structure of agricultural exports with eu countries in 2019–2021 code and name of the goods according to the ukrainian classification of goods of foreign economic activity 2019 2020 2021 deviation 2021/2019 thousand us dollars specific weight, % thousand us dollars specific weight, % thousand us dollars specific weight, % thousand us dollars rrate of change, % total 20750741,6 100,0 18604909,9 100,0 26792969,3 100,0 6042227,7 129,1 including i. live animals; products of animal origin 347127,6 1,7 304072,1 1,6 395786,6 1,5 48659,0 114,0 01 live animals 824,4 0,004 1669,2 0,009 800,1 0,003 -24,3 97,1 02 meat and edible offal 198164,6 57,1 128462,7 42,2 198139,0 50,1 -25,6 100,0 03 fish and shellfish 23709,9 0,1 25894,7 0,1 35547,0 0,1 11837,1 149,9 04 milk and dairy products, poultry eggs; natural honey 117573,9 0,6 140167,5 0,8 149420,1 0,6 31846,2 127,1 05 other products of animal origin 6854,8 0,03 7878,1 0,04 11880,5 0,04 5025,7 173,3 ii. products of plant origin 4480008,9 21,6 3369306,5 18,1 3835689,3 14,3 -644319,6 85,6 06 live trees and other plants 2084,0 0,01 2116,2 0,01 4968,9 0,02 2884,9 238,4 07 vegetables 70399,7 0,3 80266,5 0,4 60130,7 0,2 -10269,0 85,4 08 edible fruits and nuts 161463,2 0,8 184431,8 1,0 310041,4 1,2 148578,2 192,0 09 coffee, tea 2919,2 0,01 3704,1 0,02 4366,8 0,02 1447,6 149,6 10 grain crops 2628520,4 12,7 1780410,0 9,6 1934847,6 7,2 -693672,8 73,6 11 products of flour milling and grain industry 23678,4 0,1 19177,3 0,1 22313,4 0,1 -1365,0 94,2 12 seeds and fruits of oil plants 1539434,1 7,4 1254246,4 6,7 1479166,9 5,5 -60267,2 96,1 13 natural shellac 159,6 0,001 262,3 0,001 2202,3 0,008 2042,7 1379,9 14 plant materials for production 51350,2 0,2 44692,0 0,2 17651,3 0,1 -33698,9 34,4 iii. 15 fats and oils of animal or vegetable origin 1544502,7 7,4 1845670,4 9,9 2362555,5 8,8 818052,8 153,0 source: (state statistics service of ukraine) that ukraine supplies goods to almost all countries. the total value of exports in 2021 increased by $ 6042227.6 thousand or 21.7% compared to 2019. however, countries such as belgium, ireland, latvia, luxembourg, malta are characterized by a decrease in exports. the largest share of exports falls on the following eu countries and varies from: poland – 15,5 – 10,3%, germany – 11,5 – 16,0%, italy – 11,7 – 2,8%, the netherlands – 8,9 – 7,2%, spain – 7,2 – 1,7%, romania – 4,8 – 2,8%, hungary – 7,5 – 5,7%. a small share of exports falls on such countries as: portugal, greece, luxembourg, slovenia, finland, croatia. the commodity structure of agricultural exports to the eu countries (table 3) shows that the most exported products are of plant origin (21.6% in 2019, 18.1% in 2020, 14.3% in 2021). among them, in 2021, the largest share is accounted for cereals – 9.6%, seeds and fruits of oilseeds – 7.2%. the commodity is live animals; products of animal origin occupy an insignificant share in the structure of exports and ranges from 1.7% to 1.5%. fats and oils of animal or vegetable origin occupy a slightly larger share in the export structure, their share ranges from 7.4% to 8.8%. in general, the commodity structure of exports with the eu countries in 2021 (figure 2). іndicates a significant share of agricultural products. it fluctuates within 34%. in 2021, exports of ukrainian agri-food products to the eu countries increased by 33% in monetary terms compared to last year and amounted to usd 8.3 billion. this growth is partly due to an increase in the cost of most categories of goods on the world market, partly due to an increase in supply volumes. further in the structure of exports to the eu countries are the following goods: nonprecious metals – 23.7%, products of metallurgical complex – 16.7%, products of machine building – 11.9%, mineral products – 14.5%, wood and pulp – 5.4%, various industrial goods – 3.9%, light industry products – 4.8% and chemical industry products – 3.5%. the basis of agricultural exports was the supply of cereals – 7.2%, seeds and fruits of oilseeds – 5.5% of total exports. exports of natural honey, animal feed and fruit juices also increased significantly. the basis for the increase in the share of vegetable fats was the growth of sunflower oil exports by 3.9 times – from 489 thousand tons to 1 million 904 thousand tons. exports of oilseed waste, in particular sunflower cake, also increased significantly (state statistics service of ukraine). three seas economic journal 54 vol. 3 no. 3, 2022 export-import operations are systematically affected by various factors that arise or take place in a certain period of time. experts identify the following factors that influenced the formation of exports in 2020 and 2021: – the spread of the covid-19 pandemic in the world, which has caused significant changes in the life of many countries (the role of public administration in emergency situations has been enhanced; sanitary and epidemiological measures have been introduced; restrictions on the movement of citizens and their work activities have been established; distance learning and work have been introduced); – a decline in business activity of industrial enterprises and a reduction in production in all countries where measures are being taken to counter the spread of covid-19, which has led to a global decline in demand and, as a result, a drop in prices in world commodity markets (mulyk t., mulyk ya., 2020); – significant raw materials orientation of ukrainian exports and significant dependence of domestic enterprises on the foreign market, given the current volatility of the world market conditions, which causes the dependence of foreign exchange resources on 1% 14% 9% 4% 15% 3% 2%1% 5% 1% 3% 1%1% 0% 24% 12% 1% 0% 4% 0% i. live animals; products of animal origin ii. products of plant origin iii. fats and oils of animal or vegetable origin iv. ready food products v. mineral products vi. production of chemical and related industries vii. polymeric materials, plastics and products thereof viii. hides are raw, skinned ix. wood and wood products x. mass of wood or other fibrous cellulosic materials xi. textile materials and textile products xii. shoes, hats, umbrellas xiii. products made of stone, plaster, cement xiv. natural or cultured pearls, precious or semi-precious stones xv. precious metals and products from them xvi. machines, equipment and mechanisms; electrical equipment xvii. means of land transport, aircraft, floating vehicles xviii. optical, photographic devices and apparatus xx. various industrial goods figure 2. commodity structure of exports with eu countries in 2021, % source: (state statistics service of ukraine) fluctuations in foreign prices (pravdyuk n., mulyk t., mulyk ya., 2019); – continuation of russia's trade aggression (embargo and other restrictions on the supply of ukrainian goods to the russian market, russia's ban on the transit of goods of ukrainian origin to third countries through its territory); – continuation of russia's military aggression against ukraine (infographics on the general results of exports of goods and services of ukraine in 2020, 2021). another significant obstacle from 24 february 2022 is the war and its consequences. many companies in ukraine have been affected by the hostilities. some production facilities have been destroyed, and some enterprises are under temporary occupation, from where they cannot export goods to the governmentcontrolled part of the country, let alone to the eu. many surviving businesses faced a number of other problems. the war cut ukraine off from the sea, which accounted for 60% of exports (vinokurov, 2022). according to experts, the economic losses from the month-long blockade of ukrainian ports may range from 25 to 170 million dollars per day. in addition, fuel shortages, queues at the borders, destruction three seas economic journal 55 vol. 3 no. 3, 2022 of logistics centers have complicated the export of goods to the eu. it is practically impossible to export millions of tons of ukrainian agricultural and metallurgical products by rail and road, in particular, due to the different gauge of the tracks in ukraine and the eu. probably, according to experts, logistics problems will remain even after the release of ukrainian exports from restrictions on imports to the eu, so for many producers the opening of their market by the european union may go unnoticed (vinokurov, 2022). thus, after the outbreak of active hostilities and the loss of access to sea transportation, the border with the eu became the only window for ukraine's trade with the outside world. it is not only about the eu. ukraine continues to sell goods, in particular agricultural products, to africa and asia in transit through the ports of european countries. often goods in transit through the eu are subject to the import regime. that is, now the eu countries apply to them the same quotas and duties as to the goods that ukraine sells to the eu. now they will be temporarily abolished, and ukrainian goods will arrive at their final destinations at duty-free prices. therefore, the eu's decision to open the market will greatly simplify the life of transit exports and reduce administrative costs associated with the payment of customs duties, increase the profits of exporters and increase the competitiveness of their products. 5. problems and directions of increasing domestic exports of agricultural products to the eu countries. analytical assessment of agricultural exports to the eu countries makes it possible to summarize the problems in this area and identify areas of development. among the problems of the development of domestic export of agricultural products to eu countries scientists (kashuba, 2017; vasyltsiv, boyko, 2018) identify the following ones: – low level of support for agricultural producers from the state, which makes it impossible for them to fully develop in order to enter foreign markets; – non-compliance of the quality of agricultural products with international standards, which is caused by non-compliance with environmental norms for the use of mineral fertilizers, herbicides, pesticides, etc. in the production of agricultural products; – painstaking procedure of certification of agricultural products; – low level of use of scientific developments in the field of agriculture and involvement of scientific potential for the development of agricultural production; – ignorance of agricultural producers about the possibilities of exporting agricultural products; – excessive focus on raw materials and a low share of agricultural products with high added value in the structure of domestic agricultural exports; – insufficient efficiency of integration of the domestic agricultural industry into the food segments of the world agricultural market; – lack of a systematic policy of forming a positive image and promotion of products of the domestic agricultural industry on foreign markets; – underdevelopment of the network of agricultural logistics facilities to support the export activity of agribusiness entities; – underdevelopment of horizontal and vertical cooperative relations between producers of agricultural products. taking into account these problems, it is possible to determine the directions of export growth and prospects for its development. the authors support the opinion of scientists yu. p. kashuba, t. g. vasyltsiv and v. v. boyko, who note the following directions (kashuba, 2017; vasyltsiv, boyko, 2018): – stimulation of the development of agricultural production by the state, which will make it possible to increase the number of export-oriented producers of agricultural products; – increasing the level of environmental safety of agricultural products of domestic producers; – creation of a proper certification system for exportoriented agricultural products; – involvement of scientific potential for the formation of an effective export-oriented strategy; – formation of a positive image of ukrainian producers of agricultural products; – the introduction of advisory services that can be provided by district departments of agri-industrial development, which will contribute to the rise of agricultural production; – overcoming the raw material orientation of domestic agricultural exports, increasing the share of products with high added value in its structure and reducing the sectoral imbalance of food exports; – strengthening the integration of the domestic agriindustrial complex into the world agricultural market, opposition to existing institutional barriers to food exports and diversification of target agricultural export markets; – harmonization of domestic standards for guaranteeing the quality and safety of food with international requirements, improvement of the national system of certification of food products, approximation of the norms of production and technological processes in the agricultural sector to advanced world practices; – development of a network of logistical and infrastructural facilities supporting the export activity of agribusiness entities, increasing the efficiency of three seas economic journal 56 vol. 3 no. 3, 2022 the agrarian logistics system, diversifying channels for transporting products to foreign markets; – formation of a system of socio-economic motivational mechanisms and incentives for the establishment and development of horizontal and vertical cooperative structures in the agricultural sector. with the beginning of the military aggression of the russian federation, other problems that require immediate solutions, especially regarding the export of agricultural products, have come to the fore. first, this is a physical reduction of sown areas in 2022 by at least 25% of the usual amount of agricultural land that was sown annually, due to the fact that some regions are under occupation, and some fields are mined and unsuitable for cultivation in the near future. part of this problem is the large scale theft of grain by russia from the occupied territories of ukraine with further attempts to sell it. second, it is an unbalanced domestic market due to the lack of full exports and imports. rising prices for all components of production, from fuel to seeds, and unclear prospects for the sale of grown products at a competitive price due to blocked ports. third, the destruction of infrastructure (elevators, port terminals) and logistics and a significant increase in the cost of logistics both within the country and international transportation. on the example of grain, we can say that due to the lack of sea export routes, logistics costs per ton of grain have increased by about 5 times since pre-war times, which leads to a significant increase in the final price of ukrainian products on world markets (trofimtseva, 2022). 6. conclusions export of domestic agricultural products is a significant source of foreign exchange earnings and an instrument of macroeconomic stabilization of the economy. the dynamics of export operations with the eu countries convincingly testifies to the deepening of economic relations between ukraine and the eu, strengthening the position of domestic agricultural products in the european market. in recent years, the eu has become the main trading partner of ukraine in the agricultural market – 34% of ukrainian agricultural exports are directed to europe. the structure of agricultural exports is dominated by such goods as grains, oilseeds and oils. an analytical assessment of the commodity structure of agricultural exports with the eu countries suggests that the most exported products are of plant origin. among them, in 2021, the largest share is accounted for cereals – 9.6%, seeds and fruits of oilseeds – 7.2%. live animals, products of animal origin, as well as fats and oils of animal or vegetable origin occupy an insignificant share in the structure of domestic exports. the analytical assessment of agricultural exports to the eu countries, the study of the opinions of experts and scientists allowed to summarize the problems and identify priority areas for increasing exports: overcoming the raw material orientation of domestic agricultural exports, increasing the share of high value-added products in its structure, reducing the sectoral imbalance of food exports; strengthening the integration of the domestic agri-industrial complex into the world agricultural market, counteracting existing institutional barriers to food exports, diversification of target markets for agricultural exports; harmonization of domestic standards for quality assurance and food safety with international requirements, improvement of the national system of food certification, approximation of norms of production and technological processes in the agricultural sector to the best world practices; formation of a consistent policy of improving the image of the domestic agricultural sector, intensifying the promotion of agricultural products to world agricultural markets, positioning ukraine as a reliable world exporter of quality and safe food; development of a network of logistics and infrastructural support facilities for export activities of agribusiness entities, improvement of the efficiency of the agrarian logistics system, diversification of channels of transportation of products to foreign markets; formation of a system of socio-economic motivational mechanisms and incentives for the formation and development of horizontal and vertical cooperative structures in the agricultural sector. since the beginning of the military aggression of the russian federation, problems related to the production and export of agricultural products have become acute: reduction of sown areas, replacement of fields, theft of grain from the occupied territories of ukraine by russia, imbalance of the domestic market due to the lack of full export and import (rise in price of all components of production, from fuel to seeds, and unclear prospects for the sale of grown products at a competitive price through blocked ports), destruction of infrastructure (elevators, port terminals) and logistics and a significant increase in the cost of logistics both within the country and international transportation. therefore, the longer russia's aggression and war against ukraine lasts, the more difficult the situation becomes both for the domestic agricultural sector and for the world markets, which are increasingly out of balance. three seas economic journal 57 vol. 3 no. 3, 2022 references: ughoda pro asociaciju mizh ukrajinoju, z odnijeji storony, ta jevropejsjkym sojuzom, jevropejsjkym s pivtovarystvom z atomnoji energhiji i jikhnimy derzhavamy-chlenamy, z inshoji storony [association agreement between ukraine, on the one hand, and the european union, the european atomic energy community and their member states, on the other hand]. available at: https://zakon.rada.gov.ua/laws/show/984_011/ ed20140321#text (in ukrainian) mulyk, т. о. 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[the war showed the importance of the agricultural sector. how to take a new height?]. interfax-ukraine news agency. available at: https://interfax.com.ua/news/blog/839762.html (in ukrainian) received on: 29th of august, 2022 accepted on: 26th of september, 2022 published on: 31th of october, 2022 three seas economic journal 87 vol. 2 no. 3, 2021 corresponding author: 1 national aviation university, ukraine. e-mail: zarina_www@ukr.net orcid: https://orcid.org/0000-0001-6245-038x researcherid: t-8659-2018 doi: https://doi.org/10.30525/2661-5150/2021-3-12 dynamics of influence of components of the external environment of aviation enterprises functioning in competitive markets zarina poberezhna1 abstract. the purpose of the paper is research of the components of the external environment and assessment of its impact on the functioning of airlines in open markets. the article defines the essence of the concept of the external environment of the airline, in which the classical scheme highlights the environment of direct and indirect influence. the author notes that direct factors affect the activities of each individual airline separately, and indirectly – form general industry trends in competitive markets. in modern conditions, when the external environment of enterprises is extremely dynamic not only in ukraine but also internationally, the problem of developing methodological approaches to assess the impact of macroeconomic factors on the activities of airlines is extremely relevant. assessing the general trends in the aviation industry, it should be noted that the aviation industry is one of the few transport sectors that is developing gradually and has positive growth rates, despite the large wear of aircraft, which adversely affects the image component of most airlines. methodology. methods of scientific research are abstraction, grouping of data, study of time series, which made it possible to generalize the concept of environment, trends in the industry, assessment of the impact of individual factors on the development of the industry determined by correlation analysis. results the analysis of the availability and degree of the relationship between the studied indicators made it possible to conclude that there is a strong relationship between the rate of domestic passenger traffic and population, the size of real gdp and income. factors such as the political crisis, economic crisis, wars, terrorist acts, plane crashes, pandemics affect both domestic and global passenger traffic, which in turn is reflected in the financial condition of individual airlines. practical implications. analysis of the dynamics of the influence of components of the external environment of the functioning of aviation enterprises in competitive markets allows airlines to ensure sustainable development and economic activity without taking into account their economic activities. thus, to ensure the effective operation of the enterprise in competitive markets and maintain competitiveness requires systematic management of the main resources of the enterprise. value/originality. the author identified macroeconomic factors influencing the dynamics of the air transport industry, established the relationship between passenger traffic and global and national cataclysms (financial crises, political crises, plane crashes, pandemics, wars, etc.), substantiated the factors that caused the greatest impact on activities aviation enterprises. key words: external environment, factors of influence, airline, air transportation, cargo transportation, competitive markets, airlines. jel classification: l93 1. introduction competitive markets are the operating environment of an airline, which is represented by a large number of other entities, with their complex interconnections, infrastructure and special conditions of their activities. the importance of studying this environment is due to the fact that no airline does not carry out its business activities separately, but works in conjunction with suppliers, credit and financial institutions, competitors, and therefore operates in the external environment, on the one hand adapting to it, and on the other – dictating conditions and establishing the rules of the game in its market niche. since the airline is an open system consisting of individual elements that together ensure its stability, balance and ability to function and develop under internal and external influences, an important this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 88 vol. 2 no. 3, 2021 condition for its viability is the interaction with the external environment. each airline, on the one hand, is under the constant influence of macroeconomic environmental factors, the dynamics of which are characterized by cyclicality and crisis, and on the other – reflect their own cycles of development and together form the entire socio-economic system, which determines the relevance of the study. the activity of airlines in difficult conditions depends on the goals and directions of strategic development chosen by the airline. in combination and proper functioning, airlines are able to ensure the effectiveness of control over both the external environment and the main and ancillary business processes of the airline, thereby ensuring the competitiveness of its services in both domestic and foreign markets. a key element that characterizes the relationship of all components of ensuring the effective functioning of the enterprise is a number of measures that allow you to create a clear database for understanding the availability of the necessary elements of the process of functioning. thus, the factors of the external environment should include: the dynamics of market development; competition; consumer perception of products (services) produced by the airline; availability of factors of production; speed of implementation of changes; purchasing power; type of consumers. the factors of the internal environment should include: the potential for optimizing the ratio of "price / value"; degree of acceptance of changes; financial condition of the airline; technological development of the airline; quality of financial management; human resources; accumulated experience in change management and the history of the airline. thus, ensuring the operation of the airline in a complex, uncertain and dynamic environment is a modern, powerful and effective means of managing its activities. the operation of the airline in competitive markets is carried out under the influence of factors in the areas of its activities, justification of measures to eliminate obstacles to the development of the airline, in order to intensif y promising areas of activity. 2. functioning of aviation enterprises in competitive markets to achieve the objectives in the article, the purpose of the analyze and compare some components of the external environment and assess its impact on the functioning of airlines in open markets. methods of scientific research are abstraction, grouping of data, study of time series, which made it possible to generalize the concept of the external environment, trends in the industry, assessment of the impact of individual factors on the development of the industry determined by correlation analysis. 2.1. the main factors of the external environment that influence of aviation enterprises conducting research in the field of influence of certain environmental factors on the activities of airlines is given in the works of a large number of scientists, but in our opinion, it is necessary to single out o.v. ushmarov (ushmarova, 2006) who paid special attention to establishing patterns between the financial condition of airlines and environmental factors that affect it and e. d. pakleeva (pakleeva, 2016), who continued her scientific research and established a correlation between the dynamics of total revenue and the total debt burden of airlines. general trends in the aviation industry have been considered in the work of many researchers, but they are more descriptive in nature, in which there is no clear causal relationship between factors and performance factors. under the external for the airline we will consider the environment, which is represented by a set of market entities (located outside the enterprise) and the relationships between them, which have the ability to exert any influence on the activities of the airline. the classic division of the external environment is its differentiation into the environment of direct and indirect influence. the environment of direct influence is usually understood as those agents that interact quite closely with the airline and cause a strong influence on it, while the environment of indirect impact is usually understood as a set of macroeconomic components that without direct interaction with the company also affect its vital activity. the environment of direct influence of the airline should include, first of all its consumers (customers of goods, works and services, corporate and vip-clients, etc.), that is all direct users of products, works and services of the enterprise, which can be both legal entities and individuals who use the goods, works and services of airlines for their own or organizational needs. the external environment of indirect influence (macroenvironment) is a set of factors, factors and circumstances that do not directly affect the airline and ultimately have a positive or negative effect on its activities, and determine the general trends of the industry, which ultimately affects individual airlines. thus, it can be noted that direct factors have a direct impact on the activities of each individual airline, and indirect – form general industry trends and are larger. for example, among the economic ones should be distinguished: the level of inflation and bank interest, the level of income, the average annual growth of gdp per capita, the level of poverty and unemployment in the country and so on. among the political ones: the annexation of the autonomous republic of crimea and three seas economic journal 89 vol. 2 no. 3, 2021 the anti-terrorist operation in the east of the country, which negatively affected the attitude of the whole world community towards ukraine and affected the financial condition of most sectors of the economy, including aviation. an example of international environmental factors is the pandemic of the covid-19 virus, which has affected all world markets and intensified competition in them, and so on. before assessing the external factors influencing the activities of the airline should consider and understand its place in the overall transport system, and assess its level of popularity among domestic consumers, which is also an important factor in external influence on consumption of goods, works and services. based on data (state statistics service of ukraine, 2018), we can conclude that the place of air transport in the overall structure of passenger traffic is quite small, which increases from 0.03% in 1995 to 0.3% in 2019, but ukrainians have this the type of transport is not popular enough, which can be explained by its high cost and mentality of the population, which was formed in the soviet union. the largest share falls on road transport, which fluctuated in different years – the lowest value was in 1998 – 31.0% (2403424.6 thousand passengers), and the highest in 2010 – 54.4% (3726288.6 thousand passengers). 2.2. dynamics of influence of components of the external environment of aviation enterprises air transport, although it has a positive dynamics in terms of increasing cargo traffic from 19 thousand tons in 1995 to 92.6 thousand tons in 2019, still occupies a small share in traffic. this is due to the high cost of such transportation, low popularity among consumers and the mentality of the nation. in this regard, the share of air cargo transported is at the level of 0.01% in 2019. the largest number of cargo in our country is transported by road, so in 1995 was transported 1816401.0 thousand tons – this is the maximum, and the minimum was in 2000 – 938916.1 thousand tons of cargo. in conclusion, it can be noted that in the domestic market there is strong competition from air transport with other types, such as rail and road. according to (state aviation service of ukraine) and (figure 1), it is seen that the number of transported passengers by aviation companies is growing as a whole (from 5131.1 thousand people in 2009 to 13705.8 thousand people in 2019) and international (from 4135.9 thousand people in 2009 to 12547 thousand people in 2019) and domestic transportation (from 995.2 thousand people in 2009 to 1158.6 thousand people in 2019). in 2018– 2019, the transportation of passengers, cargo and mail was carried out by 34 domestic airlines, which performed 100.3 thousand flights and 103.3 thousand flights, respectively. which is 55.8% more in 2019 than in 2015. among domestic consumers (figure 1), international air transportation is in greater demand, because in 2019 it accounted for 91.5% of all air transportation, although since 2016 domestic air transportation is becoming increasingly important, and in 2018 the industry reached the level of 2009 for such transportation slightly exceeding this figure. thus, in 2019 the number of transported persons amounted to 1158.6 thousand people, and in 2009 – 995.2 thousand people. the increase was 163.4 thousand people (16.4%). comparing the data of 2019 and 2018, in 2019 the increase was by 75.7 thousand people (7.0%). the increase in passenger traffic had a positive effect on the occupancy of seats in aircraft on domestic scheduled flights during 2017–2018 from 73.5% to 79.3% respectively, in 2018–2019 it amounted to 75.9%. 5131,1 6160,5 7504,8 8106,4 8110,4 6475,2 6304,3 8277,8 10556,3 12533,4 13705,8 4135,9 5144,3 6328,5 6820,9 6900,3 5828,6 5679,6 7475,3 9614,9 11450,5 12547,9 995,2 1016,2 1176,3 1285,5 1210,1 646,6 624,7 802,5 941,4 1082,9 1157,9 0 2000 4000 6000 8000 10000 12000 14000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 total international transportation domestic transportation figure 1. dynamics of passenger traffic by air transport of ukraine 2009–2019 (thousand people) source: built on the basis of data (state aviation service of ukraine) three seas economic journal 90 vol. 2 no. 3, 2021 realizing the general dynamics of the industry, the increase and decrease in different years of passenger and freight traffic, we should pay attention to what external factors have caused the greatest impact on the performance of aviation companies. the importance of studying the external factors influencing the micro and macro environment on the activities of airlines is described by ushmarova  o. v. in the work "restructuring of the airline in the context of the sectoral structural crisis", in which it established a number of patterns between the financial condition of the airline and external factors affecting their activities, among which were the following: political instability, including wars and terrorist acts, macroeconomic factors (change in gdp, income level) and the dynamics of exchange rates and oil prices (ushmarova, 2006; pakleeva, 2016). let's analyze the dynamics of the total passenger traffic of ukrainian airlines in the period 1995–2018 which shows that the largest declines in passenger growth occurred during the crisis of 1997–1998, which arose in ukraine against the background of the collapse of the soviet union, independence and the transition from the ruble to the hryvnia in 1996, which together caused hyperinflation, negatively affected, though not large at the time passenger traffic. figure 2 shows the flow of domestic air carriers in 1995–2018. the decline of 2004–2005 was caused by the "orange revolution" in the countries against the background of the political crisis and the crisis of power. the slowdown in passenger growth in 2008 was due to the rapid depreciation of the hryvnia due to the global financial crisis. the critical minimum was reached in 2014 due to a number of political and economic upheavals. first, the annexation of crimea, and secondly, the anti-terrorist operation in eastern ukraine, the bankruptcy of most private banks. the onset of the political crisis in the country and economic instability led to a downward trend in passenger traffic in 2017–2019. in general, it is clear that the decline in passenger traffic is directly related to the crisis in the economy and political situation in the country. in addition, in 2020 it is possible to predict the negative dynamics of passenger traffic and cargo volumes due to the global pandemic caused by covid-19. paying attention to (figure 3) it can be noted that a similar situation developed with the flow of goods in 1995–2018. however, the sphere of cargo transportation turned out to be more sensitive than the sphere of passenger traffic. thus, we observe sharper peaks of ups and downs, which are caused not only by national factors but also by factors of international importance. a full understanding of the dynamics of changes in international and domestic passenger flows and identifying the impact of key events in ukraine and the world (economic crises, political conflicts, hostilities, terrorist acts, plane crashes, etc.) can be obtained from (figure 3). as can be seen from (figure 4) that 1997–1998 was marked in the world by the asian crisis, which ripened until 1997 and led to the rapid collapse of stock indices in southeast asia, together with large government and corporate debts, most affected indonesia, south korea 1724 1484,5 1163,9 1087 1164 1289,9 1767,5 2374,7 3228,5 3813,1 4350,9 4928,6 6181 5131,2 6106,5 7504,8 8106,3 8107,2 6473,3 6302,7 8277,9 10555,6 12529 13705,8 -9,9 -13,9 -21,6 -6,6 7,1 10,8 37,2 34,4 35,9 18,1 14,1 13,3 25,4 -16,9 19 22,9 8 0,01 -20,2 -2,6 31,3 27,5 18,7 9,4 -30 -20 -10 0 10 20 30 40 50 0 2000 4000 6000 8000 10000 12000 14000 number of transported passengers, thousand growth rate of domestic passenger traffic,% figure 2. passenger traffic of domestic air carriers 1995–2018 source: built on data (state aviation service of ukraine) three seas economic journal 91 vol. 2 no. 3, 2021 and thailand (statistic asian crisis, 1997–2001). the terrorist attack of september 11, 2001 in america negatively affected global passenger traffic, as shown in figure 4, but did not affect the domestic carriage of passengers. global and national passenger traffic in 2003 was determined by severe acute respiratory syndrome / sars – a viral infectious disease, a special variant of coronavirus infection with a predominance of airborne transmission of infection with respiratory damage and, in severe cases, with the appearance of atypical pneumonia (raymond, wongand alan, and wu, 2003). in ukraine, as already mentioned, this decline was caused by the consequences of the conflict with russia. the grand recession of 2007–2009 was caused by the great recession of the entire world economic system, which affected all world economies, and is called the "bail crisis" (great recession, 2017), which is also reflected in global and national passenger flows. a series of global and domestic upheavals led to a decline in passenger traffic in 2014, which was first caused by the european migration crisis and the imposition of economic and political sanctions against the russian federation, lower fuel prices on world markets and hostilities in syria. summing up the figure 3. cargo flow of domestic air carriers 1995–2018 source: built on data (state aviation service of ukraine) figure 4. dynamics of global and ukrainian passenger traffic and key events in the country and the world 1995–2019 source: built on the basis of data (iata industry statistic; asian crisis 1997–2001; raymond, wongand alan, wu, 2003; great recession, 2017; conflict on the island of tuzla, 2003; state aviation service of ukraine) three seas economic journal 92 vol. 2 no. 3, 2021 general trend, we note that the factors of the crisis in the national economy and political life of the country led to a sharper herd, especially in 2014, compared to global passenger traffic. let's analyze the growth rate of real gdp in ukraine and the growth rate of national passenger traffic. following the dynamics of passenger traffic growth and real gdp, (figure 5) it can be noted that the peaks of their growth and decline are quite closely intersected. all the above-mentioned crises in ukraine are directly related to gdp declines, but there was another circumstance that negatively affected gdp growth in 2003 – the internal crisis of ukrainianrussian relations, which was caused by the beginning of construction of a dam off the coast of tamansky peninsula to the ukrainian island of tuzla in order to join it to the mainland of russia (conflict on the island of tuzla, 2003). special mention should be made of the downing of a boeing 777 of malaysia airlines near donetsk in 2014. in (figure 6) presents the dynamics of national passenger traffic and average annual wages in ukraine 1995–2019. the figure shows that in general the growth of the average annual wage has a significant impact on domestic passenger traffic, small differences can be figure 5. dynamics of national regular passenger traffic and real gdp of ukraine 1995–2019 source: built on the basis of data (asian crisis 1997–2001; raymond, wongand alan, wu 2003; great recession, 2017; gross domestic product, 1996–2026; conflict on the island of tuzla, 2003; state aviation service of ukraine) figure 6. dynamics of domestic regular passenger traffic and average annual wages in ukraine 1995–2018 source: built on the basis of data (asian crisis 1997–2001; raymond, wongand alan, wu 2003; great recession, 2017; conflict on the island of tuzla, 2003; income of population in ukraine, 2012–2019; state aviation service of ukraine) three seas economic journal 93 vol. 2 no. 3, 2021 explained by the following: the availability of savings and wages in "envelopes" does not prevent sharp peaks and gently affects overall passenger traffic. a correlation coefficient was calculated to determine the presence and extent of relationships between indicators. there is a strong direct correlation between the total passenger flow of domestic airlines and the real gdp of ukraine. the correlation coefficient is equal to 0.962770233. there is also a strong relationship between aggregate passenger traffic and average annual wages, with a correlation coefficient of 0.878802287. however, there is not a strong direct relationship between the growth rate of passenger traffic and the growth rate of the average annual wage (correlation coefficient is 0.697257208), this may be due primarily to the above factors of "shadow wages" and the fact that data on domestic passenger traffic includes domestic and international transportation by airlines that are actually registered in ukraine. despite the growing availability and popularity of air transportation, establishing ties with europe and the world, in times of global crises and domestic shocks, against the background of declining average annual incomes, there is a decrease in the number of international air travel. more details in (figure 7) presents: pre-tax financial result and net financial result of aviation enterprises, as well as the dynamics of these indicators. it can be seen that both the pre-tax financial results and the net financial result of airlines have fluctuated significantly over the past 8 years, especially during the crisis of 2014–2015. comparing the graphs of the dynamics of indicators, we can conclude that the most sensitive indicator of the financial condition of airlines is the growth rate of pre-tax financial results. the greatest value of the indicators came in 2016, when airlines began to emerge from the crisis, but at the end of 2017, the net financial result of aviation companies was negative. 3. results and discussions summing up the research, we note that the external environment of the airline is an environment that is outside it and according to the classical approach is divided into an environment of direct and indirect influence. the environment of direct influence inclu des: consumers, competitors, partners and govern ment agencies and authorities. the environment of indirect influence includes: economic, scientific and technical, political and legal, socio-cultural, international and environmental environment. assessing the overall place of airlines in the total cargo and passenger traffic, it was noted a very small share of it among other transport companies. air transport in the overall structure of passenger traffic occupies a fairly small share, which increases from 0.03% in 1995 to 0.3% in 2019. it should also be noted that air transport, although it has a positive trend in increasing traffic cargo from 19 thousand tons in 1995 to 92.6 thousand tons in 2019, but also occupies a small share. 4. conclusions the research identified the most influential reasons for this situation: first – the high cost of such transportation, and secondly, the unpopularity of this mode of transport is caused by the mental mood of citizens, and thirdly, the lack of developed infrastructure figure 7. dynamics of pre-tax financial results and net financial result of domestic airlines in 2010–2017 source: built on the basis of data (ukrstat ukraine, 2013–2018) three seas economic journal 94 vol. 2 no. 3, 2021 due to lack in most cities suitable for use at airports and aerodromes. paying attention to macroeconomic factors influencing the dynamics of the industry, the author established the relationship between passenger traffic and global and national cataclysms (financial crises, political crises, plane crashes, pandemics, wars, etc.), which suggests that the factors of indirect influence (macroeconomic) have a strong influence on domestic and global general trends in passenger and freight traffic. after conducting a correlation analysis, a close direct correlation was found between the total passenger flow of domestic airlines and the real gdp of ukraine, the correlation coefficient is equal to 0.962770233. so, summarizing the results of the study, we can note that the early detection of the most important factors that affect the company, allows its management to develop appropriate decisions on action in changing conditions. there is a big one the number of environmental factors that have a direct or indirect effect on the state and development of the aviation enterprise. based on the study, the most important factors of the external environment of the aviation enterprise with their division into factors of direct and indirect actions, and a classification of factors is proposed external environment on various grounds. in the further separation of the factors of negative influence, monitoring and forecasting of which are available the most important actions for the aviation enterprise. any analysis can not reliably predict the future, it is impossible to take into account all the changes in the external environment of the aviation enterprise. ago it is necessary to develop and implement measures to adapt the aviation enterprise to the external environment. the developed measures will be based on the principle of adaptability, according to which the company is considered as an adaptive system, ie one that retains performance in case of unforeseen changes in its goals and characteristics or the environment by changing the algorithm or finding the optimal state. adaptability, constant adaptation of the system to external factors is achieved through feedback information communication and immediate adequate response to changes that occur. the objective function of adaptation is to achieve the strategic goals of the aviation enterprise by flexibly adapting the internal capabilities of the aviation enterprise to changes in the external environment. monitoring is aimed at constant monitoring of current and new information, disclosure of causes changes in the state of the studied factors and prediction of trends in their development. references: ushmarova, o. v. (2006). specifics of airline restructuring in a crisis. economic analysis: theory and practice, 19(76), 43–51. pakleeva, e. d. (2016). estimation of influence of factors of external environment on activity of the russian airlines. modern scientific researches and innovations, 6. available at: http://web.snauka.ru/issues/2016/06/68396 international air transport association fact sheet industry statistics. available at: https://data.worldbank.org/ indicator/is.air .psgr asian crisis 1997–2001. available at: https://neftegaz.ru/news/finance/334116-1997-2001-aziatskiy-krizis/ raymond, s. m., wongand alan, & wu (2003). haematological manifestations in patients with severe acute respiratory syndrome: retrospective analysis bmj (clinical research ed.), vol. 326 (7403), pp. 1358–1362. great recession. available at: https://www.history.com/topics/21st-century/recession gross domestic product of ukraine. available at: https://www.statista.com/statistics/296140/ukraine-grossdomestic-product/ conflict on the island of tuzla. available at: https://www.jnsm.com.ua/h/0929n/ income of the population of ukraine. available at: http://www.ukrstat.gov.ua/operativ/operativ2005/gdn/ dvn_ric/dvn%20_u/dvn_u.htm petrenko, i. (ed.) (2018). state statistics service of ukraine: transport and communications of ukraine, statistical collection. state aviation service of ukraine. available at: https://avia.gov.ua/pro-nas/statistika/operativna-informatsiya/ activities of business entities. available at: http://www.ukrstat.gov.ua/druk/publicat/arhiv_u/09/arch_ dsg_bl.htm three seas economic journal 44 vol. 3 no. 4, 2022 1 v. o. sukhomlynskyi mykolaiv national university, ukraine (corresponding author) e-mail: tanyastroyko@gmail.com оrcid: https://orcid.org/0000-0002-0044-4651 researcherid: aab-2925-2021 2 v. o. sukhomlynskyi mykolaiv national university, ukraine e-mail: harusanna30@gmail.com this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-7 anti-crisis management as the basis of ensuring the economic stability of enterprises tetiana stroiko1, hanna kharus2 abstract. crisis management in today's economic environment is the basis for competitive and efficient operations of any company. liquidation of unviable companies is a prerequisite for the effective functioning of the market mechanism. indeed, launching bankruptcy proceedings is much easier than trying to restore the life cycle of an enterprise. however, the practical experience of global companies in overcoming crisis phenomena indicates the formation of a different approach to the development of the crisis process. in order to study the need to apply anti-crisis management mechanisms, the article analyzes the financial and economic condition of sandora llc using the methods of fox, tafler, altman and springate. the calculated data confirm the fact that the specifics of domestic business, inflation rates, tax legislation, general economic and political instability make it impossible to adequately apply foreign bankruptcy forecasting models with reliable results. the peculiarity of anti-crisis management at domestic enterprises is the need to use modern risk management methods, taking into account the timeframe and the impact of external and internal factors. currently in ukraine, only large corporations or branches of international companies create special structural units, hire risk managers or high-level managers whose experience and qualifications allow them to manage the company in a crisis situation. therefore, the use of crisis prevention measures helps to increase the company's competitiveness, and ongoing diagnostics of activities, environmental analysis and identification of possible risks minimize future costs. the most important features of crisis management include the individuality of strategic programs for forecasting and overcoming crisis phenomena at an enterprise, which is primarily related to the individuality of the stages of formation and development of each company, indicators of economic efficiency and mission, the specifics of the management system, as well as the personal qualities, knowledge and experience of managers. in other words, each company should develop an individual crisis management program taking into account the global experience of risk management and the specifics of strategic planning in the short and long term. to evaluate the effectiveness of the crisis management strategy, it is necessary to determine the performance indicators and goals of such management. at the same time, the criteria for determining the effectiveness of the implemented program are purely individual and depend on many factors: the scope of activity, profitability, level of profitability, form of ownership, sales markets, company size, number of employees, etc. key words: anti-crisis management, bankruptcy, financial results, organization management, management, anti-crisis measures, anti-crisis policy. jel classification: h71, h76, m48, r51 1. introduction the intensification of globalization processes in the world society has accelerated ukraine's integration into the european space, which has been taking place since the beginning of its independence, but the final vector of its development was determined by the signing of the association agreement with the european union, which in turn opened up new opportunities and threats for domestic companies. in today 's business environment, crisis management is an important and necessary area of management development aimed at preventing crisis situations and overcoming them with minimal costs and consequences, which, for ukraine, an economy that is under the influence three seas economic journal 45 vol. 3 no. 4, 2022 of changing factors and various threats, is the basis for competitive and efficient operations of any company. each company operates under the influence of internal and external factors that determine its business lines, marketing and sales policy, management strategy and market behavior, etc. in such conditions of interdependence of the economic system elements, risks and threats to the company 's performance constantly arise and need to be addressed. to do this, it is necessary to introduce a crisis management system into the company 's policy designed to calculate and identify possible crises, take preventive measures and manage the company during a crisis in order to overcome it and minimize its consequences. 2. anti-crisis management of the enterprise: the essence of concepts and the concept of research according to the general definition, a crisis is a turning point or a period of danger and uncertainty arising under the influence of various factors, and company management during a crisis can be described as managing an enterprise under pressure, which allows to effectively analyze, plan, organize, control the organization's activities, as well as to respond quickly and make rational decisions to solve current problems. accordingly, crisis management involves forecasting crisis phenomena, analyzing the preconditions for their occurrence, developing measures to reduce the negative consequences and using its factors for further sustainable development (kukhta, 2012). crisis management, on the other hand, involves coordinating complex technical and relational systems and developing organizational structures to prevent, mitigate, and learn from a crisis (bundy, pfarrer, short, 2016). many researchers note the importance of studying the internal mechanisms of the organization in order to form the basis for the effective functioning of crisis management at the micro level (alpaslan, 2009; beck, 2009; bigley, 2001). liquidation of unviable enterprises is a prerequisite for the effective functioning of the market mechanism. indeed, it is much easier to initiate bankruptcy proceedings than to try to restore the life cycle of an enterprise. however, the practical experience of global companies in overcoming crises shows that a different approach to the development of the crisis process is emerging. thus, the main purpose of anti-crisis measures, according to the latest trends, is to prevent the occurrence of crisis phenomena at the stage of company establishment, choice of its mission, formation and maintenance of an appropriate level of strategic potential that will provide the company with competitive advantages. at present, foreign corporations prefer stabilization, restructuring and development when choosing anti-crisis strategies, while in ukraine they prefer restructuring, rehabilitation and liquidation of enterprises (ladunka, 2017). in particular, kuznetsov e. s. interprets anti crisis management as a complex management system of the organization, aimed at preventing the impact of adverse phenomena using response tools, developing and implementing a strategic program that allows overcoming difficulties, maintaining and improving market positions under any circumstances using own resources (kuznetsov, 2012). therefore, most researchers note that anti crisis management at the enterprise should be ongoing and consist of measures for early forecasting and the likelihood of crisis phenomena, implementation of anti-crisis measures to directly respond to threats from the internal and external environment, as well as overcoming the consequences of crises and using the experience gained in practice to prevent future crises. in other words, anti-crisis management is an interconnected comprehensive system of company management characterized by a strategic focus, created to identify and eliminate current and future problems in operations by developing and implementing an effective and modern program of anti-crisis measures. the consequences of crisis phenomena depend on the effectiveness of regulatory methods and are controversial, i.e., a crisis can have both negative and positive consequences: recovery of the socio-economic system or its destruction; aggravation or alleviation of social and economic problems. that is why the development of anti crisis measures requires a systematic and comprehensive approach, using the experience of the world's leading countries. the essence of the crisis management mechanism lies in its ability to restore the company 's effective operations during a crisis based on selfthree seas economic journal 46 vol. 3 no. 4, 2022 organization, maintaining internal stability and a changing external environment. the use of a systemic approach in the crisis management mechanism determines the systemic vision of the main directions and stages of its work and depends on the type and cycle of the crisis. thus, the process of anti-crisis management is a set of clearly defined sequential targeted actions and stages characterized by certain response methods and tools to bring a company out of a crisis. the current unstable economic situation in the country, characterized by inflation, corruption, change of government, integration and opening of the domestic market, encourages managers to form crisis management systems as part of the overall management structure of enterprises that will be most effective in a crisis. that is, the risk management system should function continuously, and not just be imple mented at the first sign of a crisis, so the methodology should be based on the theory and practice of the world management science, taking into account the specifics of the company 's activities (yurynets, 2014). thus, it can be noted that crisis management in the current economic environment is an important and necessary area of management development aimed at preventing crisis situations, overcoming them with minimal costs and consequences, which for ukraine, an economy that is under the influence of changing factors and various threats, is the basis for competitive and efficient operation of any company. 3. crisis state of the enterprise – when is crisis management needed? ukraine's economy is developing under the influence of economic transformations aimed at ensuring the transition to a market economy and is currently undergoing a transformation phase. in the context of european integration, more and more companies will be interested in entering the foreign market, and the first thing they must ensure is the competitiveness of their products. sandora llc is one of the most developed companies in the ukrainian food market and tops many ratings of successful businesses. the company 's main specialization is the production of juices and juice drinks. in order to study the need to apply anti-crisis management mechanisms, the authors have diagnosed the financial and economic condition of sandora llc according to the methods of lees, tafler, altman, and springate and obtained contradictory generalized results (tereshchenko, 2003; chibisova, 2012; sabadash, 2012). although, in general, the calculations showed that the threat of a financial crisis of bankruptcy in 2020 increased significantly, the results of all 4 models have approximately the same trend line (figure 1). the researchers believe that these models and their calculation systems have common disadvantages and their causes, they are unsui table for practical application at domestic enterprises, the indicators of financial condition calculation do not fully determine the current 0,4803 0,1905 0,9958 8,1425 0,47 0,718 0,3236 0,5635 0,2252 1,9099 9,5106 0,55 1,5306 2,5775 0,6463 0,652 1,7426 11,2562 0,45 0,9388 1,345 0 2 4 6 8 10 12 2019 2020 2021 figure 1. probability of bankruptcy of sandora llc according to different models three seas economic journal 47 vol. 3 no. 4, 2022 state of the enterprise, and the values obtained as a result of applying these models often differ. thus, according to g. springate's model, sandora llc reached the bankruptcy line in 2020, although according to r . j. tafler's model, altman's two-factor and five-factor models, the company has a good long-term perspective. the calculated data confirm the fact that the specifics of domestic business, inflation rates, tax legislation, and general economic and political instability make it impossible to adequately apply foreign bankruptcy forecasting models with reliable results. to summarize, it should be noted that domestic models for assessing and calculating the probability of bankruptcy of sandora llc are more consistent with the real state and financial stability of the enterprise (figure 1). after all, although foreign models recorded an increase in the risk of bankruptcy of the enterprise in 2020, no significant problems in liquidity and management were characterized, unlike domestic models. the company 's risk analysis should take into account internal and external factors of influence. thus, external factors of crisis situations generally include the economic and political situation in the country, inflation, stability of the national currency as prerequisites for the risk of losses due to exchange rate differences, the emergence and impact of global crises, relations with other countries in the field of trade, customs clearance, trade restrictions and product quality standards, both when importing raw materials and exporting products. to analyze performance, it is advisable to use the swot analysis method, which takes into account the strengths, weaknesses, opportunities and threats of the activity (table 1). according to the general methodology, the internal risks of sandora llc include risks related to the product range, consumer behavior, pricing, product and sales policies, production capacity, market competition, technology upgrades, compliance with quality certificates, etc. in order to analyze internal threats, it is neces sary to analyze the company 's competitive advantages, its market position, and the prerequisites for building capacity and potential. today, sandora llc is a leader in the production of juices and nectars due to innovative development, improvement of production processes, development of new products, and use of advanced technologies. the company prioritizes consumer taste preferences, and its product range includes almost 300 items. sandora's sales offices cover most of ukraine. the company exports 25% of its products to more than 20 countries. the company 's pricing policy is based on full costs and provides for the establishment of a single wholesale price in all regions. raw materials account for almost 50% of the price structure. the margin is 8-14%, depending on the type of raw material. despite the significant difference in the price of local and imported raw materials, the company strives to maintain almost a uniform price level for the entire range of juices and nectars. table 1 swot-analysis "sandora" llc strengths weaknesses long period of work in the domestic market; limited access to foreign markets; high quality of products: naturalness of products; large number of substitute products, competitive position is deteriorating; high image of the company; one main type of activity; regular promotions, discounts, gifts; limited resources; wide range of products. high cost of production. opportunities threats increase in purchasing power of the population; oversaturation of the domestic market with products of competitors and foreign manufacturers; increase in the number of advertisements; instability of the economic and political system; military operations in the country growth in construction and the number of gardens; new competitors entering the ukrainian market; entering new markets; a large number of substitute products; expansion of the product line in line with global trends. changes in legislation and product quality and safety standards. three seas economic journal 48 vol. 3 no. 4, 2022 the main essence of sandora's product policy is to form a product range that would bring profit to the company, meet global trends and satisfy consumer demands. according to the results of the study, it can be noted that the products of sandora llc are at the stage of market saturation and optimal use of the stabilization strategy, which does not require significant investment, market capture, but only minor supporting advertising and stability. 4. formation of ways of anti-crisis management at the enterprise as already mentioned, the crisis management process is a system of management measures aimed at diagnosing, preventing, neutralizing, minimizing the consequences and overcoming crisis phenomena and their causes. according to the analysis of sandora llc's activities, internal and external environment factors that should be taken into account when drawing up an anti-crisis program, the following areas of activity should be strengthened: 1. increase market share by leveraging the existing wide sales network. 2. belonging to the international corporation pepsico provides an opportunity to enter international markets using its experience and technologies. 3. increase production capacity by increasing the authorized capital. 4. the use of high-tech and resource-saving equipment can become a competitive advantage, which will reduce the cost of production without compromising its quality. 5. developing new products in line with consumer preferences. 6. recruitment of qualified personnel. 7. thanks to the variety of brands and trademarks, prevent the loss of the target audience and market share. 8. the advantages of the location help to reduce transportation costs. 9. the well-established system of imported raw materials allows the company not to reduce its own production capacity even in the event of a poor harvest of vegetables and fruits, for which the company usually grows its own raw materials. 10. development of a new marketing and sales policy. 11. the production of juices in a glass bottle can increase market share in line with new trends, even on the global market. 12. increase profitability by reducing costs. the swot-analysis shows that using its strengths, sandora llc can increase the share of the domestic and even international market. on the basis of its own scientific base, as well as innovations and technological innovations of pepsico, the company can produce new products and increase sales. with the help of its advantages and strengths, sandora llc can deal with market risks, because thanks to its large assortment, it can avoid reducing the target audience and reduce the number of competitors in the market. the use of the latest technologies that will reduce production costs will make sandora juices available to the general population, regardless table 2 swot-matrix "sandora" llc opportunities threats strengths development of relations in the regions ensuring the highest quality of the national product expansion of the sales network increasing consumer solvency signing new agreements with foreign companies attracting foreign investors state support for domestic producers weak nesses improvement of the marketing program creation of a new marketing policy for the european market development of a new personnel management concept for securing agreements in the regions entering the foreign market with a quality product in the short term signing long-term cooperation contracts launch of a new product with depreciation due to a powerful production line increase in production volumes creation of a clear distinction between juice and substitute products clear formulation of the main advantages of the presented products three seas economic journal 49 vol. 3 no. 4, 2022 of their income level. thus, the company will not feel the change in the age structure of the population, which is accompanied by a drop in sales. currently, juices are most often bought by children, young people and people aged 21-40; athletes and healthy eating; on holidays and in summer; the older generation still prefers homemade juices. the company 's factories, warehouses and orchards are conveniently located throughout ukraine, which helps to reduce transportation and logistics costs and lower production costs. according to the concept of the enterprise life cycle, sandora llc, after many years of market leadership, is at the highest point of development, after which, if appropriate measures are not taken, a decline in production may occur. this situation requires reorganization of the company, its management system, production, etc. to start a new life cycle (kukhta, 2012). an important prerequisite for applying the right anti-crisis measures and responding in a timely manner is to determine the depth of the financial crisis. in this regard, there are several phases of the crisis: phase 1 – does not directly threaten the operation of the enterprise; phase 2 – threatens the company 's continued existence and requires immediate anti-crisis measures to reduce the likelihood of bankruptcy; phase 3 – a crisis condition that is incom patible with the further existence of the company and leads to its reorganization or liquidation. according to the calculations of the probability of bankruptcy based on domestic models, which are the most acceptable for ukrainian enterprises, sandora llc is in the second phase, i.e., it needs to implement an anti-crisis strategy. the most important aspect of the anti-crisis strategy is the prevention of crises, preventing their occurrence, and making management decisions before the company finds itself in a crisis situation according to its key financial and economic indicators. therefore, sandora llc should have a prevention system as a component and the first stage of the crisis management system: 1. develop a typology of possible crises. that is, it is necessary to analyze and define the typology of possible crises of the company, determine in advance the parameters of their identification, probability of occurrence, conditions for avoidance, and the possible scale of losses. the values of threshold parameters or indicators for determining a crisis situation and classifying it as a certain type of risk are set by the management. such indicators of these parameters will allow to focus on the availability of financial and operational reserves, strategic goals and development plans of the enterprise, as well as the wishes of shareholders in the field of efficiency and reliability of the enterprise. 2. a program of measures to overcome crisis situations. according to this approach, the identified crisis situations are assessed and ranked by the degree of danger, and, according to each of them, a strategy and a program of measures to resolve it are developed. this identifies the priority objects to be protected in the event of a specific crisis, which must be addressed first: people's safety, the company 's reputation, business continuity, the amount of material damage, environmental damage, etc. 3. creation of an anti-crisis management team of about 10 people from employees of various divisions of the company (sales, supply, consumption, marketing, management, etc.) with the involvement of insurance and legal experts, as well as a highly qualified risk manager. their actions must be clear and coordinated, they must make decisions, often in stressful situations, and take responsibility for them, because depending on how quickly and accurately the company responds to a threat, it is clear how effective the work of such a team is and the feasibility of its creation. for sandora llc, an important area of anticrisis policy should be the use of strategic and current planning. strategic planning is a systematic and logical process of implementing an anti-crisis strategy into specific anti-crisis plans, projects, and programs with the possibility of assessing their future effectiveness. it is worth noting certain areas or structural elements of the anti-crisis policy that are recommended to be implemented in the management system of sandora llc to improve the efficiency of operations and reduce the likelihood of bankruptcy: – anti-crisis hr management system, which involves improving the system of motivation and evaluation of employees, especially during a crisis at the enterprise, because only a highly three seas economic journal 50 vol. 3 no. 4, 2022 qualified, motivated and loyal employee will be able to work most productively in the face of risks; – anti-crisis marketing policy, which includes research of the competitive environment: the market, consumers, suppliers, intermediaries, sales network and, of course, competitors and their advantages; – developed a system of indicators for diagnosing an impending crisis, determining its type or scope of influence, as well as indicators for assessing the effectiveness of the anti-crisis program; – developed programs and strategy of anti-crisis management. the anti-crisis management program should fulfill two main tasks: overcoming the consequences of the crisis and eliminating the factors that contribute to the development of crisis phenomena at the enterprise. an anti-crisis program should include the following steps: – special anti-crisis monitoring and situational analysis to identify potential problems and areas of physical activity. in this case, the anti-crisis working group should identify the main risk factors, determine their interrelationships and impact on the overall state of the enterprise. it is also important to carefully define which factors the company can withstand and which need to be reduced; – development and implementation of a system of measures to prevent crisis phenomena, early elimination of possible causes of the crisis: refusal to produce products that are not in demand, search for new suppliers of raw materials in case of supply disruptions, closure of unprofitable production facilities, etc.; – preparation of an action plan and response measures in the event of inevitable or possible crises when it is impossible to eliminate their causes: implementation of compensation measures, staff training, etc.; – immediate response to a crisis situation, actions to prevent losses, liquidation of a crisis situation, and mobilization of resources; – monitoring the implementation of the program and evaluating its effectiveness; – mitigating or eliminating the consequences of the crisis through the implementation of an anti-crisis strategy; – implementing stabilization measures and measures aimed at avoiding such risks in the future. when working out and developing ways to overcome the crisis, it is recommended to use brainstorming with representatives of the anticrisis working group and other top managers. the essence of this method is to generate a large number of ideas by a certain group of people and process them further to obtain the best idea or solution. at the micro level, it is recommended to implement an early warning and response system, a special information system that informs management and the working group about potential external and internal risks. this system identifies and analyzes information about hidden threats, the realization of which can lead to a crisis, loss of potential opportunities or bankruptcy. the main tasks of such a system also include: timely detection of negative factors and trends in the development of certain indicators, internal and external parameters of the enterprise; quick identification of the financial crisis and its causes; adoption and development of preventive and anti-crisis measures. 5. conclusions anti-crisis management at the enterprise should be ongoing and consist of measures for early forecasting and probability of crisis phenomena, implementation of anti-crisis measures to directly respond to threats from the internal and external environment, as well as overcoming the consequences of crises and using the experience gained in practice to prevent the occurrence of crises in the future. the specifics of the goals and objectives of crisis management are determined by the principles of uncertainty, and such indicators as the costs of overcoming the crisis and its consequences, the assessment of the result, and the timing of achieving strategic goals are closely interrelated. the essence of crisis management is expressed in the provisions that characterize the cyclical nature of crisis phenomena and the likelihood of their occurrence under any conditions during a certain period of the company's formation and development. the peculiarity of anti-crisis management at domestic enterprises is the need to use modern methods of risk management, taking into account the timeframe and the impact of external and internal factors. currently in ukraine, only large corporations or branches of international companies create special structural units, hire risk managers or high-level managers whose experience and qualifications allow them to three seas economic journal 51 vol. 3 no. 4, 2022 manage the company in a crisis situation. therefore, the application of measures to prevent crisis phenomena contributes to the company 's competitiveness, and the ongoing diagnostics of activities, analysis of the environment and identification of possible risks minimizes future costs. the most important features of crisis management include the individuality of strategic programs for forecasting and overcoming crisis phenomena at an enterprise, which is primarily related to the individuality of the stages of formation and development of each company, indicators of economic efficiency and mission, the specifics of the management system, as well as the personal qualities, knowledge and experience of managers. in other words, an individual crisis management program should be created for each company, taking into account global risk management experience and the specifics of strategic planning in the short and long term. to evaluate the effectiveness of the anticrisis strategy, it is necessary to determine the performance indicators and goals of such management. at the same time, the criteria for determining the effectiveness of the implemented program are purely individual and depend on many factors: the scope of activity, profitability, level of profitability, form of ownership, sales markets, company size, number of employees, etc. the crisis management program should perform two main tasks: overcoming the consequences of the crisis and eliminating the factors that contribute to the development of crisis phenomena at the enterprise. references: kukhta, p. v. (2012). crises, their causes and consequences. efficient economy, vol. 10. available at: http://www.economy.nayka.com.ua/?op=1&z=1439 (accessed september 28, 2022). (in ukranian) bundy, j., pfarrer, m. d., & short, c. e. (2016). crises and crisis management: integration, interpre-tation, and research development. 43(6), 1661–1692. doi: https://doi.org/10.1177/ 0149206316680030 (accessed september 2, 2022). alpaslan, c. m., green, s. e., & mitroff, i. i. (2009). corporate governance in the context of crises: towards a stakeholder theory of crisis management. journal of contingencies and crisis management, vol. 17, pp. 38–49. beck, t. e., & plowman, d. a. (2009). experiencing rare and unusual events richly: the role of middle managers in animating and guiding organizational interpretation. organization science, vol. 20, pp. 909–924. bigley, g. a., & roberts, k. h. (2001). the incident command system: high-reliability organizing for complex and volatile task environments. academy of management journal, vol. 44, pp. 1281–1299. ladunka, i. s., & andryushyna, o. i. (2017). anti-crisis management of the enterprise. economy and society, vol. 8, pp. 278–281. available at: https://economyandsociety.in.ua/journals/8_ukr/49.pdf (accessed september 12, 2022). (in ukranian) kuznetsov, e. s. (2012). the essence of anti-crisis management and the principles of its implemen tation. efficient economy, vol. 10. available at: http://www.economy.nayka.com.ua/?op=1&z=1488 (accessed september 8, 2022). (in ukranian) yurynets, z., & baida, b. (2014). economic security of entrepreneurship of ukraine: theory, practice, directions of strengthening: monograph; lviv. national university named after ivan franko. lviv: lnu named after ivan franko, 184 p. (in ukranian) tereshchenko, o. o. (2003). discriminant model of integral assessment of the financial state of the enterprise. ukraine economy, vol. 8, pp. 38–44. (in ukranian) chibisova, v. i. (2012). methods of assessing and forecasting bankruptcy of enterprises. scientific works of the kirovohrad national technical university. economic sciences, vol. 22 (2), pp. 389–394. available at: http://kntu.kr.ua/doc/zb_22(2)_ekon/stat_20_1/64.pdf (accessed september 15, 2022). (in ukranian) sabadash, v. v., & kovalenko, e. v. (2012). diagnostics of a crisis state and the threat of bankruptcy of an industrial enterprise: comparative assessments. mechanism of economic regulation, vol. 2, pp. 126–132. available at: https://mer.fem.sumdu.edu.ua/content/acticles/issue_10/v_v_sabadash_ ye_v_kovalenkothe_crisis_state_diagnostics_and_bankruptcy_threat_of_industrial_enterprise_ comparative_estima.pdf (accessed september 12, 2022). (in ukranian) received on: 28th of october, 2022 accepted on: 2th of december, 2022 published on: 30th of december, 2022 three seas economic journal 98 vol. 1, no. 1, 2020 corresponding author: 1 classic private university, ukraine. e-mail: val.boklag@yandex.ua doi: https://doi.org/10.30525/2661-5150/2020-1-14 the state measures how to improve the use and protection of land planted by protective forest belt valentyna boklag1 abstract. a problem of protective forest belt control expends because with the general deterioration of the existing forest belt is considered this article; a number of measures for the transfering of land plandet by protective forest belt to municipal authority, are suggested village councils. methodjlogy. the study is based on the analysis of modern legislation, which regulates the use of the territories occupied by forest belts. we used statistical data, as well as the work of scientists who have examined the current state, the rational use and the question of the protection land for shelterbelts. the research results showed that at the moment there is no clear (correct) information, which is true for the use of forest plantations, their quantitative and qualitative characteristics. there is a need for reconstruction of the existing and creation of new belts to improve their protective function for the productive land. the practical importance. the results are scientifically substantiating the improvement of the legislative framework to regulate the use of forest windbreaks, as well as the need to transfer the shelterbelts from the state to the municipal property. value/originality. these results provide justification for the adoption of the "transferring program of forest belts from the state to municipal ownership of rural and urban councils". key words: protective afforestation, use and protection of lands, local authorities, municipal land property, land resources. jel classification: q15, q23, q24, r14 1. statement of the problem one of the main problems of land use planted by field protection forest belt in ukraine and other non-agricultural land, was the legal uncertainty of it’s property right fate during land reforms and it’s land division of collective agricultural enterprises. the importance of the problem increases because legal aspects of land use, planted by protective forest belt, techniques of effective of these territory effective control have not sufficiently studied. according to the land code of ukraine field protective forest belt and other protective plantations are classified as non-agricultural land for agricultural purposes. these objects should be owned by village councils. however, the mechanism of such land use is not provided in the current legislation, which means that local governments, as owners, can not manage this property. consequently, it is controlled illegally by other people, who cut down and damage forest belt. state protective forest belt transfer under municipal control as their property is a real way of this problem solution concerning field protective forest belt and other protective plantation future viability. 2. the legal regime of the use protective belts the development of urbanization processes and the growth of world population causes an increase in the material needs of society and the inability of the biosphere in its entirety to ensure their demands causes the intensive using of land and forest resources. in view of the increasing human pressure on land and forest resources, high rate of land plowed, the excessive using of chemicals soil, development of erosion processes, reduced land productivity, development of arable and forest land for construction, mass uncontrolled deforestation issues of rational and ecological using of land and forest resources are extremely important and actual as in a scientific point of view (hordienko, 2010). three seas economic journal 99 vol. 1, no. 1, 2020 according to cl. 60 of the law of ukraine "about the environmental protection" shelterbelts natural band is a type of natural areas and a subject to special state protection. however, this law does not contain the definition of these natural areas, as well as their legal regime. though the natural belts usually represented as areas covered with forests, and the relations in it are mainly regulated by the forest legislation. thus, cl. 36 of the forest code, which regulates the division of forests into groups and to classify them in categories of protection of environmental and economic importance include windbreak to the first group of forests like those that operate primarily environmental functions. the definition of this category of special protection areas is provided the procedure of division the forests into groups, their reference to the categories of protection and allocation of specially protected land forest fund, approved by the cabinet of ministers of ukraine dated july 27, 1995. belts (windbreak) is artificially created line-type plantings to protect agricultural land (p. 24 of the procedure). these forests are classified as protective forests (next to water protection, hygiene, health and certain other categories of protection, forming forests of the first group). thus, according to p.3 of the procedure the belts in other categories of protection are not defined. field shelters make primarily protective, anti-erosion, climate-and other useful functions. the legal regulation of windbreak is not written in detail. it does not set the standards of the sizes of these bands. some requirements are contained in legislation only in part of the limit the logging of this category (cabinet’s of ministers of ukraine resolution, 2014). hodovanyuk a. j. analyses the current legislative regulating relations associated with the use and protection of belts (hodovanyuk, 2012). he highlighted the main historical stages of their creation and operation in ukraine, formulated the problems caused by the transfer of the ownership and lease of agricultural land, namely the absence of the owner of belts and other plantations became a critical issue of national importance; lack of reliable information about their actual state; the belts were left to fend for themselves after the carveup and reorganization of collective agricultural enterprises; forestry enterprises strongly against the ideas to transfer belts on their balance, noting that holding inventory, care, work on their reproduction require significant material costs. the solution of these problems, according to him, needs the following legislative changes: p. 22 of the land code of ukraine, where it is said about agricultural land, in paragraph 2-b belts should be deleted from the list of non-agricultural land for the purpose of classifying these and other protective plants to the land for forestry for determining the uncertainty status of the land planted with forest belt plantings. 3. the current state of protective belts in ukraine, there are nearly 450 thousand hectares occupied by belts, but recently very aggravated the problem of their preservation and reproduction. such land is classified as agricultural land and is used to form the environmentally safe agricultural landscapes, land management, land use adjacent agroforestry protection from negative degradation processes (water, wind erosion). the problem with retaining of shelterbelts deepens in connection with the general deterioration of the existing forest belts, restricted funds for their maintenance. therefore there is a need to establish a host of territories occupied shelterbelt forest plantations in order to determine measures for their rational use and protection. in our opinion, today it is not enough to create new shelterbelts to achieve abstract optimum performance, but also to draw attention to the preservation and improvement of the condition of forests and protective plantations, inherited by the present generation as an inheritance. now the work of the forest fund accounting is the inefficient, since the area and forest cover differ, according to the executive body on the issues of land use, state forestry, the state service statistics. in fact, at the moment we do not have information about the actual forest area in the country and its forest cover. before the land reform (1991) work on the creation and maintenance of shelterbelt plantings were in management of the local farms as usual. the bulk of the plantations were founded in 50-60s of the last century due to the "stalin’s plan for the transformation of nature" (1948). this document provides for the formation during 1950-1965's state forest shelterbelts with total length of 5320 km and an area of forest plantations 117.9 thousand ha (kindyuk, 2011). in the process of transformation of land ownership in 90 years a number of changes was held, namely, 28 million hectares of agricultural land passed into private ownership to 7 million shareholders, the land under the shelterbelt forest plantations transferred to the collective 37 agricultural three seas economic journal 100 vol. 1, no. 1, 2020 enterprises formed on the basis of former collective farms and state farms. since windbreak and other shelterbelts planting apply to non-agricultural land, they were relegated to the lands, which are not subject of unitization and in the future could be a part of the stock lands of the reserve fund, the public, or, and still be in the collectively owned (yuhnovskiy, 2009). analysing the materials of the conference of the united nations as for problems of environment and development (2012), the ministerial conference on the protection of forests in europe (2011), the thesis of the forest code of ukraine, the cabinet of ministers of ukraine "on approval of the concept of development of agro-forestry in ukraine "dated september 18, 2013, it should be noted that the management of land and forest resources is an important condition for the creation of environmentally sustainable conditions of nature, which are also relevant for the agricultural regions of ukraine. at the same time one of the main organizational and legal issues of land use of the shelterbelt plantings is to define the forms of ownership to them, due to the transformation process of ownership of the land, which occurred during the land reform. in order to ensure the implementation of urgent measures to accelerate land reform, according to the decree of the president of ukraine "on the order of unitization land transferred into collective ownership of agricultural enterprises and organizations» № 720 from august 08 1995 in the sphere of agricultural production the farmland which was the subject of unitization was transferred to collective ownership, agricultural enterprises, cooperatives, joint stock companies, including those, that were created on the basis of state farms and other state agricultural enterprises. that is, the document led to the elimination of and reorganization of the majority of collective farms. at the same time, the process of the carve-up of non-agricultural land, including land for shelterbelt plantings, were not included. now there were practical cases that could be in the course of the transformation of collective ownership in the legislative sphere of nonagricultural land, and especial land for belt plantings. consequently, the determination of their legal status is still the current organizational and legal issue, on which depends the rational use of land under the shelterbelt plantings. 4. rationale for further use shelterbelt plantings based on the principles of social and economic policy in the short term, within the framework of public administration of decentralization measures, including land, urgent action must be considered in order to achieve optimal indicators in agricultural production, preservation and improvement of protective plantations, inherited by the present generation as an inheritance. this problem requires a complex solution, which is possible through the use of target program method, ensuring the introduction of advanced technologies, and through a systematic approach to the ecological and economic feasibility of the system shelterbelts, harmonizing their output and requirements for the implementation of agroforestry protection adjacent land uses from negative degradation processes. y. v. onika gives the most actual issue of the legal status of land on which the forest plants of agroforestry are located. the scientist said that today the status of belts and their owner are not identified; there is the problem of the actual provision of agriculture land in permanent use of state and municipal enterprises (onika, 2012). m. popkov analysed several options regarding the maintenance of land for windbreaks, belts and agriculture care of: – the state is interested in the proper accounting, security, maintenance and increasing the area of belts; – owners and tenants of agricultural land usually do not have land for belts consisting of tenure and don’t have to bear the costs of their maintenance; – state forest departments, enterprises are not interested to take the land under the balance of belts in permanent use, because creation and care for them unprofitable and require significant funding; – in terms of lack of funds rural and regional councils do not want to spend local budgets for the maintenance of belts and do not do it, referring to the fact that the windbreak is located outside of the localities and can not be attributed to municipal property (popkov, 2011). taking into account all the views of each subject which uses the belts as well as their positive impact, it is important to consider while developing the transmission mechanism of land in rental and encourage land users in the creation of new belts and maintenance of existing ones. it should also be underscored that the restoration of agronomy structure, which could lead the proper three seas economic journal 101 vol. 1, no. 1, 2020 care of the land for belts, is not provided in law. the absence of the owner, which could protect and control the state of these plantations, due to extensive logging, irrational use, placing of natural landfill, could create a national environmental problem in a very short term. large agricultural companies, of course, can ensure the protection of land for belts but all the major agricultural producers work on leased land and the absence of safeguards to renew the lease or purchase of land they do not hurry to make large long-term investments in forestry. moreover, no certainty of further strategy for land reform along with plans to limit the legal arable land in one manufacturer does not allow for strategic planning of land use. furthermore, most of the owners and users of arable land belong to small land users who can not afford create plantations shelter individually, take care of them. they could plant protective plantings on their small plots, but we can hardly expect that such landings will be functional in agroforestry systems. in addition, the legislation ukraine, unlike the eu, does not provide economic incentives for private landowners who provide shelter forest plantations on their lands. if the situation does not change, we do not have to expect that the resources of the landowners who own much of the arable land will be used for forestry. thus, the main problem in using land for belts is that they actually exist as an independent property and at the same time separated from agricultural land, which they must defend, providing their main function of agroforestry. as a result, there was a gap of economic relations: agroforestry rents which is generated in agricultural land use does not support these plantations, due to the positive impact of land for planting shelterbelts, and, conversely, land under plantations shelter left by themselves, form a negative rent if it is viewed only as a woody resources (industrial wood, firewood). 5. recommendations for the efficient use of forest plantations in our opinion, the solution to the continuing effectiveness of afforestation, restoration of their network in order to improve their protective function for productive lands, it is necessary to transfer them into the ownership of local communities, that is in the municipal property. we offer to solve problems related to the transfer of land from the state and the collective to the municipal property of local communities in rural village councils, through: – determination by transmitting the status of belts through the transferring it in communal ownership of village councils for appropriate accounting, security, maintenance and increase the area of shelterbelts; – the establishment of the owner to the territories occupied forest belt plantations in order to determine measures for their rational use and protection; – the use of an effective system of qualitative and quantitative accounting and valuation of land for belts for the organization of rational use and protection; – carrying out a complete inventory of land occupied by windbreaks in the region; – demarcation of territories occupied by belts and determination their sizes and areas; – implementation of mapping the territories occupied by belts and village councils; – a survey of the state of shelterbelts, the adjustment of the materials of previous surveys; – prevention of degrading processes of soil, in particular on agricultural land, through the creation of protective forests as an effective means and inherent mechanism of protection and optimization of agricultural ecosystems. despite the imperfection of the legal framework aimed on regulating the future use of the land occupied by shelterbelts, we consider that it is necessary to take on a regional level "the program of transmission the forest belt from the state and municipal property to the collective property of village territories councils". the main aim of which should be: – ensure the efficient use of land resources, creating optimal conditions for a significant increasing in the production potential of land, the growth of its economic value; – maximize the ecological and economic effects of belt plantings as an active regulator of ecological and biological balance; – creating a unique farmland forest agricultural landscape, which will expand the species composition of flora and fauna, and is a factor in the preservation and enrichment of natural soil components, performs sanitary-hygienic, esthetical, recreational, and other functions. – the formation of agricultural landscapes management frameworks using agroforestry techniques and the creation of an optimized network agro systems belt plantings. three seas economic journal 102 vol. 1, no. 1, 2020 we consider that the program should include the following measures in the transferring belts to the property: – the development of land use documentation and feasibility studies for transferring of land from the state and the collective to the municipal property; – improving the system of self-control over the use and protection of lands occupied by field protection areas; – conducting scientific justification reconstruction of the existing network of shelterbelt plantings and design of new belts in order to protect the surrounding land uses agroforestry from negative degradation processes. the result of such a program should be a transferring of belts from the state to the municipal property and increasing the efficiency of their use and protection. windbreak plantings are an integral part of a system of measures aimed at increasing the cropping intensity; it is increasing agricultural productivity while reducing its cost. 6. conclusions in our view, to ensure the effective use of land occupied by belts it is needed to determine their legal and transferring the territory to the ownership of territorial communities. the implementation of complex measures on the transferring of land occupied by belts in the municipal property will create an effective mechanism for the preservation and improvement of protective forests. references: hodovanyuk, a. y. 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(2009). solutions to problems of belts afforestation in ukraine. scientific works of forestry academy of sciences of ukraine, vol. 7, pp. 62–65. three seas economic journal 61 vol. 2 no. 3, 2021 corresponding author: 1 international humanitarian university, ukraine. e-mail: emartynuk2017@gmail.com orcid: http://orcid.org/0000-0002-0377-7881 2 south ukrainian national pedagogical university named after k.d. ushynsky, ukraine. e-mail: sofistriya@gmail.com orcid: https//orcid.org/0000-0003-2492-8068 doi: https://doi.org/10.30525/2661-5150/2021-3-9 neuromarketing in the context of sustainable development philosophy olena martyniuk1, tetiana poplavska2 abstract. this document aims to conduct a literature review in order to identify evolution and research trends in the area of neuromarketing end marketing ethics. the fact of deep systemic crisis of the modern civilization has been discussed by politicians, scientists and philosophers for at least last fifty years. since then, more than forty of them have been published, that was base for the scientific thought development towards the formation of the concept of sustainable development of mankind. self-healing changes are extremely slow, despite the enormous efforts of scientists, politicians and public figures. this is partly caused by the fact that in modern politics and economics the neuroscience achievements are used widely but these achievements are applied for narrowly selfish purposes that contradict the main goals and objectives of the concept of sustainable development. therefore, it is relevant to turn to the analysis of a relatively new direction in modern economic science – neuromarketing, which is gaining the more influence in the society and is actively developing in use. as the world history experience shows, the most important prerequisite for the new civilization formation is a radical transformation of the spiritual (value-semantic) sphere of life. in turn, such transformation is unthinkable without the philosophical project of reconstruction and neoholism, the fundamental value of which is the eidos of harmony, can become such a project. in the modern world dominates the ideology of consumption, the products of which are the presence of fashion, wastefulness, profit orientation in decision making, etc. consumption is the act of receiving goods or services. overconsumption (or irrational consumption) that dominates in the world and is imposed by the entire marketing system is the phenomenon of receiving goods and services more than need – to a greater extent than a person needs. this is a dead end, because of which the entire system is going through a deep crisis. some scientists believe that the way out of the crisis is possible through the interaction of science and economics, or rather neurosciences and economics, which leads to overconsumption of goods and services, which means the growth of incomes of large and medium-sized capital. others see the way out in the new thinking development, a new philosophical paradigm, which must be introduced into the mass consciousness by means of education, thereby raising the level of consciousness and expanding the potential of a person. the most famous firms that have used neuromarketing techniques to achieve their goals are coca-cola, general motors, google mars, nestle and many other corporations. it is important to mention that the neuromarketing cost is increasing every year, for example, in 2015 the united states spent $25 billion on neuromarketing research. at the present stage, there are three main research methods in neuromarketing: electrical activity of the brain (eeg), oculography (eye movement, eye tracking) and analysis of facial expressions and non-verbal gestures. for example, in the evaluation process of the tv commercials effectiveness, specialists monitor the eyes and determine the speed of pupil movement. analyzing the above, it can be argued that neuromarketing in the modern world is one of the leading and promising technologies for the society influencing. it is possible that its potential has not yet been fully formed and studied, but these studies are the highly paid item of expenditure in the large corporations. key words: sustainable development, marketing ethics, neoholism, neuromarketing, neuroeconomics. jel сlassification: м31, o10, p40 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 62 vol. 2 no. 3, 2021 introducation the fact of deep systemic crisis of the modern civilization has been discussed by politicians, scientists and philosophers for at least last fifty years. the first attempt of scientific understanding of global problems and predictions of possible ways of human development in the context of an exacerbation of the global crisis has been made by members of the club of rome in 1968. since then, more than forty of them have been published, that was base for the scientific thought development towards the formation of the concept of sustainable development of mankind (ursul, 2005; nemtsev, 2015). the main idea of this concept is that mankind needs to come to a system in which “satisfaction of the present generation needs is realized without prejudice to the ability of future generations to meet their own needs” (lopatnikov's dictionary), i.e., the nature possibilities are preserved to support the mankind development in the long term, considering the various spheres of national and global security. however, as experience shows, the world continues to move along the path of unsustainable development, the number of global problems and manifestations of their negative consequences is only increasing, that makes an appeal to this matter relevant and timely. self-healing changes are extremely slow, despite the enormous efforts of scientists, politicians and public figures. this is partly caused by the fact that in modern politics and economics the neuroscience achievements are used widely but these achievements are applied for narrowly selfish purposes that contradict the main goals and objectives of the concept of sustainable development. therefore, it is relevant to turn to the analysis of a relatively new direction in modern economic science – neuromarketing, which is gaining the more influence in the society and is actively developing in use. the purpose of this paper is a critical analysis and coherent synthesis of the foundations of the neuromarketing formation and development trends as the promising direction of influence on the modern communication and business environment. 1. methodology of research 1.1. ethical intentions of marketing technology scientists believe that the neuromarketing concept was developed by psychologists of harvard university in the 1990s. however, the founders of this direction are traditionally considered the ceo of re tail branding ag arndt tryndl and the director of the store branding re tail branding bart oeyman (murphy, illes, reiner, 2008). a general neuromarketing method was developed in the late 1990s by harvard professor jerry zultman, who immediately patented it under the name zmet (zaltman metaphor elicitation method). the essence of zmet is to recognize the person's subconscious with the help of sets of specially selected pictures that cause a positive emotional response and activate hidden images-metaphors that stimulate purchase. based on the identified images, graphic collages are constructed, which are used as the basis for commercials. after that the data is interpreted through conversations with psychologist or by analyzing images of the brain. marketing technology zmet has gained popularity quickly among hundreds of large customer firms, among which are coca-cola, pepsi, nestle, general motors, procter & gamble, and others (more than two hundred large companies). according to f. kotler, today neuromarketing has developed to the full-fledged marketing direction (knutson, rick, wimmer, prelec, loewenstein, 2007; bird, 2006). the neuromarketing technology is based on the model according to which the bulk (more than 90%) of a person's mental activity, including emotions, occurs in the subconscious area, that is below the levels of controlled awareness (bird, 2006). even though neurobiological research in the field of human decision-making has been carried out for a long time, neuro scanning technology was first used exclusively for marketing purposes by the already mentioned professor zaltman in the late 1990s. the term “neuromarketing” was proposed by professor smids in 2002, and the first international conference entirely devoted to neuromarketing research was held only in 2004 in the united states. it can be noted that neuromarketing is a very young discipline, the prerequisites for the formation of which go into the field of neurobiology and medical research, which appeared long before the concept of neuromarketing formation (lim, 2018). the neuromarketing concept assumes that that a person perceives environmental irritants (for example, product presentation), first, at the level of neurophysiological signals. they are translated by the senses through biophysical and biochemical processes into the language of emotions even at the subconscious level, the limbic system – the deep subcortex of the brain, which determines the type of the emotional system. today the conceptual neuromarketing platform is based on the works of jerry zultman, arndt trindl, bart oyeman, martin lindstrom, david lewis, roger dooley and others. in the scientific community there is an information about the direct use of magnetic resonance imaging equipment in the neuromarketing research. an american scientific and commercial project called the brighthouse institute for the thought sciences became a pioneer in this field at the turn of 2002 and 2003. the new mri-based neuromarketing technique three seas economic journal 63 vol. 2 no. 3, 2021 developed by the mentioned institute is like zmet and it also uses specially selected images. the only difference is that the reaction of the surveyed clients to the presented images is established not by the psychologist’s conversation, but by the direct scanning and analysis of the brain regions activated in this case. however, during the studying of the positive and negative reactions of the brain to certain images, neuromarketologists are not interested in the conscious reaction of a person. the reason is the stated goal of the study – to establish how effective advertising is in subconsciously stimulating the purchase of a particular product or in developing brand loyalty (lindstrom, 2012). thus, marketers in their arsenal have the latest equipment that helps them to study our memory, to predict the memorability of key messages using eeg and questionnaires; our attention, using eyetracking technology to decipher priority attention to understand what arouses our interest; our emotions using eeg to analyze engagement and motivation; cognitive interest to determine the degree of information complexity to understand and determine the relevance degree of any message, and finally, our motivations underlying our desires! moreover, scientists are interested why we make mistakes, why we take risks, love, laugh, etc. neuroeconomics uses a technique called transcranial magnetic stimulation (tms) (plassmann, o’doherty, jshiv, rangel, 2008). scientists use electromagnetic coils that create a strong magnetic field that can be directed accurately to the specific brain area and, for example, temporarily suppress a few millimeters of the frontal cortex and observe what happens. professor, head of the department of psychology, leading researcher at the center of neuroeconomics and cognitive research of national research university “higher school of economics” vasily klyucharev states in his interview: “the neuroeconomic experiments of our colleagues in zurich have shown that in this way it is possible to change a person's reaction to an unfair financial decision” (fukolova, 2019). scientists also use other methods of the human brain influencing, such as electric shock, because there are no pain receptors in the brain. special electrodes are applied and it is possible to suppress or activate certain brain areas by changing the parameters of the electric current. naturally, the question arises about the ethical side of research data, as well as the question of the ethical application of obtained knowledges. employee of the national research university “higher school of economics” chernova m.a. and founder and ceo of the research agency infolio research group (moscow) klepikov o.e. are also concerned about these issues and consider it necessary to determine the range of possible actions related to the ethical component development of the latest neurotechnologies in the field of marketing. this activity should prevent the possibility of causing potential harm to the respondent, as well as form the desire of the professional marketing community to integrate processes with neurosciences and strengthen consumer confidence in this kind of research. the creation of “code of ethics” will prevent the spread of unethical attitudes towards consumers and prevent the possibility of uncontrolled use of information obtained while marketing research (chernova, klepikov, 2012). it seems to us that so-called “ethical code” in the field of neurosciences will have the same impact as the concept of sustainable development declared at the highest level. obviously, the problem is not in the creation of the relevant documents, but in the dominant ideology, which is based on materialism and atheism, or positivism and social darwinism. it is necessary to change the methodological platform, only then it will be possible to talk about the moral problems of modern science. 1.2. neoholism as an indicator of the sustainable development of society at the world summit on sustainable development in johannesburg, the heads of state and governments agreed that the idea of sustainable development can be realized only if a new society, a new civilization will be built (nemtsev, 2015). in the 2017 report of the club of rome “come on!: capitalism, short-termism, population and the destruction of the planet” authors ernst weizsäcker and anders wiikman propose some ways to solve these problems (ursul, 2005). they propose to refuse the materialism and reductionism in favor of holism and spirituality, they call for an alternative economy, a “new enlighten ment”, a planetary civilization, the development of which may be possible on condition of changing the “philosophical roots of the current state of the world”. “the current crisis is not cyclical but intensifying. it is not limited by the nature around us, but includes social, political, cultural, moral crisis, crisis of democracy, ideology and the capitalist system” (ariely, berns, 2010). as the world history experience shows, the most important prerequisite for the new civilization formation is a radical transformation of the spiritual (value-semantic) sphere of life. in turn, such transformation is unthinkable without the philosophical project of reconstruction and neoholism, the fundamental value of which is the eidos of harmony, can become such a project. according to this eidos, the value orientations of sustainable development can be characterized as follows: a) the harmony of a person with himself, which implies the acquisition of the meaning of life and happiness; b) the harmony of a person with society, for three seas economic journal 64 vol. 2 no. 3, 2021 which the individual must balance his egoistic claims with the interests of the collective, society, state; c) the harmony of society with nature, for which humanity must stop the nature expansion. the distorted behavioral concepts are approved in society, there is the preference of the rational over the intuitive, science over religion, competition over cooperation, exploitation of natural resources over their conservation and careful use. harmonization of all these areas is possible by adequate education and upbringing, that can contribute to the implementation of the following value guideline of the harmony eidos – the harmonization of relations between a person and society by coordination the egoistic aspirations of the individual with the interests of society. before the fall of the roman empire, it was said: “luxury is worse than war.” the luxury of one person gives rise to the poverty of millions of people, and mass poverty gives rise to the demographic crisis and an ecological catastrophe – everything is interconnected in this world. therefore, the main task of sustainable development at the present stage is to support the poor and limit the overconsumption of the rich. any society in the world can not last long if the laws tend to create a rapid accumulation of wealth in a few hands, leaving most of the population in poverty. so, the equalization of the ratio of wealth to poverty at the legislative level, on the one hand, and the creation of a favorable climate for the middle-class development, on the other hand, will contribute to the harmonization if not the whole society but the economic relations in it at least. 2. results and discussion 2.1. neuromarketing as the perspective of the civilizational development of society in the modern world dominates the ideology of consumption, the products of which are the presence of fashion, wastefulness, profit orientation in decision making, etc. consumption is the act of receiving goods or services. overconsumption (or irrational consumption) that dominates in the world and is imposed by the entire marketing system is the phenomenon of receiving goods and services more than need – to a greater extent than a person needs. this is a dead end, because of which the entire system is going through a deep crisis. some scientists believe that the way out of the crisis is possible through the interaction of science and economics, or rather neurosciences and economics, which leads to overconsumption of goods and services, which means the growth of incomes of large and medium-sized capital. others see the way out in the new thinking development, a new philosophical paradigm, which must be introduced into the mass consciousness by means of education, thereby raising the level of consciousness and expanding the potential of a person (deppe, schwindt, kugel, plaßmann, kenning, 2005; martinyuk, 2014). the first option is being actively introduced into public practice, because it is beneficial to large players in the economic and political arena which are very connected. they are completely indifferent to the fact that overconsumption causes numerous contradictions and problems in society (including global ones). the consumer society is initially split as the meaning of consumption lies in individualism. but this contradicts the globalization process as the single human civilization formation. so, neuromarketing is used, firstly, to influence a person, and secondly, to study the consumer behavior. in other words, it is a scientific approach to promoting and selling a product based on research in neurophysiology, cognitive psychology and marketing. it helps to understand how the mechanism of human perception works in decision-making process. neuromarketing is a new method of the data obtaining in marketing. the main areas of its application are shown in figure 1. below is the detailed consideration of each of the areas of neuromarketing application. 1. branding. as the main condition for creating the successful brand is the close interaction of the company with customers at all levels of consumer perception the neuromarketing methods make it possible not only to form the feelings and emotions of customers in the process of interacting with a brand or company 's products, but also to influence them in the direction necessary for the company. 2. product design and innovation. with the help of neuromarketing tools, it is possible to measure customers reactions to product innovations operatively (for example, the updated design) and, that is more important, to regulate the reactions of receiving emotions that are beyond the logical predictions of marketers. 3. the effectiveness of advertising. neuromarketing allows to see how the influence of advertising on the subconscious of consumers occurs and using the point influence and methods of psychological influence, to increase the advertising effectiveness in many times. 4. behavioral triggers that influence on the purchasing decisions. neuromarketing studies which exactly motivators and triggers form consumer's resistant decisions. according to the research, a person makes a purchase decision under the influence of many factors (atmosphere in the store, lighting, temperature, smell), and this often cannot be explained logically. the correct triggers selection gives the necessary effect in the process of decision making on buying the product, even if it is obviously unhealthy or even harmful to a person. three seas economic journal 65 vol. 2 no. 3, 2021 5. digital business. neuromarketing helps to form and develop an internet business competently, allowing to influence the consumer activity of internet users. 6. entertainment. the tastes, attitudes and preferences of modern buyers are mostly caused by the experience and emotions that they receive from modern forms of entertainment. in these cases, the rational or moral-ethical factors are not able to influence. neuromarketing allows to determine the level and degree of impact on the consumer, that means to conduct previously impossible in-depth analysis of behavioral reactions, stereotypes and formats of consumer behavior. considering neuromarketing as marketing science, it is advisable to note that the most promising opportunities for receiving positive emotions from the consumer can be achieved through: 1. objective assessment of the appearance (packaging design, appearance of the final product, advertising visual) using biometric tools. 2. the client's behavior testing on the website, examining the level of his attention and the number of clicks. 3. psychological tools for assessing the brand or product perception. 4. formation of the clear phasing of the marketing concept based on the obtained data. the most famous firms that have used neuromarketing techniques to achieve their goals are coca-cola, general motors, google mars, nestle and many other corporations. it is important to mention that the neuromarketing cost is increasing every year, for example, in 2015 the united states spent $25 billion on neuromarketing research (lee, chamberlain, brandes, 2018). at the present stage, there are three main research methods in neuromarketing: electrical activity of the brain (eeg), oculography (eye movement, eye tracking) and analysis of facial expressions and nonverbal gestures. for example, in the evaluation process of the tv commercials effectiveness, specialists monitor the eyes and determine the speed of pupil movement öztürk, l. (2018). the main directions of influence in the critical analysis are below (ariely, berns, 2010; ostapenko, kolesnyk, 2021). 1. through the positive emotions formation, it is increased not only the duration of customers stay in stores, but also the number of purchased goods. neuromarketing most directly influences on the level of emotions and state of comfort, which forms the desire to return regularly. 2. foreign scientists d. eraili and g. bems also mention an important aspect of neuromarketing – the confidentiality violation. according to researchers, companies can “read the minds” of their customers that violates the principle of confidentiality. transparency of research objectives can solve this problem, so that researchers can know exactly how they are helping the company and which of their data will be used only to achieve the goals. in addition, information about personal preferences should not be declassified. 3. physiological discrimination. the data obtained in the neuromarketing research may contain information that a particular product is target for people with certain physiological characteristics (possibly defects). this can be used in a discriminatory strategy. in the future it is also possible to introduce an automatic price increase when registering certain parameters of the buyer's body (for example, an increase in the price of a drink if a person feels thirsty). 4. influence on the highest and lowest levels of moral and ethical motivation. for example, information about the food low in calories affects the highest category of socio-ethical motivation, and advertising spheres of the neuromarketing influence branding entertainment digital business design and innovation advertising behavioral triggers that influence on the purchasing decisions figure 1. the main areas of the neuromarketing application in the modern conditions sources: plassmann, o’doherty, shiv, rangel, 2008; lee, chamberlain, brandes, 2018 three seas economic journal 66 vol. 2 no. 3, 2021 with erotic content affects the lower levels of moral and ethical motivation. that is an ethically incorrect norm. 5. the dissemination of the data that was collected during the recording of brain activity of subjects in focus groups is extended to the entire population. design created with insights from neuromarketing research can harm consumers who haven't participated in it. 6. companies often do not act in the consumers interests. they may be focused on profits maximizing rather than creating a truly useful product. at the same time, neuromarketing researchers can strengthen the possibility of consumer opinion manipulation significantly. the above indicates the negative aspect of the implementation and active use of neuromarketing tools. however, the progress is developing rapidly, and many phenomena cannot be slowed down or changed. that is why our research is devoted to the necessity of combination of the two conceptual directions of the applied use of neuromarketing as the basis, the superstructure of which must be the humanistic concept of sustainable development that will act as regulator of moral and ethical norms and tools of neuromarketing. conclusions humanity has entered a new century that requires the formation of new civilization new society, new ideology. new living conditions and a new environment for existence of the xxi century (under the weight of global problems) come into the conflict with the man of the xx century. the mentality, morality, human activity must be changed in accordance with new time challenges. the vector in the minds of people should be directed from the cult of money and consumption towards respect for nature and man. today time requires the revolution of human consciousness. new upbringing, new views of the world, new legislation are needed. this will be facilitated by the new world ideology – sustainable development as consolidating global idea, as the more powerful and urgently needed program of action the implementation of which will be possible on the basis of the neoholism philosophical concept. thus, humanity has two paths – the global catastrophe or the sustainable society creation that is the society based on the concept of humanism and neoholism. modern neoholism, developed by scientists and philosophers in different countries of our planet, can be the philosophical basis on which it will become possible to form new ideology, new economy, new policy, and, in general, new ecological civilization. analyzing the above, it can be argued that neuromarketing in the modern world is one of the leading and promising technologies for the society influencing. it is possible that its potential has not yet been fully formed and studied, but these studies are the highly paid item of expenditure in the large corporations. references: ariely, d., & berns, g. s. 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(2005). sustainable development: a conceptual model // national interests, no. 1. available at: http://ni-journal.ru/archive/2005/n1_05/5324690e/d93f12df/ three seas economic journal 27 vol. 3 no. 4, 2022 1 ivan franko national university of lviv, ukraine (corresponding author) e-mail: rudevska@ukr.net orcid: https://orcid.org/0000-0001-6697-9096 researcherid: k-8854-2015 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-5 customer orientation of the bank as the basis of the customer-oriented business model of the bank viktoriia rudevska1 abstract. the main purpose of this study is to deepen the theoretical foundations of defining the content of the concept of "customer focus" and assessing the level of customer focus, as well as to provide a practical perspective on the customer-oriented activities of the bank. the study covers a set of issues related to the allocation of customer focus as an independent object of management in the bank, characterization of the methodology for assessing the level of customer focus of the banking institution and determining the directions of improving the customer focus of the bank as an important element of the banking business, the main effect of which should be an increase in profits in the process of the bank. the methodology of the study, which reveals the topic of the article, is: analysis and synthesis of the theoretical basis for the content of the concept of "customer focus", its generalization and decomposition of approaches to defining the content of customer focus; the method of synthesis is used in the process of defining the concept. also, in the process of research and implementation of its goals, general scientific and analytical methods of assessing the level of customer focus were used. results. the study of the content of customer orientation based on the decomposition of different approaches to its definition allowed to formulate the author's definition of customer orientation in the bank as a tool of partnership between the bank and consumers to meet the needs of the latter, as well as to prevent their expectations, aimed at obtaining a constant long-term income by the bank due to the key competencies of its staff and the transition to a customer-oriented model of banking institution. the author's definition differs from the existing ones in that it considers customer orientation at two levels of interaction with customers: at the level of the bank as an organizational structure and at the level of personnel who contact with customers directly and indirectly, and also focuses on the bank's orientation to the desires and needs of the customer and the ability to anticipate them. without equating the level of customer satisfaction with the level of customer focus, it can be said that there is a logical connection between these concepts and conclude that the measurement of customer nps can be used as an indicator of customer focus. practical implications. in the world banking practice, the introduction of nps calculation is widely used and influences the decision-making process regarding the bank's business model, in which customer focus plays a key role. the ways of increasing the level of customer orientation of the staff and implementing a customer-oriented business model of the bank, highlighted by the author, have a wide prospect of further implementation in the activities of financial institutions. key words: customer focus, net promoter score, bank, customer-oriented business model of the bank. jel classification: м21, м31, m14 1. introduction in the current economic environment, the consumer of banking services has the opportunity to choose from a wide range of banking institutions and services of financial partners. this creates a competitive environment in which banks fight for their share in the financial services market with the help of various competitive advantages, taking into account consumer demand. in order to turn a potential consumer into a real and regular customer of the bank, not to give him a reason to move to competitors, it is necessary to introduce the concept of customer individualization into the bank's activities, that is, to offer him services that meet his needs, provide appropriate individual service and three seas economic journal 28 vol. 3 no. 4, 2022 maintenance, etc. the more the bank's offer meets the expectations, preferences and desires of consumers, the more loyal they are to the financial institution, ready to use more financial products and services, which brings profit to the bank. strengthening customer relations becomes even more important in ukraine in the conditions of uncertainty caused by military actions, which is due to the need to maintain very close contact with customers to ensure free access to information about changes occurring at the level of the banking sector and individual bank, about the measures taken by the bank, about the possibilities of remote banking, etc. the covid-19 pandemic has led to an incredible transformation of the banking business, as banks have moved much of their operations and customer interactions into the digital space and have been forced to provide customers with access to their services through remote channels. to survive the crisis, banks had to quickly adapt to a new environment where digitalization creates many solutions for complex daily operations. thus, banks have developed and improved their remote banking systems, offering consumers more convenience and security. however, replacing the human factor with a digital channel has both positive and negative consequences. such changes have forced customers to separate from the banking institution and distance themselves. with the increase in digital solutions for consumers, the ways in which customers communicate with their usual banking staff have become more complicated. traditional customer service channels are being curtailed, and offline service timeframes are being reduced. old customers and large corporate business are especially sensitive to such changes. this situation should force researchers and bank management to look differently at the content and role of customer focus and personalization of customer interaction processes. 2. critical analysis and decomposition of approaches to the definition of "customer focus" consider the theoretical foundations of the definition of "customer focus". customer focus is a comprehensive definition. the management of the company, which strives to ensure the work of the company on the basis of customer focus, must believe that it will be possible to achieve an individual approach to doing business and provide customers with high quality service. this is a focus on the consumer in order to identify and further satisfy his needs. at the same time, high customer orientation implies the desire to exceed customer expectations and impress them. if to consider the concept in the framework of practical application in business, customer focus consists in special actions designed to "make happy " the consumer and inspire trust. romanchukevych m. (2018) defines customer focus as the company 's ability to generate additional customer flow, as well as additional profit, providing a deep understanding and satisfaction of the basic needs of customers. he considers customer orientation as a tool for building customer loyalty, competitive advantages aimed at obtaining sustainable profits in the long term. in the author's opinion, it is expedient to clearly distinguish these definitions, because from the author's point of view "customer orientation of the bank" is a much broader concept than "customer orientation of the bank staff ". according to the author's vision, the bank's customer focus includes tools at the level of internal corporate culture and embedding of these principles at the level of development strategy and organization of business processes. the researcher larysa mistrian (2021) in her work considers the basics of customer-oriented activities of the bank, which will ensure effective management of customer expectations, both corporate and retail, knowledge of the client and his/her needs, his/her preferences in accordance with risk aversion, his/her behavior regarding investments and savings, customization of products and services in accordance with the life cycle of the client (legal entity or individual). another element of the bank's customer-oriented work the author calls increasing confidence in the bank by ensuring a high degree of transparency, financial education, taking into account the interests of each client at any time and at any time. bank customers want more than just to withdraw money or earn interest on their savings, they want a more personalized relationship with their financial institution, a relation ship that gives them confidence and a sense of control over that relationship. differentiation happens at the level of trust and satisfaction. three seas economic journal 29 vol. 3 no. 4, 2022 in this study, the author agrees with the researcher's position on the need to strengthen the relationship between the client and the bank through the quality and frequency of interaction. it is important to focus on customer retention, understanding the factors that determine their satisfaction, rather than on repeating the act of consumption. customer satisfaction throughout the life cycle of the established relationship is a prerequisite for their retention and further loyalty. the author also notes that banks are now adopting and demonstrating a clear customer focus, which is justified by the following: – the needs of consumers of financial and banking services are constantly growing, and banks need to adapt their products and services to meet them; – competition in the banking market is fierce and competitors are introducing improvements to catch up and stay ahead of innovative financial institutions; – customers quickly get used to banks' offers and have higher and higher expectations. thus, to maintain and strengthen their market positions, banks focus on understanding and meeting the needs and expectations of current and potential customers. attracting new customers requires the bank to monitor the business environment in order to promptly respond to changes in the needs of existing and potential consumers of financial and banking services so that they become loyal customers of the institution (mistrean, 2021). on the other hand, svitlana yegorycheva (2016) proposes to combine two approaches to the definition of customer focus. the first is a business characteristic that reflects the company 's desire and ability to build mutually beneficial relationships with its customers. the second is related to the perception of customer focus as a fundamentally different aspect of marketing, compared to the classic marketing mix, when the focus is not on the product sold, but on the customer with his needs, interests, expectations. both of these approaches are complementary, since in the first case it is the result of the company 's work, and in the second – the means of achieving it (yehorycheva, 2016). this point of view is shared by the scientist mychailo oklander (2019), arguing that the specifics of the customer orientation of banking institutions is due to the parameters of services, and the reaction of customers to the motivating factors is an indicator of such customer orientation and is divided into: cognitive, emotional, behavioral. he considers the customer orientation of the bank through the prism of marketing. at the current stage of bank development, a single platform for interaction with customers is extremely necessary. banks have separated from customers through remote services and contact centers. the mechanism of appeal in the usual way is extremely complicated and completely non-transparent. banks are extremely bureaucratized and closed in communication with their customers. this significantly worsens the reputation of the banking system as a whole and each individual financial institution. therefore, the peculiarity of innovative banking management is its organizational orientation. the researcher red'ka s. (2013) identifies three vectors of organizational orientation: territory-oriented, product-oriented and customer-oriented. according to the author, the focus of modern banking management should be a combination of scenario and customer-oriented approaches. due to the rapid development of remote channels for selling banking services, the territorial location has lost its relevance and is no longer decisive when choosing a partner bank. the product-oriented approach partly reflects the needs of today due to the homogeneity of banking services and unlimited supply on the market. therefore, from the author's point of view, the bank management in the process of choosing the vector of organizational orientation should be more focused on the scenario approach, when the buyer chooses different partner banks under different scenarios and circumstances. thus, for transactions, customers choose a banking institution with a lower fee for transferring funds, for placing temporarily free funds on a deposit account – a bank with the best rates, for making online payments and using pos-terminals – a bank with the best functionality of the application, etc. in the chosen scenario, the client prefers a customer-oriented bank – a bank that focuses on customer satisfaction and constantly improves the service process. in order to improve the customer-oriented model, the bank should use information on the level of customer loyalty nps (net promoter score), constantly improve the level of customer three seas economic journal 30 vol. 3 no. 4, 2022 orientation of the staff, conduct research on customer expectations and support the innovative development of its products. the etymology of this concept indicates customer orientation from the english "customeroriented". table 1 provides a decomposition of the most well-known definitions of this concept according to the emphasis laid in the content: on corporate culture and principles of behavior at the staff level or at the level of business processes and value creation. at the same time, the economic concept of "value" means customer satisfaction as a result of receiving a product or service created by the bank. it is the value created by the bank for customers that ensures the process of consumption of banking products and services by customers and allows the bank to perform the emission function by redistributing monetary resources. during the historical development of economic science, the theoretical development of the problem of value was realized in the cost theory of value by a. smith (in particular, it was deeply developed in the works of k. marx); in the theory of factors of production by j-b. for example, in the marginal theory of representatives of marginalism. however, in the early twentieth century, the prominent economist m. tugan-baranovsky combined these theories by separating the concepts of product cost and value. according to him, the cost is the cost of the organization, and the value is the customer's satisfaction (goncharuck, 2013). most definitions focus primarily on customer satisfaction, which should potentially lead to repeat sales. however, given the fact that the primary purpose of a business is to make a profit, some authors aim to generate sustainable profits in the long term through an organiza tion's ability to deeply understand and effectively meet customer needs. table 1 decomposition of the definition of "customer focus" by the chosen emphasis at the level of values and business processes at the level of corporate culture and personnel loshkov, v. (2019) the ability of the organization to generate additional profit through a deep understanding and effective satisfaction of customer needs mann, i. (2013) initiation of positive emotions in potential and existing customers, which leads to the choice of goods and services of the company among many competitors, to repeated purchases and attracting new customers through the recommendations of existing customers narver, j. and slater, s. (1990) understanding target customers, meeting their needs, full understanding of the value chain and its development in the future, understanding the needs of not only own customers, but also all participants of the distribution channel busarkina, v. (2007) an instrument of partnership between the organization and the client to meet its needs, aimed at obtaining sustainable profit in the long term, using the relevant core competencies of the organization rusanova, a. (2018) a process aimed at increasing the life cycle of the company 's interaction with the client deshpande, r ., farley, j., аnd webster, f. (1993) part of the corporate culture, a set of beliefs that puts the interests of the client in the first place before the interests of managers, shareholders, employees. focus not only on understanding the needs of existing and potential customers, but also on understanding their values and beliefs kokran, k. (2009) one of the core values of a business that strives for survival and prosperity mistrean, l. (2021) measures that will ensure effective management of customer expectations, both corporate and retail source: сompiled by the author three seas economic journal 31 vol. 3 no. 4, 2022 3. determination of the bank's customer orientation taking into account the level of interaction with customers establishing long-term positive relationships with customers and retaining existing customers provides stable income for the bank, which is the most important factor in ensuring competitive advantages. additional profit arises from the sale of additional goods and services to customers. the consequences of the transition to customer orientation are high appreciation by the client of the bank's policies and tactics and the formation of a positive, customer-oriented image. on this basis, it is proposed to consider customer focus in the bank as a tool of partnership between the bank and target customers to meet the needs of the latter and anticipate their expectations, which is aimed at obtaining a constant income by the bank due to the key competencies of the banking institution and its employees. in fact, this means focusing on the desires and needs of the client, the ability to anticipate them and differs from the existing ones in that it is considered at two levels of interaction with customers: at the level of organization of business processes in the bank, as an organizational structure and at the level of personnel who directly and indirectly contact with customers (figure 1). in the modern scientific environment there is no unified approach to the definition of the concept of "customer focus" and a clear separation of the content of the concept of "customer focus of the bank". most often in the scientific literature it is possible to find narrowing of the concept of customer orientation to the customer orientation of the staff. customer orientation should also be an important goal not only for the bank's management, but also for each employee. research carried out by heskett et al (1997, 2000) shows that satisfied, loyal and committed employees are more enthusiastic about the institution's customers, which ultimately leads to more satisfied, loyal and committed customers. these relationships are part of the profit value chain. roughly speaking: the more enthusiastic the employees, the more loyal the customer and the higher the profit (barends, 2019). today, customers are becoming more demanding, critical and sensitive to service. they put forward high demands not only to the quality of facilities, but also to the quality of service. customer orientation of the bank at the level of business processes of the bank at the level of bank staff customer it solutions and remote maintenance inclusive product line of the bank management of customer orientation as an object of management focus on empathy of front office staff trainings and seminars on customer orientation for staff measuring the level of customer orientation of the staff customer-centric business model of the bank figure 1. two-level structure of the bank's customer orientation source: author's own development three seas economic journal 32 vol. 3 no. 4, 2022 demanding customers should stimulate the desire of employees to comply with the rules of corporate culture; development of skills to mobilize their internal resources, personal development in the workplace, reducing conflict and the number of stressful situations for the employee. therefore, it is very important to find and implement ways to increase the level of customer focus of staff. increasing customer loyalty to the bank requires strengthening the customer focus of all departments of the financial institution, which will ensure the most effective identification of customer needs and their satisfaction. ways to increase the level of customer orientation of the bank's staff can be presented as follows: – directing business processes in such a way that the bank can provide an individual approach to each individual client, as well as provide high quality service; – to improve the bank's services in such a way that customers have the impression that the quality of the banking product is improving at the same time. implementation of service culture standards and regulation of work of all bank employees help to move in this direction; – training of employees in basic technologies of customer service and sale of banking products. the bank's profit depends on the constant improvement of the professional level of its employees; – introduction into the corporate culture of the understanding of "internal client" in the bank, i.e., different departments should help each other, and not try to stand out among all the others, to work in a coordinated manner for the overall result; it is worth noting a number of advantages provided by the customer orientation of the bank's staff: – the most satisfied customer stays with the bank and recommends it to his partners and friends, which is a powerful channel for the banking business to attract new customers. – satisfied with the customer experience, the consumer will subsequently buy more often and order additional services. – the most satisfied customer is willing to pay more over time, but one should be careful here as there are reasonable limits. – loyal customers begin to share useful information about their expectations, provide assistance in improving the offered product or service, which contributes to the optimization of business processes. thus, the value of the offered product increases. 4. measuring the level of customer focus as an independent object of management for banks, as for most organizations, customers are crucial to the existence of the business. in particular, in the current market environment characterized by intense competition and price erosion, the emphasis must be on attracting and retaining loyal customers. therefore, understanding customer expectations becomes critical for every organization, and especially for banks, given the service nature of the banking business. measuring the level of customer focus is a separate area of scientific research, which does not yet have sufficient depth of development and unity of opinion. the most common among the indicators of measuring the customer orientation of the bank is the nps (net promoter score). american writer fred reichheld (2011) created the concept of nps, which he presented in his book the ultimate question. fred has been researching how to measure customer satis faction and customer retention and see how it relates to how successful and profitable a company is and can be. reichheld and markey (2011) found that one question (net promoter score question: "on a scale of 0 to 10, how likely are you to recommend this company to a friend or colleague?") was the ultimate test of customer loyalty. customers who scored 6 and below are called haters, those who scored 7 and 8 are called passive, and those who scored 9 and 10 are called promoters. if the customer falls into the high (promoter) range of scores, then he gets real value for the company, because he will recommend it. customers at the bottom of the scale, the socalled "haters", can leave the company at any time or speak badly of it. in addition, such customers are much more expensive to serve and are unlikely to buy other products of the company. passive customers should be listened to carefully and their problems should be solved in order to transfer them to the group of "promoters". the method of calculating the level of customer loyalty by the formula: nps = % promoters – % haters (1) in the banking industry, net promoter score (nps) has never received much attention. three seas economic journal 33 vol. 3 no. 4, 2022 however, as customers become more techsavvy and expect a more personalized banking experience, financial institutions can no longer afford to ignore this metric. this is a performance metric that is widely used (by thousands of companies, including two-thirds of the fortune 1000) to determine how likely a customer is to recommend the company to a friend or colleague. without equating the level of customer satisfaction with the level of customer orientation of the company, it can be argued that there is a logical connection between these concepts. and the level of customer satisfaction can be used as an indicator of customer focus of the company. foreign banks have long introduced the practice of calculating nps in their activities. among them are such leading financial institutions as commerce bank, jpmorgan chase&co, macquarie bank, td bank, banco galicia, citigroup, lloyds, swedbank, bank of melbourne, ysbc, ing, metro bank. a number of represented banks indicate a wide geography of nps penetration in the processes of customer experience assessment in the world. consider examples of the use of nps by banks and financial services companies. according to a study by bain & company (2022), including american express, usaa, abn amro and hsbc. this analysis will allow to compare the nps tactics and best practices. usaa received a 75 nps score for banking and 76 for insurance – one of the highest in the industry. the ease of doing business with the company, coupled with a sense of fair treatment of customers, helped usaa to receive an impressive nps score of 75. the bank has been carefully investing in initiatives that reduce customer effort and promote active promoters. one such initiative was enabling customers to check their bank balance via text messages. the brand now also offers technology for customers involved in car accidents, allowing them to instantly add photos and voice recordings to their insurance claims, which can be initiated remotely. these invest ments in customer experience have helped usaa stay at the top of the financial services nps rankings and become the epitome of customer centricity. american express is one of the leading banks in the united states, leading the nps rating in financial services with an nps of 32. positive direct interaction and customer service, as well as a generous financial rewards program, have helped american express create an environment where cardholders feel valued and cared for. in turn, this has resulted in the prevention of account switching in order to take advantage of introductory offers. a great example is the recent initiatives of the royal bank of scotland (rbs). to better understand, analyze and respond to customer expectations, rbs has appointed dedicated teams of "customer experience managers" who are empowered to analyze the entire customer journey from start to finish and order specific functional changes at any problematic touch point. thanks to this investment in personalisation, rbs has achieved an nps score of 50. the role and importance of customer focus in global banking is evidenced by the fact that in 2021, 75% of banks invested in a customer centric business model. and a survey of the financial sector showed that 47% of companies have set themselves real goals to improve the customer experience (something that is key to actually improving interest rates according to the study). 5. conclusions the latest technologies and innovations have become crucial for customer loyalty in the face of social and economic upheavals due to pandemics and military actions that limit access to goods and services in a traditional way. customers change partner banks in favor of more innovative ones and the issue of maintaining and expanding the customer base as a source of income for a banking institution is a requirement of the time. therefore, each bank in the competition must take into account the expectations of customers and constantly collect information about the level of their satisfaction with their financial partner. the study of the concept of "customer focus" provided an opportunity to formulate the author's view on customer focus and define the content of customer focus in the bank. the author's definition differs from the existing ones in that it considers customer orientation at two levels of interaction with customers: at the level of the bank as an organizational structure and at the level of personnel who contact with customers directly and indirectly, and also three seas economic journal 34 vol. 3 no. 4, 2022 focuses on the bank's orientation to the desires and needs of the customer and the ability to anticipate them. the issue of assessing the level of customer focus remains open for many practitioners and researchers. without equating the level of customer satisfaction with the level of customer focus, it can be argued that there is a logical connection between these concepts and conclude that the measurement of customer nps can be used as an indicator of customer focus. in the world banking practice, the introduction of nps calculation is widely used and influences the decision-making process regarding the bank's business model, in which customer focus plays a key role. solving the task of optimizing processes, banks should improve the customer-oriented approach in their activities and strive to increase the level of customer focus. the formation of a comprehensive system for managing the bank's interaction with customers is still far from being completed. references: barends, a. 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(in russian) received on: 4th of november, 2022 accepted on: 12th of december, 2022 published on: 30th of december, 2022 three seas economic journal 28 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: vdovenko_larisa@i.ua orcid: https://orcid.org/0000-0002-6283-2385 researcherid: i-4015-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-4 ukraine's agricultural sector in ensuring global food security larysa vdovenko1 abstract. the article defines the role and place of the agrarian sector of ukraine in ensuring not only national food security, but also global. the subject of the research is a set of practical aspects of the development of the agrarian sector of ukraine in conditions of globalization and aggravation of problems of food security, which requires further growth of agricultural production potential and integration of ukrainian agro-industrial complex into the world food system. the methodological basis of the study were the main provisions of economic theory and practice of development of the agrarian sector of the economy. the following methods and techniques were used to achieve the goal set in the article: abstract-logical, monographic, analysis and synthesis; methods of comparison, generalization. the article assesses the export potential of the agricultural sector of ukraine in recent years (for 2019–2020), analyzes the development indicators (for 2016–2020) and the challenges of agriculture. the results of the study show that ukraine is one of the leading agricultural countries in the ranking of world exporters and in recent years continues to show high performance, which requires effective measures from the state to support the priority sector of agriculture. the practical value of the study lies in the proposals to stimulate the development of the agrarian sector of ukraine. it is concluded that the position of the agrarian sector of the economy of ukraine in the future and increase its export potential to address the issues of national and global food security depends on the level of long-term investment, growth of lending and real state financial support of agricultural producers. key words: agrarian sector of economy, food security, agro-industrial production, export potential, financial provision. jel classification: q17 1. introduction the agricultural sector is a priority and strategic direction of the economy of ukraine, which in recent years has shown positive dynamics of agricultural production, is effective compared to other sectors of the economy and has a significant share in agricultural exports. agriculture in the world food market as an exporter of agricultural products. the current state of the agricultural sector is characterized by problems due to the specifics of agro-industrial production and associated with the seasonality of production, dependence on natural and climatic factors, unstable prices for agricultural products, insufficient investment attractiveness of the industry, the difficulty of attracting additional financial resources, inflation of logistical problems, the low level of rural infrastructure, which constrains its development. however, climate change, which is deepening and poses additional challenges for agriculture, is also having a significant impact on the effective development of agro-industrial production. favorable natural and climatic conditions for growing most crops and powerful human potential allow not only ukraine to ensure its own food security, but also to continue to occupy key positions in the world food market. the growth potential of the agricultural sector of ukraine largely depends on the directions of agricultural policy and the proper participation of the state in its formation and implementation, in particular, the basis for sustainable and effective development is to ensure at the state level conditions to promote the competitiveness of agricultural enterprises to ensure food security. the time has come to accelerate the process of reforming the agricultural sector of ukraine, which requires significant modernization in the direction of entrepreneurial activity in rural areas, the introduction of innovative technologies in production, ensuring profitability of producers, as well as social infrastructure and rural development. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 29 vol. 3 no. 1, 2022 2. the relevance of the problem of food security strengthening the processes of globalization and the aggravation of problems of food security of the population of the planet requires further growth of the potential of agricultural production and integration of ukrainian agro-industrial complex into the world food system. agriculture is one of the most important sectors of the state economy. in addition to its own consumption and supply of raw materials for industry, agricultural products are exported, which significantly increases the export potential of the state (state of development, 2016). the share of agricultural products in ukraine's gdp in 2020 will be 9.3%. ukraine is considered the "bread basket of europe", with arable land currently equal to 30% of the european union's arable land and 2.1% of the world bank's arable land. ukraine has about 25% of the world's most fertile chernozems, making our country unique in terms of agricultural potential (agrarian sector, 2017). the growth potential of the agrarian sector of ukraine largely depends on the directions of agricultural policy and the proper participation of the state in its formation and implementation, in particular, the basis for sustainable and effective development is to ensure at the state level conditions to improve competitiveness. priorities of the agrarian sector to ensure food security of the country. given the existing problems of the agricultural sector of ukraine, there is a need to create a favorable environment for the functioning of producers in the sphere of agro-industrial production. the relevance of the problem of food security of an individual country and the world community does not decrease with changes in the world political system, nor with the scientific and technological progress of world civilization. of particular importance among natural factors of food security is land, but not all of it is suitable for growing crops for 7 billion people. the total area of the planet earth is about 55 billion hectares, of which 40 billion hectares are water and 15 billion hectares are land. agricultural land is 4.5 billion hectares, of which arable land is 1.5 billion hectares. the structure of land use varies greatly from country to country. thus, in europe and asia, 25.3% and 17.0% of the land area, respectively, is ploughed, while the area of arable land in australia and oceania, africa and latin america is only 6.0, 6.7 and 8.9%, respectively. in the structure of land use in different regions of the world, pasture is occupied in australia and oceania (56%), in latin america under forests (48.1%) of the land area. according to additional fao studies, only 78% of the earth's surface has serious natural limitations for agricultural development, 13.5% of the area is characterized by low productivity, 6% – medium and only 3% – high. only 10% of the earth's land area is suitable for cultivation, i.e., it is arable. approximately 1,800 million hectares (12% of the land surface) can be developed into arable land and perennial plantations. about 71% of the reserve land area is in developing countries (ulyanchenko, & prozorova, 2014). real and full-fledged system of food security of ukraine should include the following components: a strong and reliable supply on the basis of national agro-industrial complex, capable of continuously providing the population with food at the proper level, adequately responding to the situation on the food market; the physical and economic accessibility of the necessary quantity and assortment of food for various categories of the population is ensured by their ability to pay, which does not jeopardize the satisfaction of other basic human needs; a system of protection of domestic producers of food from import dependence in both food and resource provision. ensuring effective functioning of the food security system directly depends on the stability of the supply subsystem, structural changes in agriculture, investment policy, formation of the technical support subsystem, improvement of tax legislation, organization of banking services, creation of commodity stocks, the current system of crop and property insurance of agricultural enterprises, scientific and information support. addressing food security while preserving and restoring the ecology of the environment is a priority for any country. 3. export potential of ukrainian agricultural sector ukraine is one of the leading agricultural countries, which occupies a leading position in the ranking of world exporters. thus, in 2020, ukraine managed to maintain its leading position in the world ranking of exporters of certain types of agricultural products, despite significant restrictions on international trade due to the spread of the covid-19 coronavirus pandemic. it took the lead in exports of meal and cake, millet, barley, honey, rapeseed and other agricultural products. ukraine ranks first in the export of sunflower oil. in 2019, foreign sales of this product reached 6,860 thousand tons. by increasing sales of meal and cake (mainly from sunflower) from 4957 thousand tons in 2019 to 5522 thousand tons (+11%) in 2020, ukraine became the leader among exporters of these products in the international market. in addition, ukraine ranks second among exporters of barley, honey and rapeseed, generally strengthening its presence in the world markets for these products. thanks to an increase in barley exports to 5046 thousand tons (+22% compared to 2019), three seas economic journal 30 vol. 3 no. 1, 2022 ukraine retained second place in the ranking. despite the decrease in rapeseed exports to 2,382 thousand tons (25%) in 2020, ukraine remained in second place in 2019, behind canada (11,784 thousand tons). exports of fresh or chilled peas also continued to decline in 2020: from 49,000 tons to 18,000 tons, which eventually moved ukraine from second to third position. ukraine is among the world's top ten producers of many other products, including corn, peeled walnuts, dried peas, wheat, apple juice concentrate, casein, shelled walnuts, dried egg products, coriander, soybeans, corn breadcrumbs. oils, poultry meat, low erucic acid rapeseed oil (canola), canned tomatoes, corn oil (ukraine has gained new leading positions, 2021). in 2020, ukraine supplied 6.0 billion euros to the european union. however, due to changes in european statistics due to the uk's exit from the eu, which with an indicator of 15.5 billion euros immediately led the ranking of suppliers of agro-food to the commonwealth, ukraine has moved from the traditional third place in the list to the fourth. our country is still ahead of brazil (11.3 billion euros) and the united states (9.6 billion euros) (ukraine topped the ranking of world exporters, 2021). at the same time, it should be noted that the basis of ukraine's agricultural export is the export of raw materials, namely products of plant origin – wheat, corn, barley and soybeans, whose share in the structure is 55%. given the peculiarities of the agrarian sector of the economy, in particular the dependence on natural factors of the fall of export indicators of some types of agricultural products due to adverse weather conditions. exports of agricultural products and food industry decreased in 2020 by $ 115.5 million (by 1.1%), including: fats and oils of animal or vegetable origin – by $ 560.9 million (by 23.5%); tobacco – by $ 35.9 million (by 20.6%); residues and waste from the food industry – by $ 20.4 million (by 2.6%); cereal products – by $ 12.7 million (by 10.4%); various food products – by $ 11.4 million (by 16.7%) (the agricultural sector, 2020). thus, ukraine is undoubtedly an agricultural state, which in recent years continues to show leadership in the export potential of the world, which requires effective measures from the state to support the development of agriculture in the future. 4. indicators of development of the agrarian sector of the economy of ukraine the role of agriculture in the sectoral structure of ukraine's agro-industrial complex is determined by the fact that 70% of the country 's territory is involved in agricultural production; its products account for a significant share of gdp; almost 70% of middle-aged workers are employed in the agricultural sector; crop production dominates, accounting for over 70% of all agricultural products; agricultural products account for over 40% of commercial exports. according to state service of ukraine for geodesy, cartography and cadastre land area of ukraine on 01.01.2020 is 603.5 thousand km2, with agricultural land accounted for 68.7%, forests and other forested areas – 15.6%, land under water – 4.0, other lands – 5.7%; built-up land – 6.0% (statistical yearbook of ukraine, 2020). as of the end of 2019, the area of agricultural land in ukraine was – 41310.9 thousand hectares, of which: 32757.3 thousand ha – arable land; 2283.9 thousand ha – hayfields, 5250.3 thousand ha – pastures; 166.7 thousand ha – fallows and 852.7 thousand ha – perennial plantations. favorable natural and climatic conditions for growing the vast majority of crops and powerful human potential allow ukraine not only to ensure its own food security, but also to become an active player in the world food market. therefore, it is necessary to accelerate the process of reforming the agricultural sector of ukraine, which requires significant modernization in the direction of rural entrepreneurship, introduction of innovative technologies in production, ensuring profitability of producers, as well as the construction of social infrastructure and rural development. the distribution of enterprises engaged in agricultural activities by size of agricultural land in 2019 is as follows: 38,523 enterprises (79.4% of the total) had 1,143,600 hectares of agricultural land, including the largest number of enterprises with 20.01-50.00 hectares (10,440 or 21.4%), 100.01-500.00 hectares (7,717 or 15.9%) and 50.01-100.00 (4,778 or 9.9%) (statistical yearbook of ukraine, 2020). a positive trend is the growth of the index of agricultural production. however, ukraine's agricultural production index in 2019 was 101.4% from the previous year, lower than in 2018 (108.2%) and 2016 (106.3%), and was only 87.6% in 2020. in general, most types of agricultural products in ukraine show an increase in production (table 1), with the exception of milk production. producers are mainly engaged in crop production, the share of which in 2019 was 79.1%, while livestock products account for 20.9%. among crop production, the largest share in 2019 is accounted for cereals and legumes (35.2%), industrial crops (28.6%) and potatoes, vegetables and melons (11.4%). the largest share of livestock production in 2019 is farm animals – 10.9%, milk – 6.3% and eggs – 2.8%. in general, there is an increase in the share of major crops in livestock production, including cereals and legumes, industrial crops, fruits and berries (statistical yearbook of ukraine, 2020). three seas economic journal 31 vol. 3 no. 1, 2022 it should also be noted the change of sown areas in 2015–2020 under the main crops in ukraine: in particular, the area under cereals and legumes increased 1.2 times (from 661.4 thousand ha in 2015 to 824.3 thousand ha in 2020), the area under sunflower increased 1.1 times in this period (from 208.9 thousand ha to 239.7 thousand ha). the reduction of sown areas is observed under potatoes and sugar beet (table 2). assessing the profitability of the main types of agricultural products in the agricultural sector of ukraine, we can conclude that the highest profitability in 2019 shows sunflower (23.5%), potatoes (15.4%) and milk (20.6%). it should be noted that the profitability of these types of agricultural products has been dynamically decreasing in recent years. the most unprofitable in 2019 in ukraine was the production of agricultural products such as sugar beet (-15.4%), as evidenced by the reduction of cultivated areas under this crop by 1.42 times in 2019 compared to 2017 and by 1.14 times in 2018 compared to 2017. at the same time, the most unprofitable in 2019 among livestock products in ukraine are cattle for meat (-27.1%), sheep and goats for meat (-39.7%), poultry for meat (-3.7%), eggs (-23.5%) and wool (-71.1%) (statistical yearbook of ukraine, 2020). of these livestock products, only milk production is profitable (during 2015–2019), while egg production shows a declining trend. thus, ukrainian producers are more specialized in the production of crop products, which is more profitable in today 's agricultural business. 5. existing problems of the agrarian sector of ukraine the current state of the agrarian sector is characterized by problems and challenges (low added value of exported agricultural products; low purchasing power of the population; lag in the level of scientific and technological progress, new technologies; high level of dependence on production of imported resources; low level of rural infrastructure development; increasing soil degradation, depletion of water resources; logistics problems; aggravation of internal devaluation and inflationary processes; insufficient investment attractiveness of the industry; climate change; risk of activity; imperfection of existing financial mechanisms of development of agricultural enterprises) caused by the specifics of agroindustrial production and caused by seasonality, high dependence on climatic factors, unstable prices for agricultural products, difficulty in attracting additional financial resources, which constrains the development of the industry, reduces its competitiveness compared to other sectors. the main task for the near future will be to prepare for global climate change, to implement all overdue reforms table 1 production of agricultural products in ukraine for 2016–2020 see s.-g. products 2016 2017 2018 2019 2020 livestock products meat (live weight), million tons 3.3 3.3 3.3 x x milk, million tons 10.4 10.3 10.1 x x eggs, billion pieces 15.1 15.5 16.1 x x crop production, thousand cereals and legumes 37399.2 40789.8 49094.5 50092.3 53892.9 sugar beet factory 2894.9 2693.0 2497.7 2165.9 2002.9 sunflower 5375.0 4677.5 5760.0 6336.9 6921.6 potato 12018.0 14473.6 14080.0 12047.4 12645.0 vegetable crops 1870.8 1736.5 1902.1 1985.6 2200.2 fruit and berry crops 145.1 192.1 219.5 142.2 214.4 source: (statistical yearbook of ukraine, 2020) table 2 sown area of crops, thousand hectares plant growing 2016 2017 2018 2019 2020 cereals and legumes 661.4 697.0 717.8 772.9 824.3 sugar beet 6.9 6.3 5.7 5.2 5.6 sunflower 208.9 194.3 203.4 212.2 239.7 potato 79.4 77.8 74.2 75.0 75.6 vegetable crops 10.7 10.0 11.1 11.6 11.6 source: (statistical yearbook of ukraine, 2020) three seas economic journal 32 vol. 3 no. 1, 2022 in the agricultural sector to increase production, the introduction of new technologies in agricultural production and, consequently, increase the capacity of the industry as a whole. consideration of various factors affecting the effective development of the agricultural sector, including climate change associated with global warming, becomes a determining factor for the sustainable development of agro-industrial production. international experts estimate the years 2015–2019 as the hottest periods of the era of industrial development of mankind. the earth's climate has become warmer than the average for the twentieth century. thus, the average global temperature in july 2019 was the hottest in the last 140 years (nechiporenko, 2020). agroclimatic zones of ukraine, which are classified into steppe, forest-steppe and polesie according to the ratio of precipitation and the amount of accumu lated heat, are transformed and shifted to the north with increasing average annual temperature. after all, according to experts, an increase in the average annual temperature by 1°c shifts the tolerance limit of terrestrial species by an average of 100-125 km towards the poles and 150 m vertically upwards. at the same time, the average annual temperature in ukraine increased by almost 2°с. thus, if in 1961-1990 its norm was 7.8°с, in 2011-2019 it was already 9.5°с. thus, the boundary of climatic zones has shifted by at least 200 km. at the same time, more than 130 mm of precipitation per year is not enough to provide the norm necessary for agriculture (not less than 700 mm). thus, the amount of precipitation decreases and the average temperature increases, which causes rapid evaporation of moisture and, as a consequence, significant crop losses (nechiporenko, 2020). the climatic crisis has ambiguous consequences for agriculture in ukraine. thus, there are positive and negative results of warming, in particular, the positive include: an overall increase in the efficiency of crop production by increasing the duration and heat supply of the growing season; strengthening the effect of fertilizers; increasing the duration of frost-free period; improvement of conditions for overwintering of field and garden crops; earlier beginning of spring vegetation processes and sowing dates of spring crops; acceleration of grain ripening and terms of their harvesting; expansion of the growing zone of heatloving crops (corn, sunflower, soybean, millet, melons, peaches, grapes, etc.); reduction of costs for stabling of agricultural animals due to increased temperature and reduction of the winter stabling period. the negative factors of warming include: reduction of gross agricultural output due to drought in some regions and extreme precipitation and flooding in others; uncertainty about the timing of sowing or planting crops, as well as the choice of optimal plant species to grow; weakening of plant hardening with a possible increase in the probability of damage from soaking, various diseases, etc. with this in mind, ukraine needs to accelerate its transition to fao's recommended climate-smart agriculture, which includes a three-pronged approach: sustainable productivity and profitability; adaptation and resilience to climate change; and mitigation of long-term impacts by reducing or halting ghg emissions. these components must become the imperatives of the risk management strategy caused by the current climate crisis, and its basis will be significant improvements in the trade-off, or better, optimal synergy of land, water, biodiversity, and energy (nechiporenko, 2020). the global climate crisis is deepening every year, which creates additional problems for agro-industrial production. under these conditions, effective measures to mitigate the negative effects of weather disasters, which will affect the production of products that determine global food security, are needed to preserve the country 's food security and ensure the profitability of producers. timely implementation of climate change risk management strategies that include adaptive changes at the national, regional, and individual levels can reduce the anthropogenic pressure on natural resources and ensure sustainable socio-economic development. thus, global climate change exacerbates additional problems for agro-industrial production and agriculture, in particular, in such conditions, maintaining food security of the country and ensuring the profitability of ukrainian agricultural producers depends on the need to use effective measures to mitigate this impact. an important component of effective agribusiness is the introduction of the latest in-demand technologies in agro-industrial production, aimed at the development of agriculture as an important and priority sector and contributing to the alignment of economic interests of agribusiness and the state. the main obstacles for acceleration of innovative processes in agroindustrial complex of ukraine are orientation on outdated mechanisms and models of energy saving, small scale and low efficiency of world experience in introduction of high technologies, imperfection of infrastructure of agrarian market and many other things. the current practice of simplifying technology to the most necessary operations in many agricultural enterprises of ukraine, the violation of ancient agricultural traditions on the use of scientifically sound crop rotations – all this negatively affects not only the energy conservation and macroeconomic efficiency, but also leads to depletion and degradation of soils (korol, 2012). according to the author, "one of the most important and particularly difficult problems of energy conservation in the agricultural sector of ukraine is the lack of effectiveness of scientific achievements, especially at the boundaries of sciences three seas economic journal 33 vol. 3 no. 1, 2022 (agricultural, environmental, technical, etc.). it should be noted that even where the energy supply of agriculture doubled or increased several times, the yield of grain and industrial crops has increased by only 5-10%" (korol, 2012). certain shortcomings in the development of the mechanism of state financial support for enterprises in the agricultural sector of the economy were revealed: annual changes in the procedures and mechanisms for allocating funds from the state budget, their unwieldiness, late approval and repeated changes during the year, untimely receipt of state financial support and inefficient use and return to the state budget at the end of the year. the effective use of limited budgetary funds requires an appropriate long-term strategy for the development of the agricultural sector of the economy, the direction of financial resources from budgets of all levels exclusively on the priority areas of agricultural development and entrepreneurship in rural areas. 6. conclusions thanks to the significant potential of ukraine for the development of agriculture and given the worsening of hunger on earth (according to un forecasts, the population by 2050 will increase to 9.3 billion people, and crop yields – only 15%) in the future ukraine will not only ensure food security of its own country, but also to strengthen its leading export position in the world food market. therefore, the issues of state support at the proper level of agro-industrial production as an important component of economic development in order to ensure the effectiveness of producers aimed at the production of safe competitive agricultural products, both in the domestic and foreign markets, which in turn will guarantee not only food but also environmental and national security of the country. most of the problems of the agricultural sector of ukraine remain unresolved, so in our opinion, it is necessary to accelerate the reform of the agricultural sector of ukraine, which requires significant modernization towards rural entrepreneurship, the introduction of innovative technologies in production, preparation for global changes in producer climate, as well as the development of social infrastructure and rural development. the work considers that the policy of state regulation of the agrarian sector of the economy should have clear stable vectors of support of priority directions of financial, credit, price and insurance activities. to develop and implement an effective and favorable scenario of development of the agricultural sector in ukraine it is necessary to clearly understand the vector of development and direction of a particular sector of the agricultural sector and the environment in which it is located, namely the financial policy and the investment climate. the effective development of enterprises of agrarian sector of ukraine's economy is largely determined, first of all, by a high level of financial security. in world practice, the basis of economic policy of the world is the support of the agricultural sector as a priority sector through the development and use of state and interstate development programs. thus, ukraine is interested in the experience of the united states, which uses a system of various financial instruments and levers of influence (direct cash payments, soft loans, interest-free loans, irrevocable payments on loans) on the level of profitability of agroindustrial enterprises. however, compared with global practice, the level of financial support for agriculture remains low. therefore, to improve the financial security of agricultural enterprises, including small and medium-sized businesses, it is necessary to use guarantee funds, including in the area of lending, which will solve a number of lending problems and minimize the risk of non-repayment of loans. the author considers it necessary to develop the infrastructure of guarantee funds as institutions of credit support of farmers in the current unfavorable conditions of ensuring their creditworthiness (high collateral, high interest rates, etc.). given the increased risks of agribusiness, the role of agricultural insurance must be decisive and taken into account by producers in planning their activities (financial policy of the enterprise), it should also be a priority in government financial policy to support this business, as the best international practice. the position of the agrarian sector of ukraine's economy in the future and increase of its export potential to solve the problems of national and global food security depends on the level of long-term investment, growth of lending and real state financial support of agricultural producers. references: the state of development of the agro-industrial complex of ukraine / ministry of agrarian policy and food of ukraine. kyiv. november 2016. available at: http://www.minagro.gov.ua/ agrarian sector of ukraine and germany: facts and comments (2017) / at the institute of economic research and policy consulting. kyiv, 2 editions. ulyanchenko, a. v., & prozorova, n. v. (2014). food security is the basis of national security. available at: http://congressworld.com.ua/blog_article.php?id=5 three seas economic journal 34 vol. 3 no. 1, 2022 ukraine has gained new leading positions in the rankings of world exporters of agricultural products (2021). available at: https://agropolit.com/news/21077-ukrayina-zdobula-novi-lidiruyuchi-pozitsiyi-u-reytingahsvitovih-eksporteriv–agroproduktsiyi ukraine topped the ranking of world exporters (2021). available at: https://agronews.ua/news/ukrayina-ocholylarating-svitovyh-eksporteriv/ the agricultural sector is at its peak – the reasons for the decline in agricultural production in ukraine (2020). available at: https://agropolit.com/spetsproekty/813-agrosektor-v-pike-prichini-padinnya-virobnitstva-silskogospodarskoyi-produktsiyi-v-ukrayini statistical yearbook of ukraine. state statistics service of ukraine (2020) / edited by ie werner responsible for the issue o. a. vyshnevskaya. nechiporenko, o. m. (2020). risk management of global climate change in the agro-industrial complex of ukraine. economics of agro-industrial comple, 4, 6–16. korol, o. m. (2012). energy efficiency of the agricultural sector of the world economy. foreign trade: economics, finance, law, 6. available at: http://zt.knute.edu.ua/files/2012/6/uazt_2012_6_12.pdf three seas economic journal 18 vol. 2 no. 4, 2021 doi: https://doi.org/10.30525/2661-5150/2021-4-4 the formation of a system of indicators to assess the socio-economic development of inclusive tourism in the regions of ukraine natalyya bielousova1 abstract. the purpose of the article is to determine the procedures for the formation of a modern system of indicators to assess the socio-economic development of inclusive tourism in different regions of ukraine. this approach will determine the concept of development of the administrative and territorial unit of any country. methodology. formation of the methodological basis of the article is associated with the author's research and practicallyadapted approbation of the results of these studies. results. as a result of the formation of a methodological basis for the development of inclusive tourism in the system of socioeconomic relations at the regional level, a mechanism (model) for using the integral index as an indicator of the economic feasibility of using it in the system of regional management and economic development is proposed. the types of indicators of economic efficiency of the introduction of inclusive tourism and types of effects from the activities of inclusive tourism are defined, the methods of assessment of inclusive tourism as an innovative project, the method of determining the integral indicator of inclusive rehabilitation of people, taking into account the natural resource and recreational and tourist indicators are proposed for consideration. practical implications. given the relevance of the topic related to inclusive tourism, we see rational to evaluate the development and implementation of this innovative direction in the socio-economic system of regional development of ukraine, which can serve as a model for adapting it to the administrative and territorial units of other countries. value/originality. the development of the integral indicator of inclusive rehabilitation of people is the author's development, which is being practically tested and in the near future will become a universal methodology in working with people with inclusion and inclusive tourists in particular. for implementation in the socio-economic system of regional development, such innovative direction as inclusive tourism will allow to cover additional population groups (the poor, pensioners, people with disabilities, large families and others) in the provision of a variety of tourist services. given the multifunctionality of the tourism sector and its economic potential, the introduction of inclusive tourism will help to stabilize or improve the overall economic situation in the regions of ukraine. key words: system of indicators, socio-economic development of regions, inclusive tourism, method of determining the integral indicator, integral indicator of inclusive rehabilitation. jel classification: o14, p25, r11 corresponding author: 1 national aviation university, ukraine e-mail: belousova-69@ukr.net orcid:https://orcid.org/0000-0002-5829-1467 1. introduction development of tourism industry in ukraine is one of the most important tasks of economic development. research, development of a comprehensive methodology of research and problems of development of the national tourist market coincides with the general directions of european integration (malskaya, rutinsky, belous, & mandyuk, 2014). modern methodological approaches to the study of the domestic market of tourist services are based on a combination of methods of sectoral and territorial analysis, which provides the definition and strategy of national tourism policy, which provides the following: 1) assessment of the internal and external state of the ukrainian market of tourist services, the definition of the state of economic development in tourism and the factors affecting its development; 2) assessment of the available tourist and recreational resources as a component of tourism industry development in ukraine, as part of the application of their capabilities and the prospects for participation in the global and regional tourism process; 3) assessment of the intensity of the tourist process in the country; this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 19 vol. 2 no. 4, 2021 4) determination of directions of development of the tourist market and stimulation of market activity (malskaya, rutinsky, belous, & mandyuk, 2014). indicators of the intensity of the tourist process, which depend on the coverage of the country 's population by tourism, are of two types (net and gross intensity of tourist flows) and characterize the main logistics flows in tourism. 2. methods for assessing the socio-economic development of inclusive tourism in the regions of ukraine the economic component of the tourism industry is represented by enterprises as units of production (travel agencies, restaurants, hotel complexes, health centers, excursion bureaus and others) included in the taxation system (all, without exception), and in some cases funding (boarding houses, rehabilitation) centers, health-improving institutions of state or mixed forms of ownership), lending (if the financial capacity of the enterprise), subsidies (according to the social program of support of individual enterprises of the tourism, medical, transport industry), and investment in the form of international and government projects that help introduce innovative technologies in the tourism sector. with the help of methods of assessment of innovative projects a comparative characteristic of some projects with others is carried out, economic advantages and attractiveness of the project for its participants are revealed. if we consider inclusive tourism as an innovative project, it is logical to use the following methods of regional assessment of socio-economic development of the territory (table 1). the system of indicators (natural and tourist and recreational resources, historical and cultural heritage, availability of material and technical base, developed transport infrastructure, etc.) is an integral part of inclusive tourism, important for methods of comprehensive assessment of economic efficiency of implementation of this direction. 3. performance indicators for the implementation of inclusive tourism in the system of regional development to understand the overall situation of the effectiveness of the development and implementation of inclusive tourism in the socio-economic system of the regions of ukraine, it is necessary to take into account the performance indicators (table 2) and understand what types of effects will be attracted as a result of the practical application of the project (table 3). based on the above, it can be said that to carry out the process of development and implementation of inclusive tourism as a new project in the tourism industry, it is necessary to have a realistic idea of the resource indicators of the regions (and they are different in each region) and the economic efficiency of the results. the system of indicators to assess the effectiveness of socio-economic development should reflect the most important qualitative characteristics of regional table 1 methods for assessing inclusive tourism as an innovative project method characteristics of the method the method of criterion scoring the compliance of the project with each of the established criteria is considered, and the project is evaluated according to each criterion. the method allows to identify all the positive and negative aspects of the project and ensures the importance of each criterion. the criteria may differ depending on the area of specialization, organization or enterprise, as well as their specificity and direction. for each individual case, only those criteria are chosen that are most appropriate to characterize the method. the method of ballot estimation of the project used when it is necessary to formalize the results of project analysis, according to a list of criteria. the most important factors affecting the outcome of the project are identified and assigned a relative degree of importance: "very high", "high", "medium", "low", "below average". the overall score for this method is obtained by multiplying the ranks of the criteria by the relative importance of the factors. the obtained data are summed up. statistical method a system of indicators is used to determine the effectiveness of the project. the method is recommended to be used at the initial stage of project expertise and for projects that have a short period of time before implementation. the indicators are: real value, profit index, internal rate of return, accounting rate of return and payback period. table 2 types of indicators of economic efficiency of the introduction of inclusive tourism types of performance indicators indicator characteristics types of performance indicators the effectiveness of inclusive tourism in terms of the entire national economy of the country, its regions, industries, organizations state commercial (financial) the ratio of financial costs to the results of the development and implementation of inclusive tourism, providing the necessary rate of earnings budget the excess of budget revenues over expenditures three seas economic journal 20 vol. 2 no. 4, 2021 development and the main types of economic activity, giving in the aggregate a holistic view of the generalized characteristics of regional development. the current state of socio-economic development is characterized by several dozen macroeconomic indicators. the analysis of the diagnosis of economic and social development of regions shows a heterogeneous number of indicators (from 28 to 81), which complicates the procedures for obtaining and conducting the relevant calculations, as well as limiting their practical use (bielousova, 2018). 4. determination of the integral index as an indicator of the economic system of regions unlike other indicators, the determination of the integral index as an indicator of the economic system helps to clarify the qualitative (structural) characteristics of regional development. according to the system approach, the economy of a region (country) is a complex functional system with inherent inputs and base values (figure 1) (kholostova, & dementieva, 2002). this equation determines the interaction of the functions of aggregate demand qd (p) (nominal gdp) and aggregate supply qs (p) (real gdp) to achieve general economic equilibrium in tourism services. the indicator p determines the headline inflation, performing its function in the economic system of the region, and the macrofunction f indicates the quantitative indicators in the system (the number of population, number of enterprises in the tourism industry, the number of resource potential indicators, and others). to characterize economic development of regions, economic (level of production technology, level of use of potential opportunities, factor of innovation application) and social indicators (level of employment in tourism (officially, unofficially), level of wages) are used (kholostova, & dementieva, 2002). they fit the principal component method, whose inputs are time series of individual indicators, which, when calculated over a long period of time, can lead to disfigured estimates of weighting coefficients (formula 2.1) (melnichenko, & shvedun, 2017): і с t і еk іs ta a� �, , .= t 1 2 . (2.1) the integral index of the effectiveness of socioeconomic development, reflecting the qualitative changes in the economic system, taking into account the contribution of each component (the cobb-douglas method) is as follows (formula 2.2): ic t i x is t. ,. ,= 0 542248 0 457752� . (2.2) when considering inclusive tourism as an indicator of innovation, the absolute value of the integral indicator of the effectiveness of socio-economic development of any region (similar to the economic and social components) will determine the level of innovation (the level of popularity and demand), and its relative values, the degree of innovation (modernization) of the material and technical base, the introduction of new technologies). table 3 types of effects of inclusive tourism activities types of effects characteristics of the effects indicators of effects socio-political effect contributes to the development of society by meeting its needs. it is evaluated mainly by quality indicators living standards and lifestyles, health and longevity, increased human intelligence quotient, development of democracy, development of education, satisfaction of aesthetic needs economic effect the result, which is obtained in the process of management costs (implementation of innovative projects for production), which allows to increase the methods of production. it is evaluated by quantitative indicators and criteria project cost, investment in production, marketing, availability of funding at the right time, potential annual profits, total revenue over the life cycle of innovation, absolute and relative effectiveness environmental impact the result of the interaction of innovation with the environment. evaluated by relative indicators environmental damage; integrated use of natural resources based on zero-waste production; reduction of industrial emissions into the atmosphere, water, soil; improved environmental friendliness and ergonomics of goods; increased fines for violations of environmental laws; renewal of nature scientific-technical effect the result of scientific-applied, research and design developments with their subsequent implementation. evaluated by the actual economic effect ethnic and cultural effect a byproduct of the post-industrial era, the result of people adapting to rapid change new technologies shape the culture of future life, its system of values, tastes, norms of behavior, relationships figure 1. the model of the regional economy as a functional system three seas economic journal 21 vol. 2 no. 4, 2021 thus, it is proposed a methodology for integral assessment of the effectiveness of inclusive tourism in the system of socio-economic development of regions and the degree of its innovation, based on the variables of qualitative characteristics of the economic system, which allows: – to assess the result of the development and implementation of inclusive tourism in the socioeconomic system of the regions; – to apply the system of integral indices to assess the components of socio-economic development of inclusive tourism; – to identify the potential for the development of inclusive tourism, taking into account the impact on the structural elements. the proposed methodology is quite universal and can be applied at the level of regions and main types of economic activity. considering the production function of tourism enterprises as a fundamental element of the aggregate supply function model, the following formula can be applied (formula 2.3): vt eytlt k eyt tn p wt pt ksn a it kt kt i ta d= = ( )    ( ) − −1 1 1 1 1� � � �ξ ϑ , ,, ,at pt t a− −( )  −1 1 vt eytlt k eyt tn p wt pt ksn a it kt kt i ta d= = ( )    ( ) − −1 1 1 1 1� � � �ξ ϑ , ,, ,at pt t a− −( )  −1 1 q tvt pts = ( )σ (2.3) where, vt is production through tourist services; pt is the gdp (gross domestic product) deflator; eyt is the level of innovation; γ is the rate of implementation of innovative technologies; lt is the salary expenses of employees of enterprises in the tourism sector; kz1 is the cost of old money; a is the elasticity coefficient; ξt statistical occupancy rate (the share of employees in the tourism sector, as well as employees of enterprises engaged in the tourism industry, reduced to the equivalent of employees, in the total number of people employed in the economy); nd is the optimal job demand in travel businesses; wt is the average annual nominal wage of employees; ksn is the coefficient of social charge on payroll; ϑ is the margin of profit; it is an investment (if any); kt is the cost of capital revalued in the gdp deflator; a t-1 is the consumption of fixed capital in the previous period; σt is the coefficient of service technology in the tourism sector enterprise. unfortunately, this formula will not determine the real reproductive economic potential of a region, because in this form the formula is incorrect for comparing regions. for a region where the service sector is rapidly developing, the possibility of producing a higher grp (compared to the traditional old industrial region) is not considered. in order to calculate the economic feasibility of introducing inclusive tourism correctly, it is necessary to take into account the cost of loaded production capital, which significantly affects the value of grp (intra-regional product). at the same time, the uniqueness indicator of each region and its production potential (pp) within the framework of tourist activity, which can be defined as (formula 2.4): pp n kzd= ξ . (2.4) in this case it is possible to calculate the reproductive capacity of a particular region in relation to other regions (formula 2.5): grp qd p ndkz = ( )� ξ . (2.5) it is this indicator that allows to take into account the development of the tourist services sector, where the capital is much smaller than in the old industrial regions. but the rapid development of the services sector is necessarily reflected in the volume of grp. inclusive tourism as a service sector requires a clear methodology in the socio-economic development of the regions of ukraine, which is offered below. using the experience of foreign countries, where inclusive tourism is widely developed and has a high efficiency of implementation, it is proposed priority steps for the real application of the program of development of inclusive tourism in ukraine in the form of a theoretical and methodological framework (concepts, methodologies, forms and techniques) and practical models to create an "accessible" environment. 5. methodology for calculating the index of inclusive rehabilitation in this case, an attempt was made to create a methodology for calculating the index of inclusive rehabilitation, which allows to argue the economic feasibility of implementing inclusive tourism for rehabilitation needs, taking into account territorial, natural, historical and cultural features, recreational and tourist potential, the availability of medical and health facilities of the region and other features. for this purpose it is necessary to take into account several basic components, which may reflect the characteristics of recreational and tourist resources that contribute to a harmonious and comprehensive human health improvement. assessment of the recreational attractiveness of the territory for inclusive tourists can be presented in the form of a formula that allows to calculate the index of inclusive rehabilitation based on naturalterritorial and historical and cultural characteristics (bielousova, 2018): three seas economic journal 22 vol. 2 no. 4, 2021 і іnr іn аr і h ch sr � � � � � іncl. . . . . . . . . = + − + − , (2.6) where, iinсl. is an index of inclusion of rehabilitants. in.r. is an integral indicator of the natural resources of a given territory (ha), consisting of indicators of natural resources and calculated for the listed resources. as a sample is taken separately territory with the highest concentration of natural indicators on a 10-point scale in ukraine, specified in the formula and will serve as a marker for further calculations: іn r. . . . . . . . . . = + + + + +pw ph pms pal pbr pc st �� � � � � � , (2.7) where, pw. is a measure of forest cover (ha, for the total area of the investigated territory); ph. is the availability of hydrological objects suitable for recreational and tourist activities (ha); pm.s. is the availability of mineral springs as a healthimproving and therapeutic resource for recreational and tourist rehabilitation (area, ha); pa.l is the attractiveness of landscapes that can be used in the rehabilitation process for recreational purposes (ha); pb.r. is the presence of biological resources in a particular area of the study (points, from 1 to 10 against the marker of the maximum indicators in ukraine); pc. is a climatic indicator of the comfort and recreational capacity of the study area (points, from 1 to 10 in relation to the most favorable areas in ukraine); st. is the area of the investigated territory (ha). * all received indicators are converted into a point system from 1 to 10. classification of the territory according to recreational, tourist and rehabilitation indicators takes place according to the already existing system: – not an attractive territory for rehabilitation; – unattractive; – attractive; – as attractive as possible. and the indicators of the ability to rehabilitate are divided into the following groups: – low level (from 1 to 3 points); – average level (from 4 to 7 points); – high level (from 8 to 10 points). the same criteria are used to assess the integral index of natural and anthropogenic resources of the territory under study, the integral index of historical and cultural heritage of the territory (points), calculated as the ratio of the number of historical, cultural, archaeological, sacred and monumental structures, museums, etc. these formulas can be adjusted by adding necessary key figures or replacing one key figure with another. the main condition is to reduce the calculations to percentages and then recalculate to a point system from 1 to 10. the territory in which the maximum values of the necessary indicators are found is taken as 100%. 6. practice-testing programs for the introduction of inclusive tourism in 2017, a new approach was launched to implement the work program of the center for inclusive rehabilitation and social tourism, the main actors of which are students with disabilities, who, according to their nosologies, can get education in a certain professional direction and later, by prior arrangement with travel agencies, find employment in their specialty (bielousova, 2017). an example of an experiment with immobile or poorly mobile young people with disabilities were students of the open international university for human development «ukraine», on the basis of which the center for medical and psychological aid was created using a medical and technical base and the latest rehabilitation technologies (licensed and received permission for use in 2015 year year), as well as the center for inclusive rehabilitation social tourism, the purpose of which is to train professional tourism specialists to work in the tourism industry (bielousova, 2017). the applied method of complex adaptation of people with disabilities is the first sign of a practical direction in ukraine, which will help in solving the problems of medical, social, psychological, recreational rehabilitation of young ukrainians and may become a model for the development of techniques for other categories of inclusive tourists. 6. conclusions summarizing the material in this section, the following conclusions can be made: 1. evaluation of existing scientific and methodological approaches to the potential development of inclusive tourism in the regions of ukraine allows to identify two main scientific approaches that meet the objectives of the study (an analysis of the development of inclusive tourism as a segment of the economic system, and analysis of the prospects and opportunities for implementation of inclusive tourism). 2. the development of methodological support for the potential analysis of the formation of inclusive tourism in the regions makes it possible to determine quantitative and qualitative indicators of the region's development potential with regard to the formation of an inclusive environment. 3. generalization of methods of strategic analysis aimed at assessing the degree of development of inclusive tourism allows to form a methodology of capacity analysis, which is based on the characteristics of potential sustainability. its fundamental difference lies in the possibility of taking into account the ways of development of this direction (development or probability of increasing opportunities, traced in the relationship of resources and profits). three seas economic journal 23 vol. 2 no. 4, 2021 4. to understand the problem as a whole, it is logical to create an organizational model of the methodology with the characteristics of its elements, the scientific significance of which lies in the fact that it takes into account the relations between the subject of analysis (enterprises, organizations, institutions involved in inclusive tourism) and the subjects of decisionmaking on its results (public authorities of regions), in accordance with the goals and objectives of analysis. the main elements of the methodological model, based on the results of the analysis of the region's potential, make it possible to form qualitative analytical tools in the future. 5. assessment of the impact of budgetary instruments on the socio-economic development of ukrainian regions will determine the level of the region's ability to develop and implement new strategies and state programs. 6. a new method is proposed to derive an inclusive rehabilitation index, which will help to take into account all natural, natural-anthropogenic and historical-cultural features of a particular territory in the form of integral indicators and within the framework of socio-economic development of regions. this approach will help to create an overall picture of the suitability of a particular part of ukraine for use in the tourism and rehabilitation sector. references: bielousova, n. (2017). new forms and methods of teaching students with inclusion at the university "ukraine" within the framework of the program for the development of inclusive social and rehabilitation tourism. bulletin of the national technical university of ukraine "kiev polytechnic institute". political science. sociology, 1/2 (33/34): 92–95. bielousova, n. v. (2018). inclusive tourism in the system of rehabilitation geography: from theory to practice: monograph. kyiv: talkom, 346. malskaya, m., rutinsky, m., belous, s., & mandyuk, n. (2014). tourism economics: theory and practice. center for educational literature, 544. melnik, о. (2004). integral indicator of tourist attractiveness: concept and theoretical aspects. regional economy, 4:197–205. melnichenko, o., & shvedun, v. (2017). features of the development of the tourism industry in ukraine: monograph. kharkiv: publishing house nugzu, 153. kholostova, h., & dementieva, n. (2002). social rehabilitation: publishing and trade corporation "dashkov and k", 267. three seas economic journal 78 vol. 3 no. 1, 2022 corresponding author: 1 kherson state agrarian university, ukraine e-mail: kirilov_ye@ukr.net orcid: https://orcid.org/0000-0001-5061-2644 2 kherson state agrarian university, ukraine e-mail: kristina_zheludenko@ukr.net orcid: https://orcid.org/0000-0002-5899-3039 doi: https://doi.org/10.30525/2661-5150/2022-1-10 the role of resource potential in the formation of competitive strategies of ukrainian agricultural enterprises yuriy kyrylov1, kristina zheludenko2 abstract. the tasks of formation of competitive strategies of agrarian enterprises and increase of their competitiveness are the main factors of development in market conditions. the activity of agricultural enterprises is connected with competition and the need to form competitive advantages, the nature of which depends on the resource potential of economic entities. one of the most important problems of development of domestic enterprises of agrarian sector is the low level of efficiency of using their resource potential. that is why the aim of the article is to analyze and evaluate the effectiveness of resource potential of agricultural enterprises for determining the scope of their further competitive struggle and the formation of competitive strategies. methodology. theoretical and methodological basis of the study consisted of the works of domestic and foreign scientists on the use of resource potential of agrarian enterprises. the complexity and focus of the study ensured the use of a systematic approach as a methodological basis. the following methods were used in the study: statistical method (in determining the production of gross agricultural output), correlation and regression analysis (to identify the relationship between gross output of agricultural enterprises and the use of various types of their resources); abstract-logical method (in formulating conclusions). as a result of the study the components of the resource potential of agrarian enterprises were determined, its characteristics were given and the dynamics during 2016–2020 were analyzed. the factors on which the efficiency of the use of resource potential by enterprises of the agrarian sector and the main reasons for the loss of resources in agricultural production were determined. the most influential components of the resource potential of agricultural enterprises and their combinations were identified through the development of correlation and regression model. the main approaches to choosing a competitive strategy of agrarian companies based on the evaluation of their resources were determined. the algorithm of formation of competitive strategies of enterprises in the agricultural sector, taking into account the resource potential, and identified its main stages. practical relevance. the implementation of the results of the study will ensure the formation of effective competitive strategies of enterprises in the agricultural sector to improve their competitiveness. scientific novelty. the analysis and evaluation of the resource potential of agrarian enterprises is proposed to carry out with the help of correlation and regression analysis, which allows to determine the degree of dependence of production on the use of different types of resources and their combinations and the possibility of forming competitive strategies of agrarian enterprises, taking into account the impact of these resources. key words: resource potential, competitive advantages, competitive strategy, correlation and regression analysis, agricultural enterprises. jel classification: o13, q10 1. introduction the tasks of forming effective competitive strategies of agricultural enterprises and improving the organizational and economic mechanism to enhance their competitiveness are the main factors of development in a market environment. the success of the functioning of agricultural enterprises is deter mined primarily by the degree of resources, their structure and efficiency of use, i.e., resource potential. resource potential can be represented through the ratio of its components, which contributes to the implementation of the strategic objectives of enter this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 79 vol. 3 no. 1, 2022 prises and combines economic, social and environmental factors of development. today the activity of enterprises in the agricultural sector is characterized by quantitative, qualitative and structural imperfection of resource potentials, which resulted in significant losses of resources during the agrarian and land reforms, and their difficult financial condition. the search for ways to rationally use the available resources is of particular importance, since the solution of this problem will ensure the maximum utilization of production capacities, the stability of the competitive position of commodity producers, and will also help to reduce production costs and improve the quality of products. therefore, the purpose of this study is to analyze and evaluate the effectiveness of the use of resource potential of enterprises of the agricultural sector to determine the direction of further competition and the formation of competitive strategies. 2. characteristics of the resource potential of agricultural enterprises activity of enterprises in market conditions is associated with competition and the need to form competitive advantages, the nature of which depends on the resource potential of business entities. enterprises, attracting more unique resources to the process of creating products, have a higher chance to get ahead of rivals in attracting consumers and the formation of competitive advantages. this leads to the desire of economic entities to develop their own resource potential in those types that can provide a sustainable competitive advantage in the long term (izhevskyi, stadnyk, 2017). the study of the resource potential of the enterprise is an urgent and difficult task, by solving which it is possible to assess the possibility of production of certain types of agricultural products, to measure and identify the reserves of production efficiency, to provide an objective assessment of the activities of business entities. therefore, in order to ensure competitive advantages of the enterprise it is necessary to assess the actual state of its resource potential and then determine the ways of its effective use and increase. for the production of agricultural products at the enterprise material-technical, financial, energy, labor, administrative, organizational and managerial, intangible, information, intellectual, entrepreneurial, marketing and time resources are involved. the main characteristics of the resource potential of companies in the agricultural sector are presented in table 1. land resources are important in the formation of competitive strategies of agricultural enterprises, because land is the main means of production, due to which agricultural products and raw materials for production and non-productive consumption are produced. the size of agricultural land used by entities of the agricultural sector has a direct impact on the performance of their activities and on the ability to sell their own products on the market. for the period under study there was an increase in the area of agricultural land in agrarian companies by 2.2%. along with the provision of land resources of agrarian companies, their labor resources are of fundamental importance. during 2016–2020, there was a 13.5% decrease in the number of workers employed in agrarian enterprises, which was due to a 0.4% decrease in the number of enterprises and job cuts. the competitiveness of enterprises is influenced by the growth of labor productivity, which leads to a relative decrease in the cost of production, as well table 1 resource potential of agricultural enterprises in ukraine indicators year deviations of 2020 to 2016, %2016 2017 2018 2019 2020 number of of agricultural enterprises, total 47697 45558 49208 48504 47523 99,6 land resources agricultural land area, thousand hectares 19821,2 19960,2 20005,2 20113,6 20252,4 102,2 labor resources number of employees, thousand people 513,2 489,2 479,8 472,1 443,7 86,5 average monthly nominal wage, uah. 3916 5761 7166 8738 9734 248,6 labor productivity, thousand uah. 766,1 755,4 867,7 928,6 857,2 111,9 including crop production 807,3 777,4 900,1 954,4 853,7 105,7 in animal husbandry 616,1 664,8 730,4 815,2 872,8 141,7 material and technical resources production cost of production, million uah. 288499,3 404970,2 442993,4 463271,6 441529,6 153,0 including direct material costs 207870,2 242313,7 247997,2 266918,0 245959,8 118,3 direct labor costs 15638,4 20326,7 25234,4 29729,6 29932,5 191,4 depreciation of property, plant and equipment 14153,5 19176,6 25752,9 32292,9 35969,9 254,1 general production costs 50240,0 63067,7 74745,0 67774,1 62083,4 123,6 source: calculated by the authors on the basis of (state statistics service of ukraine) three seas economic journal 80 vol. 3 no. 1, 2022 as provides an opportunity to increase the average wage. in 2016–2020 labor productivity in agricultural enterprises increased by 11.9%. at the same time, the average monthly nominal wage per full-time employee in 2020 increased by 2.5 times compared to 2016, but remained one of the lowest among all types of economic activity in the country and amounted to 9734 uah. consequently, the efficiency of the use of resource potential by enterprises of the agricultural sector depends on a number of factors, including the rational ratio of components in the structure of resource potential, production management, the implementation of resource-saving technologies, the impact of climatic conditions, the level of resource availability of enterprises. at the same time, the main causes of resource losses in agricultural production are: irrational use of material resources in technology; non-compliance with science-based systems of machinery and mechanisms of agricultural production; unbalanced use of biological potential of plants; reduced efficiency of agricultural land potential, because machinery and equipment do not meet modern requirements, have insufficient reliability and low productivity (vinichenko, soroka, 2015). 3. evaluating the efficiency of resource potential use scientists present different approaches to the assessment of the resource potential of enterprises, and each of them is implemented with the use of specific techniques, depending on the object of evaluation. one of the approaches to the assessment of resource potential is when the dependence of gross output of agricultural enterprises on the use of their own resources is determined. therefore, it is necessary to analyze certain resources (their volume, structure, quality), to investigate their potential and the possibility of their use in the process of reproduction. the next step is the study of combinations of available resources and the choice of the most successful o ption that corresponds to the strategic orientation of the enterprise, to assess the effectiveness of the chosen combination. after that it is necessary to identify the factors that have a negative impact on increasing the efficiency of production, to determine ways to compensate for the lack of certain types of resources, to calculate the performance of production under new resource proportions. the last step is the study of ways to transform the structure of production, using attracted funds. it is advisable to assess the resource potential of agrarian enterprises by using a correlation and regression model. to conduct the process of modeling the functional dependence between the value of gross output and available resources of enterprises, take as the basis of the study approach, according to which production is formed under the influence of a combination of the following resources: х1 – agricultural land area, thousand hectares; x2 – the number of employees in enterprises, thousand people; x3 – the volume of the average monthly nominal wage of employees, uah; x4 – labor productivity (per 1 employed in agricultural production), thousand uah; x5 – production cost of production, million uah (table 2). as a result of regression analysis, the indicators that most affect the production of agricultural products (x1, x3 and x4) were identified, confirming the following results: 1. the coefficient of multiple determination r2 = 0,97339, i.e., the variation of production by 97,34% depends on changes in the studied resources. table 2 input data for modeling the dependence of changes in production of agricultural enterprises in ukraine on the use of their own resources year y x1 x2 x3 x4 x5 the cost of gross output, millions uah area of agricultural land, thousand hectares number of employees, thousand people average monthly nominal wage, uah labor productivity, thousand uah production cost of production, million uah 2010 256806,00 21058,70 590,20 1430,00 380,40 75009,55 2011 329373,40 21107,40 582,11 1801,00 472,11 99265,87 2012 309819,80 21232,50 558,57 2023,00 457,95 123739,29 2013 373437,80 21631,90 552,19 2269,00 582,97 127190,31 2014 387744,10 21009,60 503,39 2476,00 635,44 154313,46 2015 367738,80 19922,70 491,40 3140,00 624,00 228519,60 2016 403244,70 19821,20 513,20 3916,00 766,10 288499,30 2017 391015,80 19960,20 489,20 5761,00 755,40 404970,20 2018 437998,60 20005,20 479,80 7166,00 867,70 442993,40 2019 449806,30 20113,60 472,10 8738,00 928,60 463271,60 2020 395717,70 20252,40 443,70 9734,00 857,20 441529,60 source: (state statistics service of ukraine) three seas economic journal 81 vol. 3 no. 1, 2022 2. f-test: factual = 85,36667, ftest = 4,35; factual > ftest, therefore, the null hypothesis of no relation between the indicators is excluded, because the model is adequate to reality; 3. checking of regression coefficients for reliability with student's t-test has established that the use of land (х1), and labor (х3, х4) resources influences the production of agricultural enterprises, t-statistics for parameters of this equation are: tb1 = 2,25731; tb3 = -4,473788; tb4 = 10,20285 (calculated values of student's t-test are greater than tabulated value ttest = 2,2281). 4. regression analysis showed a high relationship between the function (y) and the variables (х): r = 0,986607. he values of fisher's and student's distribution tables with probability р = 0,95 were used in calculations of possible bounds. by correlation analysis, having analyzed the obtained indicators according to the chaddock scale, determine that the correlation coefficient characterizes a noticeable (0.5 – 0.7) and strong (0.7 – 0.9) connection between all the factors (table 3). table 3 correlation matrix for modeling the dependence of changes in production of agricultural enterprises in ukraine on the use of their own resources y x1 x3 x4 y 1 x1 -0,61189 1 x3 0,738272 -0,64081 1 x4 0,9401 -0,73481 0,905151 1 source: authors' calculations competitive strategy duration of use of resources resource uniqueness mobility and transferability of resources resource playback capability resource efficiency figure 1. the influence of resources on the formation of the competitive strategy of agricultural enterprises source: authors' development construct a model of the dependence of produc tion of agrarian enterprises on the use of available resources. as a result, the equation is obtained: y = -279459,03+ 17,70х1 – 12,32х3 + 514,62х4 (1) the value of the regression equation coefficients indicates the change in the function y when changing one хі provided that all other independent variables remain constant. thus, based on the analysis, the production of agricultural enterprises in ukraine is most affected by labor productivity and the area of agricultural land. 4. approaches to competitive strategy selection in a changing environment to ensure the sustainable functioning of agricultural enterprises is possible only on the basis of the formation and implementation of an effective competitive strategy, which is a set of managerial decisions represented by the program of formation of the resource potential of enterprises, through which their growth and qualitative development of key competitive advantages is provided (figure 1). with the help of the strategy the enterprise can control the efforts and organizational resources in the key areas that can bring economic and financial success. formation and implementation of competitive strategy is carried out in accordance with the direction of organizational development and available resource potential. there are two approaches in selecting a competitive strategy of the company based on the evaluation of its resources. the first approach is based on potential sources of competitive advantage of the enterprise. the position of the enterprise in the market based on resources and own three seas economic journal 82 vol. 3 no. 1, 2022 the mission of an agricultural enterprise analysis of the internal environment external environment analysis material resources information resources financial resources intellectual resources evaluating the efficiency of resource potential use identification of competitive advantages of the agrarian enterprise expense leadership focus strategy market niche strategy analysis of strategic alternatives, taking into account resource potential definition of the goals of the agrarian enterprise – – – – technology, structure and organization of production; resource potential; financial state of the enterprise; management and its information support – – – – economic and political situation; financial and credit support; market conditions, government support and pricing policy; the achieved level of scientific and technological progress formation of strategic alternatives for an agricultural enterprise, taking into account resource potential strategy calculation of the predicted value of the level of resource potential for certain strategic alternatives formation of a competitive strategy, taking into account resource potential figure 2. formation of the competitive strategy of the agrarian enterprise, taking into account resource potential source: authors' development capabilities is based on four categories, characterizing resources and their use as potential sources of competitive advantage: 1. material resources that are of purchase value: buildings, equipment, land, inventories. the market value of an enterprise's resources determines the possibility of its competitiveness and the possibility of its further development. 2. intangible assets. factors that do not lend themselves to financial evaluation, but when analyzing the work of the enterprise their impact on its image and the attitude of the population and business partners (goods, prices, quality of goods, image among customers, competitors, suppliers) (latysheva, 2018). 3. organizational capabilities. the processes and actions that ensure the transformation of tangible three seas economic journal 83 vol. 3 no. 1, 2022 and intangible assets into goods and services. this question refers to the management of resources and how they are used to achieve the goal of the enterprise, what is the return on the use of resources (izhevskyi, stadnyk, 2017). 4. the main competencies, which include individual qualities, skills, talents of managers, collective responsibility, training, retraining and professional development of employees. the emergence of competitive advantage is influenced by a large number of factors and resources. this involves the interaction of all types of resources and their coordination. having the necessary resources, the company does not always use them rationally because of the low competence of managers (latysheva, 2018). the second approach is the interdependence of resources and their strategic concept. it is necessary to consider the relationship between economic resources (income, material assets) and the strategic concept of competitive advantage of the enterprise. consideration is given to strategies and their correspondence to resources, internal reserves, possibilities of development of resources. although the two approaches do not contradict each other and are used in practice, but in developing a competitive strategy of the organization needs a more detailed delineation of individual types of resources to assess their strengths and weaknesses in the competition. 5. forming a competitive strategy the formation of competitive strategy of agricultural enterprises in market conditions is a complex and multifaceted algorithm. it is a necessary condition for the achievement of sustainable functioning of the enterprise in the market and involves the following stages (figure 2): – assessment and analysis of the external environment, which means determining the area of the economy, where the resources of the enterprise can be used; – classification of resources of the enterprise, which helps to determine its strengths and weaknesses; – an assessment of the potential of resources that can provide a significant competitive advantage; – determination of strategic alternatives for enterprises of the agricultural sector, taking into account the resource potential; – calculation of the predicted value of resource potential for certain strategic alternatives; – the formation of a competitive strategy implies the development of such a strategy, which can most effectively use the resources of the enterprise in accordance with internal and external opportunities; – implementation of a competitive strategy represented by a system of balanced indicators, policies, programs, projects and techniques. 6. conclusions the success of formation and implementation of competitive strategies of agricultural enterprises depends on their resource potential and ability to use it effectively in their economic activities. limited resources and reduction of real value create obstacles for the competitive development of any enterprise in the future. as a result of the study to ensure the competitive advantages of enterprises, the assessment of the actual state of their resource potential through the development of a correlation and regression model was carried out. this allowed to identify the more influential components of the resource potential of companies in the agricultural sector and their compositions. based on this analysis, labor and land resources have the greatest influence on the production of agricultural enterprises. taking into account conditions, in which agrarian enterprises function and available resources, there was suggested the algorithm of formation of competitive strategy, which determines the ways of further development of agrarian commodity producers, enables the most effective realization of their resource potential and planning of more intensive use in enterprises, increasing the efficiency of their production. consequently, carrying out economic activities, the main priority of the leadership of the agricultural sector should be the effective use and enhancement of resource potential, consisting in the introduction of new economic structures, improvement of material and technical base, the introduction of energy and resource-saving technologies, increasing the level of concentration, specialization and cooperation of production, the level of organization and motivation of labor and the improvement of pricing and financial mechanisms, which as a result will ensure the formation of effective competitive strategies of enterprises of the agricultural sector and increase their competitiveness. references: demchenko, o. v. 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(2020). otsinka resursnoho potentsialu silskohospodarskykh pidpryiemstv [assessment of the resource potential of agricultural enterprises]. investytsii: praktyka ta dosvid, no. 24, pp. 82–87. doi: https://doi.org/10.32702/2306_6814.2020.24.82 the official site of state statistics service of ukraine (2020). аvailable at: http://www.ukrstat.gov.ua (accessed 15 february 2022). vinichenko, i. i., & soroka, yu. o. (2015). efektyvnist vykorystannia resursnoho potentsialu silskohos podarskykh pidpryiemstv [efficiency of the use of resource potential of agricultural enterprises]. investytsii: praktyka ta dosvid, no. 22, pp. 34–37. three seas economic journal 42 vol. 3 no. 1, 2022 corresponding author: 1 v.n. karazin kharkiv national university, ukraine e-mail: n.i.goncharenko@karazin.ua orcid: https://orcid.org/0000-0003-4148-5369 2 v.n. karazin kharkiv national university, ukraine e-mail: shynkarenko2020uo11@student.karazin.ua orcid: https://orcid.org/0000-0002-2922-8004 doi: https://doi.org/10.30525/2661-5150/2022-1-6 digital innovation in the norwegian economy with the introduction of new forms of information and communication technology nataliia goncharenko1, oleksii shynkarenko2 abstract. the purpose of the article is to substantiate the need for further development of the digital transformation of the norwegian economy and to provide scientific and practical recommendations for improving its digital policy and concentration of high-tech information and communication technologies. methodology. the research is based on modern methods of scientific research, in particular, general and special methods of analysis of economic phenomena and processes: historical-logical method; structural-comparative and graphical analysis (to analyze the digital level of norway in terms of the network readiness index, the digital economy and society index, the ict index and the global digital competitiveness index); structural-factor analysis; correlation and regression analysis; scenario approach (to justify the priorities of digital development of the norwegian economy); methods of logical analysis, abstract and cognitive modeling. the results of the survey showed that along with the existing problems, there is significant potential for futher digital development of the norwegian economy. in order to assess the readiness of the norwegian economy to implement new forms of ict (5g and new iot ), the development of isps and digital services provided in cyberspace and blockchain systems, the factors characterizing the level of the norwegian economy digitalization are identified. the study identified the shortcomings, risks, opportunities and advantages of using the latest information and internet technologies. based on the results of the analysis, scientific and practical recommendations for the further development of the digital economy in norway and the prospects for their practical implementation were developed. a set of measures to enhance the potential of the internet of things, active subscription to mobile broadband, medium and high-tech industries and digital infrastructure were proposed. opportunities are proposed as development points to accelerate the transition of businesses to digitalization, encouraging the use of digital technology, creating new business models that include new jobs; employee functionality that encompasses internet skills, and good computer proficiency. practical implications. analysis of the features of the development processes of digital transformation of the norwegian economy allows us to identify priorities for the introduction of innovative forms of information and communication technologies. it is concluded that the small number of concentrated large databases, low turnover of e-commerce and cross-border online sales of high-tech does not yet allow norway to begin full coverage of its territory and water area, where industrial innovation fish farms are located, with 5g internet. to improve its digital policy and concentration of high-tech information and communication technologies, measures are proposed that will incorporate and promote digital development. value/originality. the presented scientific and practical recommendations take into account current trends and conditions of digitalization of the economies of developed and developing countries, and can be used by governments to improve digital policy and form a sustainable management system of the digitalization process. key words: information society, digitalization, information and communication technologies, digital infrastructure, the digital competitiveness index, it integration, digital transformation of the economy. jel classification: f21, f63, o11, o31, o33, q55 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 43 vol. 3 no. 1, 2022 1. introduction the digital economy is growing rapidly on a global scale. it is the most important engine of innovation, competitiveness and economic growth in the world. european countries are making good progress in the digitalization of the economy, ranking high in international rankings. data-driven recovery efforts now offer a chance for governments to play a critical role that can pave the way for new technologies and infrastructure. the shift toward greater technological integration offers an opportunity to develop plans and policies that promote a more equitable distribution of benefits, and the outcomes derived from technology can help build a better and more connected future. as society enters a new era of accelerated digital transformation, every economy must consider whether global inequalities in access to and use of technology will diminish or continue to grow. the ability to harness the current digital climate can lead to more timely and accurate data, informed decision-making, and better living conditions (portulans institute, 2021). evolution and modernization of the mobile cellular or broadband system is necessary, if we form the appropriate infrastructure and link information and communication technologies with those sectors of the economy and industry for which there are the best conditions for development. with the digitalization of the economy, there is a growing need for a strong coverage network capable of covering vast areas, especially those where urbanization, suburbanization and rural areas are taking place. the solution to this problem is the development and implementation of more powerful coverage systems – internet stations and special towers. the third-generation mobile network is fully deployed throughout norway, and more than half of the country is covered by the fourth-generation 4g mobile network, but the issue of 5g has not yet been put into practice and has only been legally prepared and signed off on by the norwegian government on digital strategy. but introducing and mastering new communication takes time and requires the right technological base (goncharenko, 2018). these technologies have great advantages over others and can accelerate the digitalization and development of the state, including norway. it is the question of the readiness of the technological and information base of norway to implement innovative technologies and communication generations that makes the topic of this study relevant and timely. after all, against the background of a high level of human development, markets for goods, labor and finance, norway has a relatively low level of investment and corresponding infrastructure development. the deployment and implementation of innovative forms of information and communication technologies are devoted to the works of such scholars as: n. goncharenko (2018), e. cassetta, u. monarca, i. dileo, c. berardino, m. pini (2020), q. deng, z. xu, m. shahab, a. bris, k. smith, e. dietrichs, c. cabolis, a. mickolei. considerable attention was paid to the development of digital economy in their works by such scientists as: n. goncharenko (2020, 2021), o. dovgal (2019, 2020, 2021), v. honcharenko (2019), o. reshetnyak (2021), g. dovgal (2021), n. danko (2021), t. shuba (2019), v. babenko (2019), v. shultsceva (2018). the purpose of the article is to justify the need for further development of the digital transformation of the norwegian economy and to develop scientific and practical recommendations for improving its digital policy and concentration of high technology. 2. norway's readiness to implement new forms of information and communication technology norway already has a reputation and image as a digital country in europe. the digitalization of schools, which are fully connected to the internet and digital devices, is about 100%, the mainstream economy, fisheries and seafood, digital biotechnology and more. but in order to accurately and objectively assess the country 's readiness to implement a new generation of internet coverage, a number of macroeconomic indices, which characterize the level of development of information and communication technologies, are used, namely: 1. digital competitiveness rating – includes three sub-indices that define the regulatory framework (knowledge), technological readiness (technology), gadget ownership, and ability to coexist with artificial intelligence (future readiness) (table 1). table 1 norway's ranking in the world on the digital competitiveness index, 2021 knowledge talents training and education scientific concentration 17 16 11 22 techniques regulatory environment capital technology base 6 1 6 12 future readiness adaptation business dexterity it integration 8 8 11 8 source: (imd, 2021) the data presented show that the highest positions in the global ranking of digital competitiveness are occupied by education and training, and we should also highlight the subindex of the legal and regulatory framework, which takes first place, the indicator three seas economic journal 44 vol. 3 no. 1, 2022 of readiness for technology and the future, and it integration. in other words, we can argue that the legal and regulatory framework is a catalyst for accelerating development, as well as the reason for the rapid adoption of the latest technologies. but it should be noted that knowledge and concentration themselves are holding back the development of 5g deployment at the level of practical use. it is the knowledge indicator that is generally above the average of other countries in the european region, but worse than all other norwegian indicators, compared to technology and readiness for the future. it should be noted that norway is one of the top ten digital economies in the world in terms of the overall level of digital transformation. hong kong and finland are ahead of or on par with norway (imd, 2021) (table 2). the digital competitiveness index report identifies digital and technology skills as having the highest value in the knowledge subindex, which increases the country 's digital potential. in terms of the share of students and teachers in higher education, norway ranks high on the ranking list of countries with a high intellectual base and concentration of highly qualified personnel. an alarming trend to note is the decline in the number of credentialed scientists, who are an important human resource for implementing technology parks and improving ict (imd, 2021). the highest positions in norway are, for example, contract enforcement – 3 place, which creates a positive image of the state, also leading positions are taken by communication technology and internet users – 3 place, as well as the development of technological applications and intellectual property rights. this positive trend allows for the development of ict and the creation of high-speed communications coverage. in the subcategory of digital competencies, norway shows particularly high rates for the percentage of people with basic digital competencies and the percentage of people with basic software competencies (imd, 2021) (table 3). regarding the subcategory of digital use in business and society, norway shows strong results in terms of smes' use of basic digital services. these are important preconditions for the benefits of further digitalization (table 4). from the analysis of the future readiness subindexes, we can conclude that norway has an information society, the use of databases is accelerating, and new system blocks of information in certain areas are being created. norway intends to become one of the leading players in the market for information services as early as this year. the competition in big data is becoming increasingly dynamic. norway intends to become a leading data exporter. a prime example of this is the already operational, unique and largest data center in the world, built in the small town of mili deep underground in an abandoned mine in lefdal. it is 120,000 meters in size and has a potential total capacity of 200 mw. the first phase (30 mw capacity, $30 million cost, 6 months lead time) is up and running (innovation norway, 2021). the second important indicator of digital transformation and transition to new ict technologies is the network readiness index (nri) – includes 4 sub-indices that consider the technological readiness of the country (technology), the social aspect (people), the regulatory framework for ict development (governance) and the importance of information products in the socio-economic sphere – impact (figure 1). table 2 norway's ranking in the world for all components of the knowledge subindex, 2021 components of the talent sub-index rating (global position) components of the training and education sub-index rating (global position) components of the scientific concentration sub-index rating (global position) educational assessment – pisa – mathematics 18 employee coaching 10 total r&d expenditure (%) 17 international experience 33 total public spending on education 19 total r&d personnel per capita 10 foreign highly skilled workforce 12 higher education achievements 21 women researchers 24 city management 13 student-teacher ratio (university education) 5 r&d output by publications 44 digital/technological skills 7 graduates in science 43 scientific and technological employment 21 net flow of international students 52 women with diplomas 19 high-tech patent grants 28 source: (imd, 2021) three seas economic journal 45 vol. 3 no. 1, 2022 table 3 norway's place in the world rankings for all components of the technology sub-index, 2021 components of the sub-index of the regulatory framework global position components of the capital sub-index global position components of the technology base sub-index global position setting up a business 14 it and media stock market capitalisation 18 communicating technologies 3 enforcement of contracts 3 financing of technological development 7 mobile broadband subscribers 28 immigration law 12 banking and financial services 2 wireless broadband access 32 technological development and application 5 country credit rating 1 internet users 3 research and development law 6 venture capital 6 internet bandwidth speed 10 intellectual property law 5 investing in telecoms 34 high tech exports (%) 16 source: (imd, 2021) table 4 norway's global ranking on all components of the readiness for the future sub-index, 2021 adaptive attitude indicators business agility indicators it integration indicators e-participation 18 opportunities and threats 12 e-government 13 online retailing 9 global proliferation of robots 42 public private partnership 7 tablet ownership 3 the agility of companies 14 cybersecurity 18 smartphone ownership 5 use of big data and analytics 9 software piracy 10 attitudes towards globalisation 14 knowledge transfer 10 enterprising fear of failure 9 source: (imd, 2021) 0 20 40 60 80 100 network readiness index techs humans management exposure figure 1. norwegian network readiness index in 2021 source: (portulans institute, 2021) three seas economic journal 46 vol. 3 no. 1, 2022 as can be seen, norway ranks best on the network readiness index for regulatory and legal environment, with effective existing laws and regulations on information laws, business use, and ict policy. the social aspect and technological readiness are almost identical (portulans institute, 2021). an important catalyst for 5g adoption is a stable digital electronic system. norway ranks first in online access to financial accounts. this means that there is access to currency and transactions all over the country. and the fifth generation can only strengthen and accelerate the country 's already established processes on the access side (norway ranks 9th in mobile 4g internet coverage). with the best providers such as vsat satellite broadband, idirect evolution w6, altibox fiber broadband and powerful 1000 mbps internet, it allows and covers almost 85% of the entire kingdom of norway. this satellite and fiber optic connection allows you to watch video in 1060-2040 quality, i.e., 4k. norway has a strong focus on cybersecurity, ranking 9th in the world for internet security (isp, 2021). an indicator of digital integration in the country is the digital economy and society index (desi), which consists of components such as human capital, connectivity, digital integration and digital government services (e-government). in terms of overall fixed broadband usage by home-based businesses as of 2021, norway as a whole is 90 percent utilized. fast broadband coverage is in use and covers 87% of all households. in terms of very high bandwidth fixed network coverage, norway has 74% coverage, compared to the european union, where the figure is 59% (european commission, 2021). an important aspect to focus on is the internet coverage of various types. 4g coverage is 99.9 percent nationwide, i.e. all of norway. indicators for the digital economy and society show that on an economic, societal, legal and social level, readiness for 5g is only 50%. and the network coverage of this type is 5% of the whole, i.e. only small business incubators and technopolises with smart-cities innovations are betatested. as for mobile broadband access, it is 91% in norway, compared to 71% in europe as a whole as of 2021. also in norway, public services for citizens are quite high, with a score of 86 out of 100 as of 2021. digital government services for business are very well developed in this country, with over 90% as of 2021. the share of e-government users among internet users is 94% as of 2020 (european commission, 2021). according to the digital economy and society index, norway ranks 5th in the european region. the best and most pronounced indicators are digital integration and digital public services. but there are some bad characteristics of norway 's digitalization that this index points to. cross-border online sales are only 6% according to the desi index, and e-commerce turnover is also low at 14%. large databases in industrial farms account for only 19%, and social networks for 20%. electronic information exchange is not yet fully exploited, and the country 's information capacity is high at 34% (european commission, 2021). according to the desi index, norway has a high score for smes, at least the baseline digital intensity is 82%, which is almost exactly the baseline compared to the european union, where the figure is only 60%. also the practical use of cloud networks in the economy in the tertiary sector is about 60%, indicating the digitalization of the norwegian economy. the acceleration of the use of ict for environmental sustainability is about 70%, indicating that such information and communication technologies are 0 10 20 30 40 50 60 70 80 1 human capital 2 connectivity 3 integration of digital technology 4 digital public services figure 2. digital economy and society index rankings in 2021 source: (european commission, 2021) three seas economic journal 47 vol. 3 no. 1, 2022 created and actively implemented and used in the energy sector of the country, especially in the green economy, in the alternative renewable energy sector (european commission, 2021). 3. integration of norway into the global digital space dynamic fluctuations of digital exports are influenced by a number of external and internal economic factors. in 2020, the level of digital exports reached 22.3% (the world bank, 2020). despite the low level of capital availability for new industries, norway has also fostered numerous high-tech companies with global reach, especially in video conferencing, semiconductors and web technology. names such as tandberg, pexip, energy micro, chipcon, fast search & transfer, opera software and visma and these companies have formed competence clusters across norway. they played an important role in the development of a new generation of technology startups in these industries (figure 3). norway has a positive image, which has been shaped by dynamo-institutional factors, especially norway 's image has grown in the digital subspace. the iot system, high-tech and digital exports have greatly accelerated norway 's digitalization process. to identify the close relationship between norway 's digital exports and foreign investment, we conducted a correlation analysis and calculated the multiple correlation coefficient, which is 0.581733 (table 5), indicating the absence of a significant correlation and confirming the "norwegian paradox". research and investments in norway focus on safe deep offshore oil and gas drilling and the development of energy reserve monitoring systems. advances in these areas are driving the development of shipbuilding, clean technologies, renewable energy, information and telecommunication technologies. table 5 correlation analysis of digital exports, gdp and foreign investment in norway gdp per capita digital export foreign investment gdp per capita digital export 0.738124 foreign investment 0.773051 0.581733 source: calculated by the authors according to (the world bank, 2021) the correlation coefficient between gdp per capita and the share of population with internet access was also calculated, which was 0.71392, as well as the correlation coefficient between the nri and desi indices, which was 0.937513, indicating a significant relationship between these characteristics and confirming the presence of interdependence between the indicators and the level of digital development in norway. as points of development and further effective integration of norway into the global digital space, we can suggest creating capabilities that accelerate the digitalization of business, encouraging the use of digital technology, creating new business models that include new jobs; employee functionality that includes internet skills and good computer skills to make requests and process them quickly and without much difficulty. 4. goals and perspectives of the norwegian government's digital country the norwegian government has identified the following goals for future e-policies: mobile and broadband access to growth and attractiveness. – 90% of all households will have access to at least 100 mbps, on the basis of commercial technology deployment in the market; – the long-term goal is for all households to have broadband high-speed internet access; 19 19,5 20 20,5 21 21,5 22 22,5 23 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 % figure 3. trends in norwegian high-tech digital exports, 2010–2023 source: (the world bank, 2020) three seas economic journal 48 vol. 3 no. 1, 2022 – stable online coverage where people living, working and travelling; – good electronic communications networks should be a competitive advantage for business and industry across the country; – regulations for laying broadband cable along urban district roads should be as uniform as possible; – electronic communications service providers need to have fast access to the following frequency resources to meet their needs. regarding freedom of choice for internet users, users of electronic communications should have access to internet content and programs of their choice. norway will work internationally to ensure that the internet remains open and non-discriminatory (oecd, 2021). also, in the main provisions that the norwegian government has identified to promote digitalization, it states the need for at least three competing cell phone networks. the government has also presented a strategic plan to create a favorable investment climate in the electronic communications industries so that it is cost-effective for investors to allocate financial resources (oecd, 2021). thus, the government has legislated and imple mented all direct action tools and future policy goals related to new types of ict, artificial intelligence, and fifth-generation-5g mobile and satellite communications. the best implementation of regulations, the effectiveness of which in this state is very intensive, gives grounds for the growth of the information component in the economy of the country in the era of globalization (oecd, 2021). 5. conclusions the aftermath of the covid-19 pandemic crisis should serve as a signal to countries that need to embrace digitalization. encouraging companies to move to digital entrepreneurship, investing in ict development and in digital skills are the challenges of the near future. there are two immediate implications for economic recovery from this. first, technology will move for ward faster than before. private sector spending on technology declined only briefly in 2020, but it is expected to rise sharply in 2022, with companies nearly doubling their investment in digital transformation. countries that have been able to modernize their ict infrastructure and increase digital adoption will be better prepared for the recovery phase. second, digital transformation must take place in parallel with the development of human capital and the legal framework. as technology advances, the growth of economic productivity depends on the ability of companies to take advantage of new technologies. on the other hand, legal codes must meet the requirements of the digital world and provide certain and simple rules for digital business models (e.g., e-commerce, financial technology, etc.). the readiness of the norwegian economy to implement 5g and the internet of things, the new ict at the regulatory level is quite high. but the widespread adoption and practical use of 5g in the norwegian economy is not yet ensured by some indicators of information technology, which somewhat hinders the state's accelerated implementation of the new information technology paradigm. indicators such as the issuance of high-tech patents, the density of robots and the spread of artificial intelligence are slowing the rapid adoption of the new generation of the internet. it can be concluded that the small number of concentrated large databases, the low turnover of e-commerce and cross-border online sales of high technology does not yet allow norway to proceed almost very quickly to full 5g internet coverage of its territory and water area, where the industrial innovation fish farms are located. norway has an active legal and government policy to implement 5g, a strategy designed for the long term in the coming years. currently, the coverage of this network is 5% – it is information and research centers, developments and technology parks that are testing it, so it can be said that in the next few years, norway will begin to implement this network of mobile cellular communication and broadband internet access throughout the country. to improve digital policy and the concentration of high-tech icts, it is possible to propose a number of measures that will act comprehensively and contribute to digital development. the first priority is to increase the demand for science graduates whose specialization will be related to artificial intelligence and modern internet communication technologies. training of highly qualified personnel and retraining in sectors of the economy related to digitalization. the second is to attract foreign direct investment and international expertise to create conditions for investors to build large business incubators and startups, this will improve the image and state of economic development. the third is the formation of a budget and financial opportunities for the innovation industry and the new generation of ict, the development and creation of public projects, increasing the number of technology development bases and technopolises within the program "smart sites nor way " and the internet of things "iot". the fifth recommendation would be to increase the turnover of e-commerce and the introduction of big databases in the industrial sector of the economy. sixth, the state should work on international internet power. a seventh equally important recommendation would be to continually update the digital state of the nor wegian telecommunications system. nor way is one step three seas economic journal 49 vol. 3 no. 1, 2022 away from a major 5g production, as the regulatory framework is fully effective and flexible, there is 3g internet coverage in rural areas and almost complete 4g coverage – all that is needed is a transformation and transformation of transmission lines and new equipment to make nor way a 5g country. 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https://doi.org/10.30525/2661-5150/2023-1-2 impact of economic crime on the sustainable development of the state ramaz otinashvili1, shota veshapidze2, gia zoidze3 abstract. purpose. the purpose of the paper is to study the impact of criminal business activities on public order and stability of the country. methodology. the methodological basis of the research is the theoretical and philosophical foundations of the origin of criminal business, its economic reasons, economic crime, competition, institutions. practical value. depending on the scale of distribution and the volume of sales, drug trafficking is considered to be one of the most important areas of criminal activity. criminality is a complex synthesis of legal, social, economic, political, psychological and other factors. the science of the mentioned phenomenon and its causes under the name of criminology was developed in the second half of the 19th century. however, the views were expressed by those who thought about it much earlier. the relevance of the topic. the scientific novelty of the research can be discussed in relation to the modern scientific and historical situation of the development of this research problem in the scientific community. based on this, it is new to generalize, analyze and study the challenges of foreign economic security. it is important to reveal the mentioned trends and to develop recommendations in the direction of overcoming and perfecting the new challenges of economic security. practical implications. there is no lack of relevant sources in the world scientific literature on specific research issues of criminal business. at the same time, in the modern stage of globalization, in today's changed conditions, it is important to comprehensively examine the domestic and foreign economic security priorities of the country. expected results of the study. to reveal the modern trends and priorities of ensuring the internal and external economic security of the country, to identify the existing challenges and to determine the optimal ways of overcoming them. key words: business, crime, criminology, competition, institutions. jel classification: k14, k42, o17, o43 1. introduction the concept of national security of the country, based on the priority of protection of national interests, determines the threats, risks, challenges faced by the country and establishes the main directions of the national security policy. from these directions, together with political, social, demographic, legal directions, it is important to ensure the economic security of the country. transnationalization and globalization of business create a fertile ground for the use of international relations for criminal purposes, which is facilitated by differences in legislation of different countries, availability of cheap economic resources, ease of money laundering in offshore zones, etc. the dynamics of guilt depends on the socio-economic conditions of society, cultural traditions, national identity, religious views, etc. in other words, its "roots" come from the negative social conditions of society. publicity and open statistics are necessary for crime detection and warning measures: first of all, research into its causes. a healthy lifestyle, moral and material well-being in the family significantly reduces the social factors that cause guilt. criminality has a long history in georgia as well as in other countries. in a short period of time, criminals have acquired considerable financial resources and improved their organization. if in the past there was mainly violent crime, today there is an impressive variety of crime: drug trafficking, smuggling, arms trafficking, gambling is slowly being legalized, prostitution is taking three seas economic journal 11 vol. 4 no. 1, 2023 on hypertrophic forms, and especially cybercrime has increased. as long as the unemployment rate in the country is high, the trend of increasing crime will always be relevant. criminal activities cause irreparable damage to public order and stability of the country. it is a special form of socialization with specific values. it has high adaptability and self-organizing ability, is strict within its own structures, easily establishes the necessary connections with the corrupt state apparatus, and thus poses a significant threat to the country 's national security. despite many attempts to estimate the global extent of crime, it is still impossible due to its complexity. the information is always incomplete. as researchers of this problem point out, an important assessment that can be made about crime is that it is constantly increasing in the world. for example, in the united states, the annual loss due to economic crime is about 300 billion usd. (gardner, 2022) the total cost of economic crime in france is twice the total budget of the ministry of the interior. as an antisocial act, crime involves a complex synthesis of legal, social, economic, political, psychological, and other factors. therefore, all these public disciplines are the object of research. 2. literature review the study of the nature of guilt is mainly the arena of representatives of two directions. the first school considers guilt as a biological phenomenon. the second as social. there are also attempts to combine these two approaches. (dubinin et al., 1989) the scientific study of the criminal world is an interesting topic. mankind has always been troubled by the dilemma: why does a person commit a crime? when the law is so strict and the criminal has already tested it. (beccaria, 2016) the science of crime and its causes under the name of criminology was formed in the second half of the 19th century. however, the views were expressed by those who thought about it much earlier. the first theoretical discussions in this field can be found with plato (mackenzie, 1981) and aristotle (engle, 2013). thinkers such as voltaire, diderot, locke, montesquieu and others paid great attention to this problem. (kent, 2002) not even famous writers hugo, dickens, dostoevsky, javakhishvili and others avoided this problem. (otinashvili, 2021) the anthropological school of law, whose founder was the italian psychiatrist cesare lombroso (1835–1909), made a great contribution to the development of the theory of guilt. the philosophical basis of his theory is a combination of social darwinist ideas and positivism. according to lombroso, guilt is as natural a phenomenon as human conception, birth, sickness, and death. (bretherick, 2019) however, he later admitted that it depends to some extent on the environment. in the works "criminal man" (lombroso, 2006) and "crime, its causes and remedies" (lombroso, 1911), lombroso claims that a person is born a criminal. such people are characterized by specific anthropological, physiological and psychological signs, peculiar appearance, look, etc. hence the famous saying: "eyes and face are the mirrors of the human soul". lombroso considered treatment, permanent isolation and even physical extermination as measures to prevent guilt. (knepper and ystehede, 2013) these ideas gained state recognition under the conditions of fascism. lombroso's obviously reactionary views were tried to be moderated by his students and followers. e. ferri – the author of the penal code of fascist italy, identifies both social and anthropological factors that contribute to criminality and considers criminality to be a disease. (ferri, 1929) in the second half of the twentieth century, biological theories of guilt are increasingly combined with cultural, psychological, and other types of research. the theory of hereditary predisposition to guilt has gained considerable acceptance. according to the representatives of the mentioned school (o. lange, e. geyer, o. kinberg), since many mental traits are passed on to the offspring, the same is characteristic for the tendency to crime. (hannum, 2023) the psychoanalytic theory of sigmund freud and his followers is quite popular. freud views guilt as innate, unconscious instincts and habits that are deeply embedded in the human psyche and are primarily sexual in nature. (mcleod, 2018) for the first time, scientists and statisticians began to study the social positions of guilt. the famous belgian sociologist a. kettle studied trends in the prevalence of crime by gender, age, place and time, paying attention to their relationship with various aspects of social existence. (kettles, 2004) three seas economic journal 12 vol. 4 no. 1, 2023 it is noteworthy that the studies of french scientists p. dupont and j. brosseau, who saw the causes of guilt mainly in social existence. based on the analysis of statistical data, dupont came to the conclusion that the number of crimes committed each year should be approximately the same, since there are common and constant causes of crime. (balhara, 2021) this was the basis of the social theory of the "eternity of guilt" developed in the studies of e. durkheim and n.d. sergeyevsky, and in modern times in the works of p. solas and m. kleinerd. according to them, it is impossible to imagine a society without guilt. (harrington, 2021) the representatives of the sociological theory criticized the biological theories and pointed to them to carry out reforms. however, they discussed the causes of guilt less in connection with the trends and processes of social development. as a result, the representatives of the sociological school classified the causes (factors) of guilt (see table 1). table 1 classification of the causes of guilt causes of guilt examples 1. social unemployment, wages, prices, etc.; 2. individual gender, age, race, etc.; 3. physical-geographical environment, seasons, climate, etc. 4. cultural family type, social institutions, traditions, etc. source: compiled by the authors it is worth mentioning the research of the outstanding american scientist e. sutherland, who developed the theory of "differential association", separating social factors, physical and physiological factors (seasons, hereditary diseases, physical defects, age, sex, etc.) from cultural factors: family type, social institutions, traditions, and so forth. (sutherland, 1983) finding many contradictions between the mentioned factors and their manifestations, sutherland came to the existence of "differential association'', by which he meant recognition of a part of values by a person and neglect of a part. sutherland's research on the analysis of the so-called "white-collar" criminality of the ruling class (elite) brought him special recognition. modern criminological science increasingly tends to the social origin of criminality, since it consists of specific acts of human social behavior. these acts represent a deviation from the moral and legal norms established by society. in general, the relationship between the biological and the social began in the process of the long formation of man as a social being. if at the initial stage the natural-biological factors were decisive, after the development of public relations the social factor becomes more and more important. a person is formed by socio-psychological signs throughout his life and work. he establishes contacts with society, learns and assimilates norms of behavior, cultural values, new requirements, interests and aspirations are constantly emerging. in western countries, the economic theory of crime has existed for more than five decades. its origin is associated with the name of the famous american economist, 1992 nobel laureate gary becker. in his 1968 paper "crime and punishment: an economic approach". (becker, 1968) he formulated the main principles of the neo-institutional concept. a rational subject participating in business relations, as a result of calculating possible costs, chooses the type of activity that brings him the maximum prosperity. becker's publication seemed to be a light at the end of the tunnel. this theory was widely recognized and developed. today it has many followers. the problems of crime have been addressed by such luminaries of modern economic theory as m. friedman (nobel laureate 1976), m. buchanan (nobel laureate 1986), j. stiglitz (nobel laureate 1998) – (stiglitz et al., 2010), etc. in general, according to neo-institutional economic theory, crime should be viewed as a kind of risky business. the criminal behaves like an economic agent, trying to use the human capital (mental and physical) at his disposal as efficiently as possible. according to this paradigm, an individual always and everywhere makes a rational choice to maximize his or her personal benefit, choosing the action that is most profitable for him or her. modern society is an association of such individuals, whose members enter into relationships with beneficial interests. the conception of the neo-institutional concept in the usa was facilitated by the lack of cultural traditions in this country. according three seas economic journal 13 vol. 4 no. 1, 2023 to this theory, the model of "homo economicus" created by adam smith is universal and can be used not only in economics, but also in any sphere of public life, family, politics, law, etc. 3. methodology the sciences of economics and law are getting closer to each other. the subject of their study is, on the one hand, the role of legal institutions in the economic development of the country, and, on the other hand, the importance of personal motivation in the perfection of legal norms. on this basis, new disciplines were created: the theory of property rights, economies of crime, economies of low, economies of organization, etc. in developed market (mixed) economies, the role and importance of business is extremely large. nowadays, healthy conditions for business development determine the level of economic development of any country. therefore, business becomes an integral part of the country 's economy. with the help of business, it is possible to discuss the extent to which the market mechanism and agricultural methods are or have been introduced into the country 's economy. therefore, the methodological basis of the research is the theoretical and philosophical foundations of the origin of criminal business, its economic reasons, economic crime, competition, institutions. in addition, attention is given to general scientific economic, quantitative and qualitative research methods, especially expert studies and evaluations. 4. results and discussions delinquency is a historically variable phenomenon. it changes quantitatively and qualitatively in accordance with changes in the organizational, governmental, socio-aesthetic, ideological and other objective conditions of society. in the course of time some forms of criminal activity die out and new ones appear. for example, in the soviet system speculation was considered one of the serious economic crimes. in just 25 years (1966–1991), 1 million people were convicted. (kudryavtseva and eminova, 2009) today, guilt is one of the types of trading business. despite the existing differences in the world, including economically developed countries, there is an absolute and relative increase in crime. according to the united nations, crime in the world is growing by 56% annually, while the population growth rate is 23%. (luneev, 2004) the sciences of economics and law are getting closer to each other. the subject of their study is, on the one hand, the role of legal institutions in the economic development of the country, and, on the other hand, the importance of personal motivation in the perfection of legal norms. on this basis, new disciplines were created: the theory of property rights, economies of crime, economies of low, economies of organization, etc. in the work "the returns to burglary ", published in 1972 (sesnowitz, 1972), the american economist michael sensowitz provides a general theoretical model for calculating the income of criminal business and considers the fact of specific theft. according to the author, this is a high-risk business, the income of which depends on various factors and is expressed by the formula: r = s – pd, – r – (return) – thief 's income return; – s – (stolen) – amount of stolen goods; – p – (probability) – the probability that the thief will be caught and punished; – d – (dollar) – expenses incurred to punish a thief. this formula is universal and can be used to determine the income of any type of crime (tax evasion, corruption, bank robbery, drug trafficking, etc.). analyzing a specific case, sensowitz obtained the following result: the average annual profit of an american thief amounted to a negative amount of "200" dollars. but this is in the usa, where the remuneration of law enforcement structures and, accordingly, the work is at an appropriate level, which increases the importance of the p-value. if there is corruption in the law enforcement structures for various reasons, the value of the quantity p decreases and the criminal business can turn out to be quite profitable. a separate direction of the theory of guilt is the economics of organized crime (economics of organized crime), whose pioneer is t. c. schelling (usa). (schelling, 1971) it is well known that crimes are committed not only by random individuals, but also by three seas economic journal 14 vol. 4 no. 1, 2023 criminal groups of various sizes and stable quality. as a social system, organized crime has a closed, rationally structured bureaucratic management structure with a strict hierarchy of criminally oriented roles and functions. it permeates all spheres of public life: business, politics, law enforcement, education, mass media, sports, etc. cybercrime should be mentioned separately, as it has reached unprecedented proportions in the context of the development of today 's information technologies. however, this problem does not represent the research area of this article. (veshapidze et al., 2022) depending on the scale of distribution and the volume of sales, let's consider the drug business separately as one of the large branches of criminal business. as it is known, the market economy has a very complex, contradictory nature. the main thing for it is the demand for goods, if it exists, regardless of whether it brings benefits to society or not, the market produces it. it is the same with drugs, only legal prohibition cannot change the technological processes without promoting the socio-economic environment. the global scale of the drug business allows us to consider it as a special field of criminal business. according to un experts, the annual turnover of the drug market reaches $900 billion, which is 10% of international trade and exceeds the volume of global car sales. (netflix, 2020) manufactured narcotics can be divided into three main groups: natural or herbal. this includes: – drugs derived from natural products: hemp, cocaine, poppy, etc. – semi-synthetic. made chemically, but using natural impurities: heroin, morphine, etc.; – synthetic. produced only by chemical processes: amphetamine, etc. an elementary laboratory with a set of school chemistry utensils is sufficient for drug production. the wholesale price of the country manufacturer is quite low. however, the retail price in the consumer country is several times higher. according to the data of the investigation department of the british customs, the price of heroin changes as follows: if 1 kg costs 2,000 dollars in pakistan, its price increases to 15,000 dollars in turkey, to 30,000 dollars in the netherlands, and to 50,000 dollars in england. this is only the wholesale price, the retail price is 150,000 dollars. (world drug report, 2010) price increases are not only due to the cost of doing business, and they have specific causes. there are illegal agreements and contracts on the conditions of movement. a normative order is formed, which is established not by legal laws, but by market practice and illegal law. the approach to the key market increases the risk of activity, which requires high costs. because of the delay, for the addict to be without medicine is equivalent to losing everything, so he agrees to pay the increased amount. high income and big money are sources of corruption. exploitation of prohibition is the food of the official. moreover, the greater the prohibition, the greater the "amount to be paid". a drug is a specific good that itself creates a market demand. it needs no advertising. a person who tries it several times becomes addicted. as a result, it is difficult to fight drug addiction in the conditions of a free local market and requires joint efforts of the countries of the world. in georgia, as in the entire post-soviet space, the problem of crime is very relevant, but it has not been properly studied scientifically (from an economic point of view). until the beginning of the 20th century, such activities were limited to so-called traditional crimes such as theft, robbery, etc. criminal groups kept their distance from the authorities. after that, the process of "getting closer" to them began step by step. during the communist rule, the one-party system gave absolute power to the leaders of the communist party, which extended not only to the political, but also to the economic and legal spheres. however, totalitarian regimes are characterized by a low level of fascist, religious-fundamentalist, communist criminality. political and ideological control by the state prevented the growth of crime. but after stalin's death, totalitarian control weakened. as a result, the average annual growth rate of crime in 1956–1991 was 5.03%, while the annual population growth in the same period was 1.1%. thus, the growth of crime was 4 times higher than the growth of population. (luneev, 1991) since the 60's of the last century, completely new structures of organized crime have been formed, which have been approaching the state management elite since the 70's. in the 1980s, many areas of public life were criminalized. all this happened before georgia's formal and three seas economic journal 15 vol. 4 no. 1, 2023 official transition to a market economy. at the beginning of the 1990s, a significant part of the population was characterized by a high propensity to commit economic crimes, which unfortunately was not taken into account during the reforms. 5. conclusions this study identifies the remaining challenges to the country 's internal and external economic security and provides the necessary tools and recommendations to address them. in the modern world, the socio-economic development of any country depends on both internal and external factors. therefore, in the conditions of modern socio-economic development, international economic relations are one of the most important factors of sustainable development of the country. it contributes to the acceleration of scientific and technological progress, rational use of natural resources, globalization of the world economy, exchange of industrial experience, accelerated development of international economic relations and world trade. the main goal of the development of the world economy is the maximum utilization of the advantages of the common economic potential of the world community. at the same time, it is necessary to realize that countries play different roles in this process, and the international importance of any country or its individual region is based on the existing natural resources, the dynamics of economic development, their availability, its place in the world system of production of goods and services, and the existence of financial resources. during the transition period, the criminal underworld accumulated considerable capital in a short period of time. its organization improved and grew. not only the rate of growth of economic crime was noticeable, but also its transition to a new level. if before it was mainly violent crime, the share of distributed crime increased: drug business, smuggling, arms trade, gambling was gradually legalized, prostitution took hypertrophic forms. if unemployment is high in the country, the trend of increasing crime will always be relevant. the dynamics of delinquency (in a broad sense) depends on the economic and social conditions of the society, cultural traditions, national identity, religious beliefs, etc., in other words, the roots of delinquency come from the negative social conditions of the society. publicity and open statistics, especially the study of their causes, are necessary to identify culpability and take preventive measures. many countries have traditionally published crime statistics in full. others publish them partially, some distort the data, and some prefer to remain silent. overall, crime in a country depends mainly on the socio-economic environment. a healthy lifestyle, moral and material well-being in the family significantly reduces the social factors that cause guilt. therefore, the systematic understanding of international economic relations is necessary for the country 's integration into the world economic community. that is why it is important to find out the accompanying trends of the global processes of the modern world economic space and their impact on the country. references: aberbach, d. 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(2023). importance of healthcare economy on sustainable development of the country. access to science, business, innovation in digital economy, 60–70. received on: 27th of february, 2023 accepted on: 22th of march, 2023 published on: 28th of april, 2023 three seas economic journal 18 vol. 4 no. 1, 2023 1 kyiv national university of technology and design, ukraine (corresponding author) e-mail: pashbush@gmail.com orcid: https://orcid.org/0000-0001-5257-9104 researcherid: aae-5238-2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-3 peculiarities of the functioning of cross-border tourism clusters in ukraine pavlo bushuiev1 abstract. in the article the author highlights the essence and specifics of the functioning of cross-border tourist clusters. accordingly, the purpose of the study was to determine the specifics of the functioning of cross-border tourist clusters in ukraine in theoretical and applied aspects. methodology. system analysis and especially scientific methods: systematization, generalization and verification of theoretical knowledge during the study, became the methodological basis of the study. thus, in particular, the article systematizes and summarizes the issues of functioning of cross-border tourist clusters. the author notes that the formation and development of the tourist cluster will allow to use the potential of the regional scientific complex, recreational opportunities of the region, to solve the problem of the lack of investment resources and the development of innovative activities. the essence of cross-border cooperation in the field of tourism is identified, general european trends and experiences in the development of tourism clusters are given. the study emphasizes that the creation of tourism clusters makes economic sense, related to the coordination and extraction of additional benefits within the distribution network of services in the destination. as the tourism sector develops, the cluster model is increasingly used as a source of adaptive management solutions by individual economic entities. among the main results and proposals it was established that joining efforts within the framework of the cluster strategy of interregional development is a useful and favorable action for expanding the geography of tourist trips for all types of tourism, which will form more promising alternative directions, will help not only to maintain, but also to increase the flow of tourists by increasing the availability and options of choosing a wider range of resources, increase the length of stay of tourists in the territory of the region, reduce customs formalities and the impact of other barriers, which would allow to maximally reduce the time and costs for free movement of tourists and develop socio-cultural and economic-political relations between countries, which will be extremely necessary after the stabilization of the situation in ukraine and the end of hostilities. key words: tourist claster, tourist destination, tourism product, service sector, cross-border tourist clusters. jel classification: l83, e69 1. introduction the competitiveness of a tourist destination manifests itself first of all in the territorial and sectoral organization of the economic space, which is subject to detailed analysis by potential investors. taking into account the international experience of territorial organization, the concept of clusters is, first of all, a modern approach to stimulate the increase of competitiveness of countries through the prism of their territories and, as a result, their economic rise. it should also be noted that the structural cluster policy should be aimed at creating favorable conditions for the formation of cluster associations. when considering cross-border tourism projects, it is necessary to focus on the provision of a tourist product that is competitive for tourists from neighboring countries, in order to satisfy the needs that this structure is aimed at. it should be noted that the theoretical foundations of cluster development include a number of stages, the most important of which are social and institutional approaches, the neoclassical school of economics and the concept of m. porter. (porter, 2003) the provisions of neoclassical economics formed the concept of network interfirm relations. it is necessary to note the industrial clusters of a. marshall three seas economic journal 19 vol. 4 no. 1, 2023 (marshall, 1922), "according to which he discovered the reasons for higher productivity of a group of enterprises of a certain industry located in a certain territory ". the development of the theory of the cluster approach is again noted in the works of m. porter, who stated that "the most internationally competitive firms of the same industry are usually systematically present in different developed countries and tend to be concentrated in the same country and sometimes even in the same region of the country ". (porter, 2000) in the scientific literature, issues related to the theory of clusters with its application to tourism and cross-border regions in the field of tourism within ukraine are highlighted, in particular, in the works of such domestic scientists as z. gerasimchuk and o. lyutak (gerasimchuk, lyutak, 2010), at the same time, the question of the specifics of the functioning of cross-border tourism clusters in ukraine in modern conditions remains extremely relevant. the purpose of our research is to determine the specifics of the functioning of cross-border tourism clusters in ukraine in theoretical and applied aspects. 2. a general approach to understanding clusters the cluster concept goes beyond "simple" horizontal networks in which firms operating in a common market for finished products and belonging to an industrial group cooperate in areas such as research and development, demonstration programmes, joint marketing or purchasing activities. clusters largely function as networked (vertical and/or horizontal) structures of combined industries, composed of heterogeneous firms specialised in the production of a specific product, service or database required by the network. by establishing rigid boundaries for industries and economic sectors (often based on some statistical parameters), the traditional research approach does not take into account the importance of establishing relationships and sharing knowledge in the production process, within the network structure. in contrast to the traditional sectoral approach, which focuses on strategic groups of similar firms with a similar position in the network structure, the cluster concept offers such a perspective on economic problems, which is more in line with the modern view, based on taking into account the interaction of innovation theory with the nature of market relations. the cluster concept can be seen as an alternative to the traditional sectoral approach in economic market research. (cuhna, 2005) while the sectoral approach focuses on horizontal relationships and competitive interdependence, i.e., relationships between direct competitors with similar activities, the cluster approach emphasises the consideration of vertical relationships between heterogeneous firms and their symbiotic interdependence. the main differences between the cluster approach and the traditional sectoral approach are shown in table 1. table 1 key differences between cluster and sectoral approaches cluster approach sectoral approach considers strategic groups of companies in network structures with complementary heterogeneous companies considers groups of companies with similar network structures attracts suppliers, consumers, producers of goods and services, specialised institutes focuses on finished goods manufacturers brings together a number of related industries that share common technologies, expertise, information, resources, channels and customers focuses on direct and indirect competitors most participants are not direct competitors, but share common problems and needs indecision in organising cooperation with competitors a wide range of improvements in areas of common interest that will boost productivity and competition narrow branch approach a forum for more constructive and effective dialogue between government and business dialogue with the government is usually aimed at obtaining subsidies, protectionism and limiting competition. looking for synergies between new associations searching for the direction of strengthening the diversification of companies under the existing conditions three seas economic journal 20 vol. 4 no. 1, 2023 it is worth noting that the cluster is described as "a sustainable territorial and sectoral partnership based on an innovative programme for the introduction of advanced innovative production, management and engineering technologies to increase the competitiveness of its participants". (alexandrova, 2007) according to m. porter's theory, a cluster is "a group of geographically contiguous, interdependent firms and related organisations that are active in a particular field and are characterised by a commonality of activities and complementarities". (porter, 2000) companies in a particular cluster can act as suppliers of products, components or specialised services, infrastructure companies, research institutes and other companies that complement each other in order to strengthen the competitive advantages of each of them and of the cluster as a whole. the academic literature identifies three ways in which clusters affect competition: – by increasing the number of firms and industries included in the cluster; – by increasing innovative activity and, as a result, the productivity of firms; – by stimulating the development of new businesses that support innovation and extend the boundaries of the cluster. in the course of his research, m. porter came to the conclusion that clusters play a leading role in the world market, which is explained by the fact that when one of the cluster participants succeeds, the successful outcome spreads to its other participants and even to consumers, suppliers and competitors. (porter, 2003) thus, the cluster approach contributes to the development of individual territories, industries and enterprises, and the state stimulation of the formation of clusters in the regions will allow to achieve a significant effect on their socio-econo mic development, increase the innovative potential, as well as the competitiveness of enterprises. the cluster approach as a tool of economic structuring allows to ensure an optimal combination of interests, territories and enterprises, as a result of which regional specialisation is formed. the presence of clusters is therefore one of the most important factors in creating competitive advantages for regions. it is cluster structures that determine competitive success in certain industries and thus contribute to the development of regions. 3. differences in tourism clusters current trends in the sphere and sphere of services in ukraine allow us to note the presence of centres of formation of potential opportunities for development of recreational activities, among which should be considered the potential of natural resources, growth of demand for these services, expansion of the sales market, the possibility of changing the specialisation of services depending on demand, development of new market segments; creation of high-quality services. in particular, the regions of western ukraine – volhynia, prykarpattia, carpathians, zakarpattia – can become such centres. participants of the tourism cluster can be tour operators, passenger and cargo transport companies, tourist accommodation facilities, producers of food products, souvenirs, medical cosmetics and others. at the same time, the formation and development of a tourism cluster will allow to use the potential of the regional scientific complex, recreational opportunities of the region to solve the problem of lack of investment resources and development of innovative activities, because as the world experience shows, clusters attract new investments, especially foreign ones. it is also necessary to take into account the peculiarities of the creation of tourism clusters, which distinguish them from industrial clusters: – the specificity of the production of tourist products; – the need to take into account the geographical characteristics of the region where tourism services are provided; – availability of the necessary amount of unique natural resources; – sufficient level of development of small and medium-sized enterprises in the region of cluster formation as the main participants of the tourism cluster. in the structure of the tourism cluster, it is common to distinguish four main sectors: 1) production of tourism services; 2) service sector; 3) auxiliary sector; 4) the tourism cluster livelihood sector. (liu, yang, 2013) the first sector (production of tourism services) comprises enterprises that directly produce a tourism product. these are primarily tour operators and travel agents. they include hotels three seas economic journal 21 vol. 4 no. 1, 2023 and restaurants (hotels and restaurants), companies that transport tourists (railways, airlines, etc.), companies that organise tourists' leisure time (museums, theatres, etc.), entertainment facilities, and nature conservation facilities (protected areas, national parks, etc.). the second (service) sector includes tourist educational institutions, insurance companies, financial institutions, etc. the third (auxiliary) sector comprises three main elements: enterprises producing tourist goods, souvenirs, etc.; polygraphic and cartographic organisations, television and radio companies; state authorities, regional tourism institutions. the fourth sector links the different sectors, ensuring their interaction and joint action. the following advantages of the tourism cluster are usually emphasised: – mutually beneficial cooperation develops in the cluster, involving the exchange of information, technologies and experience; employee qualifications increase; – more efficient use of resources; – the attractiveness of the investment area increases; – the range and quality of tourist services is increased; – cluster members have more opportunities and higher incomes; – new jobs are created by involving workers from different types of economic activity in the service of tourists. (carrie, 1999) at the same time, the implementation of cluster initiatives, especially in the field of tourism, attracts investment funds and, as a result, the development of innovative technologies and approaches directly in the recreation and tourism complex. in general, the main advantage of the cluster approach for an enterprise is the reduction of production costs due to the effectiveness of the implementation of joint investment projects, the improvement of personnel qualifications due to joint programmes, and the possibility of using the results of scientific research. as a result, it is possible to speak of an increase in the financial stability of leisure enterprises and their investment attractiveness. 4. european experience and main prospects for the creation and functioning of crossborder tourism clusters in ukraine cross-border clusters can be defined as groups of independent enterprises and related institutions that are geographically concentrated in a crossborder region. at the same time, they specialise in different fields but are linked by common technologies and skills, cooperate, compete and complement each other, and join together to implement joint projects or produce joint products. ultimately, this allows for synergy and network effects, diffusion of knowledge and skills. (solvel, lindqvist, ketels, 2006) the european experience shows that cross border partnership creates noticeable advantages for cross-border regions and allows to actively involve public, private and third sector organisations from both sides of the border, especially in the field of tourism. as a rule, cross-border clusters are formed in conditions of already established cross-border relations between business entities of border territories of neighbouring countries and their effective activity is based on mutually beneficial cooperation of business entities, authorities, non-profit and public organisations of these territories. when initiating the creation of cross-border tourism clusters, it is necessary to carry out a diagnosis of the priority of tourism in each of the participating countries. in addition, the diagnosis should include a favourable geographical location and positive dynamics of tourist flows in recent years. from the european experience, it is possible to mention the following countries that apply the cluster model of tourism organisation italy, france and norway. for example, in norway, clusters are developing in the field of marine economy. in france, the tourist cluster "nice" is visited annually by several million tourists, which is almost 1% of the world trade turnover in the field of tourism. similar models operate at a high level in greece, scotland, belgium, spain and ireland. in italy, the cluster organisation of tourism has the highest level of scientific justification. for example, in some regions of the country, specific conditions have been identified that form the basis for their creation: conditions for the development of several types of tourism, significant tourist resources, the importance of the tourist zone, etc. examples of clusters in italy: the tourist system "lake trasimeno" (umbria), "salinuntina baths" (sicily), "adriatic sea and coast", "cities of art, culture and business". (emilia-romagna) the development of cross-border tourism makes it possible to activate tourism enterprises three seas economic journal 22 vol. 4 no. 1, 2023 located near the borders and to ensure a higher level of capacity utilisation of accommodation facilities in the cross-border region thanks to the creation of a complex tourist product. (gerasimchuk, lyutak, 2010) cross-border tourism clusters, in contrast to the tourism and recreation system, include not only interacting entities (economic entities, mana-gement bodies) and their mutual links, but also all resource potentials used in interaction (natural, labour, production and social infrastructure). at the same time, the formation of cross-border tourism clusters is closely linked to the specifics of the territorial recreation system, the structure of which is shown in figure 1. the figure shows the main elements and relationships of the territorial recreation system. it distinguishes a part of the population directly related to the territorial recreation system – recreationists, i.e., holidaymakers who directly participate in recreational activities. the recreational environment includes resources (natural, cultural, economic) that ensure the functioning of the territorial recreational system. the main elements of the interaction of the territorial recreation system are: recreational activities, population and infrastructure (solvel, lindqvist and ketels, 2006). at the same time, the internal connections between these components are the closest, and their intensity determines the level of system development. to a certain extent, this structure is the basis for the formation of a cross-border tourism cluster. it is connected with the possibility of using the unique recreational base of different regions, a network of multi-specialised local specialised clusters, various regional ethno cultural and historical resources. in our opinion, a cross-border cluster can be considered as a geographically concentrated network of enterprises cooperating in complementary sectors and supporting organisations in the cross-border regions of ukraine. territories where clusters are formed become leaders of national economies and their foreign economic relations. for the real development of the cluster, it is necessary to create communication platforms (information centres) for those potentially interested in participating in the business of the respective cluster. in addition, as mentioned above, cluster initiatives stimulate the inflow of foreign investments and large international companies to the region, which usually prefer to invest in those regions and countries where clusters have already been formed in the necessary industries, or at least there are prerequisites for their formation. domestic and foreign investors interested in investing in the cluster region can get information about the region in the tourism cluster information centre and receive feedback without barriers based on low information loss with high quality of its transmission, and as a result the investor can become a participant of the tourism cluster. clusters will promote the creation and growth of incubated innovative companies. thanks to clustering, the region's investment and innovation opportunities grow. 4. conclusions to sum up, after the end of the war on the territory of ukraine caused by the russian military invasion and the stabilisation of the security situation, large-scale reconstruction works and serious economic reforms will be necessary to ensure sustainable development and the formation of a new image of the country in the future. people recreational activity use of recreational resources positive recreational effect infrastructure of the recreational region recreational environment figure 1. structure of the territorial recreation system three seas economic journal 23 vol. 4 no. 1, 2023 international practice shows that tourism can recover quickly after the end of hostilities and that new initiatives can lead to post-conflict recovery, especially when infrastructure improvement projects are developed. at the same time, it is necessary to open a critical space for interaction and development, create the most favourable conditions for business, effectively involve and expand the rights and opportunities of the population, provide entrepreneurial opportunities for the poor, in order to avoid the emergence of social causes of conflict. it is quite possible that tourism in ukraine will eventually play not only an economic, but also a socio-political, foreign economic and peaceful role in the postconflict reimaging and branding of the territory. references: alexandrova, a. yu. (2007). tourist clusters: content, boundaries, mechanism of functioning. modern problems of services and tourism, 1, 51–61. carrie, a. (1999). integrated clusters – the future basis of competition. international journal of agile management systems, 1(1), 45–50. cunha, s. k. (2005). tourism cluster competitiveness and sustainability: proposal for a systemic model to measure the impact of tourism on local development. brazilian administration review, 48–52. gerasimchuk, z. v., & lyutak, o. m. (2010). regional policy of cross-border cooperation: mechanism of formation and implementation. lutsk: nadstyria. kuah, a. t. (2002). cluster theory and practice: advantages for the small business locating in a vibrant cluster, cluster theory and the small business. journal of research in marketing and entrepreneurship, iv(3), 206–228. liu, q., & yang, q. (2013). research on tourism industrial cluster from the perspective of network platform. interdisciplinary journal of contemporary research in business, 4(11), 25–29. marshall, a. (1922). principles of economics: an introductory volume. london, macmillan and co., 871. porter, m. (2003). competition. moscow, 496. porter, m. (2000). location, clusters, and company strategy. oxford: oxford university press, 484. solvel, o., lindqvist, g., & ketels, ch. (2006). the cluster initiatives greenbook, 312. received on: 24th of february, 2023 accepted on: 29th of march, 2023 published on: 28th of april, 2023 three seas economic journal 8 vol. 2 no. 4, 2021 corresponding author: 1 v. n. karazin kharkiv national university, ukraine e-mail: t.alekseeva@karazin.ua orcid: https://оrcid.оrg/0000-0002-9805-5143 researcherid: n-2888-2016 2 v. n. karazin kharkiv national university, ukraine e-mail: hoangthikieutrinh21@gmail.com orcid: https://orcid.org/0000-0001-9115-2234 doi: https://doi.org/10.30525/2661-5150/2021-4-2 psychological features of the negotiation process in the 21st century tetiana aleksieieva1, hoang thi kieu trinh2 abstract. the aim of the article is to study psychological characteristics in the context of the negotiation process as one of the mechanisms of diplomacy in the xxi century. research is based on an understanding of the main psychological factors of the participants and their influence on the results of negotiations. the success of the negotiation process depends on understanding the goal that the participants set for themselves, their general model of behavior, and the technology of negotiation. methodology. the study used the methodology of interdisciplinary science. the authors used methods such as analysis and synthesis. an analysis of information from various sources based on psychological aspects of the negotiation process was conducted. the results of the analysis of psychological features of negotiations show that the psychology of participants is one of the integral factors influencing the results of conflict resolution and the negotiation process itself. negotiators may view negotiations as a means of winning or treat them as a means of analyzing a problem together with a partner and finding ways to solve it. from the psychological point of view, it is very important to take into account the fact that at the preparatory stage of negotiations there are already certain ideas (stereotypes) about partners, connected with cultural and/ or ethnic features. careful preparation for negotiations and the study of the characteristics of the participants in terms of their psychology will allow for a successful conclusion of the negotiation process. future negotiations can only be successful if the parties carefully analyze the situation. misunderstandings between the parties can lead to a breakdown in negotiations or an unfavorable result. practical implications. the results of the analysis of the psychology of participants in the negotiation process and identification of their characteristics can be used as a theoretical complement to the research in the context of psychological communication, causes and ways to resolve conflicts through negotiations. value/originality. the study of psychological peculiarities allows us to better understand the partners in negotiations in order to complete them successfully with the most favorable con-ditions for all participants in the negotiation process. key words: psychology, international negotiations, conflicts, mediation, manipulation, stereotypes. jel classification: d91, f51, j52 1. introduction one of the defining features of the globalized world in the 21st century is international negotiation, in which diplomacy occupies a special place. a detailed analysis of the negotiation of agreements in the course of diplomatic activity suggests that negotiations between actors are always present even in times of war, at some point even when violent confrontation arises. representatives of the different sides will try to find a negotiated solution to the confrontation (iragorri, 2003). negotiation, mediation, and the ability to understand potential disputes before they arise to prevent them are essential skills in this fast-paced and complex global environment (aquilar, galluccio, 2008). human psychology is an important factor to consider when analyzing the context of international negotiations. cognitive psychologists emphasize the study of thoughts and beliefs related to emotions, moods, experiences, behaviors, and events in people's lives. 2. psychological characteristics of negotiators the effectiveness of modern negotiation communications, including international communications, this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 9 vol. 2 no. 4, 2021 depends to a large extent on the ability to take into account the psychology of partners. in defending their positions in negotiations, partners constantly influence each other, including those of a psychological nature (rostetska, 2015). various psychological factors act as agreeing factors during the stage of discussing proposals, arguing them, developing solutions and discussing them, determining the final parameters of the agreement, etc. a misinterpretation of the participants' emotional reactions (verbal or nonverbal) can lead to misunderstandings and change the course of the negotiation process (makeyenko, 2019). observing all the participants of the negotiation process, it is necessary to note their uniqueness and individuality. this is manifested in the peculiarities of adaptation to the environment, expression of feelings towards others, mobility, speed of speech, reaction to various life situations, etc. (kaidalova, pliaka, 2011). successful negotiations, in terms of psychology, sometimes depend on the form of negotiations and the behavior of the participants in a particular situation. sometimes the results of a one-on-one meeting resolve more important issues than a group discussion. the negotiator must be careful not to fall into the trap of behavior in which he usually feels confident and natural. there is always a risk that the personal point of view of the negotiator will be involved in the negotiation process, and then success becomes a matter of principle, and the principle itself becomes more important than the end result. the ability to keep one's full attention on certain important objects and resistance to emotional disturbances allows the negotiator to remain calm in a crisis situation. paying close attention allows the negotiator to be as focused as possible on the main goals of the negotiation without noticing any visual distractions. negotiators are empowered in negotiations because this way they can determine which attention of their interlocutor is a priority in the negotiation and adjust their conversation style accordingly. if one negotiator reacts involuntarily and automatically, he or she is usually active and instinctively driven by emotion. on the other hand, the person who does everything slowly and unhurriedly, for the most part, has strong self-control over actions and emotions. therefore, when two different personality types meet in a negotiation, the latter must make enough effort to be more active in perceiving the vivid emotion-al background of his opponent or colleague. thus, the professional negotiator gets more opportunities for a better understanding with the other party and has a better chance of finding a solution to certain issues (bajalski, 2017). 3. behavioral stereotypes the advantage of negotiation over other means of conflict resolution is that it allows the conflicting parties to reach an agreement that satisfies both parties, while avoiding lengthy court proceedings, the consequences of which are often substantial material costs. from the psychological point of view, before the beginning of negotiations, the parties have an established opinion about the opponent, several attitudes, a certain stereotypical vision of the problem. a widespread distortion of the parties' perception includes the "halo effect," which consists in attributing positive or negative evaluations and qualities to the opponent that are not observed at the time of negotiations. another distortion in the perception of the situation and participants in conflict resolution is stereotyping, which is when judgments about a party and actions are based on one's own or someone else's limited experience. stereotyping simplifies the process of perceiving the other person, but at the same time causes a dispassionate attitude, an inadequate perception (buchko, 2014). international business negotiations exhibit different cultural and psycholog-ical characteristics. when preparing for such negotiations, it should be taken into account that each nationality, ethnicity, and country has its own specifics of negotiating. for example, the american national stereotype is characterized by democracy and pragmatism. but americans act quite straightforwardly, use pressure in the process of agreeing on a joint solution, and are not inclined to strictly follow the stages of negotiations and formalities. they are independent in their decisionmaking during negotiations. focusing on the real thing, they strive for material well-being and making money, which explains americans' interest exclusively in lucrative contracts. british people are characterized by restraint, a tendency to taciturnity, meticulousness, industriousness, and endurance. their psychological peculiarities manifest themselves in the fact that they usually avoid categorical statements or objections, and in their conversational speech they avoid personal moments, anything that may seem an intrusion into private life. british representatives in international negotiations are absolutely untouchable in observing all the rules. that is why it is better to negotiate with them "fair game" and not to cheat. the british respond readily to the initiative of the other side. as a result, they pay little attention to negotiation preparation, believing that the best solution will be found due to the position of the partner in the negotiation. germans are hardworking, punctual, thrifty, rational, organized, meticulous, skeptical, and serious. germans prefer those negotiations in which they are solutionoriented. negotiators usually elaborate their position thoroughly. during negotiations, issues are discussed three seas economic journal 10 vol. 2 no. 4, 2021 sequentially, one by one. germans take negotiations very seriously and do not allow humor in the process. the japanese national character has hard work, discipline, imitation of tradition, devotion to authority, politeness, neatness, thriftiness, and the desire for concerted action. the psychology of the japanese is difficult to understand, especially for those who are not familiar with the peculiarities of their culture and mentality. for example, a smile or laughter in japan means different things – it is a sign of sociability, an expression of restraint, an openness of emotion, and a sign of impatience caused by a difficult situation. ukrainian national stereotypes are characterized by an emotional perception of the world around, an open soul, a sincere heart, and kindness. an interesting psychological peculiarity is a certain dualism of ukrainians' behavior: observance of formalities and "keeping distance" in the workplace and warm personal relations outside the office. therefore, it is not surprising that important negotiations usually end with a joint meal at a restaurant, during which future partners have an opportunity to get acquainted and clarify issues not discussed at the negotiation table (vahina, 2021). national and specific features significantly affect the character and psychology of a person, determine the strategy of his behavior, which is especially evident in the field of diplomatic negotiations. we should always remember that every country has its national peculiarities, its culture, and we should be ready for everything, but all these peculiarities are not always inherent in all members of the country, that is why everything should be perceived adequately. 4. conflict of objectives a negotiation process is an alternative form of conflict resolution by the parties to a conflict, whereby the parties are able to find a solution to the conflict that meets their common interests and needs. in psychology, the concept of conflict is defined as a lack of agreement between two or more parties – individuals or groups. conflicts of interest, at least in terms of modern democracy, arise when politicians and officials begin to abuse power for their own benefit. this occurs when a representative's private interests diverge from the goals of the state. there will always be those who will automatically and unconditionally serve the goals of the state. but there will also be those who, in the absence of proper control, will give priority to their own interests (sherengovskii, 2011). conflict can be resolved with the cessation of conflict interaction and settlement of conflict relations, and the conflict can be resolved both through psychological training of the participants, and through specially organized negotiations, including the involvement of a third party. the success of the negotiation process to resolve the conflict in most cases is determined by the ability to understand the opposing party, correctly assess its model of behavior, which must include a psychological component, including the emotional state of the negotiators. often constructive conflict resolution depends not only on the ability and skills of effective communication or the ability of the parties to the conflict to master the technology of managing emotions in the negotiation process, but also on their use of special psychological techniques, such as manipulative influence. and manipulative influence on the opponent in communication is nothing else but pressure. but unlike direct, open pressure, manipulative pressure is carried out in a hidden form. the ability to feel the right moment to end the discussion and the end of the negotiation is very important. if the negotiations were successful, all parties managed to find a real and constructive solution to the problem that satisfies both parties, then a favorable conclusion of communication will confirm the success of the negotiation process. if the outcome of negotiations is unfavorable, then the successful completion of negotiations can smooth out problems and prevent further relations from escalating (lozhkin, poviakel, 2006). if the negotiation process ends with a decision and nothing actually happens, this can be the detonator of subsequent, stronger and longer lasting conflicts or lead to an escalation and transformation of the existing conflict. negotiations are too difficult. in this case, the involvement of a mediator would be more acceptable (buchko, 2014). an example of negotiations that did not lead to the desired results is the participation of representatives of france and germany as mediators in the settlement of the conflict between ukraine and russia. in september 2014, the first meeting of the parties to the conflict took place in minsk to reach an agreement on a ceasefire. at that time, germany and france were already mediating. however, a ceasefire was ultimately not reached until the minsk summit in february 2015 (baumann, 2017). 5. completion of negotiations participants in international negotiations must show a willingness to compromise, namely, if a partner's interests diverge, an agreement must be reached step by step. in a compromise solution, an agreement is reached because the partners, after an unsuccessful attempt to agree with each other, partially retreat from their demands (something is abandoned, new proposals are put forward), taking into account new understandings. during negotiations, each side usually uses conscious psychological influence on the opponent and tries to three seas economic journal 11 vol. 2 no. 4, 2021 convince the other side that its conditions are the most favorable for reaching an agreement between them, each side wants the result to be in its favor. as a rule, the "stronger" opponent, who has compelling arguments or feels more confident than the other, wins, and a compromise is reached as a result. a compromise agreement is made in cases where it is necessary to achieve a common goal of negotiation, when its failure would have adverse consequences for the partners. negotiations take place without a third party, without a mediator, whereas mediation (mediation) involves a mediator, who does not make decisions as parties, but works within the mediation procedure with the interests of the parties, takes into account the balance of power, etc. the result of the mediation procedure is consensus. what the mediation procedure and the negotiation process have in common is that they are based on communication (dialogue) between the parties in order to reach a mutually beneficial solution. however, while in confrontational negotiations there is confrontation between the parties and victory is achieved "at any cost," and avoidance of victory is considered a defeat, this is not the case in mediation. reaching agreement between the parties, mutual agreement in the negotiation process is possible through consensus. it is achieved through the psychological mechanism of alignment of goals and interests. whatever the scheme of negotiations, they can achieve a result only through the coordination of goals and interests. the degree of agreement reached can vary from full consideration of interests to partial. under such circumstances, the negotiation is considered a successful consensus. as a socio-psychological phenomenon, trust is the basis of perception of and attitude toward the other person, the foundation for achieving consensus in the negotiation process. the parties' awareness of the need to solve the problem peacefully, through negotiations, triggers the mechanism of establishing mutual trust. the more stable the trust between the parties, the greater the chance of a constructive solution to the problem. another mechanism for achieving consensus in negotiations is the balance of power and mutual control of the parties. the essence is that during negotiations the parties strive to maintain an initial or complex balance of power and control over the actions of the other party. after a long negotiation, the parties come to an agreement. the main thing at this stage is to reconcile all issues to make sure there are no disagreements left (gelfand, brett, 2004). 6. conclusions in the 21st century, the psychological component of the negotiation process is characterized by the use of soft "psychological power," which is widely used in negotiations and is especially effective if the use of "intellectual power" is simultaneously envisioned. such soft power is based on subjective factors during negotiations, and it is one of the biggest problems any professional negotiator can face. it is only feasible for a small fraction of negotiators because it requires extensive professional education, nerves of steel, and patience. the cultural aspects of human psychology in international negotiations are a very important component on which the results of the negotiation process depend. therefore, first of all, it is necessary to adhere to the cross-cultural characteristics of the countries when conducting negotiations. if you prepare in advance, the likelihood of misunderstandings during negotiations and failure in general is very small. the result of successful negotiations is an agreement between the parties. at the heart of the entire negotiation process is constructiveness, a focus not on emotions and resentment, but on reason and rational consideration of the situation. the more reasonable the parties are in the negotiation process, the more likely it is that it will result in sustainable agreements and that the interests of both parties will be taken into account. references: aquilar, f., & galluccio, m. (2008). introduction: theoretical and psychological aspects of international negotiation. in: psychological processes in international negotiations, pp. 138–147. bajalski, b. (2017). power in the process of negotiations, pp. 1–17. available at: https://www.researchgate.net/ publication/334260412_power_in_the_process_of_negotiation (accessed 29 october 2021). baumann, g. (2017). promoting dialogue and maintaining trust between participants. the russia-ukraine conflict in the context of geopolitical changes (electronic journal), pp. 87–90. available at: https://www.kas.de/ c/document_library/get_file?uuid=1406fad9-206c-005d-7452-ac3d2982b8e5&groupid=252038 (accessed 01 october 2021). buchko, v. b. 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(2011). poniattia ta sutnist mizhnarodnoho konfliktu v nautsi pro mizhnarodni vidnosyny [the concept and essence of international conflict in the science of international relations]. aktualni problemy polityky [actual policy issues] (electronic journal), vol. 43, pp. 98–108. available at: http://hdl.handle.net/ 11300/1527 (accessed 6 november 2021). vahina, o. m. (2021). formuvannia natsionalnoho styliu politychnoho spilkuvannia v ukraini yak vyklyk suchasnoi hlobalizatsii [formation of national style of political communication in ukraine as a challenge of modern globalization]. aktualni problemy filosofii ta sotsiolohii [actual problems of philosophy and sociology], vol. 30, pp. 78–82. three seas economic journal 203 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: tomashuk.inna@ukr.net orcid: https://orcid.org/0000-0001-6847-3136 researcherid: https://publons.com/researcher/1928765/inna-tomashuk/ 2 vinnytsia national agrarian university, ukraine e-mail: baldynyuk@gmail.com orcid: https://orcid.org/0000-0001-9014-8866 doi: https://doi.org/10.30525/2661-5150/2022-1-29 international labor migration in the context of geo-economic transformation inna tomashuk1, vasyl baldynyuk2 abstract. the purpose of this work is to develop a methodology for the systematic study of international labor migration in conditions of geo-economic transformations and to substantiate on this basis new conceptual principles for regulating international migration at the national, interstate and regional levels. methodology. the current state and influence of geo-economic transformations on the processes of international migration of labor resources is analyzed. it is determined that the regional migration policy should help to maximize the benefits of human resource migration for the development of the region and the use of immigrants in the region as an economic resource of strategic importance in the conditions of geo-economic transformations. the results show that the intensification of international migration contributes to removing institutional barriers to international human mobility, but numerous crises (illegal migration, migrants' income going into the shadows, humanitarian problems, social and security tensions) demonstrate the deficiencies of the institutional environment of countries pursuing migration policies. it is emphasized that deepening economic integration in less developed regions of the world requires the construction of regional migration policy as an element of the geo-economic strategies of regional integration associations. practical implications. the issue of institutionalization of the regulation of international migration flows at the global, regional and national levels with the definition of the peculiarities of regional migration policies of certain integration associations is investigated. it is noted that the annexation of crimea and the military conflict in eastern ukraine have a negative impact on migration processes, leading to largescale population displacement, a deep economic crisis and the intensification of labor migration. value/originality. it is indicated that the united nations (un) sustainable development goals for 2016–2030 include overcoming poverty, hunger, quality education and gender equality, reducing inequalities between countries, ensuring environmental sustainability, building a peaceful and open society. an institutional model of regional migration policy of integration associations as a factor of geo-economic transformation was developed. key words: international migration, national security, migration policy, geoeconomic transformations, globalization, labor force, human resources, restructuring, demographic potential. jel classification: j15, f15, k33 1. introduction globalization of the world economy, like the globalization of the world labor market, has led to natural changes in the qualitative and quantitative characteristics of human capital and potential, overall competitiveness, restructuring of national labor markets, partial reduction and elimination of barriers. at the same time, globalization has led to the emergence of new phenomena, uncharacteristic for the world and national economies, which are not reflected in traditional economic and demographic studies. in this regard, the question of systematic study of the impact of the migration activity of the region's population on the demographic potential and socio-cultural life of the region's inhabitants is relevant. geo-economic transformations are also manifested in the structural changes of national economies and the world economy due to the rapid scientific and technological development and intensification of innovation (vavryshchuk, 2007). thus, the effective implementation of geo-economic strategy becomes possible only with a sufficiently diversified structure of this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 204 vol. 3 no. 1, 2022 the economy, which is able to ensure the adaptability of countries to the unstable conditions of world markets for goods and services. modern migration, for all its fragmented manifestations, raises many problems of human development. practically from the first step of a migrant to master a new social space comes the question of coordinating the whole range of problems of everyday life with the resources of the new environment (verbovyi, 2011). the solution to these problems is to study the consequences of migration processes in terms of the possibilities of migrant integration in the host region, the use of their potential to modernize its economy and the interests of the state and society to promote ukrainian history, culture and social traditions. such research should be based on an interdisciplinary approach. 2. the results of the study of migration as a social phenomenon migration as a social phenomenon undoubtedly plays a significant role in the modernization of the economy, state and society. for some it is a way of innovative organization of human life, for others it is a factor of progress, for others it is a historical challenge to preserve the identity of nations and nationalities. numerous scientific studies on migration have repeatedly argued that the consequences of migration can be both positive and negative for human development. international labor migration is an integral part of the global economic system, it is the result of the evolution of labor, the system of international division of labor and integration (velychko, nosach, pechenka, 2017). globalization facilitates the migration of highly skilled workers to industrialized countries. the prerequisites for such specialists to move are career growth and high income, the opportunity to apply their knowledge and skills (zaremba, 2014). the study of the consequences of migration processes is based on the provisions of an interdisciplinary approach. from the point of view of the interests of demography, labor economics, social economics and politics, and regional economics, a special role is played by: – the concept of social capital is a qualitative characteristic of the organization of society, which is formed due to the presence of such components as common norms and values, mutual trust and social networks, that is, it has a two-component structure – a valuenormative component and a network component; – the concept of reproduction of the population as the preservation of its measure (the ratio of its quantity and quality). according to this concept, we consider the consequences of migration processes in two focuses of possible effect in the context of modernization of the economy, state, society (region-society): positive and negative; – the concept of migration capital (a socio-economic category used to refer to the stock of socio-economic and other resources (land, machines, buildings, raw materials, skills and knowledge, experience) that generate the flow of goods (goods and services) over time and are the result of the migration activity of the population); – the concept of spiritual and informational mobility (dim) of the nation. the concept (discussed above) harmonizes modern processes of globalization by intensifying the use of regional (national) factors in the development of intelligence of ukraine in the innovative model of its state-building and integration on an equal footing with europe. the phenomenon of ukraine's intelligence, its main components – education, science, culture, religion, language, information space, traditions, etc., the use of human capital, the introduction of modern innovations is considered as the basis of national security, the preservation of intellectual sovereignty and existential identity of the ukrainian people. in this sense, the concept of spiritual and informational mobility (dim) of a nation rationally combines the intergenerational transmission of traditional knowledge, customs, experiences, etc., by one generation or individual (kaletnik, honcharuk, okhota, 2020). labor migration is a kind of separate migration flow, which is formed under the influence of various social and demographic factors, as well as the mentality of the labor migrants themselves. international migration has undergone significant changes in the era of great economic transformation. 3. a study of the influence of social capital on the rescue behavior of a migrant the current migration situation in ukraine is characterized by stabilization of the intensity of migration movements related to the change of official residence, the transition to a positive balance of stationary migration with a large scale of external labor migration. migration processes, if they are voluntary, are formed mainly under the influence of economic factors and contribute to the movement of people and labor from countries (regions) with a worse socioeconomic situation to countries (regions) where living conditions, employment and earnings are better (kibalnyk, 2013). figure 1 presents a diagram of the mechanism of the influence of social capital on the migrant's rescue behavior. ukraine is one of the largest donors of labor in europe, where external labor migration has now become an objective reality. as a result of labor migration, labor supply and wages decrease in capitalpoor countries, while the opposite process occurs in three seas economic journal 205 vol. 3 no. 1, 2022 capital-rich countries. the positive features of labor migration include, first of all, a decrease in tension on the labor market and an increase in the well-being of certain segments of the population. in addition, the consequence of a long-term stay in western and central europe is the assimilation of market consciousness, values and norms of civilized society (kyslytsyna, 2011; mazur, tomashuk, 2019). figure 2 shows the effects of migration in light of the economic and sociocultural transformation of the economy, state, and society, including the region-society. as early as 1949, the international labor organization convention no. 97 on migrant workers defined migrant workers as those who migrate from one country to another with the intention of obtaining work on their own account. the development of economic processes in a world where political and ethnic conflicts provoke numerous human casualties and economic recession, and the unprecedented intensive forced migration of human resources takes on a global scale. the annexation of crimea and the military conflict in eastern ukraine have a negative impact on migration processes, resulting in forced large-scale population displacement, a deep economic crisis, and an intensification of labor migration. figure 3 provides information on the number of issued documents (issued permits) for citizens of ukraine to travel abroad for permanent residence in the period 2014–2021 (9 months). in our view, this reflects the geo-economic aspect of refugee migratory movements and, accordingly, the geopolitical problems and threats of worsening disintegration contradictions due to the increased burden on refugees in their countries of asylum (olshevska, 2007). figure 4 shows the logic of determining the determinants of the formation of the motive of migration. the concept of the new economy of labor migration, as well as the theory of cumulative conditioning, when considering the distribution of income in the country (region) of origin of migrants uses the concept of relative deprivation and relative satisfaction. to reduce labor migration, the government of the migrants' country of origin should promote a more even distribution of income in society. even wage increases in the donor country can increase incentives to migrate if such wage increases are unequal and affect only the wealthier people (pelekh, 2007). table 1 presents an approximate scheme for studying the effects of migration. however, as world experience shows, an excessive, even managed, influx of immigrants, especially those sharply differing in their culture, beliefs, and mentality from the local population, not only disrupts the ethnic structure of historically established territories, but also generates various interethnic misunderstandings and conflicts that do not contribute to the effective functioning of social systems at the national or regional level. examples of such conflicts are interethnic relations in france, germany, italy and other european countries (rovenchak, 2006).   social networks: formal: public associations, societies, communities. informal: colleagues, neighbors, family friends.  social capital  population groups: age, sex, marital status, ethnicity, religion, education, income, employment, region and place of residence.  norms and values: trust: interpersonal and public institutions. the system of socially acceptable values, ideas and beliefs.  impact on life support behavior: social control, social behavior, access to social network resources.  effects: reduction of psychosocial stress, strengthening of life-saving norms and values, reduction of risk of antisocial behavior. figure 1. scheme of the mechanism of influence of social capital on the rescue behavior of a migrant source: formed according to the results of the study three seas economic journal 206 vol. 3 no. 1, 2022 alarm migration: change in labor supply <0 money transfer flows > 0 changing value orientations. behavioral and feedback reactions: length of stay abroad. labor market reaction. human capital market reaction. technological progress. investment. economic restructuring. socio-cultural adaptation (assimilation). structural characteristics: characteristics of migrants (age, sex, place of residence). professional skills and abilities. labor market conditions. credit market conditions. terms of integration. conditions of socialization. e f f i c i e n c y the result of the impact: economic effects. poverty, distribution of income and wealth. scientific and technical effects. social effects. geopolitical effects. ethnocultura l effects. environmen tal effects. figure 2. migration effects in the light of economic and sociocultural transformation of the economy, state, and society (region-society) source: formed according to the results of the study 8932 11341 13621 9191 8551 11311 3889 3994 0 2000 4000 6000 8000 10000 12000 14000 16000 2014 2015 2016 2017 2018 2019 2020 2021 (9 months) figure 3. documents were drawn up (permits were issued) for ukrainian citizens to go abroad for permanent residence in 2014–2021 (9 months), persons source: formed according to data (official site of the state migration service of ukraine) three seas economic journal 207 vol. 3 no. 1, 2022 socio-demographic political and security institutional factors socio-demographic ecological and natural economic economic ecological and natural linguistic and cultural political and security linguistic and cultural environmental factors determinants of the migration motive perceived by the individual and cause his reaction, forming "ejection factors" figure 4. the logic of determining the determinants of the formation of the motive of migration source: formed according to the results of the study table 1 approximate scheme of research of consequences / effects of migration characteristics sociocultural (short-term/long-term perspective) economic (short-term / long-term) political (short / long term) +/for households, business, society -/for households, business, society +/for households, business, society -/for households, business, society +/for households, business, society -/for households, business, society countries / regions of origin of emigrants. increasing the number of single-parent families due to divorce processes; deviant behavior of children; depopulation of an aging; change in the level of qualification of certain professional groups in the labor market. increasing inequality in the processes of formation and distribution of income due to the transfer of money. countries of residence of emigrants. reducing the cost of labor. growing share of informal employment and the shadow labor market. source: formed according to the results of the study three seas economic journal 208 vol. 3 no. 1, 2022 on the basis of general theories of migration, trends in modern society and factor analysis, the following general migratory factors of attraction can be identified: 1) economic (average wages, prices in the country, quality of life, availability of jobs, stable economic development, human development index); 2) socio-cultural (positive demographic situation in the country, high quality education, decent working conditions, harmonious health care system, opportunity for development and self-realization, lack of religious persecution, racial and ethnic discrimination, culture of social environment, high standards of social protection); 3) ecological (harmonized eco-social system, low level of radiation and harmful emissions into the environment, development of natural resources and recreation); 4) political (stability of the political system, development of democracy, absence of corruption and military conflicts, low level of risk factors, consolidated society) (stasiuk, 2004). the current state of social capital of ukrainian migrant communities is characterized by dynamism, the main feature of which is the spread of circular migration behavior. these changes are also significant when measuring the social capital of migrant communities. circulating migration increases the mobility of migrants and weakens their embeddedness in the local context, a complex reconfiguration of social ties takes place in which traditional forms of migrant associations become less relevant, and instead personal migration networks that transcend narrow ethnicity and narrowness grow in importance. 4. the main characteristics of general immigration policy in the european union the intensification of international migration, which is a consequence and at the same time a driving force of globalization, is fully observed on the european continent. for ukraine, the migration policy of united europe is of double interest. first, the eu is an important partner of our country in population exchange, to which numerous migration flows are directed. numerous ukrainians work, study, and live in the european union, especially in neighboring countries, but also in southern europe (malynovska, 2014). eu enlargement has led to a significant flow of migrants from eastern europe to the west of the continent, especially to those countries that have not introduced transitional restrictions on the employment of citizens of new member states (united kingdom, ireland, sweden) (malynovska, 2014). table 2 presents the unifying goals of migrant self-organization on the interstate dimension. in the european union, a great deal of attention is given to developing a general immigration policy and dealing with the reception of refugees. as far as migrant integration policies are concerned, they are the responsibility of the national level, since a number of issues related to immigrant integration must be addressed locally. at the same time, the european union develops standards to guide the integration policies of member states and those seeking to join the eu. for example, in 2004, the european council approved the common basic principles for immigrant integration policy (mcauliffe, triandafyllidou, 2021). their essence is as follows: integration is a dynamic, two-way process of mutual adaptation of immigrants and residents of member countries; immigration implies respect for the basic values of the eu; employment is a key condition for integration and a decisive factor in ensuring the participation of immigrants in society, their contribution to society and the obviousness of this contribution to other members; basic knowledge of the language, history, institutions of the host society is necessary for the integration of immigrants, and providing migrants with access to such knowledge is an important element of successful integration; education is crucial for preparing immigrants, especially their descendants, for a more active role in society; immigrants’access to public institutions and services at the level of local residents is the basis of integration; communication, constant contacts of immigrants and local citizens are a fundamental mechanism of integration; the diversity of cultures and religions is guaranteed by the charter of fundamental rights and must be ensured, unless it conflicts with other rights or national law; the participation of immigrants themselves in the democratic process and in the formation of integration policies, especially at the local level, promotes integration; inclusion of integration issues in sectoral policies at all levels is an important component of the formation and implementation of integration policy. in order to implement these principles, a common integration agenda for 2010 was developed in 2005, which provided for the establishment of certain structures and the implementation of specific actions aimed at the integration of immigrants. the document emphasized that the main efforts to integrate migrants should be made at the local level (rudenko, hohunskyi, kovtun, smrkovska, 2021). today the european union declares the interpretation of "integration" as a dynamic two-way process of mutual adaptation of immigrants and citizens of member states. meanwhile, the public policies of some countries (e.g. norway) define integration of ethnic minorities as both an objective and a process of public policy (quality of life, equal opportunities). at the same time, it is a process to be carried out by three seas economic journal 209 vol. 3 no. 1, 2022 state authorities through the development and implementation of appropriate measures. common to most european and scandinavian countries is an understanding of the duty and responsibility of the host country to allow immigrants to participate in all spheres of social life. simultaneously, immigrants should be active subjects of integration, respecting the fundamental norms and values of the host society without losing their own identity. 5. characteristics of integration models integration is the ideal goal. by integration model we mean a number of interrelated ideas and practices that are the basis for adaptation, adaptation of newly arrived migrants to a particular society. analyzing global trends in "immigration expansion," the following models of interaction between the host society and immigrants can be identified: 1. the model of total exclusion – the refusal to accept immigrants as the simplest form of solving the problem of ethno-cultural misunderstandings and conflicts. however, in the context of globalization, the model of total rejection of immigration into a country is practically unrealizable. and given the diversity of cultures in today 's world, a state seeking to implement this model must take certain discriminatory measures. in addition, the ban on legal immigration leads to illegal immigration. 2. the segregation (differential exclusion) model focuses on allowing temporary entry of migrants into a country in order to include them in certain subsystems of society (labor market) and exclude them from other spheres of society (political life, social security, citizenship). exclusion can take place both through legal mechanisms (denial of citizenship, significant differences in the rights of citizens and stateless people) and informal methods (racism and discrimination). 3. the assimilation model assumes the incorporation of migrants into the host society through a one-way process of changing their cultural, social, and linguistic characteristics. it is assumed that in the future migrants will not differ from the majority population. for this purpose, the state creates favorable conditions for immigrants' adaptation, transformation of their culture and most of their values by maintaining the use of the dominant language and teaching migrants' children in schools. 4. the model of pluralism (multiculturalism) is based on ensuring equal rights for migrants in all spheres of society while preserving their own culture, language, and traditions. this model assumes the readiness of the majority to accept cultural differences and, accordingly, to change social behavior in society (pelekh, 2007). table 3 presents the typology of migration regimes of population reproduction. the course towards european integration is a natural consequence of ukraine's independence. proponents table 2 the unifying goals of migrant self-organization: the interstate dimension № the nature of the unifying goal forms of activity advantage 1 socio-economic security – personal, family member 1. public councils under state structures. 2. cooperation with embassies, ombudsmen, social welfare departments, and more. 3. organized (shadow) remittances, the involvement of family members and the immediate social environment in migration processes. 1. improving the socio-economic protection of migrants and their families. 2. improving the legal culture of migrants and their families. 3. development of socialization mechanisms, support for the processes of enculturation. 2 preservation of socio-cultural characteristics (language, traditions, faith). the need for communication 1. public organizations (including network). 2. association at churches. 3. cultural and artistic, sports activities (ensembles, choirs. teams, art, fiction). 4. language schools. 5. camps, conventions, gatherings. 6. cooperation with religious and public organizations in the homeland. 7. publishing activities (journalistic, scientific and cognitive literature). 8. promoting frequent visits to the native land (country). 1. preservation of ethno-national and cultural identity due to high self-motivation, slowing down assimilation. 2. development of civil society. 3. increasing the patriotism of the population of the region (country) of origin. 3 manifestation of patriotism 1. different forms of assistance to the homeland. 2. volunteering. 3. public actions. 4. targeted projects (investment, training, cultural exchange, etc.). 1. preservation of psychoemotional connection with the homeland, the region of origin. 2. formation of the nation. source: formed according to the results of the study three seas economic journal 210 vol. 3 no. 1, 2022 table 3 typology of migration regimes of population reproduction migration mode / type of migration population reproduction regime the main characteristics of the democratic development of the country as a prerequisite for the choice of migration policy characteristics of the migration regime the impact of migration policy on population reproduction sociocultural aspects between eu countries / enlargement narrow type of population reproduction, deep aging of the population, lack of human resources to meet the needs of the labor market (especially job vacancies that do not require high skills). free residence of eu citizens on the territory of any of its countries on the condition of employment or the ability to live without government assistance (self-sufficiency). naturalization of willing labor immigrants, their social protection (personal of all family members). the right to obtain citizenship at the place of birth with certain exceptions and in some countries. more than 50% of all immigrants from the eu are eu citizens who quickly integrate into society. assimilation of such immigrants occurs in the 2nd, 3rd generation. erosion of the identity of eu nationalities, but better preservation of the european gene pool. cultural and personal qualities are undergoing changes and additions. however, the idea of common (related) sociocultural aspects of many eu countries is widely promoted. north american / selected narrowed type of population reproduction, population aging, lack of resources to ensure economic development. obtaining immigration visas (citizenship) is selective, depending on personal and professional qualities and the needs of the economy. full social security for qualified immigrants and their families. lowskilled – have temporary immigrant status and somewhat limited social rights. all who qualify for immigrant status must know the language, be educated, and not belong to marginalized groups. population growth comes mainly from migration. the right kind of immigration helps attract more educated, physically and mentally healthy people to the process of demographic reproduction. shaping the sociocultural characteristics of immigrants is a key task of the assimilation and integration processes that are receiving increasing attention. gulf countries / restrictive expanded type of population reproduction, acute need for labor force, rapid economic development. attraction of a high proportion of skilled workers. labor immigration on a contract basis, without family support. complete exclusion of labor immigrants from the demographic, social and political structure of the population. prohibition (maximum minimization of possibilities) of naturalization. religious and cultural traditions create a distance between indigenous peoples and immigrant workers that does not directly affect reproductive processes. however, given that without them it is impossible to ensure the economic growth of the country, which directly affects the increase in living standards, the aging of the population and the decline in the birth rate, labor immigration has some indirect impact on democracies. source: formed according to the results of the study three seas economic journal 211 vol. 3 no. 1, 2022 of the eurasian integration model challenge ukraine to ensure the development of the common economic space (ces) on the principles and values that once guaranteed the effective development of the european integration process. critics of this course emphasize that ukraine's simultaneous participation in two geopolitically polar integration groupings – the eu and the ces – is impossible. in this context, the model of migration attractiveness describes "the dependence of population flows on movement factors, properties and characteristics of regions": nij = (ni nj /dij) f (ci, cj), where nij – the average number of people who moved per unit time (usually a year) from the region і in the region j; ni – population in the region і, і = 1, ..., k, at the beginning of the period; dіj – "distance" between regions і and j; сі – vector of region properties і; f (x, y) – some function of the properties of the regions. in addition, a general model for estimating the intensity of transitions between regions is proposed: rij = (ai bj /dij), where rij – intensity of transitions, i.e., the average number of transitions per person in the i-th region per unit time; ai – possibility to leave the i-th region; bj – availability of the j-th region (shymanska, 2019). on the basis of the strategy of ukraine's integration into the eu sectoral programs and the national program of ukraine's integration into the eu approved by presidential decree of september 14, 2000 were developed. eu at all levels – national, regional and local, at the level of governmental and non-governmental organizations, as well as the systematic and purposeful formation of a sustainable pro-european majority in ukrainian society. in order to ensure organizationally the implementation of the national program of ukraine's integration into the eu, in accordance with the decree of the president of ukraine from november 26, 2001, the institute of commissioner for european integration was created. 6. the role of human resources in achieving the sustainable development goals the sustainable development goals (sdgs) define global priorities for sustainable development and aspirations for 2030. they aim to mobilize the global community around a set of common goals and targets. the sustainable development goals (sdgs) call on governments, business, and the public to work together at the global level to address poverty and create decent lives and opportunities for all in the world (rovenchak, 2006). the un sustainable development goals can serve as a reference point for such development, given the diversity of individual competitiveness strategies. therefore, it is advisable to outline the relationship between human resource groups and the development goals, which is what the authors propose to do by constructing a matrix describing the coverage of human resource categories in achieving the sustainable development goals (table 4) (shymanska, 2019). this matrix identifies the groups of demographic and labor resources that are the focus of national and regional policies during the implementation of the sustainable development goals. its use allows to focus on target categories of human resources, which allows to target employment policy, social and educational policy, based on the characteristics of each group of human resources (aymeric faure, 2022). note that these categories also include the human resources of immigrants, which are formed in the course of various types of migration. a feature of the modern stage of modernization at the european level is the emergence of a "fifth freedom" – the freedom of movement of knowledge (along with the four freedoms of movement – capital, labor, goods and services). the resulting single "european higher education area" and "european research area" created the institutional conditions for the revitalization of the academic movement of students, teachers, and researchers. eliminating virtual boundaries between historically different educational systems requires the introduction of a clear and understandable for all participants system of diplomas, transparency in the awarding of degrees, equivalence of qualifications, etc., this is the main idea of the bologna process. the global challenges of sustainable development are themselves market opportunities for those companies that are able to develop and implement innovative and effective solutions. 7. findings migration processes in ukraine are closely related to the following: rational redistribution of labor resources is one of the phenomena for solving demographic problems in such issues as population aging, scientific and technological progress, information exchange, integration of the country in world production. but to ensure a stable socio-economic situation, ukraine, as a donor country, has a number of threats and risks, namely: the outflow of labor resources, deterioration of the age and sex structure of the population, reducing innovation and intellectual potential of the country, etc. (rudenko, hohunskyi, three seas economic journal 212 vol. 3 no. 1, 2022 kovtun, smrkovska, 2021) migration flows cannot be stopped, but they can be corrected, thanks in part to deep reforms and an improvement in living standards in ukraine. the phenomenon of educational migration has deep historical roots. the emergence of the first universities in western europe in the xii–xiii centuries marked the beginning of educational migration. the first auditorium in europe was opened in 425 by the byzantine emperor theodosius ii. later other european universities were established: the university of bologna (1119), in france – the sorbonne (1170), in spain – seville (1254), in england – oxford (1163) and others. indeed, educational migration is increasingly taking the form of labor immigration. table 5 presents the characteristics of the elements of migration policy. the goal of regional migration policy is to maximize the positive and minimize the negative effects of international labor migration, based on the provisions of the geo-economic strategy of the integration association. figure 5 presents the key elements of regional labor migration management. migration has objectively become a structural element of the global economy, supplementing the inherent interdependence of states with a new form of interdependence – migration. the need to develop a comprehensive national migration policy stems from the fact that the country is both a donor and a recipient of human resources in the migration process, that is, it acts as a country of origin, destination, and transit of migrants. effective integration of migrants into the host society implies their inclusion in the labor market, social protection, bringing migrants' incomes and financial flows between countries out of the shadows. therefore, an appropriate institutional environment for migration should include migrant access to productive employment, expanded guarantees provided by the formal social security system, a balanced tax burden on migrant workers, and the possibility and costeffectiveness of the banking system and other official channels for remittances. today, geo-economic transformations in the world are becoming a powerful external factor that parameterizes the characteristics of individual countries and regions in the system of international table 4 coverage of human resource categories in achieving the sustainable development goals № sustainable development goals 2016–2030 human resources demographic resources workforce pra r ra u / ss hg / p target 1. – overcoming poverty in all its forms around the world. + + + + + target 2. – end hunger, achieve food security, improve nutrition and promote sustainable agriculture. + + + target 3. – ensuring healthy lifestyles and promoting well-being for people of all ages. + + + target 4. – to provide comprehensive and high-quality general education and encourage lifelong learning for all segments of the population. + + + + + target 5. – achieving gender equality and equal opportunities for men for women and girls. + + + + + target 6. – ensuring universal access to water and sanitation systems. + + + target 7. – ensuring everyone has access to an affordable, uninterrupted, sustainable and modern energy supply. target 8. – promote inclusive and sustainable economic development, employment and decent work for all segments of the population. + + + + target 9. – building sustainable infrastructure and promoting sustainable industrialization and innovation. + + target 10. – reducing inequalities within and between countries. + + + + + target 11. – promoting integration, security, adaptation to changing conditions, and urban sustainability. + + + + + target 12. – implementing the principles of sustainable consumption and production. + + + target 13. – take urgent action to combat the effects of climate change. + + + target 14. – conservation and sustainable use of the oceans, seas and marine resources. + + + target 15. – implementation of measures for sustainable forest management, overcoming desertification, stopping land degradation and loss of biodiversity. + + + target 16. – promoting just, peaceful, open communities. + + + + + target 17. – strengthening and enhancing the global partnership for sustainable development. + + + + + legend: pra – potentially reproductive age; r – reproductive age; ra – reproductive age; u – unskilled; ss – semi-skilled; hg – highly qualified; p – professionals. source: formed according to the results of the study three seas economic journal 213 vol. 3 no. 1, 2022 table 5 characteristics of elements of migration policy components elements immigration emigration integration goal protection of the domestic labor market and the socio-demographic environment of the country of destination of migrants from the consequences of the influx of migrant labor resources. protecting the domestic labor market and the socio-demographic environment of the country of origin from the destabilizing effects of the outflow of human resources from the country. facilitate the integration of migrants in the destination country to reduce their burden on the destination country and eliminate the negative personal effects of migration. tools 1. limitations on the characteristics of human resources: gender, age, social, educational, financial, personal. 2. restrictions on migration goals and parameters. 3. limitations of spatial and temporal nature. 4. sanctions for violations of immigration laws. 1. limitations of the institutional status of the subjects of relations in the sphere of migration. 2. limitations of spatial and temporal nature. 3. institutional incentives to facilitate emigration and the return of migrants' financial capital to the country. 1. financial compensation programs (provide cash payments to immigrants for previously terminated activities). 2. training programs to make it easier for immigrants to leave for homeland of work. 3. economic assistance programs for regions of mass emigration. the tools of other state policies (related to migration policy in terms of migration) – social, employment, educational, environmental, information, infrastructure, political and security policies. models 1. strictly restrictive model; 2. moderately restrictive model; 3. liberal model. 1. model of migratory protectionism. 2. expansion model. 3. the model is oriented. 4. dual migration protectionism. 5. dual mutual migration support. 1. model of integration of emigrants. 2. immigrant integration model. source: formed according to the results of the study iv  creating an institutional framework for the formation and implementation of regional migration policy (defining the institutional framework of regional migration policy, formulating its goals and decomposition of requirements). k ey e le m en ts o f r eg io na l h um an re so ur ce m ig ra tio n m an ag em en t ііі  coordination with employment policy, social, educational, environmental, infrastructure, information, security policy in terms of provisions related to the management of migration flows. і  a conceptual framework for regional migration policy, which should take into account the direct and indirect effects of economic, social, environmental, infrastructure, security, information and other policies carried out at the national and regional levels, which potentially act as determinants of migration motives. іі  a comprehensive and consistent regional migration policy. v  a comprehensive approach to building a system of communication links between institutional and non-institutional actors in the field of international economic relations on international migration issues (political dialogue involving all stakeholders – politicians, civil society, formal and informal migrant organizations, etc.). vі  the system of institutions of a regional integration association designed to manage the determinants of labor migration, regulate migration processes, maximize their benefits and opportunities, and overcome the negative consequences. figure 5. key elements of regional human resource migration management source: formed according to the results of the study three seas economic journal 214 vol. 3 no. 1, 2022 economic relations, transforming their importance in achieving global development priorities and, accordingly, influencing the genesis of national or regional geo-economic strategies. summarizing the above, the following trends of geo-economic transformation and their impact on international migration should be highlighted: 1) formation of a multipolar geo-economic space in which the centers of economic development (poles) achieve geopolitical influence by increasing economic influence on peripheral countries. at the same time, the centers of economic development become centers of regional economic integration; 2) the leadership of developed countries in terms of gdp per capita and their predominance in the ranking of absolute gdp, along with the strengthening of the positions of newly industrialized countries, as well as the leadership of developing and least developed countries in terms of economic growth (gdp growth); 3) the highest rates of human development and the development of information and computer technology in developed countries; 4) transformation of the vectors of geo-economic strategies of countries on the basis of geo-economic interests of their regional associations, which makes it necessary to take into account the institutional environment of each integration association in the study of economic phenomena and processes (shymanska, 2019). assessing the prospects for the development of international labor migration, we can draw the following conclusions: the strengthening of globalization and migration flows; the formation of new bilateral corridors; the continuing trend of movement of labor resources to industrially and innovatively developed countries; the constant growth of demand in these countries for highly skilled workers, the so-called "intellectual labor". among the measures to address the problems of migration in the context of geo-economic transformation are the following: – revise existing and create new interstate agreements between donor countries and labor recipient countries to protect the rights and freedoms of migrants; – the formation of specialized migration exchanges (so-called "labor exchanges"), which will play the role of an intermediary in the process of hiring migrants; – intensified cooperation with the international organization for migration; – comprehensive use of the grant system to reduce the outflow of highly skilled labor and scientific personnel from transition countries to highly developed countries; – continuous monitoring of migration processes at the state level, identifying major trends in forecasting migration flows. 8. conclusions strengthening processes of globalization led to the intensification of migration processes, which today in difficult socio-economic living conditions, post-conflict countries and regions, numerous humanitarian problems are one of the ways to physically save people, improve living standards and income financial problems in the country of origin. living standards are one of the most important factors in labor migration. dissatisfaction with their own material situation and the well-being of their family is often the reason why economically active members of the household decide in favor of labor migration. disproportions in the national labor market, reducing the availability of the main economic resource that generates income for the entire population – work, forcing our citizens to seek employment opportunities and, accordingly, earn money in other countries. the migration process is indeed insurmountable because it is based on the globalization of the world economy. improving the information field at the level of the institutional environment allows the development of national and regional migration policies based on agreed goals of migration management in migrant pairs and regional migration associations in accordance with the sustainable development goals. to overcome the negative effects of migration it is necessary to build and develop a competitive economy with the systematic formation of an effective migration policy, which is based on a focus on preserving and increasing the active human labor potential in the national labor market. references: vavryshchuk, n. h. 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mastering the components of marketing crisis management of enterprises, to avoid the vulnerability of the enterprise to crisis phenomena and eliminate their consequences. the methodological basis of the study was the generalization of the results of applied research in the field of economics, scientific works of domestic and foreign scientists, which highlight the fundamental theories of competitive advantage, competitiveness and marketing management. results. the article conducts a study on determination of the place of marketing in anti-crisis management of an enterprise, establishes the role of main aspects of anti-crisis marketing at modern enterprises; mastered the mechanism of marketing anti-crisis management of enterprises, the purpose of which is to form a strategy for overcoming the crisis and eliminating the consequences of crisis phenomena. practical results. given the constant changes in the environment of their functioning, enterprises should develop marketing programs that provide for measures to be taken to stabilize the market situation and overcome the insolvency crisis. value/originality. in the understanding of the authors, crisis management should cover all subsystems of enterprise management: operational, technical, financial, and especially strategic, marketing, personnel. in the understanding of the authors, crisis management should cover all subsystems of enterprise management: operational, technical, financial, and especially strategic, marketing, personnel. it is recognized that marketing in crisis management is not just one of the subsystems of the enterprise, but the basis that ensures the sustainability of all its other departments. key words: anti-crisis management, anti-crisis marketing, marketing activities, anti-crisis program, marketing strategy. jel classification: м30, м11, m31, р23 1. introduction the operating conditions of domestic enterprises are directly related to the high level of instability and uncertainty of the external environment, especially external factors that affect the economic and management processes of enterprises. sometimes these factors are destructive, which can lead to the liquidation of enterprises. this can be prevented by timely implementation of crisis management system in enterprises, with the transformation of basic management methods into an integrated form of marketing crisis management. the interaction of strategic and tactical marketing goals is extremely important in crisis management. in difficult times for the economy, most businesses face a number of problems. marketing budgets become especially vulnerable. this is a time when organizations are more than ever focused on shortterm results, and some think only about survival. that is why during the recession it is important to remember about marketing priorities that will help not to miss opportunities and avoid irreversible mistakes. therefore, an urgent problem for modern enterprises is the search and implementation in practice of three seas economic journal 16 vol. 3 no. 3, 2022 such forms and methods of management, which, in combination with marketing measures, could prevent crisis phenomena, as well as contribute to the risk protection of enterprises. the outlined problem is the subject of research of many domestic scientists, who in their publications consider its various aspects, in particular: researcher pogrebnyak a. yu. (2015) presented a mechanism of crisis management based on the synergy between all its elements, to identify, prevent and overcome crisis phenomena, under the influence of external and internal environment factors. it is worth paying attention to the fact that among scientists who study the role of marketing in crisis management of the enterprise, there is no consensus on the definition of the category "crisis marketing". there is a statement that marketing in a crisis is called "anti-crisis", although the wording of its goals and objectives remains unchanged. the authors disagree with this statement and believe that the conditions of functioning of enterprises directly correlate with marketing goals, programs, strategies. therefore, most marketing categories that take place in practice require clarification and scientific substantiation. 2. anti-crisis marketing as a component of strategic management the main purpose of anti-crisis management of the enterprise is to provide such conditions for the functioning of the enterprise, under which the crisis phenomena of financial, production, marketing, personnel nature can be minimized, neutralized and eliminated by implementing certain measures. marketing as the main component in the management system includes a number of measures of analytical, strategic and organizational nature, the basis of which is a complex of marketing, in particular commodity, pricing, sales and communication policies based on the results of a comprehensive study of the market and consumer behavior. the authors are deeply convinced that marketing is a modern business philosophy that changes the thinking of entrepreneurs, employees and consumers. any enterprise, faced with the complexity of market mechanisms, faces the problem of creating a model of its behavior that would harmonize its activities in the market. this model can be associated with indicators of quantitative results to be achieved, or with the implementation of certain activities, such as entering a certain market, developing a new product, etc. it is developed based on the results of market research, correlation of market trends and needs with the company 's capabilities. marketing activities are a set of measures that involve the collection and analysis of information in order to study product markets and identify consumer demand factors to minimize risk, in order to make strategic decisions on product, pricing, sales and communication policies of the company. the role of marketing activity is significantly increasing for the enterprise during the crisis period. this is due to the fact that it is during this period that effective marketing measures are needed that will help maintain demand for products or services, find new market niches, modernize product policy, change or expand the vector of activity, etc. (natrus, xaminich, 2016). since management is considered as a process of interdependent functions, at the pre-crisis stage of management formation it is necessary to investigate the factors that could prevent a crisis situation, develop strategic business plans for marketing, control risk factors, which will avoid possible losses and negative consequences. holovach k. s. and others note that the combination of a system of measures of legal, organizational and technical nature is the basis of anti-crisis management, which is currently in the process of formation (holovach, golovach, trofimchuk, 2020). in the author's understanding, anti-crisis management should cover all subsystems of enterprise management: operational, technical, financial, and especially strategic, marketing, personnel. thus, the process of crisis management can be characterized by the following features: − use of enterprise resources in conditions of mobile and dynamic response to changes; – implementation of anti-crisis solutions based on program-targeted integrated approaches; − taking into account the time factor, especially in the process of making managerial decisions; − operative intervention in the event of a danger of crisis; − use of qualitative characteristics in making anti crisis decisions (tkachenko, mykhailenko, 2013). marketing is the main component of the enterprise subsystems, namely the base that ensures the stable operation of all its departments. on this basis, in the conditions of the crisis state of the enterprise or for preventive measures to prevent it, traditional marketing tools are used, but the tasks of marketing activities acquire new specific features, the main of which is the marketing anti-crisis program. the objectives of marketing activities should be consistent with the corporate strategy of the enterprise and adjusted depending on changing conditions. marketing activities within the framework of crisis management include: identifying market opportunities, minimizing market threats, increasing market share, retaining loyal customers, product positioning and others (zhurenko, dergalyuk, 2018). three seas economic journal 17 vol. 3 no. 3, 2022 depending on fluctuations in environmental factors and changes in the operating conditions of the enterprise, the tasks of marketing activities are subject to constant adjustment. marketing as a functional subsystem of enterprise management plays a key role in the system of its crisis management, and marketing policy serves as the basis for strategic planning of all aspects of the enterprise. anti-crisis marketing involves identifying market opportunities in order to quickly implement them in the interests of the enterprise. it is important to understand that some market opportunities are invisible during the stable operation of the enterprise, and during the crisis their use can help the company to survive and take a profitable position in the market. the authors are convinced that anti-crisis marketing involves the rapid change of all components of marketing in accordance with changes in the external environment, which helps to maintain maximum competitiveness of the company in market conditions. the mechanism of crisis marketing at the enterprise as a management system provides for the presence of the object (crisis phenomena) and the subject of management (responsible bodies of crisis management, for example, the head of the marketing service, etc.) formation of targeted management processes (subsystem of monitoring the enterprise environment, subsystem of planning and forecasting: determination of the stage, parameters, volume and scale of the crisis phenomenon, development, implementation and control of anti-crisis strategies, etc. as part of anti-crisis marketing measures, an anticrisis program should be developed. the development of a comprehensive anti-crisis program is aimed at carrying out a set of measures to overcome the crisis in all subsystems of the enterprise (sales, financial, production, organizational, supply, personnel management, marketing). 3. development of a comprehensive anti-crisis program the anti-crisis program is considered as a coordinating document that covers a set of economically and scientifically sound measures (marketing, financial and other) aimed at overcoming (preventing or leveling the impact of ) crisis phenomena at the enterprise, the content of which stages of developing a marketing plan in the framework of crisis management coordination of marketing activity goals with the overall goal of anti-crisis management of the enterprise marketing audit overview of the current marketing situation justification of dangers and opportunities justification of the problem and formulation of tasks adjustment of marketing goals based on the results of marketing audit development of proposals and a plan of marketing activities taking into account the adjusted goals monitoring the implementation of the plan and assessing the level of achievement of marketing goals within the framework of the anti-crisis management program of the enterprise identification of alternative plans for marketing activities stage 1 stage 2 stage 3 stage 4 stage 5 figure 1. stages of creating a marketing plan within the crisis management program source: developed by the authors taking into account the source (hlukhenka, 2019) three seas economic journal 18 vol. 3 no. 3, 2022 depends on the type, scale of the crisis and the conditions of functioning of enterprises of various organizational and legal forms. as part of the anti-crisis program, a marketing plan is being drawn up. in the conditions of anti-crisis management of the enterprise there is a complex interaction of marketing and management tools at enterprises. marketing programs are aimed at stabilizing the market situation and overcoming the insolvency crisis. marketing anti-crisis programs can be part of the strategic and tactical plan of the organization's way out of the crisis or crisis situation. the authors agree with the widespread statement that the basis of anti-crisis plans of enterprises should be marketing measures. on this basis, crisis marketing is a component of marketing in crisis management (figure 2). there is no doubt that factors of both external and internal environment can disrupt the stable functioning of the enterprise, affect the level of all indicators of its activity, destabilize the work of internal departments. in such situations, it is important to develop a mechanism for implementing measures that will help to resist the spread of crisis phenomena. the internal and external environment of the enterprise creates a potential threat of the impact of crisis factors (such processes and phenomena that adversely affect the activities of the enterprise, lead to an imbalance of the production and management system and frequent failures and further formation of crisis situations in various subsystems of the enterprise and beyond) on its activities. the negative impact of crisis factors is manifested in the form of signs of crisis: deterioration of the main indicators of economic activity of the enterprise, negative dynamics of indicators of development of the enterprise, deterioration of financial indicators, decline in demand, outflow of customers, etc. it should be emphasized that in most cases managerial anti-crisis decisions are made quickly on an intuitive level, as a result, it is difficult to predict their consequences. therefore, at the pre-crisis stage, marketing research plays a significant role, during the crisis – marketing communications, pricing strategies and creative means, in the post-crisis period – strategies of diversification and development of innovations, the practical significance of which is the possibility of using by domestic enterprises at the present stage. diagnosis of crisis factors can be carried out using modern methods of diagnosing the marketing anti-crisis management of the enterprise anti-crisis financial anti-crisis strategic anti-crisis investment anti-crisis personnel anti-crisis risk management anti-crisis marketing anti-crisis market research analysis of the external environment development of a marketing strategy forecasting planning motivation organization control managementmanagement management management anti-crisis management of innovations management formulation of goals and objectives complex formation marketing events figure 2. anti-crisis marketing as a component of the enterprise crisis management system source: developed by the authors three seas economic journal 19 vol. 3 no. 3, 2022 environment, such as swotand pest-analysis. when conducting the analysis, first of all, the factors of the marketing macroand microenvironment in which the organization operates are taken into account (gurzhij, 2011). economic factors have the most negative impact on the deepening of the crisis. it is possible to distinguish the factors that determine the use of marketing tools in the crisis management system: market situation, stage of the life cycle of the enterprise, management techniques and methods, quality characteristics of products, resource potential. marketing tools should be implemented in accordance with a specific anti-crisis marketing program (figure 3). the logical result of such a program is the formation and implementation of a marketing strategy for crisis management. the chosen marketing strategy should be flexible in case of sudden changes in the market. in addition, the main factors to be taken into account when developing marketing strategies are resource, investment, innovation and human resources potential of the enterprise. when substantiating the strategy, it is necessary to analyze, evaluate and make a choice of priorities in marketing activities. it is necessary to take into account the interrelation of goals and strategies, their coherence in time and subordination. today, in order to retain existing customers, as well as attract new ones, the concepts of partnership and social and ethical marketing, the search for new marketing techniques to influence the client are especially relevant for domestic enterprises. 4. conclusions the results of the study give grounds to draw the following conclusions. in order to preserve and strengthen the company 's position, crisis management will be applied, i.e., management in conditions of high probability of risk. regardless of the economic situation and the stage of the company 's life cycle, it is necessary to develop crisis management programs. such programs are aimed at preventing bankruptcy, bringing the organization out of the crisis and restoring anti-crisis program implementation plan of anti-crisis measures basics of formation and implementation of marketing strategy of crisis management the principles of its development planning; constant control; rapid response; focus; reliability and completeness of coverage; predictability; clarity and consistency; competence; orientation (focus); multivariate; professionalism; maximization of the effectiveness of anti-crisis marketing measures; optimization of the ratio of the effectiveness of anti-crisis measures and the risk of their implementation the use of specific marketing tools, means, methods and technologies is substantiated to ensure the conditions for achieving sales volumes and market share, which contribute to improving the efficiency and competitiveness of the enterprise's economic activity, strengthening its financial stability, etc. traditional modern segmentation; positioning; analysis; prognostication integrated marketing technologies; internet technologies; crm technologies; trade marketing figure 3. marketing support of anti-crisis management source: developed by the authors three seas economic journal 20 vol. 3 no. 3, 2022 competitiveness. crisis marketing is a part of crisis management. marketing as a functional subsystem of enterprise management plays a key role in the system of its crisis management, and marketing policy serves as the basis for strategic planning of all aspects of the enterprise. in the pre-crisis period and during the crisis, special attention is paid to the development of an effective anti-crisis marketing strategy based on market research. they help to diagnose opportunities and position of the company in the market, assess its strengths and weaknesses, identify possible threats. anti-crisis marketing programs should ensure the production and sale of such goods that are in steady demand in the market and bring the main profit to the enterprise. also, enterprises should meet the needs of consumers to the fullest extent, unlike competing organizations, in those areas where they have strong competitive advantages. a marketing approach to solving the company 's problems during the crisis will mitigate the impact of the consequences and continue to be active in the market. references: natrus, k. s., & xaminich, s. yu. (2016). anti-crisis marketing as a component of strategic management. economic bulletin of the university, vol. 31(1), pp. 72–79. holovach, k. s., holovach, o. p., & trofimchuk, o. l. (2020). anti-crisis measures and the mechanism of their implementation in agricultural enterprises. agrosvit, vol. 21, pp. 53–60. tkachenko, a. m., & mykhailenko, a. v. (2013). anti-crisis component of industrial enterprise management. economic bulletin of zaporizhia state engineering academy, vol. 4, pp. 119–125. zhurenko, o. v., & dergalyuk, b. v. (2018). anti-crisis marketing and stages of its implementation in the organization. development of socio-economic systems in modern conditions: materials of the ii international scientific-practical conference, pp. 94–96. gurzhij, n. m. (2011). the system of marketing risks in the enterprise. bulletin of khmelnytsky national university, no. 6, vol. 4, pp. 167–170. hlukhenka, m. v. (2019). strategic marketing as a tool for crisis management. development strategy of ukraine: scientific journal, vol. 2, pp. 129–134. pogrebnyak, a. yu. (2015). the essence of the components of the mechanism of crisis management in an industrial enterprise. economic bulletin of the national technical university of ukraine "kyiv polytechnic institute", vol. 12, pp. 300–310. received on: 2th of september, 2022 accepted on: 4th of october, 2022 published on: 31th of october, 2022 three seas economic journal 110 vol. 1, no. 1, 2020 corresponding author: 1 national metallurgical academy of ukraine, ukraine. e-mail: sgg1@ukr.net 2 alfred nobel university, ukraine. e-mail: sgg1@ukr.net doi: https://doi.org/10.30525/2661-5150/2020-1-16 research of the enterprise profitability strategy gennady shvachych1, elena kholod2 abstract. the article focuses on such indicators as profit and profitability, reflecting the economic efficiency of an enterprise, its financial condition, and the problems of its economic development. the subject of the research is to analyse the profitability of an enterprise and validate the strategy of the enterprise’s efficiency increasing. the methodology of the research is based on an analysis of the enterprise efficiency characteristics in general, the profitability of different areas of production. for this purpose, in the economic analysis, in particular, there were used profitability indicators. in this case, profitability is the most generalized, qualitative indicator of the economic efficiency of an entity’s activity, which allows comparing the amount of profit with the value of the means, by which it was obtained. the purpose of the research is to analyse the production activity of ojsc “nmtz” and to develop proposals for improving its production efficiency; study ways of production development; research factors that delay the growth process of pipe products production; identify the profitability growth factors of the enterprise that allow increasing competitiveness indicators in the pipe market. practical application. the enterprise’s priority directions of activity aimed at improving the technique and technology on the basis of modern scientific developments in order to reduce energy and material consumption, as well as to improve the quality of pipe products are shown. the key ways of increasing profit and profitability are indicated. factors of the income increase, which allow the enterprise to carry out its activities more successfully, are revealed. key words: profit, profitability, enterprise, economic efficiency, market, competitiveness. jel classification: l11, l16, o14, p11 1. introduction in an economic analysis, the results of an enterprise can be estimated by such indicators as output, sales, profit, etc. however, when it comes to assessing the effectiveness of an enterprise, it becomes obvious that the listed characteristics are not enough because those are the absolute indicators. in this regard, in order to characterize the efficiency of the enterprise in general, the profitability of different areas of production in the economic analysis, there are used, in particular, the indicators of profitability. profitability in the broad sense of the word means efficiency and returns (balabanov, 2007). profitability is the most generalized, qualitative indicator of the economic efficiency of an entity’s activity; it allows you to compare the amount of profit with the value of the means, by which it was obtained. therefore, profitability can be interpreted as a measure of returns, reinunerativeness, and business efficiency. relative indicators that allow one to evaluate the efficiency of an enterprise in general, as well as directions of its activities (production, commercial, investment, etc.), the profitability of production of certain types of products and definite services rendering measure profitability. it should be noted that the indicators of profitability are important elements that reveal the factor environment of profit generation, so they are mandatory in conducting a comparative analysis and assessment of the financial condition of the enterprise. in addition, profitability is important for decision-making in investment, planning, budgeting, coordination, evaluation, and control of the enterprise activity. the purpose of the article is: − analysis of production activity of nmtz ojsc and proposals development for improving its production efficiency; − research of ways of production development; − research of factors that delay the production growth process of pipe products; − identification of profitability growth factors of an three seas economic journal 111 vol. 1, no. 1, 2020 enterprise that allow increasing the competitiveness indicators in the pipe market; − definition of directions of optimal production process development. 2. analysis of recent research and publications one of the main results of an enterprise is profit, which is an absolute indicator of its efficiency. a significant contribution to solving the problem of improving the efficiency of enterprises belongs to such economists as v.h. andriichuk, m.ya. demianenko, v.n. kosinsky, p.m. makarenko, l.l. melnyk, n.m. bohatska, p.t. sabluk et al. (andriichuk, 2014; melnyk, 2013; sabluk, 2008; parshyna, 2013). thoroughly this problem in the classical form is reflected in the researches of e.i. krylov, v.m. vlasova, i.v. zhuravkova, t.u. turmanidze, i.a. blank et al. (krylov & vlasova, & zhuravkova, 2006; tumanydze, 2013, blank, 2007). note that some western economists define profits as a category of well-being. so, j. hicks stated that the goal of determining profit in practice is to give people a sense of the amount they can spend on consumption without becoming poorer. the essence of this provision is that profit should be considered as the maximum amount that a person can spend, provided that his/her welfare will not have been decreased by the end of a certain control period. at the current stage of economic development, most economists also interpret the profit from the economic activity of an enterprise as the excess of income over costs. in particular, s.f. pokropivnyi (pokropivnyi, 2001) and n.m. bondar (bondar, 2014) consider the profit as a part of the proceeds remaining after the reimbursement of all costs for the production and commercial activities of an enterprise. o.o. hetman and v.m. shapoval prove that “profit is the difference between the sale price and the cost price of products (goods, works, services), between the amount of proceeds received and the amount of production and sales costs” (hetman & shapoval, 2010). the researches of local and foreign scientists attest that the absolute profit size does not allow obtaining a clear idea of the level, or changing in the efficiency of production. thus, the total amount of profit may increase, when the production efficiency will remain unchanged or even decrease. this situation can take place with the profit growth due to quantitative factors of production. for example, with the equipment and staff expand. at the same time, we note that the profitability of production (or reinunerativeness) is derivative from the profit (prokopenko & hanin, 2008). in this case, the meaning of profitability in the economic literature is presented in several interpretations. this fact indicates that the profitability of the production relates to the economic category, which is different in its complexity. for instance, in general, it can be noted that the profitability of production is a relative indicator of the economic efficiency of an enterprise. in addition, such an indicator comprehensively represents the use of monetary, labour and production resources. on the other hand, the profitability of production can be interpreted as the ratio of income and the capital invested in creating such income. consequently, the profitability of a production based on a comparison of the return on investment with the capital invested allows determining the level of profitability of an enterprise and comparing it with the alternative use of capital, received by the enterprise on equal risk terms. it should be noted that, despite the significant source of research on the theory of an enterprise increasing efficiency, the problem of profit and profitability increasing has not been studied sufficiently. this is especially true in the iron and steel industry, where there is a drop in production. 3. research on the production efficiency increasing problem profit, as a source of industrial and social development, is one of the major factors in self-financing of an enterprise. moreover, the possibilities of an enterprise are mainly determined by the extent, to which its income exceeds costs. therefore, it is not only profit that plays an important role in the enterprise’s activity but also the losses. those can usually show miscalculations and even errors in the production organization, as well as in sales. the noted points allow asserting that the profit is the result of the activity of an enterprise that indicates its absolute efficiency. figure 1 shows the main factors of increasing the profit of an enterprise. indicators of production profitability are the most important factors for the current planning of an enterprise. they are also taken into account in determining the financial capacity of an enterprise. it is clear that the profitability indicators of an enterprise can be considered as generalizing criteria of economic production efficiency. in three seas economic journal 112 vol. 1, no. 1, 2020 general, such indicators reflect the efficiency of usage of money and labour resources. in this case, the enterprise is considered to be profitable if it is remunerative. the study of production profitability indicators can reveal the profit increase factors, as well as indicate the ways of further development of an enterprise. also, the profitability indicators may show the assessment of the enterprise management effectiveness, as it is obvious that the high-profit level and a significant return of the enterprise directly depend on the effectiveness of management decisions. from these positions, the production profitability can be interpreted as one of the most important factors in the quality of the enterprise management. an enterprise must constantly identify ways to increase profitability for ensuring highest indicators of its activity. the main factors in increasing the production profitability can be defined by the following: the higher the income and the less the value of fixed assets and working capital for its achievement, the higher the production profitability. at the same time, the economic efficiency of an enterprise operation increases significantly. as a rule, when performing an analysis of ways to increase the production profitability, the influence of external and internal factors is distinguished. external factors in increasing the production profitability can be referred to the sales market expansion of the products at the expense of lower prices for goods produced. internal factors are considered to be more significant than external ones. these include the following: reducing production cost, increasing production volumes, increasing the return on fixed assets, and so on (figure 2). a wide range of indicators may characterize the production profitability. those show the ways to increase the efficiency of production. on the other hand, profitability indicators are to determine the effectiveness of the funds invested in production. the more so, the assessments analysis of the financial and economic enterprise activity is based on these indicators. the most important ones may include the following. in particular, these are: assets profitability, investment capital profitability, products profitability, roi of personnel, sales profitability, the coefficient of basic profitability of assets, profitability of net assets, etc. the main factors of profit growth cost of production reduction rational use of industrial resources ensuring the products competitiveness improving product quality application of technical and organizational innovations figure 1. the main factors of increasing the profit of an enterprise key ways to increase profitability increasing the absolute amount of profits production costs reduction figure 2. the key ways to increase profitability three seas economic journal 113 vol. 1, no. 1, 2020 the direct analysis of assessments of the nmtz ojsc efficiency was conducted on the basis of determining the following indicators of profitability. production profitability: pp = pr / pc × 100%, (1) where pp – production profitability; pc – production costs; pr – profit obtained from the production volume. the share of profits accounted for by 1 uah spent on production assets characterize such an indicator. products profitability: pr = pr / c × 100%, (2) where pr – production profitability; pr – profit; c – cost. it shows the profit amount for 1 uah of self-cost. sales profitability: sp = pr / s × 100%, (3) where sp – sales profitability; pr – profit; s – sales or revenue. the sales profitability is responsible for the profits amount, which accounted for 1 uah of revenue. sometimes such an assessment is called general profitability. 4. analysis of profit, financial condition, and production profitability ojsc “nmtz” is focused on the production of electric welded pipes of various purposes. the priority direction of the plant’s activity is the production of pipes of such a diameter as large, medium, and small. modern technologies and equipment in production, as well as quality control and product testing systems, ensure the production of pipes of the following grades of steel: carbon, lowalloy, and stainless steel. the pipes are produced according to the local and international standards. the analysis of the financial condition of the enterprise was based on the report that describes the corresponding balance of the enterprise. table 1 shows the main indicators of such a balance. table 1 analysis shows the following. the enterprise received a profit of 1 419 197 thousand uah from its activity for the reporting period. this profit amount shows that in comparison with the last year’s corresponding indicator, it decreased by 18.7%. it is 423 303 thousand uah in absolute values. closer analyses of the enterprise main indicators show the following. the self-cost of production, realized by the enterprise, increased by 8.4%. thus, at the enterprise, there was a growth in the production self-cost over the income. this situation has led to a 9.8% decrease in gross profit in general. a detailed analysis of the situation at the enterprise showed the following. the slowdown in the enterprise performance occurred due to the deteriorating situation in the production and sale of the produced goods, that is, the main activity of the enterprise was in the crisis phase. this explains the costs increase over other activities of the enterprise. the next step was to analyse the enterprise profitability. table 2 represents the main profitability indicators. those show a decrease in the efficiency assessment of the enterprise for all major parameters compared with the last year. in addition, there were determined other profitability indicators of the enterprise. profitability decreased by 16%. such an assessment showed that 1 uah of assets accounted for 0.12 uah of net profit. in the past reporting period, it was 0.28 uah. the profitability of the net worth decreased by almost 2.1 times. in the previous reporting period, table 1 the main indicators of financial activity of the enterprise item line code for the reporting period for the same period of the previous year net income from sales of goods (goods, works, services) 2000 1 498 197 1 842 500 self-cost of the products sold (goods, works, services) 2050 (1 271 830) (1 516 403) gross: profit 2090 226 367 326 097 table 2 basic indicators of the enterprise profitability profitability for the reporting period for the same period of the previous year production 0,166 0,143 products 0,215 0,178 sales 0,166 0,143 three seas economic journal 114 vol. 1, no. 1, 2020 1 uah of the net worth accounted for 0.51 uah, while at the reporting period it was 0.24 uah. 5. the strategy of increasing the production profitability analysis of the strategy of increasing the production efficiency is based on the peculiarities of the sales figures of pipes by the enterprise. table 3 shows such data. table 3 pipes sales figures profitability for the reporting period for the same period of the previous year sales of pipes in local market 452 432 500 217 sales of pipes for export 1 045 765 1 342 283 total proceeds from sales of pipes 1 498 197 1 842 500 table 3 data analysis shows that the enterprise pays a considerable attention to the sales of pipes for export. the main consumers of the enterprise’s products are such countries as the us and china, as well as the eu countries. it should be noted that the enterprise produces pipes for oil and gas sector. and this, in turn, means that the prospects for the expansion of the production of the enterprise directly depend on the oil and gas field development. against this background, there could be specified several subjective factors that affect the phase-out. the main ones include the following: − expansion of pipes production by countries that are consumers of pipes’ products (usa, china, eu); − significant aggravation of competitive opportunities in the world markets for pipe products; − a significant increase in prices for raw materials; − some activation of the policy of import substitution of ukrainian pipe products. it is also possible to point out objective factors that hamper the expansion of the pipe product market. thus, the price of energy resources has a significant impact on the final cost of pipe products. abroad pipe plants have the opportunity to buy them at a significantly lower price than local producers do. clearly, this situation leads to a reduction in the cost of pipe production for abroad enterprises and thus has significant advantages in the competition. there should also be noted another aspect that has a significant impact on the competitiveness of products. this is the quality. for pipe products, this is primarily due to the increase in the accuracy of the pipes’ diameter. this circumstance indicates that today pipe producers are trying to follow american standards. this allows a significant increase in the sales figures of pipes in the us market. on the other hand, this approach opens the prospects of development and other markets, e.g., central asian. the results of the above analysis show that competition in the market of pipe products is quite high. for these reasons, every pipe producer is looking for ways to increase the competitiveness of its products. one of the most promising directions for increasing the competitiveness of products for nmtz ojsc could be the implementation of the energy-saving program. to do this, there was analysed both externals and internals of the enterprise. at the same time, there were spotted the opportunities and the greatest future threats. in this regard, to improve the profitability of the enterprise there were proposed some measures: the investment project involves the improvement of the technology of producing pipes of a certain diameter, which increases the yield of a suitable products and reduce the number of defects, as well as reduce the self-cost and improve the profitability of production. the essence of the design choices is to replace the outdated electrical equipment of one rolling mill with more up-to-date and reliable, namely, the replacement of the relay-contact control system on four motors on serial complete thyristor converters. modernization of electrical equipment can be carried out at the expense of the depreciation fund. direct capital investments were calculated to implement such a proposal. capital investment in production includes: the costs associated with the purchase of the appropriate equipment, the cost of installation and commissioning, the cost of supporting materials. in general, this project requires 190.35 thousand uah. another strategic direction of the enterprise’s energy saving program is the refusal of the open-hearth process and the introduction of the technology of smelting steel processing. such a transition allows using the local steel. the introduction of such an approach is aimed at reducing the cost of production as the enterprise may partially refuse the purchase of imported production components. consequently, there is an opportunity to bring the quality of pipe products to the level that meets the regulatory three seas economic journal 115 vol. 1, no. 1, 2020 requirements of the european union, as well as to increase the volume of pipes delivered to the abroad consumers. in addition, there should be noted that it is advisable for the enterprise to consider a competitive strategy of cost leadership since it may be very relevant to it. such a strategy aims at reducing costs throughout the chain of the technological process of pipes production. the main purpose of such a strategy is to create a significant advantage over competitors at appropriate costs. for the most part, such a strategy is used by large enterprises with a limited range of products, namely, such as nmtz ojsc. the main idea of this strategy is to find opportunities to reduce costs. the use of this strategy could cut production costs by reducing the percentage of defects and by optimizing the production process. with the cost lowering, there supposed the increase in the net profit amount, with the same sales figures, which leads to an increase in profitability indicators. therefore, in order to maintain favourable positions in the pipe production market, it is necessary to work systematically in all directions of the enterprise’s activity, particularly: improving the quality of products, improving production technologies, and developing new types of products according to the growing market requirements. 6. conclusions based on the foregoing, subjective and objective factors hindering the increase of pipe production efficiency are established. the priority directions of the enterprise development are determined. a program of energy saving is proposed to increase the competitiveness of products. in addition, the enterprise was proposed to introduce a competitive strategy of cost leadership. the use of this strategy will cut production costs by reducing the percentage of defects and by optimizing the production process. with the cost lowering, the net profit amount is supposed to increase, keeping the same sales figures, which leads to an increase in profitability indicators. references: andriichuk,  v. h. (2014). problemni aspekty rehulyuvannya funktsionuvannya ahropromyslovykh kompaniy [problematic aspects of regulation of the functioning of agro-industrial companies]. ekonomika apk [economy of agro-industrial complex], no. 2, pp. 5–21. (in ukrainian) balabanov,  i. t. (2007). finansovyy analiz i planirovaniye khozyaystvuyushchego subyekta [financial analysis and planning of an economic entity]. moscow: finansy i statistika. (in russian) blank, i. a. (2007). upravleniye pribylyu [profit management]. kyiv: nika-tsentr. (in russian) bondar,  n. m. (2014). pro kryteriyi efektyvnosti mekhanizmu derzhavno-pryvatnoho partnerstva [on the criteria of the effectiveness of the mechanism of public-private partnership]. upravlinnya proektamy, systemnyy analiz i lohistyka [project management, system analysis and logistics], issue 13, p. 244–260. (in ukrainian) hetman, o. o., & shapoval, v. m. (2010). ekonomika pidpryyemstva [economy of the enterprise]. kyiv: tsentr uchbovoyi literatury. (in ukrainian) krylov,  e. i., vlasova,  v. m., & zhuravkova,  i. v. (2006). analiz finansovykh rezultatov, rentabelnosti i sebestoimosti produktsii. [analysis of financial results, profitability and cost of production]. moscow: finansy i statistika. (in russian) melnyk,  l. l. (2013). naukovi zasady prybutkovosti ahropidpryyemstv ta yiyi derzhavna pidtrymka [scientific principles of profitability of agro enterprises and its state support]. investytsiyi: praktyka ta dosvid [investments: practice and experience], no. 7, pp. 46–49. (in ukrainian) parshyna, o. a. (2013). kontseptualni osnovy zabezpechennya konkurentospromozhnosti promyslovykh pidpryyemstv [conceptual basis for providing competitiveness of industrial enterprises]. teoretychni ta prykladni aspekty pidvyshchennya konkurentospromozhnosti pidpryyemstv [theoretical and applied aspects of increasing the competitiveness of enterprises]. dnipropetrovsk: herda, vol. 1, pp. 7–14. (in ukrainian) pokropivnyi, s. f. (2001). ekonomika pidpryyemstva [economy of the enterprise]. kyiv: kneu. (in ukrainian) prokopenko, i. f., & hanin, v. i. (2008). metodyka i metodolohiya ekonomichnoho analizu [methodology and methodology of economic analysis]. kyiv: tsentr uchbovoyi literatury. (in ukrainian) tumanydze,  t. u. (2013). upravlenye proyzvodstvennymy zatratamy predpryyatyya [management of production costs of the enterprise]. stratehyya razvytyya ékonomyky [strategy of economic development], no. 3(202), pp. 24–28. (in ukrainian) sabluk,  p. t. (2008). problemy zabezpechennya dokhidnosti ahropromyslovoho vyrobnytstva v ukrayini v postindustrialnyy period [problems of ensuring the profitability of agro-industrial production in ukraine in the post-industrial period]. ekonomika apk [economy of agro-industrial complex], no. 4, pp. 19–37. (in ukrainian) three seas economic journal 12 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: aleskerovaaleskerova@gmail.com orcid: https://orcid.org/0000-0003-3072-4854 researcherid: m-6099-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-2 optimization and prospects for the development of insurance in the tourism business in the context of the pandemic yuliia aleskerova1 abstract. the purpose is the current state of tourism in ukraine and the need to find alternative positive methods and tools to prevent the bankruptcy of the subjects of tourist activity. on the basis of a study of the peculiarities and risks of the subjects of tourist activity, which have increased in the conditions of the covid-19 pandemic, recommendations for implementation in the practice of insurance as a method of preventing bankruptcy have been developed. comprehensive insurance protection of business entities in the tourism industry should be carried out by combining insurance in such areas as: insurance against interruption of tourist activity (compensation for losses from business interruption for reasons beyond the control of the tourist operator, including those associated with covid-19 and restrictive measures on tourism), civil and professional liability insurance of tour operators, travel agents, property and personnel insurance, as well as cyber insurance hiding. methodology. the issue of insurance provision of the tourism industry in a pandemic requires a comprehensive and systematic approach. modern realities require it to raise social standards of protection of the population in general and tourists in particular. achieving risk minimization in tourism is possible only with the establishment of active cooperation between the state authorities, travel companies and insurance companies. results. insurance in tourism can be considered as a system of financial and economic relations between insurance companies, subjects of tourist activity and tourists on the satisfaction of the interests and needs of each of them. in the tourism business, the risk of adverse events and their negative consequences is particularly significant. sometimes it is difficult to predict the presence of adverse factors or events for the well-being of tourists. additional difficulties are associated with the participation and interaction of a large number of independent business partners (tour operators, consular services, hotels, transport companies, etc.) thus, the probability of occurrence of insurance claims has substantial grounds. value/originality. analyzed the current state, threats and prospects of the situation in the insurance market in ukraine. various factors and objective circumstances influence the development of global and, in turn, national markets of insurance services. the priority of development of national and world economy in recent years is globalization of financial institutions. the substantial basis of integration and globalization processes is the movement of capital. the insurance market, as an integral part of the country's financial market, is primarily influenced by globalization processes. this market reacts almost instantly to the dynamic processes in the world economic environment and reflects the main trends reflecting the formation of the modern insurance space. the pandemic crisis differs from the previous ones in that the freedom of movement was considerably restricted. the aim of the study is to identify the most necessary adaptive and transformational changes in ukraine, taking into account the factors caused by the pandemic. today the domestic insurance market is experiencing many negative challenges. the question of what consequences are inevitable after the end of the quarantine and how they will affect the participants of the insurance market remains less relevant. the external and internal factors affecting the functioning of the insurance market of ukraine have been considered. it is established that due to objectively direct consequences the number of insurance companies will decrease. it is established that in ukraine insurance companies offer health insurance programs that provide financial support in case of covid-19 diseases, as well as improve already existing insurance programs. legislative changes that have occurred in ukraine in the sphere of insurance in connection with the pandemic coronavirus are analyzed. it is established that the state implements measures aimed at protection and support of the population in the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 13 vol. 3 no. 1, 2022 event of a pandemic. existing and potential threats have been determined, the opportunities that will allow insurance companies to maintain and strengthen their positions in the insurance market have been identified. key words: insurance, insurance protection, bankruptcy prevention, tourism, subjects of tourist activity, covid-19. jel classification: g22, g33, l83 1. introduction the covid-19 coronavirus pandemic is the most serious challenge the world has faced since world war ii. having appeared in asia late last year, the virus has spread to every continent except antarctica. the crisis will have serious consequences for the global economy and, according to an imf report, the projected drop in gdp from april 2020 in ukraine will reach 7.7%. there are quite different estimates of further global economic recovery, from a similar scenario, which envisages economic recovery in 2019 in 2021, to a longer recovery and even a long-term recession. tourism is one of the sectors of the world economy that has been hit hardest by travel restrictions, and the situation is particularly difficult in aviation. as of april 20, 2020, 100% of all international destinations had imposed travel restrictions because of the pandemic. governments responded immediately to the need to minimize the economic impact of the covid-19 pandemic based on two general approaches: the first is to provide affordable credit lines for businesses, the second is to defer debts and tax debts. today in ukraine there is a significant lag in the pace of implementation of measures to support the tourism sector, which is a serious threat to the competitiveness of the industry in the world market in the projected recovery period in 2021. key industry players, including international hotel chains, are introducing a number of external and internal measures to minimize the impact of the covid-19 pandemic, including market safeguards (deferring or refunding booked rooms, optimizing loyalty programs, community support), health and safety measures and internal reorganizations (cuts, unpaid leave, downsizing/rejection of capital investments). regarding the consequences of the covid-19 pandemic in the tourism sector, ukraine is in a relatively better situation than most countries, as the share of domestic and outbound tourism significantly exceeds the inflow. ukrainian tourism has not received a quick systematic response from the government in the form of implementation of possible measures to support the tourism industry, compared to the average response and types of measures implemented by the governments of neighboring countries and eu member states. this further complicates the situation of small and mediumsized businesses (smes) working in the hospitality, tourism and recreation sector. at the end of 2019, at the initiative of the ebrd and with the participation of external partners, the document "roadmap for the competitive development of tourism in ukraine" was prepared, which was the result of intensive work of all major stakeholders in the tourism sector in ukraine. already today the insurance market of ukraine is experiencing a number of difficulties. the question of what consequences are expected after the end of the quarantine, and how the events will affect the participants of the insurance market is important. there are external and internal factors that affect the functioning of the insurance market of ukraine. let us consider external factors. regardless of what prospects professional analysts predict for financial institutions, none of them in recent years has foreseen such a negative factor as a global virus or pandemic. however, in the absence of general estimates of its global significance, we can say whether or not it will have the strongest impact on the world economic and financial situation, and may intensify the financial crisis, which may begin as early as 2021. thus, global external factors, such as the global financial crisis and the covid-19 pandemic (which has led to increased global crises), could have the strongest impact on the financial sector of ukraine, in particular on the insurance market. euro-insurers have potential losses similar in the optimistic scenario, as natural disasters of average size are appropriately reflected in the financial models of leading insurance and reinsurance companies. however, in a pessimistic scenario, which they also take into account, the possible losses due to my covid-19 could lead to the loss of the new positive development dynamics of the previous decades and hitherto unheard of losses. negative events in the global insurance markets will certainly have a negative impact on the domestic insurance market, in particular, its consequences may be: – an increase in the cost of reinsurance; – a fall in the ratings and indicators of reliability and financial stability of insurers and reinsurers; – the introduction of new restrictions and exceptions on the timing of reinsurance contracts; – a significant reduction in activity or no restrictions on work in small and weak markets, including emerging markets. all this could have a negative impact on the domestic insurance market in the near future. but the insurance market of ukraine will also be affected by internal factors and their negative consequences. in particular, it is already clear that the pandemic has three seas economic journal 14 vol. 3 no. 1, 2022 led to a decline in the domestic economy and gdp growth, decreased sales and profits of business entities, and reduced business activity. some spheres of business were forced to suspend or close down altogether. for example, insurers note that pandemics and epidemics of demusica are exceptions to reimbursement to insured persons. but because of the lack of protection of the population with testing, improper diagnosis, the number of patients with "traditional" diseases is growing. all this leads to unnecessary taxes for insurance companies and, as a consequence, to damage in the sphere of personal insurance in general. 2. the impact of the economic crisis on consumer behavior the covid-19 coronavirus pandemic is the most serious challenge the world has faced since world war ii. when the virus appeared in asia late last year, it spread to every continent except antarctica. the crisis will have serious consequences for the global economy according to the imf report, the projected drop in gdp from april 2020 in ukraine will reach 7.7%. there are quite different estimates of further global economic recovery – from v-shaped scenario, which envisages economic recovery at the level of 2019 in 2021, to a longer recovery and even a long-term recession. tourism is one of the sectors of the global economy that has been hit hardest by travel restrictions, and the situation is particularly difficult in the aviation industry. as of april 20, 2020, pandemic travel restrictions had been imposed on 100% of all international destinations. governments immediately responded to the need to minimize the economic impact of the covid-19 pandemic based on two general approaches to managing situations: the first approach is to provide affordable credit lines for businesses, and the second is to defer debt and tax obligations. in ukraine today there is a significant lag in the pace of implementation of measures to support the tourism sector, which poses a serious threat to the competitiveness of the industry in the world market in the projected recovery period during 2021. key industry representatives, including international hotel chains, are introducing a number of external and internal measures to minimize the effects of the covid-19 pandemic, including market safeguards (rescheduling or refunding booked rooms, optimizing loyalty programs, community support), implementing mandatory health and safety measures and internal reorganizations (cuts, unpaid payroll leave, reduction/rejection of capital investments). as for the consequences of the covid-19 pandemic in the field of tourism, the situation in ukraine is relatively better than in most countries, as the share of domestic and outbound tourism far exceeds the inbound flow. ukrainian tourism has not received a quick systematic response from the government in the form of implementation of possible measures to support the tourism industry compared to the average response and types of measures implemented by the governments of neighboring countries and eu member states. this further complicates the situation of small and medium-sized enterprises (smes) working in the fields of hospitality, tourism and recreation. 3. results the world economy is projected to shrink by 4.4 percent in 2020, according to october forecasts. the shock in tourism-dependent countries will be much stronger. the real gdp of african tourismdependent countries will fall by 12 percent. caribbean countries dependent on tourism would also see a drop of 12 percent. pacific island nations, such as fiji, could see a real decline of 21 percent in real gdp in 2020. domestic tourism has partially recovered and is helping to mitigate the impact on jobs and businesses in some areas. but a real recovery will only be possible when international tourism recovers. this requires global cooperation and science-based solutions so that travel restrictions can be safely lifted. the survival of businesses in the tourism ecosystem is questionable without continued government support, and while governments have taken impressive steps to mitigate tourism impacts, minimize job losses and enable recovery in 2021 and beyond, more proactive and coordinated action is needed. key policy priorities include restoring traveler confidence, supporting tourism businesses to adapt and survive, promoting domestic tourism and supporting the safe return of international tourism, providing clear information to travelers and companies and reducing uncertainty (as much as possible); the sector and closing support gaps, strengthening cooperation within and between countries, creating more sustainable tourism. while flexible policy solutions are needed to sustain the tourism economy with the virus in the short and medium term, it is important to look beyond and address the effects of the crisis, which has left gaps in government preparedness and response. coordinated action between all levels of government and the private sector is critical. the crisis is an opportunity to rethink tourism for the future. tourism is at a crossroads, and the actions taken today will shape tomorrow's tourism. governments need to address the long-term effects of the crisis while harnessing digitalization, supporting a low-carbon transition and facilitating the structural transformation needed to build a stronger, more sustainable and stable tourism economy. domestic three seas economic journal 15 vol. 3 no. 1, 2022 tourism provides a much-needed boost to support many tourism destinations and businesses and will remain a key driver of economic recovery in the short to medium term. since mid-2020, there has been some activity in domestic tourism, in particular due to the effects of lifting restrictions on international travel. however, domestic tourism has not become a panacea, as many countries have faced new waves of the virus, and, as expected, the level of domestic tourism at the end of 2020 was below covid. for example, spain and great britain predict a 45-50% decline in domestic tourism in 2020. in addition, not all tourist destinations and establishments have benefited from permanent restrictions on movement within the country and changed patterns of tourist demand and behavior. this has very tangible economic and social consequences for many people, places and businesses, as well as for the economy as a whole. forecasts of tourist activity and its recovery for some countries, according to the organization for international cooperation and development (oecd), are shown in table 1. the halt in tourism has a significant impact on the economy as a whole, given the interconnected nature of the sector. according to oecd estimates, more than a third of the value added of tourism generated in the domestic economy comes from indirect impacts, reflecting the breadth and depth of links between tourism and other sectors (eg food, agriculture, transport, business). meanwhile, according to the united nations conference on trade and development (unctad), global gdp losses due to the tourism crisis could reach 2.8% of world gdp ($ 1.2 trillion) if the number of international tourists arrives decreases by 66%, with effects most visible in countries such as croatia (potential decline in gdp 8%), portugal (6%), morocco (4%), greece (4%), ireland (3%) and spain 3%). this could increase to 4.2% of world gdp ($ 3.3 trillion) if international tourism flows stop within 12 months. the crisis threatens millions of jobs in the tourism sector. tourism is labor-intensive and provides a high level of employment for low-skilled workers along with high-skilled jobs. according to the international labor organization (ilo), 144 million workers are employed worldwide in the accommodation and catering subsectors alone, about 30% of whom are employed in small tourism enterprises with 2-9 employees. many of these jobs are in professions that work with customers and are therefore also at risk of contracting the virus (e.g. waiters, stewards, hotel administrators). the extent of job losses is not yet clear, as government support has shielded workers from the full impact of the pandemic. however, according to the world travel and tourism council (wttc), layoffs in 2020 threaten 174 million jobs worldwide. the european commission's joint research center predicts that businesses that work and/or depend on tourism between 6.6 and 11.7 million jobs could face reduced working hours or permanent losses in 2020, ranging from 3.2% to 5.6% of the total active population in the table 1 predictions of tourism development and economic recovery: examples of some countries country projections for tourism and economic recovery canada the july 2020 revised estimates for tourism from canada's destination country were based on the opening of the canadian border in january 2021. canada, as a destination country, developed two possible scenarios for 2020 based on different possible conversion rates of canadian outbound tourism to domestic travel: scenario 1: assuming only 20% of outbound tourism demand in canada is converted to domestic tourism, tourism spending would decline by 61% (to cad 41.3 billion) and tourism-related jobs would decline by 55% (to 324,000). scenario 2: assuming 100% of canada's outbound tourism demand turns to domestic tourism, tourism spending would decline by 43% (to cad $59.7 billion) and jobs related to tourism decline by 41% (443,500). croatia travel forecasts are revised every 15 days, after studying the latest travel safety and epidemiological recommendations. this was reported by the e-visitor system, which provides daily updates. germany the latest forecasts of the federal center for competence in tourism the july 2020 "recovery check" identifies three possible scenarios for domestic and international tourism recovery. under the central scenario, domestic tourism is expected to return to 2019 levels in the summer of 2021, while the forecast for international tourism resumption is in april 2023 (i.e., two years longer). annual recorded turnover from 2019 is expected to decline by: 42% in domestic and 57% in international tourism in 2020, 14% in domestic and 52% in international tourism in 2021, and 30% in international tourism in 2022. switzerland according to the swiss institute of economics (kof), overnight stays are expected to decline by 34% by 2020. the decline in domestic demand is projected to be relatively small (14%) with significant losses in international business (55%). domestic and european demand is expected to gradually recover, but demand in overseas markets will not recover until 2023. with the exception of a few hotspots, hotel prices will also fall and resume in 2022. fares on mountain railroads could increase significantly with a sharp decline in passenger numbers. uk visitbritain modeled a series of short-term scenarios for inbound and domestic tourism. under the central scenario, the number of inbound tourists is expected to decrease by 73%, with a corresponding 79% reduction in spending (last updated in early october 2020). for domestic tourism, the central scenario predicts a 49% reduction in trips and spending. three seas economic journal 16 vol. 3 no. 1, 2022 european union. among them, the social groups most often employed in micro or small tourist businesses – women, youth, rural communities, indigenous peoples and informal workers – will be the most affected. estimates at the national level similarly reflect the degree of impact on tourism, along with the challenges of forecasting in a rapid and uncertain situation. quantifying the current and future impact of the crisis on the tourism sector is difficult as the crisis has revealed weaknesses in tourism statistical information systems, including a lack of reliable, comparable and timely data to inform policy and business decisions. evidence suggests a sharp decline in international tourist flows and tourism expenditures, as well as a decrease in domestic tourism. attempts to predict the impact of a pandemic on the tourism economy have repeatedly outpaced the rapidly changing sanitary situation and changes in measures and regulations to contain the epidemic. traditional forecasting methods are unreliable in today 's environment. table 1 presents projections of domestic and international tourism performance in 2020 in some countries, but like these oecd projections, scenario approaches show some areas of tourism recovery, but they are necessarily based on assumptions and simplifications and are subject to constant adjustment and revision. the outlook for tourism is highly uncertain, and recovery will depend on the interrelated effects of the economic and medical crisis on supply and demand. these include the development of a pandemic, the availability and affordability of vaccines (or alternative means of control) and the lifting of travel restrictions, as well as the survival and readiness of businesses throughout the tourism ecosystem to meet demand, the impact on consumer confidence and travel behavior and the development of the overall economy. the global scale and long duration of the crisis, the prolonged uncertainty and the interrelated economic and health nature of this crisis make it unlike all previous shocks to the tourism system. the crisis is a call for governments at all levels to take decisive and coordinated policy actions to mitigate and support recovery. it is also an opportunity to take advantage of new technologies, implement green recovery strategies, and move toward policies and business practices that better balance the environmental, social, and economic impacts of tourism. policymakers should seize this opportunity to move the tourism economy to a stronger, fairer, and more sustainable footing. the crisis and ongoing recovery plans are a once-in-a-lifetime opportunity to transition to more sustainable and sustainable models of tourism development. in addition to the economy of tourism, the pandemic caused a global economic crisis, which in turn has implications for the resumption of tourism. the way forward is brighter as progress in vaccine production has given hope, but problems remain, and recovery will be uneven across countries and sectors. growth will recover in many parts of the economy, but tourism and other sectors are recovering more slowly, and this is affecting recovery in many countries. it is too early to say what long-term effects the crisis will have on tourism, but a return to normalcy is very unlikely. the tourism sector in 2021 will be very different from what it was in 2019. the longer the crisis lasts, the more businesses and jobs will be lost, the greater the impact on traveler behavior, and the harder it will be to recover in tourism. this creates challenges for the sector as well as opportunities to spur innovation, encourage new business models, explore new niches and markets, discover new destinations and move toward more sustainable and sustainable tourism models. in this context, tourism is high on the global political agenda, and other international institutions, including the united nations, the world bank and the world trade organization, are making similar calls. the g20 tourism ministers in the diriya communiqué recognized that covid-19 could change the paradigm of the travel and tourism sector, and pledged to continue working together to support those most affected by the crisis and to support a sustainable and comprehensive recovery. tourism sector. 4. strategy to overcome the global crisis in the tourism industry using the method of swot-analysis the outlook for the tourism sector remains highly uncertain. the coronavirus pandemic (covid-19) continues to have a strong impact, and international tourism is expected to decline by about 80% in 2020. domestic tourism is helping to mitigate the impact, at least in part, and governments are taking impressive immediate measures to rebuild and revitalize the sector while protecting jobs and businesses. many countries have also developed, and continue to develop, measures to create a more sustainable tourism economy after covid-19. these include preparing plans to support a sustainable tourism recovery, promoting the digital transition and the transition to an eco-tourism system, and rethinking tourism for the future. since threats exist and are difficult to influence, steps must be taken to avoid negative consequences. ignoring threats can lead to loss of markets, slowing tourism development, which, in turn, leads to a slowdown of the economy as a whole. by recognizing the obstacles that can shake the existing tourism infrastructure, carefully assessing the problems that will arise in the development of the industry, measures can be taken to avoid them or reduce their impact on three seas economic journal 17 vol. 3 no. 1, 2022 the development of the tourism industry. the next step is to build a hierarchy of opportunities that the industry can use to achieve positive results by implementing strategic goals. key issues affecting the prospects of the tourism industry: 1. pandemic factors: how long will the pandemic last and what will be the publicly available treatments or vaccines? 2. factors related to the lifting of travel restrictions and blocking measures: when will countries start loosening restrictions and how? how will the social distance rules affect the supply side of the travel market? 3. factors affecting consumer and business confidence: how long will it take consumers to resume travel? how will travel patterns change? 4. economic factors: how deep and what will the global recession be? what will consumers' discretionary spending decisions be? 5. state measures: how will state measures and programs to support tourism be planned and implemented? the swot-analysis of factors affecting the prospects for recovery and development of the tourism industry in the world after the pandemic is presented in table 3, where the relevant factors are divided according to their impact on the development of the industry (positive or negative) and the nature of the factors (internal or external). the proposed swot-analysis of factors affecting the prospects for recovery and development of the tourism industry, allows you to assess the strengths and weaknesses of the strategy to overcome the tourist crisis, taking into account its opportunities and threats. the covid-19 crisis was a tremendous shock to the tourism economy, severely affecting people's livelihoods, industries, regions and businesses. as the pandemic continues to evolve, all of its effects are still impossible to calculate and account for. however, a return to "business as usual" is unlikely. politicians need to learn lessons from the crisis in order to build a stronger, more sustainable tourism economy for the future. although it is too early to say for sure, there are some lessons to be learned: the crisis has become a call for action by governments at all levels to respond in a coordinated way, and the importance of comprehensive approaches to tourism policy to support recovery. taking into account all four components of the swot-analysis in its entirety will determine the main strategic directions of tourism development, formulate goals and specific objectives. in addition, swot-analysis will allow to outline a plan of strategic development of the tourism industry in the future, to provide necessary actions and tools, to take into account new opportunities. in the context of european integration processes in the tourism sector, the use of swot-analysis should be combined with other management tools, allowing to improve the quality of tourist products to international standards, to attract more consumers of tourist services, which, according to researchers, are not satisfied with the "price-quality " ratio on tourist products of domestic enterprises. therefore, under the conditions of transformational changes in the national economy, it is necessary to pay special attention to the development of management tools in tourism. government at all levels and the private sector need to be better prepared and able to respond and adapt quickly. this requires better risk assessment and crisis response mechanisms, as well as greater coordination at the local, national and international levels. providing targeted and affordable support as quickly and effectively as possible to vulnerable tourism businesses, workers and tourists has been and continues to be extremely important. tourism generates foreign exchange, supports jobs and businesses, stimulates regional development and supports local communities. before the pandemic, the tourism sector accounted for 4.4% of gdp, 6.9% of employment and 21.5% of services exports on average for oecd countries (and 6.5% of world exports according to the world trade organization (dow roger, 2020)). however, these shares are much higher in a number of oecd countries where tourism is the main driver of economic activity, such as france (7.4% of gdp), greece (6.8%), iceland (8.6%), mexico (8.7%), portugal (8.0%) and spain (11.8%). the indirect impact of tourism is also significant, adding to the shock to national and local economies. providing policy clarity and taking steps to reduce uncertainty (as much as possible) will be crucial to support the resumption of tourism. the outlook for the tourism economy remains highly uncertain, and confidence in business and travel has suffered greatly. clear communication, well-developed information policies and clear epidemiological criteria will be particularly important where travel restrictions and containment measures need to change in response to virus outbreaks and changes in the health situation. crisis is a once-in-a-lifetime opportunity that encourages us to move toward more equitable, sustainable and rational (socio-eco-economic) models of tourism development. the pandemic has once again exposed the structural weaknesses of the tourism system and vulnerability to external shocks. there is an urgent need to diversify and strengthen the resilience of the tourism economy, better prepare for future shocks, address long-standing structural weaknesses and stimulate the digital, low-carbon transformation needed to move toward stronger, more equitable and sustainable tourism models. three seas economic journal 18 vol. 3 no. 1, 2022 5. findings travel insurance can compensate for a range of disruptions and inconveniences depending on the terms of the policy, from cancellation of travel to departure in the event of death of a pet or illness of a family member, equipment problems, illness or injury, emergency medical evacuation and accidental death. expenses for delayed baggage and change fees are reimbursed separately, in accordance with other insurance policies. also, the viewer has observed a tendency for travelers to book and buy travel insurance much closer to the departure date. over the past three months, travelers have been buying travel insurance about 50 days before their departure date, compared to 94 days from their departure date. but keep in mind, if you wait too long for travel insurance, there's a chance that you risk your ability to buy travel insurance to cancel your trip for whatever reason. such compensation allows you to get a refund of part or all of your expenses from 50% or 75%. although travel insurance covers many contingencies, there are some common drawbacks that travelers should be aware of. for example, not everything in luggage can be compensated for delayed or lost luggage, and accidents due to natural disasters that began before the purchase of a travel insurance policy may also not be covered. covid-19 found another disadvantage – fear of travel. as health and safety has become more and more on lu's mind, the pandemic has certainly raised the profile of the travel insurance sector. all of these changes in the travel industry will have a direct impact on the compensation provided by travel insurers, and it is necessary to o continuously review benefits and prices to ensure that travel insurance remains relevant and affordable to travelers. if insurance companies cannot provide their clients with "priority " access to emergency medical care in an overburdened system, life-insurance programs come to the rescue, when the client receives a cash payment for the very fact of treatment in a hospital clinic, i.e., in this way the insured receive financial assistance for the period of illness and rehabilitation. 6. conclusions the outlook for the tourism sector remains highly uncertain. the coronavirus pandemic (covid-19) continues to have a strong impact on international tourism, as expected to decline by about 80% in 2020. domestic tourism is helping to mitigate the impact, at least in part, and governments have taken impressive immediate measures to rebuild and revitalize the sector while protecting jobs and businesses. many countries have also developed, and continue to develop, measures to create a more sustainable tourism economy since covid-19. these include preparing plans to support a sustainable tourism recovery, promoting the digital transition and the transition to an ecotourism system, and rethinking tourism for the future. table 2 potential consequences of long-term tourism policy sustainable development of tourism it may become more popular in tourism choices due to a greater awareness of climate change and the adverse effects of tourism. natural areas, regional and local destinations are expected to contribute to restoration, and reduced travel distances may lead to reduced environmental impacts of tourism. domestic tourism domestic tourism is expected to benefit as people prefer to stay put and visit destinations within their own country. domestic tourists are often more price sensitive and tend to have a lower cost structure. trust travelers' confidence has been hit hard by the crisis and constant uncertainty. this can lead to a decline in demand and consumer tourism, which will continue long after the initial shock. behavior of travelers travelers' behavior will be affected by the development of the crisis as well as long-term consumer trends that change the way we travel. this may include the emergence of new niches and market segments, as well as a greater emphasis on safety protocols and a no-contact travel experience. safety and hygiene safety and hygiene have become key factors in selecting travel destinations and activities. people more often prefer the "private solution" when traveling, avoiding large crowds of people and giving preference to private vehicles, which can have a negative impact on the environment. tourism offer structural changes in tourism supply are expected in the ecosystem. not all businesses will survive the crisis, and capacity in this sector is likely to decline for some time, limiting recovery. deficit qualified personnel the shortage of skilled workers in the tourism sector could increase as many jobs are lost and workers are transferred to other industries. reduction of investments reduced investment will require proactive policies to encourage and renew investment in the tourism sector to maintain the quality of the tourism offer and promote a sustainable recovery. digitization the digitalization of travel services is expected to further accelerate, including greater use of automation, contactless payments and services, virtual experiences, and the provision of real-time information. tourism policy tourism policy must be more responsive, and in the long run it will move to more flexible systems that can adapt more quickly to changes in policy. particular attention will be paid to crisis management. safety and health policies are also important. three seas economic journal 19 vol. 3 no. 1, 2022 providing targeted and affordable support as quickly and effectively as possible to vulnerable tourism businesses, workers and tourists has been and continues to be extremely important. tourism generates foreign exchange, supports jobs and businesses, stimulates regional development and supports local communities. before the pandemic, the tourism sector accounted for 4.4% of gdp, 6.9% of employment and 21.5% of services exports on average for oecd countries (and 6.5% of world exports according to the world trade organization). however, these shares are much higher in a number of oecd countries where tourism is the main driver of economic activity, such as france (7.4% of gdp), greece (6.8%), iceland (8.6%), mexico (8.7%), portugal (8.0%) and spain (11.8%). the indirect impact of tourism is also significant, adding to the shock to national and local economies. the existing tourist potential of ukraine can be realized by implementing effective approaches to tourism and recreation development and management of tourist and resort complexes. based on the analysis of strengths and weaknesses, opportunities and threats to the development of tourism industry in ukraine it can be concluded that the long-term development of tourism in the country should be based on the following components: investments and innovations in infrastructure development; reorganization of transport support; training of qualified personnel; normalization of the political, economic and legislative climate, etc. the results of swot-analysis is the basis for determining the strategic directions of development of the tourism industry and optimize tourism and recreation management. in addition to the economy of tourism, the pandemic caused a global economic crisis, which in turn has implications for the resumption of tourism. the way forward is brighter as progress in vaccine production has given hope, but problems remain, and recovery will be uneven across countries and sectors. growth will recover in many parts of the economy, but tourism and other sectors are recovering more slowly, and this is affecting recovery in many countries. it is too early to say what long-term effects the crisis will have on tourism, but a return to normalcy is very unlikely. the tourism sector in 2021 will be very different from what it was in 2019. the longer the crisis lasts, the more businesses and jobs will be lost, the greater the impact on traveler behavior, and the harder it will be to recover in tourism. this creates challenges for the sector as well as opportunities to spur innovation, encourage new business models, explore new niches and markets, discover new destinations and move toward more sustainable and sustainable tourism models. references: adam behsudi (2020). wish you were here, international monetary fund, finance & development, december 2020. available at: 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"safe travels": global protocols & stamp for the new normal. available at: https://wttc.org/ covid-19/safe-travels-global-protocols-stamp wttc press release, 174 million travel and tourism jobs could be lost due to covid-19 and travel restrictions, 29 october 2020. three seas economic journal 28 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: zakharovatet@ukr.net orcid: https://orcid.org/0000-0002-5736-8346 doi: https://doi.org/10.30525/2661-5150/2022-3-5 the importance of information technology for forecasting the activities of the enterprise in the tourism business tеtiana zakharova1 abstract. the aim of the article is to study the importance of information technologies for forecasting business activity in the tourism business. the analysis of the processes taking place in the industry shows a discrepancy between the level of application of information technologies in the activities of domestic business entities in the sphere of tourism development and their implementation in tourist developed countries of the world. specific features of the creation and implementation of tourism services (a large number of participants and a significant geographical reference, a balanced system of relations between the subjects of the tourism market, territorial differentiation of the tourist product, remoteness of the place of sale of tourist services from the place of their consumption) necessitate an increase in the level of provision of the management system of modern information technology. methodology. the following methods were used to study this topic: descriptive, idealization, statistical, field research. much of the data in this study was obtained through observations of both tourism businesses and consumers of tourism services. results. the need to forecast the results of the enterprise is due to a significant degree of uncertainty and a large number of risks, because the economic environment, both external and internal, is characterized by high dynamics and changes. forecast indicators are an important component of the management process of the enterprise and its divisions in the context of identifying opportunities and threats, the level of solvency of the enterprise. practical implications. activity in the field of information technology is based on a number of features, which are based on the innovation policy of the enterprise in the tourism business: the dynamism of information technology; novelty of products or services provided or produced. this leads to the growth of the information services market, implementation and use of the most modern products in the field of information technology. all this provides a strategic advantage of the company in the market. value/originality. it is proved that the modern work of the enterprise is impossible without the analysis of future forecasts and development programs that will contribute to the achievement of the expected and desired state of affairs. the development and implementation of forecasting methodology has become an objective requirement for enterprises in any field of activity. key words: forecasting, information systems, information technologies, tourism business, efficiency. jel classification: м30, l83, z32 1. introduction modern tourism business is impossible without the support of information technology, which has a significant impact on the activities of enterprises and is important for the survival and growth of the economy in a country where there is a war today. for many people, 2021 and 2022 are years they would like to leave behind. the impact of covid-19 and the war in ukraine has affected both businesses and consumers, and the world at large. of all the areas of activity in ukraine, tourism has suffered the most. today this industry needs changes. instead of guessing "blindly ", it is better to entrust the future to information technologies. the degree of development of information resources determines the overall level of informatization. informatization is defined as a set of interconnected organizational, legal, political, socio-economic, scientific and technical processes aimed at creating conditions for meeting information needs through the formation and development of information systems, networks, three seas economic journal 29 vol. 3 no. 3, 2022 resources and technologies based on the use of modern computer and communication technologies. the main purpose of information systems and technologies in tourism business is to ensure the efficient use of information resources, such as (voynarenko, 2017): – development of strategic development plans of organizations; – ensuring the competitiveness of the company 's divisions, taking into account the opinion of customers and the state of competitors; – facilitating management decision-making; – in the process of studying the impact of investment and innovation activities. the importance and effectiveness of the use of information technologies and information resources to improve the efficiency of the tourism business enterprise has been repeatedly emphasized in professional sources. the research of the essence of forecasting and modern technologies, which can be used to develop enterprise development strategies, is devoted to the work of the following scientists: v. vernadskyi, i. blagun, n. viner, v. vitlinskyi, p. hryhoruk, v. v. glushkov, z. partiko, s. lazareva, o. lyashenko, o. chernyak, g. pocheptsova, e. toffler, k. shanon, b. evelson, d. vesset, p. luna, f. kotler, l. fleischner, m. porter, and others. 2. the impact of the economic crisis on consumer behavior studies of the behavior of ukrainian consumers by domestic scientists are carried out fragmentarily. in this regard, there remain unresolved topical issues of the influence of consumer sentiment on the perception of innovations in the tourism business, taking into account the factors of influence of the economic crisis, as well as their interpretation in terms of possible consequences for the tourism market and society as a whole. these problems are of particular relevance in the context of, firstly, economic and political crisis, and secondly, in the context of modern european integration processes of ukraine, which, in particular, are associated with the adaptation of ukrainian consumption culture to the european level. 3. differences in consumer behavior between age groups at different stages of creating and promoting a tourism product, information technologies influence tourism. modern information technologies create a single information space. its physical basis is laid in integrated computer networks and communication systems. this unity makes it possible to support and coordinate not only technological processes, but also business activities of any modern organization or enterprise. this approach involves technical, organizational and methodological integration of the main areas of management activities, such as: production, organizational, marketing, financial, accounting, personnel and project. information products can be located in different databases. in the future, each individual organization regulates information technology improvement of the efficiency of enterprise management creation of new services improvement of customer service quality іmplementation of services figure 1. the main directions of the use of information technology in tourism source: compiled by the author based on (2018, 2019, 2022) three seas economic journal 30 vol. 3 no. 3, 2022 access to certain information products depending on its own goals. thanks to information technologies, operational coordination of actions is ensured through the use of modern means of communication and software products (yaremko, 2021). modern information systems are able to assess the competitive environment, taking into account all important macroeconomic and microeconomic factors for the enterprise. it is also possible to analyze the information gap in the tourism industry, to identify current and future needs of clients and customers. with the help of information products, an enterprise can receive information about the state of the market, evaluate it and make forecasts about competition in the industry (semenenko, 2019). the stability of the financial condition of the enterprise is ensured by the profit that remains after the payment of taxes and other mandatory payments. forecasting for enterprises is a tool that ensures viability and successful functioning. thanks to forecasting, the management of enterprises can navigate the economic environment and choose such options in the strategic perspective that could lead the company to success and rapid growth (kovtun, 2018). for the effective functioning of the tourism business enterprise, it is necessary to implement and use an information system that can provide a set of needs arising in the enterprise in the process of its economic activity for a long period of time. today shows that the use of information technology allows to obtain or process the necessary information in a very short time. using modern technologies, the company gets the opportunity to increase its competitiveness. tourism enterprises in most cases do not have a developed information system infrastructure due to the small number of workplaces. to a large extent, a typical tourism enterprise has a small number of computers with internet access from a local provider, sometimes served by system administrators (or without it) (mykhalyuk, 2020). tourism enterprises that are representatives of much larger networks have more technical equipment and have a permanent service, which is an exception for a travel agency. large travel agencies have a much more developed information system infrastructure, both external (connected by cooperation via the internet) and internal. this is caused by the specifics of entrepreneurial activity and is due to the fact that with small investments in the development of the information system in a short time, a significant improvement of business processes (automation of activities with travel agencies, hotels, activities with tourists) is carried out. tourist operator, as a complex organization, uses all solutions for the information system of the corporate level. information and communication technologies make it possible to accelerate the circulation and exchange of information, collect the necessary data, which is the basis for decision-making and affects the effective management of small and medium-sized businesses. the media reflect the transformation of society and highlight the potential of technology. the forecast is important for a modern enterprise, as it can be used to determine possible goals and directions of development of the object; to make a plan for the future depending on social, economic, scientific, technical and environmental factors; planned determination of future measures to implement opportunities, as well as to reduce possible threats to each of the probable options for the development of future predicted events; assessment of material costs and certain resources for the implementation of the developed measures and consequences (coslovsky, 2019). in order to plan the future at the enterprise, it is necessary to carry out forecast estimates, because only the forecast allows to largely realize such an important and necessary planning function as prediction, which is based on a scientific analysis of reality and predictable trends and processes in the future. forecasting functions include (kovtun, 2018): – identification of possible goals and directions of development of the forecasting object; – assessment of various economic and scientific, social and technical, and possibly environmental consequences of the implementation of each of the options for the development of the forecast objects; – definition of the measures that can ensure minimization of various threats for the period of implementation of the defined strategic objectives and goals of the enterprise; – determining the need for costs and resources for the period of implementation of the planned ideas, based on the conditional limitation "time – money ". that is, forecasting is a method that uses the experience gained in the past and takes into account certain possible assumptions about the situation in the future (2022). high-quality forecasting will be the basis for making future decisions and will be the basis on which they will be implemented. the availability of forecasts allows to reasonably plan and foresee different scenarios in case of changes in certain factors affecting the implementation process. existing information systems provide managers of enterprises with information focused mainly on the internal environment – technology, organization of production. information about the external environment is unsystematic. software products for forecasting activities used in the market have created conditions for facilitating the analytical work related to the calculation of certain financial ratios. three seas economic journal 31 vol. 3 no. 3, 2022 this allows to get additional time to interpret the results of the analysis of the situation in which the company is. with the help of software and certain algorithms it is impossible to obtain information about current economic trends, certain scientific and technical developments, or about markets and competition in them, consumers and their needs, etc. there is a need to determine the basic functionality of software products used to analyze the activities of the enterprise (dykan, 2019). forecasting is divided into the following categories (2022): 1. economical: supply chain – forecasting is used in the supply chain to provide a company 's customers with the right product at the right time. it is an integral part of demand management processes and sales and operations planning, which is an integral part of the processes in the mrp ii algorithm. business planning is part of the preparation and development of business plans. 2. political. 3. natural: weather forecast; meteorology; prediction of earthquakes. 4. technical and technological: technical forecasting; technological forecasting; transport planning. today on the market there are more than a dozen systems of automation of management of tourist enterprises. presented on the market of information technology computer programs for automation of the tourism industry have different capabilities (kovtun, 2018). in recent years, there has been a significant impact on scientific and technological progress in the tourism industry, which applies well to the introduction of new information technology. in the field of tourism, one of the main achievements was its computerization. the internet network, the personal computer made it possible to create a publicly available, extremely informational bridge and, in accordance with other information technology systems, a cheaper and faster information infrastructure, accessibility and reliability contributed to the application of modern information technology in all areas of humanity, which largely ensured the growth of productivity in the service sector. the need for predicting the results of the enterprise is due to a significant degree of uncertainty and a large number of risks, since the economic environment, both external and internal, is characterized by high dynamics and changes. predictive indicators are an important component of the management process of the enterprise and its units in the context of identifying opportunities and threats, the level of solvency of the enterprise (varnaliy, 2019). the best programs for forecasting in 2022 (2022): sap is an integrated software that provides planning and consolidation solutions for business planning. the software provides customers with specific financial forecasting or budgeting tools that provide scenario-based planning, consolidation and creation of customer collaboration tools. revolution r enterprise is an analytical and statistical program for production. it is based on the use of the statistical language r . statistica is used for statistical analysis and data visualization. it provides database management as well as the development of custom applications that include a significant set of analysis procedures used for scientific research or in engineering, business, as well as specific data collection methods. oracle demantra is a demand management and supply chain management software. it simplifies automated forecasting processes while displaying demand forecasts with factors such as supply constraints, customer commitments and inventory levels. kinaxis is an online supply chain management software. it integrates your data, processes, and people into a single software environment. netsuite is a powerful software package with many features. they are good and bad at the same time. functionality provides forecasting from startups to revenues for small and medium-sized organizations, fast-growing enterprises use netsuite to automate key processes and get real analytics on current operational and financial performance of the company. skubrain is a program based on using sales history to predict future demand for a company 's products and then, by analyzing current inventory levels, makes certain recommendations on how the company should purchase to be able to meet that demand, or identify a group of products that can be re-stocked. relex is the must-have solution for retailers. with this software, retailers can be more competitive with their own cloud-based retail planning solution. this software enables companies to plan better using accurate forecasting and replenishment inventory, efficient use of retail space and optimized workforce planning. infor cloudsuite is an integrated supply chain planning platform. it helps today 's companies create and manage, collaborate and coordinate plans across the entire supply chain. the importance of introducing information technology to analyze and predict the results of the enterprise is due to the rapid transformation of business, which involves the use of software products to optimize business processes, improve the efficiency of the enterprise to make the right management decisions (dykan, 2019). three seas economic journal 32 vol. 3 no. 3, 2022 4. survey methodology the following methods are used to study this topic: descriptive, idealization, statistical, field research. basically, the description, systematization of the territory and theoretical generalization of the received information are carried out. two main stages can be distinguished – the inventory of information and its systematization. information is collected through direct empirical observations, which were summarized by means of route observations. classification and typology methods were used to analyze the collected information (varnaliy, 2019). the method of idealization consists in constructing so-called ideal models and comparing the situation. in its application, the features of some other methods and modeling, analogy, abstraction, etc. were taken into account. statistical data concerning the development of tourism in the international arena and in ukraine (melnyk, 2018) are partially published in domestic sources. this information is incomplete and provides an opportunity to analyze the development of world tourism and domestic tourism related to ukraine. therefore, many data in this study were obtained by observing both the enterprises of tourist business and consumers of tourist services. 5. findings activities in the field of information technology is based on a number of features that determine the innovation policy of the enterprise in the tourism business: the dynamism of the field of information technology; novelty of products or services provided or produced. this leads to the growth of the market of information services, the introduction and use of the most modern products in the field of information technology. all this ensures the company 's strategic advantage on the market. using forecasting software, we cannot claim 100% that an enterprise will have the predicted outcome. as it is necessary to understand that the enterprise is influenced by external and internal factors that can affect the forecast. 6. conclusions modern enterprise work is impossible without the analysis of forecasts for the future and the design of development programs that will contribute to the achievement of the expected and desired state of affairs. the relevance of tourism development has caused the need for analytical studies on the application of information technology at four main levels: mega-, macro-, meso-, micro-level. the main indicators of assessment of its application at different levels are defined. the analysis of trends in the impact of information technology on the development of tourism, the results of which are the basis for improving methodological approaches to assess the effectiveness of the use of information technology in the management of subjects of tourist activity. the development and implementation of forecasting methodology has become an objective requirement for enterprises in any field of activity. assessment of certain prospects, taking into account objectively existing directions of development of entrepre neurship requires from managers the formation of thinking on the basis of forecasts, the use of appropriate knowledge and the acquisition of competencies, a high degree of general culture and educated staff, the ability to not only see but also understand those changes and trends in the external environment, the ability to use science-based methods of forecasting and their tools. references: buryk, a. f. 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(2020). planning of enterprise activity. education manual. 2nd edition. recommended by the ministry of education and science of ukraine. kyiv. payanok, t. m., & lagovskyi, v. v. (2019). analysis and forecasting of socio-economic processes and tax revenues. kyiv: cpu "comprint". three seas economic journal 33 vol. 3 no. 3, 2022 semenenko, t. o., & domrachev, v. m. (2019). forecasting the dynamics of macroeconomic indicators. bulletin of sumy state university. series "economics", vol. 3, pp. 110–116. coslovsky, v. g. (2019). project financing. education manual. 2nd edition. recommended by the ministry of education and science of ukraine. kyiv. yaremko, s., kuzmina, o., & novytskyi, r . (2021). use of artificial intelligence technologies for forecasting business processes. computer-integrated technologies: education, science, production, vol. 43, pp. 230–234. voynarenko, m. p., dzhuliy, l. v., kuzmina, o. m., & yanchuk, t. v. (2017). managing the development of innovation business processes with automated information systems. marketing and innovation management, vol. 4, pp. 133–148. received on: 8th of september, 2022 accepted on: 10th of october, 2022 published on: 31th of october, 2022 three seas economic journal 78 vol. 2 no. 3, 2021 corresponding author: 1 oles honchar dnipro national university, ukraine. e-mail: serge.alexsson@gmail.com orcid: https://orcid.org/0000-0001-9012-9913 2 oles honchar dnipro national university, ukraine. e-mail: yakovenkoa@i.ua orcid: https://orcid.org/0000-0003-1315-6322 doi: https://doi.org/10.30525/2661-5150/2021-3-11 practical realizations of a generalized advertising cybernetic model serhii ostrianyn1, oleksandr yakovenko2 abstract. nowadays, a big number of various math models of advertising exists, however all of them describe only specific effects of advertising influence, thus, considering most modern advertising campaign utilize multiple ad channels for different purposes and are highly integrated, systematic and complex in its structure, math modelling of such campaigns remains a challenge for practitioners. as for today, there is no such framework that would be flexible and effective enough in solving tasks of advertising campaigns management. hence, a framework of generalized advertising modelling and illustrations of its practical realizations for particular real cases would be a valuable addition to the research of the topic as well as a useful manual for practitioners. an objective of the current article is to illustrate various cases of generalized advertising model realizations, explain framework and algorithm of building model’s realizations for particular integrated marketing campaigns and show economic effects of proposed approach on an example of a real enterprise. proposed framework is especially focused on modelling sequential and structured customer journeys and utilizing its systematic effects which become a modern standard of advertising activities among the enterprises. article also includes considerations of modelling modern marketing tools such as womm and its integration into advertising campaigns utilizing more conventional tools which is illustrated for a first time in research literature on the topic. proposed model supports taking into account indirect advertising tools which are not resulting in purchase directly, however, build awareness or move customers towards a purchase within a customer journey in any other way. present research uses such methods as synthesis, generalization, case study and a real-field experiment. results of this research can be useful for marketing practitioners as a guidance for building math models of bespoke advertising campaigns. provided guide also shows how to turn built model into an optimization one and use it as a support for budgeting decision making process. cases of practical application of proposed guide show improvement of profitability of advertising campaign ranging between 3.6% and 30% percent depending on market peculiarities. key words: marketing, advertising, math modeling, cybernetic model, word of mouth, generalization, customer journey. jel classification: m37, c53 1. introduction research in fields of psychology, mass communication and the theory of economic decision making defined and formalized strong links between sales and advertising and described different effects of advertising influence. in parallel, explosive growth of digital technologies and digitalization of all the parts of life related to market and consumptions took place. modern information technologies have made possible gathering big data sets which describe consumers’ behavior in conjunction with advertising impact. (ostrianyn, dynamic budgeting of an advertising campaign, 2017) all that prerequisites have enabled complex and integrated advertising campaigns which are no longer a simple set of various channels distributing the same advertising message, but a system of different advertising tools which can be fine-tuned towards the goal of making customers purchasing advertised goods and services. customer behavior also became more complex and now it can only be influenced by precise advertising campaigns, rather than broad and plain ones. moreover, markets move towards developing numerous niches with its specific audiences and customer journeys within which this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 79 vol. 2 no. 3, 2021 consumers learn about available offers, make purchase decisions and interact with the enterprise. hence, it is impossible for enterprises to use available advertising models which describe only specific advertising effects separately. new advertising tools also keep being developed and not seldom there is a lack of modelling proposed for such tools. considering all of that it appears to be relevant and needed to come up with such a framework which would allow advertising practitioners to build custom modelling realizations of campaigns utilizing new advertising tools as well as considering those tools as parts of a system. present article explains main concepts of the generalized model, describes the process of assembling its practical realizations as a sequence of building a conceptual model of a campaign for the particular set of adverti sing tools and desired customer journey at first, descriptive and, consequently, optimization budgeting math model of a planned campaign. article also features illustrations of suggested steps and provides economic results of real-field application of a model assembled according to the proposed guide. 2. literature review a little research done on topic of generalized advertising models is known to date. most related works include those of reconsidering classic aida linear marketing model by adding more steps to it such as (sukma wijaya, 2012); developing a theoretical framework of social media advertising model as a part of integrated marketing communication (ahmed & mustafa raziq, 2017); considering hybrid marketing mix within integrated marketing communications (naumovska & blazeska, 2016); approaching multichannel, multi-audience communication (key & czaplewski, 2017); proposing customer-integrated marketing communication (finne & grönroos, 2017). however, all of those works are purely conceptual in their nature and there’s little to no math modelling proposed on the topic of consideration. thus, developing and proving such a model is of nowness and value to the frontier of marketing research. 3. generalized model framework 3.1. conceptual model assembling let’s overview main concepts of the generalized model. the main element of the model is a stage which can represent a step of a supposed consumer decision making process, a touchpoint within a customer journey which is a place where an information interaction between enterprise and the customer happens or a group of customers which is believed to be sensitive to particular messages and tending towards particular action. practitioners should conduct an observation of its audience and split it up into several stages. as a next step, model builders should consider how usually customers move between the stages, keeping in mind that linear movements in one direction are obsolete and reality proves to be more complex, hence analyzing customer data is handy for that task. moves between the stages can be caused by natural factors such as changing customer needs, seasonality or any other factors and by intentional factors such as advertising or any other information passed by an enterprise to customers of the stage. hence, a number of customers of particular stage may be described as a function with a number of customers from other stages in the previous period as an argument of that function. a function choice should rely on the nature of a transition between the stages and in case of uncertainty a black-box modelling with use of artificial neural networks can be applied. once the structure of stages and links between them is defined, making a conceptual model of a campaign may be considered as done. 3.2. descriptive model assembling next step of a framework is assembling of a descriptive math model. in general case, let mijt be the number of consumers that move from stage i to stage j at the moment t. in general, this move is being defined by a formula: m f s g i i c cijt it ct= ( ) ∈ ∈, ,� � (1) i – a number of stages defined for a particular model realization, c – a number of targeted advertising tools. hence, a number of consumers at the stage i is being defined as following: s s m mit it j j jit j j ijt= + −− = − = −∑ ∑1 1 1 1 1 (2) we will illustrate this step on an example of building a model for advertising campaign which utilizes both traditional advertising as well as word of mouth marketing. before considering particular realization of generalized model, we will provide explanations of model capabilities of generalization and adjustment to distinctive peculiarities of an advertising campaign and behavior of consumers of different market categories within wom process. global market penetration of social networks, which create far more social links, hence, peer to peer communication channels, streamlined strengthening and widening of “word of mouth” communication effects as a viable alternative to traditional advertising tools within advertising campaigns. an abbreviation of wom (word of mouth) is commonly adopted in literature as well as its use for the benefit of the firm – womm (word of mouth marketing), hence we will utilize those abbreviations further. (kozinets, de valck, wojnicki, & wilner, 2010) let’s use three seas economic journal 80 vol. 2 no. 3, 2021 a concept of touchpoints (ostrianyn & yakovenko, generalized model of the enterprise marketing activity management, 2020) and define main groups of consumers within wom context: 1. s1 – consumers which do not consider purchasing decision hence are not sensitive to recommendations. it happens due to a couple of reasons: first, they are not conducting active information gathering and, second, they won’t remember either positive or negative peer feedback as they are not interested in that information at the moment. 2. s2 – consumers which are considering purchasing decision hence are sensitive to recommendations and feedbacks. it is commonly known that thanks to aggregators and social networks peer recommendations are easily accessible. 3. s3 – consumers which have made a purchase and formed a positive impression of it and tend to leave positive feedbacks. 4. s4 – consumers which are not satisfied with the purchase so that they will leave negative feedbacks and refuse others to make a purchase. 5. s5 – as a certain time is needed to make an impression of a purchase it makes sense to define a separate group for consumers which have made a purchase and haven’t come to particular conclusion yet. let the system be a closed one as for the companies that last less than a year, which is typical for an industry, demographic data and, consequently, the overall number of consumers at the market remains the same. this overall number can be distributed among a set of groups, let it be five based on aforementioned reasons. under the influence of different factors consumers migrate among those five stages so that the number of consumers in each group changes as the time passes. those migrations can be caused by the following reasons: 1. natural effects such as losing an interest or a need in a purchase or a disappointment of a product category. 2. wom effects caused by the fact that consumers of different groups do communicate with each other and this communication makes an impact on consumers’ behavior. 3. effects of targeted advertising. in order to visualize capabilities of generalized model we will build a womm model based on it, which will utilize effects of feedbacks on consumers’ behavior. we will use a model proposed in (li, et al., 2018) as a starting point but will make it a closed one based on assumption provided earlier. let’s consider its organic dynamic more thoroughly: 1. under an influence of numerous uncontrolled factors (ostrianyn & yakovenko, modeling of advertising activity in conditions of uncontrolled demand factors, 2020) and an advertising itself a certain number of consumers joins a group of those who plan a purchase. 2. under an influence of positive recommendations (yakovenko, 2017) sensitive consumers make a purchasing decision. 3. a positive impression is being formed which causes a desire to recommend. 4. a negative impression is being formed. 5. due to the desire to make a repetitive purchase, a positively impressed consumer again becomes sensitive and makes a decision. 6. positively impressed consumers leave a group of product target audience due to some reasons. 7. unsatisfied consumers leave a market group due to some reasons. 8. due to the desire to make a repetitive purchase, a consumer again becomes sensitive and makes a decision. 9. consumers leave market group as the purchase is made and the need is met. 10. under an influence of negative comments consumers leave a market group all the links are shown on the diagram (see figure 1). figure 1. improved conceptual scheme of womm three seas economic journal 81 vol. 2 no. 3, 2021 let’s provide a concrete math definition of a proposed model. for convenience we will describe all defined moves mijt in table 1. rows represent stages i while columns – stages j. hence, there are formulas of all defined moves mijt on the intersections of rows and columns. dashes marks irrelevant moves such as consumers which haven’t made a purchase forming a positive or negative attitude. questions mark moves which require additional research and hypothetically can be meaningful. the main diagonal of a matrix is left blank as, naturally, if consumers do not move, then they remain on the particular stage. math model can be described as a set of equations: table 1 definitions of move among stages s1 s2 s3 s4 s5 s1 ∝s1 ? s2 βns5 βps4 s3 δis3 γis3 αps3 αns3 s4 δps4 γps4 ? s5 δns5 ? ? ⎩ ⎪ ⎨ ⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) ⎩ ⎪⎪ ⎨ ⎪⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) (3) δ δ δi p n, ,� � – forgetting coefficients, which describe probability of consumers moving to the stage of insensitive; ∝ – coefficient which describe probability of consumer to gain interest of particular product category; γi – coefficient which describe probability of consumer which just have made a purchase to gain an interest in recurring purchase; γp – coefficient which describes probability of positively impressed consumer to gain an interest in repeating purchase and making another decision; βp – coefficient which describes magnitude of influence of positive recommendations on purchasing decision; βn – coefficient which describes magnitude of influence of negative recommendations on purchasing decision; αp – coefficient which describes frequency of forming a positive impression of a purchase; αn – coefficient which describes frequency of forming a negative impression of a purchase. in order to compare the model with the one proposed in (li, yang, yang, xiong, wu, & yan tang, 2018) we will use its coefficients (see table 2) and analyze system’s behavior for different initial values si . a closed system with 1000 consumers in total is being considered. as shown on figure 2 – in case of no initial recommenders and no other effects, natural movement among stages results in insensitive consumers becoming sensitive but experiencing no recommendations can’t find out about the product hence sales don’t happen. in case of 0,5% consumers being persuaded by the enterprise itself or a personal experience in benefits of a product or a service, sales surge at the beginning of a planning horizon which can be explained as an interest due to novelty with a consequent stabilization among all stages. equilibrium of a closed system without additional disturbances provides stable sales at the level of 52 units per period (see figure 3). in case of 10% of recommenders at the beginning almost instant peaking is being observed with a consequent stabilization at the same level as in the previous case (see figure 4). as a result, it leads to a conclusion that if an enterprise can somehow control a number of initial recommenders it defines only a speed of reaching the equilibrium and more intensive sales at the beginning of the modeling horizon. table 2 coefficient values of the model ∝ 0,1 βp 0,01 γi 0,1 δi 0,45 αp 0,3 αn 0,2 δp 0,05 δn 0,85 γp 0,4 βn 0,02 three seas economic journal 82 vol. 2 no. 3, 2021 figure 2. stage dynamics without initial recommenders figure 3. stage dynamic with 5 initial recommenders 3.3. optimization model assembling next step of a framework is turning descriptive model into optimization one, which again will be shown on an example. let’s consider enterprise’s abilities of managing system’s dynamic. the model can incorporate control means based on different marketing tools, all of which are based on different influence effects, hence require different approaches for math modeling. there are several marketing tools which utilize womm effects (keller & fay, 2016): 1) “seeding” particular ad message by sharing it among close group of impactful peers which can influence their social circles – “influencers”; three seas economic journal 83 vol. 2 no. 3, 2021 2) encouraging previous customers to refer their friends with some reward for every new customer referred; 3) viral marketing: broadcasting such an ad that majority of consumers would voluntarily tend to share with their peers which would result in a broad advertising reach; usually those messages are masked to be an entertainment with a hidden advertising content; 4) agent campaigns, also known as “network marketing”: members of those campaigns function as sales managers and are being rewarded with a percentage of sales done. modern tendencies show a lack of trust in traditional ad channels. at the same time, credibility and even desire to replicate influencers’ behavior is becoming more common which lays a foundation for womm. let s6 mark a group of influencers. conceptual scheme is being shown at figure 5. added links are being explained below: 1. enterprise provides influencers a product or service with a substantial discount or even for free, figure 4. stage dynamic for 100 initial recommenders figure 5. conceptual scheme of womm with control ability three seas economic journal 84 vol. 2 no. 3, 2021 counting on them to form a positive impression and spread recommendations among their social circles; 2. as a product or service has been a bargain for the influencer, a positive impression is expected to be formed more frequently; 3. naturally, there’s a fraction of influencers which is not impressed, hence loses interest in a product category. math definitions for extended model are shown in table 3. extended math model can be written as a set of equations: table 3 definitions of extended model s1 s2 s3 s4 s5 s6 s1 ∝s1 ? s2 βns5 βps4 xt s3 δis3 γis3 αps3 αns3 s4 δps4 γps4 ? s5 δns5 ? ? s6 δfs6 αfs6 ⎩ ⎪ ⎨ ⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) ⎩ ⎪⎪ ⎨ ⎪⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) (4) δf – coefficient of forgetting which describes a probability of influencers losing interest in a product category; αf – coefficient which describes a frequency of an influencer forming a positive impression from a product or a service; x – amount of influencers which have been embraced by an enterprise in a period t . let’s make an assumption that an enterprise provides a product to influencers for free. then, profits of such advertising campaign can be calculated as following: p s s p t t t t t t= −       = = ∑ ∑ 1 3 1 6 (5) p – a price of a single unit of a product p – overall profits of an advertising campaign optimization problem looks like: max x p (6) based on common statistics, only 2% of all users of social networks generate content and have a substantial audience which requires the following constraint on x: 0 0 02�� �″ ″x s, (7) s s t t i i it= ∈ = ∑� � 1 , (8) in case of 10% of customers being positively impressed at the beginning of campaign lasting 100 periods, the overall profits would be 5209,01. embracing influencers (yakovenko, 2017) resulted in profits’ increase up to 5398,93. figure 6 shows stage dynamics and an optimal control x. as has been stated in (guruge, 2018), during the last decade influencers have morphed into full-fledged media which can compete with traditional channels while remaining more positively perceived by the consumers. such an advantage leads to a conclusion that a magnitude of influence generated by full-fledged influencers is expected to be much higher than of usual peer recommenders. hence, we can make an assumption that a move from stage s2 to stage s3 can be defined as following: s s s sp f3 2 4 6= +( )� β β (9) then, extended math model looks like: ⎩ ⎪ ⎨ ⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) ⎩ ⎪⎪ ⎨ ⎪⎪ ⎧ 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡)𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) + 𝜇𝜇𝜇𝜇𝑆𝑆𝑆𝑆1(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛽𝛽𝛽𝛽𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) − (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + (𝛽𝛽𝛽𝛽𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛽𝛽𝛽𝛽𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡))𝑆𝑆𝑆𝑆2(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝐼𝐼𝐼𝐼𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) − 𝛾𝛾𝛾𝛾𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆4(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) + 𝛼𝛼𝛼𝛼𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆3(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝑁𝑁𝑁𝑁𝑆𝑆𝑆𝑆5(𝑡𝑡𝑡𝑡) 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡 + 1) = 𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) + 𝑥𝑥𝑥𝑥(𝑡𝑡𝑡𝑡) − 𝛿𝛿𝛿𝛿𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) − 𝛼𝛼𝛼𝛼𝐹𝐹𝐹𝐹𝑆𝑆𝑆𝑆6(𝑡𝑡𝑡𝑡) (10) in general, β βf p� � , but based on assumption above, an equality makes sense: β βf p= �2 (11) for the practical implementation, the last equation should be validated or estimated based on a completed advertising campaign of an enterprise which utilized three seas economic journal 85 vol. 2 no. 3, 2021 womm tools and could be described with a conceptual model proposed in the article. methodically, it is recommended for advertisers to evaluate two metrics: a number of customers which made a purchase after seeing a peer recommendation and a number of those who made a purchase after perceiving influencer’s content. both numbers can be easily obtained by utilizing commonly known promo-code technique which supposes that a customer can obtain a unique code from either a peer recommendation or an influencer’s message and use the code to receive a discount, which allows the enterprise to tie each purchase to a particular source of influence. for the same market of 1000 consumers, no more than 2% of influencers, and 10% of initial positively impressed consumers expected profits would be 6903,46 which is 32,5% than it would be expected if counting only on natural factors of cross-stage movement with no womm intervention of an enterprise. stage dynamics for the case is shown on figure 7. while womm is being a useful tool of persuasion in making a purchase, traditional mass advertising is still a suitable tool for building awareness, which is known to be a foundation of a marketing. (chan, leung, tan, & tse, 2015). considering that, it makes sense to show such a model modification that would allow taking into account traditional advertising tools as well. it can be shown as a controlled movement from s1 to s2 . it is known that marginal effect of advertising expansion approaches zero once 100% awareness has been achieved в (ostrianyn, dynamic budgeting of an advertising campaign, 2017); incorporation of an advertising saturation effect into a generalized marketing model is shown below: 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 10 1d is tr ib ut io n of c on su m er s am on g gr ou ps time, t s1 s2 s3 s4 s5 x figure 6. stage dynamics of a controlled system figure 7. stage dynamics in case of amplified influencers’ impact s t s t s t s t s t s t s t s ti p n p f2 2 1 3 4 5 4 61+( ) = ( )+ ( )+ ( )+ ( )− ( )− ( )+µ γ γ β β β (( )( ) ( )− ( )s t x t2 (12) three seas economic journal 86 vol. 2 no. 3, 2021 µ ξ= − ( )1 1/e g t (13) ξ – coefficient of diminishing returns on scale. g t( ) – budget allocations on traditional advertising channels in (13) a coefficient describing probability of natural interest in budget category ∝ is being defined as dependent on g t( ) . it is obvious from (13), that for g t( ) → ∞ it is expected µ →1 . 5. conclusion an example realization of a generalized enterprise marketing model was proposed for modelling an advertising campaign utilizing womm tools. abilities of a proposed model to describe existing model as well as tuning them from simple descriptive to more advanced and useful for a practical use at the enterprise – optimization ones, has been illustrated. a capability of a model to account means of marketing control based on different tools utilizing different effect and, consequently, math approaches, has been shown. an expected profits of a baseline descriptive model has been compared against advanced models describing utilization of influencers as a womm tool for two different assumptions: the one of equal peer and influencer impact and the one of more powerful influence of the latter. references: li, p., yang, x., yang, l.-x., xiong, q., wu, y., & yan tang, y. 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(2017). math models of activity processes in economic dynamics. dnipro: bila k.o. three seas economic journal 59 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: nadiia.hryshchuk@gmail.com orcid: https://orcid.org/0000-0002-3960-7841 doi: https://doi.org/10.30525/2661-5150/2022-1-8 financial initiatives in growing the investment activity of agricultural producers in the conditions of globalization challenges nadiia hryshchuk1 abstract. the purpose of the study is to study and summarize the existing views of scientists and practitioners on the application of various financial instruments in the theory and practice of investment resources in the agricultural sector in the context of globalization challenges. methodology. the methodological basis of the study were the provisions of state regulation of the economy, investment and the theory of agricultural relations. theoretical and methodological basis of the study are general and special methods of scientific knowledge: generalization – identified benefits and caveats for the use of certain financial instruments in the agricultural sector, analogy, analysis and synthesis, induction and deduction (to clarify the conceptual apparatus, theoretical generalizations of research, conclusions and proposals); on the basis of systematic and comparative analyzes, innovative instruments for financing agricultural producers are grouped. results. the practice of using various financial instruments in the system of formation of investment resources of the agricultural sector of ukraine in the context of globalization challenges is assessed. internal and external financial instruments are distinguished on the basis of the generalization of the prevailing financial practices of raising funds by economic entities in the agricultural sector. it was revealed and proved that the most widespread in recent years in the list of domestic financial instruments were: bank lending, which includes agricultural insurance, avalized promissory notes, lending for software products; forward purchases; agricultural receipts. globalization challenges lead to the expansion (emergence of new) financial instruments to attract investment resources, in particular: factoring and mezzanine lending. practical consequences. according to the results of the study, priority financial initiatives in increasing the investment activity of agricultural producers, which will ensure financial security, through a balanced and sound state policy of agricultural enterprises and the proposed financial instruments in the context of global challenges. key words: globalization, financial instruments, agricultural sector, global financial, banks, financial obligations. jel classification: p34, g30, q14 1. introduction the agricultural sector is a fundamental part of the domestic economy, the operation of which is aimed at developing the production of food products, raw materials for industry, creating conditions for the growth of ukraine's export potential. to ensure stable financial and economic activity, increase production efficiency and realize the existing competitive advantages of agricultural entities, it is necessary to ensure the proper level of use of various financial instruments in the system of formation of investment resources of the agricultural sector of ukraine. modern domestic practice of formation and use of financial support for the development of agricultural enterprises, the growth of their investment activity is characterized by instability of income sources, their small volumes. these problems are exacerbated by the volatility of the national currency, lack of financial resources, existing land reform issues, high competition in foreign and domestic markets, the dependence of agricultural producers on natural, climatic and political conditions. all this necessitates scientific substantiation of financial initiatives, effective forms and methods of attracting promising and untapped sources of financing for agricultural enterprises to achieve high performance in their financial and economic activities and ensure financial stability of ukraine's agricultural sector in general. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 60 vol. 3 no. 1, 2022 2. literature review it should be noted that the issues of theoretical and practical approaches to the application of various instruments of financial and credit mechanism of intensification of investment processes in certain sectors of the national economy have been thoroughly studied by l. kuznetsova (2015), t. mayorova (2014), a. peresada (2006) and other scientists. scientists have mainly covered the experience of using various financial instruments to invest in sustainable economic development. also, the progressive development of the economic environment, the rapid development of new market segments, new information and telecommunications opportunities have affected the development of financial markets and the circulation of borrowed capital in particular. o. grabchuk (2012) proves that new financial instruments have arisen as a result of intensified competition of banks on the world market. to attract customers and increase their profits, global financial market participants – banks, stock exchanges, specialized credit and financial institutions – have created a hybrid of various financial documents, including debt instruments, securities guaranteed by bank assets, hedging instruments. financial instruments as a kind of certain documents are considered in the works of m. malik and l. vdovenko (2013). lysenkov yu. and n. fetyukhina (2006) identify a financial instrument with a legalized certificate. v. sheremet defines financial instruments as "various forms of financial obligations", v. fedosov. and s. yuri (2006) analyze financial instruments as various financial assets that circulate in the market, and zagorodniy a. and voznyuk g. (2005) call financial instruments "various types of financial product". however, despite the existing scientific achievements, the issues of using various financial instruments in the practice of investing in the domestic agricultural sector, the characteristics of existing opportunities and possible reservations about the choice of financial instruments by agricultural producers in global challenges remain insufficiently considered. 3. the current state of financial instruments approaches to management in the agricultural sector of agricultural producers proves that the formation of investment resources in the agricultural sector of the economy is carried out using various financial instruments. bank lending stands out as the most established and applied in all countries of the world, as well as in ukraine. positive changes in lending to agribusiness entities are noted by banking experts. the main subjects (players) of the domestic credit services market are banks and non-banking financial institutions and other legal entities that do not have the status of financial institutions, but have the appropriate licenses from financial market regulators, whose activities are regulated by the law of ukraine "on financial services and state regulation financial services markets". according to this criterion, financial institutions that can operate in the field of lending include credit unions and other non-bank credit institutions, pawnshops, legal entities unde r public, leasing companies and other legal entities licensed by the regulator. it should be noted that natskomfinposlug publishes information on the state and development of non-bank financial institutions of ukraine with periodic changes in the methodological approach to their grouping by type, which complicates the systematic analysis of their activities. a developed credit market, which is effectively managed by the state, ensures the optimal distribution of limited financial resources among the sectors of the economy and promotes economic growth. the functioning of the credit market is ensured by the credit system, which includes the central bank, commercial banks and other financial institutions. the credit system organizes the movement of capital and promotes the accumulation and efficient allocation of financial resources among market participants. from the current study to draw the following conclusions: during 2018–2020 in the banking system as a whole there are positive trends. the number of operating banks decreased every year, but this did not affect the overall performance of banks. the reason table 1 trend indicators of the banking system of ukraine indicators years change, % 2018 2019 2020 2018/2020 number of operating banks 77 75 73 -5,19 including with foreign capital 37 35 33 -10,81 regulatory capital, mln uah 121742,1 147073,2 181880,5 +49,40 assets, uah million 1359703 1493298 1822841 +34,06 liabilities, uah million 1204743 1293377 1613381 +33,92 return on assets, % 1,69 4,26 2,44 +44,38 return on capital, % 14,67 33,45 19,22 +31,02 official exchange rate uah/usd, uah 27,20 25,85 26,96 -0,88 source: developed by the author on the basis of nbu three seas economic journal 61 vol. 3 no. 1, 2022 for this is "withdrawal of insolvent banks from the market and optimization of the network of individual banks," the national bank explained. the stable dynamics of growth in the banking system of the population's funds is positive. the increase in liabilities in 2020 compared to 2018 amounted to 33.92%. during 2020, the official exchange rate of the hryvnia against the us dollar of the national bank of ukraine decreased by 19% (from uah 23.6862 per us dollar on january 1, 2020 to uah 28.2746 per us dollar on december 31, 2020). the credit market of ukraine has a distorted structure, the banking sector is much larger than the sector of non-banking financial institutions. the organization of effective lending activities in the current unstable economic conditions is due to a prudent credit policy of the bank. one of the main tasks of credit policy is to control and reduce credit risk in the banking process. the effective operation of banks in the credit market is a key component of the financial stability of the banking system, which plays a leading role in ukraine's economy on the path of market transformation. that is why it is worth focusing on assessing the lending activity of banks in ukraine. lending is one of the most important banking operations, so bank loans play a significant role in financing the development of a market economy, meeting the temporary need of some entities for additional funds due to their temporary surplus in others. during the period 2018–2020, the share of credit funds in the resources of ukrainian enterprises increased from 22.7% to 31.1% (for comparison: the share of credit funds in the capital of foreign enterprises reaches 57.8%). these statistics are based on the fact that 2018 was economically unstable due to the global economic crisis and falling economic growth in china, which is ukraine's largest trading partner, so companies were unable to generate the necessary profits to reinvest it. 2020 was another test for agribusiness due to the covid-19 pandemic, which further forced companies to turn to banks for loans for capital needs. it is affirmative that ukraine does not receive the necessary funding, which limits its opportunities for development. this allows us to state that the loan in such conditions – the most flexible form of meeting the temporary needs of the enterprise in cash. credit products, which are mostly offered to representatives of the agricultural sector (on the example of the largest banks in ukraine), are quite uniform – both in terms of types and in terms of the level of the average interest rate. however, the interest rate on them averages 16.5%, which is quite high in the conditions in which the agricultural producer found himself. this requires additional support and stimulation of credit activity from the state. the key innovation that laid the preferential basis for lending to farmers by ukrainian banks is the state business support program "affordable loans 5-7-9%", which was announced on 01.02.2020 with clear conditions and rules for participation of enterprises. the purpose of the program is to create effective lending conditions for different segments of agribusiness. the essence of the "compensatory " component of the program is to further reduce the lending rate: for borrowers who are subject to an interest rate of 7% or 9% per annum under the program, the interest rate is reduced by 0.5% for each new job created. оn the date of the last day of the month of the reporting (previous) quarter compared to the date of the loan agreement, but in any case such interest rate on the loan may not be less than 5% per annum. continuing to study financial initiatives, the involvement of which will expand opportunities for the formation of investment resources in the agricultural sector, we consider it appropriate to identify those most used in recent years, according to available funding for agricultural producers had the following components: due to their nature, forwards are not highly liquid, as their performance is guaranteed only by a contract, and there can always be a situation when it will be more profitable for one of the parties to pay a penalty for non-performance of a contract than to perform a forward. in addition, the search for the reverse side, for the conclusion of the forward, is associated with large operating losses. in addition, due to the lack of an organized market of forwards, the search may end in nothing. forwards exist so that the farmer can record profits and not play the lottery in the future. of course, the farmer can say, seeing a better price in the market (at a time when he has to fulfill a forward contract), that he can not fulfill the contract. for example, due to crop losses. first of all, such a decision will hit a trader who expected to buy a certain amount of goods at a certain price. such a buyer has already been re-contracted, but due to non-fulfillment of obligations the farmer will be forced to buy a shortage on the market, and even at another price, which may be significantly higher than planned. we believe that more attention should be paid to forwards, which are considered to be one of the most dynamic instruments of financing the agricultural sector over the past three years. the leading companies that buy grain in ukraine on the basis of forward "agrarian fund" and the state food and grain corporation of ukraine. "agrarian fund" cooperates with large agricultural holdings, small and mediumsized farms, which have successful experience in growing crops, with a positive credit history and no tax arrears. in 2020, agricultural producers delivered 30,000 tons of grain to the warehouses of the agrarian fund under the forward program, and 95,000 tons were contracted. concentration on the forward program is relevant for agriculture. but a lot depends on how you manage three seas economic journal 62 vol. 3 no. 1, 2022 to return the grain under the forward contracts of the previous marketing year. the problem is clear rules: before issuing an advance to the farmer, there must be a field inspection report from the insurance company. the so-called drought and crop failure insurance cases find solutions to the problems of both the farmer and the legal representative. the progress made is due to the adaptability of forward contracts to the agricultural sector, as they determine the period of time in which it is necessary to make a delivery at a price that is not lower than the market. it is also important that the forward program has several financing conditions and is more accessible to medium and small producers due to a simpler registration procedure compared to the bank. the advantage of the forward is the choice: to take into account the dollar or not. thus, interest rates on the forward taking into account the dollar exchange rate when purchasing the harvest of the last 2020 marketing year ranged from 19-21%, without taking into account this – in the range of 22.5-27.5%. in recent years, the experience of banks' introduc tion of avalized promissory notes as financial instruments in the agricultural sector of ukraine has received positive results. as it is established that the bill is: – a debt obligation to pay a certain amount at a specified time; – means of payment, circulating settlement instrument that can be transferred from one person to another, it is credit, trade money arising from the seller's loan to the buyer, which he provided to the buyer. promissory note payment is a deferral of payment in cash; – a type of security, concluded in a strictly established form, which contains a written abstract and unconditional commitment to pay a certain amount to a certain person (or to whom it will order) at a specified time. promissory notes issued only for goods provided (works, services) are called commodity, commercial. settlements with the use of promissory notes must be provided for in a written agreement between the counterparties. for the issuance of a promissory note without a monetary debt for goods (works, services) or without specifying in the contract that the bill is used in the calculations, the law provides for a fine. both legal entities and individuals can participate in promissory note circulation in ukraine. in ukraine, payments on promissory notes are made only in non-cash form. promissory notes are issued on a promissory note form, which can be purchased at a commercial bank. promissory notes, both commodity and tax, exist only in documentary (paper) form. in ukraine, they are filled in only in ukrainian on a promissory note. promissory notes of legal entities must be signed by two persons – the head of the enterprise and the chief accountant. a promissory note issued for payment under a contract between residents of ukraine may be denominated only in the national currency – the hryvnia. in a promissory note, the principal debtor is the drawer, in a transferable bill, the acceptor specified by the drawer. the promissory note indicates two persons: the drawer and the first holder of the bill (the drawer has a debt to the first holder), the transferable – three: the drawer, the acceptor and the first holder of the bill (the drawer has a debt to the first holder and the acceptor has a debt to the drawer). promissory notes are transferred from one owner to another by issuing a special transfer inscription on the back – endorsement. the number of transfers of a bill from one holder to another is not limited. if the debtor does not pay, the holder may apply to the notary to protest the bill and the writ of execution, after which – immediately to the state enforcement service. promissory notes are sold remotely, without visiting the bank. aval of the bill by privatbank institution – a guarantee of payment on the bill. privatbank avails bills of exchange. the fee for the aval is significantly lower than the fee for the loan (4 times or more). the seller does not trust anyone and works only on prepayment. instead of receiving a prepayment loan – deferred payment and a 100% payment guarantee – a promissory note endorsed by privatbank. for the aval of the bill of exchange, the bank charges a monthly fee, expressed as a percentage per annum and accrued on the amount of the current avals of the bank. the size of the commission depends on the type of security. privatbank avails tax bills of all types provided by law: – the amount of excise duty to manufacturers of medical drugs; – the amount of excise duty to primary winemaking enterprises; – the amount of excise duty to producers of alcoholic beverages; – the amount of excise duty to biofuel producers; – the amount of excise duty to producers of organic synthesis products; – the amount of excise duty when purchasing petroleum products for use in the chemical industry, etc. for the aval of the tax bill, the bank charges a monthly fee, expressed in% per annum and accrued on the amount of the current avals of the bank. the sooner the drawer issues the tax bill and provides the bank with supporting documents, the less he will pay commissions for the aval. we agree with the scientific statement of a. zagorodniy (2005), in which the bill avalization program has proven its effectiveness, as it allows to optimize the cost of borrowed capital in conditions of high cost of credit resources and is a convenient tool for all market participants. the effectiveness of such three seas economic journal 63 vol. 3 no. 1, 2022 a financial instrument is achieved by the bank taking full or partial responsibility for the fulfillment of obligations of any of the parties to the promissory note agreement. the main area where avalized bills are currently used is payments for plant protection products, seeds and fertilizers from well-known global manufacturers. in recent years, the use of such calculations has gained some popularity, because the use of avalized promissory notes in the calculations provides significant benefits for both farmers and suppliers. settlement by a promissory note has advantages over a commodity loan, because the bill clearly fixes the amount of payment and has the opportunity to get an attractive price, and also guarantees the supplier timely receipt of payment in full, because aval is a guarantee of the bank to make payment on the bill their payment obligations to him. the process of using avalized bills is quite simple and transparent. the bill avalization program for the agricultural sector in recent years has proven its high efficiency and convenience for all market participants. this financial instrument makes it possible to optimize the cost of borrowed capital, which is especially important in a period of significant market volatility and high cost of traditional financing. in our opinion, such financing is evidence of significant support for the agro-industrial complex, as the bank has a solid and reliable reputation and is ready to work with farmers with a land bank of 200-300 hectares. also, given the difficulties with bank lending, the system of instruments for financing the agricultural sector has become widespread agricultural receipts, launched in brazil in 1994. they now provide most of the working capital of agricultural enterprises in this country, which in monetary terms reaches 20$ 30 billion usa per year. financial experts and practitioners point to a direct relationship between the introduction of agricultural receipts in brazil and the development of its agricultural sector: grain production has grown from 60 to 200 million tons over the past 20 years. studying various aspects of the use of agricultural receipts (banking operations, record keeping, enforcement, etc.) and assessing the possibility of introducing and adapting such a financial instrument in ukraine. implementation of the pilot project "agricultural receipts in ukraine". the introduced model is slightly different from the brazilian one. thus, in ukraine there is a single centralized electronic registration system, the use of which allows banks and suppliers of production resources to track already harvested crops, which significantly reduces the risk of default. the pilot project in 2015 began its work in poltava region, where 10 agricultural receipts worth uah 40 million were issued, which are currently successfully implemented. today in ukraine there are two types of agricultural receipts – commodity and financial, where commodity guarantees the supply of products, and financial, respectively, provide a cash payment. this form of lending is currently the most alternative source of financial support for agricultural producers. the mechanism for the functioning of agricultural receipts is being developed with the participation of the world bank group and the swiss state secretariat for economic affairs (seco). this new calculation tool is more accessible to small and medium-sized agricultural enterprises and farmers who do not have enough liquid assets to pledge, and do not meet the required profitability to gain access to credit resources of banks. according to statistical observations, farmers of vinnytsia region issued 144 agricultural receipts as of december 30, 2020. which once again confirms that such trends allow small and medium-sized agricultural businesses to reach a new level. agricultural receipts are a progressive method of non-bank lending that balances and secures the rights of both the creditor and the debtor. for agricultural producers, the use of agricultural receipts allows them to sell their products on the security of future harvests, reducing dependence on subsidized loans and improving the process of shortand mediumterm planning of their economic activities. an important advantage of the agricultural receipt mechanism is that it allows agricultural producers to attract loans from the private sector without attracting public funds, which, in turn, has a positive impact on the development of agricultural production. in general, a successful campaign to introduce a financial instrument in the form of agricultural receipts was achieved in ukraine by correcting the shortcomings of the functioning mechanism in brazil. first, the process of issuing and executing agricultural receipts was standardized; secondly, a single electronic table 2 aval tax bill bank remuneration (commission) for bank services the tariff is the same, uah without taxation term of payment the order of payment commission fee for tax aval liabilities not less than 1% per annum according to the bill payment order commission fee for obligations under the commodity aval not less than 3% per annum – secured by property rights to the deposit – not less than 4% per annum – secured by movable / immovable property – not less than 5% per annum – for other collateral than the deposit, movable / immovable property according to the bill payment order three seas economic journal 64 vol. 3 no. 1, 2022 registration system has been introduced; thirdly, the legislative level establishes the procedure for enforcement of the obligation after the recovery of the pledge within seven days. given the importance of developing outlined financial instruments for the formation of investment resources of the agricultural sector in the context of globalization challenges, there are a number of problems that hinder the competitive development of agricultural enterprises. 4. problems of attracting and using financial instruments problems associated with significant financial and material costs of agribusiness are the search for and attraction of credit. a significant obstacle for domestic business is the high cost of credit. lending rates of commercial banks for business are 21-27%, so only highly profitable companies can afford loans. the following problems hinder obtaining loans: – complicated procedure for obtaining credit funds; – significant time spent on consideration and execution of the loan for short-term lending, low profitability of small and medium enterprises, which does not cover the bank rate on the loan; lack or absence of collateral from the borrower, which banks and credit institutions consider as a type of collateral. a significant obstacle is the problem with the sale of debtors' collateral, which banks and credit institutions can sell for a long time and at reduced market prices; – risks associated with late repayment of the loan and interest payments on it; – risks of bankruptcy of newly established agricultural enterprises due to financial insolvency. large "players" remain in the market, and the number of small and medium-sized businesses in the market that go bankrupt or exit the market decreases. problems related to force majeure. the latter can be divided into three groups: – natural phenomena: these are weather conditions and natural disasters: hurricane, storm, flood, snowfall and snow accumulation, ice, earthquake, fire, etc.; – social circumstances: strikes, riots, hostilities and terrorist acts, declared and undeclared war; – actions of the authorities: imposition of martial law or state of emergency, military mobilization, introduction of quarantine (announcement of quarantine in march 2020 in order to prevent the emergence and spread of coronavirus disease (covid-19)). this, in turn, makes it impossible for agribusiness entities to conduct their operations; causes inability to fulfill its obligations to counterparties; inability to sell goods, provide services or perform work; restriction of certain activities, from which business entities incur losses; limitation of working hours of enterprises and institutions; the probability of the risk of losing part or all of the property by entrepreneurs and legal entities, etc. in general, the outlined problem of financing agricultural holdings on the one hand indicates low access to credit banking resources, and on the other hand reflects the tendency to use companies to transit funds generated by large corporations to optimize taxation. after all, an additional factor that led to an abnormal increase in non-bank liabilities was the reinvestment of owners in the form of borrowed capital. 5. ways and vectors of further development as we have studied above, the practice of management in the agrarian business of the country proves that the formation of investment resources in the agricultural sector of the economy is carried out using various financial instruments. the state must now take on the role of organizer of the future full-fledged system of lending to agribusiness, separated from direct state support for agriculture, which operates on the market principles of cooperation between the banking sector and agriculture. the modern system of agricultural credit should be organized by combining various credit products that take into account the characteristics of all categories of enterprises. banking product – a credit line. a credit line is a form of lending in which, within the established limit, the loan is issued and repaid in several parts (tranches), in the most convenient mode for the borrower's business. the credit line can be renewable or non-renewable. the latter provides that in the event of partial or full repayment of the loan, the borrower may get a loan within the established limit and term of the loan agreement (table 3). the modern system of agricultural credit should be organized by combining various credit products that provide for the characteristics of all categories of agricultural producers, both large agricultural enterprises and medium-sized peasant (farmer) farms and small farms. the choice of sources of funding depends on certain factors, such as: the size of the enterprise, industry and field of activity, technological features, the specifics of products, the relationship with markets, and so on. it should be noted that any way to attract credit resources, even budget or subsidized, must be justified, and the company must be solvent. the choice of sources of financial resources and justification of their effectiveness should be based on comparative analysis, for example, banks' proposals for investment credit on several key criteria: interest rate, additional payments for opening a credit line or maintaining an account, collateral base, collateral ratio, additional conditions (insurance, assessment, surety). the effective development of the credit system in the agricultural sector requires easing the conditions three seas economic journal 65 vol. 3 no. 1, 2022 of bank lending to businesses, which is experiencing a high interest rate burden compared to other sectors of the national economy. improving the competitiveness of bank lending can help speed up service, logistics, improve credit products, comprehensive solutions, including taking into account the individual characteristics of regional customers. in this regard, the problem of stimulating the involvement of regional banks in lending to agricultural enterprises, better adapted to regional clients, the peculiarities of doing business in the region. the development of mutually beneficial cooperation between banks and businesses is possible on the basis of the development of lending programs, a variety of collateral, the formation of tariff policy that takes into account the real risks. at the same time, various forms of enterprise lending must be developed in order to provide financial resources. we have proposed the conditions for granting loans by banks to agricultural enterprises. one such type is mezzanine financing. mezzanine financing is a hybrid form of financing that combines the characteristics of different forms of financing, and involves not only a combination of own and borrowed sources of financing, but also a combination of credit and equity financing, as well as the use of securities and/or derivative financial instruments implementation of the agreement. the term "mezzanine financing" is used in world practice to denote investment schemes that occupy an intermediate place between the direct debt financing of the company and investment in its capital. this is a relatively new financial instrument, which began to be used in developed countries only in the 70–80s of the xx century to finance acquisition agreements. the first beneficiaries of this mechanism were insurance companies, credit and savings associations and specialized investment funds. later, this mechanism extended to the financing of business development, share capital restructuring and other areas where there were difficulties in obtaining bank credit. the mezzanine financing mechanism is especially actively used during periods of economic crises, which was especially noticeable during the financial crisis of 2007–2008. as mezzanine investors, as a rule, are pension and investment funds, insurance companies that accumulate investors' funds, specialized structures of banks. the main goal of mezzanine investors are sustainable second-tier companies that have proven their viability. that is, mezzanine financing is a method of financing projects in which the investor provides funds in the form of debt financing with the simultaneous purchase of an option to purchase shares of the borrower the future at a certain price, possibly under certain conditions. in essence, mezzanine financing involves two parts that give a synergistic effect: debt and partial, with the debt part is always present, and the partial part may not be implemented. the debt part of the mezzanine can be represented by both secured and unsecured loans, as well as subordinated loans, which provide for repayment after meeting the requirements of other loan agreements or bonds. in most cases, primarily due to the prevalence of bank lending, the debt part of the mezzanine is represented by a bank loan, but it may be replaced by a loan from third parties, which will also correspond to the essence of mezzanine financing at present, banks, as the main creditors of domestic producers, mainly issue loans to secure tangible assets, at the expense of future harvests or output. therefore, table 3 terms of lending on credit lines in banks of ukraine for agricultural enterprises parameters of cb "privatbank", at "oschadbank", patab ukrgasbank otp bank pjsc, pjsc "credit agricole bank" pjsc bank credit dnipro тerm up to 3 years obligatory annual full repayment of the entire loan or each individual tranche at least once every 12months up to 18 months, up to 12 months under a seven – year framework agreement up to 18 months limit up to 60.0% of the costs of the campaign for sowing, care and harvest maximum – 500 thousand euros up to 70.0% from the general costs per season interest rate, % per annum 28.0-34.0 (kb privatbank) 21.25-24.0 hryvnias; from 12.0 in us dollars; from 12.0 in euros 19.0-21.0 from 21 in hryvnia, payment during the period of receipt of sales revenue harvest commission, % from 0.2 per month one-time 0.99-1.0 of the amount of the set limit security real estate and movable property, property rights, surety agricultural machinery and equipment, cars and trucks; real estate; the borrower's own assets; as an additional pledge – cattle, grain, the harvest of the future period future harvest and machinery source: developed by the author on the basis of nbu three seas economic journal 66 vol. 3 no. 1, 2022 it is advisable to expand lending opportunities through the mechanism of mezzanine financing. most often, mezzanine financing involves obtaining credit resources for collateral. in this case, the collateral may be primarily such assets of agricultural enterprises as real estate, machinery, equipment, much less securities. in essence, mezzanine financing schemes occupy an intermediate place between a bank loan and a direct investment in the company 's capital. therefore, we consider it appropriate to take into account when implementing mezzanine financing: – first, the presence of mezzanine debt. lack of security or a negative assessment of the debtor's condition does not allow him to count on a loan, and attracting direct investment, due to certain circumstances has become impractical for potential borrowers. mezzanine debt, compared to direct investment, may have collateral, but it is usually weaker than bank credit. the required return on a mezzanine lender is lower than that of direct investment, but higher than that of banks. in essence, mezzanine financing schemes involve the use of various financial instruments, including, such as subordinated debt, warrants for shares or loans "with profit participation". repayment of mezzanine loans is mainly carried out at the expense of funds received from the sale of assets and shares of the debtor, and for loans, the repayment is financed using the money supply obtained in the course of the main activity. mezzanine financing is carried out exclusively with the use of instruments which are determined by the results of negotiations between the investor and the borrower; – secondly, a certain part of the mezzanine must be represented by a financial instrument that will give its owner the right to purchase shares of the agroindustrial company in certain circumstances and / or at a certain time (for a certain time) at a predetermined price. options (as derivative financial instruments) and options of the issuer (as securities) can act as such financial instrument. as a rule, it depends on a set of circumstances, external and internal factors and individual specificity of each separately considered enterprise of the agrarian sphere; – thirdly, financial instruments are mixed within mezzanine financing not just by private subscription, but, in fact, in a limited way: they are issued and transferred to one person, combining the functions of creditor and investor. it is believed that such tools are completely illiquid. however, this can be questioned, because both the option and the issuer's option, respectively, are derivative financial instruments and securities, in theory, can circulate freely in the financial market. of course, mezzanine financing does not imply that the creditor-investor will seek to sell its financial instrument, but nevertheless, this cannot be ruled out; – fourth, the average debt repayment period is 5-7 years, and at the beginning of the credit period there is a deferral of payment of the debt, which allows agricultural enterprises to invest in business development, rather than giving them to repay the loan. this is extremely important due to the specifics of agribusiness, which requires constant serious replenishment of not only fixed assets but also current assets. in the future, when the company will reach a relatively stable performance, loan payments will increase just by repaying the body of the debt. mezzanine does not involve creditors-investors in the management of the enterprise, which receives resources, which can also be its competitive advantage if the owners of the enterprise want to manage it exclusively independently. thus, the debt part of the mezzanine is always present, but the share may be absent if it is impractical for the creditor-investor to exercise the rights under the option or the issuer's option. all other things being equal, it is interesting for a lender-investor to use a financial instrument under the mezzanine financing mechanism, if the lent enterprise is successfully developing and in the long run will bring more income than from the loan. it is also rational to exercise the option in a negative situation when the borrower does not fulfill its obligations, and thus try to at least partially compensate for the lost benefit. in this case, the investor buys (and actually pays for) shares, exercising the option, and the money transferred for payment goes to the account of the agricultural business, which in turn at the expense of the funds repaid the debt to the investor. the mezzanine financing mechanism provides quite flexible conditions and can be applied to various operations in the agribusiness, ranging from the development of the innovative component of agro-industrial clusters to large mergers and acquisitions. it is obvious that this tool is attractive for large forms of management, including agricultural holdings. this tool can also be adapted and used for farms, personal farms, family farms, sole proprietors and more. 6. conclusions research of financial instruments on the credit market of ukraine in the conditions of european integration processes to make a number of conclusions of scientific-theoretical and applied character. based on the analysis of qualitative and quantitative changes in lending in ukraine, we analyzed the types of credit services of banking institutions. at present, credit services provided to individuals with the help of credit cards are promising in ukraine. however, only in 2018 loans to customers increased, but both before and after 2018 we see a downward trend in loans to customers. in general, the development of the credit market at the present stage of economic development in our three seas economic journal 67 vol. 3 no. 1, 2022 country does not meet the real needs of the economy. the number of banking institutions in the country is significantly declining and interest rates on loans are rising. the results of the analysis of credit activity of a number of banking institutions showed that bank credit occupies an important place in the credit market of ukraine, and in the activities of the banking institution itself. credit services bring the bank big profits. with the help of the credit mechanism, selfregulation of the economic system is achieved, the rate of profit is equalized in various sectors of the economy, and so on. credit promotes the concentration and centralization of capital. the credit plays an extremely important role in ensuring scientific and technological progress and servicing the innovation process. credit is an important source of financing capital investments. credit relations have given rise to the credit mechanism, which includes the principle of lending, credit planning and credit management, conditions and methods of lending, ways to quantify it. the results obtained in this paper allow us to make proposals for improving the credit market and the use of its financial instruments in the context of european integration processes. we believe that the strategic direction of reforming credit services in ukraine in the face of global challenges is the implementation of the concept of "financial initiatives". the financial initiatives launched in recent years in the agricultural sector are clearly acceptable and successful, but so far this is, without exaggeration, a successful phase, which will help increase the investment activity of agricultural producers. in order to achieve positive changes in ensuring the sustainable development of the agricultural sector, it is necessary not to dwell on the results obtained, but to work towards the qualitative and territorial deepening of the introduced innovative financial instruments. adequate investment support for the agricultural sector is possible provided that these processes are intensified and agricultural producers use all possible tools to raise funds, the range of which has expanded significantly in recent years. the product of such a credit market is innovative financial instruments, their introduction and use in a competitive economic environment, which are proposed to ensure the monetary relations of credit market participants. references: grabchuk, o. m. (2012). the essence of the concept of financial instruments. financial mechanism for solving global problems: prevention of economic crises. international scientific-practical conference. available at: http://www.confcontact.com/20120322/3_grabchuk.php electronic visit of privatbank. available at: https://finbalance.com.ua/news/privatbank information on the state and development of credit institutions of ukraine. official site of the national commission for state regulation of financial services markets. available at: https://www.nfp.gov.ua/ua/ informatsiia-pro-stan-i-rozvytok-kredytnykh-ustanov-ukrainy.html zagorodniy, a. g. (2005). financial and economic dictionary. lviv: lviv polytechnic university, 714 p. kuznetsova, l. v. (2015). innovative financial instruments to protect banks from risks in the credit market. economic sciences, іssue 15, рart 2, рp. 142–145. moshenets, o. (2011). innovative products and technologies in the market of banking services. financial market of ukraine, no. 12, рр. 7–8. malik, m. i., & vdovenko, l. o. (2013). monetary instruments to stimulate credit activity of commercial banks. economics of agro-industrial complex, no. 11, р. 61. mayorova, t. v. (2014). synergetic approach in the formation of the modern paradigm of financial and credit mechanism of activation of the investment process. economic journal-xxi, no. 3–4 (1), рp. 66–69. mikhailov, a. m. (2017). investment resources of the agricultural sector of the economy of ukraine: scientific foundations, status, prospects: a monograph. sumy: fop litovchenko e.b., 300 p. "agrarian fund". available at: http://agrofond.gov.ua/news/list/580--pat-agrarnij-fond(accessеd 15 january 2022). peresada, a. a., & kovalenko, yu. m. (2006). financial investments: textbook. kyiv: kneu, 728 p. yuri, s. i., fedosov, v. m., & alekseenko, l. m. (2006). finance: textbook. kyiv: knowledge, 611 p. three seas economic journal 20 vol. 3 no. 4, 2022 1 national technical university "kharkiv polytechnic institute", ukraine (corresponding author) e-mail: tetiana.koliada@emmb.khpi.edu.ua orcid: https://orcid.org/0000-0002-3515-9842 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-4 research of organizational development of food industry enterprises tetiana koliada1 abstract. the purpose of the work is to analyze economic processes at the enterprise level and in-depth study of their economic processes, which is important not only in the process of establishing market relations, but especially during the economic crisis in the country. methodology. there is an urgent need to make managerial decisions aimed at improving the economic sustainability of the enterprise, which can only be achieved through professional economic analysis of the enterprise, which is carried out using a number of economic and financial indicators calculated on the basis of financial statements and additional accounting indicators at the enterprise. the most difficult task of the food industry is to provide high-quality products and achieve their competitiveness. according to the results of the analysis, it was concluded that the food industry ranks second in terms of sales. the food industry ranks second in terms of sales volume. in 2016, the volume of sold products of the food industry amounted to 381.4 billion uah (21.6% of the total volume in the industry), of which 91.4 billion uah (19.6% of the volume of industrial products sold outside the country). the food industry of ukraine has great potential and is competitive. in the context of the strategy development, measures to stimulate the economic activity of food industry enterprises are also proposed. practical implications. manufacturers are expanding the geography of external supplies and are looking for access to foreign markets, and the export potential makes it attractive to investors. under such conditions, the ukrainian food industry should change its priorities and modernize production. there is a clear lack of funding for the industry, which could be provided by both foreign and domestic investors. capital investments should go to the food industry, which produces competitive products. and the reduction of investments in the food industry in the long run will increase the technological lag of ukraine from the developed countries of the world. value/originality. during the year, work was carried out to attract food and processing enterprises of all forms of ownership to participate in seminars on the development, implementation and certification of management systems, namely: quality, food safety, environmental management, occupational safety. key words: organizational development, food industry, management, enterprises. jel classification: d21, d29, d70 1. introduction the modern paradigm of business management is determined by a high level of uncertainty and dynamism of the external environment, intensification of competition in the markets, intellectualization and computerization of activities, the growing role of the human factor, proactive development strategies, the crucial importance of a unique combination of resources and outstanding competencies, the need for strategic flexibility in the management of production, marketing and innovation. as a result, the company 's operating model should be based on comprehensive multi-criteria analytical support and design of business processes and organizational changes. for many years, the food industry of ukraine has been a priority and strategically important industry that ensured food security of the ukrainian people and contributed to the rapid integration of the national economy into the european union. in the world practice, the quality and quantity of food products are important indicators of social stability of the country, which testify to its development. therefore, the issue of quality and safety of three seas economic journal 21 vol. 3 no. 4, 2022 products is of concern to both specialists and consumers, and therefore it is necessary to manage and control the quality of products. since quality cannot appear by itself, it must be managed. and this process should involve all economic counterparties that interact in the process of production and promotion of products to the consumer. but the most difficult task of the food industry was and remains ensuring high quality products and achieving its competitiveness. 2. scientific principles of organizational development despite the economic crisis, the country is developing market relations, accompanied by the active formation of entrepreneurship, the creation of new enterprises in the food industry. this business is characterized by low economic sustainability of food enterprises. analysis of economic processes at the level of enterprises and in-depth study of their economic processes is important not only in the process of establishing market relations, but especially during the economic crisis in the country. there is an urgent need to make managerial decisions aimed at improving the economic sustainability of the enterprise, which can only be achieved through professional economic analysis of the enterprise, which is carried out using a number of economic and financial indicators calculated on the basis of financial statements and additional accounting indicators at the enterprise. at this stage of management there is a need for in-depth identification of the existing capabilities of the enterprise to achieve and maintain sustainable and effective business development. and most importantly – achieving positive results in solving the tasks of the enterprise on economic sustainability at all other levels of production process management (development of the food processing industry in 2018). first of all, in the scientific literature, the concept of "organization development" began to be used in the 1950s of the xx century, understanding it as a specific strategy of systemic change aimed at improving the efficiency of the organization by improving the management of organizational processes, structures and culture. in the 60s and 70s of the xx century, organizational development research focused on improving the internal functioning of the organization by improving communications, clarifying organizational roles, creating teams, etc. in the 1980s of the twentieth century, the concept of "organizational development" under the influence of increased competition, development of information technology, political and economic changes acquired a new meaning. its main components were the mission, key principles, vision, strategy of the organization (denysiuk, 2013). organizational development researchers consider their field of study as a separate interdisciplinary field of knowledge, which is more general and covers the concepts of organizational behavior, management, business administration, psychology, sociology, anthropology, economics, education, consulting and public administration. among the definitions of organizational development, attention should be paid to the typology (egan, 2001), who made a historical analysis of the creation of 27 different interpretations in the period from 1969 to 1999. at the same time, attention should be paid to the definition (mclean, 2005), which defines organizational development as any process or activity aimed at improving know ledge, experience, productivity, income, interpersonal relationships or other desired results in the organization and for the benefit of the organization. for example, (christian freilinger, johannes fischer, 2002) notes that a holistic (systemic) approach to change in an organization cannot be implemented without the classical distinction between first and second order changes. the system can acquire different states, i.e., change according to the first-order principle. in another form, second-order changes make the system understand itself and perform this role in a completely new way. second order changes are quantum leaps, startling discoveries, etc. changes are associated both with internal changes at the enterprise (forms of ownership; in the management, production and other structures of the enterprise; forms and methods of management, development prospects), and with the external environment (new business conditions, competitive environment), the emergence of new technologies, etc.) (otenko, moskalenko, 2005). thus, organizational changes are systemic transformations that cover the entire enterprise three seas economic journal 22 vol. 3 no. 4, 2022 as a whole or its individual parts. they are aimed at improving economic, legal and social relations in the field of organization functioning. the objects of organizational changes can be structures, management systems, processes, methods, technologies. changes that occur in the process of functi oning of the enterprise are qualitative in nature and can be manifested in the transformation of the enterprise potential (technological, intellectual, managerial, financial, etc.), as well as in changing the size and scope of the enterprise. organizational changes at enterprises are aimed at solving two main tasks: 1) ensuring the survival of the enterprise in the short term, mainly through the use of internal reserves; 2) achieving long-term efficiency by ensuring high competitiveness of the enterprise in the market. organizational changes cover all planned, organized and controlled activities in the field of strategy, production processes, structuring and management of enterprises. they involve a radical transformation of the structure of an economic organization, its assets, property, finances, management, personnel, strategic orientation, and ways of adapting to the external environment. organizational changes can be carried out both in enterprises seeking to overcome the crisis, and in organizations with dominant positive trends in functioning, which seek to qualitatively transform their activities in order to maintain the current trajectory of development and further increase efficiency. 3. analysis of organizational development of the food industry the food industry is one of the most investmentattractive industries in ukraine, which is due to the rapid return on investment, the availability of a large base of agricultural raw materials, much less dependence on changes in the situation on foreign markets due to the large capacity of the domestic market and low elasticity of demand for food. at the same time, the development of the food industry is characterized by the presence of unresolved problems, such as the lack of a systematic approach to state policy to ensure stable and efficient food production; low level of technical equipment and high level of equipment disposal; decrease in the level of raw material supply and purchasing power of the population; lack of investments and innovations; lack of stable relations between suppliers of raw materials and processing enterprises. today, food industry enterprises are concerned with such issues of organizational development management as (sakhno, sakhnenko, 2019): 1. significant level of seasonal impact in industries that process agricultural raw materials. 2. high consumption of raw materials and other material resources in the production process (it should be taken into account that the quality of indigenous agricultural products needs to be improved for the normal functioning of raw and finished products). 3. limited shelf life of food products in the industry. 4. the most common goal of the food industry enterprise is to meet the needs of the end consumer in terms of the impact of sales volumes on the welfare of the population. 5. the need to constantly change the business of manufactured products in order to keep demand at the required level and maintain its market share in the face of fierce competition from imported producers. 6. high level of qualification of working personnel at food industry enterprises. undoubtedly, the change in modern conditions of industrial development has led to the emergence of new challenges for the production and sale of food industry products. at the same time, the problems that previously had a destructive impact on various industries and sectors remain unresolved. scientists traditionally refer to such restraining factors as (sychevskyi, yuzefovych, 2014): – insufficient demand for food solvents; – diversified attractiveness of food industry for foreign investors; – the impact of uncontrolled and unpredictable factors on production results; the lack of economic regulators. in other words, under current conditions, in addition to traditional challenges that destabilize the food industry, new problems arise due to the limitations and consequences of the covid-19 pandemic and military operations in ukraine. after all, the food industry has a serious impact on the state economy, revenues to budgets of different levels and the development of various three seas economic journal 23 vol. 3 no. 4, 2022 sectors of domestic industry. however, as in most areas of state building, there are a signi ficant number of problems in domestic practice that affect the capacity of the national food indus try system, namely (rymar, mazurkevych, 2021): 1. poor quality of food industry management. effective management allows standardizing the work of food industry enterprises, improving management processes in accordance with the requirements of the market economy, while respecting the interests of society and the state. 2. insufficient funding, investment in food industry. the realities of today require new investments that can modernize technological processes and technical base at enterprises. 3. poor quality of legislative provisions regulating the functioning of the food industry. despite the fact that the association agreement provided for the unification and improvement of regulatory standards in the food industry, the expected improvement did not occur. 4. difficult economic, political and epidemiological situation. the crisis phenomena of social life in ukraine create an unfavorable situation both in the domestic and foreign markets, which affects the volume of product supplies, investment climate, sales markets, etc. the food industry ranks second in terms of sales volume. in 2016, the volume of sold products of the food industry amounted to 381.4 billion uah (21.6% of the total volume in the industry), of which 91.4 billion uah (19.6% of the volume of industrial products sold outside the country). one of the main tasks of today is to produce high-quality products that would meet the standards of european markets and be competitive. during the year, work was carried out to attract food and processing enterprises of all forms of ownership to participate in seminars on the development, implementation and certification of management systems, namely: quality, food safety, environmental management, labor protection. foreign economic relations, especially foreign trade, is one of the most dynamic sectors of the economy and the leading form of participation in relations between ukraine and other countries. it should be noted that the main obstacles to the organizational development of the food table 1 volume of food industry products sold by ukrainian enterprises in 2020-2021, uah million № type of products volume of products sold, 2020, uah million volume of products sold, 2021, uah million share in the volume of products sold, %, 2020 share in the volume of products sold, %, 2021 1 meat and products of meat 62921,8 75160,6 2,92 3,00 2 oil and solid fats 115350 132746,4 5,36 5,29 3 fish 3782,2 4853,6 0,18 0,19 4 fruits and vegetables 13142,5 15680,6 0,61 0,63 5 dairy products 51561,5 57638,6 2,39 2,30 6 bread, bakery and flour products 306998,6 33733,7 14,26 1,34 7 in general, food industry 380695,6 422730,5 17,68 16,85 table 2 change in production volumes of the main types of food industry products № group of goods growth rate, % 2005/2004 2010/2009 2016/2015 2021/2020 1 food +17,5 +10,7 +8,5 +13,4 2 bread and bakery products -1,1 +12,3 +11,1 +8,4 3 meat and products of meat +30,3 +2 +7,3 +20,9 4 fish and fish products +29,8 +5,1 +5,1 +1,7 5 milk, cheese and eggs +23,4 +21,9 +14,1 +20,8 6 oil and fats +24 +9,6 +13,4 +15,4 7 fruits +20,6 +5,1 -1,8 +15,2 8 vegetables -8,3 +14,5 -6,4 +10,3 9 sugar +27,5 +57,5 +17,8 +6,8 three seas economic journal 24 vol. 3 no. 4, 2022 industry in terms of increasing production volumes are insufficient efficiency of agricultural markets, monopoly of certain trading enterprises, low quality of raw materials, in particular, final products, inconsistency of the system of food standards with european and world practice, inefficient system of crediting and subsidies, high level of use of material and technical base and low level of introduction of innovations in enterprises 4. recommendations for improving the organizational development of food industry enterprises modern trends in the socio-economic development of society determine the directions of activity of enterprises in order to achieve economic stability. increasing requirements for sustainable production and economic, financial and economic, economic and organizationalmanagerial activities of the enterprise requires the development and implementation of effective approaches to enterprise management, among which the main place belongs to social management and development strategies. the moment of implementation of the social component in the overall management process of the enterprise will contribute to its development in parallel with increasing its economic stability. meeting the needs of society is an extremely important task for any business. the human factor should be taken into account in the assessment. the search for ways to increase the economic sustainability of food supply in the context of the economic crisis is an urgent and necessary component of the process of overcoming the crisis not only at the micro level, but also at the macro level. most enterprises do not have a social orientation of business and lack qualified employees, which requires the creation of a new socially oriented system. improvement of organizational development of food industry enterprises based on social development strategies should include the following elements (strategy for the development of exports of agricultural products, food and processing industry of ukraine for the period up to 2026): – employment policy should include all possible measures aimed at providing enterprises with highly qualified personnel, creating the necessary working conditions, ensuring guarantees of labor protection, career growth and wage growth; – a training policy that includes all possible measures to improve the skills of employees and encourage the desire for professional growth; – a remuneration policy that includes elements of a sufficiently high proportion of salary, experience-ability-dedication, benefits, incentives. meeting the social needs of the workforce encourages employees to work hard, and therefore solves the related problems of ensuring the economic stability of the food enterprise. improving quality, production, continuous production, small narrow spaces, losses, not 94 103,2 102,9 100,8 95 102,5 89,3 104,4 102,9 98,5 80 85 90 95 100 105 110 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 figure 1. dynamics of food industry production indices in 2012–2021 three seas economic journal 25 vol. 3 no. 4, 2022 significant or absent. however, saving employees is one of the ways to reduce the economic stability of the enterprise. foreign experience shows that the growth of economic stability in times of crisis by increasing the competitiveness of enterprises through (the state of the agro-industrial complex. information and analytical portal of the agroindustrial complex of ukraine. february 4, 2021). – introduction of reduction of production costs by reducing bottlenecks and, accordingly, the cost of production, the use of alternative energy sources; – implementation of international quality standards; – implementation of measures aimed at the development of small food industry enterprises as one of the most important areas of job creation and income growth in the economic crisis. also, in the context of developing a strategy to stimulate the economic development of food industry enterprises, it is necessary to propose: – increase in the volume of investment revenues in the food industry from the state; – training and advanced training of personnel of food industry enterprises; – reducing the cost of products in this industry by introducing innovative devices and technologies; – ensuring the purchasing power of the population using the levers of state influence to increase the demand for food products; – expansion of the geography of international markets for the sale of products and provision of international standards for its production; – creation of favorable investment climate for international investors; – providing cooperation with agricultural enterprises within the framework of the raw materials portfolio formation. the proposed actions should have a positive impact on the development of the food industry in ukraine, and therefore ensure the food security of the state. 5. conclusions summarizing the above, we can see that the food industry of ukraine has great potential and is competitive. producers are expanding the geography of external supplies and are looking for access to foreign markets, and the export potential makes it attractive to investors. but the economic, political and epidemiological crises deepen the existing problems that destabilize the work of food industry enterprises and force them to look for new opportunities for the functioning of the market. under such conditions, the ukrainian food industry must change its priorities and modernize production. the review of problematic issues related to the functioning of the food industry showed that there are a number of managerial, economic, regulatory issues that have a destructive effect on the development of the food industry. there are no necessary capital investments, state financial support, which causes an unfavorable climate for the development of the industry. it should be noted that the main obstacles to the organizational development of the food industry in terms of increasing production volumes are insufficient efficiency of agricultural markets, monopoly of certain trading companies, low quality of raw materials, in particular finished products, low quality of the products produced, inconsistent system of food standards to european and world practice, inefficient system of crediting and subsidies, high load of material and technical base and low level of introduction of innovations at enterprises. today there is a clear shortage of funding for the industry, which could be provided by both foreign and domestic investors. prospects for the food industry development are depend on the growth of the industry, its competitiveness, and the effectiveness of economic levers of proceeds, development of a market-based production model adapted to national realities. capital investments should go to the food industry, which produces competitive products. and the reduction of investments in the food industry in the long run will increase the technological lag of ukraine from the developed countries of the world. further directions of research should reveal the specifics of industry management in crisis conditions, identify real ways to attract investment, including in-depth marketing research. references: rozvytok kharchovoi pererobnoi promyslovosti za 2018 rik [development of the food processing industry in 2018]. informatsiino-analitychnyi portal apk ukrainy. available at: https://agro.me.gov.ua/ua three seas economic journal 26 vol. 3 no. 4, 2022 denysiuk, i. m. (2013). stratehiia rozvytku pidpryiemstva kharchovoi promyslovosti: ekonomichna sutnist [development strategy of the food industry enterprise: economic essence]. ekonomichnyi analiz, vol. 12 (3), pp. 112–115. egan, t. m. (2001). organization development: an examination of definitions and dependent variables. organization development journal, 20, 16-3. mclean, g. (2005). organization development: principles, processes, performance. gary mclean. berrettkoehler publishers, 466 p. christian freilinger, & johannes fischer (2002). upravlenye yzmenenyiamy v orhanyzatsyy [organizational change management]. м.: knyhopysnaia palata, 264 p. otenko, y. p., & moskalenko, n. a. (2005). orhanyzatsyonno-ekonomycheskyi mekhanyzm restrukturyzatsyy predpryiatyia: nauchnoe yzdanye [organizational and economic mechanisms of enterprise restructuring]. kharkov: yzd. khneu, 216 p. sakhno, i. v., & sakhnenko, o. i. (2019). stratehichne upravlinnia yak instrument formuvannia konkurentospromozhnosti pidpryiemstva [strategic management as a tool for the formation of enterprise competitiveness]. infrastruktura rynku, vol. 31, pp. 362–367. available at: http:www.market-infr.od.ua/ uk/31-2019 sychevskyi, m. p., & yuzefovyc,h a. e. (2014). rozvytok kharchovoi promyslovosti: aktsenty derzhavnoi polityky [development of food industry: emphasis of state policy]. ekonomika apk, vol. 7, pp. 46–51. rymar, o., & mazurkevych, і. (2021). problems and prospects of development of food industry of ukraine. ekonomika ta derzhava, vol. 3, pp. 66–70. stratehiia rozvytku eksportu produktsii silskoho hospodarstva, kharchovoi ta pererobnoi promys lovosti ukrainy na period do 2026 roku: rozporiadzhennia kabinetu ministriv ukrainy vid 10 lypnia 2019 r. № 588-r [strategy for the development of exports of agricultural products, food and processing industry of ukraine for the period up to 2026: order of the cabinet of ministers of ukraine of july 10, 2019 № 588-р]. available at: https://zakon.rada.gov.ua/go/588-2019-%d1%80 stan haluzei apk. informatsiino-analitychnyi portal apk ukrainy. 2021. 4 liutoho [the state of the agro-industrial complex. information and analytical portal of the agro-industrial complex of ukraine. february 4, 2021]. available at: https://agro.me.gov.ua/ua/investoram/monitoring-stanu-apk/stanrozvitku-apk/stan-galuzej-apk received on: 8th of november, 2022 accepted on: 17th of december, 2022 published on: 30th of december, 2022 three seas economic journal 182 vol. 3 no. 1, 2022 corresponding author: 1 attorney, kyiv, ukraine e-mail: o.teresh4enko@gmail.com orcid: https://orcid.org/0000-0003-3167-8407 doi: https://doi.org/10.30525/2661-5150/2022-1-26 currency market and mechanisms of its regulation in the system of economic security of the state olga tereshchenko1 abstract. the aim of the work is to improve the system of indicators to assess the economic security of the state in the foreign exchange market and ways to develop mechanisms of its regulation. methodology. the study is based on a statistical evaluation of currency security indicators in the period 2008–2021, which allowed to establish that: first, the ratio of loans in foreign currency to total gross loans is a clear indicator of currency crises, when the value of the indicator increases to 60%, while in the pre-crisis period it is almost two times lower; secondly, the dollarization of the money supply changed in the range of 25%-33%, that is, the range of variation is insignificant, but in the post-crisis period, its level drops below 30%; thirdly, the level of dollarization of gdp, which is almost two times lower than the level of dollarization of the money supply, is characterized by greater variability and tends to increase in the crisis period and tends to decline in the post-crisis recovery period. the results of the work include a systematization of approaches to the interpretation of currency security and the factors that determine it. according to the narrow approach, currency security is reduced to the state of exchange rate, ensuring the stability of the national currency. foreign exchange security in a broad sense also implies the ability to automatically set the balance of payments, sufficiency of official foreign exchange reserves, ensuring a stable inflow of foreign exchange into the domestic market with a high export potential and investment attractiveness of the country. statistical evaluation of currency security indicators in the period 2008–2021 allowed to establish the peculiarities of their interrelation with the signs of currency crises. proposals aimed at strengthening economic security in the foreign exchange market were substantiated. the practical implication is to improve the methodological recommendations for a comprehensive assessment of the level of currency security of the state based on supplementing the current system of six indicators with two additional indicators – the difference between interest rates on deposits in u.s. dollars and in hryvnias, the level of dollarization of the gross domestic product. the advantage of the first is less informational asymmetry compared to the difference between the forward and official hryvnia exchange rates, the advantage of the second is the demonstration of how much of the gross domestic product is served by the money supply in foreign currency. it is advisable to strengthen economic security in the foreign exchange market through the coordinated implementation of monetary, currency, fiscal, structural and investment policies, soft dedollarization, the use of financial derivatives and international lending. value/originality. the proposed mechanisms of currency market regulation in the system of national economic security are based on the separation of narrow and broad approaches to the interpretation of currency security of the state, as well as on the clarification of conditions for the use of currency liberalization tools in the system of formation of a full-fledged competitive currency market and deregulation of currency control. key words: currency market, mechanisms, regulation, system, economic security, state. jel classification: f31, f32, h56, e58, g18, g28, l51 1. introduction currency market is an institutional formation, where currency values, derivative financial instruments and contracts are traded and prices for them are formed. an indication of the functioning of the foreign exchange market is its uncertainty, as the opposite nature of the motives of its subjects has a multidirectional impact on the dynamics of the exchange rate. its high volatility causes financial instability in the activities of economic entities and the emergence of financial crises that threaten the functioning of the global and national currency systems. long periods of currency instability lead to significant losses for national economies, economic entities, households and have a negative this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 183 vol. 3 no. 1, 2022 impact on their economic security. this makes it relevant to study the problem of currency market regulation in the system of maintaining national security of ukraine at a sufficient level. on the other hand, currency security is only one of the subsystems of financial security, which, in turn, is a subsystem of economic security. therefore, in the process of forming proposals for the development of the mechanisms of the latter it is necessary to take into account the dialectical relationship of the foreign exchange market with other related markets. the issues of currency market regulation and liberalization are considered through the prism of economic security in the studies of many scientists. in this case, currency liberalization is distinguished as the formation of a full-fledged effective and competitive foreign exchange market, and the liberalization of currency regulation is seen as the deregulation of currency control, the introduction of soft norms of currency legislation, deregulation of currency operations, reduced intervention of the central bank and the authorities in the operation of the foreign exchange market, and the gradual removal of currency restrictions on the current and financial transactions of the balance of payments (lahutin & zhurba, 2018). a rather critical opinion is expressed about the noncompliance of ukraine's monetary policy with generally accepted international norms over the past 20 years due to the irresponsibility of the authorities, impunity of crimes of high-ranking officials, wastefulness and inefficient use of state budget funds (ilychok, 2017). for these reasons, inflation-deflationary processes and ukraine's low global competitiveness index have become a permanent phenomenon in our country as a whole. the state of fiscal, tax, currency and banking determinants of financial security of ukraine is considered in a causal relationship and their crisis state is noted (vasyltsiv, lykholat & hudzovata, 2017). the weakness of fiscal security is determined by the high level of secondary redistribution of gdp, the budget deficit, and its coverage by external borrowing. threats to banking security are associated with a high share of foreign capital and weak support for the development of the real economy. threats to currency security are associated with hryvnia devaluation, a critical level of official currency reserves, and significant dollarization. the replacement of ukraine's national currency by foreign currencies, primarily the u.s. dollar and the euro, threatens not only the economic but also the national security of our country. the paper agrees that the government and the nbu should conduct a balanced fiscal and monetary policy to create a new phenomenon – the dedollarization of the national economy (fedulova, 2015). to achieve this goal, it is necessary to develop appropriate programs and action plans to coordinate the demand for foreign currency and its supply, to increase confidence in the hryvnia, to create a regulatory framework for cooperation with international financial organizations, which will consolidate strategies to achieve currency security in the system of national security of ukraine (lesnik, 2017). while appreciating the scientific work of these authors, we should recognize the lack of attention to the causal links between currency crises and the economic security of the state, the statistical assessment of the level of dangers. 2. currency security of the state as a subsystem of the national economic system the economic security of the state is a derivative of many processes taking place in the world monetary and economic system and the national economy. in the conditions of ukraine, given the level of dollarization, currency security has a significant pressure on the level of economic security, as a significant saturation of foreign currency circulation channels binds the hryvnia and the national economy as a whole to the fluctuations of other currencies, simplifies the import of currency crises, etc. the development of recommendations to strengthen the country 's economic security in the field of currency and economic relations requires clarification of the definition of currency security. as an integral category, it combines external and internal aspects of competitiveness of the national economy, its ability to withstand external currency shocks and threats, currency imbalances, imbalances in the currency market, etc. on the other hand, the guarantee of currency security determines the investment attractiveness of the country for foreign investors, the risks of their investments in the national economy, the degree of currency market liberalization and the tightening of currency restrictions. therefore, the level of currency security, capable of mitigating currency crises, should become a strategic goal of monetary policy, and its tactical mechanisms should be aimed at balancing consumer prices and stabilizing the national currency (toropchenko & trokhymets, 2021). currency security is a hierarchical category, which within the national economy is associated with various actors: the state, individual industries and regions, enterprises, households. despite significant differences in the purposes of currency operations of these entities, the common features of their currency security are the protection of financial interests in the face of external and internal destabilizing factors affecting the currency market, their ability to maintain the usual mode of operation during currency shocks. generalization and critical evaluation of definitions of currency security of the state allows to distinguish two approaches: narrow and broad. the methodological recommendations on the calculation of three seas economic journal 184 vol. 3 no. 1, 2022 the level of economic security of ukraine contains a narrow interpretation, which is reduced to the state of exchange rate formation and requirements for it (ministry of economic development and trade of ukraine, 2013). however, in terms of cause-and-effect relationships, the state of foreign exchange policy, which ensures the stability of the national currency, is derived from a positive balance of payments, the presence of a sufficient level of official foreign exchange reserves, etc. therefore, the author considers a broad approach to the definition of monetary security to be more convincing (figure 1). in a narrow sense, currency security is ensured only by monetary policy, while in a broad sense it is a derivative of other areas of economic policy: structural, investment, debt, etc. however, the dynamics and level of the national currency exchange rate as a result of the exchange rate policy certainly acts as a stimulant / destimulant of export-import activity and attraction of foreign investments into the country. that is why it can be argued that exchange rate policy affects all components of the broad sense of "monetary security " directly, not indirectly. 3. methodological approaches to assessing the currency security of ukraine in the methodological recommendations for calculating the level of economic security of ukraine for a comprehensive assessment of the level of currency security an integral index is used on the basis of six indicators using weighting coefficients determined by expert method (figure 2). for an unambiguous interpretation of the indicators, methodological recommendations for their calculation and the source of information are given. however, there are certain difficulties, particularly in terms of calculating the difference between the forward and official hryvnia exchange rates, as information about the forward rate is not published by the nbu, and forecasts of consulting financial companies differ significantly. therefore, the paper supports proposals for the use of an alternative indicator – the difference between the interest rates on usd and uah deposits (marena & inozemtseva, 2018), since in the pre-crisis and crisis period it increases and at the same time reflects an increase in threats to currency security. the paper also proposes to use an additional indicator to the level of dollarization of the money supply – the level of dollarization of gdp, because the volume of money supply in national and foreign currency is an instantaneous indicator, while the proposed coefficient combines it with the interval indicator and reflects the ratio between monetary aggregates in foreign currency and the gdp created during this period. the ratio of loans in foreign currency to total gross loans, presented in figure 3 demonstrates three distinct peaks corresponding to crisis situations: the first (60.32%) – in the 4th quarter of 2008. up to the 4th quarter of 2013, in the process of post-crisis recovery, there was a steady decrease in the indicator up to 34.72 %, as the crisis unfolded in 2014, the share of loans in foreign currency in total gross loans increased and formed the second crisis peak of 57.37 5 in the 1st quarter of 2015, and the third crisis currency security narrow approach broad approach – state of exchange rate formation which is characterized by high confidence of society in national monetary unit and its stability – ability to automatically counterpoise the payment balance; – sufficiency of official currency reserves; – ensuring stable inflows of foreign currency into domestic market by a high export potential and investment attractiveness of a country; – state of exchange rate formation which ensures stability of a national monetary unit creation of optimal conditions for the rapid development of the national economy, integration of ukraine into the world monetary and economic system, protection against shocks on the international and domestic currency markets figure 1. formalization of narrow and broad approaches to the interpretation of currency security of the state source: author’s own development three seas economic journal 185 vol. 3 no. 1, 2022 peak appeared in a year – in the 1st quarter of 2016 (59.29%). the recovery of the foreign exchange market and the national economy after the currency crisis of 2014–2015 is accompanied by a steady downward trend in the analyzed indicator to 32% in the 3rd quarter of 2021. the phenomenon of dollarization is inherent in many countries of the world and is associated with the u.s. dollar acting as national money. more than half of cash us dollars are in circulation outside the us. ukraine, as well as russia, china and belarus, is a significant recipient of dollars (hrona, 2020). figure 4 shows the dynamics of dollarization indicators, or the presence of foreign currency in the currency security system of ukraine. the level of dollarization of the money supply during 2008–2018 exceeded 30%, except for 2010, 2013, 2018–2021. this means that almost every third uah equivalent of the money supply is invested in foreign currency. this increases the external depenindicators of currency security of the country index of changes in the official exchange rate of the national monetary unit to the u.s. dollar, the average for the period difference between the forward and official hryvnia exchange rates, uah gross international reserves of ukraine, months of imports share of loans in foreign currency in the total volume of loans issued, percentage balance of purchase and sale of foreign currency by the population, usd billion the level of dollarization of the money supply, percent difference between the interest rate on deposits in usd and uah, % per year level of dollarization of gross domestic product, percent figure 2. indicators of currency security of a country source: constructed based on the data (ministry of economic development and trade of ukraine, 2013) 44,58 60,32 34,72 57,37 59,29 32,00 30,0 35,0 40,0 45,0 50,0 55,0 60,0 65,0 20 05 q 4 20 06 q 3 20 07 q 2 20 08 q 1 20 08 q 4 20 09 q 3 20 10 q 2 20 11 q 1 20 11 q 4 20 12 q 3 20 13 q 2 20 14 q 1 20 14 q 4 20 15 q 3 20 16 q 2 20 17 q 1 20 17 q 4 20 18 q 3 20 19 q 2 20 20 q 1 20 20 q 4 20 21 q 3 figure 3. ratio of loans in foreign currency to total gross loans source: constructed based on the data (national bank of ukraine, 2021) three seas economic journal 186 vol. 3 no. 1, 2022 dence of the national economy, contributes to its shadowing, reduces the standard of living of the population, complicates the conditions for small and medium-sized businesses. the existing significant level of dollarization increases the risks of ukraine's default on foreign debts, which can be assessed using the proposed gdp dollarization indicator. during 2008–2014, its value increased from 15.9% to 19.4%. this means that during the 2014–2015 crisis, the value of foreign currency in circulation amounted to almost a fifth of gdp. the steady decrease of the dollarization of gdp to 10.5% in 2018 can be recognized as a positive effect of the reform of the foreign exchange policy, which has been underway since 2016. an additional argument in favor of this conclusion is the fact that during 2016–2021 there was a pronounced downward trend in the dollarization of the money supply from 32.9% to 25.3%. 4. ways to strengthen the currency security of the state: international experience and ukraine the process of replacing foreign currency with national currency from circulation can be called dedollarization. international experience shows that it can be soft and coercive in nature (oliinyk, 2016). in the first case, the instruments of soft dedollarization are: anti-inflationary policy, development of financial markets, issuing bonds to sterilize the excess money supply and turn it into an investment resource, increasing reserve requirements for banks on loans denominated in foreign currency, the concentration of foreign currency in lending to exporters, increasing the overall level of interest rates on deposits in national currency and indexing them in line with inflation. forced dedollarization was carried out by developing countries through forced conversion of all dollar assets into the national currency, freezing deposits in foreign currency, etc. however, such mechanisms are unacceptable for the conditions of liberal currency markets, to which ukraine is moving. the most acceptable instruments of currency security for our country are the following: coordinated measures of monetary, fiscal, debt and structural policy, correct information policy of the nbu, aimed at increasing confidence in the national currency (stetsiuk, slyvka & bashynskyi, 2018), cooperation with the imf to maintain a sufficient level of official currency reserves, reducing the level of dollarization of monetary mass due to increasing the attractiveness of assets nominated in hryvnia, using currency derivatives for hedging currency risks; stimulation of export-oriented sectors of the industries of national economy, balance monitoring and counterpoising the payment balance. the issue and circulation of digital currency may significantly affect the nature of the monetary policy of the national bank of ukraine, the conditions of the monetary transmission mechanism and the conduct of fiscal policy (mishchenko & naumenkova, 2021). the most important tasks of strategic anti-crisis management of currency security of the state on the way of its integration into the global economy are to ensure effective integration of regional and global financial relations, increasing the effectiveness of public administration in terms of neutralizing external and internal threats to financial security, conducting a policy of reasonable protectionism within the framework of generally accepted and effective procedures, as well as maintaining the stability of the national currency and its moderate volatility, etc. (getmanenko, 2020). 15,9 16,3 16,1 16,0 17,7 16,9 19,4 16,1 15,2 12,9 10,5 10,4 11,8 11,2 30,6 31,7 29,1 30,4 32,1 27,2 32,2 32,2 32,9 31,9 29,2 28,7 26,9 25,3 0 5 10 15 20 25 30 35 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 gross domestic product, % money supply, % figure 4. dynamics of dollarization indicators in the currency security system of ukraine, % source: constructed based on the data (national bank of ukraine, 2021) three seas economic journal 187 vol. 3 no. 1, 2022 an important role in the formation of economic security of the state is currency security of economic entities, the insurance of their currency risks on the basis of hedging, that is, the use of certain countermeasures in response to deteriorating situation on the currency market. the most common are: balancing assets (receivables) and liabilities (payables) by term and amount; derivative financial instruments (futures, forwards, swaps, options). in ukraine, the most common financial derivative of the foreign exchange market is the forward instrument, which contributes to strengthening the currency security of business entities through the following mechanisms: forward premium compensates the difference between the interest rates on the dollar deposit and the hryvnia loan, ensuring exchange rate parity; forward contracts allow foreign exchange market participants to keep their currency position closed and bring the exchange rate in settlement closer to the spot rate at the time of payment; the sale or transfer of obligations under forward foreign exchange contracts to other parties, as well as their termination, is carried out only with the mutual consent of the buyer and the seller, which imposes a 100% obligation to fulfill the agreements and disciplines the parties, especially in times of currency crisis. in ukraine, the forex market operates in a legal vacuum, which has a negative impact both on the protection of the rights of its participants, and on the volume of tax revenues to the state budget. the most acceptable way to eliminate this drawback is to introduce the experience of eu countries on the legal regulation of forex-companies, as well as to create a legal basis for their self-regulation in the framework of improving the legal regulation of foreign exchange outside the exchange in ukraine (podorozhnyi, sirokha & komirchyi, 2017). the forex market functioning will contribute to the stability, reliability and efficiency of the financial system, increasing the guarantees of protection for the rights of private investors, increasing tax revenues to the budget and strengthening the currency security of the state. the currency potential of economic entities increases their receipt of international currency loans, parallel and multi-currency lending, which covers the shortage of financing on the domestic currency market and contributes to the financial security of the state as a whole. insurance instruments, state guarantees, and first-class banks are used to reduce credit risks. 5. conclusions 1. the approaches to the interpretation of currency security and the factors determining it are systematized. according to the narrow approach, currency security is reduced to the state of exchange rate, which ensures the stability of the national currency. in addition to the above characteristic, currency security in the broad sense also includes the ability to automatically balance payments, sufficiency of official foreign exchange reserves, ensuring a stable inflow of foreign currency in the domestic market with a high export potential and investment attractiveness of the country. 2. as a result of the critical evaluation of methodological recommendations for a comprehensive assessment of the level of currency security, it was proposed to supplement the current system of six indicators with two additional indicators – the difference between the interest rates on deposits in u.s. dollars and in hryvnias, the level of dollarization of gross domestic product. the advantage of the first is less informational asymmetry compared to the difference between the forward and official hryvnia exchange rates, the advantage of the second is the demonstration of how much of the gross domestic product is served by the money supply in foreign currency. 3. a statistical evaluation of currency security indicators for 2008–2018 found that: – firstly, the ratio of loans in foreign currency to total gross loans is a clear indicator of currency crises, when the value of the indicator increases to 60%, while in the pre-crisis period it is almost two times lower; – secondly, the index of dollarization of the money supply changed in the range of 25% – 33%, that is, the range of variation is insignificant, but in the postcrisis period, its level falls below 30%; – thirdly, the level of dollarization of gdp is almost twice lower than the rate of dollarization of the money supply, it is characterized by greater variability and tends to increase in the crisis period and tends to decrease in the post-crisis recovery period. 4. it is advisable to strengthen economic security in the foreign exchange market through the coordinated implementation of monetary, currency, fiscal, structural and investment policies, soft dedollarization, the use of financial derivatives and international lending. the purpose of further research is to formalize the exchange rate regime as an object of regulatory policy of the state under the conditions of openness of the 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(2021). trends in investment activity and accumulation of investment disproportions in the economy of ukraine. green, blue & digital economy journal, 2(1), 73–81. doi: https://doi.org/10.30525/2661-5169/2021-1-11 vasyltsiv, t. h., lykholat, s. m., & hudzovata, o. o. (2017). stan biudzhetnoi, podatkovoi, valiutnoi ta bankivskoi determinant finansovoi bezpeky ukrainy [the state of budget, tax, currency and banking determinants of financial security of ukraine]. naukovyi visnyk lvivskoho derzhavnoho universytetu vnutrishnikh sprav. seriia ekonomichna, 1, 19–28. three seas economic journal 104 vol. 2 no. 3, 2021 corresponding author: 1 vinnitsia national agrarian university, ukraine. e-mail: olenatomchuk@ukr.net orcid: https://orcid.org/0000-0003-0974-8018 doi: https://doi.org/10.30525/2661-5150/2021-3-14 methodology for analysis of the financial condition of agricultural enterprises and ways of its enhancement olena tomchuk1 abstract. the purpose of the article is to form the main directions of improving the financial condition of the business entity in modern conditions. methodology. methods of theoretical generalization and concretization, internet resources have been used in this study. results. groups of users of information concerning the financial condition of the enterprise are selected. the first group includes creditors, investors, competitors, regulators, and other users, and the second – the company's management, economic and other interested internal services, shareholders, etc. for each of these users, certain selected metrics are important. a technique for determining the significance of indicators for a particular group of users, which involves the use of economic and mathematical methods and models, is developed. in order to make certain management decisions, the analysis should be carried out according to the indicators required by the management and, accordingly, will be implemented in the management practice of khmilnytske llc. the sequence of assessment of the financial condition by economic and mathematical methods is determined. having chosen the direction of research of indicators and having carried out their corresponding calculations, it is possible to carry out the analysis of factors of influence on the financial position of the investigated business entity and to calculate reserves of its improvement. to do this, it is advisable to use the procedures of correlation and regression analysis. the content of these procedures is to determine the impact on the financial condition of each of the elements of the formulas of coefficients or other indicators. a set of factors influencing the formation of economic strategy of agricultural enterprises is divided into two groups, namely exogenous and endogenous. the leading system ensuring the enterprise solvency has been developed. software for the financial condition analysis at the enterprise is proved. practical implications. the developed system takes into account the available initial data (financial statements and software) and significantly reduces the cost of working time for analysis, which speeds up the management decision-making process and allows you to respond quickly to changes in asset structure to improve efficiency and improve business subject efficiency. value/originality. the developed model of the analysis of a financial condition with the use of economic and mathematical methods which is sufficiently adapted for automation will provide, provided its introduction in analytical practice, a high level of optimality of operative administrative decisions, and also will increase the efficiency of agricultural enterprises. key words: analysis, financial condition, agricultural enterprises, information users, indicators, economic and mathematical methods. jel classification: c15, c50, c88 1. introduction in today 's market economy, the relevance and ffectiveness of management decisions at the micro and macro levels mainly depends on the results of the analysis of the financial condition of the entity, which calculates not only individual ratios and studies a set of indicators, but also reflects various aspects of financial activity. the not very stable development of the economy creates a need for every business entity to be in constant search of ways to improve and increase the efficiency of its activities. so the study of financial activities of economic entities is becoming especially popular. the instability of the market economy necessitates a high-quality and timely assessment of the financial condition of the entity, its liquidity, solvency, business activity. this will help to determine the competitive advantages and production potential, which will this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 105 vol. 2 no. 3, 2021 contribute to the formation of an effective set of measures aimed at consolidating the leading position of the business entity in the market and ensuring its financial stability. at the same time, there is a need for objective information on these issues, the provision of which is impossible without a perfect method of analysis and quality information base. after all, the financial condition is the most important generalizing characteristic of the efficiency of the enterprise, the quality of management, placement, and use of financial, material, and labor resources. therefore, the study and systematization of scientific and practical methods of stabilizing the financial condition of agricultural enterprises is an important issue of modern theory and practice. 2. research results in domestic and foreign economic literature, economic and mathematical methods of analysis of economic activity are widely considered. the justification of their use is also the statement of the founders of the theory of economic analysis m. bakanova and a. sheremet, who believe that the widespread use of mathematical methods is an important way to improve economic analysis (bakanov, sheremet, 1993) because their use reduces the time of analysis, more full coverage of the impact of factors on business results, replacement of approximate or simplified calculations with accurate calculations, formulation and solution of new multidimensional analysis problems, which is almost unattainable when performing traditional manual methods. to determine the methodology that best meets the requirements of the modern functioning of agricultural enterprises, it is necessary to consider its stages (figure 1). from figure 1 it is seen that at the first stage the classification of indicators of assessment of financial condition depending on users is carried out. it is important to determine the circle of these users and to group them accordingly. in our opinion, all users can be divided into two main groups: external and internal. the first group includes creditors, investors, competitors, regulators, and other users, and the second – the company 's management, economic and other interested internal services, shareholders, etc. (figure 2). for each of these users, certain selected metrics are important. for example, creditors need to consider the following objective indicators to assess the financial condition of the borrower: – sales volume; – profits and losses; – profitability; – turnover on accounts; – solvency; – liquidity; – financial stability; – the dynamics of repayment of the borrower's credit debt in the past. to determine the significance (weight) of indicators for a particular group of users, it is advisable to use our methodology. its essence is as follows: – in order to make certain management decisions, the analysis should be carried out according to the indicators required by the management and, accordingly, will be implemented in the management practice of khmilnytske llc. the following groups of evaluations by thematic subdivisions were selected by the specified users: – balance sheet asset analysis (inventory turnover ratio, receivables turnover ratio); – analysis of liabilities of the balance sheet (turnover ratio of accounts payable); calculation of indicators classification of indicators of financial condition analysis choice of the direction of analysis according to the method of assessing the importance of indicators for the user * calculation of the value of the integrated indicator (integrated assessment of the financial condition of the enterprise)* assignment of the enterprise to one of the classes characterizing the financial condition of the enterprise according to the rating scale analysis of financial condition figure 1. the structure of the method of analysis of the financial condition source: stages of analysis carried out according to the method developed by the author three seas economic journal 106 vol. 2 no. 3, 2021 – assessment of the liquidity of the enterprise (coverage ratio, quick liquidity ratio, absolute liquidity ratio); – assessment of long-term solvency (equity concentration ratio, loan capital concentration ratio, loan-to-equity ratio, loan security ratio); – assessment of profitability (return on sales, asset turnover ratio, return on assets, return on capital, profitability). for clarity, we summarize these indicators in the auxiliary table, indicating their theoretical and weight values (table 1). table 1 the system of indicators and their theoretical and weight value indicators theoretical significance weight value inventory turnover ratio unlimited 1 receivables turnover ratio unlimited 1 accounts payable turnover ratio unlimited 1 coverage ratio 1-2 1 rapid liquidity ratio not less than 0.5 1 absolute liquidity ratio not less than 0,2 1 equity concentration ratio more than 0-1 2 debt capital concentration ratio more than 0-1 2 loan collateral ratio more than 1,5 1 profitability of sales more than 0,03 3 asset turnover ratio more than 0,01 3 return on assets more than 0,03 2 return on capital more than 0,04 2 profitability more than 0,04 2 source: suggested by the author it should be noted that in ukraine there is no single approach to the theoretical values of these coefficients and their weight values. that is why the author's establishment of their limits (table 1) is quite debatable, because these values of coefficients can be changed depending on the general level of economic development, and for critical (marginal) values, then here scientists must reach unquestionable consistency. in this case, there is a balanced and sound approach developed by domestic economists, which is usually quite well adapted and easily transformed in accordance with modern forms of reporting, as it was developed taking into account the international experience of financial reporting analysis. the calculation of coefficients, in our opinion, logically fits into the model of economic and mathematical analysis proposed by us for application in the analytical practice of domestic enterprises, because by establishing weight values based on them you can calculate the integrated indicator of financial condition and assign a research enterprise to a certain group (class: a, b, c, d, e – according to the following method). the proposed method of assessing the significance of analytical indicators of the financial condition of agricultural enterprises depending on the users of analytical information involves the use of economic and mathematical methods and models. since, in our opinion, it is not enough to limit oneself to the simplest and least reliable methods and techniques to solve the problems of improving the financial condition, it is more expedient to use more accurate and reliable results users of information internal leadership economic service shareholders other internal users external lenders investors competitors regulatory authorities other external users figure 2. groups of users of information about the financial condition of the enterprise source: (bagatska, govorushko, sheremet, 2013; mazur, tomchuk, branitsky, 2017) three seas economic journal 107 vol. 2 no. 3, 2021 of financial condition assessment and its elements determined by the above methods. the methodology of traditional expert-analytical assessment of financial condition, its elements and factors influencing it can be significantly supplemented and improved through the use of statistical material collected for previous periods, and appropriate mathematical models to analyze the objectivity and accuracy of expert assessments, to give additional information concerning the factors influencing the determination of the level of financial condition. to ensure the correct choice of the direction of analytical calculations required for a particular group of users, from a number of indicators grouped by user needs, it is necessary to form an analytical table on alternative grounds and use chuprov's coefficient for calculations (cch). the method of filling in the tables and calculating chuprov's coefficients is covered in detail in the scientific literature, but the most suitable for use in the analysis of the financial condition, in particular, to our proposed method is the method described by v. horkavyi (horkavyi, 2012). the chuprov's mutual coupling coefficient is calculated by the following formula: c f n n ch = − − 2 1 21 1( )( ) (1) where f is the indicator of mutual connection; n1 – the number of selected indicators; n2 – number of assessment levels. scientists recommend that if the value is cch > 0,3 the relationship of indicators can be considered close. however, in the case of financial analysis, when the number of indicators recommended for calculation is extremely large, this critical value is overestimated. in our opinion, even the result of 0,05-0,1 can be considered as indicating a close relationship between the studied indicators. the next step in the analysis of financial condition in accordance with the proposed method is to determine the adequacy of expert assessments of the importance of calculated indicators for a particular user by applying the rank correlation coefficient (cc), which in the scientific literature is also called spearman's coefficient. to this end, it is recommended to set the following pairs of numeric series: 1. a number of ratios selected in accordance with the needs of the user of information about the financial condition of the studied entity (according to a specially developed classification). 2. a number of coefficients arranged in descending order user interest in calculating this particular ratio. thus for calculation of the coefficient of a mutual combination of indicators, it is expedient to use the possibility of carrying out such calculations in an automated way, forming the special initial table that will give the chance to estimate really weight of the analyzed indicators on the basis of practical material. to calculate spearman's rank correlation coefficient, a number of selected coefficients should be arranged in the order corresponding to the classification, or in other words, in the order of decreasing their significance for the user. each coefficient, which is in the numerical series in the і-th place, corresponds to the rank of хі=і. in the second column of the developed analytical table, the same indicators are arranged in descending order user interest in their calculation. each value in this series is assigned the rank уі (the index is equal to the ordinal number of the corresponding coefficient sorted in the first row of numbers). the next step in the study is to determine the sum of the squares of the differences between the respective ranks хі and уі. after that, you can calculate the spearman's rank correlation coefficient, which is done using the following formula: c d п п п c і= − − ∑ 1 6 2 2( ) , (2) where di is the square of the differences between the respective ranks хі and уі; п – the number of indicators of the numerical series. since the rank correlation coefficient varies from -1 (full inverse correlation of ranks) to +1 (full correspondence or full direct correlation), by dividing (grouping) the boundaries, it is possible to identify the necessary areas of financial performance for a certain range of users. having chosen the direction of research of indicators and having carried out their corresponding calculations, it is possible to carry out the analysis of factors of influence on the financial position of the investigated business entity and to calculate reserves of its improvement. to do this, it is advisable to use the procedures of correlation and regression analysis. the content of these procedures is to determine the impact on the financial condition of each of the elements of the formulas of coefficients or other indicators. to simplify the calculations, it is advisable to use an integrated indicator of financial condition, calculated taking into account the absolute actual estimate of each i-th value of the weight of the corresponding coefficient. in order to obtain preliminary actual estimates of the value for the user by the information of each specific coefficient, it is necessary to compile special tables in which to group the estimates according to the previously established limit values. for example, to divide (classify) enterprises depending on the value of the integrated indicator of financial condition (table 2). we tend to think that experience is useful in this case the banking classification system, namely: three seas economic journal 108 vol. 2 no. 3, 2021 – class a – an enterprise with an extremely stable financial condition; – class b – an enterprise with a stable financial condition; – class b – an enterprise with signs of financial stress; – class d – high-risk enterprise; – class e – an enterprise with unsatisfactory financial condition. the weight values of the coefficients are determined taking into account the importance of the factors that affect the overall assessment of the financial condition, and to determine the value of the integrated assessment of the values of the coefficients should be multiplied by their weight value. the level of the integrated indicator should be calculated by the following formula: і аe і c іп і п f= × = ∑ ( ) ( ) 1 (3) where аe(і) – is the absolute actual estimate of the i-th indicator (coefficient) of financial condition; cf(і) – weight value of the i-th indicator (coefficient) of financial condition; п – the number of indicators to assess the financial condition. it should be noted that in this case, we abstract from many other subjective factors, but their impact can be significant and therefore in the analysis of financial condition can be used an additional factor to overcome the error of undiscovered factors, which can be established only experimentally. the application of mathematical methods in the analysis of financial conditions will have a particularly high effect, provided the following conditions. first, it is important to ensure a systematic, consistent approach to the study and assessment of financial condition, taking into account the relationship between the studied indicators, as well as the subjective factors of its formation. second, from the methods recommended by various scientists, it is necessary to choose one that would reflect the quantitative characteristics of economic processes and meet the objectives of the analysis of the financial condition. third, the modern information base, adapted to international standards, despite a number of advantages, requires further improvement. fourth, the availability of computer technology is a necessary condition for economic and mathematical calculations. and the last condition, which is an objective result of all the previous ones, is the need to ensure the appropriate professional level of analysts, specialists in economic and mathematical modeling, programmers, etc. in modern conditions, when approaching the organization of economic analysis in general, it is necessary to skillfully use modern economic and mathematical research methods. s. shkaraban notes in this regard that at the present stage economic management is impossible without the implementation of economic methods, the effectiveness of which is possible only with a deep and comprehensive analysis of the use of all available resources of production, condition, and changes in property, identification of causal links and patterns of economic development (shkaraban, 1997). in our opinion, the methods of financial condition analysis recommended by various authors, which are based on the use of economic and mathematical methods, should not focus on evaluation functions, as it was in the conditions of centralized management, but on strengthening the diagnostic and search value of calculated indicators. accordingly, the methodology of financial condition analysis should be refocused on a deep and comprehensive study of new phenomena and factors, as well as their interaction and impact on the end result. the method described by the author in practice is manifested in the form of an algorithm that can be attributed to economic and mathematical methods of analysis of the financial condition, and the use of actual data llc "khmilnytske" will illustrate the application of the method in dynamics. the first stage of the study according to the proposed algorithm is to choose the direction of the study (choice of indicators) according to user requirements. it is possible in two ways: the first concerns the manual method of analysis, and the second – automated. in the first case, the user is asked from the general list of calculation indicators (classification of indicators of financial condition depending on their value for the user) to select those that are most interesting to the customer analysis (specific user) and calculate them (note that this option is easy to automate). the second solution of the analytical problem is much more difficult because it involves the use of economic and mathematical method to determine both the direction of the study and all subsequent calculations. in this case, the solution of the analytical problem allows you to take into account the relationship between indicators, to track their dynamics, as well as changes in the requirements of the same user over the years. we think that the method of assessing the financial condition by economic and mathematical methods, table 2 rating scale the value of the integrated indicator enterprise class more than 40,07 а from 30,55 to 40,06 b from 20,65 to 30,54 c from 10,59 to 20,64 d less than 10,58 e source: suggested by the author three seas economic journal 109 vol. 2 no. 3, 2021 taking into account estimates of the importance (value) of indicators that affect its integrated indicator, can be illustrated in the following sequence: 1. collection and systematization of data (including statistical) on the results of integrated assessment of the financial condition and its elements (the period is chosen either by the customer of the analysis or by the analyst independently depending on the needs of management). 2. calculation of chuprov's ratios (cch) for each factor of influence on the overall integrated assessment of the financial condition. 3. calculation of spearman's rank correlation coefficient (cc). 4. carrying out of repeated expert-analytical research of the factors of influence chosen by the user on an integrated estimation of a financial condition. 5. development of working tables for estimating the value of the integrated assessment of financial condition for further use and formation of analytical conclusions and proposals (figure 3). it should be noted that the solution to this analytical problem is possible in two ways: in the traditional order of calculations and in an abbreviated form, which includes a specific approach and opinion of the author on these issues. the choice of path depends on the user's requirements for the efficiency of obtaining settlement data on the assessment of the financial condition. the list of financial condition ratios can be constantly adjusted, excluding those whose weight is not confirmed by calculations. the list of coefficients can include new ones that are considered significant. thus, the proposed method allows to improve the working model of financial condition assessment and increase the accuracy of the results, to choose the most successful direction of calculations in order to obtain an adequate integrated assessment of the financial condition of the enterprise. in an unstable economy, bankruptcy is a fairly common phenomenon, which is characteristic of agricultural enterprises. in order to avoid it, restore solvency and a sufficient level of financial stability of enterprises, it is necessary to timely diagnose and predict the possibility of a situation close to bankruptcy. this requires a periodic study of the financial condition of the enterprise, determining the scale of the crisis and studying the main factors that caused it. analysis of the financial condition is necessary for each company because its further effective operation is directly related to profitability and the ability to maintain solvency. assessment of development prospects is necessary not only for the company but also for its business partners. therefore, the priority is to forecast the future financial and economic condition of the enterprise and illustrate the possibility of predicting the negative impact of negative phenomena on its activities (tomchuk, levchuk, 2019). in this case, information about the financial condition of the enterprise can be the basis for decisionmaking by various interested users: 1) creditors who are interested in the solvency of the enterprise; 2) the founders of the enterprise, interested in achieving high-end results and receiving the appropriate income by them personally; 3) employees of the enterprise, who are responsible for the efficient use of production resources and the sustainability of all types of enterprise income, etc. information on the financial condition is of some interest to foreign investors, tax officials, public administration, and control. collection and systematization of data on the results of integrated assessment of the financial condition and its elements calculation of chuprov's mutual coefficients for each factor influencing the overall integrated assessment of the financial condition calculation of the rank correlation coefficient carrying out of repeated expert-analytical research of the factors of influence chosen by the user on an integrated estimation of a financial condition development of worksheets for estimating the value of the integrated indicator of financial condition figure 3. the sequence of assessment of financial condition by economic and mathematical methods source: suggested by the author three seas economic journal 110 vol. 2 no. 3, 2021 in our opinion, it is also important for analytical practice in assessing the financial condition of the enterprise to determine the relationship between the individual calculation factors. when identifying these relationships, one can conclude that there are factors that simultaneously affect the magnitude of both (or more) elements. this stage of the analysis is important in order to be able to exclude from the model those factors that duplicate each other and distort the overall integrated assessment of the financial condition. the simplest and most convenient direction of further analysis, in our opinion, is to use the method of identifying reserves by comparing the best theoretical (or basic) values of the calculated coefficients with those achieved by a particular enterprise. the basis of comparison can be taken by industry averages, the best indicators of the enterprise, which were achieved in other periods, or indicators achieved by advanced agricultural enterprises. the specified method of calculation of reserves of improvement of a financial condition is convenient and clear and also adapted to automation of analytical calculations that allow influencing quickly and operatively on a course of realization of financial and economic activity for the purpose of receiving the best final results. focusing on certain areas of improving the financial situation by improving the efficiency of management, we note that the whole set of factors influencing the formation of the economic strategy of agricultural enterprises can be reduced to two groups: exogenous and endogenous. the relationship between the factors of financial improvement and the mechanism of their management is presented in the form of a diagram (figure 4) (tiutiunnyk, dorohan-pysarenko, tiutiunnyk, 2016). among the internal factors, an important role belongs to the technical base of production, technology improvement, marketing activities. at the same time, in modern conditions, such socio-economic factors as social competence of managers, professional qualification level of employees, working and health conditions, production ecology should not be neglected. external factors include the levers of state regulation, tax policy, financial and credit policy, the mechanism of profit distribution. at the same time, in market conditions, the impact on tax policy, financial and credit policy, the mechanism of profit distribution is extremely important. at the same time, in market conditions, the impact on the financial condition and efficiency of management of such factors as market conditions, prices for economic resources, competition, the purchasing power of the population, etc. is extremely important. exogenous and endogenous factors together form the appropriate economic environment and indicate possible areas for improvement of the financial condition, and the mechanism of their management makes it possible to form optimal ratios that can affect the efficiency of management. we believe that no less important reserve for improving the financial situation is the choice of method for assessing the state of solvency on the basis of the information obtained (figure 5). after all, only on the basis of the conducted analysis, it is possible to draw qualitative conclusions, to substantiate the efficiency and necessity of these or those administrative decisions. the choice of valuation method depends on what type of analysis we conduct – financial or managerial. financial analysis can be performed both internally and externally. it is focused mainly on the analysis of financial activities and indicators of the financial condition of the enterprise. management analysis, in contrast to financial, can only be internal and carried out at a deeper level. it is characterized by full access to accounting and management reporting and provides a qualitative analysis of internal resources and potential of the enterprise, the study of the impact on its activities of certain internal or external factors and the consequences of their impact (tomchuk, 2019). the results of management analysis provide senior management with the necessary information to make a final decision. further analysis will depend on its main purpose – to identify the factors that led to insolvency, or to assess the consequences of their impact on the company. depending on the set goal, we choose one of the methods of analysis of the causes and symptoms of insolvency or methods of assessing the depth of the financial crisis. in order to effectively respond to the threats posed by the onset of insolvency, we have developed a leading system to ensure the solvency of the enterprise. the order of application of this system includes a certain set of management actions and decisions: – search and processing of information on the state of solvency of the enterprise; – choice of evaluation method; – characteristics of the level of solvency and evaluation results; – selection of measures to improve the level of solvency; – restoration of lost solvency and further monitoring of solvency. an interesting approach to expanding variations in determining the degree of liquidity of the enterprise through the use of a modified aggregate approach is presented in the work of i. oleksandrenko, who proposed five levels of solvency (although traditionally this approach is associated with determining the measure of liquidity) (table 3) (oleksandrenko, 2014). three seas economic journal 111 vol. 2 no. 3, 2021 without underestimating i. oleksandrenko's contribution to the process of improving the methodological support for assessing the liquidity (solvency) of the enterprise, it should be noted that this method is not without certain shortcomings, and one of the most serious is the uncertainty with the attribution of assets or liabilities to certain groups. at the same time, another significant disadvantage of this methodological approach is, in particular, the lack of opportunity to compare enterprises in different areas or those that differ in scope. in view of the above, it can be concluded that each individual ratio, which is calculated to determine the liquidity and solvency of the enterprise, provides factors of improving financial condition endogenous exogenous business entity technical base technology improvement marketing activity independent of the efforts of the enterprise dependent on the efforts of the enterprise advertising management social competence of managers professional qualification level of employees production ecology and more fa ct or s of s ta te in fl ue nc e fa ct or s in fl ue nc in g th e po pu la tio n state tax policy financial and credit policy state regulation of economy inflation forms of calculations purchasing power of the population figure 4. the relationship between the factors of financial improvement and the mechanism of their management source: (tiutiunnyk, dorohan-pysarenko, tiutiunnyk, 2016) three seas economic journal 112 vol. 2 no. 3, 2021 only one-sided, limited information about the ability of the enterprise to repay its current liabilities. on the contrary, in combination, these ratios provide a complete picture of the company 's ability to pay its current liabilities using different types of current assets. however, we think that the problem is that the analysis of the solvency and liquidity of the company methods of analysis financial analysis management analysis analysis of the causes and symptoms of insolvency assessing the depth of the financial crisis the main components method regression analysis deciphering the magnitude of financial losses and missed opportunities estimation of available financial reserves analysis of the causes and symptoms of insolvency assessing the depth of the financial crisis process analysis of quality management situational analysis expert assessment of financial potential development of scenarios for the restoration of solvency figure 5. choosing a method of assessing the state of solvency source: suggested by the author table 3 criteria for the distribution of enterprises by level of solvency criteria the level of solvency of the enterprise characteristic а1 > l1 + l2 high the company is characterized by high liquidity potential and solvency, and all its assets are mainly formed at its own expense. а1 + а2 > l1 + l2 а1 + а2 + a3 > l1 + l2 а1 + а2 + a3 + a4 > l1+ l2 а1 < l1 + l2 average there are not enough liquid assets in the company due to the presence of large amounts of receivables. in general, the company is liquid and can provide timely repayment of liabilities. in this situation, the company is recommended to take measures to restructure receivables. а1 + а2 > l1 + l2 а1 + а2 + а3 > l1 + l2 а1 + а2 + а + а4 > l1 + l2 а1 < l1 + l2 moderate a significant share of the working capital of the company are stocks formed from borrowed funds. the presence of significant amounts of inventories indicates that the company is an inefficient use of working capital. а1 + а2 < l1 + l2 а1 + а2 + а3 > l1 + l2 а1 + а2 + а3 + а4 > l1+ l2 а1 < l1 + l2 low enterprises form their current assets only at the expense of borrowed funds for a short period of time (current obligations). in this case, the company has no own funds in circulation, but only borrowed and borrowed. part of the current debts of the company is aimed at creating non-current assets. а1 + а2 < l1 + l2 а1 + а2 + а3 < l1 + l2 а1 + а2 + а3 + а4 > l1+ l2 а1 < l1 + l2 the company is on the verge of bankruptcy this situation indicates that the company is bankrupt because its property (assets) will not be enough to repay the current debt. this situation occurs when the company is operating at a loss, it has an uncovered loss that affects the reduction of equity (equity is negative) а1 + а2 < l1 + l2 а1 + а2 + а3 < l1 + l2 а1 + а2 + а3 + а4 < l1 + l2 source: (oleksandrenko, 2014) three seas economic journal 113 vol. 2 no. 3, 2021 does not take into account the maturity of current liabilities, which makes the results of the analysis not objective enough. thus, if there are current liabilities for short-term loans, the maturity of which is expected, for example, in six months or more (within 12 months), when calculating the solvency ratio, the indicators of assets available at the reporting date are used. such liabilities may also include current arrears on long-term liabilities. the financial stability of the enterprise is a more generalized characteristic of the financial condition of the enterprise, which to some extent includes indicators of liquidity and solvency (tomchuk, 2020). bazyliuk v. notes that a significant number of ukrainian enterprises need measures for their financial recovery in order to ensure a sufficient level of solvency, strengthen financial stability and improve production activities. therefore, the main ways to increase financial stability, the author identifies (bazilyuk, 2015): 1. improving the management of working capital, which is the most significant factor in increasing the financial stability of the enterprise. the strategic goals of such management should be: optimization of volumes, ensuring balance liquidity, accelerating turnover, ensuring inflation protection, reducing the cost of formation. 2. development of an effective cash flow management policy, which to some extent depends on the organization of operational financial planning. a specific method of such a policy may be the development of a payment calendar and cash budget. 3. in order to increase the liquidity and solvency of the enterprise, it is proposed to introduce inventory management of the enterprise in order to optimize inventories of materials, work in progress, and finished products. optimization of inventories should affect the redistribution of working capital of the enterprise, resulting in an increase in the amount of liquid cash and a decrease in the number of illiquid inventories. 4. the company can reduce financial liabilities by reducing the number of fixed costs (including the cost of maintaining management staff ); reducing of the level of conditionally variable costs; extending of accounts payable for commodity transactions (bazilyuk, 2015). sidorova t. and lysak h. emphasize that the currently used absolute and relative indicators of financial stability do not meet the requirements of reliability and, as a rule, allow to assess only the already formed picture of the financial situation, while in modern conditions of particular relevance methods of forwarding analysis to forecast financial stability of the organization taking into account the impact on its activities of external and internal factors (sidorova, lysak, 2021). therefore, the authors propose to develop retrospective and promising methods of management analysis of financial stability, allowing all interested users to conduct a qualitative analysis and on its basis to make timely optimal management decisions. in this regard, sidorova t. and lysak h. proposed the following methodological approaches to the assessment and diagnosis of financial stability, indicating the sources of information needed for analysis (table 4). thus, among the wide variety of techniques that allow for current retrospective management analysis by external users according to the financial statements, preference should be given to methods of a comprehensive assessment of financial stability, which combines a multi-criteria approach and takes into account the specifics of the organization. table 4 methodical approaches to the assessment and diagnosis of financial stability in terms of types of management analysis type of analysis methodical approaches sources 1 2 3 r et ro sp ec tiv e operative assessment of the organization's ability to pay its debts, ie analysis of its solvency in accordance with the scale of diagnosis of financial stability initial documents, analytical accounting data, balance sheet data, accounting data current comprehensive assessment of the stability of the financial condition; assessment of compliance of assets with sources of financing accounting data pr om is in g short-term (from 1 month to 1 year) compilation of forecast balance sheets for the purpose of the general assessment of expected financial stability primary documents, analytical accounting data, balance sheets, accounting data, analytical research data medium-term (1-3 years) forecasting the solvency of the organization depending on the expected sales volume in conditions of uncertainty long-term (strategic) (more than 3 years) evaluation of non-financial indicators in order to strengthen financial stability source: (sidorova, lysak, 2021) three seas economic journal 114 vol. 2 no. 3, 2021 this will allow you to make the most effective management decisions based on the results of the analysis. taking into account foreign experience in determining the indicator of positive net capital (positive net worth) or the availability of net assets and its performance information, lakhtionova l. considers it appropriate to introduce in the internal financial analysis an indicator – positive own sources of financing as the difference between total resources and total liabilities and to separate it as a part of the main absolute indicators of financial stability (lakhtionova, 2011). the author also proposes to include in the main absolute indicators of financial stability in the internal financial analysis the presence of own circulating sources of funding as the difference between own sources of financing, non-current resources, and future expenses. this value will indeed indicate purely own circulating sources of financing, ie the part of own sources of financing that falls on the financing of working capital. the economic meaning of this indicator is that it determines the number of own sources of funding, which remains to finance really working capital. in the current economic conditions in ukraine, agricultural enterprises are increasingly faced with the problem of increasing business activity to ensure the efficient use of financial resources, accelerate their movement, as well as promoting the company in the product market, increasing competitiveness. we fully share the proposal of ye. rudenko on improving business activity in agricultural enterprises (table 5) (rudenko, 2014). the author notes that the problems identified as a result of the study of business activity of enterprises indicate the need for systemic changes in the financial and economic activities of economic entities. in particular, it is necessary to find internal levers of financial stabilization of the enterprise, increase net cash flow, take measures to optimize the capital structure, increase production efficiency, and more. the imbalance of the "golden rule of the economy " also occurs at the level of individual enterprises. we believe that it is possible to give some recommendations to agricultural enterprises to improve their business activity. first, it should be borne in mind that in modern conditions, a significant impact on business activity is the dynamics of profitability of the enterprise, and therefore, it is necessary to seek reserves to increase profits such as cost reduction, resource savings, quality improvement, if the costs of these measures are reasonable, as well as market monitoring for changes in product prices, finding favorable sales conditions, working with partners, etc. secondly, domestic agricultural enterprises are characterized by a lack of working capital and to increase business activity it is necessary to accelerate the turnover of working capital by collecting receivables, providing various services, processing agricultural products, establishing close economic ties with partners for sales, etc. table 5 directions for improving business activity and fulfilling the "golden rule of economics" of enterprises type of economic activity problem the direction of its solution 1 2 3 en te rp ri se s o f a ll ty pe s of e co no m ic a ct iv ity the growth of financial dependence optimization of capital structure, increase of efficiency of use of available financial resources, competent attraction of borrowed resources the low growth rate of net income compared to the growth rate of assets and equity monitoring changes in agricultural sales prices, finding ways to use resources more efficiently tendency to decrease profitability, in some years unprofitable, unstable dynamics of profit search for internal levers of financial stabilization of the enterprise, cost optimization, resource-saving, search for more profitable markets, intensification a gr ic ul tu re the growth of financial dependence optimization of capital structure, increase of efficiency of use of available financial resources, competent attraction of borrowed resources unstable dynamics of net income growth one of the reasons for this is the dynamics of prices and inflation, and therefore, the solutions may be price monitoring, search more profitable markets, increase competitiveness. reduction of production and sales costs, resource conservation decrease in growth rates of net profit reducing the cost of production, introduction of resource-saving technologies, cost optimization, search for other reserves to increase profitability source: (rudenko, 2014) three seas economic journal 115 vol. 2 no. 3, 2021 third, the imbalance of the "golden rule of the economy " was observed in relation to the growth rate of equity and assets, so it is necessary to search for the optimal capital structure by developing economic and mathematical models to optimize the capital structure with profit maximization. so, one of the main reasons for the low level of business activity of agricultural enterprises is the unstable dynamics of their profitability, in some years the loss due to rising prices for factors of production and price disparity. the financial crisis also has a negative impact on these processes. lack of working capital enterprises lead to a further increase in the financial dependence of agricultural enterprises on borrowed funds. at many agricultural enterprises there is a reduction in sales (especially in animal husbandry), the use of available resources is inefficient. failure to comply with the "golden rule of the economy " indicates a deep structural disparity in agricultural enterprises, the lack of stability of their development, and the need for change at the state level and at the level of individual businesses. proposed by ye. rudenko directions of balancing the pace of change of the main indicators of enterprise development based on the analysis of compliance with the "golden rule of economics" will increase the business activity of agricultural enterprises and the industry as a whole (rudenko, 2014). the current state of the information base and the need to obtain operational data on the financial condition of the enterprise in order to improve the economic mechanism requires finding ways to accelerate the procedure for obtaining all necessary data. it is generally accepted that such acceleration can be achieved through the automation of analytical procedures. automated processing of analytical information is based on the use of professional software products to convert the original accounting data into effective information suitable for management decisions. it should be noted that the process of processing with the help of software products of the initial analytical information in modern conditions is somewhat simplified due to the automation of accounting and settlement procedures. in khmilnytske llc the accounting is carried out automatically, therefore actually all initial data for the analysis are already stored in the software product chosen by the enterprise. in this case, it is advisable to develop only such an algorithm (block diagram), which would logically fit into an existing automated system. however, we must also take into account the fact that the situation with the use of automated software products, according to l. volontyr, n. potapova, i. ushkalenko, there are many facets for solving any problem. such versatility, in our opinion, is that (volontyr, potapova, ushkalenko, 2020): – the user solves only the task he needs; – this task must contain input and output data; – there are several methods for solving this problem; – the method of using personal computers (pc) in solving the analytical problem requires the presence of verbal descriptiveness using various abstractions, as well as the provision of a system of definite boundaries of analysis; – the most important step in creating an automated workplace analyst should be to take into account the gradual transformation of the problem from one form to another, ie to determine the algorithm for its solution. it is important to take into account the fact that for certain categories of users of analytical information may be interesting result of the intermediate analysis, therefore, when developing a flowchart should provide for the formation of an intermediate result in the form of a complete analysis. the possibility and necessity of taking into account the above versatility in creating an algorithm for solving problems of financial condition analysis have its objective prerequisite. in other words, we fully support the opinion of domestic scientists and practitioners that to use a pc in solving problems requires a method of modeling algorithms on a pc, and to model the analytical problem requires inter pretation of the pc as a modeling mechanism, ie requires a language model of pc (volontyr, potapova, ushkalenko, 2020). in addition, when developing an algorithm for solving the problem of analysis of financial condition on the basis of the method proposed by the author should pay attention to the method of the modeling process. when developing an algorithm (block diagram) for solving an analytical problem should take into account not only the conclusion about the feasibility of automation of calculation procedures, but also the possibility of their application in practice, because the simulation results have no independent value, they should always be considered as a simulation program. an important role in the automation of analysis, according to l. mazurkevich and t. shmatkovskaya, which we support, takes into account a number of important organizational, methodological and methodological aspects, including requirements for software, which, in our opinion, may include (figure 6) (shmatkovska, mazurkevich, 2015): – general-purpose application packages (used for data processing, choice of research direction depending on user requirements, calculation of financial ratios (indicators) to identify an integrated assessment of the financial condition); – special programs of financial condition analysis (they can be developed by programmers according to the developed block diagram). the developed system takes into account the available initial data (financial statements and software) three seas economic journal 116 vol. 2 no. 3, 2021 and significantly reduces the cost of working time for analysis, which speeds up the management decisionmaking process and allows you to respond quickly to changes in asset structure to improve efficiency and improve business subject efficiency. 3. conclusions despite the impossibility of developing a universal, extremely accurate mathematical model of financial condition analysis, the use of economic and mathematical methods can significantly improve the quality of the analysis and form the most optimal conclusions for appropriate management decisions. combining such an analysis with the calculation of reserves to improve the financial condition of the enterprise, which can be done by comparative analysis of average calculated values of coefficients or taking into account the achievements of the most profitable enterprises, will provide an effective financial strategy. the developed model of the analysis of a financial condition with the use of economic and mathematical methods which is sufficiently adapted for automation will provide, provided its introduction in analytical practice, a high level of optimality of operative administrative decisions, and also will increase the efficiency of agricultural enterprises. financial analysis software system software applications (application software) operating system (standard programs) additional features (service programs) general purpose (new versions) purpose accounting programs economic analysis programs analysis of financial condition according to traditional methods (horizontal and vertical analysis, analysis using coefficients) economic and mathematical analysis figure 6. elements of software analysis of the financial condition of the enterprise source: (shmatkovska, mazurkevich, 2015) references: bakanov, m. i., & sheremet, a. d. 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(in ukrainian) shmatkovska, t. o., & mazurkevich, l. e. (2015). otsiniuvannia suchasnykh tendentsii ta shliakhy pokrashchennia avtomatyzatsii oblikovo-analitychnoho protsesu subiektiv hospodariuvannia [assessment of current trends and ways to improve the automation of the accounting and analytical process of business entities]. bulletin of zaporizhia national university, 1(25), 88–97. three seas economic journal 193 vol. 3 no. 1, 2022 corresponding author: 1 vinnitsa national agricultural university, ukraine e-mail: tvltvl2@ukr.net orcid: https://orcid.org/0000-0002-3498-1295 researcherid: l-8200-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-28 security management of ukrainian banks volodimir todosiichuk1 abstract. the purpose of the study is the current state and trends in the development of the banking system of ukraine. the main problems of functioning of banking institutions at the present stage of reforming the state economy were revealed. the essence and content of the category of banking security is analyzed, the role and importance of guaranteeing the safety of banks in the system of financial security of the state is shown. the main threats and risks to banking security in general are described, the principles of improving the level of banking security are outlined. the category of banking security is characterized by: the state of security of banking activities and resources of a financial institution, the ability to develop effectively in the strategic dimension, the ability to withstand threats, protect the economic interests of participants and the ability to increase the overall financial and economic potential. methodology. improvement of the mechanism of banking security is the implementation of measures at the level of the bank and the banking system as a whole. the measures include: improving regulatory support, bringing activities closer to international standards of banking services, introduction of conceptual approaches to strategic management of banks' financial security, improving the quality of corporate governance and bank management, etc. results. to ensure the sustainable development of the national financial system, it is necessary to "improve" the management systems of banks, ensuring full economic protection from external and internal factors, which is one of the main directions of state policy in the field of economic security. value/originality. ensuring stability of the banking system, prevention of systemic banking crises is the most important task of authorized government bodies in the field of financial sector regulation. considering the notion of banking supervision, it can be noted that "banking supervision" is a monitoring system consisting of state, international, inter-bank, intrabank, intra-bank supervision in the form of preliminary, introductory and current supervision from the establishment until liquidation of a bank or its subdivisions. it should be noted that banking supervision is a systemic system that comprises several closely intertwined elements. the components of banking supervision are control proper, which boils down to study or observation of compliance with legislation in the activities of banking institutions, as well as active actions by the national bank of ukraine to apply appropriate enforcement measures. the mechanism for ensuring the smooth functioning of the country's banking system is a set of tools used by government agencies and providing for regulatory and supervisory measures. key words: ukraine, economic security, security management, bank, financial stability of banks. jel classification: g17, g21, g28 1. introduction as the development of the global financial crisis shows, despite the fact that it started in the banking sector, in a short period of time its impact was felt by all other sectors of the economy. this is due to the fact that today there is a close connection between all sectors of the economy. therefore, special attention should be paid to methods of ensuring financial security, as well as scientific and methodological approaches to forming a comprehensive system of financial security at the level of an individual bank. with the acceleration of human development, the periods between the onset of global economic crises are shortening, their scale is increasing, and most importantly, they are shifting from the sphere of production to the sphere of finance. in its turn, the accent in this sphere is shifting towards the banking sector. thus, the problem of providing financial security for banks is today a crucial factor not only in the national but also in the international economy (prylutskyi, 2020). as far as ukraine's banking system is concerned, as our country 's economy enters the world, increasing this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 194 vol. 3 no. 1, 2022 the degree of its integration into the global financial system, its dependence on the instability of global financial markets is growing. the consequences of the recent global crisis are increasingly affecting ukraine's banking system. in particular, liquidity problems begin to arise, the cost of resources for banks increases, promising projects are curtailed due to the lack of financial resources and the inability to obtain them in foreign markets (ruda, 2021). banking security is part of the financial security of the country. it should be noted that the banking system is the most important component of the financial and credit sphere of the state. in fact, it is the state of the banking sector that determines the level of financial and credit security, and therefore, to some extent, the level of financial security of the state. 2. the impact of the economic crisis on consumer behavior the modern world economy is unthinkable without the active integration and globalization of the economies of different countries, which strive to take their place in the business world, providing a certain effect of cooperation with the economies of different countries. the crisis fluctuations that began in the modern world have exacerbated the problems associated with the economic security of many countries. to confront the negative consequences of the crisis, it is necessary to take a comprehensive approach to the study of economic security. economic security is an integral and integral part of the country 's national security, the core of which is the banking sector. the period from 2013 to 2014 and early 2015 was marked for the banking sector of the russian economy by mass revocation of licenses from banks for banking operations, which indicates the systemic nature of the problems in the banking sector of the economy. challenges and threats to the banking system of ukraine are 25 challenges and threats to economic security, including exposure of the financial system of ukraine to global risks (including at the expense of speculative foreign capital), the vulnerability of the information infrastructure of the financial banking system. to ensure the sustainable development of the national financial system it is necessary to "improve" the management systems of banks, ensuring full economic protection from external and internal factors, which is one of the main directions of state policy in the sphere of economic security. august 2021 "on the strategy of economic security of ukraine until 2025". consider the components of state policy to ensure economic security, see table 1. solving any problem in financial circulation is impossible without effective management support and detailed systematic analysis of large volumes of data. any information leakage, staff misinformation. the intensity of bank regulation is proposed to assess with the author's index of intensity of bank regulation (ibrr), the mechanism for calculating which allows to take into account such components of the mechanism of regulation as functional, reflecting the methodological basis of regulation of the br (in particular, the intensity of monetary policy). indicative and administrative instruments, organizational, which reflects the cost of regulatory measures and is measured by the cost of regulatory activity based on the number of personnel involved, and institutional, which characterizes the institutional environment of banking through the rule of law and financial freedom. the indicator is calculated on the basis of normalized values of the outlined indicators by the method of minimum depending on the direction of influence on the intensity of banking regulation (prylutskyi а., 2020). 3. differences in consumer behavior between age groups the study of banking regulation intensity in the context of bank financial stability was carried out using the statistical package stata, in particular, the built-in module longitudinal / panel data, which allows processing panel data, and special operators xtreg and areg. panel data were chosen as the initial data for the study, rather than the usual set of data with univariate structure, because the panel data have a number of advantages over univariate data: – panel data avoids the phenomenon of "aggregation bias" because the study covers a long period of time, which is tracked by a particular indicator; – panel data always include a large number of observations in the context of different objects (countries, enterprises, etc.), so the number of degrees of freedom increases, which allows to reduce the degree of collinearity between the factor variables. this allows us to be confident in the efficiency of the constructed model; – when analyzing similar or related objects grouped by a certain criterion, panel data allow you to trace the evolution of changes in the criterion and identify the causes of these changes; – using panel data, individual characteristics between different economic actors can be analyzed and taken into account. to build a model, in addition to the dependent and independent variables, we need to add several control variables that allow us to unify the results (i.e., align them for different countries). in this case, the control variables will be: gdp and the share of foreign banks in the banking system, foreing bank. the results of the panel analysis of the impact of the intensity of bank three seas economic journal 195 vol. 3 no. 1, 2022 table 1 components of state policy to ensure economic security components characteristics challenges and threats the state of development of the economy of ukraine over the past 10 years has not allowed to ensure the national economic interests. during 2010-2019 the state of economic security was assessed as unsatisfactory with deterioration of almost all components to a dangerous level in 2012 and 2014–2015. according to the calculations of the ministry of economy of ukraine, conducted in accordance with the methodological recommendations for calculating the level of economic security of ukraine, approved by the order of the ministry of economic development and trade of ukraine from october 29, 2013 № 1277, the average level of economic security in this period was 40 percent – the zone of unsatisfactory condition (according to the results of recalculation of the economic security of ukraine by the main components of economic nature). in 2019, the level of economic security of ukraine was 43 percent, and in the first half of 2020 – 41 percent. over the last 10 years the state of financial security (with average value of financial security assessment for this period of 42 percent of optimal value) was assessed as unsatisfactory, which is caused by constant state budget deficit and significant debt load of investment crediting of economy and stock market. due to structural problems, the financial system of ukraine could not adequately withstand the challenges of armed aggression from the russian federation and temporary occupation of part of the territory of ukraine and has been in crisis for several years already. in 2019, the level of financial security decreased by 4 percentage points (compared to 2018) to 42 percent and by 3 percentage points to 38 percent in the first half of 2020 compared to the level in the first half of 2019. however, the results of the financial stability report prepared by the national bank of ukraine showed that the level of financial security was sufficient for the financial sector to properly perform its functions and successfully overcome the crisis caused by the sar coronavirus pandemic (hereinafter referred to as covid-19). objectives 1. strengthening the economic sovereignty of ukraine. 2. ensuring economic growth. 3. increasing the economy 's resistance to external and internal threats; 4. supporting .he scientific and technical potential of economic development at the global level and increasing its competitiveness. 5. ensuring the military and economic defense of the country. 6. improving the quality of life of the population. tasks in the field of financial security building an effective model of combating crimes in the economic sphere through the activities of the economic security bureau of ukraine; improving the efficiency of planning activities of the main administrators of the state budget of ukraine in accordance with the priority areas of state development, taking into account budget indicators for the medium term, increasing budgetary discipline; gradual reduction of the state budget deficit and strengthening of cooperation with international financial organizations; implementation of the minimum standard of the plan to combat tax base erosion and profit shifting (beps action plan) and implementation of effective tax rules for controlled foreign companies; encouraging the banking sector to channel credit funds primarily to the development of the real sector of the economy, small and medium-sized businesses; creation of conditions for increasing the attractiveness of long-term financing and expansion of long-term and investment lending; reducing the level of non-performing loans and increasing the stability of the banking system; preserving the institutional independence of the national bank of ukraine; intensification of national stock market development to ensure its efficiency and competitiveness; protection of the national financial system from money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction; minimization of investor risks by ensuring effective protection of investor rights on the stock market; ensuring the reduction of the cost of borrowing for the needs of the state (through optimal coordination of monetary and debt policy); further alignment of the provisions of the customs code of ukraine with the provisions of the eu customs legislation for the implementation of the association agreement between ukraine and the eu; reforming the ukrainian insurance market through the widespread introduction of life insurance, medical and other types of personal insurance, legislative consolidation of the rights of insureds; ensuring the functioning of the three-tier pension system without increasing the burden on the payroll with an increase in revenues to the budget of the pension fund of ukraine; development of the sphere of public procurement by further aligning ukraine's public procurement system with eu standards as defined in the eu directives on public procurement. indicators of the state of economic security 1. money supply index (monetary aggregates m2) 2. net import (export) of capital) three seas economic journal 196 vol. 3 no. 1, 2022 regulation on the financial soundness of banks for 23 countries (including ukraine) for 2008–2020 are presented in table 2. it should be noted that the greatest and most significant impact of the aggregate indicator of banking regulation intensity has on the amount of overhead costs of banks to total assets of the banking system. as the ibrr increases by one, the cost of banking business will increase by 0.108, with a p-level of 0.0155, the t-test value is less than 1.96 (with a significance level of 0.05) and is 2.44, with an r2 coefficient of determination showing a moderate level of relationship between the independent and dependent variables. also, as the intensity of bank regulation increases by one, there is a tendency for the ratio of non-performing loans to the total loan portfolio in the banking system to decrease by 0.067 (p-level equals 0.0281, r2 = 0.4), but the low coefficient of determination is not confirmed. this relationship indicates the need for the regulator to find and take into account the real causes of asset deterioration, not only related to aggressive policies of banks, but also those associated with the relationship of the bank with insiders, as well as their lending on more favorable terms than other market participants. the positive relationship between the intensity of regulation and the cost of banks can be explained by the fact that over-regulation of banking activities can overburden the bank, forcing it to incur additional overhead costs. in the author's opinion, it is necessary to supplement the proposed classification of banking supervision by stages of bank existence with another important type, namely special supervision of troubled and insolvent banks (figure 1). the inability of a banking institution to meet certain requirements places it in the category of a problem bank. one of the important measures of nbu influence on activity of such banks in ukraine is introduction of provisional administration as well as support – introduction of moratorium on satisfaction of creditors' claims. this method was quite actively used by the nbu during the aggravation of the banking crisis in ukraine. another tool for early diagnosis of bank problems is the rating systems of banking supervisors, which are used to obtain information on the assessment of table 2 the results of the impact of the intensity of bank regulation on the financial stability of banks dependent variables independent variables control variables adequacy models ibrr* gdp forеign_bank f-test r2cor. share of problem loans in the bank -0,067 -0,187 -0,08 0,0281 0,40 the ratio of banks' regulatory capital to their risk-weighted assets 0,001 0,146 -0,060 0,0125 0,61 the ratio of banks' capital and reserves to their assets 0,090 0,067 0,005 0,5158 0,71 return on capital of banks -0,001 -0,116 -0,032 0,0267 0,70 return on assets of banks 0,010 -0,089 -0,027 0,3862 0,50 the ratio of banks' administrative costs to their assets 0,115 0,071 0,022 0,0459 0,77 ibrr – aggregate indicator of the intensity of banking regulation gdp – gross domestic product; foreign_bank – share of foreign banks in the banking system f-test – fisher's test; r2cor. – adjusted coefficient of determination types of banking supervision by stage of existence special supervision supervision of "insolvent" banks (carried out by the nbu) supervision of "troubled" banks (carried out by the nbu) supervision of liquidation (carried out by the dgf) prudential supervision (carried out by the nbu) introductory control (carried out by the nbu) figure 1. classification of types of banking supervision in ukraine three seas economic journal 197 vol. 3 no. 1, 2022 various components that form an overall picture of the financial condition of a banking institution. common assessment components include capital, asset quality, management, earnings, liquidity, and sensitivity to market risk. the objectives of state policy to ensure economic security are: 1) strengthening the economic sovereignty of ukraine; 2) increasing the resilience of the economy to external and internal threats; 3) ensuring economic growth; 4) support of scientific and technical potential of economic development at the world level and increase of its competitiveness; 5) support of the potential of the domestic defenseindustrial complex at the level necessary for solving the tasks of military-economic support of the state defense; 6) raising the level and improving the quality of life of the population. the state policy on economic security has 8 directions, one of which is the sustainable development of the national financial system. the financial system is a set of different groups of financial relations through which the state forms, distributes and uses centralized funds. the main tasks are: 1) reducing the critical dependence of the national monetary system on fluctuations in international financial and commodity markets; 2) reduction of the use of foreign currency in the course of economic activity in the russian jurisdiction; 3) development of internal (national) sources of long-term financial resources, ensuring the rate of accumulation sufficient for sustainable development of the national economy; 4) development of mechanisms and instruments of investment-oriented public financial policy, which provides in particular for increasing the rate of accumulation, as well as attracting savings for the implementation of investment projects; 5) improvement of specialized tools to support lending to strategic sectors of the economy, knowledge-intensive and high-tech industries; 6) development of the infrastructure of the national financial market, the national payment system, the national system of payment cards and the system of transfer of financial connections; 7) improving the regulation of financial organizations, development of prudential supervision and stress testing methods; 8) counteracting the transfer of non-cash funds into the shadow circulation of cash and legalization of proceeds from criminal predicate economic crimes; 9) ensuring the stability and balance of the budget system of ukraine, in particular state extra-budgetary funds; 10) improving the management of public financial assets and debt obligations (ruda, 2021). the main indicators of the state of economic security are the money supply index and net import (export) of capital. the money supply index includes the monetary aggregate m2, which includes m0, m1 and time deposits, balances in national currency on term deposit accounts and 13 other funds of the population attracted for time, non-financial and financial (except credit) organizations that are residents of ukraine. an effective state policy aimed at improving the economic security of the banking system can increase the susceptibility of the economy and the financial national system in general to innovative development, external and internal factors and increase the country 's competitiveness in the world economy. 4. findings one of the most important components of the economy of any modern state is the banking system. the importance of the banking system in ensuring stable and full development of the modern economy is very great. at the present stage, its special role is to ensure stable economic growth, expand the ability of enterprises to attract financial resources, and preserve and augment citizens' savings. the banking system is the "blood" mechanism of the market economy. it is the most important institution that ensures the redistribution of capital across different sectors in accordance with their needs, investment attractiveness and a number of other factors of internal and external environment. the banking system can act as a single (sole) institution and as a set of different types of banking institutions that perform the functions of lending and receiving deposits, as well as other operations that have arisen in the development of monetary relations between economic entities. the characteristics of the banking system as a set of regional banking systems are relevant for large states (first of all, arranged on the federal principle). the regional aspect is especially important because it affects the problems of formation of a single economic space of the country, as well as spatial socio-economic differentiation. however, a crisis in one credit institution can cause a crisis in the regional banking system as a whole, due to the effect of "deleterious influence" or "contagion". this means that the problems of one bank affect the functioning of others through a network of inter-bank connections (inter-bank markets, payment systems, derivatives). and the example of the global financial crisis of 2008 made it clear that the problems of one credit institution can lead to an economic downturn of the state and the world economy. in this situation, there is an obvious need to create a regional banking system for institutions that could use tools that can reduce the risks of the crisis, and in case of its onset – to provide the necessary forms of support to the system (including financial). regulation at the state (national) and international levels should be considered as such institutions. state regulation is understood as a system of legislative, administrative and economic measures carried out by state institutions of various levels in order to influence the sociothree seas economic journal 198 vol. 3 no. 1, 2022 economic system. state regulation of the banking system by its nature can be divided into two main types: 1) general regulation of the banking system. subjects of the banking system, as a rule, in many areas of activity (labor law, civil law) are guided by the same rules and regulations as subjects of other industries and sectors of the economy; 2) state regulation of the banking system in terms of its functions and responsibilities related to the specifics of banking activities and enshrined in the legislation of the country. the activity of institutions of state regulation is a process characterized by either a weakening of influence or its strengthening up to the nationalization of the banking system at the national and regional levels. nationalization of the banking system can take the following forms: – strengthening the state as a regulator (in terms of controlling and supervisory functions of the state through institutions – the central bank, etc.); – strengthening the state as a participant in the banking market (increasing the state's share in the capital of commercial banks and managing them through their representatives). the banking system as an object of management is divided into levels. allocation of a higher level implies compliance with the following conditions: 1) the presence of vertical relations of subordination between levels. this means the regulation of commercial banks by the central bank. 2) lack of competition between central and commercial banks in terms of performing their functions, which provides a clear division of administrative and operational tasks related to servicing economic relations. otherwise, the central bank, directly lending to enterprises and accepting deposits from citizens, is a commercial credit organization functions related to the implementation of public policy, which usually has certain privileges. in other words, a one-tier banking system can be a system in which: – banking operations are carried out only by commercial credit institutions, and the central state banking institution is absent; – the central bank, being the leader of the monetary policy of the state, which is also engaged in attracting deposits and lending (along with commercial banks); – the central bank has a monopoly on banking activities in the country. based on the institutional definition of the banking system mentioned earlier, we can conclude that the central bank is a component of it, while acting as an institution of state regulation due to the fact that many functions are implemented in the form of banking operations. other (non-banking) institutions of state regulation form the infrastructure economy – the legal field within which the banking system operates. at the first level of the banking system is the country 's central bank – a key institution for regulating the entire system. the exclusive role of the central bank is due to the fact that it performs regulatory functions at all stages of the "life cycle" of the credit institution. at the regional level, nbu territorial institutions are responsible for regulation. the functioning of the elements of the regional banking system is strictly tied to international standards of control and regulation in the banking sector. the basel committee on banking supervision (bcbs, committee) is the main institution whose documents largely determine the policy of national central banks in the field of capital regulation and liquidity. its main objectives are: – implementation of uniform principles, standards and rules of regulation of the banking system; – dissemination of best supervisory practice; – ensuring cooperation between banking supervisors of different countries; – creating conditions for the exchange of information between supervisory authorities. despite the advisory and advisory nature of the documents developed by the committee, they are actively implemented by central banks as participating countries, as well as countries not included in the bcbs (through banking legislation). all the committee's materials can be divided into three major groups (agreements): basel 1, basel 2 and basel 3. the new basel 4 regulatory standards are still in the process of being assessed for potential impact by the international community. basel 1 was launched in 1988 and was the first agreement to reduce credit risk and set common standards for regulating equity adequacy. despite the fact that the document was signed by the heads of central banks of the "group 10" (g-10 – canada, france, belgium, germany, italy, japan, the netherlands, sweden, switzerland, britain, usa), even then bcbn aimed to attract much more countries: yes, the materials of the agreement were sent to the supervisory authorities of other countries in order to encourage the adoption of this procedure to non-g-10 countries and for banks leading significant international business. this leads to the disappointing conclusion that basel 1 was aimed not so much at strengthening banking legislation at the national level through the introduction of international standards (although strengthening the system is usually accompanied by strengthening norms), but rather at the emergence of a unified methodology applicable to any – which country that would assess the competitiveness of an individual bank and the national banking system in general at the international level. as already mentioned, the main provisions of the agreement concerned the regulation of capital adequacy. therefore, bcbn divided the bank's equity into 2 groups (categories): three seas economic journal 199 vol. 3 no. 1, 2022 – capital i category, which included share capital and declared reserves, distributed from income after tax; – capital of the ii category – other elements of capital, in particular additional capital, undeclared reserves, reserves for revaluation. its sufficiency was assessed on the basis of a system of risk assessment of capital tied to different types of assets using a special ratio. this ratio could take one of five values – 0%, 10%, 20%, 50% and 100% (the higher the ratio, the greater the risk). the main significant position of "basel 1" was the definition of the minimum standard of sufficient capital: the ratio of capital to risk-weighted assets should be at least 8%, while the capital of the first category – at least 4%. it is obvious that a significant part of regional banks will not be able to approach this level at the expense of profits. at the same time, the analysis of the basel accords shows that despite the strengthening and complexity of the methodology for calculating capital adequacy, the minimum level of capital ratio to riskweighted assets remains unchanged (4%) from 1988 to the present planned for 2019); the ratio of total capital to assets also changed. moreover, in implementing the minimum standard set by basel i, the authors set an intermediate level, which was to reach 7.25% by the end of 1990. these facts reflect the desire of the initiators of the document to ensure smooth and painless implementation of international standards on such a key indicator as capital adequacy of the bank. basel 2 was adopted in 2004. the following changes were made: creation of a system of balanced calculation of regulatory capital most sensitive to risks, based on quantitative risk assessments conducted by banks themselves; the greatest recognition of credit risk mitigation instruments; improved capital requirements to cover operational risk; increasing the role of supervisory bodies; disclosure of information and methodology by banks. the release of new bcbs materials consolidated a long-term trend towards strengthening banking regulation and complicating the methodology for calculating minimum capital standards. representatives of the regional banking community repeatedly expressed concern about the possibility of doing business in accordance with the specifics of the basel agreements. the innovation of basel 2 was the transition from focusing on equity adequacy as a key component of banking system regulation to a comprehensive threeelement approach: minimum capital requirements; supervision procedures; market discipline. basel 2 has expanded the list of uncertainties, highlighting additional operational and market risks. operational risk involves the possibility of incurring losses due to deficiencies in internal banking procedures and systems, which may arise due to the influence of both external and internal factors. thus, operational risk also includes legal risk due, for example, to possible sanctions by regulators; potential damages here may be fines, penalties, etc. market risk reflects possible losses due to changes in the market value of financial instruments in the bank's portfolio. there are 4 basic principles of banking supervision: 1) banks must have procedures for assessing capital adequacy in relation to the nature of their risk and a strategy for maintaining the level of this capital. this principle establishes the responsibility for the correct rationing of capital for the management of the bank. however, the example of a sharp increase in the minimum capital level of ukraine raises a certain contradiction: the guidelines are planned not by top management (as noted in the materials of the committee), but by the state. 2) banking supervisors should analyze and assess the adequacy of domestic capital adequacy, as well as their ability to ensure compliance with capital standards. banking supervisors should take the necessary supervisory measures if they are not satisfied with the outcome of this process. despite the existence of certain standards and calculation methods, many of the committee's recommendations can be implemented using a tool of reasoned judgment. for example, verification of all risk factors in determining the benchmark for the level of capital, including environmental factors: estimates of the supervisory authority and bank management may differ significantly, but have justification in the form of reports of various qualified expert organizations. 3) banking supervisors expect banks to maintain capital levels above minimum regulatory requirements and should require banks to sustainably maintain capital above this minimum. for this purpose, in addition to the minimum level of capital, the bank must create a reserve, which will allow the bank to avoid sanctions from the supervisory authority in case of a small drop in capital, previously unaccounted risks and other factors. this solves for the regulator the problem of banks that go beyond capital adequacy. 4) banking supervisors should take preventive measures to prevent the decline of capital below the minimum level necessary to ensure the risks inherent in the bank and should take urgent corrective action if the amount of capital is not maintained and not restored at a sufficient level.the committee does not restrict regulators in the measures taken, noting that they should have the powers that best suit the state of the bank and its operating environment. the use of basel ii was expected to dramatically improve the quality of risk management in most banks. in addition to applying a more risk-sensitive credit risk assessment, many of them will for the first time pay increased three seas economic journal 200 vol. 3 no. 1, 2022 attention to operational risk – one of the main risks of commercial banks (along with credit, liquidity and market); in addition, it was later expected to have the greatest impact on medium and small financial institutions in developed markets (including most european banks), most markets and developing countries. however, practice has shown that the use of basel ii standards is more likely to provoke a slowdown in the economy and bring the stagnation of industries closer. basel 3 was released in december 2010. the main ideas laid down in the new materials, which were determined by the crisis in the world economy, in particular related to the bankruptcy of the largest banks. thus, the above list of objectives of the basel accords can be supplemented by the need to prevent future crises. it should be noted the trend of further strengthening of banking regulation, as well as the introduction of new standards of the bank: raising the minimum level of capital 1 category from 4% (this figure has not changed since the first basel materials to 6%; introduction of basic capital adequacy introduction of a financial leverage ratio equal to the ratio of capital to assets and off-balance sheet instruments, not weighted by the level of risk (3% for capital 1 category), the establishment of a countercyclical buffer – a special reserve of capital in economic crises (2.5%). the development of this ratio reflects the committee's concerns about the prospects for new crises: in fact, the bank must have sufficient reserves of high quality assets in the event of a 30-day outflow. a controversial point of strengthening standards is its impact on economic growth. according to experts, each percentage increase in the capital adequacy threshold leads to a decrease in global gdp growth by 0.04% per year for 4.5 years. thus, international regulatory standards play an important role in the development of the banking system by defining standards for a number of key indicators of a credit institution and shaping approaches to developing methods of risk assessment. changes in indicators of the basel accords are reflected in table 3. based on the generalization of the analysis, we note a downward trend in the potential for selfdevelopment of the regional banking system. this is due to the fact that it is currently under pressure from changing national macroeconomic parameters, on the one hand, and internal institutional conditions of development, on the other. in the first case it is about the objective deterioration of market conditions, which affects the assets of the credit institution. this refers to the growth of overdue and non performing debt, the depreciation of investments in securities, and the decline in consumer activity. at the same time, the institutional environment for the development of the banking system in the regions is strengthening. thus, territorial institutions of the central bank are gradually losing their supervisory functionality, transferring it to the central office. the second major trend in the development of the regional banking system under the growing influence of international supervisory standards is to restrain the growth of its assets due to lack of capital. the strengthening of regulation is largely determined by the use of instruments developed by the basel committee. thus, it can be seen that the introduction of international standards extends the goals of banks from primary business growth to primary control over the quality of available assets. state regulation is one of the main institutional factors in the development of the regional banking system, mass revocation of licenses from ukrainian banks in recent years, the formation of a number of programs to support liquidity in the banking sector, other parameters of functioning in the banking sector are determined by state institutions and, above all, the central bank. the key role of state regulation of the banking system and the institution of the central bank suggests the need for more detailed study. this will allow in the practical part to form practical recommendations for state institutions to improve the efficiency of regulation of the regional banking system of ukraine. at the current stage of development of the banking system one of the important factors affecting the mechanisms of state regulation of banking activity is the policy of the nbu, which is the main subject of ensuring the stability of the banking system of ukraine. regulation is carried out with the use of appropriate tools. the development and stability of the banking table 3 changing basic parameters and standards in the development of the basel agreements indicator basel 1 basel 2 basel 3 сategory 1 capital adequacy ratio 4 % 4 % 6 % category 2 capital adequacy ratio 8 % 8 % 8 % basic capital adequacy ratio not provided not provided 4,5 % reserve capital buffer not provided not provided 2,5% leverage (financial leverage) not provided not provided 3% short-term standard liquidity not provided not provided ≥1 the coefficient of net stable financing not provided not provided ≥1 three seas economic journal 201 vol. 3 no. 1, 2022 sector depend on the choice of priority directions of banking regulation. at the same time, a particularly important task of the state banking system should be to attract funds and concentrate them on priority areas of economic development, prevent inflation and crisis processes, increase credit and investment activity, stabilize the economy and the state as a whole. currently, the main instrument of macroprudential regulation and supervision of the nbu are the requirements of the basel accords, which are developed and regularly improved. prudential regulation, monetary regulation and economic standards are considered as instruments (see table 4). prudential regulation – the establishment of requirements, financial standards, reporting requirements for the bank, aimed at minimizing risks. prudential regulation has the following functions: decision-making on state registration of credit institutions and licensing of banking operations; presentation of qualification requirements to the heads of credit organizations; establishing rules of activity (banking, accounting, statistical reporting); establishing requirements for combating money laundering; organizations of the deposit insurance system. monetary regulation instruments aimed at minimizing the risk of liquidity loss: interest rates on nbu operations; reserve requirements; open market operations; deposit operations; refinancing of credit institutions; currency interventions. economic standards of credit institutions. in order to ensure economic conditions for the sustainable functioning of the banking system, protect the interests of depositors and creditors, the nbu sets the following mandatory standards: the minimum amount of authorized capital for newly established banks; minimum amount of own funds (capital) for existing banks; capital adequacy ratios; capital liquidity ratios; the maximum amount of risk of one borrower or group of related borrowers; the maximum amount of large credit risks; maximum amount of risk per creditor (depositor); standard for the use of banks' own funds for the purchase of shares (stocks), etc. jur. persons. standards set the definition of the dynamics of the bank, assessment of liquidity, recognition of the bank's problems at different stages, the possibility of prompt decision-making to remedy the situation in the bank. liquidity ratios determine the bank's ability to repay existing liabilities as soon as possible. as for the minimum reserves ratio, mandatory reserves are part of the borrowed resources as a percentage, which is placed on an interest-free account with the nbu. it depends on the type of resource and currency. 5. conclusions ensuring the stability of the banking system and preventing systemic banking crises is the most important task of authorized government bodies in the area of financial sector regulation. considering the concept of banking supervision, it can be noted that "banking supervision" is a system of monitoring, consisting of state, international, interbank, intrabank, intra-bank table 4 banking regulation tools tools characteristics prudential regulation – decision-making on state registration of credit institutions and licensing of banking operations; – presentation of qualification requirements to the heads of credit organizations; – establishment of rules of activity (banking, accounting, statistical reporting); – establishing requirements for combating money laundering; – organizations of the deposit insurance system. monetary regulation instruments aimed at minimizing the risk of liquidity loss: – interest rates on nbu transactions; – reserve requirements; – open market operations; – deposit operations; – refinancing of credit institutions; – currency interventions. economic standards in order to ensure the economic conditions for the sustainable functioning of the banking system, protect the interests of depositors and creditors, the nbu sets the following mandatory standards: – the minimum amount of authorized capital for newly established banks; – the minimum amount of own funds (capital) for existing banks; – capital adequacy ratios; – capital liquidity ratios; – the maximum amount of risk of one borrower or group of related borrowers; – the maximum amount of large credit risks; – the maximum amount of risk per creditor (depositor); – standard for the use of banks' own funds for the purchase of shares (stocks), etc. jur. persons. three seas economic journal 202 vol. 3 no. 1, 2022 supervision in the form of preliminary, introductory and current supervision from the establishment until the liquidation of the bank or its subdivisions. it should be noted that banking supervision is a systemic system that comprises several closely intertwined elements. the components of banking supervision are control proper, which boils down to study or observation of compliance with legislation in the activities of banking institutions, as well as active actions by the national bank of ukraine to apply appropriate enforcement measures. the mechanism for ensuring the smooth functioning of the country 's banking system is a set of tools used by government agencies and providing for regulatory and supervisory measures. the main tools for the implementation of supervisory functions by authorized bodies include the following actions: establishment and supervision of compliance with regulatory requirements (economic standards, quality of corporate governance and risk management, manage ment requirements); continuous monitoring, examination of reports and analysis of the financial condition of the bank; periodic on-site inspections of banks; application of sanctions against banking institutions. an effective banking supervision system should meet such conditions as clear goals, independence and accountability of the regulator and sufficiency of its resources for effective performance of regulatory functions, availability of legislation and authority to impose sanctions. the main purpose of banking supervision is to protect the interests of depositors from mismanagement of banks, to create a competitive environment in the banking sector, to ensure transparency of the policy of the banking sector in general and banking institutions in particular. functions of banking supervision are embodied in organizational structures of banking supervision. experience of banking supervising in developed countries shows prevailing fulfillment of supervising functions by central banks. according to current legislation, the supervisory function is performed by the national bank of ukraine, in particular, the main department of banking supervision. the results of the study show that effective for ukraine will be a system of banking supervision, which combines partial delegation of certain functions of control and supervision to certain financial market participants with the use of rules and principles in the process of supervision with a significant predominance of rules in the structure of supervision. references: aleskerova, y., & fedoryshyna, l. (2018). analysis of investment activities of enterprises of ukraine economic system development trends: the experience of countries of eastern europe and prospects of ukraine: monograph. riga, latvia: "baltija publishing", рр. 1–17. aleskerova, yu., todosiichuk, v., & maksymenyuk, t. (2020). the impact of external financial risks on enterprise activities. magyar tudományos journal, no. 40, рр. 14–25. aleskerova, yu., salkova, i., fedoryshyna, l., & todosiichuk, v. (2020). insurance management: a textbook. vinnytsia: vnau, 295 p. prylutskyi, а. (2020). current trends and problems of the banking services market. sciences of europe. czech republic: praha, no. 59, vol. 3, рр. 44–51. ruda, o. l. (2021). current state of the banking system of ukraine in the context of banking supervision. сolloquium-journal, no. 16(103), рр. 68–73. ruda, o. l. (2021). the interbank credit market and role in providing the development of the banking system. сolloquium-journal, no. 5(92), сzęść 1, рр. 31–35. three seas economic journal 7 vol. 3 no. 4, 2022 1 national university of life and environmental sciences of ukraine, ukraine (corresponding author) e-mail: bogdanavyshnivska@gmail.com orcid: https://orcid.org/0000-0002-3166-7567 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-2 product image in the enterprise’s marketing product policy bogdana vyshnivska1 abstract. a strong image of the organization and its products indicates unique business abilities (special skills, abilities) that allow you to increase the value of goods and services offered to consumers. managers of any organization or eventually start building its image, and then the sequence of their actions will be as follows: image measurement, image assessment, development of an image-building program and its implementation. each organization performs many roles, so its image formed at different levels: socio-cultural, industry, enterprise and product level. based on this, it is necessary to study the formation of a positive image of ukrainian enterprises and companies. the purpose of the article is to theoretically substantiate and develop scientific and methodological provisions and practical recommendations for the improvement of the product image in the marketing product policy of the enterprise. the object of research is the brand, llc "industrial and commercial company shabo". the subject of the research is the influence of the image and its perception by consumers, namely: analysis of the alcohol market of ukraine, the place of "shabo" in it, determining the impact of the company's image on its profit. the methodological basis are general and special methods: the systematic approach, system-structural analysis, synthesis, comparative analysis, modeling, semantic analysis, and terminological approach. the research results: most of ukrainian scientists define the brand as an image that arises in the mind of the consumer, is associated with certain advantages of the product (service) or company, and clearly differs from competitors. the image makes a huge contribution to the formation of the image of the brand in the mind of the consumer. the practical significance of the obtained research results is that the conclusions and recommendations are of practical importance and can be used to strengthen product image in the marketing product policy of the llc "industrial and commercial company shabo". therefore, it is necessary to study the importance of the company's brand, its impact on consumers, the company's profit and the competitiveness of the company's products on the alcohol market of ukraine and the international market. key words: product image, brand, competitiveness, wine market, pest, swot. jel classification: m30, m31, l11, l66 1. introduction product image is a stable, long-term and constantly maintained perception of consumers (buyers) about the quality of the product and the manufacturer (seller), its reputation, presale and after-sale service. a positive image of the product and the manufacturer increases their competitiveness and chances of success. a negative image leads to loss of market position and business. if it has developed, then it is very difficult to overcome it, it will take a lot of money and time (gavurova, bacik, fedorko, nastisin, 2018). a positive image is formed through the activities of the marketing communications complex, in which publicity and public relations play a decisive role. creating a positive image is a complex process of maintaining communication links with real and potential consumers, the purpose of which is to form at the subconscious level certain positive associations regarding the name of the product, trademark or name of the manufacturer (consumer psychology). the effect will be greater if the image of the product is formed with the involvement of disinterested parties. thus, the certification of products and enterprises, especially according to international standards (iso 9000), significantly improves the image of the product. three seas economic journal 8 vol. 3 no. 4, 2022 the image of a product, brand or company is an idea or association that arises in the buyer in connection with certain names. the main characteristic of the image is that, according to marketers, it captures those who personally know nothing about the product and do not have their own opinion about it, but are influenced by the image that has formed in the relevant environment. the image characterized by the "radiation" effect, when one of its components (positive or negative) perceived so strongly that it determines the consumer's attitude as a whole. the company should study this effect. with the help of appropriate questionnaires, information is obtained about the attractiveness of the image of the product and the company and the level of trust in it by buyers, about the assessment of the "quality-price" ratio, as well as about the consumers of the product. special promotional activities help to create a favorable image of a new product or support a fading image of traditional products (yan shi, laura hjaltaso, 2016) the concept of image is closely related to understanding the popularity of the product. there is a distinction between the so-called spontaneous (the answer to the questionnaire question: " which soft drinks do you know in general?") and the awakened popularity (the answer to the question posed in a different way: "which of the listed names of soft drinks do you know?"). popularity that has awakened, as a rule, needs additional confirmation. the company should strive not only to create a favorable image of its products, but also to ensure its maximum popularity. the latter is explained by the fact that the consumer always tries to minimize his efforts in the purchase process. in national markets and due to the growing trend of globalization of the world market, this leads to the fact that a small number of product brands (three or four) can interfere with the sale of other less well-known products. that is why we can conclude that advertising should contribute to the growth of popularity, since most people buy already known goods as "more reliable". in today 's competitive environment, an enterprise can only survive by constantly adapting to market requirements. in industrialized countries, markets are constantly changing under the influence of scientific and technological progress. new types of raw materials and production methods are emerging, there is an unconventional use of traditional goods, and the pace of changes in the product range under the influence of fashion is accelerating. it is clear that manufacturers need to anticipate possible changes in the actions of competitors and consumer behavior, that is, to feel the "demands of the time". the latter is significantly facilitated by product testing. such marketing actions are most widespread in relation to food, cosmetic products, and household care items. they test both already known products and new or modified products. in the first case, testing is carried out in order to determine the attitude of consumers to the goods on sale: the level of customer satisfaction with a particular product, their attitude to the services of competitors is determined. when developing new products or modifying old ones, the company tries to find out what positive qualities consumers see (would like to see) in a particular model, the reasons for their satisfaction or indifference, the opinion about the price and availability of use. in addition, testing allows you to find out how a particular product is evaluated against similar products produced by competitors. therefore, preliminary testing makes it possible to make decisions on modifying a product that has already been mastered by production or switching to the production of a new product. the main market characteristics of a product are fundamental, but not the only ones for determining the competitiveness of a manufacturing company (olexova, chlebikova, 2020). usually, when analyzing the competitiveness of a company, they take into account the market share controlled by it and the prospects for its content. and also the compliance of product properties with the needs of consumers, absolute profit per unit of production, profit as a percentage of production costs, the quality of the distribution network and the suitability for the market of the company 's product promotion program, considering the actions of competitors. 2. wine market of ukraine and the image of llc "shabo" on it the wine industry of ukraine is represented by enterprises of primary and secondary wine making. the main type of raw material for wine production is wine materials. in addition to powerful wineries that have about a thousand hectares of their own vineyards, small wineries are being created that contribute to the developthree seas economic journal 9 vol. 3 no. 4, 2022 ment of the culture of wine consumption and production in ukraine through the production of original wines, wine tastings, and wine festivals. the main varieties in ukraine are aligote, bastardo magaratsky, cabernet sauvignon, merlot, muscat, odessa black, pinot, riesling, etc. although there is a tendency to reduce the amount of wine produced compared to 2016, 119 million liters of wine were produced in 2020. in 2020, ukraine exported 14.4 million liters of wine, which is twice as much as in 2019, although wine imports to ukraine in 2020 increased by 22% compared to 2019. despite this, the grape and wine industry is developing in ukraine. in the context of the globalization of the wine market and ukraine's accession to the wto, competition is becoming more acute, which requires restructuring the industry in such a way that its products meet the high requirements of the market ( jung young yun, vyshnivskyi, 2019). in 2009, the industry program of viticulture and winemaking of ukraine for the period up to 2025 was developed and approved; unfortunately, it is not fully valid. the aim of the program was to implement the state policy of ukraine to regulate the development of this sector of the economy, concentration of financial, material, technical and other resources, production and scientific and technical potential to solve the main problems of the industry. although many of the most important concepts are not legally fixed at all, or the existing laws do not meet the modern requirements of the world wine production market. it is necessary to increase planting, restore and lay new nurseries of grapes, and most importantly improve the quality of wine from recognized international varieties that grow perfectly on the territory of ukraine, as well as develop local aboriginal varieties, of which there are quite a lot in ukraine. the family business – shabo wine company, combines a powerful production complex with modern european equipment and almost two thousand years of winemaking traditions. it was founded in 2003 on the basis of the oldest wine production in ukraine in the village of shabo. the wine-making traditions of this region were laid down in ancient times, and cultural winemaking was developed by swiss settlers, who founded a wine settlement here in 1822. the company 's structure includes "shabo wine house", "shabo sparkling wine house", and "shabo cognac house". the production volume is 15 million liters per year. today llc "shabo" is one of the leading ukrainian producers a modern winemaking enterprise that operates according to ukrainian and international standards (official site of shabo company). since 2012, the llc "shabo" company – the only one in ukraine – received the right to create premium wines of "controlled designation of origin" (knp wines) – the ukrainian analogue of the french appellation; output controlled. over the past 10 years, the production volume of shabo noble drinks has almost doubled in 2008 – 533.5 thousand dal, in 2018 – 989.8 thousand dal. since 2012, shabo has been actively exported to 18 countries – europe, the usa, canada, asia. according to official statistical sources, the herfindahl-hirschman index can be determined, that is, an indicator of business concentration on the ukrainian wine market (zeman, bogdan, 2019). the hhi is a commonly accepted measure of market concentration. it is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers. it can range from close to 0 to 10,000. this index is calculated using the formula: hhi = s21 + s 2 2 + s 2 3 + … s2n where: sn – the market share percentage of firm n expressed as a whole number, not a decimal. according to calculations, in 2021 the herfindahl-hirschman index was 1413.75. whereas 1000 < hhi ≤ 1800, this market belongs to moderately concentrated markets (medium market concentration). the classification list of wines is very extensive. all products are divided into different categories, depending on the quality and aging period, production technology, as well as depending on the raw materials from which the wine is made. therefore, the amount of demand for wine products is influenced by a certain number of factors, knowledge and understanding of the needs of consumers of these products, and the correct positioning of the product. equally important are the development of a productive and correct advertising campaign, the strengthening of market positions and the increase or preservation of market share, targeting the three seas economic journal 10 vol. 3 no. 4, 2022 table 1 features of demand for sparkling wines demand features what is this characteristic? impact on the company 's operations 1. secondary wine products are not secondary, but act as an independent final product. since demand depends on end users, it is necessary to monitor changes in demand in the consumer market and stimulate it with various measures. 2. extensibility demand for products may be slightly increased as a result of the growth of the sparkling wine consumption culture. the company needs to gain a foothold in existing market segments, establishing long-term relationships with customers. 3. elasticity, indicator of demand elasticity relative to price demand is weakly elastic – this is expressed in the fact that if prices are reduced or increased, demand will not change significantly. the company needs to work on improving the quality of products, on ways to reduce prices in order to increase attractiveness for the buyer, as well as improve the quality of the company 's products. 4. cross elasticity, an indicator of cross elasticity cross elasticity partially exists. the role is played by raw materials-grapes. enterprises partially purchase raw materials from foreign suppliers. if the dollar exchange rate increases or the cost of raw materials increases, the price of final products increases. it is necessary to establish cost-effective relationships with suppliers of raw materials in order to get discounts, reduce inventory and get some privileges. 5. rationality/ emotionality the consumer's choice is mostly emotional. rationality is influenced by knowledge of the style features and manufacturing technology. it is necessary to position products in terms of quality for customers, as well as goods for everyday use, as a food product. 6. seasonality seasonality is clearly expressed on new year's eve and during periods of women's and men's holidays. the demand for certain types of products may vary slightly by season. it is possible to change the advertising campaign by season to increase demand in accordance with the needs of customers at this time, as well as take into account the amount of demand during periods of greatest consumption. 7. instability demand is steady, especially during new year's holidays and other celebrations. also, the demand for products is growing in the summer due to the heat. the company needs to limit the price of products as much as possible, increase the range and improve quality, and improve technologies. 8. current state of demand falling (due to the economic crisis) it is necessary to restore demand this can be done by reducing the price (looking at the current economic situation), improving quality, increasing the range, and increasing public awareness. domestic supplier of raw materials, and most importantly, the formation of an assortment and quality that would satisfy consumers. among the domestic brands, artemivsk champagne wine factory has the greatest advantage in the segment of sparkling wines. the products of the kyiv factory under the wellknown name "soviet champagne" are no less popular. next come producers from odesa: "french boulevard", "shabo", "odesa". among imported sparkling wines, the leader is "martini" – a brand of vermouth produced in italy, named after the martini & rossi distillery in turin. therefore, martini asti, and the second place by martini rose occupy the first place among the sold brands. in third place is the representative of georgian winemaking tm "bagrationi". it should also be taken into account that due to the culture of wine consumption in ukraine, with a significant increase in the price of goods, the consumer can replace the drink with another cheaper category. for example, the consumption of cider or other non-strong drink may increase. pest analysis (political, economic, social and technological) is a management method whereby an organization can assess major external factors that influence its operation in order to become more competitive in the market. as described by the acronym, those four areas are central to this model. pest analysis can assist an organization in recognizing and thereby capitalizing on opportunities offered by existing conditions in the business environment. it can also be used for three seas economic journal 11 vol. 3 no. 4, 2022 тable 2 evaluation of llc "shabo's" characteristics for pest analysis factor description influence of the factor expert evaluation average rating weightadjusted score1 2 3 4 5 political factors this year, restrictions on the import of raw materials will increase and higher customs duties on imports will come into force. 4 3 4 2 1 4 2,8 0,35 a new law has been adopted regulating advertising activities, tightening the requirements for advertising texts and prohibiting the use of doctors in advertising. 1 1 3 2 5 3 2,8 0,09 growing tension in relations between our country and the country of the main exporter. 3 2 3 1 3 3 2,4 0,23 economic factors next year, the country 's gdp growth forecast is 3%. 3 5 4 4 5 5 4,6 0,43 the availability of loans will increase. 2 5 4 4 3 4 4,0 0,25 inflation is projected at 7%, with unemployment falling to 10% 3 1 2 3 1 1 1,6 0,15 socio-cultural factors people are more likely to buy imported goods. 3 3 5 3 2 4 3,4 0,32 the number of online purchases and mobile internet usage is increasing in the age category up to 35 years. 1 5 5 3 5 5 4,6 0,14 a positive attitude towards natural products is growing in society. 2 3 4 3 4 4 3,6 0,23 technological factors the market values design more than the technological properties of the product. 4 3 5 3 1 2 2,8 0,35 there is no technological breakthrough in the industry. 3 4 5 5 4 5 4,6 0,43 players are in no hurry to import technologies used in more developed markets. 3 2 4 5 2 4 3,4 0,32 overall summary 32 40,6 table 3 pest analysis of llc "shabo" company political еconomical factor weight factor weight a new law has been adopted regulating advertising activities, tightening the requirements for advertising texts and prohibiting the use of doctors in advertising. 0,09 next year, the country 's gdp growth forecast is 3%. 0,43 this year, restrictions on the import of raw materials will increase and higher customs duties on imports will come into force. 0,35 the availability of loans will increase. 0,25 growing tension in relations between our country and the country of the main exporter. 0,23 inflation is projected at 7%, with unemployment falling to 10%, 0,15 socio-cultural techonological factor weight factor weight a positive attitude towards natural products is growing in society. 0,23 there is no technological breakthrough in the industry. 0,43 people are more likely to buy imported goods. 0,32 players are in no hurry to import technologies used in more developed markets. 0,32 the number of online purchases and mobile internet usage is increasing in the age category up to 35 years. 0,14 the market values design more than the technological properties of the product. 0,35 three seas economic journal 12 vol. 3 no. 4, 2022 identifying current or possible future challenges, allowing for effective planning of how to best manage these challenges. pest analysis can also be applied in assessing the in-house structure of an organization in order to identify strengths and weaknesses in its internal politics, economic outlook, social climate, and technology base. the results of this analysis can facilitate changes or improvements in areas identified as subpar. pest analysis can be used in conjunction with other forms of strategic business analysis, such as the swot (strengths, weaknesses, opportunities, and threats) model, for an even more comprehensive result (vyshnivska, skorobahatyi, 2022). conducting a comparison between these completed analyses can provide a very solid basis for informed decision-making. based on the results of the analysis, it is proposed to use the strategy of reverse vertical integration, which is implemented by building a container, and packaging shop and building additional production facilities. it is also advisable to promote products for the target audience in the premium segment and focus on whether the company has international awards. thus, there is a need to increase plantings, restore and establish new grape nurseries, and most importantly, to improve the quality of wine from recognized world varieties that grow beautifully on the territory of ukraine, as well as to develop local aboriginal varieties, of which there are quite a lot. a lot in ukraine. 3. problems of the wine industry of ukraine in recent years, the indicators of grape cultivation and export of ukrainian wine have fallen. in general, in 2020, ukraine imported three times more wine than it exported (ukrbrand, 2020). moreover, in 2021, the number of imports in creased even more. after all, since january 1, the state canceled the customs duty on european wines, in accordance with the association agreement. at the same time, according to the results of the tasting commission, which checked 400 ukrainian and foreign wines, 30% of imported wines and 90% of imported wine based drinks have violations. according to representatives of the industry, in order to develop, ukrainian winemakers need state support. small producers complain about the reduction of vineyard areas; lack of raw materials; difficulties with obtaining plots for long-term lease; unnecessary trouble with excise stamps and reporting; outdated state standards (for example, regarding packaging or wine production only from own grapes); lack of cheap loans. in december 2021, ten ukrainian associations of winemakers signed a memo-randum of cooperation. the participants agreed to work together to create competitive conditions for the development of winemaking and support legislation to liberalize the industry. associations also advocate fair competition and countering counterfeiting. among the goals of the memorandum is the approximation of domestic tax legislation to eu legislation on wine products. for example, exemption from excise tax on wine, other non-carbonated and sparkling fermented beverages. in order for ukrainian wine to become a real brand, targeted state policy and local initiatives are needed. table 4 swot analysis of the llc "shabo" enterprise strengths weaknesses rating parameters rating parameters 1 availability of qualified personnel 1 weak promotion of new products 2 good employee motivation 2 lack of branded stores 3 modern technologies 3 low representation in retail chains 4 own raw material base 4 no ads in the premium segment 5 discount system 6 well-established partnerships opportunities threats 1 creating a branded trading network via franchising 1 competition of imported products 2 packaging production as feedback 2 increase in packaging prices 3 emergence of innovative technologies 3 changing consumer preferences three seas economic journal 13 vol. 3 no. 4, 2022 4. material and methods modern theories of the formation of competitive advantages on the ukrainian and international markets, scientific concepts, monographs and periodical publications of ukrainian and foreign scientists on marketing, management, formation of mechanisms for managing the development of the enterprise are the theoretical basis of the research for the article. the research information base: economic sources and periodicals, analytical data from various areas of business activity, materials of the state statistics bodies of ukraine, enterprise development programs, as well as the results of research carried out by the author. the following methods of scientific research were used in the article: historical and logical (to identify the categories "product competitiveness" and "market share of the main sparkling wine producers in ukraine"); analysis and synthesis (summarization of the global experience of ensuring the competitiveness of products at the corporate and state levels, identification of potential, problems and contradictions achieving competitiveness of ukraine on international commodity markets); system-structural analysis of economic processes (for the systematization of criteria, factors, typification of macro-marketing and corporative technologies for the formation of product competitiveness); methods of quantitative and qualitative comparisons (for a comprehensive assessment of marketing research methods). 5. findings llc "shabo" is a large-scale company that has expanded its business not only in the ukrainian open spaces, but also abroad. this indicates a good image impact and status of the company in a variety of markets. based on the analysis conducted, we can confidently say that shabo occupies one of the first steps in ukraine in the production of cognac and wine. which is directly affected by the image (vyshnivska, 2021). however, a competent rebranding and conversion of the company to more expensive and high-quality products, which will become a worthy competitor not only in ukrainian markets but also in international ones, can affect the development and raising of status in all markets. 6. conclusions creating a strong brand can have the following economic effect, which, as experience shows, is often underestimated by managers of enterprises: – consumers are willing to pay a high price for it; – it helps to expand market share, that is, increase sales, as retailers are eager to sell it and consumers are willing to buy it; – it has more opportunities for further growth; – due to consumer loyalty, it brings consistently higher profits, as it reduces risks, subsequent marketing costs, and successfully overcomes unexpected obstacles; – provides a higher rate of return on investment, which is fundamentally important for investors; – it has high protective barriers and high development opportunities. it becomes obvious why a strong image of the enterprise and its products is the most important strategic advantage of the enterprise. creating and maintaining a strong image requires a lot of money, a long time, and there is a contradiction between the need to constantly have a sufficiently high profit and long-term investments in the image that do not give a quick return. however, we have to understand that if once an enterprise gives up its market positions, it will be extremely difficult, almost impossible, to return to them. now it is necessary to determine the priorities for the development of viticulture, taking into account zonal and regional characteristics. pay attention to the development of special state programs to preserve the best grape varieties. the government needs to restore the law of ukraine "on collection for the development of viticulture, horticulture and hop growing" (587-14) until 2025 and improve the mechanism for providing state support to viticulture and ensure the development of winemaking taking into account the requirements of the wto, develop a grape cadaster within the framework of the general land cadaster. the regulation of land relations and rationalization of land use, the development of legal and technical registration of the right to lease land for vineyards, and the formation of an agricultural land market remain an open issue. there are also ways to develop the wine industry: – attracting large investments in the industry; – choosing the right marketing policy; – implementation of measures to ensure the development of the infrastructure of the wine market, diversification of sales channels and three seas economic journal 14 vol. 3 no. 4, 2022 quality assurance of products, regulation of supply and demand, protection of the market from imported wine products and low-quality raw materials; – implementation of measures to increase the market capacity of grapes and processed products, taking into account the needs of the population, its purchasing power and maximum export opportunities; – innovative and investment strengthening of the material and technical base of the grape and wine industry, introduction of environmentally friendly, resource – and energy-saving technologies; – improvement of insurance and tax policy in the field of grape and wine production; – increasing the role of science and education, developing advisory services; – improvement of the management system in the grape and wine industry; – development of industry – specific regulatory and technological documentation that meets the regulations and requirements of the european community. therefore, favorable soil and climatic conditions, excellent grape varieties, knowledge and many years of experience in wine production allow us to create ukrainian wine with unique taste and quality indicators. in addition, the potential capacity of the domestic and foreign wine market, the availability of intellectual and production capital for the introduction of innovative technologies, the reorientation of consumer preferences from strong alcoholic beverages to wines make it necessary to improve and develop viticulture and winemaking in ukraine. references: consumer psychology and how it plays a role in marketing by robyn clare under brandy candy. available at: https://brandcandy.co.za/consumer-psychology-and-how-it-plays-a-role-inmarketing/ gavurova, b., bacik, r ., fedorko, r ., & nastisin, l. (2018). the customer´s brand experience in the light of selected performance indicators in the social media environment. journal of competitiveness, 10 (2), 72–84. jung young yun, petro vyshnivskyi (2019). specifics and growing use of high erucic acid rapeseed. 15th international rapeseed congress. berlin, 493 р. ukrbrand 2020. top-100 ukrainian brands. mpp consulting. available at: http://goo.gl/wc0tnr olexova, v., & chlebikova, d. (2020). tools of product policy as part of business marketing in the conditions of globalization. globalization and its socio-economic consequences. vyshnivska, b., & skorobahatyi, v. (2022). swot-analiz yak odna iz skladovykh marketynhovoi diialnosti pidpryiemstv. suchasni trendy povedinky spozhyvachiv tovariv i posluh: iii mizhnarodna naukovo-praktychna konferentsiia. rivne, рр. 141–143. vyshnivska, b. v. (2021). pr-events in the innovative activity of the enterprise. uman: unus, рр. 101–104. yan shi, & laura hjaltaso (2016). product image to build the core competitiveness of enterprises. matec web of conferences, 100, рр. 1–5. zeman, z., & bogdan, a. (2019). marketing strategy and building brand value on the hungarian market. ekonomicko-manazerske spektrum, 13(2), рр. 1–9. official site of shabo company. available at: https://shabo.ua/ received on: 3th of november, 2022 accepted on: 15th of december, 2022 published on: 30th of december, 2022 three seas economic journal 153 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: a.pravd4449@gmail.com orcid: https://orcid.org/0000-0002-1420-8604 researcher id: e-5735-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-22 land tax in the structure of the tax system of ukraine maryna pravdiuk1 abstract. as a result of the study the main possible directions of improvement of the mechanism of taxation of land resources are substantiated. the dynamic development of the tax system is accompanied by constant changes in the collection of taxes, fees and other obligatory payments. the need to improve the mechanisms of taxation, to find those forms that best fit the fiscal psychology and tax culture of taxpayers, is the main task and way to improve the socio-economic development of the state. recognition of the uniqueness of land and its isolation from any other real estate necessitates the establishment of a special legal regime of its use. the article deals with the content and structural elements of the mechanism of legal regulation of land tax in ukraine. the essence of payment for land as one of the most important tax payments, which today is a significant source of filling local budgets, is revealed. on the basis of analysis of scientific works and normative-legal acts the legal meaning of the notions "land tax" and "payment for land" is determined. such element of land relations as obligation to pay land tax is disclosed. it is noted that payment for land in relations of land use has a derivative character. it is established that the object of taxation is a specific, individually defined and legally separate land plot (or its part), assigned to a particular subject of use in accordance with its designated purpose. the main attention is focused on the characteristic of such components of the mechanism of legal regulation of land payment as land tax payers, object of land taxation, tax base, land payment rate, procedure of calculation, tax period, term and procedure of payment of land tax, term and procedure of reporting on the calculation and payment of land payment. it is established that the notion of a "land share (unit of land)" does not contain a proper definition in legislation. land shares (parcels) are a special object of land relations, since it is not a specific plot with established boundaries, but only the owner's right to receive such a plot. a land share (unit) as an object of land tax is only the right of its owner to claim ownership of a land plot from the land plot to be divided. that is, the right of ownership of a land share (unit) does not mean ownership of a land plot, but only the right to claim for granting to the owner of such land plot. it is established that the property tax, to which the land tax relates, relates to local taxes and is compulsory. amounts of land tax are credited to the general funds of local budgets. the normative-legal regulation of the system of benefits in land taxation is investigated. the system of tax control is considered as an important element of legal regulation in the field of land taxation, providing proper functioning of the tax system of ukraine. key words: land tax, payment for land, land plot, land share, legal mechanism. jel classification: h24, k34, r14, r52 1. introduction at the present stage of land reform and implementation of financial decentralization the legal content of land relations, in particular in the field of taxation, is significantly changing. the opening of the land market, as well as the increased role of the territorial community causes the necessity to develop new scientific approaches to land taxation in the science of financial law. the main problems of land taxation in ukraine are the lack of proper legal regulation of land payment, low efficiency of control over the timeliness and completeness of its payment, insufficient powers of local governments in the field of land taxation, insufficient regulation of the rights and obligations of land owners, land users, territorial communities and other subjects of land relations, the lack of mandatory targeted distribution of land payment revenue, etc. problems in the field of land taxation necessitate the formation of new scientific approaches and further research on these issues. the issues of legal regulation in the field of land taxation have been studied by ye. alisov, this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 154 vol. 3 no. 1, 2022 o. bandurka, o. hetmanets, o. holovashevych, e. dmytrenko, o. drozd, o. kopylenko, i. krynytskyi, m. kucheriavenko, m. perepelytsia, o. tronko, y. tunyk, r . usenko, m. shulga and others. however, the need to improve legal mechanisms of land tax requires more detailed research. taxation of land has always been important for ukraine because land is a national treasure under the special protection of the state (constitution of ukraine, 1996). this constitutional provision emphasizes the extremely important role of land resources in all spheres of human activity and the need to create the most optimal organizational and economic conditions for their rational and efficient use. recognition of the uniqueness of land and its isolation from any other real estate necessitates the establishment of a special legal regime of its use. land resources in ukraine are a strategic source of economic development, and their taxation plays an important role in this process. land tax is an integral part of the tax system of ukraine, the system of local taxes and fees. it is also one of the most important sources of financial support for local governments, without which the successful development of territorial communities is impossible. proper collection of land tax is in the interests of territorial communities, on behalf of which local governments act. the successful functioning of the institution of local taxes and fees is an effective mechanism for creating prosperous territorial communities and a lever of development of the entire economic system of ukraine. the main normative legal acts regulating land taxation in ukraine are the tax code of ukraine (2011), the land code of ukraine (2002), the budget code of ukraine (2010), the laws of ukraine "on local self-government in ukraine" (1997), "on land lease"(1998), etc. the lands of ukraine include all lands within its territory, which are divided into nine categories in accordance with their final use (articles 18, 19 of the land code of ukraine) (2002). attribution of lands to a certain category is carried out on the basis of relevant decisions of local self-government or state authorities. the legislation stipulates that land use in ukraine is paid. the principle of payment for land, on the one hand, provides rational use and protection of land resources, and on the other hand, is a guarantee of budget revenues. legal relations in the sphere of land use are an important prerequisite for the emergence of the obligation to pay land tax. payment for land in relation to relations on land use is derivative in its nature. the legal mechanism of payment for land is built through the object of land legal relations. land relations are the basis and prerequisite for the emergence of the obligation to pay land tax (alisov, 2016) . the object of payment for land is a specific, individually defined and legally separate land plot (or its part), which is assigned to a particular subject of use in accordance with its intended purpose. thus, the content of the right to use land is the totality of the rights and obligations of the subjects of the relevant legal relations, which are formed regarding the use of a particular land plot. according to shulga m., certain legal land relations arise regarding this plot, through which the subjective right is realized, as well as the right of possession, the right of land use, and its internal management (shulga, 2019). in land and legal relations, the legal fact of possession or use by the subject of these legal relations of a particular individually defined land plot (land share) allocated for designated use is decisive (alisov, 2016). the ukrainian legislator uses the concepts of "land tax" and "land fee". to determine the legal meaning of these concepts is possible by analyzing the scientific views, norms of tax and land legislation. according to the tax code of ukraine (tcu), land tax is a mandatory payment made by owners of land plots and land shares, as well as permanent land users. land tax as a specific mandatory tax payment has a number of characteristics: a) local tax is set by the decisions of local governments (local councils), and all revenues from its payment are accumulated in the revenue part of local budgets; b) property tax – the object of taxation is real estate owned or used by the taxpayer, namely a land plot (owned or used) and / or a land share (owned only); c) direct (real) tax – payers of this tax are only those persons who own or use a particular land plot, regardless of whether such land gives them income, whether it is actually used by them; d) mandatory tax – in accordance with the provisions of paragraph 10.2 of article 10 of the tax code, the payment for land is mandatory until local councils establish a mandatory tax payment; e) integrated tax is a structural element of the payment for land (krigina, 2018). tax law defines the land fee as a compulsory payment within the real estate tax, which is levied in the form of land tax or rent for land in state and communal ownership (paragraph 147 of clause 14.1 of article 14 of the tax code of ukraine). consequently, the legal content of the terms "payment for land" and "land tax" are somewhat different in meaning. payment for land has a broader meaning and includes land tax. according to v. kryhina, application of the term "payment for land" is explained by the need to combine legal norms concerning the regulation of both land tax and rent. however, in some provisions there is a certain inconsistency in the terminology used (for example, the categories of "payment for land" and "land tax") (krigina, 2018). three seas economic journal 155 vol. 3 no. 1, 2022 according to ye. alisov, the term "payment for land" indicates an objective feature that determines the features of the legal regulation of this type of mandatory payments, and a direct link with special land use, in particular(alisov, 2016). land tax in one form or another exists in the vast majority of countries. as already mentioned, in ukraine land tax is obligatory to be introduced at the local level as an obligatory tax payment. 2. legal mechanism consider the legal mechanisms of land tax collection, the main components of which are the subjective and objective content of legal relations in the sphere of payment, the tax base for land payment, the rate of land payment, the procedure for calculating land payment, tax period, terms and procedure for calculating the amount and payment of land tax, term and procedure for filing a tax return. the tax code stipulates that the subjects of land tax are the owners of land plots, land shares and land users (article 269 of the tcu). based on the above, land tax payers can be differentiated by a number of classification features: depending on the legal status of the owner or user of a land plot into a) taxpayers – legal entities and b) taxpayers – individuals; depending on the specific property right, under which the land tax payer owns the object of taxation, into a) taxpayers – owners of land plots (land shares) and b) taxpayers – land users. thus, the owner of a land plot may be a legal entity or an individual who have acquired land ownership rights. a land user may be an individual or legal person that have been provided with the state and communal land plots for the use, including on lease terms (article 14 of the tcu). depending on the resident status, land tax payers can be divided into a) resident taxpayers; b) nonresident taxpayers; depending on the taxation system to which land tax payers belong, they can be divided into 1) taxpayers belonging to the general taxation system; 2) taxpayers belonging to the simplified taxation system. depending on the specifics of the object of ownership rights among land taxpayers can be distinguished: a) taxpayers – owners of land plots; b) taxpayers – owners of land shares. according to article 270 of the tcu, the objects of land tax are land plots and land shares. if the law clearly defines the concept of "land", the concept of "land share" as an object of taxation requires detailed analysis (tax code of ukraine, 2011). thus, article 79 of the land code of ukraine stipulates that a land plot is a part of the surface with fixed boundaries, a certain location and certain rights with respect thereto. the title to a land plot extends within its boundaries to the surface (soil) layer, as well as water bodies, forests and perennial plantings located on it, and also extends to the space above and below the surface to the height and depth required for construction of residential, industrial and other buildings and structures. the notion of "land share" is not properly defined in legislation. a land share is a special object of land relations, as it is not a specific plot with established borders, but only the right of the owner to receive such a plot. a land share as an object of land tax is only the right of its owner to demand separation from the land plot to be divided. so that ownership of the land share means belonging not of the land plot, but only the right of claim to provide the owner with such a land plot. at the same time, for example, article 81 of the land code of ukraine stipulates that citizens of ukraine "acquire property rights to land plots on the basis of… d) allocation in kind (on the ground) of their land share (land code of ukraine, 2002). to understand the essence of the concept of "land share" it is necessary to refer to the land code of ukraine, laws of ukraine "on land lease", "on the procedure for allocating land plots in kind (on the ground) to owners of land shares (units)", decree of the president of ukraine "on the procedure for distribution of land transferred to collective ownership of agricultural enterprises and organizations" (decree of the president of ukraine "on the procedure for sharing lands transferred to collective ownership by agricultural enterprises and organizations", 1995). for the first time the term "land share" was introduced in the land legislation of ukraine by the decree of the president of ukraine "on urgent measures for accelerating the land reform in agricultural production", which states that "land management organizations divide land transferred to collective ownership into land shares without isolating them in kind (on the ground)" and also states that "the right to a land share may be the object of purchase and sale, donation, production, inheritance, pledge." (decree of the president of ukraine "on urgent measures to accelerate land reform in the field of agricultural production", 2007) the concept of "land share" is directly related to the distribution of agricultural land owned by landowners on the right of collective ownership. thus, in accordance with the above-mentioned normative acts regulating the process of land distribution, a land share is the right to a conditional land share. the law defines the circle of persons entitled to a land share. the law of ukraine "on the procedure for allocation of land in kind (on the ground) to owners of land shares (shares)" defines the category of persons entitled to a land share (law of ukraine "on the procedure for allocation of land in kind (on the ground) to owners of land shares (shares)", 2003). three seas economic journal 156 vol. 3 no. 1, 2022 in order to ensure the exercise of the right to a land share, the owner of a land share shall be obliged to confirm such right. the main document confirming the right to a land share is a certificate of right to a land share indicating the size of the share in conditional cadastral hectares as well as in terms of value. 3. taxation of land fees the tax base for land payment is the normative monetary evaluation of land plots, taking into account the indexation coefficient and the area of land plots, the normative monetary evaluation of which has not been conducted. thus, the land tax rate may be calculated both with and without the normative evaluation of land. in this case the area of the respective land plots is used as the base. the tax rate is set at an appropriate rate depending on the category of land. thus, for land plots with a normative monetary evaluation, the rate should not exceed 3 percent of their normative monetary evaluation; for public lands – not more than 1 percent of their normative monetary evaluation; for agricultural lands – not less than 0.3 percent and not more than 1 percent of their normative monetary evaluation, and for the forest fund lands – not more than 139 percent of their normative monetary evaluation. in addition, the land tax rate is set at the amount of no more than 12 percent of the normative monetary value for land plots that are in the permanent use of business entities (except for the state and municipal ownership) (article 274 tcu). the law divides the rates of land tax for land plots, the normative monetary evaluation of which has not been conducted. thus, the tax rate for land plots located outside settlements or within settlements is set at no more than 5 percent of the normative monetary value per unit of arable land in the autonomous republic of crimea or the region, and for agricultural lands – not less than 0.3 percent and not more than 5 percent of the normative monetary value of arable land area in the autonomous republic of crimea or region, and for forest lands – not more than 0.1 percent of the normative monetary value of arable land area in the autonomous republic of crimea or region ( tax code of ukraine, 2011). the procedure for such evaluation is regulated by the law of ukraine "on land evaluation" and other regulations. according to the legislation, the normative monetary evaluation of land is the capitalized rental income from the land plot, determined according to the established and approved standards. such an assessment should be carried out in the case of determining the amount of land tax, determining the amount of rent for land of state and communal property, etc. decisions of councils on the normative monetary evaluation of land plots are officially published by the relevant local government body before july 15 of the year preceding the budget period in which the normative monetary evaluation of land or changes (planned period) are planned. otherwise, the norms of the relevant decisions shall be applied no earlier than the beginning of the budget period following the planned period. the duty of the central executive body implementing the state policy in the field of land relations is the annual calculation by the consumer price index for the previous year of the indexation coefficient of the normative monetary valuation of land, for which normative monetary valuation of agricultural lands appointment is indexed as of january 1 of the current year, which is determined by a clearly established formula (article 289 of the tcu). thus, the normative monetary evaluation of land is a prerequisite (characteristic) for determining the amount of land tax. land tax rates may be determined by other criteria as well. for example, depending on the location of the land plot the rates applicable to lands located within settlements and the rates applicable to lands located outside settlements can be distinguished; depending on the end use of land there are rates for public lands and rates for agricultural lands. maximum and minimum rates are established by the verkhovna rada of ukraine (krygina, 2018). local authorities approve the tax rates in the respective territory taking into account the marginal rates. thus, the tax rate is set at a rate not exceeding 12 percent of the normative monetary evaluation of land plots in permanent use of economic entities (except for state and municipal property). thus, with regard to land permanently used by business entities, local governments may set the rate from 1 to 12 (inclusive) percent of the normative monetary evaluation of such land (article 274 of the tcu). consequently, the law establishes marginal rates, as there are fixed minimum and maximum rates for land plots with or without normative monetary evaluation. the legislator establishes the minimum and maximum rates, within which the local authorities may set the rates when approving decisions on the amount of land tax rates in the respective territory. according to tokarieva k., the normative monetary valuation of land is a key factor for the determination of the appropriate tax rates. at the same time, in the context of european integration processes, it is necessary to consider the experience of countries where either mass or cadastral valuation of land is mainly used ( tokareva, 2019). 4. tax benefit it should be noted that the tax legislation provides for a system of benefits for the payment of land tax. according to article 30 of the tcu, the tax benefit three seas economic journal 157 vol. 3 no. 1, 2022 is a tax exemption provided by the tax legislation of the taxpayer from the obligation to accrue and pay tax or pay tax in a smaller amount on the grounds provided by the provisions of tax legislation. land tax exemptions are defined in articles 281 and 282 of the tcu. land tax exemptions can be divided into two main groups: land tax exemptions for individuals and land tax exemptions for legal entities. in turn, the following categories of persons are entitled to land tax benefits: a) disabled persons of the first and second groups; b) persons with three or more children under the age of 18; c) pensioners (by age); d) war veterans and persons covered by the law of ukraine "on status of war veterans, guarantees of their social protection"; e) persons recognized by law as victims of the chernobyl disaster. exemption from taxation applies to land plots for each type of use within the limits: a) for personal farming – in the amount of not more than 2 hectares; b) for the construction and maintenance of a dwelling house, farm buildings and structures (homestead land): in villages – not more than 0.25 hectares, in settlements – not more than 0.15 hectares, in cities – not more than 0.10 hectares; c) for the individual country house construction – not more than 0.10 hectares; d) for the construction of individual garages – not more than 0.01 hectares; e) for horticulture – not more than 0.12 hectares (articles 281, 282 of tcu). the need for the introduction of appropriate land plot boundary norms is caused by objective reasons and should be aimed at implementing the principle of social justice. in this case, we can indeed agree that it is hardly advisable to apply such a land tax benefit to surplus land plots, the title to which would belong to the specified category of citizens. since the purpose of this exemption is to promote the realization of the minimum and most important vital interests of the respective category of citizens. in order to stimulate economic turnover and protect the interests of owners (users) of land plots (land shares) that do not use them personally, lawmakers introduced appropriate benefits (article 281 tcu). thus, owners of land plots, land shares and land users are exempt from tax for the period of the single tax of the fourth group, provided the land plots and land shares are leased to the payer of the single tax of the fourth group. in this case, it stimulates the development of agriculture – payers of the fourth group were able to form a material (land) base for their own economic activities on a contractual basis, and citizens were given the opportunity not to pay land tax on land plots not used by them. in this case, it stimulates the development of agriculture – payers of the fourth group were able to form a material (land) base for their own economic activities on a contractual basis, and citizens were given the opportunity not to pay land tax on land plots not used by them. land tax benefits are also provided for legal entities, including sanatoriums and health facilities of public organizations of the disabled, rehabilitation facilities of public organizations of the disabled, public organizations of the disabled, bases for olympic and paralympic training, preschool and secondary schools of all ownership forms and sources of funding, institutions of culture, science, education, health care, social protection, physical culture and sports, which operate at the expense of the state or local budgets, state and municipal children’s sanatoriums, health and recreation facilities, etc. (article 282 tcu). thus, the establishment of relevant benefits is determined by the peculiarities of the legal status of such taxpayers and the social orientation of their activities. it should be noted that if the subjects subject to the land tax privilege lease out such land plots, buildings or structures, they lose the right to the privilege in respect of such land plots (including the land plots located under the respective buildings and structures). this means that under such circumstances the land tax will be paid on general grounds. this norm does not apply to budgetary institutions when they provide buildings, structures (their parts) for temporary use (lease) to other budgetary institutions, pre-school institutions, general education schools, regardless of ownership and funding sources. it is also possible to distinguish a "partial exemption" from the payment of land tax. thus, the provisions of the current tax legislation enshrine land tax benefits for land plots provided to railroads in the right-of-way; provided to mining companies for the extraction of minerals and development of mineral deposits. this "partial benefit" ensures that the land tax for the relevant category of land is collected in the amount of 25 percent of the total amount of land tax, i.e., ¼ of the amount of land tax, which is calculated in the manner prescribed by the current tax law. land tax benefits should be distinguished from the objectively conditioned exemption from payment of such tax in respect of certain types of land plots. 5. peculiarities of non-taxation of land the list of categories of land plots that are not subject to land tax has been directly formalized within the norms of article 283 of the tcu. thus, land tax is not paid for: a) agricultural lands located in the radioactively contaminated areas and chemically contaminated agricultural lands; b) agricultural lands that are being temporarily conserved or are in the stage of agricultural development; c) land plots of the state variety testing stations and variety divisions used to test varieties of agricultural crops; d) lands under public roads; e) land plots of agricultural enterprises three seas economic journal 158 vol. 3 no. 1, 2022 of all ownership forms and farms under young orchards, berries and vineyards before their fruiting, as well as hybrid plantations, gene pool collections and nurseries of perennial orchards; e) land plots of cemeteries, crematoria and columbariums; f ) land plots on which diplomatic missions are located; g) land plots provided for the construction and maintenance of religious and other buildings necessary to ensure the activities of religious organizations of ukraine (article 281 of the tcu). it should be noted that the introduction of land tax benefits is explained, first of all, by the specifics of the subjects to which they apply. thus, it is obvious that tax privileges directly affect the subjects of tax relations. however, it should be emphasized that exemption from taxation of certain categories of land is due to objective reasons associated with the object of tax relations, namely the specificity of this or that category of land. for this category of taxpayers the tax period for land tax can be less than 12 months. land owners and land users pay land tax from the moment of occurrence of the right of ownership or right to use land. in case of termination of ownership or use of land, the land fee shall be paid by such taxpayers for the actual period of ownership or use of land in a particular year. it should be noted that the current tax legislation provides for a different procedure for payment of land tax for legal entities and individuals. thus, legal entities shall pay land tax monthly within 30 calendar days following the last calendar day of the tax (reporting) month. as for the individuals, they are obliged to pay land tax within 60 days from the date of delivery of the tax notice of the decision. if the controlling body has not sent (not served) a tax notice of the decision within the time limits set by the tcu, individuals are released from liability for late payment of tax liability (article 287 of the tcu). control over payment of all taxes, including land fees, is entrusted to the tax authorities. other bodies do not have the right to check the timeliness, accuracy, completeness of accrual and payment of taxes and fees, including at the request of law enforcement agencies (article 41 of the tcu). the object of tax control in the field of payment for land is public relations arising with regard to calculation and payment of land tax. the subject of tax control in the field of land payment is correctness of tax calculation, completeness and timeliness of payment, accrual of financial sanctions, reliability, completeness and timeliness of submission of tax declarations. the task of tax control in the field of land fees is to achieve these results by collecting and using information necessary for tax control, prevention of violations of tax laws, checking compliance with the law, etc. 6. conclusions having analyzed the current legislation defining the legal mechanism of land tax payment, it should be noted that a number of norms of tax legislation do not meet the requirements of the time. the state of land taxation is determined by the lack of a balanced state policy in this area, unstable legislation, significant changes in land ownership. in our opinion, a significant problem is the lack of clearly defined principles of payment for the use of land, especially now, in the absence of a clear and transparent mechanism for evaluating land. the need to improve tax legislation in the field of land payment is due to social processes taking place in ukraine in connection with the decentralization reform, land reform, the opening of the land market. according to the author, it is necessary to expand the powers to regulate the collection of land tax by local governments, to establish a procedure for the targeted use of land tax revenues, to introduce tax incentives for small agricultural producers, to exclude rental payments for state and municipal land from taxation. it can also be noted the fact that the transfer of land management authority to the local level will improve the quality of land management. this, in turn, will increase tax revenues to local budgets, which is necessary for the development of rural communities in the context of increasing their autonomy within the framework of the decentralization reform. with regard to land tax, the legislator uses marginal rates as fixed minimum and maximum rates for land plots with or without normative monetary evaluation. once again, it should be emphasized that this position of the legislator is quite understandable and justified, since in fact the relevant limits are set, within which local self-government bodies may show some variability when approving decisions on land tax rates on the territory of a district. it should be emphasized that the normative monetary evaluation of land is a key factor in determining appropriate tax rates. land valuation is especially important under conditions of decentralization of power, which involves the alienation by territorial communities of their land, as well as on the eve of the formation of a market turnover of agricultural land, the formation of which is taking place in ukraine. references: konstytutsiia ukrainy: vid 28 cherv. 1996 r. no. 254k/96-vr [constitution of ukraine from june 28, 1996, no. 254k/96-vr] (n.d.). zakon.rada.gov.ua. available at: http://zakon5.rada.gov.ua/laws/show/254%d0%ba/ 96-%d0%b2%d1%80 (in ukrainian) three seas economic journal 159 vol. 3 no. 1, 2022 pro poriadok vydilennia v naturi (na mistsevosti) zemelnykh dilianok vlasnykam zemelnykh chastok (paiv): zakon ukrayiny [on the procedure for allocating land plots in kind (on the ground) to owners of land shares (units)] (2003). ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: https://zakon.rada.gov.ua/laws/show/899-15#text (accessed october 3, 2021). pro nevidkladni zakhody shchodo pryskorennia zemelnoi reformy u sferi silskohospodarskoho vyrobnytstva: ukaz prezydenta ukrainy [decree of the president of ukraine on urgent measures to accelerate land reform in the field of agricultural production]. ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: https://zakon.rada.gov.ua/laws/show/666/94#text (accessed october 4, 2021). tokarieva, k. (2019). normatyvna hroshova otsinka zemel: sutnist i znachennia dlia vyznachennia stavok zemelnoho podatku [normative monetary valuation of land: the essence and significance for determining land tax rates]. available at: https://ndipzir.org.ua/wp-ontent/uploads/2019/15.11.19/15_11_2019_(27).pdf (in ukrainian) podatkovyy kodeks ukrayiny: zakon ukrayiny [tax code of ukraine: law of ukraine] (2010). ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: https://zakon.rada.gov.ua/laws/show/2755-17#text (accessed october 25, 2021). zemelnyi kodeks ukrainy: zakon ukrainy vid 25.10.2001 r. no 2768-iii (2002). vidomosti verkhovnoi rady ukrainy, 3–4, art. 27 (iz zminamy) (accessed october 25, 2021). budget code of ukraine. no 2456-vi (2010, july 8). available at: http://zakon.rada.gov.ua (in ukrainian) pro mistseve samovriaduvannia: zakon ukrainy [on the local self-government: the law of ukraine] no. 280/97-вр (1997, may 21). zakon.rada.gov.ua. available at: https://zakon.rada.gov.ua/laws/show/280/97вр#n19 (in ukrainian) pro orendu zemli: zakon ukrayiny vid 06.10.1998 no.161-xiv [on lease of land: law of ukraine dated 06.10.1998, no. 161-xiv]. baza danykh "zakonodavstvo ukrayiny ". vr ukrayiny. available at: http://zakon.rada.gov.ua/laws/show/161-14 (in ukrainian) alisov, ye. (2016). do pytannia pro spetsyfichni pravovi formy platy za zemliu v ukraini [on the question of specific legal forms of payment for land in ukraine]. jurnalul juridic naţional: teorie şi practică. available at: www.jurnaluljuridic.in.ua/archive/2016/6/part_1/16.pdf desembre, 2016 (in ukrainian) shulha, m. (2019). zemelne pravo ukrainy. land law of ukraine. kharkiv: pravo. (in ukrainian) pro poriadok paiuvannia zemel, peredanykh u kolektyvnu vlasnist silskohospodarskym pidpryiemstvam ta orhanizatsiiam: ukaz prezydenta ukrainy [decree of the president of ukraine on the procedure for distribution of land transferred to collective ownership of agricultural enterprises and organizations]. ofitsiinyi sait verkhovnoyi rady ukrayiny [official web site of the verkhovna rada of ukraine]. available at: https://zakon.rada.gov.ua/laws/ show/720/95#text (2021, september, 30). kryhina, d. (2018). legal regulation of property taxes in ukraine. phd diss. kharkiv: yaroslav mudryi national law university. (in ukrainian) three seas economic journal 168 vol. 3 no. 1, 2022 corresponding author: 1 national university of life and environmental sciences of ukraine, ukraine e-mail: sverdanof@ukr.net orcid: https://orcid.org/0000-0002-1773-3919 doi: https://doi.org/10.30525/2661-5150/2022-1-24 wealth tax modifications: status and trends mykhailo sverdan1 abstract. the purpose of this article is to study the topical issues of wealth taxation, which is due to the existing stable trends of growth of wealth of market subjects. modern society is characterized by a marked increase in the wealth of individuals and corporations. especially the number of wealthy individuals is growing. the aim of the paper is to define the essence of wealth and prerequisites of its taxation. the theme of the article is conditioned by the necessity to reveal different forms and methods of wealth taxation. at the same time the aim of the article is not to study wealth, but its taxation. in this connection the general system of taxes on wealth is considered and the peculiarities of functioning of different types of tax on wealth are determined. methodology. a proper analysis of the social structure of society in the context of individual groups of taxpayers allows us to assess the effectiveness of the application of specific forms of wealth taxation. results. the issue and modern specificity of the system of wealth taxes is explored. wealth taxes exist in many countries in various forms. practical implications. the peculiarities of application of different wealth taxes to different categories of taxpayers are investigated. the economic essence of taxes on wealth is investigated. the specifics of functioning of various taxes on wealth in modern conditions are considered. value/originality. it has been established that taxation of wealth is a perfectly acceptable and even necessary form of fiscal influence of the state on society. a wealthy society is able to pay more taxes. this is important for the formation of state revenues. the economic potential of a large part of society is sufficient to pay a wealth tax. the peculiarities of functioning of different types of wealth tax for different taxpayers in different countries of the world are considered. the use of various taxes on wealth as a fiscal tool in the tax system of the state is proposed. improvement of fiscal mechanisms of wealth taxation is recommended. key words: wealth, taxation, economy, property, enrichment, well-being, wealth tax, lump sum tax, income tax, bank levy. jel classification: e62, h22 1. introduction modern society lives in an era of mass and increasingly progressive enrichment. this is the new beginning of humanity 's economic rise. this is the society of the rich and the super-rich (sverdan, 2020). this is a new stage in the economic progress of civilization. the state promotes the growth of social welfare. the correct attitude of the state is that society should be prosperous and individuals should be prosperous and wealthy. this is the essence of economic development and the social evolution of society. the progress of civilization unequivocally seeks to create a prosperous society. the modern market economy promotes efficient, socially oriented economic systems to ensure a general social level of well-being. the market ensures the creation of economic goods, which are distributed unequally in society. to some extent, this problem is solved by taxation of individuals who have a significant amount of accumulated property. a wealth tax is used for this purpose. there is always a category of wealthy people in society that motivates the imposition of a wealth tax. the wealthy stratum in society is very significant. generally, a wealth tax is levied on an individual's assets. wealth tax is levied on an individual's net wealth, or the market value of all assets owned minus liabilities. the ultra-wealthy give a portion of their wealth to the state by taxing it, which benefits the entire society (aaron, 1980; auerbach, 2017). a wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for wealth tax can vary (alm, 2011; hakelberg, 2021). in addition to personal wealth taxation, corporate wealth taxation will also be applied. this has been especially evident in recent years in the financial sector in the context of bank taxation. the taxation of the financial sector is gaining increasing support, many countries have introduced a bank levy or financial transaction tax into the national tax system, moreover, the european union is considering the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 169 vol. 3 no. 1, 2022 introduction of a financial transaction tax throughout the eu. it is important to identify and assess the opportunities and risks associated with the taxation of the financial sector depending on its different forms (bank levy on assets, liabilities or financial transaction tax). in general, there are 3 main approaches regarding the taxation of banks, to wit: – financial stability contributions (levied on liabilities and/or assets); – financial activities taxes (levied either on profits or remunerations); – financial transaction taxes (levied on trade in financial instruments such as stocks, bonds, derivatives, and currencies). 2. basics of wealth taxation the taxation of wealth has been known for a long time. in fact, wealth taxation is the main form of taxation of individuals. various forms and methods of taxation have emerged and evolved since the emergence of organized society and the state (head, 2009). the progress of civilization contributed to the improvement of taxes and fiscal technologies (hildreth, 1999). the socio-economic division of society in the hierarchy of stratification predetermines the application of different taxes. the main taxpayers are individuals. the tax system provides for the payment of a generally accepted set of taxes for the whole society. the wealthiest part of society is also obliged to pay a wealth tax. there are different categories of wealthy taxpayers in society. at the same time, there are different types of wealth tax. taxpayer status provides for the payment of the appropriate type of wealth tax. the economy and the market system provide all the necessary conditions and require the creation of wealth. a market economy provides virtually unlimited freedom in economic activity, the production of money and income, the consumption of goods, and the accumulation of wealth (crétois, 2019; hirst, 1935; kerr, 2017; peacock, 1997). so, there are no limits in wealth and accumulation and its taxation (salanié, 2002). at the same time, it provides scope for the application of a wealth tax in its various variations. there are various formulations in the definition of wealth and, similarly, corresponding varieties of taxes. in fiscal practice, there are various forms of taxation of society (førsund, 1985; scully, 2000; strayer, 1958). thus, taxation has no limitations, but the scope of taxation is limited. thus, two questions arise: (i) are there limits on spending and consumption? – no, only income and money; (ii) are there limits on enrichment and the accumulation of wealth? – no, only income and money. due to the presence of different categories of wealth, there are also different types of its taxation. the following classification of wealth taxes is proposed, which includes three main groups (strong, 1941): (i) on wealth in the process of acquisition; (ii) wealth in possession; (iii) wealth in the stage of consumption. mostly, the wealth tax in its different variations has to do with individuals. just few countries apply a wealth tax for businesses (belgium, canada). 3. wealth taxes for individuals fiscal practice has developed various effective forms of personal property taxation. wealth tax has an important place in their general system. at the same time there are different types of wealth tax in fiscal practice (pechman, 1966). the existence of different types of taxes makes the system of wealth taxation very diverse (peacock, 1981). each of them has its own fiscal specifics (sandford). wealth tax. the wealth tax is the basic form of taxation of the property of individuals. in its modern expression, it has passed through all the stages along with the progress of civilization. net wealth refers to the total value of a person's equity. a wealth tax is a tax based on the market value of assets owned by the taxpayer. wealth tax is levied on property owned by individuals. the tax usually applies to a person's net worth, which is assets minus liabilities. generally, liabilities are deducted from a person's wealth (value), so it is sometimes called a net wealth tax (net worth tax). net wealth taxes are assessed periodically (usually annually). the composition of the elements included in the tax base may be different for a given tax. this is the classical net wealth tax (net wealth tax). it has experience of application in many countries. in the context of tax reforms, many european countries have eliminated the net wealth tax from their tax spectrum. currently, three countries in europe levy a wealth tax: norway, spain and switzerland. many countries apply other forms of wealth taxes. in norway individuals pay both municipal and state wealth tax. the municipal wealth tax rate is 0.7 per cent and is based on assets in excess of the net capital tax base of nok 1.7 million for single/ unmarried taxpayers and nok 3.4 million for married couples. the state wealth tax rate is 0.25 per cent, based on assets in excess of the net wealth tax base of nok 1.7 million for single taxpayers/non-married couples and nok 3.4 million for married couples. for 2022, a new step for the state rate is introduced: for net wealth exceeding nok 20 million, nok 40 million for married couples, the rate is 0.4%. thus, the maximum wealth tax rate is 1.1%. in spain autonomous regions hold some authority over both tax allowances and tax rates. the wealth tax three seas economic journal 170 vol. 3 no. 1, 2022 is progressive with marginal tax rates ranging from 0.2% to 3.5%. in spain, net wealth of up to € 700,000 plus an additional € 300,000 for housing are tax-exempt. so, the total amount of tax-free property is € 1 million (individual deduction and discount on habitual dwellings). out of the three countries presented, spain applies the highest tax-free exemptions and highest tax rates. in 2009, the spanish government abolished taxes on net wealth, but reinstated this form of taxation on an annual basis from 2011. in switzerland, the wealth tax is the oldest. among the countries that apply a net wealth tax, the share received from net wealth taxes is the highest in switzerland – 4.75% of total tax revenues. in switzerland, the tax system is organized in a decentralized way, allowing for competition between the cantons. all property of private individuals worldwide is taxed, and taxes are levied in the canton or municipality in which the individual's tax domicile is located. reportable assets are as follows: (i) bank account balances, bonds, shares, funds and other equities; (ii) life insurances with a surrender value; (iii) cars, boats, airplanes, etc.; (iv) properties/real estate.; (v) other valuable assets, e.g. paintings, art collections, jewellery, etc. household goods are not subject to wealth taxation. most cantons in switzerland have no wealth tax for individual net worth less than chf 100,000 and progressively raise the tax rate on net assets with a top rate ranging from 0.03% to 1.09%. ad valorem tax. wealth can be considered as a separate element of an individual's property. an ad valorem tax ("by value") is a tax based on the assessed value of an item. ad valorem tax on real estate and intangible tax on financial assets are examples of wealth taxes. the most common ad valorem taxes are property taxes levied on real estate. however, such taxes can also be seen as taxes on luxury. previously, france had a classic tax on net wealth. but as of 2018, it was replaced by an estate tax, exempting all financial assets. another example in this context is italy. italy still has no net wealth tax, but financial assets are taxed at 0.2% and real estate abroad at 0.76%. high-income tax. wealth can be thought of as high income earned by individuals or groups. as a rule, additional low taxes are specially applied to such incomes. this practice of income taxation exists in portugal, france, greece, poland, the czech republic, and japan. the most striking example of modernity in the taxation of high incomes is france with a rate of 75%. lump-sum tax. wealth can be thought of as the presumed sum of a person's expenditures rather than his income and assets. this is its main difference from all other varieties of wealth taxation. in this case a lumpsum tax is levied. this practice of taxation exists in greece, italy, liechtenstein, switzerland. 4. taxation of wealth in the financial sector and bank levy the financial sector is a part of the economic system that is directly related to the activities of financial institutions, their operations and products. at present, taxes play almost the key role among other economic levers designed to regulate the financial sector. every state uses tax policy and its instruments to regulate positive and negative phenomena of the modern financial market. particular attention is paid to the fiscal mechanisms regulating the banking system, which is the central institution in the money market and in the financial sector of the economy. the purpose of this is to optimize money flows and trade in financial products and instruments. therefore, there remains a need to improve the tax mechanism for regulating the financial sector and especially the banking segment in its structure. the taxation of financial sector is being considered in various forms and different extend. the main forms of financial sector taxation are: financial transaction tax (ftt), financial activity tax (fat) and financial stability contributions (fscs, or bank levy). each of them is distinct from another. the experiences of many countries show a different design of these taxes, which not only causes varied consequences for financial institutions, but also for budget and economies. financial stability contribution (fsc) – a tax on a financial institution's balance sheet (most probably on its liabilities or possibly on assets) whose proceeds would most likely be used to create an insurance fund to bail out the industry in any future crisis rather than making taxpayers pay for bailouts. financial activities tax (fat) – a tax on the sum of bank profits and bankers' remuneration packages with the proceeds going into general government revenues. financial transactions tax (ftt) – a tax on a broad range of financial instruments including stocks, bonds, currencies and derivatives. types of financial transaction taxes are: securities transaction tax, currency transaction tax, bank transaction tax, automated payment transaction tax. the bank transaction tax can also be different. in particular, between 1982 and 2002 australia charged a bank account debits tax on customer withdrawals from bank accounts with a cheque facility. this tax was abolished in 2002 and 2005 as part of the goods and services tax reform package. some latin american countries have also experimented with bank transaction taxes. argentina introduced a bank transactions tax in 1984, and it was repealed in 1992. in 1993 brazil implemented a temporary "cpmf" tax at a rate between 0.25% and 0.38% to fund its health system; the tax lasted until 2007. in 1998 ecuador introduced the "impuesto a la circulacion de capitales" or tax on money circulation, at a rate of 1% of deposits made three seas economic journal 171 vol. 3 no. 1, 2022 into financial institutions. this tax was introduced in place of the income tax and was supposed to provide an amount of income at least equal to the income tax, without the administrative costs associated with such a tax. the initial result of the introduction of this tax was a massive withdrawal of cash from banks before the tax was levied and disintermediation, as economic agents avoided using banks to avoid the tax. revenues from this tax were about half of what was expected, and in mid-1999 the income tax was reintroduced and the tax rate was reduced to 0.80%. in 2000, the tax was repealed. among the member countries of the european union two basic models of taxation of the financial sector are used: a bank levy and a tax on financial transactions. different countries apply different models of taxation. liabilities or their individual items are the basis for taxation in most countries, while 4 countries decided to tax assets (hungary, poland) or risk-weighted assets (finland, france). in addition, the uk introduced an additional tax on bank profits in 2016. among the european union member states, only 3 countries introduced financial transaction tax (table 1). the financial transaction tax is quite popular around the world. in 1998 colombia imposed a financial transaction tax of 0.2%; currently the rate is 0.4% since 2004 india has imposed a securities transaction tax (stt); the rate on sales and purchases made through a recognized national stock exchange is 0.1% payable by the seller, plus 0.1% payable by the buyer. in 2003 the peruvian government introduced a 0.1% general financial transaction tax on all foreign currencydenominated incoming wire transfers regardless of their country of origin, to raise finance for the education sector. in taiwan, the securities transaction tax (stt) is imposed upon the gross sales price of securities transferred and at a rate of 0.3% for share certificates issued by companies and 0.1% for corporate bonds or any securities offered to the public. before 1999, japan levied a transaction tax on various financial instruments, including debt and equity instruments, but at different rates. the tax rates were higher on stocks than on debt and bonds. the tax was eventually repealed as part of the "big bang" of financial sector liberalization in 1999. there were the following taxes: exchange tax (1893–1999), securities transfer tax (1937–1950), securities transaction tax (1953–1999). a bank tax (bank levy) is different from a financial transaction tax. a financial transaction tax is a tax on a specific type (or types) of financial transactions for a specific purpose (or purposes). the term is most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. however, it is not a tax on the financial institution itself. rather, it is levied only on specific transactions that are determined to be taxable. if an institution never conducts a taxable transaction, it will never be taxed. moreover, if it conducts only one such transaction, only that transaction will be taxed. as such, this tax is neither a financial activities tax (fat), nor a financial stability contribution (fsc). the bank levy dominates the system of taxation of banks (table 2). in most countries, the fiscal objective of the bank tax prevails. in some countries, the main purpose of the tax was to ensure the stability of the banking sector and to contribute to a special stabilization fund (slovakia, sweden), a restructuring fund (germany), or a deposit guarantee fund (belgium). some countries (austria, cyprus) have also created stabilization funds, but once the target volume of funds is reached, the revenues will go to the treasury. in many countries, the bank tax is levied on the basis of liabilities or assets. however, some countries have decided on a different tax base. for example, france taxes the minimum amount of capital required to meet regulatory requirements. belgium has a fairly extensive tax system in the financial sector, which pays a number of specific (high) fees: – the financial stability contribution or fsc is a charge levied by the national bank of belgium to ensure the stability of the financial system. it is calculated on the total amount of liabilities in the balance sheet, excluding core capital and deposits. the fee is 0.035%; table 1 financial transaction tax in european union member states country year tax base tax rates france 2012 – equity issued by french firms with market cap > €1bn – high frequency order cancellations or modifications – cds derived from eu sovereign debt 0.2% 0.01% 0.01% italy 2013 – equity (issued in italy) – equity traded otc – high frequency trading (hft) on equity (issued in italy) – derivatives and hft of derivatives 0.1% 0.2% 0.02% lump sum hungary 2013 – bank transfers, payments, direct debits, deposits – withdrawals 0.3% 0.6% three seas economic journal 172 vol. 3 no. 1, 2022 – the annual levy on financial institutions, the so-called subscription tax, is calculated on "eligible deposits", in other words on all savings deposits that might be eligible for the deposit guarantee (dgs) up to €100,000 per saver and per bank. in 1996 the subscription tax was 6 basis points, but in 2007 it was increased to 8 basis points. investment funds (beveks/ sicavs) and branch-23 products are also subject to subscription tax; – the levy for the deposit guarantee (dgs) is the "insurance premium" paid by financial institutions for the deposit guarantee up to €100,000 provided by the public authorities. the dgs consists of a recurrent part (that is always owed) and a non-recurrent part (that does not recur each year). banks, but also branch-21 products, are subject to dgs contributions; – the loan-to-deposit tax was introduced in 2012. it has the same taxable base as the subscription tax, but the charge varies: the charge fluctuates between 3 and 12 basis points according to whether the financial institution has more or less loans in proportion to its deposit base. in addition to taxes paid by financial institutions, there are also taxes or fees that are levied as a result of their intervention. these include taxes on financial products or taxes related to employment in the sector. at the end of 2020, the belgian federal government reached an agreement to introduce a new annual tax on securities accounts ("solidarity contribution"). the conditions for the operation of the securities account tax are as follows: – the tax is to apply to securities accounts held by resident and non-resident individuals, companies, and legal entities (including legal constructions subject to the "cayman tax"); – exemptions will be available for certain financial institutions that hold securities accounts for themselves and for non-residents holding their own accounts with a "central securities depository " or with an account licensed by the national bank of belgium "deposit bank" that performs similar functions; – the new tax concerns all securities (including cash on the securities account) if the average value of the securities account exceeds €1 million, with the tax determined based on the entire average value; – the tax rate of 0.15% will apply on the average value of a securities account. in the u.k., the bank levy (stability fee scheme) has been in place since 2011. the uk is one of the first european countries to effectively use the bank levy. the level of taxation of banks is low, roughly at an average level, compared to the countries of the european union as a whole. despite this, the bank levy has a small but definite fiscal importance in government tax revenues (table 3). table 2 bank charges in the european union member states and the united kingdom country tax rate tax base year purpose austria 0.024%-0.029% total liabilities net of equity and insured deposits 2011 the stability of banking sector, fiscal belgium 0.035% various tax bases depending on size of institution, risk, and destination of tax payments 2012 the stability of banking sector cyprus 0.15% all deposits excluding interbank deposits 2011 the stability of banking sector, fiscal finland 0.125% total amount of risk-weighted assets 2013 fiscal france 0.0642% minimum regulatory capital requirement 2011 fiscal germany 0.02%-0.06% balance sheet (liabilities) 2011 the stability of banking sector greece 0.12%-0.60% value of the credit portfolio 1975 the stability of banking sector, fiscal hungary 0.15%-0.20% total assets net of interbank loans 2010 fiscal iceland 0.145% total debt 2011 the stability of banking sector ireland – deposits 2014 the stability of banking sector latvia 0.10% total assets 2011 fiscal netherlands 0.033%-0.066% total liabilities net of equity and insured deposits 2012 fiscal poland 0.44% total value of assets 2016 fiscal portugal 0.01%-0.11% various tax bases 2011 fiscal romania – liabilities net of deposits 2011 the stability of banking sector slovakia 0.20% total liabilities net of basic capital 2012 the stability of banking sector slovenia 0.10% total assets 2011 the stability of banking sector spain – deposits 2014 the stability of banking sector, fiscal sweden 0.05% total liabilities net of equity and insured deposits 2015 the stability of banking sector united kingdom 0.05%-0.10% total liabilities net of insured deposits 2011 fiscal three seas economic journal 173 vol. 3 no. 1, 2022 table 3 united kingdom – bank levy year total tax revenues, £ financial stability contribution, £ fsc, % of ttr 2011 545 571 1 899 0.35 2012 549 839 1 641 0.30 2013 568 769 2 352 0.41 2014 589 770 2 853 0.48 2015 611 151 3 369 0.55 2016 646 868 3 120 0.48 2017 680 021 2 568 0.38 2018 704 364 2 613 0.37 2019 725 615 2 523 0.35 2020 692 207 2 250 0.33 * oecd statistics some countries have still abolished financial stability fees. in latvia, the bank tax was introduced in 2011 and was levied on the amount of assets at a rate of 0.1%. however, in latvia, the bank tax was abolished in 2020. in 2012, the slovak financial stability contribution was introduced. by the end of 2020, the tax on bank liabilities after the capital deduction was supposed to expire. despite this, slovak lawmakers voted in november 2019 to extend the tax indefinitely and increase the rate from 0.2% to 0.4%. both the slovak national bank and the european central bank criticized the plan. the central bank predicted in its november 2019 financial stability report that the tax increase would reduce bank revenues by 33%. the bank levy in slovakia was repealed in january 2021. however, while it was in effect, the covid-19 pandemic continued, and slovak politicians tried to lower bank taxes to provide more financial support to businesses and public sector investment programs. in return for lenders' assistance in funding the country 's economic recovery from the pandemic, the slovak government approved the removal of a special tax on bank deposits. banks agreed to provide annual credit funding increases of €500 million for state investment projects and €1 billion for corporate and individual loans. the financial potential of banks is the most significant in the modern financial sector of the economy; it has been created and strengthened over the centuries and has been particularly evident in recent decades. the variety of financial products and financial operations allows banks to carry out a very wide range of financial activities. this creates an appropriate platform for the application of different forms of taxation of banks: individual transactions, instruments, returns and wealth in general. thus, different types of bank wealth taxation can be used. the wealth tax is quite acceptable in today 's environment for both individuals and business structures. this also applies to financial institutions. the wealth tax is effectively implemented by the example of banks. at the same time, there are other institutions in the financial sector with enormous capital, income and wealth. these include various financial and insurance companies and others. perhaps it is also appropriate to apply some mechanism of wealth taxation to such institutions. 5. conclusions the progress of society is inherently oriented toward economic growth and wealth creation. wealth is the stimulus for economic development. wealth is a normal phenomenon in economics (sverdan, 2021). the absence or lack of motivation to create wealth distorts the economy and significantly changes the trajectory and goals of human development. wealth is not just a formal phenomenon in economics. wealth is a desirable and necessary phenomenon for the economy. wealth is both an achievement as a result of economic activity and an incentive to stimulate economic activity and economic growth. the market and the market system are designed in such a way that they themselves provide for and require the creation of wealth. otherwise, the essence of economics becomes significantly distorted and turns into a primitive model of nominal existence of society, built on the expenditure of economic resources without receiving an increment of economic benefits in the future. the market involves increasing economic potential and creating additional economic goods that motivate the formation, accumulation, and growth of wealth. this is what the market system and people's purposeful, productive economic activity is for. the level of wealth achieved is an indicator of wellbeing in society. at the same time, wealth has social significance, which is realized through its taxation. for this purpose various forms of wealth taxation are applied. the wealth tax is the most variable in modern tax systems because it is often subject to various modifications. the changes are most often not nominal adjustments to individual elements, but the transformation of the tax model itself and the introduction of its new or updated fiscal structure, depending on the essence of the concept embedded in the economic content of wealth. this explains why in modern market conditions there are various models of wealth tax, which over time are also optimized, modified and adapted as much as possible to the specific socio-economic situation. wealth tax has quite significant areas and ways of application. a wealth tax can be introduced in any country, depending on the state's fiscal intentions. three seas economic journal 174 vol. 3 no. 1, 2022 references: aaron, h. j., & boskin, m. j. 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(2021). wealth: the economic prerequisites of taxation. three seas economic journal, 2(1), pp. 71–77. three seas economic journal 1 vol. 3 no. 3, 2022 1 department of management, universitas methodist indonesia, indonesia (corresponding author) e-mail: antonmethodist@gmail.com this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-3-1 poverty perspectives and reduction strategies in indonesia anton atno parluhutan sinaga1 abstract. the purpose of this study is to identify the poverty perspective and poverty alleviation strategies in indonesia. poverty is one of the problems still facing indonesia. given that the problem of poverty in indonesia is a complex and multifaceted problem, poverty reduction efforts should be carried out in a comprehensive manner, covering various aspects of people's lives and implemented in an integrated manner. it is important to know what factors influence poverty for the benefit of society, people and the state. the aim of this study was to identify the factors that cause poverty and ways to overcome them. the results of previous literacy studies show that poverty is influenced by many factors. one of them is micro-poverty caused by unequal distribution of resource ownership, which leads to unequal distribution of income. the problem of poverty is a challenge that has been going on for a long time until today. in fact, many poverty reduction programs have been implemented by the government, but have not brought significant changes. poverty reduction programs are implemented in many countries around the world. the development strategy elaborated by the indonesian state has so far been based on high rates of economic growth. according to the forecasts of high rates of economic growth, income is distributed unevenly among all segments of the population, there is an imbalance between growth and equity. observing some mistakes of the poverty reduction paradigm, where the analysis should bring to the forefront the variables that are significant for poverty reduction, exactly those variables that are not significant, so the strategies that should be adopted to overcome poverty: should also not only prioritize the economic aspect, but also pay attention to other dimensions; to increase the capacity and productivity, the chosen strategy is to increase the basic ability of the poor to increase income; involvement of the poor in the whole process of poverty reduction; empowerment strategy. people-centered development approach as a paradigm of decentralized policy is very relevant in overcoming social problems, including poverty. key words: poverty, strategy, alleviation, formulation, society. jel classification: d01, d02, d04, r10, r11 1. introduction poverty is still a big issue in indonesia's history as a country. in a country with poor governance, there is no big problem anymore except poverty (arsyad, 2012). poverty results in millions of children not being able to access quality education, difficulties in financing health care, absence of savings and investment, lack of access to public services, no employment opportunities, poor social security and household protection, intensified urban mobility, urbanization, and worse, poverty prevents millions of people from meeting their needs, including food, clothing, shelter and limited means of transportation. poverty leads to the fact that people are ready to sacrifice everything. poverty is a condition in which a person is deficient, either materially or physically, or one who is unable to fulfill the lowest standard of living and is unable to achieve the minimum level of goals that have been set. these goals can be in the form of consumption, freedom, the right to get something or just enjoy life, etc. ( jonaidi, 2012). poverty is a problem faced by all countries, especially in developing countries such as indonesia (primandhana, 2022). poverty is a limitation borne by an individual, a family, a community or even a country, which causes discomfort in life, threatens law and order and justice, as well as the loss of generations and a bleak future for the nation and the state. this understanding is broad, it was said that poverty is associated with discomfort in life (ferezagia, 2018). in all spheres, people are always marginalized because they cannot equate their conditions with those of the surrounding society. overcoming poverty is one of the tasks of the government, whether it is the central three seas economic journal 2 vol. 3 no. 3, 2022 or regional government, which jointly fulfill the task of prosperity of the people, as regulated in the law. poverty alleviation must be taken seriously, which means that it includes all the causes of poverty. some of them that are part of the fight against poverty that need further action and improvement in their implementation include increasing access to credit for the poor, raising the level of education of the population, increasing employment opportunities, prosperity of the people and meeting all aspects of needs, with the hope that poverty can be somewhat overcome (prawoto et al., 2009). one important aspect of supporting poverty reduction strategies is the availability of accurate poverty data. when such data is available, the government can make decisions about what to do to respond. in addition, available data can force the government to compare poverty levels from year to year. ([bps] central bureau of statistics, 2021b) overall, numerical poverty in indonesia has good quantitative and percentage performance for the period from march 2010 to march 2021, except for september 2013, march 2015, march 2020 and september 2020. further in descending order. figure 1. number and percentage of poor population in indonesia, march 2010 – march 2021 source: statistical indonesia, bps, 2021 table 1 number and percentage of poor people in indonesia by region march 2020 – march 2021 region/year number of poor people (million people) percentage of poor population (%) (1) (2) (3) urban march 2020 11.16 7.38 september 2020 12.04 7.88 march 2021 12.18 7.89 rural march 2020 15.26 12.82 september 2020 15.51 13.20 march 2021 15.37 13.10 urban + rural march 2020 26.42 9.78 september 2020 27.55 10,19 march 2021 27.54 10,14 source: compiled according to the national socio-economic survey (susenas) march 2020, september 2020 and march 2021 three seas economic journal 3 vol. 3 no. 3, 2022 increase in the number and share of poor population during september 2013 to march 2015. rising prices of daily necessities due to higher fuel prices. on the other hand, an increase in the number and proportion of poor people during march 2020 and september 2020 due to the covid-19 pandemic that hit indonesia. change in poverty rate from march 2010 to march 2021. ([bps] central bureau of statistics, 2021a) in march 2021, the number of poor people in indonesia reached 27.54 million people. compared to september 2020, the number of poor people decreased by 0.01 million. on the other hand, compared to march 2020, the number of poor people increased by 1.12 million. the share of the poor population in march 2021 was 10.14 percent, which is 0.05 percentage points less than in september 2020 and 0.36 percentage points more than in march 2020. in terms of settlements, from september 2020 to march 2021, the number of poor in urban settlements increased by 13.81 thousand people, and in rural areas decreased by 145 thousand people. the urban poverty rate increased from 7.88 percent to 7.89 percent. at the same time, in rural areas it decreased from 13.20% to 13.10%. one of the ways to overcome poverty is economic growth (kuncoro, 2013). economic growth is the economic process in a country that is experiencing positive growth or moving towards better conditions for the country. to improve the economy in a country what the government should do is: creation of competent human resources increase in national income. in addition, the government should also focus on the natural resources available to manage competent human resources. if the competence of human resources is good, then the development process will be faster, and hence economic development will increase, and it is possible to raise the poverty level so that the population does not increase. indonesia's poverty reduction strategy has so far focused only on economic growth. high. economic growth does not follow an equitable distribution of income for all classes of society. the mechanism is actually considered according to the increase of capital accumulation and the development of an economic system capable of spreading equal prosperity. the purpose of this study is to identify the poverty perspective and poverty alleviation strategies in indonesia. 2. literature review. poverty ([bps] central bureau of statistics, 2019) poverty is defined as: less prosperous conditions or status of rupiah (indonesian rupiah) per capita per month. on the other hand, the minimum physical needs (kfm) are used as a benchmark (clothing, housing, the amount of calories, proteins, vitamins and other minerals needed) that ensure a decent life for workers. consumer demand should satisfy 2100 calories per day (food group) plus needs (non-food) that include at least housing, clothing, health and education (rini & sugiharti, 2017). kotze (kuncoro, 2010) states that the poor have a relatively good ability to obtain resources from existing opportunities. although external assistance is sometimes used, it is not always guaranteed, so people depend on external support. this approach to empowerment is considered unsuccessful because no community can live and prosper if it is isolated from other community groups. such isolation breeds passive attitudes and the situation becomes even worse. (arifin, 2020) argues that poverty is a completely limited situation that arises not by the will of the person concerned. a population is considered poor if it is characterized by low levels of education, productivity, income, health, nutrition and well-being of life, indicating a circle of powerlessness. poverty can be caused by limited available human resources, both through formal and non-formal education, which in turn has the consequences of low levels of informal education. more emil salim (arsyad, 2012) suggests five characteristics of the poor. five characteristics of the poor: 1) they do not have their own factors of production; 2) they are not able to acquire productive assets on their own; 3) the level of education is usually low; 4) many of them do not have housing; 5) there are relatively many young people who do not have skills or appropriate education. (prawoto et al., 2009) poverty is multi-dimensional. this means that human needs vary, so poverty also has many aspects, including: 1) primary aspects in the form of: poor assets, social and political organization, knowledge and skills; 2) secondary aspects include: social networks, sources of finance and information. 3. causes of poverty and its characteristics there are many explanations for the causes of poverty. the mass poverty that emerged in many newly independent countries after world war ii focused on the underdevelopment of the country 's economy as the root of the problem. the population of the country was poor (kuncoro, 2013; suripto & subayil, 2020), as it depended on the subsistence agricultural sector, traditional production methods, which were often accompanied by apathy towards the environment. sharp, et.al (arsyad, 2012; kuncoro, 2010) tries to identify the causes of poverty from an economic point of view. first, at the micro level, poverty arises three seas economic journal 4 vol. 3 no. 3, 2022 from unequal ownership of resources, which leads to unequal distribution of income. the poor have only limited and low quality resources. second, poverty arises from differences in the quality of human resources (primandhana, 2022). low quality of human resources means low productivity, which in turn lowers wages. low level of human resources is caused by bad education, disadvantage, discrimination or inheritance. finally, poverty arises from differences in access to capital. these three causes of poverty lead to the nurkse's vicious circle theory of poverty (kuncoro, 2013), the existence of underdevelopment, market imperfections and lack of capital cause low productivity. reduced labour productivity leads to low incomes that they receive. low income will have consequences for poor savings and investment. low investment leads to underdevelopment and so on. developing countries still have certain peculiarities, especially difficulties in managing their domestic market to transform it into a more advanced competitive market. when they are unable to manage economic development, there may be a tendency to capital shortage, followed by low productivity, lower real income, low savings and reduced investment, so that the country is again locked in a state of capital shortage. and so on, in a circle. therefore, all efforts to combat poverty should be aimed at breaking this circle and this poverty trap. (pateda et al., 2019; zuhdiyaty & kaluge, 2018) describes that the emergence of poverty is related to the culture in which a society lives, injustice in the ownership of factors of production and the model of development approach adopted by a country. robert chambers (rachmawati, 2011; zuhdiyaty & kaluge, 2018) emphasized that the factors that cause poverty are: entanglement in poverty, loss of rights or wealth that is difficult to recover, which can be caused by the need for pressure that exceeds its threshold of potency, such as expenses that were calculated earlier but the amount was too large, or the sudden encounter with a severe crisis. usually the need that drives a person into poverty has to do with five things: ordinary obligations, distress, physical incapacity, unproductive expenditures, and extortion. and from the above description, it can be seen that the factors that cause poverty are internal factors in the form of immediate needs that need to be met, but not having sufficient ability to manage the resources available to them (insufficient skills, minimal education, and others). external factors in the form of natural disasters, such as this economic crisis, and lack of partiality in the form of policies that provide opportunities and chances for the poor. although experts offer many opinions on the causes of poverty, there are at least two types of theories that are commonly used to explain the roots of poverty, namely marginalization theory and dependency theory(usman), apathy, fatalism (arifin, 2020; tarigan et al., 2020). the poor, their characteristics tend to be weak in their ability to do business and have limited access to economic activity, so they are increasingly left behind other communities with higher potential. meanwhile (nadia ika purnama, 2017; pateda et al., 2019; siagian, 2018) describes various ways of measuring poverty with different standards, while taking into account two categories of poverty levels, as follows: first, absolute poverty is a condition in which a person's income level is insufficient to meet basic needs such as food, clothing, shelter, health, and education; second, relative poverty is a calculation of poverty based on the proportion of income distribution in a particular area. this type of poverty is referred to as relative poverty because it is related to the distribution of income among social strata. chambers (kuncoro, 2010) suggests five characteristics of disadvantage that surround poor people or poor families, including: poverty, physical weakness, isolation, and powerlessness. ( jonaidi, 2012; kuncoro, 2013) argues about the profile of poverty as follows: the problem of poverty is not only a welfare problem, it contains six causes, among which is a problem of vulnerability. poverty means that access to various employment opportunities is closed because production relations in society do not allow participation in the production process. problems of mistrust, feelings of powerlessness, emotional and social in the face of the village elite and bureaucrats who make decisions about him without allowing him to actualize himself, thereby rendering him helpless. poverty also means spending most of one's income on the consumption of food of limited quality and quantity. a high dependency ratio, due to the large number of families. further (rachmawati, 2011) put forward five characteristics of the poor, among others: lacking their own factors of production, unable to obtain productive assets by their own efforts, educational attainment generally low, many lacking amenities, among them relatively young and lacking skills or education. understanding the characteristics of poverty is necessary to know what policy strategies are relevant to poverty reduction efforts. ([bps] central bureau of statistics, 2019) give a specific formulation of what the main indicators of poverty are: 1. the area of the residential building is less than 8 m2 per person. 2. the type of living floor is of cheap ground/bamboo/ wood. 3. residential wall types made of bamboo/rumbia/ low quality wood/unplastered walls. three seas economic journal 5 vol. 3 no. 3, 2022 4. have no defecation devices or together with other households. 5. domestic light sources do not use electricity. 6. sources of drinking water are wells/unprotected sources/rivers/rainwater. 7. the fuel for daily cooking is wood/coal/kerosene. 8. eat meat/milk/chicken only once a week. 9. buy only one new set of clothes per year. 10. able to eat only once/twice a day. 11. unable to pay the cost of treatment in hospitals. 12. sources of income for the head of household are: farmers with 500 m2 or more of land for agricultural workers, fishermen, construction workers, plantation workers and or other jobs with an income below idr 600,000 per month. 13. higher education of the head of household: no school / did not finish elementary school/finished elementary school. 14. do not have savings/goods that can easily be sold for at least rs. 500,000, such as credit/non-credit motorcycles, gold, livestock, motor boats or other capital goods. (sari, 2019; tarigan et al., 2020) there are many definitions of poverty in the literature, but they can basically be divided into three definitions of poverty. absolute poverty, relative poverty, cultural poverty. a person is considered truly poor if his or her income is below the poverty line and insufficient to meet the basic necessities of life: food, clothing, health, housing, and education. (pratiwi et al., 2020; rini & sugiharti, 2017) people who are classified as relatively poor actually live above the poverty line, but still below the capabilities of the surrounding community. cultural poverty is closely related to the attitudes of people or community groups who do not try to improve their standard of living, even if other parties try to help them. in addition, the poverty line is a measure of a community 's average ability to meet minimum living needs. 4. research methods this research is a study using the literature review or literature review method. a literature review is a comprehensive review of research done on a particular topic to show the reader what is already known about the topic and what is unknown, to find a rationale for the research done or ideas for further research (denney & tewksbury, 2013). literature research is the process of finding theoretical references in the relevant literature for various problems or cases being studied. these references were obtained and found from journals, research report articles, and internet websites related to the study of poverty (sugiyono, 2017). the end result of the literature-based research is a response to the formulation of the problem with a selection of highly relevant literature. the goal is to reinforce the problem and as a theoretical basis for research, as well as a basis for research related to concepts related to poverty itself (moleong, 2017). 5. results and discussion previous literacy research shows that many factors influence poverty: first, at the micro-level, poverty arises from unequal patterns of resource ownership that lead to unequal income distribution. the poor have only limited resources and of poor quality. second, poverty arises from differences in the quality of human resources. low quality of human resources means low productivity, which in turn leads to lower wages. the low quality of human resources is due to low levels of education, disadvantageous fate, discrimination, or heredity. third, poverty arises from differences in access to capital (kuncoro, 2013). underdevelopment, market imperfections, and lack of capital lead to low productivity. low productivity leads to low income that they earn. low income leads to low savings and investment. low investment leads to underdevelopment, and so on. the fourth causal factor is the workforce, which includes poor quality labor education, low skill levels, lack of productivity, and low wages (bodea and herman) (arifin, 2020). the fifth factor is natural disasters, which include famine and drought (rini & sugiharti, 2017). the sixth factor is inflation, which includes economic growth, export-import, exchange rates and interest rates. the seventh factor is government policy, which includes subsidies, taxes and government spending (ferezagia, 2018; pateda et al., 2019; suripto & subayil, 2020). the eighth factor is the environment, which includes unfavorable natural conditions, population, geographic location, and isolation. and finally, the educational factors, which include education with no clear direction, poor educational outcomes, unequal education, and poor quality of education (arifin & wijaya, 2016; kuncoro, 2010, 2013). 6. addressing poverty issues (nafi'ah, 2021) understanding and solving the problem of poverty is certainly interesting for the observation of economic theory, to break the vicious circle of poverty can improve the skills of human resources, increase investment capital and the development of technology. (primandhana, 2022) understanding and solving the problem of poverty is certainly interesting for the observation of economic theory, to break the vicious circle of poverty can improve the skills of human resources, increase investment capital and the development of three seas economic journal 6 vol. 3 no. 3, 2022 technology (zuhdiyaty & kaluge, 2018). indonesia's response to poverty is still dominated by the economic zone and does not address other aspects such as social, cultural, legal, political and even religious. paradigmatic errors in understanding poverty, of course, lead to the wrong analysis. that is, the variables that are important for overcoming poverty need to be taken into account. on the other hand, it contains irrelevant variables, so it does not provide biased estimates and expected results. the human-centered approach to development is very relevant as a policy paradigm for decentralization in addressing social problems, including poverty. this approach recognizes the importance of community capacity to increase independence and internal strength through the ability to exercise internal control over tangible and intangible resources. korten (arifin & wijaya, 2016; jonaidi, 2012) states that there are three basics for carrying out structural and normative changes in people-centred development: 1. focusing public policy thinking and action on creating conditions that encourage and support people's efforts to meet their own needs and solve their own problems at the individual, family, and community levels. 2. develop structures and processes for organizations that operate under the rules of organizational systems. 3. develop systems of production-consumption organized according to the territorial principle based on the principles of local ownership and control. (arsyad, 2012; kuncoro, 2010) the humancentered model of development, however, places more emphasis on empowerment. this model views people's creative initiatives as the most important resource for development and views people's material and spiritual well-being as the goal to be achieved in the development process. strategic research on community empowerment, whether economic, social, cultural or political, is important as a contribution to reformulating the human-centered development model. this reformulation provides a tremendous opportunity for participatory community develop-ment. in participatory development, empowerment is one strategy that is considered appropriate if the determinants are conditioned in such a way that the essence of empowerment is not distorted. (prawoto et al., 2009) given some of the shortcomings of the anti-poverty paradigm, there are strategies that need to be implemented to overcome poverty. poverty is multifaceted, so anti-poverty programs should not only prioritize economic aspects, but also pay attention to other aspects. this means that in addition to prioritizing basic needs, we should strive to overcome non-economic poverty. poverty reduction strategies should focus on the reduction of cultural values. moreover, effective antipoverty measures must overcome structural and political barriers. 1. the strategies chosen to increase capacity and productivity are health and education, business skills improvement, technology, network expansion, and market information. 2. the decision-making process, the involvement of the poor in the whole process of poverty reduction, which begins with planning, implementation, monitoring and evaluation. 3. empowerment strategy. the rural people's group, led by a group of experts and ngo activists, emphasized that if the government wants to give freedom to these groups to self-regulate, the poor are a group that can develop on their own. in truth, the data on poverty, both quantitative and qualitative in terms of community behavior, capacity, and competitiveness, are local government data. the regional strategy creates a climate that allows the community to develop, strengthens the potential and power of the community, as well as a model for community empowerment. 4. the strategy of direct assistance (blt) to the poor that has been implemented so far is very shortterm. the developed strategy, which has a long-term orientation, is actually indirect assistance, which expands opportunities. e.g. programs to improve labor/business abilities and skills through education and job training, business networking, and market information, help with working capital. (arifin, 2020; arifin & wijaya, 2016) this condition reflects the need for an urgent change in the role of government from that of provider of social services to that of facilitator, mediator, coordinator, educator, mobilizer, support system and other roles that are more focused on indirect services. the role of local organizations, community organizations, ngos and other community groups is more encouraged as agents of change and the provision of social services to vulnerable groups or society as a whole. in this position, social problems are solved by the community with the assistance of the government. (nafi'ah, 2021; prawoto et al., 2009) regarding empowerment strategies, it is argued that there are three main empowerment strategies in social change practice, namely traditional, direct action, and transformation: 1) traditional strategy, assumes knowledge and free choice of best interests in different circumstances, 2) direct action strategy, requires dominant interests that are respected by all parties involved, in terms of the changes that may occur, and 3) transformational strategy, shows that mass education in the long run is necessary before identifying self-interest. each strategy consists of theories, concepts, and skills closely related to each strategy, which are then broken down into eight specific theories, ten three seas economic journal 7 vol. 3 no. 3, 2022 concepts, and twelve skills. all of the signs in the matrix provide enough information to ensure that they relate to each other in harmony. using the matrix will ensure that important parts of the practice of social change are made clear to the people involved. in the initial stages, practitioners would do well to familiarize themselves with the three basic components – theory, concepts, and skills – and try to understand the three categories. based on this, a comparison of three different methods of social change can be made. ( jonaidi, 2012) the following factors are necessary for the successful implemen tation of the strategy: 1. efforts to reduce poverty must be compre hensive, integrated, multisectoral, and appropriate to the local context and culture. there is no one-size fits-all anti-poverty policy. 2. pay attention to the process aspect, don't ignore the income from the process. make poor people feel their way out of the cycle of poverty. 3. it is a result and involvement of many parties, and a process of consultation in dialogue with all stakeholders, especially the poor. 4. raise awareness and concern among all stakeholders and encourage stakeholders to play appropriate roles in creating ownership of the program. 5. provide as much space as possible for the creation of various public initiatives and creativity at different levels. in this case, the government acts only as an initiator of the process, then as an intermediary, and in the end there is a mutual agreement on a framework of conditions and procedures to reduce poverty. 6. the government and other stakeholders (ngos, universities, businessmen, civil society, political parties, social and religious institutions) can work together to help each other. 7. budget managers must recognize the importance of fighting poverty and ensure that this effort is a top priority for all programs in all agencies. (kuncoro, 2013; noor, 2011) thus, the fight against poverty becomes a movement of the people, by the people, and for the people. in general, the strategic programs for poverty reduction that can be implemented are: 1. opening up business opportunities and possibilities for the poor to participate in the process of economic development. 2. policies and programs to empower the poor. because of the multifaceted nature of poverty, it is not enough to rely only on an economic approach, policies and programs must also be developed in the social, political, legal, and institutional fields. 3. 3. policies and programs to protect the poor. the poor lack the resilience and security to cope with these shocks, which lead to shocks internally (e.g., death, illness, dismissal of head of household) and externally (e.g., unemployment, natural disasters, social). very vulnerable to conflict. 4. strategies and programs to overcome the intergenerational legacy of poverty. children's rights and the role of women. poverty is often passed on from generation to generation. therefore, it is necessary to break the chain of inherited poverty. increasing the role of women in education and the family is one of the keys to breaking the chain of poverty. 1. policies and programs to strengthen rural autonomy. rural autonomy can be a space for rural communities to overcome their own poverty. (suharlina, 2020; suripto & subayil, 2020) note that the process of community development should be assumed on the following principles: the direction of community growth always rests on increasing participation in social structures. 2. the emergence of the various conditions of dissatisfaction felt by citizens today should be used as a starting point for community development programs. 3. the dissatisfaction felt and experienced by community members should be channeled into joint plans and actions to solve problems. 4. community development programs must involve leaders who are identified and accepted by the various major social groups in society. 5. organizations implementing community development programs should develop effective channels of communication within the various key social groups in the community, and strengthen the ability of these groups to collaborate with each other in implementing flexible working procedures without disrupting the regular decision-making model. 6. determination of community development programs should be based on collaborative decisions by community members themselves, taking into account the speed of community steps and fully involving community members in the development planning process. (nafi'ah, 2021; rachmawati, 2011) community development is considered very important, the following considerations are made: 1. a healthy society is a product of an active society. 2. a planning process that is originated and desired by the community is better than planning that comes from the authorities. 3. the process of participation in community development is the prevention of various ignorant attitudes of individuals in society. 4. a strong empowerment process in community efforts is the basis of strength for the community. (arifin, 2020; prawoto et al., 2009) another attempt to solve the problem of poverty is the active participation of the entire community through a mass movement. this movement is conducted to remove the impression that poverty reduction efforts are "only " the responsibility of government. three seas economic journal 8 vol. 3 no. 3, 2022 active community participation also shows that the community has a deep empathy that is built on the principles of compassion, empathy, and caring. (pateda et al., 2019; suharlina, 2020) the government's concern for poverty reduction can be seen in the comprehensive poverty reduction movement (gerdu taskin) launched by the government in 1998. gerdu taskin is an integrated and comprehensive anti-poverty program run by the government, the private sector, nongovernmental organizations (ngos), and community-based organizations. the program involves the general public as well as poor families themselves. as a concrete effort in that direction, since 1998/1999 the district develop ment program (ppk) policy has been implemented, and the urban poverty alleviation program (p2kp) hereinafter referred to as the national community empowerment program (pnpm-ppk or pnpm-p2kp), which substantively inspires active participation of the community in participating in the poverty alleviation movement. (pratiwi et al., 2020) emphasized that the community empowerment program was designed by the government to solve three main development problems, namely unemployment, inequality, and poverty alleviation. the recommended poverty alleviation efforts according to (hadiyanti, 2008; noor, 2011). community empowerment policies are nothing less than policies of providing spaces, public facilities, and opportunities that promote the abilities and capabilities of poor community groups to overcome their own problems, rather than actually pressuring them and pushing them to the margins or into dependency. (sari, 2019; suharlina, 2020) stated that there are three basic program strategies that aim to help the poor, namely: 1. aid is directed to places where the majority of the poor live through comprehensive village development programs or village-oriented service production projects. 2. assistance is aimed at overcoming the limitations in the standard of living of the poor through programs to meet basic human needs. 3. aid focuses on groups with similar socio economic characteristics that encourage or support them to continue in the cycle of poverty, through community-specific projects. 7. conclusions the level of poverty can be directly and indirectly influenced by several factors: starting with the level and rate of growth of production (labor productivity). the level of inflation. the level of investment. the distribution and quality of natural resources. the level and type of education. the work ethic and motivation of workers. the problem of poverty has been around for a long time and still is. in fact, many anti-poverty programs have been implemented by the government, but have not brought significant change. poverty reduction programs have been implemented in many countries. the development strategy devised by the indonesian state has so far been based on high rates of economic growth. after projections of high economic growth, income is unequally distributed among all population groups. the gap between growth and equity. observing some of the errors of the poverty reduction paradigm, when the analysis must derive the variables that are meaningful for overcoming poverty, it is those variables that are not meaningful, so the strategies that must be adopted to overcome poverty: must also not only give priority to the economic aspect, but also pay attention to other dimensions; to increase capacity and productivity, the chosen strategy is to increase the basic income-raising capacity of the poor; to involve the poor in the whole process of poverty reduction; and to pursue a strategy of empowerment. to support the success of this strategy, the following elements must be considered: efforts must be comprehensive, integrated, crosssectoral, and appropriate to the local context and culture; attention must be paid to the process aspects without neglecting the end result of the process; involves and is the result of a process of dialogue with various parties and consultants with all stakeholders, especially the poor; raises awareness and concern among all relevant parties; enjoys the widest range of motivation, for the emergence of various community initiatives and creativity; the government and other parties join forces to support each other. references: [bps] central bureau of statistics (2019). official statistics news. bps. go. id. 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(2018). analysis of factors affecting poverty in indonesia during the last five years. scientific journal of asian business and economics, 11(2), 27–31. doi: https://doi.org/10.32812/ jibeka.v11i2.42 received on: 11th of september, 2022 accepted on: 3th of october, 2022 published on: 31th of october, 2022 three seas economic journal 1 vol. 4 no. 1, 2023 1 moldova state university, moldova e-mail: kaprianusm@gmail.com orcid: https://orcid.org/0000-0001-7701-5356 2 ștefan cel mare university of suceava, romania e-mail: iulitabirca2021@gmail.com orcid: https://orcid.org/0000-0002-3910-8022 3 research center for industrial problems of development of the national academy of sciences of ukraine, ukraine (corresponding author) e-mail: nata_tru@ukr.net orcid: https://orcid.org/0000-0002-6741-7738 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-1 logistical support for the development of the circular economy iulia caprian1, iulita birca2, nataliia trushkina3 abstract. the aggravation of ecological problems at the global level, as well as the need to solve the economic and social problems of humanity, require the implementation of important economic transformation measures. the circular economy (or closed-loop economy) is a form of production organization related to extending the life cycle of products and minimizing harmful disposal and waste. it is also about sharing, renting, reusing, repairing, refurbishing and recycling existing materials and products as much as possible. as with any type of economic model, the functioning of the circular economy requires a corresponding logistics system. in this context, together with the acceptance of the concept of ecological efficiency and "green" economy in many countries, the new approach of "green logistics" has emerged in international practice. the purpose of this article is to generalize theoretical approaches and to substantiate the conceptual provisions of logistical support for the development of the circular economy in the conditions of global transformations. methodology. the methodological basis of the study is the scientific work of scientists on the problems of green economy, circular economy, environmental management, waste management, logistics management. the research was conducted using general scientific methods: analysis and synthesis – to summarize the existing conceptual approaches and regulations, scientific developments on the development of the circular economy, greening of logistics systems, green logistics, clarification of terminology; classifications – to systematize theoretical approaches to the definition of "green logistics" proposed by various scientific schools; structural and logical generalization – to determine the key logistics approaches to the development of the circular economy and the principles of green logistics for the implementation of circular business models. results. in order to present the specific aspects of circular economy logistics, the opinions of researchers from different countries were studied to outline a related synthetic vision. after conducting the study, the current characteristics of the circular economy were identified. then the current international trends in logistics development were identified. an important trend is the development of "green" logistics. it has been found that many conceptual approaches to the definition of the terms "green" logistics and environmental logistics are generally accepted and have a broader meaning, without taking into account the specifics of the functioning of different areas of economic activity, including the transport sector and logistics activities. scientific views on the interpretation of the nature and content of the concept of "green" logistics are generalized. it is proposed to consider the concept of "green" logistics as a tool of circular economy. it offers companies a number of advantages and is based on certain principles. as a synergy effect, the massive implementation of the circular economy and green logistics can significantly contribute to solving the socioeconomic problems of humanity. practical implications. the practical significance of this study lies in the fact that the conceptual provisions can be used in practice when developing an organizational and economic mechanism for implementing the concept of green logistics. this mechanism should include such blocks as: management of supplies and purchases of material resources; production of products; warehousing and inventories; logistics flows; risks of logistics activities; logistics service processes; waste recycling; innovation and change. the introduction of the proposed organizational and economic mechanism will reduce the cost of managing the movement of logistics flows and increase the level of environmental safety. this is one of the most three seas economic journal 2 vol. 4 no. 1, 2023 important requirements for the implementation of the concept of corporate social responsibility of business in a circular economy. value/originality. the authors' approach to formulating the category "green logistics" is theoretically substantiated. key words: circular economy, green logistics, environmental logistics, greening of logistics activities, green technologies, logistics system, conceptual approach, organizational and economic mechanism, sustainable development, cost minimization, environmental safety, synergistic effect, globalization. jel classification: g30, m14, m21, o31, q21, q56 1. introduction according to the world business council for sustainable development, the circular economy is critical to addressing today 's biggest environmental priorities, including resource scarcity, pollution, climate change, biodiversity loss, land use change, and food loss and waste. it is becoming increasingly clear that humanity is approaching the threshold of depletion of a wide range of natural resources. this requires an urgent abandonment of the practice of the linear model of production. in this context, experts v. ganea and i. birca (2020) mention: "this model has caused a huge deficit of energy resources, intensification of environmental pollution, increase in the area of industrial and household waste landfills, etc. the new challenges are to ensure a dignified quality of life for all the inhabitants of the planet, in the context of growing volumes of production and consumption, but at the same time in conditions of diminishing reserves of natural resources." the circular economy model has become an alternative to the linear production model, which is seen as the only way to solve global problems related to rationalizing the use of exhaustible natural resources and minimizing the harmful impact of human activity on the environment. in this regard, the nominated authors (ganea, birca, 2020) state: "this new type of economic activity aims to move away from the direct vector of economic growth based on the volume of resources used, gradually moving from depletion to the regenerative use of materials. this is made possible by optimizing the use of existing assets, stocks and materials, i.e., by reducing the amount of raw materials consumed and the volume of waste generated." the implementation of the circular economy has as its fundamental purpose the achievement of the synergy effect (environmental, economic and social). the circular economy is intended to offer acceptable solutions based on the principles of resource efficiency, increasing the environmental and social responsibility of economic entities in combination with technological development and the transformation of social needs. (ganea et al., 2022) acceptance of the circular economy model is part of the transition activity of many countries in the world to the "green" economy. (caprian et al., 2023) as with any model of production organization, the success of the implementation and operation of the circular economy depends on the creation of an appropriate logistics system. leading scientists (dzwigol, 2003, 2008, 2009; karbownik et al., 2012; kwilinski et al., 2021; bezpartochnyi et al., 2022; kuzior et al., 2022) are conducting scientific discussions on the implementation of the concept of green growth in order to preserve the environment and improve the economic activities of enterprises. the desire of companies to create an ecological image among consumers has contributed to the development of a sustainable logistics concept (boichuk, kauf, 2019; trushkina, shyposha, 2021), which includes green components and takes into account economic, social and environmental activities in the context of logistics management. it is precisely the greening of logistics activities that is a key vector for business development, since most consumers give priority to companies that carry out cargo transportation by "green" means and use technologies that save natural resources. (trushkina et al., 2021) the use of "green" technologies in logistics has become as much a necessity as the implementation of a quality management system. as a result, according to the "green trends survey " in the study "towards sustainable logistics" (christof, ehrhart 2012), 59% of companies found that the green transportation of their products is recognized as a decisive factor in attracting consumers. based on a survey conducted by pe international (uk) (mckinnon et al. three seas economic journal 3 vol. 4 no. 1, 2023 2010), the main benefits of implementing green logistics include reducing air emissions (33% of company directors and senior managers) and attracting new customers or developing new products (26% of respondents). thus, modern business conditions dictate new requirements for business development. the priority is green logistics as one of the most important components of the overall strategy of corporate social responsibility in the context of the development of a circular economy. (dźwigoł et al., 2021; trushkina, prokopyshyn, 2021) it should be noted that the role and importance of green logistics as a tool to support environmental safety is becoming more relevant every year, as it has become a socially useful and profitable symbiosis of ecology and economy as part of corporate environmental governance policies. against this background, the purpose of the paper is to generalize theoretical approaches and to substantiate the conceptual provisions of logistical support for the development of the circular economy in the conditions of global transformations. 2. the circular economy from a modern point of view there are several definitions of circular economy in the literature: – the circular economy is an economic model that aims to use resources efficiently by minimizing waste, preserving long-term value, reducing primary resources and creating closed loops of products, product parts and materials within the limits of environmental protection and socio-economic benefits. (morseletto, 2020) – the circular economy is a production model that emphasizes the reuse of products, components, and materials; remanufacturing, reconditioning, repairing, and upgrading; and the use of energy derived from waste throughout the product value chain. (korhonen et al., 2018) – circular ecology is a concept that contributes to the preservation of the environment by minimizing the extraction of resources and the generation of waste. within this production model, the aim is to extend the life cycle of products and the materials from which they are made. products that have reached the end of their use-by date must be reused or remanufactured as much as possible, avoiding or postponing their incineration or storage. (beames et al., 2021) the circular economy concept is based on nine elements ("9rs"): rethink; refuse; reduce; reuse; re-gift; repair; rent; recycle; rot. in the conditions of the emerging scarcity of resources, the circular economy can allow producers to reduce the cost of purchasing raw materials through repeated processing and ensure the optimal use of generated waste. the benefits of minimizing waste and environmental pollution are also remarkable. the circular economy is also related to the minimization of excessive consumption of resources due to the circularity of the production process. in particular, the use of components and materials with the highest utility throughout the entire technical and biological cycle is remarkable. (ganea et al., 2022) within the circular economy, a distinction can be made between the biological cycle and the technical cycle. the biological cycle includes products made from materials derived from living organisms, but not from fossil resources. the technical cycle includes products made from metals and minerals that must first be extracted from the earth's interior. (beames et al., 2021) some experts have highlighted the basic principles of the circular economy: (bugaian, diaconu, 2020) – the principle of ensuring the sustainability of resources provides for the use of renewable energy and renewable, recyclable and biodegradable materials in successive life cycles. – the principle of transforming waste into raw materials proposes the total disappearance of waste and the rethinking of products so that they can be recycled and reused to obtain other consumer products. – recycling products, components and materials with the highest use and priority achieves the principle of optimizing resource yields. – the principle of promoting the efficiency of the system is achieved by denouncing and combating the harmful effects of the current industrial economic system. – the principle of ensuring the diversity and high adaptability of products is a priority for the circular economy, which seeks to create sustainable products over time that can be transformed into other products, creating a cycle of recycling without waste. three seas economic journal 4 vol. 4 no. 1, 2023 3. modern approaches to logistics logistics is an economic category that has existed since ancient times. as a science, it has always been linked to the imperatives of the economy of the time. some experts define logistics as follows "logistics is that part of supply chain management that plans, implements, and controls the efficient and effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer requirements. it is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost." (flex logistics, 2021) the romanian expert g. e. mocuța (2009) believes that since 2005 a new concept of logistics has been promoted as an activity related to "the delivery of a product, in good condition, at the right time, in the right place, in the right and necessary quantity, in the packaging of properly presented goods, preceded, accompanied and followed by correct and accurate information entered in legal documents, all under the best economic conditions". this definition confirms the application of the 7 "rights" in logistics: right product; right customer; right cost; right quantity; right condition; right time; right place. (flex logistics, 2021) some researchers believed that beginning in the 1990s, cooperative logistics is developing in global practice. (akbari et al., 2002) in this context, a complex concept of logistics is formulated: "the functions of planning, execution and control of the flow of goods and information for the acquisition, storage, movement and delivery of goods in full cooperation with the other members of the logistics chain in order to achieve the expected objectives of the logistics chain, in particular the reduction of the response time to the market." (mocuța, 2009) in the first decade of the 2000s, total production capacity for many products was much higher than the market's ability to absorb them. competition is getting fiercer. product life cycles are shortening, and the need for innovation is growing. all of this makes forecasting demand very difficult and creates important uncertainties in markets. companies are required to produce their products in small quantities and deliver them in ever shorter periods of time. (akbari et al., 2002) in these conditions, modern companies have to solve the following tasks: – search for new markets, market segments and niches; – maintain high quality of products and services; – minimize the cost of products; – maintain marketing agility to respond quickly to unexpected consumer demands. modern logistics must solve a variety of problems in the following basic areas: organization of the transportation system throughout the logistics chain; strategic design of the supply chain in terms of size and location decisions; determination of demand and its satisfaction by supply and the formation of the resulting networks; detailed supply planning in the movement of products through supply chains. modern logistics focuses on the supply chain, which consists of all parties directly or indirectly involved in the flow and transformation of goods and services from the origin of the product to the consumer. logistics encompasses the economic activities necessary to satisfy consumer demand for the products of companies with product offerings. these activities span the entire product supply chain, from the extraction of raw materials to the delivery of the final product. the collection and recycling of used products and rail waste is also logistics. (beames et al., 2021) modern logistics is associated with the rapid development of logistics services and the outsourcing of logistics functions within manufacturing companies. in the first decade of the 2000s, experts considered it a current trend among logistics providers to focus more on logistics operations than on transportation, which is increasingly outsourced after second-level subcontracting. in particular, following the development of new information and communication technologies, the competence of the logistics provider has evolved from 3 pl (third party logistics) to 4 pl (fourth party logistics). (vasiliu et al., 2008) 3pl is the outsourcing of logistics functions (priority warehouse management and transportation procedures) to an external company that manages the company 's supply chain and ensures its daily operations. the 4pl service is related to the management of the customer's entire supply chain and, upon request, the design and optimization of the customer's supply chain. 5pl and 6pl level services are three seas economic journal 5 vol. 4 no. 1, 2023 currently offered. 5pl is a fully integrated logistics solution that encompasses the entire supply chain through multiple outsourced service providers. this logistics service solution is created by applying it technologies to provide full visibility of the entire supply chain in real time. 6pl is more theoretical with the alternative name "artificial intelligence-based supply chain management". this is a fully integrated and partially automated supply chain solution that is monitored and controlled by artificial intelligence. with the development of self-driving vehicles, warehouse robots and delivery drones, some components are already in use today. 4. provision of logistics support for the circular economy the establishment of the circular economy requires certain adjustments to logistics systems. in the circular economy, suppliers and other supply chain partners need to streamline information exchange and introduce new transportation services as infrastructure elements of the circular economy. in a circular economy, goods are in constant motion and do not become waste because they can always be reused. the most challenging logistics issues in a circular economy are the predictability of goods flows, the low cost of materials, and the wide variety of trading qualities. similarly, the implementation of the circular economy is closely linked to the development of reverse logistics. it refers to the supply chain process of returning products from end users back through the supply chain to the retailer or manufacturer. from these positions, it is very important to solve problems related to repair, reuse, refurbishment, remanufacturing, recycling, wasteto-energy, and storage: (beames et al., 2021) first, it is important to examine the possibility of reusing, remanufacturing or recycling a product in the area of circular product design. second, for products that have a significant level of use, it is necessary to emphasize the optimal use of the product during its life cycle and the possible extension of this life cycle. in this context, maintenance or repair work is of great importance. third, all materials in products that are durable or recyclable must eventually be recycled. the notion of a circular supply chain is also linked to the logistics of the circular economy, which ensures the operation of a cycle with the highest degree of product processing from finished products. this means generating value from end-of-life products, often leading to the recycling of their primary components. in recent decades, the concept of "green" (ecological) logistics has been promoted. wikipedia offers the following definition: "green logistics describes all attempts to measure and minimize the environmental impact of logistics activities. it includes all activities related to the forward and reverse flows of products, information and services between the point of origin and the point of consumption. the goal is to create sustainable value for the company by balancing economic and environmental performance." green (ecological) logistics is any business activity aimed at minimizing the impact of the logistics system and delivery on the environment. green logistics offers high profits without compromising consumer satisfaction and the well-being of the planet. based on the analysis of literary sources ( janbo, songxian 2008; brdulak, michniewska 2009; sbihi, eglese, 2009; mesjasz-lech, 2011; ubeda et al., 2011; lai, wong 2012; dekker et al., 2012; ćirović et al., 2014; harris et al., 2014; jedliński, 2014; seroka-stolka, 2014; zhang et al., 2015), scientific views on the interpretation of the essence and content of the concept of "green" logistics are generalized. as a rule, this term is understood by scholars as: – a scientific field and one of the factors of environmental protection based on resource saving and environmentally friendly technologies; – a new direction that involves the use of advanced logistics technologies and modern equipment to minimize environmental pollution and increase the efficiency of logistics resources; – from the theoretical and scientific-methodological point of view, the functionality of the "green" economy is subordinated; – logistics based on resource-saving and environmentally friendly technologies; – a type of logistics in which scientific and practical activities take into account environmental aspects at all stages of the movement of material and other flows that correspond to it in order to reduce the destructive impact on the environment and optimize resource consumption; three seas economic journal 6 vol. 4 no. 1, 2023 – an innovative method in logistics; – part of the concept of sustainable economic development, an effective approach to managing resource and energy flows to reduce environmental and economic damage to the environment and ensure effective innovative development of production; – a system of measures that involves the use of energyand resource-saving logistics technologies and modern equipment in all parts of the supply chain to minimize the negative impact on the environment and increase the overall consumer value of products; – an environmentally friendly and efficient transportation distribution system; – a scientific and practical activity aimed at optimizing and efficiently managing direct and reverse material and related flows (information, financial, waste, emissions, various natural resources and energy) in order to minimize the negative impact on the environment; – a scientific and practical activity that involves the formation of an effective mechanism for integrating environmental and socio-economic aspects at all stages of planning, designing and managing supply chains in order to minimize environmental and economic damage and increase the consumer value of products through the use of energy and resource-saving logistics technologies; – an activity related to environmentally efficient management of logistics flows of products moving from the enterprise to the consumer, as well as reverse flows of goods in the supplierconsumer system; – a set of actions related to the assessment and minimization of environmental impacts of logistics activities; – coordination of logistics activities of market players with a focus on achieving economic, social and environmental benefits through the use of energy and resource-saving technologies; – аn increase in environmental responsibility in the transport and logistics sector. as a result of research (kwilinski et al., 2021; ganea et al., 2022) it was established that green logistics is a tool of circular economy. the experience of some countries shows that the use of resource-saving technologies in logistics can reduce material stocks by 40-60%, speed up the turnover of working capital by 20-40%, reduce transportation costs by 7-20%, reduce the costs of loading and unloading and warehouse work by 15-30%. ecological logistics should be based on the following principles: – integrated approach to the management of logistics flows; – rationalization of the use of various resources (production, financial, energy, information); – minimizing the use of raw materials and nonrecyclable packaging; – economic and ecological rationalization of transportation and storage of material resources; – maximizing the use of production waste, containers and packaging as secondary raw materials or their disposal in environmentally safe conditions; – optimization of costs of organization of logistic activities; – minimizing risks in the operation of transport and logistics systems; – increasing the level of environmental education and responsibility of employees; – implementation of innovative technologies to reduce the ecological burden on the environment; – application of advanced information technologies in the field of environmental protection. using eco-friendly logistics has a number of advantages: – increase the long-term profitability of firstand last-mile delivery by reducing waste, costs, and carbon footprint; – create new partnerships or expand existing ones. when companies embrace sustainable supply chains and green logistics, they become more attractive to both customers and business partners; – increase customer satisfaction and loyalty through fast delivery and flexibility, and simplify the returns process; – enhance reputation by taking corporate responsibility to reduce local and global environmental impacts; – simplified recruitment, as the company using green logistics is more attractive to young professionals. 5. conclusions the circular economy represents a global hope for the efficiency of production activities while minimizing their negative impact on the environment. it is linked to the renewal of resources and is an alternative to the linear three seas economic journal 7 vol. 4 no. 1, 2023 economy. the development of the circular economy is impossible without the implementation of ecological logistics and new forms of logistics services. the implementation of new forms of logistics services is of interest as an opportunity to continue the research carried out. the study of successes in the development of green logistics also deserves attention. green logistics is a powerful tool for transforming logistics systems. based on the analysis and generalization of existing scientific approaches to the definition of the term "green" logistics, it was established that under it is considered a scientific direction; the factor of preserving the environment with the help of environmentally friendly technologies; component of the green economy; type of logistics; economic activity; scientific and practical activities; type of activity related to the eco-efficient management of the movement of logistics product flows; a tool for ensuring the ecological safety of the ecosystem; a set of logistical approaches to the optimization of waste and resource flows; environmentally friendly transport distribution system; coordination of logistics activities to achieve sustainable development. at the same time, most scientists identify the concepts of "green" and "ecological logistics", which is understood as a scientific direction that includes the use of modern innovative logistics technologies; a set of actions aimed at minimizing the environmental impact of logistics activities; integrated management of logistics processes (production, storage, waste transportation); a subsystem for managing product flows from the supplier to the consumer with minimal impact on the environment. as a result of the study, it was proposed to consider the term "green logistics" as a concept of sustainable development of logistics systems of different levels and a tool of circular economy. for the effective implementation of the concept of green logistics, it is advisable to develop an organizational and economic mechanism, which is considered as a set of principles, tools, functions, methods and means aimed at reducing the level of greenhouse gas emissions and costs of organizing logistics activities and various logistics services (transport, warehousing, marketing, etc.). the main principles of green logistics should be the application of an integrated approach to the management of logistics flows; rational use of resources (production, financial, energy, information); minimal use of raw materials and packaging that cannot be recycled; economically and environmentally sound transportation and storage of material resources; maximum use of production waste, containers and packaging as secondary raw materials or their environmentally sound disposal; optimization of costs of organization of logistic activities; minimization of risks in operation of transport and logistic systems; increase of the level of environmental education and responsibility of personnel; introduction of innovative technologies for reduction of environmental pollution; application of information systems and digital technologies in the field of environmental protection. the implementation of the green logistics mechanism helps to minimize the costs of managing the movement of logistics flows while maintaining the required level of environmental safety, which is one of the important requirements for the implementation of the concept of corporate social responsibility of companies in a circular economy. in further scientific research it is planned to carry out a swot analysis of the development of logistics systems taking into account the environmental component on the example of different countries of the world; 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(2011). green logistics at eroski: a case study. international journal of production economics, vol. 131(1), pp. 44–51. doi: https://doi.org/10.1016/j.ijpe.2011.04.041 vasiliu, c., felea, m., măruntelu, i., & caraiani, g. (2008). logistica şi distribuţia mărfurilor. editura ase, bucurești. available at: https://adrianabuzdugan.files.wordpress.com/2010/09/cartelogistica.pdf zhang, s., lee, c., & chan, h., et al. (2015). swarm intelligence applied in green logistics: a literature review. engineering applications of artificial intelligence, vol. 37, pp. 154–169. doi: https://doi.org/ 10.1016/j.engappai.2014.09.007 received on: 14th of march, 2023 accepted on: 10th of april, 2023 published on: 28th of april, 2023 three seas economic journal 140 vol. 3 no. 1, 2022 corresponding author: 1 national academy of management, ukraine e-mail: osospavlo@gmail.com orcid: https://orcid.org/0000-0001-7036-3737 doi: https://doi.org/10.30525/2661-5150/2022-1-20 supply chain management system – a key tool for the development of the pharmaceutical industry in ukraine pavlo osos1 abstract. the subject of this article is the supply chain management system of pharmaceutical industry enterprises in ukraine. methodology. in the course of the study, the systematic and logical approaches are mainly used. at the same time, during the study the following scientific methods were used: 1) analogy – an effective supply chain management system (hereinafter – scm system) is defined as important for enterprises of any sector of the national economy of ukraine; 2) induction – significant attention is paid to the individual components and parameters of the supply chain of the pharmaceutical industry in ukraine; 3) generalization – it was found that, despite the diversity of views on the definition of scm system, the basic idea of such a definition is identical; 4) others. the purpose of this article is to study the current state of scm-system of pharmaceutical industry in ukraine, as a key tool for its development. the results of the study show that the spread of coronavirus disease covid-19 (hereinafter covid-19) caused changes in the transport components of the scm system in the enterprises of the pharmaceutical industry in ukraine. conclusion. the ukrainian pharmaceutical industry is the most developed among the postsoviet countries and has a leading position in the production of generic drugs. thanks to the distribution of covid-19, the industry today is the guarantor of the protection of life and health of citizens, and pharmaceutical companies receive significant profits. given today's realities, such companies continue to transform internal business processes related to the scm system, which must first and foremost be as flexible, fast and sustainable as possible. at the same time, changes associated with the possibility of "online" sales of medicines can have a positive impact on the effectiveness of scm system parameters in the pharmaceutical industry in ukraine, which in the long term will lead to an increase in its profitability. however, such sales cannot fully guarantee high quality and safety of pharmaceutical products. strict domestic legislation related to pharmaceutical industry regulation contributes to unpredictable situations related to the scm system. proper identification of key priorities and anticipation of possible obstacles in advance will greatly reduce their occurrence. key words: supply chain management system, pharmaceutical industry, business processes, parameters, covid-19. jel classification: l29, l80, l81 1. introduction any enterprise operating in the system of national economy of ukraine, seeks to strengthen its position in the domestic and foreign markets, taking into account the rules of a market-oriented economy. market competition forces companies to work on improving product quality and safety, in particular, to improve their own internal business processes. an essential competitive advantage for most companies is to have a commercial strategy that includes scm system approaches. rational use of production capacities promotes the possibility to avoid production of excess production, which always causes additional financial costs for enterprises. without scm system, most enterprises were forced to plan their own production with significant buffer intervals due to the lack of synchronized supply processes between the supplier and the potential buyer and/or consumer. the emergence of modern software for scm system has significantly increased efficiency in the coordination of business processes, from production to delivery to the end consumer (smerichevska et al., 2012). scm systems mainly include the following business processes: purchasing, transportation, inventory planning, forecasting of future sales and other operations. considering the above, scm system is a complex this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 141 vol. 3 no. 1, 2022 operation of interdependent business processes, which provide enterprises with maximum proficiency. however, the scm system may differ depending on the type of products, the type of enterprise and the industry affiliation of such enterprises. the spread of covid-19 and the resulting use of quarantine restrictions has forced most enterprises to transform their internal business processes related to the scm system. the application of quarantine restrictions had a negative impact on the national economy of ukraine in 2020: real gross domestic product declined (-4%); exports of goods and services declined (-5.6%); imports declined (-9.6%) (nbu, 2021). however, despite the negative trend, the pharmaceutical industry was one of the first to adapt to the new negative realities due to the highest share of innovative production compared to other industries. a considerable part of enterprises of pharmaceutical industry (48%) invested 1.5 billion uah into new equipment, repeated research innovations, etc. (darnytsia, 2021) at the same time, legislative changes allowing "online" sales of drugs have caused significant changes in supply chain management, particularly in the transportation process, as part of the pharmaceutical industry 's scm system. the importance of an effective supply chain management system in the national economy of ukraine, in particular in the pharmaceutical industry, has been investigated by the following scientists: smerichevska  s. v., zhabolenko  m. v., ibrahimkha lilova t. v., kolodizieva  t. o., dorokhova  l. p., dorokhov  o. v. et al. the scientists mentioned above have explored the problems associated with the importance of the scm system in the context of economic globalization, the role of supply chains in improving the efficiency of the logistics activities of the enterprise in particular, the development of scm system strategy for pharmaceuticals, etc. despite minor differences in the areas of research, the above mentioned scientists agree on the need for effective functioning of the scm system and its strategic importance in the management of enterprises of the national economy of ukraine. despite minor differences in the areas of research, the above-mentioned scientists agree on the need for effective functioning of the scm system and its strategic importance in the management of enterprises of the national economy of ukraine. despite minor differences in areas of research, the above scholars agree on the need for effective functioning of the scm system and its strategic importance in enterprise management of the national economy of ukraine. 2. features of scm-system in the pharmaceutical industry of ukraine the ukrainian pharmaceutical industry is the most developed among the post-soviet countries and has a leading position in the production of generic drugs. due to the spread of covid-19, the demand for antibiotics, antivirals and antipyretics, etc. has increased during 2020–2021. at the same time, there was a need for pharmaceutical products designed to prevent the emergence and spread of covid-19, in particular as defined by the decree of the cabinet of ministers of ukraine (hereinafter cmu) № 224 of march 20, 2020. according to the cmu decree, such products must be supplied to the territory of ukraine without hin drance and delay. thus, due to the spread of covid-19, the effective functioning of the pharmaceutical industry of ukraine is a guarantee of saving the lives and health of citizens. the efficiency of this industry depends on the internal business processes of pharmaceutical companies: planning, forecasting, transportation, etc. the above business processes are part of the scm system and operate at the micro and macro levels. domestic pharmaceutical companies were ready to instantly transform internal business processes in accordance with modern developments (economic truth, 2020). according to r . handwild, the scm system covers the relevant organizations involved in relocation and conversion of products, from the stage of raw materials purchase and to delivery thereof to the end user, taking into account also information traffics. k. rutkowski sees the scm system as a physical network that connects the original supplier to the end user (client). according to the standard iso 28000-2005, scm system is considered as an interconnected set of resources and processes from the production of raw materials to the delivery of products or services to the consumer through transport systems (kolodizieva, 2015). although the above definitions differ somewhat, the general idea is the process of moving a product from its place of production to the final consumer, taking into account product characteristics and a particular supply strategy of individual industrial enterprises. although the above definitions differ slightly, the general idea is to move the product from its production process to the end consumer, taking into account the characteristics of the product and a certain supply strategy by individual companies in the industry. given the realities of modern life, with the proliferation of covid-19, the scm system must be as flexible, fast and resilient to failure as possible. at the same time, the strategy for the scm system must ensure the need to reduce costs, given the current global instability (deloitte, 2021). as of the end of april 2020, the production of pharmaceutical products increased by 22%, in particular, the number of manufacturing companies increased by 600%. this result was certain-ly influenced by the cmu's positive decision to allow the "online" sale of drugs and medical supplies, subject to appropriate transportation three seas economic journal 142 vol. 3 no. 1, 2022 conditions. "online" sales services in ukraine have shown significant demand. during the period from april 10 to may 10, 2020 (the first month of the service), the ukrainian company nova poshta, which provides express delivery services, made 32,000 orders for shipments of medicines: 24% (villages and settlements); 36% (for urban residents); 40% (kyiv and regional centers). at the same time, the domestic state en-terprise "ukrainian railways" jsc, which provides the transportation services (grain, ore, and metal), reported about a decrease of traffic volumes by about 9% in the first half of 2020 (car , et al., 2020). thus, enterprises providing express delivery services create indirect competition for traditional transportation companies. for example, an increase in the volume of online sales of pharmaceutical products from the manufacturer to the end consumer will affect the reduction in the supply of such drugs to wholesalers and retailers (pharmacies) through traditional transport operators (logistics). in the future, logistics as part of the scm system in the pharma ceutical industry will be defined in terms of transportation services by traditional transportation companies and companies providing express delivery services. 3. parameters of scm system efficiency in the enterprises of pharmaceutical industry in ukraine the effectiveness of the scm system directly affects the cost of pharmaceutical products. the variable manifestations of the growth of covid-19 infections force governments to tighten or lower quarantine restrictions depending on the epidemiological situation. such "merry-go-rounds" jeopardize the functioning of the pharmaceutical industry. the chaotic situation in the scm system of the pharmaceutical industry and not only directly affects production processes, international trade and domestic distribution. today there are many indicators that reflect the effectiveness of scm system in the industry. a large part of them is aimed at the study of customer satisfaction, because it has a direct impact on the demand for products. thus, pharmaceutical companies, based on the assessment of the level of satisfaction of their customers and their needs, form a unique strategy of scm system and determine its possible risks. parameters of scm system are the main indicators to assess their effectiveness. the overall effectiveness of the entire scm system can be judged only after a detailed evaluation of each parameter of such a system. only high values of all the above parameters can guarantee the productivity of the entire scm system. for example, high speed parameters alone will not have a positive effect on the overall supply chain in the case of excessive raw material and/or final product inventories, indicating a low flexibility parameter. at the same time, the scm system cannot be considered effective only due to high parameters of flexibility, speed and reliability, in particular, without taking into account the low level of cost optimization. thus, the basis for determining the state of performance of scm system at the enterprises of national economy of ukraine, in particular, the pharmaceutical industry, is the planning process. the efficiency of supply chain management parameters depends on their deviation from the planned parameters. in the case of consistently low performance of one or more parameters, it is necessary to examine in detail the factors that may influence the negative result. for example, there may be cases where an unreasonably high target rate parameter can lead to an overestimation of supply chain costs (cost parameter). at the same time, incorrect forecasting of product demand can table 1 parameters for assessing the effectiveness of the scm system parameter name parameter definition flexibility the company 's ability to adjust its supply chain in a timely manner in response to changes in customer needs. a positive indicator of flexibility is the absence of excessive stocks of raw active pharmaceutical ingredients at manufacturing plants, in particular stocks of finished products in warehouses of wholesale companies, as well as the stable availability of pharmaceutical products in retail chains. rate and the period of time from the purchase of raw materials to the receipt of the final product by the consumer. the speed of the supply chain is often called its length and is measured in days. enterprises constantly take into account possible risks on the timing of delivery associated with various delays at customs, force majeure, in particular, when they occur, with the implementation of alternative measures. reliability and the guarantee of meeting established delivery deadlines. receipt of active pharmaceutical ingredient raw material producers and wholesalers and retailers of finished products in a clearly defined time frame is a positive criterion for reliability in the pharmaceutical industry. a reliable supply chain prevents companies from incurring additional financial losses. costs the total cost of supply chain operation, which covers the significant business processes of the company (purchasing, transportation, inventory write-offs, warehouse management, etc.). the efficiency of this parameter is measured by the company 's ability to optimize costs at each stage of the supply chain. source: added by the author according to (kolodizieva, 2016) three seas economic journal 143 vol. 3 no. 1, 2022 lead to an excess or shortage of raw materials and/or final products in warehouses (flexibility parameter). lack of raw materials and/or final products in stock may result in non-compliance with delivery conditions (reliability parameter). at the same time, the excess of raw materials and/or products in warehouses indicates the additional costs of enterprises. considering the above, it can be assumed that the system of scm system efficiency evaluation has cyclicality. the evaluation of the effectiveness of the scm system parameters is determined only by taking into account the correct planned execution. at the same time, the establishment of planned indicators takes place only taking into account the evaluation of the effectiveness of the scm system parameters, in particular the factors that may negatively affect the final result of such parameters. the implementation of an effective scm system in the pharmaceutical industry is necessary not only for the pharmaceutical industry, but also for the state. a large mass of the added value of pharmaceutical products is formed at all stages of supply. it is beneficial for the business environment to work on reducing costs at all stages of the supply chain at the expense of revenue growth. the state is interested in increasing the revenues of pharmaceutical companies, as budget expenditures will increase at the expense of the tax system. 4. possible consequences of an ineffective scm system a stable and flexible scm system is the key to the success of the pharmaceutical industry. with the onset of quarantine measures caused by the covid-19 pandemic, logistics processes are in a state of uncertainty and chaos. for example, china was one of the first countries to experience the severe consequences of the pandemic. japan is close to deciding to move its own production facilities out of china. the trend of global corporations, particularly pharmaceutical corporations, to move their production facilities existed even before the covid-19 pandemic due to the increased costs associated with workers' compensation. many multinational corporations are moving their production facilities to the european continent for a more flexible and predictable process of product delivery to consumers. ukrainian businesses are avoiding long-term warehouse lease offers due to the contingency of the scm system sector related to the application of quarantine measures. this approach allows companies to respond much faster to new challenges (trans.eu, 2020). due to the strict domestic legislation on the regulation of the pharmaceutical industry, companies repeatedly face unpredictable situations, largely related to the scm system. to overcome such obstacles, it is necessary to properly identify the main priorities and model possible situations in advance. this approach will allow pharmaceutical companies to control possible contingencies (dorokhova et al., 2020). significant failures and incorrect forecasts in the scm system can have negative financial consequences for manufacturing, wholesale and retail businesses. depending on the characteristics of possible problems in scm system, such consequences can be: reduction of production, excess of final products in warehouses, increase in transportation costs, etc. to avoid negative consequences, it is necessary to implement scm system taking into account the effectiveness of the above-mentioned parameters. 5. research methodology theoretical and methodological basis of the study is the scm system as a major component of the pharmaceutical industry in ukraine. the results of the study are based on scientific works of leading domestic scientists, public and state organizations and others. at the same time, modern research mainly uses systemic, process and logical approaches. in this regard, the following scientific methods were used in the re-study: 1) analogy – an effective supply chain management system (hereinafter – scm system) is defined as important for enter-prises of any sector of the national economy of ukraine; 2) induction – significant attention is paid to the individual components and parameters of the supply chain of the pharmaceutical industry in ukraine; 3) generalization – it was found that, despite the diversity of views on the definition of scm system, the basic idea of such a definition is identical; 4) others. 6. conclusions having a commercial strategy that provides scm system approaches is a significant advantage for most businesses. commercial strategy and scm system management strategy are interrelated, as scm system also provides research and forecasting of demand for products. modern software for scm systems has helped to improve the efficiency of coordination of business processes, from the production of goods to their delivery to the end consumer. the spread of the covid-19 pandemic has forced most businesses to transform their own supply chain business processes. today the pharmaceutical industry of ukraine is the guarantor of preservation of life and health of citizens. for further development of this industry, pharmaceutical companies need to implement scm systems in accordance with modern realities and taking into account the effectiveness of parameters (flexibility, speed, reliability, costs). the overall effectiveness of the entire scm system can be judged only after a detailed evaluation of each parameter three seas economic journal 144 vol. 3 no. 1, 2022 of such a system. only high values of all the above parameters can guarantee the performance of the entire scm system. changes related to the possibility of online sales of medicines may have a positive impact on the efficiency of supply chain management system of pharmaceutical industry in ukraine, which will further increase its profitability. nevertheless, such sales cannot fully guarantee high quality and product safety. at the same time, it can be assumed that the performance evaluation system for the scm system is cyclical. an effective scm system of the pharmaceutical industry has a positive impact on the state budget. rigid domestic legislation on the regulation of the pharmaceutical industry greatly contributes to the occurrence of unpredictable situations in relation to the scm system. correctly defined main priorities of scm system, in particular, the possible negative situations modeled in advance are a guarantee of overcoming any obstacles. despite the large number of definitions relating to scm system, the general idea is the process of moving goods from the 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(ukraine, kharkiv, march 19, 2020), kharkiv: menedzhment ta marketynh u skladi suchasnoi ekonomiky, nauky, osvity, praktyky, pp. 233–235. available at: http://91.234.42.22/handle/123456789/22120 (accessed 12 december 2021). three seas economic journal 73 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 institute for economics and forecasting, national academy of science of ukraine, ukraine (corresponding author) orcid: https://orcid.org/0000-0001-9674-1337 doi: https://doi.org/10.30525/2661-5150/2022-3-11 peculiarities of digitalization of financial services among countries by income groups: conclusions for ukraine oleksii shpanel-yukhta1 abstract. the article reveals the features of digitalization in the context of groups of countries by income level. the main channels of digitalization impact on the financial market and economic growth are highlighted. it is established that the combination of digitalization of financial depth and financial inclusion and the effectiveness of monetary policy stimulates economic growth. comparison of 3 groups of indicators identical in economic value but with different impacts of digitalization (availability of an account – availability of a mobile account, availability of borrowings – availability of mobile borrowings, availability of savings – availability of mobile savings) and the indicator of electronic payments made it possible to generalize that digitalization does not significantly affect the stimulation of credit inclusion, but stimulates the expansion of access to banking operations: opening an account, making/receiving transfers and savings. given the high level of financial inclusion in high-income countries, digitalization of financial services was also noted before the digitalization of financial services, digitalization only simplifies access to accounts and payments, but does not expand it (in particular, among high-income countries, the share of the population with open accounts in financial institutions is more than 96% in 2021). it is determined that digitalization can partially resolve the problem of low confidence in financial institutions. thus, for the period from 2017 to 2021, the share of the population with mobile accounts in low-income countries exceeded the share of the population with accounts in formal financial institutions. it was noted that the covid-19 pandemic and post-pandemic recovery have become an additional incentive to deepen the digitalization of financial services, as they have necessitated the expansion of remote communication channels and customer service for financial institutions. it is emphasized that the growth in the prevalence of electronic payments in the world as a whole is due to their ease of use for crossborder payments on global online trading platforms and the expansion of remote payments in the context of restrictions related to the covid-19 pandemic. the trends of digitalization of financial services in ukraine are summarized. the domestic level of prevalence of accounts in financial institutions and electronic payments among the population corresponds to the level of countries with an income level above the average. the need for financial deepening is emphasized, both from the point of view of the banks' resource banking (stimulating the transfer of savings to the financial sector and thus launching the economic cycle) and from the point of view of lending to the real sector. the advantage of digitalization in the conditions of martial law was highlighted, when due to the high level of financial services coverage it was possible to ensure payments – against the background of the complication of the state's financial obligations to citizens and the risks of the country's payment system. key words: digitalization, financial services, monetary policy, financial inclusion. jel classification: g20 1. introduction digitalization is one of the key characteristics of the early 21st century and an integral part of most spheres of society. at the same time, the financial sector is one of the drivers of digitalization of economic processes. in general, the digitalization of financial services is the process of digitalizing banking and non-banking products and services for consumers and creating new ways to channel financial flows to businesses and households, deepening financial inclusion. according to experts of the institute for management development, digitalization is one of the foundations for three seas economic journal 74 vol. 3 no. 3, 2022 the formation of economic competitiveness, which provides a higher level of income (imd, 2022). furthermore, digitalization is an indicator of a digital nation and is the result of a combination of digital talent, digital regulation and data management, digital attitudes and availability of financial capital (malpas, 2022). the discussion about the need for digitalization became especially active during the covid-19 pandemic, as there was a need for: 1. providing financial services with minimal physical contact of the population. 2. ensuring the implementation of transfer payments (pensions, scholarships, etc.) with remote service by state and financial institutions. 3. transformation of the sphere of business services in the conditions of remote work of business. some aspects that stimulate digitalization are: 1. implementation of payment service directive 2 in the eu. 2. development of digital currencies of central banks. 3. development of cryptoassets and digital universe as an alternative to the standard financial circulation (adrian, mancini-grifoli 2021). in addition, in the context of russia's full-scale invasion of ukraine, the high level of digitalization of services has made it possible to continuously supply most financial services and new financial assistance programs, including foreign ones, taking into account internal and international migration of the population. ukrainian experience has shown that the digitalization of financial services is an additional guarantee of the continuity of financial services, including in the face of unforeseen external risks. despite the positives of digitalization, one of the key under-researched aspects of digitalization is the nature of its impact on individual financial services depending on the average income level of the country 's economy. 2. theoretical aspects of the relationship between digitalization and financial policy efficiency according to f. mishkin, the effectiveness of financial policy directly depends on the level of development of the financial system and financial stability. the ability to withstand external shocks is one of the key features of an effective monetary policy of the central bank (mishkin, 2002). in turn, the imf experts determine that one of the key indicators of the effectiveness of financial policy is its manageability – that is, the speed and adequacy of the market reaction to certain actions of the regulator. in particular, this is an important factor for small open economies. in general, most researchers agree that one of the key characteristics of an effective financial policy is the ability to achieve the set monetary policy objectives. for his part, k. mathai (mathai, 2020) from the imf, considering the effectiveness of financial policy, focuses on the effectiveness of monetary policy as the ability to achieve the goals of economic growth in the long run and, accordingly, price stability in the short run. thus, in the long run, an effective financial policy is one of the important factors in ensuring a higher level of income for the population. managed achievement of economic policy goals, both long-term and short-term, is based on achieving a certain level of development of the financial system, which is based on: 1. financial depth/financial deepening is an effective characteristic that demonstrates the saturation of the economy with financial resources, which makes it possible to assess the ability of the financial system to effectively mobilize and redistribute financial resources to achieve sustainable economic develop ment (shapoval, 2021). 2. financial inclusion is the process of interaction between financial market entities and consumers of financial services, which through the provision of equal access to financial services ensures the involvement of consumers of financial services in the financial system. at the same time, effective access to credit, savings, payments and insurance from formal service providers implies convenient and affordable provision of services to the customer under conditions of sustainability for the provider (sustainable services), as a result of which clients outside the formal financial system (i.e., the one regulated by law) start using formal financial services rather than informal options. later, the concept of financial inclusion was subject to different interpretations by financial market participants. thus, financial inclusion is defined as the process of providing financial services in accordance with the needs of disadvantaged groups (in particular, lowincome population) at an affordable price and in a transparent manner (oecd, 2011). 3. efficiency of monetary policy – the ability of the financial sector and its governing bodies to ensure a sufficient level of availability of financial services, the level of their use and further redistribution of funds through the financial sector in the most efficient way. digitalization affects financial development through: 1. expanding access to financial services by providing remote/digital access to financial services. 2. financial deepening as a resulting element of simplifying access and the possibility of prompt use/conversion of money into various liquid forms (kerimov, 2021). three seas economic journal 75 vol. 3 no. 3, 2022 3. empirical aspects of the impact of digitalization on economic development the impact of digitalization was assessed by grouping countries by per capita income (according to the world bank methodology into low-income, lower-middle-income, upper-middle-income and high-income countries, respectively) by indicators: 1. account availability – as a basic indicator of the availability of the main financial service – opening an account. 2. electronic payments – as a basic indicator of the use of the main service of economic circulation. 3. borrowing/lending – as an indicator of credit as a driving force of economic development. 4. savings/deposits – as an indicator of the financial base of financial institutions for credit and payment transactions. figure 1 shows the dynamics of changes in access indicators under the influence of digitalization by income level. the classical indicator for assessing the availability of financial resources is the share of the population with open accounts in financial institutions. during 2017–2021, this indicator reached its maximum peak among high-income countries, as only more than 3% of the population over 15 years old do not have open accounts in financial institutions. given the presence of financial exclusion (due to physiological, religious and other restrictions), the maximum level of "coverage" with basic financial services can be noted. as a result, opening a digital account (an indicator of the use of mobile money in the last 12 months) is not typical for high-income countries. for upper-middle income groups, there was the largest increase (more than 10 percentage points) in the share of the population with open accounts in financial institutions and more than 4 times (up to 10%) in the digital indicator. this trend indicates the legalization and simplification of the legal circulation of mobile/virtual money systems in countries with appropriate income levels and the deepening of access to financial services in general. the low level of trust in financial institutions, geographical problems with the availability of financial institutions for opening accounts, complicated opening procedures are the main reasons for the lower level of financial inclusion in the respective countries and the dynamic development of mobile payments. for example, one of the successful central bank digital currency projects was launched in nigeria. in october 2021, nigeria launched africa's first digital currency enaira. during the launch, the governor of the central bank of nigeria announced that 500 million enaira (usd 1.2 million) had already been generated. as of december 2021, over 600 thousand enaira wallets have been created and over 35 thousand transactions have been conducted. currently, 90% of transactions are between people and businesses. enaira is expected to help nigeria achieve its goal of increasing financial inclusion low level of income high level of income above average income lower than average income level legend. figure 1. dynamics of accessibility indicators by groups of countries according to income level, % source: compiled by the author based on (global findex database, 2022) three seas economic journal 76 vol. 3 no. 3, 2022 from 64% to 95%. a well managed enaira is projected to accumulate $29 billion to gdp over the next ten years (atlantic council, 2022). as for ukraine, the prevalence of accounts corresponds to the level of higher income groups. a significant increase (by 20) in the share of the population with open accounts in financial institutions is due to the general digitalization of the population, the expansion of electronic channels of communi cation between banks and customers, and the linking of money transfers, social and wage payments in the private sector to bank accounts. given the data in figure 2, the growth of e-payments is typical for all income groups both in 2017 and 2021. the level of financial inclusion in ukraine corresponds to the level of countries with above average income. the dynamics of digital payments depends on: 1. expansion of infrastructure and simplification of regulation of electronic payments. 2. extension of e-commerce segment and online sales, especially in the context of covid-19. 3. growth of trade on international online platforms (aliexpress, alibaba, ebay, amazon, etc.) and simplification/acceleration of cross-border payments through the use of electronic payments and acceleration of goods delivery. more than 50% of the world's population (figure 3) borrow money in one form or another. however, while in high-income countries up to 80% of borrowings are made through financial institutions, in low-income countries only 22% of borrowings are made through financial institutions. one of the main ones is higher requirements for borrowers at lower income levels, lower levels of guaranteed income in lower income countries and as a result inability to obtain loans from financial institutions. although digitalization has a smaller impact on lending volumes as it cannot solve these basic problems, it is a critical factor in the lending process as: 1. it reduces the cost of scoring a client through the introduction of automated solutions. 2. it reduces the cost of attracting customers by spreading aggregators of financial offers (shapoval & shpanel-yukhta, 2021). one of the key aspects of the functioning of financial institutions is the ability to raise funds for their further use (figure 4). while overall savings, including savings in financial institutions, have increased among high-income and upper-middleincome countries, they have declined among lowermiddle-income and low-income countries. this trend is caused by: 1. the covid-19 pandemic, which for the population of poorer countries has led to the process of erosion of savings in the context of the economic downturn. 2. stimulating fiscal measures of developed countries and measures to support the population, which had a positive impact on the propensity to save. legend. high level of income low level of income above average income lower than average income level figure 2. dynamics of digital payments by country groups according to income level, % source: compiled by the author based on (global findex database, 2022) three seas economic journal 77 vol. 3 no. 3, 2022 high level of income above average income lower than average income level low level of income legend. figure 3. dynamics of lending by groups of countries according to income level, % source: compiled by the author based on (global findex database, 2022) legend. high level of income above average income lower than average income level low level of income figure 4. savings dynamics by country groups by income level, % source: compiled by the author based on (global findex database, 2022) three seas economic journal 78 vol. 3 no. 3, 2022 the spread of electronic money among low-income countries, where the population has become more trusting than financial institutions. it should be noted that a slight decrease in both savings and savings in financial institutions of ukraine is explained by the fact that: 1. in 2017–2019, the consequences of the significant contraction of the banking sector after the events of 2014 were still felt. 2. covid-19 has affected the real income of the population and reduced the potential for saving money. 3. the maximum amount of deposit reimbursement was not changed: it remained at the level of uah 200 thousand even after a significant devaluation of the hryvnia since 2014 – only under martial law in 2022 it was increased to uah 600 thousand, and without any limitations on the amount. 4. conclusions the analyzed trends in the digitalization of financial services have shown that the level of income is one of the determining factors of digitalization in certain segments of the financial market. 1. within the framework of financial inclusion, in order to ensure the accessibility of the population to financial services and products, digitalization ensures the inclusion of an additional percentage of the population in the use of financial services. 2. digitalization does not affect the volume and spread of lending through financial intermediaries, but primarily affects the structure of lending. 3. raising funds through digital assets is a promising direction for the development of deposit relations and, accordingly, improving bank funding. the level of trust in virtual institutions is higher than in formal financial institutions in low-income countries. at the same time, savings institutions are underdeveloped in high-income countries and may provide additional liquidity reserves in the future. 4. in terms of accessibility and use of payments, the level of financial inclusion in ukraine corresponds to the level of upper-middle-income countries. 5. in terms of lending and savings, the level of financial inclusion in ukraine is typical of the lower middle income group. that is, electronic funds are a potential for liquidity formation, which can be further used to increase financial depth. references: adrian, t., & mancini-grifoli, t. (2021). a new era of digital money. finance & development. june, 2021. available at: https://www.imf.org/external/pubs/ft/fandd/2021/06/online/digital-money-new-era-adrianmancini-griffoli.htm atlantic council (2022). central bank digital currency tracker. available at: https://www.atlanticcouncil.org/ cbdctracker/ global findex database (2022). retrieved september 30, 2022 from https://globalfindex.worldbank.org/ imd world competitiveness center (2022). available at: https://www.imd.org/centers/world-competitivenesscenter/rankings/world-digital-competitiveness/ kerimov, p. (2021). financial depth-economic growth nexus: implications for the ukrainian banking sector. banks and bank systems, vol. 16(4), pp. 72–83. doi: https://doi.org/10.21511/bbs.16(4).2021.07 malpas, d. (2022). aiding the digital revolution in global financial inclusion. word bank blogs. available at: https://blogs.worldbank.org/voices/aiding-digital-revolution-global-financial-inclusion mathai, k. (2020). monetary policy: stabilizing prices and output. finance & development. archive. available at: https://www.imf.org/external/pubs/ft/fandd/basics/monpol.htm mishkin, f. (2002). does inflation targeting matter? commentary. federal reserve bank of st louis review, vol. 84, pp. 149–153. roundtable on the updates on financial education and inclusion programmes (2011). oecd. presentation. available at: https://www.oecd.org/finance/financial-education/48303408.pdf shapoval, y. (2021). relationship between financial innovation, financial depth, and economic growth. investment management and financial innovations, vol. 18(4), pp. 203–212. doi: https://doi.org/10.21511/ imfi.18(4).2021.18 shapoval, y., & shpanel-yukhta, o. (2021). effect of financial deepening on economic growth: does it encourage income group transition? banks and bank systems, vol. 16(4), pp. 101–113. doi: https://doi.org/10.21511/ bbs.16(4).2021.09 received on: 7th of september, 2022 accepted on: 14th of october, 2022 published on: 31th of october, 2022 three seas economic journal 58 vol. 4 no. 1, 2023 1 admiral makarov national university of shipbuilding, ukraine (corresponding author) e-mail: volodymyr.parsyak@nuos.edu.ua orcid: https://orcid.org/0000-0002-4756-8977 researcherid: v-8329-2017 2 admiral makarov national university of shipbuilding, ukraine e-mail: eyzhukova@gmail.com orcid: https://orcid.org/0000-0001-8966-8354 3 admiral makarov national university of shipbuilding, ukraine e-mail: artem.biz.mk@gmail.com this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-7 ukraine's blue economy: potential and prospects for integration into the european space volodymyr parsyak1, olena zhukova2, artem vashchylenko3 abstract. the purpose of the work is to analyze the state of affairs in the ukrainian blue economy. this study limited its scope to regions that are not currently occupied by the russian army. these are geographical boundaries. in terms of types of economic activity, these include fishing and fish processing, aquaculture, coastal and marine tourism, and maritime transportation. the subject of the study is the theoretical and applied aspects of determining trends in the development of key types of economic activity in the maritime complex. methodology. the authors used the methods of analysis, synthesis, systematization and generalization to solve the problems that appeared. according to the results of the conducted research, it was found out that governments, research community, academia, business investors are paying more and more attention to the blue economy. the main reason is that the resources humanity has had on land are running out. and there are no other resources on the planet. in addition, there are the economic growth prospects associated with the maritime industry. these are new jobs, the contribution of blue economy enterprises to the improvement of macroeconomic indicators, social stabilization in the coastal regions of coastal states. in this context, it is important to unite the efforts of the coastal states around the urgent problems of developing the resources of the world ocean. the black sea and the countries bordering it are no exception. each of them is trying to understand what its potential is, what needs to be done to mobilize it, what can be offered to partners for the development and implementation of joint projects. ukraine has always positioned itself as a maritime power. there are good reasons for this. it has a long coastline, large areas of internal waters, territorial sea and exclusive economic zone. conclusion. the wealth of new data presented in this article provides valuable insights into important aspects of business activity in key sectors of the ukrainian blue economy. now it is possible to better understand its needs and contribution to the development of all stakeholders. the presented generalizations are important for practitioners, especially for owners and management of enterprises. key words: ukraine, economy, blue economy, fisheries, aquaculture, coastal maritime tourism, maritime transport. jel classification: l10, l60, o18, r10 1. introduction the increased attention paid to the blue economy in recent years is due to the growing role of the world ocean as one of the largest providers of vital ecosystem services to humanity, as a source of food, and as an area of activity for numerous marine industries that provide jobs for hundreds of thousands of people in coastal areas and contracts for businesses beyond its borders. these include shipbuilding, maritime freight and passenger transport, aquaculture, offshore wind, tidal and wave energy, mariculture, extraction of minerals from and under the seabed, recreation, etc. objectively, the prospects of the blue economy do not pass by ukraine with its internal sea waters of the area of 27,000 km2, a territorial sea of the area of about 30,000 km2, a maritime state border of the length of 1,355 km, and an exclusive economic zone of the area of 82,000 km2. the detailed blue economy agenda developed by the european commission aims to bring three seas economic journal 59 vol. 4 no. 1, 2023 together the potential of industry, finance, academia and public authorities to create synergies from relevant investments in research, skills and innovation. in ukraine, the center of blue economy enterprises is a part of the northern black sea region within the geographical boundaries of the odesa and mykolaiv oblasts. a general presentation of some of its varieties is given below. the purpose of this study is to identify the key players of the ukrainian blue economy in its key sectors: fisheries and aquaculture, coastal maritime tourism, and maritime transport. the sources of information were public registers, reports of the state statistics service of ukraine, information published on the official websites of registered enterprises, organizations and institutions, databases of public associations (in particular, the business support center, the maritime cluster of ukraine, regional chambers of commerce and industry). 2. fishing and fish processing odesa and mykolaiv oblasts accounted for 15 and 22 percent, respectively, of aquatic living resources produced by domestic fishermen (fish and seafood, 2019). plaice, mullet, trachurus, bluefish, diplodus, goby, and other species were the basis of marine fish catch (figure 1). in some of them there are facts of overfishing, influence of unfavorable anthropogenic factors, violations of fishing rules and, as a result, a decrease in the volume of industrial production. (demianenko, 2019) this makes it urgent to initiate mariculture projects, on the one hand, and to introduce programs for the preservation of biological diversity in natural reservoirs of inland, territorial sea and exclusive economic zone, on the other hand. as a result of the military aggression by russia and the introduction of martial law in ukraine, in 2022 the industrial catch of aquatic biological resources in internal fishery waters (parts thereof ), internal sea waters and the exclusive (maritime) economic zone of ukraine decreased by more than 62 % and amounted to 20.0 thousand tons (in 2021 – 53.4 thousand tons). about 80 % of the users of aquatic bioresources stopped their economic activity. in the black sea basin, the industrial activity of ukrainian business entities has de facto stopped. as a result, there were insurmountable obstacles to scientific research activities in the field of fisheries, and fishing in waters outside the jurisdiction of ukraine suffered significant losses. despite the fact that it retains membership and capacity for expeditionary fishing in the area of responsibility of the commission for the conservation of antarctic marine living resources (ccamlr) and the northwest atlantic fisheries organization (nafo). as of august 1, 2022, the losses of the subjects of the fishing industry of ukraine due to the actions of the terrorist state amount to almost 40 million us dollars. (because of the war, 2022) the fishery complex of the odesa oblast consists of the black sea seaport, 6 fish processing 66 220 401 5254 447 1888 1210 187 0 1000 2000 3000 4000 5000 european anchovy catfish sander goby black sea shad bream sprat ballerus figure 1. structure of fish catch of ukrainian fishermen, tons source: (the catch of fish …, 2019) three seas economic journal 60 vol. 4 no. 1, 2023 factories and plants, 104 fishery enterprises of various forms of ownership, 7 fish farms, 4 of which have the status of tribal farms. 3. aquaculture aquaculture opens wide prospects for the development of the fishery complex in odesa and mykolaiv oblasts. their coastal sea waters are favorable ecosystems for the cultivation of molluscs (mussels, oysters, rapans), the industrial cultivation of which does not require the cost of artificial feed. a raft of 16×25 m, with 600 ten meter collectors suspended from it, produces more than 4 tons of oyster meat per year. since the life of molluscs is linked to the filtration of water, they also purify it. especially from pathogenic bacteria. (consolidated report, 2018) according to scientists' calculations, one mollusc can purify up to 100 litters of water per day. in the south of ukraine it is promising to cultivate euryhaline species of marine fishes that live in conditions of moderate and variable salinity and temperature ranges of this zone. they include: – mullet (flathead grey mullet, so-iuy mullet, golden grey mullet) – due to artificial reproduction, grazing in estuaries and lagoons; – pleuronectidae (platichthys – black sea turbot) – possible artificial reproduction, controlled culture in pools, recirculation systems; – sturgeon (russian sturgeon, starry sturgeon, bester, beluga, various sturgeon hybrids) – by artificial propagation, controlled commercial breeding in ponds, recirculation systems; – gobiidae – reproduction and pasture cultivation using artificial reefs. (ukrainian shalanda, 2021) in 2020, 33 specialized commercial fish farms and 56 aquaculture units operated in mykolaiv oblast. the implementation of the aquabator project – an incubator for the creation of enterprises in the field of aquaculture – began here. it provides for the creation of an ecosystem for the development of aquaculture in the south of ukraine. it is implemented by the business support center, mykolaiv city council and halytsynove village council as part of the sectoral policy support program. (aquabator, 2022) the total cost of aquabator is 8.9 million uah. the state budget provided uah 5.9 million of this amount, and the rest came from partners. it is expected that in the future aquabator will become an attractive tourist attraction. it is planned to conduct tours and treat guests with freshly prepared meals. 4. coastal and marine tourism the black sea coast of the odesa and mykolaiv oblasts has a great recreational potential. among its components the following deserve special attention: – sports and recreation. in turn, it is divided into subsystems: water and underwater recreation; – health resort. it is based on the mobilization of a number of favorable balneological factors (sea water, air, mineralized waters and mud) to restore vitality and maintain the health of patients; – cognitive. it is about the organization of excursions to architectural structures, historical and cultural monuments (including those located in the coastal areas of the country), familiarization with the ethnographic features of the regions, unique natural phenomena, excavations of ancient civilizations. the therapeutic profile of the resorts of odesa and odesa oblast is characterized by the presence of natural curative resources: mineral waters of odesa, kuialnyk and black sea deposits, poloids of kuialnyk and khadzhibey estuary, brine of estuaries and lakes. sea beaches, natural sites and complexes are conducive to treatment, health improvement and medical rehabilitation due to climatic conditions. in 2022, there were 321 health resorts in odesa oblast that could accommodate more than 40,000 clients. among the most prosperous health resorts are bilhoroddnistrovskyi (141 facilities), tatarbunary (80), kiliia (75), and ovidiopol (56) raions. (development, 2020) the main recreational areas of mykolaiv oblast are also located on the black sea and estuaries. according to the main department of statistics in mykolaiv region, 271 health and recreation facilities with 29,229 beds provide health and recreation services. these include 79 hotels (3,332 beds), 13 health resorts (3,273 beds), 12 boarding houses (2,416 beds), and 167 recreation centers (1,9357 beds). the most promising areas of tourism development in mykolaiv oblast are ecological, rural (green), historical and cultural, industrial, youth, and active types of tourism (rafting, kiting, jumping, hiking, orienteering). (the program …, 2020) three seas economic journal 61 vol. 4 no. 1, 2023 the law of ukraine "on tourism" declared it one of the priority areas of economic and cultural development. appropriate programs developed in this context constitute a complex of interrelated legal, economic and organizational measures aimed at realizing the constitutional rights of citizens to rest and a healthy lifestyle. the sphere of tourism and resorts relates to the work of enterprises of more than 50 types of activities, contributes to increasing the level of employment of the population in the coastal regions, preservation and development of their cultural potential, as part of its international component, contributes to the harmonization of relations between countries and peoples. (the law of ukraine "on tourism", 2023; the programs …, 2020) 5. maritime transportation the economy of ukraine depends on the efficient functioning of ports. about 39 % of its foreign trade (by volume) passes through ports. in particular, 90 % of the gross export of agricultural products. in recent years, the volume of cargo processing in seaports has a tendency to increase (in 2015 – 144.7 million tons, in 2016 – 131.7 million tons, in 2017 – 132.6 million tons, in 2018 – 135.2 million tons, 2019 – 160.0 million tons). in 2019, container terminals handled more than 1,003.5 thousand teu, and the volume of container trans portation increased by 18.6 %. (sea ports of ukraine …, 2020) the seaport of odesa is one of the largest on the black sea. its 55 berths have a total annual throughput capacity of 51 million tons of various cargoes. five elevators and three indoor warehouses are designed to protect and handle 12 million tons of grain per year. the ports of pivdennyi, chornomorsk, izmail, bilhoroddnistrovsk, reni and ust-danube are also integrated into the logistics scheme of sea cargo transportation. there are 34 ports and port terminals in mykolaiv and mykolaiv oblast, which form the structure of the buzka-dnipro maritime transport hub. the most efficient of them are mykolaiv sea port, olvia specialized sea port, ochakiv port, mykolaiv river port, nibulon, mykolaiv specialized port nika tera. (ports in mykolaiv oblast, 2023) their geographical location, proximity to enterprises exporting products, a developed network of related river, railway, road and air communications contribute to the organization of cargo transit. according to the data of the administration of sea ports of ukraine, the increase in the volume of transshipment through the ports of mykolaiv in 2018 compared to 2017 was 5.7 %. (on the approval..., 2020) since the beginning of the war, the russian navy has paralyzed commercial shipping in the black sea. the danube navigation route became an alternative to sea transportation. the ports of the largest river in europe have become the main alternative to sea agricultural export, their throughput capacity has reached 1.5 million tons per month. cargo turnover of danube ports for 9 months of 2022. amounted to more than 11 million tons, which is 3.5 times more than in the same period last year. (the danube ports …, 2022) another segment of the marine transportation market is the construction and maintenance of offshore energy facilities. blue energy is a tool to free humanity from hydrocarbons, the quantities of which are constantly being depleted on the planet. it also has the potential for sustainable energy production, which is important in the face of increasing environmental threats and challenges. the implementation of new legislation, the introduction of relevant standards, and the development and implementation of projects contribute to increasing the capacity of companies in this sector of the energy industry. the blue economy cannot fulfill its mission without the main component of fixed capital – ships. it requires more and more technical means: – the ability to solve more and more new tasks arising from the development of the world's oceans (both in terms of their complexity and the amount of work to be done); – maximum possible economic efficiency during operation; – minimal or zero harmful impact on the environment. for this reason, shipbuilding is not left out. since independence, the number of shipbuilding companies in the southern industrial region has almost doubled. this has happened thanks to the initiative of private capital. investors and management would certainly welcome government incentives. but in an environment three seas economic journal 62 vol. 4 no. 1, 2023 where they have to wait, they are looking for their own ways to develop their business. the military-political confrontation between ukraine and russia had a significant impact on the number of ships built. in 2014, the production volume decreased by 33.3 % compared to 2010. at the same time, the number of ships built in 2020 doubled in comparison with the first year of the war (2014). almost 30 % of the total of 176 structures belongs to the mykolaiv shipyard "nibulon" (50 vessels). the structure of the order portfolio has changed significantly. military facilities appeared in it, the construction of which was started by february 25, 2022 in cooperation with the state defense concern of the republic of turkey (corvettes) and the united kingdom (missile boats). as for civilian shipbuilding, it is dominated by individual production. this favors the use of modular technologies and the rational management of supply chains. this allows contracts to be completed quickly, with high quality and at competitive costs. the peculiarity of pre-war ukraine is the dynamic development of ship repair and conversion. looking at the number of completed orders, it is obvious that their volume is much higher than that of shipbuilding. ship repair was much less affected in 2014 and recovered more quickly. in 2019 the number of orders almost reached the level of 2010. the reality of modern shipbuilding is the flourishing of engineering. there are more than 12 design offices in mykolaiv and odesa. only one is part of the ukroboronprom group. the rest is privately owned and is constantly increasing the volume of services provided to foreign and domestic customers. the lion's share of the operating companies represents a new generation of investors, managers and engineers with a unique way of thinking and acting. this means, first, that thanks to their enthusiasm and capital, an industry of intellectual services has been created that can only be compared to the it business. they have discovered and implemented a new development strategy based on the standards of the digital economy. another characteristic feature is the acceptable cost of the work performed, which is not burdened by the high overhead costs typical of organizations with sprawling bureaucratic management structures. as a result, the cost of projects will decrease and their competitiveness will increase. 6. conclusions as a result of this study, a number of useful conclusions were drawn. it turned out that despite all the problems of business in pre-war ukraine, the blue economy exists and has a desire to develop in each of the sectors that were the focus of the study. representatives of the business community (mostly small and medium-sized enterprises) provided qualitative practical evidence that they are well aware of the principles of the blue economy. at the same time, they understand the problems they face in implementing these basic postulates. the monitoring showed the dependence of enterprises on local infrastructure and the ability of private initiative to withstand external challenges (threats) by mobilizing internal potential. the study made it possible to understand innovative ways of repositioning blue economy enterprises (their marketing strategy, products) in the national and international markets. an important condition for the development of the blue economy is the creation of an institutional basis for it, the implementation of normative legal acts, programs that regulate the activities of the government, private investors, trade and industrial associations, research institutions and universities, and encourage civil society to take active actions. much has been done in this regard, and much more needs to be done in the future. after the exhausting and destructive war is over, it will be extremely useful for ukrainian entrepreneurs to feel the support of foreign investors and donors. that is why it is so important to focus efforts on participation in international programs supporting the blue economy and eu grant programs. 7. practical implications the wealth of new data presented in this report provides valuable insight into important aspects of business activity in key sectors of the ukrainian blue economy, the needs and contributions of all stakeholders to its development. the presented generalizations, three seas economic journal 63 vol. 4 no. 1, 2023 conclusions and recommendations are important for practitioners, especially for owners and management of enterprises. by joining forces and working together, they can gain competitive advantages and protect themselves against many threats and risks. national authorities and local governments must recognize that creating the right conditions for the development of the blue economy can be a global benefit: the creation of jobs, especially in high-tech, intellectual and digital businesses, the opening of sources of wealth for maritime communities, and the well-being of coastal residents. references: the law of ukraine "on tourism" (2023). available at: https://zakon.rada.gov.ua/laws/show/ 324/95%d0 %b2 %d1 %80#text (accessed 16 february, 2023). aquabator project website (2023). available at: https://aquabator.online/ (accessed 17 february, 2023). because of the war in ukraine, the catch of fish decreased by 60 % (2022). available at: https://agropolit.com/news/24334-cherez-viynu-v-ukrayini-na-60-skorotivsya-vilov-ribi--derjribagentstvo (accessed 15 february, 2023). consolidated report on aquaculture in all partner oblasts (2020). available at: https://blacksea-cbc.net/ images/e-li brar y/bsb461_daci at_-_consolidated_repor t_on_aquaculture_in_par tner_ countries_ua.pdf (accessed 16 february, 2023). sea ports of ukraine and odessa oblast: results of 2019. department of maritime complex, transport infrastructure and communications of odesa regional state administration (2020). available at: https://morhoz.od.gov.ua/pro-viddil/ (accessed 17 february, 2023). demianenko, k. (2019). prospects of ukrainian fishing in 2020. available at: https://uifsa.ua/news/ fishery/prospects-for-ukrainian-fisheries-in-2020 (accessed 15 february, 2023). development strategy of odesa oblast for 2021–2027 (2020). available at: https://www.minregion.gov.ua/ wp-content/uploads/2020/05/strategiya-rozvytku-odeskoyi-oblasti-na-period-2021-2027-roky.pdf (accessed 17 february, 2023). "fish and seafood: 2018 results and 2019 estimates" (2019). available at: http://edclub.com.ua/ analityka/ryba-ta-ryboprodukty-rezultaty-2018-roku-ta-ocinky-na-2019-rik (accessed 15 february, 2023). on the approval of the state regional development strategy for 2021–2027 (2020). available at: https://zakon.rada.gov.ua/laws/show/695-2020%d0 %bf#text (accessed 17 february, 2023). ports in the mykolaiv oblast (2023). available at: https://tripoli.land/ua/infrostructura/porty/ nikolaevskaya (accessed 16 february, 2023). the catch of fish from the black sea has increased significantly (2019). available at: https://darg.gov.ua/_vilov_vodnih_bioresursiv_u_0_0_0_9117_1.html (accessed 15 february, 2023). the danube ports increased their cargo turnover by 3.5 times in the current year. (2022). available at: https://agropolit.com/news/24608-dunayski-porti-zbilshili-vantajoobig-u-35-razi-u-potochnomu-rotsi (accessed 18 february, 2023). the program for the development of tourism and resorts in the mykolaiv oblast for 2021–2023. available at: https://www.mk-oblrada.gov.ua/userfiles/decree/16111534666008403ad2055.pdf (accessed 17 february, 2023). the programs of activity of the cabinet of ministers of ukraine. available at: https://zakon.rada.gov.ua/ laws/show/471-2020%d0 %bf#text (accessed 18 february, 2023). ukrainian shalanda: in order to eat your own sea fish, you need to build reefs. available at: https://agravery.com/uk/posts/show/ukrainska-salanda-sob-isti-vlasnu-morsku-ribu-treba-buduvati-rifi (accessed 17 february, 2023). received on: 10th of march, 2023 accepted on: 16th of april, 2023 published on: 28th of april, 2023 three seas economic journal 42 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: ruslanaivan@gmail.com orcid: https://orcid.org/0000-0003-0663-8307 doi: https://doi.org/10.30525/2661-5150/2022-3-7 improving the methods of personnel management of the restaurant chain ruslana lopatiuk1 abstract. the aim of the article is to study the issues that determine the relationship between the management function and its instrumental apparatus to improve the efficiency of enterprises in the field of catering. methodology. the management system used and inherent in the network of restaurants in vinnytsia is investigated in order to identify their effectiveness and determine their strengths and weaknesses. the article analyzes the relationships in the team, which form the basis of personnel management at restaurant business enterprises, because in the conditions of constant socio-economic changes and dynamic development of market relations, the need for effective and professional management personnel is growing. socio-economic approaches to improving the efficiency of personnel management in the food industry are considered. according to the results of the study, it was found that the implementation of management decisions is influenced by the following factors: material and resource base, training and strategy of the company's management, and the key role is played by the support of the staff. what is the motivational component and what is the main purpose of motivation, psychophysical, personal, professional and material motivators of the behavior of employees of the restaurant chain, as well as the main types of motivation and forms of their stimulation are determined. practical implications. the main methods of improving the efficiency of personnel management are proposed, taking into account the concepts of corporate culture, leadership development and the use of positive features of the organizational structure of the network. it is argued that employees should be given the opportunity to acquire new skills and move up the hierarchical structure of the restaurant, along with the implementation of incentive motivation policy. this will significantly reduce the outflow of personnel from the enterprise and ensure its effective functioning. value/originality. the essence of the personnel management system, which is inherent in the network of restaurants in vinnytsia "faini spravy" and has a systemic nature, is substantiated, and it is established that the restaurants of this chain need constant improvement of personnel in order to continue to keep pace with modern market challenges. the company should also reduce the costs and time spent on the search for new personnel. to do this, it is necessary to establish closer ties with colleges and universities in ukraine. key words: personnel, leadership, strategy, management, restaurant business, communications. jel classification: m12, j23, j29 1. introduction effective restaurant management involves several basic tasks: public relations, inventory, staff responsibility and customer service. in some cases, the restaurant owner may act as the manager. in any case, a strong manager is an important component of a successful restaurant (kononenko, polstyana, 2019). in the conditions of constant socio-economic changes and dynamic development of market relations, the need for effective and professional management personnel is growing. the implementation of management decisions is influenced by the following factors: material and resource base, training and strategy of the company 's management, as well as the key role of support from the staff. the recent crisis showed that enterprises were not ready for the new challenges that emerged. the management system required new measures to increase staff motivation, additional training for managers and support for employees to work effectively (kozhuhivska, parubok, 2018). 2. principles of successful personnel management successful personnel management in the restaurant business largely depends on the quality of personnel three seas economic journal 43 vol. 3 no. 3, 2022 selection. the search for personnel in the restaurant business market is currently quite difficult. the main feature of the selection of professional employees is the competitiveness of the institution. the best establishments sometimes use the method of labor piracy as the main tool for managing human resources of the restaurant. as an additional incentive for cooperation, establishments use qualified motivation for this. it allows saving employees' money by providing them with additional incentives through tangible and intangible methods of motivation. some scientists also identify a system of principles that should ensure the harmonious existence of these types of motivation. researchers offer five points: 1) it is necessary to regularly improve the management system through motivational incentives. such steps will create a competitive enterprise that will hunt for valuable personnel in the labor market; 2) the task of material incentives is to orient the management structure in such a way that it is fully invested in the final result, combining into a single whole the work for themselves, for the benefit of the enterprise and the company; 3) it is recommended to invest a certain percentage of profits in providing staff with additional payments and bonuses that increase in accordance with the position held in the hierarchy of the enterprise; 4) it is necessary to give the employee the opportunity to implement the acquired experience and relevant skills for the purpose of its own realization, which is aimed directly at the development of the company; 5) it is necessary to constantly monitor the balance between two types of motivation, material and nonmaterial, in order to maintain a balanced incentive system (selyutin, 2018). the motivational component is a kind of tasking process, the purpose of which is to create such a psychological state in an employee that will help to control and model his behavior in order to purposefully activate it in the interests of the enterprise. the main purpose of motivation is to get the maximum benefit from the available labor potential of the institution and ultimately to make a profit. also, motivation as a component of labor potential is divided into certain elementary parts. among them there are subtypes of motivation: labor activity; productive employment; competitiveness of the employee; choice of workplace; mastering various means of production. unfortunately, the application of the entire motivation structure is not always traced, but only its individual components. but it is worth noting the general rules that should be systematically used at the enterprise to motivate the staff: equal opportunities; agreed remuneration; proper conditions for all employees; opportunities for professional growth; atmosphere of trust. restaurateurs in the process of carrying out their business activities constantly have to solve problems related to the management of restaurant personnel, as the availability of qualified and well-trained staff is the key to the success of the restaurant business. therefore, the creation and application of a viable personnel management system in the restaurant industry can increase the efficiency of the restaurant business several times. due to the functioning of the personnel management system, continuous improvement of methods of work with personnel is ensured using modern scientific and practical developments in this area. in turn, the essence of personnel management is to establish economic, administrative, organizational, managerial, sociopsychological, informational, intellectual and legal relations between the subject (owner or top manager of the restaurant) and objects (restaurant staff ) of management. the basis of these relations are methods of influencing the motives of behavior, interests and labor activity of restaurant workers for their most productive use. i. i. bazhan believes that the personnel of the enterprise is defined as a set of permanent employees who have undergone the necessary professional training and have practical experience (bazhan 2018). 3. management objects in the restaurant industry that is, personnel management can be understood as a purposeful complex influence on individual employees or a team in order to provide optimal conditions for creative and initiative work to achieve the company 's goals. therefore, personnel management in the restaurant business requires careful attention from owners and managers, which can be carried out qualitatively using a set of certain management methods. under the methods of personnel management understand a set of techniques and methods of influence on the staff of the enterprise to achieve the goals of the organization. however, any method of personnel management is based on the motives that guide the employee in the process of his work. in turn, the motive is the motivating reason for the actions and deeds of the staff. it is the motives that influence the interests, behavior, actions and needs of the personnel. it should be noted that each category of personnel has its own needs, and the methods of influencing them may differ. therefore, it is important to distinguish several categories of personnel of restaurant business establishments with their unique methods of managerial influence and motivation. three seas economic journal 44 vol. 3 no. 3, 2022 4. categories of restaurant staff 1. restaurant administration is the management staff, specialists who provide financial and administrative management of the restaurant (restaurant manager, accounting, marketing and advertising services, human resources, logistics, etc.) the best motivation for top management personnel is the possibility of career growth, high income, social status, recognition of their importance. 2. kitchen specialists are qualified workers who ensure high quality of cooking, their wide range in the restaurant (chef, pastry chef, pizza chef, cooks, sushi chefs, etc.). motivation for this category of employees will be recognition of their talents in cooking and serving dishes, as well as their importance for the restaurant. social and psychological motivation for them can be various competitions for the title of "best in business". an element of economic motivation can be cash bonuses for the number of original dishes sold. 3. service personnel in the hall are skilled and unskilled workers who provide direct contact with customers and visitors of the restaurant (hall managers, cashiers, banquet managers, hall administrators, waiters, bartenders, sommeliers, etc.) the main economic motivation for them will be the amount of tips received from satisfied customers. 4. employees of auxiliary services are unskilled workers who provide the necessary conditions for the functioning and work of all other categories of restaurant staff (food suppliers, cleaners, dishwashers, kitchen auxiliary workers, etc.) they will be motivated by a stable and decent salary, a clear range of their responsibilities, the possibility of a short rest during the working day, respect of the management and periodic moral and material incentives. at the same time, restaurant staff is characterized by a number of specific features: high staff turnover among line staff; lack of highly qualified managerial staff; lack of hr department or hr manager in many restaurants; unprofessionalism of ordinary restaurant workers, especially waiters, bartenders and cooks. therefore, the competent use by the management of the restaurant business establishment of various management methods, ways and means of influence, tools and types of motivation, taking into account an individual approach to each of the above categories of restaurant personnel, will be the most important condition for the effective functioning of the entire restaurant personnel management system, which will allow to maintain professional and dedicated staff. to do this, it is necessary to take as a basis traditional and introduce innovative methods of personnel management of restaurant business enterprises. a. ya. kibanov proposes the following classification of personnel management methods (kibanov, 2020): 1) administrative methods (formation of the organizational structure and management bodies, approval of administrative rules and regulations, creation of orders and instructions, development of organizational regulations, performance standards and job descriptions, selection and placement of personnel); 2) economic methods (pricing policy; technical and economic analysis and justification; tax, accounting and financial accounting; planning; material incentives; economic rules and regulations); 3) social and psychological methods (social development and analysis of the team; social planning; participation of personnel in management; psychological influence on employees; moral stimulation; formation of working groups; creation and maintenance of a healthy psychological climate in the team; stimulation of creativity, initiative and responsibility). the effectiveness of the application of certain methods of personnel management depends on their motivational orientation, consistency and the availability of a mechanism for their implementation and involves the management work of the management of the restaurant business establish ment to find and implement modern and innovative methods of personnel management in the general complex of methods of personnel management of the restaurant business enterprise. 5. personnel potential of hotel and restaurant facilities the human resources potential of hotel and restaurant facilities has quantitative and qualitative characteristics. the quantitative side of human resources potential is determined, according to most economists, by the labor resources available to the enterprise in each period, as well as the amount of working time. the qualitative characteristics of human resources include indicators that can be formulated using a set of features: demographic, professional qualification, social, moral and other. the staffing potential of hotel and restaurant facilities is characterized by the following absolute and relative indicators: – the registered and attendance number of employees of the enterprise and its internal structural units, individual categories and groups at a certain date; – the average number of employees for the specified period; – the growth rate of the number of employees for the specified period; – the average length of service in the specialty; – staff turnover. the concept of "human resources" requires a more detailed study and a clear separation of the object and subject of human resources management. the main element of management is people who are both the object and the subject of management. the ability of human resources to simultaneously act as an object and subject three seas economic journal 45 vol. 3 no. 3, 2022 of management is the main specific feature of the management of hotel and restaurant facilities. the main purpose of staff motivation in the personnel management system is to get the maximum return from the use of available human resources, which allows to increase the overall efficiency and profitability of the enterprise. properly organized system of material incentives at the restaurant business enterprise creates an atmosphere where employees feel the need to work with maximum efficiency for the success of the institution. the system of material incentives requires constant study of the factors that determine material incentives. these factors are understood as the driving forces that ensure the formation and use of a set of incentives to meet the collective and personal interests of employees (tranchenko, shkolniy, lopatyuk, biletska (2018). personal self-realization is necessary for the effective work of the restaurant business. although remuneration is the most significant source of income in the restaurant business, it is impossible to ensure these qualities of an employee with the help of traditional forms of material incentives and strict external control, salary and punishment. only those employees who are aware of the meaning of their activities and strive to achieve the company 's goals can count on obtaining high results (tranchenko, 2018). it can be argued that monetary motivation by its nature is "insatiable" and in the future other types of material motivation should be used to retain specialists at the enterprise and stimulate them to perform their duties in good faith. along with a decent salary as additional financial incentives can be used: bonus system of accrual; provision of free or preferential meals at the enterprise; payment for mobile communication directly related to the implementation of the labor process; reimbursement of transportation costs; financing professional development; providing an opportunity to get a loan or a preferential loan for housing or other household needs; partial compensation of vacation expenses, etc. these benefits help to create comfortable working conditions, thanks to which a person will be satisfied with his work not only because of the salary. if the interests of the enterprise and employees are balanced, it will allow to identify a certain group of motivators in the first place. they will be interested in achieving the set goals and will encourage other employees to do so in order to get a certain incentive for the work of the team. in turn, the motivators are divided into groups: psychophysical, personal, professional and material (figure 1.) although the motivators and their elements are in different structures, they are still in some way related to each other (lopatiuk, 2021). the purpose of each hotel and restaurant enterprise is to make a profit as a result of providing effective services. they are directly related to the service, that is, the staff that provides them. in order to build quality services, it is necessary to prevent the decrease in staff motivation due to lack of support from management and in the process of disagreement with colleagues. to do this, the following system must be created that will be effective and consistent in the process of achieving the goal (tranchenko, 2018) . to improve the efficiency of personnel management abroad, there is a practice of personnel training. depending on the goals and objectives, the following training options are used: – training of new managers and specialists who are hired for the first time at the enterprise. employees are introduced to the peculiarities of the structure, economy, organization of production activities, technologies, social conditions and safety; – retraining of personnel is carried out in order to obtain additional higher or vocational education; – providing staff with special skills and knowledge that were not previously used at the enterprise to increase labor productivity and adapt staff to new realities due to changes in the production process (loptiuk 2020). after analyzing the work of vinnytsia restaurant establishments, it was concluded that there are negative trends in the work with staff during the quarantine period: – lack of professionalism of waiters (most of them do not have the appropriate qualifications and education); – decrease in motivation, which is reflected in the work of employees (they work without enthusiasm, without effort, do not show initiative, approach their duties formally). it was on the basis of our study of the chain of institutions "faini spravy " that it was possible to find out that the role of the leader is especially important when the strategy of the team is formed, which provides a variety of services and serves consumers. in the case of direct contact of the employee providing services with the recipient of these tangible and intangible benefits, the most important thing is to create a sense of a high-quality and well-coordinated team capable of providing competitive services. in the conditions of constant dynamic changes that are always inherent and occurring in the environment of restaurant business enterprises, it is worth noting that leadership qualities can positively affect the use of intellectual and human resources potential of the economy. this statement makes clear another function of management – to exercise targeted control over the entire personnel structure (tranchenko, shkolniy, lopatyuk, biletska (2018). the process of realization of such influence should lead to an increase in the types of competitive, three seas economic journal 46 vol. 3 no. 3, 2022 strategic and business-modeled behavior in the teams in order to guarantee the provision of quality goods and services to the consumer, raising the enterprise to a higher level as a result of constant inevitable processes of development of the institution and its place among the segments of the market economy. in order to effectively apply leadership as a powerful mechanism for the development of hotel and restaurant services, it is necessary to carry out its scientific institutionalization. this will make it possible to implement this approach within the framework of normal relations, thanks to the method that will consolidate this direction in socio-economic processes, streamlining them with related formats of management and leadership in the conditions of sustainable development of the business complex. at the enterprises it is advisable to apply methods related to diagnostics of assessment of return on investment in intellectual development of personnel (figure 2). they are an integral part of economic potential development and create an inextricable link between human and organizational potential. human potential should be a source of innovations that are implemented in the process of knowledge transformation (kozhuhivska, parubok, 2018) having implemented the leadership function, the next step is to improve human potential and intensify corporate culture development programs. after analyzing various results of leadership programs, it was found that the involvement of investment policy in human capital is much more effective compared to the modernization of technological production base. this conclusion is based on the fact that production facilities are managed by employees, and as a result of maximum involvement of the team in the implementation of changes, transformations and other types of optimization, it is possible to improve business results. it also depends on the number of employees involved and the speed of involving motivators for using the labor potential of the enterprise material motivators pay system copartnership participation in ownership participation in management provision of benefits professional motivators educational level professional skills experience personal motivators ability to master and generate ideascompetence responsibility initiative psychological motivators staff rotation social guarantees work force development system improvement of working conditions figure 1. the structure of motivators for increasing tpp three seas economic journal 47 vol. 3 no. 3, 2022 employees in solving certain processes. to solve complex and non-standard issues, managers use the methodology of a systematic approach, which allows to involve managers of the company at all levels, forming a powerful management team that is able to organize the team to the conditions of the most effective work (yuryk, romanyuk, 2017) in order to improve the management culture, it is necessary to identify the elements of organizational culture that have the specificity of repetition and have an indirect ability to influence other areas of communication. this type of culture begins to form as a result of communication and actions aimed at achieving the company 's goals through the staff. due to these processes, special norms of behavior, values, approach to contact with external factors were created. in order to carry out a complete, continuous reproduction of the general culture of the staff, managers need to adhere to a targeted analysis, control and evaluation in the process of setting tasks for employees. in order to ensure that employees adhere to roles, it is necessary to establish a type of reward that will have an intangible origin. another step towards improving the efficiency of personnel management is its practical side. to do this, the following criteria must be met: – constantly increase the role of self-management; – establish effective cooperation between the staff and the leader; – to improve the quality of the organization of management activities; sufficient starting capital implementatio n of the management mechanism justification of the economic feasibility of investment the relationship between expected income and risk investment investment in human capital urgency of implementati on the size of the return depends on the interest of the person high profitability in combination with riskiness influence of historical, cultural and family traditions ability to transfer the acquired knowledge longer investment period management staff figure 2. peculiarities of investing in human capital – application of ethical methods and techniques in business communication. the "lezghinka" restaurant, which is part of the "faini spravy " chain, needs constant improvement of its personnel to keep moving along with modern market challenges. the company should also reduce the costs and time spent on the search for new personnel. to do this, it is necessary to establish closer ties with colleges and universities in ukraine. 6. conclusions introducing such opportunities is a way for staff to grow and develop professionally within the company. providing employees with the opportunity to acquire new skills and move up the hierarchical structure of the restaurant, along with a policy of incentive motivation. this will significantly reduce staff turnover from the enterprise and ensure its effective functioning. in order to improve the work of the departments of the teams, it is necessary to create such conditions that will allow to implement the following factors: – as a result of the campaign on the use of business ethics, to increase the level of communication; – significantly reduce the cost of finding new employees through cooperation with colleges and universities; – to improve the moral climate of the "faini spravy " restaurant chain through the implementation of the principles of "organizational culture", which have the specificity of repetition and have an indirect ability to influence other areas of communication. this type of three seas economic journal 48 vol. 3 no. 3, 2022 culture begins to form as a result of communication and actions aimed at achieving the company 's goals through the staff; – introduction of self-management, increasing the level of responsibility of employees and cooperation with managers; – due to the introduction of internal culture in the farm, staff turnover will be significantly reduced. improving the efficiency of personnel management also requires the implementation of a program to strengthen communications with staff. the absence of such communications of one department with other departments of the restaurant for the most part always contributes to a decrease in the speed and quality of work. references: kozhuhivska, r . b., & parubok, n. v. (2018). improvement of the organizational structure of the management of hospitality enterprises. economy and society, vol. 17, pp. 258–264. kononenko, t. p., & polstyana, n. v. (2019). improvement of quality management of hotel and restaurant services. in the 4th international scientific and practical conference "scientific achievements of modern society "(december 4-6, 2019). cognum publishing house, liverpool, united kingdom. paliychuk, e. s., & pavlyk, i. v. (2020). theoretical approaches to the formation of organizational and economic mechanisms for increasing the efficiency of the functioning of enterprises in the food sector. scientific bulletin of uzhhorod university. "economy" series, vol. 1(55), pp. 108–111. lopatiuk, r . i. (2020). аplication of economic and mathematical models for the restaurant enterprise management. colloquium-journal, vol. 31(83), pp. 7–11. selyutin, s. v. (2018). assessment of strategic development of restaurant establishments. business inform, vol. 10, pp. 421–428. tranchenko, l. v., shkolniy, o. o., lopatyuk, r . i., & biletska, n. v. (2018). peculiarities of managing enterprises in the service sector. entrepreneurship and trade, vol. 23, pp. 137–143. harun, o. a. (2017). the motivational component of increasing the competitiveness of the labor potential of enterprises. black sea economic studies, vol. 15, pp. 126–130. yuryk, n., & romanyuk, o. (2017). swot analysis in diagnosing the state of the organization. materials of the international scientific and practical conference of students and young scientists "socio-economic aspects of economic development", april 27-28, 2017. ternopil: tntu. received on: 2th of september, 2022 accepted on: 7th of october, 2022 published on: 31th of october, 2022 three seas economic journal 58 vol. 3 no. 3, 2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 1 state pedagogical university; sector of innovation and investment problems of industrial development, institute of industrial economics of national academy of sciences of ukraine, ukraine (corresponding author) e-mail: omvitaliy@gmail.com orcid: https://orcid.org/0000-0003-0713-1444 researcherid: q-6358-2016 2 sumy state pedagogical university, ukraine e-mail: maxwmail28@gmail.com orcid: https://orcid.org/0000-0001-8010-793x 3 sumy state pedagogical university, ukraine e-mail: velozu97aproved@gmail.com orcid: https://orcid.org/0000-0003-4709-6735 doi: https://doi.org/10.30525/2661-5150/2022-3-9 innovative projects for the revitalization of old industrial areas vitaliy omelyanenko1, maksym vernydub2, oleh nosachenko3 abstract. the purpose of this study is to consider the revitalization of old industrial areas in the framework of the project approach, which will take into account modern trends in innovative development. methodology. the authors consider the revitalization of old industrial areas in the framework of the project approach, which will take into account modern trends in innovative development. the study based on the review of successful foreign and domestic experience allowed to summarize the key provisions of the revitalization of old industrial areas. it is determined that modern regional policy is implemented on the basis of targeted solution of specific problems and implementation of infrastructure projects. in foreign countries, new approaches are being applied to stimulate regional development through measures aimed at maximizing the use of regional potential, promoting entrepreneurship and innovation, supporting educational projects and retraining the local workforce, which allows better use of the potential of depressed regions in connection with the development of more prosperous regions of the country. practical implications. the formation of the innovation system of old industrial cities and regions integrated into the knowledge economy concerns the interaction of business entities at all levels: an adequate response of industrial enterprises to changing operating conditions should be supported by effective institutional policy of the region and the state. studying the world experience of modernization of old industrial regions makes it possible to identify the best practices and tools that will contribute to the development of these territories. foreign experience convincingly proves the success of such projects and can be very interesting for certain territories and monocities of ukraine. the choice of a specific model of revitalization should be carried out in each case individually, but the comprehensive renewal of the district territory involves a certain set of measures aimed at determining the new function of industrial areas, their planning structure, taking into account the entire urban organism. value/originality. based on the generalization of current trends, the promising components of modern projects for the revitalization of old industrial areas were identified. in this regard, the creative cluster is an effective tool for demonstrating modern technologies directly in natural conditions, which contributes to the confident promotion of humane and progressive ideas in modern society. key words: old industrial regions, innovations, revitalization, creative cluster, project. jel classification: o25, r11, r58 1. introduction in the modern world, economic globalization and the development of new technologies have led to increased competition between countries and regions. developed countries have already moved to a fundamentally new post-industrial or information model of development. old industrial regions, which used to be the backbone of the national economy, have turned into depressed areas that need to be transformed by the 1960s and 1970s. old industrial regions developed dynamically, but today most of them are in a state of socio-economic three seas economic journal 59 vol. 3 no. 3, 2022 crisis, in which they found themselves due to the inability to adapt to new conditions. in particular, the problems of old industrial areas are typical for the regions, many of which often do not have modern production facilities and competitive products. the common problem of the countries that went through a period of transformation in the 90s of the twentieth century is the social, economic, urban planning and architectural consequences of the decline of large industrial enterprises. to ensure the sustainable development of the territories where these enterprises were located, urban planning projects are needed that provide a new and modern look, transforming outdated territories into new urban spaces filled with modern solutions for future residents and all city residents (sustainable development of old industrial regions of ukraine: innovative dimension, 2021). in such projects, it is necessary to offer a model and concept that will include a set of solutions necessary for the life, recreation and development of a modern citizen. the territory should receive modern space, additional infrastructure capabilities, engineering networks, social infrastructure, public areas, etc. the formation of the innovation system of old industrial cities and regions integrated into the knowledge economy lies in the plane of interaction of business entities at all levels: an adequate response of industrial enterprises to changing operating conditions should be supported by effective institutional policy of the region and the state. studying the experience of modernization of old industrial regions makes it possible to identify best practices and tools that will contribute to the development of these territories. 2. literature review detrick s. (1999) describes the transformation of a steel-producing pittsburgh with an extremely tense environmental situation into a center of quality medicine, education, nanotechnology, and financial services. in other studies, for example, dicken p. (2002) and koutsk j., slach o., boruta t. (2011) analyze the transformation of textile manchester into the cradle of cultural life through the recon struction of urban areas, the development of creative industries, and the modernization of transport infrastructure. the success of emscher park, a symbol of the new economy of the cities of the ruhr region (once the center of the coal and steel industry throughout europe), is explained by the following factors shaw r . (2002): commercial companies, nonprofit organizations, as well as residents of the region, independently resources. the state was given a predominantly coordinating role. despite the availability of significant international experience in the revitalization of old industrial areas, these processes should take into account national specifics and local context. therefore, the purpose of this study is to consider the revitalization of old industrial areas in the framework of the project approach, which will take into account modern trends in innovative development. 3. world experience in revitalization of old industrial areas abandoned factories, ports, warehouses and other unused industrial areas can once again become an important and attractive part of the city. thanks to the joint efforts of architects, designers, sociologists, local authorities and civic activists, post-industrial zones are being transformed into active areas with residential buildings, business space, public spaces, cultural and tourist attractions. the transformation of former industrial areas has been a popular trend in cities across europe and the world for over 30 years. foreign experience convincingly proves the success of such projects and can be very interesting for certain territories and monocities of ukraine. the most famous examples of redevelopment, regeneration and revitalization of industrial areas are located in western europe and north america. some of them need no introduction even for those people who are far from architecture, urban planning and/or tourism. these are london's m&m's world and the docklands quarter, germany 's umbau wassertum and wunderland kalkar amusement park, montreal's 780 brewster, new york's "lincoln center" and a number of others. the result of the redevelopment of the industrial canal zone in birmingham is particularly unique, as the transformation of the city that took place in this case was very significant in terms of its perception by tourists. this is the case when the revitalization of industrial infrastructure resulted in not a secondary, but even a primary city attraction. in the most economically developed countries, there are many examples of industrial redevelopment that are neighbors with natural places of unique scenic and species characteristics, as in the case of the norwegian district of rjukan-notodden. of great interest is the experience of innovations in industrial zones based on the example of individual industries. for example, the redevelopment of meat industry territories (slaughterhouses & meatpacking districts) as one of the most thematically successful from the point of view of vivid international examples (strömberg, 2017). in poland, revitalization projects began to develop at the beginning of the 21st century. in 2002, work began on the transformation of the lodz textile factory of israel poznański into the manufactura shopping and entertainment center; in the same year in the three seas economic journal 60 vol. 3 no. 3, 2022 city of konstancin, near warsaw, in a factory building of the nineteenth century, a luxurious and chamber shopping center "old paper factory " (stara papiernia) appeared. three years later, the building of the old power plant in the center of radom housed the masovian museum of modern art, and in katowice, the silesia city center shopping center, operating on the territory of a closed mine, was put into operation. in 2003, the old brewery was opened in poznań, and the bolko loft, a house on the site of a former mine lamp house, was opened in bytom. after that, the former factories began to turn into residential buildings in lodz, gliwice and zirardow. in general, the following models of transformation of old industrial territories are distinguished (kornienko, 2019): 1. the model of preservation of production functions, which is characterized by: preservation of the original appearance of the building (restoration) and technological re-equipment of production in the existing configuration of the building or structure (modernization). 2. the model of partial replacement of functions, which is characterized by: reconstruction of the planning structure with increasing the stability of its characteristics; re-profiling of objects into museums and museum-exhibition complexes; introduction of new objects of urban planning importance in industrial areas of historical and cultural value. 3. the model of complete replacement of functions has the following features: re-profiling of industrial facilities and territories; improvement and landscaping of depressed areas; complete demolition of industrial buildings and use of the territory for other purposes. 4. key issues of revitalization projects of old industrial areas the choice of a specific model should be carried out in each case individually, but the comprehensive renovation of the district territory involves a certain set of measures aimed at determining the new function of industrial areas, their planning structure, taking into account the entire urban organism based on the following principles (chelnokov, samoylenko, kozlova, 2016): 1. the principle of sustainable development of the territory. 2. the principle of environmental friendliness. creation of a favorable environmental climate in the territories under reconstruction or adjacent to industrial facilities by removing or closing harmful production and its elimination. 3. the principle of forming the ecological framework of large areas. 4. the principle of "polycentricity " of the city. creation of a developed center of the planning district with its own specialization and with the development of both commercial and public functions. 5. the principle of deindustrialization, reduction of industrial activity of the district, replacement of its functional orientation. 6. the principle of priority. increasing the density and intensity of development in compact areas. based on the generalization of current trends, it is possible to identify promising components of modern projects for the revitalization of old industrial areas: 1. "green offices". the stimulus for the emergence of an increasing number of "green" business centers in ukraine is the oversaturation of the office segment and the growing competition between facilities. an office built according to "green" standards is characterized by lower maintenance costs and better working conditions for employees. furthermore, it is an additional opportunity for companies to demonstrate corporate social responsibility and environmental culture. there is a wide range of energy efficient technologies that can be used by developers in the construction and modernization of office space. 2. redevelopment and reconstruction of industrial areas. repurposing old industrial real estate in new directions is a global trend that is being implemented in ukraine. 3. synergy of formats – the formation of multifunctional centers. such projects combine workspaces with service, entertainment and educational components. these can be exhibition venues, art spaces, galleries. the trend concerns not only the office segment, but also the real estate market as a whole. an example is "art-zavod platforma", the territory of which unites the co-working space of the platforma brand, large-scale festivals, the creative space "akt", locations for concerts and holding corporate events. 4. office center vs full-fledged ecosystem. a stan dard set of internal infrastructure, including cafes, restaurants, etc. is not enough today. in order for a business center to be competitive, it is necessary to make office projects more service-oriented, taking into account the scope of activities and interests of tenants ("humanization of space" – the opportunity to work, relax, go to the gym, attend lectures, exhibitions or master classes without leaving the business center). modern business centers are no longer just workplaces, but a full-fledged dynamic ecosystem. 5. development of coworking spaces. flexible office formats are becoming increasingly popular in ukraine. the development of coworking is due to the following reasons: changing approaches to the organization of the work process in large cities, strengthening the role of creative work and outsourcing, as well as the development of new technologies. this format allows companies to optimize office costs. three seas economic journal 61 vol. 3 no. 3, 2022 creative cluster is a relatively new phenomenon, which is experimental in nature and is implemented mainly through revitalization – the gradual adaptation of illiquid real estate: old plants or factories that were vacated as a result of deindustrialization. the task of increasing the "creativity " of the economy implies a completely different level of requirements for work and the surrounding space and relations between people. unlike workers and service personnel, the creative class is not paid for routine work, but for intellectual work and social skills. such people are less and less ready to work in classic office business centers and require immersion in a special, creative environment. first, despite the development of remote work opportunities, the synergy of co-location remains important for people in creative professions. second, due to such proximity, a high density of events and connections (cultural, economic and social) between people is achieved. third, this environment provides an opportunity to gather on one compact platform the audience of consumers of the products of these creative industries (which is often the same for different creative segments). fourth, the concentration of creative people, activities and events combined with the design of the space creates a sense of high quality of life that allows to feel comfortable, productive and develop. the main task of the creative cluster is to attract the creative community of the city and talented youth to its territory, to provide the environment and conditions for the emergence of their business ideas, as well as to produce, promote and sell their products. the absence of any of these elements complicates the task of creating a cluster. the most attractive for potential residents of the cluster are: 1. co-location – neighborhood: this factor allows you to be close to your customers, customers and colleagues. 2. completeness and quality of service: bicycle parking, charging for telephone and electric transport, recycling points, free internet access. 3. price / quality: for minimal funds, more opportunities are provided – together with square meters, the resident receives image bonuses of the status of a resident of a fashionable place. 4. spirit of the place: the presence of the spirit and history of the place, the architectural and aesthetic value of the object. 5. do what you want: the ability of residents to freely change the rented space for themselves and participate in the design of the overall environment of the cluster. 6. diversity of layouts: constructive and planning diversity, a minimum of typical and uniform forms. 7. access 24/7: round the clock access to the territory and the opportunity to spend the night there. 8. a city within a city: human-scale heterogeneous development – ideally an entire block with courtyards, streets, and protected interior space. 9. an engaged owner who can speak the same language with tenants – one for whom the development of a creative cluster is a long-term strategy. 10. accessibility: the ability to easily reach the space by public and private transport or on foot, the availability of parking spaces. 11. attractive environment: a well-maintained area that includes places for sports and various activities, street coffee shops, bars, food establishments, as well as attractive design of the territory (artist's works, art objects, high-quality environmental design). 12. education: open cultural and educational program, spaces for events, exchange of experience and communication. when creating creative clusters it is necessary to take into account the global trend of energy saving and energy efficiency. in this regard, the creative cluster is an effective tool for demonstrating modern energy-saving technologies directly in natural (operational) conditions, which contributes to the confident promotion of humane and progressive ideas of energy saving in modern society. at the same time, the territory of the technopark can be considered as a kind of "demonstration platform" for the results of science-intensive innovative production activities of the technopark, the search for the most effective technologies of "smart home" and "smart city ". in terms of energy saving, according to the authors, the most promising is the promotion of the following science-intensive fundamental and applied technologies: – development of solar energy in architecture and construction; – development of optoelectronics for the production of leds and their application in artificial lighting systems for buildings and territories; – development of technologies for the production of reliable and durable building materials and products with increased heat-shielding, moistureproofing, air-proofing and sound-proofing properties; – the use of external building envelopes (walls, windows, roofs, basements, etc.) with an increased level of thermal protection; – the use of highly efficient engineering systems with automatic control (individual heating points, meters for the consumption of thermal energy and water, thermostats on heating devices, mechanical ventilation with heat recovery of exhaust air); the highest energy performance can be achieved only with the thermal insulation of the entire building envelope and the use of highly efficient engineering systems with automatic control, which reduces the cost of thermal energy for heating and ventilation by 70%; three seas economic journal 62 vol. 3 no. 3, 2022 – improvement of natural lighting systems in buildings through the use of hollow tubular light guides; the use of light guides can reduce the cost of artificial lighting of the building and increase the comfort of people working in the room; – construction of energy-passive and energy-active buildings; they either consume almost no energy from external sources, or they produce more than they consume; – the use of a quarterly type of building, which streamlines the planning structure, improves heat and mass transfer processes and contributes to an increase in the comfort of urban development; – the use of green building technologies, which contributes to the formation of conditions for a healthy lifestyle, primarily by absorbing dust, reducing noise levels and protecting building enclosing structures from atmospheric influences; the use of green roofs smooths out the effect of "heat islands" by equalizing surface temperatures and can significantly reduce the average temperature of an entire city; – application of multidisciplinary scientific and educational services for the training of competent specialists. an important factor in the implementation of innovative solutions at the territorial level is international. thus, thanks to the eu and undp, 20 target communities in donetsk and luhansk oblasts received unique marketing strategies, visual identity and brands to strengthen and promote local identity. the project brought together a team of developers with various stakeholders: representatives of local administrations, business, education, civil society activists and cultural figures. communities and their residents were able to realize the advantages of their own territory for development and turn it into their personal unique brand. the un recovery and peacebuilding programme is implemented by four un agencies: the united nations development programme (undp), the united nations entity for gender equality and the empowerment of women (un women), the united nations population fund (unfpa) and the food and agriculture organization (fao). the programme is supported by twelve international partners: the european union (eu), the european investment bank (eib), the u.s. embassy in ukraine, as well as the governments of canada, denmark, germany, japan, the netherlands, norway, poland, sweden, switzerland and the united kingdom. 5. conclusions the formation of the innovation system of old industrial cities and regions integrated into the knowledge economy concerns the interaction of business entities at all levels: an adequate response of industrial enterprises to changing operating conditions should be supported by effective institutional policy of the region and the state. the formation of the innovation system of old industrial cities and regions integrated into the knowledge economy concerns the interaction of business entities at all levels: an adequate response of industrial enterprises to changing operating conditions should be supported by effective institutional policy of the region and the state. the choice of a specific model of revitalization should be carried out in each case individually, but the comprehensive renewal of the district territory involves a certain set of measures aimed at determining the new function of industrial areas, their planning structure, taking into account the entire urban organism. based on the generalization of current trends, it is possible to identify promising components of modern projects for the revitalization of old industrial areas. when creating creative clusters it is necessary to take into account the global trend of energy saving and energy efficiency. in this regard, the creative cluster is an effective tool for demonstrating modern energy-saving technologies directly in natural (operational) conditions, which contributes to the confident promotion of humane and progressive ideas of energy saving in modern society. creative cluster is a relatively new phenomenon, which is experimental in nature and is implemented mainly through revitalization – the gradual adaptation of illiquid real estate: old plants or factories that were vacated as a result of deindustrialization. 6. acknowledgement the publication was publicly funded by ministry of education and science of ukraine for developing of research project "innovative component of security of sustainable development of old industrial regions of ukraine: strategic directions of institutional support and technology transfer in innovation landscapes" and project let edu 85399/17 (italy). references: 20 communities of eastern ukraine received new brands. relief web. 2021. аvailable at: https://reliefweb.int/ sites/reliefweb.int/files/resources/pr_tcbranding_ukr.pdf 5 trends in office real estate in ukraine. аvailable at: https://commercialproperty.ua/interview/5-trendov ofisnoy-nedvizhimosti-v-ukraine-/ three seas economic journal 63 vol. 3 no. 3, 2022 chelnokov, a. v., samoylenko, e. v., & kozlova, e. s. 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(2019). a practical guide to creating a creative cluster. flacon x. received on: 3th of september, 2022 accepted on: 10th of october, 2022 published on: 31th of october, 2022 three seas economic journal 24 vol. 4 no. 1, 2023 1 volodymyr dahl east ukrainian national university, kyiv, ukraine (corresponding author) e-mail: klius@snu.edu.ua orcid: https://orcid.org/0000-0002-1841-2578 2 volodymyr dahl east ukrainian national university, kyiv, ukraine e-mail: zamayoo@gmail.com orcid: https://orcid.org/0000-0003-1244-6846 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-4 methods of valuation of items of financial reporting of ukrainian enterprises: unification of national and international standards yuliia klius1, oleh zamai2 abstract. the purpose of the paper is to unify the methods of valuation of items of financial reporting of ukrainian enterprises on the basis of national and international standards. methodology. the theoretical aspects of the study are based on international accounting and financial reporting standards, as well as national accounting regulations (standards). the applied aspects consist in specifying the methods of valuation of certain objects of accounting (assets, liabilities, income, expenses) and their reflection in the financial statements. the results of the paper made it possible to determine the conditions for the implementation of international accounting and financial reporting standards in ukraine. it was shown that their implementation began in 2007 and was completed in 2012 by public joint stock companies due to the requirements for placement of securities on stock markets. the impact on the implementation of international accounting and financial reporting standards by ukrainian enterprises in connection with the signing by ukraine of the association agreement with the european union was determined. the characteristics of the anglo-american and continental accounting models, their regulatory standards, existing differences between us gaap and ifrs/ias, work on their harmonization with a view to creating an international accounting model were presented. the methods of valuation of items of financial reporting were systematized: historical cost, present value, net selling price, fair value or amount of expected compensation. their advantages, disadvantages and scope of application were determined. the cost approach to the valuation of financial reporting items and the prospects for its use were examined in more detail. it was shown that enterprise value is characterized by indicators reflected in balance sheet, off-balance sheet and financial statements. the information model for determining the value of an enterprise on the basis of financial statements was proposed. the methods of value determination depending on the organizational and legal form of an enterprise were differentiated. the sources of formation of its market and fundamental value have been clarified. the informational capacity of the items of the financial statements of an enterprise was estimated. the practical implications include the creation of an information model for determining the value of the company according to financial reporting, the substantiation of recommendations for regrouping its items for the needs of management accounting, and the creation of additional reporting forms – a value statement and a value-added statement. value/originality. the methodological recommendations for the harmonization of the systems of financial and management accounting of added value were substantiated in terms of: recognition of income generated by fully depreciated assets; capitalization of financial costs; use of 8-class accounts; off-balance sheet accounting to reflect non-financial information about capital and integrated added value of a company; simplification of the tax system by introducing a single value added tax, which will absorb income tax and lead to further harmonization of financial and tax accounting. key words: unification, methods, evaluation, financial reporting, item, ukrainian enterprises, international standards. jel classification: d82, d83, m40, m41 three seas economic journal 25 vol. 4 no. 1, 2023 1. introduction the globalization of the world economy is accompanied by an increasing role of information flows, harmonization of conditions for functioning of national economic systems, unification of accounting rules and formation of financial statements. traditional accounting and financial statements provide limited information on the value parameters of an enterprise as an integral business, limited to data on its economic resources and financial results. the accounting and information system of an enterprise is dominated by historical estimates, which is acceptable to a certain extent for the performance of activities, but does not meet the requirements of financial and investment activities, which are oriented to market indicators. at the same time, the key drivers of value (capital – human, intellectual, organizational, customer, etc.) are beyond the traditional accounting system, for which the value of the enterprise is an external category. accounting and financial statements of a company provide users with information about the balance value of assets and capital, which may be significantly different from the market value of a company, either increasing or decreasing it. when it comes to the value chain, the main disadvantage of financial reporting is its focus on traditional indicators of financial results, rather than providing information on the value of the business. (holov, 2015) the disadvantages of the formal application of accounting principles and methods in accordance with national and international standards in terms of ensuring the transparency of information on the value, eliminate creative accounting and reporting focused on the implementation of certain groups of users. the mechanisms for ensuring such possibilities are professional judgments and assumptions of company officials, which are subjective in nature, but are based on objective value factors. the basis of profit as a basic concept of accounting is the method of accrual accounting, the matching of revenues and expenses, the periodicity of their recognition. therefore, there are opportunities to influence the accounting estimates of financial results by regulating them or equalizing profits based on the appropriate distribution and redistribution of revenues and expenses among reporting periods. an important component of a company 's value is its value added. it is the subject of taxation, not financial accounting, and is reflected in the value added tax return. it is also the object of statistical accounting at the macroeconomic level in the system of national accounts. value added reflects a real increase in value for shareholders, and its creation and distribution is the subject of corporate social responsibility reporting. this is due not only to the economic but also to the social significance of value added, since it characterizes the contribution of owners and stakeholders (employees, creditors, government, etc.) to the financial results of a company. the basis for the distribution of value added among stakeholders (employees, government, owners, creditors) is capital and labor. due to the emergence of a new information function of accounting, the purpose of the study is to develop recommendations for unification of methods of valuation of items of financial reporting of ukrainian enterprises on the basis of national and international standards. 2. conditions for the implementation of international standards of accounting and financial reporting in ukraine the implementation of international accounting standards in ukraine began in 2007 in connection with the approval of the strategy for the implementation of international financial reporting standards in ukraine by the order of the cabinet of ministers of ukraine (cabinet of ministers of ukraine, 2007). for public joint stock companies, it should be completed by 2012, since in order to place securities on the stock exchange, they must prepare and publish financial statements in accordance with ifrs/ias. the signing of the eu-ukraine association agreement by ukraine gave another impetus to the introduction of international standards of accounting and financial reporting by ukrainian companies (european union, european atomic energy community, 2014). chapter 13 of this agreement regulates issues of corporate governance, accounting and auditing. measures for approximation to eu accounting and auditing legislation are listed in annex xxxv. ukraine undertook to implement regulation (eu) no. 1606/2002 of the european parliament and of the council of 19 july 2002 on the introduction of international accounting standards within 2 years from the date of entry into force of the three seas economic journal 26 vol. 4 no. 1, 2023 eu agreement, and directive no. 2006/43/eu of the european parliament and of the council of 17 may 2006 on the statutory audit of annual accounts and consolidated accounts, amending council directives no. 78/660/eeu and no. 83/349/eeu and repealing council directive no. 84/253/eeu within 3 years. the most common models are anglo american and continental, which are based, respectively, on generally accepted accounting principles of the united states (us gaap – generally accepted accounting principles), international accounting standards (ias – international accounting standards) and international financial reporting standards. despite the existing differences between us gaap and ifrs/ias, efforts have long been made to harmonize them in order to create an international accounting model. comparing these models from the perspective of cost oriented management, it should be noted that the concept of fair value has become more widespread within us gaap. 3. methods of valuing financial reporting items, their advantages, disadvantages and scope of application in accordance with paragraph 118 (ias 1) of presentation of financial statements (international accounting standard board (2012)), the following estimates may be used to present items in the financial statements: historical cost, present value, net selling price, fair value, or the amount of expected compensation. an entity may use one of these methods or a combination of them. the primary consideration in selecting a method for measuring financial reporting items is the purpose and needs of the user. because the estimates made can have a significant effect on the interpretation of the financial statements and the results of analysis, information about them should be disclosed in the notes to the financial statements. the advantages of using historical estimates include reliability and objectivity due to the existence of primary documents confirming the initial value of assets, according to which a business transaction is documented and reflected in accounting at the time of its implementation; real, rather than calculated, reflection of a change in the value of the company 's resources in accounting; determination of production costs on the basis of the actual costs of the enterprise, i.e., according to their initial valuation; ensuring the calculation of the financial result on the basis of the comparison of income with corresponding costs; generation and disclosure of information on real cash flows; relative simplicity; compliance with the concept of continuity of activity in the absence of plans for sale (liquidation). disadvantages of using historical estimates include: the artificial nature of overvaluation of assets due to their subjectivity based on assumptions and value judgments; price difference of assets from their accounting valuation in case of sale; the need to reflect inflation gain (loss) in the value of assets when market conditions change; isolation from market estimates of the value of an enterprise; low relevance for making management decisions. the value of an enterprise is a monetary estimate of all components of its assets and capital, or the price that a competent potential buyer is willing to pay for its integral property complex, as for a separate business unit, as a result of a commercial agreement voluntarily concluded with an independent seller in the real market. the value of a business entity is an indicator of its economic potential, and the dynamics of changes in value signal the state of corporate management and its quality. (atamas  p. y., atamas o. p., 2015). the indicator of enterprise value can be considered as a static category (determined by financial and economic parameters and results) and a dynamic category (determined by expectations of prospects of financial and economic development). as a complex characteristic, the enterprise value includes financial indicators (the most important are income from sales, profit, profitability) and non-financial indicators (capitals – human, intellectual, environmental, social, etc.). the value of the enterprise value estimate is determined by the following factors: the isolation of owners from management; a significant amount of accounting and non-accounting non-financial information that needs to be replaced by a comprehensive indicator; the delegation of management authority and influence over financial results to top management and employees; providing capital owners with clear and understandable guidelines regarding the investment attractiveness of three seas economic journal 27 vol. 4 no. 1, 2023 the company and its ability to create value for current and future owners; establishing price benchmarks for possible transactions for the sale and purchase of the company on a free competitive basis; creating a system of financial and managerial accounting of value indicators, including those for information and analytical accounting of value management. 4. cost approach to valuation of financial reporting items and prospects for its use the value of a company is characterized by the indicators reflected in the balance sheet, off-balance sheet and financial statements. the specified system of indicators makes it possible to identify the factors that create or destroy value. determining its magnitude, each group of internal and external users of financial reporting has its own goal and priorities for the growth of value added, therefore, it focuses on certain factors (koriahin, 2013). quantification of value is a complex process and requires an appropriate information model (table 1). the main source of information on a company's assets is the balance sheet, but it needs to be adjusted because, on the one hand, the balance sheet reflects tangible and intangible assets at table 1 information model for determining enterprise value based on financial reporting data no. of form reporting form information capacity merits drawbacks 1 2 3 4 5 1 balance sheet (statement of financial position) value of a company 's assets, liabilities and equity discloses the residual value of tangible assets and part of intangible assets covered by the provisions of np(s)a 8 "intangible assets". it does not take into account a number of important intangible factors: organizational culture, company reputation, human resources, employee loyalty and skills, innovation of activity, brand, synergy effect, etc. 2 statement of financial results (total income) revenues, expenses, financial results (total income) ability to use the capitalized value of income existence of restrictions represented by constant revenues or constant rate of their change. the need to determine typical income taking into account the characteristics of the enterprise, its development prospects, industry specifics and a number of other economic factors. the dependence of the valuation result on the chosen capitalization rate. 3 cash flow statement the value of incoming and outgoing cash flows by type of activity the ability to use cash flow discounting to determine the value of a business the need to justify the discount rate and the types of activities (operating, investing, and financing) whose net cash flows are considered. 4 statement of changes in equity changes in the value and sources of formation of the company 's own capital ability to calculate net value based on equity, its comparison with the value of net assets the need to calculate gross value based on total capital according to the balance sheet (statement of financial position). 5 notes to annual financial reporting ensures detail and validity of financial statement items, discloses methods of their calculation and estimation provide additional information for calculating the value auxiliary in nature 6 appendix to the notes to the annual financial reporting "segment information" revenues, expenses, financial results, assets and liabilities of reporting segments provide additional information to structure the value of a business for specific types of deals auxiliary in nature source: author's own calculations three seas economic journal 28 vol. 4 no. 1, 2023 a residual value, which may be higher or lower than the market value, and, on the other hand, it does not reflect the value of assets that do not meet the criteria for recognition in the balance sheet. the procedure for taking into account the factors of increase (decrease) in the value of the enterprise is determined by np(s)a 28 "decrease in the usefulness of assets" by determining the benefits of restoring the usefulness and the losses of decreasing utility. the risk of loss of enterprise value due to non-payment of receivables is taken into account by creating a provision for doubtful debts in accordance with np(s)a 10 "receivables", using one of the following methods: taking into account the absolute amount of doubtful debts or the coefficient of doubtful debts. the methods for determining the value of a company depend on its organizational and legal form. for joint-stock companies, indicators of domestic and foreign stock exchanges play an important role. therefore, indicators of public financial statements of companies whose securities are listed on stock exchanges should reliably reflect information about the market value. (mysaka, derun, 2018), which is the basis of their investment attractiveness and creditworthiness. an important element of the value-oriented management of companies is the fundamental analysis of their publicly traded securities and the calculation of their intrinsic value. it is based not only on current market conditions and the financial position of the company, but also on the long-term prospects of its operations. in contrast to intrinsic value, which takes into account fundamental value factors, a market price is based primarily on the subjective current assessment of securities by active market participants. the logic of investment decisions is based on the following patterns: if the estimated intrinsic value is higher than the current market value, the security is attractive for investment due to the growth of expected benefits, and vice versa. the volatility of stock price forecasts is determined, among other things, by the discrepancy between balance sheet estimates and market estimates of enterprise value. therefore, in order for securities to be listed, the issuing company must disclose its financial statements. depending on the geographical location of the stock trading platform, accounting model requirements may be imposed. 5. assessing the informational value of an entity's financial statement line items balance sheet indicators are used to assess the value of the company according to the real estate approach, which includes three main methods: the value of the assets in use (cost); the calculation of net assets; the liquidation value. these methods are static, unlike the dynamic ones, which are based on the data of form 2 and form 3. the statement of financial results (total income) and the statement of cash flows provide the necessary information to аssess the value by the income method, reflecting the ability of the assets to generate income (determined by the accrual method) and cash flows. the disadvantages of these methods are: firstly, the need to make certain assumptions about the nature of the distribution of income and cash flows, their composition, rate of change, etc.; secondly, the dependence of the valuation result on the chosen capitalization rate, discount rate, etc. the equity valuation is also static, it offers the possibility to determine the net value, while the gross value calculation requires the use of balance sheet data (balance sheet). the notes to the financial statements and the segment information annex to the notes to the financial statements provide additional information for the calculation of value, but are of an auxiliary nature. form 6 is most relevant for large companies that operate in various fields and have a geographically extensive branch network, and the elements of the economic and geographical structure are independent objects of sales and other transactions. in accordance with np(s)a 8 "operating segments", the valuation of assets in the financial statements must be consistent with the objectives of management and determined by the person responsible for making operating decisions. it may differ from the methods used to measure a particular asset in other forms of reporting. for example, according to international standards, the same asset may be reported in the balance sheet, in the notes to the financial statements, and in the notes to the segments at a higher (market) value, at historical cost, or at a discounted (current) cost. the real estate method is the most regulated of the abovementioned valuation methods based on financial statements. according to the law of ukraine "on valuation of property, property rights and three seas economic journal 29 vol. 4 no. 1, 2023 professional valuation activities in ukraine", the property valuation certificate is a document that provides information on the value of property on the basis of the performed valuation procedures. (verkhovna rada of ukraine, 2001) in order to obtain estimates of the value of the enterprise, it is necessary to adjust the items of the financial statements: non-operating assets should be excluded from the value of fixed assets and intangible assets, "quasi-owned" items should be included in equity, created reserves should be adjusted, costs of research, development, marketing, operational leasing should be capitalized, and emergency one-time revenues and expenses should be excluded. (lahovska, 2012) fixed assets and intangible assets should be revalued if their residual value differs significantly from their market value, otherwise indexation is acceptable. in order to use the real estate method to value a company, the company 's balance sheet must be reduced by the amount of non operating assets and liabilities, as well as related income and expenses. the main items of nonoperating assets are excess cash, marketable securities, and real estate not used for business activities. it is also necessary to revalue inventories, capitalize assets received under operating lease, adjust the amounts of unused created reserves. in the process of applying the real estate method, the real estate valuation statement should be used. the requirements for its content, preparation and verification are determined by the regulations (national standards) approved by the cabinet of ministers of ukraine. the sections of the content of the statement of real estate valuation should disclose the performed procedures and the application of the regulatory framework. real estate appraisal may be performed by state authorities, local governments, business entities having the right to perform appraisal activities. as part of the preparation for the application of the income method of accounting, it is necessary to exclude unusual, non-recurring, one-time, emergency income and expenses from the profit and loss statement in order to avoid distortion of the achieved results. it is also necessary to capitalize the costs of research and development, marketing, education and training, implementation of social programs and improvement of business processes, as well as to adjust the amount of income taxes. the annex to the notes to the annual financial statements "segment information" in accordance with np(s)a 29 "financial statements for segments" is formed for individual business segments: economic, geographical and production, geographical and sales. the availability of details of segment reporting provides a detailed description of the performing activities of an enterprise and allows forecasting its indicators, making assumptions about the forecast balance sheet, statement of financial results and statement of cash flows. the system of segment accounting and reporting is the basis for building a financial model of an enterprise and serves as an important source of information for assessing the value of the enterprise. (ihnatenko, 2012) thus, the basis of the variety of approaches to the formation of value added reporting are the traditional concepts of accounting, the data of which are subject to regrouping for the needs of management accounting and for the preparation of additional forms of reporting – the value statement, the value added statement. in order to harmonize the systems of financial and management accounting of value added, it is advisable to take the following measures: – to recognize the value generated by fully depreciated assets as added value. to do this, it is necessary to restore the usefulness of the asset based on its new book (residual) value determined from its revised period of operation; – to abandon the capitalization of financial expenses in the distribution of added value, by which is meant the inclusion of financial expenses in the cost of a qualifying asset in accordance with np(s)bu 31 "financial expenses"; – to use the 8-class accounts to summarize the information on value added and its distribution (the name "value added formation" can be an alternative name to "cost of elements"). unlike profit, value added is fully distributed in the reporting period, so the undistributed value added does not exist; – to maintain off-balance sheet accounting to reflect non-financial information on the integrated value added of a company in off-balance sheet accounts for each type of capital using financial and non-financial indicators; – to simplify the tax system by introducing a unified value-added tax, which will absorb three seas economic journal 30 vol. 4 no. 1, 2023 income tax and contribute to further harmonization of financial and tax accounting. 6. conclusions the factors of convergence of indicators of book and market value of the enterprise according to the data of financial reporting are: first, an increase in the number of items estimated at fair value; second, an increase in their share in the total balance; third, the creation of internally generated goodwill in the form of excess of market capitalization of a company over the sum of net assets. the macro-environmental drivers of corporate value growth are: financialization; digitalization of the economy; transnationalization of business, which creates opportunities for transfer pricing and tax optimization. the main risks of value loss are: speculative nature of the stock market, implementation of risky innovations, excess of the rate of growth of securities and fictitious capital emission over the indicators of growth of the real sector of economy. references: atamas, p. y., & atamas, o. p. (2015). problemy otsinky vartosti pidpryiemstva ta yii vidobrazhennia u zvitnosti dlia zovnishnikh korystuvachiv [problems of estimating the value of the enterprise and its reflection in the reporting for external users]. ekonomika. finansy. pravo, 5(1), 62–67. cabinet of ministers of ukraine (2007). on approval of the strategy for application of international financial reporting standards in ukraine. available at: https://zakon.rada.gov.ua/laws/show/9112007-%d1%80#text european union, european atomic energy community (2014). association agreement between ukraine, of the one part, and the european union, the european atomic energy community and their member states, of the other part. available at: https://zakon.rada.gov.ua/laws/show/984_011#text holov, s. (2015). oblik i zvitnist na osnovi kontseptsii dodanoi vartosti [accounting and reporting based on value added concepts]. bukhhalterskyi oblik i audyt, 8–9, 2–13. ihnatenko, t. v. (2012). zvitnist za sehmentamy: informatsiina baza dlia otsinky vartosti pidpryiemstva [segment reporting: information base for estimating the value of the enterprise]. visnyk sotsialnoekonomichnykh doslidzhen, 1, 202–207. international accounting standard board (2012). international accounting standard 1 "presentation of financial statements". available at: https://zakon.rada.gov.ua/laws/show/929_013?find=1&text=% d1%96%d1%81%d1%82%d0%be%d1%80%d0%b8%d1%87%d0%bd#w1_2 koriahin, m. (2013). finansova zvitnist yak informatsiine dzherelo dlia vyznachennia vartosti pidpryiemstva [financial reporting as an information source to determine the value of the enterprise]. zbirnyk naukovykh prats cherkaskoho derzhavnoho tekhnolohichnoho universytetu. seriia: ekonomichni nauky, 35(2), 27–31. lahovska, o. a. (2012). protsedura transformatsii finansovoi zvitnosti dlia tsilei otsinky vartosti pidpryiemstva: identyfikatsiia normalizuiuchykh koryhuvan [procedure for transforming financial statements for the purpose of estimating the value of the enterprise: identification of normalization adjustments]. ekonomichni nauky. ser.: oblik i finansy, 9(2), 244–252. mysaka, h. v., & derun, i. a. (2018). vplyv danykh finansovoi zvitnosti na formuvannia rynkovoi vartosti kompanii [the influence of financial reporting data on the formation of the company 's market value]. ekonomika ukrainy, 5, 35–48. verkhovna rada of ukraine (2001). the law of ukraine "on valuation of property, property rights and professional valuation activity in ukraine". available at: https://zakon.rada.gov.ua/laws/show/265814/ed20160116#n100 received on: 19th of march, 2023 accepted on: 17th of april, 2023 published on: 28th of april, 2023 three seas economic journal 68 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: dzisvg@gmail.com orcid: https://orcid.org/0000-0003-4897-9425 researcherid: i-5167-2018 2 vinnytsia national agrarian university, ukraine e-mail: olena.diachynska@gmail.com orcid: https://orcid.org/0000-0003-1856-3525 researcherid: l-5709-2018 doi: https://doi.org/10.30525/2661-5150/2022-1-9 simulation modeling of investment projects in the service sector viktor dzis1, olena dyachynska2 abstract. scientific article is devoted to researching the possibility of developing a simulation model of an investment project for a travel agency. in recent years, the tourism industry in the world is experiencing rapid development. the development of the tourism industry requires new investments. the investor must assess the degree of risks, the likelihood of profit or loss. it is noted that the most important advantage of simulation modeling is that it makes it possible to study economic systems at the design stage. due to this, simulation models can be used as a universal tool in making appropriate decisions under conditions of uncertainty and taking into account those factors that are difficult to predict and take into account, which is why simulation is so often used in the development of investment projects. when assessing the risks of investment projects, the collection of information requires significant financial expenses, is quite time-consuming, and sometimes impossible. the subject of the study is a set of the theoretical, methodological and organizational problems related to the management decisions regarding the investment of the projects in the field of tourism. the methodology is based on the stochastic simulation modeling of economic processes. the aim of the study is to develop a simulation model for an investment project in the tourism sector, which will allow the investor to appreciate the degree of the risk and the likelihood of return on the investment. the article reveals the features of computer simulation in the mathcad system. it is proved that it is convenient to develop simulation models of investment projects in the mathcad system. it has a powerful mathematical support, remains one of the systems in which the description of the solution of mathematical problems is given with the use of conventional mathematical formulas and symbols and does not require special training in programming. the simulation model of the investment project of the travel agency was developed in the mathcad system. statistical processing of the results of the experiments with the model has been carried out. the necessity of the detailed study of critical intervals of the histogram at the transition from loss-making to profitable npv values has been substantiated. based on the results of simulation experiments with the model, the errors of the model were estimated, the law of npv random variables distribution was established. the developed simulation model allows the investor to estimate the risk factor, the probability of profit or loss from the investment, to assess the possible uncertainty of the results of their own decision to invest in the project. conclusion: the simulation model of the investment project built and investigated in mathcad system allows investor to estimate the risk factor, probability of profit or loss for choosing the optimal pricing policy and optimization of economic strategy of tourist agency. key words: simulation model, mathcad, investments, tourism industry, risk factor, probability, histogram, critical intervals, errors. jel classification: c53, c63 1. introduction statement of the problem. simulation modeling is a method of research in which the system under study is replaced by a mathematical model that describes the real system with sufficient accuracy, and experiments are conducted with it in order to obtain information about this system. experiments with a model are called simulation. simulation is a numerical method of conducting computer experiments with mathematical models that describe the behavior of this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 69 vol. 3 no. 1, 2022 complex systems over long periods of time. simulation changes the parameters of the model without resorting to experiments on the real object. thus, simulation consists of developing a robust mathematical model of the system and performing numerous experiments on that model. the information about the simulation model has a logical and mathematical nature and is presented as a set of algorithms describing the process of system functioning. thus, the simulation model is more its software implementation on the computer, and simulation modeling is reduced to conducting experiments (simulations) with the model by repeatedly running the program with some set of data. when you investigate a system, you can act on its inputs and observe its outputs. of course, you can change all the input variables during the simulation. thus, the simulation model can function in the same way as the real system under study. during simulation, it is necessary to ensure the software implementation of algorithmic descriptions, to organize, plan and perform computational experiments with mathematical models on the computer. simulation requires a lot of computation and multiple runs of the program, so it is done with the help of computers. simulation models are quite convenient to develop in the application package: matlab (simulink application) (zhitenko, 2011), scilab (xcos application) (dubovoy, 2018), anylogic (taranenko, 2015), mathcad (gavrilenko, 2007). ms excel is often used to build simulation models of economic and financial systems (gavrilenko, 2007). however, many people prefer to write their simulation programs in high-level languages such as python, c ++ a few runs of a program with some data set. simulation statistical modeling plays an important role in modeling. simulation statistical models are used to simulate probabilistic systems and processes under uncertainty. stochastic modeling is an extremely important area of simulation modeling and is used to study the dynamics of nondeterministic systems, i.e., systems whose exact characteristics are unknown a priori. economic models are a typical example of such a system. simulation statistical modeling is a numerical method of conducting computational experiments on a computer with mathematical models that simulate the behavior of real objects, processes and systems over a certain period of time. most economic processes and systems are probabilistic, so statistical simulation models are used to study them. the essence of statistical simulation: – numerical values of stochastic parameters for each experiment are taken as random numbers from confidence ranges; – confidence range – the range limited by the optimistic and pessimistic value of the parameter; – random numbers are generated using a random number generator (often using a uniform distribution); – the obtained results are analyzed as statistical data. the most important advantage of simulation modeling is that it makes it possible to study economic systems at the design stage. because of this, simulation models can be used as a universal tool in making appropriate decisions under conditions of uncertainty and taking into account those factors that are difficult to predict, so simulation is often used in the development of investment projects. when assessing the risk of investment projects, the collection of information requires significant financial expenses, is quite laborintensive, and sometimes impossible. to adequately assess risk, it is necessary to have a sufficiently large set of data. in cases where it is difficult or impossible to obtain physical data, they are replaced by values obtained in the course of a simulation experiment. the results of the simulation allow the investor to assess the uncertainty of the decision to invest in the project, to determine the feasibility of this decision and the degree of risk. thus, building simulation models and improving the reliability of forecasting in the service sector is relevant. 2. analysis of recent research and publications the work of many scientists is devoted to the development and study of simulation models of economic systems. gavrilenko v. v., shumeiko o. a. in their work using ms excel and mathcad revealed the essence of simulation modelling of the investment risks (gavrilenko, shumeiko, 2007). the problems related to the use of new information technologies in the management analysis, namely simulation modelling were considered by kulinich m. b. (kulinich, 2009). yanekova j., fabiarova j., kadarova j. presented the methodology of choosing the optimal investment option using the monte carlo modelling and optquest optimization ( janekova, 2021). the method of construction and research of simulation models of technical systems (dubovoy, 2018; dubovoy, 2017; yeliseyev, 2021; zhitenko, 2011), is developed in detail. in the field of medicine, it is fundamental work on simulation model of the spread and reduction of the impact of the covid-19 virus (christine, 2020). 3. investment project simulation model consider an investment project for the development of a travel agency. in the model we put the conditional parameters (table 1): evaluate the effectiveness of the investment project and the risk of its implementation by simulation modeling. three seas economic journal 70 vol. 3 no. 1, 2022 investing in any project involves risk. the results of an investment project are ambiguous. this is due to the fact that the criteria for assessing the effectiveness of investments depend on cash flows, which in turn may be influenced by random factors in future periods: to increase or decrease. risk and uncertainty factors should be taken into account when assessing the effectiveness of the project, as under different possible conditions of the project the results will be different. the main criteria of the investment project: – cash flow; – the net present value of the project is net present value (npv). cash-flow (cf) is used in the analysis of securities, development of investment projects and reporting of enterprises. net cash flow from operating activities is called operational cash flow, net cash flow from investing activities is called investment cash flow. the difference between inflows and outflows in financial activities (in the narrow sense) – cash-flow from financial activities. net cash-flow (cash flow) of the enterprise for the reporting period is calculated as the arithmetic sum of cash-flow from all activities. it will be equal to the growth of cash and cash equivalents for the specified period (gavrilenko, 2007; janekova, 2021). �cf q p v pv am pd am= ⋅ −( )− −( )⋅ −( )+1 , (1) where q – sales, p – the cost of one ticket, pv – variable costs per tourist, am – depreciation, pd – taxes. the net present value (npv) of a project. this is the best known and most commonly used criterion. npv is the discounted value of a project (the present value of the income or benefits of the investment). (gavrilenko, 2007; janekova, 2021). the net present value of a project is the difference between the amount of cash flow discounted at a reasonable rate of return and the amount of investment. to calculate the npv of a project, you must determine the discount rate, use it to discount the cost and benefit streams, and add up the discounted benefits and costs (minus sign costs). npv calculations are cumbersome, so they are done on a computer using built-in functions: – ms excel function of ps (r, τ, cf); – mathcad function pv (r, τ, cf), where: r – is the discount rate (rate) for the period, τ – is the total number of payment periods (in our case 3 periods, the number of periods is equal to the number of years of implementation), cf – is the payment made in each period (enter as a negative value). npv = pv(r, τ, cf) – in. (2) for a preliminary analysis of npv value distribution series, absolute value histograms are most often used and the absolute value of frequencies is plotted along the ordinate axis rather than the frequency density. histograms for modeling investment projects should be constructed so that individual intervals contain only positive (profitable) or negative (unprofitable) npv values. if one of the histogram intervals contains both negative and positive npv values, the results of the simulation experiment can be significantly distorted. it is also necessary to examine in detail the critical intervals of the histogram at the transition from loss-making to profitable npv values. they may contain a significant number of frequencies with insignificant gains or losses for the project. errors of average npv values in these intervals can reach quite large values of 100-500%, so average values in these intervals are not very reliable. in some cases, the results of simulation modeling it is possible to establish a density function of the distribution of the random variable under study, then the probability of the event is estimated by the classical relations of mathematical statistics and probability theory. the errors of the simulation model depend on the type of mathematical dependence of the model, the number of variables, and the number of model runs. the relative error of the number of values falling within one histogram interval is estimated by the ratio (dubovoy, 2018): table 1 model parameters variable model parameters minimum maximum variable costs per hotel voucher (v), uah 3000 4600 number of sold hotel vouchers (q), units 3000 6000 the cost of one hotel voucher (p), uah 3600 5500 constant model parameters numerical value initial investment (inv), uah 1000000 fixed costs (pv), uah 500000 depreciation (am), uah 200000 tax (pod), % 60 project implementation period (τ), years 3 discount rate (r), % 10 source: developed by the authors three seas economic journal 71 vol. 3 no. 1, 2022 εi ip n = − ⋅ 1 100% , (3) where pi� �� – is the probability of the value falling into a separate interval of the histogram expressed in fractions of units p n ni i= / ; n – frequency; n – sample size (number of runs of the program on the computer). the relative error of the arithmetic mean ε and the absolute root-mean-square error σ of the mean npv value on a separate histogram interval are estimated by coefficients: ε = − ⋅ = ∑ 1 100 1n npv npv npvi n i i % , (4) σ = −( ) − = ∑ 1 1 1 2 n n npv npv i n i( ) , (5) where n – frequency; npv – the mean value of npv in a single interval. the model error can be estimated only on the basis of simulation results. for this purpose, preliminary simulation experiments are performed with the model. the number of runs of the program is chosen so that the average value of the frequency error in the interval does not exceed a predetermined level, for example 2.5%. note that the number of histogram intervals increases with the number of program runs n. in mathematical statistics the optimal number of histogram intervals k is recommended to estimate by sturges formula: k log n lgn= + ≈ +1 1 3 3222 , , (6) where n – sample size. 4. construction of a simulation model we will build the simulation model in the mathcad system (listing 1), because it has powerful mathematical software, remains one of the systems in which the description of solving mathematical problems is given using conventional mathematical formulas and symbols and does not require special training in programming (dzis, diachynska, 2020; dzis, levchuk, diachynska, 2020; dzis, 2019). vectors of random values of the variable parameters of the model (the cost of servicing one tourist, the number of tourists, the cost of the tour) will be set according to the uniform distribution law. dependencies for npv estimation (formulas 1, 2) are non-linear functions, which nullifies the results of correlation analysis, so for a detailed analysis of the results of the simulation experiment we build summary statistical tables (tables 2, 3). testing the results of simulation experiments according to the pearson agreement criterion χ2 table 2 statistical parameters of npv sampling according to the results of the simulation experiment value setting value setting the number of values of n 2000 the standard deviation of σ 3451187,1 sample average a 2218556,5 asymmetry 0,175 dispersion d 11910692397194,8 kurtosis -0,21 source: developed by the authors table 3 statistical characteristics of npv at histogram intervals interval the middle of the interval, uah the average value of npv in the interval, uah the relative error of the average value of npv in the range, % absolute root mean square error of the npv mean value in the interval, uah frequency the relative error of the npv value in the interval,% probability (profit, loss), % 1 -5674490 -5341195 8,7 101988 34 2,2 1,7 2 -3750000 -3639295 9,1 40639 98 2,2 4,9 3 -2250000 -2185424 17,1 32762 158 2,1 7,9 4 -750000 -718369 355 27323 249 2,1 12,45 5 750000 760281 566 24512 309 2,1 15,45 6 2250000 2236295 19,0 24267 350 2 17,5 7 3750000 3726007 10,6 25637 297 2,1 14,85 8 5250000 5180837 7,1 29079 217 2,1 10,85 9 6750000 6675803 5,5 34116 161 2,1 8,05 10 8250000 8189900 4,7 53656 65 2,2 3,25 11 9750000 9765995 3,8 68893 40 2,2 2,0 12 11444284 11474141 4,2 121311 22 2,2 1,1 source: developed by the authors three seas economic journal 72 vol. 3 no. 1, 2022 listing 1 three seas economic journal 73 vol. 3 no. 1, 2022 (continuation of the listing 1) three seas economic journal 74 vol. 3 no. 1, 2022 (continuation of the listing 1) three seas economic journal 75 vol. 3 no. 1, 2022 (continuation of the listing 1) source: developed by the authors based on [1; 2; 4; 6; 7] three seas economic journal 76 vol. 3 no. 1, 2022 shows that the random values of npv are distributed according to the normal distribution law (listing 1, histogram of the distribution of absolute npv frequencies, table 2, 3): f x e x a ( ) = ⋅ ⋅ − − 1 2 2 22 π σ σ ( ) , (8) where a = 2218556 5, � is the sample mean npv, σ = 3451187 1, is the standard deviation of npv. the function for the distribution of the npv random variable density (formula 8), which allows us to estimate the probability of profit or loss from the investment, is obtained. for example, the probability that the profit will be in the range from x1 1000000= � uah up to x 2 2000000= � uah is estimated by the formula: w e dx x x x a 1 2100 1 2 1 2 2 2 = ⋅ ⋅∫ − − % . ( ) π σ σ � (9) if the type of distribution function of random variables npv can not be established, the probability w of profit or loss is estimated by the usual relations of probability theory w n n x 2 100= %. (10) the probabilities of return on investment estimated by two methods (formulas 9, 10) are consistent with each other within the errors of the model w1 11 3= , %, w2 11 8= , % (listing 1). 5. conclusions and suggestions the developed simulation model is based on a scenario approach, which in turn allows you to consider and analyze different options for the development of a travel agency. cumbersome mathematical formulas are embedded in the simulation model. the model requires a significant number of simulation experiments on the computer, so it is advisable to build it in mathcad, which has all the necessary mathematical tools and powerful graphical capabilities to visualize the model (dzis, levchuk, diachynska, 2020). to generate vectors of random values of model variables (cost per tourist, number of tourists, cost of the tour) it is recommended to use the uniform law of distribution. when constructing a histogram of the distribution of random npv values, you should assume that the individual intervals of the histogram should contain only positive (profitable) or negative (unprofitable) npv values. particular attention should be paid to model accuracy. the accuracy of the model depends on the number of model runs on the computer and the type of mathematical model underlying it. it is recommended to choose such a number of program runs that the average value of frequency error in the interval does not exceed a specified level, for example, 2.5%. in some cases, it is possible to establish the law of probability distribution of random npv values, which allows the use of reliable statistical methods for analyzing the npv distribution. on the basis of the simulation experiments the law of probability density distribution of random npv values was established. the developed simulation model allows the investor to estimate the risk factor, the probability of profit or loss, to assess the possible uncertainty of the results of his own decision to invest in the project. the model, based on simulation experiments, allows investors and entrepreneurs to choose the optimal pricing policy and optimize the economic strategy of the travel agency. the scientific novelty of our results lies in the improvement of existing and introduction of new approaches to simulation modeling of simulation processes in the predictive activity of tourist infrastructure. references: gavrilenko, v. v., & shumeiko, o. a. (2007). imitatsiyne modelyuvannya investytsiynykh ryzykiv zasobamy ms extsel ta mathtsad [simulation modeling of investment risks using ms excel and mathcad]. ekonomiko-matematychne modelyuvannya sotsial'no-ekonomichnykh system – economic and mathematical modeling of socio-economic systems, vol. 12, pp. 31–34. (in ukrainian) kulinich, m. b. (2009). imitatsiyne modelyuvannya v konteksti upravlins'koho analizu [simulation in the context of management analysis]. visnyk natsional'noho universytetu l'vivs'ka politekhnika – bulletin of lviv polytechnic national university, pp. 587–590. (in ukrainian) christine, s. m., currie, john w. fowler, kathy kotiadis, thomas monks, bhakti stephan onggo duncan a. robertson et al. 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(in ukrainian) three seas economic journal 36 vol. 3 no. 4, 2022 1 national university of life and environmental sciences of ukraine, ukraine (corresponding author) e-mail: sverdanof@ukr.net orcid: https://orcid.org/0000-0002-1773-3919 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-6 lump-sum tax is an alternative to wealth taxation mykhailo sverdan1 abstract. the purpose of the article is to study the topical issues of wealth taxation, which is due to the established stable trends of growth of welfare of market participants. this study can be considered relevant and in demand based on the steady trend of enrichment that has taken hold in the world. this is a consequence of the accelerated pace of economic progress aimed at improving the well-being of individuals. modern society is characterized by a noticeable increase in the number of wealthy people and an increase in the level of well being in general. the number of wealthy individuals is especially growing. the purpose of this paper is to determine the essence of taxation of wealthy individuals. the topic of the article is driven by the need to disclose various forms and methods of taxation of wealthy individuals. at the same time, the purpose of the article is to study not the taxation of wealth, but rather the taxation of wealthy individuals. in this regard, the mechanism of one-time taxation is considered. methodology. a correct analysis of the structure of wealth and wealthy citizens in society makes it possible to assess the effectiveness of specific forms of taxation, including one-time taxation. results. the article examines the issues and current specifics of the lump-sum tax. the lump-sum tax is currently applied only in some countries, but it is quite effective. practical implications. the peculiarities of the application of a one-time tax for wealthy individuals are investigated. the economic essence of the one-time tax is investigated. the specifics of the functioning of a one-time tax for wealthy individuals in some countries of the world are considered. value/originality. it is found that wealth is a complex, multifaceted category which can be characterized as a specific characteristic of the socio-economic structure of society, which determines its status, results, dynamics and development trends. the features of the functioning of the one-time tax in different countries of the world are considered. the use of a one-time tax as a fiscal instrument in the tax system of the state is proposed. key words: taxation, wealth, lump-sum tax, consumption, income, expenses, economy, well-being. jel classification: e62, h22 1. introduction in the course of its evolution, society has gone through many different stages of development. there were different types of societies with their own social and economic structures. in the context of each component, different activities were carried out, which are closely intercon nected and dependent on each other. it is the desire to develop the economy, stimulate economic growth, fight poverty, fight for equality, etc. in fact, all activities pursued the goal of enriching and improving the well-being of individuals (creedy, 1996). there are different definitions of the state of modern society. a society of wealth is probably the most appropriate definition to define the current economic status of individuals in the social hierarchy. this definition has been given before (sverdan, 2020). regardless of the various circumstances, the socio-economic structure of a society is always divided into layers. thus, a certain pyramid is built that reflects the socioeconomic structure of society. this pyramid is built depending on the level of people's well being. at the top of the socioeconomic pyramid are the wealthy. these are rich and super-rich people who have significant wealth (income and property). a wealthy society does not mean the same level of well-being for all people. it only refers to people with above average or higher levels of well-being. this does not mean that there are no three seas economic journal 37 vol. 3 no. 4, 2022 other strata of society (with a minimum level of well-being; with a level of well-being below average). this indicates the presence of a significant number of wealthy people (as a growing indicator of the economic progress of society). the economy itself has the property of selfexpansion. the economy is aimed at creating various goods and increasing the welfare of as many individuals as possible. this goal is gradually being achieved. an increase in the number of wealthy people is a logical conse quence of economic development. the wealth society is a reality of the modern world. high net worth individuals pay taxes on an equal basis with all other categories of taxpayers. unlike all other individuals, high net worth individuals are subject to special taxes, some of which are mandatory and others potentially applicable. in general, the taxation system for high net worth individuals is simple. fiscal practice has developed various effective forms of the taxation of wealthy (ahmad, 2015). the wealth tax occupies an important place in their general system (carlos, 2016; vasques, 2016). at the same time, there are various types of wealth tax. the existence of different types of taxes makes the system of wealth taxation very diverse. each of them has its own fiscal specifics (sverdan, 2022). as an alternative to the wealth tax, there are also some other forms of taxation on the income and property of wealthy individuals (eichengreen, 1989). one of them is a lump sum tax. in today 's environment, this is not a very common, but at the same time quite effective form of taxation. the one-time tax has its own specific features. first of all, its amount does not depend on the activities of individuals. also, its general prerequisite and feature is the practical impossibility of tax evasion. some countries still use the mechanism of a one-time tax (donovan, 2016; goldberg, 2013). 2. economic prerequisites for lump-sum taxation unlike other types of wealth tax, the lumpsum tax has clear features (tam, 2004). this is a fixed tax with a specific amount of tax (kambe, 1934). this amount does not depend on the value of the total wealth of the individual. the tax is intended for foreign individuals who do not conduct profitable activities. this is an expenditure-based taxation (based on the expenses of an individual). it is not a tax on expenditures (kaldor, 1955). this tax takes into account the estimated consumption of an individual. consumption is an integral part of the economy and human life ( jappelli, 2017; ilmonen, 2011; mayer, 1972). particularly significant consumption is among wealthy individuals (kyrk, 1923; waite, 1939; wyand, 1937). thus, the tax is associated with income that is spent on consumption (duesenberry, 1949; friedman, 1957; canoyer, 1951). this is not a consumption tax, which are indirect taxes. it’s a concept of presumptive taxation (tanzi, 1987; yitzhaki, 2007). presumptive taxation involves the use of indirect methods for determining tax liabilities that differ from the usual rules based on the taxpayer's financial statements (panagariya, 1999; rajaraman, 1995). the level of income is not important; it is only important as a source of covering a person's expenses (balestrino, 2005; bovenberg, 1995; erbas, 1993). thus, a lump sum tax is a one-time tax on wealth, or rather a tax on the rich. over the past century, a number of countries have tried to introduce one-time wealth taxes or capital taxes. a one-time wealth tax involves a lump-sum charge based on the value of assets held by individuals. these can be different assets (e.g., property, savings, investments). in the twentieth century, one-time wealth taxes were widely discussed and somewhat less used. in the twenty-first century, interest in this form of fiscal policy has been revived. some of these taxes can be viewed as a type of one-time wealth tax, offering interesting variations on the traditional capital tax format. a one-time wealth tax involves shifting the tax burden to people with a higher marginal propensity to consume. historical examples provide valuable insights into the design and administration of one-time wealth taxes today. after the first world war, onetime wealth taxes were levied in countries such as italy, austria, hungary, and czechoslovakia (italy even repeated this policy in 1937). finland introduced a one-time wealth tax after the first russo-finnish war in 1941. after the second world war, wealth taxes played an important role in the reconstruction of france, west germany, japan, belgium, the netherlands (twice), finland (again), luxembourg, norway, three seas economic journal 38 vol. 3 no. 4, 2022 and denmark. these taxes proved to be successful. they often brought in substantial revenues for the state. the fact that these taxes often stretched over several years (usually three to seven years, although in the case of west germany up to 30 years) meant that wealthy business owners could afford to pay even high tax rates (up to 50% in west germany) (o’donovan, 2021). one-time wealth taxes are an unusual form of taxation. they are a highly efficient form of wealth taxation that does not distort the economic behavior of citizens and, moreover, contributes to economic stabilization. the global history of taxation has extensive experience and practice of using one-time taxes. one example of one-time taxation is the german experience of the nineteenth century. this was due to the formation of the german customs union (zollverein). the territories located outside the common customs border had to participate in the expenses of the empire by paying an "aversum" (a lump sum or an amount of justification). hamburg paid this tax. the taxation system in hamburg is specific compared to other states of the german empire because of the relationship that existed between hamburg as a free port and the imperial government. the main sources of revenue for the imperial government were import duties and taxes on consumer goods. hamburg is not considered an inland city because it is a free port; some consumer goods (spirits, beer, sugar, salt, tobacco, etc.) are not directly taxed. but since hamburg is a state of the german empire and receives benefits and advantages from institutions maintained by imperial revenues, it was necessary to find a way in which the city of hamburg could contribute its due share to the imperial treasury. this is done with the help of the socalled "aversum". in addition to this "aversum" there is collected from "aversum" a per capita tax of 5 marks, which is levied in consideration of the fact that hamburg's population, being a well-to-do people, consume more of the taxed articles than the population residing within the zollverein (henderson, 1939). another example of a one-time taxation is the tribute paid by the russian lands to the golden horde in the 13th-15th centuries (smith, 1970). this was a consequence of the formation of the mongol-tatar yoke as a system of dependence of the russian principalities on the mongol empire. in economic terms, it was tribute dependence. a little earlier, a system of onetime fees existed in kievan rus’. it was a kind of tribute paid from lands (principalities) in the 9th-12th centuries in kievan rus’. at the level of taxpayers, the most common unit of taxation was the "dym", i.e., a house (or family home). it was a fixed tax that did not depend on the number of household members, income, or property. the tax base did not matter, as it was absent, only the presence of an individual as a taxpayer was important. a similar tax structure was later formed in the tsardom of muscovy (which separated from kievan rus’ and was formed both from a part of its principalities and with the formation of new principalities and the annexation of new lands). a similar fiscal practice of one-time fees existed at different times in different countries of the world, especially in europe. this was an important reason for the formation of a better taxation system. subsequently, this motivated the use of the valuation of individuals' property for taxation. thus, the prototype of the wealth tax was formed. 3. practice of lump-sum taxation an effective system of wealth taxation has long been established in the world. the lump sum tax is not as common as other types of wealth taxes. some practice of collecting lump-sum tax. liechtenstein. cost-based taxation, or lump-sum tax, was introduced into the tax law as early as 1923. in liechtenstein, cost-based taxation is still widely used. individuals can apply to the fiscal authority for a one-time taxation. liechtenstein provides foreign nationals with preferential taxation based on annual expenditures if they meet certain requirements. they can choose to be taxed on the basis of their expenditures instead of paying the usual income and property tax. this type of taxation is provided by the liechtenstein fiscal administration only upon request. if an individual owns real estate in liechtenstein, it is subject to ordinary wealth tax (the so-called sollertrag) without deduction for liabilities or tax-exempt property. given that only a fraction of the world's income and wealth is taxed on an expenditure basis, moving to liechtenstein may be attractive to wealthy three seas economic journal 39 vol. 3 no. 4, 2022 foreign nationals. liechtenstein nationals are not eligible to apply for such a one-time taxation. the discretionary decision on one-time taxation is made by the liechtenstein fiscal authority. a one-time taxation takes into account all expenses of the taxpayer. the tax can be determined for several years depending on the regularity of the amount of expenses. the sum of all expenditures of an individual constitutes the tax base for a single taxation. if a foreign national owns property located in liechtenstein, he or she is subject to ordinary property tax and local income tax only. the exemptions and deductions (e.g., for mortgages) that are generally available to persons with unlimited liability for (ordinary) property tax and income tax do not apply. in order to be eligible for lump-sum tax, applicants must fulfil the following requirements: – move their principal or habitual residence to liechtenstein; if they previously resided in liechtenstein, they must have been absent from the country for at least 10 years before returning; – not have liechtenstein citizenship; – not have a paid job in liechtenstein; – live on income from their assets or other income received from outside. the one-time tax benefit is granted only after submitting an application to the tax authorities. the application must provide detailed information on the applicant's living expenses. this is due to the fact that the amount of the onetime tax is determined based on the total annual living expenses of the taxable person and his/her family members (in liechtenstein and abroad), and not on actual income or assets. before approving an application for a onetime tax, the tax authorities will require payment of a one-time minimum tax. this minimum tax was originally set at chf 100 per year in 1923. in 1995, the government raised the minimum tax to chf 300'000 and it has remained at this level ever since. since 2013, the tax rate has been set at 25% of expenditures. at this rate, a minimum tax of chf 300'000 is typically levied on expenditures of chf 1.2 million. accordingly, lump-sum taxation is worth considering in case one has assets worth chf 30 million or more. it should be noted that the one-time tax does not cover the property tax payable on real estate in liechtenstein, the real estate capital gains tax, and the income tax levied on liechtenstein companies. however, any assets owned by the lump sum taxpayer are not subject to gift or inheritance tax. the liechtenstein lump sum tax offers a simple and attractive solution for individuals planning to relocate to liechtenstein. some tax jurisdictions (e.g., some swiss cantons and the uk) have recently abolished the lump sum tax or increased the tax base due to changing public opinion. some swiss cantons offer similar tax regimes for foreign nationals. however, expenditure-based taxation is under scrutiny and many cantons have already abolished it. some other cantons still offer this type of taxation, but have tightened the conditions to be met and/or increased the tax base. given that many swiss cantons are seeing a decline in the adoption of favorable regimes for foreign nationals, liechtenstein may be an alternative to switzerland worth considering. given these global trends, liechtenstein is becoming an even more attractive tax jurisdiction for high-net-worth individuals. foreign nationals who are eligible for expenditure-based taxation can apply for a temporary residence permit. persons who intend to apply for a one-time taxation should also consider the relevant provisions in conjunction with a residence permit in liechtenstein. the number of residence permits is currently quite limited, although there is a lottery open to citizens of the european economic area. in addition, the issue of issuing more residence permits to wealthy or highly skilled foreigners has been discussed several times in the political process, but no final decision has been reached. due to the small size of the country, only a limited number of residence permits are issued each year. any one-time payments are non-refundable. italy. in 2017, the italian government intro duced a new tax regime: the taxation regime for non-residents without permanent residence (flat tax regime), with the aim of attracting wealthy individuals wishing to relocate to italy. individuals who move their tax residence from abroad to italy may elect to have their non-italian source income taxed in italy by applying a fixed substitute tax at a fixed rate. the italian flat tax regime ("italian substitute tax", or ‘imposta forfettaria’) exempts persons of all nationalities (including italians) who have not resided in italy for the last 9 out of 10 years from reporting three seas economic journal 40 vol. 3 no. 4, 2022 to the italian tax authorities and paying taxes on income earned abroad (including gift and inheritance tax, rent and interest tax, and capital gains tax), subject to payment of an annual flat tax. the mentioned tax regime could substitute: – tax on income from foreign investments (foreign interest, dividends and capital gains), except for capital gains from qualified partici pation received during the first five years; – wealth tax on real estate and financial investments owned outside italy; – the obligation of financial monitoring through the italian tax return (this means that an individual is not obliged to declare his or her foreign investments in the italian tax return). generally, italian tax residents pay income tax on worldwide income, a tax of 0.2% on the value of certain financial assets wherever located, and a tax of 0.76% on the value of real estate located in italy and abroad. under the law, a person who meets certain conditions can be considered resident but not domiciled in italy. this allows them to pay the usual tax on income earned in italy, as well as a one-time payment of eur 100,000 per year to cover the tax on income earned outside italy. this does not depend on the type or source of the international income. in such a case, each family member may be subject to a flat tax, replacing confiscation, on income derived from outside italy at a lower flat rate of €25,000. the maximum period for which this preferential tax regime can be used is 15 years and can be canceled by the taxpayer at any time. in order to choose this regime, a person must meet several requirements: – not being a tax resident of italy for 9 of the previous 10 years preceding the application for this tax regime; – transfer tax residence to italy; – has income earned abroad. the new package allows certain resident taxpayers to elect to pay an annual lump sum tax of eur 100,000 instead of income tax: – income tax on non-italian source items of income (under italian laws income includes dividends and capital gains); – 0.2% tax on the value of foreign financial assets; – 0.76% tax on the value of foreign real estate. thus, a one-time tax payment of eur 100,000 per year will be paid on income from foreign investments, foreign financial assets and any other income from a foreign source. since italian taxation of financial income is generally levied at a rate of 26%, a one-time tax of €100,000 corresponds to the normal taxation of approximately €385,000 of financial income (excluding the fact that this tax also replaces the wealth tax on foreign financial assets and real estate). under the res non-dom regime, taxpayers can choose in which country or countries to tax their income with a substitute fixed tax (the socalled "cherry on top" principle). any income earned in "non-elected countries" (if any) is excluded from the res non-dom regime (as well as income earned in italy) and is therefore subject to ordinary italian taxation, as well as receiving a tax credit for taxes paid abroad (within the usual limitations) and the relevant tax treaty protection. any income earned in "non-elected countries" is excluded from the flat tax regime (as well as any income earned in italy) and is therefore subject to ordinary italian taxation at a rate of up to 45%. foreign assets and income can be transferred at any time and will not be subject to italian income tax. as noted, the regime can be extended to family members for an additional eur 25,000 per person per year (family members are defined very broadly and are not limited to spouse and children). any one-time payments made are nonrefundable. the special one-time taxation regime will be automatically terminated after the expiration of the 15-year period, which cannot be extended. greece. in recent years, greece has implemented austerity measures, with sharp cuts in public spending to reduce its budget deficit. this has been accompanied by tax increases and decisive measures to combat tax evasion. the introduction of a favorable tax regime is aimed at attracting wealthy individuals to greece, as the country seeks to generate additional tax revenues from a sector that can make a significant economic contribution, while generally not overly burdening its resources. in early 2020, greece established the conditions and procedure for high-net-worth individuals who transfer their tax residence to greece to qualify for alternative lump-sum taxation. the most significant changes relate to the introduction of the greek res non-dom regime three seas economic journal 41 vol. 3 no. 4, 2022 for tax residents of greece, who can benefit from tax exemption on their foreign income subject to a one-time tax payment of eur 100,000 and provided that they have not been tax residents of greece for seven of the last eight years. individuals who choose to use the alternative taxation method in greece, as in italy, are obliged to pay a one-time tax of €100,000 annually. family members can also benefit from this regime by paying €20,000 annually (€5,000 less than in italy). once admitted to the special tax regime, an individual can use it for a maximum of fifteen years, which also corresponds to the italian equivalent. the next requirement is that such person or their relatives, directly or through a company in which they are majority shareholders, must invest in real estate or other assets, including shares in legal entities located in greece, worth at least €500,000. however, this is not mandatory for persons who have received a "golden visa" or other residence permit based on a previous investment in greece. if the investment is not finalized within three years, taxpayers will not be considered subject to the special tax regime. any one-time payments made are non-refundable. the special one-time taxation regime will be automatically terminated after the expiration of the 15-year period, which cannot be extended. the similarities between the greek regime and the similar italian scheme are obvious and can also be seen in the inheritance regime with inheritance and gift tax exemption for foreign situs assets. switzerland. private individuals who are not swiss citizens can agree with the tax authorities of most swiss cantons to tax their income agreed with the administration on a one-time basis. the system originates from the 19th century when wealthy foreigners spent a long time in switzerland, i.e., for health reasons. at the time, the only real relief for tuberculosis patients was a fresh breeze from the alps. since it was difficult to obtain tax returns from these foreigners living in swiss sanatoriums, practical swiss tax administrations developed a taxation system based on local expenses incurred by these foreign residents. the taxable income must be at least seven times the annual rent for the dwelling. a lump-sum taxpayer is not allowed to work in switzerland. however, they may receive income from abroad in the form of rent, interest or royalties. the taxpayer's income must have a foreign source in order to avoid being taxed in switzerland more than the previously agreed amount. another limitation relates to the minimum taxable income below which the tax authorities do not agree to such taxation. this amount is chf 400'000 (for federal and cantonal taxation). nevertheless, some cantons still agree to tax a lower amount. the issue of minimum taxable income leads to another problem. in order to become a taxpayer in switzerland, it is necessary to obtain a resi dence permit. such a permit can be granted if the new immigrant brings economic benefits to switzerland. this happens if he pays a one time tax based on an amount that is at least twice the required minimum amount, i.e., at least chf 800'000. the one-time taxation regime has proven to be very attractive not only for newly arrived high-net-worth individuals (hnwis), but also for entrepreneurs and investors who, for example, stopped their professional activities before moving to switzerland. 4. conclusions many countries are trying to create attractive tax regimes, especially for the wealthy. as a rule, the tax burden is generally quite high, but this is not an obstacle to choosing a place of residence or placing assets. the high level of taxation is effectively compensated by the high standard of living, which is the key reason. a lump sum tax is quite convenient and fiscally beneficial, and therefore may have an advantage over other forms of taxation. a tax whose amount does not depend on the actions of the taxpayer. if the lump sum tax is the same for all taxpayers, it is called a poll tax. there are different types of taxes for the rich. a flat tax is not a novelty in tax practice. in fact, the history of taxation began with the use of fixed taxes. a one-time tax is a flat tax. an important difference between the lump sum tax and the wealth tax and other types of property taxation is that the taxpayer voluntarily chooses this form of taxation. only in this case is it mandatory. the lump-sum tax is not mandatory for the entire wealthy population three seas economic journal 42 vol. 3 no. 4, 2022 references: ahmad, e., & brosio, g. (2015). handbook of multilevel finance. london: edward elgar pub. ix, 650 p. balestrino, a., & galmarini, u. (2005). on the redistributive properties of presumptive taxation. cesifo working paper. no. 1381. ii, 16 p. bovenberg, l., & cnossen, s. (1995). public economics and the environment in an imperfect world. boston: kluwer academic publishers, xi, 374 p. canoyer, h. g., & vaile r . s. (1951). economics of income and consumption. new york: ronald press co., 355 p. carlos, a. b. (2016). impostos: teoria geral. coimbra: almedina, 267 p. creedy, j. (1996). fiscal policy and social welfare: an analysis of alternative tax and transfer systems. brookfield: edward elgar, xi, 260 p. donovan, n. (2016). a unique contribution: reducing budget deficits and tackling inequality with a one-off wealth tax. london: fabian society, [2], 31 p. duesenberry, j. h. (1949). income, saving and the theory of consumer behavior. cambridge: harvard university press, 128 p. eichengreen, b. j. (1989). the capital levy in theory and practice. cambridge, ma: national bureau of economic research, 45 p. erbas, s. n. (1993). presumptive taxation: revenue and automatic stabilizer aspects. imf working paper, no. 93/69, iii, 16 p. friedman, m. (1957). a theory of the consumption function. princeton: princeton university press, xvi, 243 p. goldberg, d. s. (2013). the death of the income tax: a progressive consumption tax and the path to fiscal reform. new york: oxford university press, xiv, 318 p. henderson, w. o. (1939). the zollverein. cambridge: the university press, 375 p. jappelli, t., & pistaferri, l. (2017). the economics of consumption: theory and evidence. new york: oxford university press, xv, 294 p. ilmonen, k. (2011). a social and economic theory of consumption. basingstoke: palgrave macmillan, x, 237 p. kaldor, n. (1955). an expenditure tax. london: george allen & unwin, 249 p. kambe, m. 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(1970). mongol and nomadic taxation. harvard journal of asiatic studies, vol. 30, pp. 46–85. of a country, but only for a small part of it, who are not citizens. the choice of a one-time tax is based solely on a person's own desire to live in the country. the living conditions in the country meet the needs of the citizens, and they agree to pay a one-time tax for this. a one-time tax regime can be introduced in any country. the higher the standard of living in a country, the higher the one-time tax can be. wealth can be viewed as an estimated amount of expenditures, not as an individual's income and property. this is its main difference from all other types of wealth taxation. in this case, the tax is levied once. this taxation practice exists in greece, italy, liechtenstein, switzerland, and italy. based on the results of the study, it is advisable to propose to divide wealth taxes into taxation of wealth (including wealth tax) and taxes on the rich who own wealth. such a proposal would improve and make the wealth tax system more efficient. it will also improve the mechanisms of wealth taxation. three seas economic journal 43 vol. 3 no. 4, 2022 sverdan, m. (2020). economics and taxation of wealth. three seas economic journal, vol. 1 (4), pp. 126–132. sverdan, m. (2022). wealth tax modifications: status and trends. three seas economic journal, vol. 3 (1), pp. 168–174. tam, h. (2004). the humean critique of lump sum taxation (or the implausibility of pure lump sum taxes in autocracy). public choice, vol. 118 (1/2), pp. 61–76. tanzi, v., & jantscher, m. c. de (1987). presumptive income taxation: administrative, efficiency, and equity aspects. imf working papers, no. 1987/054, iii, 18 p. vasques, s., & pereira, t. c. (2016). os impostos especiais de consumo. coimbra: almedina, 428 p. waite, w. c., & cassady, r . (1939). the consumer and the economic order. new york: arno press, x, 389 p. wyand, c. s. (1937). the economics of consumption. new york: macmillan, xiii, 565 p. yitzhaki, s. (2007). cost-benefit analysis of presumptive taxation. finanzarchiv / public finance analysis, vol. 63, no. 3, pp. 311–326. received on: 11th of november, 2022 accepted on: 18th of december, 2022 published on: 30th of december, 2022 three seas economic journal 98 vol. 4 no. 1, 2023 1 vasyl’ stus donetsk national university, ukraine (corresponding author) e-mail: t.yanchuk@donnu.edu.ua orcid: https://orcid.org/0000-0003-3901-7670 researcherid: https://www.researchgate.net/profile/tanya_yanchuk 2 vasyl' stus donetsk national university, ukraine e-mail: o.boienko@donnu.edu.ua orcid: https://orcid.org/0000-0003-2209-7731 researcherid: https://www.researchgate.net/profile/olena-boienko this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-11 restoration and directions of tourism business development in ukraine after the end of the russo-ukrainian war tetiana yanchuk1, olena boienko2 abstract. the article examines the prospects and directions of development of the post-war recovery of the tourist business in ukraine after the end of the russo-ukrainian war. it is well known that the tourist activity in ukraine and abroad has suffered a lot. the purpose of the article is to analyze the peculiarities of the tourist sphere of ukraine, to study the possible directions of the development of the tourist business and to reveal the prospects of the post-war renewal of the tourist sphere in ukraine. methodology. in order to achieve the set goal and solve the set tasks in the research process the following methods were used: system method (to study the current state of tourism in ukraine); method of theoretical generalization (to specify the data); graphical method (to interpret the obtained results); methods of surveys, expert assessments (to assess the situation in tourism enterprises); method of transition from abstract to concrete. results. the peculiarities of military, educational and ecological tourism were studied. the priority directions of development of tourist sphere of ukraine are suggested. it was established that the post-war reconstruction of ukraine is an opportunity to involve international experts from various fields in modernization. at the same time, it is necessary to take into account the experience of many countries, which were able to overcome the crisis situation as a result of military actions, and attract foreign tourists to increase the economy of ukraine. practical implications. a program has been proposed that will be an important part of future development and not a decline. value/originality. general mechanism of renewal and development of tourism. the innovative development of the economy in the affected regions can be ensured only by the creation (first on the controlled territories, and then on the de-occupied ones) of special economic zones and scientific and production parks. such creation will stimulate development of production based on new advanced technologies, increase of vacancies, volume of exports, etc. key words: tourism, restoration, russo-ukrainian war, tourism, military tourism, foreign tourists, migration of population, challenges, prospects of development. jel classification: а11, м21, м38 1. introduction the urgency of the topic is caused by the fact that in today 's conditions the tourist business of ukraine will suffer huge losses. due to the russo-ukrainian war the tourist activity in the center, east and south of ukraine has completely stopped. the decrease in tourist flows began in 2014 due to the occupation of the autonomous republic of crimea and parts of the donetsk and luhansk regions of the russian federation, as well as the beginning of the war between russia and ukraine. in addition, the quarantine restrictions caused by the covid-19 wind epidemic had a great impact on the tourist sphere. the new challenge for the tourist business was febru ary 24, 2022 – the beginning of a full-scale invasion of ukraine by russia. since then, there has been a dramatic decrease in tourist flows, as a large number of ukrainians have moved abroad to escape the brutal war, and some tourist enterprises have closed or turned to volunteer activities. three seas economic journal 99 vol. 4 no. 1, 2023 the purpose of the research is to analyze the peculiarities of the tourist sector of ukraine, to study the possible directions of the development of the tourist business and to reveal the prospects of the post-war renewal of the tourist sector in ukraine. 2. nature and potential of tourism in ukraine tourism is a temporary departure of a person from the place of residence for health, cognitive, professional-business or other purposes without carrying out paid activity in the place where the person leaves. the main types of tourism are as follows: urban tourism; ecological (green); ethnic; rural; cultural and educational; joint; medical and health; culinary; religious; mountain, sports, cycling; adventure and active; scientific and educational; cruise and yacht; shopping and entertainment tourism; other priority types of tourism. (verkhovna rada of ukraine. the law of ukraine on tourism) depending on the categories of people who travel, their goals, objects used or visited, or other signs, there are such types of tourism: children, youth, family, elderly, accessible, cultural-cognitive, medical-health, sports, religious, ecological (green), rural, underwater, mountain, adventure, hunting, car, amateur, etc. (verkhovna rada of ukraine. about the approval of the strategy) it is well known that ukraine has considerable tourist potential. in particular, it is one of the leading countries in europe by the number of objects of historical and cultural heritage. in the state register there are about 170 thousand real estate monuments of cultural heritage located on the territory of ukraine. by 2021, more than 15 thousand monuments of national (1167 objects) and local significance were included in the state register of immovable monuments of ukraine, the rest were included in the lists of monuments until 2000, according to the soviet legislation (great ukrainian encyclopedia). 3. war's impact on tourism as a result of the russo-ukrainian war, tourism has suffered greatly both in ukraine and abroad. experts predict that the greatest impact of the war will be on the tourist activities of the middle east, turkey, germany and greece. and these consequences are not connected with political reasons, but with rising gas and oil prices. in addition, the prices of tourist services will increase. (parfenenko) the main challenges in the sphere of tourism were (national council for the restoration of ukraine from the consequences of the war): – lack of tourist flows to ukraine; – dangerous stay in many regions of the country; – large number of destroyed objects of tourist infrastructure, historical monuments, museums, etc; – lack of awareness of tourist facilities in many regions; – absence of an automated system for collecting tourism statistics to assess the industry, the volume of revenues and expenditures in the industry; – no-fly zone over the country; – absence of a national tourism portal for foreigners. it is worth noting that the sphere of tourism is defined by the following aspects (korchevska, 2022): – volunteering has become one of the main goals of tourism business management; – most tourist centers have become centers of humanitarian and volunteer assistance; – a tourist route should include a map of bomb towers or other protective structures; – there should be minimal routes around important state and military facilities, which can be a target of rocket-bomb attacks of the russian aggressor; – routes in the vicinity of important state and military facilities should be minimized because they can serve as targets for the russian aggressor; – inability to conduct beach and pedestrian tours due to military actions. today, there are no completely safe recreational areas in ukraine during the war, which affects the tourist attractiveness and competitiveness of the country, which currently has no positive indicators. regular mass shootings and rocket attacks have completely closed the entrance of foreign tourists to ukraine. they do not have the opportunity and do not want to go to a country with increased danger. moreover, not only international tourism has stopped its activities. due to the migration of millions of people from the dangerous regions of ukraine to the safe ones, ukrainians themselves stopped traveling. three seas economic journal 100 vol. 4 no. 1, 2023 the sphere of tourism has become especially relevant during the full-scale war in ukraine, that is why it is studied by many domestic and foreign scientists. in particular, sak t., bilo i., tkachuk yu. in their works analyzed the ecological and economic consequences of the russo-ukrainian war. in the researches of pankov n. attention is paid to the direct influence of the war on the tourist sphere, the behavior of the participants of the tourist market at all stages of the crisis is discussed. in addition to enormous real human losses, war has very serious economic costs, such as damage to infrastructure, reduced labor force, inflation, deficits, insecurity, increased debt, and disruption of normal economic activity. for example, during world war ii, inflation in the united states rose sharply because the economy was operating at near full capacity, and high government spending and a shortage of labor created inflationary pressures. (sak, bilo, tkachuk, 2022) the ukrainian tourist industry is losing a lot of money. first of all, foreign tourists do not come to ukraine. in 2020 their number will be almost 4 million, of which about 90 thousand will use the services of ukrainian travel agencies. in fact, since february 24, the flow of inbound traffic has been completely lost, business tourism has been suspended, and local tourism has turned into the movement of internally displaced persons. (maliarchuk, chirva, 2022) however, despite the losses of the ukrainian tourist sector due to the war, in the first four months of 2022 the total amount of tourist tax was 64 million 611 thousand uah, which is almost 65% more than in the same period of 2021, when the budget received 39 million 206 thousand uah. the leaders on payment of tourist fees included the city of kyiv and 4 regions (figure 1). (state agency for tourism development) such a noticeable increase was caused by the massive migration of the ukrainian population fleeing bombing and occupation. millions of people left their homes in the eastern, central and southern regions and moved to more peaceful areas in the west of ukraine. as a result, there has been a significant decrease in tourism in the areas where fighting is taking place or has taken place, as well as in the occupied territories. in mykolaiv oblast the amount of tourist tax decreased by 63%, in luhansk oblast – by 60%, in sumy oblast – by 48%, in kherson oblast – by 46%, in zaporizhzhia oblast – by 41%. taking into account the calculations, in the first 4 months of 2022 representatives of the tourist sector of ukraine paid 18% less taxes than in the same period of 2021. thus, the total number of taxpayers engaged in tourist activity, during the first months of the war, decreased by about 10%. (state agency for tourism development) 18,17 11,46 6,21 5,69 3,49 3,18 0 2 4 6 8 10 12 14 16 18 20 kyiv lviv oblast zakarpattia oblast ivano-frankivsk oblast kyiv oblast odesa oblast figure 1. total tax revenues from tourism by region, million uah three seas economic journal 101 vol. 4 no. 1, 2023 having analyzed the current situation and evaluated the existing potential of the tourist sphere, it is possible to define the measures for the renewal of tourism, increase of tourist attractiveness in ukraine after the end of the russo-ukrainian war. 4. survey methodology in order to analyze the situation in the field of tourism, marketing research was carried out, companies working in this field were analyzed, the ukrainian market was studied and a survey was conducted. after that, it is possible to see what happens to companies in the travel business. the survey was conducted in december 2022. enterprises from the central and western parts of ukraine participated in the survey. in general, the survey was conducted by 26 enterprises. the reality of today is that full-scale military actions on the territory of ukraine lead to the reconstruction of the entire tourism sector. prospects for the resumption of tourism in ukraine after the end of the russo-ukrainian war can be: – analysis and digital collection of data on the state of destruction of tourist objects; – restoration of tourist sites and objects of national, regional and local level; – application of new methods of advertising and sale of products to tourist enterprises; – creation of funds for restoration of ukraine and specific programs and strategies for restoration; – increasing the flow of tourists using the experience of countries that have experienced war. since many tourists are interested in places that have become symbolic and leave a memory, they will be able to visit ukraine. it is military tourism that could become real after the end of the war. mariupol, bucha, irpin, chornobaivka – cities that can receive a large number of tourists. another very important direction of the post-war revival of tourist activity is the demining of coastal tourist areas. in addition, speaking about the renewal of the tourist business in ukraine, it is expedient to take into account the experience of other countries, which were in crisis situations because of the war, and now are successful in the development of the tourist sphere. military, educational and green tourism could be the areas of tourism development in ukraine. nowadays military tourism is very popular. all this is connected with people's desire to see historical places and learn about these or other events. moreover, it can satisfy the needs of tourists of all ages who want to feel like participants of historical events. the goal of military tourism after the end of the russo-ukrainian war should be to honor the memory of all victims and to demonstrate to ukrainians and the world the consequences and cruelty of the russo-ukrainian war, which has continued since 2014. (barvinok, 2018) on the territory of ukraine there are many towns and villages which are unique heroes of 25% 42% 20% 13% 2022 business has stopped operate only on the local market is active in both domestic and foreign markets closed the business figure 2. war's impact on the activities of tourism enterprises three seas economic journal 102 vol. 4 no. 1, 2023 glory and resistance against the russian aggression. in the future they can serve as the main centers of military tourism. tourists will have an opportunity to see all the terrible events that took place in mariupol, bucha, chornobyl, borodianka, kharkiv and other unforgotten cities and villages. the possible resource base of military tourism in ukraine on the example of the russo ukrainian war can be served by the towns and villages, as shown in table 1. besides, military tourism in ukraine can be based not only on the objects created during the russo-ukrainian war. history shows that ukraine has a huge number of objects, places, monuments preserved from previous wars. it is also worth mentioning educational tourism as a direction of tourism development, which is becoming more and more popular every year. the covid-19 pandemic created new conditions for its development. the past years have been the beginning of a powerful digital transformation of education and tourism, which is still in progress. the development of green tourism is also important. ukraine can create its own model of development of this type of tourism, taking into account the peculiarities of nature, historical and cultural specifics. the combination of environmental protection and aesthetic harmony is one of the features of this unusual type of tourism. in addition, it is aimed at preserving the habits and customs of the local population. ukraine has invaluable natural and historical heritage, unique natural reserves, favorable climate and self-preservation of ethnic heritage, which are the main factors for the development of green tourism. 5. findings according to the authors, innovative economic development in the affected regions can only be ensured by the creation (first in the government-controlled territories, and then in the de-occupied ones) of special economic zones and research and production parks. such creation will stimulate development of production based on new advanced technologies, increase of vacancies, volume of exports, etc. the general mechanism of renewal and development of tourist business is shown in the figure. in addition to the proposed mechanism, the authors propose to evaluate it from an economic point of view. for this purpose, together with the programmers the program "economic mechanism of return of invested funds" was developed, with the help of which it is possible to significantly reduce the time of decision-making, which in turn will allow enterprises of tourist business to control table 1 military tourism in ukraine. geography 2014–2022 city/village landmark debaltseve "debaltseve kettle" ilovaisk "ilovaisk kettle" donetsk battle for donetsk airport sloviansk battle for sloviansk kramatorsk battle for kramatorsk sievierodonetsk fighting for sievierodonetsk pisky fighting for pisky mariupol battle for mariupol, genocide of the ukrainian people, azovstal buсha "the bucha massacre" borodianka "the most destroyed city in kyiv oblast" hostomel battle of antonov airport, destruction of the ukrainian mriya irpin destruction of the bridge of life izium mass killings kharkiv missile attacks and shooting kherson antonivka road bridge chornobaivka "see chornobaivka and die" snake island "here is the oldest sanctuary of apollo. whoever controls the snake island can control the course of world history." three seas economic journal 103 vol. 4 no. 1, 2023 implementation of the state target program for restoration of peace and development of the eastern regions of define national strategic priorities define implementation mechanisms identifying and securing funding sources define and evaluate performance indicators strategy adjustment update priorities control of the use of funds by the institute of international auditors supervisory board control the use of funds by creating mechanisms for transparent use supervisory board mechanism of renewal and development of tourist business at the territorial community level at the state level ensuring innovative development legislative support organizational support creation of special zones and scientific parks creation of a single fund for the accumulation of funds for the restoration and development of the tourist business development of social and economic development strategies by individual hromadas define community priorities define implementation mechanisms identifying sources and providing funding define and evaluate performance indicators strategy adjustment update priorities expenses, invested funds and promptly get information about their necessary sum for carrying out of measures of renewal of tourism. the post-war reconstruction of ukraine is an opportunity to involve international experts in various fields in the modernization of the country. the experience of many countries where military actions took place shows that in the post-war period the number of tourists to these countries only increases. and due to the income from foreign tourists, it is possible to grow the economy of the country faster than other sectors, which require a longer period of renewal. international partners are willing and ready to help in the reconstruction of tourism and infrastructure. three seas economic journal 104 vol. 4 no. 1, 2023 6. conclusions thus, studies of the tourist business of ukraine have shown that the russo-ukrainian war has a considerable negative impact on it. therefore, the main tasks in the sphere of tourism are development of strategy of renewal and directions of development of tourist activity of ukraine. the most promising directions of the post-war revival of the tourist sphere are: – development of military, educational and ecological tourism; – acquainting potential tourists with regional tourist attractions; – development of small and medium business in the field of tourism; – increasing the interest of foreign tourists in the places of war glory of the armed forces; – creation of funds and various programs to support tourism enterprises; – improving the tourist attractiveness of ukraine in the world. it is also necessary to prepare a large marketing campaign for foreign markets and to look at the experience of other countries that have experienced crisis situations, including war, and have been able to rebuild the tourism industry. tourism enterprises, which will resume their activity in the post-war period, can apply the directions of tourism development suggested in this study. references: verkhovna rada of ukraine. the law of ukraine on tourism. (publication № 324/95-vr). available at: https://zakon.rada.gov.ua/laws/show/324/95-%d0%b2%d1%80#text verkhovna rada of ukraine. about the approval of the strategy of tourism and resorts development for the period till 2026. (publication № 168-р). available at: https://zakon.rada.gov.ua/laws/show/1682017-%d1%80#n9 great ukrainian encyclopedia. cultural heritage of ukraine. available at: https://vue.gov.ua/ %d0%9a%d1%83%d0%bb%d1%8c%d1%82%d1%83%d1%80%d0%bd%d0%b0_%d1%81%d0 %bf%d0%b0%d0%b4%d1%89%d0%b8%d0%bd%d0%b0_%d0%a3%d0%ba%d1%80%d0%b 0%d1%97%d0%bd%d0%b8 parfenenko, g. it became known how the war in ukraine affected tourism in germany and the usa: disappointing forecasts were announced. available at: https://dip.org.ua/nimechchina/stalo-vidomoyak-vijna-v-ukraini-vplinuli-na-turizm-nimechchini-ta-ssha-ozvucheno-nevtishni-prognozi/ national council for the restoration of ukraine from the consequences of the war. working groups for infrastructure rehabilitation and development. (publication № 266/2022). government portal. the only web-portal of executive authorities of ukraine. available at: https://www.kmu.gov.ua/storage/ app/sites/1/recoveryrada/eng/recovery-and-development-of-infrastructure-eng.pdf korchevska, l. (2022). the state, peculiarities and prospects of tourism in military and post-war periods. management of hospitality sector development: regional aspect, 337–341. available at: https://tourlib.net/ statti_ukr/korchevska.htm sak, t., bilo, i., & tkachuk, yu. (2022). ecological and economic consequences of the russo ukrainian war. economy and society, 38. doi: https://doi.org/10.32782/2524-0072/2022-38-6 maliarchuk, n. m., & chirva, o. g. (2022). problems and prospects of the development of unusual types of tourism in the territory of ukraine after the end of the russianukrainian war as an example of military tourism. economies’ horizons, 4(22), 34–42. doi: https://doi.org/10.31499/26165236.4(22).2022.267014 state agency for tourism development. tourism in ukraine increased by 65% in the first four months of 2022. available at: https://www.tourism.gov.ua/blog/turzbir-v-ukrayini-za-pershi-chotiri-misyaci2022-roku-zris-na-65 barvinok, n. c. (2018). prospects of development of military tourism in the territory of ukraine after the end of the russo-ukrainian war. topical problems of the region’s economy development, 14 (2). available at: https://journals.pnu.edu.ua/index.php/aprde/article/view/2419 received on: 20th of february, 2023 accepted on: 25th of march, 2023 published on: 28th of april, 2023 three seas economic journal 21 vol. 3 no. 1, 2022 corresponding author: 1 pavlo tychyna uman state pedagogical university, ukraine e-mail: berzhanir.i@udpu.edu.ua orcid: https://orcid.org/0000-0001-7035-1170 researcherid: w-1731-2017 doi: https://doi.org/10.30525/2661-5150/2022-1-3 financial market of ukraine: structure and development trends inna berzhanir1 abstract. the purpose of this work is to study the current state and trends in the financial market of ukraine. methodology. the following methods of scientific research were used: analysis and synthesis; theoretical generalization; abstraction and comparison; systematic approach. results. the article reports that the financial market of ukraine is in the process of formation, which is due to the uneven spatial dynamics of financial capital in the course of market reforms; heterogeneity of economic and financial space of the country; fundamental asymmetry between regions in terms of financial capacity; localization of financial institutional infrastructure; level of investment attractiveness, etc. it was found that the main problem of the financial market of modern ukraine is the inability to provide an effective redistribution of financial resources needed to meet the challenges of modernizing the domestic economy and create an innovative impetus to the reproductive processes. practical implications. to improve ukraine's financial sector and boost economic growth, it is necessary to create an effective mechanism for improving banks' lending policies. to develop bank lending and create financial stability in this period it is necessary to make banking services of higher quality to improve their competitiveness; to set maximum interest rates on loans within the framework of state acts and monitor their implementation; to encourage commercial banks to lend to innovative projects; to increase the size of main assets of state banks, increase their number and strengthen their role in the financial and credit market of ukraine, etc. value/originality. it has been researched that the structure of the financial market is dominated by the number of companies engaged in the provision of loans, loans, financial leasing, the provision of guarantees; carrying out factoring, currency exchange and money transfer operations. for the development of bank lending it is necessary to improve banking services to improve their competitiveness; set maximum interest rates on loans within state acts and monitor their implementation; stimulate lending by commercial banks to innovative projects; increase capital resources of state banks, increase their number and strengthen their role in the financial and credit market of ukraine, etc. these measures will contribute to the recovery of the national economy and increase the level of financial efficiency of the domestic banking system. key words: financial market, financial companies, banks, financial capital. jel classification: e44, g19, o16 1. introduction the financial market of modern ukraine is still in the process of formation. its main problem is the inability to provide effective redistribution of financial resources needed to solve the problems of modernization of the domestic economy and create an innovative impetus for reproduction processes. this is largely due to uneven spatial dynamics of financial capital in the course of market reforms; heterogeneity of economic and financial space of the country; fundamental asymmetry of regions by financial potential; localization of financial institutional infrastructure and the degree of investment attractiveness, etc. domestic financial market, its further integration into the world financial system in accordance with its requirements, the combination of interests of all economic subjects should be provided by effectively functioning modern infrastructure, a key component of which is the financial market infrastructure. distrust of owners of financial resources to financial intermediaries, as well as other destructive economic, political and social factors against the background of increasing stagnation processes in the state, do not allow to realize the investment potential of each subject – the owner of financial resources. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 22 vol. 3 no. 1, 2022 a significant contribution to the study of methodology and practice of various aspects of the financial market and its structural components have made ukrainian and foreign scientists, in particular: a. abakumenko, l. alekseenko, d. blackwell, j. garbar, m. krupka, s. kruchok, i. february, s. mishchenko, a. moroz, s. naumenkova, s. onishko, yu. pasechnik, r . peterson, n. prikazyuk, v. pryadko, l. seliverstova, v. smagin, n. tkachenko, m. tugan-baranovsky, v. sheludko, i. shkolnik, s. volfel and other scientists. however, today among the scientific approaches and in practice there is no unambiguous and clear understanding of the classification, hierarchy of interdependence of infrastructure institutions, their elements in the economic system, quantitative assessment of performance, which does not allow to fully realize the potential of the financial system of ukraine. despite the importance of the available developments of researchers, the current state of functioning of the financial market infrastructure in ukraine, some of its theoretical and practical aspects still remain insufficiently studied. 2. structure of the financial market the analysis of the financial condition will begin with the dynamics of financial market companies (figure 1). analysis of the data of figure 1 shows that in 2016–2020 the number of financial companies engaged in the provision of financial loans, credits, financial leasing, guarantees and securities prevailed. they carry out factoring operations, currency exchange 1200 1000 800 600 400 200 2013 2014 2015 2016 2017 2018 2019 2020 number of banks number of credit unions number of number of banks number of insurance companies number of private pension funds number of pawnshops figure 1. dynamics of the number of companies in the financial sector of ukraine in 2013–2020, pcs. source: developed according to the official nbu data three seas economic journal 23 vol. 3 no. 1, 2022 operations, and money transfers. their total number in 2020 was 1,032 companies, 2.3 times more than in 2013. the smallest number of companies is characteristic of banks and non-state pension funds. in 2020, the number of banks will be 75, which is 99 less than in 2013 (reduction by more than 2 times). the number of private pension funds in 2020 will be 63 companies. the number of non-state pension funds decreases throughout the study period. studying the dynamics of the number of companies, we came to the conclusion that the financial market of ukraine is dominated by financial companies, pawnshops and credit unions. but this conclusion is incorrect, because the role of one or another type of company on the market is characterized not by the number, but by the volume of activity (volume of assets, capital) (rekunenko, 2014). credit unions and pawnshops are in second and third place by the number of market participants. moreover, the number of these companies in the financial sector has decreased significantly in recent years. the maximum number of credit unions was observed in 2014 – 739 companies, and pawnshops – in 2015 – 482 companies. after that we can observe a decrease in the number of both companies. on the fourth place are insurance companies, the number of which in 2020 was 225 companies. the maximum number of insurance companies in 2013 was 414. let us consider the dynamics of assets of insurance companies, banks, financial companies and credit institutions (figure 2). the assets of non-state pension funds and pawnshops were not taken into consideration during the review, as their volume is insignificant comparing to other types of participants in the financial market of ukraine. the data in figure 2 shows that the absolute leader in terms of assets in the financial sector of ukraine are banking institutions, which indicates the bankcentric nature of the financial system of ukraine. in general, the volume of assets of the banking sector in 2014–2020 increased, except for 2017–2018. this decrease is characterized by a decrease in the number of banks operating in the market. in 2014–2020, the amount of assets of banks increased by 20.7% and in 2020 amounted to 1,360,764 million uah. as of 2020, the assets of banks were 21.4 times higher than the assets of insurance companies, assets of financial companies – 10.7 times, assets of credit institutions – 619.5 times. analyze the amount of capital of insurance companies, banks, financial companies and credit institutions (figure 3). the data of figure 3 indicate a significant predominance of bank capital over the capital of other 1600000 1400000 1200000 1000000 800000 600000 2014 2015 2016 2017 2018 2019 2020 banks’ assets, million uah insurance companies’ assets, million uah credit institutions’ assets, million uah financial companies’ assets, million uah figure 2. asset dynamics of insurance companies, banks, financial companies and credit institutions for 2014–2020, uah million source: developed according to the official nbu data three seas economic journal 24 vol. 3 no. 1, 2022 companies in the financial market of ukraine. the increase in the capital of banking institutions began in 2017 as a result of the increased requirements of the national bank of ukraine to the amount of registered and regulatory capital of banks. in 2020, the capital of banks exceeded the capital of insurance companies by 7.3 times, the capital of credit institutions by 476.4 times, and the capital of financial companies by 19.5 times. this predominance of assets and capital of banks over the assets and capital of other participants in the financial market of ukraine allows us to conclude that banks are the most important participants in the financial market of ukraine (berzhanir, 2020). the data in table 1 show that the assets of banking institutions increased by 32.58% between 2013 and 2020, indicating the development of the banking sector. this increase in assets is a particularly positive trend, given that the number of banks during the study period, on the contrary, decreased – by 56.9% (from 174 banks in 2013 to 75 banks at the end of 2020). in addition, the volume of loans increased by 26.35%, which also indicates the expansion of banking institutions and credit expansion of banks. this situation also indicates economic growth in the country. 3. banking sector another positive trend is the growth of banks' deposits from individuals and legal entities. this growth in 2013–2020 was 78.4%. a decrease in funds on deposits with banks was observed only in 2015, when the banking crisis arose, which led to an outflow of funds from ukrainian banks. 600000 500000 400000 300000 2014 2015 2016 2017 2018 2019 2020 bank’s capital, million uah insurance companies’ assets, million uah credit institutions’ assets, million uah financial companies’ assets, million uah figure 3. capital dynamics of financial companies, insurance companies, banks and credit institutions in 2014–2020, uah million source: developed according to the official nbu data table 1 dynamics of key indicators of banking sector development in 2013–2020 year banks’ assets, million uah banks’ liabilities, million uah number of operating banks loans provided to customers, million uah customer funds, million uah 2013 1127192 1127192 174 818000 589000 2014 1278095 1278095 180 916000 701000 2015 1316852 1316852 145 1028000 686000 2016 1254385 1254385 117 1007000 751000 2017 1256299 1256299 96 1004000 850000 2018 1336358 1336358 82 1041000 906000 2019 1360764 1360764 77 1118860 914824 2020 1494460 1494460 75 1033539 1050748 deviation(+,–) 32,58 32,58 -56,90 26,35 78,40 source: calculated according to the nbu data three seas economic journal 25 vol. 3 no. 1, 2022 4. insurance market next proceed to the analysis of the key indicators of the insurance market of ukraine, which are presented in table 2. the analysis of these data shows a fairly rapid development of the insurance market in ukraine. on average the number of concluded contracts of obligatory insurance against accidents, including transport, increases almost by 8-9 million units per year. the dynamics of the number of concluded contracts other than compulsory insurance against accidents, including transport, is not so positive. in 2016–2020 their number decreased by 26.43%. the minimum value of the number of concluded contracts was observed in 2017 – 61272,8 thousand units, which was a consequence of the crisis of 2015–2016, which reduced solvent demand for insurance services. since 2018, the number of contracts began to grow, which indicates the recovery of the insurance market. volumes of reinsurance (premiums received by reinsurers) are also growing: by 68.63%. at the same time, reinsurers' payouts are growing faster than premiums – by 86.37% over the last 5 years. this situation indicates a decrease in profitability of reinsurers, which is a negative trend. a positive trend is the growth of insurance reserves – by 60.85% over the last 5 years. technical reserves significantly exceed mathematical reserves during 2015–2019, which is the result of the prevalence of insurance other than life insurance. assets of insurance companies also increased during this period, although insignificantly – only by 5% over 5 years. in 2017 there was a decrease in the volume of insurers' assets, which was connected with a decrease in the number of concluded contracts in that year. thus, the insurance market suffered from the consequences of the crisis of 2015–2016. since 2018, the market began to resume its activity, which is reflected in its key indicators. 5. stock market next, here is the ukrainian stock market. the ukrainian stock market in 2019 was represented by 6 exchanges: pfts stock exchange pjsc, perspektiva stock exchange pjsc, ukrainian stock exchange pjsc, ukrainian interbank currency exchange pjsc, innex stock exchange pjsc and pjsc "ukrainian exchange". in the author's opinion, the analysis should begin with the analysis of the main stock index of the country – pfts. this index has been calculated in table 2 dynamics of the main indicators of insurance market development of the insurance market in 2016–2020 indicator year deviation from 2020 to 2016 (+;–) 2016 2017 2018 2019 2020 number of insurance contracts concluded during the reporting period, thousand units number of contracts, excluding contracts with os from transport accidents 109106,8 61272,8 70658,2 77495 80271,1 – 26,43 number of contracts with environmental protection from transport accidents 93322,5 118198,4 114824,7 123582,5 116652,6 25,00 insurance activity, uah million gross insurance premiums, including: 29736 35170,3 43431,8 49367,5 53001,2 78,24 life insurance 2186,6 2756,1 2913,7 3906,1 4624 111,47 gross insurance payments, including: 8100,5 8839,5 10536,8 12863,4 14388,3 77,62 life insurance 491,6 418,3 556,3 704,9 575,9 17,15 the level of gross payments, % 27,20 25,10 24,30 26,10 27,10 – 0,37 net insurance premiums 22354,9 26463,8 28494,4 34424,3 39586 77,08 net insurance payments 7602,8 8561 10256,8 12432,6 14040,5 84,68 the level of net payments, % 34,00 32,30 36,00 36,10 35,50 4,41 reinsurance, uah million paid for reinsurance 9911,3 12668,7 18333,6 17940,7 16713,4 68,63 payments reimbursed by reinsurers 1345,8 1233,2 1208,2 2459 2508,2 86,37 insurance reserves, uah million the amount formed insurance reserves: 18376,3 20936,7 22864,4 26975,6 29558,8 60,85 – insurance reserves life 6889,3 7828,2 8389,6 9335,1 10273,7 49,13 – technical reserves 11487 13108,5 14474,8 17640,5 19285,1 67,89 insurers' assets and authorized capital, uah million total assets of insurers 60729,1 56075,6 57381 63493,3 63866,8 5,17 assets defined in art. 31 of the law of ukraine "insurance" 36418,8 35071,9 36084,6 40666,5 44609,9 22,49 three seas economic journal 26 vol. 3 no. 1, 2022 ukraine since october 1997. the pfts index is a price index weighted by the volume of free-floating shares. the pfts index basket includes shares of 20 issuers. based on the data in figure 4 we can conclude that the greatest increase in trading was observed in 2019, when the value of the index was 562.91 points. the minimum value of the index in 2016 was 240.7 points, which was due to the economic and political crisis of 2015–2016. in general, the value of the pfts index indicates the weak development of the stock market and a rather large volume of transactions (the value of the index in 2020 is almost twice less than in 2007 before the 2008 crisis). although since 2017 there has been some positive dynamics of the index (aleksejenko, 2004). in 2016–2018 the securities market decreased by uah 1,863.25 billion (the most significant decrease was in 2017 – by uah 1,658.86 billion or 71.14%). this decrease in transactions was due to the nssmc's stock market clearing procedure and the increase in the transparency of transactions in the stock market segment (berzhanir, 2021). the procedure included the introduction of new listing requirements for securities on stock exchanges, based on european standards and allowing only high-quality securities to be listed. in addition to the reduction in the number of companies whose securities were listed under the new rules, the reduction in market transactions in 2018 was also affected by the fact that nbu deposit certificates were no longer taken into account in trade settlements. in 2019, the market began to grow, up 26%, which is a result of the stabilization of the country 's economy. the ratio between the volume of gdp and the volume of transactions in the stock market is also important for the development of the country 's stock market. during 2013–2016, the volume of trading in the market exceeded the volume of gdp, i.e., was more than 100% of gdp. since 2017, on the contrary, the volume of gdp began to prevail. in 2018–2019, there was a significant decrease in the volume of securities trading compared to gdp, which indicates a low level of stock market development. in countries with a high level of economic development, this indicator should always be more than 100%. 6. conclusions the most active participants of the financial market of ukraine are commercial banks, insurance companies, stock exchanges, as they account for the largest share of financial resources of the state. to improve the financial sector and increase economic growth in ukraine, it is necessary to create an effective mechanism for improving the credit policy of banks. for the development of bank lending and creation of financial stability in this period it is necessary to improve banking services in order to increase their competitiveness; to set maximum interest rates on loans within the framework of state acts and control their implementation; to stimulate lending by commercial banks of innovative projects; to increase the capital resources of state banks, increase their number and strengthen their role in the financial and credit market of ukraine, etc. these measures will contribute to the recovery of the national economy and improve the financial efficiency of the domestic banking system. an important component of the financial market is the insurance market. insurance companies act as financial intermediaries, and their role is to reduce transaction costs associated with the movement of funds from savers to borrowers by accumulating significant funds from thousands of premium payers. 600 562,91 509,64 500 386,92 400 330,7 300,53 310,53 300 240,7 262,21 200 2013 2014 2015 2016 2017 2018 2019 2020 figure 4. the dynamics of the pfts index in 2013–2020 three seas economic journal 27 vol. 3 no. 1, 2022 the insurance market is still underdeveloped, its financial potential is not able to meet the needs of customers at the expense of small insurance premiums. an important problem is the large market value of insurance companies. to the main officials how to streamline the development of the insurance market can be derived: the undeveloped infrastructure of the insurance market, poor development of mediation and reinsurance market, as well as a guaranteed legal framework. holders should put their own priority on the reorganization of the insurance market of ukraine on the requirement of stable insurance activity, reducing the volume of insurance services and satisfaction of insurance customers. an important element of the financial market of ukraine is the stock market. the stock market is characterized primarily by the volume of exchange trading in securities. according to the results of trading in the organized market in january-december 2020, the volume of exchange-traded securities contracts amounted to 335.41 billion uah. to sum up, today the main task in ukraine is to develop and implement a permanent mechanism for improvement and development of the financial market, taking into account global trends. references: berzhanir, і. а. (2020). bankivske kredytuvannia: suchasnyi stan ta perspektyvy rozvytku [bank lending: current state and prospects for development]. modern economics, 20, 26–30. doi: https://doi.org/10.31521/modecon. v20(2020)-04 (in ukrainian) materials of the official website of the national bank of ukraine. available at: http://www.bank.gov.ua (in ukrainian) rekunenko, i. i. (2014). characteristics of the financial market’s infrastructure elements. bulletin of the ukrainian academy of banking , 1(36), 38–44. (in ukrainian) bilochenko, a. m. (2008). financial capital in ukraine: features of formation and prospects of development. ukraine economy, 3, 95–98. (in ukrainian) aleksejenko, l. m. (2004). rynok finansovoho kapitalu: stanovlennia, perspektyvy rozvytku [financial capital market: formation, development prospects]. ternopil: economic thought, 424. (in ukrainian) three seas economic journal 35 vol. 3 no. 1, 2022 corresponding author: 1 international european university, ukraine e-mail: bogdanavyshnivska@ieu.edu.ua orcid: https://orcid.org/0000-0002-3166-7567 2 national university of life and environmental sciences of ukraine, ukraine e-mail: eva_1310@ukr.net orcid: https://orcid.org/0000-0002-9575-5742 doi: https://doi.org/10.30525/2661-5150/2022-1-5 peculiarities of application of public-private partnership as a mechanism for implementation of innovation activity bogdana vyshnivska1, olena kireitseva2 abstract. the purpose of the article is the theoretical justification and development of scientific and methodological provisions and practical recommendations for the development of public-private partnership in order to ensure the modernization of the economy on an innovative basis. the methodological basis is the general and special methods: historical method; method of scientific abstraction (in order to generalize the conceptual foundations of the study); methods of analysis and synthesis – in the study of the structure of the innovation system in publicprivate partnership; induction and deduction (to study approaches to the definition of innovation in public-private partnership); method of comparison (in order to justify the application of foreign experience of innovation in public-private partnership in our country); methods of grouping and systematization (in order to classify, identify factors of innovation development, factors of formation of the national innovation system); statistical methods (in order to analyze the dynamics of innovation in the economy of ukraine, trends in the formation of innovation infrastructure). the results of the study showed that most accurately reproduces the meaning of the concept of public-private partnership, when public relations are actively involved in the relationship with the private sector, emphasizing the public focus. however, in countries with economies in transition, where institutions of civil society are underdeveloped, the term "public-private partnership" is most often used. since the initiator of the vast majority of public-private partnership projects, the main actor is the state. the problems of formation and development of public-private partnership are currently paid considerable attention in foreign studies. the world practice has accumulated considerable experience in the implementation of public-private partnership in various areas and spheres of activity. in many countries, public-private partnerships have proven effective in modernizing the economy and have long been a domestic policy priority. the practical significance of the results is that the provisions, conclusions and recommendations have a practical orientation and can be used to improve the efficiency of regulation of innovation processes in terms of public-private partnership. value/originality. the peculiarity of the proposed definition is that public-private partnership is an effective tool of state regulation only if conditions of competition between private sector entities for the right to participate in a particular ppp project are created. key words: innovations, innovative activity, public-private partnership, central executive institutions, regional executive institutions. jel classification: o3, o31, o38, p43 1. introduction the innovation process can be considered as a set of sequential actions, as a result of which the innovation develops from an idea to a specific product and spreads in the process of practical use. the course of the innovation process, like any other, is determined by the complex interaction of many factors. the effectiveness of the innovation process is determined only after the implementation of the innovation, when it becomes clear to what extent it meets the needs of the market. an effective way to overcome the consequences of the financial and economic crisis is the transition of ukraine's economy to an innovative model of development. it was the crisis that showed the danger and futility of focusing on the export of raw materials, and the transition to economic development on an innovative basis depends on this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 36 vol. 3 no. 1, 2022 the effectiveness of the efforts of both the state and individual companies. innovative activity of domestic enterprises is insufficient, and its growth rate is low. therefore, in the conditions of formation and development of economic, innovative, political, legal, social model of development of the state and its regions, cooperation of central and local authorities with private structures on realization of projects of social and economic development, attraction of investments and creation of developed infrastructure is especially important. the problems of formation and development of public-private partnership are currently given considerable attention in foreign studies. the world practice has accumulated considerable experience in the implementation of public-private partnership in various areas and spheres of activity. in western countries the public-private partnership has proven its effective role in the process of modernization of the economy and has long been a priority direction of domestic policy. the category "public-private partnership" is widely used both in foreign and domestic theory and practice as a general term to denote the whole range of relations between the state and business. however, there is a special form of relations between the state and business, which reflects public-private partnership as a type of investment-public management, which has its own definition in different countries. for example, in the united kingdom the term "private financial initiative" (pfi) is used to refer to public-private partnerships, in the united states, canada and australia – "public-private partnership" (p3 or pp partnership), in france – "public-private partnership contract" or "mixed economy community ". for the cis countries, the term "public-private partnership" is translated as "ngo-government alliance" or literally "public-private partnership" (ppp). this is due to the fact that the category of "public partner" in most foreign countries has a broader meaning than "public". in foreign practice, public partners can often be not only public authorities, but also local self-government bodies, as well as public organizations and charitable foundations. it should be noted that public-private partnership most accurately reproduces the content of the concept, where public relations are actively involved in the relationship with the private sector, while emphasizing the public orientation. however, in countries with economies in transition, where institutions of civil society are underdeveloped, the concept of "publicprivate partnership" is most often used. since the state is the initiator of the vast majority of public-private partnership projects, it is the main actor. in addition, the state determines the priority sectors of the economy and invites business to participate in the project, which cannot be implemented only by the state. in such conditions the term "public-private partnership" should be used in ukrainian practice. 2. the essence of public-private partnerships in a broad sense, public-private partnership is interpreted as any relationship between the public and private sectors. this approach does not reveal the essence of the category and features of publicprivate partnership as a separate economic category. in the narrow sense, public-private partnership is not understood as any form of interaction between the state and business, but only those that involve a partnership between the state and the private sector to implement a project with its own features. features of public-private partnership are disclosed in the organizational and financial aspects. organizational aspects concern the institutional basis of relations between the state and the private sector. most of the authors, interpreting the public-private partnership, emphasize the distribution of risks between the participants of the partnership (verkhovna rada of ukraine, 2010). the subject area of public-private partnerships is the relationship between the state and business, and more specifically: the implementation of a project on the basis of public-private partnership (broader interpretation); the relationship between the state and business, in which the private partner assumes part or all of the public sector functions of design, financing, construction/modernization, operation and maintenance of public facilities or related services (narrower approach). there is no consensus among scholars on the target focus of public-private partnerships. most scientists, when defining the purpose of public-private partnership, focus on the solution of socio-economic problems in the implementation of the partnership between the state and the private sector. researchers, when defining public-private partnership, indicate the goal, which is to solve socially significant problems in the sphere of public interests (tasks associated with the creation of public infrastructure and the provision of services on its basis). thus, the purpose of public-private partnership is to solve public and socially significant tasks by implementing investment projects in respect of objects in the sphere of public interest and control, creating public infrastructure and (or) providing services on its basis, aimed at implementing state policy, meeting public needs, creating socially significant objects, protecting social, labor, other rights of citizens or solving other socially significant tasks (savostenko, gritsaenko, 2005). public-private partnership is a way to find a balance of forces between state and market regulation, to optimize the ratio of state and market principles in the reproduction process. public-private partnership three seas economic journal 37 vol. 3 no. 1, 2022 is one of the directions of formation of social systems of mixed type, i.e., mixed economy, which is understood as intertwining of functioning forms of ownership, which provides the choice of the most effective ways of using both public and private property. public-private partnership is used in the following areas: – prospecting, exploration and extraction of mineral deposits, except for those carried out under production sharing agreements; – production, transportation and supply of heat, distribution and supply of natural gas; – construction and/or operation of highways, roads, railroads, airfield runways, bridges, overpasses, tunnels and subways, sea and river ports and their infrastructure; – mechanical engineering; – water collection, treatment and distribution; – health care; – tourism, recreation, recreation, culture and sports; – maintenance of irrigation and drainage systems; – waste treatment; – electricity generation, distribution and supply; – real estate management. public-private partnerships can also be used in other areas of activity, with the exception of economic activity, which, according to the law, is allowed only to state enterprises, institutions and organizations. within the framework of public-private partnerships, concession agreements, joint activity agreements and other agreements can be concluded (table 1). in a public-private partnership, both the state and business, interacting on the basis of partnership, pursue their own interest, which is beneficial to both of them in the future. the benefits from the implementation of public-private partnerships differ from each other due to the different goals pursued by the parties. business, participating in partnership with the state, expects certain guarantees at the expense of administrative, material, financial and natural resources of the state. in addition, for the private sector, the benefit of participating in public-private partnerships is the guaranteed income over the long term, as well as the opportunity to expand their activities. partnering with business, as a rule, the state receives not only the opportunity to attract additional sources of funding for socio-economic project, which in turn reduces the burden on the budget, but also a more flexible and efficient system of economic management, thereby increasing the competitiveness of products and services on the domestic and foreign markets. the hierarchy of subjects of innovation management in the framework of public-private partnership is presented in figure 1. thus, within a partnership, both government and business have their own interests and seek to maximize each other's opportunities. the parties to the partnership are endowed with certain functions, which, when clearly divided, give balance to their relations and ensure long-term implementation. the state plays a key role in such interaction, since the object of the agreement is primarily state property, and the subject is the implementation of state functions. the analysis of domestic and foreign experience resulted in the classification of forms of public-private partnerships (table 2). the desirability of expanding public-private partnership agreements is also due to the lack of an institutional environment of commodity-money relations and the incompleteness of classical principles of the basic attributes of a market economy, which requires direct participation of the state in the redistribution of individual assets owned by it or by the local community. the implementation of projects on the basis of publicprivate partnerships is based on a set of principles which, in addition to obtaining commercial (economic) effect, also bring the domestic economy closer to the economic standards of highly developed countries and accelerate the greening of production. this is especially relevant for our country, which has a high level of anthropogenic and anthropogenic pressure on ecosystems. such principles include openness, trust, payback, continuity and convergence of national and international accounting. table 1 benefits of public-private partnerships benefits for the state benefits for business 1. reducing the cost of providing services. 2. increased infrastructure efficiency. 3. development of forms of project financing. 4. stimulation of innovative development of enterprises. 5. equal dialogue between the state and business. 6. preservation and creation of workplaces. 7. activation of investment activity. 8. optimization of risk distribution. 9. use of experience of private companies. 10. savings of financial resources of the state. 11. effective management of property. 1. attracting public funds to the project. 2. access to previously closed areas of the economy. 3. expansion of opportunities to obtain loans under state guarantees. 4. improved work with state permitting agencies. 5. improvement of the project status due to the participation of the state partner in the project. 6. positive image in the society. 7. optimization of the project risk distribution three seas economic journal 38 vol. 3 no. 1, 2022 unfortunately, the domestic legal framework does not provide a sufficient basis for the spread of various forms of public-private partnerships in certain segments of the national economy. moreover, the latency of the main provisions defining the scope of such interaction creates additional obstacles to the implementation of projects on the basis of publicprivate partnership, which does not contribute to the increase in the level of capitalization of state and municipal assets. based on the analysis, systematization and generalization of the approaches to the interpretation of public-private partnership existing in the world science, the main characteristics revealing its economic meaning as "the unity of all the components of the object, its properties, internal processes and relationships" (1), its inherent features are presented in figure 2. public-private partnership as an economic category is a set of ownership, financial, economic, organizational, managerial and legal relations between the state and a private partner in the models of financing, ownership and management of participation in the system of coordinated activities to create value, which form a variety of forms of public-private partnership and are the basis for choosing a specific scheme of relations between partners in order to implement a particular project. the economic essence of public-private partnership can be defined as an instrument of state regulation of the economy through a competitive admission of a private partner into the sphere of responsibility of the state and cooperation with it on the basis of pooling of resources and competencies, sharing of risks, obligations and benefits, provides the private partner with additional opportunities for a guaranteed profit and increased competitiveness, and the state – to conduct economic policy, to fulfil its traditional tasks, to increase efficiency, to meet public needs, to provide goods (services). the peculiarity of the proposed definition is that public-private partnership is an effective instrument of public regulation only if conditions are created for competition between private sector entities for the right to participate in a particular public-private partnership project. thus, we can conclude that public-private partnership should not be seen as a simple combination of state and business resources, but as a technology for the development of economic relations, which combines entrepreneurial activity and other corrective actions of the state with the ability to attract private investment and competencies of private business to solve socioeconomic problems. the purpose of public-private partnership is to combine the capabilities of the state and the private sector to maximize the benefits of joint ministry of economic development and trade (public-private partnership department) local governments central executive institutions regional executive institutions consulting institutions tender commissions state partner private partner figure 1. hierarchy of subjects of innovative activity management in the framework of public-private partnership table 2 classification of forms of public-private partnerships form of cooperation ownership most of the risks length of time contracts for works (provision of services) state state short-term (1-3 years) contract for management state state medium-term (3-8 years) lease state public / private sector long-term (8-15 years) concession state private sector long-term (15-30 years) joint enterprises state + private state + private sector long-term (more than 30 years) three seas economic journal 39 vol. 3 no. 1, 2022 activities to solve public problems of socio-economic development of the country/region in the priority areas of the economy. 3. world experience in the implementation of the ppp mechanism public-private management is a widespread phenomenon in global business practice and is considered more effective than purely public management, examples of which can be found in many countries. in developed countries the ppp mechanism is used in projects of construction of new production facilities, infrastructure development (road, transport, communications, information, etc.), geological exploration and mining, as well as in solving the problems of energy conservation, real estate management, modernization of housing and utilities, recycling of production and consumption waste, providing quality health services, water treatment and in the development of tourism. in the vast majority of countries that have positive experience in implementing ppp projects, one of the defining features of public-private partnerships is that this mechanism is used to implement large-scale, national or international, socially significant projects. global experience shows that cooperation between the state and private business has the greatest effect, especially in infrastructure sectors, where there are historical preconditions, needs and opportunities for such cooperation in the implementation of large-scale socio-economic tasks. more than 900 ppp projects have been signed in the uk, many of them in the social infrastructure sector. this reflects the priorities of the government, which seeks to solve problems through ppps, particularly in the medical and educational sectors, but also in transport, prisons, waste management, the military and housing. most of these projects are implemented by local governments (rosenau, 2000). the experience of ppp development in france is important for the ukrainian practice of implementation. the latter has considerable experience in the field of public-private cooperation in the field of infrastructure, but mainly in the form of concessions. today in france there are 73 projects worth 8.5 billion euros. one of the features of partnership in france is the balance between large and small public projects implemented by local authorities. the main area of public-private partnerships in the country are concessions for the construction of roads and water supply. over the past 10 years, turkey has remained a leader among eastern european and central asian countries state property as an object of partnership or joint participation of the state and business in the economic organization of the corporate type state participant private participant formal relations the redistribution of responsibilities between the parties to the partnership for more effective implementation partner (equal) relations risk allocation between participants consolidation of assets (resources and competencies) long-term relationship profitable stage of implementation solving state tasks of socio-economic development of the country/region in the priority areas of the economy figure 2. components of the economic content of public-private partnerships three seas economic journal 40 vol. 3 no. 1, 2022 in working with the private sector through publicprivate partnership mechanisms, which has tripled its gdp by attracting $115 billion in investments in 193 ppp projects. the main sectors of investment were energy (76 projects), roads and road infrastructure (29 projects), ports and port infrastructure (21 projects), airports (19 projects), and health (17 projects). it is worth noting that the use of ppp mechanisms can radically change the goals of the industry – in turkey there are now more than 50 airports (including 21 international), and the share of private investment in the industry is 90%. in general, concessions are the most developed progressive form of partnership between the state, local authorities and the private sector at the present stage. this form of public property management is widespread in more than 120 countries of the european union, central and latin america, asia, oceania, as well as in eastern europe and the cis (hodge, greve, 2007). examples of using public-private partnerships: 1. implementation of infrastructure projects: – construction of roads, schools and hospitals (great britain, spain, finland, canada); – construction of high-speed highways and railroads, subways and airports, stadiums (france, austria, portugal, turkey and greece); – construction of ferry crossings (romania, bulgaria, greece); – construction of new and reconstruction of worn-out systems of urban transport and housing and communal services (australia, the netherlands and ireland). ppp in the water and sewage sector in the u.s. and canada has reduced costs by 10-40%, in scotland – by 20%, and in ireland – by 25-30%. according to the european commission, in the transport sector – by 10-17%. in the uk, the average savings for different sectors were 17%. involvement of private business by the state is one of the main global trends in the development of transport. this involvement comes in a variety of forms: from contracts for the management of existing facilities to the transfer to private companies of the entire cycle of construction and operation of new infrastructure. successful examples of public-private partnerships are projects in the field of railway transport: tunnel rail link (uk), high-speed hsl zuid (netherlands), oresund line (denmark – sweden). such complex projects as the channel tunnel, the sydney harbor tunnel, the confederation bridge in canada, the national airports in hamburg and warsaw, central park in new york, some branches of the london underground have been completed using the public-private partnership mechanism and others. 2. implementation of humanitarian projects: – improving the quality of education and health care (usa and canada); – research (in particular, in germany alone in 2012, private investment in research amounted to more than 50 billion euros). 3. implementation of environmental protection projects (canada). 4. implementation of projects in the field of agriculture: – construction, operation and management of irrigation projects in brazil, india, peru, morocco and jordan; – construction and management of networks of cold chain companies in the philippines, india, mexico and pakistan; – construction, maintenance and management of markets for the sale of local agricultural products in the philippines, jordan, etc.; – construction and operation of grain terminals in the seaports of the philippines; – processing of agricultural waste (moldova, slovenia, uganda, mauritius, brazil, etc.). 4. material and methods the objectives of the article are the theoretical justification and development of scientific and methodological provisions and practical recommendations for the development of publicprivate partnerships to ensure the modernization of the economy on an innovative basis. the article used research methods: abstract-logical; economic-statistical (comparison, system and factor analysis, graphic), which are the basis of the analytical assessment of the results of innovative enterprises; calculation-constructive. 5. findings from this it can be concluded that ppp should not be seen as a simple combination of state and business resources, but as a technology of economic relations, combining the business activity of the state and other public corrective action with the ability to attract private investment and private business to solve socioeconomic problems. public-private partnership as an economic category is a set of property rights, financial, economic, organizational, managerial and legal relations between the state and a private partner in the models of financing, ownership and management of participation in a system of coordinated activities to create value, which form a variety of forms of publicprivate partnership and are the basis for choosing a specific scheme of relations between partners to implement a particular project. 6. conclusions thus, it can be concluded that public-private partnership as an economic category is a set of property relations, financial, economic, organizational, three seas economic journal 41 vol. 3 no. 1, 2022 managerial and legal relations that develop between the state and a private partner in the models of financing, ownership and management of participation in a system of concerted value creation activities, which form a variety of forms of public-private partnership and are the basis for choosing a specific scheme of relations between. the mechanism of public-private partnerships makes it possible to overcome the limited capacity of the state and regional bodies to finance social and infrastructure projects, transfer part of the risks to business and use private sector management skills and experience to improve the quality of social services and public infrastructure management. analysis of foreign experience shows that the role of public-private partnership in innovation policy of regions and the country as a whole varies from country to country, but there is a clear trend to increase its influence on the process of increasing innovativeness. the exceptional importance of public-private partnership as an effective tool for implementing innovation policy is determined by the development of innovation infrastructure, taking into account the interests of business and with its active participation; increasing the efficiency of public property and budget expenditures, including those aimed at supporting innovation; encouraging the private sector to develop business activities in areas with the greatest potential for quality economic growth. these areas are reflected in state budget expenditures, legislative initiatives, and the development of new programs in the area of innovation partnerships. innovation activation as a result of public-private partnership takes place at all stages of the innovation process. factors of innovative activity are: exchange of knowledge, generation of ideas, co-financing of research and development. partnership of the state and business in the regions requires coordination of interests of these two main institutions of modern society and economy. public-private partnership does not mean simply investing resources. each side of the partnership has its own goals, solves its own specific problems, the parties have different motivations. today in the world practice has accumulated considerable experience in the implementation of public-private partnerships in various sectors and spheres of activity, which in western countries is due to historical features. the analysis of foreign experience of financial stimulation of innovations revealed the following main directions of its implementation in domestic practice: 1) achievement of an optimal balance between direct and indirect instruments of regulation (experience of france, the usa and canada); 2) concentration on stimulation of innovative activity of small and medium-sized enterprises (the netherlands and portugal); 3) the state should diversify methods of innovation regulation, taking into account the experience of transparency and openness in the use of financial instruments (australia); 4) the introduction of full income tax exemption for enterprises engaged exclusively in research and development (croatia); 5) further study of the prospects for the restoration of free economic zones, where innovative products are produced (poland). ukraine needs a model of development of publicprivate partnership in the innovation sphere, which will ensure the continuity of the chain "business – science – government" and allow the formation of a national innovation system. institutional support of public-private partnership processes will create conditions for the real involvement of private business in the innovation sphere and form the country 's competitive advantages in the long term. references: hodge, g., & greve, c. (2007). public-private partnerships: an international performance review. public administration review, june, 37–49. rosenau, p. (2000). public-private policy partnerships. edition: illustrated. published by mit press, 256. savostenko, t., & gritsaenko, a. (2005). porіvnyal'na kharakteristika metodіv derzhavnogo regulyuvannya іnnovatsіinoi dіyal'nostі v rozvinutikh krainakh svіtu ta v ukrainі. ekonomіchnii vіsnik ngu, (1), 19–27. verkhovna rada of ukraine (2010). pro derzhavno-privatne partnerstvo: zakon № 2404-vi. available at: http://zakon3.rada.gov.ua/laws/show/2404-17 three seas economic journal 52 vol. 3 no. 4, 2022 1 batumi shota of rustaveli state university & center for socio-economic research, georgia (corresponding author) orcid: https://orcid.org/0000-0002-7626-3355 e-mail: murman.tsetskhladze@bsu.edu.ge 2 batumi shota of rustaveli state university, georgia e-mail: salome.sulaberidze1900@gmail.com this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2022-4-8 possible risks in agritourism and ways to overcome them (based on the example of the guria region) murman tshekladze1, salome sulaberidze2 abstract. agritourism activities are sometimes associated with certain risks, protection against which can be seen as one of the important factors contributing to the development of agritourism. the purpose of the article is to analyze the risks in agritourism on the example of guria, one of the regions of georgia, and to outline ways to overcome them. the document outlines the risks associated with overcrowding in tourist destinations, climate change, seasonality of tourism, spread of various pests/diseases of agricultural plants and animals, food safety, environmental and air pollution, improper waste management, financial support for agritourism, etc. their solution often requires both individual and joint coordinated efforts of farmers, local governments and visitors themselves, resulting in the opportunity to offer tourists a variety of safe tourism products in the form of recreation, interesting attractions, and a better understanding of local life, which will make their stay more enjoyable, useful and interesting. the main results of the article are based on the data of our research, which was conducted by direct survey (questionnaire) in one of the regions of georgia – guria. the study determined that there are 566 farms in all three municipalities of the guria region (281 in ozurgeti municipality, 110 in chokhatauri municipality, in lanchkhut municipality – 175), 400 farmers took part in the study, 80 of whom are engaged in agritourism (41 in ozurgeti municipality, 16 in chokhataur municipality, 23 in lanchkhut). the topic analyzes the peculiarities of the existing risk management and offers recommendations on measures to be implemented on the example of the guria region. key words: agro-tourist, farmer, safety, climate, seasonality, waste, parasites, pollution, environmental protection. jel classification: o13, q12, q53, q58, z32 1. introduction according to the world tourism organization, agritourism is one of the five strategic directions of tourism development and ranks second in popularity after sea tourism (chkonidze ... 2019). its development was mainly determined by the prospect of increasing farmers' incomes. it is known that the outflow of able-bodied rural population to cities has led to a reduction in the number of rural residents and a decrease in agricultural income, and a shortage of natural products has emerged on the market. the desire of tourists to relax in the natural environment and have the opportunity to taste natural products has contributed to the reduction of migration from rural areas and the formation and development of agritourism as a specific industry that has provided new employment opportunities for the local population and improved their living conditions (tshekladze, 2022). this issue is also relevant in the case of guria, one of the regions of georgia (see figure 1). the region is located in the west of georgia, on the black sea. it has great potential for agritourism development. the beautiful landscape, clean air, organic food, peaceful environment, georgian hospitality, the opportunity to engage in agriculture, colorful traditions, etc. all this creates conditions for tourists to feel happy and have a great vacation. however, there are many challenges to overcome. the results of our research have shown that for the development of agritourism it is important to: link agricultural activities, farms, village/ three seas economic journal 53 vol. 3 no. 4, 2022 community and customs, traditions and cultural values with tourism. sustainable use and proper management of natural and potential tourism resources in the community/village. one of the important components of good management is managing expected risks. tourists should feel safe and receive as diverse a tourist product as possible. therefore, it is necessary to analyze all expected threats and take adequate measures to prevent them. 2. methodology in the direction of agrotourism, foreign scientists have dedicated their works: b. bosk, j. bridenhans, j. lopa, e. vikens, r . mareski, r . turner, o. korobova, t. volkova-goncharova, s. markarian et al. at the regional level, they studied the potential of one of the tourism areas – agritourism. georgian authors include e. kharaishvili, m. metreveli, l. korghanashvili, n. chikhladze, g. bedianashvili, i. shalamberidze, g. shanidze, l. khartishvili, n. jabnidze, r. beridze, i. gagnidze, c. tsekhtadze, n. khakhubia, n. samchkuashvili, i. akhalbedashvili, m. diasamidze, a. devadze, z. mikashavidze, p. chaganava, the works of gogelia, and others. based on the conceptual analysis of foreign and georgian literature, the article uses a qualitative research method – documentary analysis. a synthetic analysis of the obtained results is carried out. the authors also used information technology, a systematic approach, and comparative analysis. to obtain the data, a survey was conducted by filling out a questionnaire. both local agritourism farmers and non-tourism farmers were interviewed. information provided by representatives of local government entities also helped to assess the current situation and identify problems. the data obtained from the survey were analyzed. the results were presented in the form of diagrams, conclusions and recommendations were formulated. 3. results and discussion the study identified the risks, threats and challenges that farmers may face in successfully managing agritourism: environment polution. its sources can include: industrial and thermal power complexes, household, construction, agricultural facilities, transportation, chemicals introduced into ecosystems by humans, intensive farming, consumption of chemical fertilizers and pesticides (civil... 2019:30). in addition to air, water is also polluted. for example, the sufsa river not only worsens the figure 1. georgia, guria region three seas economic journal 54 vol. 3 no. 4, 2022 quality of coastal water, but often the waste and garbage left by the river pollutes the river banks and the sea coast in grigoleti. since most of the local population uses yard latrines, sewage in the guria region is currently not large in quantity, but in the future, with the improvement of living standards and tourism development, along with an increase in the number of modern latrines, the problem of domestic sewage will definitely be on the agenda. sewage not only pollutes surface water, but is often located near drinking water wells, which directly threatens to contaminate drinking water (integrated...2019). any mass tourism destination may face the problem of poor or inadequate waste management when the number of visitors far exceeds the number of local residents. at such times, old landfills grow, which has a negative impact on nature and can lead to the spread of diseases. waste management is one of the most important environmental issues in the guria region. it is complex and includes issues related to environmental pollution from household waste, prevention of unsanitary landfills, and hazardous waste management. relevant events were also held in the region, but on a smaller scale. in particular: ozurgeti municipality won a grant competition, and several dozen garbage cans were installed in the central areas of the municipality. the ozurgeti cleaning service received new equipment. a group was created to clean the rivers flowing through the city. as a result of the event, the pollution of beaches with household waste on the black sea coast adjacent to the municipality has decreased. currently, there are four landfills in the region: ozurgeti village. ureki, lanchkhuti and chokhatauri villages, and budzhak village. however, there is still no periodic collection and sorting of solid waste from villages remote from the center. climate change and natural disasters. weather and climate are the two main factors that determine the bioclimatic resources of an area. unfavorable climatic conditions and their changes can affect the flow of tourists or seasonal changes in tourism activities. this is especially true for tourism, which depends on the need to produce agricultural products. weather is mainly related to changes in the average annual temperature, the amount and nature of precipitation, and extreme climatic events (droughts, floods, storms, strong winds). natural hazards in the region include strong winds, heavy rains, floods, landslides, and erosion of banks and rivers. coastal erosion (climate...2016). in addition to ozurgeti municipality, the so-called seismological and tectonic zones of chokhatauri municipality in the guria region are particularly vulnerable. the adjacent areas of krip. the region's densely populated hilly terrain is characterized by a high risk of hazards. there is also a risk of flooding in the lanchkhut municipality. in 1997 and 2005, a 60-hectare area was flooded as a result of river overflows, and the total damage amounted to $7 million. landslides (melting of precipitation during rains) and erosion in river valleys (washing away of banks during summer and autumn floods) are also observed. based on the above, it is necessary to have an emergency response plan (guria...2013). seasonality and changes in tourism. the study of seasonality in tourism allows to determine the degree of influence of natural and climatic conditions on the formation of a tourist product, to identify the factors that determine seasonality in tourism (kartvelishvili, 2019). attention is paid to climatic conditions, especially in the case of agritourism. after all, agritourism is directly related to the production of organic products. the production of the product depends on the growth and development of plants, animals and birds, their reproduction and yield on farms. one of the conditions for a fruitful year for a farmer is favorable weather. for example: guria is divided into bar and mountain regions by natural conditions. it is characterized by humid subtropical weather. due to rising temperatures in the summer, a period of drought begins. currently, horticulture farmers do not have enough water and irrigation facilities. the lack of drinking water makes it difficult for pets and birds to survive. therefore, farmers need help and support from local authorities in organizing water supply and irrigation systems. in addition, the region is widely distributed. most of the local population owns land plots. they grow corn. due to climate change, the sowing season was postponed. if they used to sow corn in april, now they sow it in late may or three seas economic journal 55 vol. 3 no. 4, 2022 june. the corn does not reach full maturity and the harvest is of poor quality. there are also cases of deforestation in the region. as a result, there are natural disasters such as floods, landslides, floods, droughts, and destruction of biodiversity. the targeted use of forest resources: collection and processing of non-timber forest products, berries, medicinal herbs, tea, contributed to the development of agritourism. in winter, bad weather and frequent rains interfere with traffic, movement, and recreation of visitors. finally, suitable natural conditions contribute to the development and productivity of farms, which is important for the health and recreation of tourists. various of pests / diseases spread risk. pests cause enormous damage to agriculture. agrotechnical, physical and mechanical, biological, chemical and integrated control methods are used to eliminate them (kanchaveli, 2022). to protect plants from the asian pheasant and other pests in the guria region, the national food agency 's mobile laboratory vehicle is used to travel to villages when necessary. it is equipped with the latest modern equipment and tools necessary for field work, and samples of fruits and vegetables brought by the public are checked on site, and appropriate recommendations are made on measures to be taken on household plots. for example, such outreach events were held in the villages of lanchkhut municipality (lesa, chochkhati, zemo chibati) (food...2019). it is necessary and important to take such measures, which should be active and systematic. general principles of food safety and regulation. local farmers offer consumers natural and diverse products. in order to improve their quality, measures are taken periodically to combat plant diseases. in the field of veterinary medicine, preventive and therapeutic measures are taken against particularly dangerous animal diseases. private veterinary activities are coordinated by special services (guria...2013:18). however, there are cases when the quality of the products produced does not meet the demand of visitors. or a large part of the population's income is spent on food products whose quality is not controlled. therefore, the quality of service and food safety issues still remain underdeveloped and need to be improved. economic risks consist of two main parts: 1) in agriculture – a year without a harvest and 2) in the enterprise – low key characteristics of the products manufactured. in both cases, the economic risks are low economic growth, economic instability, possible complications in international trade relations, low productivity of the agricultural sector, weak entrepreneurial skills in rural areas, insufficient economic diversification in rural areas, limited access to financial resources and modern technologies, and poor infrastructure in rural areas. social risks. currently, guria district has a difficult demographic situation, which is negatively affected by migration. migration processes are caused by a difficult social situation, low level of social infrastructure development and poor employment prospects. one way to solve this problem is to develop agritourism. agritourism will help improve demographic processes in rural areas and reduce migration. pandemic. the covid-19 pandemic has dealt a serious blow to this sector. the negative impact of the pandemic was also reflected in georgian tourism. a decrease in the number of tourists was observed in all regions of the country. guria was among them. therefore, based on the study, the authors compared the situation before the pandemic with the period after it. in 2019, all three municipalities received a total of 140,844 visitors, of which 20,535 were agritourists. in 2021, 43,420 visitors visited the guria region, of which 8,250 were visitors interested in agritourism. that is, over the past 2 years, the total number of tourists has decreased by 97,424, and the number of agritourists has decreased by 12,285 (see figures 2, 3). ways of regulation. the existence of these risks requires the development of ways to regulate, implement and put into practice, in particular, the main areas of risk regulation are as follows: 1. ensuring active and systematic preventive activities on the part of the farmer to minimize expected risks: • technical tips to keep guests safe: – farms must be equipped with medical, fire, telephone, transportation and other types of communication that may be necessary in the event of an emergency; three seas economic journal 56 vol. 3 no. 4, 2022 – necessary warning signs for visitors should be posted on the farm, as a significant number of tourists may not know the rules of behavior and life on the farm related to coexistence with pets and the use of farm equipment; – special signs should be placed in those parts of the farm where the movement of guests/ tourists is restricted; – the farm should have an internal communication system (e.g., a handheld voice transmitter) that allows guests to easily communicate with the farm staff; – first aid kits should be available in all farm buildings, and farm guides should be equipped with first aid equipment; – animals should be placed away from tourists, and they should not approach tourists without guides working on the farm; – special sanitary facilities should be available for tourists in different parts of the farm; – it is necessary to organize open and closed recreation areas for tourists. it is necessary to have drinking water and bathrooms available in these places; 110637 25268 4939 16595 3790 150 0 20000 40000 60000 80000 100000 120000 ozurgeti municipality chokhatauri municipality lanchkhuti municipality number of tourists number of agro-tourists figure 2. number of tourists in all three municipalities in 2019 source: tourism services of ozurgeti, chokhatauri and lanchkhuti municipalities 20000 15000 8420 5000 2250 1000 0 5000 10000 15000 20000 25000 ozurgeti municipality chokhatauri municipality lanchkhuti municipality number of tourists number of agro-tourists figure 3. number of tourists in all three municipalities in 2021 source: tourism services of ozurgeti, chokhatauri and lanchkhuti municipalities three seas economic journal 57 vol. 3 no. 4, 2022 – garbage cans should be placed on the farm. it is desirable that garbage cans allow tourists to separate waste. separated waste can be used for compost production, and the sale of metal and glass waste will bring additional income to farmers (farmer, 2016:10-11). in addition, it is advisable to use the views of other scholars on this topic. for example, štetić s. opinion regarding risk control in agrotourism: risk control and reduction: – one of the essentially important tools in the fight against risk is insurance on responsibility (page, getz, 1997). before rural destination start receiving tourists, they have to check security of rural destination, then the host should: – identify the places guests visit, the activities they participate in, how they are monitored, the precautions to be taken, and all rules of conduct and warnings should be posted in prominent places; – develop an emergency plan and always keep a box with a well-stocked first aid kit on hand; a plan should also be in place for natural disasters such as earthquakes, floods, and fires; – recommend that visitors wear appropriate footwear (closed-toe shoes, sneakers or deep boots, not sandals) and clothing; – provide guests with special instructions and explain to them that this is a farm; since some accidents are always related to the terrain (uneven ground, insects, climate, odors), visitors should accept any such risk and take certain precautions (štetić, 2015). it is also worth noting rohana p. mahaliyanaarachchi's views on risk management in agritourism: "risk management in agriculture is vital for both individual farmers and agriculture as a whole, as higher risks threaten the sustainability of the agricultural sector and lead to the collapse of both the micro and macro economies in a country. therefore, mitigating the impact of agricultural risks is essential for the progress of the sector, and identifying appropriate risk management strategies to overcome these effects is an urgent need. risk management should not focus on just one risk factor or just one solution. diversification is a good strategy to reduce agricultural risks. within a normal level of risk, individual farmers are responsible for and able to manage their own business risks. farmers apply different strategies to manage the risks that affect their production and income. agritourism is an enterprise that can be introduced to successfully diversify the farm business"1 (rohana p. mahaliyanaarachchi, 2016). in addition to the safety of visitors, it is important to protect farmers' crops and their operations from potential risks. in this regard, it is worth noting the agricultural insurance program implemented by the agrarian development agency. it is aimed at developing the insurance market in the agricultural sector, promoting agricultural activities, preserving income and reducing risks for those involved in these activities (agroinsurance, 2014). 2. cooperation and involvement of representatives of local governments and environmental protection authorities in the management of expected risks. measures of state support for agritourism can be divided into: – political stability and security; – establishment of tax benefits; – ensuring the possibility of obtaining a government grant; – provision of preferential credit resources. – development and implementation of projects and programs to promote agritourism; – arrangement of tourist infrastructure (explanatory, 2021:13). 3. respect for the environment and the rules of life of local farmers in a tourist location by visitors. the following key questions arise from the above: from tourists: psychological or behavioral capacity is the point at which a visitor feels that additional tourists will spoil the experience. the ecological culture of tourists and vacationers is very important – knowledge of and compliance with environmental behavioral norms (pavlia shvili, 2018). from the above, it follows that the implementation and use of the "main areas of risk management" in practice is a necessity. this will help the farmer to avoid possible risks when carrying out agritourism activities. 4. conclusions the study revealed the following problems: 1. environment pollution. 1 department of agri business management, faculty of agricultural sciences, sabaragamuwa university of sri lanka, belihul oya 70140, sri lanka. three seas economic journal 58 vol. 3 no. 4, 2022 2. climate change and natural disasters. 3. miscellaneous of pests / diseases spread risk. 4. food safety and general principles of regulation. 5. economic risk. 6. disorganized infrastructure. the solution to the existing problems is as follows: develop and implement an action plan for environmental protection and agriculture at the regional level. this should be taken into account: 1. a group of environmentalists should be mobilized to protect the environment. they should monitor the behavior of local farmers and visitors in the environment (cutting down trees, polluting the environment, interfering with flora and fauna). representatives of the cleaning department should also become more active against environmental pollution, focusing not only on cleaning central streets and districts, but also on placing bins in villages and near farms, and gradually removing and sorting garbage and waste. take care of cleaning the central squares of villages and towns. in addition, control over the internal and external security of the farm also lies on the farmers' shoulders. they are not able to create a safe environment for visitors to relax. 2. climate change and natural disasters – to mitigate existing risks, it is necessary to have an emergency response plan. hydrometeorological stations should be established in municipalities. accordingly, information about possible changes in climate conditions and natural hazards will be provided. the territorial unit should also have an early warning system for impending natural disasters. disaster risks should also be considered when preparing land use and farming projects, village taverns, cottages, spatial planning and engineering projects. 3. various methods can be developed to prevent plant diseases: agrotechnical, physical and mechanical, biological, chemical, biophysical and biochemical. each village should have a veterinary service that will deal with preventive, therapeutic, and elimination measures against animal diseases. 4. according to local farmers: they offer natural and diverse products to consumers. namely: mzia sharashidze's "churchkhela enterprise" in the village of tsikhisferd in ozurgeti, "natanebi" cooperative in the village of natani in ozurgeti, greenhouse and cold storage – production of strawberries, fish farm "mishos aremare" in the village of nigoit in lanchkhuti, "bichiko's kvevrebi" in the village of atsana in lanchkhuti, host bichiko chkha idze, in chokhatauri, family hotel and dried fruit factory "skiji house", host darejan berdzenishvili and others. however, there are cases when the quality of the products produced does not meet the demand of visitors. or most of the population's income is spent on food products whose quality is not controlled. therefore, the quality of service and food safety issues are still underdeveloped and need to be improved. in particular: management and promotion of agri-food, agroprocessing, agricultural, veterinary and plant protection industries; ensuring the rational use and protection of land to produce natural food; minimizing the use of poisons, chemicals, pesticides. fertilizing the soil with organic matter, peat and humus; compliance with the rules of food storage and procurement, hygiene and sanitary standards. 5. local government representatives should be interested in farmers' problems. in particular, they should focus on the financial side. attract investments and grants to attract farmers, stimulate them with financial assistance and benefits. in addition, to help local farmers organize advertising and present agritourism tours internationally. 6. infrastructure projects should also be implemented in villages. designate a special team to provide information on rural access roads, water supply, irrigation systems, sewage, electricity, gas, internet, public toilets on the road, street lighting, street numbering, community center banners, road signs, and tourist centers. representatives of tourist centers provide information to tourists. relevant: maps, brochures and guides with specific infor mation about the tours and the region direct visitors to the right farms. agritourism development is a prerequisite for strong villages in the region. therefore, it is necessary to inform farmers about the benefits of agritourism activities so that more of them are interested and involved in these activities. as a result, the level of migration will decrease, jobs will be created, and their financial situation will improve. three seas economic journal 59 vol. 3 no. 4, 2022 references: "integrated sustainable development plan of the coastal village of grigoleti for 2019–2023", "decree no. 54 – on the approval of the strategic plan for the sustainable development of the village of grigoleti". available at: http://lanchkhuti.gov.ge/?p=4101 "agroinsurance" (2014). state projects, ministry of environment protection and agriculture of georgia. available at: https://mepa.gov.ge/ge/projects/details/16 climate change adaptation and impact mitigation at the local level, current situation in ozurgeti municipality, program – institutionalization of climate change and impact mitigation measures in the regions of georgia (2016). the program is implemented by the national association of local governments of georgia and was made possible by the generous support of the american people and the efforts of the united states agency for international development (usaid). available at: http://nala.ge/climatechange/uploads/baselinepermunicipality/38_ozurgeti.pdf explanatory reference "about agritourism" on the project of the law of georgia (2021). georgian parliament research center, promotion of agrarian tourism, digest n02/05. available at: https://info.parliament.ge/file/1/billreviewcontent/264468 "farmer's guide to starting eco and agri-tourism" (2016). available at: https://vdocuments.mx/ ffffffff-fffffffffffoefff-fff-ff.html "georgian agriculture and rural development strategy 2021–2027" (2019). ministry of environment protection and agriculture of georgia. available at: https://www.gov.ge/files/ 524_74660_648714_2665.pdf kartvelishvili, l., kurdashvili, l., khetsuriani, m., & fanchvidze, b. (2019). "consideration of environmental conditions in the tourism industry ", international scientific conferences of paata gugushvili institute of economics of ivane javakhishvili tbilisi state university, "economy – xxi century ". st. tbilisi. kanchaveli, sh. (2022). "essence of the biological method of plant protection", school of farmers. available at: https://agrokavkaz.ge/fermerta-skola/mtsenaretha-datsvis-biologiuri-methodis-arsi.html "on the approval of the 2014–2021 strategy for the development of the guria region" (2013). decree of the government of georgia no. 1363, c. tbilisi. available at: https://matsne.gov.ge/ka/document/ view/2024372?publication=0 pavliashvili, n. (2018). "geography of world tourism" synopsis, part one. available at: https://old.tsu.ge/data/file_db/faculty_social_political/pavliashvili.pdf petrović, n., roblek, v., khokhobaia m., & gagnidze, i. (2021) "ar-enabled mobile apps to support post covid-19 tourism," 2021 15th international conference on advanced technologies, systems and services in telecommunications (telsiks), pp. 253–256. doi: https://doi.org/10.1109/ telsiks52058.2021.9606335 rohana p. mahaliyanaarachchi ( january 2016). "agri tourism as a risk management strategy in rural agriculture sector: with special reference to developing countries", forestry and plantation conference 2015 (kliafp2015). the journal of agricultural sciences, vol. 11, no. 1, pp. 1–12. available at: https://cutt.ly/q9f ubil sulaberidze salome & tsetskhladze murman (2021). development of agro-tourism in guria region and potential for its use. globalization and business, vol. 11, pр. 133–138. issn 2449-2396. available at: https://www.eugb.ge/view_content.php?content=content&id=335&development% 20of%20agro -tourism%20in%20guria%20region%20and%20potential%20 for%20its%20use# "the machine-laboratory of the food agency will move to the villages" (2019). available at: https://www.facebook.com/watch/?v=385251589056108 tshekladze, m., & sulaberidze, s. (2022). foreign experience of agrotourism development and some aspects of its use in georgia. economy and business, vol. 2. available at: http://eb.tsu.ge/ ?cat=number&leng=ge&adgi=1136&title štetić, s. (2015). "risk management in rural tourism", multifunctional agriculture and rural development (v) – regional specicities, belgrade. available at: https://www.researchgate.net/ publication/330094386_risk_management_in_rural_tourism received on: 10th of november, 2022 accepted on: 15th of december, 2022 published on: 30th of december, 2022 three seas economic journal 29 vol. 4 no. 2, 2023 1 v.o. sukhomlynskyi mykolaiv national university, ukraine (corresponding author) e-mail: tanyastroyko@gmail.com orcid: https://orcid.org/0000-0002-0044-4651 researcherid: aab-2925-2021 2 v.o. sukhomlynskyi mykolaiv national university, ukraine e-mail: katharinakatrina@gmail.com this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-2-4 modern aspects of measuring labour productivity in ukraine in the context of the "decent work" concept tetiana stroiko1, katrina artiushenko2 abstract. the purpose of the article is to study the realisation of labour productivity at ukrainian enterprises through the concept of "decent work". studying the current trends in the ukrainian labour market in wartime, the authors note the growth of unemployment, loss of motivation for professional growth, migration, and the difficult economic situation in the country. all of this makes it urgent to search for legal ideas and guidelines that would restore labour to its natural meaning – to be a driving force for personal and social progress. to ensure progress in the area of decent work, the priorities of socio-economic policy in the near future should be actions aimed at: building the economic foundation, which is a prerequisite for solving problems in the area of employment; improving the institutional mechanism for regulating labour relations in the current conditions of development of the state and society; balancing the interests of employees and employers; and increasing the value of work. in order to improve management activities aimed at increasing labour productivity, рrjsс "кyiv соnfесtіonеry fасtоry "roshen" also offers consulting services of specialists in effective personnel management and training of managers in self-management. certain economic and social indicators are necessary to evaluate the effectiveness of the project to improve human resources development. the following changes can be attributed to the positive ones: implementation and development of employees' individual skills; creation of a favourable social and psychological climate in the organisation; increase in employees' motivation; increase in the commitment of the organisation's personnel; providing employees with an adequate standard of living (high wages). among the negative aspects that can be prevented are: dissatisfaction of employees with their position, incompatibility of the professional level of employees with the requirements of the workplace, lack of opportunities for self-realisation of employees. the positive social consequences of the project to improve the system of professional development of personnel are also formed outside the organisation: a favourable image is created, stable employment is ensured. key words: labour productivity, the concept of "decent work", motivation, personnel management at enterprises, management, professional growth. jel classification: h71, h76, m48, r51 1. introduction labour productivity is the main indicator of overall production efficiency. as an economic category, labour productivity has several manifestations; therefore, different aspects of its study are always interesting and relevant. labour productivity, which manifests itself as a reduction in the cost per unit of output and shows the saving of the working day and even of resources (raw materials, materials, energy), also manifests itself as an increase in the sum of consumption values per unit of time. labour productivity also manifests itself as a change in the ratio of capital intensity to labour intensity. in this study, the authors examine labour productivity through the concept of "decent work". the study of current trends in the ukrainian labour market in wartime conditions reveals an increase in unemployment, loss of motivation for professional growth, migration, and difficult economic conditions in the country. all of this makes it urgent to search for legal three seas economic journal 30 vol. 4 no. 2, 2023 ideas and guidelines that would restore labour to its natural meaning – to be a driving force for personal and social progress. this is the position taken by the international labour organization in defining global principles in the field of employment (international labour organization (ilo), 1999), which combine such general goals as observance of labour rights at work, employment security, social protection and social dialogue. the united nations has recognised the achievement of decent work as an appropriate development goal for 2030, stating: "decent work includes opportunities for work that is productive and provides a fair income, security at work and social protection for families, better prospects for personal development and social inclusion, freedom for people to express their concerns, the ability to organise and participate in decisions that affect their lives, and equal opportunities for all women and men." (international labour organization (ilo), 2021) 2. labour productivity at enterprises: theoretical concept and research methods labour productivity as an economic category has been studied in the works of researchers in various fields of economic science. the origins of the problem of "labour productivity " were formed in the 18th century under the influence of ideas embedded in the concept of economic liberalism. adam smith believed that the development of production had a direct impact on the well-being of a country. in his vision of the economic system, one of the key factors is the division of labour, because it is the division of labour that causes the increase in labour productivity (semykina, 2010). much of the credit for developing the theory of labour productivity goes to david ricardo, in whose works labour productivity is a key concept. in ricardo's work "principles of political economy and taxes", labor productivity is one of the key concepts because it is one of the main parts of the law of comparative advantage (amosha, 2016). in the usa, the ideas of the scientific organization of work were developed, the founder of which was f. taylor. the priority of increasing productivity, according to b. gilbreth and h. ford, was the development of special equipment and mechanisms for increasing labor productivity. h. gantt considered it possible to increase labor efficiency due to the effective use of working time and constant individual planning. thanks to his research in the field of labor productivity, h. gantt developed the gantt chart, which is used in time management (makogon & kapranov, 2017). labour productivity was also studied by j.m. keynes, who recommended increasing the level of employment in the state and shortening the working day in order to stimulate production growth. employees will be able to spend the free time on intellectual and physical self-development (markova, chkan and shkryobka, 2017). it can therefore be concluded that labour productivity research in the 20th century was mainly aimed at studying the efficiency of human capital. labour productivity was an integral part of macroeconomic theories because many countries paid attention to it. ukrainian scientists (geets & al, 2007), noting the presence of a tendency to weaken the motivation to increase labour productivity, the level of education and skills on the part of workers, cite as an argument the existing deformations in wages, anticipatory growth in the structure of income of the population, the share of social transfers, compared to the share of wages, in recent years. in general, this indicates that society and political science are aware of the importance of the task of increasing labour productivity as an important prerequisite for the growth of the competitiveness of the economy and of the existence of a number of factors that counteract its growth. from an economic point of view, labour productivity characterises the efficiency of the corresponding activity of the labour force in the field of national production. the result of the labour productivity of the labour force is the total mass of consumer values created in a given period in the form of provided goods and/or services. production output in a certain volume and range, production costs, level of profitability, number of employees, average salary of employees depend on the level and dynamics of labour productivity (kuzmenko and kozakova, 2017). labour productivity and unit labour cost are included by the ilo in the list of key indicators three seas economic journal 31 vol. 4 no. 2, 2023 of the labour market (kilm), which are recommended for research and analysis of the national labour market. labour productivity is defined as a general indicator of labour productivity that characterises the efficiency of labour costs in production and services. in accordance with the order of the ministry of economy of ukraine "on approval of temporary methodological recommendations for calculation of labour productivity in the economy as a whole and by types of economic activity " (no. 916 dated 26.12.2008), labour productivity for international comparisons is defined as the ratio of gross domestic product (gdp) at purchasing power parity (ppp) to the number of employed persons (according to the labour force survey) (lisohor, 2010). it should be noted that, according to the recommendations of the international labour organisation (ilo), a distinction should be made between the concepts of "productivity " and "labour productivity ". productivity is considered to be a general indicator that, firstly, shows the efficiency of the use of resources (labour, capital, land, materials, energy, information, etc.) in the production of various goods and services, and, secondly, reflects the relationship between the quantity and quality of the produced goods or services provided and the resources spent on their production, and, thirdly, allows to compare the results of production at different economic levels (semenova and tatarynova, 2019). as for labour productivity, the ilo recommends that it is an indicator that reflects the degree of efficiency in the use of a specific factor of production (or resource) – labour. in line with this position, kachan et al. and their supporters claim that "labour productivity is the efficiency of specific labour costs determined by the quantity of products produced per unit of labour time or the quantity of time spent on a unit of production". based on the above ambiguous approaches, it can be concluded that labour productivity is a rather controversial and debatable economic category. it should be emphasised that the volume of produced products depends on the totality of labour costs, in particular, on living and past (reified) labour. the last group of labour costs includes the labour costs related to the creation of the means of production used in the process of labour activity (it is about the return of the means of production). traditionally, this is considered from a theoretical point of view, but at the same time, the complexity of managing labour productivity from an applied point of view is recognised, since for a thorough analysis of the dynamics of this indicator, it is advisable to take into account the role of all labour costs. accordingly, a typical pattern is formed. the higher the individual labour productivity of an employee and the longer the period of his/her activity, the more income he/she generates and the more valuable he/she is for the enterprise. in general, the methodology for assessing labour productivity at the micro level can be represented as a sequence of the following actions: formation of categories, development of indicators, setting a comparison criterion, selection of assessment methods, and obtaining the assessment result. 3. human resource management of enterprises in the context of the "decent work" concept an important aspect of decent work is respect for labour rights, which are enshrined both in international documents and in the current legal framework. in ukraine, a fairly developed legal framework has been created to regulate these issues. however, the state of affairs in this area cannot be recognised as fully meeting today 's requirements. in particular, this is evidenced by the fact that employees are sent on unpaid leave for an indefinite period of time, part-time work is introduced, wages are not paid, unacceptable working conditions are maintained, and so on. at the same time, according to the estimates of the attitude of the population of ukraine in the field of work, carried out by employees of the institute of sociology of the national academy of sciences of ukraine, the share of workers who are fully satisfied with their work in recent years is within 5-11%, the share of those who believe that the nature of their work fully corresponds to their professional qualification level does not exceed 40%, and the share of those who believe that it is difficult to find a job in the place of residence with a qualification with sufficient income is more than 80% (ukrainian society, 2016). one of the examples of ukrainian companies trying to implement the concept of decent work is рrjsс "kyiv соnfесtіonеry fасtоry three seas economic journal 32 vol. 4 no. 2, 2023 "roshen". the personnel management strategy of рrjsс "кyiv соnfесtіonеry fасtоry "roshen" is the development of an approach to personnel management and the formation of a highly professional team to improve professional skills and create good working conditions (roshen, 2023). in particular, the development of professional knowledge and skills is an important part of the corporate culture of рrjsс "kyiv соnfесtіonеry fасtоry "roshen". training programmes have been developed for various groups of employees, which include both classroom training and electronic courses that enable independent learning of the material. electronic platforms are used to train, store and update data on the training history of each employee. the internal training system includes the adaptation of new employees, the development of professional skills, the improvement of personal efficiency and the development of leadership competencies. training programmes for the development of functional and leadership skills are grouped in a catalogue from which it is possible to choose the course of interest. employees also have the opportunity to take part in regular corporate english classes. training is divided into levels and is carried out using progressive methods with the involvement of professional trainers. it is important that every employee of the company has opportunities for professional and personal development. for those who simply want to join the team of top-class specialists, the company has set up a training programme, the completion of which increases the candidate's chances of successful employment. for example, the "school of masters" training project comprises two programmes: one for external candidates for the position of master technologist and one for internal employees who hold this position within the company. the programme for external candidates includes a block of theoretical training of 161 hours and a practical block of on-the-job training of 35 work shifts. the total duration of the training course is 3 months. at the end of the training, an examination is held, the results of which are used to decide whether to accept the candidate for employment. all candidates for the programme are pre-selected. participation in the programme is paid. the company pays for travel and accommodation for candidates from other cities. the programme for internal employees is aimed at improving the qualifications of roshen master technologists and includes a block of theoretical training of 104 hours. it is clear that salary is the main motivator for company employees, with career progression coming in second. this means that employees are interested in working for the company for the long term and want to do more. in third place is self-development; employees want not only monetary benefits for themselves, but also to develop fully, to gain knowledge that can be applied not only in the workplace, but also outside it. collective recognition comes fourth. it can be said that this indicator is also an important component because it motivates many employees to work for results, forcing them to act rather than sit still. the social package and certain bonuses are the least motivating. it should also be noted that the company 's management is constantly working to ensure that employees develop, achieve better results and reach new heights, which in turn affects productivity and increases its level. in order to deepen and update theoretical knowledge, develop practical skills and abilities necessary for employees, рrjsс "kyiv соnfесtіonеry fасtоry "roshen" organises professional training, retraining and advanced training. the company tries to apply modern systems of personnel productivity improvement, namely: material rewards, additional payments, free training and career development, medical care, assistance in treatment. an integral part of increasing labour productivity is the constant improvement of conditions for the company 's employees. the company has a gym with all the necessary equipment where employees can work out absolutely free of charge. there are shops and specially designated areas where one can relax during the lunch break. there are coffee machines in the offices and soda machines in the factory. the problems of creating decent work and shaping the quality of working life are not only economic and legal, but also ethical and valueoriented. the clearly expressed humanistic orientation of the concept of decent work dictates the need to take into account the values of workers in the process of organising their working life, to answer questions about the priority of the values of working life, their three seas economic journal 33 vol. 4 no. 2, 2023 structure and hierarchy. the innovative development of the economy is inseparable from ensuring the processes of intellectualisation of work, which in turn poses new requirements for defining the characteristics of the subjects of innovative work, their basic values. the quality of working life should be based on the principle of conformity of the conditions, organisation and content of work with the needs and values of the employee. this approach minimises the employee's intrapersonal conflict, prevents professional burnout and alienation from work without personal internal content (ryabokon, 2015). 4. implementation of the concept of "decent work" at enterprises in ukraine the implementation of the concept of decent work requires finding ways to ensure it in ukraine. the course set by ukraine for the construction of the social state and the commitments made in connection with the choice of the european integration path are a prerequisite for the further development of social and labour relations in the sphere of the implementation of the concept of decent work. рrjsс "kyiv соnfесtіonеry fасtоry "roshen" is on its way to ensuring the concept of "decent work". its principle is that in order to influence employees, they must be interested. therefore, an interesting approach will be to give employees the opportunity to participate in decision-making about the organisation's goals (as well as the availability of the necessary resources and information to do so). even if the goals are defined by someone else, it is important to let people decide how best to achieve them by hearing from their immediate supervisor: "here is our goal, the goal to be achieved, and you decide how to accomplish this task." for example, employees can be given the right to set their own schedules, determine how they work, and decide when and how the quality of their performance is checked. employees can make their own decisions about when to start and stop work, when to take breaks, and how to set priorities. they can be encouraged to find solutions to problems and to consult with other employees in the organisation, rather than immediately going to the manager when a problem arises (odyntsova, 2013). in рrjsс "kyiv соnfесtіonеry fасtоry "roshen" the bonus should be within 10-50% of the basic salary. annual and one-off bonuses for company employees should be used effectively. this type of bonuses should be extended to highly qualified employees and to employees of the company with a long working experience. in order to organise an annual bonus, it is necessary to propose the creation of a financial incentive fund separately for each division of the company. the distribution of this fund is carried out automatically on the basis of the specific weight of an individual employee's salary in the general salary fund of the structural unit, without the influence of the top management of the enterprise and the unit. a number of methods that should be implemented for рrjsс "kyiv соnfесtіonеry fасtоry "roshen" in order to increase the efficiency of working time and ensure the principles of "decent work" are listed in table 1. thus, in order to reduce the number of time eaters, it is worth using techniques for planning and recording working hours, which will save 1.5-2 hours per day. when using workload management and chaos structuring techniques, efficiency can increase by up to 10%, and the time spent on information management can be reduced by 0.5-1 hour per day. with the use of more applications that computerise personal work, efficiency can increase by 7-20% and time spent on coordinating schedules can be reduced by 1.5-2 hours per week. after an employee has completed long-term training, it is necessary to assess the effectiveness (efficiency) of his or her activities, which is expressed in: – raising production standards; – increase in labour productivity; – reduction of time spent on work and projects; – reduction of financial costs (strus, koval and myshko, 2018). the positive social impact of the project to improve the system of professional development of staff is also felt outside the organisation: a favourable image is created and stable employment is ensured. in order to improve management activities and increase labour productivity at рrjsс "kyiv соnfесtіonеry fасtоry "roshen", it is also proposed to use the services of specialists in three seas economic journal 34 vol. 4 no. 2, 2023 consulting on effective personnel management and training managers in self-management. to assess the effectiveness of a project to improve staff development, certain economic and social indicators are required. the social effectiveness of the project is manifested in the possibility of achieving positive and avoiding negative changes in the organisation from a social point of view. positive changes include the following: – realisation and development of individual abilities of employees; – creating a favourable social and psychological climate in the organisation; – increasing employee motivation; – increasing the commitment of the organisation's staff; – providing employees with an adequate standard of living (high salary). the following aspects should be highlighted among the negative issues that can be prevented: – employee dissatisfaction with their position; – inconsistency of the professional level of employees with the requirements of the workplace; – lack of opportunities for staff self-realisation. the positive social impact of the project to improve the system of professional development of staff is also felt outside the organisation: a favourable image is created and stable employment is ensured. 5. conclusions in order to ensure progress in the field of decent work, the priorities of social and economic policy in the short term should be actions aimed at: – creation of the economic base, which is a necessary condition for solving problems in the field of employment; – improving the institutional mechanism of regulation of labour relations in modern conditions of development of the state and society; – balancing the interests of employees and employers in the use of labour, reducing social tensions and ensuring social justice in order to achieve progressive development of society and increase the well-being of the population; – increasing the value of work, which should contribute to the reproduction of the labour force, provide opportunities to meet the needs of the population, realise the potential of the labour force, stimulate highly productive work and self-improvement. modern state statistics of ukraine do not reflect the problem of decent work and quality of working life in ukraine in the context of the areas presented. for example, the problem of equal opportunities and equal treatment in employment is not reflected in the indicators of official statistics due to the lack of gendersensitive indicators to measure the level of inequality. table 1 methods of increasing the efficiency of use of working time of рrjsс "kyiv соnfесtіonеry fасtоry "roshen" and their economic efficiency suggested activities cost-effectiveness of their implementation techniques for planning a working day, setting priorities, long-term planning, and reviewing tasks. increase efficiency by 5-15%. each employee can gain up to 1.5-2 hours per day by reducing "absorbers". at least 60% of working time is budgeted and planned. special attention is paid to priority tasks. techniques for self-motivation, goal-setting, workload management, and chaos structuring. increase in efficiency by 3-10%. reduced time spent on information management by 0.5-1 hour per day. reducing the feeling of overload, "urgency " of work. improving the quality of work and employee motivation through more efficient workload management. technologies of "computerisation" of personal work in outlook / lotus / sharepoint / mind manager increase in efficiency by 7-20%. reduced total time spent on scheduling by 1.5-2 hours per week. reduction of time for supervisory control by the manager due to the use of tasks – 5-10%. improved performance discipline by guaranteeing reminders of deadlines for all tasks – 10-20%. planning technologies, knowledge of various planning approaches, project monitoring techniques. increase efficiency by 5-15%. minimisation of all inconsistencies in planning. reducing the "urgency " of work through the early implementation of all necessary measures. increased flexibility of teamwork and adaptability to unexpected changes in the situation. increased use of flexible working hours and remote work increase in employee productivity by 10-15%. increased employee job satisfaction, better work-life balance. source: compiled by the authors three seas economic journal 35 vol. 4 no. 2, 2023 it would be appropriate to introduce indicators on the time spent by women and men, their participation in the informal economy, domestic violence and sexism at work, distribution of resources, income, etc. in the field of social dialogue, representation of workers and employers, the problem is that indicators of coverage by collective agreements are taken into account only for large and medium-sized enterprises, without taking into account data on small enterprises. as a result, ukrainian government statistics lack sensitive indicators for monitoring decent work and the level of quality of working life. attention should be paid to the fundamental relationship between the economic and social effectiveness of improving hrd processes. on the one hand, social efficiency in the form of incentives for personnel can only be ensured if the existence of the organisation is reliable and allows for the provision of these incentives. on the other hand, economic efficiency can only be achieved if employees make their labour available to the organisation, which they are usually only willing to do if there is a certain level of social efficiency. thus, the social effects of the project activities will be – increasing social growth and social significance of each employee of the organisation; – creating favourable conditions for staff selfrealisation; – increased employee satisfaction with their position and career progression. references: (ilo, 1999). international labour organization (ilo). report of the director general: decent work. in proceedings of the international labour conference 87th session, 1–17 june 1999; geneva, switzerland. (ilo, 2016). international labour organization (ilo). ilo implementation plan 2030 agenda for sustainable developments 12 august 2016—cabin-160421-en docx. available at: https://www.ilo.org/global/topics/sdg-2030/wcms_51022/lang--en/index.htm (accessed february 1, 2023) semykina, m. v. (2010). productivity of labor: measurement methodology, prerequisites for growth. scientific works of the kirovohrad national technical university. economic sciences, 17, 457–463. (in ukranian) amosha, o. i. (2016). development of the labor potential of industry on the basis of social responsibility: conceptual and scientific and methodological support. herald of the economic sciences of ukraine, 2 (31), 3–8. (in ukranian) makogon, y. v., & kapranov, m. a. (2017). motivation as a factor in effective personnel management of the enterprise: theoretical and methodological aspects. theoretical and practical aspects of economics and intellectual property, 16, 334–341. (in ukranian) markova, s. v., chkan, a. s., & shkryobka, s. v. (2017). formation of a system of personnel motivational factors in industrial personnel management. eastern europe: economics, business and management, 3 (08), 172–178. (in ukranian) geets, v. m. & al. (2007). strategic challenges of the 21st century to the society and economy of ukraine: in 3 vols. / ed. acad. nas of ukraine v.m. geetsya, acad. nas of ukraine v.p. seminozhenka, member-cor. nas of ukraine b.e. kvasnyuk kyiv: phoenix, p. 101. (in ukranian) kuzmenko, a. v., & kozakova, a. s. (2017). labor productivity: european approach; labor productivity in the context of ensuring the growth of ukraine's economy. available at: http://global-national.in.ua/archive/20-2017/79.pdf (accessed january 14, 2023) (in ukranian) lisohor, l. s. (2010). labor productivity in ukraine: problems and prospects for improvement. demography and social economy, 2, 131–138. (in ukranian) semenova, l. yu., & tatarynova, k. s. (2019). development of an effective motivational mechanism of enterprise activity. young scientist, 1 (65), 238–241. (in ukranian) kachan, e. p., dyakiv, o. p., ostroverkhov, v. m., etc. (2008). economics of labor and social and labor relations: education manual. under the editorship e. p. kachan. kyiv: znannia, p. 142. (in ukranian) ukrainian society (2016). ukrainian society: monitoring social changes. collection of scientific papers. founded by the institute of sociology of the national academy of sciences of ukraine, 3(17), 546. (in ukranian) roshen (2023) рrjsс "kyiv соnfесtіonеry fасtоry "roshen". available at: https://roshen.com/ uploads/presentation/roshen__ar-2018__32_1.pdf three seas economic journal 36 vol. 4 no. 2, 2023 ryabokon, i. a. (2015). methodical approaches to the assessment of the quality of working life: a critical review, man-society-economy, zelena gura, volume 2: management staff human capital, p. 71. (in ukranian) odyntsova, n. g. (2013). personnel motivation as a key factor in increasing work efficiency in the conditions of economic development. regional business economy and management, 4, 24–31. (in ukranian) strus, r . v., koval, o. g., & myshko, o. v. (2018). optimization of enterprise management by means of personnel motivation. economy and society, 17, 373–377. (in ukranian) received on: 27th of april, 2023 accepted on: 07th of june, 2023 published on: 30th of june, 2023 three seas economic journal 85 vol. 3 no. 1, 2022 corresponding author: 1 kyiv national university of technologies and design, ukraine e-mail: bogkolesnik@gmail.com doi: https://doi.org/10.30525/2661-5150/2022-1-11 analysis of the effectiveness of methods to expand the audience of the brand in its own media bohdan kolesnyk1 abstract. companies are turning to digital marketing to promote their brand and increase sales through various methods. nowadays, thanks to social media, companies are able to attract the attention of consumers on the internet, attracting a certain part of the brand's target audience. overall, it can be said that social media has had a huge impact on how companies find and communicate with their audiences. thus, there is a need to explore strategies to attract more engaged brand audiences to companies' social media pages. the purpose of this article, as part of the scientific research, is to identify the essence of marketing management strategies in social media, which will include costeffective expansion of the brand audience, as well as comparing their effectiveness. dialectical method of scientific knowledge, method of analysis and synthesis, comparative method, as well as the method of data generalization are used in the work. the results obtained represent the comparative effectiveness of brand audience expansion methods that can be applied in the areas of digital marketing and brand management. the need for a clear strategy for promoting a company on social platforms is dictated by their effectiveness, as well as the size of potentially spent budgets on ineffective digital campaigns. the results of the study allow developing a set of strategies for effective expansion of companies' own media, which can be applied both in ukraine and all over the world. in addition, the results of the study help to determine the possible values of performance indicators and suggest audit methods. key words: digital marketing media, social network, influencer, blogger, brand management, targeted advertising, advertising platform. jel classification: m37 problem statement. over the past two decades, social media has become the most important channel for marketing communications, including digital marketing. it is known that almost 50% of the world's population uses social media, which is more than 3 billion users worldwide (kemp s., 2021). each user spends an average of 2 hours and 25 minutes on social media and messaging (mander j., 2019). millennials participate in social media for an average of 2 hours and 38 minutes a day, while generation z uses this type of media for 2 hours and 55 minutes (world economic forum, 2020). the main reason people follow company pages is to get more information about business products (25.6% of users). 26.3% of respondents hope to get useful information and news on the brand page; for 21.3% the reason is funny or interesting content; another 15.3% want to be the first to know about special offers. this is the conclusion reached by the research company boston digital (boston digital, 2020). thus, businesses of all sizes need a social media presence. of course, in order to attract more people and have a deeper impact on the market, the maximum number of followers converted into a target audience is necessary. using digital advertising tools will accomplish this goal. the question is, which tools are more effective? this is a question that needs research. analysis of modern studies. the problem of measuring the effectiveness of internet advertising and promotion on social networks is being studied by scientists in ukraine and all over the world in various aspects: banner and search advertisement (morrissey brian; mccambley joe; jansen b. j.; mullen t. and others), social media marketing (felix r ., rauschnabel p. a.; hinsch c.; bowden j.; deis michael h.; hensel kyle and others), internet media efficiency analysis rzemieniak magdalena; brodie r . j., ilic a., juric b., randall lewis, justin m. rao, david h. reiley and others). at the same time, given the lack of systematic study of methods to increase an audience on social networks and of all the internet marketing instruments’ comparative effectiveness, the peculiarities of social networks marketing management need further research. presentation of the main material. types of digital marketing media. own media is any communication this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 86 vol. 3 no. 1, 2022 channel or platform owned by the brand itself; companies create and control them independently. the audience for owned media is all of the brand's existing, new and potential customers. the convertibility into customers of those visitors who were attracted by paid tools and platforms depends on the quality and relevance of the brand's own media content. key features: indispensable in building long-term relationships with the target audience; cost-effective, versatile and can be sustained indefinitely. at the same time, paid media is an effective channel for large-scale campaigns aimed at increasing brand awareness and attracting conversions. earned media complete the classification, whose audience consists of those users who are currently targeted (segmented) by the advertising campaigns, as well as brand fans and those people who were previously involved through paid and organic internet marketing channels. the limitations and opportunities of social media. social platforms make it possible to organize brand management in such a way as to become the "top-ofmind" customer at the moment of purchase, i.e. the first brand mentioned by the target audience. what exactly do ceos think of this concept? in a survey of nearly 200 top marketing executives, 50% responded that they think the "top-of-mind" indicator is very important (farris p. w., neil t. b., phillip e. p., david j. r ., 2010). here and below we will analyze methods of expanding the brand's audience on facebook and instagram. bloggers ("influencers") should be singled out as one of the components of earned media. presentation of certain content is more typical for the relevant categories of bloggers; classification of bloggers by type in ukraine is presented in figure 1 (trendhero, 2020). either way, the most interesting for business is the engagement rate of paid media, and therefore the engagement rate of bloggers, which is calculated as follows: 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 = � 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑜𝑜𝑜𝑜 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑛𝑛𝑛𝑛𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝑟𝑟𝑟𝑟𝑜𝑜𝑜𝑜 𝑜𝑜𝑜𝑜𝑟𝑟𝑟𝑟𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑟𝑟𝑟𝑟𝑓𝑓𝑓𝑓𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 � ∗ 100 average engagement rates of accounts in ukrainian segment of instagram are given in table 1. for other countries, market researchers point out that, for instance, in the united states, er figures for million+ "influencers" are lower. this may be due to the fact that in developed countries the so-called "giveaways" are not so common, while there are significantly more bloggers (especially celebrities). table 1 an average engagement rate (er) by account size and country account’s audience er (%), ukraine er (%), russia er (%), usa 1-2 ths. 8,9 5,7 7 2-5 ths. 3,4 2,6 4,5 5-10 ths. 1,6 1,5 2,7 10-100 ths. 1,2 1 2 100-1 mln 1,8 1 1,8 1 mln or bigger 3,4 2,1 1,9 source: compiled by the author (source: trendhero, 2020) the table shows that ukrainian million+ "influencers" have higher er rates than in other countries. it should also be borne in mind that these two social networks have different average level of audience engagement. in 2020, for facebook this figure was 0,27% per post, while for instagram it standed at 1,16% ( jipa a, 2021). moreover, advertising formats are significantly different. for "engagement" campaigns on facebook, there are types such as: "post engagement" (getting reactions to a post), "page likes" (getting subscribers to a "fan page", i.e., a company page), and "event responses" (getting subscribers to an event page). at the same time, figure 1. categories of instagram bloggers in ukraine three seas economic journal 87 vol. 3 no. 1, 2022 "page likes" engagement campaigns are not available on instagram. this means that there is no official advertising tool for expanding the audience of your instagram account. of course, other types of campaigns are used for this business purpose, but because their advertising models do not include payment for the required result (follower), planning and performance analysis are difficult, and the cost per follower increases. it is also worth noting that there are artificial technical limitations created by the instagram platform. for example, promoting "stories" with a link to the account takes the user from the instagram app to the browser; the account from the ad opens in the app only if that ad was created on instagram itself (which lacks most of the ad platform features necessary to run an effective campaign). whereas advertising platform on facebook allows to expand an audience using traditional tools of internet marketing, on instagram, social network with a higher average er , greater coverage of ukrainians under 31, as well as greater number and voice of "influencers" (plusone, 2021), advertising platform’s tools are not enough. at the same time, the total audience of instagram in ukraine is only 1 million less (and this gap is narrowing) – 15 million against 16 million facebook users (plusone, 2021). these reasons lead to the study of other tools to expand an audience. methods of promotion of the account. to begin with, target advertising. launching a campaign to attract followers on facebook is fairly easy, and internet advertising experts consider $0.40 per follower to be the baseline price. of course, the amount may vary depending on a company 's budget, targeting settings (especially those made possible by analyzing existing audiences), and the industry in which the business operates. at the same time, the effectiveness of engagement campaigns like "page likes" on facebook decreases over time (see figure 2): after a few days or weeks, such campaigns bring worse results, so it is necessary to select new advertising materials, test the settings, and restart the campaign. these processes can be explained by the fact that the minimum required auction price increases over time, targeted advertising becomes less effective because of the new privacy policies of some technology companies (see id for apple advertisers), or simply ineffective advertising layouts. launching similar targeting ads on instagram is more complicated. there are two options: launching a "traffic" campaign through a single advertising platform or launching a similar campaign using the instagram app. here and below the advertising campaigns in the building and construction sector will be considered, using the example of a large manufacturer in the plumbing equipment industry (company "a"). the results of the "first option" campaign are presented in table 2. the total number of followers is 371, but the average daily natural increase on the instagram account of company "a" is at least 5 followers, i.e., the actual result is no more than 301. since the actual total cost was $327.8, the price per follower was $1.09 (at the same time, company a had worse campaigns with the same settings). thus, this is a much higher price for the company in question than on facebook: the price of a subscriber on the second of these two social networks corresponds to the industry average (which is $0.40). there was also an "option 2" advertising campaign (using the same advertising layouts), less controlled, but with links opening on instagram itself. the results are shown in table 3. the actual total cost was $210, and the price per follower was $0.78. in the absence of appropriate figure 2. example of "page likes" type of engagement campaign with declining results and prices per result rising three seas economic journal 88 vol. 3 no. 1, 2022 settings, with automatic targeting to a similar audience (users similar to the current audience of instagramaccount of company "a"), the effectiveness of the advertising tool remains quite low. if the effectiveness of advertising is unsatisfactory, you should first try to use the methods of popular accounts (mostly bloggers), namely contests and giveaways. it is clear that in order to attract an external audience, the draw (giveaway) should be promoted with a standard advertising campaign. at the same time, in order to minimize the impact of giveaways on the reputation of a "serious account," the prizes should always be of value, related to the nature of the company 's activity and aimed at attracting attention to a particular product. the raffles themselves on the official account representing the company in social networks should be conducted sparingly and cautiously, screening out with special conditions "prize hunters," not radically changing the type of content and not raising expectations of prizes among the target audience. let's consider an example of a raffle conducted on the instagram account of company "a". the object is a large international company in the sphere of plumbing equipment (15 000+ instagram subscribers in ukraine). product x with an invoice price of 114$ was raffled off by randomly selecting one winner; to participate, it was necessary to leave a comment mentioning two people who may benefit from product x (anticipating viral distribution). the budget of advertising campaign support stood at 130$. the results are presented in table 4. similar raffles on facebook are possible but require a huge own audience and coverage of the external ones. for instance, a raffle on the company’s "a" owned facebook account (70 000+ followers in ukraine) of the more expensive and prestigious product y with an invoice worth 239,26$ brought only 566 followers. although this figure may be overstated too, as facebook statistics on followers is more difficult to calculate accurately. given the campaign budget of 92,84$, the cost of a follower reached 0,58$, which is bigger than the optimal 0,35-0,40$. if one needs a wider reach, partners can always be involved. for the reviewed company, this includes importers of plumbing equipment and retail chains. however, it should be noted that such a partnership may need to be paid for: for instance, epicenter retail chain (monopolist in ukraine among sellers of building materials under diy retail system, 350 000+ followers on facebook) requests 200-1000$ and more for publishing something about a brand on their social networks. at the same time, rozetka, which is the largest marketplace in ukraine (750 000+ facebook followers), create posts with raffles for brands free of charge, according to an agreed schedule. the company "a" initiated several such cooperative raffles on the rozetka page, the results are set out in table 5. based on our observations, it can be said that the effectiveness of raffles on rozetka’s facebook page is decreasing over time; this may be due to an extraordinary number of raffles and regular posts (10 per day or more). one way or another, the company "a" failed to agree on cooperation with rozetka on instagram. to test the hypothesis of whether cooperative raffles always attract more external audiences, the company table 2 instagram "traffic" campaign with expanded control days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 clicks (opening account) 111 112 83 89 142 112 91 55 162 171 158 140 142 69 new followers 36 27 17 29 35 26 20 17 43 26 28 24 16 27 established budget/day, usd 25 25 25 25 25 25 25 30 30 30 30 30 30 30 actual expenses, usd 19,98 20,16 19,09 19,58 25,56 24,64 23,66 11,57 29,64 30,30 30,24 29,89 29,55 11,81 table 3 campaign "traffic" in instagram with automatic settings days 1 2 3 4 5 6 7 8 clicks (opening account) 214 273 298 271 206 262 246 37 new followers 40 43 52 43 42 57 31 3 established budget/day, usd 30 30 30 30 30 30 30 30 actual expenses, usd 25,85 29,91 31,04 30 28,31 31,21 29,50 4,18 table 4 the results of the "a" company’s own instagram page raffle comments (participants) reposts reach (people covered) impressions (views) frequency new followers results 5 267 536 50 390 74 583 1,48 690 the cost of a follower was 0,35$ three seas economic journal 89 vol. 3 no. 1, 2022 "a" also approved a raffle on the instagram page of leo ceramics chain stores (27 000+ instagram followers). results of the raffle are in the table 6. together with the product x invoice price of 114$, the cost of a follower was no less than 0,38$, which is much higher than the price on the facebook page rozetka (although at the level of targeted facebook advertising). it can be concluded that the size of the paid media audience, and not the source of this audience, has a decisive role. however, unlike targeted advertising, the use of partners as paid media is limited: large account holders often charge a payment amount that makes the cooperation itself economically impractical. moreover, the number of accounts of this size, which are somehow related to a brand thematically or have commercial relations, may be limited in some areas (which is also relevant for manufacturer of plumbing equipment – the company "a"). consider interacting with bloggers, also known as "influencers. company "a" had experience working with instagram-bloggers in the past, but no specific goals were set. the results of the collaboration, which took the form of a post and a short one-time "story " about the products given to the bloggers, are shown in table 7. accordingly, the cost of attracting 1,000 instagram users (not necessarily the blogger's subscribers) was $7.95 and $3.25, respectively. however, are these costs economically justified? it is necessary to analyze the results by comparing the cost per thousand with alternative means of online advertising, namely search ads and google display network. for the imputation of the search network, let's take 9 transactional keywords and 1 brand query, such as "plumbing to buy ", "plumbing brand a", "bathroom faucet to buy ", etc.; for the display network, let's take "plumbing" and "home repair" as the audience's interests conditionally. an approximate calculation of the media plan made using google ads tools is shown in table 8: it is estimated that the approximate cost to reach 1,000 people with search advertising is $1.30 and $0.37 on the display network. this is much lower than the cost of outreach achieved through social media "influencers. note that it is unknown which channel (blogger post or google ad) will have the highest value on the conversion path (in this case, the purchase of plumbing equipment), that is, will have the greatest impact on the decision. however, usually a search query on google (especially a transactional one) indicates a certain level of interest in a purchase, unlike casual users on social platforms. as for display network banners, their relevance depends on the relevance of the product to the sites where the banners are posted table 5 the results of a raffle conducted on the rozetka page comments (participants) reposts new followers invoice price of the prize, usd cost of a follower, usd february 5 300 2 500 3 500 122,92 0,04 april 3 600 1 800 900 122,92 0,14 september-october (2 raffles) 3 700 2 000 1 350 114+31,42 0,11 table 6 the results of a raffle conducted on the leo ceramics page comments (participants) reposts reach (people covered) impressions (views) frequency new followers results 3 394 208 7 583 8 365 1,1 up to 300 table 7 company a's collaboration with bloggers without setting a goal expanding the brand's own audience blogger own followers category invoice price of the prize, usd reactions comments reach (people covered) impressions (views) frequency lidiya_kosharska 470 000 lifestyle 591,38 8 078 34 74 386 96 403 1,30 yuliyasholudko 425 000 lifestyle 711,91 22 236 915 219 398 243 901 1,11 table 8 an approximate media plan with google ads tools used advertising campaign clicks cost per click (cpc), usd click through rate (ctr), % impressions (views) duration, days impressions per day total budget, usd search advertising 5 700 0,13 1 570 000 31 36 774 739 google display network 1 000 0,08 0,5 200 000 31 6 452 75 three seas economic journal 90 vol. 3 no. 1, 2022 (while the relevance of bloggers' posts depends on the relevance of the main topic of their accounts). from the author's point of view, unless it is a new product awareness or direct sales campaign (e.g., a review of a new smartphone model, a "challenge" with a candy bar, etc.), it would be a mistake to build relationships with "influencers" just for the sake of coverage and mentions as such. a more appropriate way is to expand the brand's own media audience, being able to influence consumer demand in the long term, which is especially important for products of irregular or deferred demand with a long purchase cycle. company "a" began cooperating with bloggers in a new format: a barter agreement with the condition of a prize draw. for legal reasons, "a" cannot pay a partner directly, so it is much harder to find bloggers than necessary: "influencers" are reluctant to consider barter offers from brands, even with expensive products or direct benefits for their subscribers. company a chose several bloggers with sufficient reach (100,000 subscribers or more), offering them, among other things, barter for several x products (for the bloggers themselves and raffles among subscribers), free installation of products, as well as a special link to the promotional page of the plumbing store with discounts on all products (for subscribers). as an example, consider working with the instagram account alina_lalisea, agreeing on the following terms: – making video reviews, posts and "stories", barter for product z (invoice price 168,81$); – providing product x for the raffle (invoice price 114$); – not mentioned during the negotiations gift of product y (invoice price 31,42$) engraved with the blogger’s nickname – in anticipation of a better relationship and additional free mentions. performance of the published content and the raffle are given in table 9. thus, the cost per subscriber was $0.86. obviously, the results depend on the relevance of the content for the audience of the account (the analysis of this factor will be given below), as well as on the implementation of the integration with the blogger. here's a comparison of the effectiveness of methods for expanding a brand's account audience (figure 3). it can be concluded that the most effective method of attracting social media users in terms of the number of subscribers and average cost is cooperation with the accounts of partners, whose audience is approaching a million. at the same time, given the limited nature of such offers, as well as the gradual saturation of subscribers with standard draws from such pages, for instagram pages businesses can consider integrating "prizes from bloggers" as well as their own draws. for a company 's facebook page, the most effective is targeted advertising on facebook, such as a "page likes" campaign, the effectiveness of which is virtually unlimited and easier to predict. analysis of contributing factors. for a complete analysis of the effectiveness of attracting an audience, in addition to price and quantity, there is another important factor to consider – the quality of the follower, i.e., its relevance to the brand's target audience. thus, the worst positions by this parameter are taken by affiliate pages on facebook, because their audience can be analyzed only superficially (unbox social, 2021) and even, for example, the terms of a raffle are often drawn up by the affiliate. a slightly more complicated, but technically possible way is to analyze the audience of bloggers' accounts (especially on instagram) with the help of special services. it is necessary to consider this process on the example of the ukrainian service trendhero, which is considered one of the most functional solutions on the market. along with an integrated assessment of the "quality " of a blogger's account, which includes an analysis of the follower base, types of followers (real, suspicious, fake accounts), audience growth or decline patterns, and more, the demographic profile of the audience, its interests, and lists of other accounts followed by that audience are also available. such a system makes it easier to find potential partners and study the offers coming in. in addition to checking the quality of incoming audiences, it is also necessary to record their expansion. while substantial statistics are available in facebook targeting ads, in instagram only clicks are recorded as results for "traffic" type campaigns. therefore, in this case the only technically possible solution is to monitor the number of subscribers. numerous technical limitations of instagram manifest themselves in the inability to know the sources of followers, inaccurate statistics and lack of links in posts. however, there are several ways to account for the sources of followers on instagram when interacting with partners or integrating with "influencers: 1. tracking links. utm tags, common for web analytics systems, will not work because it is not the site's traffic that is tracked, but the social network table 9 established a partnership between company a and a blogger to expand the brand's own audience blogger own followers category invoice price of the prize, usd reactions comments (participants) reach (people covered) impressions (views) frequency new followers alina_lalisea 118 000 family and relations 314,23 1 169 240 25 286 37 329 1,48 up to 365 three seas economic journal 91 vol. 3 no. 1, 2022 account. instead, you can provide bloggers or partners with shortened links (e.g., bit.ly) that have traffic tracking built in. limitations of the method: links can only be provided in "stories" or in the profile description; instagram may block redirected links. 2. instagram "branded content" tools. they allow the blogger to specify a partner – an account of a company that is marked as a "paid partner" of the publication. posts created by the blogger using this functionality give the advertiser direct access to statistics, as well as the ability to approve or send the posts for revision directly to instagram. the advertiser can also run an advertising campaign on the facebook advertising platform using the blogger's posts or "stories". limitations of the method: the tag "paid partnership with" may be undesirable for parties, practically not used in ukraine. the last important aspect of any audience expansion method presented here is the actual content to be distributed. for successful integration with bloggers or partners, it is essential that the content be as "native" as possible, i.e., that it blend naturally with existing media content. in contrast, targeted ads need to stand out, attracting the attention of "feed eaters"-users who scroll through their newsfeeds very quickly. brands are more likely to use standard product photos, partners can rent a photo studio for their own photos, and "agents of influence" tell a story in the form of a review, trip or game, not necessarily with studio-quality photos or video. texts written for bloggers should also express the "author's" own opinion, emotions and be somewhat figure 3. comparative effectiveness of brand audience expansion methods illiterate (in most categories, such as lifestyle bloggers, an unmistakable text and concise narration will raise suspicion). content creators need to be controlled, although sometimes unexpected, suggested formats by bloggers can benefit the brand. key findings. a brand needs its own media to build long-term relationships with its target audience; social media representation will help the company stay in touch with customers, keep them informed of important news and be "top-of-mind" to the customer at the time of purchase. a brand management strategy should include specific goals, one of which is to expand the brand's in-house media audience. facebook and instagram are characterized by different audiences, content types, levels of engagement and advertising opportunities, so a company 's account promotion strategy differs significantly from one social platform to the other. internet marketing tools that can be used to achieve the goal of promotion: targeted advertising, interactive formats on the company 's own page, interaction with partners, interaction with bloggers. in terms of the number of subscribers and the average cost, the most effective method of promotion is cooperation with partners whose pages have a very large audience, as well as interaction with bloggers in the format of draws, contests, and "challenges". the price per subscriber is inextricably linked to its quality, which must be analyzed for each method separately. understanding the difference between types of content and controlling its creation will help increase the effectiveness of actions to achieve the goals of the promotion strategy. three seas economic journal 92 vol. 3 no. 1, 2022 references: boston digital (2020, january 28). 5 things you need to know about consumer social media habits. available at: https://www.bostondigital.com/insights/5-things-you-need-know-about-consumer-social-media-habits farris, paul w., neil t. bendle, phillip e. pfeifer, & david j. reibstein (2010). marketing metrics: the definitive guide to measuring marketing performance. upper saddle river, nj: pearson education, inc. isbn 0137058292 jipa, a. (2021, october 8). 2021 social media industry benchmarks. socialinsider. available at: https://www.socialinsider.io/blog/social-media-industry-benchmarks/ kemp, s. (2021, october 22). tiktok hits 1 billion users – faster than facebook. hootsuite. available at: https://blog.hootsuite.com/simon-kemp-social-media/ mander, j. (2019, november 27). daily time spent on social networks. globalwebindex. available at: https://blog.gwi.com/chart-of-the-day/daily-time-spent-on-social-networks/ plusone (2021, july). facebook та instagram в україні [facebook and instagram in ukraine]. available at: https://plusone.com.ua/ sprout social (2021, june 16). the index, edition xvii: accelerate. available at: https://sproutsocial.com/insights/ index/ statista (2021, january 28). u.s. users who use social media to follow brands 2020. available at: https://www.statista.com/statistics/276394/usa-social-media-use-brand-follow/ trendhero (2020, august 27). ryinok instagram-influenserov ukrainyi 2020: top-blogeryi, vovlechennost i nakrutki [ukrainian instagram influencers market 2020: top bloggers, engagement and fraud]. ain.ua. available at: https://ain.ua/ru/2020/08/27/instagram-influensery-ukrainy-2020/ unbox social (2021, october 29). how to conduct facebook competitor analysis. available at: https://www.unboxsocial.com/blog/facebook-competitor-analysis/ world economic forum (2020, february 9). who uses social media the most? available at: https://www.weforum.org/ agenda/2019/10/social-media-use-by-generation/ three seas economic journal 29 vol. 3 no. 2, 2022 corresponding author: 1 isma university of applied sciences, latvia e-mail: kaspars.kikste@gmail.com orcid: https://orcid.org/0000-0002-9522-6349 doi: https://doi.org/10.30525/2661-5150/2022-2-4 prerequisites for the formation of a regional security system in the baltic-black sea union kikste kaspars1 abstract. the purpose of the paper is to summarise and present various aspects of forming a security group within bbs. the method allows to reveal features of evolutionary process of formation of security group. methodology. the study is based on an evolutionary study of the formation of a security group within the baltic-black sea union. the content of this study, scientific findings, conclusion and recommendations are based on the broad application of the systematic approach to the study of the phenomena. the proposed work is based on a synthesis of existing approaches to understanding the essence of security group bbs. results research has shown that the idea of forming a regional grouping to form a security system has a long historical retrospective. the idea of forming a regional group that implements the concept of protection of democratic freedoms and rights became relevant in the early 90's and is especially actively implemented with the intensification of hostilities in ukraine. all this raises the issue of forming the baltic-black sea union, which could become an outpost of europe's defense. practical implications. the formation of a security group is an important task in modern conditions, given the presence of external threats, there is a need for its quality justification and identification of key players and their capabilities. value/originality. analysis of the historical retrospective of the formation of regional security education provides a better understanding of the prospects for its operation. key words: a regional security, baltic-black sea union, security system, prerequisites for the formation. jel classification: f01, f15, f42 1. introduction the current geopolitical situation is developing under the decisive influence of such processes as globalization, regionalization, digitalization, virtualization and networkization of most of the interconnections and relations between national and global actors of different levels. in addition, a distinctive feature is extreme turbulence: the situation and the balance of power in the world are changing very rapidly. what we knew or believed a year ago may change significantly or even lose its meaning in new circumstances. the deployment of a hotbed of instability in the middle east (afghanistan, iraq, kuwait, syria), the terrorist attacks of september 11, 2001, regional military conflicts in the balkans, and, finally, russia's unjustified aggression in ukraine. undoubtedly, all these events are milestones in the formation of not only a new world order, but in general – global civilizational shifts. therefore, speaking of some modern process, we mean the main trend, which, at the same time, is constantly acquiring new aspects and meanings. randomness and uncertainty are becoming integral features of today. predicting events is becoming increasingly difficult, even based on the most serious analytical studies. this is evidenced by the appearance of the most polar forecasts regarding the future scenario of human development: on the one hand, the deployment of a protracted global war, on the other, the triumph of democracy and economic progress as a result of the resolution of modern conflicts. the all-encompassing process of modernity is globalization, which not only does not exclude, but is also successfully accompanied by regionalization, localization, as well as the development of national identity and identity. many countries are trying to preserve their national characteristics, culture, language, etc. despite the successes achieved since the second world war in achieving stable peace and order, we can state a constant increase in the number of new threats to the security of countries and peoples. singling out such a phenomenon as terrorism as a separate threat. aggravation of painful imperial ambitions of the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 30 vol. 3 no. 2, 2022 russian federation. islamic fundamentalism and interethnic conflicts in arab countries. all these and many other processes exacerbate the need to create military alliances and alliances for security purposes. 2. research review the study of the formation of defense economics is the basis of a significant number of works by the following scientists: brömmelhörster d.j., paes w. (brömmelhörster d.j., paes w., 2003), james black, richard flint, ruth harris, katerina galai, pauline paille, fiona quimbre, jess plumridge ( james black and all, 2021), arthur cecil pigou (arthur cecil pigou, 1920), charles j. hitch, roland mckean (roland mckean, 1960), g. kennedy (g. kennedy, 1975), todd sandler, keith hartley (todd sandler, 1995) and others. research is devoted to the problems of financing of defense economic: rafael calduch cervera (rafael calduch cervera, 2012), buffotot p. (buffotot p., 2010), crotty j. (crotty j., 2008), kagan r . (kagan r ., 2011), rose a.k., spiegel m.m. (rose a. k., 2009), taylor j.b. (taylor j.b., 2008), watts b. (watts b., 2008). the impact of military spending on the economy is explored in many more works: the political economy of war by arthur cecil pigou (1920), charles j. hitch and roland mckean the economics of defense in the nuclear age (1960), g. kennedy published his book the economics of defence (1975), todd sandler and keith hartley the handbook of defense economics (1995). features of the formation of regional alliances to ensure security are studied in the works aydin m. (1995). studies of the regional security system are found in the works aydin m., fabrizio tassinari. 3. historical prerequisites for the formation of the baltic-black sea union the creation of any alliance is always conditioned by the presence of external threats. naturally, the increase in the number of threats creates preconditions for the development of new forms of cooperation within existing military alliances. the history of the black sea region shows that it has always been the subject of conflicts. since the black sea connects europe and asia, the struggle for transport routes (sea and land) has been going on for many centuries. periods of relative calm were accompanied by new wars and conflicts, which confirms the great strategic importance of this region. the black sea region is multicultural and multinational, encompassing the peoples of slavic, turkic, caucasian cultures. despite the mixed ethnic composition and a long history of border disputes in the region, at the moment these problems do not pose a risk of violating regional security and there is no reason to talk about the threat of igniting any inter-ethnic conflicts. of course, there are problems of stable economic development, overcoming corruption, the formation of an effective management system and entry into the single european space. the main threat remains the aggressive policy of the russian federation, which requires a rethinking of the entire system of collective security in europe. after the end of the cold war, a period of establishing multilateral cooperation in this and other regions began, when the foundations for its institutionalization were laid (aydin, 2005). in 1992, the organization of the black sea economic cooperation (bsec) was established. bsec includes 6 countries (russian federation, georgia, turkey, romania, bulgaria and ukraine) with direct access to the sea and 6 neighboring countries (albania, armenia, azerbaijan, greece, moldova and serbia). a significant part of the coastline is represented by the russian federation. since 2004, serbia and montenegro have become full members, while poland, slovakia, austria, france, germany, italy, egypt, israel, tunisia, the bsec business council and the international black sea club have observer status. half of the coastline is made up of eu countries (turkey, bulgaria and romania), nato members – greece, turkey, bulgaria, romania, albania. over the past time, within the framework of the black sea of the region, serious foundations have been laid for the development of comprehensive cooperation (economic, trade, cultural, scientific, etc.). and although it cannot be characterized as dynamically developing, nevertheless, such a vector of development would certainly contribute to further strengthening the potential of the region. the russian aggression of 2014 and 2022 is fundamentally changing the configuration of the region, its aspirations, directions and forms of cooperation, in general, the strategic vector of development. in addition to the bsec, the guam organization was established in this region in 1997, including georgia, ukraine, azerbaijan and moldova. this association went through different stages in its development: both rise and oblivion. but from the very beginning, it had the goal of confronting the russian federation in the aspects of security, the movement of energy resources, transport communications. the baltic region is part of the security system in northwestern europe. this basin includes 9 coastal countries (sweden, finland, russia, estonia, latvia, lithuania, poland, germany and denmark), as well as neighboring countries – belarus, the czech republic, slovakia, norway and ukraine. by the way, the composition of the baltic region in different sources is called differently. there is a widespread position to consider only coastal countries as the baltic region. quite often, under the baltic countries they mean only estonia, latvia and lithuania. at the same time, three seas economic journal 31 vol. 3 no. 2, 2022 denmark, iceland, finland, norway and sweden are classified as nordic countries. collectively, they are often referred to as the north-baltic countries. there is a certain logic in the position of fabrizio tassinari, a scientist from the university of copenhagen, who divides all the countries of the baltic region into three groups. the first group includes germany and the nordic countries, the second – poland and the three baltic countries, the third group – the russian federation (tassinari, 2005). a distinctive feature of the baltic region in comparison with the black sea is the lower level of conflict. in the latter, there are long-term conflicts between armenia and azerbaijan (over nagorny karabakh), between russia and georgia, and transnistria. in addition to these sluggish stories, the conflict brought about by russian aggression in crimea, donbass and ukraine as a whole is of a completely different urgency. however, although unlike the black sea region, the history of the baltic sea has not been as bitter, the significance of the northern sea routes is no less important in the global transport and economic space. in the modern context, there is a need to build a radically new system of regional, collective, paneuropean and even global security. the starting point for this new configuration of international security will be ukraine and the agreements that will be adopted after the end of hostilities. in any case, regardless of this, it is necessary to clearly understand the potential of the black sea and baltic regions in terms of both developing cooperation and building the north-south vertical, the baltic-black sea axis. it is quite obvious that all previously created institutions will definitely be reviewed in a new context, since they will either have to disappear, or be transformed, or acquire a radically new purpose and mission. until 2022, the russian federation was considered primarily as a partner and, somewhere hypothetically, as a threat. in many documents, analytical and political, it was emphasized that the russian federation is an important partner, that cooperation with it is diverse and strategically important, and not only in the field of energy supplies. but the february events of 2022 radically changed the perception of this country, the scale of this threat became clear. for any country, any alliance or international organization, this is now primarily a threat. and the primary task is a real assessment of this threat in all aspects: military, political, economic, etc. accordingly, this task is extremely relevant in the context of the development of small alliances in the baltic and black sea regions. analysts, military and political experts from all over the world are trying to assess and predict the scale of this threat, which will undoubtedly be decisively determined by the results of the war with ukraine. the most optimistic forecast is if the putin regime will be broken in the bud. such an outcome gives hope for a decrease in the aggressiveness of this country, the creation of conditions for predictability and controllability of the situation with its aggressive aspirations. the fact remains that the existence of the russian federation in any form is a great threat to peace and security. moreover, the greater the defeat, the more dangerous this threat seems. a wounded beast with painful ambitions and a lack of pity even for its citizens is a colossal threat to peace, not only in europe, but throughout the world. in modern history, the idea of creating a single axis was voiced at the beginning of the 20th century. in august 1919, at a conference near riga, a confe deration of states was created – the baltic-black sea union (bcs) with the aim of developing cooperation in the fields of defense, the economy, a common banking and monetary system, a political convention on mutual support and joint foreign policy, and ensuring a free way from the baltic sea to the black sea. signed a program document on the creation of such countries as finland, estonia, lithuania, latvia, poland, belarus and ukraine. the bbs program was developed by the latvian diplomat siegfried meierovits. unfortunately, this project did not receive practical implementation, since poland refused to participate. in the period between the first and second world wars, the borders of states changed, and other problems became of paramount importance. the idea of a union of countries between the baltic, black, aegean and adriatic seas was also voiced after the second world war by the polish government in exile under the leadership of vladislav sikorsky. in 1942, negotiations began between the greek, yugoslav, czechoslovak and polish governments in exile, which discussed the creation of the polish-czechoslovak confederation and the greco-yugoslav confederation. these ideas also received an extremely negative assessment and resistance from the soviet union and other allies. the revival of the bbs project took place at the end of the 20th century, when this idea was raised by the politicians of belarus, lithuania, poland, and ukraine. during this period, the idea of the "intermarium" was also revived, which assumed at the first stage the integration of ukraine, poland, georgia, lithuania, latvia and estonia. at the next stage – a possible expansion of the alliance to the adriatic-baltic-black sea union with the involvement of such countries as moldova, croatia, slovenia, hungary, slovakia, czech republic, azerbaijan and turkey. in addition to the mentioned states, romania, bulgaria, belarus (after the liquidation of the lukashenka regime), as well as finland, which also waited in vain for help from three seas economic journal 32 vol. 3 no. 2, 2022 the western allies in the winter of 1939–1940, could theoretically join it in the future. non-bloc austria and sweden were also considered as potential partners (stepanenko, 2016). back in the early 1990s, polish president lech walesa expressed the idea of creating a nato bis. in 1997, lithuanian president a. brazauskas at the summit in vilnius expressed the need to intensify the baltic-black sea cooperation. in 1999, at a conference in klaipeda, the leaders of lithuania, ukraine and poland not only supported the idea of cooperation, but also discussed specific projects to create transit routes between the baltic and black seas. in 1994, the league of parties of the intermarium countries was created in kyiv, which was supposed to generate the idea of the baltic-black sea alliance as a zone of stability and security. in september 1999, a summit was held in yalta entitled "baltic-black sea cooperation: toward an integrated europe of the 21st century without distribution lines", where issues of intensifying multilateral cooperation in the expanses between the two seas were discussed. the significance of this project was confirmed by the words of president l. kuchma at the summit: "the baltic-black sea axis can and should become one of the consolidating and stabilizing pillars of the new europe, and, therefore, its integral component". however, the formalization and institutionalization of the baltic-black sea cooperation did not take place during the summit in yalta (volovich, 2017). in belarus, certain forces also supported the idea of creating a baltic-black sea union. thus, zenon poznyak, as a representative of the belarusian popular front, expressed the idea of creating such an alliance as a buffer international entity without the military bases of nato and russia. however, the russian federation managed to preempt all these ideas through the creation of a puppet regime and the virtual suppression of the national sovereignty of the state of belarus (volovich, 2017). at the end of the 20th and beginning of the 21st centuries, there were attempts to institutionalize relations between the countries of this region. it has already been mentioned above that such organizations as the bsec, the visegrad group (1991), the council of the baltic sea states (cbss), guam (1997), the communities for democratic choice (2005), the alliance of the baltic-black sea nations (2014), eastern partnership, etc. of particular note is the idea of the eastern partnership, which has been actively developed by the european union since 2004. this concept was presented by polish foreign minister radosław sikorski at the eu general affairs and external relations council on may 26, 2008. the purpose of this project is the development of integration ties between the european union and six post-soviet countries: azerbaijan, armenia, belarus, georgia, moldova and ukraine. the main priorities were defined: democracy, economic integration with the eu countries, energy security and the development of contacts between people. at the moment, this project has been stalled to a certain extent due to a number of circumstances: the armenian-azerbaijani conflict, relations with belarus, financial difficulties associated with the pandemic and, of course, russian aggression in ukraine. it should be noted that from the very beginning, the russian federation perceived the idea of the eastern partnership as a challenge to its interests. in the 21st century, and especially after the russian aggression in 2014, the idea of bchs takes on a radically new meaning. this union is presented rather than as a full-fledged alliance or bloc, but as an alliance for expanding cooperation. and it is obvious that its main goal is to deter russian aggression, create conditions for joint defense. in determining the contours of the bbs, it seems logical to single out several waves or stages. estonia, latvia, lithuania, poland, ukraine, bulgaria, moldova, romania, turkey should be referred to the first wave or, in fact, the core of the union. of course, the presence of belarus is also logical, but this is possible only after the change of the dictatorial regime. on the second wave, georgia, greece, slovakia, hungary, finland, sweden and other neighboring countries can join the bbs. in 2015, polish president andrzej duda expressed the idea of creating a partner bloc of countries – the baltic-black sea alliance of states consisting of poland, ukraine, belarus, latvia, lithuania, estonia, moldova, hungary, romania, bulgaria, slovakia, the czech republic and six countries of the former yugoslavia, 12 of them are members of the european union. the same initiative was supported by the president of croatia, kolinda grabar-kitarović (georgievska, 2020). it should be noted that the initiative to create such an alliance does not contradict or compete with such an integration association as the european union. its goal is to unite countries that have a common history and development that is different from other european countries. in 2016, ukraine also showed interest in this project, and contacts between certain forces in ukraine and croatia intensified. also, this idea was voiced during the signing of a contract between ukraine, poland and the united states regarding the supply of reduced gas through the polish terminal (georgievska, 2020). thus, the idea of creating a baltic-black sea union obviously has a long history. in different configurations and on different scales, this idea has been expressed for quite a long time by representatives of different countries: latvia, belarus, poland, ukraine, croatia, etc. the presence of a long history confirms that this idea, three seas economic journal 33 vol. 3 no. 2, 2022 of course, has certain prerequisites for its implementation: historical, geographical, political and economic. at the same time, the question of the place and role of this union, its relationship with such heavyweights as the european union and nato, which are the main subjects of international relations in europe, is very important. undoubtedly, the activation of the idea of the baltic-black sea union in 2015 was a reaction to the minsk agreements, which were rightly perceived as a compromise between the russian federation and the eu countries germany and france at the expense of the interests of ukraine. therefore, the statement of this idea from the most developed and politically influential country in eastern europe – poland – cannot but mean a gradual strengthening of the subjectivity of both the countries included in the association and the bbs itself. another reason for the revival of the idea of bbs is the presence of obvious problems in the modern system of european and global security. the blatant act of open russian aggression has not received a proper response from organizations such as the osce, un, eu and nato. the leading world countries – the leaders of the united states and great britain – have not fulfilled their obligations to protect the sovereignty of ukraine in accordance with the budapest memorandum, which they signed together with the russian federation in 1994. the issue of ukraine's entry into nato is also being dragged out, which clearly provokes the aggressor to further actions. the sluggish position of the west is forcing ukraine to look for other allies in confronting the aggressor. potentially, such allies can be those countries that also suffered from russian aggression – georgia and moldova. poland, lithuania, latvia, and estonia are also likely allies. this is practically the main backbone of the countries included in the bes. together they (even without neighboring countries) form a single transport and energy corridor from the baltic to the black sea. the economies of these countries have been successfully cooperating and complementing each other for a long time. the mentality and cultural traditions of the population of these countries are very close, based on european and civilizational values. activation of economic cooperation is quite possible. a whole system of measures can contribute to this: the creation of a free trade zone, support and simplification of business in joint projects, the development of large infrastructure, transport and energy projects, etc. as part of the restoration of the destroyed economy of ukraine, there are real grounds for creating qualitatively new infrastructure facilities and enterprises, taking into account modern technological and environmental requirements and, of course, taking into account considerations of collective security. in general, the strengthening of the economic potential of the bbs countries, both individually and this association itself, is already becoming an important prerequisite for strengthening the system of collective security in the region. the formation of a transport corridor within the framework of the bbs is a particularly important area, since it will ensure the supply of energy resources from the countries of the caucasus, the middle east, and central asia. in fact, bbs is a crossroads between east and west, north and south. the strengthening of this union (both economic and political) will allow it to perform very important functions as a powerful transit corridor between the black, mediterranean, caspian and baltic seas. a strategically important consequence of this will be to reduce (if not eliminate) dependence on russian energy resources. equally important is the creation of reliable logistics corridors for the transportation of various goods. thus, latvia expressed interest in creating the shortest waterway "daugava – dnieper". rail transportation has been established along the international transport route ilyichevsk-klaipeda, which, provided it is connected to the ferry-railway line operating between ukraine and turkey, gets access to the middle east. back in the early 1990s, the idea of creating the euroasian oil transport corridor (eaotc) on the basis of the ukrainian odessa-brody pipeline arose. poland showed interest and was ready to complete it to gdansk. according to experts, the main reason for the failure of this project was the active opposition of the russian federation, which perceived it as a competitor in the european market. 4. conclusions at this stage, the search for new sources and ways of supplying energy resources is extremely topical for europe. it is obvious that the existing supply channels (mainly russian) will be gradually closed. strengthening the bbs as a transport corridor is an important prerequisite for the development of the european economy and, of course, strengthening its defense capability and security. it is also important that the bbs should be considered not so much as a separate integration association, but rather as an integral part of the european union, but with broad powers and opportunities for subregional cooperation. accordingly, in relation to nato, the bbs can be considered as a sub-alliance, a small alliance. goals can be set to strengthen collective security within the framework of such a small alliance, which, on the one hand, provide for its local strengthening, and on the other hand, will undoubtedly help strengthen the power of the entire alliance and ensure collective european security. three seas economic journal 34 vol. 3 no. 2, 2022 references: volovich, a. (2017). baltic-black sea union: prospects for implementation. available at: https://bintel.org.ua/ ru/nash_archiv/arxiv-regioni/arxiv-yevropa/arxiv-insha-yevropa/volodich-balto/ stepanenko, t. (2016). the baltic-black sea union is a european shield from the kremlin. available at: http://www.fttc.com.ua/2016/08/balto-chernomorskij-soyuz-evropejskij-shhit-ot-kremlya/ fabrizio tassinari (2005). the european sea: lessons from the baltic sea region for security and cooperation in the european neighborhood. journal of baltic studies, 36:4, 387–407. doi: https://doi.org/ 10.1080/01629770500000171 aydin, m. (2005). europe’s new region: the black sea in the wider europe neighbourhood. southeast european and black sea studies, vol. 5, no. 2, may, pp. 257–283. doi: https://doi.org/10.1080/ 14683850500122943 georgievska, j. (2020). his "intermarium". available at: https://www.lrt.lt/ru/novosti/17/1141121/svoemezhdumor-e watts, b. (2008). the us defense industrial base: past, present and future. washington. center for strategic and budgetary assessments. available at: http://www.csbaonline.org/4publications/publibrary/r .20081015._ the_us_defense_in/r .20081015._the_us_defense_in.pdf rose, a. k., & spiegel, m. m. (2009). cross-country causes and consequences of the 2008 crisis: early warning. federal reserve bank of san francisco. working papers series, no. 17 ( july), 53 p. available at: http://www.frbsf.org/publications/economics/papers/2009/wp09-17bk.pdf rené van beveren ( january 1993). military cooperation: what structure for the future? three seas economic journal 13 vol. 3 no. 2, 2022 corresponding author: 1 department of mathematics, faculty of applied sciences, university of sri jayewardenepura, sri lanka e-mail: anuradhaiddagoda@sjp.ac.lk orcid: https://orcid.org/0000-0003-2586-430x 2 department of accountancy, wayamba university of sri lanka e-mail: hiranya@wyb.ac.lk orcid: https://orcid.org/0000-0002-4963-5125 doi: https://doi.org/10.30525/2661-5150/2022-2-2 the intervening effect of employee engagement on the relationship bet ween high performance work practices and employee job performance anuradha iddagoda (phd)1, hiranya dissanayake2 abstract. it is evident that high performance work practices are bringing competitive advantage to the organizations. on the other hand, employee engagement is all about employee’s cognitive, emotional and behavioral involvement of his/her job as well as with the organization. the purpose of this study was to investigate the intervening role or the mediating role of employee engagement on the relationship between high performance work practices and employee job performance. methodology. data gathered from 135 managerial level employees in the sri lankan public listed banks. hypothesis was developed based on the theoretical assertions and empirical evidence. three hypotheses were tested in a non-contrive study setting as a cross sectional study. after the reliability is ensured the correlation, regression and sobel test used to examine the hypothesized relationships. results. the findings of this study reveals that significant mediating effect of employee engagement on the relationship between high performance. work practices and employee job performance. practical іmplications. this study is beneficial for the banks to improve their job performance by adopting high performance work practices including realistic job preview, pay for performance, staff attitude surveys, selfdirected teams, regular appraisals, extensive training and symbolic egalitarianism. originality. this study makes two theoretical contributions. a novel theoretical framework built on the foundation of system theory is presented first, laying the groundwork for further investigation. secondly, this study adds new knowledge to signaling theory by ensuring the high-performance work practices such as symbolic egalitarianism signals the employee that the organization recognize their worth and enhance and their job performance. key words: high performance work practices, employee engagement, employee job performance, intervening effect. jel classification: m12, g21 1. introduction employee is our most important asset, is a common statement in the annual reports of the organizations. this is far from the truth. only the engaged employees are the asset to an organization. high level of employee engagement promotes the organizational image in the society high retention rate less absenteeism, innovativeness and good team sprit (iddagoda and opatha, 2020; graça et al., 2019; sendawula et al., 2018). the ultimate result of high level of employee engagement is high level of employee job performance and organizational financial performance (anitha, 2014; iddagoda and gunawardana, 2017). according to gallup (2017) report there are 38% of employees engaged in sri lanka. high performance work practices (hpwps) is a human resource management (hrm) practice that gives a higher impact on organizational success (iddagoda and opatha, 2018; arachchige and robertson, 2015). arachchige and robertson (2015) state that high performance work practices lead to increased productivity and profits and thereby they provide a competitive advantage for the relevant organizations. rana (2015) found a theoretical linkage between hpwps and employee engagement. endeavor was taken to review the literature of employee engagement. sun and bunchapattanasakda this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 14 vol. 3 no. 2, 2022 (2019) state that there is lack of research on the mediating role of employee engagement. unavailability of empirical evidence about the mediating effect of employee engagement on the relationships between hpwps and employee job performance in the sri lankan context as well as in the international context is an important research gap in the literature of employee engagement. meanwhile iddagoda and opatha (2017) identified that there is no empirical evidence which indicates the linkage between employee engagement and hpwps. it reveals that the impact of the hpwps on employee engagement has not been empirically tested in the sri lankan context, perhaps in the international context. these two research gaps are empirical gaps. according to miles (2017) empirical gap often addresses that no study to date has directly attempted to evaluate a subject or topic from an empirical approach. meanwhile iddagoda and opatha (2020) in their study made an attempt to bridge this empirical research gap using the managerial employees in the public listed companies in sri lanka. these listed companies have a wide range of industries in sri lanka and it can be categorized into sectors. they are namely, banking finance and insurance, manufacturing, information technology, beverage food and tobacco, chemicals and pharmaceuticals, construction and engineering, diversified holdings, footwear and textiles, health care, hotels and travels, investment trusts, land and property, motors, oil palms, plantation, power and energy, services, stores and supplies, telecommunications and trading. in their study they gather data from banks as well, but they have not specifically mentioned sector wise. this study attempts to bridge the identified research gaps by iddagoda and opatha (2017) using a hypothetico deductive approach using the empirical evidence from the managerial employees in the sri lankan public listed banks. the research objectives are; to identify the level of high-performance work practices hpwps, employee engagement and employee job performance as perceived by the managerial employees in public listed banks in sri lanka; to identify how hpwps significantly effect on employee engagement; to identify how employee engagement significantly effect on employee job performance; to identify whether employee engagement significantly mediate the relationship between hpwps and employee job performance. 2. literature review 2.1 high performance work practices (hpwps) and employee engagement arachchige and robertson (2015) state the organization that implements hpwps increases productivity and profits and the like, thereby delivering a competitive advantage for it. appelbaum et al. (2011) and rana (2015) conducted literature studies on the relationship between hpwps and employee engagement. high performance work practices enhance employees’ motivation and commitment, which turns into an organizational and labormanagement climate, in which employee engagement in problem solving and performance improvements is motivated and supported is the view of appelbaum et al. (2011). arefin et al. (2019) through his empirical study found a positive link between hpwps and employee engagement in the bangladeshi context. greenberg and baron (2007) defined organizational justice as people’s perceptions of fairness in organization (opatha, 2015). greenberg and baron (2007) as cited in opatha (2015) state that distributive justice, procedural justice and interactional justice are the three dimensions of organizational justice. according to opatha (2015) distributive justice is the degree to which employees perceive their receptive outcomes as fair. here the employee is motivated by the comparing his/her inputs i.e. skills, effort and knowledge and the outcome i.e. salary with other employees. pay for performance is a high-performance work practice. pay for performance is closely linked with individual performance (iddagoda and opatha, 2018). mcphie and sapin (2006) point out those brilliant performers will receive the highest financial and nonfinancial rewards. when it comes to the average and poor performers mcphie and sapin (2006) point out employees who perform in the average level receive small increment and poor performers receive no increment. distributive justice is provided by pay for performance. saks (2006) states that positive perceptions of fairness and justice in the organization leads to employee engagement. signaling theory introduced by spence in 1973. arefin et al. (2019) state that hpwps signal to employees that organization emphasizes employee contribution, recognizes their worth, fosters their development, cares about their skills and knowledge, and helps them to interpret the hr practices positively as like the organization. hysa and mansi (2020) found that happiness of the employee leads to employee job performance which is a consequence of employee engagement. according to kahn (1990) that employees experience psychological meaningfulness when they feel worthwhile or useful and no fear of tarnishing a person’s self-image or status. symbolic egalitarianism is identified as a highperformance work practice by pfeffer (1995) and iddagoda and opatha (2018). symbolic egalitarianism means using visible signs such as dress and the use of physical space such as common cafeteria and parking areas (iddagoda and opatha, 2018) minimize differences among all the levels of employees who work towards achieving a common organizational goal (pfeffer, 1995). researchers can say symbolic three seas economic journal 15 vol. 3 no. 2, 2022 egalitarianism signals the employee that the organization recognize their worth irrespective of their designation. this ultimately leads to psychological meaningfulness which is an employee engagement driver. these relationships between hpwps and employee engagement lead to the following hypothesis, hypothesis 1: high performance work practices (hpwps) is positively related to employee engagement. 2.2 employee engagement and employee job performance engaged employees go beyond the call of duty in order to perform their job in an excellent manner (tennakoon, 2019; bulińska-stangrecka and iddagoda, 2020). anitha (2014) found that employee engagement had significant impact on employee performance. demerouti and cropanzano (2010) argue that engagement can lead to enhanced performance as a result of various factors. scholars such as rich et al., (2010) provided empirical evidence that job involvement, job satisfaction, and intrinsic motivation failed to exceed engagement in predicting performance-related outcomes. evidence of this growth can be operationalized in the growing body of research on engagement as well as the numerous practitioner-based commentaries touting unique engagement interventions aimed at increasing organizational performance (shuck et al., 2012). it is a known fact that all organizations, other than philanthropic ones, are concerned about increasing their financial performance (iddagoda, 2020). researchers like harter et al., 2002; saks, 2006; have shown that the concept of employee engagement shares an important relationship with productivity and organizational financial performance and intention to turnover which is an outcome variable employee job performance. hypothesis 2: employee engagement has a significant and positive effect on employee job performance. 2.3 employee engagement, hpwps and employee job performance there are inputs, process and output in the systems theory. according to wright and snell (1991) skills and abilities are treated as inputs from the environment in the systems theory. training should provide knowledge, skills and attitudes to both new and present employees need to be trained as and when it is required. extensive training is a high-performance work practice (pfeffer, 1995; iddagoda and opatha, 2018). according to pfeffer (1995) extensive training is training the employee with broad perspective, with the intention of enhancing a wide range of skills, rather than training them simply to complete a restricted job. therefore, hpwps become an input. bevan et al (1997) as cited in (armstrong, 2009) engaged employee is someone ‘who is aware of business context and works closely with colleagues to improve performance within the job for the benefit of the organization. hewitt (2015) reveals that engaged employees talk positively about their organization when they move with the society. iddagoda et al., (2016) state that employee engagement is a combination of attitude and behavior. hpwps pay for performance distributive justice (the degree to which employees perceive outcomes such as pay as fair) organizational justice (the extent to which employees perceive the organization as fair) employee engagement figure 1. theoretical assertions derived from justice theory source: constructed by the authors hpwps – symbolic egalitarianism signaling theory employee engagement psychological meaningfulness figure 2. theoretical assertions derived from signaling theory source: constructed by the authors three seas economic journal 16 vol. 3 no. 2, 2022 in a behavior there are some actions and do the action is employee engagement. according to wright and snell (1991) in systems theory employee behavior treated as a throughput. therefore, employee engagement becomes a process. anitha (2014) and demerouti and cropanzano (2010) point out that employee engagement leads to employee job performance. wright and snell (1991) state employee satisfaction and performance are treated as output. consequently, employee job performance becomes the output. below hypothesis is developed based on these assumptions. hypothesis 3: employee engagement will significantly mediate the relationship between hpwps and employee job performance. 3. methodology according to sekaran (2003) a research design is set up to decide on, among other issues, how to collect further data, analyze and interpret them, and finally, to provide an answer to the problem. sekaran (2003) has identified six elements of research design. they are (1) purpose of the study; (2) type of investigation; h3 high performance work practices employee engagement employee job performance independent variable dependent variable mediator h2h1 figure 3. nomological network of employee engagement with the hypotheses source: constructed by the authors table 1 logical flow of research questions, research objectives, hypotheses and analytical tools research objective research questions hypotheses analytical tool research objective 1: to identify the level of hpwps, employee engagement and employee job performance as perceived by the managerial employees in public listed banks in sri lanka. research question 1: what is the level of hpwps, employee engagement and employee job performance, as perceived by the managerial employees in public listed banks in sri lanka? n/a descriptive statistics: minimum, maximum, mean, standard deviation. research objective 2: to identify how high performance work practices (hpwps) significantly affect on employee engagement. research question 2: are high performance work practices (hpwp) significantly affect employee engagement? h1: hpwps is positively related with employee engagement. – bivariate correlation research objective 3: to identify how employee engagement significantly affect on employee job performance. research question 3: are employee engagement significantly affect on employee job performance. h2: employee engagement has a significant and positive effect on employee job performance. – bivariate correlation research objective 4: to identify whether employee engagement significantly mediate the relationship between hpwps and employee job performance. research question 4: is employee engagement significantly mediate the relationship between hpwps and employee job performance? h3: employee engagement has a significant mediating effect on the relationship between hpwps and employee job performance. – multiple regression analysis three seas economic journal 17 vol. 3 no. 2, 2022 (3) extent of researcher interference; (4) study setting; (5) unit of analysis; (6) the time horizon. in this study the extent of the researcher’s interference is minimum. type of investigation is correlational in a non-contrive study setting. cross sectional is the time horizon of this study. purpose of the study is hypothesis testing. the unit of analysis is managerial employees in the public listed banks in sri lanka. theoretical assertions derived by the justice theory, systems theory and signaling theory when developing hypothesis. implications for theory and practice going to be discussed as a part of this study. data gathered through a self-directed questionnaire. according to dewasiri et al. (2018), the research questions of this study are in accordance with the quantitative methodology. hence, the quantitative methodology is employed in investigating the phenomenon. narration of the conceptualization and operationalization of some variables have been published; iddagoda, opatha, gunawardana, 2016 for the construct of employee engagement and iddagoda and opatha (2018) for the construct of hpwps. likert scale was used as the measurement scale, with a rating scale of five-points; strongly agree, agree, neutral, disagree and strongly disagree. researchers used non-probability sampling. sample size is 135 and the sampling rule is given roscoe (1975), as cited in sekaran (2003). according to them the sample sizes should be more than 30 respondents and less than 500 respondents. population is approximately 710. response rate is 86% since we distribute 160 questionnaires and 139 responded. however only 135 questionnaires were in usable state. statistical package for social science 23 was the software package that was used. 4. results 4.1 reliability test for the constructs in social sciences cronbach’s alpha values range from 0 to 1, values at or above 0.7 are desirable (nunnally & bernstein, 1994 as cited in andrew et al., 2011). the cronbach’s alpha of all the variable were in a desirable level. refer to table 2. sekaran (2003) highlighted the importance of content validity and it can be achieved proper conceptualization and operationalization. content validity of all the instruments ensured through proper conceptualization and operationalization. question statement was developed for each element of the dimensions. for hpwps minimum is 2 and for employee engagement and employee job performance it are almost that level. the maximum is 5.00. based on all this, it is evident that the respondents of this study answered within the range of low to very high according to the descriptive statistics of "hpwps", "employee engagement" and "employee job performance". when it comes to the standard deviation for instance the standard deviation of hpwps is 0.751, which is small. most of the respondents "agreed" in the five point likert scale of the construct of hpwps", "employee engagement" and "employee job performance". it can be concluded that level of "hpwps", "employee engagement" and "employee job performance" is high among the managerial employees in the public listed banks in sri lanka based on these findings. 4.2 testing the hypotheses about the selected dynamics of employee engagement 4.2.1 high performance work practices and employee engagement h1: hpwps is positively related with employee engagement the investigation of the pearson correlation matrix of the variables is shown in table 4. a one-tailed test was conducted. this is a non-directional hypothesis. the reason is hpwps are high, the level of employee engagement should be high where there is a bivariate hypothesis. the relationship between hpwps and employee engagement is significant. table 3 descriptive statistics for the constructs n minimum maximum mean std. deviation hpwps 135 2.00 5.00 3.6794 0.58797 employee engagement 135 1.92 5.00 3.9235 0.62907 employee job performance 135 1.83 5.00 4.1210 0.75157 source: survey data table 2 reliability test for the constructs variable cronbach's alpha reliability coefficient (α) high performance work practices (hpwps) 0.898 employee engagement 0.899 employee job performance 0.926 source: survey data three seas economic journal 18 vol. 3 no. 2, 2022 4.2.2 employee engagement and employee job performance h2: employee engagement has a significant and positive effect on employee job performance. the investigation of the pearson correlation matrix of the variables is shown in table 5. a non-directional hypothesis. a one-tailed test was conducted. employee job performance should be high when the level of employee engagement is high where there is a bivariate hypothesis. there is a significant relationship between employee engagement and employee job performance. 4.2.3 testing the hypotheses about mediating role of employee engagement h3: employee engagement has a significant mediating effect on the relationship between hpwps and employee job performance. frazier et al. (2004) developed a method for testing mediation in research. according to frazier et al. (2004) there are four steps with regression equations for establishing the mediation effect. they are, step 1 – predictor is significantly related to the outcome (path c in figure 4); step 2 – predictor is significantly related to the mediator (path a in figure 4); step 3 – mediator is significantly related to the outcome variable (path b in figure 4); step 4 – when the mediator is added to the model, the strength of the relation between the predictor and the outcome is significantly reduced (compare path c with path c/ in figure 4). the studies stipulate that the employee engagement variable mediates the relationship between hpwps and employee job performance. consequently, of the significant relationship between hpwps and employee engagement which is exemplified in table 6. 5. discussion and conclusion frenzy or passion of the researchers all over the world leads to research on employee engagement, but there are research space in employee engagement still exists (iddagoda and opatha, 2020; saks and gruman, 2014). this is an attempt to fill a population gap in employee engagement. employee engagement leads to high level of employee job performance, which is the dream of any chief executive officer. for table 4 correlation for hpwps and employee engagement hpwps employee engagement pearson correlation 0.471** sig. (1-tailed ) 0.000 n 135 source: survey data table 5 correlation for employee engagement and employee job performance employee engagement employee job performance pearson correlation 0.670** sig. (1-tailed ) 0.000 n 135 source: survey data table 6 testing mediator effect of employee engagement on the relationship between hpwps and employee job performance testing steps in mediator model b sig testing step 1 (path c) outcome: job performance predictor: hpwps 0.503 0.000 testing step 2 (path a) mediator: employee engagement predictor: hpwps 0.471 0.000 testing step 3 and step 4 (paths b and c/) outcome: job performance mediator: employee engagement 0.078 0.000 predictor: hpwps 0.109 0.239 source: survey data path a path b predictor (hpwps) outcome (employee job performance) predictor (hpwps) mediator (employee engagement) outcome (employee job performance) path c path c/ figure 4. diagram of direct and mediating effects source adapted: frazier et al. (2004) three seas economic journal 19 vol. 3 no. 2, 2022 that reason both business and academic world have an aspiration to understand the essence of employee engagement. based on theoretical and empirical justifications a set of hypotheses was developed. it is apparent that there is a significant relationship between hpwps and employee engagement. appelbaum et al., (2011) and rana (2015) has done conceptual studies and iddagoda and opatha (2020) about the link between hpwps and employee engagement. anitha (2014) found that employee engagement leads to employee job performance. the results of this study congruence with the finding of anitha in 2014. fourth objective is to investigate whether there is a mediating effect of employee engagement on the relationship between hpwps and employee job performance. this study reveals that there is a significant mediating effect of employee engagement on the relationship between hpwps and employee job performance. when it comes to the level of hpwps, employee engagement and employee job performance is high among the managerial employees in the public listed banks in sri lanka based on these findings. limitations the current research is based on cross sectional design. according to saunders et al., (2007) the cross-sectional study as a particular phenomenon (or phenomena) at a particular time, i.e. a "snap shot". the reasons are the time constraint and the other reason is the organizations main concern on profit making. therefore, they do not allow their employees to spend time on answering the questionnaires several times. delimitations the characteristics that limit the scope and define the boundaries of the study are delimitations. suresh (2015) mentions that the boundaries of the study can be the sample size and geographic size and etc. suresh (2015) further mentions that delimitations help to define the scope clearly and make the research study more practical and feasible. sample size of this study is restricted to 135. one reason is most of the participants are reluctant to participate in the survey because they see this as time consuming. through personal contact the organizations have been selected. managerial implications in order to enhance the level of employee engagement the findings imply that hpwps need to be used appropriately. it is suggested that the organization should give attention to high performance work practices i.e., realistic job preview, pay for performance, staff attitude surveys, self-directed teams, regular appraisals, extensive training and symbolic egalitarianism which the researchers used for this study. the endeavors which take to enhance the level of employee engagement ultimately lead to higher level of employee job performance. references: arefin, m. s., alam, m. s., islam, m. r ., & rahaman, m. 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(1991). toward an integrative view of strategic human resource management. human resource management review, 1(3), 203–225. three seas economic journal 50 vol. 3 no. 1, 2022 doi: https://doi.org/10.30525/2661-5150/2022-1-7 macroeconomic vision of the essence of financial resources of enterprises in agriculture nadiia hryshchuk1 abstract. the purpose of the work is to study the essence of financial resources of enterprises, their current state in the economy of ukraine, the definition of priority financial instruments to provide financial resources to the agricultural sector. methodology. theoretical and methodological basis of research are general and special methods of scientific knowledge: generalization, analogy, analysis and synthesis, induction and deduction (to clarify the conceptual framework, theoretical generalizations of research results, conclusions and proposals); economicstatistical and tabular methods are used. results. it is established that the economic activity of the agrarian sector largely depends on the volume and types of financial resources. the development of the industry and the state is impossible without a sufficient level of financial resources, their focus on the priority areas of the national economy and effective use. financial resources are an important factor in the progressive development of any economic system and economic entities of the agricultural sector. it was found that the volume of financial resources in the domestic economy remains low due to the imperfect legislative framework, underdeveloped financial and credit system, strong tax pressure, inefficient use of depreciation deductions, low level of transformation of population's savings. the analytical assessment of the types of financial security showed that the attraction of soft loans and various types of financial resources by economic entities of the agro-industrial complex will improve financial security. prospective financial resources of enterprises in the field of agriculture allow access to competitive positions of representatives of the agrarian sector. practical consequences. according to the results of the study, priority areas for improving the financial resources of economic entities, which will contribute to financial security, through a balanced and sound public policy to support the economic activity of agricultural enterprises and the implementation of the proposed recommendations for businesses and authorities, were identified. key words: financial provision, financial resources, budget financing, competitiveness, agricultural enterprises, crediting, strategic directions of financial provision. jel classification: p34, g30, g32, q14 1. introduction financial support of agricultural enterprises is carried out in accordance with current economic laws, which is the basis of social reproduction in the country. however, these laws have certain specifics in the sphere of the national economy in which they operate. financial support is an important element of the financial management system, the purpose of which is to transform financial resources into capital in monetary form by attracting money and their use for certain purposes. financing is the basis of financial provision, and the elements of the financial mechanism act as a regulator of functioning. with regard to the agricultural sector, it is important to take into account the full range of features inherent in agricultural production, especially those that are not subject to regulatory influences from both agricultural enterprises and the state. the identification of all the features of agricultural production, their understanding and consideration is a prerequisite for the reproduction of products by agricultural enterprises. the content of financial support of agrarian sector is a set of principles, tools of use, general and specific methods, algorithms of formation, distribution, redistribution and use of financial resources acting between the subjects of agrarian business. the basis for the organization of financial support of agricultural enterprises is a well-defined regulatory framework, justification of the volumes and sources of financial, credit and investment sources. financial support of reproductive processes in agricultural enterprises becomes possible if financial resources are available and used. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: nadiia.hryshchuk@gmail.com orcid: https://orcid.org/0000-0002-3960-7841 three seas economic journal 51 vol. 3 no. 1, 2022 the term "resources" comes from the french resource "help" and the latin resurgere "to straighten, raise up" a supply, a source, a means, an opportunity for realization. in modern conditions the financial resources of agricultural enterprises are treated as an independent object that requires effective management, and the financial management system is characterized as a subsystem of financial management, including both general elements and specific, closely interrelated and interacting with each other and comprehensively affecting the process of formation, distribution, assessment and use of financial resources of the enterprise with the use of certain methods, techniques, management tools, taking into account the key and special principles in the implementation of the chosen financial strategy. today the financial resources of agricultural enterprises are filled with new content and require further implementation. 2. literature review the works of many domestic scientists are devoted to the study of the essence of financial resources of enterprises, including problems in the field of agriculture (v. aleksiychuk, o. gudz, l. gutsalenko, n. davydenko, i. demyanenko, m. demyanenko, a. dibrova, g. zabolotny, o. yermakov, g. kaletnik, c. kvasha, l. khudoliy). scholars' views on the nature of financial resources can be traced back to medical research. according to a prominent ukrainian scientist, g.g. kireitsev (2002), the economic category "resources" at the level of an economic entity has a number of features; in particular, the need for resources is associated with the process of production and creation of consumer value; the structure of resources is dynamic and depends on the development of the enterprise, the stage of its operation, industry and sphere of the economy; the use of any kind of resources involves their cost reproduction (resources from the material form go to the cost or financial). financial encyclopedia provides the following definition – "financial resources" (english financial resources, from the french resources – funds, stocks) – the totality of funds, money, resulting from the distribution and redistribution of the total public product and national income and are at the disposal of the state, local authorities, enterprises, organizations of various forms of ownership. financial resources of enterprises are funds available to enterprises, including: cash, part of cash used in non-fund form, securities, currency values. scientists a. g. zagorodniy and g. l. vozniuk (2000) in the financial and economic dictionary explains that "financial resources" is a set of funds available to the state and businesses and are their source of industrial and social development. they characterize the financial condition of the economy and are divided into centralized (created at the state level) and decentralized (created at the level of enterprises, organizations, associations). in the work "essays on the theory of soviet finance" by the economist o. m. byrman (1972), the term "financial resources" refers to the part of national income expressed in money, which can be used by the state (directly or through an enterprise) for expanded reproduction and for general state expenditures. this vector of macroeconomic vision of the essence of financial resources emphasizes the concept of interconnection between the emergence of financial resources and the processes of distribution and redistribution of gross domestic product and national income, in which the leading role belongs to the state. further research into the economic essence of financial resources was influenced by the above approaches to the interpretation of this category. as for the definition of the economic essence of financial resources, the scientists identified the advantages, which are divided into two approaches and are based on the distributive and reproductive concepts of finance. proponents of the distributive concept of finance support the position about the emergence of finance in the process of distribution and redistri bution of the value of the total social product and national income, whose main functions are distri bution and control. other proponents of the reproductive concept attribute the existence of finance to all stages of the reproductive process, including the stages of production and exchange of goods. exploring the concept of "financial resources" v. v. buryakovsky (1988), under financial resources means the money accumulated in special-purpose funds for the implementation of relevant costs. the vision of the peculiarities of the construction of the concept of "financial resources" of professor n. m. is quite successful and original. davydenko (2013), who primarily provides a theoretical justification for the place, role and importance of financial resources, considering finance as an economic category that is positioned separately. from the point of view of i. zelisko (2014) – financial resources can be used as a management tool, based on their impact on production processes. they are characterized by material characteristics with different value and level of liquidity. according to reproduction theory, this aspect allows financial resources to manifest themselves at all stages of reproduction of production. l. m. khudoliy (2014) notes that in order to fully meet the needs of enterprises in financial resources as a process of ensuring the activities of the entity through the use of different methods, it is urgent to use different tools. it is necessary to direct financial managers to constantly search for the most effective of them, to adapt to the requirements of creditors, three seas economic journal 52 vol. 3 no. 1, 2022 in order to best meet the needs of enterprises in financial resources. 3. the current state of financial resources of enterprises in agriculture the main priority of state policy in the vector of european integration is to change the orientation of the state in the direction of increasing the investment attractiveness of rural areas, the introduction of restructuring of rural economic infrastructure for a balanced multifunctional development, the formation of organizational and economic tools for risk management and security (kaletnik, 2020). in ukraine, the agricultural sector plays an important economic role with a share of 9% in the gross domestic product (gross domestic income in 2019). as of 2020, the entire economy employs more than 14% of the population. by comparison, in germany, the human economy has a share of 0.82% of gross domestic income, and only 1.17% of the population is employed in the sector (world bank 2020). one of the differences between small and medium businesses and large businesses is that large businesses attract financing from additional sources for expansion and development of the enterprise, while a small business enterprise seeks and attracts financial resources in the course of current activities. the main problem in small business is the lack of working capital. in this regard, there is a need for small and medium enterprises to attract additional sources of financing. if a company has quality and good collateral, it can choose which source of financing suits it best: 1) internal resources (i.e., funding from retained earnings, through capitalization or a bank loan against the owner's deposit, etc.). 2) traditional bank lending. 3) issue of corporate bonds on the domestic or foreign market, ipo, etc. 4) commercial lending – prepayment of goods by buyers and deferred payment to suppliers. 5) repo transactions are essentially a loan secured by securities belonging to a company, with the transfer of ownership of those securities to the lender in one hour. 6) factoring, leasing, project financing, export financing, etc. as of 2020, farms have received 71,573.2 thousand uah of state support. the corresponding distribution of funds was approved under the budget program "financial support of agricultural producers" in the direction of "financial support for development" by the following development funds: – provision of partial compensation of the cost of purchased agricultural machinery and equipment of domestic production in 2019 for a total amount of 24 400.5 thousand uah. the funds will be received by 460 farms that purchased 1,152 pieces of equipment; – providing partial compensation for the cost of sowing agricultural plants of domestic production, purchased from individuals – entrepreneurs and legal entities, which employs 53 uah. funds will be provided to 447 farms that purchased 3 368.4 tons of land; – provision of budget subsidy per unit of cultivated land (1 ha) – other farms for october-november 2019 for a total amount of 25 992.0 thousand uah. 861 farms will receive funds. for 2021, the government has prepared a program to support the development of farms in the following areas: – budget subsidy for keeping cows; – additional payment in favor of the insured persons – members / chairmen of sfg without acquiring the status of an eu legal entity; – partial reimbursement of expenses related to the provision of agricultural advisory services; – budget subsidy per unit of cultivated land (1 hectare) – for newly created farms; – financial support on a revolving basis. it is also possible to receive compensation for agricultural machinery of own production. certain compensation of the cost of purchased agricultural machinery and equipment of own production are received by farms on a non-refundable basis in the amount of 40% of the cost of purchased machinery and equipment without taking into account the tax amount noted in the certificate of acceptance and other documents which confirm payment through the state bank-participant. according to the budget program "financial support for agricultural producers," the following support is provided: – in the direction of "partial compensation of the cost of agricultural machinery and equipment of domestic production" in the amount of 25% of the cost; – in the area of "financial support for the development of farms" in the amount of 15% of the value. also one of the important areas of state support is the reduction of agricultural loans. of the total number of authorized banks that signed the memorandum of understanding on the general principles of cooperation with the ministry of economy (36 banks), 33 banks participated in the provision of funds by the bank. top-5 leaders among the regions with the most loans – odessa (uah 91.6 million), kharkiv (uah 71 million), ternopil (uah 68.9 million), cherkasy (uah 65) and vinnytsia (66.5) uah 4 million) of the region. the largest number of loans was provided by the following banks: raiffeisen bank aval (uah 112.2 billion, of which uah 8.5 billion was offset), credit agricole bank (uah 8.9 billion, of which uah 1.4 billion was compensated), procredit bank (uah 3.9 billion, of which uah 3 billion was compensated), oschadbank (uah three seas economic journal 53 vol. 3 no. 1, 2022 2.6 billion, of which uah 2 billion was compensated, uah 5 billion), privatbank (uah 1.7 billion, of which all are compensated) and ukreximbank (uah 1.6 billion, of which uah 1.4 billion is compensated) (table 1). in 2020 the state budget allocated uah 2 billion to finance the program "cheap loans 5-7-9%", through which more than 50,000 loans may be granted. under the support, ukrainian companies with fewer than 50 employees and a maximum annual income of 50 or 50-100 million uah may take loans for business development in the amount of up to 1.5 million uah with a maximum term of 5 years and receive loans with state support for payment of the interest rate. interest costs are reduced from 9% to 5%. loan guarantees are provided for loans to micro and small businesses that do not have sufficient assets to transfer as loan collateral or are characterized by increased indebtedness. this support program was opened to the entire economy after the 2020 drought. a total of 6 billion uah has already been provided for support under this program. a program for irrigation of agricultural land is also to be launched. international financial organizations play an important role in lending to ukrainian businesses. however, attraction of funding from these organi zations is a rather complicated and time-consuming process, as a result of which it is possible to get significant amounts for the relevant project at relatively low rates. the list of international organizations working in ukraine in this direction is presented below: 1) cosme european small and medium business support program. cosme is a support program that includes a set of thematic projects and programs that run from 2014 to 2020, with a total budget of € 2.3 billion, there are 25 sub-programs, which are classified into three areas: new access to foreign markets, increased competitiveness and the formation of a culture of doing business. representatives of small and medium-sized businesses, public organizations, regional development agencies, business organizations, organizations and organizations have the opportunity to participate in cosme programs. 2) programs from the european bank for reconstruction and development: from engaging expert consultants to providing grants. the european bank for reconstruction and development supports entrepreneurs in various industries, such as: food and beverage production, wholesale and retail trade, retail trade. grants are provided for activities related to business development, such as: it consulting, marketing initiatives, transition to european reporting standards, exit. the main focus is on business development in the regions – 65% of projects are implemented outside kyiv. the ebrd provides grants to companies with a staff of less than 250 people, with a period of activity not exceeding 2 years. 3) the german-ukrainian foundation provides microcredits and lending programs for priority sectors. microcredit is a program for individuals, micro, small and medium enterprises. it finances the areas of production, services, agricultural economy and trade. loans are equalized from 25 to 250 thousand uah for 3-5 years. the program of crediting of priority branches is financing and preferential conditions for agriculture, fish farming, food industry, development of small hotels, green tourism, restaurant business, light industry, projects, from efficient energy and power supply, as well as projects on increase of labor productivity and creation of work places in problem regions. under this program loans of up to 300 thousand in hryvnia equivalent are issued. 4. problems of attracting and using financial instruments in ukraine there is a clear problem of attraction and use of assets and inefficiency of obsolete financial instruments. that is why the analysis of ukraine and its regions in terms of attracting incentives and the use of financial instruments determines the relevance of the study. when searching for sources of financial resources an agricultural enterprise proceeds from the purpose of activity and available resource opportunities, prospects of their attraction and receipt. table 1 status of attraction of preferential loans by subjects of management of agro-industrial complex in 2020, thousand uah authorized banks number of companies involved preferential loans preferential loans attracted total in short term average urgent long-term at procreditbank 251 3 027 989,9 1 563 800,9 143 600,2 1320 588,8 jsc "credit agricole bank" 139 1 418 861,9 833 489,0 308 747,4 276 625,6 raiffeisen bank aval 763 8 503 107,3 4 404 188,6 1 645 497,8 2453 420,9 jsc oschadbank 560 2 484 841,4 274 389,5 1 897 179,3 313 272,7 jsc at kb privatbank 2026 1 681 642,6 869 865,2 435 680,0 376 097,4 source: grouped by (loan reduction program) three seas economic journal 54 vol. 3 no. 1, 2022 the activity of agricultural enterprises is connected with many directions, which becomes possible due to the structural transformation of the sources and types of financial resources attracted. this aspect is important to consider when an agricultural enterprise aims at such a vector of development with the developed production strategy, which does not provide for the formation of the most efficient and financially sustainable structure of financial resources. thus, if the management of the enterprise and its owners are aimed at increasing the return on invested capital, as well as ensuring the control and regulatory impact on the economic process, the solution of property and income distribution, then under these conditions is provided and supported by a perfect, optimal structure of the sources of financial resources. in this situation, based on modern financial theory, the company 's management will direct its activities to attract a significant amount of financial resources. it will be necessary to attract these resources taking into account the price of use, the terms of repayment, the most attractive payment terms and the possibilities of achieving financial performance with minimized risk and an acceptable level of the rate of return. it is also important to consider the chosen financial strategy and management tactics of the organizational and economic development scenario. if to imagine that the enterprise operates at the expense of its own financial sources of product reproduction, then at the initial stage the borrowed resources are not used. in accordance with this management scenario, an appropriate financial strategy and tactics should be formed. thus, the management of the enterprise will be aimed at ensuring economic development by generating and transforming borrowed resources and borrowed financial resources to ensure the development of the enterprise. the tools for implementing such financial tactics will be credit resources and interest for their use. a necessary condition will be the ability of an agricultural enterprise to pay for the use of credit resources in excess of the achieved level of profitability. in turn, this development will lead to an increase in the price of equity as a result of an increase in the amount of borrowed funds and the price of their use. such a financial scenario, according to value theory, would increase financial risks and increase the probability of bankruptcy of an agricultural enterprise. as a result, the weighted average cost of capital will move to the current level of the rate of return. this, in turn, will restrain the development vector of the enterprise aimed at increasing the generation and use of financial resources. if an agricultural enterprise reaches a minimum in the level of the difference between such indicators as the weighted average cost of capital and the rate of return in the course of its activities, it will be forced to stop raising additional borrowings due to their increase. at the same time, creditors can stop financing the activities of agricultural enterprises. the reason for this decision may be the lender's desire to help maintain the borrower's positive financial position by preventing the borrower from borrowing significant amounts of money from the company, which would negatively affect the lender's income. the financial situation is quite contradictory and ambiguous. so, on the one hand, companies have a direct financial interest in increasing external borrowings for economic growth and financial strengthening. however, such a financial strategy will eventually lead to the need to consider and compare the potential of external borrowings and the ability to meet their obligations. external borrowings must be within the potential ability to generate profits that can be used to repay service obligations. a positive financial scenario has significant advantages in terms of increasing the company 's capitalization. however, if the resource of profits for repayment of liabilities is exhausted, this financial condition should be considered the limit of increased borrowing and growth of borrowed capital. 5. ways and vectors for further development structures that finance the activities and development of the enterprise should be primarily interested in the current diagnosis of the financial condition of the agricultural enterprise. their interest lies in guaranteeing the repayment of borrowed funds, as well as in the potential threats and the ability of the agricultural enterprise to fulfill its obligations. if the company has exhausted reserves for further increase of additional borrowings and increase of the share of debt capital in the structure of financing, then the best way of further financial support is to reformat the financial policy and focus on the vector of development, based on the increase of equity capital. for this purpose two tactical directions of financial strategy implementation are possible. first, through the generation and accumulation of its own profits, especially its undistributed part. second, by increasing equity, and on its basis the formation of own financial resources created by the owners of the enterprise. thus, the formation of own financial resources at the expense of own sources and the increase in equity is an important component of the financial independence and autonomy of agricultural enterprises. this scenario is the most promising for the company in terms of minimizing financial dependence and maximizing the level of creditworthiness. the logical manifestation of such financial solvency is the cyclical attraction of credit resources in direct dependence on the financial positive performance of their use, which three seas economic journal 55 vol. 3 no. 1, 2022 is an objective consequence of generating profits and using them to ensure continuous production and create a potential basis for improving the competitiveness of agricultural enterprises. this process of circulation of financial flows for the formation and generation of financial resources includes the following components: the agricultural enterprise will carry out additional borrowings and use additional borrowed sources of financial support, the availability of which will be financially justified, taking into account the ratio of profit and payment in the form of interest on borrowed funds. in modern conditions profitable activity should be considered as the difference between profit before taxation and payment of interest on borrowed funds and the amount of accrued interest for the use of borrowed funds. the rule is implemented: the expediency of the use of borrowed funds is limited by the level of the difference between profit and the amount of accrued interest. this process is prevented by the presence of a negative value of this difference as an indicator of unprofitable activity of the enterprise. in a difficult financial situation regarding the possibility of finding and attracting additional borrowed funds of the enterprise, given the optimal price of using these sources, this indicates a significant amount of debt compared to the existing amount of equity (figure 1). table 2 the impact of borrowed sources of financial resources on the activities of small and medium-sized enterprises directions of the influence of credit sources on the activities of enterprises factors limiting the use of borrowed sources strengthening the material and technical base lack of access to long-term financing necessary for expanded reproduction, due to the lack of significant and stable long-term liabilities in the banking system, the risk of long-term cooperation of credit institutions with farmers accelerating turnover revolving assets significant duration of the operating cycle in the industry, low solvency of agricultural enterprises, which leads to increased risk of bankruptcy due to late repayment of debt imperfect system of rationing working capital accelerate the turnover of current assets low purchasing power of population, growth of accounts receivable and emergence of nonpayment crisis growth of financial potential and investment activity the reluctance of potential investors to invest in the agricultural sector of the economy due to high economic and political risks high risks and lack of reliable support – land market reduction of the tax base by crediting interest on the loan to the cost of businesses reduced mass of profits and return on capital advanced due to the need to pay interest and dividends diversification of sources of financing the economy activities difficulty in attracting funds because of the large number of documents required to obtain credit, and the long time it takes to review them low level of access to credit resources, low level of creditworthiness of agricultural producers, lack of effective insurance protection weak development of financial and credit infrastructure of the agricultural sector, psychological and practical unpreparedness of managers and specialists of agricultural enterprises to attract new modern forms of loan capital the emergence of specific risks associated with the financial activities of the company in the market of borrowed capital opportunity to increase return on capital partial loss of control and the ability to manage the activities of the enterprise the emergence of specific risks associated with the financial activities of the company in the market of borrowed capital gaining access to government support the procedure for obtaining budget compensation for agricultural enterprises is complicated lack of equal access to state support (for unprofitable enterprises, farms, small producers, newly created enterprises, etc.) source: generalized by the author the company further raises funds attracting additional borrowed funds if the profit is>% for the loan the company can be unprofitable increasing the amount of equity figure 1. harmonization of equity and debt capital ratio source: built by the author three seas economic journal 56 vol. 3 no. 1, 2022 it is logical in this case to stop borrowing, which can lead to unprofitable activities and prevent tendencies to reduce the level of capitalization of the enterprise. the illustrated stages of formation and transfor mation of the sources of financial resources of the enterprise are based on the ideology of ensuring the possibility of the next stage subject to the final use of the previous stage. this approach is explained by the fact that the enterprise does not seek to increase debt by increasing the cost of debt service. this is due to a number of factors: in the case of an increase in borrowed funds, the cost of their service and use increases, which in turn leads to negative financial consequences for the value of the enterprise. also, if there is a need for additional financing of investment activities, the limit of availability of borrowed sources may be exhausted. in this situation the enterprise is in a financial conflict about its ability to meet the financial needs. therefore, the general vector of the financial strategy of the enterprise should be the application of preventive measures to contain the growth of the cost of borrowed loans. the main of such preventive measures should be the growth of equity, which will be a limiting factor in the convergence of net income and the cost of servicing the use of borrowed loans. in this sequence of stages, there is a certain pattern of maximum borrowing of financial resources in the structure of all financial resources. the content of the process that takes place at each stage is expressed in the possibilities of financial growth, which is limited by the ability to increase borrowing. at the same time, if the strategic structure of the sources of financial support is determined, these processes stop, if it is achieved. another scenario can also be effective. given the uncertainty of the most optimal and acceptable level of the structure of sources of financial support, on the part of the owners of the enterprise and the existing goal of management to generate the maximum amount of financial resources, it is possible to repeat cycles and stop them for other reasons. such a limiting factor may be the market reaction. for agricultural enterprises, in conditions of difficult financial opportunities and limited access to available sources of financing, a competent financial policy and rational approach to the problem of financial support is important. a significant role in the provision of agricultural enterprises, in the content of which a special place is occupied by credit reduction, is carried out in order to attract loans to the agricultural sector and to create real conditions for their reduction. the average interest rates of banks at which agribusinesses attracted loans were 14-16% per annum. although this is not a significantly high rate compared with previous years, it does not stimulate agribusinesses to obtain loans. in addition, it should be noted that the nbu discount rate today is only 6% per annum. this problem lies not only in the significant margin that banks have to charge for loans, but above all in the high risk of agribusiness, as well as in the lack of effective business planning for projects that could offer loans with much lower interest rates to financial institutions. overdraft is a special form of short-term credit provision within the limit set by the bank, which allows making payments when there are not enough funds on the client's settlement account to make a payment transaction. under the terms of the overdraft, the bank credits the client's settlement account for the appropriate payment of settlement documents in case of lack or absence of funds on the client-borrower's settlement account. in addition, the bank deducts funds from the client's account in full, automatically granting the client a loan in excess of the balance. it should be noted that an overdraft differs from an ordinary loan primarily in the fact that all funds received on the customer's current account are used to repay the debt. in case of temporary shortage of funds in the current account, the bank offers an overdraft. it will help optimize settlements with partners and ensure uninterrupted financial and economic activities. it is a kind of additional insurance for business. clients prefer an overdraft, as the interest is accrued only on the used loan amount. an overdraft is beneficial for a company because it can at any time replenish its working capital, which is insufficient for settlements, at the expense of the bank. according to item 2 of art. 1069 of the civil code, the rights and obligations of the parties related to the crediting of the account are determined by the provisions on the loan and credit. since an overdraft is a type of loan, it can be made out in a contract. the agreement specifies the terms of the loan: the overdraft agreement sets to the client an overdraft limit – the maximum amount within which he can make payments from his current account in excess of the actual balance on it. the overdraft limit is determined on the basis of data on the client's financial condition and depends on the size and dynamics of receipts on the current account. depending on its own policy, each bank sets its own conditions for determining it. but, as a rule, the overdraft limit is determined as a percentage of the application – 10-14% of the average monthly income on the account of the enterprise for the last three to six months. sometimes the overdraft amount is set at twice the average daily balance of the account for the last 30 calendar days. in the financial market, according to the analysis of information of the nbu, interest rates on new loans in september 2021 were, in particular, for agriculture, forestry and fishing – only 16.0% – overdraft, respectively, 16.9% (table 3). compared to the previous year, interest rates on loans to the agricultural sector decreased due to a decrease in the nbu discount rate. three seas economic journal 57 vol. 3 no. 1, 2022 it is also important that usaid lends to ukrainian farmers through credit unions. the united states agency for international development (usaid) has developed a project to lend to ukrainian farmers, which is being implemented by the world council of credit unions (woccu). according to the statistics of the national commission for public utilities, this year the number of members of credit unions in ukraine decreased by 13% – up to 674.1 thousand. unions of the lviv region (110.7 thousand people) are in the lead in terms of the number of participants, and the unions of kyiv and the kyiv region (uah 576.7 million) are in the lead in terms of assets. the european union and ukraine have signed new agreements on financing in the amount of 105 million euros for the support of ukrainian small and medium-sized enterprises of the polish economy and the development of small agricultural enterprises of ukraine. the agreement also aims to mitigate the socio-economic consequences of the coronavirus pandemic and continue to support the health sector. the support of the agricultural sector and the development of small agricultural enterprises will be provided by 25 million euros, which will improve access to loans for small agricultural enterprises throughout ukraine under the eu4 business program and the rapprochement of ukraine. from the recently signed agreement aimed at improving the business, business environment through the harmonization of legislation of ukraine and the european community, access, to loans for the modernization of enterprises, consulting enterprises, experts on the subsequent development of enterprise skills and access to global markets in the initiative. many other individual states, as well as private and political initiatives are active in ukraine and support ukraine's development in various areas. the evolution of financial instruments is of great importance for the development of agricultural enterprises. timely access to finance gives producers the opportunity to invest in production, increase productivity and profitability. in mature sectors of the economy, producers need more financial resources and further exploration of new tools and applications to enable this further development. 6. conclusions the key basis of the financial mechanism to ensure the development of agricultural enterprises is financial resources, which can be formed by own, borrowed and gratuitous sources. it is proved that based on the considered features of the financial mechanism of agricultural enterprises, the main motivating problem is the rational use, accumulation and formation of financial resources in the process of economic activity, which is the basis of an effective financial policy. it is established that a balanced policy of formation, accumulation, transformation and distribution of financial resources of agricultural enterprises is crucial to ensure their competitive, financially sustainable functioning, capitalization and market success. the system of management of financial resources of agricultural enterprises must be aimed at ensuring the positive efficiency of the use of financial resources. risk management of agricultural enterprise provides reduction of total amount of losses of enterprise, will promote its financial stability and effective development in the future. the main purpose of agricultural enterprises financial resources management is to achieve financial sustainability – the formation of a system of managerial impacts on the financial sustainability of agricultural enterprises and the search for the most appropriate ways to ensure their successful functioning. in the future, the system of managerial impacts on the financial stability of agricultural enterprises should consist of the following interrelated elements: – supply and marketing policy (the choice of marketing strategy and tactics throughout the supply of products to its implementation, monitoring operational information about the market, the transition to the direct supply of products, the creation of a sales network); – financial policy, cash flow analysis, selection of strategies for attracting external resources (loans), management of accounts receivable and payable, development of accounting and tax policies; – credit policy (determining the total amount and operation of borrowing); possible sources of funds, credit resources and guarantees are determined; table 3 prospective financial resources of enterprises in agriculture type of economic activity interest rates on the loan in national currency in foreign currency total in particular total in particular overdraft total excluding overdraft overdraft total excluding overdraft total 9,7 16,0 8,7 5,2 4,7 5,2 agriculture, forestry and fisheries 13,4 16,9 12,7 5,7 5,7 source: (credit reduction program) three seas economic journal 58 vol. 3 no. 1, 2022 – personnel policy (formation of ideology and principles of personnel work, planning, hiring, selection and dismissal of employees, organization of labor and personnel management, training and education of employees, implementation of incentive system for their activity, development of social partnership). agricultural enterprises need to develop financial policies that focus on: – profit maximization; – optimization of capital structure and ensuring its financial stability; – achieving transparency of the financial and economic condition of enterprises for owners (participants, founders), investors, creditors; – creation of an effective financial management mechanism. based on the above definitions of financial resources and taking into account the current paradigm of financial relations in the agricultural sector, it is believed that timely access to finance provides producers with the opportunity to invest in production, increase productivity and profitability. in the mature sectors of the economy, producers need more financial resources and further exploration of new tools available to the agricultural enterprise and advanced in its economic activities to generate profits, improve competitiveness, ensure sustainable development to ensure such further development. references: abramova, i. v. (2014). status and prospects of state support of agricultural service cooperatives. bulletin of zhnau, 12, 65–71. arnaut, i. p. (2012). reserch of approaches to the definition of enterprise competitiveness. innovative economy, 3, 111–114. birman, a. m. (1972). essays on the theories of soviet finance. moscow: finance, 137 p. buryakovsky, v. v. (1998). enterprise finance: a textbook. dnepropetrovsk: thresholds, 246 p. grishchuk, n. v. (2019). financial support of the competitive development of agricultural enterprises. economics, finances, management: current issues of science and practice, 8, 172–183. davidenko, n. m. (2013). financial support for the development of corporate governance in the agricultural sector of the economy of ukraine: [monograph]. kyiv: cp “comprint”, 430 p. zagorodniy, a. g. (2000). financial dictionary. kyiv: tv “knowledge”, 587 p. zelisko, i. m. (2014). features of management of financial resources of agro-industrial companies of ukraine. scientific bulletin of the national university of life and environmental sciences of ukraine. series: economics, agricultural management, business, vol. 200(3). kaletnik, g. m. (2020). state regulation of socio-economic development of rural areas in ukraine. economics, finance, management, 2, 7–22. kireitsev, g. g. (2002). financial management: [textbook]. 2nd ed., revised. kyiv, 496 p. credit reduction program. available at: httрs://рrіvаtbаnk.ua/busіnеss/zdеshеvlеnnуа-кrеdуtіv-dlуа-fеrmеrіv on the peasant (farmer) economy (2019): [law of ukraine: ofits. text: document 973-15, current, current version. edited on november 6, 2017, grounds 1206-18]. credit reduction program. available at: httрs://рrіvаtbаnk.ua/busіnеss/zdеshеvlеnnуа-кrеdуtіv-dlуа-fеrmеrіv on the peasant (farmer) economy (2019): [law of ukraine: ofits. text: document 973-15, current, current version. edited on november 6, 2017, grounds 1206-18]. on the state budget of ukraine for 2020: law of ukraine № 1801-vііі of 21.12.2016. available at: httрs://zаkоn.rаdа.gоv.ua/lаws/shоw/1801-19 three seas economic journal 223 vol. 3 no. 1, 2022 corresponding author: 1 vinnytsia national agrarian university, ukraine e-mail: shevchukhv@gmail.com orcid: https://orcid.org/0000-0001-6094-0414 researcherid: https://publons.com/researcher/3539580/hanna-shevchuk/ doi: https://doi.org/10.30525/2661-5150/2022-1-31 development and implementation of a rational marketing structure of production enterprises hanna shevchuk1 abstract. the most important branch of the national economy of the country, designed to meet the needs of the population with fruits, berries, vegetables at affordable prices, is the fruit and vegetable industry. compared with others, this industry faces more complex tasks associated not only with the need to produce products, but also as best as possible to preserve them, to make high quality food products with biologically active substances. the article is devoted to the role of marketing in the fruit and vegetable subcomplex. it has been determined that the implementation of marketing principles of doing business in the horticultural complex allows producers to respond faster to changes and increase competitiveness. the changes in the structure of filling the market of fruit and vegetable products by directions of production and marketing activities have been studied. peculiarities of the influence of marketing communications are presented. modern forms of marketing of fruit and vegetable industry enterprises are reflected. the paper presents the algorithm of marketing application for the fruit and vegetable industry. the purpose of scientific research is to develop a rational marketing model for the effective functioning of processing enterprises. methodology. in the process of research and development of the rational marketing structure of production enterprises the following methods were used: methods of economic analysis, grouping, graphical method and method of comparison. results. the article defines the main directions of building of effective functioning of competitive marketing potential of processing enterprises in market conditions. the article analyzes a number of studies of domestic scientists on the definition of the concept of "marketing of the enterprise". science novelty. the article reveals its essence, defines the main elements of marketing potential and the importance of the need to manage the marketing potential at the processing enterprises. the main factors determining the policy of effective management of marketing potential at the enterprise have been revealed and the level of use of marketing potential at processing enterprises has been determined. the application of strategic approach to the management of marketing potential in processing enterprises is proposed. the necessity of creating cooperatives as one of the effective ways of entering the market of organically produced food to jointly solve production, social and other problems has been substantiated. value/originality. the main scientific provisions of the article can be used in the work of enterprises involved in the processing industry. key words: marketing, processing enterprises, consulting, farming, cooperation, marketing mechanism, structure. jel classification: m31, м11 1. introduction the development of marketing activities has many problems at the present stage. one of these problems is the rationalization of interaction between enterprises and small rural businesses in the industry in order to provide the latter with marketing services. since agricultural enterprises, intermediaries, and other large suppliers are well aware of the state of the markets, therefore, in our opinion, marketing services are not necessary for all categories of suppliers. the consolidation of small agricultural producers into cooperatives, the reorganization of enterprises, or the creation of a special department run by a single enterprise, all in order to establish marketing in the region, does require considerable effort. such foreign scientists as g. armstrong, i. ansoff, r . lankar, m. porter and others made a significant contribution into solving the problem of marketing implementation. peculiarities of marketing activity in the field of industry are described in the works of domestic scientists, such as a. pavlenko, l. balabanova, v. gerasymchuk, v. bondarenko, z. varnaliy, v. gatsura, m. zhuravlyova and others. this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 224 vol. 3 no. 1, 2022 research of modern theoretical and practical problems of cooperation development can be found in the works of many ukrainian scientists such as: g. kaletnik, i. goncharuk, yu. luzan, m. malik, l. bilyi and others. the purpose of scientific research is to develop a rational marketing model for the effective functioning of processing enterprises. the need of rural producers for marketing and other (e.g., logistical) services is growing every day. in modern conditions, information and knowledge about the production and sale of products that have market novelty is important. today, this market niche in many regions of ukraine remains unfilled. providing advisory services to farmers requires significant funds and specially selected specialists, because it is extremely important to establish a long-term and productive contact. specialists from government agencies cannot solve this task, as they have a different goal. the processing business cannot cope with this task either, if its members want to organize such a structure by one company. the main task of a consulting activity, consulting agency or business consultant is to help the client implement improvements to ensure the innovative development of their business. 2. consulting as a modern management tool when creating such organizations, a number of key points should be taken into account. these organizations can and should be created in various organizational and legal forms, which will lead to increased economic competition between them and, accordingly, improve the quality of the services offered. these types of organizations must be as free as possible from the pressures of the external environment to have the freedom to make management decisions and conduct business. their internal environment should be designed in such a way as to encourage employees to work efficiently and increase their productivity. the organization of consulting firms, especially for small rural businesses, requires certain and сonsiderable efforts at the initial stage, especially in terms of resources. their sources can be various. however, borrowed sources are too expensive, and also their owners can interfere in the activities of the created structure, and this degree of influence can be excessive. the most profitable source is the funds of the enterprises themselves. it seems to us that within several neighboring areas and natural-economic zones, for example, within the processing industry (as a system with established structures), it is advisable to interact with its subjects by sector (crop and livestock) to create and rationally organize the work of marketing structures. they will focus on researching the solvent demand of buyers and will help small rural producers produce more and better quality products at lower costs and timely, profitable sales of goods and services. a number of scientists and specialists believe that it is necessary to turn to other (specialized) organizations to solve such problems. in our opinion, it is more rational to use the base of processing enterprises. cooperation has a positive effect on the activities of enterprises. t. fliginskikh shares the opinion: "cooperation should contribute to the intensive development of production, the establishment of equivalence of exchange at the intra-industry and intersectoral levels, increase competitiveness and efficiency, creating conditions for financial stabilization of enterprises" (fliginskikh, 2005). the effective functioning of cooperative marketing formations is impossible without a system of financial support (fliginskikh, 2005). financial support for the activities of marketing cooperatives is provided by the marketing cooperatives themselves. it should be noted that if participants lack effective internal incentives, and newly organized associations are not flexible and cannot easily adapt to rapidly changing environmental conditions – even financial investment and ideal physical infrastructure cannot produce the expected results. financial independence creates autonomy in the provision of resources (satalkina, 2013). of course, not all resources can be owned. but these organizations should strive for it, because the rural commodity market is a very tidbit for many competitors, and they have the necessary resources to work in it and are unlikely to share them. at the initial stage, the attraction of resources should take place through rental contracts, hiring people who own personal vehicles. work on the market of agricultural raw materials with its fierce competition requires a special organizational structure of enterprises. first, it should have a small management hierarchy, which will allow it to have the necessary flexibility, efficiency in making and implementing decisions. second, the structure of the organization should be as simple as possible. the nature of the market in which the companies will operate also affects the management system. in the author's opinion, it should be forward-looking, multifaceted and comprehensive. management should cover the following areas: logistics, service production, innovations in service production and realization, service marketing, personnel, finance, and accounting. personnel are of great importance when creating an organization aimed at accomplishing such a task. personnel are divided into core and support personnel. while the criteria for selecting support staff may not be so stringent, the core staff, that is, the people who will directly develop approaches and dialogue with small rural business clients, must be carefully selected. after all, the capacity of the organization depends three seas economic journal 225 vol. 3 no. 1, 2022 entirely on the effectiveness of their work. the staff should be, on the one hand, highly qualified and ready to learn professionals, and on the other hand, they should be communicative. and the latter quality should be most applicable to rural residents. the complexity and economic danger of working in this sector of the commodities market requires companies to have a reliable organizational and legal form (kuksov, 2002). of course, the organizationallegal form must conform to the conditions and interests of the owners who have united to create it. however, ignoring this rule in conditions of fierce competition can have extremely negative consequences. however, negative factors can easily be turned to the advantage of business owners. for example, when a company operates in a certain area, there is a limit at which it will be very difficult for it to compete (there will be a so-called competition limit), which will inevitably affect the supply of raw materials. but this situation is easily resolved. in this case, the cooperative will supply raw materials to the factories on the basis of their participation in it. it should be noted that this rule will be the main rule in the distribution of raw materials among the owners. the complexity of competition creates requirements for such formations in a given area of one group of owners. the number of structures must be carefully thought out in accordance with the current situation in a given region or area of the commodity market, otherwise there will be competition between "their" structures, which is extremely unprofitable, because this will only disperse efforts for competition, when they must concentrate only in one direction – to win in competition with other market participants. the cooperative marketing formations of processing enterprises should be strictly oriented to the samples of the quality of the services produced. for this purpose it is necessary to follow the development of competitors' experience in finding mistakes and to carry out constant quality control not only at the stage of preparation of services, but also in the process of implementation. when organizing cooperative agricultural marketing it is also important to consider the current objective conditions and peculiarities of its formation. without taking into account these points, the developed proposals are unlikely to make processing more productive and efficient than it is now. with all the variety of forms and types of cooperative marketing structures, these are primarily service formations. the objects of socialization in them are (or are not) the members of enterprises and the property of enterprises – fixed and circulating assets. the scale of such cooperation depends on the state of their resource endowment, available production infrastructure in the area and other factors. unification of processing enterprises, which, for example, experience a shortage of some material and technical means and a certain surplus of others, can correct this situation, improve the efficiency of resource potential. depending on the degree of socialization of property processors, delegation of management functions, coordination of potential participants in the further formation of economic interests, there are such models of cooperative marketing as legal entities: cooperatives, companies and societies (sabluk, 2007). all of these models are independent and governed by democratic principles of formation, created on the basis of a voluntary association of processing enterprises. the processes of development of cooperative marketing formations are accompanied by various issues of controversial nature, for example, the "noncommercial" development of these service formations (sabluk, 2007). the paper proposes the author's own approach to solving this problem. initially, the purpose of creating marketing formations is to meet the economic needs of processing enterprises. this will take place on a commercial basis, since marketing formations must provide themselves with resources, purchase raw materials and, finally, ensure expanded reproduction. however, these commercial principles should be regulated, because processing enterprises are the organizational and economic basis of this formation, and the latter is designed to achieve specific goals of the owners. in addition, in favor of justifying the impossibility of "non-commercial," it should be said that an established association can make a profit from the sale of raw materials to other consumers (not to owners). this is possible when the marketing structure fully satisfies the owners – processors, for example, if it is a small business. another issue that causes mixed opinions about the prospects of creating such organizations would be the so-called "suppression of economic interests" of small businesses in rural areas, which would lead to a lack of demand for services and, consequently, to the failure of the organization (bondarenko, shevchuk, 2018). the author believes that the practical application of this problem is not realistic, since, on the one hand, the consolidation in such a profitable market is the main goal of the creation of cooperative marketing structures, and on the other hand, it should be noted that the structures will not be monopolists in the market and will not be pioneers. there are enough participants in this market to have healthy competition, and any restriction on the common interests of consumers would simply be unprofitable business. the economic situation in the country has noticeably improved, but the problems of processing enterprises have not abated (bondarenko, shevchuk, 2018). in such a situation, the need to organize cooperative marketing formations increases. however, the creation of a full-scale service system and its infrastructure due to objective (including economic) reasons is now unrealistic. in this situation, we offer fundamentally three seas economic journal 226 vol. 3 no. 1, 2022 new solutions for small rural businesses: the development of marketing cooperative services for industry application on the basis of the processing industry as the most well-established system, including procurement, processing of agricultural raw materials and sales. not only does such interaction fit well into the envisioned system of serving small agricultural producers and processors, but it is likely to be the first step in its creation. the norms of the constitution of ukraine regulate the basic provisions of the legal activity of processing enterprises, including cooperatives. this creates a holistic view of the essence of the cooperative, work with its organizations, including processing enterprises, formation of the legal framework. the civil code of ukraine also states that relations related to the creation of cooperatives are also regulated by other normative acts and regional norms. in fact, most of the basic principles can be implemented in some other forms of mergers. basic principles of cooperation (kaletnik, honcharuk, 2015): – voluntary participation in a society. not less than two, but not more than fifty participants under a joint activity agreement may combine their efforts and act together to satisfy their own interests by achieving a goal not contrary to the law; – the authorized capital of the company is formed on the basis of contributions of the participants. the amount of the contribution is formed on the basis of its value. the contribution can be anything that the participants themselves contribute to the common cause. it is not allowed to release a shareholder of a company from the obligation to make a contribution to the authorized capital, including by offsetting claims against a company. the amount of the authorized capital may not be less than a multiple of the minimum wage established by state law on the date of submission of documents for state registration of the company; – the supreme governing body of the company is the general meeting of its members; the executive body (collegial and (or) sole executive body) accountable to the general meeting performs operational management. the supreme management body makes decisions only on the most important issues of business activities. issues related to the exclusive competence of the general meeting may not be delegated by it to the executive body of the company and others. a company does not have the right to make a decision on the distribution of its profits in the following cases: before the full payment of the authorized capital of the company; before the payment of the actual value of the share (part of the share) of member companies in cases provided by the law "on limited liability companies" (law of ukraine, 2012); if at the time of taking such decision the company meets the signs of insolvency (bankruptcy) in accordance with the legislation of the state on insolvency (bankruptcy) or if these signs appear with the company as a result of taking such decision; in other cases stipulated by the legislation of the state. since a limited liability company from the economic point of view is a centralized association of the efforts of several participants, some other principles of the cooperative, extremely important at the current stage of economic development, apply to it. for example, upon withdrawal from the company, a participant is entitled to receive a part of the property corresponding to his share in the charter capital; a participant of the company is interested in increasing the capital of the company, since part of the profit is distributed as dividends, in proportion to the shares in the charter capital; each participant of the company participates in management through the general meeting. the choice of a limited liability company is justified, of course, not only by a certain set of principles in its creation, but also by the positive aspects of the processing business (for example, opportunities of a logistical, financial and other nature). thus, the basic principles of creating cooperatives in accordance with modern requirements to the structures of processing business can be implemented in a limited liability company with a rational organization. and the rational type of cooperative marketing is based on obtaining by its participants the necessary benefits at minimum costs. the established structure will organize interaction with farmers (farms). when organizing such interaction to serve farmers and private subsidiary farms, we proceeded from the fact that the structure unites, first of all, managerial, organizational abilities, capital, not excluding personal labor of the participants for maximum use of resource potential of processing enterprises in the interests of small commodity producers in rural areas. for this purpose it is necessary to systematize the interaction of such structures and producers of raw materials on the basis of establishing bilateral obligations, and not only on the basis of a contract. business relations between them should not be ad hoc, spontaneous, but long-term, based on mutually beneficial interests. such an approach allows each party to plan their work more confidently, at least for the near future. organizing marketing services for representatives of the agricultural raw material market is a benefit not only for the processing business, but also for the raw material producers themselves. after all, successful sales of products depend not only on the price set by the parties, but also on guaranteed purchases and other services, up to and including logistics. of course, in the early stages of the development of marketing formations, the possibility of logistical assistance is unlikely. however, as the organization develops and strengthens, it will have reserves that should be used three seas economic journal 227 vol. 3 no. 1, 2022 for these purposes, since this is a significant contribution to the development of competition. science and practice show that the production activity of any organization is desirable to begin with the analysis of market conditions, i.e., with the intensification of marketing. however, the specificity and focus of the services provided by cooperative marketing formations implies a partial abandonment of these aspirations. here the sale of services, that is, marketing activities should not precede, but be inextricably linked and at the same time associated with their production. after all, there are many options for bringing services to the consumer, and it is impossible to process and prepare all of them only at the marketing stage. now that ukrainian shelves are filled with imported goods and quality domestic products remain in warehouses, it is especially important to help buyers and sellers find each other. and it should be noted that wholesale markets serve as an effective channel to promote agricultural products from producers to consumers. domestic experience shows that successful implementation of many initiatives requires a mixed approach of movements "from above" (with the help of representatives of the government and other initiative structures) and "from below" (the market participants themselves). organizers need to correctly determine the ratio between these two movements – they need to be able to form a marketing structure. 3. rational marketing structure of the processing industry enterprises of course, when properly applied, marketing can be a very useful tool. however, most of those who have high hopes for the formation of the marketing cooperative movement, especially after an all too promising start, may have to be somewhat reassured by the emergence of numerous problems that reduce the effectiveness of the process. the existence and development of any organization is impossible without the provision of resources. their formation should take place on a contractual basis. the size of the provision can be different: everything depends on the scale of marketing formations, which, accordingly, are generated by success in the market. but in any case, it should be noted that the implementation of marketing services should be carried out between processors and representatives of the rural market. this is due to the fact that the raw material for the industry requires preservation, and therefore transporting it a hundred or two kilometers would be extremely risky and too expensive (goncharuk, shevchuk, 2020). for the structure to work successfully, the focus must be on meeting clear and real needs, consistent with the agreements. each service must pay for itself, or the performance of the investment must be very close to the cost, or the organization may go bankrupt. in the future, according to the level of development of the organization, the volume of services must be increased, but their quality must not decrease. this is the only way to successfully compete in a market that is both profitable and difficult at the same time. the proposed organization of marketing services has a number of other positive properties as well. firstly, the proposed scheme of creating marketing cooperatives differs from the traditional schemes of purchasing raw materials, which consist of buying them only by one's own efforts; secondly, it solves the most important production problem of many farmers – its marketing and, thirdly, it provides some support, which is also very important for rural areas. the proposed system of marketing services for farmers, in addition, provides interaction between partners, which does not limit, but rather supports the interests of the parties to further strengthen their competitiveness. as is known, small agricultural enterprises have disadvantages, the elimination of which contributes to their interests. these are difficulties in attracting large capital, disadvantages of specialized management, unlimited liability for debts, the need to be an expert in many areas, the risk of losing all their personal savings and property. these disadvantages are characteristic of individual entrepreneurs. cooperative marketing formations are the best solution, as they are stronger financially and in other areas. cooperative marketing formations are staffed by specialists who specialize not only in marketing, but also in other areas of activity related to achieving the organization's goals. but the most important quality of the structures proposed for the organization is, of course, the implementation of activities needed by both sides: both processors and small agricultural businesses. some people want to procure and process raw materials, others want to produce them and sell them profitably. the work of the organization is structured as follows. the activity of created cooperative organizations must be controlled: a supervisory board consisting of representatives of enterprises and management is created, which is done by the general meeting of members. these bodies carry out their activities throughout the life of the organization and monitor the implementation of the set long-term plans. the current and tactical planning and management of the marketing structure is created by the director, who is appointed by the members of the cooperative and to whom all services (departments) of the organization report. the number of functions performed by the departments can vary depending on the need. the head of the marketing department reports to the head three seas economic journal 228 vol. 3 no. 1, 2022 of the organization (director), he is constantly on the scene and receives operational and information through various channels from manufacturers and other sources, and then passes it on to specialists and employees. one department marketer forms the pricing policy, and the other acts as a consultant on the proper and effective delivery of services to consumers for those marketers who work directly in the countryside. when necessary (illness, etc.) one replaces the other. the remaining marketers serve producers in their area (consisting of several localities). their job is to analyze markets, customers, competitors, products, plan, and negotiate. they form demand, ensure the purchase and transportation of agricultural products to processing plants and enterprises. the work of lower-level marketers is also based on the principle of interchangeability. depending on the size, number of producers, and list of products, it is advisable to have up to 18-20 specialists in each structure. the size of the staff depends on the scale of the organization. it is not economically beneficial to have too many employees. if this is the case, the principle of combining their functions in one person should be used to reduce the number of employees. that is, one employee should be entrusted with the tasks of several professions, such as two (accountant-economist) or three (driver-loader-marketer). a large combination of professional tasks for one person makes no sense, as it will only lead to overload and, consequently, to job dissatisfaction. backyard farms, farmers produce in planned, agreedupon quantities and of the highest quality. marketers take their products from them on the spot. for this, the marketers themselves decide the organizational issues (destination and others). of course, they need to be resourced to carry out their activities. they need to have the full financial means to, for example, rent a vehicle if they need one, or deal with other such issues. the information obtained in the implementation process is transmitted to the head of the marketing department for analysis, and then to the processors to adjust production plans for the agricultural period, and the purchased raw materials go to the receiving department of processing enterprises. interaction between the consulting firm and processors on the main activity is carried out on the basis of contractual relations. then, at the next meeting at the end of the period, marketers and growers finally agree on the volumes, terms and other parameters of production and sign (or not sign, if the partners have a close trusting relationship and one of the parties is personal/donor) documents for the next period. the interaction period may have different duration for any raw material producers. the variant of agricultural marketing organization proposed in the work, presented in the scheme of processing enterprises that provide marketing services general meeting of members supervisory board director of the enterprise head of marketing service marketing department sources of resources: • fruit and vegetable processing enterprises • wholesale markets • urban municipal markets • retail network • credit organizations • district marketer small producers: • farms • own farms purpose: information flow cash flow product flow resource flow figure 1. scheme of flow of information, products and funds in marketing services of small rural processing enterprises source: developed by the author three seas economic journal 229 vol. 3 no. 1, 2022 flow of information, products and funds in marketing services of small agricultural producers by processing enterprises, is shown in figure 1. the labor of employees involved in the production and realization of marketing services, i.e., key personnel, should be paid decently. since the effectiveness of their work depends not only on professional knowledge, but also on luck, so relying only on the quantitative sign of its performance, as can be seen, makes no sense. practice shows that the most effective will be a system of remuneration consisting of two parts: basic and cumulative. the basic part of the salary should be constant and not depend on the results of the employee's work in the amount above the subsistence minimum of the population in the region in the range of 15-20%. the cumulative part will depend entirely on the performance of the employee. as a result, the remuneration of the main personnel should be higher than that of the auxiliary personnel, and at the same time should not exceed the discriminatory barrier. this principle of wage formation leads to a fuller incentive for the employee. in addition, such a system attracts professional staff, as it allows the latter to fully use their knowledge and skills and receive appropriate material remuneration. in the proposed structure, in addition to the main personnel, there are service or support personnel (e.g., accountant, lawyer, and others), whose work should also be paid. of course, the amount of salary here will depend on the effective work of the "core" staff. however, it should be noted that in order to interest employees in their work, their salaries should also be built from the two parts mentioned above. and the basic part will be determined by the subsistence minimum of the population in the region, and the funded part should vary depending on the success of the main personnel. of course, the success and value of any organization lies in its employees, so in order to keep them from staff turnover, it is necessary to create a special fund. the funds of this fund will be used primarily for staff training, improvement of working conditions, social programs, as well as to finance the main part of the salary in the event that for some reason the income from the results of the organization will be small (this may be due to the seasonality of raw material purchases). in addition to this fund, it is preferable to create other specialized funds, such as a savings fund. their number and purpose may vary and depends on the management of the organization. 4. conclusions consulting services are an important tool for implementing the policy of development of enterprises of the agricultural sector. the volume of output needs to be coordinated with the demand for it, and with this in mind to reduce or increase the production capacity of the enterprise. information and analytical subsystem is a chain that combines the infrastructure of the agrarian market, production and agro-service formation, creating conditions for meeting consumer demand and ensuring the profitability of the enterprise. the given scheme of movement of information, products and money at marketing service of rural manufacturers is not rational enough. therefore, the main task was to create a scheme in such a way that it would be based on the combination of efforts of processing enterprises by branch ownership, located within several adjacent areas. equally important for the improvement of fruit and vegetable enterprises is the need for advisory activities, the creation of agricultural cooperatives, the availability of highly qualified personnel and the improvement of domestic practices. so, summing up, it should be noted that organizational-legal forms, internal environment and variants of interaction of marketing formations, built on the principles of cooperation of processing enterprises efforts, can be different. everything depends on specific interests, aspirations of participants, their possibilities, as well as on the market conditions of agricultural raw materials, which are different in different regions and even districts. however, communication with the heads of agricultural and processing business in ukraine shows that the proposed developments can be implemented in the practice of enterprises, although not in all regions of the country without exception. references: bondarenko, v. m., & shevchuk, h. v. (2018). problems, development and implementation of the rational marketing structure in enterprises in the fruit and vegetable industry. economics and finance, 9, 121–132. fliginskikh, t. n. (2005). financial aspect of development of integrated structures. ekonomíka apk, 6, 152–154. goncharuk, i. v., & shevchuk, h. v. (2020). marketing as a factor in the competitiveness of enterprises in the fruit and vegetable industry. agrosvit, 5, 50–55. kaletnik, h. m., & honcharuk, i. v. (2015). components of rural development and models of agricultural entrepreneurship and cooperation. development of small and medium business and cooperation in rural areas. conference and training seminar proceedings. vinnytsia, edelveys & co., 5–13. kuksov, a. (2002). enterprise planning. ekonomist, 6, 61–67. three seas economic journal 230 vol. 3 no. 1, 2022 official web-portal of the parliament of ukraine (2012). "about agricultural cooperation" law of ukraine as of october 2, no. 5412-vi. аvailable at: https://zakon.rada.gov.ua/laws/show/469/97-%d0%b2%d1%80#text (accessed november 20, 2021). official web-portal of the parliament of ukraine (2013). "for approval of the strategy for the development of the agricultural sector of the economy until 2020: order of the cabinet of ministers of ukraine of october 17, no. 806". аvailable at: https://zakon.rada.gov.ua/laws/show/806-2013-%d1%80#text (accessed november 20, 2021). (2021). "purpose, tasks and functions of consulting activities". аvailable at: https://pidru4niki.com/74029/ marketing/meta_zavdannya_funktsiyi_konsaltingovoyi_diyalnosti (accessed november 27, 2021). sabluk, p. t. (2007). economic mechanism of agro-industrial complex in the market system of management. ekonomika apk, 2, 3–4. satalkina, l. o. (2013). sources of financing the investment portfolio of the enterprise. ekonomika: realii chasu, 2(7), 181–186. "swiss-ukrainian project "development of the organic market in ukraine". organic business directory of ukraine". аvailable at: https://naau.org.ua/zustrich-z-predstavnykamy-shvejtsarsko-ukrayinskogo-proektu-rozvytokorganichnogo-rynku-v-ukrayini/ (accessed december 10, 2021). three seas economic journal 1 vol. 3 no. 1, 2022 corresponding author: 1 faculty of applied sciences, university of sri jayewardenepura, sri lanka e-mail: anuradhaiddagoda@sjp.ac.lk orcid: https://orcid.org/0000-0003-2586-430x 2 wayamba university of sri lanka e-mail: hiranya@wyb.ac.lk orcid: https://orcid.org/0000-0002-4963-5125 3 chartered institute of personnel management sri lanka e-mail: lakshani33@gmail.com orcid: https://orcid.org/0000-0002-1987-8118 doi: https://doi.org/10.30525/2661-5150/2022-1-1 employee engagement system: empirical evidence from the sri lankan banking sector anuradha iddagoda1, hiranya dissanayake2, lakshani ranasinghe3 abstract. employee engagement builds positive attitudes toward the organization. according to researchers, no studies have examined the mediated relationship of employee engagement between high-performing work practices, religiosity, personal character, leadership and work-life balance, and performance in banking. two hundred managers were randomly selected from banks in sri lanka, and data were collected using a structured online questionnaire. the results showed a mediating relationship of employee engagement between high performance practices, religiosity, and job performance. the results of this study add new insights to systems theory and are necessary for policymakers and practitioners to improve performance in the banking sector. key words: employee engagement, high-performance work practices, religiosity, banking sector. jel classification: m12, g21 1. introduction organizations have realized that in today 's everchanging business scenario, the most valuable resource that needs to be engaged is human resources. employee engagement is a human resource (hr) concept that describes it as a level of employee enthusiasm and dedication to their work. engaged employees produce better business results, don't quit their jobs, care about their work and the company 's bottom line, and feel that their efforts matter. this engagement is achieved when people feel that the organization respects their work, contributes to its goals, and, more importantly, satisfies their personal aspirations for growth, reward, and pay. saad et al. (2021) argue that employee engagement has attracted the attention of both scholars and practitioners because of its importance in improving the profitability and performance of organizations. iddagoda and opatha (2020) identified a research gap, i.e., there is no empirical evidence concerning the mediating effect of employee engagement on the relationships between religiosity, hpwps, personal character, leadership, work-life balance, and employee job performance in the sri lankan context as well as in the international context. they address this research gap in the context of public listed companies (plcs) in sri lanka. in this study, researchers will fill this research gap as a population gap in publicly listed banks in sri lanka. the reason is that iddagoda and opatha's (2020) study did not look specifically at the banking sector or any other sector. they took listed companies in general. the research objectives of this study are to identif y the mediating influence of employee engagement on the relationship between high performance work practices (hpwps) and employee performance; to identif y the mediating influence of employee engagement on the relationship between religiosity and employee performance; to identif y the presence of a mediating influence of employee engagement on the relationship between personal character and employee performance; to reveal the presence of a mediating influence of employee engagement on the relationship between leadership and employee performance; to determine the presence of a mediating influence of employee engagement on the relationship between work-life balance and employee performance. tennakoon and lasanthika (2018) conducted a study to test the association between religiosity and employee engagement. their study was quantitative and was conducted with a general this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 2 vol. 3 no. 1, 2022 sample drawn from sri lankan institutions (public or private, not including self-employment). the purpose of this study is to fill the research gap identified in the sri lankan banking sector by iddagoda and opata (2020). this gap is population-based. the purpose of the study is to determine the mediating effect of employee engagement on the relationship between the dynamics of employee engagement, i.e., high performance work practices (hpwp), religiosity, personal character, leadership, and work life balance, and employee performance. in addition, iddagoda and opatha (2020) conducted a reliability and construct validity analysis of the questionnaire and a relationship analysis using spss software. in this study, a full reliability and validity analysis was conducted using discriminant validity and mediation using partial least squares modeling, helping to bridge the methodological gap. 2. literature review 2.1 employee engagement employee engagement is the dominant source of competitive advantage. in any changing environment, employee engagement is important. engaged employees have unity with the organization and its goals; they feel a sense of responsibility and value to the organization – this is harshitha's view (harshitha, 2015). according to kaur and randhawa (2020), engaged employees express themselves emotionally, physically, and intellectually during their roles. engaged employees know the business context and work with colleagues to improve productivity levels in the workplace for the benefit of the organization, sundarai argued in 2011. meanwhile, anitha in 2014 found that employee engagement leads to high levels of productivity, and researchers such as harter et al. (2002); iddagoda and gunawardana (2017) found that employee engagement leads to high levels of organizational financial performance. engaged employees who are engaged and committed to their organizations provide companies with critical competitive advantages, including lower employee turnover and higher productivity. according to iddagoda et al. (2016) and iddagoda and gunawardana (2017), engaged employees work with their bodies and minds as well as their "heart". organizations and engaged employees will do their best, and they see the mutual benefits of investing in their relationships for each other. a highly engaged employee will consistently perform above and beyond expectations. iddagoda et al. (2016) defined employee engagement as the degree to which an employee is cognitively, emotionally, and behaviorally engaged in the workplace and organization. this is the working definition of this study. 2.2 high performance work practices (hpwps) high performance work practices help achieve organizational goals and objectives efficiently and effectively by effectively attracting, hiring, selecting, developing, and retaining high-performing employees (perdomo-ortiz et al. 2021; iddagoda and opatha, 2018; arachchige and robertson, 2015). here are some management practices, such as teamwork, empowerment, functional flexibility, evaluation, employee development, counseling, and productivity, that supposedly improve the overall productivity and effectiveness of the organization by better utilizing the skills of employees and increasing their commitment to the organization (iyanda ismail et al. 2021; kotzé and mostert, 2021; kaur and kaur, 2021). according to iddagoda and opatha (2018), hpwps can be defined as a set of certain human resource practices that have a relatively greater impact on organizational performance. this serves as the working definition for this study. tang yu et al. (2017) said that the high-performance of work practices is a set of human resources practices (hrm) practices which creates to promote employees skills, motivation and to gain suitable competitive advantage to firms. the practice of human resource management, improving the knowledge and skills of employees. supporting the organizational process, systems and strengthening their internal and external relationships, and building the firm's resources for sustainable competitive advantage. 2.3 religiosity since ancient times, religion has played an important role in human life. the term religiosity contains many definitions, but they do not reflect the whole idea of religiosity, they need to be clarified. many different religions with basic beliefs, values, rituals, and practices of human beings have arisen. sri lanka has a variety of religions such as buddhists, hindus, muslims, and christians. the main religion followed in sri lanka is buddhism. however, according to the sri lankan constitution, there is freedom to choose and express one's religious affiliation. meanwhile, iddagoda and opatha (2017) define religiosity as the degree to which a particular employee believes in and venerates the founder, gods or goddesses of the respective religion, practices the respective teachings, and participates in the respective activities. this is the working definition for this study. religiosity presupposes that one is sincerely and genuinely religious, not frivolous and nominal. religiosity is necessary not only in the form of beliefs and practices, but also includes a dimension of spirituality in islamic religion, which robbie and novianti discussed in 2020. koenig (2012) mentions that practices, beliefs and rituals related to the transcendent involves religion. religion pervades three seas economic journal 3 vol. 3 no. 1, 2022 all aspects of human life. awuni and tanko (2019) pointout that religion has been a great force shaping human history since prehistoric items by (awuni and tanko, 2019). the duties and responsibilities of workers and employers, as well as the need for good relations between them, are explained in the ‘sigalowada sutra’. this underscores the fact that religiosity paves the way for the ideology that religiosity influences employee performance. a 2014 study by grim and finke also confirms this. according to them, religiosity is one of the most important things that can increase productivity and commitment in an organization. 2.4 personal character "character", as defined in the pocket oxford english dictionary (1997), is "the qualities that distinguish a person from other people". personal character is an attitude toward activities and problems. depending on the situation, it can be positive or negative. but a positive character will lead to better achievements. character is a quality a person possesses that makes him or her a person, and it can vary from person to person. good characters are reliable and honest, and bad characters are unreliable and dishonest. opatha (2010) defines personal character as a person's moral qualities. moral qualities or characteristics are their essence. it is the degree to which they are moral and immoral. a good character is moral and civil, while a bad character is immoral or illiterate. in an organization, the development of human resources is done through character building. the aggregate of all the relatively persistent moral qualities a person has that combines to form his/her real nature by (opatha, 2014). for an organizational research, individual character study is an essential area and it instrumental in ensuring ethical behavior at individual and organizational level by (weragoda and opatha, 2016). personal character distinguish from one person to another person, behavior over a range of situations, it does not alter dramatically over time by (opatha, 2014). personal character is the power or ability of a person to contemplate the importance of having a high level of virtues in one's life while eradicating vices or bad qualities – this is the definition given by iddagoda in 2020. it serves as the working definition for this study. 2.5 leadership leadership is that the art of motivating a group of people to act toward achieving a standard goal. "leadership is the ability to evaluate and or forecast a long term plan or policy and influence the followers towards the achievements" (mayowa, 2009). according to hao and yazdanifard, 2015, good leaders are willing to set optimistic goals and objectives and guide the corporation toward those goals through effective strategies. leadership is not an attribute only of the business context. in government, in universities, in the military, in hospitals, and wherever there are people in groups, a leadership function arises. there has to be someone who instructs, inspires, and influences that group. leaders are people who willingly guide and support their subordinates to achieve their personal vision and that of the organization. juneja (2019) argues that leadership is the process by which a leader can guide, direct, and influence the behavior and performance of others to achieve specific goals in a particular situation. mohammed et al. (2018) argue that leadership is a must in a globally competitive environment. from now on, an organization needs a leader who can understand and cope with the complexity of the world. therefore, as a leader, they should improve the standard of data related to leadership and implement it in the area in which they contribute. meanwhile, iddagoda (2021) defines leadership as inspiring, leading, and influencing people when necessary. this is the working definition of this study. 2.6 work life balance work-life balance is a technique that helps employees in an organization balance their professional and personal lives. it is the amount of time spent at work versus the amount of time spent with family and enjoyable activities. mendis and weerakkody (2017) note that these days many workers around the world are faced with work-life balance, which has become a key issue in a dynamic business environment. opatha (2010) defines work-life balance as your ability to meet the expectations of your employer and your family members to the extent that makes them happy. according to lockwood, (2003) in organizations and on the home front, the issue of work-life balance rises to the top of many employers' and employees' minds. according to lewis et al. (2002), " work-life balance is established on the basis of careers and personal lives that should be conducted equally ". the view of dhas in 2015 is that, in organizations and on the house front, the challenge of work-life balance is rising to the highest of many employers and employees consciousness. human resource professionals are looking for options to positively impact the bottom line of their organizations, retain employees with valuable knowledge of the organization, improving employee morale is a trend that can be seen nowadays. according to ramawichrama et al. (2018), corporate work life quality can be a challenging factor in making decisions about employee-related outcomes in today 's organizations. obiageli et al. (2015) mentions that work-life balance is extremely important phenomenon that’s of great concern to varied employees in both public and personal sectors. obiageli et al. (2015) further mentions that work life balance goes beyond prioritizing one’s three seas economic journal 4 vol. 3 no. 1, 2022 personal life and the role of work, this also affects the psychological, social, economic and mental well-being of the individual. the definition provided by iddagoda et al. (2021) is the working definition of this study. iddagoda et al. (2021) define work life balance as ensuring the balance between fulfilling the duties for the family members, either in a nuclear family or extended family, and fulfilling duties for the employer. 2.7 employee job performance iddagoda et al. (2021) identify employee contributions to tasks and jobs to create a positive work environment while eliminating negative or harmful actions; this serves as the working definition of this study. 3. methodology deductive reasoning and quantitative methods are used to examine the mediating effects of employee engagement on the relationships between religiosity, hpwps, personal character, leadership, work-life balance, and employee performance in this study, which is based on a positivist paradigm. by the end of 2020, sri lanka's banking sector consisted of 30 banks, including 24 licensed commercial banks, including 11 foreign bank branches, and six licensed specialized banks (cbsl, 2020). the banking sector plays an important role in sri lanka, as it is a significant provider of domestic credit, providing about 50% of credit to the private sector (worldbank, 2020). the covid-19 pandemic has significantly affected the banking sector in sri lanka. however, the banking sector is using digital platforms to survive in this situation. therefore, the banking sector plays an important role in sri lanka's economy. in order to improve the efficiency of the banking sector, it is necessary to improve the efficiency of the banking sector. this study will help determine if employee engagement mediates the relationship between hpwp, rel, pc, led, wlb, and job performance. therefore, the study population consisted of managers of banking companies listed on the colombo stock exchange. the sample for this study was initially formed from a randomly selected 250 managers working in the banking sector in sri lanka. in this study, there were 200 completed questionnaires and the response rate was 80%. all variables in this study were derived from previously tested scales. all items were rated on a five-point likert scale, where 1 indicates strong disagreement and 5 indicates strong agreement. the operationalization of the variables is shown in table 1. iddagoda and opatha (2020) derived five hypotheses based on general systems theory. this study used the same hypotheses to test the demographic gap and the methodological gap for the chosen research gap. rana (2014) determined that there is a relationship between hpwps and employee engagement. there is a relationship between religiosity and employee engagement (tennakoon and lasanthika, 2018); personal character and employee engagement (iddagoda and opatha, 2020). employee performance is a consequence of employee engagement, a conclusion anita came to in 2014. hypotheses as follows: h1: there is a mediating effect of employee engagement on the relationship between hpwps and employee performance; h2: there is a mediating effect of employee engagement on the relationship between religiosity and employee performance; h3: there is an indirect effect of employee engagement on the relationship between personal character and employee performance; h4: there is an indirect effect of employee engagement on the relationship between leadership and employee performance; h5: there is an indirect effect of employee engagement on the relationship between work-life balance and employee performance. this paper used harman's (1976) one-factor test to examine general method bias. the first factor was extracted without rotation using the principal axis factorization method, and it accounts for only 40.5% of the total variance, indicating that general method bias is not present in our data and will not affect subsequent data analysis. table 1 operationalisation of variables variable abbreviation questionnaire items reference high performance work practices hpwp 14 iddagoda and opatha (2018) religiousity rel 07 iddagoda and opatha (2017) personal character pc 19 iddagoda (2020) leadership led 10 iddagoda (2021) work life balance wlb 09 iddagoda et al. (2021) employee engagement ee 12 iddagoda et al. (2016) employee job performance ejp 6 iddagoda et al. (2021) three seas economic journal 5 vol. 3 no. 1, 2022 4. data analysis using smart pls software, the partial least squares structural equation modeling (pls-sem) approach evaluated the proposed model and tested the proposed hypotheses (v.3.2.8). pls was chosen because (1) the research model is complex in terms of the types of relationships (direct, indirect, and mediated) (2) unlike covariance-based structural equation modeling (cb-sem), pls-sem is a soft modeling method that does not require a large sample size and is not based on the assumption that the data are normally distributed (hair et al., 2019). in addition, pls is now widely used in many areas of human resource management (ringle et al., 2020). 4.1 reliability analysis cronbach's α, composite reliability, and average variance extracted(ave) were used to assess data reliability. cronbach's α ≥ 0.70, composite reliability ≥ 0.70, and ave ≥ 0.50 are considered as the criteria for the construct reliability (hair et al., 2019). cronbach alpha value of this study ranges from 0.845(ejp) to 0.948(pc), which ensures strong reliability. in addition, composite reliability ranges from 0886(ejp) to 0.953(pc), which further confirms reliability. convergent validity is assured because ave values range from 0.503(wlb) to 0.654(rel). accordingly, we can conclude that all constructs have met the threshold criterion and are therefore regarded as reliable and may be used for further research analysis. 4.2 factor loadings the validity of the data at the indicator level is assessed using factor loadings (henseler et al., 2015). when the indicators had a factor load greater than 0.60, it was decided that they met the criterion of validity (hair et al., 2019). this study excluded three indicators, including those that did not meet the recommended criteria. table 3 presents statistical results for all valid items. table 2 reliability analysis cronbach's alpha rho_a composite reliability average variance extracted (ave) ee 0.908 0.912 0.923 0.523 ejp 0.845 0.849 0.886 0.565 hpwp 0.939 0.942 0.947 0.58 led 0.907 0.909 0.923 0.545 pc 0.948 0.949 0.953 0.53 rel 0.912 0.917 0.93 0.654 wlb 0.876 0.879 0.901 0.503 4.3 fornell–larcker criterion along with the validity of the indicators, the fornell–larcker criterion was used to determine the construct level validity (fornell & larcker, 1981). each construct should have a greater diagonal value than its adjacent constructs(fornell & larcker, 1981). these diagonal values represent the square root of ave. additionally, these numbers show the correlation between the research variables, and the accompanying signs (positive and negative) indicate the direction of the association. the analysis determined that all constructs met the fornell–larcker criterion (see table 4). 4.4 r squared r2 was used to determine the overall model's predictive capability. according to hair et al.'s (2019) criteria, r2 is 0.19, judged to be weak, r2 is 0.33 thought to be moderate, and r2 is 0.69 assessed to be strong. the findings indicated that the study model has a robust predictive capacity for ee (r2 = 62.7%) and ejp (r2 = 71.7%), which are greater than 0.69 (see table 6). 4.5 hypotheses testing direct effects the path coefficients, t values, and p values test the proposed hypothesis. the strength and direction of the high performance work practices religiosity personal character leadership work life balance employee engagement employee job performance figure 1. conceptual framework source: iddagoda and opatha (2020) three seas economic journal 6 vol. 3 no. 1, 2022 table 3 factor loadings ee ejp hpwp led pc rel wlb ee1 0.652 ee10 0.73 ee11 0.665 ee12 0.698 ee2 0.625 ee4 0.647 ee5 0.75 ee6 0.767 ee7 0.822 ee8 0.751 ee9 0.819 ejp01 0.788 ejp02 0.735 ejp03 0.787 ejp04 0.733 ejp05 0.793 ejp06 0.665 hpwp1 0.663 hpwp10 0.802 hpwp11 0.836 hpwp12 0.793 hpwp13 0.733 hpwp14 0.776 hpwp2 0.718 hpwp3 0.661 hpwp5 0.803 hpwp6 0.782 hpwp7 0.732 hpwp8 0.711 hpwp9 0.859 led01 0.739 led02 0.706 led03 0.703 led04 0.709 led05 0.737 led06 0.789 led07 0.724 led08 0.696 led09 0.804 led10 0.768 pc01 0.7 pc02 0.682 pc03 0.699 pc04 0.705 pc05 0.776 pc06 0.77 pc07 0.761 pc08 0.704 pc09 0.762 pc10 0.722 pc11 0.732 pc12 0.762 pc13 0.69 pc14 0.722 three seas economic journal 7 vol. 3 no. 1, 2022 association are illustrated by the magnitude and sign of path coefficients. t values and p values were interpreted as t = 1.96, p < 0.05; t = 2.403, p < 0.05; and t = 2.534, p < 0.1. table 6 illustrates that all the relationships are significantly associated. mediating effects williams and mackinnon's (2008) approach was used to conduct mediation analysis. vaf score was examined to analyze the mediation (iacobucci, saldanha, & deng, 2007). the vaf scores are calculated by dividing (end of table 1) ee ejp hpwp led pc rel wlb pc15 0.698 pc17 0.739 pc18 0.732 pc19 0.732 rel1 0.772 rel2 0.846 rel3 0.812 rel4 0.833 rel5 0.76 rel6 0.793 rel7 0.842 wlb01 0.735 wlb02 0.761 wlb03 0.743 wlb04 0.678 wlb05 0.674 wlb06 0.643 wlb07 0.746 wlb08 0.713 wlb09 0.682 table 4 fornell-larker criterion ee ejp hpwp led pc rel wlb ee 0.723 ejp 0.615 0.752 hpwp 0.775 0.69 0.761 led 0.585 0.717 0.714 0.739 pc 0.642 0.786 0.792 0.785 0.728 rel 0.671 0.498 0.725 0.605 0.608 0.809 wlb 0.564 0.795 0.703 0.79 0.804 0.576 0.709 table 5 r squared r square r square adjusted ee 0.627 0.617 ejp 0.717 0.708 table 6 direct effects relationship path coefficient standard deviation (stdev) t statistics ee -> ejp 0.192** 0.08 2.403 hpwp -> ee 0.568*** 0.104 5.44 pc -> ejp 0.311** 0.107 2.903 rel -> ee 0.227** 0.074 3.049 rel -> ejp -0.146** 0.057 2.534 wlb -> ejp 0.427*** 0.094 4.547 three seas economic journal 8 vol. 3 no. 1, 2022 indirect effect by total effect. when the vaf score is>20% confirms as significant mediation (iacobucci et al., 2007). this study revealed that ee powerfully mediates the associations between hpwp and ejp (71.7%) and rel and ejp(43.1%) (see table 8). 4.6 discussion the p-value is greater than 0.005 for the relationships between leadership and employee engagement, which is 0.856; personal character and employee engagement, which is 0.621; work life balance and employee engagement, which is 0.811. there is a relationship between religiosity and employee engagement, i.e., the p-value is 0.003. there is also a relationship between high-performance work practices, i.e., the p-value is 0.000. regarding the mediating effect, employee engagement has a mediating effect on the relationship between pvp and employee performance. the p-value is 0.000. there is also a mediating effect of employee engagement on the relationship between religiosity and employee performance. here the researchers used a questionnaire that measures high-performance work practices such as realistic job previews, pay by performance, staff attitude surveys, self-directed teams, extensive training, regular appraisals and symbolic egalitarianism. realistic job previewing is a technique that presents job seekers with a "realistic" idea of what they should expect from an organization, and realistic job previewing can potentially derail potential employees' expectations (iddagoda and opatha, 2018). pay-forperformance should be linked to the organization's payfor-performance system. cost-conscious companies believe that by paying by results, employees will be motivated and the organization will be able to control payroll costs, an opinion appelbaum and mackenzie expressed in 1996. staff attitude surveys are conducted not only to assess job satisfaction, employee morale, and attitudes toward the company, but also to focus on the strategic imperatives of the organization (iddagoda and opatha, 2018). rowley (1997) argues that self-directed teams (sdt) refer to a small group of employees who are responsible for managing themselves and their work on a daily basis. spinks (1999) argues that conducting performance review interviews at frequent intervals is important because it allows employees to understand where they stand. according to pfeffer (1999), extensive training is training an employee with a broad perspective, with the intention of expanding a wide range of skills, not just training to do a limited job. symbolic egalitarianism can be realized in an organization through a single dress code, a common cafeteria, shared parking, and consistent office locations, according to iddagoda and opatha in 2018. this study showed that senior leadership in the banking sector is paying more attention to implementing high performance practices. in a study by iddagoda and opatha (2020), they determined that there was a partial correlation between religiosity and employee engagement. they attributed this result to locus of control theory. employees who are more likely to have an internal locus of control practice religious scripture to achieve kpis. employees who are more oriented toward the external locus of control take vacations and participate in religious activities. absenteeism is a characteristic of uninvolved employees. their study focused on managerial employees in publicly traded companies. they did not isolate specific results by sector. this study found a higher importance between these two constructs. this underscores the fact that these managerial workers practice religious scripture training in order to be active, energetic, and productive employees. 5. conclusions this study examines the relationship between high-performing work practices, religiosity, personal character, leadership, and work-life balance and job performance and the mediating effect of employee engagement on the relationship between these variables in the banking sector. this study confirms the reliability and validity of the questionnaire and uses a partial least squares modeling method to examine the relationship. the results of this study provided empirical evidence of hypothesized relationships between employee engagement as a mediator between high-performance work practices, religiosity, and job performance. the results of this study have implications for policymakers and companies in the banking sector. first and foremost, policymakers, such as the central bank and the securities and exchange commission, need to implement policies to improve highperformance work practices to improve performance by engaging employees. in addition, banking authorities table 8 mediation effect total effect direct effect indirect effect path coefficient t statistics path coefficient t statistics point estimate confidence interval vaf hpwp -> ee -> ejp 0.152* 1.684 0.043 0.445 0.109** (0.02,0.218) 0.717 rel -> ee -> ejp -0.102* 1.784 -0.146** 2.534 0.044* (0.006,0.094) -0.431 three seas economic journal 9 vol. 3 no. 1, 2022 figure 2. represents the structural model for all effects three seas economic journal 10 vol. 3 no. 1, 2022 should consider adopting religiosity and highperformance work practices to improve productivity, which is necessary to achieve higher organizational performance. the findings of the study should be viewed in light of its limitations, which may open up a new line of research. despite its usefulness in establishing directional relationships among variables, crosssectional research has limitations in making causal judgments. future research can trace the mediated relationship of employee engagement between religiosity and high performance practices over time using a longitudinal methodology. in addition, future researchers can make connections to other sectors such as manufacturing, hospitality, plantations, etc., to generalize the results. references: appelbaum, s.h. and mackenzie, l. 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(2008). resampling and distribution of the product methods for testing indirect effects in complex models. structural equation modeling : a multidisciplinary journal, 23–51. three seas economic journal 6 vol. 4 no. 2, 2023 1 vinnytsia national agrarian university, ukraine (corresponding author) email: liudmyla.boltovska@gmail.com orcid: https://orcid.org/0000-0002-6202-998x researcherid: l-3460-2018 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-2-2 integration links and methods of their improvement for the effective functioning of the meat and food subcomplex liudmyla boltovska1 abstract. the subject of research is the current trends in the development of the meat products sub-complex of ukraine and the formation of integration ties as an integral factor of influence on the effective activity of the livestock industry. among the branches of agriculture, animal husbandry is a source of important food products for humans: milk, meat, eggs, and supplies various types of raw materials for industry (food, light pharmaceuticals, etc.). the growth of animal husbandry in the agricultural sector of ukraine is formed in the meat products subcomplex, which unites producers of agricultural (animal) products, trade organisations and enterprises of the meat processing industry in the process of livestock and poultry breeding, their processing and sale of finished products. an important factor contributing to the sustainable development of the meat products sub-complex is the effective use of its components, i.e., agricultural enterprises, peasant farms, private farms of the population. the problem of sustainability in agricultural production is more complex than in other sectors of the economy. this is due to the fact that agricultural products are almost irreplaceable and the demand for them is inelastic. methodology. the theoretical and methodological basis of the research were general and special methods of studying economic phenomena and processes, basic rules of management theory and general scientific principles of economics, logical and qualitative analysis and synthesis, system structural analysis. the research was conducted on the basis of the application of general scientific methods and techniques: the method of cause-effect analysis – to identify problems in the development of enterprises of the meat products sub-complex and the industry; logical generalisation – to form conclusions and proposals; factor analysis – to identify the influence of certain factors on the development of enterprises of the meat products subcomplex. the results of the research will broaden the scientific understanding of the integration processes in the meat products subcomplex, help to overcome the fragmentation of scientific knowledge in this area, contribute to the formation of information and applied research, and can be used in the development of programmes for the development of the meat products subcomplex. practical implications. the choice of any development strategy requires the study of all factors affecting the effective operation of the company in the future, therefore the study of integration relations and the study of methods for their improvement is an important aspect in the formation of the company's development strategy. value/оriginality. on the basis of the peculiarities of the activities of the enterprises of the meat products subcomplex, it is worthwhile to focus on the directions of improving the integration relations of the functioning of the meat products subcomplex on the basis of the use of vertical integration, which will contribute to the coordination of the economic interests of the participants and, in general, to the growth of production volumes, the improvement of the quality of animal products and food and environmental safety in general, in solving an important scientific task of the development of the food products subcomplex on the basis of a complex system of measures aimed at preserving and restoring the potential of the interrelated industries. key words: meat product subcomplex, market of meat and meat products, sustainable development, management of dynamic processes, integration links. jel classification: a10, a11, b17, b27, d13, d24 three seas economic journal 7 vol. 4 no. 2, 2023 1. introduction the meat subcomplex is an important part of the economy and the main component of the country 's food security. however, due to the decline in animal husbandry, the number of livestock, with the exception of poultry, is decreasing every year, which has a negative impact not only on the population's consumption of meat products, but also on the country 's economy in general. the development of the meat market in ukraine requires scientifically based actions, one of which is the management of the integration ties of the meat products subcomplex. ukraine is currently implementing a model for the development of the meat products subcomplex based on vertically integrated industrial complexes with a full production cycle – from compound feed production to meat processing. vertical integration is mainly characteristic of poultry and pig farming enterprises and the processing of their products, since in these industries there is a high level of concentration and mechanisation, which contributes to achieving efficiency due to the scale of production in large enterprises. the purpose of the study is a theoretical substantiation and development of methodical and practical approaches to the formation of organizational and economic principles of management of integration ties of the meat products subcomplex. the objective of this study is to select directions for improving the integration links of the meat and food subcomplex. 2. development of integration processes in the meat and food subсomplex the development of integration processes in the industry, skipping the stage of the contractual form of relations characteristic of world practice, immediately began with the most rigid option of integration, based on the transfer of ownership and the centralisation of management in the hands of the integrator company. in many countries, particularly in europe, vertical integration through ownership is practically non-existent, and is instead based on feed mills and meat processing plants operating independently of each other, and on livestock farming providing the raw materials needed for meat processing. the integration of agriculture into big business takes place through the conclusion of long-term contracts for the supply of products (chumachenko, 2018). in ukraine, small farms are not integrated into vertical production chains and occupy separate, narrow niches in the food market. in addition, the vertical integration of production makes it possible to provide the raw material base for meat processing in the required quantities and with guaranteed quality; to reduce transaction costs; to minimise logistics costs by clustering the entire production cycle in a given area; to optimise the tax burden by excluding taxes on intermediate products and by relocating production to the area with more favourable tax conditions; to reduce business risks by allocating them to different market segments and controlling the entire production and sales chain; by providing full control over the quality of raw materials and their complex processing, expand the range of products, respond to changing consumer demands, increase the competitiveness of products, reduce the cost price; to improve information security of activities. as a result of the combination of the abovementioned advantages, a synergistic effect occurs – the appearance of new system properties in the integrated formation, which ensure that the overall effect is greater than the sum of the effects of its participants acting separately. at the same time, the integration processes in the domestic meat products sub-complex had negative economic and social consequences. these include the monopolisation of the market and the reduction of competition, the reduction of opportunities for development and the displacement of small and medium-sized enterprises from the sector, the creation of barriers to market entry, the unavailability of agricultural land to small producers and owners of personal subsidiary farms, which were put at the disposal of integrated structures and in some cases formed latifundia; political and economic lobbying, including the obtaining of state support; the emergence of contradictions in the economic interests of the participants in integrated formations; the increase in unproductive costs of managing the extensive organisational structures of agricultural holdings. for the further development and effective functioning of the meat subcomplex in the three seas economic journal 8 vol. 4 no. 2, 2023 conditions of market relations, it is necessary to combine the efforts of enterprises and branches of the agricultural sector and the food industry on the basis of cooperation and integration. this will make it possible to concentrate labour, material and financial resources on the production of final products, to restore the equivalence of exchange between industries, to use available production capacities and resources rationally, to harmonise the economic interests of commodity producers and to coordinate actions for their protection on the market. in society, as industrial relations develop, the processes of cooperation and integration converge and take on a new character. and here the emphasis is on the "interpenetration", the "fusion" of industries or business units, i.e., closer industrial relations. the intensity of these links is not the same. it is determined by the degree of unity of purpose of the integrating units. therefore, an important feature of cooperation and integration is the unity of the final useful result as a general objective of the functioning of agro-industrial formations (radchenko, 2019). cooperative forms of management are of particular interest in integration processes. they offer great opportunities for establishing closer production and economic links of mutual interest. cooperation is carried out in three directions: intra-enterprise cooperation; cooperation of subjects of entrepreneurial activity in the field of agribusiness and individual farms; interfarm cooperation at the district and regional levels. at the first level of cooperation, the association of labour collectives makes it possible to already develop cooperative relations within the enterprise, to direct them towards a common interest in increasing the efficiency of production. the second direction of cooperation development is the creation of agricultural production cooperatives on the basis of reorganised agricultural enterprises. cooperatives of subjects of entrepreneurial activity in the field of agriculture and individual farms are created for the purpose of consolidation of production, unification of separate production functions – distribution, processing, sale of products; implementation of financial and accounting operations and maintenance of services, etc. the development of the cooperative movement at the district level includes the production of agricultural products, their harvesting, storage, processing, trade, credit operations and other business activities at the district level. inter-economic cooperation is based on the development of two inseparable and interdependent processes: the division of labour (specialisation) and the expansion of production links between specialised enterprises. depending on the natural and economic conditions, the type of production relations and the composition of cooperative enterprises in agriculture, the following main areas of cooperation have developed: – on the basis of intra-industry division of labour; – by organising joint production on a share basis; – on the basis of unification of all production activities of specialised farms; – on the basis of the union of agricultural enterprises with processing enterprises, production maintenance with scientific institutions (dovhal, 2013). each of these directions corresponds to a specific form of organisation: a company specialising in technology; a joint inter economic association; an agricultural-industrial association; a scientific-industrial association. as the primary form of inter-economic organisation, agricultural cooperation acts as one of the tools of the market mechanism, which allows the enterprise to easily adapt to the conditions of the market situation, while at the same time protecting agricultural production from the elements of the market. on the other hand, the cooperative system in the form of branch unions is a reliable means (instrument) of state regulation of agricultural production for the implementation of large state and local programmes for the introduction of technical agronomic innovations and the implementation of a rational financial policy. the basis of the cooperative development of enterprises in the agricultural sector is currently seen in the combination of the vertical (branch) principle of building a primary (grassroots) network of cooperation with the territorial principle of organising a system of cooperative unions (associations). this allows material, financial and labour resources to be centralised and reallocated for structural change to maximise returns from technologically networked production. savings in capital costs are achieved by making it three seas economic journal 9 vol. 4 no. 2, 2023 impossible for agricultural producers to build their own processing facilities. the creation of general services, including marketing, the absence of taxes at intermediate stages of production, the acceleration of the circulation of working capital, the increase in the rhythm of the supply of raw materials and the loading of meat processing plants, ensures the reduction of selling prices and the increase in the production of competitive products. the fragmentation of agricultural production into small business structures that took place during the reform years has strengthened the situation in agriculture. today it is necessary for agricultural producers to unite on a cooperative basis and not to divide production into natural farms of individuals. cooperatives for the production of agricultural products should unite in branch cooperatives and associations. the experience of many countries shows that the most successful elements of the market are those that face difficulties together and win. 3. integration links – experience of the world's leading countries domestic and foreign experience shows that in large agricultural areas it is advisable to build processing plants of adequate capacity and to create agro-industrial cooperatives or associations in which capital can be transferred from processing plants to producers of agricultural raw materials. banks are more willing to invest money in large enterprises. worldwide, 35% of farms are created and supported by thestate (revutska, 2014). well-established cooperative relations of farmers and private farms with large agricultural and processing enterprises will allow them to receive support from them both in cash and in kind: feed, veterinary medicines, seeds of agricultural crops, fertilisers and other services. cooperation between agricultural producers is widespread in other countries, where credit and loans to farmers are provided by rural credit cooperatives and other financial cooperative organisations that support producers of agricultural products on preferential terms. in many countries, compensation is paid to farmers in the event of natural disasters and payments are deferred for several years (shahrayuk onofrey, 2013). the activities of cooperatives differ from other forms of production in a number of ways. cooperatives, created on the initiative of the producers themselves and managed by them at their own risk and peril, are characterised by the existence of collective ownership. the main task of the cooperative is to provide services to its members and to produce goods, and the profit generated by its activities is mainly used to replenish the reserve and other funds of the association. the remaining part of the profit is distributed among the members in proportion to their capital participation. the peculiarity of the collective form of vertical cooperation is that each enterprise is linked to several cooperatives at the same time. some of them deliver agricultural raw materials from farms to cooperative enterprises, ensure their processing and sale of finished products; others supply commodity producers with tools and means of production; third parties provide loans. in each country there is a system of cooperative production services for cooperative members, including the provision of technical assistance, advice and other production services. cooperatives engaged in the collection, processing and sale of products produced by farmers are the most developed area of cooperative activity, and the key role is played by marketing cooperatives, which determine the direction of activity of producers and processors of products in the given market situation. the inclusion of this link in the system of vertical links allows farmers and cooperatives to work with confidence and stability. farmers' cooperatives are grouped at regional, national and state levels into large sectoral, product and territorial unions. national cooperative federations represent cooperative farmers in negotiations with the government of their country and actively participate in the development of agricultural policy, defending the interests of cooperatives. they also represent national cooperation in various international cooperative organisations, in a number of countries and in the governing bodies of the eu (berezivskyi, 2013). the main legal basis for the activities of cooperatives are specific laws on cooperation, which regulate the status of a cooperative organisation as a voluntary association of farmers operating on a democratic basis. however, these laws vary from country to country. the basic law of the internal life of the cooperative is its statute. it contains the definition of three seas economic journal 10 vol. 4 no. 2, 2023 the purpose of the company, regulates the procedure for joining the company, determines the amount and the procedure for paying the share contributions, establishes the rules of commercial relations between the company and its members and the procedure for forming the governing bodies. the content of the statutes must fully comply with the norms of the legislation in force. usually, the statutes are drawn up according to a single model, for which purpose there are model statutes for cooperatives in certain sectors, recommended by central associations. the charter is supported by a number of legal acts. during the organisation of the cooperative, its direction should be determined. legislation does not describe the objectives of cooperatives of different specialisations, with the exception of credit cooperatives. the manner of establishing cooperatives is regulated by a number of legal acts. any person can become a member of a cooperative. agricultural cooperatives are governed by law. the highest governing body of a cooperative is a general meeting of members or (in very large associations) a meeting of commissioners. for the operational management of the cooperative, the general assembly elects the board of directors or the management and control bodies (supervisory board). the administrative bodies are elected for 1-4 years, with an obligation to report on their activities to the general meeting of the cooperative and to the supervisory bodies. it is allowed to involve salaried employees in the administration and to hire a paid director for the day-to-day management of the cooperative. cooperative activities require significant working capital (in the form of cash) and fixed assets (in the form of investment capital). agricultural cooperatives are financed from their own resources and from state and supranational subsidies. the source of cooperatives' own funds is their members' shares and annual contributions, as well as deductions from profits. the compulsory financial participation of each member in the cooperative's activities is regulated by law and is included in the statutes of most countries. capital contributions are registered (entered in the register), they cannot be inherited, they cannot be waived in favour of someone else. in the event of withdrawal from the cooperative, shares will be paid out at the nominal value or book value at the time of withdrawal. in addition to share capital, agricultural cooperatives use other internal sources to increase their funds, including initial and annual contributions. these contributions are mandatory, especially for cooperatives that create share capital. for example, swiss legislation stipulates that the amount of the annual contributions is determined by the cooperative's general meeting, depending on the needs of the association (rybak, 2014). in addition to share capital, cooperatives sometimes require new members to pay a "right of entry " contribution. the profits (or savings) generated by the cooperative's activities are allocated to reserves and other funds (insurance, depreciation, investment, development, etc.). these funds are important sources for the formation of cooperative capital and are of great importance because, unlike share capital, this part of the funds remains in the cooperative and is not subject to return in the event of withdrawal from the cooperative. the part of the profit remaining after the deduction of the funds is distributed among the members of the association in proportion to their equity participation. if the financial year ends with a profit, the general meeting may decide to pay interest on the capital belonging to the members of the cooperative. the amount of interest is often limited. 4. mechanism for building relationships between the subjects of integration links the organisational and economic mechanism of relations between subjects of the integration system is a multifaceted economic category and includes the following main components (figure 1). successful development of economic relations in agro-industrial formations is possible if the main rules of their development and implementation are observed. these include: social orientation of economic relations; effective use of production potential; respect for the interests of all participants of the integrated formation; material and moral responsibility of the participants; transparency of economic relations for the employees of the agro-industrial formation; state regulation and support of economic relations for the employees of the agro-industrial formation; state regulation and support of economic relations. three seas economic journal 11 vol. 4 no. 2, 2023 priority attention should be paid to the process of creating an integrated formation, since it is at the stages of creation of the association that the foundations of the economic mechanism of its functioning and the prerequisites for successful further activities are laid. in the economic literature, the authors highlight the following leading principles for the creation of integrated formations: formation of a package of legal documents of the integrated association. provisions to ensure strict compliance with legal acts. coordination of the basic principles of operation with district and regional administrative authorities. determination of production and investment programmes. promising areas of technical and technological upgrading of production. terms of purchase of material and technical resources. organisation of financial support for current operations and production development. terms of advance payments, lending and repayment of funds received. the system of anticrisis measures during the break-even operation of the enterprise. organisation of an effective marketing service. the main work in this area is carried out by the investor, but the efforts of each agricultural enterprise are not excluded. justification of the need to create an integrated formation. definition of the organisational and legal form. general principles of functioning of an integrated formation. property relations between investors and agricultural enterprises. basic conditions for the use of property of former agricultural enterprises and newly acquired ones. land relations between the owner of a land plot, an agricultural enterprise and an investor. lease, trust management are the most important factors of land use in rural areas. рurpose. pledge transfer to the charter capital. organisation of day-to-day operations and management. management functions of integrated units, district agricultural departments, and regional industrial departments. list of management functions performed by integrated formations. the social sphere of the village, its development in the context of the creation of integrated formations. mandatory preservation of rural settlements as a prerequisite for a viable state. justification of the need to create an integrated formation. determination of the organisational and legal form. development of the principles of functioning of the integrated formation. problems of motivation, organisation of material incentives and measures of responsibility. level of earnings. e co no m ic s up po rt a nd o rg an is at io na l m ea su re s in te ch no lo gi ca lly in te rc on ne ct ed in te gr at ed fo rm at io ns figure 1. the main components of the mechanism of economic relations of agribusiness enterprises in technologically interconnected integrated formations source: author's own development three seas economic journal 12 vol. 4 no. 2, 2023 – the principle of voluntariness. the decision to join the integrated structure is made in accordance with their charters: by a decision of the shareholders' meeting (in joint-stock companies), depositors (in limited liability companies), members (in cooperatives); – the principle of adaptability. integration entities should choose the form of association that best suits the existing economic conditions and be able to respond adequately and quickly to changes in the external environment; – the principle of phasing. as the material, technical and economic conditions are created, it is possible to move from simple to more complex forms of integration (from horizontal to vertical, from production to production and trade, etc.); – the principle of territorial integrity and optimality. for a balanced resource provision, territorial integrity and clear coordination between all links (participants) of the integrated process must be observed; – the principle of the "leading link" – the integrator. when creating an agro-industrial formation, it is necessary to choose an integrator enterprise, the functions of which can be performed by a financially stable enterprise with production potential (abduroimova, 2013). 5. assessment of integration links in the meat and food subcomplex to assess the integration processes in the agricultural sector, it is proposed to introduce the following system of indicators for assessing agro-industrial integration (table 1). the indicators of the first block are used to determine the level of integration potential of enterprises and changes in their individual characteristics in the process of integration. the presented indicators make it possible to study the quality and assortment of products in order to assess business prospects, the degree of wear and tear of fixed assets, the level of utilization of production facilities, financial stability, business activity, solvency. in addition, the indicators in this block make it possible to study the legal status of the fixed assets: whether they belong to the company or not, and whether they will be lost as a result of the merger. similarly, the investment policy of the enterprise, the relations of the owners with its management, the attitude of the authorities to possible integration, the prospects and forms of return of invested financial resources are evaluated. an important criterion for assessing the feasibility of integration is the degree of mutual importance of the enterprises in terms of supply to each other and their share in total sales (consumption), the existence of alternative sales channels (alternative consumers) in the association and in each of its members, the uniqueness of the enterprise for the technological chain. the indicators of block ii require an assessment of the extent to which the change in the final indicators of agro-industrial formation is directly caused by the interaction of the participants. the criteria of block iii can be used to assess the efficiency of the agro-industrial formation. the competitiveness of a type of product produced by the integrated formation can be determined as the ratio of its price to the assessment of consumer properties in points or by calculating the integral indicator of competitiveness in the form of a price index – table 1 system of indicators for agro-industrial integration block i a system of indicators to assess the feasibility of integration 1. general description of the technological process and applied technology 2. indicators of financial stability 3. legal status of fixed assets 4. the degree of mutual importance of enterprises block ii system of indicators of the level of integration 1. level of intensification of management decisions 2. level of integration of production with science 3. degree of production integration 4. level of marketing integration block iii integration performance indicators 1. competitiveness of the final product 2. social and economic efficiency 3. cumulative effect of joint activities source: author's own development three seas economic journal 13 vol. 4 no. 2, 2023 the ratio of the selling price of the products of the agro-industrial formation to the average market price on the regional market. the socio-economic efficiency of agro industrial formations can be expressed through a system of indicators: wages, the size of the public funds of the association, the level of mechanisation, the equipment of the workforce, the improvement of the qualifications of the employees, etc. the cumulative effect of the joint activity of the participants in the agro-industrial integration is determined by the ratio of the total profit obtained as a result of the integration to the cost price of the final products. when making a final decision on the creation of an integrated agro-industrial complex, it is necessary to determine its possible significance for the socio-economic development of the district (region) in which its activities are planned. the developing processes of cooperation and integration should not happen spontaneously, when creating long-term relations between agricultural and processing enterprises, the experience of previous stages of management should not be forgotten, because the placement of production capacities of processing enterprises was made taking into account the rational use of the raw material base, formed agricultural zones and needs of the population living in the respective territory. the following factors can be highlighted as criteria that determine the direction and form of agro-industrial integration. 1. the availability of large markets. satisfying the needs of customers is the purpose of any business. proximity to potential consumers is not only a strong incentive for the creation of large-scale agro-industrial production, but also influences its specific form. for example, the organisation of processing directly by agricultural enterprises (meat processing plants of agricultural enterprises and processing cooperatives set up by small producers) only makes sense in the vicinity of sales markets, otherwise the commercial costs become prohibitive for producers. 2. the presence in a given area of companies that are links in a single technological chain "production-processing". the essence and concept of agro-industrial integration implies the combination in a single structure of two or more links of agro-industrial production and, first of all, of agriculture and processing. the presence in the agricultural zone of economic entities – producers of agricultural products and a processing enterprise capable of providing the necessary amount of processing of raw materials is the main condition for the formation of an agro-industrial association in this territory. 3. the volume of production of agricultural producers. this factor is not the last one that influences the expediency of choosing one or another form of unification processes. the creation of agricultural holdings tends to focus on large-scale production, as this reduces transport costs and allows the capacities of processing enterprises, which act as the main initiators of integration in the creation of holding structures, to be quickly utilised. 4. financial situation of potential integration participants. when carrying out integration processes, it becomes necessary to select the main integrators – one, less often – several large, financially stable enterprises, capable of taking on all the organisational difficulties of creating an association. the formed financial position of the subjects of the adjacent stages of the technological chain determines the direction of integration: a stable economic condition and access to financial resources of the enterprises of the processing sector in case of an agricultural crisis will lead to "backward" integration, the opposite situation can contribute to the development of "forward" integration. given the unfavourable financial situation of both spheres, it will most likely be necessary to turn to external sources of financing, i.e., there will be conditions for the development of lateral integration. 5. organisational and legal status of the potential participants. this factor is important for the choice of one or another form of agro-industrial formation. for example, the predominance of agricultural enterprises operating in the form of production cooperatives in the region will make it difficult to create holding structures based on the ownership of large blocks of shares or cash capital of the organisations included in the association by the main company. at the regional level, in order to coordinate the activities of agro-industrial formations, it is advisable to create an association (union) of meat producers and processors. three seas economic journal 14 vol. 4 no. 2, 2023 the work of the meat union should be carried out with the active support of the regional administration, which is interested in stabilising and increasing the efficiency of the industry. its main tasks should be: – representation and protection of producers' interests in local and state authorities; – participation in the development of national and regional programmes for the development and support of livestock farming; – initiating and participating in the development of programmes aimed at stimulating the development of cooperation and integration in the livestock sector; – cooperation with research and educational institutions, financial and industrial organisations to provide organisational, scientific, technical, economic and investment support to its members; – coordination of economic activities of the association's members, which includes: analysis and assessment of the industry, development of proposals for its development, planning and coordination of programmes for the introduction of intensive technologies for the production and processing of livestock products; – promoting the development of market infrastructure (creation of wholesale food and resource and technical markets, credit cooperatives, insurance institutions); – assisting union members in selling products, finding potential investors, obtaining loans, tax and other benefits for leasing operations; – conducting research on economic, technological and other issues of the livestock industry; – providing legal assistance to the union members. in order to function effectively, this union must first be supported by the state and recognised by the regional authorities as an equal partner in the management system of the agricultural sector. integration and cooperation processes are just beginning to develop and are currently spontaneous and fragmented, which cannot significantly affect the state of the livestock industry in general. only a comprehensive approach to the creation and development of agro-industrial formations, taking into account the management conditions of each territorial zone of the region, is capable of changing the situation. a comprehensive approach to the reform of the system of intra-economic relations is necessary for the successful entry of an agricultural enterprise into an integrated formation. studies have shown that the improvement of intra economic relations in agricultural cooperative formations is a necessary condition for their financial recovery and increase in production efficiency. in order to achieve these goals, it is necessary to reform intra-farm labour and organisational relations based on the coordination of the general farm interests and the individual interests of the members of the cooperative. economic calculation corresponds most closely to such relations. modern agricultural production cooperatives differ significantly in the level of application of elements of intra-farm calculation. the highest category is the use of all elements of intra-economic calculation, when each unit of the cooperative formation and even individual employees are in a relationship of complete self-sufficiency with the cooperative administration. the first category consists of cooperatives that establish intra-economic relations according to the principles of intra-economic calculation. self-sufficiency and self-financing, material interest and economic responsibility are practised here. in these enterprises, the optimal production and organisational structures of the cooperative have been determined and the order of relations between structural divisions has been clearly regulated on the basis of estimated intra-farm prices. expenditure standards are applied to the units and bonuses are paid for their reduction, financial incentives depend on the income received, the responsibility of the units towards the cooperative administration and other units for violations of production conditions is provided. the second category consists of cooperatives where only the basic elements of internal accounting have been mastered. the relationship between the units and the management of the cooperative does not clearly differentiate responsibility for failure to fulfil obligations, compliance with regulations. in the third category of cooperatives, elements of intra-household calculation are also applied. the order of interrelationships between structural subdivisions is determined on the basis of intra-household estimated prices, financial incentives are related to the results of operations but are not fully dependent on them, three seas economic journal 15 vol. 4 no. 2, 2023 i.e. payment is made for the products produced, but there is no bonus for reducing costs. there is no clear division of responsibility between the units and the cooperative management for failure to meet commitments. the fourth category includes all other forms of cooperatives in which intra-enterprise calculations are practically not used, intraenterprise relations are based on the conditions of management methods, and the remuneration of the members of the cooperative is not directly related to the results of the units' activities. at present, the main task of the cooperative is to fulfil the contractual obligations between the units, between the cooperative and the units, between the cooperative and the employees, and between the cooperative and external partners. the development of self-supporting relations, the granting of real independence to the structural units provides an opportunity for the self-realisation of specialists, promotes the increase of material interests of all employees and activates entrepreneurial activity. state accounting increases the effectiveness of the system of control and accounting for the consumption of production resources, ensures an increase in the material interest and responsibility of all members of the cooperative. in order to improve the organisational and economic relations in the cooperative, it is proposed to introduce additional measures to stimulate the work of managers and specialists, to establish the standard of their salaries (from the gross income, profit or the amount of revenue for the economy), as well as a fixed amount of other planned expenses (the content of fixed assets attached to the equipment, stationery, expenses for business trips, personnel training, etc.). during the year, employees are paid an advance salary (shareholders receive a guaranteed minimum, employees receive full salary). at the end of the year, the actual salary is determined according to the approved standard. savings on fixed costs are added to this amount (or the excess is retained). the total amount is adjusted according to the fulfilment of obligations. if the cooperative manager and the equipment staff have fulfilled all their obligations, this amount is increased by 35%, but is reduced by 11% for each unfulfilled item, as is the fixed amount of other planned expenses (maintenance of fixed assets assigned to the equipment, stationery, travel expenses, staff training, etc.). the proposed system is designed to ensure a sufficiently close link between the level of material participation, increased employee responsibility and the level of gross income of the cooperative, thus contributing to the growth of production and improving product quality. in today 's conditions, increasing the efficiency of production can be achieved mainly through the development of innovative processes, which table 2 classification of agricultural production cooperatives according to the degree of application of elements of on-farm accounting elements of intra-accounting transactions categories of agricultural cooperative organisations higher category 1 2 3 4 1. the optimal production and organisational structure of the cooperative is determined + + + 2. the procedure for relations between structural units on the basis of internal business estimates is determined + + + + 3. prove cost standards + + + + 4. reward for cost savings was introduced + + + 5. employees' financial incentives are entirely dependent on the income of the divisions + + + + 6. provides for liability of departments and administration for violation of the terms of proceedings + + 7. each unit is fully self-supporting with the cooperative's administration + 8. an automated system was introduced to record the work of each unit and the cooperative as a whole, as well as their relationships + source: author's own development three seas economic journal 16 vol. 4 no. 2, 2023 find their final expression in new technologies, new types of competitive products. finding and using innovations directly in enterprises is a real problem. the development of new technical and organisational-technological solutions, the improvement of the main principles of management in relation to the specifics of the domestic market create conditions for the restoration of reproduction processes in enterprises and provide additional impetus for economic growth. constant updating of equipment and technologies makes the innovation process the main condition for the production of competitive products, gaining and maintaining positions of enterprises on the market, increasing productivity and efficiency of the enterprise. 6. distributional relations in the activities of integrated formations in the process of economic activity of integrated formations, an important place is occupied by the distribution relations of the achieved joint effect, the mechanism of which must be ensured: – firstly, the determination of the fair individual contribution of each participant to the overall result of the joint activity; – secondly, the identification of a real criterion for the distribution of the achieved joint results (income, profit). the choice of the organisational and economic mechanism and the rules for the distribution of the general additional effect must, of course, be determined as the result of negotiations between the participants of the integrated formation. the process of finding a "fair compromise solution" can be clearly determined by the variety of formations created, if only because the concept of "justice" itself is very complex, multifaceted and can be interpreted differently by different members of the association (karmazina, 2012). this circumstance requires the development of methodological approaches to the distribution of the general co-benefit based on a combination of different economic interests, focusing on the different perceptions of the participants regarding the fairness of such a distribution. such a technique should be multi-variant, gradually leading to the maximum consideration of all interests and arguments of the integration participants in order to reach an agreed solution. the most modern and effective method of obtaining a compromise solution is the method of modelling the created or functioning integrated formation in the meat products sub-complex based on the use of personal computers. it allows to visually present various options based on different distribution principles and different states of the external economic environment. specific options for the distribution of income between meat producers, meat processors and traders can be reviewed and clarified both at the stage of establishment and during its operation, in the event of unforeseen changes in conditions or a reassessment of the interests of some participants in the integration structure. according to the assessment, there is no doubt about the multivariate and interactive nature of the process of coordinating the interests of the integration subjects. studies show that it is useful to define the basic reference options for the distribution of the total additional financial result. for example, in the first basic version, the additional effect is distributed between the integration subjects in proportion to their production contribution. the second basic option is to allocate the effect in proportion to the value added in each firm and in each link of the technological chain, but the apparent fairness of such an allocation may be distorted by existing price differentials. if one of these options is taken as the basic one, the other should be used to adjust it. on the basis of the above provisions, it is possible to propose methodical approaches to the distribution of the benefit received, as well as the choice of the organisational and economic mechanism of the functioning of the integrated formation. the choice of mechanisms can be based on several important approaches. without pretending to be exhaustive, some principles will be presented that should be applied with regard to the importance of the individual organisations involved in the integration and, indirectly, the validity of their claims to a share of the overall benefits (profit). first. the basis of the distribution of impact by contribution (specific weight) is most often economic indicators that determine the relative three seas economic journal 17 vol. 4 no. 2, 2023 economic power of each subject of integration. the basic version of the distribution based on the economic contribution of organisations to the total value added has already been shown. in order to clarify or reshape this distribution, it is necessary to take into account such important economic indicators as the profit before the organisation of the integration structure, the balance of liquid assets, fixed assets, working capital and some of their combinations. the choice of a particular combination of indicators is made on the basis of the analysis of the functioning of the integrated formation or the project of its functioning, taking into account the specifics of individual participants. second. the distribution of the effect according to where it occurs. to determine this, all possible options are considered. this principle is derived from the distribution of income received in proportion to the additional value created in each company or in each link of a single technological chain. third. the distribution of the additional effect by the amount of assets and fixed assets can be used with a small number of participants in the formation and a large uniformity of the products produced. fourth. distribution according to the principle of coalition power, since the importance of each member of the alliance is determined purely by economic indicators. according to the assessment, the importance of the individual participants (and therefore their share of the profit) is higher the more important their entry into the alliance is for its successful functioning. fifth. the principle of the distribution of benefits, based on the theory of threats, is to determine the importance of the principle of coalition power. it is obvious that a member of the coalition (in this case, an integrated formation) is stronger or more important for the group the greater the number of threats associated with its exit from various options of the coalition; the remaining members do not find counter-threats. on the basis of the application of one of the principles described above or of another principle obtained, for example, by their synthesis, the possibility of distributing the total income among the participants of the integration is determined. furthermore, the resulting options for the distribution of the total benefit can be implemented both in an explicit form, i.e., by determining the absolute amounts allocated to each organisation, and through more complex, "hidden" schemes of mutual calculation, e.g., through the mechanisms of internal settlement prices or internal taxes, which are subdivisions of the organisational-economic mechanism. distribution relations in integrated formations of the meat products subcomplex can be constructed according to two models: – price, which in practice can be applied in two ways: at current market prices or at estimated domestic prices; – normative-distributive, which differs from the price model in that the calculations are not made on the basis of the intermediate result, but on the basis of the final result. in the price (or cost-technological) model, calculations are made according to the costs of the technological process, starting from the producer of raw materials and ending with the trading organisation for the sale of semi-finished and finished meat products. it is advisable to use such a scheme in those integrated formations in which the participants either retain legal and economic independence, or retain only economic independence, but do not have the rights of a legal entity. since the price model is built according to the stages of the technological process, the prices of meat products passing through successive stages can be determined in two ways: – based on the normative or actual costs and the applied meat production technology, while the cost of the final products is determined on a cost basis, starting from the first stage of production and ending with the last – trade, taking into account the increase in added value; – based on the retail price of the final type of meat products, i.e., a reversible model is used, according to which the estimated price of raw materials is determined in reverse order. the peculiarity of this method is that the starting point of the calculations is the actual market price for a specific type of semi-finished or finished product and the final point is the calculated price for a specific type of raw material (increase in cattle, pigs, poultry). the application of the pricing model in the market relations of the participants of the joint activity has constraining moments, because each participant of the integrated chain proceeds three seas economic journal 18 vol. 4 no. 2, 2023 from its own interests and tries to obtain the maximum profit through the price. in integrated formations of a closed type, the concept of pricing is built primarily with the orientation of all participants to obtain the maximum aggregate income from integrated activities in general, and here it should not act as an in dependent tool of distribution relations, but serve as a value basis for the distribution of the final financial result. in the normative-distributive model, economic relations are established by distributing the final financial outcome (sales revenue, profit) in proportion to the participants' contribution to the joint production. the amount of this contribution for each participant can be determined by one of three normative methods: cost, price, resource. the regulatory cost method calculates the regulatory costs at each stage of product promotion. the contribution of agricultural producers is determined on the basis of the normative (full) cost price, the rest on the basis of its increase. one of the main conditions for using this method of calculation is that the right of product ownership must belong to the main integrator of the group. this has the effect of deferring the tax assessment, since in this system the profit is calculated only at the end of the technological cycle, i.e. at the stage of sale of semifinished or finished meat products. however, given the practical difficulty of determining the normative level of costs for the production of the meat products sub-complex, it is possible to use a more modified option. the standard price method differs from the price method in that the standard profit indicator is added to the calculation procedure. the contribution of the participants is determined as follows: for agricultural cooperatives – according to the standard value, for others – according to the added standard value. this option can be used for any form of integration – both with the loss and with the preservation of the legal independence of the participants – economic units. the full calculation is carried out through the distribution of the profit received at the final stage of the integrated association's activity, and earlier an advance is paid to the supplier of livestock after the sale (handover) of the products for processing. the use of a cost-price variant of distribution relations will allow agro-industrial formations to effectively influence the interests of integrators in order to reorient them towards the final results of joint activities. the formation of the profit of each of the participants should be carried out taking into account the real conditions of operation. the normative-resource method determines the resource intensity of the production of weight gain and its processed products. to do this, all types of production resources used in agricultural production and processing are summed up in a monetary estimate and the share of each participant is determined. the application of this method is limited by the complexity of comparing the costs of resources of different quality (labour, fixed assets) and of the same type but belonging to different activities (e.g., livestock farming and meat processing). for agro-industrial formations of the meat products subcomplex of the joint-stock type with the maximum degree of integration, which implies the loss of the legal entity status of the participants, the given distribution relations of the obtained general effect are the most acceptable. participants who do not have legal independence, operating under the conditions of internal commercial settlement, have collective economic interests, the totality of which affects the formation of the mechanism of distribution relations, especially when justifying the ratio between accumulation and consumption. 7. conclusions the author's position is to recognise the need for a reasonable combination of large agroindustrial formations, medium-sized agricultural enterprises, farms and private peasant households in the subcomplex, which allows for the realisation of the advantages of each form of management, economic growth in the industry and sustainable development of rural areas. the results of the study provide grounds to identify the following areas for the effective development of integration processes and integrated structures in the meat and food subcomplex, on which it is proposed to focus the efforts of the state, business, industry associations and the scientific community: – ensuring effective entry of integrated structures into the global agri-food market; – implementation of full-scale anti-epizootic measures to combat animal diseases, primarily three seas economic journal 19 vol. 4 no. 2, 2023 african swine fever, which poses a major threat to the development of pig production; – еstablishing a legal framework for property and distribution relations between participants in integrated structures, including the adoption of the law of ukraine "on holding"; – development of scientific and methodological support in the field of organisational and economic mechanism of integrated formations, taking into account the interests of all participants; – organisation of state statistical monitoring of the functioning of integrated structures in order to form a system of statistical indicators that comprehensively characterise their activities; – focusing investment activities of integrated entities on modernising production and sales, developing the breeding, genetic and feed base; – vertical integration of producers with research and development organisations with the creation of research and production associations to create an innovative direction for the industry 's development; – creation and expansion of contractual forms of integration, inter-organisational interactions and institutional arrangements; – developing the diversification of the integrated units' activities (towards deep processing, coverage of new regions, meat and livestock projects), increasing production volumes for emerging market segments (turkey, duck, rabbit, etc.), improving product safety and quality; – use of modern scientific and methodological support for corporate strategic management, business process and quality management, and marketing; – state regulation of the activities of integrated structures, including by improving land legislation, in order to mitigate the negative impact on the competitive environment, environmental situation and socio-economic situation in rural areas; – regionalisation of the state policy of supporting integrated structures, taking into account the specifics of business entities and the current level of development of vertically integrated industries in the respective territories; – increased focus on corporate social responsibility of agro-industrial integrated entities and their social objectives; – development of mechanisms of public-private partnership in the creation of integrated structures in "growth points" and implementation of large investment projects by integrated entities (boltovska, 2021). the results of the conducted research, which systematize and specify the content and genesis of agro-industrial integration, taking into account the specifics of the industry, expand scientific ideas about integration processes in the meat products subcomplex, contribute to overcoming the fragmentation of scientific knowledge in this area, contribute to the formation of information and applied research, and can be used in the development of programs for the development of the meat products subcomplex and rural areas, mechanisms of state support for meat production, and in the preparation of proposals for improving the regulatory and legal framework for the activities of integrated structures. references: chumachenko, yu. s. 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(2021). organisational and economic principles of managing dynamic processes of the meat and food subcomplex: a thesis for the degree of doctor of economics: 051. vinnytsia: vnau, 248 p. received on: 27th of april, 2023 accepted on: 29th of may, 2023 published on: 30th of june, 2023 three seas economic journal 71 vol. 4 no. 1, 2023 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: tomashuk.inna@ukr.net orcid: https://orcid.org/0000-0001-6847-3136 researcherid: https://publons.com/researcher/1928765/inna-tomashuk/ 2 vinnytsia national agrarian university, ukraine e-mail: baldynyuk@gmail.com orcid: https://orcid.org/0000-0001-9014-8866 researcherid: https://publons.com/dashboard/summary/ this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-9 eco-innovation as a basis for sustainable development inna tomashuk1, vasyl baldynyuk2 abstract. the purpose of the article is to substantiate the necessity of introducing ecological innovations into the activities of enterprises, to study the problems and prospects associated with the introduction of ecological innovations, and to make recommendations on increasing the ecologicalization of the activities of enterprises. methodology. the work uses general and special scientific methods and techniques of cognition: methods of theoretical generalization, analysis, synthesis and grouping, logical-historical method, deduction and induction. it is pointed out that one of the means to ensure the balanced development of society is the introduction of ecological innovations in enterprises. this will contribute to the growth of economic well-being of business entities, ensure the competitiveness of their products, give an opportunity to enter the world market of goods and services, increase the level of environmental safety of the territory and the health of people living there. the results of the work show that the direct implementation of ecological innovations will ensure environmental responsibility of business, increase the efficiency of enterprises, increase consumer loyalty to products and, as a final result, high indicators of competitiveness of manufacturers while preserving the environment. practical implications. eco-innovations provide a gradual impact on sustainable development. achieving the principles of sustainable development, refusing to achieve high rates of economic growth at the expense of future generations, stopping the processes of depletion of natural resources are possible only through the implementation of effective innovative policies based on greening. value/originality. environmental innovations should be aimed at solving tasks related to reducing the consumption of resources, controlling harmful effects on the environment, increasing the production of ecological products, reducing the costs of eliminating destructive effects of production activities. such innovations will lead to a significant reduction in the negative impact of the economic activities of enterprises on the environment and will increase the efficiency of the use of resources, energy and materials. in addition, the ability to ensure the implementation of the waste management process will increase, which will contribute to the sustainable development of the enterprise in the long term. key words: ecological innovations, environment, greening, ecological development strategy, environment, sustainable development, competitiveness. jel classification: q50, e60, f60 1. introduction in connection with the necessity of transition to the "green" economy, a special role is assigned to ecological innovations. ecological innovations are the final product of ecological and innovative activities for creation, implementation and use in production of an innovation aimed at increasing the level of ecology, which is realized in the form of ecological goods, technologies for their production, methods of management and sale of goods at all stages of production, which contribute to development and improvement of socioeconomic efficiency of functioning of business entities, ensure minimization of the impact on the environment. eco-innovative activity within the economic system (different levels: local, regional, national) also depends on the implementation of framework agreements (rules and norms) by three seas economic journal 72 vol. 4 no. 1, 2023 subjects (universities, research centers, structures of innovative activity, industrial enterprises and other organizations). the intensity and quality of interaction of these subjects determines the performance of such a system. in today 's reality, economy and ecology are increasingly overlapping. the tension between nature and society is rapidly intensifying, bringing society closer to the reality of the threat of global ecological disaster. for a long time, society believed that the development of the world economy would always be stable and uninterrupted, and that natural resources would be unlimited. as for environ mental problems, they were considered to be only technical problems that could be solved by the same technical means. however, mankind's powerful development of scientific and technological progress, without considering the possible consequences, became the basis of today 's environmental problems. the ecological imperative of social development in the current conditions becomes an endogenous factor in the functioning of the system of economic relations. in order to prevent an ecological crisis, there is a growing need for a transition from an artificial type of development to a sustainable one, which includes the use of the latest technologies designed to meet people's needs without harming the environment and, at the same time, is connected with the application of innovative activities and the use of human potential. in the conditions of the growing burden on the ecological system, the threat of the global economic crisis, ecological innovations are of the utmost importance for the sustainable development of both individual industrial enterprises and the country as a whole. 2. theoretical content of the concept of ecological innovations and their main types the concept of "eco-innovation" first appeared in world literature in 1996 in the book "driving eco-innovation: a breakthrough discipline for innovation and sustainability " by claude fassler and peter james in the following formulation: "eco-innovations are products and processes that contribute to sustainable development". in his article, peter james defines eco-innovations as "new products and processes that are designed to satisfy the business interests of companies and at the same time must significantly reduce the impact on the environment". (kosyakova, kapmar, 2017) among the many approaches to defining the concept of ecological innovation, it is worth highlighting the most traditional: – any innovation aimed at meeting the everincreasing needs of citizens and leading to a significant reduction or minimization of the destructive impact on the environment; – progressive technical and technological changes in production, which promote the transition to modern ecological technologies. taking into account the above, it can be argued that environmental innovations are changes in the field of development of competitive advantages, which are achieved by improving the efficiency of use of natural resources, minimizing the harmful impact on the environment, creating and promoting the use of ecological products. eco-innovations, like others, can be technical (for example, equipment that works on natural substances), technological (for example, technologies that minimize harmful emissions into the atmosphere), product (for example, reusable goods produced on such resources that have a short period of decay in the environment), organizational (introduction of quality standards that correspond to sustainable development), regulatory or marketing to increase the socalled "green competitiveness" of the enterprise. (boyarynova, bychkovska, 2020) more broadly, such innovations include: development, creation and introduction of economical technological processes, closed production cycles, cascade technologies of resource use (technological ecoinnovations); development and application of resource-saving and multifunctional equipment (technical eco-innovations); development and production of environmentally friendly products (product eco-innovations). eco-innovators are divided into the following four categories: ecological technologies; organizational innovations for the environment; innovative goods and services that provide environmental benefits; innovations of green systems or alternative systems of production and consumption (table 1). one of the most important factors of environmental and economic development is the interaction of innovation and investment, which should become the basis of sustainable growth, three seas economic journal 73 vol. 4 no. 1, 2023 eventually leading to the emergence of new economic opportunities. the introduction of innovative technologies and technological rearmament of outdated environmental protection equipment requires significant financial investments. a systemic barrier for ukrainian enterprises in the implementation of environmental protection measures is the lack of investment resources. (andreychenko, 2017) frequently, business owners perceive eco-innovations as economically unprofitable large financial investments. in addition, the vast majority of enterprises are focused on short-term investments and achieving quick profits, and the costs associated with the implementation of eco-innovations are quite significant. a final analysis of the evolution of the concepts of ecological innovations and ecologically safe production from the point of view of approaches to greening of production and the achieved ecological consequences was proposed by the organization for economic cooperation and development. this evolution takes place in the direction from processes and technological solutions (dominance of recycling and waste disposal) to the principles of cleaner production, product life cycle management, implementation of integrated production and environmental management systems, creation of ecological industrial parks (figure 1). environmental management is based on the control of waste and release of harmful substances, assessment of the impact of pollution on the environment in accordance withinternational standards developed by the international organization for standardization (iso). the system of standards for the green economy includes iso 14001 on environmental management systems, iso 19011 on environmental management system auditing, iso 14031 on envi ronmental performance evaluation, iso 14020 on environmental labeling and declarations, iso 14064 on greenhouse gas assessment and verification. (vitkin, 2016; tomashuk, 2022) as a result of ecological innovations, new business models are emerging in practice – ecoindustrial parks (eip), which use the synergy of economic and environmental protection activities of manufacturers of industrial products, which under normal conditions are not related to each other. table 1 categories of environmental innovations according to the purpose of their implementation categories characteristics of environmental innovations included in the category environmental technologies – pollution control technologies, including wastewater treatment technologies; – technologies for cleaning atmospheric air from pollutants; – cleaner technological processes: new production processes that pollute less and/or use resources more efficiently; – waste management equipment and technologies; – environmental monitoring and control and measuring devices; – green energy technologies; – water supply; – noise and vibration control. organizational innovation for the environment – environmental pollution prevention schemes; – environmental management and audit systems: formal environmental management systems, including measurement, reporting and accountability for material, energy, water and waste use (e.g., emas and iso 14001); – network management: cooperation between enterprises for the purpose of rational use of raw materials and materials, reduction or avoidance of environmental damage of materials during the entire life cycle of the product. product and service innovation offering environmental benefits – new or ecologically improved goods (products, services), including eco-houses and construction; – green financial products (for example, ecological lease or "green" mortgage); – environmental services: management of solid and hazardous waste, wastewater, environmental consulting, testing and engineering, other testing and analysis services; – services aimed at reducing environmental pollution and optimal distribution of resources. green system innovations – alternative systems of production and consumption that are more ecologically safe than existing systems: biological agriculture and an energy system based on renewable energy sources, etc. source: (kotsko, 2019) three seas economic journal 74 vol. 4 no. 1, 2023 as a result of this synergy, companies benefit from the efficient use of all available resources and the entire production cycle, which allows them to significantly reduce costs and thus achieve one of the main goals of the company. 3. the essence of enterprise development and its connection with greening in today 's rapidly changing socio-political and economic conditions, all companies are faced with the task of not only surviving, but also constantly developing and increasing their potential. development as a process is subject to the action of economic laws: general (the law of supply and demand, the law of synergy, the law of self-preservation) and partial (the laws of production management, the law of competitiveness of managers) of content, which reflect the cause-and-effect relationships of socio-economic phenomena. one component of development is economic development, which scientists define as qualitative and structural changes in national economies as a result of economic growth. the economic development of an enterprise describes the dynamics of the processes of its development and can be classified according to a separate type of development, namely a growing type of development (the feature of this type is to ensure economic growth by increasing the number (volume), measured by certain indicators, of the results of the enterprise's activity for a certain period of time); a shrinking type of development (this type is characterized by negative dynamics of the key indicators of economic growth); a stable type of development (characterized by the equality of the indicators of the enterprise's activity when comparing the current and previous stages; in the case when the market is observed with unchanged prices for goods and services, this type is able to ensure simple reproduction). pollution control cleaner production environmental efficiency life cycle concept closed production cycle industrial symbiosis recycling and waste disposal warning management spread restoration synergy implementation of nonessential technologies modification of products and production processes systematic environmental management spread of environmental responsibility restructuring of production methods integrated production systems figure 1. evolution of concepts and practice of ecological innovations source: designed based on research three seas economic journal 75 vol. 4 no. 1, 2023 however, one of the most important vectors for the implementation of the sustainable development program is the greening of production, the implementation of which will allow solving environmental problems at the level of enterprises and regions. scientists distinguish three models of environmentalization of business activity – passive, active and traditional. taking into account the above models, as well as the factors of formation of the potential of environmentalization of inno vative activities of enterprises, it is possible to distinguish five models of environmental policy based on the level of development of the organizational culture of the enterprise and its capabilities (figure 2). greening takes into account the priority of issues of harmful impact on the environment when making decisions on creation of new or modernization of outdated industries for the purpose of business development. the term "greening" itself is a rather broad concept and means a reduction of the integral ecodestructive impact of the processes of production and consumption of products per unit of the total social product. (kaletnik, lutkovska, 2022) each of the proposed models of greening provides a separate system of directions and tools that can be included in the activities of the enterprise if there is an environmental management subsystem. (kotsko, 2019) it should be noted that there is no universal mechanism of greening that would be suitable for all companies. currently, greening is at the beginning of its development – it is a long, complex, gradual and rather expensive process. it largely depends on people's ecological awareness, psychological mood and ecological qualifications, which in turn requires the formation of a new ecologically oriented world view from childhood. in modern realities, it is impossible to achieve completely waste-free technologies. thus, it is possible to speak only of "nature-preserving" technologies, which scientists divide into five types (figure 3). in this context, the integral indicator of the ecological level, which can be calculated both for some individual types of man-made pollution, and as a generalizing integral indicator according to the formula, will be characterized: ii = (fw а1 + dp а2 + he а3 + нw а4) * ip, where ii –integral indicator; fw – volume of fresh water consumption for production needs (million cubic meters); dp – volume of discharge of polluted effluents (million cubic meters); he – the amount of harmful emissions into the atmosphere (million tons); hw – volume of hazardous solid waste (million tons); ip – volume of sold (produced) industrial products (million hryvnias); offensive (the strategic nature of the greening policy, which creates the conditions for the development of ecological potential) proactive (anticipatory nature of the greening policy, ensuring current and strategic effects of its implementation, determining patterns of behavior on the market) passive (the greening policy is outdated) reactive interactive (greening policy is based on balancing resource opportunities with greening priorities.)d ev el op m en t l ev el the financial potential and the level of technological development types of nature-saving technologies waste-free (low-waste technologies) recycling technology biotechnology resource-saving technologies environmental technologies (geotechnologies) * it provides a minimum amount of solid, liquid, gaseous, and thermal waste (complete zero waste is impossible because the second law of thermodynamics would not work), so we often talk about technologies that provide a theoretical minimum of waste in production that can be achieved. * the technological process represents the fact that waste from one production can become raw material for another (closed-loop technology). * producing and realizing the final product with minimal use of resources and energy at all stages of the production process and with minimal impact on people and natural systems. * a collection of methods and techniques for obtaining biological products and phenomena useful to humans using biological means (biofilters, bioreactors, etc.). * technologies are built on the basis of processes (types of processes) characteristic of nature, sometimes as a direct continuation of them (contour farming or no-till farming, etc.). figure 2. models of environmentalization of business activity source: (kotsko, 2019) three seas economic journal 76 vol. 4 no. 1, 2023 а1, а2, а3, а4 – weighting coefficients (the degree of importance of the ith type of impact in relation to other types of eco-destruction). the coefficients are determined by an expert and can take any value from 0 or higher, for example: 0.5; 1; 1.5; 4; 7 and others. in today 's world, the solution to the global crisis related to the protection of the environment and the rational use of natural resources cannot be achieved only by implementing methods of processing, reusing and disposing of waste – new ways are needed, based on fundamentally innovative, non-traditional scientific developments. 4. formation and regulation of environmental responsibility of enterprises: domestic and foreign practice unfortunately, environmental responsibility in modern domestic companies remains primarily a way to achieve economic goals. investments in the environment and environmental innovation activities do not provide quick sources of profit capitalization and therefore are usually considered by management as lost market opportunities. it is also worth noting that ukrainian enterprises do not yet perceive the greening of their activities as a dominant factor in the competitive struggle. practice shows that a well thought-out system of environmental responsibility is an important tool for preventing violations of normative environmental requirements and, as a result, for fulfilling the environmental obligations of enterprises. the concept of corporate environmental responsibility, environmental impact assessment and environmental audit should be distinguished by a number of features: the composition of the subject and object, the purpose of implementation, the nature of publicity and obligations, forms of public participation (table 2). it should also be noted that companies that carry out environmental audits and environmental impact assessments offensive (the strategic nature of the greening policy, which creates the conditions for the development of ecological potential) proactive (anticipatory nature of the greening policy, ensuring current and strategic effects of its implementation, determining patterns of behavior on the market) passive (the greening policy is outdated) reactive interactive (greening policy is based on balancing resource opportunities with greening priorities.)d ev el op m en t l ev el the financial potential and the level of technological development types of nature-saving technologies waste-free (low-waste technologies) recycling technology biotechnology resource-saving technologies environmental technologies (geotechnologies) * it provides a minimum amount of solid, liquid, gaseous, and thermal waste (complete zero waste is impossible because the second law of thermodynamics would not work), so we often talk about technologies that provide a theoretical minimum of waste in production that can be achieved. * the technological process represents the fact that waste from one production can become raw material for another (closed-loop technology). * producing and realizing the final product with minimal use of resources and energy at all stages of the production process and with minimal impact on people and natural systems. * a collection of methods and techniques for obtaining biological products and phenomena useful to humans using biological means (biofilters, bioreactors, etc.). * technologies are built on the basis of processes (types of processes) characteristic of nature, sometimes as a direct continuation of them (contour farming or no-till farming, etc.). figure 3. types of nature-saving technologies source: designed based on research three seas economic journal 77 vol. 4 no. 1, 2023 are not automatically considered to be environmentally responsible, given the mandatory nature of these procedures. in this connection, the question arises about the introduction and observance of a clear strategy for the implementation of entrepreneurial activities of enterprises. in general, the strategy of ecological development contains a philosophy of behavior and directions for development of business associations, corporations and individual enterprises of their activities taking into account environmental priorities. in table 3 indicators of the volume of capital investments in environmental protection in ukraine by types of environmental protection measures are presented. in general, there are a number of specific types of ecological development strategies in the world. each of these strategies reflects the usual conditions of formation, object-subject composition, strategic advantages, etc. the majority of post-soviet enterprises adhere to the strategy of protective ecological development, which is characterized by compliance with mandatory standards of the enterprise's relationship with the environment. scientific literature and international practice of environmentally friendly business distinguish 4 classification categories of such tools – administrative, social motivation, economic and organizational. in fact, economic instruments, in turn, can be classified according to the methods of influencing the issuer. it is appropriate to distinguish such categories as market, financial, collateral, fiscal and those belonging to the system of obligations. environmental impact assessment plays an important role in the north american model of environmental liability. yes, in the usa it is the national environmental policy act (nepa), the environmental quality improvement act of 1970, section 309 of the clean air act, as amended (42 us code 7609) and executive order 11514 (march 5, 1970, as amended). (beloboro dova, 2014) table 2 demarcation of concepts in the field of environmental responsibility signs eco-responsibility of industrial enterprises environmental impact assessment environmental audit subjects businesses, community, state and local government, stakeholders. business entities, state authorities, local self-government bodies, the public. executive authorities, local self-government bodies, owners of environmental audit facilities, public representatives, environmental auditors. objects management system, systems environmental quality control in the sphere of influence of the enterprise, production processes. planned economic activity, including construction, reconstruction, technical re-equipment, re-purposing, liquidation of objects. industrial enterprises, their associations, separate production sites, raw materials, discharges, waste, environmental management systems. goal greening of industrial activity, establishment of ecological and economic balance through social dialogue. ensuring ecological safety, environmental protection, rational use of nature, in the process of making decisions about conducting business activities. ensure compliance with environmental protection legislation in the course of economic and other activities. reporting social reports with disclosure environmental information. environmental impact assessment report, conclusion from environmental impact assessment. environmental audit conclusion. news partly voluntary. mandatory. voluntary/mandatory. public access yes yes yes – when conducting an external environmental audit the role of local hromadas participation in the formation of the development strategy of the industrial enterprise, control, construction of social dialogue. public discussion, making comments and suggestions, contesting the conclusion of the environmental impact assessment. initiation of external audit. source: (the law of ukraine "on environmental impact assessment"; law of ukraine "on protection of the natural environment"; law of ukraine "on strategic environmental assessment") three seas economic journal 78 vol. 4 no. 1, 2023 in general, environmental assessment in the united states began to be used as part of a rational decision-making process in the 1960s. at that time, it was considered a technical assessment for decision making. if talking about canada, in this country environmental liability is regulated based on the canadian environmental assessment act (ceaa), which is the legal basis for the federal practice of environmental assessment in most regions of canada; "directive on the environmental assessment of policy, plan and program proposals". (vitkin, 2016) strategic environmental assessment is defined as a systematic and comprehensive process for evaluating the environmental impacts of proposed policies, plans, programs, and other strategic initiatives. in the north american model, financial support mechanisms such as environmental insurance are also increasingly used. in the european union, the problems of environmental responsibility of companies and corporations are increasingly coming to the fore in the context of the implementation of directive 2004/35/eu "on environmental responsibility for the prevention and elimination of the consequences of damage to the environment", the adaptation of which was completed by all eu member states in july 2010 (directive of the council of the european union № 2004/35/ce on environmental liability, aimed at preventing environmental damage and eliminating its consequences). in the european union, environmental responsibility is part of the development strategies of states, which is determined by the existence of a number of national environmental strategies. in promoting environmental responsibility, the governments of european countries are primarily trying to ensure that government institutions themselves set the right example. great britain and japan are a good example of a combination of features of the north american and western european models. as for the japanese model, it has a significantly expressed internal character, directed at employees and collective decision-making in environmental table 3 capital investments in ukraine for environmental protection by type of environmental protection measure1 (in actual prices; thousand uah) year total including air and climate protection wastewater management waste management protection and remediation of soil, groundwater and surface water other environmental activities 2006 2194188,5 762538,6 777924,5 339529,6 247695,4 66500,4 2007 3080687,6 1379250,6 809677,1 388386,6 393036,8 110336,5 2008 3731400,4 1476343,3 927352,9 422918,6 787303,8 117481,8 2009 3040732,7 1273789,4 882525,4 400016,9 401425,6 82975,4 2010 2761472,1 1139946,7 734663,4 475584,3 319922,0 91355,7 2011 6451034,6 2535632,6 721325,5 1183880,2 639123,1 1371073,2 2012 6589336,5 2462675,3 846955,4 730544,4 540516,8 2008644,6 2013 6038783,0 2411935,1 834114,8 713856,3 324980,1 1753896,7 2014 7959853,9 1915129,7 1122149,3 783965,4 359925,6 3778683,9 2015 7675597,0 1422946,6 848881,2 737498,9 388259,2 4278011,1 2016 13390477,3 2502805,8 1160029,1 2208676,6 419988,9 7098976,9 2017 11025535,2 2608027,4 1276530,2 2470969,5 1284502,0 3385506,1 2018 10074279,3 3505920,6 1692640,7 1182045,8 1444291,6 2249380,6 2019 16255671,8 4276767,6 1753869,1 5754260,9 1721924,9 2748849,3 2020 13239649,8 5595319,4 1578201,4 2899793,4 2554224,5 612111,1 deviation (+/-) 2020/2006 11045461,3 4832780,8 800276,9 2560263,8 2306529,1 545610,7 1 data for 2014-2020 exclude the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol, and part of the temporarily occupied territories in the donetsk and luhansk regions. source: (official website of the state statistics service of ukraine) three seas economic journal 79 vol. 4 no. 1, 2023 management, which in turn is part of general corporate management. (beloborodova, 2014) a large share of state ownership harmoniously determines a high level of regulation by state authorities. as far as the british model is concerned, the basic point of environmental responsibility here is the pronounced activity of companies and corporations themselves in creating projects, which in general fully corresponds to the principle of voluntariness. it is worth noting that the position of minister for corporate social responsibility was created for the first time in great britain. this fact indicates a high level of attention to environmental responsibility in the country. the post-soviet model is used in eastern european countries and traditionally focuses on the fact of causing damage. that is, in case of damage to the environment (including atmospheric air), the enterprise must pay financial compensation to the state, even if restoration of this component of the environment is impossible. today the legislation of ukraine on environmental protection includes the following basic laws, documents and codes constitution of ukraine, relevant branch codes (code of land, air, forest, water, subsoil), about 40 laws, including: "on environmental protection", "on environmental expertise", "on ecological audit", "on nature reserve fund of the country ", "on atmospheric air protection", "on animal life", "on energy saving", "on use of nuclear energy and radiation safety ", "on management of radioactive waste", "on use of nuclear energy and radiation safety ", "on radioactive waste management", "on legal regime of the territory radioactively contaminated as a result of the chernobyl accident", "on status and social protection of the citizens affected by the chernobyl accident" and others. (economic code of ukraine) regarding legal liability for environmental violations, ukraine uses 4 types of legal liability: disciplinary, administrative, criminal and property. to date, the issue of adoption of the environmental code of ukraine (ecu) remains unresolved. the vast majority of scientists are inclined to accept the ecu, but some areas of regulation remain controversial and need to undergo in-depth scientific discussions. an important vector of development of environmental responsibility of enterprises in ukraine is their reorientation towards international standards of environmental restoration. modern ukrainian realities require stricter state regulation in the field of environmental responsibility of enterprises, as the level of business motivation in the country is currently low. the legislation does not provide for the granting of benefits and preferences to the so-called "green" production. (andreychenko, 2017) it is worth noting that the share of enterprises, which believe that business should participate in the solution of environmental problems of society, is significantly higher among state-owned enterprises than among private enterprises. it is also important to solve the problem of substantiating the conceptual basis of economic methods and tools of environmental regulation, stimulating and improving their efficiency. solving these problems will significantly contribute to increasing the level of environ mental responsibility of domestic enterprises. (mazur, kovalchuk, 2019) at the present stage of social development, the problems of global ecological and economic interrelations and international ecological cooperation in environmental protection are among the most important. the solution of these problems should lead mankind to find rational ways to prevent and minimize the consequences of the global environmental crisis. 5. analysis of the state of innovative development and the needs of greening with the development of humanity and scientific and technological progress, the destructive impact on the environment is increasing, more and more global environmental problems are appearing, and therefore the attention to ecological innovations is growing both in domestic and international circles. the direct implementation of ecological innovations can ensure the environmental responsibility of business, increase the efficiency of enterprises, increase consumer loyalty to products and, as a result, high indicators of competitiveness of producers while preserving the environment. the introduction of measures for sustainable development into the basis of management of economic entities requires the formation of new three seas economic journal 80 vol. 4 no. 1, 2023 methods of carrying out production activities, assessing their impact on the environment. in order to assess the effectiveness of the intro duction of environmental innovations at the international level, a number of indicators have been developed and implemented. one of these indicators is the environmental performance index (ерi) – a comprehensive indicator of the assessment of the environmental policy of the state and its individual subjects. the index is calculated on the basis of 24 perfor mance indicators in ten categories of health, environment and ecosystem viability. (beloborodova, 2018) these indicators make it possible to assess the level of achievement of environmental policy goals by countries. in table 4, information on the position of ukraine in the international rankings reflecting innovative development for the period 2015–2021 is presented. related to ecology is the global cleantech innovation index, which was launched in 2012. the index is calculated for 40 countries of the world as a weighted sum of assessments of two groups of indicators: available resources and conditions for innovation (inputs to innovation) and achieved practical results of innovation implementation (outputs of innovation). the final index represents the ratio of the cost of innovation development and the achieved effect. (markevich, 2019) table 5 shows the dynamics of changes in the indices of the european innovation scoreboard for ukraine for the period 2015–2021. china, switzerland, sweden, the united states, the netherlands, the united kingdom, finland, denmark, singapore, and germany are among the top ten countries in the global index of environmentally clean innovations. the republic of korea is also approaching the top ten. as for ukraine, according to the results of innovative activity, it took the 45th place and also entered the group of economies that successfully demonstrated themselves in the sphere of innovation in 2020. among the ten countries with below-average income level with the best result in its category, ukraine took the second place (innovation rating 2020 and the covid crisis, 2020). according to the index of efficiency of transition to sustainable development (sdp) in 2021. ukraine took the 64th place in the world (table 6). the key to the implementation of any inno vation in the company is the positive dynamics table 4 ukraine's place in international rankings reflecting innovative development in the period 2015–2021 indicator 2015 2016 2017 2018 2019 2020 2021 deviation (+/-) 2021/2015 global innovation index 64 56 50 43 47 45 49 -15 іnnovatіon іnput 84 76 77 75 82 71 76 -8 institutions 98 101 101 107 96 93 91 -7 human capital & research 36 40 41 43 51 39 44 8 infrastructure 112 99 90 89 97 94 94 -18 market sophistication 89 75 81 89 90 99 88 -1 business sophistication 78 73 51 46 47 54 53 -25 іnnovatіon output 64 40 40 35 36 37 37 -27 knowledge & technology outputs 34 33 32 27 28 25 33 -1 creative outputs 75 58 49 45 42 44 48 -27 index of innovative development for bloomberg 33 41 42 46 53 56 58 25 productivity 48 50 50 50 60 57 55 7 patent activity 25 28 27 27 35 36 36 11 efficiency of higher education 5 5 4 21 28 48 57 52 value-added production 40 46 47 48 58 57 57 17 intensity of research and development 39 45 44 47 54 57 59 20 concentration of researchers 39 41 44 46 48 49 52 13 high technology penetration 31 36 34 32 35 35 39 9 innovation index of the european innovation scoreboard 35 35 35 36 33 33 34 -1 source: (european innovation scoreboard 2021) three seas economic journal 81 vol. 4 no. 1, 2023 of its financial indicators, which ensures the company 's ability to financially support the implementation of innovative projects and be prepared for certain risks associated with this process. 6. problems and prospects of implementation of ecological innovations in the enterprise among the modern global problems of humanity, one of the main and most important is the problem of ecology and environmental protection. the extensive development of the economy as a result of ignoring its impact on the environment led to an environmental crisis, which in the course of the 20th century moved from the local to the global level. the imperfection of the methods of modern economic development, the depletion of resources and the interdependence of all ecological and economic processes became the main reason for searching for ways of balanced development of society. the main goal of such development should be to satisfy the needs of present generations without endangering the ability of future generations to satisfy their needs. one of the most important methods of ensuring the balanced development of humanity is ecological innovation, which promotes the environmentalization of all spheres of social life. (andreychenko, 2017) the new model of economic growth should be based on an innovative type of development, which, in turn, implies the redefinition of concepts such as scientific and technological table 5 dynamics of changes in the indices of the european innovation scoreboard for ukraine in the period 2015–2021 № the main blocks of eis 2015 2016 2017 2018 2019 2020 2021 deviation +/ 2021/2015 1 hr 67 66,1 131,6 100,8 53,4 46,4 31,8 -35,2 2 attractive research systems 8 14,9 22,3 15 17,3 15,1 17,3 9,3 3 innovative environment/digitalization 5,5 6 169,6 97,5 72 72 4 funding and innovation support 23 19 16,7 7,6 11,3 9,8 17,7 -5,3 5 innovation costs 46 46,8 44,8 52,9 45,1 34,8 41 -5 6 innovators 0 15,7 16,0 15,6 20,2 22,6 7 ties 24 4,6 9,6 3 37,6 36,5 10,1 -13,9 8 intellectual property 29 23,6 13,4 13,1 20,9 22,4 9,8 -19,2 9 impact on employment 77,9 77,9 77,4 86,9 80,5 78,2 78,2 10 impact on exports 44 33,1 32,8 34,7 53,1 35,3 37,5 -6,5 source: (european innovation scoreboard 2021) table 6 ranking and scores of non-eu european countries and central asia on the sustainable development transition performance index (sdp) in 2021 place for sdp name of country the value of sdp in points according to the directions of transition: in the region in the world general economic social ecological management 1 1 switzerland 78,4 79,8 82,9 71,7 83,0 2 5 united kingdom 73,3 58,2 77,1 78,0 75,7 3 8 norway 71,3 67,3 85,8 54,2 86,8 4 31 iceland 61,2 67,2 89,7 28,7 79,1 7 44 armenia 54,2 33,1 66,2 55,6 59,6 8 49 georgia 53,2 29,8 61,8 56,0 61,1 9 53 turkey 51,9 47,1 53,5 55,6 49,3 10 56 moldova 50,6 41,4 65,8 46,8 51,3 13 61 serbia 49,4 37,5 63,4 42,8 57,1 14 64 ukraine 48,5 40,3 70,5 42,7 45,7 source: (transitions performance index 2021) three seas economic journal 82 vol. 4 no. 1, 2023 progress and scientific and technological development. this implies the emergence of new priorities, in particular the intellectualization of production activities, the use of advanced information technologies and environmental friendliness. this model also requires the formation of a new financial and credit policy at the macro level, the effective stimulation of innovations, especially ecological ones, the development of knowledge-intensive industries and the minimization of nature-using industries; at the micro level it is possible to talk about a change in the type of entrepreneurial activity, the active involvement of small and mediumsized private enterprises in the production of socially useful products. (yastremska, yastremska, 2020) at present, ecological innovation is still an underdeveloped field in the economic space, despite the rapidly growing global problem of environmental sustainability of industry and increasing environmental sustainability of enterprises. therefore, the implementation of environmental innovation requires the system and complexity of the relevant environmental innovation processes. however, it is worth noting that the interest of enterprises in ecological innovation is increasing against the backdrop of growing global environmental problems. first of all, such innovations can increase the competitiveness of enterprises and ensure the social and environmental responsibility of business. (tomashuk, tomashuk, 2021) thanks to the principles of sustainable development, new approaches to the functioning of the industrial sector of the economy are formed, while improving technologies and their technological support, as well as developing a conscious strategic vision of the top mana gement in the field of sustainable development. today it can be clearly stated that the number of low-waste and resource-saving technologies in enterprises, although not significant, has started to grow since 2016. awareness of the processes of the necessity of changes under the influence of resource depletion, increased control over harmful effects on the environment, and modernization of technical and technological support of enterprises acquire significant indicators of activation. however, it is worth noting that in the presence of such a positive trend in the growth of modern ecologically oriented technological processes at enterprises, their percentage value among all implemented technologies is not significant. thus, in 2016 it was no more than 21%, and in 2019 – 37% (official website of the state statistics service of ukraine). with its gradual development, environmental innovations are transformed into business approaches, which, in turn, ensure sustainable development of enterprises and increase the efficiency of operations and competitiveness. in this regard, the main factors that encourage companies to implement environmental innovations in their operations are as follows: – focus on the causal nature of action, which means addressing the causes, rather than the consequences, of adverse environmental and human health impacts of business activities; – delimitation of liability, which includes determination of the degree and direction of liability of the subjects of ecologically destructive activities; – formation of a motivational toolkit, which must correspond to the existing socio-economic conditions; – efficiency maximization, i.e., achieving environmental goals with minimum costs and obtaining the maximum return on investment. figure 4 shows the indicators of innovation costs in ukraine by types of economic activity in 2020. the goal of any business has traditionally been to increase profitability while increasing sales and reducing production costs. however, the implementation of eco-innovations in the specified context is not always a priority for manufacturers, as it implies an increase in costs for modernization of production processes, replacement of outdated technologies, renewal of the material and technical base for the same production volumes. this causes the problem of lack of interest of the product manufacturers in the introduction of sustainable development into technological processes, which requires research and actualizes the need to raise issues of ecooriented innovative activity. table 7 shows the performance indicators of ukrainian enterprises in the period 2010–2021. eco-innovations have a gradual impact on sustainable development. even if there are no significant changes, the indicators of environmental sustainability of enterprises continue to grow, three seas economic journal 83 vol. 4 no. 1, 2023 which collectively forms a comprehensive focus on establishing the principles of sustainable development at the scale of the real sector of the country 's economy. (tomashuk, 2022) however, despite the proven effectiveness of eco-innovation development and implemen tation, researchers identify a number of inherent limiting factors: – the inertia of human thought and behavior; – resistance to change on the part of those who benefit from the status quo; – incomplete knowledge of the global ecosystem, its synergistic nature; – self-centered and limited short-term interests of stakeholders. table 8 shows examples of the main industries that are currently most active in using environmental innovations. therefore, in order to activate the processes of greening at the enterprises of the agricultural sector, as well as at other enterprises, it is necessary to create and ensure a number of economic conditions (honcharuk, tomashuk, 2022): – creation of a reliable insurance market for reliable insurance of business activities in case of losses resulting from the development and implementation of environmental innovations; – development of the market of alternative energy sources, subsidizing enterprises for the transition to their use; – creation of clusters of ecologically oriented production, which would include producers of ecological raw materials, final products, energy-saving, resource-saving, ecologically safe technologies; – increase the attractiveness of investing resources in the greening of businesses and corporations; – creation of dedicated funds in companies for the development and implementation of ecoinnovations; – formation of a program of sustainable development of ecological innovations and support of enterprises in its implementation. these proposals for the activation of greening processes can ensure the sustainable development of the enterprise, solve the problems of stimulating the introduction of eco-innovations, create affordable conditions for obtaining investment resources for greening, and increase the economic interest of enterprises for their direct introduction into production. (honcharuk, kovalchuk, tsitsyura, lutkovska, 2020) ecological orientation contributes to the development of the company and the achievement of its economic efficiency, because the expected positive effect on the environment is the main reason for the development and implementation of ecological innovations. the main advantages of introducing environmental innovations are as follows: gdr performed by own forces; 6606,263 gdr performed by other enterprises; 1734,671 other innovation costs (excluding gdr); 14988,691 figure 4. costs for innovation in ukraine by types of economic activity1, 2, mln. uah in 2020 1 the data exclude the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and part of the temporarily occupied territories of the donetsk and luhansk regions. 2 data are for legal entities with an average of 10 or more employees. source: (official website of the state statistics service of ukraine) three seas economic journal 84 vol. 4 no. 1, 2023 table 7 performance indicators of ukrainian enterprises, grouped by special aggregations provided for by regulation (ec) № 251/2009 of 11.03.2009 on structural statistics of enterprises in 2010–20211 year number of active companies, units number of employees, thousands of people of which, number of employees in thousands the volume of sold products (goods, services) according to the institutional approach, million uah volume of produced products (goods, services) according to the institutional approach, million uah value added at factor cost, million uah 2010 378810 7958,3 7836,4 3366228,3 … … 2011 375695 7793,1 7712,4 3991239,4 … … 2012 364935 7679,7 7577,6 4203169,6 2593346,7 1015503,5 2013 393327 7406,5 7285,6 4050215,0 2468790,2 977145,0 2014 341001 6298,5 6193,0 4170659,9 2723971,2 1234090,1 2015 343440 5889,7 5778,1 5159067,1 3215287,9 1329264,5 2016 306369 5801,1 5713,9 6237535,2 3884617,6 1702670,5 2017 338256 5812,9 5714,6 7707935,2 4872748,1 2099504,8 2018 355877 5959,5 5870,6 9206049,5 5626457,3 2310580,6 2019 380597 6407,5 6241,9 9639730,6 6301412,2 2744295,8 2020 373822 6366,1 6288,4 10049870,8 6508169,6 2883240,0 2021 370834 6391,7 6289,7 13616793,2 … … deviation (+/-) 2021/2010 -7976 -1566,6 -1546,7 10250564,9 1 the data are given without taking into account the results of the activities of banks, budget institutions for 2014–2021 without the temporarily occupied territory of the autonomous republic of crimea, the city of sevastopol and a part of the temporarily occupied territories in the donetsk and luhansk regions. source: (official website of the state statistics service of ukraine) table 8 key industries using eco-innovations branch examples of ecological innovations management of natural resources and emissions – innovations to reduce the consumption of raw natural resources. energy – the use of new resource-saving technologies that lead to greater economic efficiency; – alternative sources of energy supply, which are distinguished by their efficiency, minimum level of service and optimal price. industry – transformation of one product into another. urban planning – ecological urban planning, technologies that minimize emissions of harmful substances on a city scale. green construction – approaches to design, construction and operation buildings containing a certain number of solutions, measures, materials and equipment aimed at energy and resource efficiency. alternative transport and logistics – vehicles running on ecological and cheap fuel, for example on electricity. source: (markevich, 2019) – calculation and forecasting of the activities of organizations in the field of eco-innovation, consumer behavior and the development of zero-waste production; – identification of factors that negatively affect the creation and implementation of environmental innovations, necessary for the develop ment of effective tax and trade policies; – raise awareness of environmental innovations among interested parties and encourage companies to green their activities, based on an analysis of the benefits to companies, sectors and the economy; – providing information to society on the link between economic growth and environmental degradation; – create a need for ecological products and an ecological way of life. there are various motivating factors for the introduction of eco-innovations in enterprises. the most important of these factors is the solution three seas economic journal 85 vol. 4 no. 1, 2023 of the problem of reconciling the goals of effective economic activity of enterprises with clear regulation of the impact of such activity on the environment. 7. findings the instability and changeability of modern economic conditions, the difficulty of the content and structure of industrial relations of production with the environment, the strengthening of harmful eco-destructive tendencies in the development of social transformations at the present stage are a characteristic feature of the modern period of economic development of ukraine. in this context, solving the problem of ensuring the effectiveness of management of ecological and economic development should require a comprehensive solution of an equally important and multifaceted list of many production, organizational, economic and social problems, the most important of which should include the following: – formation, support and development of the company 's natural resource potential that is rational in terms of quantitative, qualitative and structural parameters; – introduction of technical and technological, organizational, economic, social and other conditions for ensuring anticipatory growth of efficiency of management of ecological and economic development of the enterprise; – implementation of modern achievements of scientific and technical progress in production activity, increase of productivity of use of natural resources with the help of automation of production processes; – development and implementation of a consistent and targeted set of measures to promote the creation, expansion and modernization of a flexible and broad range of knowledge, skills and abilities among employees; – formation of organizational, economic and social conditions to ensure increased compliance of the motivational complex of labor activity of personnel with the established priorities of ecological and economic development at the enterprise level; – establishment of a favorable organizational culture of the enterprise in terms of preservation and protection of the environment. any enterprise with a high level of environmental responsibility should be based on a strategy of balanced environmental management based on modern trends in the field of strategic management and sustainable development (table 9). implementation of the principles of greening in the activities of enterprises with effective state table 9 environmental strategies of enterprise development the level of responsibility for the environment areas of activity of the enterprise type of environmental development strategy unsatisfactory 1. cleaning up emissions, creating a waste management strategy at the end of the production and technological cycle. 2. compliance with pollution reduction procedures. 3. meeting the requirements for publication of external environmental reports. 4. availability of environmental services. – defensive strategy. – normative environmental management. satisfactory 1. reduce emissions to legal levels. 2. internal environmental audits (of various types and orientations). 3. long-term environmental protection measures, including technological changes. 4. responsibility of departmental managers for compliance with the environmental parameters of the production system. – compensation strategy (sufficiency strategy). – effective environmental management. sufficient 1. prevent emissions to the environment. 2. compliance with environmental standards for products on international markets. 3. reflect the concept of sustainable development in the company 's reporting. 4. external and internal environmental audits of the company. – proactive strategy (strategy of balanced nature management). – management of an environmentally responsible organization. source: formed based on research results three seas economic journal 86 vol. 4 no. 1, 2023 stimulation of innovative developments will make it possible to ensure an effective mechanism of rational use of nature and environmental protection. 8. conclusions implementation of environmental innovations in most developed countries is an effective tool for solving both environmental and economic problems, a tool for achieving the principles of sustainable development. such innovations are capable of solving the problem of reducing the consumption of limited natural resources, ensuring the preservation of the environment, increasing the profitability of business activities and creating a circle of environmentally conscious consumers. the promotion of environmental innovations, in particular the introduction of energyefficient and resource-saving technologies, the development of alternative energy sources and the introduction of environmentally friendly production at the regional level is considered a strategic program for ensuring sustainable development. in the current conditions of global transformation processes, the implementation of ecological innovations becomes a priority direction of economic development, ensuring sustainable development and competitiveness of the national economy both on the domestic and foreign markets. references: andreychenko, a. v. 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(2020). enterprise development management: clarification of theoretical provisions. problems of the economy, 1(43), 214–226. transitions performance index 2021. retrieved december 24, 2022 from https://ec.europa.eu/assets/ rtd/tpi/2021/index.html received on: 27th of february, 2023 accepted on: 25th of march, 2023 published on: 28th of april, 2023 three seas economic journal 31 vol. 4 no. 1, 2023 1 vinnytsia national agrarian university, ukraine (corresponding author) e-mail: syk_vsau@ukr.net orcid: https://orcid.org/0000-0001-7590-4467 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-5 european integration dominants of waste management of road transport infrastructure svitlana kovalchuk1 abstract. in the modern conditions of the implementation of the european strategy of sustainable mobility and adaptation to climate change, the requirements for the responsible management of waste from motor vehicle infrastructure are growing. the subject of the study is the theoretical, methodological and practical bases of the formation of organizational and economic vectors of waste management of motor vehicle infrastructure objects. methodology. the theoretical and methodological basis of the research are the basic regulations of foreign and domestic science in the field of responsible management of motor vehicle waste in relation to environmental protection, eu regulations, normative legal acts of ukraine. the research methodology is based on the dialectical method. general scientific and empirical methods were used to solve the problems, namely: methods of analysis and synthesis when studying the conceptual provisions of the formation of the motor vehicle component of waste management and determining the european benchmarks for the development of the motor vehicle industry, system-structural methods – when determining the direction of transformation processes, observation methods – when applying environmental standards of motor vehicles, abstract-logical – when justifying directions for improving the environmental safety of a car at all stages of its life cycle, the swot analysis method – for forming strategic guidelines for the development of the motor vehicle industry with the leveling of negative impact on fishing, methods of comparison and analogy, methods of statistical analysis. the purpose of the study is to identify the priorities in the responsible management of waste from motorized transport infrastructure and the vectors of implementation of the european strategy for sustainable mobility. the realization of the goal determined the formulation and solution of the following tasks: analysis of the conceptual basis of the company's waste management; study of the problem of state regulation in the field of waste management; analysis of compliance with the company's waste management priorities to ensure the implementation of the european strategy for sustainable mobility. results. the unregulated standardization of motor vehicles and the lack of an effective state policy to stimulate the renewal of private and public transport have led to the fact that ukraine is constantly turning into a reserve of used non-ecological motor vehicles from abroad, while its own auto industry is on the verge of extinction. based on the results of the research, it is proven that today the motor transport system, based on the experience of the european community and implementing the requirements of sustainable and intelligent mobility, can achieve its green and digital transformation and become more resistant to the current crisis. conclusions. the set of received provisions forms a systematic approach to the analysis of known and synthesis of new ways of increasing the environmental safety of vehicles in the processes of european integration of design and operation, their evaluation and selection according to the criteria of fuel efficiency and the level of environmental pollution. therefore, currently the main task in the field of environmental and road transport state policy should be to ensure a balance between the availability of vehicles and the observance of environmental rights of citizens in ukraine. the conditions for improving the ecological situation in ukraine and minimizing the environmental impact of the motor vehicle infrastructure have been established. key words: motor transport infrastructure, waste management, sustainable mobility, environmental safety, environmental standards, environmental protection. jel classification: l91, l92, o13 three seas economic journal 32 vol. 4 no. 1, 2023 1. introduction the transition to climate neutrality also requires a special approach to waste management. the national economic strategy for the next decade envisages economic growth that takes into account the sustainable development goals and the need to achieve climate neutrality by 2060. climate neutrality can be achieved when emissions of greenhouse gases into the atmos phere as a result of human activities are balanced by the same amount of these gases being removed from the atmosphere by various methods. as a result of the operation of road transport, road equipment bases and other transport infra structure objects, a lot of waste is generated. the importance of solving this problem to ensure the fulfillment of the goals of sustainable development of ukraine attracts the attention of leading scientists. in particular, when studying the problems of responsible waste management, the works of burkinsky b.v., kravtsiv b.c., lysetskyi  a.s., melnyka l.g., mishchenko b.c., richter k.k., rusnak p.p., khachaturova b.c., khvesyka m.a., khlobistova e.v., shchuryka m.v., khumarova n.i., shevchenko t.i., and other researchers. the importance of the given problem is determined by the need to substantiate and find new opportunities for further sustainable mobility of the motor vehicle infrastructure and post-war reconstruction, which determines the relevance of the chosen research topic and forms the vectors of its structural definition. the aim of the study is to identify the priorities in the responsible management of waste from motor transport infrastructure and the vectors of implementation of the european strategy for sustainable mobility. the realization of the goal determined the formulation and solution of the following tasks: analysis of the conceptual basis of the waste management of the enterprise; study of the problem of state regulation in the field of waste management; analysis of compliance with the waste management priorities of the enterprise to ensure the implementation of the european strategy for sustainable mobility. the object of the study is the processes of formation of the motor vehicle component of waste management, which generate the principles of functioning of the environmentally safe operation of the motor vehicle infrastructure. the subject of the study is the theoretical and methodical bases of formation of organizational and economic principles of waste management of motor vehicle infrastructure objects. the basis of research methodology is the dialectical method. general scientific and empirical methods were used to solve the problems, namely: methods of analysis and synthesis when studying the conceptual provisions of the formation of the motor vehicle component of waste management and determining the european guidelines for the development of the motor vehicle industry, system-structural methods – when determining the direction of transformation processes, observation methods – when applying environmental standards of motor vehicles, abstract-logical – when justifying directions for improving the environmental safety of a car at all stages of its life cycle, the swot analysis method – for forming strategic guidelines for the development of the motor vehicle industry with the leveling of negative impact on fishing, comparisons and analogies, methods of statistical analysis. 2. conceptual provisions for the formation of the motor transport component of the waste management system the interaction between human society and nature is one of the most important issues of our time. on the one hand, society 's economic interests are aimed at achieving maximum economic efficiency from the use of natural resources. on the other hand, environmental interests are aimed at preserving natural resources and the environment in general. human experience shows how important it is to find a reasonable compromise between economic and environmental interests. ecological and economic concepts reflect the appropriate development of productive forces and the historical experience accumulated as a result of studying the impact of scientific and technical progress on the state of the natural environment. the problem of waste management is one of the most urgent, which is associated with a significant threat to human health and the natural environment. at the same time, it should be noted that one of the main sources of air pollution is road traffic. car emissions contain such harmful substances as carbon monoxide, nitrogen oxides, particulate three seas economic journal 33 vol. 4 no. 1, 2023 matter and volatile organic compounds. it should be noted that 90% of carbon dioxide emissions into the atmosphere are caused by road transport. at high levels in the air, this gas causes drowsiness and even death. the maximum number of emissions is recorded during peak hours, and the concentration of pollutants inside the car is the highest. nitrogen dioxide is thought to irritate the lungs and aggravate asthma. particulate matter that settles around (including on clothing and skin) is a component of vehicle pollution. the smallest of these (down to 10 micrometers, or one-hundredth of a millimeter) can penetrate deep into the lungs and aggravate respiratory diseases. a significant amount of these particles are emitted into the air by diesel powered cars and large trucks. exhaust gases contribute to the greenhouse effect, which causes global warming. volatile organic compounds, such as polyaromatic hydrocarbons and benzene, lead to the formation of smog. hydrocarbon emissions are the result of incomplete fuel combustion. they can be gases or solid particles. benzene (which enters the atmosphere with exhaust and fumes from gas tanks and service stations when cars are refueled) can cause lung cancer and respiratory disease. when burning 1 kg of gasoline, each car consumes 15 kg of air, especially 5.5 kg of oxygen. burning 1 ton of fuel releases 200 kg of carbon monoxide into the atmosphere. motor vehicles are responsible for about 55% of total harmful emissions, which include more than 200 different compounds, including: carbon oxides, lead, nitrogen, formaldehyde, especially aromatic hydrocarbon impurities, benzapyrene, carcinogens, including surfactants, among which there are many mutagens. it is possible to solve this problem by production and introduction of new (alternative) types of environmentally friendly fuel, for example, hydrogen. photochemical smog (a nebula of corrosive gases visible to the naked eye, characteristic of large cities) is formed as a result of the action of the sun's ultraviolet radiation on hydrocarbons and nitrogen oxides. due to temperature inversions, the smog hangs over the city and does not dissipate. (current problems of atmospheric pollution; cars in modern environmental policy) as a result of the analysis of the conceptual connections between the field of waste management and the economic, as well as the related social, ecological and indeed ethical content of waste management (see table 1), it can be stated that the conceptual foundations of the study of the waste problem include, firstly, the theoretical provisions of environmental economics, waste economics, secondary resource economics and, secondly, the political component (environmental, social, regulatory policy – in those aspects that intersect with the generation and management of motor vehicle waste. (study of the impact on emissions of harmful substances into the atmospheric air of types of paper, 24-hour waste disposal facilities in ukraine; kodzhebash, 2019) however, it should be emphasized that cooperation and integration of ukrainian companies into global networks of environmentally responsible business will help to organize closed supply chains in ukraine, obtain more accurate information about suppliers, reduce potential economic risks, and share costs among all participants of the newly organized closed circle. (naboka, 2021) reducing the consump table 1 comparison of innovative approaches to waste management conceptual approach comparison criteria integration into the enterprise management system direct connection to the waste management industry focus on taking into account the interests of third parties environmental focus corporate social responsibility average level low level high level average level extended liability manufacturer average level high level average level average level integrated management of waste high level average level average level average level environmentally extended motivated responsibility average level high level average level high level source: (kodzhebash, 2019) three seas economic journal 34 vol. 4 no. 1, 2023 tion of resources and, consequently, the demand for them, will lead to an understanding that the current economic model will no longer be able to support economic growth, improve well-being in the long term, and the transport infrastructure will begin to diversify its activities and apply environmental standards. 3. transformation of the motor vehicle industry in ukraine, the processes of european integration of transport and logistics systems, characterized by production cooperation, inter and intra-industry connections, are gaining special importance. taking into account the resource potential of ukraine, the impact of the motor vehicle complex on the environment is characterized by the dominance of integration business processes in the motor vehicle complex and the introduction of process innovations in the production of vehicles and their operation. at the same time, the issue of stabilization and development of the industry should be solved comprehensively, considering production, consumption and related material flows in connection with the movement of waste based on the principles of the circular economy. with this in mind, it should be emphasized that the automatic transmission system is one of the main means of environmental protection. full air pollution with oxides of nitrogen and carbon, lead and other harmful substances and most of the large amount, according to the data of the guide of ukraine, acetic acid is significantly increasing (see table 2). on the other hand, about one third of the total amount of harmful substances emitted into the atmosphere comes from highways, and in megacities this amount reaches 85-90%, which creates serious problems for the purpose of environmental monitoring. this is connected with the tendency of intensive increase in the number of vehicles, which is irrevocably connected with the increase in the number of destinations on earth and the increase in its life span. according to iag auto consulting, the car fleet of ukraine, as of january 1, 2021, is about 14,269,268 cars. at the same time, the average age of cars in ukraine is about 21.5 years. the current level of environmental safety of the automotive transport sector as a whole and its main elements is determined by the level of energy and resource consumption, environmental pollution by emissions and waste in the process of vehicle use and recovery of productivity. (kodzhebash, 2019) transportation and logistics occupy a special place among them: starting with the timely removal of waste, especially the first three hazard table 2 air emissions of some pollutants from motor vehicles designation 2010 2015 2018 2019 2020 sulfur dioxide, thsd. tons 19,8 16,3 18,6 19,8 20,9 carbon monoxide, thsd. tons 1782,7 1092,0 1974,9 1255,2 1358,4 nitrogen dioxide, thsd. tons 206,1 152,9 170,4 178,8 189,9 nitric oxide, thsd. tons 1,3 0,8 0,8 0,8 0,9 non-methane volatile organic compounds, thsd. tons 272,4 157,6 162,8 162,6 175,3 ammonia, thsd. tons 0,018 0,009 0,007 0,006 0,007 methane, thsd. tons 7,6 4,7 5,0 5,1 5,6 carbon, thsd. tons 23,8 21,6 24,7 26,5 27,7 in % to the previous year sulfur dioxide 105,9 86,2 102,2 106,5 105,5 carbon monoxide 100,9 80,0 99,4 63,6 108,2 nitrogen dioxide 104,2 84,6 100,9 104,9 106,2 nitric oxide 100,0 72,7 100,0 100,0 112,5 non-methane volatile organic compounds 100,5 78,6 95,5 99,9 107,8 ammonia 100,0 75,0 87,5 85,7 116,6 methane 100,0 79,7 98,0 102,0 109,8 carbon 107,7 88,2 103,8 107,3 104,5 source: ministry of environmental protection and natural resources of ukraine three seas economic journal 35 vol. 4 no. 1, 2023 classes, and the way it is transported to storage and processing facilities, the level of potential environmental damage depends on the level of environmental damage. at the same time, it should be noted that the issues of stabilization and development of the industry should be addressed comprehensively when production, consumption and related material flows are considered in connection with the movement of waste according to the principles of a circular economy. the operation of road transport, road equipment bases and other transport infrastructure facilities generates a lot of waste (final report of the heavy vehicle fuel efficiency standard evaluation group, heavy vehicle standards evaluation subcommittee, energy efficiency standards subcommittee of the advisory committee on natural resources and energy; study of the impact on emissions of harmful substances into the atmospheric air of types of paper, 24-hour waste disposal facilities in ukraine). the difference between the waste situation in ukraine and other developed countries is the large volume of waste generation and the lack of waste management infrastructure. in general, the waste management system in ukraine is characterized by accumulation tendencies. in turn, the fulfillment of the requirements for the adaptation of ukrainian legislation to the eu requirements and the recovery plan of ukraine provides opportunities to solve this problem (see table 3). the strategic directions of state regulation in the field of waste management in the coming decades, taking into account the european approaches to waste management, are based on the provisions of eu directives. ukraine is currently in the second stage of implementation of the national strategy for waste management. the first stage of implementation of the strategy fell on 2017–2018, the second – for 2019–2023, and the third – for 2024–2030. in recent decades, the requirements of national laws and regulations on environmental protection have increased in almost all countries. at the same time, the issue of the environmental friendliness of cars, one of the main sources of harmful emissions into the atmosphere, has become a priority. as early as 1988, a regulation (so-called "euro-0") came into force in europe, which required a reduction in the level of emissions of carbon monoxide, nitrogen oxides and other substances from cars. the "euro" ecological standard has become one of the main tools for controlling the level of emissions of toxic substances in car exhaust gases. there are also similar regulations in the u.s. and japan. for comparison, the average age of cars in the eu is 10.5 years, in germany – 9.3 years, and in poland – 13.6 years. 53.4% of the car fleet in ukraine was produced before 1991. in 1991 for the first time in europe the euro-0 environmental standards were introduced, which began to regulate the level of emission of hazardous substances from cars. in the future, approximately every 5 years, the requirements for environ mental standards of vehicles were strengthened, until euro-6 was adopted in 2014. half of the ukrainian car fleet are euro-0 cars. the share of cars meeting the euro5 standard and higher is no more than 5-6%. as for electric cars, as of january 1, 2020, there are only 18,066 units. ecological classes of vehicles are expressed by a coefficient of conformity with the eu standards (according to table 4), which is determined on the basis of the comparison of emission standards for means of transport of the k-th cluster of the euro with the euro-0 emission standards and experimental studies on the toxicity of exhaust gases. (weigang, 2014) with the acquisition of full membership in the wto, ukraine obtained additional rights to use a number of measures to protect the internal market. however, these rights have not been fully utilized with respect to the national automobile industry. it should be noted that article 361 of the ukraine-eu free trade area agreement provides that cooperation shall be aimed at preserving, protecting, improving and restoring the quality of the environment, protecting public health, prudent and rational use of natural resources and promoting activities at the international level aimed at solving regional and global environmental problems, including in the following areas: a) climate change; b) environmental management and related issues, in particular education and training, access to information on environmental issues and the decision-making process; c) atmospheric air quality. article 363 of the eu-ukraine association agreement provides that "gradual approximation of ukrainian legislation three seas economic journal 36 vol. 4 no. 1, 2023 to eu environmental law and policy shall be carried out in accordance with annex xxx to the agreement." at the time of the agreement's entry into force, the import and initial registration in ukraine of cars and buses that did not meet the euro 5 environmental standard was prohibited. over the past two years, amendments to the legislation have been made that allow similar operations for used cars at the level of environmental class euro 2. (kovalchuk, mazur, overkovska, 2019) at the same time, based on these requirements, the necessary changes were made in the customs legislation. and despite the fact that the state mechanisms for solving this problem were and are insufficient, since 2017 there have been constant changes in the customs and tax codes, which have further liberalized the requirements for used cars with low environmental standards, which largely became the reason why the domestic car fleet became the oldest in europe and one of the oldest in the world. a civilized environmental policy of ukraine is one of the integral components of the european integration process. in ukraine, the gradual tightening of requirements for environmental parameters of vehicles imported into ukraine is being introduced in accordance with the law of ukraine "on amendments to the law of ukraine "on certain issues of importation into the customs territory of ukraine and registration of vehicles" regarding wheeled vehicles" no. 5177 of 2012. thus, from january 1, 2016, the euro-5 environmental standard for motor vehicles came into force in ukraine. in addition, from january 1, 2018, the norms on the table 3 adaptive directions of waste management system development problems of the waste management system in ukraine fundamentals of european approaches to waste management problem solving – accumulation of waste in both the industrial and domestic sectors, which negatively affects the environment and human health; – improper utilization and disposal of hazardous waste; – disposal of household waste without taking into account possible dangerous consequences; – improper use of waste as a secondary raw material. – framework directive no. 2008/98/ec of the european parliament and of the council of november 19, 2008 " on waste and the repeal of certain directives"; – council directive no. 1999/31/ec of april 26, 1999 "on waste disposal"; – directive no. 2006/21/ec of the european parliament and of the council of march 15, 2006 "on waste management of mining enterprises and amending directive 2004/35/ec"; – directive 94/62/eu of the european parliament and of the council of december 20, 1994 "on packaging and packaging waste"; – directive 2012/19/eu of the european parliament and of the council of july 4, 2012 "on waste electrical and electronic equipment (weee)"; – directive 2006/66/ec of the european parliament and of the council of september 2006 "on batteries and accumulators and spent batteries and accumulators". – the installation of catalytic converters on gasoline car engines makes it possible to reduce the amount of nitrogen oxides, carbon monoxide and hydrocarbons emitted into the atmosphere by more than 75%. to solve a problem, it needs to be implemented: – the use of special motor oils, additives to them and fuel, modifiers of car kinematic units, introduction of catalytic fuel converters, etc. on motor vehicles, which will lead to a decrease in fuel consumption, decrease in pollutant emissions and increase the motor resources of engines; – strict control over the quality of fuel supplied and sold by gas stations, its compliance with state standards. table 4 values of vehicle emission reduction factors in nom. eurо polluting substances ecological classes of vehicles euro-0 euro-1 euro-2 euro-3 euro-4 euro-5 co 1 0,4 0,32 0,17 0,12 0,12 nox 1 0,55 0,49 0,34 0,24 0,13 cmhn 1 0,46 0,46 0,28 0,2 0,2 tm 1 0,51 0,21 0,14 0,03 0,03 source: (weigang , 2014) three seas economic journal 37 vol. 4 no. 1, 2023 introduction of euro-6 should come into force. the introduction of new standards significantly limits the import of old cars that have already been in use and belong to a lower class of environmental safety. however, ukraine postponed the introduction of euro6 environmental standards for two years, until january 1, 2020. environmental standards for harmful emissions of light vehicles are shown in table 5. (pymytskyi, 2014, p. 43–49) emission standards are established and periodically revised for various categories of vehicles, depending on the make and type of vehicle. it should be noted that the implementation of european standards in ukraine is delayed by 8-10 days. currently there are more than 10 million cars in ukraine, the average age of which is 21.5 years. approximately half of these cars meet the euro-0 environmental standard, while the share of cars meeting the above euro-5 standard is 5-6%. the share of electric cars in the ukrainian fleet does not exceed 0.15%. in order to reduce the emission of polluting substances into the atmosphere from mobile sources by 30%, it is necessary that the share of cars meeting the euro-4 environmental standard and higher in the car fleet should be at least 20-25%. as the legislation emphasizes, the main goal of such an initiative is to increase the level of environmental friendliness of the car fleet of ukraine by stimulating the development of the market of motor vehicles of the euro5 environmental standard. the main improvement of the situation in the infrastructure sector is the opportunity to adjust the production and market of vehicles to the gradual introduction in ukraine of environmental safety requirements that meet the international environmental standards for wheeled vehicles. it should be noted that the transition to stricter environmental standards is a necessary step that allows reducing the amount of harmful emissions into the atmosphere. however, the transition to high euro standards should not be separated from the development of the system as a whole. in particular, the introduction of euro-6 should be accompanied by an adjustment of fuel production, since the standards for the latter are far behind the environmental requirements for motor vehicles. the vehicle's compliance with the standards for the content of pollutants in exhaust gases is directly dependent on the compliance of the fuel used with the environ mental standards (study of the impact on emissions of harmful substances into the atmospheric air of types of paper, 24-hour waste disposal facilities in ukraine). it should be noted, however, that the euro 6 environmental regulation left the emission standards for gasoline engines unchanged, while significantly tightening the standards for diesel engines. first of all, the level of nitrogen oxides, which according to scientists is 10 times more harmful than carbon monoxide. diesel engines are no longer considered clean in europe and are causing increasing dissatisfaction among environmentalists, and the authorities are taking table 5 environmental standards for light motor vehicles in terms of emissions of harmful substances eco-friendly standard co cmhn noх tч for a diesel engine euro-1 2,72 (3,16) – – 0,14 (0,18) euro-2 1,0 – – 0,08 euro-3 0,64 – 0,50 0,05 euro-4 0,50 – 0,25 0,025 euro-5 0,50 – 0,18 0,005 euro-6 0,50 – 0,08 0,005 for a gasoline engine euro-1 2,72 (3,16) – – – euro-2 2,2 – – – euro-3 2,3 0,20 0,15 – euro-4 1,0 0,10 0,08 – euro-5 1,0 0,10 0,0б 0,005 euro-6 1,0 0,10 0,0б 0,005 source: cars in modern environmental policy, actual issues of atmospheric air pollution three seas economic journal 38 vol. 4 no. 1, 2023 steps to reduce their number on the roads. at the same time, the diesel ban is no longer an isolated case. in ukraine, however, the environmental pressure on the automobile infrastructure is based on the commitments between the governments of the countries to reduce harmful emissions. 4. european recommendations for the development of the motor transport industry as special studies of the eu experience show, the development of motor vehicles and the initiatives of the european green deal are reflected in detail in the eu sustainable and intelligent mobility strategy, which was published in december 2020. this is a strategic document of the european union that aims to transform the european transport system to reduce emissions from transport by 90% by 2050 and make cities more resilient to future crises. the strategy includes initiatives and incentives to accelerate the use of zero-emission transport (not only electric transport, but also cycling and micro-mobility), the use of renewable energy to power transport, the transfer of freight transport to rail and water, the acceleration of the market entry of electric trucks, aircraft and ships, stricter taxation of carbon emissions and air pollutants (application of the polluter-pays principle). in view of this, the problem of introducing fast multimodal cargo and passenger transport systems is becoming extremely urgent. the sustainable and smart mobility strategy of the eu (sustainable and smart mobility strategy) notes that the digitalization of transport services should contribute to reducing emissions from transport (sustainable and smart mobility strategy). in this context, it is appropriate to emphasize that the european court of justice has approved the main directions of eu policy in the field of climate and energy until 2030. one of the main goals is to reduce greenhouse gas emissions by 40% by 2030 compared to 1990 levels. to date, according to the international energy agency (iea), the european union has managed to reduce co2 emissions from fuel combustion by 21% compared to the level of 1990, despite the fact that in the usa the volume of such emissions increased by 8%, and in china – by 333%. it should be noted that the iea only calculates emissions from fuel combustion, but these data allow us to see the general picture, as emissions from the energy sector account for about 2/3 of global greenhouse gas emissions (actual issues of atmospheric air pollution). the eu sustainable and smart mobility strategy ensures the achievement of the objectives of the european green deal in the field of transport and mobility. it should be noted that the european green course defines 10 main objectives, which are detailed in the sustainable and smart mobility strategy, as shown in table 6. it should be noted that the integration of ukraine's transport network into the transeuropean transport network ten-t, which is a significant part of the eu mobility strategy, requires the development of sustainable urban mobility plans in ukrainian cities. it is known that ukraine plans to become climate neutral by 2060, and therefore the transportation infrastructure needs much needed transformations. as of 2021, the financing program "ukraine indicative ten-t investment action plan projects" includes 39 projects with a total cost of 4,378.9 million eur . the majority of these projects are long-term (14 projects, 5% of the cost) with a deadline of 2030; three other table 6 vectors of implementation of the european green deal in the motor transport infrastructure vectors for the implementation of the european green deal by 2030 by 2050 at least 30 million zero-emission vehicles will be used on european roads; almost all cars, trucks, buses and other heavy vehicles will be zero-emission; at least 100 european cities will become climate neutral freight transportation by rail will double; the number of trips by high-speed rail will double; travel by high-speed rail will triple planned trips (by intercity public transport) of up to 500 km within the european union will be climate-neutral (not by plane); – maximum automation of mobility three seas economic journal 39 vol. 4 no. 1, 2023 automotive and two rail and aviation projects worth 1.3 billion eur (30%) are currently being implemented. 18 short-term projects (14% of the cost of the ten-t investment program) are being prepared for implementation in the near future. with this in mind, the ministry of environ ment, in its analytical review of the second nationally determined contribution, predicts an increase in the share of electric vehicles in the passenger car fleet to 3%. however, the growth of the fleet of electric vehicles by 3% in 10 years is a natural course of things, and most likely this indicator will be exceeded by 2030 anyway. according to the transport&environment study, in 2026 the price of electric cars will be equal to the price of cars with internal combustion engines and will become cheaper in the future, which will lead to an increase in their number in the car fleet. therefore, ukraine can set a higher share of electric vehicles as the main vector for achieving the goals of sustainable development (emissions from transport and how to deal with them). in the field of road transport, the eu-ukraine association agreement (in particular annex 32) requires ukraine to implement 14 mandatory and directly related eu regulations and directives. in order to bring ukrainian legislation into line with eu legislation in the field of road transport, the draft law of ukraine "on amendments to certain legislative acts of ukraine on the regulation of the market of road transport services in ukraine in order to bring them into line with the act of the european union" was developed, which proposes the implementation of regulation (ec) no. 1071/2009 laying down common rules on the conditions for authorization of road transport operators and repealing council directive no. 96/26/ec, in accordance with annex 32. in the light of the above, the association agreement sets the deadline for the implementation of directives 92/b/eec and 2009/40/ec for all vehicles used for the international carriage of goods within one year after the entry into force of the agreement (in accordance with article 486 of the agreement, it is provisionally applied from november 1, 2014 until the entry into force of the agreement). at the same time, the use of tachographs in vehicles is directly regulated by two regulations: council regulation (eec) no. 3821/85 and regulation (eec) no. 561/2006, which, unlike directives, do not leave any room for flexibility. considering the above issues in detail, it should be emphasized that the order of the ministry of transport and communications of ukraine dated 07.0b.2010 no. 340, in particular the provisions on the equipment of buses used for irregular and regular special passenger transport, for regular passenger transport on intercity bus routes with a length of more than 50 km, and trucks with a gross vehicle weight exceeding 3.5 tons, cannot be considered as a proper implementation of the above-mentioned regulations and fulfillment of ukraine's obligations. since a number of amendments to laws and the code (penalties, relevant powers of the ministry of infrastructure and ukrtranssafety in relation to an effective mechanism of state control and supervision), which are necessary to ensure the implemen tation of the regulations, are possible only at the level of law. as for the above comments made during the consideration of the draft law no. 4683, most of them have been taken into account in its new version. in particular, when the anti-corruption committee issued its conclusion that the requirements for approval of the conditions for production of vehicles and component parts create conditions for corruption and corruption-related relations and do not comply with the law "on accession of ukraine to the agreement concerning the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted and/or used on wheeled vehicles and on the conditions for mutual recognition of approvals issued in no. 1448-iii of february 10, 2000" did not take into account the provisions of directive 2007/46/ec regulating the production and approval of vehicle designs. also, the committee's remark about "returning to mandatory technical inspection of civilian vehicles", which contained a corruption component, is not entirely true. at the legislative level, a new system of roadworthiness testing of vehicles is envisaged, a completely new mechanism that has been tested in european countries and is regulated by a number of directives (2009/40/ec, 2014/45/ec) and is important for increasing/improving road safety and is not a "revival" of the old inspection system. three seas economic journal 40 vol. 4 no. 1, 2023 by signing and ratifying the association agreement, ukraine has committed itself to aligning its national legislation with that of the eu and to implementing european standards, norms and requirements. in the field of transport, ukraine has to implement about 49 eu directives and regulations, which is an extremely ambitious and complex agenda (european integration in transport: joint work and responsibility; transport). 5. adaptive directions of implementation of european experience taking into account previous studies, it is appropriate to emphasize that the sector of waste management of the motor vehicle complex in ukraine is actually under significant stress due to a number of interrelated aspects that hinder its effectiveness and lead to undermining the health of the population and the environment. there are a number of reasons for this, ranging from a weak and incoherent regulatory and organizational framework, lack of financial resources, and inadequate monitoring and evaluation. it should be emphasized that the motor vehicle complex is a source of serious environ mental problems. therefore, it is extremely important to objectively assess the level of environmental hazard of a motor vehicle facility. improvement of methods of maintenance, operation and repair of automobiles with the purpose of reduction of concentration of toxic components in exhaust gases, noise level and reduction of environmental pollution caused by operating materials, use in technological process of maintenance and repair of equipment that reduces the level of environmental pollution and observance of labor protection requirements and safety techniques when performing work in technical service facilities along international highways will allow to improve the environmental situation in the region. at the global level, the introduction of regulatory documents limiting the use of certain types of fuel, especially those containing lead, as well as the introduction of requirements for the reduction of carbon oxides, nitrogen and hydrocarbons in the exhaust gases of automobile engines, is of great importance for the environmental safety of motor vehicles. compliance with the requirements for standardization and certification of the motor transport infrastructure (see table 7) has a certain impact on the maintenance of the balance with the environment. the environmental impact of road transport infrastructure is that soil contamination is possible in the event of oil spills from vehicles and construction machinery. in addition, there is a possibility of contamination of the territory with construction waste and garbage; to prevent negative impact on land resources, the company plans to equip workplaces and the construction site with containers for household and construction waste and then transport them to the city landfill. there is no direct negative impact on the land, flora and fauna during the operation of the object, as the limit of influence is limited to the territory of the company. solving the problem of monitoring the environmental safety of the road transport network is an extremely difficult task and requires, first of all, a final conceptual table 7 implementation of standardization and certification name implementation measures standardization implementation of a unified scientific and technical policy for the production, operation, repair, maintenance and disposal of vehicles; to increase the reliability, comfort and safety of vehicles, the quality of work and services in accordance with the development of science and technology, the needs of the population and the national economy; saving of all kinds of resources, improvement of technical and economic indicators of activity; safety of facilities, taking into account the risk of natural and man-made disasters and other emergency situations. certification preventing the use of vehicles, works and services dangerous to life, health of people and the environment; to help consumers to make a conscious choice of vehicles, works and services; creation of conditions for participation of business entities in international economic, scientific and technical cooperation. source: methods of improving environmental safety at motor transport enterprises three seas economic journal 41 vol. 4 no. 1, 2023 definition. in addition, environmental safety and protection of the population from the longterm effects of environmental pollution caused by vehicle emissions require increased control over the implementation of sanitary and hygienic rules and standards at all levels of sanitary and epidemiological services (methods of improving environmental safety at motor transport enterprises). in 2021, the cabinet of ministers of ukraine approved the order "on approval of the plan of measures for implementation of the national transport strategy of ukraine for the period up to 2030". the national transport strategy drive ukraine 2030 is the main program document that determines the development of the transport industry for 10 years. the strategy implemen tation plan, approved by the government, defines specific stages and deadlines for the implementation of measures necessary to ensure effective activity and comprehensive development of the industry as a whole. the document was developed with the support of the european union representation in ukraine and reflects the implementation of the european integration obligations of ukraine in the field of transport. these are the implementation of the european "green course" and the replacement of public transport with a more modern and ecological one, as well as the improvement of passenger transport services and the development of bicycle infrastructure. the action plan provides for the development, implementation and execution of specific actions to ensure the fulfillment of tasks aimed at achieving competitiveness and efficiency of the transport system of ukraine, creating conditions for innovative development of the transport industry and global investments, safe for society, environmentally friendly and energyefficient transport, as well as unimpeded mobility and interregional integration. regulatory policy instruments for reducing emissions can be divided into those that apply to the producer and those that apply to the user. (ganoshenko, golik, 2021, p. 40–45; chernyshova, petrenko, vyshebaba, 2020) technological means of emission management are divided according to the stage of production and according to the main source of pollution or excessive energy consumption: wellto-tank – from the well to the tank (cost of extraction, processing, fuel delivery to the tank of the machine); well-to-wheel – from the well to the wheel (cost of all previous processes + fuel cost in test conditions); tank-to-wheel – from the tank to the wheel (fuel consumption in test conditions); real driving consumption (rdc) – fuel consumption in real driving conditions. vehicle certification takes into account the emissions determined for the last two stages. in different regions of the world, the permissible emission levels are regulated by different legal standards (eu5, eu6, ulev, levii, levii, etc.). legislative standards define the allowable emission levels, which are evaluated with different test approaches, which can be divided into 3 main clusters: the united states and some countries in central and south america, which fully or partially use the us federal test procedure (ftp); europe and countries based on eu legislation, which use the new world light-duty vehicle test procedure (wltp) and real driving emissions (rde) test from 2017; japan has its own test procedure, but will also move to the new wltp and is consi dering the possibility of introducing rde; china, which combines elements of europe (now nedc – new european driving cycle, but moving to wltp and rde) and elements of us legislation. all regulations limit the maximum emissions in mg/km for each car sold. this means that any vehicle that needs to be certified, whether it's a premium car or a small city car, has to meet a certain level of emissions. currently, the strictest emissions regulations are in the united states, and from 2023, china will have stricter requirements than europe. ukraine is one of the countries that rely on the european emissions classification system in its regulatory policy. since 2017, the european commission has required car manufacturers to use the worldwide harmonized light vehicle test procedure (wltp) (chernyshova, petrenko, vyshebaba, 2020). unlike the nedc system, which was developed in 1980 and used theoretical driving profiles, wltp uses real driving profile data collected from around the world. according to wltp, the driving cycle is divided into four parts with different average speeds: low, medium, high and ultra high. each part includes different phases of movement, stopping, acceleration and braking. three seas economic journal 42 vol. 4 no. 1, 2023 for a given vehicle type, the wltp tests each powertrain configuration for the lightest (most fuel efficient) and heaviest (least fuel efficient) versions of the vehicle. as a result, corresponding values of fuel consumption are measured, which directly affect the volume of co2 emissions. from september 2018, the values of co2 emissions according to wltp must be indicated for all new cars registered in the eu. since ukraine as a producer is not competitive enough in the market of car sales today, the vast majority of new cars that hit the roads of ukraine are foreign-made and meet international standards. from the ecological point of view, the greatest threat is posed by used cars that do not meet modern environ mental standards, both those that are already in the country and those that are actively imported from europe. (gutarevich, zerkalov, govorun, 2008; chernyshova, petrenko, vyshebaba, 2020) therefore, in order to increase the level of environmental friendliness of the car fleet, countries stimulate the renewal of rolling stock. the policy applied to the user can be centralized, for example, extended to all owners of motor vehicles with a certain level of emissions, or local, that is, limited to the territory where a restriction on the use of vehicles with certain indicators is introduced. 6. ensuring sustainable mobility of motor transport infrastructure in accordance with the national transport strategy of ukraine for the period up to 2030, three-year action plans will be developed, which will include the definition of: key tasks and actions; responsible body; term of execution; main stages; assessment of resources and costs (the government approved the plan of measures for the implementation of the national transport strategy of ukraine until 2030). continued harmonization of ukrainian legislation with the norms of the eu legal system in the field of transport in accordance with the association agreement between ukraine, on the one hand, and the european union, the european atomic energy community and their member states, on the other hand, will bring the industry to a new level. in particular, the national transport strategy "drive ukraine 2030" provides measures for the responsible management of waste from motor vehicle infrastructure, which are presented in table 8. logically, the issue of ensuring the implementation of measures with specifically defined steps for the implementation of the tasks and priorities of the transport policy, the formation of an effective state administration and the determination of the direction of development of the industry arises. for the implementation of the action table 8 measures for responsible waste management of road transport infrastructure "drive ukraine 2030" activities ways of execution 1 transportation infrastructure development projects, both regional and interstate, whose implementation aims to improve the safety, quality and availability of transportation services; strengthening the institutional capacity of state authorities that directly or indirectly regulate the transport services market and carry out measures of state supervision (control) of transport safety: implementation of a new approach to the licensing of transport operators, including in particular requirements for good reputation, financial capacity, professional competence of personnel; 2 inclusion of innovative technologies and introduction of benefits to support national producers proposed by professional associations; creation of a new organizational, legal and economic model for the management of the motor vehicle industry, in particular the creation of a central executive body that will perform the functions of a regulatory body in the motor vehicle sector; completion of the transformation of the motor vehicle component by introducing a vertically integrated management system with proper planning of resources in the short term, while ensuring the separation of the infrastructure operator, freight and passenger carriers; 3 improvement of the quality of transport services, their environmental friendliness and compliance with world standards, integration of the ukrainian transport system into the european network, etc. improvement of the state vehicle safety management system in accordance with international standards; road management reforms to be implemented through the decentralization of state road management, the structure of effective management and the distribution of powers and responsibilities in the field of road management; ensuring equal, open and transparent access to transport infrastructure for operators. source: national transport strategy of ukraine for the period up to 2030 three seas economic journal 43 vol. 4 no. 1, 2023 plan, infrastructure projects, regulatory changes, responsible bodies, implementation deadlines, expected results and the relationship between key tasks have been determined, and an assessment of resources has been provided. the effective implementation of the action plan will be ensured through the use of appropriate tools for monitoring key performance indicators and strengthening the institutional capacity of the ministry of infrastructure of ukraine and other central executive authorities. as part of the monitoring of the implementation of the action plan, a monitoring committee will be formed, which will include representatives of interested authorities, public organizations, businesses and mass media, and it is expected that an annual report on the state of implementation of the action plan will be prepared and published. based on the results of the evaluation of the implementation of the action plan and the analysis of the transportation model, it is possible to make changes to the list of infrastructure projects (on approval of the "national waste management plan until 2030" resolution of the cabinet of ministers of ukraine). therefore, it is important to highlight the priority areas for improving the environmental safety of a car at all stages of its life cycle (see table 9). for the implementation of the measures of responsible waste management of the infrastructure projects of the automobile industry, certain sources of financing will be used (own funds of the enterprises, funds from the state and municipal budgets, participating private investments and investments of international financial organizations). the strategic environmental assessment and the assessment of the impact on the environment, including the health of the population, have been carried out taking into account the specified features. as a result of the conducted research, adaptive goals of rational functioning and progressive development of the waste management sphere in ukraine, including its automotive component, were formulated in accordance with the global goals of sustainable development (table 10). summarizing the results of the swot analysis, the strengths and weaknesses of responsible waste management will be highlighted. a swot analysis of waste management in the road transport infrastructure provides a clear understanding of the situation and indicates the direction of the industry 's development. it also allows to develop an effective business strategy by utilizing strengths and knowing weaknesses. it should be noted that the swot analysis of road transport infrastructure waste management can be used to develop a strategy for individual communities and regions (see table 11). swot analysis helps to minimize the risks of responsible management of road transport infrastructure waste. nowadays, swot analysis is used in a promising direction: when starting a new business table 9 priority directions for improving the environmental performance of the vehicle at all stages of its life cycle ways to improve the environmental safety of the car 1 various methods to reduce the emission of toxic components into the environment; 2 installation of special indicators on nodes and parts subject to the most rapid wear, indicating the need for their replacement; 3 design and manufacture of new vehicles capable of rapid disassembly, reuse of used working mechanisms and units and their disposal; 4 constant increase in the number of environmentally friendly materials used in production and implementation of control over the use of materials with harmful substances in the construction of cars; 5 the use of harmful materials and special fluids should be minimized at all stages of the vehicle's life cycle; 6 timely maintenance and precise adjustment of the ignition system and power supply of internal combustion engines; 7 reducing the harmful effects of toxic substances on the environment during operation by introducing the latest systems for neutralizing harmful emissions; 8 widespread use of liquefied natural gas, alternative fuels, new vehicles – electric cars; 9 improving the ecology of large cities by complying with the requirements of environmental legislation, banning the construction of parking lots in the city center, controlling the construction of gas stations within the city limits, building bypass roads, stopping the mass cutting of trees and parks, developing noise protection, and promoting environmentally friendly transportation. three seas economic journal 44 vol. 4 no. 1, 2023 table 10 the relationship between some of the sustainable development goals and waste management in ukraine goal the task of permanent development waste treatment tasks tasks of the motor transport component 9 development of high-quality and accessible infrastructure development of high-quality and accessible infrastructure, primarily transportation, in the field of waste management 12 reduce waste generation and increase recycling ensure full coverage and rationalization of waste collection and sorting coordination of transport logistics processes; rationalization of waste transportation routes source: compiled by the author based on materials from the (strategy for sustainable development of ukraine until 2030) table 11 swot analysis of responsible waste management in road transport infrastructure s (strengths) w (weaknesses) development of the region's transportation network. development of cooperation with domestic investors. interest of the regional leadership in the development of the waste management system. the possibility of obtaining additional income. development of the industry, which can be the basis for the development of the infrastructure of processing and disposal of waste. the possibility of using waste to obtain "green" energy. availability of active regional waste management programs and plans. lack of statistical data on the state of the industry, lack of systematic collection and analysis of information. lack of a proper system of accounting and registration of indicators characterizing the state of waste management. insufficient control in the field of waste management, non-transparency of activities. lack of a clear vision for solving the problem of waste collection and disposal. lack of sufficient number of qualified personnel. lack of motivation to collect and properly dispose of waste. low profitability of business units. presence of a significant part of the waste management market in the "shadow sector" of the economy. non-compliance of waste management facilities with safety requirements, overcrowding of landfills. low level of inter-municipal and inter-regional cooperation. lack of local political focus on environmental safety issues. insufficiently developed industrial infrastructure. insufficient coverage of the territory with waste disposal services. o (opportunities) t (threats) access to mfi grant and loan funds for mfi infrastructure development, cooperation with foreign investors. increased environmental awareness among the population. significant potential for waste recycling and reuse. development of innovative technologies and equipment for waste management. creation of new jobs. ensuring compliance with sanitary, hygienic and environmental standards in settlements. potential for business development in the processing of secondary raw materials. low level of awareness, unwillingness to pay for services, and lack of responsibility among the population and businesses regarding solid waste management. weak financing of programs and projects in the field of waste management. gaps in the legislative regulation of the industry, lack of an effective mechanism for the implementation of legislative provisions. lack of a single center coordinating the solution of problems in the waste management system. the effect of "other people's garbage", social rejection when determining the locations of regional waste management facilities. source: summarized by the author or a new line of business, when considering the options of business restructuring, when analyzing the market for a better understanding of the situation, when checking the correctness of the given course of development of territorial communities, etc. this type of analysis is carried out with the aim of more detailed definition and clarification of the list of factors that can influence the development of the approval and further implementation of the regional waste management program and recovery plan of ukraine. as a result, external and internal factors were selected and classified into positive (strengths) and negative (weaknesses). on the basis of the conducted researches it is possible to fully confirm the necessity to create an industrial system for the disposal of vehicles with the produced resource. at the same time, it three seas economic journal 45 vol. 4 no. 1, 2023 should be noted that the implementation of the recycling system is not limited only to the creation of the appropriate legal basis in this area. in particular, in the future it is necessary to pay attention to the economic and innovative issues related to this process, namely: to determine the income and costs of implementation, to establish existing in the state technologies for processing, disposal and reuse of materials and parts of vehicles with the produced resource, and to develop new ones, similar to those already used in the eu member states, to explore available innovations in this area. therefore, the network of motor vehicle complexes contributes to the formation of background pollution, to the increase in the content of pollutants at a considerable distance from the sources of pollution, and to global changes in the composition of the atmosphere, which can lead to many undesirable consequences, including climate change. the directions of adaptation to the paris agreement (second national defined contribution, sndc) require that emissions in the transport sector are effectively reduced, the following targets must be set (provided that electric transport is powered by renewable energy sources), see table 12. these targets can help achieve climate neutrality by 2050. in addition, all new infrastructure must be built with the inevitability of climate change and the need to adapt to it in mind. the action plan of the national transport strategy 2030 is a complex document, because the project was discussed for more than 2 years not only with the central bodies of executive power, regional state administrations – it was also discussed with ifis (ebrd, eib, world bank) and, given the cross-border impact, with the neighboring countries of the eu (bondarenko, 2021; action plan for the implementation of the national transport strategy of ukraine until 2030; on approval of the national waste management strategy in ukraine until 2030). during the development of the action plan project, a balanced approach was introduced, which responds to the future growth and changes in the demand for transport services, contributes to economic development, improves the quality of life of the population and efficient use of resources. the result of the implementation of the action plan should be the formation of a unified transport space of ukraine, in which the transport infrastructure of the national and regional levels, the transport infrastructure of cargo owners will be effectively integrated, and a single information environment for the interaction of different types of transport will be created. 7. conclusions thus, at present the main task of state policy in the field of environment and motor transport should be to ensure a balance between availability of vehicles and observance of environmental rights of citizens in ukraine. undoubtedly, the protection of the health of citizens should be a primary component of state policy. in this connection, it is also worth remembering the table 12 adaptive directions of adaptation to the paris agreement (sndc) № directions of adaptation to the paris agreement (sndc) 1 increase the share of urban travel by public transport to more than 50% (and where it is already 50%, maintain it) and do not allow it to fall below 35%. this means electric public transport: trams, trolleybuses (including autonomous ones) and electric buses. diesel minibuses and similar vehicles must be phased out. 2 reduce the share of passenger trips made by private cars in cities to 10%, while encouraging their replacement by electric cars. increase the share of passenger trips made by bicycles, scooters, and other forms of micro-mobility to 10-20%, depending on the size of the city. 3 to increase the popularity and possibility of walking (pedestrian crossings, lowered curbs, urban planning "center near the house", development of multifunctional neighborhoods). 4 transfer 75% of land freight transport from road to rail. currently, this indicator in ukraine has fallen from 60% in 2010 to 51.6% in 2018. provided that the tracks are electrified, rail has every chance of becoming the least carbon-intensive means of transporting goods. 5 increase of rail electrification to 70% by 2030. this indicator is now at 47.2%. 6 refuse to heat passenger cars with coal. 7 increase the share of passenger transportation by rail to 15%. three seas economic journal 46 vol. 4 no. 1, 2023 association agreement between ukraine and the european union, within the framework of which ukraine undertook to adapt to eu legislation a number of legal acts related to motor vehicles as mobile sources of environ mental pollution. there are prerequisites for improving the environmental situation in ukraine and minimizing environmental damage from cars: 1) state programs and measures are aimed at rejuvenating the automobile fleet of ukraine by stimulating the purchase of new cars with an environmental standard not lower than euro-4 and electric vehicles. in order to stimulate the purchase of electric vehicles by ukrainians, it is necessary to maintain zero customs duties, excise taxes and vat on the import of such vehicles. in addition, in order to stimulate the production of electric cars in ukraine, it is necessary to attract investors capable of setting up production, which at present seems unlikely due to the fact that imported and domestic cars are found on unequal terms. it is also worth expanding the list of goods "for industrial assembly of motor vehicles" in the customs tariff of ukraine and extending their use to the production of electric vehicles. the decision of the cabinet of ministers of ukraine to encourage ministries to purchase electric cars instead of vehicles with internal combustion engines is positive in the context of promoting ecological cars. it is worth noting that the vehicle fleet renewal program can be made not only environmentally friendly but also more inclusive, in particular by adding a social component to it. for example, it is possible to launch a program with the conditional name "my first car" that could be used by those who buy a car for the first time. the program will provide a 10% discount (state subsidy), but the initial price of the car should not exceed, for example, 500-600 thousand uah, the car should at least meet the euro-4 environmental standard, it is also worth setting a limit on the total weight of the car. it is also possible to establish as a mandatory condition, which will contribute to the restoration of car production in ukraine, that the car must be assembled in ukraine. this model can also support young families, for example by introducing the state program "cars for the family ". 2) encourage the phase-out of old vehicles with low environmental standards (mainly euro-0). at the regulatory and legislative level. 3) the measures are aimed at limiting the import of used cars with low environmental standards. in order to adapt the transport infrastructure of ukraine to the strategy of sustainable mobility of the eu, it is necessary to: develop and implement a transparent and automatic system for calculating carbon footprints; collect and publish carbon footprint data from different modes of transport; implement taxation systems for the purchase, ownership and use of cars according to the polluter-pays principle: more expensive for cars with high emissions, cheaper for cars with low and zero emissions; restore state technical inspection of cars; develop and implement a system for recycling old cars; resume and improve the collection of data on emissions from mobile sources of pollution by region (at the local level, at the level of settlements) in order to monitor emission indicators; create a network for charging and refueling zero-emission vehicles; propose and initiate research and innovation in the field of connectivity and automation of transport, especially multimodal, and road safety (through universities, scientific institutes); сreate multimodal options for passengers to travel between cities, for example by offering tickets for the route (including transfers) rather than for each individual train or bus, and offering free use of public transport on the day of departure/ arrival of the train or plane for which the passenger has a ticket; promote the development of zero-emission freight transport and actively participate in eu activities in this direction; develop and implement a system of state support and co-financing for the creation of bicycle infrastructure in cities; abolish taxation on spare parts/elements for the production and repair of permanent means of transport (e.g., bicycles). therefore, a comprehensive solution of environmental and transportation problems requires concerted actions of legislators and various state institutions. the focus of their actions should be primarily on environmental safety, protection of life and health of ukrainian citizens, ensuring adaptation to climate change. the implementation of these provisions in the country 's regional recovery plans is the subject of further 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until 2030]. strategy of sustainable development of ukraine until 2030. three seas economic journal 48 vol. 4 no. 1, 2023 available at: http://www.ua.undp.org/content/dam/ukraine/docs/sdgreports/undp_strategy_ v06-optimized.pdf pro zatverdzhennia natsionalnoho planu upravlinnia vidkhodamy do 2030 roku [regional waste management plan in the vinnytsia region for the period until 2030]. available at: http://www.vin.gov.ua/upr-ter/33784-rehionalnyi-plan-upravlinnia-vidkhodamy-u-vinnytskii-oblasti-2 plan zakhodiv z realizatsii natsionalnoi transportnoi stratehii ukrainy do 2030 roku [action plan for the implementation of the national transport strategy of ukraine until 2030]. available at: https://cfts.org.ua/blogs/plan_zakhodiv_z_realizatsi_natsionalno_transportno_strategi_ukrani_do_ 2030_roku_587 pro skhvalennia natsionalnoi stratehii upravlinnia vidkhodamy v ukraini do 2030 roku [on approval of the national waste management strategy in ukraine until 2030]: decree of the cabinet of ministers of ukraine dated november 8, 2017 no. 820-p available at: https://zakon.rada.gov.ua/laws/show/8202017-%d1%80#text received on: 20th of february, 2023 accepted on: 29th of march, 2023 published on: 28th of april, 2023 three seas economic journal 217 vol. 3 no. 1, 2022 corresponding author: 1 kyiv national university of technologies and design, ukraine e-mail: shatskaya@ukr.net orcid: https://orcid.org/0000-0003-1600-1481 researcherid: d-4215-2019 doi: https://doi.org/10.30525/2661-5150/2022-1-30 formation of business structures in the context of pandemic transformations zorina shatskaya1 abstract. the purpose of the work is to study the process of formation of business structures in different regions of the world in the pre-pandemic and pandemic periods. the object of the study is the process of formation of business structures as integrated subjects of the global network economy. methodology. the study uses the systematic method of cognition of processes and phenomena in their interconnection and development, as well as methods of statistical analysis used in the analysis of the formation of business structures in the pre-pandemic and pandemic periods. the results of the study reveal the features of the formation of new integration formations of network economy – business structures, which are understood as a complex open integrated system functioning in a dynamic globalized environment based on a combination of material and immaterial interests of member companies to accelerate joint development by accelerating the commercialization. joint innovation activities. it was found that the formation of business structures has become a modern global trend resulting from mergers and acquisitions (m&a) of several enterprises. practical implications. the practical results of the study allow us to analyze the formation of global business structures in the pre-pandemic period (2015–2018) and the pandemic period (2019–2020). thus, in the pre-pandemic period there was an annual increase in the number of global business structures by an average of 5%. however, their value in 2018 compared to 2015 decreased by 5.85% to usd 0.449 trillion. the number of global business structures in the regional aspect for 2015–2020, despite the impact of the covid-19 pandemic, increased annually only in north america (8.4% in 2020 compared to 2015). other regions of the world saw an annual decline in the number of business structures. it was found that since 2019, due to the impact of the covid-19 pandemic, the number and value of business structures in the world has continued to decline, which has become rapid. the annual decline in the number of global business structures during the 2019–2020 pandemic averaged 6.37%, and the annual decline in their value averaged 33.19%. the regions that lost the most business during the 2019-2020 pandemic were western europe (2%), southeast asia (1.2%), and eastern europe (0.8%). value/originality. the value of the study lies in the fact that it allows to analyze global trends in the formation of business structures in the pre-pandemic and pandemic periods and to identify further prospects for their formation in different regions of the world, given the rapid decline in the number of business structures in the world. key words: business structure, integration of enterprises, mergers and acquisitions, the covd-19 pandemic, to the pandemic period, pandemic period. jel classification: f01, f15, o12 1. introduction modern processes of globalization of the world space, the strengthening of cooperative ties between states under the influence of economic integration, the transition of the world economy to the seventh technological mode, change the modern paradigm of global economic development. with the rapid invention of new information and communication technologies and the formation of a global networked economy, enterprises need to adapt in a timely manner to the dynamic impact of the globalized space. their activities are becoming more complex, which is impossible without the introduction of modern methods of production organization and the use of new approaches to management. often an individual company lacks its own resources and/ or capabilities to implement these strategic and operational changes, which leads to the need to consolidate and merge companies. that is why the current trend is the integration of enterprises and this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 218 vol. 3 no. 1, 2022 the formation of new business entities – business structures. the unification of enterprises within a single industry gave an impetus to the formation of horizontally integrated business structures. the development of vertical integration processes has led to the formation of vertically integrated business structures. global integration processes have led to the formation of globally integrated business structures in the form of transnational corporations. 2. literary review in the scientific works of domestic and foreign researchers, the concept of "business structure" is considered from different points of view. thus, in the scientific works of bezhenar i. m., basilsky a. v., nitsenko v. s. and others, the business structure means a non-integrated enterprise, as a synonym for the term enterprise or as a generalizing concept. scientists gubanova l. i., goncharuk t. v., yavorska t. i. and many others understand the business structure as "small enterprise" or "small business enterprise", which is also studied as a non-integrated enterprise. business structure, as a complex integrated enterprise formed as a result of merging several enterprises is studied in the works of such scientists as: bilega o. v., gorbachevskaya o. v., korsun t. a., kochubey r . v., rusin-girnik r . r . and many others. despite the significant scientific achievements of domestic and foreign researchers in the study of the specifics of formation and features of business structures, the problems of formation of business structures in conditions of pandemic transformation are new and insufficiently studied. 3. methods and results the purpose of this work is to study the process of formation of business structures in different regions of the world in the pre-pandemic and pandemic periods. based on this goal, the object of the study is the process of formation of business structures as integrated subjects of the global network economy. the scientific novelty of the study lies in the fact that it allows to analyze global trends in the formation of business structures for the period 2015–2020 and to identify further prospects for their formation in different regions of the world, taking into account the impact of the covid-19 pandemic on global business. the methodological basis of the study are the scientific works of leading domestic and foreign experts on the functioning of business structures in modern conditions. the study is based on the systematic method of understanding processes and phenomena in their interconnection and development, as well as methods of statistical analysis used in the analysis of the formation of business structures in the pre-pandemic and pandemic periods. the monographic method was used in the study of published scientific works of foreign and domestic scientists on the peculiarities of formation of business structures. 4. peculiarities of the formation of business structures in modern conditions 4.1. the essence of the concept of "business structure” business structure, as defined by the author, is a holistic complex open integrated system functioning in a dynamic globalized environment, based on a combination of material and immaterial interests of member companies to accelerate joint development by accelerating the commercialization of joint innovations (rusin-girnik, timnyak, 2018; shatskaya, 2021). the formation of a business structure, as a complex integrated system, occurs as a result of the interaction of its constituent elements, which include: enterprises as independent entities; entrepreneurs or freelancers as independent entities. these components of the business structure form and directly affect the transformation of its internal and external environment. entrepreneurial structure as a system can be either "highly organized, that is, have a branched and complex structure, or less organized, with a fairly simple structure, or generally chaotic, when its elements are distributed randomly and evenly " (romanova, makarov, 2014), depending on the number of enterprises of its participants. the main driving force behind the creation of a business structure is the need to improve competitiveness and ensure further development of the enterprises – members of this structure. 4.2. formation of business structures in the pre-pandemic period the formation of business structures has become a modern global trend resulting from mergers and acquisitions (m&a) of several businesses. over the period of 2015–2019, a large number of business structures were created around the world, the dynamics of which change annually (figure 1). until 2018, there was an annual increase in the number of business entities in all regions of the world (6.5% from 2015-2016, 11.7% from 2016–2017). in 2015, the largest number of business structures were created in north america (14,656 units), southeast asia (14,618 units), and western europe (14,303 units). in 2016-2017, these regions dominated by the number of business structures created. the smallest number of business structures was created in the middle east and north africa: 429 units in 2015. three seas economic journal 219 vol. 3 no. 1, 2022 in 2016-2017, their number decreased by 0.1% year on-year. there was a slight decrease of 3.7% in the number of business entities globally in 2017–2018 and 9.5% in 2018–2019. in 2017, the number of business structures, even in the dominant regions of the world, decreased slightly in north america by 0.6%, southeast asia (1.1%). during the same period, however, it grew by 1.2% in western europe. in 2018–2019, these regions dominated by the number of established business structures. in the regional distribution of global business entities in 2015, 29.7% of the total were business entities in north america, 29.6% in southeast asia, and 29.0% in western europe. the smallest number (0.9% of the total) were business entities located in the middle east and north africa (figure 2). in 2016, the leading positions in the regional distribution of global business structures were occupied by business structures established in southeast asia (31% of the total), in second place – business structures from north america (29.1% of the total), in third place – from western europe (28.4%). in 2017, the leading position in the regional distribution of global business entities was again taken by business entities established in north america (33.8% of the total), with western european business entities in second place (28.2% of the total) and those from southeast asia in third place (26.7%). in 2018, the leading regional distribution of global business entities was again led by business entities established in north america (33.2% of the total), down 0.6% from last year; western european business entities (29.4% of the total) were in second place, up 1.2% from last year; in third place, those from southeast asia (26.7% of the total), down 1.1% from last year. despite the large number of business structures created in the world between 2015 and 2018, their value changes annually under the influence of various factors (figure 3). thus, in 2015 the value of business structures created as a result of mergers and acquisitions in the world amounted to $ 7b681 trillion, and in 2016 decreased by 20% to $ 6.148 trillion. in 2017, the total value of business structures in the world increased by 7.75% to $6.625 trillion. in 2018, the general trend of increasing the value of global business structures continued, the value of which increased by 9.16% to $7.723 trillion. the total decrease in the value of business structures in the world in 2018 compared to 2015 was $0.449 trillion or 5.85%. 4.3. formation of business structures during the pandemic while there was an annual increase in the number of business entities in all regions of the world before 2019, there has been a decline in the number of business entities globally since 2019 due to business barriers related to border closures, quarantine restrictions, and other negative factors caused by the covid-19 pandemic. so, if in 2018 there were 49371 52610 55172 53140 48081 46528 0 10000 20000 30000 40000 50000 60000 2015 2016 2017 2018 2019 2020 north america south america western europe eastern europe southeast asia gulf cooperetion council (gcc) middele east and north africa (mena) in total in the world figure 1. the number of business structures created as a result of mergers and acquisitions (m&a) in the world for the period 2015–2020 source: compiled author by (yavorska, franchuk, 2014; fortune, 2020) three seas economic journal 220 vol. 3 no. 1, 2022 29,7 29,1 33,8 33,2 32,8 38,1 2,2 2,1 2,8 3 3,2 3,2 29 28,4 28,2 29,4 29,5 27,5 4,1 3,8 3,2 3,4 5 4,2 29,6 31 26,7 25,6 24 22,8 4,6 4,8 4,6 4,6 4,8 3,2 0,9 0,8 0,7 0,8 0,8 1,1 0 20 40 60 80 100 120 2015 2016 2017 2018 2019 2020 north america south america western europe eastern europe southeast asia (acean), од gulf cooperetion council (gcc), од middele east and north africa (mena) figure 2. regional structure of business structures created as a result of mergers and acquisitions (m&a) in the world for the period 2015–2020 source: compiled author by (yavorska, franchuk, 2014; fortune, 2020) 53,140 business structures in the world, in 2019 their number decreased by 9.52% to 4,881 units. in 2020 the downward trend in the number of business structures in the world continued, the number of which decreased by 3.23% to 46,528 units compared to 2019. the total decrease in the number of business structures in the world in 2020 compared to 2015 was 2,843 units or 5.76%. regionally, the largest declines in the number of business structures during the 2019–2020 pandemic occurred in western europe (2%), southeast asia (1.2%), and eastern europe (0.8%). with the exception of north america, where the number of business structures increased by 5.3% during the analyzed period (figure 2). in 2019, the value of business structures created by global mergers and acquisitions rose 12.61% from $7.232 trillion in 2018 to $8.144 trillion in 2019. with the onset of the covid-19 pandemic and business restrictions, the value of business structures created through mergers and acquisitions globally in 2020 increased sharply by 48.5% from $8.144 trillion in 2019 to $4.195 trillion in 2020. the overall decline in the value of business structures globally in 2020 compared to 2015 was 45.4%. 5. conclusions in 2016, there were 6.56% more global business entities than in 2015. the total increase in the number of global business structures in 2017 was 4.86% compared to 2016. and in 2018, 3.68% more global business structures were created than in 2017. thus, the annual increase in the number of global business entities over the pre-pandemic period of 2015–2018 averaged 5%. however, with the start of the covid-19 pandemic, there were 9.52% fewer global business entities in 2019 than in 2018. this trend continued in 2020, when the number of global business structures decreased by 3.22%. three seas economic journal 221 vol. 3 no. 1, 2022 2,545 1,873 1,931 2,061 1,996 1,183 0,76 0,72 1,15 1,16 0,83 0,64 1,236 1,045 1,084 1,231 0,638 0,662 0,4 0,43 0,27 0,42 0,49 0,3 0,93 1,1 1,31 1,13 1,41 0,52 0,39 0,35 0,28 0,46 1,05 0,3 1,42 0,63 0,6 0,77 1,73 0,59 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018 2019 2020 middle east and north africa (mena), trillion $ gulf cooperetion council (gcc), trillion $ southeast asia (acean), trillion $ eastern europe, trillion $ western europe, trllion $ sourth america, trillion $ north america, trlllion $ figure 3. the value of business structures created as a result of mergers and acquisitions (m&a) in the world for the period 2015–2020 source: compiled author by (yavorska, franchuk, 2014; fortune, 2020) thus, the annual decline in the number of global business entities during the 2019–2020 pandemic averaged 6.37%. the number of global business structures regionally for 2015-2020, despite the impact of the covid-19 pandemic, grew annually only in north america (8.4% in 2020 compared to 2015). other regions of the world saw an annual decline in the number of business establishments. the regions that lost the most business establishments during the 2019–2020 pandemic were western europe (2%), southeast asia (1.2%), and eastern europe (0.8%). the value of global business structures in 2016 decreased by 19.95% compared to 2015. the total increase in the value of global business structures in 2017 was 7.75% compared to 2016. and in 2018, the value of global business structures was 9.16% less than in 2017. thus, the annual decline in the value of global business entities over the pre-pandemic period of 2015–2018 averaged 21.36%, despite a slight increase in 2017. the value of global business structures increased by 12.61% in 2019 compared to 2018. however, with the onset of the covid-19 pandemic in 2020, the value of global business structures fell sharply by 45.8%. thus, the annual decline in the value of global business structures during the 2019–2020 pandemic averaged 33.19%. however, it can be concluded that despite the rapid decline in the number of business structures in the world and the significant decline in their value during the pandemic, such structures continue to work, being more efficient enterprises than non-integrated enterprises. references: basilsky, a. v. (2004). development of the management system of business structures in ukraine: dis ... cand. econ. sciences: 08.06.01 / european university of finance, information systems, management and business, ukraine. available at: http://www.disslib.org/rozvytok-systemy-upravlinnja-pidpryyemnytskykh-struktur-v-ukrayini.html bezhenar, i. m. (2016). the state of development of specialization in agrarian business structures. mykolayiv national university named after v. o. sukhomlinsky, 10, 128–133. available at: http://global-national.in.ua/ archive/10-2016/28.pdf three seas economic journal 222 vol. 3 no. 1, 2022 bilega, o. v. (2013). formation of stable competitive advantages of network structures in the national economy of ukraine: author's ref. dis. ... cand. econ. sciences: 08.00.03. chernihiv: chernihiv. state inst. of economics and management. goncharuk, t. v. (2017). foreign experience in the development of business structures and the possibility of its use in ukraine. efficient economy, 9. available at: http://repository.vsau.org/view_doc.php?filename=19620.pdf gorbachevskaya, o. v. (2014). development of integrated business structures in the economic system of ukraine. current problems of the housekeeper, (155), 166–170. gubanov, s. s. (2008). neoindustrialization plus vertical integration. economist, 9, 3–27. korsun, t. a. (2010). development of business structures in a changing competitive environment: dissertation abstract. to receive science. degree of economics. science: 08.00.01. ulan-ude. available at: http://economy-lib.com/razvitie-predprinimatelskih-struktur-v-usloviyah-izmenyayuscheysya-konkurentnoysredy nitsenko, v. s. (2014). mechanisms for ensuring sustainable development of business structures of the agri-food sector on the basis of integration. bulletin of khnau. economic sciences series. available at: http://visen.knau.kharkov.ua/uploads/visn_econom/2014/6/23.pdf romanova, o. a., & makarov, e. v. (2014). estimation of efficiency of integration of the enterprises in the market of metals. osu newspaper, 9(170). available at: https://cyberleninka.ru/article/n/otsenka-effektivnostiintegratsii-predpriyatiy-na-rynke-metallov/viewer rusin-girnik, r . r ., & timnyak, z. s. (2018). the essence of the competitiveness of business structures. investments: practice and experience, 17. available at: http://www.investplan.com.ua/pdf/17_2018/7.pdf shatskaya, z. ya. (2021). scientific and methodological foundations of the formation of business structures in a globalized space. scientific bulletin of kherson state university. economic sciences series, 43, 57–65. doi: https://doi.org/10.32999/ksu2307-8030|2021-43-9 shatskaya, z. ya. (2020). influence of integration factors of macroenvironment in the context of formation of business structures. entrepreneurship and innovation, 13, 67–74. available at: http://www.ei-journal.in.ua/index. php/journal/issue/view/31/70 yavorska, t. i., & franchuk, i. b. (2014). transformation of personal peasant farms into business structures. collection of scientific works of the tavriya state agrotechnological university (economic sciences), 3(27), 48–52. doi: https://doi.org/10.37320/2415-3583/13.13 fortune (2020). reading allowed: fortune global 500. available at: http://fortune.com/global500/ thomson financial (2020). institute of mergers, acquisitions and alliances (imaa). available at: https://imaa-institute.org/mergers-and-acquisitions-statistics/ three seas economic journal 1 vol. 4 no. 2, 2023 1 t.h. shevchenko national university "chernihiv colehium", ukraine (corresponding author) e-mail: maibuttya @gmail.com orcid: https://orcid.org/0000-0001-7790-337х this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-2-1 financing inclusive education in ukraine ivan bykov1 abstract. the financing of inclusive education in ukraine and the procedure of using subsidies from the state budget to local budgets for providing state support to persons with special educational needs are the subject of research. the purpose of the article is to analyse the current process of financing inclusive education in ukraine. the research methods were carried out in three years (2020, 2021, 2022). the methodology is based on modern provisions of economics, economic theory, financial law and reflects the interrelation of methodological approaches to the study of the concept of the process of financing inclusive education in general secondary educational institutions of ukraine. the results of the study prove that the financing of inclusive education in ukraine and the procedure of using subsidies from the state budget to local budgets for providing state support to persons with special educational needs is an urgent problem today. the procedure of using subsidies from the state budget to local budgets for providing state support to persons with special educational needs is highlighted. the formula for calculating the equalisation subsidy is constructed in such a way that a single standard of budgetary support per secondary school pupil is used for all general secondary schools. funding programmes for inclusive education can be targeted at students and their families rather than at local authorities and schools. this can be financial assistance (e.g., scholarships), tuition fee waivers or other assistance such as school meals. the procedure and conditions for granting subsidies from the state budget to local budgets for the provision of state support for persons with special educational needs take into account the financing of resources for corrective and developmental classes. no more than 35% of the funds of the "integrative" subsidy are used for the purchase of corrective and developmental aids. the work of specialists hired on the basis of civil law contracts (for corrective and developmental classes) is also paid from this subsidy. the resolution also contains a list of corrective and developmental classes that may be conducted. practical implications. the main source of funding from local budgets that can be used for inclusive education services is the equalisation grant. the government has a general policy of financing local authorities or schools. the method of financing regions, schools and pupils in secondary education in general and primary education in particular should be based more on equality in the redistribution of material resources. the law of ukraine "on general secondary education" (2020) states in paragraph 3 of article 24 that for work in inclusive classes or groups there should be an additional payment of 20% to the tariff rate for all teaching staff. special education teachers, rehabilitators and teacher's assistants receive an additional payment for hours worked in inclusive primary school classes. the research has shown that in 2020, the state will allocate 21.3 thousand uah for each child who graduates from secondary school in various educational institutions in ukraine. key words: financing of inclusive education, economy, inclusion, primary school, "inclusive" subsidy. jel classification: g20, a10, j44, l51, g28 1. introduction relevance of the research topic. the financing of inclusive education in ukraine and the procedure for using subsidies from the state budget to local budgets for state support of persons with special educational needs is an urgent problem today. ukraine has chosen the european path of development and ratified the un convention on the rights of persons with disabilities. this will help to ensure the realisation of the rights of children with special educational needs to education without discrimination and on the basis of equal opportunities through the development of an inclusive form of education. the availability of developed funding mechanisms in this direction is necessary for the development three seas economic journal 2 vol. 4 no. 2, 2023 of inclusive education. the selection of stakeholders for the focus groups was made in order to explore the raised issue as much as possible and to analyse the financing of inclusive education in the field in depth. two focus groups were held in odesa, with the participation of financiers from the odesa regional ministry of education. scientific novelty. conducting a focus group, taking into account the complexity of the study, to understand the existing problems in financing inclusive education in odessa. principals of schools (e.g., general secondary education institution "maibuttya" for levels (grades) i-iii, odesa) in which an inclusive form of education is organised, accountants and financiers from the field of education, teachers and teacher's assistants, parents of children with special educational needs were invited to participate in the study needs. the purpose of the study is to analyse the current process of financing inclusive education in ukraine. scientific and research tasks: 1) to analyse the policy of financing inclusive education; 2) to highlight the procedure for using subventions from the state budget to local budgets to provide state support to people with special educational needs. the research methodology is based on modern provisions of economics, economic theory and financial law and reflects the interrelation of methodological approaches to the study of the concept of the process of financing inclusive education in general secondary educational institutions of ukraine. the logic of the presentation of the material under study. it is important to avoid ambiguity in the understanding of the mechanism of existing subsidies from the state budget to local budgets for the provision of state support to persons with special educational needs. the budgetary process in ukraine is regulated by the budgetary code of ukraine. the drafting of the state budget of ukraine is preceded by preparatory measures, provision of relevant data to the authorities, which takes about four months (from january to the end of april of the year preceding the planned one). the ministry of finance of ukraine submits a draft law on the state budget to the cabinet of ministers of ukraine. the cabinet of ministers of ukraine adopts a resolution on the approval of the draft law on the state budget of ukraine. the cabinet of ministers of ukraine submits the approved draft to the verkhovna rada of ukraine by 15 september at the latest. the second stage of the budgetary process, according to article 19 of the budgetary code of ukraine, is the consideration and adoption of the law on the state budget, decisions on local budgets. at the same time, the consideration and adoption of the state budget of ukraine takes place in the verkhovna rada of ukraine in accordance with a special procedure established by the regulations of the verkhovna rada of ukraine. the subsidy for the support of persons with special educational needs is established in the state budget of ukraine for the respective year. 2. financial support for inclusive education the main source of funds from local budgets that can be used for inclusive education services is the equalisation grant. its amount is calculated on the basis of a formula. the formula is designed in such a way that a single standard of budgetary support per pupil is applied to all institutions of general secondary education. the equalisation grant does not take into account the need to finance the special needs of children with special educational needs (on approval of the action plan for the implementation of inclusive and integrated education in general education institutions and the period until 2012, 2009). another important obstacle to the development of the system of inclusive education may be the fact that, in accordance with articles 89-90 of the budgetary code of ukraine, the operation of ordinary institutions of general secondary education is financed from district and regional budgets. at the same time, special general education institutions for children requiring correction of their physical and/or mental development and boarding schools for children with disabilities are financed from regional budgets. this creates a situation where it is easier and more profitable for the regional authorities to ensure full occupancy of the boarding schools they finance. it is unprofitable and uninteresting for city (district) authorities to create conditions for ensuring the education of children with special educational needs in institutions financed from their budgets, since such funds are not taken into account in the formula (bezpalko & gubareva, 2002). there are three main types of inclusion financing: "the government has a general policy for funding local authorities or schools. such a policy either ensures that each authority or school receives the same amount of resources per pupil in primary three seas economic journal 3 vol. 4 no. 2, 2023 education (equity), or takes into account the characteristics of districts or schools (equity). the policy may vary according to the type of school or the nature of financial and human resources, and may be supplemented by specific programmes to compensate for unfavourable conditions." (shvadchak, 2021) education support programmes may be targeted at learners and their families rather than at local governments and schools. it may be a financial grant (such as a scholarship), a fee waiver, or other support: for example, in the form of school meals. there are funding programmes that are not related to education. they target primary school students and their families and can have an impact on equity and inclusion in education. these are usually social protection programmes: cash transfers or child allowances with an education component aimed at tackling poverty. the ministry of education and science of ukraine should cooperate with other ministries and local governments, as well as non-governmental organisations, to promote inclusion. – inconsistencies in services and communication protocols, poor coordination and insufficient funding lead to poor implementation of inclusion and weak accountability. – funding for oblasts, schools and secondary education in general, and primary education in particular, should be more equitable, make better use of data, and redistribute more resources to compensate for inequalities. there is no ideal way to finance inclusive education, as ukraine differs in "its history, understanding of inclusive education and level of decentralisation" of inclusion (shvadchak, 2021). national government must facilitate and encourage networks to share resources and capacity-building opportunities, for example through block grants within service contracts with local authorities or clusters of schools. such autonomy and flexibility should be accompanied by quality assurance mechanisms to monitor whether local authorities and schools are achieving inclusion outcomes. 3. subsidies for the remuneration of specialists working in inclusive classrooms personnel issues and the organisation of inclusive education are insufficiently prepared in the modern era. today, the level of training of specialists in ukraine to work in an inclusive educational environment is such that it does not meet public demands and needs. the quality of inclusive education in primary schools in ukraine, despite the tremendous work of teachers and educators, sometimes fails to withstand criticism, as even pilot schools lack specialists and staffing levels (psychologists, defectologists, speech therapists); there are mostly no assistants who should have been introduced in schools in 2012; school psychologists are overworked and cannot always provide advice on various nosologies. there is a lack of theoretical knowledge and practical skills in working with children with special educational needs, particularly among the vast majority of primary school teachers (on approval of the concept for the development of inclusive education, 2010). there is a financial problem in the management of the teaching staff on the part of the administration of the educational institutions, because today not every teacher is willing to work in a class with children with special educational needs without a salary subsidy. the support for inclusion on the part of the directors of general secondary schools is rather weak and insufficient. for the year 2023, there is a methodological and psychological unpreparedness of pedagogical workers, class leaders, teachers, both in primary school and subject teachers, for teaching a number of disciplines to children with certain limitations (with special educational needs) (mishchyk, 2012) ( justified by the author, 2023). the provision of methodological materials for primary school is estimated at 30%. materials for secondary schools have not been developed or exist only as the work of individual teachers in pilot schools. in general secondary schools with "spontaneous inclusion", the class size is about 30-34 pupils, which does not correspond to the model of inclusive education. the recorded increase in the number of children with special educational needs who are placed in individual education by teachers and administrators in general secondary schools, which distorts the very idea of inclusive education. the motivation of teachers in general secondary education (in this study, primary schools) to implement inclusive education is low due to insufficient salaries and overwork. no clear criteria have been developed to determine the level of psychophysiological disorders that do not preclude study in general secondary schools (inclusive education in three seas economic journal 4 vol. 4 no. 2, 2023 ukraine: achievements, problems and prospects: summary of an analytical report based on the results of a comprehensive study, 2011: 20; the law of ukraine "on general secondary education", 2020). 4. the procedure for granting an "inclusive" subvention from the state budget the procedure and conditions for granting subventions from the state budget to local budgets for providing state support to persons with special educational needs refers to the financing of funds for correctional and developmental classes (on approval of the procedure and conditions for granting subventions from the state budget to local budgets for providing state support to persons with special educational needs, 2017). no more than 35% of the "inclusive" subvention is used for the purchase of correctional and developmental means. the work of specialists hired on the basis of civil law contracts (for corrective and developmental classes) is also paid from this subsidy. the resolution also contains a list of corrective and developmental classes that may be conducted. at the new ukrainian school there are currently no requirements for the basic equipment of the sports hall for work with children with special educational needs. everything that an educational institution buys for corrective and developmental work is regulated by the standard list of special corrective means for psychophysical development of children with special educational needs who study in integrative and special classes (groups) in elementary schools of general secondary education institutions (on approval of the model list of special means of correction of psychophysical development of children with special educational needs studying in inclusive and special classes of general secondary education institutions, 2018). and also, by the order of the ministry of education and science of ukraine dated 21 june 2019 no. 873 (on amendments to the order of the ministry of education and science of ukraine dated april 23, 2018 № 414, 2019). if an inclusive class in a primary school is created at the beginning of the school year or at any other time, the funds will not be deposited immediately, because according to the resolution they are deposited within the calendar year, not the academic year. however, with the balance of funds from previous budget periods, inclusive education in primary school can be financed from any month. in particular, according to this resolution, local councils have the right to redistribute the subsidy funds between the different types of institutions within the limits of the respective local budget. in many documents the issue of additional payment for work in inclusive primary classes and for work with children with special educational needs is regulated. one of the most recent is the law of ukraine "on general secondary education" (the law of ukraine "on general secondary education", 2020), where in paragraph 3 of article 24 it is indicated that for work in inclusive classes or groups there is an additional payment of 20% to the tariff rate for all teaching staff. therefore, special education teachers, rehabilitators, teacher's assistants and specialist teachers receive an additional payment for the hours they work in inclusive primary school classes. the study showed that in 2020, the state allocated 21.3 thousand uah for each child who completed secondary education in various educational institutions of ukraine. 6. conclusions the results of the study prove that the financing of inclusive education in ukraine and the procedure of using subsidies from the state budget to local budgets for providing state support to persons with special educational needs is an urgent problem today. the procedure of using subsidies from the state budget to local budgets for providing state support to persons with special educational needs is highlighted. the formula for calculating the equalisation grant is constructed so that a single standard of budget support per secondary school pupil is used for all general secondary schools. funding programmes for inclusive education may be targeted at learners and their families rather than at local governments and schools. this may be in the form of financial support (e.g., a scholarship), a fee waiver or other support: for example, in the form of school meals. the motivation of teachers in general secondary schools (in this study, primary schools) to implement inclusive education is low because their salaries are not commensurate with the work they do. prospects for further research include a more indepth study of salary subsidies for professionals working in an inclusive educational environment. three seas economic journal 5 vol. 4 no. 2, 2023 references: inkliuzyvna osvita v ukraini: zdobutky, problemy ta perspektyvy: reziume analitychnoho zvitu za rezultatamy kompleksnoho doslidzhennia (2011) [inclusive education in ukraine: achievements, problems and prospects: summary of an analytical report based on the results of a comprehensive study]. yevropeiska doslidnytska asotsiatsiia: demokratychni initsiatyvy molodi. – european research association: democratic youth initiatives. june 2011 – january 2012. 36 p. mishchyk, l. (2012). inkliuzyvna osvita yak umova sotsializatsii ditei-invalidiv u protsesi navchannia [inclusive education as a condition for the socialization of disabled children in the learning process]. available at: http://www.nbuv.gov.ua/portal/soc_gum/znpkhist/2012_5/12mliupn.pdf pro povnu zahalnu seredniu osvitu (2020) [the law of ukraine "on general secondary education"]. vidomosti verkhovnoi rady ukrainy – information of the verkhovna rada of ukraine, no. 31, art. 226. available at: https://zakon.rada.gov.ua/laws/show/463-20#text pro zatverdzhennia poriadku ta umov nadannia subventsii z derzhavnoho biudzhetu mistsevym biudzhetam na nadannia derzhavnoi pidtrymky osobam z osoblyvymy osvitnimy potrebamy (2017) [on approval of the procedure and conditions for granting subventions from the state budget to local budgets for providing state support to persons with special educational needs]: postanova kabinetu ministriv ukrainy [resolution of the cabinet of ministers of ukraine] dated 14 february 2017 no. 88. available at: https://zakon.rada.gov.ua/laws/show/88-2017-%d0%bf#text pro zatverdzhennia typovoho pereliku spetsialnykh zasobiv korektsii psykhofizychnoho rozvytku ditei z osoblyvymy osvitnimy potrebamy, yaki navchaiutsia v inkliuzyvnykh ta spetsialnykh klasakh zakladiv zahalnoi serednoi osvity (2018) [on approval of the model list of special means of correction of psychophysical development of children with special educational needs studying in inclusive and special classes of general secondary education institutions]: nakaz ministerstva osvity i nauky ukrainy [order of the ministry of education and science of ukraine] dated 23.04.2018 no. 414. available at: https://mon.gov.ua/ua/npa/pro-zatverdzhennya-tipovogo-pereliku-specialnih-zasobiv-korekciyipsihofizichnogo-rozvitku-ditej-z-osoblivimi-osvitnimi-potrebami-yaki-navchayutsya-v-inklyuzivnih-ta pro vnesennia zmin do nakazu ministerstva osvity i nauky ukrainy (2019) [on amendments to the order of the ministry of education and science of ukraine] dated 23 april 2018 no. 414: nakaz ministerstva osvity i nauky ukrainy [order of the ministry of education and science of ukraine] dated 21.06.2019 no. 873. available at: https://zakon.rada.gov.ua/laws/show/z0783-19#text pro zatverdzhennia kontseptsii rozvytku inkliuzyvnoi osvity (2010) [on approval of the concept for the development of inclusive education]: nakaz ministerstva osvity i nauky ukrainy [order of the ministry of education and science of ukraine] dated 01.10.2010 no. 912. available at: http://www.mon.gov.ua/ ua/activity/68/nakazi_zno/ pro zatverdzhennia planu zakhodiv shchodo zaprovadzhennia inkliuzyvnoho ta intehrovanoho navchannia u zahalnoosvitnikh navchalnykh zakladakh na period do 2012 roku (2009) [on approval of the action plan for the implementation of inclusive and integrated education in general education institutions and the period until 2012]: rozporiadzhennia kabinetu ministriv ukrainy [order of the cabinet of ministers of ukraine] dated 03.12.2009 no. 1482. bezpalko, o. v., & hubareva, t. h. (ed.) (2002). sotsialna pidtrymka ditei z obmezhenymy funktsionalnymy mozhlyvostiamy: metodychni rekomendatsii [social support for children with disabilities: guidelines]. kyiv: lohos, 48 p. shvadchak, n. (2021). nova ukrainska shkola [new ukrainian school]. tezy shchodo sposobiv finansuvannia inkliuzyvnoho navchannia z hlobalnoho monitorynhu osvity yunesko "inkliuziia y osvita: usi oznachaie vsi" [theses on ways to finance inclusive education from the unesco global monitoring of education "inclusion and education: all means all"]. available at: https://naiu.org.ua/ groshi-na-vklyuchennya-yak-finansuyut-inklyuziyu-rizni-krayiny/ received on: 20th of april, 2023 accepted on: 25th of may, 2023 published on: 30th of june, 2023 three seas economic journal 64 vol. 4 no. 1, 2023 1 ivan franko national university of lviv, ukraine (corresponding author) e-mail: dmytroriznyk@gmail.com orcid: https://orcid.org/0000-0003-3188-5158 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-8 systemic and structural characteristics of investment activity in ukraine dmytro riznyk1 abstract. investment activity is an important component of the financial and economic mechanism of the national economy. in the socio-economic turbulence inherent in ukraine, significant challenges for the development of the state and its national economy, the role of investment activity in supporting socio-economic development at both the micro and macro levels is growing significantly. in this context, special attention is paid to the main characteristics of investment activity, and the subject of study is revealed in its systemic and structural features. the purpose of the article is to determine the systemic and structural aspects of investment activity in ukraine, taking into account the influence of exogenous and endogenous drivers both at the level of enterprises and the state. the methodology used in this article consists of a systemic and structural analysis of investment activity in ukraine, including the study of key components and factors, comparative analysis with other regions, and sectoral analysis. this comprehensive approach makes it possible to identify challenges and opportunities in the investment climate, which ultimately leads to the formulation of practical recommendations for improving investment activity in the country. the article examines the nature of investment activity in ukraine at the current stage, emphasizing its systemic and structural aspects. the main risks and limiting factors for the adequate development of investment activities in ukraine were identified both at the microand macro-levels. the main challenges to investment activity in ukraine were studied with a focus on the main groups of stakeholders. within the framework of the study, the main trends of investment activity in ukraine were analyzed from the point of view of its system and structural architecture. the trends in the sectoral structure of foreign direct investments, as well as in the leading countries of their receipt are highlighted. the structure of the development of capital investments by spheres of economic activity, as well as the peculiarities of the financing of capital investments in their structural aspects were studied. in conclusion, based on the results of the research, scientific and practical proposals were made to support the development of investment activity in ukraine in financial and economic, regulatory and legal, communication and promotion aspects. the conducted research can be useful for professional researchers, experts in financial and investment sphere, professional investors, business associations, financial institutions and state authorities. prospects for future research are an extended analysis of the issues of the essence of investment activity from the point of view of its critical challenges for the creation of added value for stakeholders of different levels in a turbulent environment. key words: direct foreign investment, investment activity, capital investments, limited funding, stakeholder. jel classification: e22, g11 1. introduction investment is a crucial economic category that significantly influences both the short and long-term prospects of socio-economic development for all microand macro-economic actors. accordingly, investment activity as an economic phenomenon has a complex economic essence, which is influenced by a wide complex of exogenous and endogenous factors, which are mutually accepted. socio-economic turbulences in ukraine represent additional obstacles in the context of investment activity. in this context, one of the critical challenges is to strengthen the focus on the systemic-structural characteristics of ukraine's investment activity, which influences the prospects for the development of the national economy at the level of the state as a whole, as well as individual households, enterprises, three seas economic journal 65 vol. 4 no. 1, 2023 financial institutions, and other economic agents operating at both the macroand micro-levels. this issue requires a deeper understanding of the systemic-structural features of investment activity in ukraine. consequently, this demonstrates the high importance of this direction of research. the purpose of this article is to identify the peculiarities of investment activity in ukraine in its systemic and structural dimension in the context of the influence of critical microand macro-level drivers. within the framework of this study a number of tasks have been formed: – to determine the essence and current issues of investment activity in ukraine with a special focus on its systemic-structural features; – to conduct an analysis of the main trends and drivers of investment activity in ukraine from the perspective of its systemic-structural construction; – to formulate proposals for activating investment activity in ukraine, taking into account the needs of critical stakeholders. the nature of investment and the systemicstructural characteristics of this economic category have been the subject of considerable research. several works analyze the theoretical foundations of investment activity, especially in its systemic-structural aspects. in this regard, kapral (2016) examines the theoretical and methodological approaches to studying the essence of the economic phenomenon of investment activity. dolinsky (2016) examines the theoretical and methodological foundations of investment activity in ukraine in the context of the banking sector. skorobogatova (2016) examines the essence of investment activity in critical aspects of value creation for various stakeholders, and the integration of investment activity into the overall financial and economic mechanism of the national and global economy. an additional contribution to the study of the above issues was made by a work of niss (2023), which examines the institutional basis of investment activity in ukraine, particularly in the context of the formation of good socioeconomic relations between economic agents at the microand macro-levels. the study examines the main cause and effect relationships and key factors in terms of exogenous and endogenous changes in the socio-economic environment that shape the peculiarities of investment activity in developed and developing countries. in this context, igan, kulan, and marzaei (2016) examine the impact of capital flows on the economies of several developing countries. scientific and practical work in this direction is complemented by the work of rodionova and sisoian (2019), which examines the issues of implementation of investment activities in terms of microand macro-level drivers of a general and specific nature (using the example of the baltic region). an additional contribution to deepen the understanding of this issue is the work of ogbokor (2018), who conducts an econometric analysis of the impact of foreign direct investment on the state of the national economy in developing countries (using the example of namibia). research by grabiec (2022) examines the peculiarities of investment activity at the micro level during the socio-economic crisis caused by the covid-19 pandemic (using poland as an example). research by bvca (2023) analyzes current trends and key drivers of investment activity in developed countries in 2020–2022 (using the united kingdom as an example) during significant socioeconomic turbulence at the level of individual states and the world. the role of investment activity at the macro level, in particular, in supporting the socioeconomic development of the national economy and fulfilling other state functions, is studied in many articles. for example, kulakov (2021) analyzes investment activity at the international level in the context of diplomacy and interna tional relations. the work of aleksin (2019) examines the issue of limited financing in the context of activating investment activity in ukraine, especially in stimulating the growth of capital investment in the real sector at the state level. a separate body of work examines the role of investment activity in stimulating the competitiveness of economic agents at the micro and macro levels in ukraine. in particular, korittyko (2016) examines critical factors in the context of the system of investment activity in ukraine at the micro level. avramenko (2018) examines investment activity in the context of supporting an appropriate level of competiti veness in ukraine's agricultural sector. burkaltseva, voronin, lisitsky, mazur, guk (2017) study investment activity in the three seas economic journal 66 vol. 4 no. 1, 2023 innovation sector as a driver of growth in the competitiveness of the regions of the country. polozova and manoilenko (2017) analyze the role of investment activity in ukraine in supporting the competitiveness of enterprises in the field of innovation and investment mechanisms at the micro-, meso-, and macro-levels. another direction studies the peculiarities of investment activity in terms of the specificity of the application of its tools in different industries and business practices. for example, mclaughlin (2019) analyzes the role of state companies in the implementation of investment activity at the national and global economic levels. in line with the above research direction, kutsyk (2020) analyzes the role of the state in activating investment activity in the it sector in ukraine. this scientific and practical issue is complemented by the work of valencik and cervenka (2016), which examines the analytical tools for increasing the degree of coherence of various blocks of state investment activity. paskaramoorthy (2020) examines the issue of conducting investment activity in an online environment. however, the issue of systemic and structural peculiarities of investment activity in ukraine in connection with the implementation of a comprehensive solution in this area needs to be further studied. 2. systemic and structural analysis of investment activity according to the legislation of ukraine (in particular, the law of ukraine № 1561-xii of 18.09.1991), investment activity is a set of actions of economic entities and their socioeconomic relations in the implementation of investments. the cambridge university dictionary defines investment activity as a financial-economic process consisting of purposeful steps to acquire assets for the benefit in the form of interest or increase in their market value, carried out by both professional investors and the population. accordingly, this economic category covers a wide range of socioeconomic and financial-economic relations at micro and macro levels of broad stakeholder groups, which determines the complexity of systemic-structural features of investment activity. the essence of investment activity in its systemicstructural aspects can be identified through its essential components and drivers. in this study, the following drivers can be distinguished: – investment risks and limiting factors; – sectoral structure of foreign direct investment; – structure of foreign direct investment by main countries of origin; – structure of the development of foreign direct investment by sectors of economic activity; – structure of investment financing. it should be noted that due to the specific impact of micro and macro factors of short-term and long-term actions at the regional, national and global economic levels, which can be generally defined as the investment climate, investment activity in ukraine faces many risks and constraints. accordingly, these factors determine the volume and dynamics of investments in the country and shape the systemic-structural peculiarities of investment activity in ukraine. in this context, the ey (2021) study on the national strategy in the field of investment activity in ukraine identifies several risks and limiting factors for fdi (foreign direct investment) in ukraine from the investors' perspective in 2021. among the main obstacles to the growth of fdi, ey experts highlight the following (out of a maximum of 10.0 points): – corruption in ukraine (8.8); – low quality of the functioning of the national judicial system and the state of the rule of law in ukraine (8.6); – involvement of regulatory authorities in ukraine (8.2); – risk of restrictions on the free movement of capital from ukraine (7.6); – risk of state nationalization of companies (7.5). accordingly, the above-mentioned restrictions from the investor's point of view should be prioritized within the framework of the state policy of ukraine in the sphere of investment activity – for all groups of stakeholders, not only for the central executive authorities and the parliament, but also for the expert and consultative-analytical communities in the sphere of investment, the financial sector, professional investors and enterprises of the real sector of the ukrainian national economy. these risks and limiting factors directly or indirectly affect the state of investment activity in ukraine. ey experts conducted a comparative analysis of the total volume of fdi and its three seas economic journal 67 vol. 4 no. 1, 2023 distribution per capita in a sample of countries from eastern europe, the middle east, north africa and central asia. as a result of this analysis, ukraine shows significantly lower results compared to the benchmark countries in terms of fdi per capita. this indicates significant challenges for ukraine's investment activity, especially in the systemicstructural aspect. detailed data and results of this comparative analysis are presented in table 1. in terms of sectoral breakdown, direct foreign investments in ukraine are mainly directed to industrial enterprises (44% of the total volume as of 2021) and wholesale and retail trade organizations (15% for the same period) (kapral, 2016). thus, fdi often flows into the developed sectors of the national economy. this pattern is typical for investment activity in both developed and developing countries. from the perspective of countries from which direct foreign investments come, ukraine's investment activity is significantly concentrated on direct foreign investments in a geographical context. the main countries from which direct foreign investments originate are cyprus (31.5% as of 2021) and the netherlands (21.7% for the same period) (kapral, 2016). it should be noted that these european countries account for more than half of the volume of direct foreign investments in ukraine in 2021. the list of the main countries from which fdi will flow to ukraine in 2021 is presented in figure 1. as for capital investments until 2022, the investment activity of ukraine was characterized by rather high growth rates. as of 2021, the volume of capital investment utilization in ukraine amounted to 508.2 billion uah, compared to 623.9 billion uah for the same period of the previous year. this indicates unfavorable dynamics of capital investments in ukraine. at the same time, in terms of sources of financing for capital investments, the dominant role will be played by the enterprises' own funds (68.6% by 2021). another significant source of financing of capital investments in ukraine is financing from the state and local budgets – at 17.6% for 2021. however, bank and other loans will account for only 5.0% in 2021. funds of foreign investors in the structure of financing of capital investments in the country constitute only 0.1% for 2021 (kapral, 2016). table 1 volume of fdi and its distribution per capita for individual countries in the eastern europe, middle east, and central asia region, 2021, billion usd, million people, thousand usd per person country region volume of fdi, billion usd population, million people volume of fdi per capita, thousand usd/person czech republic eastern europe 146,5 10,7 13,7 slovakia eastern europe 57,2 5,5 10,5 kazakhstan central asia 156,2 18,8 8,3 poland eastern europe 235,7 38,4 6,1 serbia eastern europe 41,5 6,9 6,0 lithuania eastern europe 16,6 2,8 5,9 romania eastern europe 81,5 19,3 4,2 turkey middle east 143,7 83,2 1,7 tunisia north africa 38,0 11,7 3,2 ukraine eastern europe 71,2 41,8 1,7 source: based on (ey – usaid) 31,5% 21,7% 6,1% 4,5% 4,6% 3,0% 2,3% 2,0% 24,3% cyprus netherlands switzerland united kingdom germany austria luxembourg france others figure 1. structure of foreign direct investment in ukraine by major countries of origin, %, 2021 source: based on data from the state statistics service of ukraine, national bank of ukraine, ministry of finance of ukraine, ministry of economy of ukraine three seas economic journal 68 vol. 4 no. 1, 2023 the specific structure of investment financing in ukraine leads to systemic and structural challenges in the short and long term. in particular, the dominance of own sources of financing combined with the low weight of attracted sources of financing indicates a significant limitation of financing of capital investments in ukraine. as a result, firstly, there is no adequate transfer of funds from the financial sector to the real sector of the national economy of ukraine; secondly, it limits the opportunities of ukrainian enterprises to improve their production and operating facilities; thirdly, it artificially limits the pace of socioeconomic growth in ukraine; and fourthly, it leads to the limitation of the work of certain sectors of the national economy of ukraine, which could serve as business partners for ukrainian enterprises in a more balanced structure of financing capital investments in ukraine. accordingly, this requires the implementation of active measures by the state to activate the attraction of other sources of financing to achieve higher and longer-term results in the context of ukraine's investment activity. (kapral, 2016) 3. investment activity in ukraine: sectoral analysis within the framework of the analysis of systemic and structural features of investment activity, the structure of capital investment utilization by economic activity sectors is of scientific and practical interest. it should be noted that the key areas of capital investment in ukraine as of 2021 are industry (35.5% of the total), compulsory social insurance (12.3%), and agriculture (10.0%). this reflects the structural features of the national economy and the priorities of the country 's socio-economic development. the detailed structure of capital investment utilization by sectors of economic activity in ukraine for 2021 is presented in figure 2. (kapral, 2016) based on the analysis of systemic and structural features of investment activity in ukraine, the article offers a set of scientific and practical recommendations aimed at strengthening the work of this institution in the short and long term, both at the level of the national economy as a whole and at the level of individual enterprises. these changes are intended to create a stable foundation for the development of investment activities in ukraine based on competitiveness and a focus on creating value for various stakeholders: financial and non-financial corporations, households, and the state. the proposed set of recommendations consists of three interrelated blocks: – block 1. financial and economic measures; – block 2. regulatory and legal measures; – block 3. communication and popularization. consider the proposed measures within the framework of the issue under study in more detail. block 1 includes the planning and implemen tation of comprehensive reforms to improve the state of the exogenous and endogenous environment of investment activity in ukraine, thus attracting investors to more active participation in this process. this block also includes the development and implementation of targeted reforms aimed at improving the state of individual sectors as potential areas for activating investment activity. block 2, "regulatory and legal measures", envisages appropriate changes in the regulatory, legal and legislative framework to provide a legal basis for the financial and economic measures to be taken. such an approach is necessary to 35,5% 12,3% 10,0% 8,2% 7,8% industry compulsory social insurance agriculture vehicle repair construction figure 2. key sectors of economic activity in terms of capital investment utilization in ukraine, %, 2021 source: based on data from the state statistics service of ukraine, national bank of ukraine, ministry of finance of ukraine, ministry of economy of ukraine three seas economic journal 69 vol. 4 no. 1, 2023 enable the appropriate implementation of the reforms in block 1, the acceptance of these changes by key stakeholders, and the normalization of these changes. the set of proposed measures to strengthen investment activity is presented in block 3, which is aimed at deepening the acceptance of changes by key stakeholders – primarily households. this can be achieved by conducting various information campaigns to popularize the ideas of reforms focused on investment activity in ukraine. this will lead to greater openness of citizens to interaction with professional investors and the state in the field of investment. these information and communication activities will also strengthen the trust of local communities in local investors. at the same time, professional investors, the financial sector, and foreign companies need additional explanations that will increase their confidence in the prospects of the ukrainian economy. these information and communication activities can be carried out within the framework of state export promotion, cooperation with industrial and business associations, and economic diplomacy. as a result, the level of stakeholder engagement will increase, activating the investment process in ukraine. 4. conclusions in summary, the function of investment activity in ukraine has been studied in its systemicstructural aspect. a special focus of the research is aimed at identifying key problem areas and, accordingly, ways to improve the state of investment activity in ukraine. this analysis is carried out in the context of critical risks and barriers to the creation of a good investment environment at the micro and macro levels in ukraine. as a result, a comprehensive study of this economic category in its essential aspects, namely systemic-structural features, is required. it is important to note that significant challenges arising from the need for post-war reconstruction and activation of socio-economic development in ukraine will only exacerbate the current need to strengthen investment activity – primarily in its systemic-structural dimension. accordingly, this will require the implementation of deep and coordinated reforms to improve the favorability of the national socio-economic environment at both the micro and macro levels. these changes should be addressed to existing and potential investors and other key stakeholders. in response, a set of solutions has been formulated that includes measures necessary to improve the micro and macro socio-economic environment in the context of activating investment activity in ukraine. this set includes several blocks: financial and economic measures, regulatory and legal measures, and communication and popularization measures. accordingly, these blocks are coordinated and aimed at improving the socio-economic environment in the shortand long-term dimensions of time to activate investment activity in ukraine on a systemic basis. the prospects of future research in this 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(2020). a framework for online investment decisions. investment analysts journal, 49(3), 215–231. law of ukraine № 1561-xii from 18.09.1991 "on investment activity " (n.d.). retrieved march 23, 2023, from https://zakon.rada.gov.ua/laws/show/1560-12#text cambridge university dictionary (n.d.). retrieved march 23, 2023, from https://dictionary.cambridge.org ey – usaid (2021). national strategy to increase foreign direct investment (fdi) to ukraine. retrieved december 14, 2022, from https://drive.google.com/file/d/1cfa_gp58tonnxqqfd_ 6d8uuf rzg19b7_/view state statistics service of ukraine (2022). retrieved december 14, 2022, from https://www.ukrstat.gov.ua national bank of ukraine (2022). retrieved december 14, 2022, from https://bank.gov.ua/ua/statistic/ sector-external ministry of finance of ukraine (2022). retrieved december 14, 2022, from https://www.mof.gov.ua/ uk/makroogljad ministry of economy of ukraine (2022). retrieved december 14, 2022, from https://www.me.gov.ua/ documents/detail?lang=uk-ua&id=62bfd716-8665-4a4c-9e2d-6325ba53b3c8&title=investitsiivukr ainutavidnovlenniaekonomiki received on: 03th of march, 2023 accepted on: 10th of april, 2023 published on: 28th of april, 2023 three seas economic journal 21 vol. 3 no. 2, 2022 corresponding author: 1 black sea research institute of economics and innovation, ukraine e-mail: a.bilyaze@gmail.com orcid: https://orcid.org/0000-0003-3361-7931 doi: https://doi.org/10.30525/2661-5150/2022-2-3 strategy of economic development of the state in the conditions of globalization oleksii bilyaze1 abstract. the influence of globalization processes on the functioning and implementation of the strategy of economic development of the state is analyzed and proved. the author's approach to defining the concept of economic globalization and economic strategy of the state taking into account globalization challenges is offered, the model of realization of strategy of economic development of the state in the conditions of globalization is developed. new external challenges for ukraine in the context of globalization and further integration of the country into the world economy include both potential benefits that should be sought to maximize and serious risks and threats that require targeted action to identify, mitigate and neutralize. ukraine's economic development are formed. in the light of modern globalization challenges and a new stage of ukraine's economic development, the importance of scientific substantiation of national economic strategies and the formation of effective state economic policy on their basis is growing. it is important to form a new vision for the choice of economic development strategies, which will be based on scientific knowledge, existing patterns of modern economic development and a clear understanding of the possibilities of advanced development. the choice of economic development strategy in the context of globalization requires a theoretical understanding of the essence of this phenomenon, its impact, determining their place in the system of macroeconomic development. new external challenges for ukraine in the context of globalization and further integration of the country into the world economy include both potential benefits that should be sought to maximize and serious risks and threats that require targeted action to identify, mitigate and neutralize. the strategy of economic development of the state should be to effectively integrate the economy into globalization, which ensures maximum use of the resulting benefits and minimize the inevitable risks in favor of successful economic development. the strategy of economic development of the state in the effective introduction of the economy in the processes of globalization, which ensures maximum use of benefits and minimizes the risks in favor of successful economic development of the state. key words: economic development, state strategy, globalization, economic globalization. jel classification: f62, f63 1. introduction globalization is a grandiose and dynamic process in modern conditions – the global economy acquires common and unique characteristics. defining the transformations of economic development of the national economy in the context of globalization is an element of progress, as it authorizes not only the delineation of current development trends, but also the positioning of major changes that threaten development for certain countries in the future. according to the national intelligence council (intelligence council, 2017), the key trends in the globalized world by 2035 will be weak economic growth, and therefore, leading economies will face shrinking labor and declining productivity growth; accelerating technological progress, which will create new opportunities but increase disparities between leaders and outsiders; further spread of automation and artificial intelligence, which threaten to rapidly change the industry, potentially pushing workers with traditional skills and limiting the usual path of development for poor countries; climate change, environmental and health issues that will require more attention and collective action, even if cooperation becomes more difficult; changing the nature of conflicts, the number of which will increase due to differences in the interests of major powers, the expansion of terrorist threats. the purpose of this study is to study the impact of globalization processes on the functioning and implementation of the strategy of economic development of the state. achieving the goal of the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 22 vol. 3 no. 2, 2022 study necessitated the formulation and solution of the following main tasks: to analyze own approach to definition of concept of economic globalization and economic strategy of the state taking into account globalization challenges, to develop model of realization of strategy of economic development of the state in the conditions of globalization. to solve the above tasks, the following general and special methods and approaches were used: morphological analysis – to clarify the conceptual and categorical apparatus of research; system-structural approach – in the study of theoretical and methodological foundations of the strategy of economic development of the state in the context of globalization; comparative analysis to compare processes, objects, phenomena, to identify the general and special, to study the causes of change, to identify trends in the national economy. the article also used: methods of statistical analysis – to assess the dynamics of the globalization index; functional synthesis – when designing approaches to modeling the strategy of economic development of the state; functional synthesis – in developing a mechanism for implementing the economic strategy of the state in the context of globalization. the versatility and dynamics of the world economy point to the need for a systematic study of globalization in order to identify the challenges that countries must respond to today, as their neglect will lead to further deviations from the vector of development trends. the research objectives of this study are to identify the mediating influence of globalization processes on the functioning and implementation of the strategy of economic development of the state. 2. literature review the influence of globalization on the development of the state to study the following scientists: lukyanenko d. g. (2001), filipenko a. s. (2007), dubnitsky v. i. (2015), kravchuk n. ya. (2012), korablin s. o. (2017) separately, fiedman j. (1989), reich s. (1998), levitt t. (1983) the following scientists studied the formation and implementation of the strategy of economic development of the state: grodovsky o. v. (2010), hubanov s. l. (2006), veduta o. m. (2003), lagutin v. d. (2017). the works of these scientists are used in the article. the scientific novelty of this article is that for the first time the influence of globalization on the strategy of economic development of the state is investigated. 3. generalization of the main statements 3.1. definition of globalization and economic globalization globalization as a phenomenon means strengthening the interaction and interdependence between different countries and regions of the world in the field of economy, politics and culture. economic globalization is the strengthening of the interdependence of national economies around the world, due to the rapid growth of movement across borders of goods, services, technology and capital (rakesh mohan joshi professor, 2009). levitt t. (1983) emphasizes and that in the process of global homogenization, modern markets are expanding to achieve cost savings globally. globalization expert j. friedman (1989) notes that globalization is the integration of markets, nation states, and technologies, enabling individuals, corporations, and nation-states to reach anywhere in the world faster, deeper, and cheaper than before. globalization has its own set of economic rules based on the opening, deregulation and privatization of national economies in order to strengthen its competitiveness and increase the attractiveness of foreign capital. holovchenko o. (2020) notes that the process of globalization is a mandatory accompanying segment of the functioning and development of the national economy, which affects the process of intensive integration of commodity and stock markets, as well as promotes rapid implementation of scientific and technological advances and optimization of production efficiency. yakovets yu. (2003) monograph "globalization and the interconnection of civilizations" notes that "integration processes in the world economy have reached such a level and closeness of ties between national economies that it is correct to speak of the global economy as a priority phenomenon with its own patterns, trends, mechanisms of functioning and development ". the structure of the globalization process is also presented in the works of lukyanenko d. h. (2001). in it he identifies the following globalization areas: economic, political, social, scientific and technological, environmental. filipenko a. s. (2007) grouped all the diversity of views on globalization into three scientific concepts: structuralist (structural), conjunctural, constructivist. structuralist theory is based on the laws of domestic and international economic systems and considers globalization as a necessary, pronounced, inevitable process caused by economic and political factors. according to the conjunctural concept, the main features of globalization are determined by individual policies and circumstances that depend on changes in internal and external environments, their interaction in space and time with a unique configuration of social forces and historical background. constructivist theory is based on ideas that characterize globalization as a random, stochastic, unpredictable process, determined by the communicative discourse of three seas economic journal 23 vol. 3 no. 2, 2022 political agents, the content of which is motivation, interests, ideas. according to reich s. (1998), globalization is an interconnected set of economic phenomena. these include liberalization and deregulation of markets, privatization of assets, relinquishment of government functions, dissemination of technology, international distribution of production and integration of capital markets. the washington international trade association states that economic globalization in the broadest sense means the growing integration of national economies around the world, in particular through trade and financial flows. economic globalization includes trade in goods and services, capital flows and trade in assets (eg currency, stocks), technology and idea transfer, and international labor flows or migration. experts from the international monetary fund (2002), focusing on the economic nature of the phenomenon under study, characterize globalization as growing economic interdependence around the world through increased international exchange of goods, services, capital, technology, knowledge, ideas and labor. the process of globalization at the stage of functioning of the world economy is characterized by the following properties – the objective strengthening of the permeability of interstate borders; a sharp increase in the volume and intensity of transnational, transnational flows of capital, information, services and human resources; strengthening the role of non-state and supranational regulators of the world economy; forced export of models of democratic state system and principles of market management; development of economic and political interdependence of countries and regions of the world to such a level that it becomes possible and necessary to raise the issue of creating a single global legal field and world bodies of economic and political governance; going beyond the interests of national economic entities beyond the national-state framework; solving national private economic problems taking into account world economic interests and mobilization of world resources; the interdependence of the economic situation in developed countries. thus, globalization as a process of unification of socio-economic and political processes in its development poses new challenges to individual countries. other forms of globalization affect even those countries that are less economically globalized, and therefore their successful development largely depends on the ability to adequately respond to ongoing challenges. thus, analyzing and focusing on the economic essence of the process of globalization, we propose our own author's definition of "economic globalization". economic globalization is a multifaceted and multivector concept that encompasses the process of absolute integration between states. economic globalization is characterized by the expansion, deepening and acceleration of cooperation in the world. undoubtedly, globalization has a significant impact on the structure of the world economy as an interconnected system. 3.2. analysis of the kof index in ukraine in order to assess the degree of involvement of individual countries in the process of globalization, the index of globalization is used, which allows you to build a ranking of countries by the degree of involvement in global flows – kof-index of globalization. the globalization index (kof globalization index) is an index developed by the swiss institute of economics at the federal university of technology in zurich, which measures the level of globalization in the economic, political and social dimensions (savina gygli, florian haelg, niklas potrafke, janegbert sturm, 2019). the indicators of this chart indicate the lack of growth dynamics of the globalization index. thus, in 2010 the general index of globalization was – 71, and in 2019 – 74, the index of economic globalization in 2010 – 61 and in 2019 – 77. in line with the globalization of the world economy, there is the problem of creating a system of management of economic processes on a global scale. the role and place of national economies operating within such a global economic environment is considered from two rather contradictory directions: the first means the expansion and development of economic relations, based on the internationalization of national economies and the formation of a single integrated economic space, the second has based on the concept of independence of national economies, maintaining the independence of the state economy in a globalized world environment (dolishnii, kozoriz, 2002). it is obvious that neither market self-regulation nor state intervention alone can ensure the full and harmonious development of society. these two mechanisms should not oppose, but interact and complement each other. scientists are always on the lookout for their ideal balance, but it should be noted that such a balance is specific to each country and for different stages of economic development (kravchuk, 2012). 3.3 analysis of the concept of economic strategy of the state the study of the economic strategy of the state in the globalized world deserves special attention, because three seas economic journal 24 vol. 3 no. 2, 2022 the interdependence of countries and ties between them are growing. to address these issues, the role of state economic policy in developing a strategic vector of economic development should be increased. the formation of the economic policy of the state, the responsibility for violating the established procedure for the formation and implementation of its provisions should receive its own legally established mechanism. ms. w. kolodko (2013) determined that the state should ensure balanced long-term economic development, which is based on three components: balanced economic growth; growth balanced in the social dimension; growth balanced in an environmental context. in our opinion, the strategy of the economy should be to ensure a standard of living that is comprehensive and harmonious development of the individual and society as a whole. such a development should assume that as much of society as possible should be involved in the distribution of national income and public goods. at the same time, the well-being of the population is the main reference point for economic development and depends on the parameters of its structure and dynamics. to create an effective economic strategy, it is necessary to understand what the economy is like at the present stage, what it may become in the future, how it can be changed, and only on this basis to influence it. the state must look for existing imbalances in economic development and, accordingly, eliminate such imbalances with the help of an effective economic strategy. analyzing the state of the national economy, we can outline the prospects for further development of economic strategy and identify the necessary changes. the state must have the tools with which it could realize and implement an effective economic strategy. in this context, s. korablin (2017) quite rightly states that "the state in the economy should play not the minimum possible role, but active – but in its usual areas. accordingly, the main issue should not concern the scale of the state, but the directions and methods of its activities. in this sense, it is not surprising that in countries with efficient economies, the sphere of responsibility of the state is quite wide". next, we turn to the definition of the economic strategy of the state and focus on the global challenges of its formation and functioning. according to hrodovsky v. o. (2010) economic strategy is a set of economic methods and techniques by which you can effectively achieve the fundamental goals of state development in a changing competitive environment. according to the economic code of ukraine (2003), economic strategy is a course of economic policy chosen by the state, designed for the long term and aimed at solving large-scale economic and social problems, cultural development, economic security, preservation and increase of its economic potential and national wealt, national welfare. economic strategy includes the definition of priority goals of the economy, means and methods of their implementation, based on the content of objective processes and trends in the national and world economy, and taking into account the legitimate interests of economic entities. skobkin s. s. (2009) argues that the economic strategy of the state is a dynamic system of interrelated rules and techniques that provide effective formation and maintenance in the long run of competitive 0 10 20 30 40 50 60 70 80 2010 2015 2019 dynamics of the kof globalization index in ukraine globalisation index economic globalisation source: generated from site data https://kof.ethz.ch/en/forecasts-and-indicators/indicators/kof-globalisation-index.html three seas economic journal 25 vol. 3 no. 2, 2022 advantages of the state in domestic and foreign markets of individual and public goods. in the most general form, any strategy, regardless of the level of the subject (macro or micro level) is based on a clearly formulated program statement, a presentationof supporting goals and objectives and a scenario for achieving (implementing) a growth strategy. the economic strategy of the state is a section of public administration designed to maintain through a set of planned measures (strategic decisions) the unity between the proposed strategy for future development, goals and objectives of state economic policy and real trends in the world economy based on economic potential, opportunities in achieving socioeconomic growth and strengthening the economic security of the state in conditions of global competition (hubanov, 2006). in our opinion, the economic strategy of the state is a form of long-term management of macroeconomic processes at different levels of the economic system, taking into account globalization challenges. the chosen stage is characterized by an interconnected system of key macroeconomic indicators: the growth rate of gross domestic product (gdp), industrial and agricultural production, the level of welfare and income, inflation and others. at the micro level, the development of the economic strategy of the state is part of the innovation and marketing strategy in the context of globalization. 3.4. the impact of globalization on the economic strategy of the state one of the urgent problems of forming an economic strategy for the development of any state in the context of economic globalization is to reduce the gap between the national economy and the advanced countries of the world. the state faces the task of ensuring sustainable growth in the long run, but also qualitative transformations of the economy – the formation of an effective institutional system, development of advanced technologies, diversification of the economy as opposed to "unilateral" specialization and more. the implementation of these priorities is to find a long-term economic growth strategy in the context of globalization. the development of a growth strategy in the context of globalization takes into account the domestic economic potential, determines the most likely profile of specialization of the state economy, as well as global development trends. thus, the main stages (directions) of the economic strategy of the state are: 1) creation of the strategy of development of the state in which it is defined: the concept of the chosen strategy, the purposes, tasks, the program of actions, the basic criteria of an estimation of quality of the realized strategy, possible scenarios of development of a situation in the world market; 2) adjustment of tactical decisions in the main areas of economic policy in accordance with the chosen strategy, taking into account possible and anticipated scenarios of development and economic potential at each stage of the development strategy of the state; 3) control of compliance of the result of decisions with the main criteria (economic, social, financial) efficiency (quality) of the state strategy. at the stage of development of the world economy, any state is strategically interested in maintaining stable positions, but also in the growth of indicators of socioeconomic and financial development. we propose the following scheme for developing the economic strategy of the state in the context of globalization. this scheme of developing the economic strategy of the state in the context of globalization shows us the stages of effective policy implementation through the prism of dynamic development and means that the chosen strategy will depend on the ability to achieve strategic priorities. the competitive strategy of economic growth of the national economy determines not only the positive trend of the main macroeconomic indicators of development (in this case the effectiveness of the growth strategy), but also ensures the country 's competitiveness in the world economy, which allows it to differ from its competitors. in the most general form, the algorithm for substantiating the strategy of economic growth of the state in the context of globalization includes the following areas: 1) assessment of trends in the world economy; 2) assessment of the economic potential of the state, the possible profile of specialization of the national economy in the world economy; 3) substantiation of the concept of competitive growth strategy; 4) assessment of the effectiveness of the strategy in terms of its impact on solving internal problems of socio-economic development of the state; 5) assessment of the effectiveness of the strategy in the context of increasing the competitiveness of the state in the world economy; 6) formation of economic policy aimed at implementing a competitive strategy. the concretization of the strategic goals of the state in the field of economy is economic tactics or policy. it is carried out in the following main areas, such as (veduta, 2003): – foreign economic policy (policy in the field of export and import of goods, services and capital); – institutional policy (organization of the institutional structure of the economy); three seas economic journal 26 vol. 3 no. 2, 2022 – structural policy (aimed at changing the macroeconomic proportions between final consumption and gross accumulation, government revenues and expenditures, sectoral structures of the economy); – social policy (policy in the field of social services, redistribution of income, support for a certain, least protected part of the population); – investment policy (aimed at determining the required amount of investment and its sources); – pricing policy (aimed at regulating consumer market prices and producer prices); – financial policy (in the field of formation and use of state financial resources, control over the targeted use of state budget funds); – monetary policy in the field of money circulation and credit. economic strategy of development in the context of globalization allows the state: first, to get an idea of the state of the economy and the level of solving economic problems at any given time; secondly, to design for the future existing trends in the development of macroeconomic relations; thirdly, to outline strategic goals to be achieved by the relevant actors; fourth, to link the goals with the amount and structure of all types of resources needed to achieve them; fifth, to ensure a comprehensive, coordinated inclusion of fiscal and monetary instruments in the mechanism for achieving strategic objectives; sixth, it enables the production organizations of the state to get an idea of the situation in the domestic and world markets and trends in them. the economic strategy of a country always implies the correlation of goals and means of economic development in the long-term aspect of its policy. this is especially important for a country that is making big changes. a key position in the interpretation of economic strategy is given to its goals, commensurate with the means of achieving them. a key position in the interpretation of economic strategy is given to its goals, commensurate with the means of achieving them. no less important of its parameters is the time of implementation of goals, which should cover a fairly long period, as well as a specific space of economic processes. of course, the goals set by the country are of key importance for the characterization of economic strategy. these goals cannot be arbitrary, they must meet the needs of society at a certain stage of its development. the experience of developed countries shows that as economic goals of the government can identify a variety of tasks and indicators, however, they always have in one way or another a set of tasks of this kind: 1. economic growth. 2. full employment. 3. economic efficiency. 4. stable price level. 5. economic freedom. 6. fair distribution of income. 7. economic security. 8. trade balance. 4. discussion the main problem in the formation of economic strategy is usually to specify and limit the sets of tasks and ranking priorities among the selected goals. at the same time, the goals are constantly commensurate with the means of achieving them. in fact, goals and means are interdependent and may even change places. thus, the task of market formation in the context of our considerations is more a means of imple can economic strategy improve the development of the state in a global environment? what strategy is decisive in the light of globalization trends? does the strategy meet global challenges? will the implementation of the strategy create a competitive advantage? what are the strategic opportunities of the state at this stage of development? what are the ways to improve the existing economic strategy? does the state have the opportunity to change the strategy at this stage of development? strategic analysis the choice of the best strategy in the realities of globalization analysis of the general situation in specific sectors of the economy analysis of internal relations three seas economic journal 27 vol. 3 no. 2, 2022 menting the country 's economic strategy than its goal. however, it can be seen as a component of the goal, if you specify the qualitative parameters of what is called the market, as well as clearly link it to the terms. decree of the president of ukraine of 30.09.2019 № 722/2019 adopted "sustainable development goals of ukraine until 2030". this normative legal act does not take into account ukraine’s international obligations on sustainable development, defined by un strategic documents; the basis for the implementation of economic transformations in ukraine in the direction of sustainable development is the association agreement between ukraine and the european union. it should be noted that the developed and approved strategic document does not fully reflect the goals and objectives of sustainable economic development in the context of globalization. for ukraine, the implementation of the economic development strategy should also help increase the competitiveness of domestic producers, standards and quality of life and lay the foundation for sustainable economic growth. the choice of the appropriate strategy of economic development of the state is not a simple reflection of the theoretical concept, but the result of the implementation of principles and foundations that depend on the national characteristics of each country and correspond to national traditions. this is where the country 's competitive advantages are formed. in this context, v. lahutin's (2017) approach is considered, which defines five elements of the model of formation and implementation of economic policy, including: the adequacy of environmental policy, development and implementation of economic policy, obtaining results and, above all, identifying differences between expected results. at the same time, the scientist notes that in a unbalanced economy, the state in most cases does not have the necessary tools that can give a quick positive effect. given the current economic trends, it is necessary to distinguish between internal and external manifestations of the formation of the strategy of economic development in the context of globalization challenges. internal factors include those identified in the process of internationalization (imports of goods, services, capital, labor immigration), and external – manifestations of interaction in a globalizing environment (exports of goods, services, capital, labor emigration). 5. conclusion the current model of socio-economic development of ukraine must take into account the globalization challenges on the basis of which the strategic priorities of ukraine's economic development are formed. in the light of modern globalization challenges and a new stage of ukraine's economic development, the importance of scientific substantiation of national economic strategies and the formation of effective state economic policy on their basis is growing. it is important to form a new vision for the choice of economic development strategies, which will be based on scientific knowledge, existing patterns of modern economic development and a clear understanding of the possibilities of advanced development. the choice of economic development strategy in the context of globalization requires a theoretical understanding of the essence of this phenomenon, its impact, determining their place in the system of macroeconomic development. new external challenges for ukraine in the context of globalization and further integration of the country into the world economy include both potential benefits that should be sought to maximize and serious risks and threats that require targeted action to identify, mitigate and neutralize. the strategy of economic development of the state should be to effectively integrate the economy into globalization, which ensures maximum use of the resulting benefits and minimize the inevitable risks in favor of successful economic development. the consequences of the transformation of the economic system in ukraine have raised the issue of choosing and justifying the directions of its further development of economic strategy. the multifaceted nature and scale of this problem identified the need for its comprehensive study and determined the diversity of scientific research. the course of real economic processes in ukraine does not fit into the standards of economic science. for the practical implementation of the economic strategy of state development in the globalization of the national economic system requires updating priorities, clarifying resource provision, working out mechanisms for implementing the strategy of economic development. given the changes taking place in the country, there is an approval of the economic model of development with increased globalization challenges and complex government functions. references: decree of the president of ukraine on the sustainable development goals of ukraine until 2030. document 722/2019. available at: https://zakon.rada.gov.ua/laws/show/722/2019#text (in ukrainian) dolishnii, m., & kozoriz, m. 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(in russian) three seas economic journal 1 vol. 3 no. 2, 2022 corresponding author: 1 university of sri jayewardenepura, sri lanka e-mail: rashmikasanduni@gmail.com orcid: https://orcid.org/0000-0003-4463-4163 2 university of sri jayewardenepura, sri lanka e-mail: madhushinarmada93@gmail.com orcid: https://orcid.org/0000-0001-9691-3928 3 university of sri jayewardenepura, sri lanka e-mail: anuradhaiddagoda@sjp.ac.lk orcid: https://orcid.org/0000-0003-2586-430x 4 wayamba university of sri lanka e-mail: hiranya@wyb.ac.lk orcid: https://orcid.org/0000-0002-4963-5125 doi: https://doi.org/10.30525/2661-5150/2022-2-1 mediating role of employee engagement on the relationship bet ween workplace spirituality and employee job performance sanduni rashmika gurugamage1, madhushi narmada ramanayake2, anuradha iddagoda3, d.h.s.w. dissanayake4 abstract. there is a growing trend of workplace sprituality in the management world. not only workplace sprituality but employee engagement also catched the attention of the managerial employees because of its consequences. the main consequences of the emplyee engagement are employee job performance and organizational financial performance. the main aim of this study is to briege a population gap in the public listed banks sri lanka. identified gap is that there is no evidance related to the sri lanka banking sector on the mediating effect of employee engagement on the relationship between work place sprituality and employee job performance. this is a quantitative study which uses random sample of 92 of the managerial employees in the listed banks in sri lanka. the main purpose of the study is hypothesis testing and cross sectional study was conducted in a natural environment with the minimum researcher interference. initially reliability and confirmatory validity is ensured using smartpls 3.3.9 software and partial least squares model is used to examine the hypothesis. this study found the positive significant relationship between spirituality and job performance and which have empirical and theoretical contributions. key words: workplace sprituality, employee engagement, employee job performance. jel classification: m12, g21 1. introduction due to the covid-19 pandemic and economic crisis employees frequently feel anxiety, fear, and depression. working in an environment that supports the employees’ right to openly express their beliefs helps them to have better working relationships with colleagues, feel safer, and be more engaged in their work (rathee & rajain, 2020). therefore, more and more organizations are inculcating spirituality in their environment, as the impact of a good environment is not only felt by the this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 three seas economic journal 2 vol. 3 no. 2, 2022 employees but can be measured through economic outputs, using measures such as quality, productivity, and profitability (rathee & rajain, 2020). employee engagement has become a buzz word in the management circles (tharika et al., 2021) due to th consequesnes of organizationa financial performance and employee job performance (iddagoda et al., 2022a). iddagoda and opatha (2020) conduct a study about the mediating effect of employee engagement. however their study is limited to the employee engagement factors such as reliogisity, personal character, high performance work practices, leadership and work life balance. their unit of analysis is individual i.e managerial employees in the public listed companies in sri lanka. this indicate that there is a population gap which is related to the sri lanka banking sector on the mediating effect of employee engagement on the relationship between work place sprituality and employee job performance. the research objective is to identify the mediating effect of employee engagement on the relationship between workplace sprituality and employee job performance. 2. workplace spirituality workplace spirituality is defined as the "recognition that employees have an inner existence that nourishes and is nourished by meaningful work taking place in the context of a community " (ashmos and duchon, 2000). another definition of workplace spirituality is the desire to discover one's life's ultimate purpose and behave appropriately (cavanagh, 1999). employee-related issues are mostly stress-related illnesses, absenteeism, violence, and corruption plague modern businesses. these workplace issues are common in businesses when spirituality is lacking (nasina and doris, 2011). furthermore, nasina and doris (2011) suggest that the employees become more productive, fulfilled and creative if they are free to bring their physical, intellectual, emotional and spiritual attributes to the workplace. allowing the deepest, most spiritual aspects of human experience to be expressed may not only reduce stress, conflict, and absenteeism, but also improve work performance (krahnke et al. 2003). according to ashmos and duchon (2000) spirituality in the workplace, both as an individual's experience and as a result of the organization's work environment. a spiritual workplace, according to them, is one that allows an individual to express his or her inner life through meaningful employment in the framework of a community. dehler and welsh (2003) define workplace spirituality as "a search for purpose, deeper self-knowledge, or transcendence to a higher level". this serves as the working definition of the study. as described by ashmos and duchon (2000), when it comes to spirituality at work, it's not about religion or persuading employees to accept three seas economic journal 3 vol. 3 no. 2, 2022 a certain belief system. "spirituality is all about employees feeling connected to one another and to their workplace community ". 3. employee engagement employee engagement plays a major role in any organization which wants to gain the competitive advantage over the others. according to baumruk (2004), employee engagement is considered as the most potent indicator of a company 's viability. the concept of employee engagement was first defined by kahn (1990) as the harnessing of organizational members’ selves to their work roles; self-employment and self-expression of people physically, cognitively, and emotionally in their work role performances. schaufeli and bakker (2010) define work engagement as "the psychological state that occurs as a result of an individual's behavioural investment of personal energy ". according to the definition above, an engaged employee is intellectually and emotionally connected to the organization, cares deeply about its aims, and is devoted to upholding its values. another definition of employee engagement is "an energetic state of connection in personally full-filling activities that boost one's sense of professional efficacy " (maslach and leiter, 2008). employee engagement is investing employees’ head, hands and heart in their performance (rich et al., 2010). this definition is described more by christian et al. (2011) as a broad concept "an individual invests their entire self in terms of physical energies, emotional and cognitive". cook (2012) defines employee engagement as "how favorably the person thinks, feels, and is proactive in regard to accomplishing organizational goals for customers, colleagues, and other stakeholders". moreover, employee engagement is the result of a mix of attitudes and behaviors (iddagoda and opatha, 2020). employee engagement is a very crucial factor for an organization’s success and competitive advantage (macey, et al. 2009; rich, et al. 2010). furthermore, many claims have been made that organizations with higher employee engagement have increased productivity, customer satisfaction, profitability and shareholder returns (crawford, et al. 2010; harter, et al. 2002). employee engagement is the extent to which an employee gets involved in the job and the organizationcognitively, emotionally and behaviorally. is the definition given by iddagoda et al. in 2016. this is the study’s working definition. 4. employee job performance employee job performance is defined as the overall outcome of an employee fulfilling his/her duty in terms of the quality, effectiveness, efficiency and standards which have been determined in advance (motowidlo, 2003). stewart and brown (2011) define employee performance as the individual’s contribution to the organization in which three seas economic journal 4 vol. 3 no. 2, 2022 they work. they believe that the success of an organization is determined by the performance of its people. samsuddin (2006) defined job performance as the degree to which a person, unit, or division can complete tasks utilizing current capabilities and constraints in order to meet the organization's or company's objectives. the employee should feel responsible for successful tasks and duties performed by him/her (opatha, 2009). in 1993, borman and motowidlo suggested two categories of job performance. they are task performance and contextual performance. task performance refers to how well employees perform the activities that are formally part of their job and contribute to the technical core of the organization. contextual performance refers to voluntary organizational actions that are not required by the job and do not directly contribute to the technical core. contextual performance encompasses tasks that are not formally part of the job but are crucial for all jobs, such as assisting others, cooperating with others, and volunteering. griffin et al. (2007) argued that job performance in dynamic organizational contexts should represent not just an employee's ability to complete job responsibilities, but also the interdependence of work activities and job holders' adaptive and proactive behavior. according to swanson (2007), organizational support, management support, coworker support, adequate resource provision, motivation, capability, and individual expertise all influence employee job performance. according to seneratne and rasagopalasingam (2017), one of the most important determinants of organizational success is employee job performance. furthermore, graso and probst (2012) argued that quality and quantity are the most essential markers of job performance. employee’s contribution to fulfilling the tasks and jobs in order to make a positive work environment while eliminating negative or harmful acts is the definition given by iddagoda et al. (2021) for the construct of employee job performance. this serves as the working definition of this study. 5. hypothesis development both the meanings of workplace spirituality and employee engagement imply a sense of fullness and completion. according to milliman et al. (2003), according to nearly all scholarly definitions, spirituality entails a sense of wholeness. according to krishnakumar and neck (2002), "employees will feel fulfilled when they come to work if spirituality is fostered". krishnakumar and neck (2002) argue that, "spirituality is widely acknowledged as one of the most important aspects of human workplace sprituality employee engagement employee job performance figure 1. nomological network / conceptual framework three seas economic journal 5 vol. 3 no. 2, 2022 personality. as a result, if a company promotes spirituality, it is essentially encouraging employees to bring their complete selves to work". connections are also an important part of workplace spirituality and employee engagement. people are emotionally attached to their work and to others when they are engaged (kahn, 1990). according to kahn when people had positive interpersonal encounters with coworkers and clients, they felt psychologically meaningful and engaged. he also discovered that psychological safety and engagement were enhanced by helpful and trusting interpersonal interactions. according to whittington et al. (2017), those with a high spiritual strength have a higher chance of landing important job roles. ke et al. (2017) found that when values in work, groups, and organizations are described and combined, and is known as employee engagement, employees feel and experience workplace spirituality. furthermore, past research has consistently found a positive relationship between workplace spirituality and employee engagement (i.e., richman, 2006; saks, 2011; schaufeli, 2012; whittington et al., 2017). workplace sprituality practices have also been found to be a predictor of an employee's desire to uphold and accept the ideals of his or her chosen profession (ballout, 2009). there are several connections between workplace spirituality and employee engagement and job-related results. according to krishnakumar and neck (2002) honesty, creativity, personal fulfillment and trust are few instances. in the long run, organizations that practice spirituality achieve higher profitability and productivity. according to lloyd (1990) organizations that are steeped in spirituality at work, perform 86 percent better than firms that have little or no spirituality at work. spiritual firms outperformed their opponents in terms of efficiency and rate of return ( jurkiewicz & giacalone, 2004). they also argued that spirituality in the workplace can improve organizational performance and yield stronger revenues and returns on investments. according to fry (2003), workplace spirituality has personal benefits (joy, satisfaction, and devotion), as well as organizational ones (increased productivity, lower absenteeism, and lower turnover). enabling the deepest, most spiritual expression of human experience may not only alleviate stress, conflict, and absenteeism, but also improve work performance (krahnke et al., 2003). according to weick and sutcliffe (2006), persons who are more mindful of their work acquire a capacity for sensible action and hence perform better. according to van der van der walt and de klerk (2014), employees are satisfied and perform well when the company 's spiritual ideals are upheld. osman-gani, et al. (2013), also found that there’s a significant positive relationship between spirituality and employees in their research. managers can improve employee job satisfaction and performance by fostering an envithree seas economic journal 6 vol. 3 no. 2, 2022 ronment that fosters spirituality in the workplace (shrestha, 2017). according to milliman (1994), spirituality values have positive implications on both personal well-being and job performance. according to previous research, "spirituality may be employed as a persuasive technique in many firms for manipulating the employees' psycho-social demands to their benefit" (brown, 2003; fernando, 2005; pradhan and jena, 2016). saks (2011) states that the interest in workplace spirituality and employee engagement has increased considerably over the last decade among practitioners and scholars. saks (2011) further states that there is a relationship between workplace sprituality and employee engagement. meanwhile anitha (2014) found that employee job performance is a consequence of employee engagement. these findings leads to the hypothesis given below. hypothesis 1: there is a mediating effect of employee engagement on the relationship between workplace sprituality and employee job performance. hypothesis 2: workplace sprituality has an impact on employee job performance 6. methodology through a quantitative study the research objective was achieved. according to sekaran and bougie (2010) there are six components of the research design. they are namely the purpose of the study, extent of researcher interference with the study, type of investigation, study setting, the time horizon of the study and unit of analysis. this research was explanatory or hypothesis testing. this is the purpose of the study. type of investigation in the research is correlational. according to sekaran and bougie (2010) is that a correlational study is conducted with the researchers’ minimum interference in a natural and normal work movements. consequently, the researchers’ interference was minimal, and the study setting was non-contrived. the unit of analysis was individual, that is, managerial employees in the public listed banks sri lanka. sample is 92 employees of banking sector in sri lanka. sampling rule is laid by roscoe (1975) as cited in sekaran (2003). that is, for most research, when deciding the sample size, a sample size larger than 30and less than 500 is suitable. the measurement scale for this study was the likert-type scale. the rating scale of the study is five-point likerttype scale. 7. analysis the structural equation modeling method of partial least squares (plssem) was used to analyze the primary model in this study. correlations between constructs and overall reliability and average variance extracted (ave) are retrieved in table 1. because all latent variables were measured using three seas economic journal 7 vol. 3 no. 2, 2022 pre-existing scales, content validity was assumed for the data ( jawaad et al., 2019). the results of table 3 reveal that the composite reliability of all latent variables is more than the required range of 0.7, indicating that divergent validity exists (hair et al., 2019). even more critically, the variance explained (ave) for all variables is greater than the cut-off value of 0.4, indicating that the study also demonstrated convergent validity. the hetero-trait mono-trait (htmt) ratio was used to assess discriminant validity. its acceptable range is less than 0.9 (henseler, ringle and sarstedt, 2015). as shown in table 4, the htmt ratio is less than 0.9 across all latent variables, suggesting that correlations between indicators across variables are fewer than correlations between indicators within the same latent variable, proving discriminant validity. there was no evidence of multicollinearity in the values of the vif coefficient, which was a positive sign for further mediation analysis. after performing a confirmatory factor analysis (cfa), all items with loadings less than 0.5 were removed from the measurement model (hair et al., 2019). table 5 summarizes the findings of the cfa. table 2 discriminant validity ee ejp ee ejp 0.432 sp 0.708 0.478 table 3 confirmatory factor analysis ee1 0.592 ee10 0.637 ee11 0.567 ee12 0.705 ee2 0.677 ee3 0.703 ee4 0.588 ee5 0.613 ee9 0.599 ejp3 0.625 ejp4 0.776 ejp5 0.763 ejp6 0.727 sp11 0.574 sp14 0.603 sp15 0.712 sp16 0.707 sp17 0.574 sp18 0.748 sp19 0.697 sp2 0.705 sp20 0.6 sp22 0.733 sp3 0.641 sp4 0.588 sp8 -0.632 table 4 summarizes the path analysis results, which show a strong correlation table 1 reliability and validity results cronbach's alpha rho_a composite reliability average variance extracted (ave) ee 0.812 0.818 0.857 0.401 ejp 0.703 0.714 0.815 0.526 sp 0.827 0.897 0.877 0.433 three seas economic journal 8 vol. 3 no. 2, 2022 between a company 's spirituality and its employees' job performance (ejp), as shown in the graph. research shows that spirituality influences employee engagement. as a result, both h1 and h2 were found to be correct. however, employee engagement does not affect employee job performance, as shown by a t-statistic of less than 1.96 at a 5% significance threshold. according to the findings, there is no mediating role for employee engagement in the relationship between spirituality and employee job performance. thus, if an employee's spirituality level is increasing, it is likely to have a more significant impact on his level of employee job performance to the company, regardless of his level of employee engagement. 8. discussion logical flow between research gaps and hypothesis is given under table 6. eventhough there is no mediating effect on the relationship between workplace sprituality and employee job performance, it is evident that there is a relationship between workplace sprituality and employee job performance. employee job performance directly adds to the organizational effectiveness is a view of iddagoda et al. (2022). stewart and brown (2011) defined job performance as the contribution that individuals make to the organizationthat employs them. this highlights the importance of employee job performance. workplace spirituality (wps) aims at meaningful work, sense of community, and value of organization (hassan et al. 2016). since there is a relationship between workplace sprituality and employee job performance the managers should take initiatives to implement workplace spirituality upliftment programs. for example yoga and mindfulness programs in the organization. limitations this study is limited to a cross-sectional study. future studies this nomological network/conceptual framework can be tested in the other table 4 path analysis path coefficient standard deviation t statistics p values hypothesis results ee -> ejp 0.097 0.155 0.623 0.533 not supported sp -> ee 0.614 0.064 9.636 0 supported sp -> ejp 0.353 0.12 2.946 0.003 supported table 5 meditation results β standard deviation t statistics p values result sp -> ee -> ejp 0.059 0.102 0.583 0.56 no mediation three seas economic journal 9 vol. 3 no. 2, 2022 sectors such as hospitality, health sector and education sector etc. longitudinal study can be done in the banking sector in-orer to test this network/conceptual framework. 9. conclusion this study found that spirituality is directly impact on organisational performance in the banking sector in sri lanka but there is no mediation effect by the employee engagement. this study is empirically contribute to literature with an developing economy and economy which faced by economic and political crisis. in addition, current sri lankan crisis situtation and covid-19 situtation the employees are faced by higher stress level specifically banking sector which is an essential service. in this situation banking higher management must consider the programs to improve spirituality of employees for the improvement of job performance. accordingly networking programs, meditation programs, religious actvities, mentoring programs can be introduced to improve the spirituality of emplyees. thus this study will consists empirically and practical implications. references: anitha, j. 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(2006). mindfulness and the quality of organizational attention. organization science, 17(4), 514–524. three seas economic journal 21 vol. 4 no. 2, 2023 1 national university of life and environmental sciences of ukraine, ukraine (corresponding author) e-mail: bondarenkovalm@gmail.com orcid: https://orcid.org/0000-0002-5929-7158 2 national university of life and environmental sciences of ukraine, ukraine e-mail: bogdanavyshnivska@gmail.com orcid: https://orcid.org/0000-0002-3166-7567 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-2-3 promotional marketing as a method of increasing sales valerii bondarenko1, bogdana vyshnivska2 abstract. this article examines the importance of promotional marketing in modern business. an analysis of scientific research and publications on the subject of promotions and their impact on business success has been carried out. the main types of promotions and their characteristics of use in business are considered. the key elements of the promotional marketing strategy and their influence on the effectiveness of the promotional campaign were studied. the research methodology consisted of the analysis of scientific literature and publications on the topic of promotional marketing in business, as well as the use of such methods as analytical (analysis of statistical data and reports of flagman seafood llc on the use of promotions and their impact on product sales) and case study research (use of promotions by the company, their results and impact on consumers). the scientific novelty of promotional marketing research lies in the study of various aspects and effectiveness of promotional strategies in modern conditions. specifically: analysis of the impact of various factors on the success of promotions, including pricing strategy, distribution channels and consumer behaviour; study of different types of promotions, such as discounts, gifts, loyalty programmes and promotions, in order to determine the most effective strategies for increasing sales and attracting new customers; study of the impact of promotions in different markets, in particular, study of the influence of cultural and social factors on the reaction of consumers to different promotional strategies. the study showed that the effectiveness of promotions depends on their correct selection and calculation. insufficient attention to target group analysis and the development of an effective promotion strategy can lead to unsuccessful results and a loss of consumer confidence in the brand. the practical value of the research lies in the fact that the article provides practical advice and recommendations on the use of promotional marketing in business. in addition, the article can be useful for marketing managers and entrepreneurs who plan to develop their business with the help of promotions. the results of the study allow us to understand the importance of promotional marketing for increasing the competitiveness of the company and attracting more customers. the scientific novelty lies in deepening the understanding of promotional marketing and determining its importance for business. the article offers an original classification of promotions and analyses their role in the formation of consumer behaviour. in general, the article helps to increase the effectiveness of marketing strategies and ensure the successful operation of enterprises in the conditions of the modern market. key words: promotions, promotional marketing, strategy, business, advertising campaign. jel classification: m31, d22, l10 1. introduction modern business is a highly competitive and saturated market where the success of companies depends not only on the quality of their products and services, but also on the effectiveness of their marketing strategies. one of the most important components of a marketing strategy is promotional marketing, which helps to attract consumers' attention to a product or service, increase their loyalty and ensure a competitive advantage in the market. despite the importance of promotional marketing to business, not all companies use it correctly and do not always understand how to use it effectively. this can lead to a loss of competitive advantage and reduced business three seas economic journal 22 vol. 4 no. 2, 2023 profitability. there is also a risk of over saturating the market with promotions and reducing their effectiveness through poor planning and execution. the purpose of the article. considering that promotional marketing is an important tool for increasing sales, the article aims to reveal the following aspects: understanding the essence of promotional marketing and its role in effective marketing strategy planning; analysing the types of promotions, their impact on different categories of consumers and the effectiveness of their use depending on the characteristics of the product/service; studying the effectiveness of the use of promotional marketing; determining the key factors influencing the success of promotional marketing, such as pricing policy, content of promotions, cooperation with partners and others. therefore, for a business to be successful, it is necessary to understand the importance of promotional marketing and to be able to apply it correctly to achieve maximum results. this article is devoted to the study of the role of promotional marketing in business and the identification of effective strategies for using this method. 2. analysing and researching publications studies conducted in different countries around the world show that promotional marketing is an important tool for attracting new customers and increasing sales. for example, a nielsen study found that 72% of consumers look for promotions and discounts before making a purchase. in addition, 62% of consumers said that promotions and discounts are the main factor when choosing a product or service (a look at the 21st century cmo, brett house, vp product marketing and strategy, 2018). in the article "the ultimate guide to product marketing in 2023", the authors state that promotions can increase sales from 10% to 50%. in addition, promotions can help companies increase market share and attract new customers. for example, a study by experian found that a loyalty programme using promotions helped a company increase its market share by 20% (the share of promotional sales in ukraine is growing; the ultimate guide to product marketing in 2023). in addition, promotions can increase awareness of the brand and its products. in the article "effect of promotional mix on the marketing of insurance services", the authors note that promotions can help the brand attract consumer attention and make it more accessible to a wide range of customers (anyadighibe, etuk, edim eka james, stephen, 2021). promotions are one of the most effective marketing strategies for attracting customers and increasing sales. in the article "the influence of product, price, promotion and distribution on the marketing strategy of small and medium enterprises in lhokseumawe city ", the authors state that promotions can be used to attract new customers, increase the average check and increase customer loyalty (saharuddin saharuddin, khairil anwar, azhar azha, 2022). promotions are also one of the most popular marketing strategies among small and mediumsized enterprises. in the article "promotion as a form of communication of the marketing strategy ", the authors note that promotions can help small and medium-sized businesses attract new customers and increase sales without significant advertising costs (alexandrescu, mihai-bogdan and milandru, marius, 2018). promotions can also be used to draw attention to new products and services, helping companies to draw consumers' attention to new products and services, thereby increasing sales and brand awareness. in addition, promotions can be used to attract customers to other products and services of the company. in the article "issues impacting sales promotion in international marketing. international journal of multidisciplinary: applied business and education research", the authors note that promotions can be used to attract customers to other products and services of the company, which allows to increase the average check and increase customer loyalty ( jadhav s., kumar a., brar v. 2022). ukrainian researchers have also conducted research on promotional marketing. for example, one of these studies is the article "marketing research of agricultural enterprises: theoretical and practical aspects", the authors examine the role of promotions in the marketing strategy of the enterprise, and also analyse different types of promotions and their impact on sales and customer loyalty (mazur k., babyna o., three seas economic journal 23 vol. 4 no. 2, 2023 babyn  i., germaniuk n., нarbar z., hontaruk y., bondarenko v., lohosha r . 2022). in addition, there are scientific centres and institutes in ukraine that conduct research in the field of marketing, including promotional marketing. for example, the kneu institute of marketing and the marketing research centre "arma marketing" conduct market research and marketing strategies for companies. the article "position and role of promotion in the marketing communication system at the company level" examines the features of the use of promotions in the marketing strategy of a company and their impact on sales (pitinova т.в., khyzhnyak к.в., 2017). the peculiarities of the use of promotions in the promotion of goods on the market and their impact on consumers are disclosed in the article "sales promotion: measures and means that help in the formation of the marketing activity of the enterprise in the implementation of fea" (sheremetynska o.v., nevmer zhytska yu. 2016). the article “brand loyalty importance: how to build brand loyalty” examines the impact of promotions on the formation of consumer loyalty. the authors conducted a survey of consumers and found that promotions have a significant impact on consumer brand loyalty. they also find that the effectiveness of promotions depends on how well they are organised and targeted (brand loyalty importance: how to build brand loyalty). 3. presentation of the main material one of the key strategies for successful marketing is to understand the target audience. defining the target audience and analysing their needs, preferences and behaviours can help companies create more effective marketing messages and campaigns. conducting a qualitative analysis of the target audience can also help a company plan sales and advertising campaigns more effectively. by understanding their target audience, businesses can tailor their advertising efforts to better meet their needs and increase their chances of success (bondarenko v., martynova l., chorna n., sukhorebra t., seheda s. 2019). creating a clear and compelling message is one of the most important aspects of successful promotional marketing. the message should be simple, memorable and easy to understand. it should also be tailored to the target audience and communicate the benefits of the product or service being promoted. a clear and compelling message can help capture the attention of potential customers and increase the likelihood of conversion. choosing the right advertising channels is also critical to successful promotional marketing. different channels, such as social media, digital marketing or print advertising, can be effective depending on the target audience and campaign objectives. it is important not to focus on just one channel, but to diversify and use multiple channels to reach a wider audience. by choosing the right promotional channels, companies can maximise reach and engagement, leading to increased brand awareness and sales (abuselidze g., talavyria m., vyshnivska b., bondarenko v., makedon h., kniazieva t., salkova i. 2023). promotional marketing is an important aspect of any successful business as it plays a crucial role in building brand awareness and recognition. by creating powerful visual, audio and text messages that resonate with their target audience, businesses can increase their online presence and capture the attention of potential customers. video marketing, for example, is one of the most important communication tools a company can use to promote its brand and achieve different audience responses. by using different channels to increase brand awareness and reach target audiences, businesses can ultimately increase sales and revenue. promotional marketing is a type of marketing strategy that aims to increase sales and brand awareness through the use of promotional materials and events. the goal of promotional marketing is to get customers to make a purchase or take an action, such as signing up for a newsletter or attending an event. promotional marketing can include a variety of tactics such as discounts, sweepstakes, contests and loyalty programmes. it is an effective way for businesses to attract new customers and retain existing ones (what is promotional marketing? your guide to getting started). according to the authors, promotional marketing is a marketing technique and strategy used to increase sales, promote a brand and attract new customers through special three seas economic journal 24 vol. 4 no. 2, 2023 promotions, offers, discounts and other sales promotion methods. one of the main benefits of promotional marketing is its ability to build customer loyalty and grow business. by offering promotions, discounts and other incentives, companies can encourage customers to return and make new purchases. in addition, placing information about the company on resources through content marketing can help create a positive opinion about the product and increase customer loyalty. as a result, companies can build a loyal customer base that will continue to generate revenue over time. this type of marketing is also an effective way to stimulate sales and increase profits. by investing in sales promotion, companies can reap a number of benefits, including generating additional revenue, increasing market share, expanding the target market and creating a positive perception of the product. there are different methods of sales promotion that businesses can use, such as price cutting, which involves reducing the price of a product to increase sales and attract new customers. by implementing effective sales promotion strategies, companies can ultimately increase sales and revenue, leading to long-term market success. promotional marketing uses various types of promotion, including advertising, public relations, personal selling and sales promotion. advertising is a powerful communication tool that can influence people's behaviour and is used to promote goods and services in the marketplace. public relations involves managing a company 's reputation through media coverage and other forms of communication. personal selling involves face-to-face interaction between the salesperson and the customer, while sales promotion includes tactics such as discounts, coupons and competitions. by using a combination of these tactics, companies can create a comprehensive promotional marketing campaign. promotional marketing is an extremely important component of any business, as it allows to attract new customers and increase sales of products or services. promotional marketing enables companies to: – attract new customers. аdvertising helps to attract the attention of potential customers and provide information about products or services. this allows to attract new customers who may be interested in purchasing a product or service; – increase sales. promotion helps increase awareness of a product or service, which can lead to increased sales. advertising can also help retain existing customers and encourage repeat purchases; – develop the brand. advertising helps to build brand awareness and recognition – branding. this can increase customer confidence in the brand and lead to increased sales; – gain a competitive advantage. advertising contributes to differentiation from the competition and provides additional benefits that can be a decisive factor in the customer's choice of a particular product. in general, promotional marketing is an important part of any business, as it allows to attract new customers, increase sales, develop one's brand and gain a competitive advantage. this type of marketing includes various activities such as competitions, promotions, discounts, gifts with purchase, loyalty programmes, special offers, etc. these activities can be aimed at both increasing sales and increasing brand awareness among potential customers. promotional marketing can be an effective tool for attracting new customers and increasing the loyalty of existing customers. however, it is important to remember that such events must be well planned and aligned with the company 's marketing strategy in order to get the most out of them. there are many different types of promotions that companies can use to attract customers and increase sales. some of the most popular types of promotions include: – discounts. this is one of the most common forms of promotion when companies offer discounts on goods or services; – sweepstakes. this is an effective method of building brand awareness when companies offer customers the chance to win valuable prizes such as cash rewards or merchandise; – giveaways. this is a form of promotion where customers can receive free gifts for purchasing goods or services; – loyalty programmes. this is a long-term promotion strategy where companies give customers the opportunity to accumulate bonus points or receive additional discounts for repeat purchases; three seas economic journal 25 vol. 4 no. 2, 2023 – buy one, get one free (bogo). this is a form of promotion where companies offer customers to get one product for free with the purchase of another product; – games and contests. this is a method of increasing brand awareness when companies run various games and contests in which customers can win valuable prizes; – special offers. this is a form of promotion where companies provide special offers for certain products or services, such as free shipping or discounts on bulk purchases. these types of promotions can be used individually or combined for maximum impact. "flagman seafood" llc is a domestic company established on 12 june 2017. the company transports and delivers the following products to its customers: chilled and frozen fish and seafood; red caviar; salmon roe; mussels in butter (sealed); a bit of the baltic sea; cod liver; frozen crab; salted, hot and cold smoked. a leading company in the field of fish snacks and seafood trade, offering its partners the widest range of fish and seafood in ukraine. the company imports more than 300 types of fish and seafood from various countries of the world: norway, iceland, spain, denmark, sweden, greece, france, netherlands, scotland, ireland, lithuania, latvia, estonia, chile, usa, etc. there is a wide range of these seafoods, and flagman seafood will deliver them to where they are needed (the official website of flagman seafood llc, its structure and the available catalogue of products they sell). the production level of the enterprise is a large volume of finished products, the enterprise makes profits by selling goods on the domestic and foreign markets, a production line and a large number of vehicles, which are necessary to pay all employees and maintain them in good condition. the weakness is that the production link has not been fully developed, resulting in a lack of production sites (table 1). the flagman seafood company uses only western production technologies, which are integrated into the production of a wide range of products, in order to avoid potential problems and unexpected breakdowns during production. the company is constantly tracking global equipment manufacturers to acquire and integrate them into the existing process chain as quickly as possible. this saves time in the production and packaging of goods, which is particularly important for large orders where production and shipping of goods is carried out around the clock. however, the use of such high-tech equipment has its drawbacks – the rapid ageing of components and aggregates, which can lead to long production stoppages in the event of an accident. therefore, the company must have an adequate stock of spare parts to be able to quickly replace non-functioning units and resume production in the event of a breakdown. the company 's financial position remains at a high level due to the stable profit resulting from the increase in the volume of products sold and the entry into new product sales markets. table 1 grouping of internal factors and their impact on the enterprise groups of internal factors strengths weaknesses production level a large number of goods produced and sold in the country and abroad the production line is not yet fully operational, and there is still room for investment to increase product turnover technologies advanced european technologies are used in the production of the entire product line technologies are rapidly becoming obsolete, and it is necessary to constantly monitor market updates financial factors thanks to stable orders and an expanding product range, the company is highly profitable businesses need to be more pragmatic and flexible to have a good excess profit organizational and managerial factors the created hierarchy of the enterprise is as correct as possible for the optimal and uninterrupted work of managers management should be optimised to reduce the cost of this staff personnel the company has a large number of employees across the country, providing people with jobs and decent wages the pandemic and all the restrictions have shown that the company does not have enough manpower to ensure the smooth operation of all production processes three seas economic journal 26 vol. 4 no. 2, 2023 flagman seafood is a dominant player in its market and has a large number of orders both in ukraine and abroad. flagman sea food makes extensive use of western equipment in its production to ensure reliability and efficiency of processes. it constantly monitors global equipment manufacturers to keep abreast of new developments and ways of integrating them. this enables them to increase production volumes. the financial situation of the company has always been stable, thanks to the increase in sales and the expansion of the sales geography. this is explained by the fact that the company is a leader in its market and has a large number of orders not only in ukraine but also abroad. during the pandemic, however, the company faced significant difficulties as it was not prepared for new challenges, including quarantine restrictions and lockdowns in european and asian countries. this led to a 35-40% reduction in sales markets and the closure of some production facilities due to their inability to supply. the company is vertically integrated, which means that all issues in the organisational structure must be resolved to ensure the smooth running of the company and the generation of profits. each manager is responsible only for his or her area, which allows other colleagues to work without hindrance. the weakness, however, is the large number of redundant staff, so it is necessary to optimise and reduce the number of departments that are no longer competent or necessary. this will reduce labour costs and allow funds to be invested in modernising existing equipment and launching new products in new markets. an equally important component of the company 's marketing activities to sell products quickly is promotion (a product promotion tool). a promotion is an opportunity to inform potential and existing customers about goods, services, special offers and to encourage them to make a purchase. as a result, it is possible to create loyalty to the seller, promote new products,increase demand for products, gain a foothold in a new niche among competitors and thus gain a significant place in the market. flagman sea food often uses this method to introduce new products to potential consumers. various promotional options are used to initiate the process of selling existing goods or services. among the popular types of promotions used by the company are the following (figure 1). a benefit as a tool should show good results when used and justify the resources that will be spent on this event. in fact, many large companies use promotions not only to focus on large sales and market coverage, but also to work for high loyalty to themselves as a responsible seller. in general, a promotional event is quite expensive, but if a new product or service is successfully sold, the company will make a good profit, so this option can be considered quite cost-effective and rational. the bonus of such a promotional event is also an increase in the company 's reputation, which plays a crucial role for the buyer, since when choosing a product, he is guided not only by consumer promotions llc "flagman sea food" demonstration of a new product in branded stores a gift of a trial version of the product upon purchase in stores distribution of flyers advertising new services promotions in stores "two for the price of one" cooperation with companies that specialize in advertising on the internet and on various resources in general using coupons in the form of promo codes with discounts for subsequent purchases in stores wide use and issuance of limited club cards, the owners of which have privileges in the form of bonuses and permanent discounts on the entire range of products figure 1. promotions of flagman sea food llc source: systematized by the authors three seas economic journal 27 vol. 4 no. 2, 2023 qualities, but also by the seller's reputation in this niche and in the market as a whole. therefore, it is appropriate and effective to improve the company 's reputation, attract more customers and increase market share by running a promotion. 4. conclusions thus, from research and analysis of publications, it can be concluded that promotional marketing is an important strategy for attracting new customers, increasing sales and improving customer loyalty. promotions can be used for both small and medium sized businesses and large corporations, as well as for new products and services. on the basis of the research conducted, it can be concluded that expanding the possibilities of understanding and using promotional marketing as a key business tool for attracting and retaining customers provides an opportunity to ensure sustainable growth of profits and competitiveness of the company, the interaction of various types of promotions with each other to achieve a synergistic effect, and also a significant contribution to the development of scientific knowledge about promotional marketing in the context of modern business. in addition, promotions can be used to attract customers to other products and services of the company, which can increase the average check and increase customer loyalty. hence, promotional marketing can be a useful tool for companies in any industry. promotional marketing is a key tool in business because it allows companies to effectively attract and retain customers, increase sales and profits, and become more competitive in the marketplace. the importance of p romotional marketing in business lies in the following aspects: – attracting customers. promotions allow to attract new customers who can become regular buyers of the company. this helps to increase sales and profits; – customer retention. campaigns also help to retain regular customers, increase their loyalty and engagement with the company. this reduces the risk of losing customers and ensures stable sales; – increase brand awareness. promotions can increase the visibility of a brand and its products or services. this helps to increase brand awareness and competitiveness in the market; – increase in sales. promotional activities help to increase sales and profits. this can be achieved through discounts, gifts, loyalty programmes, and other tools; – increase in competitiveness. special promotions can improve a company 's competitiveness in the market, as they help to attract and retain customers, increase brand awareness, and boost sales and profits. consequently, the importance of promotional marketing in business lies in its ability to help businesses achieve their goals of attracting and retaining customers, increasing sales and profits, and enhancing competitiveness and brand awareness in the market. references: a look at the 21st century cmo, brett house, vp product marketing and strategy (2018). available at: https://www.nielsen.com/insights/2018/perspectives-the-21st-century-cmno/ the share of promotional sales in ukraine is growing. available at: http://www.nielsen.com/ the ultimate guide to product marketing in 2023. available at: https://blog.hubspot.com/marketing/ product-marketing anyadighibe, j. a., etuk a., & edim eka james stephen, r . (2021). effect of promotional mix on the marketing of insurance services. journal of business and management studies, 3(2), 125–134. doi: https://doi.org/10.32996/jbms.2021.3.2.13 saharuddin saharuddin, khairil anwar, & azhar azha (2022). the influence of product, price, promotion and distribution on the marketing strategy of small and medium enterprises in lhokseumawe city. doi: https://doi.org/10.29103/mrbj.v2i2.10456 alexandrescu, mihai-bogdan, & milandru, marius (2018). promotion as a form of communication of the marketing strategy. land forces academy review, 23(4), pp. 268–274. doi: https://doi.org/ 10.2478/raft-2018-0033 jadhav, s., kumar, a., & brar, v. (2022). issues impacting sales promotion in international marketing. international journal of multidisciplinary: applied business and education research, 3(6), 1159–1163. doi: https://doi.org/10.11594/ijmaber.03.06.18 three seas economic journal 28 vol. 4 no. 2, 2023 mazur, k., babyna, o., babyn, i., germaniuk, n., нarbar., z, hontaruk, y., bondarenko, v., & lohosha, r . (2022). marketing research of agricultural enterprises: theoretical and practical aspects. international science group. available at: https://isg-konf.com/wp-content/uploads/2022/05/ monograph/979-8-88680-819-3/979-8-88680-819-3.pdf pitinova, т. в., & khyzhnyak, к. в. (2017). position and role of promotion in the marketing communication system at company level. scientific bulletin of the national academy of statistics, accounting and audit, 3, 65–71. doi: https://doi.org/10.31767/nasoa.3.2017.08 sheremetynska, o., & nevmerzhytska, yu. (2016). sales promotion: measures and means that help in the formation of marketing activities of an enterprise in the course of fea. efficient economy, 2. available at: http://www.economy.nayka.com.ua/?op=1&z=4785 brand loyalty importance: how to build brand loyalty. available at: https://www.masterclass.com/ articles/brand-loyalty bondarenko, v., martynova, l., chorna, n., sukhorebra, t., & seheda, s. (2019). evaluation system formation of development of enterprise's innovative potential. academy of strategic management journal, 18(1). available at: https://www.scopus.com/record/display.uri?eid=2s2.085062414505& origin=resultslist&sort=plf-f abuselidze, g., talavyria, m., vyshnivska, b., bondarenko, v., makedon, h., kniazieva, t., & salkova, i. (2023). the economic mechanism of marketing activity management of food enterprises, e3s web of conferences, issn 2267-1242, edp sciences, les ulis, vol. 371, pp. 1–10. doi: https://doi.org/ 10.1051/e3sconf/202337105002 what is promotional marketing? your guide to getting started. available at: https://www.coursera.org/ articles/promotional-marketing the official website of flagman seafood llc, its structure and the available catalogue of products they sell. available at: http://www.fseafood.com/ received on: 27th of april, 2023 accepted on: 05th of june, 2023 published on: 30th of june, 2023 three seas economic journal 88 vol. 4 no. 1, 2023 1 vasyl’ stus donetsk national university, ukraine (corresponding author) e-mail: victor_tomchuk@ukr.net orcid: https://orcid.org/0000-0001-8575-4618 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-10 ways to improve the accounting of set tlement transactions viktor tomchuk1 abstract. the purpose of the article is to consider the method of accounting for settlements with debtors and creditors and to determine directions for its improvement. methodology. the theoretical and methodological basis of the study is a systematic approach to the study of practical accounting tools for settlement transactions. in the process of research and systematization of the obtained results, general scientific and special methods were used: abstract-theoretical, historical, dialectical, induction and deduction, analysis and synthesis, formalization and comparison. results. it has been proven that the quality of accounting organization is important today, as it contributes to the organization of information, transparency and reliability of data on transactions with debtors and creditors, and also provides minimum guarantees of reality, completeness and legality of the given information on calculations for users of financial statements. timeliness of payments is important for both the debtor and the creditor, and its provision depends to a large extent on the correct organization of accounting and day-to-day control. the availability of information on the amount of bad and overdue debts in the financial statements of economic entities would allow both internal and external users to make effective management decisions, which is extremely important in the context of european integration of the domestic economy. practical implications. it is proposed to make an improvement that will unite all information about receivables and payables, make it integral and allow users, in particular the head of the enterprise, to receive complete information about the state of indebtedness to debtors and creditors for received goods and services, provided works. the analytical accounting statement of the extended balance to account 63 "settlements with suppliers and contractors" will help in practical activities to prevent errors in the presentation of information in financial statements, and management personnel to make operational management decisions. it is possible to solve the problems of the company's accounts payable accounting by improving the procedure of applying individual elements of the accounting method on the basis of identifying systemic connections between them. the information from the above analytical accounts to account 66 "settlements for employee benefits" will allow management to track salary trends not only by employee groups but also by type of benefit. for the rational organization of accounting of accounts payable at enterprises, it is suggested to use a special analytical table, which will highlight the debt in the section of each supplier according to contracts, the terms of debt repayment according to the schedule and actually. this document must reflect all transactions the company has made with a particular supplier during the year (receipt of goods and services for a particular delivery; receipt of a subscription for a particular delivery; payment of arrears for a previously received delivery). value/originality. the above-mentioned possibilities will contribute to the improvement of the organization and accounting of the accounts, to the reduction of receivables and payables, and to the strengthening of the financial position of the company. key words: accounting, calculations, accounts receivable, accounts payable, improvement, the concept of accounting. jel classification: м40, м41, м49 three seas economic journal 89 vol. 4 no. 1, 2023 1. introduction depending on the type of activity and its size, settlements between business partners occupy an important place in the balance sheet of a company. cyclical development of the economy with periodic recessions and crises in the conditions of martial law leads to deterioration of the state of settlements between business entities. bankruptcy of enterprises causes an increase in the level of indebtedness. therefore, the quality organization of accounting, analysis and control is important today, as it contributes to the organization of information, transparency and reliability of data on transactions with debtors and creditors, and also provides minimum guarantees of reality, completeness and legality of the given information on calculations for users of financial statements. in this case, business entities act as suppliers for some and as purchasers for others. at all stages of the historical development of accounting, it developed as a dynamic process (making a payment before, simultaneously or after the receipt of goods, works and services) and, on the other hand, as a static state, i.e., a debt between the subjects of accounting. since the beginning of the 21st century, the century of the development of the information society, the problem of the crisis of confidence in accounting has taken a leading place not only in ukraine, but also in the world. this is due to the bad credit that constantly occurs in large companies and enterprises. in a crisis situation, the main tasks of accounting for settlement transactions are: compliance with the established rules of settlement relations; timely documentation of settlement transactions: timely and accurate analytical and synthetic accounting of settlements. thus, summarizing the above, it is necessary to emphasize the need to improve all accounting components for a more correct reflection at the current stage of historical accounting of calculations in the enterprise management system. 2. improvement of accounts receivable the formation of reliable information on the accounting and payment operations of the enterprise can be ensured only by effectively organized accounting of transactions with debtors. information related to settlements with customers and clients requires an appropriate system of information resources formation. s.v. vizirenko and k.v. ivanitskyi propose to subdivide the accounting accounts of settlements with counterparties into subaccounts and analytical accounts, which will be relevant when organizing the accounting of settlements with counterparties (table 1). the authors believe that the implementation in practice of the proposed detailing of accounting for settlements with debtors will contribute to the formation of proper accounting and information support for making management decisions on the organization of accounting for settlements with debtors. for the organization of accounting of settlements with debtors, z.m. levchenko offers a system of complex combination of organizational procedures and methods of accounting of receivables (figure 1). the author emphasizes that a comprehensive system of accounting for settlements with debtors in the unity of methodological and organizational aspects will also allow to ensure timely and full repayment of other receivables. (levchenko, 2017) financial instruments such as factoring are most often used for receivables intended for sale. this requires a detailed consideration in the accounting of outsourcing, factoring of receivables through the use of financial instruments. today, the assignment of rights to a monetary claim upon conclusion of a contract is reflected with the help of subaccount 377. this is a logical and methodologically correct step, but it causes a distortion of information, which negatively affects the quality of management decisions. to take into account outsourcing, o.v. kostiunik, l.l. turova and v.m. kovtunenko suggest entering a separate subaccount of account 37 "calculations from factoring" in the chart of accounts with details in analytical accounting. (kostiunik, turova, kovtunenko, 2016) v.d. popova and v.i. kuz consider it expedient to provide for the practical use of the following analytical accounts for the purpose of rapid preparation with the least possible delay of data on receivables by maturity: 361/1 "settlements with domestic buyers and customers (repayment term up to 10 days)"; 361/2 "settlements with domestic buyers and customers (repayment three seas economic journal 90 vol. 4 no. 1, 2023 table 1 suggested accounts for accounting of settlements with debtors synthetic accounts subaccounts analytical accounts 1 2 3 36 "settlements with buyers and customers" 361 "settlements with domestic buyers" 361.1 "current accounts receivable with domestic buyers" 361.2 "long-term receivables with domestic buyers" 361.3 "bad debts with domestic buyers" 362 "settlements with foreign buyers" 362.1 "current accounts receivable with foreign buyers" 362.2 "long-term receivables with foreign buyers" 362.3 "bad debts with foreign buyers" 365 "settlements with domestic customers" 365.1 "current accounts receivable with domestic customers" 365.2 "long-term receivables with domestic customers" 365.3 "bad debts with domestic customers" 366 "settlements with foreign customers" 366.1 "current accounts receivable with foreign customers" 366.2 "long-term receivables with foreign customers" 366.3 "bad debts with foreign customers" 37 "settlements with various debtors" 371 "settlements based on advances issued" 371.1 "settlements in national currency with various debtors for issued advances" 371.2 "settlements in foreign currency with various debtors for issued advances" 374 "settlement of claims" 374.1 "settlements in national currency with various debtors for claims" 374.2 "settlements in foreign currency with various debtors for claims" 377 "settlements with various debtors" 377.1 "settlements in national currency with various debtors" 377.2 "settlements in foreign currency with various debtors" source: formed by the author on the basis of (vizirenko, ivanitskyi, 2020) assessing and minimizing losses from the liquidation of receivables integrated system for organizing settlements with debtors methodical principles of accounting organization of settlements with debtors and receivables organizational procedures for dealing with debtors and their accounting classification of customer payment transactions determination of settlement methods with counterparties recognition of the company's counterparty as a debtor organization of contractual relations the process of recognizing receivables, classifying them and accounting for them organizing the documentation of settlements with debtors valuation of receivables at recognition date and balance sheet date organization of tax settlements organization of the inventory of the state of settlements use of financial instruments in settlements with debtors organizing the repayment of receivables and managing claims organization of receivables liquidation figure 1. integrated accounting system for settlements with debtors source: formed by the author on the basis of (levchenko, 2017) three seas economic journal 91 vol. 4 no. 1, 2023 period from 10 days to 30 days)"; 361/3 "settlements with domestic buyers and customers (repayment period from 30 days to 60 days)"; 361/4 "settlements with domestic buyers and customers (repayment period from 60 days to 180 days)"; 361/5 "settlements with domestic buyers and customers (repayment period from 180 days to 360 days)". the given set of analytical accounts is also acceptable for other subaccounts of the synthetic account 36 "settlements with buyers and customers". (popova, kuz, 2020) according to v.d. popova and v.i. kuz, the application of the proposed system of analytical accounts for the accounting of receivables for goods, works, and services involves the following sequence of accounting operations: 1) display of recognized and estimated receivables on the corresponding analytical account, according to the repayment terms defined in the contractual relationships; 2) accounting control over the terms and completeness of the repayment of receivables; 3) in case of establishing the facts of untimely repayment, the transfer of such debt to the composition of doubtful with the execution of the corresponding entry in the accounting accounts; 4) provision of information on the occurrence of questionable debts to management staff in order to take measures for their collection; 5) preparation at the end of the reporting month, based on the data of the analytical accounts of the management report, to determine the potential amounts of monetization of receivables for the following reporting periods and assessment of solvency. (popova, kuz, 2020) 3. improvement of the accounting of settlements with creditors in the conditions of the financial crisis the issue of accounts payable is relevant and problematic for most enterprises, which is connected with the existence of a crisis of nonpayment. today, many companies acutely felt the lack of their own financial resources, the need for credit funds, and accumulated significant amounts of accounts payable, which led to the deterioration of their financial condition. in the author's opinion, it is necessary to develop possible areas for improving the management of a company's accounts payable in order to avoid crisis situations and improve management in general. for generalization of information on the state of settlements with suppliers and contractors, in accordance with the principles of accounting and financial reporting, yu.v. podmeshalska and d.v. kornienko offer the form analytical accounting information of the extended balance to account 63 "settlements with suppliers and contractors" (table 2). table 2 analytical accounting statement of the unfolded balance to account 63 "settlements with suppliers and contractors" contents of the operation indexes display in accounting expanded balance at the beginning of the period extended balance after the transaction the value of the assets according to the invoice the actual value of the assets received debt credit debt credit debt credit 1 2 3 4 5 6 7 8 9 631 "settlements with domestic suppliers" deliveries in accordance with concluded contracts 100 received materials 500 300 200 300 200 400 received materials 800 800 800 200 1200 deliveries in accordance with concluded agreements received basic means 900 900 900 200 2100 received materials 700 800 100 200 2200 deliveries in accordance with orders received materials 600 300 300 300 500 2500 balance at the end of the period 500 2500 source: formed by the author on the basis of (podmeshalska, kornienko, 2021) three seas economic journal 92 vol. 4 no. 1, 2023 the proposed analytical statement of accounting of the extended balance to account 63 "settlements with suppliers and contractors" will help in practical activities to prevent errors in the presentation of information in financial statements, management personnel to make operational management decisions. o.o. liubar notes that the work on improving the reporting system of the company with regard to the presentation of its liabilities should be carried out in a section of its individual types in order to determine the optimal level of detail of the items of such liabilities and the directions of their interpretation in the notes to the financial statements. solving the problems of the company 's accounts payable accounting becomes possible by improving the procedure for applying individual elements of the accounting method on the basis of identifying systemic relationships between them (table 3). the author emphasizes that the implemen tation of the proposed recommendations will provide the necessary impetus and contribute to the growth of the quality of accounting infor mation on the company 's settlements with its creditors. v.d. popova and y.i. kolotylo draw attention to the inadmissibility of modern requirements of conducting economic processes and the current trends of management of settlements with personnel specified in the plan of accounts of accounting of assets, capital, liabilities, and economic operations of enterprises and organizations sub-accounts to synthetic account 66 "calculations for payments to employees". after all, the use of subaccount 662 "settlements with depositors" is not relevant, taking into account the use of payment cards for payment of work. therefore, first of all, it is necessary to make changes in the system of sub-accounts of the account under consideration (popova, kolotylo, 2019). initially, for the management of the business entity, the information on the amount of accrued wages will be relevant in terms of structural subdivisions (centers of responsibility). in this regard, it is appropriate to propose the following subaccounts to account 66 "calculations for payments to employees" (figure 2). the authors believe that the information from the above analytical accounts will allow the management to monitor the trends of changes in the number of salaries not only in terms of groups of employees, but also in terms of types of payments. for example, an increase in the specific weight of incentive payments in the total amount of payments may signal the need to increase salaries or rates for operations performed by employees. (popova, kolotylo, 2019) k.t. konovalova and a.s. makarova draw attention to the fact that the use of account 63 "settlements with suppliers and contractors" with the corresponding subaccounts (631 "settlements with domestic suppliers", 632 "settlements with foreign suppliers", 633 "settlements with members of the industrial and financial group") does not allow to record accounts payable, as it limits the available information on the existing liabilities in relation to partner enterprises, suppliers. in order to improve this area, domestic scientists propose to deepen analytical accounting and introduce analytical accounting in subaccount 631 (table 4). according to the authors, the use of analytical accounts allows the company 's management to more accurately analyze existing debts and plan their repayment in accordance with the company 's financial capabilities. the use of invoice data also provides an opportunity to get table 3 solving the problems of accounts payable accounting by improving the application of elements of his method accounting method element accounting problems identification problem assessment problems problems of classification balance the indicator of the number of liabilities on the balance sheet is the result of the identification and valuation of liabilities. display of liability indicators in reporting requires their classification by maturity dates and types of civil legal relationships. reporting the reporting forms contain indicators of commitments, in particular their amount by type. the application of the periodicity principle determines the valuation at the balance sheet date. source: formed by the author on the basis of (liubar, 2020) three seas economic journal 93 vol. 4 no. 1, 2023 an idea of suppliers, concluded contracts, terms of payment. as an opportunity to improve the proposed division of analytical accounts, it is worth proposing to add a period to the account description, since each of the suppliers has different terms of payment for goods and services. for example, the analytical account 631/11 "debt for goods with future payment" should be renamed and used to record the debt to be repaid in the next reporting month (within 30 days). instead, analytical account 631/31 "overdue debts for goods" should be used to analyze and record debts to suppliers within 30 days. accordingly, if the company is large and has many different suppliers with different payment terms, the analytical accounts presented above can be even more detailed. the availability of such information will allow the company 's management to make effective decisions taking into account already existing and possible liabilities. (konovalova, makarova, 2018) for the rational organization of accounts payable accounting at enterprises, it is proposed to use a special analytical table that will highlight the debt in the context of each supplier in accordance with the contracts, the maturity of the debt according to the schedule and in fact. this document must reflect all the transactions that the company has carried out with a given supplier during the year (receipt of goods and services for a given delivery; receipt of a subscription for a given delivery; payment of arrears for a previously received delivery). according to t.v. hilorme and y.k. shachanina, this approach will be quite effective for deepening the informativeness of management accounting on the state of settlements with suppliers. the document should contain the following information (hilorme, shacha nina, 2018): – delivery of goods and material values (services); – conditions of sale of goods and material values (services), namely the form of the civil law account 66 "calculations for payments to employees" subaccount 661 "settlements for payments to workers" subaccount 662 "settlements for payments to managers" subaccount 663 "calculations for payments to employees of the sales department" subaccount 664 "settlements for payments to other employees" figure 2. proposed sub-accounts to account 66 "calculations for payments to employees" source: formed by the author on the basis of (popova, kolotylo, 2019) table 4 directions of expansion of analytical accounting of accounts payable № account interpretation 631 "settlements with domestic suppliers" 1 631/11 debt for goods with future payment 2 631/12 debt for works and services with future payment 3 631/21 debt for goods, deferred 4 631/22 debt for works and services, deferred 5 631/31 overdue debt for goods 6 631/32 overdue arrears for works and services 632 "settlements with foreign suppliers" 1 632/11 debt for goods, works, services with foreign suppliers with future payment 2 632/21 debt for goods, works, services with foreign suppliers, deferred 3 632/31 overdue debts for goods, works and services with foreign suppliers source: formed by the author on the basis of (konovalova, makarova, 2018) three seas economic journal 94 vol. 4 no. 1, 2023 contract according to which the delivery is made, its number and the date of its conclusion; – subscription to the delivery of goods and services; – the actual debt for this delivery; – debts for previous deliveries; – causes of the debt; – the date and amount of the actual payment of the debt for a given delivery; – the unpaid balance and the existence of an overdue debt to a particular supplier; – other terms of settlements with suppliers and contractors; – measures taken to repay the debt. 4. the concept of accounting development concept (from latin сonceptio – perception, understanding; system) is a certain way of understanding, interpretation of some phenomena, a basic view, a guiding idea for their illumination; a single, defining idea, the leading idea of a project (literary or scientific work, system, etc.). accounting concepts – basic theoretical principles of accounting and reporting. in the past, there were discussions about the existence of a theoretical basis for accounting, since accounting developed on the basis of practice. however, accountants have tried to create an accounting theory; although various theoretical concepts have been proposed, only a few have gained general acceptance. there are four main accounting concepts: 1) the ongoing concern concept, which is based on the assumption that the enterprise is valid until evidence to the contrary appears; therefore, the assets of the enterprise are not valued as the sum of ordinary shares and reserves; 2) the accrual basis of accounting, which requires that income and expenses be recognized when they are incurred rather than when they are received or paid; 3) consistency – requires that reporting for successive periods be based on the immutability of accounting policies; 4) the concept of prudence requires that accounting be conducted on a conservative basis, i.e., revenues should not be recorded before the money actually arrives, and losses should be recorded at the time when such losses are only anticipated. first of all, m.s. pushkar emphasizes the need to develop the concept of accounting development at the state level, noting that it should be the basis of the basic accounting model of ukraine. in particular, the scientist proposes to include in the concept such provisions as: characteristics of accounting information (types of accounting, quality characteristics of information, users); structure and content of the concept (definition of accounting as a system, paradigm of accounting, categories of accounting, methodological levels of construction, objects, subjects of accounting, accounting policy of the state); adoption of accounting conventions (historicity, periodicity, conservatism, measurements, etc.); elements of financial reporting; accounting procedures. the concept of the development of accounting should be based mainly on scientific regulations, and "not on practice, which has not yet made significant achievements". (pushkar, 2022) n.m. maliuha, defining the prospects for building a national accounting system adequate to new industrial and social relations, emphasizes the need to develop the concept of accounting development as a theoretical basis for institu tional and reformed restructuring. the author considers the components of the concept (maliuha, 2005): – improvement of the national accounting system, which consists in adapting it to the requirements of the market economy, taking into account the state of the world financial markets; – updating the accounting regulatory framework by developing methodological guidelines for organization and reporting; – improvement of accounting methodology; – formation of the accounting profession through the establishment of the institute of professional accountants of ukraine; – professional development of accounting personnel. due to the lack of a concept of accounting for settlement operations, it was proposed to organize the accounting for settlement operations according to the stages of the accounting process (differentiation of the organization of accounting for settlement operations, keeping records of settlement operations, and preparation of reports). in addition, it is proposed to divide the accounting of settlement operations into principles: 1) determined by the economic environment (economic unit, period, monetary unit); 2) shaped by the accounting environment (continuity); three seas economic journal 95 vol. 4 no. 1, 2023 3) requirements (predominance of substance over form, accrual, sequence, completeness, evidentiality). the proposed concept of accounting for settlement operations is presented in figure 3. with the help of the given concept ofaccoun ting for settlement operations, accountants are provided with accounting information about: – general approaches to the organization and accounting of settlement operations; – management decisions related to accounting operations; – helping users of accounting information to understand the data contained in accounting statements. the expediency of distinguishing the accounting concept of settlement operations is determined by the economic environment and is explained by the three-dimensionality of the surrounding world: any object can be measured in space, time and energy. therefore, the facts of economic life (fel) should refer to a certain business entity – spatial identification; business transactions take place on a certain date, reporting is made for a clearly defined period (in terms of computerized accounting, it can be not only a month, quarter or year, but also a day, decade, week); temporal identification; in addition, all fel must be measured in monetary terms (with the possible specification of characteristics using physical and labor metrics). the principles formed by the accounting environment are objective in nature, while the requirements are more subjective, and it is this group of principles that changes the most with changes in business conditions. the accounting concept of settlement operations should be based on a number of interrelated fundamental concepts developed within accounting theory. a.v. hevchuk emphasizes the rules of its organization for accounting of settlement operations: – compliance with regulatory and legal acts in the field of accounting regulation of settlement operations; – dynamism of accounting of settlement operations, constant improvement of the accounting process, methodology and accounting techniques on the basis of computerization and optimization of the costs of keeping the accounting of settlement operations; – application of the principles of the system approach (adaptability, adequacy, integrity, structurality, interdependence of structure and environment, hierarchy, etc.) (hevchuk, 2018). it is believed that these rules can be clarified taking into account the specifics of the business environment of a particular company and organization of accounting for settlement transactions the concept of accounting for settlement transactions accounting for settlement transactions formed by the accounting environment economic entity time period money counter caused by the economic environment reporting requirementssequence completeness probabilitythe prevalence of substance over form accrual continuity figure 3. the proposed concept of accounting for settlement transactions source: formed by the author on the basis of (maliuha, 2005) three seas economic journal 96 vol. 4 no. 1, 2023 should be specified with a detailed explanation of the essence in the order on the accounting policy of the entity. 5. conclusions accuracy and timeliness of accounting operations is one of the most important indicators of the financial condition of the enterprise, which is of great importance for the organization of accounting, especially in conditions of fullscale war. a decrease in the level of accounting discipline leads to an increase in receivables, including overdue receivables. the main part of receivables consists of obligations to pay buyers and customers for delivered goods, finished products, works performed, and services rendered. it is very important for the company to prevent an unjustified increase in the number of receivables from customers and to avoid receivables with a high level of risk. accounting transactions make up a significant part of the company 's total current assets, therefore incorrect accounting leads to significant distortion of the information reflected in the company 's reporting. accounting of transactions with customers and suppliers is the most important part of accounting work, since the main part of the company 's income and cash receipts is formed at this stage. in this regard, there are a large number of unsolved problems related to the accounting of settlement operations for goods, works, services. the results of the conducted study of accounting transactions indicate the need to improve the methodical approach to their accounting and analysis as tools for improving the financial condition of the enterprise. the proposed accounts, sub-accounts and documents of analytical accounting of settlement transactions will help the enterprise in practical activities to prevent errors in the display of information in financial statements, management personnel to make operational management decisions. a noteworthy proposal regarding the concept of accounting for settlement operations, which will provide accountants with accounting information. thus, the above proposals will contribute to the improvement of the organization of accounts and their accounting, to the reduction of receivables and payables, and to the strengthening of the financial position of the company. the prospect of further research in this direction is the development of measures to improve the analytical accounting system of the enterprise and a more detailed justification of the methods of managing both receivables and payables with the aim of bringing their volume, structure and quality characteristics to acceptable parameters for the effective functioning of the enterprise and maintaining it in good condition of solvency. references: vizirenko, s., & ivanitskyi, k. 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(2017). integrated reporting: a new stage in accounting evolution. finance, accounting , banks, no. 1 (22), рp. 170–180. received on: 22th of february, 2023 accepted on: 29th of march, 2023 published on: 28th of april, 2023 three seas economic journal 49 vol. 4 no. 1, 2023 1 estonian entrepreneurship university of applied sciences, estonia; education and research center of project technologies, sumy state pedagogical university, ukraine; sector of innovation and investment problems of industrial development, institute of industrial economics of national academy of sciences of ukraine, ukraine (corresponding author) e-mail: omvitaliy@gmail.com orcid: https://orcid.org/0000-0003-0713-1444 researcherid: q-6358-2016 2 business economics and administration department, sumy state pedagogical university, ukraine e-mail: elnikkrasnaya@gmail.com orcid: https://orcid.org/0000-0001-8993-806x researcherid: aae-6410-2022 this is an open access article, distributed under the terms of the creative commons attribution cc by 4.0 doi: https://doi.org/10.30525/2661-5150/2023-1-6 infrastructure and service methodology for the development of innovative hromadas: general idea and example of smart city infrastructure vitaliy omelyanenko1, olena omelianenko2 abstract. the purpose of the study is the development of analytical tools and organizational and economic mechanisms for the post-war restoration of sustainable development of territories based on the infrastructural and service methodology of the development of innovative hromadas as a basis for ensuring the well-being of local hromadas to avoid the social, environmental and economic problems of war and their approval within the framework of pilot infrastructural and service projects. methodology. the research is based on the approach of r. jochimsen, who, in one of the first system descriptions, defined infrastructure as a set of material (production), institutional and individual conditions available to economic agents, which condition integration and the maximum level of economic activity. it is also worth considering the idea that the main differences of the neo-industrial paradigm of local hromada development lie in competent participation based on self organization, multisubjectivity and decentralization of social relations based on cooperation and communicative equality, and the orientation of society towards the realization of human potential. innovative hromadas correspond to these trends and provide an effective solution to the primary task of the service-oriented system, which consists in the development of a service policy capable of ensuring the inclusion of existing resources and functional potential of territories to ensure dynamic, balanced, complex socio-economic development. the infrastructure-service approach includes the maximum satisfaction of human needs and desires, as well as the creation of working and living conditions, and aims to meet the needs of the hromada by attracting and retaining human resources through the development of services and infrastructure. practical implications. the results of the research have applied socio-economic significance and are aimed at solving the important problem of post-war restoration of sustainable development of territories through the design of service provision and use of resource potential of local innovative hromadas. the main result of the application of the developed methodology is the scientific substantiation of the organizational and economic support for the postwar restoration of the sustainable development of territories based on the infrastructure-service methodology of the development of innovative hromadas and the development of the corresponding analytical toolkit, which will allow its adaptive use within the framework of intelligent specialization. scientific and methodological approaches will be developed to determine the role of infrastructure and service clusters for the well-being of hromadas, based on a consideration of their impact on human capital and its components. value/originality. compared to existing analogues, the proposed approach is systemic, takes into account the specifics of innovative activity and covers the entire range of tasks for managing infrastructure and service factors of sustainable development. key words: infrastructural and service methodology, innovations, infrastructure, smart city, project. jel classification: h54, о33, r10 three seas economic journal 50 vol. 4 no. 1, 2023 1. introduction in the conditions of decentralization and transition to new principles of management, the issue of sustainable development of hromadas is a relevant and important direction of interdisciplinary research. it is necessary to note that in connection with the military actions in the hromadas of a number of regions, cardinal economic and social changes are taking place, which quite often have the character of socioeconomic instability. the purpose of the study is the development of analytical tools and organizational and economic mechanisms for the post-war restoration of sustainable development of territories based on the infrastructural and service methodology of the development of innovative hromadas as a basis for ensuring the well-being of local hromadas to avoid the social, environmental and economic problems of war and their approval within the framework of pilot infrastructural and service projects. the results of the research have applied socioeconomic significance and are aimed at solving the important problem of post-war restoration of sustainable development of territories through the design of service provision and use of resource potential of local innovative hromadas. 2. literature review a number of studies by domestic and foreign scientists consider the role of the innovation factor in the development of regions and local hromadas. in particular, the study (tödtling, trippl, 2018) is devoted to the development of a management methodology for "new paths of regional growth", which should take into account the local context. the authors (frangenheim, trippl, chlebna, 2020) determine the prospects of regional structural changes and develop the basis for the analysis of the dynamic interdependence of new regional growth paths. the study (martin, simmie, 2008) examines the local innovation system in combination with the ability to absorb new knowledge. the study (hansen, 2013) examines the development of regional innovation systems in the context of the search for their foundations. thus, the paper (domanski, howaldt, kaletka, 2020) considers social innovation as a factor in successfully solving social, economic, political and environmental challenges at the local and regional level. the authors (grillitsch, martin, srholec, 2017) consider the combination of the most favorable innovations at the firm level, taking into account the impact of the knowledge base available in the region. the study (asheim, grillitsch, tripple, 2017) points to the role of economic geography in providing a better understanding of the mechanism of economic growth and development in different sectors and regions, as well as a better understanding of the consistent heterogeneity of regional outcomes. these approaches and ideas can be the basis for a large scale approach to innovation policy and the active role of government in stimulating new combinations of differentiated innovations. at the same time, the analysis of these studies makes it possible to conclude that they are focused on developed countries, but in the conditions of ukraine, innovation policy should be focused primarily on overcoming numerous crisis processes. in this regard, it is worth noting the work (yevsyukova, 2018), which considers the wellbeing factor and states that human capital is determined by natural genetic characteristics, developed by education and general education, and its success (competitiveness) depends on ecological, economic and material well-being, economic and legal institutional conditions, adequate stimulation and the level of a specific qualification, which constitute a socio-ecologicaleconomic system in a relative current equilibrium. in the work (tarkhov, derkach, 2013) it is noted that human capital includes health capital, cognitive and creative capital, entrepreneurial capital, qualification capital. the study (mokii, pavlikha, naumenko, datsko, 2018) presented a scientific and theoretical justification for institutional support of innovative regional development, which should be based on the idea of a hromada as a social system. at the same time, little is known about the innovative profiles of different infrastructure sectors of the economy and the nature of their innovative activities, and a targeted approach to defining service design and the methodology of its implementation has not yet been developed. three seas economic journal 51 vol. 4 no. 1, 2023 3. methodology the research is based on the approach of r . jochimsen ( jochimsen r . theorie der infrastruktur), who in one of the first system descriptions defined infrastructure as a set of material (production), institutional, individual conditions available to economic agents, which condition integration and the maximum level of economic activity. from an applied point of view, for the purposes of research in the context of post-war reconstruction, the approach of the experts of the institute of infrastructure policy will be adapted, in the framework of which vital infrastructure is defined as systems, networks, objects, resources (both physical and virtual or information), services, which are of such great importance that their destruction, damage or disabling will lead to the most serious negative consequences for the life of a person, society and the state, socio-economic development of the country, defense capability of the state and ensuring national security. it is also worth considering the idea that the main differences of the neo-industrial paradigm of the development of local hromadas lie in the competent participation based on self organization, multi-subjectivity and decentralization of social relations based on cooperation and communicative equality, and the orientation of society towards the realization of human potential. the innovative hromadas correspond to these trends and provide an effective solution to the primary task of the service-oriented system, which consists in the development of a service policy capable of ensuring the inclusion of the existing resources and functional potential of the territories, in order to guarantee a dynamic, balanced and complex socio-economic development. the infrastructure-service approach includes the maximum satisfaction of human needs and desires, as well as the creation of working and living conditions, and aims to meet the needs of the hromada by attracting and retaining human resources through the development of services and infrastructure. therefore, it is advisable to focus on the adaptation of the management of the development of innovative hromadas to the problems of sustainable development as such, which opens opportunities for the study of promising organizational and economic mechanisms of service-oriented management, based on the assessment of the impact of changes in the state as a result of military operations in the economic space and its effects on the quality of life, vital space and human capital. it is important to take into account the ideas and methodology of the geography of innovation, which combines the methods of economic geography, regional economy and innovation and examines the spatial patterns of creation, implementation and distribution of new ideas, technologies, products, as well as the impact of these processes on regional (local) development. from these points of view, the infrastructureservice approach is relevant because it is based on the potential of territories and aims at a more intensive use of their capabilities. 4. main material the research is based on the infrastructure and service methodology of the development of innovative hromadas, which implies the understanding that innovations include not only technological changes, but also changes in organizational, labor and social practices as such, which can potentially affect the well-being of the human capital of hromadas. service modeling involves the description of all processes in hromadas of different typologies in order to take these processes into account during design. infrastructure and service design is a process of organizing space in such a way that the interaction of economic agents within innovative hromadas takes place as smoothly and efficiently as possible. in this context of the project, service innovation at the local level is considered as an integration set of basic factors of standard of living, socio-economic conditions, characteristics of innovative business units, innovative infrastructure, cluster and network connections. for the development of infrastructure at the local level, it is necessary to use the existing potential of the hromada as much as possible, which can be done most effectively through the development of innovative hromadas. development at the regional level should be carried out through a combination of smart specialization strategies and sustainable development tasks. based on the understanding of the impact of military operations on three seas economic journal 52 vol. 4 no. 1, 2023 sustainable development goals, the project uses a methodological approach to determine the loss of human capital and ensure the environmental and economic well-being of hromadas based on consideration of their role for human capital and its components (health capital; cognitive and creative capital; capital of entrepreneurial abilities; qualification capital). for the implementation of pilot infrastructure and service projects, it is proposed to use the toolkit of sub-outsourcing cooperation, which is based on the implementation of the principle of commercial partnership and can manifest itself in the form of support for various areas of commercial support, sectoral support of a single project, distribution of service flows between outsourcing partners, integration of joint resources to solve a single task, which can ensure the use of the potential of innovative hromadas. experts from the insead business school note that the government of ukraine during the recovery "should work for the people, and the corresponding infrastructure (housing, transport, hospitals, schools) should be a priority ". the eu's strategic plan for post-war reconstruction of ukraine, "rebuilding ukraine", notes the important role of the infrastructure factor, which should be restored according to the principle of "doing better than it was". the draft recovery plan of the government of ukraine provides for the reconstruction of the entire infrastructure, including medical and educational facilities, as well as strategic enterprises that were destroyed or partially damaged. the analysis of the results of the survey conducted by the razumkov center in 2021 among the representatives of local self government bodies on the principles, conditions and feasibility of implementation of intelligent infrastructure in the cities of ukraine makes it possible to note that even before the military operations, the highest priority was the expansion of services for city residents in the field of health care, social security, education, transportation, housing and public services, etc. it is worth mentioning a number of initiatives, for example, the program of the president's office "new village", according to which 1,600 infrastructure projects are planned to be implemented in a new format of interaction between the state, local authorities, business and the hromada on the basis of private-state partnership. the role of the infrastructural factor can be confirmed by the norms of the law of ukraine "on national security of ukraine", which defines that the fundamental national interests of ukraine include the sustainable development of the national economy, civil society and the state to ensure the growth of the level and quality of life of the population by ensuring the security of vital for society and persons of interest. undp experts in ukraine also presented a project aimed at supporting pilot territorial hromadas in issues of updating local development strategies and approval of the monitoring and evaluation tool in the conditions of post-war reconstruction and development. from these positions, the proposed study is relevant and aimed at solving the important task of post-war reconstruction. thus, compared to existing analogues, the proposed approach is systemic, takes into account the specificities of innovative activity and covers the whole range of tasks for the management of infrastructure and service factors of sustainable development. 5. smart city case despite the significant potential of the proposed methodology, the question of its practical implementation arises. one of the options for solving this problem is related to the creation of an area with a high concentration of human capital and innovation – smart cities. smart cities are based on a combination of human capital (skilled workforce), infrastructure capital (e.g., high-tech communications), social capital (such as an intensive and open communications network), and entrepreneurial capital (for example, creative and entrepreneurial activities). a smart city is a city built on the principles of sustainable development, a city where modern technologies are used for more efficient and sustainable management, a city with a high quality of life that contributes to the development of its human capital. smart cities are high quality of life cities that strive for sustainable economic development through investment in human and social capital, traditional and modern it infrastructure, and participatory natural resource management. three seas economic journal 53 vol. 4 no. 1, 2023 smart cities are about using digitalization to create future-ready, self-optimizing, sustainable urban hromadas where people want to live, work, and learn. they provide an environment that improves the lives of everyone: residents, businesses, students and faculty, and visitors. at the same time, a smart city is efficient, resilient, and minimizes environmental impact. smart technologies offer a wide range of solutions for reformatting the infrastructure of cities with new approaches to energy supply, mobility development and the urban economy in general, in order to reduce emissions by ensuring an appropriate level of energy efficiency and decarbonization of energy supply. main components of smart infrastructure are shown in table 1. table 1 main components of smart infrastructure (commission on science and technology for development, 2016) smart infrastructure component main idea practical implications smart buildings smart buildings intelligently integrate the various physical systems present to ensure that all systems work together in an optimized and efficient manner. intelligent building management systems can improve a building's energy efficiency, reduce waste, and ensure optimal water use, while increasing operational efficiency and resident satisfaction. smart mobility smart mobility is best described as approaches that reduce congestion and promote faster, greener, and cheaper transportation options. most smart mobility systems use data collected from a variety of sources about mobility patterns to help optimize traffic conditions in a holistic way. intelligent mobility systems include mass transit systems as well as individual mobility systems that include bike sharing, ride sharing (or carpooling), vehicle sharing, and more recently, on-demand transportation. smart energy smart energy management systems use sensors, advanced meters, renewable energy sources, digital controls, and analytical tools to automate, monitor, and optimize the distribution and use of energy. such systems optimize grid operations and usage by balancing the needs of the various stakeholders involved (consumers, producers, and providers). there are a number of smart energy infrastructure innovations, such as distributed renewable generation, microgrids, smart grid technologies, energy storage, automated demand response, virtual power plants, and demand-side innovations such as electric vehicles and smart appliances. such innovations provide an extended network of smart energy devices across a city, with a detailed view of energy consumption patterns, enabling community-based energy monitoring programs and improving the energy efficiency of buildings. smart water cities are constantly trying to solve water scarcity problems with innovative technologies and better water management. improved metering and flow management are key to a good water distribution system. a smart water management system uses digital technology to help conserve water, reduce costs, and increase the reliability and visibility of water distribution. physical pipe networks are overlaid with data and information networks. the system typically analyzes available flow and pressure data to identify anomalies (such as leaks) in real time to better manage water flow. customers can be provided with real-time information on the water situation and relevant information to help conserve water, resulting in lower water bills. smart waste management waste generation is growing faster than urbanization. cities are finding it increasingly difficult to source, separate, and utilize different types of waste that can potentially be returned to a consumer's life cycle. waste management typically involves the monitoring, collection, transportation, processing, recycling, and disposal of waste. intelligent waste management systems reduce waste, categorize the type of waste at the source, and develop methods for proper waste management. such systems can be used to turn waste into a resource and create closed-loop economies. their primary benefits lie in improving the efficiency of waste collection, segregation, separation, reuse and recycling. three seas economic journal 54 vol. 4 no. 1, 2023 smart infrastructure component main idea practical implications smart health the health and well-being of urban populations is of particular concern for the sustainability of urban areas and their supporting ecosystems. smart cities can develop the capacity to use technologies such as big data to develop predictions or identify hotspots of population health (such as epidemics or health impacts during extreme weather events). smart health management transforms health-related data into clinical and business insights, including digital health records, home health services, and remote diagnosis, treatment, and patient monitoring systems. it also facilitates the delivery of healthcare through intelligent and connected technologies that help monitor the health of citizens. it enables a shift in focus to prevention rather than cure, with a broader view of total care, healthy living and wellness management. smart health systems have great potential in the aging societies of developed countries and can reduce inequalities in health care between highand lowincome groups. examples of smart health approaches include crowdsourcing to collect data on epidemics and predict outbreaks and take necessary precautions, remotely collecting patient vital signs and data for diagnostic purposes, and setting up automated alerts for patients regarding medications and health checkups. in africa, for example, the medic mobile project in rural areas uses locally available mobile technology to help health workers report symptoms to the nearest clinic, receive treatment advice and emergency referrals, and provide information on the prevalence of disease burden in a village or hromada. smart digital layers smart digital infrastructure helps to better understand and control operations and optimize the use of limited resources in a city. one of the key value propositions of ict in a smart city is the ability to collect and share information in a timely manner. when information is provided in real time and is accurate, cities can potentially take action before a problem escalates. one way to think about digital infrastructure is in terms of different supporting digital layers, as follows: (a) urban: the layer where physical and digital infrastructure meet. examples include smart buildings, smart mobility, smart grids (for utilities such as water, electricity, and gas), and smart waste management systems. (b) sensor: this layer includes smart devices that measure and monitor various parameters of the city and its environment. (c) connectivity: this layer includes the transport of data and information from the sensor level to storage and data aggregators for further analysis. (d) data analysis: this layer involves the analysis of data collected by various smart infrastructure systems to help predict certain events (such as traffic congestion). (e) automation: the digital interface layer that enables automation and scalability for a large number of devices across multiple domains and verticals. (end of table 1) 6. practical implications the results of the research have applied socioeconomic significance and are aimed at solving the important problem of post-war restoration of sustainable development of territories through the design of service provision and use of resource potential of local innovative hromadas. the scientific and methodological bases of building innovative hromadas within the framework of the concept of sustainable development can be used to solve the strategic planning of infrastructural development of regions in the context of neo-industrial modernization. three seas economic journal 55 vol. 4 no. 1, 2023 the results of the project also have a distant socio-economic impact, which consists in the effort to solve the national and global problem of maintaining and strengthening the well-being of hromadas, especially the health of the population, preventing the loss of human capital due to the influence of the military factor. on the basis of the developed methodology, it is possible to develop proposals for the management of resources for the development of territories from the point of view of the formation of an infrastructure and service base (1) for the development of production (financing of innovative infrastructure projects of industrial parks, formation of "growth points of industry 4. 0", clusters, development of financial infrastructure (leasing)); (2) innovation – for financing innovative projects for creation of innovative infrastructure: business incubators, it industry sector, r&d in medium-term priority scientific and technical areas of regional development; (3) social development – for implementation of innovative projects in the field of education, health care, modernization of housing and communal services, recreation. 7. conclusions the main result of the application of the developed methodology is the scientific substantiation of the organizational and economic support for the post-war restoration of the sustainable development of territories based on the infrastructure-service methodology of the development of innovative hromadas and the development of the corresponding analytical toolkit, which will allow its adaptive use within the framework of smart specialization. scientific and methodological approaches will be developed to determine the role of infrastructure and service clusters for the well-being of hromadas, based on the consideration of their impact on human capital and its components (health capital; cognitivecreative capital; entrepreneurial skills capital; qualification capital). based on the definition of the problems of human capital formation, it is possible to develop a scientific and methodological approach to determine the optimal scenario for the formation of public-private partnerships in the context of scenarios for the development of infrastructure-service clusters and a platform approach to the accumulation of social capital in innovative hromadas, and their experimental approval was carried out. according to the results of the review of the best world experiences and in order to improve the development of smart specialization strategies, it is possible to prepare practical recommendations for the adaptive development of service (soft) infrastructure in hromadas in the context of post-war recovery (e-commerce and e-business infrastructure (e-contracting, e-invoicing, e-logistics); life support infra structure (digital medical, educational, transport, logistics and other systems, public safety systems); geo-information infrastructure (linking digital data to spatial objects); industrial digital infrastructure (industry 4.0). an important result will be the theoretical and methodological foundations of the analytical approach to justify the choice of infrastructure and service elements to ensure the well-being of hromadas, based on the identification of the main social, environmental and economic problems that have arisen as a result of military operations. on the basis of the research results, appropriate spatial planning tools, infrastructure trends, new services, and human-centered methodologies and approaches to the design of technical and social solutions in modern cities will be identified. the research will develop pilot infrastructure and service projects and identify appropriate infrastructure and service clusters for their implementation. the specified projects will be based on the key principles of the service economy (the principle of customer relations between citizens and authorities, the principle of competitiveness of public services, the principle of independent assessment of the quality of public services, the principle of optimization of the technological chain of public services) and will be oriented to the key tasks of post-war reconstruction. key aspects of infrastructure and service design will be identified for each project developed: responsiveness to needs (latent or explicit); high value to the consumer: provision of a new service, benefit or function or its provision in an improved form; quality of provision of a new service; technological synergy. three seas economic journal 56 vol. 4 no. 1, 2023 8. acknowledgment the research was funded by the ministry of education and science of ukraine within the projects "organizational and economic support of post-war sustainable development of territories based on infrastructure and service methodology of innovation hromadas' development", let edu, "territory of innovations: best practices for sustainable development at the local level" and estonian national scholarship program for foreign students, researchers and lecturers at the estonian entrepreneurship university of applied sciences. references: asheim, b., grillitsch, m., & tripple, m. 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