Investment attraction models for enterprise modernisation under elevated economic risks

Abstract

The article systematises investment attraction models for enterprise modernisation under elevated economic risks. It is substantiated that elevated risks (macroeconomic instability, political and legal uncertainty, security threats, structural and infrastructural disruptions) fundamentally transform the investment process by increasing the cost of capital, shortening investment horizons, narrowing the range of available instruments, and shifting investor risk appetite towards flight to safety. Drawing on the real options theory by Dixit and Pindyck, the pecking order theory by Myers and Majluf, and the institutional theory by North, the study reveals the 'modernisation paradox in crisis': precisely when upgrading production capacity is critical for enterprise survival and adaptation, financing such upgrades becomes most difficult due to escalating risk premiums and investment paralysis. A classification of investment attraction models is proposed based on capital type and risk allocation: debt, equity, hybrid, grant-based, blended finance, partnership, and innovative models. De-risking mechanisms are systematised across six categories: guarantee, insurance, structural, institutional, informational, and technical instruments designed to reduce investment project risk to levels acceptable for private investors. Comparative analysis of Israel, Colombia, Georgia, Poland, and Vietnam reveals common patterns: the priority of institutional de-risking over direct subsidisation, the catalytic role of anchor investors in building investment ecosystems, the effectiveness of sectoral targeting, and the necessity of complementary institutional reforms. For Ukraine as a borderline case of elevated risks where all five risk clusters operate simultaneously, a strategic configuration is proposed based on a portfolio approach and the 'de-risk, don't avoid' principle, combining blended finance with war risk insurance, grant-credit mixes for SMEs, industrial parks with reduced risk profiles, and parallel institutional reforms as a baseline condition for the effectiveness of all financial instruments.