Baltic Journal of Economic Studies

AI-DRIVEN STRUCTURING AND SEMANTIC MATCHING OF CONSTRUCTION COST DATA FOR EFFICIENCY AND CO₂ IMPACT ASSESSMENT

Oskars Bagants — 2026-08-07

The buildings and construction sector is one of the largest contributors to global greenhouse gas emissions. It accounts for around 34% of global energy-related CO₂ emissions, which come from both the energy used to operate buildings and the emissions produced when construction materials such as cement, steel and concrete are made. Despite the increasing use of embodied-carbon assessment methodologies in the architecture, engineering and construction (AEC) sector, carbon accounting tools are still not integrated into the cost estimation and procurement processes that directly affect material selection and initial design choices. This study presents the novel, AI-driven 'EEBOQ' framework, which was developed in the context of the Latvian construction market while taking into account broader European and international carbon accounting practices. The proposed framework integrates a hybrid semantic processing pipeline that combines Large Language Models (LLMs), ontology-based classification mechanisms and vector-based similarity retrieval techniques in order to autonomously interpret heterogeneous, spreadsheet-based procurement documentation. The system aligns the free-text estimate positions with standardised embodied-carbon reference datasets, such as the ICE Database, Environmental Product Declarations (EPDs) and EN 15978-compliant life cycle assessment structures. To improve the reliability of practical CO₂ estimation, the framework introduces a Bayesian Feedback Correction Engine (BFCE). This is designed to reduce discrepancies iteratively between generalised look-up table emission factors and observed, project-specific embodied carbon data. The feedback mechanism continuously recalibrates environmental coefficients using primary data provided by suppliers, transport information related to logistics, records of material substitution, and validated environmental product declarations. Experimental validation on a corpus of real-world construction projects demonstrated that the semantic-matching module achieved top-1 matching accuracy of 89.3% and top-3 accuracy of 97.1%. Furthermore, the proposed Bayesian correction mechanism reduced the median absolute percentage error in embodied carbon estimation from 28.5% using a conventional static look-up table to 8.3% after three iterative feedback cycles. The results obtained indicate that the proposed architecture establishes a scalable, reproducible pathway towards real-time, evidence-based embodied carbon accounting that is directly integrated with operational construction cost management and procurement processes.

EVALUATING HOSPITALITY ECOSYSTEM COMPONENTS IN A REGIONAL TOURISM DESTINATION: EFFECTS ON TOURIST SATISFACTION AND RECOMMENDATION INTENTIONS

Remigijus Kinderis — 2026-08-07

Tourism destinations are becoming more and more like interconnected hospitality ecosystems, where visitor experiences are created through the interaction of information services, infrastructure, hospitality services and leisure opportunities. Understanding how these components influence tourist satisfaction and intention to recommend a destination is important for enhancing its competitiveness. This study therefore aims to evaluate the influence of these components on tourist satisfaction and recommendation intentions in a regional tourism destination in western Lithuania. A quantitative research design was employed, involving a structured questionnaire survey. The final sample consisted of 455 visitors. The data were analysed using descriptive statistics, a reliability analysis, a Pearson correlation analysis, multiple linear regression and an ordinal logistic regression. The findings revealed generally positive evaluations of the dimensions of the hospitality ecosystem. Information quality received the highest evaluation (M = 3.79), while infrastructure quality received the lowest score (M = 2.88). Reliability analysis revealed excellent internal consistency, with Cronbach’s alpha coefficients ranging from 0.934 to 0.967. Regression analysis revealed that infrastructure quality (β = 0.235, p = 0.036) and leisure service quality (β = 0.164, p = 0.020) had a significant impact on tourist satisfaction. In contrast, information quality, food service quality and accommodation quality were not found to have a significant effect. The model explained 28.1% of the variance in tourist satisfaction. Satisfied tourists were significantly more likely to recommend the destination (β = 1.817, p < 0.001). These results emphasise the importance of infrastructure and leisure services in enhancing visitor experiences and boosting a destination's competitiveness.

THE IMPACT OF THE UNITED STATES OF AMERICA-ISRAEL AND IRAN MILITARY CONFLICT ON GLOBAL TRADE FLOWS AND SUPPLY CHAINS: A SYSTEMATIC LITERATURE REVIEW

Steven Kayambazinthu Msosa — 2026-08-07

This systematic literature review investigated the impact of a potential military conflict between the United States of America (USA), Israel and Iran on global trade flows and supply chain systems. The study adopted the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) approach, drawing on a large number of studies identified through a literature search of several popular academic databases, including Web of Science, Scopus, EBSCOhost, ScienceDirect and JSTOR. Consequently, a total of 52 articles that have undergone the peer-review process and were published between 2020 and 2026 were selected on the basis of their relevance. The present study has identified the following five major transmission channels of the effects of geopolitical conflict on international trade flows and supply chains: energy market disruptions; maritime transit vulnerabilities; trade fragmentation through economic sanctions; supply chain resilience and adaptive strategies; and macroeconomic and sectoral spillovers. Based on the reviewed literature, the following major implications of the current conflict on international trade flows can be identified: instability in energy markets and threats to strategic maritime routes, including the Strait of Hormuz, are likely to impose cost pressures on international trade flows and require the restructuring of global trade. The findings emphasise the importance of strategic diversification and the development of resilient supply chains, as well as prospective policy actions to address the potential for disruption. This study makes theoretical and policy contributions based on the latest scholarly discourse. It emphasises the need for adaptive, technology-facilitated and diversified approaches to ensure the smooth running of international trade in a tense geopolitical environment.

INTERNATIONAL ECONOMIC CO-OPERATION IN THE FIELD OF LAWMAKING IN THE CONTEXT OF UKRAINE'S INTEGRATION INTO THE EU

Stepan Kovbasiuk — 2026-08-07

This study examines the theoretical, legal and practical aspects of international economic co-operation in the context of Ukraine's accession to the EU. This is important given Ukraine's status as a candidate for EU accession and the ongoing process of European integration, as well as the need for thorough reform of the national legal system in line with European standards. International economic co-operation is expanding beyond traditional trade and economic relations to increasingly encompass legal regulation. This is because successful economic integration hinges on proper legislative harmonisation and effective mechanisms for regulating social relations. International economic co-operation is an important means of aligning Ukrainian legislation with that of the European Union. The process of legal integration has been found to entail not only aligning national legislation with EU law, but also amending the lawmaking process and improving procedures for drafting and assessing the impact of regulations, as well as implementing advanced tools for monitoring legislation's effectiveness. The study concludes that the Association Agreement is a vital legal mechanism that paves the way for legislative harmonisation and establishes the regulatory preconditions for Ukraine's continued integration into the European legal framework. The study found that the Ukrainian lawmaking system is gradually aligning with European standards. This is evident through the introduction of new institutional instruments and the development of a regulatory framework. However, several issues were also identified, such as fragmented individual lawmaking procedures, ineffective impact assessment mechanisms, limited use of legal oversight tools and insufficient institutional capacity within government bodies. Particular attention was paid to the impact of martial law on lawmaking and the importance of adhering to relevant governance rules and making effective regulatory decisions. The subject of this study is international economic co-operation in lawmaking, as it relates to Ukraine’s integration into the European Union. Methodology. The formal-legal method was applied to analyse the provisions of the Association Agreement between Ukraine and the European Union, the Law of Ukraine “On Lawmaking Activity”, the Treaty on European Union and other legal acts governing the process of legislative harmonisation and legislative activity. The comparative legal method made it possible to identify similarities and differences between the Ukrainian and European approaches to lawmaking, regulatory policy, impact assessment, public consultation and legal monitoring. The systemic method was employed to analyse lawmaking activity within the context of a broader legal and institutional framework of European integration. Meanwhile, the functional method was employed to evaluate the practical effectiveness of legal mechanisms designed to implement European standards within the Ukrainian legal system. The aim of this article is to examine the role of international economic co-operation in the development of lawmaking activities in Ukraine in the context of European integration. Results. The research demonstrates that international economic co-operation has become one of the main factors influencing the transformation of Ukraine’s lawmaking system during its integration into the European Union. It has been established that bringing Ukrainian legislation into line with the European Union's acquis involves changes not only to the content of legal norms, but also to the way rules are made. The present study demonstrates that the adoption of the Law of Ukraine "On Lawmaking Activity" signifies a significant step towards the institutional modernisation of the national lawmaking framework and the implementation of European regulatory standards. Concurrently, the research identifies several challenges, including the need to strengthen the institutional capacity of public authorities responsible for European integration. Conclusion. International economic co-operation in the field of lawmaking constitutes an essential element of Ukraine's European integration process and serves as an important mechanism for the modernisation of the national legal system. The approximation of Ukrainian legislation to European Union law necessitates not only the harmonisation of legal norms but also the transformation of lawmaking procedures and institutional practices in accordance with European standards of good governance.

THE ECONOMIC DIMENSION OF DOMESTIC VIOLENCE: FROM CRIMINALISATION OF AN ACT TO REPARATION IN THE CONTEXT OF ECTHR PRACTICE

Dmytro Baranenko — 2026-08-07

The subject of the present study is the legal and institutional framework for responding to the economic dimension of domestic violence. The focus of the study is on the transition from criminalisation of the act to reparation for the victim in the context of the practice of the European Court of Human Rights. The paper focuses on the interaction between criminal liability, positive obligations of the state, economic autonomy of the victim, compensation mechanisms, social support, and human rights standards in ensuring effective protection against domestic violence. Methodology. This research draws on a combination of comparative legal, systemic, human rights-based, criminal law and institutional economic methods. The analysis integrates the European Convention on Human Rights, an examination of the European Court of Human Rights' (ECtHR) case law on domestic violence, an assessment of the economic consequences of abuse, and an evaluation of legal mechanisms for compensation, protection and restoration. This methodological approach has enabled the interdependency between criminalisation, institutional responsibility, economic deprivation, victim protection and the enforceability of human rights in cases of domestic violence to be identified. This work aims to define the legal and economic framework of the state's response to domestic violence, evaluate the limitations of criminalisation as a protective measure and develop a conceptual approach to reparation that encompasses compensation, restoration of autonomy, social support and the prevention of further violations. The article demonstrates that domestic violence is a human rights violation with direct material, social and institutional consequences. The results of the study demonstrate that domestic violence is a complex legal, social and economic phenomenon. The first necessary level of legal recognition is criminalisation, because it confirms the public nature of the violation and creates the basis for intervention, investigation, prosecution and protective measures. However, the practice of the European Court of Human Rights (ECtHR) demonstrates that formal criminal provisions are insufficient where public authorities fail to assess risks, respond to complaints, protect victims, or address repeated patterns of abuse. Cases such as Opuz v. Turkey, Volodina v. Russia, Kurt v. Austria, Tunikova and Others v. Russia, Talpis v. Italy and Tkhelidze v. Georgia demonstrate that state responsibility can include effective prevention, protection and investigation measures, as well as just satisfaction and structural reforms. The study emphasises that the economic aspect of domestic violence is an integral part of the harm caused. Victims may be deprived of income, housing, employment opportunities, access to documents, family resources, childcare, mobility and the practical capacity to leave the abusive relationship. These losses are often hidden, cumulative and difficult to prove, yet they are crucial in determining whether the victim can establish an independent life. Therefore, the legal response should include compensation for material and non-material damage, as well as access to safe housing, legal aid, psychological and medical support, employment assistance, protection from financial abuse and stable public financing of infrastructure supporting victims. Conclusion. The legal regulation of domestic violence is the responsibility of the state in terms of criminal law, economics, and human rights. The shift from criminalisation to reparation reflects the need to change the state's response from punishing the perpetrator to restoring the victim’s autonomy and preventing repeated harm. In the context of the European Court of Human Rights' (ECtHR) practice, effective protection requires a model in which criminal liability, positive obligations, compensation, social support, institutional accountability, and financial responsibility operate within a single framework. The future development of this model hinges on national legal systems recognising the economic impact of domestic violence and redistributing the associated costs away from victims through compensation, public support and structural prevention measures.

ECONOMIC INCENTIVES AND CRIMINAL LIABILITY: DOES PUNISHMENT FUNCTION AS A MECHANISM FOR REGULATING MARKET BEHAVIOUR?

Andrii Borovyk — 2026-08-07

This article presents a comprehensive, interdisciplinary study of the relationship between economic incentives and criminal liability as instruments for regulating market behaviour. The topic's relevance stems from the need to identify an optimal model of state intervention in economic relations, given the increasing prevalence of economic crime, the high latency of economic criminal offences and the limited effectiveness of traditional punitive mechanisms. The study aims to evaluate the effectiveness of criminal punishment as a means of regulating the behaviour of economic agents, determine its regulatory capacity limits, and substantiate the optimal balance between punitive and incentive-based public policy instruments. The methodological framework combines economic analysis of law with systemic, comparative, formal, logical-analytical and statistical legal methods. The research is theoretically founded on Gary Becker's economic model of the rational offender, the ultima ratio doctrine, the principle of the economy of criminal law enforcement, and contemporary approaches within the field of law and economics. The findings demonstrate that compensatory increases in the severity of criminal sanctions do not ensure a proportional enhancement of the deterrent effect of economic criminal offences under conditions of a high level of latency, and may conflict with the principles of proportionality, justice, and economy of criminal law repression. Based on an analysis of deposit and lending activity dynamics in Ukraine, the study concludes that lawful financial behaviour is influenced to a much greater extent by economic and institutional incentives, particularly the deposit guarantee system, preferential lending programmes and predictable monetary policy, than by intensified criminal law enforcement. The study also argues that excessive or disproportionate reliance on criminal law mechanisms to regulate economic activity may increase legal uncertainty, raise businesses' transaction costs, and negatively impact investment activity. The research's scientific novelty lies in the development of the concept of complementary market behaviour regulation, whereby economic incentives and criminal liability perform mutually reinforcing functions. Economic instruments shape incentives for lawful behaviour ex ante, whereas criminal law serves a protective function ex post, responding to the most socially dangerous manifestations of opportunistic behaviour. The practical significance of the findings lies in their support for the transition to an integrated criminal policy model that prioritises the use of economic incentives alongside the proportional, predictable and ultima ratio-based application of criminal law mechanisms.

LEGAL AND ECONOMIC CHALLENGES OF ARTIFICIAL INTELLIGENCE USE IN JOURNALISM: TOWARDS RESPONSIBLE MEDIA GOVERNANCE

Liudmyla Borovyk — 2026-08-07

This article presents a comprehensive interdisciplinary analysis of the legal and economic challenges associated with the use of artificial intelligence in journalism. It does this within the framework of developing a model of responsible media governance. The relevance of the study is driven by several factors. Firstly, there has been rapid diffusion of generative artificial intelligence technologies in editorial practice. Secondly, there has been transformation of media business models. Thirdly, there has been emergence of new challenges relating to copyright protection, professional journalistic ethics, and information security. Finally, there is a need to harmonise Ukrainian legislation with the European regulatory framework governing artificial intelligence. The study aims to examine the legal and economic implications of artificial intelligence in journalism, evaluate current approaches to its regulation and demonstrate that responsible media governance is a viable model for balancing technological innovation, economic efficiency and public interest protection. The findings demonstrate that, although artificial intelligence can substantially enhance the efficiency of editorial workflows by automating routine tasks, it can also generate new legal, economic and ethical challenges. These challenges are associated with using journalistic content to train generative AI models, allocating liability for AI-generated content, developing the market for licensing journalistic data, spreading disinformation and the growing use of digital avatars and synthetic media. The study concludes that the risk-based regulatory approach set out in the European Union's Artificial Intelligence Act (AI Act) offers a modern conceptual basis for managing the use of artificial intelligence in the media sector. However, effective implementation requires economic mechanisms to complement content licensing, transparent allocation of responsibilities among digital ecosystem participants, and further development of editorial self-regulation. The research's scientific novelty lies in substantiating the interdisciplinary concept of responsible media governance, integrating legal, economic and organisational self-regulatory mechanisms for the use of artificial intelligence in journalism. The practical significance of the findings is their potential to improve Ukrainian legislation on media and artificial intelligence, develop editorial AI governance policies, establish licensing mechanisms for journalistic content and align the national regulatory framework with European Union legislation.

ECONOMIC RESILIENCE AND COMPETITIVENESS OF AGRI-FOOD CHAINS IN WARTIME: THE CASE OF UKRAINIAN ANIMAL HUSBANDRY

Natalia Vasylieva — 2026-08-07

The economic resilience and global competitiveness of agri-food chains are critical components of national economic security, particularly in times of geopolitical instability. The full-scale Russian invasion of Ukraine had a highly disruptive effect on the macroeconomy as a whole, including livestock agri-food chains driven by agricultural enterprises and households. This study evaluates how these chains can preserve their viability under extreme risk conditions through structural adaptations and market reorientations. The study hypothesis was that Ukrainian livestock agri-food chains had developed distinct institutional and structural patterns of economic resilience, enabling them to maintain international competitiveness despite wartime pressures. The purpose of the research was to evaluate the structural changes, market adaptability and trade competitiveness of Ukrainian animal husbandry between 2021 and 2024, as the sector establishes stronger links with the EU. The research methodology used available official statistics and encompassed quantitative econometric tests (Student's T-test), regional cluster optimisation modelling and trade balance analysis. The findings revealed a significant structural divergence. Agri-food chains anchored by agricultural enterprises demonstrated high economic stability in capital-intensive sectors such as egg production, pork production and poultry production. The agri-food chains led by smallholder households only retained dominant market shares in the highly fragmented milk and honey niches. Optimisation modelling identified three distinctive economic clusters in regional agribusiness, mirroring pre-war configurations but with an increased focus on exports. Despite massive asset destruction, the paper proves that strategic resource reallocation and a pivot to exporting to the EU market allowed Ukrainian agri-food chains to remain competitive in international trade. This lays the groundwork for their integration into the EU's Common Agricultural Policy (CAP).

STABILITY OF ECONOMIC TURNOVER AS A FACTOR OF MARKET PREDICTABILITY

Oleh Vaskovskyi — 2026-08-07

The subject of the present study is market predictability as an autonomous economic and legal category, and its functional relationship with the stability of economic turnover. Market predictability is defined as an aggregated characteristic of the institutional environment that reflects the extent to which market participants are able, in advance and with a reasonable degree of certainty, to relate their economic conduct to its probable legal and economic consequences. This enables them to form expectations that remain stable over time regarding the operation of rules, the enforceability of obligations, and the protection of rights. The relevance of the topic is heightened by contemporary armed conflicts, particularly the full-scale war against Ukraine. The consequences of this war are disrupting supply chains, contractual ties and investment horizons, thereby eroding predictability in both the global and national economies. The purpose of the article is threefold: to substantiate market predictability as a distinct phenomenon and functional result of stable economic turnover; to define its content, features and nature; and to develop a system of criteria for assessing market predictability that captures the influence of stable economic turnover on market participants' behaviour. Methodology. The study combines economic and legal approaches. General scientific methods of analysis and synthesis are employed to break down the category into its components and functions. The systemic-structural and functional methods form the basis of the two-channel model of influence, while the formal-legal and comparative-legal methods are used to organise legal instruments and align national approaches with the EU acquis. This argument is supported by recent European empirical research indexed in Scopus and Web of Science. Results. Firstly, market predictability is distinguished from neighbouring categories. Legal certainty is characterised by the clarity, coherence and consistency of norms and their application. Stability of economic turnover reflects the continuity, protection and recoverability of economic ties. Market predictability, on the other hand, is characterised by participants' ability to form well-founded expectations. Therefore, predictability is not identical to the stability of turnover, but is one of its functional results. Secondly, the formation of predictability through a two-channel mechanism is revealed: turnover stability shapes participants' expectations by reducing transaction costs at the stages of concluding, performing and enforcing contracts, and by strengthening institutional trust among counterparties, creditors and investors. Empirical studies confirm the link between judicial efficiency and the development of trade credit, the level of doubtful receivables and economic growth rates. This supports the idea that the consistency and effectiveness of legal regulation's application is more important than its formal immutability. Thirdly, a system of criteria for assessing market predictability has been developed. Each criterion is linked to an observable indicator and the corresponding channel through which turnover stability affects market conduct. This design ensures the system's empirical verifiability and distinguishes it from generalised assessments of institutional quality. This gives the approach a diagnostic character, making it possible to identify the sources of a predictability deficit and determine appropriate legal responses. Fourthly, the significance of predictable insolvency procedures in forming a system is substantiated. Uncertainty regarding the duration, cost and outcome of such proceedings complicates credit risk assessment and may increase financing costs, whereas timely and foreseeable restructuring and liquidation procedures boost the confidence of creditors and investors. Conclusions. The insolvency regime should not be regarded as a peripheral matter, but as a key element in ensuring the stability and predictability of economic turnover. The practical value of the results lies in the applicability of the proposed system of criteria for evaluating the impact of reforms to economic legislation, the judiciary, enforcement proceedings and insolvency procedures on the behavioural expectations of market participants. During wartime and the subsequent period of transformation, the criteria for the restoration of economic ties, the effectiveness of rights protection and the trust of creditors acquire particular importance. In this context, securing market predictability – notably by aligning national insolvency legislation with EU law – should be considered an independent area of economic and legal policy, and a precondition for sustainable recovery.

THE IMPACT OF LAW ENFORCEMENT AGENCIES ON ENSURING NATIONAL ECONOMIC SECURITY WITHIN THE SYSTEM OF STATE FINANCIAL CONTROL (THE SSU AND SBI CASE STUDY)

Marianna Koshchynets — 2026-08-07

This article uses the examples of the Security Service of Ukraine (SSU) and the State Bureau of Investigations (SBI) to examine the role and significance of law enforcement agencies in the exercise of state financial control for ensuring the economic security of the state. This research employs an interdisciplinary methodology that integrates economic and legal analysis to ensure the reliability of its findings. The evolving role of law enforcement in maintaining national economic security through financial control was examined using the dialectical method. The systemic-structural method enabled the conceptualisation of state financial control as a vital component of the country’s economic architecture. A comparative analysis was conducted to evaluate the functional economic impact of the SSU and SBI within the oversight system. The dogmatic method was employed to evaluate the regulatory framework in terms of financial stability and fiscal discipline. Statistical analysis played a key role in quantifying the economic outcomes of financial crime investigations in 2025, with a particular focus on asset recovery and mitigating budgetary losses. Finally, the analytical method synthesised the findings into strategic recommendations for improving the economic efficiency of state control mechanisms. Results. Theoretical and legal approaches to defining financial control were summarised and a definition of state financial control was provided. The tasks and entities involved in the latter were also identified. The system of bodies exercising state financial control in Ukraine was visualised. The role of law enforcement agencies in its implementation was also established. Practical implications. The role of the Security Service of Ukraine as a key institution in ensuring state security, including economic security, was analysed. Although the State Bureau of Investigation does not directly belong to the system of state financial control bodies, it was demonstrated that it nevertheless acts as a key entity in jurisdictional activities in this sphere. Value / Originality. The results of this study deepen the understanding of the institutional role of law enforcement agencies in the State financial control system, which enhances Ukraine's economic efficiency. The study also paves the way for improvements to the regulatory framework in this area.

ASSESSING ENERGY SECURITY AND SYSTEM RESILIENCE: EVIDENCE FROM THE GEORGIAN ENERGY SECTOR

Eka Chokheli — 2026-08-21

In modern energy systems, energy security has become one of the key priorities, as it directly affects the stability of energy supply, economic sustainability and national security. This study aims to evaluate the level of energy security within the Georgian energy system, considering technological transformation and emerging systemic risks. This research takes a mixed-methods approach, combining systems analysis, multi-criteria decision analysis (MCDA), resilience-based assessment and scenario analysis. A composite Energy Security Evaluation (ESEC) index has been developed to assess the performance of the national energy system. This index incorporates three key aspects: technological and operational resilience, energy dependency and supply diversification, and systemic resilience. The indicators were normalised on a 0–100 scale and aggregated using a weighted composite model. The empirical results show that Georgia's overall energy security level reaches ESEC ≈ 67, indicating a moderately high level of energy security. However, the analysis reveals several structural vulnerabilities, particularly with regard to external energy dependency and supply diversification. A scenario-based assessment shows that digitalising the energy sector and implementing smart energy management technologies could significantly strengthen system resilience. The findings suggest that improving energy security in Georgia requires a focus on energy diversification, smart grid development and modernising digital infrastructure. The proposed analytical framework can also be used to evaluate the energy security of other emerging energy systems.

THE CHANGING DRIVERS OF FOREIGN DIRECT INVESTMENT IN ICELAND: EVIDENCE FROM THE KNOWLEDGE-CAPITAL FRAMEWORK, 1998–2024

Guðmundur Kristján Óskarsson — 2026-08-21

Foreign direct investment (FDI) is an important source of capital and economic development for small open economies, yet relatively little is known about whether the determinants of FDI remain stable during periods of major macroeconomic disruption. This study examines whether the drivers of inward FDI into Iceland changed across three distinct macroeconomic regimes: a pre-crisis expansion period (1998–2009), a post-crisis recovery period (2010–2019), and a pandemic and post-pandemic period (2020–2024). Using annual bilateral FDI stock data from fifteen source countries over the period 1998–2024, the analysis applies an extended Knowledge-Capital framework incorporating interaction effects between key explanatory variables and macroeconomic regimes. To accommodate the presence of zero and negative FDI observations and reduce the influence of extreme values, the primary specification employs a random-effects panel model using an inverse hyperbolic sine transformation of FDI stocks. Fixed-effects and alternative random-effects specifications are estimated as robustness checks. The results indicate significant temporal variation in the determinants of inward FDI. Joint Market Size and geographic distance exhibit statistically significant changes across macroeconomic regimes, whereas skill differences and institutional quality remain comparatively stable. Market-size effects are positive during the pre-crisis period, become negative during the post-crisis recovery period, and return to a positive association during the post-pandemic period. Geographic distance remains a significant deterrent to investment throughout the study period and becomes more influential during periods of heightened economic uncertainty. The findings suggest that the determinants of FDI in small open economies are not temporally fixed but vary according to broader macroeconomic conditions. The study contributes to the Knowledge-Capital literature by demonstrating the importance of accounting for regime-dependent effects when analysing long-run FDI patterns.

INSTITUTIONAL REGULATION OF ECONOMIC GROWTH IN SMALL EU COUNTRIES IN THE CONTEXT OF GLOBALIZATION AND DIGITALIZATION

Jurijs Baltgailis — 2026-08-21

The institutional-sociological approach views the economy as a system in which the relationships between economic entities are shaped by economic and non-economic factors. Technical and economic factors play an exceptional role in this system. The concept of 'institution' is interpreted very broadly and includes the state, corporations, trade unions, competition, monopolies, taxes, sustainable ways of thinking and legal norms. Those who subscribe to the institutional approach are united by a characteristic methodological principle: an expansive interpretation of the subject of economic theory, otherwise known as the interdisciplinary approach. Unlike the classical school, this school of economic thought focuses not on the processes of production and circulation, but on the system of economic organisation and management, as well as social and historical aspects. According to its proponents, the economy is a playing field. The final outcome of this 'game' is determined by the 'institutions', or parameters, that exist within it. By adjusting these parameters, it is possible to influence the behaviour of the 'players' (who make economic decisions independently). Using the example of the Baltic states and other small European economies, the authors use neo-institutional theory to substantiate the problems associated with the macroeconomic development of small countries. This is because the conditions for economic growth have changed, with intangible costs becoming the most important and determining factor in the development of many EU countries.

THE DIGITALISATION OF STATE REGULATION AND OVERSIGHT OF FEA: UKRAINE VS THE EU

Nelia Yehorova — 2026-08-21

The subject of this study is the digitalisation of state regulation and control of foreign economic activity in Ukraine within the European Union. This study aims to identify the characteristics of digitalisation processes in this area of state regulation and control, and to compare them with the European Union’s experience. To this end, methods such as hermeneutic, legal-technical, comparative and systems analysis were employed. It has been established that foreign economic activity is a key component of state economic policy. This is because it enables the state to generate budget revenue through export and import trade, and to provide the population with necessary goods, works, and services. The key factors underpinning the need to introduce digital technologies into the regulation of international economic activity have been identified. These include optimising state regulation, enhancing oversight of trade procedures, increasing budget revenues, creating platforms for close co-operation between participants in foreign economic relations and improving the state's image on the international stage. The study has shown that the lack of harmonisation between Ukrainian and European Union regulations in international trade restricts businesses from carrying out export and import operations effectively on a large scale. Consequently, aligning this system of relations with a single digital standard would have a positive impact on the development of such economic relations. The article emphasises that the proper use of digital technologies in foreign economic activity must be underpinned by legislation. However, it concludes that the digitalisation of this sector cannot be fully encompassed, particularly given the rapid progress in the application of innovative digital technologies. The practical impact of digitalisation on the regulation of foreign economic activity, and the resulting outcomes, have been examined using the example of the customs regulation of goods, works and services exported, imported or transited between Ukraine and the European Union. Significant progress has been made in this area, particularly through the development and use of the ‘Single Window for International Trade’ single state information web portal, and participation in the European digital transit system (the New Computerised Transit System, or NCTS).

FUNDING AND LOGISTICAL SUPPORT FOR THE NATIONAL RESISTANCE IN THE CONTEXT OF IMPLEMENTING THE CONCEPT OF MODERN FINANCE

Nina Petrukha — 2026-08-21

The relevance of this study stems from the need to establish a sustainable system for the financing and logistical support of national resistance in the context of prolonged armed aggression, rising defence expenditure and limited budgetary resources. Contemporary security challenges require the development of new approaches to the mobilisation and management of resources capable of ensuring an adequate level of the state’s defence resilience. The aim of this study is to develop theoretical and methodological foundations and practical recommendations for improving the financing and logistical support of national resistance in Ukraine in the context of implementing the concept of modern finance. The subject of the study is the processes of financial and resource support for the components of national resistance. The study employs systemic, institutional, comparative and economic-statistical approaches, as well as methods of analysis and synthesis, econometric modelling, index analysis and expert assessment. To assess the relationship between a country’s economic potential and defence expenditure, a regression model was constructed, which demonstrated the existence of a strong statistical correlation between GDP per capita and expenditure on security and defence (R² = 0,9213). In addition, a comprehensive indicator of the effectiveness of funding for the security and defence sector has been developed, which takes into account the level of defence expenditure, its share of GDP, the structure of public expenditure, the Ministry of Defence of Ukraine’s share in the funding of the security and defence sector, and the rate of growth in the relevant expenditure. The study’s findings showed that Ukraine’s expenditure on security and defence rose from 191.7 billion UAH in 2018 to 3,830 billion UAH in 2025, whilst its share of public expenditure reached 70 per cent. The value of the integrated indicator rose from 0.0091 in 2021 to 0.9043 in 2025, indicating a significant increase in the priority and scale of defence funding. A model for multi-channel funding of national resistance has been proposed, combining resources from the state and local budgets, international aid, military bonds, public-private partnerships and the voluntary sector. The practical value of this work lies in the potential to use the proposed approaches to improve public policy in the areas of national resistance, medium-term budget planning and the digital management of defence resources.

LEGAL FRAMEWORK FOR GREEN ECONOMIC GROWTH: INTERNATIONAL AND NATIONAL DIMENSIONS

Vira Halunko — 2026-08-21

This article examines the legal framework for green economic growth from international, European and national perspectives, paying particular attention to the economic effectiveness of legal mechanisms that support the transition to sustainable development. The study's relevance is determined by the growing need to balance environmental protection with economic development priorities in the context of climate change, resource depletion and the implementation of the European Green Deal. The research focuses on the legal and economic mechanisms that regulate the development of a green economy, ensuring the transition to a low-carbon, resource-efficient growth model. The study aims to analyse the legal basis for green economic growth and evaluate the economic impact and effectiveness of regulatory instruments implemented at international, EU and national levels. The methodological framework combines both general scientific and specialised research methods. The dialectical method was employed to analyse the development of the concept of the green economy within the context of sustainable development theory. A comparative legal analysis was conducted to evaluate international, EU and Ukrainian legal instruments that govern environmental and climate policy. A systems approach was adopted to identify the interactions between legal, economic and environmental institutions. Statistical and economic analysis methods were employed to evaluate the impact of green investments, environmental taxation, emissions trading systems and renewable energy policies on sustainable economic development. The study shows that the modern legal framework for green economic growth combines international environmental law principles, climate governance mechanisms and economic incentives to stimulate environmentally responsible investment and production. Particular attention is given to the European Green Deal, the European Climate Law, the Fit for 55 package, the REPowerEU plan and the Circular Economy Action Plan. The research reveals that legal mechanisms are most effective when combined with economic instruments, such as carbon pricing, environmental taxation, emissions trading schemes, green finance and public investment programmes. Analysis of the EU's experience suggests that legal regulation has led to a significant increase in green investment, accelerated the deployment of renewable energy technologies and substantially reduced greenhouse gas emissions, all while maintaining economic growth. The findings confirm that the effectiveness of green transition policies hinges on integrating regulatory requirements with financial and institutional support mechanisms. It can be concluded that a green economy should be regarded as a comprehensive legal and economic transformation model aimed at achieving climate neutrality, environmental sustainability and long-term economic resilience. For Ukraine, the essential prerequisites for successfully implementing the green economy model are further harmonisation with EU environmental legislation, the development of green finance instruments, and the strengthening of institutional capacity.

THE ECONOMIC FUNCTIONS OF PARLIAMENT AND THE POLITICO-ECONOMIC DIMENSION OF BICAMERALISM IN POST-WAR UKRAINE

Denys Yakovlev — 2026-08-21

The economic dimension has become one of the key factors during the Russo-Ukrainian war. In the context of the country’s future post-war transformation, the issue of Ukraine’s economic resilience and financial security in the current phase of the war must be considered. The war has exposed the strengths and weaknesses of Ukraine's post-Soviet economic and political model, characterised by a clash of authoritarian and democratic political trends (with electoral democracy and autocracy prevailing in public policy) and the oligarchisation of the economy. To achieve economic stability, the institutional interaction between Ukraine's executive and legislative branches must be significantly strengthened. Most importantly, parliament's role in economic growth and post-war reconstruction, as well as its institutional interaction with the government and president, need to be reconsidered. The search for effective parliamentary models is associated with the need to strengthen the representation of territorial communities, districts and territories, improve the quality of the legislative process, and establish a balanced system of checks and balances. One possible approach to modernising Ukraine's parliamentary system is to introduce a bicameral model of parliament (bicameralism). This article aims to determine the economic functions of parliament and the political and economic dimensions of bicameralism in Ukraine during and after war, based on an analysis of expert assessments of the institutional purpose and functions of the upper house of parliament. The study focuses on the political and economic aspects of the bicameral parliament's activities. The study focuses on the economic functions of parliament and the political and economic dimension of bicameralism in (post-)war Ukraine. The methodological basis of the research is a combination of theoretical analysis of scientific approaches to bicameralism and the empirical method of expert polling. The research was conducted in January-February 2026 and comprised over fifty experts, including representatives of political science, constitutional law, local council deputies, public activists, volunteers and veterans of the Russo-Ukrainian war. The research was conducted in the format of an individual questionnaire and included both closed and open questions with the aim of clarifying the experts' attitude to the prospects for introducing a bicameral parliament and the possible functions of the upper house. The results of the research indicate that the expert community has a moderately positive, yet cautious, attitude towards the idea of bicameralism. At the same time, experts emphasise the importance of parliament’s economic functions and its role in representing the interests of local communities, in order to safeguard their economic interests. While more than half of the respondents support the introduction of a bicameral parliamentary system, a significant proportion of experts consider this feasible only under certain political and institutional conditions. The most important function of the upper house is to represent territories and territorial communities, and to rationalise the legislative process by examining draft laws more thoroughly and preventing populist decisions. Experts pay special attention to the potential role of the upper house in post-war reintegration processes, the economic recovery of territories, and the control of budgetary resource efficiency. The practical significance of the results obtained lies in the possibility of using expert assessments to further conceptualise the bicameral parliamentary system in Ukraine, determine the upper house's functional purpose, and develop strategic approaches to modernising Ukrainian parliamentarism in the context of post-war state development.