Economic Security in Turbulent Time: the Case of Ukraine

The proliferation of investment screening mechanisms (ISMs) across Western liberal democracies in early 2010s has attracted attention of scholars. To understand this shift in investment regulation researchers offered a range of explanations for the adoption and institutional structure of ISMs highlighting a complex set of factors that influence governments’ decisions to review cross-border capital flows, including globalization backlash, domestic political motives, economic nationalism, geopolitical concerns, institutional contexts and firm-government relationships structures (CanesWrone et al., 2020; Chan & Meunier, 2022; Doppen et al., 2024; Lenihan, 2018; Schild, 2022; Wernicke, 2021). Today, when the world is rapidly shifting from neoliberal to geoeconomic order with increased security concerns in regulation of international commerce (Roberts et al., 2019), ISMs became a legitimate instrument at the heart of economic security agenda (European Commission, 2023). Thus, in the contemporary context of increased geoeconomic competition, the absence of an ISM rather than its adoption raises questions. While the existing research tells us that in certain legal and political settings policymakers can be reluctant in acknowledging security risks due to a combination of institutional and ideological factors (Bauerle Danzman & Meunier, 2024),we still know little about what prevents states from advancing their economic security policies. This study takes the first step in addressing this gap by investigating the case of Ukraine. Facing Russian military aggression first in 2014 and the full-scale invasion in 2022, Ukraine managed to advance its defense and security capabilities making it more resilient to external threats. However, the development of the economic security agenda in Ukraine remains unclear, and it particularly lacks a full-fledged cross-sectoral investment screening despite the reported pressure for its adoption from Western partners. This paper probes into this chasm and investigates why Ukraine still has not adopted a cross-sectoral ISM, explores how Ukraine has been navigating uneasy trade-offs between prosperity and security over time, and identifies what domestic and international factors have been driving such choices. The article bridges IR/security and IPE studies and contributes to the literature on economic statecraft and geoeconomics.