In modern economic management, innovations are crucial in ensuring productive development and economic progress. However, Ukraine has shown a noticeable lag in many aspects of innovation activity compared to developed countries worldwide. This includes technological equipment for production, efficiency of research and development, innovative and inventive activity, cooperation in the field of innovations, scientific capacity of GDP, and financing of research and development works. This article aims to explore the peculiarities and regularities of the relationship between innovative activity and the productive capacity of the economy of Ukraine's regions. The article primarily emphasizes that innovations are a crucial factor in enhancing productivity and economic growth in the current economic conditions. The features and regularities of the relationship between innovative activity and the productive capacity of the economy of Ukraine's regions have been investigated. Scatter diagrams showing the relationship between multifactor productivity and the scientific intensity of the economy of Ukraine's regions, the distribution of patents for inventions and utility models among regions, the share of innovation-active enterprises engaged in scientific cooperation on R&D, and expenses on R&D per employed person have been presented. To determine the change in the impact of these indicators on multifactor productivity, the analysis was conducted for the years 2013 and 2021. The results of the analysis indicate that not all innovative processes directly or significantly impact the growth of multifactor productivity in the regions of Ukraine, and some considered factors, on the contrary, have a reverse impact on its formation as they lead to its decrease. Attention is drawn to the existence of the so-called innovation paradox and productivity. Several cause-and-effect mechanisms leading to the innovation paradox have been analyzed. It has been established that despite current challenges, the post-war revival of the Ukrainian economy depends on implementing an effective strategy to increase innovation potential for productivity growth, requiring increased state support for innovative projects and encouraging the industry to modernize production with adequate funding. Keywords: innovative processes, technological developments, productive capacity, financial resources, patent activity, innovation paradox.
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