Strategic role of innovation in transforming economic systems in the age of global competition

Introduction. This article examines the role of innovation-driven development in the context of structural transformation of economic systems at both global and national levels. The theoretical and methodological foundations of innovation are summarized, while current global trends in innovation development, digital transformation, and Ukraine’s innovation policy during wartime are analysed. The paper identifies key areas of government support for innovation, with reference to best practices from the United States, the European Union, China, and South Korea. The strategic need to intensify innovation activity in Ukraine during the post-war recovery period is substantiated. Practical recommendations are provided for strengthening the institutional foundations of innovation policy. The purpose of the article is to conduct a comprehensive analysis of how innovation-driven development influences the transformation of economic systems under global challenges. The main objectives are: to explore theoretical approaches to innovation policy; to analyse international experience of innovation leaders; to identify the role of digital transformation; to examine the features of Ukraine’s innovation economy during wartime; and to formulate strategic recommendations for improving innovation management. Method (methodology). The research methodology includes analysis of secondary sources (such as reports from the GII, OECD, European Commission, and World Bank), comparative country analysis of innovation models, SWOT analysis of barriers and opportunities for innovation development, and synthesis of best practices in innovation management. Elements of forecasting analysis and a systems approach are also applied. Results. It is found that innovation is a key factor in economic transformation under global competition. Leading innovation economies share common traits: high levels of investment in R&D, developed digital infrastructure, and effective cooperation between government, business, and academia. Despite the challenges of war, Ukraine demonstrates innovation resilience through the growth of the IT sector, defence technologies, and digital public services. Barriers such as lack of funding, brain drain, and regulatory constraints are identified, along with proposed solutions. Conclusions. Innovation is a critical driver of competitiveness and economic growth. Improving the effectiveness of innovation policy requires a long-term strategic approach, cross-sectoral cooperation, and alignment with global standards and indicators. For Ukraine, this represents a pathway to high-quality post-war recovery, integration into the global knowledge economy, and the construction of a modern, high value-added economy.