Foreign investments in small and medium-sized businesses: the experience of Spain, risks and prospects for Ukraine

Abstract

The paper explores the transformation of legal and institutional frameworks for protecting foreign investments in the small and medium-sized enterprise (SME) sector amid economic turbulence and geopolitical instability. The focus of the study concerns the interaction between regulatory safeguards, financial infrastructure and public policy instruments that shape a predictable and secure environment for international capital participation in entrepreneurial activity. Particular attention is devoted to the comparative assessment of Spain’s integrated model of investment protection and Ukraine’s evolving regulatory system in the context of European integration and post-crisis economic recovery. The research problem arises from the growing gap between the formal existence of legislative guarantees and their practical implementation, especially in economies undergoing structural transformation and facing security challenges. The purpose of the study is to conceptualise the key elements of Spain’s approach to safeguarding foreign direct investment in SMEs and to determine the feasibility, risks and strategic prospects of adapting selected mechanisms within the Ukrainian institutional environment. The research generalises that Spain’s investment framework combines transparent authorisation procedures, proportional control of strategic sectors, diversified financial instruments, regional business support networks and risk-mitigation guarantees, thereby fostering investor confidence and long-term capital inflows. In contrast, Ukraine’s SME sector operates under heightened political, financial, and infrastructural risks, which constrain foreign investor engagement despite statutory protections. The findings substantiate that strengthening institutional coordination, ensuring regulatory stability, developing alternative financing channels, expanding regional advisory platforms and introducing comprehensive war-risk insurance mechanisms could substantially enhance Ukraine’s investment attractiveness. The study concludes that the selective adaptation of the Spanish experience, aligned with European Union standards and tailored to domestic socio-economic realities, may contribute to building a resilient investment ecosystem capable of supporting sustainable SME development and accelerating integration into global economic networks.