DIGITAL TRANSFORMATION AND SUSTAINABILITY OF THE IT SECTOR IN UKRAINE: EU INTEGRATION PATHS AGAINST GEOPOLITICAL CHALLENGES

Abstract

This article provides a comprehensive analysis of the impact of digital transformation on the resilience and development trajectory of Ukraine’s IT sector, situated within the complex context of ongoing geopolitical challenges and the strategic process of integration with the European Union. Employing a mixed-methods approach that integrates quantitative trade data analysis from the National Bank of Ukraine with qualitative policy analysis, the study examines the remarkable dynamics of IT services exports, profound structural changes in foreign trade composition, and the critical role of digitalization as a catalyst for GDP growth and enhanced national economic competitiveness. The research identifies and elaborates on key success factors underpinning this transformation, including the strategic harmonization of Ukraine’s legislative and regulatory frameworks with pivotal European digital standards such as eIDAS and GDPR, the active implementation of large-scale infrastructure initiatives like 5G deployment and the EU’s Connecting Europe Facility (CEF) Digital programme, and the successful development and adoption of sophisticated national digital platforms including the Diia portal and the Trembita data exchange system. The study empirically demonstrates that concerted digital transformation efforts have significantly fostered export growth in high-value services, systematically reduced long-standing regulatory and transactional barriers to trade, and effectively cultivated a vibrant and globally competitive innovation ecosystem, notably evidenced by the emergence of internationally acclaimed unicorn startups such as Grammarly and Preply. Simultaneously, the article provides a critical assessment of severe exogenous challenges, including the devastating economic and human capital consequences of the ongoing war, a pressing talent shortage exacerbated by outward migration, constrained global demand due to post-pandemic recessionary pressures, and persistently uneven access to the EU’s single digital market. Based on robust analysis of recent National Bank of Ukraine datasets and official EU integration progress reports, the research quantifies the substantial potential economic gains, projecting a possible 7.6–17% increase in Ukrainian exports to the EU following deeper digital integration, alongside a significant 2.4–12.1% boost to national GDP growth, contingent upon the successful implementation of envisaged integration measures. The concluding synthesis argues that digitalization represents a paramount strategic factor for ensuring Ukraine’s macroeconomic stability and accelerating its European integration aspirations, yet simultaneously emphasizes the indispensable necessity for enhanced multilateral coordination, sustained foreign direct investment in digital infrastructure, and the development of targeted human capital initiatives to secure long-term sectoral resilience and sustainable development.