Regional governance and economic virtualization: its role in innovative recovery, principles, and challenges

Regional governance today plays a crucial role in promoting innovative development and the revitalization of territories. Its importance is determined by the fact that it is at the regional level that state priorities are most effectively combined with local needs and resource capabilities. This creates a favorable environment for the implementation of innovative projects, the development of entrepreneurship, the modernization of infrastructure, and the introduction of digital technologies. During the reconstruction process, regional governance ensures the coordination of efforts among local authorities, businesses, research institutions, and the public, thereby facilitating faster adaptation to challenges and the development of sustainable development models. Thus, the regional level of governance becomes a key driver of transformations, capable of turning reconstruction into innovation-oriented development. The purpose of this article is to analyze the features of regional governance under the conditions of economic virtualization, to determine its impact on the innovative recovery of territories, and to systematize the principles and problems that determine the effectiveness of management decisions. Negative factors affecting regional management are revealed, which are divided into external and internal. External factors of negative impact on regional management include: the war of the Russian Federation against Ukraine, full-scale hostilities in most territories; reduction in exports due to the war and falling world prices; slowing down the growth rate of production and worsening its indicators; reduction in the scale of small and medium-sized businesses. Internal factors of negative impact on regional management include: lack of highly qualified specialists, which is due to mass migration of the population and mobilization processes; distrust of the local population in state and local authorities, which reduces the effectiveness of management decisions; low level of transparency and accountability of management structures, which prevents the formation of open and responsible regional management; low level of solvency of both business and the population; lack of regional programs for the development of small and medium-sized businesses. The identified problems will allow strategic guidelines for the development of territories in accordance with the identified negative factors of regional management.