Why the first-mover advantage matters in Ukraine’s reconstruction

This article contributes to the Friends of Europe’s Peace, Security and Defence programme and Ukraine Initiative. Its insights feed into the Jacques Delors Friends of Europe Foundation’s broader Spending Better initiative, which seeks to optimise defence spending, strengthen European institutions and capabilities, and enhance Europe-wide preparedness and societal resilience.

Reconstruction in Ukraine is often discussed as a post-war project: something that begins once the war ends and conditions stabilise. Yet much of that reconstruction is already underway. The question for investors, governments and international partners is not whether to engage, but whether to do so while priorities, partnerships and market positions are still being shaped.

Oksana Markarova, presidential advisor on reconstruction and investments and former ambassador of Ukraine to the United States, has warned that those waiting for the war to end before engaging risk missing the opportunity entirely. The assumption that waiting is neutral is misleading. As she puts it, “They miss everything. No one cancelled the first-mover advantage.”

Ukraine has already demonstrated an ability to function under conditions few economies have faced.  Since 2014, Ukraine has built independent institutions, returned to international capital markets, transformed its military industrial sector and kept its economy functioning through years of full-scale war. Ukrainian businesses relocated from front lines, rebuilt their operations, created jobs and kept paying taxes into the national budget while under bombardment, which she describes as the backbone of Ukraine’s defence and its future economic prosperity. The combination of continuity and adaptation under pressure that this represents is something no stable market produces on its own, and it is the foundation on which serious reconstruction investment is now being built.

The energy sector shows how this dynamic works in practice. Because Russian strikes have destroyed enough of Ukraine’s grid that, in some areas, there is simply no choice but to try something new, Ukraine is already deploying distributed generation, storage and small modular reactor technology in real operating conditions that energy systemselsewhere cannot test without disrupting systems that already work.

The same applies to agriculture. Ukraine holds approximately 30% of the world’s black soil deposits, has abundant fresh water and remains one of the few genuinely stable agricultural zones at a moment when climate change is reducing reliability across Asia, Africa and the Americas.With sufficient investment in agritech and modernisation, Markarova argues that agricultural output could eventually double or even triple.

The scale of reconstruction remains immense. According to Markarova, between six and seven million Ukrainians are currently outside the country, many of them from cities that have been completely destroyed. These people need safety, housingand work to come back. Many of those cities will have to be built entirely from scratch. Nove Misto, the new reconstruction project Markarova is leading, is the first attempt to show how that gets done.

The concept is a city for approximately 100,000 residents, privately financed at 75%, structured around a central innovation park focused on life sciences, high technology and medtech. From that core, the city extends outward into country-specific sectors (French, Italian, American, British), each designed to bring in the businesses and capital of the country it represents. Partner governments already have export credit instruments, loan guarantees and investment insurance tools designed to support their own companies investing abroad. These instruments are capitalised and ready, but they have not moved into Ukraine at scale because there were not enough structured, bankable projects for those instruments to support. Nove Misto is being built precisely to close that gap.

The city concept draws on ancient Ukrainian Trypilian urban forms, circular and built around a central gathering space, merged with every available advance in energy, defense, logistics and urban design. The ambition is for technology to be embedded in how the city functions rather than layered on top of existing processes: autonomous vehicles, AI in schools, fully integrated smart infrastructure, all designed with human choice at the center. The city must also be safe by design, green and energy self-sufficient.

Markarova describes the first year or two as a city lab phase, where investors, partner countries and stakeholders design the city together. If the Nove Misto concept proves out, it becomes the model for every other Ukrainian city that Russia destroyed completely. Markarova puts it this way: “Nove Misto will succeed when Ukrainians say: that’s the city we want to build together, that’s the city where we want to raise our families, that’s the city where we see ourselves for generations to come.”

For investors trying to find an entry point into Ukraine’s reconstruction, the first step is to come. A single visit to Ukraine is enough to open meaningful contacts across ministries, investment agencies and business associations. Ukraine Invest handles inbound investor interest directly, the European Business Association and the American Chamber of Commerce continue to operate on the ground, and Ukrainian embassies abroad can help make the initial connections.The opportunities emerging through reconstruction are already taking shape, and those who engage earlier are likely to be better positioned to understand and help shape them.

This article draws on insights from “FORWARD with Valeriya Ionan”, a podcast for decision-makers and builders. The full conversation with Luukas Ilves, former Chief Information Officer of Estonia, that informed this article is available here. The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.