Importance The article overviews theoretical and practical approaches to ensuring the innovative development of local reproduction systems. The approach will indicate the scope of possible innovation activity regulation within the economy of the Administrative and Territorial Entity (ATE). Objectives The research identifies whether it is possible and practicable to ensure the innovative development of local reproduction systems. The research uses a structural and functional approach to ATE and considers systematization of integration of local business entities by incorporating structural components and the most considerable functional ties. Methods The methodology contains fundamental provisions of the economic theory, applied aspects of the theory and methodology of systems analysis, economic systems management theory, fundamental research into innovative development of regional economy. Results The research results in a set of tools and activities that would, in theory, ensure the innovative development of a reproduction system of the area. I determined a structure of the mechansism for driving innovative development of a local reproduction system, main phases and provisions of the strategy for innovative development of the reproduction system of the area, methodological toolbox of special-purpose finance for innovative development of the local reproduction system. Conclusions and Relevance The outcome of the research may be applied by authrotities as they become more competent in forming parameters of innovative economy of ATE. Special-purpose finance will help prevent narrowing the reproduction process at the macro-, meso- and microlevels, thereby effectively implementing innovation and activate innovative activities of entities.
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