Abstract <p>To this day, the question of whether investments are a driver of innovative development and what factors and conditions ensure the achievement of the expected innovative effects remains controversial. The aim of this study is to examine the relationship between investment in fixed capital and indicators of innovative development of the region. The object of study comprises the regions of the South of Russia. The source of information was panel data from the Federal State Statistics Service of Russia for the regions of the Southern Federal District for the period from 2005 to 2022. The study used comparative and correlation analysis. The authors put forward the following hypotheses: (1) investment and innovation activity in times of crisis are activated in regions with high socioeconomic development indicators; (2) there is a positive relationship between investment and innovation at the regional level, while for entities with higher socioeconomic development indicators, this relationship is expressed more strongly. The results of the study generally confirmed the hypothesis that the relationship between investment in fixed assets and innovation activity is more pronounced in regions characterized by a high level of socioeconomic development. With regard to the second hypothesis, the results of the analysis are ambiguous, which does not allow us to fully confirm or refute the hypothesis on a positive relationship between investments in fixed assets and indicators of innovative development of regions. Differences in the strength and direction of the relationship between the indicators of investment and innovation activity are explained by the industry specifics of the socioeconomic complexes of the regions, as well as the specifics of regional factors and conditions. It is concluded that in order to incentivize innovation processes in the regions, state support for technological renewal of production is necessary through investments in new highly efficient technologies.</p>