The leaders of the modern world economy reached a high level of development during the period of industrial capitalist production. At present, in the world, machine production follows the path of minimizing and universalizing machines (systems, industries), robotization, computerization, digitalization, the formation of artificial intelligence, etc. All this is not de-industrialization, but a new stage in machine production, hyper-industrialization, building a new economy and introducing digitalization. Moving machine production from developed countries to third world countries does not mean de-industrialization of parent producer countries at all. It means their further development. In Ukraine, these complex processes are inadequately perceived, industry, mechanical engineering, for various reasons, have undergone total destruction through changes in forms of ownership, loss of strategy and development prospects, which is fundamentally wrong. In studies, insufficient attention is paid to the functioning of machine-building enterprises in “falling”, collapsing markets, there is no unambiguous and adequate understanding of what should be attributed to mechanical engineering, there is no clear classification of sub-sectors of mechanical engineering or business associations (industry, industry, sub-sector, complex, cluster). The variety of machine building classifications makes it difficult to assess economic activity objectively. The purpose of the article is to develop proposals for restoring the leading role of the industry in the technical re-equipment of the domestic economy production, its way out of the ongoing systemic crisis, based on the analysis of how the mechanical engineering functions as a driver of industrial and social development of industry and economy. It is shown that mechanical engineering provides a high level of labor productivity, production culture, science, contributes to the further deepening of labor cooperation. It was revealed that the most intellectually and professionally prepared part of the middle class was formed in mechanical engineering. The article examines the evolution of mechanical engineering over the years of the formation of the state, comparison with a number of industrial countries. The necessity of prioritizing the development of mechanical engineering for the formation of a modern self-sufficient economy is proved, the main directions of management including collaborative, structural and organizational regulation of the industry and the introduction of nature-like processes are outlined. The expediency and possibility to develop highly specialized industries in Ukraine and the cultivation of "hidden champions" have been substantiated.