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18ECONOMIC SCIENCES
UKRAINIAN INNOVATION POLICY COMPONENTS EVALUATION: GLOBAL CONTRASTS
Zgalat-Lozynska L.
Ph. D. in Economics, Associate Professor, Doctoral Student of the Department of Economic theory, Accounting and Taxation, Kiev National University of Construction and Architecture, Ukraine
0000-0002-2063-5738
Abstract
The article is devoted to the assessment of innovation policy of Ukraine by analysis of international ratings of innovative activity efficiency. The dynamics of Ukraine 's position in the innovation indexes ranking by structural elements of the Bloomberg innovation Index and the Global Innovation Index is analyzed. Problems and directions of state regulation of innovation policy of Ukraine are determined.
Keywords: Ukraine innovation policy, state regulation, innovation activity, efficiency of government, political environment.
Introduction. Ukrainian economy transformation into a knowledge-based one provides for innovation as a main source of every branch efficiency increasing. Ukraine innovative development has not reached the appropriate level, despite the fact that the country has a high scientific and technological potential. This is due to many factors, but the main one is the imperfect mechanism of state regulation of innovation development. Therefore, the study of the mechanism of state regulation of innovative activity is relevant because it directly affects the speed, development and implementation of new products, technologies and whole economy competitiveness.
Main part. Diagnosing state regulation of innovation, first of all it is advisable to analyze the dynamics of innovation efficiency of Ukraine in comparison with economically developed countries 70
2018 2019 ■ 2020
Figure 1. Bloomberg Innovation Index and its subindexes, Ukraine's position in 2018-2020 [1-3]
and identify methods, tools of their state regulation of innovation, which would be appropriate at this stage of Ukraine's economy. The most significant international rankings for this are the Global Innovation Index (GII) by Cornell University in conjunction with the World Intellectual Property Organization (WIPO), INSEAD Business School, and the Bloomberg Innovation Index.
In 2020 Ukraine hit the 56rd place in the Bloomberg innovation rating among more than 200 countries studied, having gone down by 10 positions over the last three years [1]. Ukraine's rating in Bloomberg Innovation Index have analyzed by components of the index, the main focus was on ones have been worse, than the total score (the average value) (Fig. 1).
Bloomberg Innovation Index take into account the cost of research and development (R&D), the share of high-tech companies in the economy, Manufacturing value added (MVA) of the economy and the number of new patents.
The production of high-tech goods, labor productivity, the intensity of research and development were the worst components of Ukraine's ranking. Over the past three years, Ukraine has lost its position in almost all components, which indicates the lack of effectiveness of Ukraine's innovation policy. Manufacturing of high value-added products had decreased in last 10 years. Significant negative dynamics of innovation activity of Ukrainian industry is associated with structural changes due to decline share of the machine-building complex and increasing of the share of ferrous metallurgy, energetics, chemical industries with relatively low levels of raw processing, and consequently low value-added. Nowadays outdated industries and economic brunches don't form a demand for of new technologies and innovations. Deficient state support for innovative Ukrainian enterprises does not encourage large-scale development of innovative products and
technological solutions [4, p.8]. Weak insight capabilities of Ukrainian enterprises to develop technologies contribute mainly to the free export of high value-added domestic scientific and technical developments to countries with strong potential for technologies implementation. There is a tendency to reduce the share of innovative products output in the total industrial output in Ukraine since 2008. The low level of innovation activity of industrial enterprises and the dynamics of reducing of innovative products output lead to increased dependence on imports of science-intensive products and new technologies. Long-time enterprises financial shortage for innovative activity inhibits the modernization of production capacity.
According to international practice, when the share of innovative products in the country's GDP is less than 20%, national products, as well as the country, lose their competitiveness. In China this indicator reaches 40%, in Europe the average value is - 25-35% [5]. Share of the volume of sold innovative products (goods, services) in the total volume of sold products of industrial enterprises haven't exceeded 3.8% in 20102019 (fig. 2).
Share of the volume of sold innovative products (goods, services) in the total volume of sold products (goods, services) of industrial enterprises,%
Figure 2. Innovation activity of Ukrainian industrial enterprises, 2010-2019 [6]
The expenditures on innovations of Ukrainian industrial enterprises had constantly reduced till 2014, then they have increased unevenly during 2015 - 2019 [6]. The biggest expenditures were in 2015 and 2016, when Ukraine became an associate member of the EU and enterprises had upgraded the production facilities to implement the EU directives and regulations of quality standards for exported goods. Share of innovatively
active enterprises have increased by 2% over last 10 years.
The number of R & D employees has halved by 103,222 people during 2010-2019 [7, p. 63]. The main reason for this reduction is the low level of wages and prestige of R & D sector. Therefore, there is a tendency to the outflow of intellectuals, which are highly valued in the EU and other economically developed countries.
The implementation of visa-free travel to the EU countries and low social living standards in Ukraine are exacerbating migration trends, especially among skilled workers, talented youth, scientists and researchers. Therefore, researcher concentration and patent activity also got worst.
The specific gravity of high-tech exports in total exports of industrial products in Ukraine in 2017 was only 6.9%. Thus, industry can be an accelerating driver for economic development and qualitative changes in
the economy structure only after significant modernization, correction of depreciation of fixed assets by more than 80% and the introduction of innovations and manufacturing activation of competitive products with high value added.
Analysis of the dynamics of Ukraine's rating compared to other countries according to the Global Innovation Index (GII rank) shows an improvement: in 2020 Ukraine took 45th place compared to 43rd place in 2018 (Fig.3).
Figure 3. Global Innovation Index and its subindexes, Ukraine's position, 2018-2020 [8, p. 335; 9, p.337; 10,
p.335]
At the same time, the sub-indices "Human capital and research" during this period improved in the ranking from 43 to 39 positions, "Knowledge and technology outputs" - from 27 to 25, "Creative outputs" - from 45 to 44, while "Infrastructure", "Market sophistication" and "Institutions" showed consistently low positions - respectively 89 - 94, 89 - 99 and 107 -93 places in the ranking.
Compared to other economies in Europe, Ukraine performs below average in all seven subindexes of the Global Innovation Index (GII). Ukraine performs best in Knowledge & technology outputs and its weakest performance is in Market sophistication.
GII weaknesses for Ukraine are found in 5 subindexes of GII:
1) subindex "Institutions" (93 rank): shows weaknesses in the sub-pillars "Political environment" (105) and "Business environment" (104) and in the indicators "Political & operational stability" (123), "Rule of law" (109) and "Ease of resolving insolvency" (117);
2) subindex "Infrastructure" (94 rank): exhibits weaknesses in the indicators "Gross capital formation" (102) and "GDP/unit of energy use" (117);
3) subindex "Market sophistication" (99 rank): displays weaknesses in the subindexes "Investment" (121) and in the indicators "Microfinance gross loans" (78), "Market capitalization" (71) and "Venture capital deals" (64);
4) subindex "Business sophistication" (54 rank): the indicator "Joint venture/strategic alliance deals" (113) demonstrates a weakness;
5) creative outputs (44): the indicator "National feature films" (99) reveals a weakness.
Ukraine's low position in "Political environment" (105) indicates an extremely low efficiency of innovation policy state regulation. The indicator "Political environment" in the GII index is determined taking into account the criteria "Political and operational stability" (123) and "Government efficiency" (93). The "political and operational stability" component reflects the perception that the government is likely to be destabilized or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism. Such low ratings are quite obvious: in 2014 President Yanukovych V.F. during the acute political crisis he was removed from power by the Verkhovna Rada of Ukraine when he tried in an unconstitutional way to change the previously determined course of Ukraine to European integration. At the same time, world experts believe that Ukraine is still politically destabilized, that conclusions were confirmed by the presidential election in 2019, when President Poroshenko P.O. lost the election campaign to a person who haven't previously been a politic. It was a reaction to the efficiency of the incumbent president, including his appointments, although during this period the Verkhovna Rada
adopted a number of amendments to the current regulations at the request of the presidential faction (Laws "On Higher Education", "On Scientific and Technical Activities", the resolution of the Cabinet of Ministers "On the National Research Fund of Ukraine"), judicial reform began (one of the innovations was the creation of the Supreme Court and two higher courts - the High Anti-Corruption Court and the High Court of Intellectual Property), which further gave impulse to innovation intensify. "Efficiency of government" is an index, that represents an idea about quality of activity of government services and degree of their independence from political pressure, quality of development and realization of innovative politics, and also level of actual support of innovative politics realization by the government. "Efficiency of government" has a low rating, because in Ukraine there is practically no unified scientific, technical and innovation policy, there is no single state body for management and coordination of innovation activities. All managers of budget funds (academies, institutes, departments) do not coordinate their activities within a single ministry department or within a single system of financing expenditures; participation in scientific symposia, round tables, conferences are formal, which identifies the Ukrainian innovation system as an unbalanced, deregulated structure that has no clear subordination and organizational vertical. It is necessary to achieve coordination of powers and responsibilities for the implementation of innovation policy and fruitful cooperation of central and regional authorities, economic entities. It is necessary to provide a comprehensive indicative forecasting of promising vectors of innovation and to outline guidelines for strategic planning of innovation for economy sectors and enterprises.
"Rule of law" (109 rank) concern a wide range of issues related to the regulation of innovation from the protection of intellectual property rights, the formation of innovation infrastructure to state support for innovative economic development, including allocation of special economic zones, preferential taxation, crediting, etc. This indicator reflects an objective assessment and characterizes the regulatory framework in Ukraine as predominantly declarative. The reason for this is the unsatisfactory implementation of existing regulations, non-compliance with the principles of complexity and legality, which is expressed in violation of hierarchical subordination depending on the legal force of regulations, their contradiction, which leads to impossibility of compliance with legal norms, legal requirements. thus, it is necessary to improve the normative legal regulation of innovation, especially it is necessary to continue bringing the current legislation, regulations to ratified agreements with the EU in accordance with the strategy of European integration of Ukraine; to restore the norms of laws on the support of innovative enterprises, to eliminate unnecessary bureaucratization of the examination of their activities; improve procedures for innovative projects financing by the formation of venture funds, expanding lending to innovative businesses, tax holidays, develop public-
private partnerships, cooperation between science and education. This will provide a positive effect on subindex "Business sophistication".
Despite the large number of scientists and engineers, as well as the specific gravity of high educated people, Ukraine has a mediocre rating on the GII because of low rank of "ICT use" (89), "Investment" (121), "State of cluster development" (91). To form an innovative economy with developed entrepreneurship, innovation and high productivity of Ukraine as a country with great intellectual potential, it is necessary to solve these problems.
Conclusions. State innovation policy must be focused on different stages of the innovation process in Ukraine, taking into account the interests of all stakeholders. So, at the stage of creating innovations it is necessary:
- to increase of financing of scientific researches with attention on coordination of the results within the framework of fundamental, applied scientific researches, also stimulate industrial enterprises and business for R&G financing;
- to make favorable conditions for the implementation of innovation by using of tax levers to stimulate innovation activity;
- to create special economic zones and form appropriate infrastructure on them, provide information-analytical and methodological support for the development of innovation;
- economically stimulate enterprises to scientific research and scientific and technical, experimental development and innovation;
- to transform the mechanism of stimulation of scientists for raising of prestige of work in R & D, formation of actual and enterprises demanded directions of scientific researches, innovative developments which will provide innovative development of domestic economy;
- to create, with the involvement of world experts, trainers, mentors, the European Entrepreneurship Network, schools for the exchange of experience and national resources for studying entrepreneurship, innovation and intellectual property protection, in particular for research and higher education institutions. These structures can also provide consulting and guidance on participation in European programs related to innovation, and disseminate the positive experience of successful participants in these programs;
At the stage of innovation transfer it is necessary:
- to eliminate gaps that exist in the legislation on the creation and operation of elements of innovation infrastructure, and to develop methodological documents on the creation and operation of such infrastructure;
- to introduce deductions for the transfer abroad of technologies developed at the state budget expenditure, a certain percentage to a special fund, such as the National Research Fund of Ukraine, for further use to support innovation;
- change the tax base to stimulate demand for intellectual property (accelerated depreciation, tax benefits, innovative directed programs);
- to launch a communication mechanism of technological platforms, where business and the state can
become potential customers of innovations: on the one hand, business and the state apply to solve their problems, and on the other, scientists, students, inventors offer innovative solutions that further scale and become basis for own innovative business;
- to promote the creation of elements of innovation infrastructure for the promotion and transfer of innovations;
- to start providing state support to inventors and entrepreneurs for educational and consulting services;
- to stimulate the activity of venture business;
- to establish effective work of the simplified system of taxation and reporting for the newly formed small innovative business;
- legislative regulation of measures for state support of small innovative businesses subject to co-financing from other sources;
- to provide state support for the creation and effective functioning on the basis of higher education institutions and research institutions of the continuous chain startup school - accelerator - business incubator.
It is expedient to promote the creation of clusters that unite industrial enterprises with vocational education institutions that improve the skills of specialists, and with scientific and higher education institutions that provide scientific and methodological support for innovation, as well as support them in at the local level. In addition, it is important to improve the general business environment, especially in the areas of justice, protection of intellectual property, protection against illegal actions of regulatory authorities, raiding operations, simplification of procedures and reduction of business costs, including its closure and resolving insolvency issues.
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