NATIONAL INNOVATION POLICY
Teres N., Peretiatko
I., Topenko J.
of Technologies and Design
уже давно стало неотъемлемой частью нашего лексикона. Однако означает ли это, что
экономика Украины приобрела инновационный характер, что инновации действительно
легли в основу экономического роста и социального развития Украины?
The viability of the economy of any country is determined by the scale
and quality of accumulation of innovations, such as: new ideas, technologies, products, management systems, which are the result of the
development of science and innovation activity. Innovation processes and their
implementation in new technologies, new products, new services, new management systems are the basis for sustainable
socio-economic development. Nowadays, innovations covering all areas of human
activity, radically affect the economy, changing social and economic relations
in society. A characteristic feature of our time is the extensive growth of
innovative activities at the international level: the cost of research and
development is increasing, education and training are changing, national
innovation systems are emerging, processes of introduction and innovations
spreading are conceiving.
Innovation is regarded as a basic driving force in the process of
narrowing gaps with developing countries in global economy. Innovation is
considered as important precondition towards a transition into self-sustaining
innovation led- growth economy. Effective innovation system includes firms,
research centers, R&D institutions which provide new goods creation, new
processes and new knowledge. In first years of independence, the governments of
did not pay adequate attention to innovation development despite some important
legislative acts being passed in the 1990s and early 2000s . A calamitous
reduction of funding for scientific research occurred during the period of
market transformation including a cutting down of funds for research equipment.
In the mid-1990s, Ukraine's
official GDP decreased by more than 60% in comparison with the level in 1990.
Whole hi-tech industries disappeared (for example, electronics). The size of
domestic demand for numerous products, and especially high-tech ones, fell
According to the estimates of specialists, in order to increase the
competitive production by 5 percent it is necessary to invest 25 percent of the
GDP into innovative process, scientific research and technological development.
The size and structure of investments, the quality and speed of their
realization are decisive in the process of technical and technological
renovation, which ensures the country’s technological safety.
It is also necessary to note that the negative structural changes stemmed
from the low level of innovation activities amongst the majority of Ukrainian
enterprises. The values for indicators concerning basic innovation activities
(e.g. number of new technologies, the number of inventions, etc.) went down
5-15 times between the 1990s and 2000s. Yet the pattern of science and
technology activities has changed gradually. Key efforts were not directed
towards the development and introduction of domestic technologies and products
but towards the adaptation of imported equivalents.
The economy of the country has become increasingly oriented towards
producing of relatively simple goods for export. Essential to the understanding
of innovation policy in Ukraine
is the selection of innovation projects. The state does not support innovation
activities of commercial companies or R&D organizations or commercial
companies but the innovation projects that they undertake. The assessment of
Ukrainian competitiveness shows the markets concentration at national level and
inadequate finance and human capital distribution in regions. The competition
is still weaker at regional level. Concentration has a negative and highly
significant effect on labor productivity growth. The financial shortage causes
the reduction of the quantity of enterprises applied the innovations.
For years regional authorities had no resources for any special
innovation support activities, although some regions had special chapters
devoted to the innovation activities. Some administrations, such as those in
the Kiev and Donetsk regions,
have special departments responsible for the support of S&T and innovation
activities. However only Kiev,
regions have provided some money for innovation activities from their budgets.
The contribution of regions to the total volume of financing of innovation
reached 1.4% in 2005. The main source of innovation funding came from
enterprises' own funds (77.3%) and loans (17.8%).
Thus, declarations on support of innovation development and the real support
of innovations differ substantially in different regions. At the same time, it
is evident that almost all regions are trying to develop elements of local
S&T and innovation infrastructures (e.g. research institutes, techno parks,
universities and hi-tech companies). These steps had had positive impact on the
general level of innovation activities in the country, which resulted in the
growth of innovation production in some regions of the country.
The development of research activities is a potential driving force for
innovation in Ukraine.
As it was mentioned above, in 1990s key parameters of R&D and innovation
spheres shrunk by 2-5 times. In spite of the substantial increase in resources
allocated to R&D during the last six years, the amount of finances and the
manpower remains considerably lower than the EU average (both in absolute and
According to its size and potential, the scientific and technical complex
of Ukraine remains one of
the biggest in Europe and the second (after Russia) among the CIS countries
. The economy of Ukraine
has the following advantages: good geopolitical position, developed basis of
raw materials and transportation infrastructure, considerable scientific and
technological potential of civil and defense industries, high level of
engineering science and education.
– a state with enormous innovative potential in the past – today is unable to
realize it in the competitive environment of the open market, lagging behind in
economic development after the recently less powerful Poland, Hungary,
Slovakia and even Romania.
The Organization for Economic Co-operation and Development  defines
an organizational innovation as the implementation of a new organizational
• the enterprise’s business practices (the
implementation of new methods for organizing routines and procedures for the
conduct of work);
• the enterprise’s workplace organization (the
implementation of new methods for distributing responsibilities and decision
making among employees for the division of work within and between enterprise
activities (and organizational units), as well as new concepts for the
structuring of activities, such as the integration of different business
• the enterprise’s external relations (the implementation of new ways of
organizing relations with other firms or public institutions, such as the
establishment of new types of collaboration with research organizations or
customers, new methods of integration with suppliers, and the outsourcing or
subcontracting for the first time of business activities in production,
procuring, distribution, recruiting and ancillary services).
The intention of organizational innovations is to increase an
enterprise’s performance by:
• reducing administrative costs or transaction costs;
• improving workplace satisfaction (and thus labor productivity);
• gaining access to non-tradable assets (such as non-codified external
• reducing the costs of supplies.
Despite the fact that in the last years there has been a positive
dynamics of the innovation activity of Ukrainian enterprises, its level is
low. According to the State Statistics Service of Ukraine, the share of
innovative enterprises was 17.4%. The level of innovation activity has not
reached the level of the early 90s of the 20th century. In 1992–1995, the share
of innovatively active enterprises ranged within 20–26%. At the end of the
1980s, the share of enterprises that developed and adopted new or improved the
existing products in the industry was 60–70% . Today, in the European Union
(EU) more than half of all enterprises (52.9%) reported innovation activity.
The highest shares of innovative enterprises were observed in Germany (79.3%), Luxembourg
(68.1%), Belgium (60.9%) and
(60.3%). The lowest shares were recorded in Bulgaria
(27.1%), Poland (28.1%), and
(29.9%). In Ukraine,
the share of innovative enterprises is 3.0 times lower in comparison with the
average level of the EU countries, 4.6 times lower than the maximum level, and
1.6 times lower than the minimum level of the EU countries.
Industrial enterprises of Ukraine
are more focused on the implementation of technological innovations; the share
of their implementation had a positive dynamics during 2006–2012. The
proportion of industrial enterprises that adopted the product innovations was
11.7% and the process innovations – 12.4% in 2010–2012. Ukrainian industrial
enterprises don’t use the potential of introducing non-technological
innovations (organizational and marketing); the share of this type of
innovations was 6.2% in 2010–2012.
the percentage of the total innovation costs of industrial enterprises is
inefficient. About 60% of all expenses on innovations are the expenses on the
purchase of machines, equipment and software, whereas expenses on R&D
operations reach only 17.1%.
Expenses on research and development investments exceed 1.5–2 times the
investing in equipment in the EU Member States. In Eastern
Europe, the investing is more focused on the purchase of machines,
equipment and software, and the renewal of existing equipment. The correlation
of expenses on research and the purchase of equipment is
1:3 in Ukraine.
has an unstable dynamics by the international position of the innovation index.
In 2013–2014, by the “innovation” sub-index Ukraine occupied the 93rd place.
Compared to data of the Global Competitiveness Report 2012–2013, Ukraine has
shifted down by 22 positions . The rating of Ukraine by all elements of the
sub-index of innovation has decreased. According to the “capacity for
innovation” index, Ukraine
has the biggest drop – by 44 positions. The main reason for such a drop is that
the Ukrainian business has become less innovative.
According to the Global Competitiveness Report 2013–2014, the most
problematic factors for doing business in Ukraine are:
• access to financing (16.7%);
• corruption (15.5%);
• inefficient government bureaucracy (13.4%);
• tax regulations (11.0%);
• policy instability (10.1%);
• tax rates (8.4%);
Stressing the need to revitalize the innovation sector, it should be
noted that in recent years the government adopted a number of resolutions and
decisions of government programs aimed at improving the innovation performance
of enterprises, but most of them failed to be realized in full in the real
economy. It is therefore natural law of Ukraine «On National Security of
Ukraine’s» № 964-IV dated 19.06.03 refers to strengthening innovative model of
a major national priority (Article 6 of the Law). At the same time in Article 7
of the Law is specified that the inefficiency of the state innovation policy
mechanisms to stimulate innovation activities threaten the national security of
In fact, we are dealing with ineffective innovative policy. However, the
responsibility for this no one has, the law in this respect is not valid.
Legislation approving the 1.7% of GDP as a ratio of budget funding for
science, the state allocates for many years to science only 0.3% of GDP. Every
new president and every new government of independent Ukraine proclaimed
science and innovation as one of the most important strategic components of the
state ideology of social and economic .
As a result, over the last 22 years in Ukraine:
• 3.3 times decreased the number of workers in innovation (in the U.S.
and Western Europe in that time it has grown 2 times in Southeast Asia – to
• 3.5 times decreased the number of researchers in technical sciences
(with 5.6 times increased their numbers in political scientists, 3.5 – in law);
• decreased to 14.3 times the development of new technology;
• 5.5 times (from 60% to 11.2%) dropped share of innovation active
enterprises (in Russia,
their share is 10%, - 16 in
in the EU – an average of 60);
• almost completely destroyed industry science
(of 220 organizations, only 20 left);
• GDP growth through the introduction of new technologies in Ukraine is
0.7%, meanwhile in developed countries this figure is 60-90% .
Enhancing innovations is only possible on the basis of a developed system
of financing that is designed to provide a solution of the following major
1. Creating the necessary conditions for rapid and effective innovation
sphere at all levels of the national economy, ensuring its structural and
2. Preservation and development of strategic scientific and technological
capabilities in priority areas of development;
3. Creating the necessary material conditions for the preservation of
human resources of science and technology, to prevent his moving abroad.
So, taking into account all the above, it would be possible to summaries
positive and negative moments in the national innovation policy in recent
The positive changes in Ukrainian innovation policy formulation and
implementation are as follows:
• Preparation of various laws in innovation sphere, which cover different
aspects of innovation activities;
• Declaration of innovation development as a key priority at the national
level and attempts are being made to implement different innovation - related
• Creation of the national patent system and its development in
accordance with the international standards;
• Creation of specialized state agencies, responsible for R&D and
• Attempts are being made to stimulate development of different
instruments of innovation support (techno parks, business incubators, direct
financing and favorable tax regime for R&D organizations).
The negative aspects of the process of forming innovation policy are the
• Ukrainian legal system is not harmonized, as some lobbying groups with
the help of the Law on Budget could stop implementation of the most important
clauses of the laws, which are aimed at support of innovations.
• Innovation-related programs are numerous, and in the past it was
difficult to find money for their realization. It is much better to have less
programs that will receive better financing Ukraine has very few American or EU
patents, if compare with other countries of the region, even with countries of
smaller size. Partially, it could be explained by relatively high costs of
patenting in these countries but the state has no special program of support
patenting abroad, despite discussion about such program is still continuing in Ukraine .
Specialized state agencies that have to support innovation, have overlapping
functions, which are not clearly defined;
• Support of specialized instruments and elements of innovation
infrastructure are not very effective, as the demand for innovation is low and
the rules of functioning of the techno parks are revised substantially (and
mostly negatively) within relatively short period of time.
1. Hanouz, M. D., Geiger, T. (2008): The Ukrainian
Competitiveness Report 2008. Towards Sustained Growth and Prosperity. - World
Economic Forum 2008, Geneva,
pp. 47 –109.
Economic Outlook (2013): May 2013 update. http://www.conference-board.org/data/globaloutlook.cfm
3. Organisation for Economic Co-operation and
Development (OECD), 2005: Oslo Manual:
Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition, Paris.
P. T. (2008). Instytutsiina dynamika
prostorovoi orhanizatsii ekonomichnoho rozvytku: monohrafiia. Kharkiv: KhNAMG. 295 p.
Global Competitiveness Report 2013–2014[interactive]. Geneva: World Economic Forum [accessed 1 July
2014]. Access through Internet: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf
Давідов M. B. Шляхи організаційно-фінансового
забезпечення інноваційного процесу на підприємствах
України // Актуальні
проблеми економіки. ‑
2008. ‑ № 4 (82). ‑ С. 130‑134.
Денисюк В.М. Інноваційна активність
національної економіки: вдосконалення методології, показники промислових підприємств, державна
підтримка //Економіст. ‑ 2005. ‑ № 8. ‑
Осецький В.Л. Інвестиції як інструмент інноваційного розвитку економіки // Вісник УАБС . – 2005. – №1 (18). –