In 2017, the Innovations Development Platform published the introduction of the Strategy of Innovations Development in Ukraine offering a clear plan to activate innovation development processes [7]. In fact, the strategy meeting was held and the Innovation Development Board has been formed in Ukraine. Besides, the Board has held the advisory meeting, and the Plan of Innovations Development in Ukraine has been elaborated. Presently, the Ukrainian economy requires progressing to further stages, i.e. auditing of the current regulatory environment, development and approving of the new legislative framework and further adoption of the new laws.
KeyBio pipeline for bioinformatics and data science
Strategy of Innovations Development in Ukraine Part II
2. 1 | INNOVATIONS DEVELOPMENT PLATFORM
CONTENTS
Foreword.......................................................................................................................... 2
World Bank’s Report on innovation and
entrepreneurship ecosystem diagnostic.......................................................................... 3
World Bank’s Report on Ukraine’s fiscal incentives for science,
technology and innovation activities: good practice review............................................ 5
World Bank’s Report on Ukraine’s intellectual property
and technology transfer regulatory review...................................................................... 7
World Bank’s Report on Ukraine’s science, technology,
and innovation public expenditure analysis..................................................................... 8
Peer review of the Ukrainian research and innovation system........................................ 10
Summary of Innovation Development In Ukraine strategy meeting................................ 12
List of Acronyms.............................................................................................................. 13
Sources............................................................................................................................ 13
Annex А: Proactive players of the Ukrainian innovation
and investment environment – participants of
Innovation Development in Ukraine strategy meeting..................................................... 14
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
FOREWORD
The European Commission’s recommendations on modernisation of research centres (2016) [1] and
four reports of the World Bank describing further steps of the Government which intend the relevant
new research & development (R&D) laws (2017) [2-5] were published in the recent years in order to
launch the innovation-based economy in Ukraine, further develop such economy and switch from raw
material production to exportation of knowledge-intensive and hi-tech products with a high added value.
The aforesaid documents, in general, analyse the innovation component of the Ukrainian economy and
purport global changes in laws (i.e. corruption fighting, Government reforms, reforms of universities and
the National Academy of Sciences of Ukraine (NASU)). Furthermore, the initiatives of the Reforms Office
formed in 2016 as the advisory agency of the Ukrainian Cabinet of Ministers [6] have been developed,
and the Innovation Development Board headed by the Ukrainian Prime Minister has been launched.
In 2017, the Innovations Development Platform published the introduction of the Strategy of Innovations
Development in Ukraine offering a clear plan to activate innovation development processes [7]. In fact, the
strategy meeting was held and the Innovation Development Board has been formed in Ukraine. Besides,
the Board has held the advisory meeting, and the Plan of Innovations Development in Ukraine has been
elaborated. Presently, the Ukrainian economy requires progressing to further stages, i.e. auditing of the
current regulatory environment, development and approving of the new legislative framework and further
adoption of the new laws.
The aforementioned document combines and summarises the recommendations of the European
Commission and the World Bank in respect of switching to the innovation model of economic
development and the results of Innovation Development in Ukraine Strategy Meeting held in 2017 on
the initiative of the Innovations Development Platform and participation by the Ukrainian Institute of the
Future, the Reforms Office of the Ukrainian Cabinet of Ministers, the Investment Engagement Office
(UkraineInvest), representatives of McKinsey & Company and representatives of other 32 proactive
players of the Ukrainian innovation and investment environment (please refer to Annex А).
In order to ensure efficient implementation of the assignments set out in the Strategy of Innovations
Development in Ukraine, it is suggested to form the Project Office responsible for accomplishment of
specific and clearly defined tasks, such as:
•• auditing of the legislative framework, innovation and investment infrastructure;
•• coordination of new legislative framework development and approving; and
•• coordination of development and approving of the comprehensive model of cooperation
between innovation environment stakeholders and investors.
The relevant taskforces are suggested to be formed to develop the innovation environment model.
Based on the analysis of the current recommendations, in particular, the review of the World Bank
concerning obstacles to commercialisation of justified researches (‘Intellectual Property and Technology
Transfer Regulatory Review’) [4], and the results of the Strategy Meeting, we offer the following vision of
Ukrainian laws improvement:
1. Development of the laws enabling formation of joint ventures that involve governmental institutions
and the use of intellectual property rights to develop such joint ventures with both, domestic and
foreign partners.
2. Development of the laws regulating transfer of technologies and intellectual property rights; ensuring
of the possibility to implement the spin-off model (i.e. incorporating of separate independent entities)
and commercialise innovative developments based on the governmental financial support.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
WORLD BANK’S REPORT ON INNOVATION AND
ENTREPRENEURSHIP ECOSYSTEM DIAGNOSTIC
This report is focused on understanding of the Ukrainian innovation environment that affects the companies’
ability to implement innovations and includes the business / market structure, government policies and
programs, human capital, R&D, the financial environment, and various kinds of infrastructure.
Key Findings:
1. R&D and innovations in Ukrainian industries tend to shrink.
2. Research institutions and universities do not effectively support innovation development in Ukrainian
companies.
3. The current innovation-related policies are rarely coordinated among ministries and are poorly
implemented and funded. Recommendations from previous innovation studies have, in general,
not been effectively implemented.
4. The research infrastructure has not displayed sustainable development over the last 20 years.
Science and technology parks, incubators, and business accelerators are in place, but many of
them are inactive and only a few are successful. There is no broad system to provide innovation
support (knowledge transfer and technology transfer) to small and medium enterprises.
5. A Government reform is needed. Corruption, numerous and flawed regulations, weak rule of law,
lack of programs implementation, and frequent changes of the Government and governmental
policy direction – all of these factors prevent efficient cooperation between the Government and
the industry, and result in barriers to innovations, foreign investments and trade. Deficiencies in
Government’s operation also hinder implementation of the efficient innovation policy.
6. Ukrainian public research institutes consume a large portion of the national funds allocated for R&D,
have aging facilities, and are not well matched to Ukraine’s current industrial needs.
Essential Recommendations:
1. Implementation of a Government reform aimed at reducing corruption, restoring trust in
the Government, reforming the judiciary system, improving governmental regulations, and other
institutional areas.
2. Implementation of fundamental reforms of public research institutes and universities (which
are crucial for innovations), including reforming of the National Academy of Sciences of Ukraine
(NASU) and piloting targeted programs that could bring research activities closer to the needs of
local industries.
Next Steps:
1. Form an innovation agency that develops advocates and publicises the national vision of an
innovation-based economy; serves as a platform to identify and remove barriers to innovation
on the sectoral and horizontal levels; advocates for innovation-related reforms, including steps to
reduce corruption, implement reform regulations, and expand public and private R&D expenditures.
This agency should work closely with industry groups to understand what the industry needs to
succeed in innovation, and should work closely across ministries and the Government to remove
barriers to innovations and to implement innovation support programs.
5. Strategy of innovations development in Ukraine. Part II. Action plan | 2018
2. Identify and scale up working approaches:
•• Expanding entrepreneurship support programs, such as building on the Science Park and
entrepreneurship programs at Ihor Sikorskyi Kyiv Polytechnic Institute (KPI) National Technical
University.
•• Building on and expanding regional cluster programs; coordination of acts taken by local
authorities, industry players and universities to develop strong regional innovation ecosystems.
3. Develop, manage and implement pilot innovation support programs for businesses and new
companies (start-ups) to create innovative high added-value products.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
WORLD BANK’S REPORT ON UKRAINE’S FISCAL INCENTIVES
FOR SCIENCE, TECHNOLOGY AND INNOVATION ACTIVITIES:
GOOD PRACTICE REVIEW
This report highlights the advanced global practices of implementation of fiscal incentives to support
science, technology and innovation programs, and sets forth recommendations concerning the acts and
steps to be taken to implement such incentives in Ukraine.
Key Findings:
1. Ukraine requires a comprehensive approach to implement its policy of innovations encouragement
in the private sector.
2. A preliminary step before considering fiscal incentives for R&D is to improve the investment climate
by strengthening of Government’s policy predictability, mitigating corruption and state capture,
overcoming the political risks, and reducing the cost of doing business.
3. Science parks contribute to knowledge spill overs across collocated firms, research institutes and
universities. Geographic proximity may enable common facilities such as technology transfer offices
to provide timely support for commercialisation of spin-off companies.
4. Each of the fiscal policy tools covered in this report (i.e. R&D tax incentives; capital allowances for
facilities which do not intend R&D development; tax benefits for investors; customs duty exemption
for imported inputs to accelerate researches and developments; special economic zones (SEZs);
patent box regimes), requires state capacity and political commitment of the Government, in
particular, the Ministry of Finance, to design, implement, monitor, and evaluate.
Essential Recommendations:
1. Investing in capacity building to implement fiscal incentives in the future, which involves developing
a suitable skill set within the Ministry of Finance to work on cost-benefit analysis of possible future
implementation; reliable data collection in private R&D and innovation efforts.
2. Identify the clear policy target, which can clarify the appropriate governmental policy tools to
achieve the target (i.e. the innovation-based economy). Given Ukraine’s earlier experience in
establishing many SEZs and operationalising only a few, establishing of further SEZs is not an
effective and efficient policy option at this stage.
Next Steps:
1. Analyse the current environment and conduct stocktaking exercises:
a) Conduct systematic analyses of impediments to private R&D, technology upgrading of
the national economy, and attraction of knowledge-intensive investments. The analyses
should be carried out in consultation with the private sector and other actors of the national
innovation system.
b) Collect reliable and systematic data on R&D activities at the firm level for ex ante cost-benefit
analyses and later for monitoring and evaluation.
c) Create a system for monitoring and evaluation of efficiency of tax incentives and for monitoring
of tax benefits for large investment projects.
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2. Establish macroeconomic stability and improve the business climate:
a) Introduce tax incentive schemes and / or SEZs so that the state could build its institutional
capacity. Another approach could be to consider implementing some small, carefully evaluated,
and perhaps temporary, pilots to help build capacity (for example, existing SEZs could be used
to pilot instruments and build some experience).
b) Build an all-encompassing policy framework in the future, after establishing macro stability and
more predictability about the political environment. Once the macroeconomic and investment
climate conditions have improved, the Government should consider a policy framework with a
mix of direct subsidies and R&D tax incentives.
c) Ensure development (by the Government) of clearly defined, transparent, and objective eligibility
criteria and (if necessary) special incentive packages for anchor investors (who can generate
significant multiplier effects). Tax incentives should be established in the Tax Code or in special
laws. All measures should be coordinated at the regional and municipal levels.
3. Increase the implementation capacity:
a) Develop competencies of tax offices, authorities, and companies to facilitate transparency,
dialogue, proper use of incentives, and prevent illicit behaviour.
b) Build capacity to assist companies that are applying for any kind of tax incentives.
c) Ensure simplicity and policy predictability, as it is crucial for young and innovative firms to
compete on a level playing field as more mature incumbents.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
WORLD BANK’S REPORT ON UKRAINE’S
INTELLECTUAL PROPERTY AND TECHNOLOGY
TRANSFER REGULATORY REVIEW
This report identifies regulatory and framework impediments for the commercialisation of publicly funded
research and recommends reforms and policies that could improve the framework conditions for intellectual
property (IP) and technology transfer (TT).
Key Findings:
1. Lack of clear division of roles and responsibilities across different institutions, poor coordination
across various ministries and other actors in IP and TT matters, and weak institutional capacity in
implementing of the IP and TT normative framework.
2. Limited engagement of higher education institutions in R&D and commercialisation activities.
3. Absence of a leading technology supplier nor a source of demand for IP in the local private sector.
4. Inefficient Ukrainian TT intermediaries in their commercialisation efforts despite their official existence
in most R&D active institutions.
5. Conflicting provisions of IP ownership rules for publicly funded technologies are scattered throughout
different legal acts. This creates ambiguity and uncertainty for IP owners.
Essential Recommendations:
1. Public policy makers should provide incentives to attract foreign direct investments from collaborative
research alliances that bring new technologies into the local technology market and generate
knowledge spill over into the local economy.
2. The Government and institutions should design and implement TT and IP systems that meet their
own needs, resources, and objectives in a realistic manner.
3. The reform should be broad and go beyond regular IP and TT legal acts. It should also encompass
labour and fiscal legal acts whose implementation influences successful IP and TT policies. The
reform should focus on patents and on other intellectual property rights
4. It is advisable that the legal acts stipulate clear competencies between different institutions that do
not overlap but complement each other. Thus, there will be lower transaction costs and less waste
of human and financial resources.
5. Research organisations should be given more financial autonomy. A greater degree of autonomy of
universities will allow them to use venture capital for technology commercialisation. Another source
of funding might be specialized investment funds, whose activities are concentrated in potentially
profitable innovation projects.
6. Improve monitoring of IP activity with respect to publicly funded technologies should be promoted.
7. Regulatory acts of the Government should ensure that research organisations have a common basis
for allocation ownership of IP to contracting parties. This will reduce transaction costs, increase
transparency, and facilitate exploitation of IP by third parties.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
WORLD BANK’S REPORT ON UKRAINE’S SCIENCE,
TECHNOLOGY, AND INNOVATION PUBLIC
EXPENDITURE ANALYSIS
This report evaluates the quality mix of public support programs for science, technology, and innovation
(STI) and provide recommendations for the improvement of the support programs’ effectiveness.
Key Findings:
1. The Government of Ukraine has recently renewed its commitment to STI policies and launched two
strategies that target innovation in the Ministry of Economic Development and Trade (MEDT) and the
Ministry of Education and Science of Ukraine (MESU). These are important and necessary efforts
to improve the governance of the National Innovation System (NIS). However, the NIS remains
fragmented and with little alignment across strategies.
2. Ukraine’s innovation underperformance is reducing economic competitiveness and compromising
growth in firm productivity.
3. The existing innovation policy mix and relevant public funding do not respond to the critical needs
of the Ukrainian NIS.
4. Industry-university collaboration is weak and prevents firms from acquiring the latest industrial
advances.
5. The current governance arrangements with large transfers of block funding to the national academies
do not provide strong incentives to business innovation. Only half of the 350 universities perform
any kind of R&D. The problems identified pertain to the poor articulation of priorities aligned with
the private sector and the low impact efficiency of state support for R&D and innovation. Absence
of mechanisms to promote competitive allocation of public resources for innovation support is
reducing the efficiency of public funds use.
6. Lack of effective integration platform that can articulate a national STI strategy.
Essential Recommendations:
1. Governance, planning, and learning mechanisms should be strengthened for better innovation
policy efficiency. Before reallocating existing resources, addressing design and implementation
capacity of Ukrainian innovation agencies will increase the likelihood of deployment of efficient
instruments.
2. Improving of the governance system in STI, reforming of the structure of national academies,
strengthening of academic and university research cooperation, and providing of better
incentives to qualified researchers and entrepreneurs to cooperate and establish innovative
ventures should be ensured.
3. The academies should be reformed with the focus on introducing of transparent and competitive
funding so that competent knowledge producers (research institutes and universities) could produce
impactful and relevant research results.
4. R&D funding should be allocated based on competitive selection in order to improve the quality of
research.
5. Decentralisation and granting of portions of the innovation support to the regional level should be
ensured (so that innovations happen at the regional rather than national level).
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
6. Regular reviews should be conducted to evaluate the extent to which funding allocation is achieving
the intended goals and generating knowledge that is effectively contributing to productivity growth,
competitiveness, and technological progress in Ukraine.
7. Systematic diagnostics and deliberate measures should be introduced to identify issues to support
the design of innovation policy interventions. Justifications for funding public research should be
based on its potential ability to generate knowledge that is applicable and can be commercialised
to foster innovation and technological change.
8. Accession to the Horizon 2020 framework program, the EU-supported smart specialization strategy,
and other donor-funded programs opens new opportunities for international cooperation and
additional financial support that offset the difficult fiscal situation of STI in the last few years. However,
before increasing spending, the Government of Ukraine needs to have in place mechanisms to
ensure sound use of public resources. It is, therefore, urgent to undertake an internal evaluation of
existing programs and analyse existing complementing external evaluations.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
PEER REVIEW OF THE UKRAINIAN RESEARCH AND
INNOVATION SYSTEM
This report is the Horizon 2020 Policy Support Facility [8] and was prepared by the panel of independent
experts and peer reviewers from the pertinent ministries of EU Member States. The report contains
the following findings and recommendations:
Key Findings:
1. Poor state of the scientific infrastructure; lack of incentives for public research organisations
to get involved in innovation-related activities; lack of entrepreneurship and innovation culture
in the public research sector; exploitation of research results in foreign countries, where it is
taking place in more attractive conditions.
2. Insufficient interest in R&D activities from the side of the economic actors; lack of awareness and
capacities of SMEs to undertake innovation; lack of visibility and understanding of the potential
in Ukrainian public research organisations from the side of companies; public authorities not
ready to use STI results in their field (e.g. acting as “first buyer of innovation”).
3. Little experience in public-private partnerships for innovations; absence of formal and effective
channels to convey messages from industry with respect to expectations from the science and
education sector.
Essential Recommendations:
1. The National Board on the Development of S&T should work strategically in reforming and re-
orienting the system of S&T in Ukraine on the basis of jointly defined priorities with all involved
stakeholders.
2. Raising quality and relevance of S&T through competitive research funding (a stepwise strong
increase in the competitive funding of research projects).
3. R&D enhancing at universities and through increasing of their autonomy. All research
organisations of the Academies of Science and universities should be entitled to their own
discretionary use of acquired third party funding.
4. Raising the efficiency of research organisations through institutional reforms – modernising
of sectoral Academies of Sciences, restructuring or dissolving of certain agencies under the
Ministry of Education and Science of Ukraine (MESU) and other ministries.
5. Establishment of science parks.
6. Research careers should be stimulated through a mix of policy instruments, such as increase in
salaries, exchange programmes or awards. Opportunities for international STI exposure should
be assured for researchers based on their contribution to research advancement.
7. Cooperation with the scientific Diaspora should be increased in order to exploit its potential for
Ukrainian STI.
8. International collaboration efforts in STI should be aligned with national priorities and strategies.
9. A cross-governmental Innovation Strategy and Action Plan focusing on priority domains for
science- and technology-based innovations should be elaborated.
12. Strategy of innovations development in Ukraine. Part II. Action plan | 2018
10. A permanent taskforce for innovations together with consultative processes under the National
Board on the Development of S&T should be established.
11. Supporting innovation with certain instruments, programmes and schemes should be ensured.
Realistic and effective innovation policy instruments should be identified.
12. Cooperative projects between the public research sector and industry should be supported.
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
SUMMARY OF INNOVATION DEVELOPMENT
IN UKRAINE STRATEGY MEETING
Innovation Development in Ukraine Strategy Meeting was held on July 21, 2017 on the initiative of
the Innovation Development Platform and was participated by the Ukrainian Institute of the Future,
the Reforms Office of the Ukrainian Cabinet of Ministers, the Investment Engagement Office
(UkraineInvest), representatives of McKinsey & Company and representatives of other 32 proactive
players of the Ukrainian innovation and investment environment. The key findings and recommendations
appertaining to the innovation environment in Ukraine are set forth hereafter1
:
Key Findings:
1. The innovation development process in Ukraine faces such barriers, as no single coordination
centre and lacking protection of intellectual property rights.
2. Establishing of a special innovation development zone is the key driver of the innovation-based
economy in Ukraine.
3. Innovation policy on the demand side (i.e. law making, public procurement, etc.) [9] may increase
the number of successfully commercialised innovative solutions and bring about the R&D impetus.
4. Strengthen weak cooperation and improve poor links between all parties involved are critical factors
of further development of the innovation environment in Ukraine
5. The efficient innovation environment will enable fruitful cooperation among individual entrepreneurs,
businesses, universities, research institutes, investors and governmental authorities to maximise
the potential of their researches and innovations.
Essential Recommendations:
1. A consistent approach to innovation development would largely contribute to switching from
the resources-based economic system to manufacturing of high added-value products.
2. Further development of the innovation environment in Ukraine should take account of the existing
domestic and international studies and recommendations in respect of the Ukrainian innovation
ecosystem, global best practices and their adaptation engaging numerous experts from the
business sector, research institutions, non-governmental organisations, governmental authorities
and international organisations involved in innovation development.
3. An integral prerequisite of Ukrainian innovation ecosystem development is the creation of
an independent project office for innovations development
1
According to the data of the Innovations Development Platform
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Strategy of innovations development in Ukraine. Part II. Action plan | 2018
ANNEX А
Proactive players of the Ukrainian innovation and investment environment – participants of Innovation
Development in Ukraine strategy meeting
1 Agency of European Innovations NGO
2 Association of Ukrainian Industry Automation Businesses
3 State Finance Institution for Innovations (SFII)
4 State Intellectual Property Service of Ukraine
5 Unit.City Innovation Park
6 Economy and Forecasts Institute under the National Academy of Sciences of Ukraine
7 Institute of Mathematics under the National Academy of Sciences of Ukraine
8 Institute of Physics under the National Academy of Sciences of Ukraine
9 Ministry of Economic Development and Trade of Ukraine
10 Ministry of Education and Science of Ukraine
11 KYIV POLYTECHNIC Science Park
12 Ukrainian National Science and Technologies Association
13 Investment Engagement Office (UkraineInvest)
14 Reforms Office of the Ukrainian Cabinet of Ministers
15 Innovations Development Platform
16 Reforms Support Office under the Ministry of Finance
17 Entrepreneurs Board under the Ukrainian Cabinet of Ministers
18 SPETSTECHNOEXPORT State-Run Foreign Trade Enterprise
19 TEVA Ukraine FC
20 Ukrainian Venture Capital and Private Equity Association (UVCA)
21 Ukrainian Institute of Future
22 UKRINMASH Foreign Trade and Investment State-Run Company
23 UKROBORONPROM State-Run Concern
24 NaUKMA Innovation Development Centre
25 Uniway Consulting Group
26 Upromex Limited Liability Company
27 JUSCUTUM Law Firm
28 Aidditive Solutions
29 GrowthUP Business Accelerator
30 Empire State Capital Partners Ukraine
31 Reddy & Company
32 SocialBoost Technology Non-Governmental Organisation
16. AGENCY ON INCUBATION AND IMPLEMENTATION OF INNOVATIVE
PROJECTS IN THE AREA OF DEFENCE TECHNOLOGIES
Contacts: 1, Dorogozytska Str., UNIT City, office 204, Kyiv,
Ukraine, 04119
tel. +380 44 333 60 63
www.ukrinnovate.com
info@ukrinnovate.com
Expert council:
Pavlo Barbul
Denys Gurak
Anton Kaminsky
Dmytro Ruzhytskiy
Oleksii Poliarush
Dmytro Shestakov
(с) Full or partial reproduction of research materials is permissible only with the consent
of the authors of the project