Economic sciences/14. Economic Theory

Anton Bezkorovainyi, postgraduate student

National University of “Kyiv Mohyla Academy”, Ukraine

MAJOR CHALLENGES OF UKRAINIAN INNOVATIVE POTENTIAL IMPLEMENTATION

Innovations play the crucial role in economic development of any modern country. Ukraine is currently facing the problem of system crisis taking place since switching to market economic system. Therefore, implication of innovations is a chance for our economy to make a development breakthrough [1]. Innovative potential of our country formed itself as a part of USSR, and currently decent quantitate indicators characterize its actual level. Local research projects were important not only in terms of the country but also worldwide. According to UNESCO data, share of Ukraine in world engineering potential was about 7% during the second half of XX century. However, after the collapse of USSR economic crisis spread over innovative potential as well [6]. Currently there are many R&D projects held in Ukraine but the quality of many of them remains too poor especially in terms of implementation and commercialization. It is important to divide the volume of simply held R&D projects and quantity of held and commercialized ones. In this case, deep investigation of key challenges facing Ukrainian innovative potential realization is urgently needed.

It is vital to note that current innovative infrastructure in our country is strongly underdeveloped. According to Global Index of Innovations 2014 Ukraine is on the 63^rd position in the world [3]. It is possible to see clear correlation with overall situation in economy as our position in Global Competitiveness Index 2014-15 is 76^th [5]. Ukraine lacks integrated patent system while the cooperation between government, research institutions, and industry is only at its early development stage [4]. Global Index of Innovations confirms the existence of above-mentioned problems adding unfavorable investment climate to the list [2]. What is more, some conceptual problems of current Ukrainian innovation model take place as they create huge barriers on the way of delivering innovations to the real market.

Linear innovation model is characterized as a process of a phased transfer of research achievements from one body to another working on the same innovative product. For example, one research institution (no matter whether via technology-push or demand-pull mechanism) starts working on some innovation. After theoretical research, the other body (e.g. design bureau) works on creating the virtual prototype of new product. The next phase is by the third body – its aim is to make a real prototype of innovative object. Finally, only after passing three previous stages new product gets to the market. Unfortunately, this linear model is a prevailing one in Ukraine, and it is deficient in terms of implementing national innovative potential. In our view, there are six major challenges:

1) Time lag. Phased format of cooperation between different bodies in innovative process results in the situation when it takes too much time between the need creation and market implementation (need satisfaction). We have to add imperfections of intellectual property legislation and overloaded bureaucracy within patent system to the list. Consequently, time lag becomes too long which leads to possible situation when there is no need in newly developed product anymore or there is a decent alternative. This turns the whole innovative process into waste of expensive resources.

2) Poor cooperation between stakeholders. In linear innovative model all the bodies work in turn which leads to asynchronous actions. As a result, the development process can lose a precise vector as well as a new product may not meet basic market requirements.

3) Non-compliance with market needs. As we mentioned before all the bodies (those who design, build, and sell a new product) of innovative process act separately. It may lead to the case when developed innovation does not fulfil the expectations of customers. They will never pay for useless product, which means that it is impossible to commercialize this innovation.

4) Low level of researchers’ involvement. Scientists or engineers act on different stages of new product development. It results in lack of responsibility, interest, and motivation to generate new ideas. In addition to this, researchers do not get decent compensation in form of salary or profit share from new products in Ukraine.

5) Process formality. Innovation development and implementation cycle takes place by pre-designed set of procedures. Moreover, it is overwhelmed by bureaucracy and is not able to adapt quickly to new market comditions.

6) Costs disproportion. Transfer of innovations from developers to industry take place only during the latest phase, which leads to possible inadequate correlation between development costs and real (paid) product price. On different stages innovation could be evaluated differently and distort the funding process.

Abovementioned challenges have mostly conceptual character. Therefore, the whole Ukrainian innovation ecosystem suffers because of complete inability to commercialize new ideas and products. Government reforms of existing model may improve the situation but will never bring drastic changes. That is why we need to solve the core problem - inability to commercialize innovations by introducing integrated innovation models, which requires further deep research.

References

1. Antonelli G. Economics of structural and technological change / G. Antonelli, N. De Liso. – London, 1997. – 316 p.

2. Coombs R. Economics and Technological Change / R. Coombs, P. Saviotti, V. Walsh., 1987. – 256 с.

3. Dutta, S. The Global Innovation Index 2014. The Human Factor in Innovation. 2014, 428 p.

4. Eide E. World Economic Forum: Scenarios for Ukraine / E. Eide, P. Rosler., 2014. – 40 p.

5. Schwab, K. "Insight Report «The Global Competitiveness Report 2014–2015» [Electronic resource]." Geneva: World Economic Forum. 2015.

6. Poruchnyk A. Innovacijnyi potencial Ukrainy ta iogo realizaciia v mizhnarodno-technichnomy spivrobitnyctvi / А. Porychnyk // [Electronic resource]: http://www.iepjournal.com/journals/1/2004_1_Poruchnik_UKR.pdf