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Ukraine's actual place in world economy

Author : Oleksiy Kushch

Ukraine spends 0.5% of its GDP on financing the researches, while in the EU this figure is 2.5%
11:33, 28 January 2019

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Ukraine has an experience of boxer serving a city mayor, so why cannot it survive after having boxer as a president. Wladimir Klitschko has delivered a speech at the international forum in Davos during the discussion on Ukraine’s attractiveness for foreign investors. Unfortunately, the consciousness of our political "elites" and the existing reality are two parallel worlds that never intersect.

Related: Trump cancels visit to World Economic Forum in Davos

Great athletes are becoming mediocre politicians, unable to even invite a couple of their Californian or Munich friends to Kyiv, not to mention a “mass” investor.

Wladimir Klitschko claimed: “We are sexy and everybody wants us.” Although the "meaning" of this phrase was flawed. If they played a song I'm Sexy and I Know It by LMFAO at the meeting, and the participants of the boring panel took off their official suits and appeared in G-strings, it would be much more impressive. After all, after the word “sexy,” a few potential investors began to yawn and watch something on their gadgets.

My long introduction describing the news from the international forum in Davos is just perfect setting to the recent news that Ukraine has fallen sharply in Bloomberg 2019 Innovation Index. Moreover, it has appeared in the list of "losers," together with Tunisia. Although we have to admit that, unlike Ukraine, Tunisia has never been a leader in the field of science and the development of innovative products. Deterioration of Ukraine’s valuation scores was most affected by the lack of the main global innovation companies. Investors prefer reading Bloomberg to the speeches of our officials with cheerful calls to invest in Ukraine, where "all" opportunities for the development of private business are created.

Related: Ukraine cannot get out of crisis, as its economy working for foreign offshores

South Korea is the leader in the Innovation Index, its president has not come to Davos. Maybe because he does not need to catch the head of the IMF somewhere "in the corridors" with a request to issue new loans... Germany is catching up with the Koreans. These two countries have demonstrated impressive results in value-added innovative products, patent activity, and research intensity. German innovation centers are Volkswagen AG, Robert Bosch GmbH and Daimler AG.

 

Related: Ukraine could disappear from economic map of the world

What about the Ukrainian centers: Ukrainian Motor Sich JSC, Antonov state company, Yuzhmash state enterprise? Nothing. Our security officials have almost accused Motor Sich of trying to transfer the plant to Chinese Chongqing. Although some time before Ukraine’s First Vice Prime Minister of Ukraine and simultaneously Minister of Economic Development and Trade Stepan Kubiv proudly spoke during his trip to China that Ukrainians will produce aircraft engines in China. Ukraine buys helicopters in France, and a profile plant in Zaporizhia reports a record decline in gross income. Ukrainian aircraft designers are developing aircraft industry of Azerbaijan, and Antonov does not sell aircraft to Saudi Arabia, but just a factory for assembling these aircraft (with all the technologies, intangible assets, copyright, etc). Yuzhmash still somehow exists thanks to orders from the United States; this small production cooperation seems to be slow euthanasia.

Meanwhile, China has improved its position due to its patent activity, gradually turning from a plagiarist to a new center for generating innovations of the 21st century. Experts note the dichotomy of this country: Huawei Technologies Co. and BOE Technology Group brought the country to the second place in the world in patent activity, but at the same time the rate of transfer of innovations to the real sector is still quite low, and their impact on the growth of labor productivity is insufficient.

Related: Shadow economy level reduces in Ukraine, 32% of GDP still in shadow

Asia is among the new global trends. This country strengthens its competitiveness, relying on innovations, for which it develops science, education, and medicine as priorities. Developing countries win the competition from the developed world with the help of their brains, not their hands. Only Ukrainian officials are still trying to seduce investors with "cheap labor."

Citing Bloomberg: “The battle for control of the global economy in the 21st century will be won and lost over control of innovative technologies. Korea’s number one spot and China’s shift up the rankings is a reminder that the U.S. trade war might slow but won’t stop Asia’s technological rise."

 

Related: IMF worsens economic forecast in Ukraine in 2018

Ukraine’s place of Ukraine in this battle is still in deep reserve. Not a single systemic participant in the innovation market has yet come to us, while the national innovation centers die a slow and painful death, and the authorities stay completely indifferent.

The only success is that Ukraine is still in the list of 60 best countries, that is, it appears in the ranking. This should not be perceived as our success but as the “flaw” of Ukrainian officials.

Ukraine spends 0.5% of its GDP on financing the researches, while in the EU this figure is 2.5%. Our spending on science is less than $ 100 million a year (equivalent to the innovation budget of an average European pharmaceutical company), while 5,7 billion USD was allocated for the nationalization of PrivatBank, and the state 8,9 billion USD on capitalization support of banks , while the state funding of innovation is less than 71 million USD over the past ten years. However, Ukraine’s Cabinet of Ministers promised to launch a fund for financing startups with a common resource of 1,8 million USD in 2019. This money would be enough just to repair the office of the director of the fund...

Related: Ukraine's cry for economic justice

In the 21st century, the dependence of the global economy on raw materials and "working hands" weakens with each year. In the direct proportion to this process, the dependence of world economic systems on "brains" will increase. And what about us? We are sexy and everybody wants us.

Read the original text at 112.ua.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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