Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Acknowledgements and Disclaimer This report is prepared by David Cheney (Senior Innovation Consultant) with contributions from Andrey Zolotarev (Innovation Policy Specialist) and Jamil Wyne (Consultant). The team was led by Anwar Aridi (Innovation Specialist - Task Team Leader), the editor of the report, with support from Iryna Kuzmina and Victoria Tetyora. The report gratefully benefited from comments provided by Yevgeny Kuznetsov and Vinod K. Goel (Senior Innovation Consultants) and feedback provided by several World Bank Group staff. Disclaimer and Copyright ©2017 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff of the World Bank Group. 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Table of Contents List of Acronyms ................................................................................................................................1 Executive Summary ............................................................................................................................2 Introduction .................................................................................................................................... 10 Purpose and Scope......................................................................................................................... 10 Methodology and Organization ..................................................................................................... 11 Innovation Ecosystem for Existing Companies ................................................................................... 14 Overview ........................................................................................................................................ 14 Industry and Market Structure ...................................................................................................... 15 Leadership, Governance, and Policy .............................................................................................. 17 Access to Knowledge and Technology ........................................................................................... 20 Finance ........................................................................................................................................... 23 Human Capital................................................................................................................................ 24 Supports ......................................................................................................................................... 26 Innovation Ecosystem for Entrepreneurial Companies ...................................................................... 28 Overview ........................................................................................................................................ 28 Leadership, Governance, and Policy .............................................................................................. 29 Finance ........................................................................................................................................... 31 Markets .......................................................................................................................................... 33 Culture ........................................................................................................................................... 35 Human Capital................................................................................................................................ 36 Supports ......................................................................................................................................... 37 Innovation Ecosystem for Multinational Companies in Ukraine ......................................................... 40 Overview ........................................................................................................................................ 40 Industry and Market Structure ...................................................................................................... 41 Leadership, Governance, and Policy .............................................................................................. 41 Access to Knowledge and Technology ........................................................................................... 42 Human Capital................................................................................................................................ 43 Conclusions and Next Steps .............................................................................................................. 44 References ....................................................................................................................................... 48 Appendix I. List of Interviewees ........................................................................................................ 51 Appendix II. List of Ukrainian Intermediaries, Entrepreneurship Support Organizations, and Equity Investors.......................................................................................................................................... 53 List of Tables Table 1. Number of Enterprises Introducing Innovations in Ukraine .......................................................................... 15 Table 2. Global Innovation Index Quality of Governmental Institutions ..................................................................... 18 Table 3. Global Competitiveness Index Financial Market Measures ........................................................................... 23 Table 4. Global Innovation Index Human Capital Indicators ....................................................................................... 24 Table 5. Global Competitiveness Index Human Capital Indicators .............................................................................. 24 Table 6. Global Innovation Index Infrastructure Indicators ......................................................................................... 26 Table 7. Global Competitiveness Index Infrastructure Indicators ............................................................................... 26 Table 8. Sample Financial Capital Indicators: Ukraine versus Benchmark Countries .................................................. 31 Table 9. Financing of Innovation from the Foreign Sources in 2000–2014 ................................................................. 40 List of Figures Figure 1. Share of Innovative Enterprises, Percent ..................................................................................................... 14 Figure 2. GERD 2005–2014 .......................................................................................................................................... 21 Figure 3. Business Reforms since 2009 ........................................................................................................................ 29 Figure 4. Breakdown of Investment Sizes .................................................................................................................... 33 Figure 5. Organizations Supporting Entrepreneurship in (Number of Organizations Created Annually) ................... 38 List of Acronyms BEEPS Business Environment and Enterprise Performance Survey CIS Commonwealth of Independent States EaP Eastern Partnership EBA European Business Association EBRD European Bank for Reconstruction and Development EIB European Investment Bank FDI Foreign Direct Investment EU European Union GDP Gross Domestic Product GERD Gross Domestic Expenditure on Research and Development GSP Global Solutions Program I&E Innovation and Entrepreneurship ICT Information and Communication Technology IDCEE Investor's Day Central