Private and other national funding sources

 

In 2013, the Business Enterprise Sector consumed 55.3% of GERD, while the governmental sector consumed 38.6% and the higher education sector only 6.2%.⁹⁷ This high share of R&D consumption by the Business Enterprise Sector, however, should not be overrated, because its contribution to R&D funding has dropped since 2003 (36%). It hit a low of 26% in 2009 when international prices for steel slumped, forcing the metallurgy and machine-building industries to reduce wages and to lay off workers and when gas supplies by Russia were suspended due to a dispute over Ukraine’s natural gas debt in January 2009. Since then the financial contribution of the Business Enterprise Sector to GERD has stagnated (29% in 2013).

 

In 2014, however, the private funding (in current prices) has increased compared to 2013 by 5.6% of the total R&D expenditure in Ukraine. However, it should be noted that overall GERD has decreased in the last five years. This development shows that private funding could have an important role in the future as the state funding further decreases, but it has hardly the capacity to counterbalance public reductions in the short and medium term. The reason for this negative perspective is the specific structure of the Ukrainian economy: two-thirds of business spending on R&D is concentrated in machine-building, an industry which has seen its contribution to the national economy contract since independence in 1991. Because of the crisis with Russia, it is assumed that this industry will further decline, because Russia has been the main customer for machine-building products of Ukraine until now.

 

96 Self-assessment report: Scientific and technological sphere of Ukraine, MESU, 2016

 

97 UNESCO Science Report 2015.

 

 

Figure 12: Percentage of other and private funding of Ukrainian R&D (2005-2015)

 

As regards funding from other sources, Figure 12 above shows that in 2014 the percentage of “other national investments” in R&D (e.g. investments by public companies) has practically remained stable

 

(+0.1 %) compared to 2013. However, the data also show that this type of funding decreased in the last ten years by almost 12% compared with 2005.

 

4.3. Foreign investments in R&I

 

 

Figure 13: Share (%) of the foreign investments in R&D in Ukraine (2005-2014)

 

 

According to the available data, the share of foreign investments in R&D in Ukraine is at a high level of about 25% of GERD in 2010-2013, but has dropped⁹⁸, not at least due to the political and economic instability since 2011 and the recent military conflict in the occupied eastern regions. In 2005, this share was 24.8%, and in 2014 19.8 %⁹⁹ (latest data available, see Figure 13 below). However, this share of foreign investments in Ukrainian R&D is still relatively high compared to the other Eastern Partnership(EaP) countries. Detailed data about the sectors of investment and the origin of investors are not available.

 

In order to attract foreign investments, the Ukrainian state offers certain measures to protect foreign investments against future changes in legislation. Among these is the possibility for non-native investors to register their assets with state authorities to enjoy guarantees for foreign investment for a certain period of time after the investment has been made.¹⁰⁰

 

The Ukrainian state statistics do not provide information about the distribution of funding by country of

 

origin. However, it is known that a substantial share is associated with the Russian Federation, the USA, EU and China.¹⁰¹

 

Exact data on R&D funding by the private non-profit sector, especially the international research orientated NGOs, are not available, as this funding category is presumable very small and thus not yet disclosed every year by official statistics¹⁰².

 

Some local branches of international foundations and agencies, for example the Soros Foundation¹⁰³ or USAID¹⁰⁴ are organized as private non-profit organizations, but they are referred to under the category

“Funding from abroad”.

 

RESEARCH PERFORMERS