National innovation system of Ukraine: potential of import substitution of high-tech goods

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Kyiv national university of trade and economics

National innovation system of Ukraine: potential of import substitution of high-tech goods

Melnyk T.,

doctor of economic sciences, professor department international management

Hrynko K.,

Ph.D., senior lecturer department of international management

Abstract

The article encapsulates an insight into the essence of the national innovation system (NIS), its current state, potentially determine prerequisites for import substitution of high-tech goods, analyzes the share of export and import of high-tech goods, provides the substantiation of prospects for the development of the NIS in the context of the implementation of technological structures, and provide suggestions for the NIS growth and sustainability. The existing structural elements of the national innovation ecosystem in Ukraine and the legislative framework of their functioning are not built into a single structure. The results of these elements are independent, the consequence of which is the lack of a synergistic effect, which should consist in increasing the efficiency of the national production of goods (services) and strengthening their competitiveness through large-scale implementation of the results of scientific research and scientific and technical (experimental) developments.

Keywords: innovation, innovation activity, national innovation system of Ukraine, foreign trade.

Анотація

Досліджено сутність національної інноваційної системи, проаналізовано сучасний стан та потенціал НІС України та визначено передумови імпортозаміщення високотехнологічними товарами, розраховано частки експорту та імпорту високотехнологічних товарів, обґрунтовано перспективи розвитку вітчизняної НІС в умовах реалізації технологічних укладів та надано пропозиції щодо нарощування її потенціалу. Головною рушійною силою розвитку України має стати інноваційна економіка, національна інноваційна система (НІС), функціонування якої визначається специфікою економіки країни. Метою статті є подальше вивчення національної інноваційної системи України та розкриття потенціалу імпортозаміщення високотехнологічними товарами. Дослідженно сутність національної інноваційної системи (НІС) та зроблений аналіз сучасного стану та потенціалу НІС України. Надано визначення передумов для імпортозаміщення високотехнологічними товарами вітчизняного виробництва та пропозиції щодо розбудови потенціалу вітчизняних НІС. Високотехнологічний сектор має стати локомотивом і каталізатором технологічних перетворень української промисловості. Промислові високотехнології можуть стати чинником конкурентоспроможності промислових підприємств, а масове впровадження технологій 4.0 може відвернути тенденцію деіндустріалізації країни, водночас безповоротно давши потужний імпульс переробній промисловості та збільшивши виробництво з високою доданою вартістю ланцюжки. В даний час українська економіка орієнтована на виробництво традиційної промислової продукції з низькою валовою доданою вартістю, яка реалізується на насичених ринках з низькими, якщо такі є, перспективами розвитку майбутнього. Дослідницька робота вітчизняних наукових установ зосереджена в основному на задоволенні потреб економіки, що базується на матеріальних ресурсах. Технологічний розрив між Україною та розвиненими країнами з кожним роком поглиблюється. Усунення відставання вимагає системних змін у методах державного регулювання у розвитку економіки, освіти, формування інноваційної моделі розвитку високих технологій.

Ключові слова: інновації, інноваційна діяльність, національна інноваційна система України, зовнішня торгівля.

Introduction

Evolvement of a post-industrial society focused on new technologies, design of new approaches, mobilization of scientific potential as leading trends in the world. The relevance of the issues is confirmed by the strategic documents developed in the EU countries, in particular Horizon Europe 2020 [1] and Horizon Europe 2021-2027 [2], which outline global technological trends in development of industry and economy in general, among which they prioritize and single out digitalization in production, improved and new materials, biotechnology, nanotechnology, etc. The global nature of such changes dictates the need to thoroughly comprehend the directions of their evolvement and to determine the tasks for the development of the national economy. Any country can become post-industrial, regardless of the type of governance, if the main emphasis is laid on a developed market economy and on an active exchange of high-tech products among countries.

The main driving force in Ukraine's development should be an economy of innovation, a national innovation system (NIS), the functioning of which be determined by specifics of the country's economy. A coordination of efforts and interests of business and the state, the NIS could serve as the basis for the formation of competitive advantages of national economies. In this aspect, the state's task of forming an effective NIS is actualized by identifying clear priorities and creating effective mechanisms for its functioning, which will contribute to the emergence of new forms of international interaction between participants in the innovation processes. The high-tech sector should become a locomotive and catalyst for the technological transformation of the Ukrainian industry. Industrial high-techs can become a factor in the competitiveness of industrial enterprises, and the massive introduction of 4.0 technologies can avert the trend of de-industrialization of the country, whilst irreversibly giving a powerful impetus to processing industry and boost high value-added production chains.

Currently, the Ukrainian economy is focused on the production of traditional industrial products with low gross value added, which are sold in saturated markets of low, if any, prospects for furture development. Research work of domestic scientific institutions is mainly focused on meeting the needs of araw material-based economy. The technological gap between Ukraine and developed countries is deepening every year. Eliminating the backlog requires systemic changes in the methods of state regulation in the development of the economy, education, and the formation of an innovative model of high-tech development. Import substitution, which is considered as a transitional stage for the accelerated modernization of production, can further create fundamental conditions for the development of high-tech export-oriented economy.

Analysis of recent research and publications. A significant amount of research by both scientists and peers in the fields of international economics and business has been focusing on formation of national innovation systems and the study of in-country scientific and technological potential. In particular, domestic scientists, such as T. Pisarenko and T. Kvasha, A. Chukhno, P. Yukhimenko and P. Leonenko, V.

Sidenko, G. Lagutin, V. Vasilenko [3-7], etc. made a significant scientific contribution to the development of the national innovation system and its development in the context of global technological trends and challenges.

A number of modern foreign authors such as F. Todling and M. Tripple, M. Fritsch and A. Stefan, K. Hauser et al., D. Dos, A. Isaksen [8-12] studied the characteristics of NIS in different countries, as well as identified and benchmarked various NIS development models (G. Etzkovits and L. Leidersdorf, A. Afonso with co-authors, J. Kimatu [13-15]).

Numerous works of domestic scientists, in particular A. Vlasyuk, V. Geyts and L. Daineko, are devoted to the problems of forming the prerequisites for the development and assessment of the innovative component in Ukraine's foreign trade [16,17]. They analyzed the state of demand for technological goods in foreign trade of the countries of Central and Eastern Europe, the national technological level of production, developing opportunities for externally-oriented sectors of the Ukrainian economy, taking into account the implementation of achievements in national science and technology.

At the same time, it should be noted that the innovative model of economic growth is one of the strategic goals of Ukraine, as enshrined in the Strategy for the Development of the Innovation Activity until 2030 [18], the Strategy for Sustainable Development «Ukraine-2020» [19], and other projections. However, questions remain about the correspondence of the domestic scientific and technological potential to the goals and objectives of Ukraine's national innovation system, which is still in flux.

The purpose of the article is to further study the national innovation system of Ukraine and reveal the potential of import substitution with high-tech goods. In this regard, the following tasks were set and pursued for solution:

1) investigation of essence of the national innovation system (NIS)

2) analysis of the current state and potential of the NIS of Ukraine;

3) determination of prerequisites for import substitution with domestically-made high-tech goods;

4) substantiation of prospects for the domestic NIS in the context of the implementation of technological development;

5) suggestions for building the capacity of the domestic NIS.

Materials and methods used. The theory and methodology basis for the article rests on modern scientific concepts and theories on the development and analysis of the functioning of NIS, data of the State Statistics Service of Ukraine. To achieve the goal of the study and the implementation of the tasks, the author of the article resorted to various methods of statistical analysis, synthesis, group sampling, and graphic representation of the results yielded.

Results

1. The essence of the NIS. In developed countries, there exists an established understanding that an integral national innovation system (NIS) is important for the transition to an innovative economy, which transforms new knowledge into products and services vital for the economy and society. In essence, a NIS is the foundation for building a knowledge-based economy. Therefore, the most important priorities of scientific and technological development are increasingly associated not with grand and expensive breakthrough projects, but with routine and meticulous daily work to form a NIS and its integral parts.

The formation and development of the concept of national innovation systems have emerged recently. By the end of the 20th century, three leading schools were formed to deal with issues of national and regional competitiveness [20]. In particular: American (M. Porter, M. Enright, etc.), British (K. Freeman, J. Dunning, H. Schmitz, J. Humphrey, R. Kaplinsky) and Scandinavian (B.-A. Lundval, B. Johnson, B. Asheim, A. Isaksen). It was the Scandinavian school that made a great contribution to the development of the concept of the national innovation system (NIS) [21].

The notion of «national innovation system» was introduced by K. Freeman and further developed by B.-A. Lundwall, B. Johnson and R. Nelson [22].

Within the framework of the national innovation system in developed countries, they customary understand a set of interconnected organizations (structures) engaged in the production and commercialization of scientific knowledge and technologies within national borders [23]. The national innovation system is also understood as a set of institutions (economic, financial, legal) to ensure innovation processes [13].

Analysis of classical and modern concepts of the NIS showed the absence of a unified and finally defined concept of the «national innovation system», as well as the fact that approaches to interpretation are mainly divided into two categories. The first of them define a NIS as a set of interconnected organizations, institutions, business entities that interact in production, distribution, and use of new knowledge. According to the second approach, some authors interpret a NIS as a holistic, improved system, which in turn unites various elements of innovation to transfer knowledge into technology.

A number of leading foreign studies (J. Alvedalen and R. Bochma) present innovation as the result of a complex process of constant interaction between private and public agents involved in creation, dissemination, and use of new technological knowledge at the national level [24]. In general, an innovation system is formed by an interaction of between a production system comprised of a wide range of companies and scientific base consisting of technology centers and research institutes, on the one hand, and the education system consisting of universities and formal training centers, intermediary institutions, official hiring centers and other intermediaries between the workforce and companies [25], on the other hand. Interactions between these systems and agents take place in a certain institutional-regulatory and socio-cultural environment, and are formed by the nature of such a structure.

The results obtained in the course of analysis of foreign experience in the functioning of national innovation systems, to single out elements of a NIS, including: financial institutions (venture funds, investment banks, insurance companies, government funding institutions); educational institutions (institutions of higher education, postgraduate training, vocational training, advanced training institutions); research institutes (universities, laboratories) innovative enterprises (small and medium-sized enterprises, research centers of trans-national companies, corporations producing high-tech goods); innovative intermediaries (business incubators, technology parks, accelerators, technology transfer centers, online information exchange portals); state institutions in the field of innovations (institutions that regulate the state's innovation policy, institutions for state financing of innovations); marketing institutions (marketing agencies, marketing divisions of innovative enterprises, scientific institutions, innovation intermediaries).

The main problem in solving the problem is the absence or underdeveloped relationships between participants in the innovation process. Therefore, while developing a preliminary concept, it is possible to chart the components of the innovation system, carrying out coordinated interactions aimed at achieving the common goal of creationand implementation of innovations (Fig. 1.).

As a result of the interaction of these elements, various NIS models can be formed. In particular, when the Triple Helix - TH model [13], the industry (business) receives information about the scientific research conducted by universities, taking into account the market requirements for specialists in this area, and gcan get stable licensing agreements. The state manages to initiate new industries and products, which leads to an increase in the number of jobs for citizens. In addition, the state benefits from an increase in taxes and fees resulted, which in turn leads to an increase in the standard of living and economic development of the nation. Universities benefit from the functioning of science parks, get reliable sources of funding from business and government, and improve the quality of industrial research. Universities can also conduct research based on national and global needs. In general, all this increases the efficiency of the functioning of the national innovation system.

Fig.1 Interactions in Innovation System

Source: Designed by the authors of article

Due to the rapid development of information and communication technologies, in particular the spread of the Internet, it helps to strengthen the role of civil society and the citizen in assessing the sustainability of certain technological advances and controlling their impact on economic, social and environmental conditions, a new paradigm of innovative development is emerging as associated with the implementation of the quadro-helix model (Quadruple Helix - QH), with the latter resulting from the development of the previous model of the triple helix, where government, business, science, and citizens work together to foster structural change [15].

Thus, based on the consideration of the features of various interpretations of the concept of the national innovation system, one can say that it is a set of subjects (research institutes, enterprises, consumers) and institutions (legislative, financial, social) interacting in the processes of production, use, and dissemination of advanced knowledge and technologies within the framework of an innovation ecosystem based on models (TH or QH), whichis aimed at implementing the priority areas of development of the country's economic system, thereby contributing to increasing competitiveness of the nation.

The study of theoretical concepts of the functioning of national innovation systems allows to generalize that in the current development of NIS, one can distinguished the following key phenomena:

- in the formation and maintenance of the functioning of the national innovation system of the country, the state plays a leading role, determining goals and priority directions of its development. At the same time, as the NIS strengthens, the state is increasingly focusing not on direct methods of state management of innovation activities, but on creating favorable conditions for the innovative activity of all elements of the NIS;

- the accelerated development of information and telecommunication technologies contributes to the creation of network interactions between the participants of the NIS, which ensures the solution of a large number of problems within the system, allows you to quickly adapt to changes in the external conditions of functioning;

regions are gaining more and more importance in the development of innovative processes, since the functioning of the chains «creation - application - dissemination» of innovations is most effectively carried out at the regional level; at the same time, the innovation system is one of the tools for regional development;

the globalization of the world economy contributes to the integration of national innovation systems into large (supranational or global) innovation systems.

The development strategy of the national system of each country is determined by the state policy in the field of industrial and innovative development, regulatory and legal support, mechanisms of direct and indirect state support, the availability of scientific and technical potential, the development of domestic commodity markets, labor and capital markets, as well as cultural and historical traditions, and peculiarities.

2. Current state and potential of NIS of Ukraine. The study of modern trends in the development of national innovation systems of various countries of the world made it possible to identify four models of the functioning of the NIS in the world:

1. Euro-Atlantic (USA, Germany, France, Sweden, Switzerland), has signs of an extensive network of innovative institutions and organizations, active participation of HEIs in the development of innovations (one of the main components of NIS), full coverage of innovative developments in the economy, dominance of the state in innovations, focus on fundamental research, a wide range of sources to finance innovative developments (public funds, funds of business entities, credit funds, venture capital), multiplication off innovations, concentration of innovations in a certain area in order to obtain a synergy effect.

2. East Asian (Japan, South Korea, China, Hong Kong, Taiwan), which also has an extensive network of innovative institutions and organizations, full coverage of innovative developments in the economy, a wide range of financialsources for development of innovations, but is based on the predominance of private structures in innovations, weak participation of HEIs in the development of innovations, attention is focused on applied research and purchase of innovations, and has signs of dispersal of innovative developments.

3. Countries of the third world (Thailand, Vietnam, Cambodia, Argentina, Uruguay, Tunisia, Oman), which is characterized by a limited network of innovative institutions and organizations, the participation of individual HEIs in the development of innovations, the coverage of innovative developments only in certain sectors of the economy, the predominance of the state in innovative developments, an emphasis on applied research, a narrow range of sources of financing for innovative developments (public funds, funds of business entities), receiving innovations free of charge (free transfer or «piracy»), dispersing innovative developments.

4. Transitional (Brazil, India, Russia, Ukraine, Kazakhstan), which implies the existence of a limited network of innovative institutions and organizations, which is growing and transforming; active participation of individual HEIs in the development of innovations; partial coverage of the economy with innovative developments; predominance of the state in innovative developments, an emphasis on fundamental and applied research, a small range of sources of financing for innovative developments (public funds, funds of business entities, credit funds), production, purchase or free receipt of innovations, as well as dispersal of innovative developments.

Now Ukraine belongs to the countries with a transitional model of the national innovation system. Countries with such a NIS model are either the states with rapidly growing economies (Brazil, India, etc.) or countries that are transforming their national innovation system as part of the transition from a command-administrative to a market economy (Russia, Kazakhstan, etc.). The key problem of the latter NIS model is its transformation into any of the three models (Euro-Atlantic, East Asian, third world countries), which requires balanced steps towards reforming it in order to avoid approaching the model that is typical for third world countries.

Due to the wave-like dynamics of Ukraine's indicators in international indices characterizing the economic situation of the country and, accordingly, the state of innovative development (global competitiveness index, international innovation index, index of doing business, index of economic freedom, index of investment attractiveness), it is impossible to assert that Ukraine has entered a positive trend of changes in the innovation environment. The recent downgrade of the country's innovativeness ratings indicate not so much the current state of technology, but the deterioration of the situation in the economy, education and science.

The long stagnation of the processes of socio-economic development and renewal of the production and technological base of the economic activity of the national economy, as well as the lack of interaction of «science - production - the state» affect the position of the national innovation system, is reflected in the deterioration of the qualitative and quantitative indicators of innovation (Table 1): the number of innovatively active enterprises is decreasing (more than twice since 2001); along with an insignificant increase in the number of introduced new technological processes (63%), there is a decrease in the production of innovative types of products (by more than 9-fold), which led to a significant drop of the share of sold innovative products (goods, services) in the total volume of products sold (down by 5.2 times), the dynamics of GDP science intensity is deteriorating (from 1.09% in 2005 to a critical level of 0.43% in 2019).

Table 1. Indicators of Innovation Activity at Ukrainian Enterprises in 2001-2019

Note: *data for 2014-2015 are given without taking into account the temporarily occupied territory of the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone. Source: developed by the authors according to [26]

If we analyze the innovative activity of Ukrainian industry by technological sectors, we can note the deformation of the national innovation system, built on a medium - and low-tech basis. Changes in the technological composition of industry show a tendency to deteriorate its structure and areas of funding, due to the lack of a comprehensive mechanism to stimulate innovation, primarily through the mobilization of internal resources of enterprises and attracting foreign investors. At the same time, support for innovation activities at the expense of state funds is extremely insufficient, and the mechanism of long-term bank lending to industrial enterprises is not fully used.

The crisis situation in the innovation system of the country is due to the manifestations of a number of factors: external and internal imbalances of economic development; imperfection of the legal framework in terms of stimulating innovation activity; lack of proper innovation infrastructure and mechanisms for commercialization of scientific and technical developments; spontaneous initiation of innovations; inconsistency and inefficiency of the state innovation policy; insufficient level and unstable financing of innovation activity.

Restricting investment in the economy reduces opportunities for economic growth, both in the direction of extensive development and creating barriers to the development of innovative potential of enterprises and the achievement of intensive growth. The results of scientific research in this area prove that foreign investment in Ukraine in no way affects the development of innovation due to the development of domestic research institutions. Given the well-developed and inexpensive scientific potential of emerging markets, opportunities for Ukraine to attract such investments are limited regardless of favorable macroeconomic conditions in the country.

The study by the authors of innovation in Ukraine has identified a number of problematic issues related to the threatening trends of loss of scientific and innovative potential of the country, accumulated during the years of the Soviet Union. The margin of safety in this area is almost exhausted. Indicators of the number of international scientific publications, scientific publications of the highest international level and public-private joint scientific publications are at a fairly low level compared to European countries. The crisis of most academic and branch research institutes, caused by the prolonged economic downturn, is already affecting the level and results of research in many areas. In addition, education and science policies are ineffective in ensuring real positive changes that are commensurate with the pace of development of European economies. The task of preserving the human potential of science has not yet become a state priority. Of particular concern is the decline in education, which further impairs the ability of the Ukrainian economy to absorb and innovate.

3. Prerequisites for import substitution of high-tech goods in Ukraine. Current research by world leaders shows that a necessary condition for technological progress is the transition from raw materials specialization to an export-oriented economy with a predominance of high-tech goods and services. In particular, such export goods should be extremely popular with consumers in international markets and produced by national innovation enterprises that cooperate with the subjects of the innovation process both inside and outside the national innovation system of the country. With this in mind, Ukrainian companies must use technological solutions in the production of high-tech goods and solve current consumer problems by offering competitive innovative products such as e-books, waterproof touch monitors and tablets, nanotechnology products or SaaS (software as a service).

According to the OECD classification [27], there are seventeen groups of high-tech goods: radioactive substances and related materials; medicinal and pharmaceutical products; medicines; rotating power plants and their parts; other machines and parts that produce energy; office machines; machines for automatic data processing; parts, accessories for cars; telecommunication equipment; electric power machines and their parts; electrodiagnostic apparatus for medical sciences; cathode valves and tubes; aviation and related equipment, spacecraft; optical devices and apparatus; apparatus for measuring, analyzing and monitoring; cameras and equipment; weapons and ammunition.

The creation, production and export of high-tech goods play an important role for the country on the path of import substitution, economic growth and its competitiveness in the international market. In order to adequately assess the export-import flows of high-tech goods in Ukraine, it is necessary to calculate the share of exports and imports of high-tech goods in total foreign trade.

Based on the fact that currently in Ukrainian statistics there is no official definition of the list of trade in high-tech goods, the task is to harmonize their list according to the codes UKTZED with the list of hightech goods according to SITC Rev 4 [27].

In this regard, six-digit UKTZED codes were chosen, which are harmonized with the codes of hightech product groups SITC Rev.4. and on the basis of these data the general transitional table of codes containing the expanded statistics of foreign trade in high-tech goods for 2008-2019 is created.

As a result of the comparison, the shares of exports and imports of high-tech goods in 2019 were calculated (Table 2).

Table 2. Volume of export-import of high-tech goods of Ukraine according to SITC Rev.4 classification in 2019

Source: calculated by the authors, data from [26].

The data in Table 2 show that as of 2019, Foreign Trade in high-tech goods of Ukraine is characterized by a rather low share of exports of high-tech goods (2.27%) in the total export of Ukrainian goods. Exports of high-tech goods in 2019 amounted to 1,137 million dollars: telecommunication equipment, not included in other categories; equipment parts and accessories, not included in other categories - 0.6% of total exports of goods, medicines - 0.4%, radioactive substances and related materials - 0.17%. Ukraine imported high-tech goods in the amount of 8,151 million dollars. Medicines (including veterinary drugs), telecommunications equipment, and other power generating equipment accounted for the most of them. The positive balance of foreign trade in high-tech goods in 2019 was observed only in the group «radioactive substances and related materials» (77 million dollars). All other high-tech goods are dominated by imports.

In this context, it should be noted that in recent years, a trend has been established in Ukraine when the share of so-called critical imports (energy resources and raw materials) decreases annually, but consumer goods produced abroad, primarily high-tech, confidently strengthen their position in the domestic market of Ukraine.

So, it can be stated that the deformed domestic economic model, built on a low-average technological basis, high import dependence on high-tech goods, requires drastic changes. Increasing innovation activity provides for improving conditions for the commercialization of innovations, the development of the IT sector and high-tech production, the spread of research and production cooperation, the development of Technology Parks and business incubators. This requires the development of a modern research base and technology transfer infrastructure, the creation of Centers for commercialization of innovations, the activation of the development of the «knowledge economy» and the introduction of the NIS model based on the principles of close interaction between science, business and the state.

4. Prospects for the development of domestic NIS in the context of the implementation of technological structures. The technological structure of the economy clearly characterizes the level of its development, technical and technological compliance with modernity. It is a reliable basis for ensuring the development of the economy through progressive changes, determining the direction of investment, consistent growth of the scientific and technical level of the economy, gradual increase in the components of the information economy, the knowledge economy.

Today, experts estimate the technological structure of the Ukrainian economy as follows: the share of the fifth order (military space equipment, communications equipment) is 4.7%; the fourth - almost 42.4%, the third - 52.8%. In addition, the Ukrainian economy is also characterized by components of relict ways (the first and the second) [28]. The country is undergoing a process of Structural Simplification of the economy and its approximation to the structural characteristics of less developed countries of the world.

At the same time, in developed countries, the knowledge economy, which corresponds to the branches of the 5th and 6th technological order is the core of the economy and contributes to the qualitative transformation of the entire society. It provides up to 30% of GDP growth, job creation, export potential growth, and reduced production costs.

Inclusion in the global technical and economic dynamics is not ensured if the necessary prerequisites are not available. These include, in particular, the presence of a sufficiently developed production potential, well-established mass education, the possibility of obtaining capital and information from external sources.

Ukraine has accumulated significant technological potential, but the weak point is the low technological level of the economy, the imperfection of the technological structure. The technical level of most industries lags behind developed countries by at least 50 years, which is a threatening trend in terms of competitiveness. Fixed production assets are quite significantly physically and especially morally worn out.

In this regard, we can consider four possible scenarios for the development of new technological structures in the national economy (table 3).

Table 3. Scenarios of technological development of Ukraine

Source: developed by the authors

The scenario of «technological stagnation» is implemented if the industrialization program is curtailed. Under this scenario, the trends of technological and economic development of the 2000s will again manifest themselves, where technologies from the metallurgical and mining sectors and primary processing will remain the main technologies. The role of technological structures III and IV will increase, and the emergence of new technological structures will be impossible. If the situation on global commodity markets worsens and export revenues continue to decline, then this scenario of economic development will become the most likely.

The scenario of «technological inertia» is considered while continuing industrialization in the country without changing priorities, strengthening the innovation component of implemented investment projects. This scenario is characterized by the export of raw materials and medium-tech products.

For Ukraine, «technological inertia «provides for the consolidation of trends that manifested themselves during the implementation of the program of economic reforms for 2010-2014 adopted in July 2010» rich society, competitive economy, efficient state» [29], which laid down the principles and stages of long-term economic growth based on the reform and modernization of economic policy in the state and the functioning and development of its system. One of the main organizational and economic measures for implementing these reforms should be the modernization and technological renewal of the machinebuilding industry in Ukraine. According to statistics, in economically developed countries, the share of Mechanical Engineering ranges from 30% to 50% of total industrial output, in particular in Germany - 53.6%, Japan - 51.5%, Great Britain - 39.6%, Italy - 36.4%, China - 35.2%, the United States - 10%, in the Russian Federation - 18%. This ensures Technical re-equipment of the entire industry every 8-10 years.

In addition, despite attempts to activate innovation activities, they were not fully implemented. Thus, the State target economic program «Creation of innovative infrastructure in Ukraine» for 2009-2013 [30] was not financed from the state budget, as a result of which the measures provided for in the program were not fulfilled, and the tasks and measures provided for by the State target program for the development of the system of information and analytical support for the implementation of State Innovation Policy and monitoring the state of innovative development of the economy were only partially funded. The measures provided for in the» action plan for the implementation of the concept of state policy reform in the innovation sphere for 2015-2019» [31] were not implemented due to their unsystematic nature and failure to take into account the need to attract a wide range of stakeholders - business, civil society, and the scientific community.

In total, more than 100 regulatory documents (laws, presidential decrees, bylaws in the form of government resolutions, orders of central authorities) have been in force and are still in force in Ukraine. In total, more than 100 regulatory documents (laws, presidential decrees, by-laws in the form of government resolutions, orders of central executive authorities and other regulatory documents) dedicated to the implementation and development of innovation activities have been in force in Ukraine. However, it should be noted that in terms of quality and quantity, these regulatory legal acts are inferior to similar systems in developed countries of the world, primarily due to inconsistency with each other. Therefore, first of all, in our opinion, it is necessary to streamline and develop legal norms for defining innovation activity as an important link in national policy.

`As technical modernization of the machine-building industry has not taken place in Ukraine, so the predominance of the third way with the technologies of the construction materials industry, ferrous metallurgy, shipbuilding, metalworking, light industry, woodworking, pulp and paper industry remains, which in general will not contribute to a sufficient increase in the technological dynamics of the Ukrainian economy. Under this scenario, we can expect an increase in the role of the fourth technological order. This scenario looks most likely, given the unchanged structure of capital investment in industrial activities since 2014 (Fig. 2).

From the point of view of formation of new technological orders for the economy of Ukraine, the best scenario is «new technological niches», which provides for the need to strengthen the actual technological competencies themselves by including them in global technological chains. The country exports high-tech products manufactured under license and using imported technologies.

Fig. 2. Capital investments in industrial activities

Source: Developed by the authors based on data from [26]

innovative import substitution high-tech export

Such a scenario focuses on such recent trends in global technological development as the gradual completion of the now dominant fifth order in the technological leaders of the technological cycle and its transfer to developing countries. In backward countries, there are «windows of opportunity» for the use of technologies of the fifth technological order, which have already passed the peak of profitability in the markets of leading countries, which are losing interest in them. However, these technologies retain the potential for profit in the global market. By doing so, in 10 years in China more than half of industrial enterprises mastered the technologies of the fifth technological order [32].

This scenario is possible if active measures are taken to integrate Ukraine into the global technological space through interaction with foreign partners, the arrival of non-primary TNCs in the country, and the placement of their production and technological units in the country [33]. In this aspect, as Sidenko V. notes: «The state should actively influence innovation processes, accelerate the acquisition of the new technologies that will provide global and regional competitive advantages in the field of high technologies. And such properties are lacking in the state economic policy of Ukraine throughout the period from the early 1990s to the present «[5].

One of the promising strategies of development of the machine-building industry, and stimulating the development of production of its products, is to provide domestic manufacturers with government orders, including for innovative products. Scientists also have to stimulate the development of mechanical engineering. In this direction, it is necessary to increase funding for domestic science and research in the field of mechanical engineering. These directions and perspective vectors should ensure the competitiveness of the machine-building complex of Ukraine, the transition of the country's industry to the introduction of a new industrial policy - neo-industrialization.

Attracting the national scientific potential will allow implementing high-tech projects in such new «technological niches» as biotechnologies, pharmaceuticals, space technologies, nuclear technologies, new materials, etc. There are already favorable prerequisites for the implementation of this scenario in Ukraine. Operating today: 40 industrial parks (of which 31 are available in the Register of industrial parks), 26 science parks, 16 technology parks, 24 innovation and technology transfer centers, 22 innovation centers, 38 commercialization centers, 24 innovative business incubators, one investment and technology cluster, more than 30 clusters, one innovation and production association, other startup schools (business entities that provide theoretical knowledge and practical skills in the field of creating and operating startups), incubation programs (programs for newly created enterprises aimed at the development of a startup), intellectual property centers (business entities that ensure the implementation of educational and professional, educational and scientific and research programs, as well as advanced training of employees in the field of intellectual property), venture and investment funds, centers of scientific, technical and economic activity, etc. All this creates prerequisites for the rapid development of innovation activity in Ukraine and the rapid transition to the next stage of technological order and the implementation of the scenario described above.

The last scenario is a «technological breakthrough» scenario, which focuses the country on maximum possible synchronization with global technological dynamics, characterized by the export of not only final products, but also technologies. For Ukraine, it can be considered not as a short-term economic perspective, but only in terms of creating prerequisites for the formation of the sixth technological order. In light of this, the tasks of strengthening scientific potential, training highly qualified personnel, and developing innovative infrastructure are becoming urgent.

5. Proposals for building the capacity of the national innovation system.

As this study showed, the national innovation system requires fundamental changes in relation to the unified development strategy of the state. That is, it is not about improving and focusing on any specific component of the NIS, but a consistent comprehensive state policy to transfer Ukraine to the innovative path of development, the formation of a national innovation ecosystem (a set of institutions, relations, as well as various types of resources involved in the process of creating and applying scientific knowledge and technologies), which would contribute to its implementation and the development of innovation culture in the state, using, in addition to financial, other mechanisms for the development of innovation activities.

The existing structural elements of the national innovation ecosystem in Ukraine and the legislative framework of their functioning are not built into a single structure, so the results of these elements are independent, the consequence of which is the lack of a synergistic effect, which should consist in increasing the efficiency of the national production of goods (services) and strengthening their competitiveness through large-scale implementation of the results of scientific research and scientific and technical (experimental) developments.

When setting tasks for the NIS, which is currently being formed, the most important requirement for any plans and programs in the innovation sphere is completely ignored: their effectiveness should be fully determined by the country's ability to enter specific markets for high-tech and science-intensive products. This fundamental point almost completely fell out of the field of view of the developers of the previous innovation policy and the developers of the Strategy-2030 [18]. But it is the formation of demand for innovation that should be fundamental in the formation of NIS. Therefore, the vector of innovation policy should be determined by the assessment of potential markets according to the criteria of favorable pr...