How can Ukraine stop migration for innovation and preserve human capital

How can Ukraine stop migration for innovation and preserve human capital
Migration causes staff shortage and, as a consequence, a slowdown in economic growth. According to the forecasts of the Institute of Demography and Social Research of the National Academy of Sciences of Ukraine, if everything goes at the same pace, by 2031, the Ukrainian population will decrease to 39,5 million people.

The decline in population is related to labor and social migration. This is evidenced by the results of an express survey of the European Business Association, presented in June 2019.

The indicator of satisfaction with life in Ukraine is 2.61 points out of five possible, which is very low. People are dissatisfied with the level of health care, education, and infrastructure.

Scientists leave Ukraine more often. According to the State Statistics Service, between 1996 and 2011, 1648 scientists left Ukraine, most of them went to the USA and Russia.

The fact is that abroad, scientific work is not only paid more but also becomes the foundation for the implementation of real projects, which cannot be said about Ukraine.

The UN's International Migration Report 2017 states that the level of migration from rich countries is much lower than from poor countries, where the quality of life is much worse.

High-income countries hosted 64% of the world's migrants in 2017, while middle-income countries hosted 32%, and low-income countries hosted 4%.

 Oleg Krot
Oleg Krot, Managing Partner of TECHIIA Holding:

"Ukraine competes for its citizens in the global market. This applies not only to talented scientists and IT specialists but also to employees who go to other countries in search of a better life."

IT specialists most often travel to Poland or the Baltic States, and from there, they are more often lured to Germany, Norway, and the United States.

In the IT industry, we already adhere to international standards for the creation of working conditions, and this significantly prevents specialists from migrating. Such a future awaits other industries, where the level of salaries reaches an international level.

Ukraine competes not only with salaries but also with the level of medical services, infrastructure, and the opportunity to get a decent education.

The standard of living comes to the fore because a good specialist has a choice of place of residence and work — in Ukraine or abroad.

According to the European Commission, the speed and quality of innovation depend on such key factors.

  • Quality of research — scientists' experience, quantity, support, and partnership with other countries.
  • Financial support — the state and the public sector are ready to support R&D activities, and the private sector should have the risk capital to create and implement new technologies.
  • Interested investors — an attractive investment climate should bring additional funds from foreign investors for technology development.
  • Innovations in small and medium-sized companies.
  • Interaction of companies, hubs, centers at the international and local levels.

Steps that will contribute to the implementation of innovations to improve the competitiveness of Ukraine

1. Development of science. Expenditures on science should correlate with the cross-government strategy of economic development. Science in Ukraine should be applied in practice at enterprises and in other areas of life. Grant support from the National Research Foundation of Ukraine should be provided transparently to scientific institutions.

2. Identification of priority projects for the state. The recently announced "Action" project by the ministries of digital transformation is a good start for the state on the way to improving the living standards of citizens.

3. Simplification of doing business. Ukraine ranks 71st among 190 countries of the world (between Kyrgyzstan and Greece) in the World Bank's Ease of doing business index. This is five positions higher than in 2018, but it is not enough for the arrival of large businesses or the development of local ones.

4. Increasing the investment attractiveness of the country. The index of investment attractiveness of Ukraine decreased to the level of 2016. In the first half of 2019, the index amounted to 2.85 points out of five possible ones and turned out to be negative. The main problems are corruption, distrust in the judicial system, the outflow of the labor force, political and economic turbulence.

5. Modernization of the real sector of the economy and implementation of technological solutions in the public sphere. Such projects can be implemented only if the government and business interact. Industry 4.0 requires prompt actions.

6. Establishment of clear rules of the game for all participants of the process. Successful implementation of innovative projects at the state level is possible if the interests of the public, business, and the state are satisfied.

"Ukraine competes for its citizens in the global market. This applies not only to talented scientists and IT specialists but also to employees who go to other countries in search of a better life."

The state's interest is in saving budget funds, improving the living standards of people. The interest of business is transparency and fair playing conditions. Public interest — access to services, control over the use of public funds.

Ukraine has successful projects implemented in a synergy between the state and business.

European experts of the Organization for Economic Cooperation and Development recognized the Ukrainian case of eHealth as one of the most promising in the public sphere worldwide.

The use of the system is obligatory for all budget institutions.

The introduction of such systems significantly improves the quality of life in Ukraine, giving an understanding of the distribution of funds for health care of each citizen and eliminating the need to stand in line to get to doctors.

Many IT companies develop or offer ready-made solutions for government agencies voluntarily.

For example, GlobalLogic helps the military create software that meets the latest NATO standards. The company is currently negotiating with the KCSA and some other cities on the test implementation of the "Green Wave" project. It is an intelligent traffic management system that can launch a "green wave" from traffic lights for fast and safe passage of special vehicles.

According to Andrii Moskalenko, the Deputy Lviv city mayor for development issues, IT-companies help to solve the problems of Lviv. Thus, the EPAM company takes part in conducting social hackathons, and the SoftServe company helps the city to create a parking system.

Investments in Ukraine are growing. According to the State Statistics Committee, the volume of capital investments in the Ukrainian economy in January-September 2018 amounted to 337 billion UAH, which is 19.9% more than in the corresponding period of 2017.

Oleg Krot, Managing Partner of TECHIIA Holding:

The world perceives Ukrainians as members of the global community. We have a reputation as a nation of strong technical specialists.

If we want talents to work in Ukraine and make it better, we need to create the conditions under which the projects they generate will be implemented.

Investors are ready to invest in projects in Ukraine and make it more attractive for living. Proving readiness to accept new investments is a challenge for Ukraine.

Having 127 thousand IT developers of the international level, Ukraine should actively introduce information technologies in all spheres of the country. Meanwhile, the vast majority of IT companies are export-oriented.

Software development is a business.

There is a law on public-private partnerships. It provides for the development of solutions for health care, distribution, and supply of electricity, real estate management, social services, and management of social institutions. However, for companies to develop solutions for citizens and the country, the state and companies must work together as business partners.

IT companies will be able to more actively develop innovative solutions for the internal needs of a number of conditions.

1. Availability on the side of the state as a customer of high-level specialists who can formulate clear terms of reference and advise in the process of solution development.

2. Transparency in the selection of IT companies as contractors and the rules of the game.

3. Remuneration of developers at the market level.

4. Support of the implemented solution by the IT company.

Migration and innovation are closely connected. If we compare the data from the ranking of countries with the highest level of innovation development and migration, we can see a clear pattern.

People are eager to stay in the country where they can get online services, to control what projects their taxes are used on, to get a high level of medical services, and their children — a decent education.

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